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Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> The Northern Heritable Securities Investment Co. (Ltd) and Others v. Whyte [1888] ScotLR 26_91 (21 November 1888)
URL: http://www.bailii.org/scot/cases/ScotCS/1888/26SLR0091.html
Cite as: [1888] SLR 26_91, [1888] ScotLR 26_91
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SCOTTISH_SLR_Court_of_Session
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Court of Session Inner House First Division.
v.
Facts:
A bankrupt was discharged without composition in 1884, and his trustee was also discharged. By the contract of marriage of the bankrupt's parents the fee of certain bank shares remained in his mother. By deed of transfer dated 1870 she transferred the shares to herself in liferent, and to her children, including the bankrupt, in fee. She died in 1887. In a petition for the revival of his sequestration, on the ground that these shares had not been ingathered and divided, the bankrupt averred that the shares had not vested till his mother's death, which happened after the date of his discharge, but that in any view the trustee had abandoned them. There was no evidence of abandonment by the creditors. The Court held that the shares had vested in him before the date of his discharge, and (following the case of Thomson, Petitioner, December 17, 1863, 2 Macph. 325) remitted to the Lord Ordinary on the Bills to appoint a meeting of creditors for the election of a trustee.
The estates of George Whyte & Company, and George Whyte sole partner thereof, were sequestrated on June 7, 1882, and James Alexander Robertson, C.A., Edinburgh, was appointed trustee. He took measures to realise and divide the estates, which paid a dividend of 7
d. per £. 1 2 On 18th March 1884 the bankrupt was discharged without composition, and on 4th November 1887 the trustee was discharged by the Sheriff.
Mrs Isabella Mess or Whyte, the bankrupt's mother, died on 18th January 1887. Sometime before her death there stood in her name in liferent, and in the name of the bankrupt and of his three sisters in fee, certain shares of the Commercial Bank of Scotland.
By the contract of marriage entered into between the parents of the bankrupt, Mrs Whyte conveyed these shares to herself in liferent, but exclusive of the jus mariti, and failing her by death to her husband George Whyte in liferent, and in either case to the children of the marriage, equally among them if more than one, in fee, subject to the power of division and other conditions mentioned in the contract.
By transfer dated May 1870 Mrs Whyte transferred and made over these shares to herself in liferent, and her children equally in fee.
The present petition was accordingly presented by the Northern Heritable Securities Investment Company (Limited) (who were creditors of the bankrupt to the extent of £8124, 5s. 7d.) and others, who averred that the said Commercial Bank shares had fallen under the sequestration, and that the creditors of the bankrupt were entitled to this asset, and to any other estate which might yet fall in and be available for distribution. The petitioners applied to the Court to remit to the Lord Ordinary on the Bills to order an early meeting of the creditors of George Whyte & Company, and of the said George Whyte sole partner of the said company, to be held to elect a trustee on the sequestrated estate.
Answers were lodged by the said George Whyte, who averred that his whole assets were fully known to his trustee and creditors before his sequestration came to an end, and that the petitioners were consenters to his discharge; that he acquired a vested right to these shares only on his mother's death; and that neither the creditors nor the trustee, who were both well aware of the condition of these shares, had taken any steps to have it found that they were entitled to them; and that accordingly the creditors and trustee had abandoned any right competent to them to these shares.
The respondent referred to the action at his instance against D. H. Murray, supra, p. 67.
Argued for the petitioner—The bank shares formed estate falling under the sequestration which had not been ingathered. They were vested in the bankrupt at the time of his sequestration. The bankrupt being discharged without composition the sequestration was not ended, and he was not reinvested in his estates. The present question related to a claim of debt under a marriage-contract. The effect of the marriage-contract was to leave Mrs Whyte the fiar of these shares. A power of apportionment did not affect vesting, nor did a destination-over where there was no clause of survivorship. Vesting here took place subject to defeasance if the children died leaving issue— Snell's Trustees v. Morrison, March 20, 1877, 4 R. 709; Haldane's Trustees v. Murphy, December 15, 1881, 9 R. 269. The share of each child vested in 1870 at the date of the transfer, and that being so, the bankrupt's share vested in him prior to his sequestration, and so passed to his trustee—Bankruptcy Act 1856, secs. 102 and 103. The trustee had not abandoned this security, although he did not take any active steps to bring it into the sequestration. In order to infer abandonment there must be something more than mere silence; there must be actually abandonment in favour of the bankrupt. Here, at the most, there was abandonment in error— Greig v. Fraser, February 6, 1850, 12 D. 684; Mackay v. Brownlee, January 31, 1866, 4 Macph. 333; Douglas v. Maclachlan, February 4, 1881, 8 R. 470. At all events there had been no abandonment by the creditors.
Argued for the respondent—The proposal of the petitioner was to revive a sequestration in order to deal with estate which had been overlooked by the negligence of the trustee, and this four years after both the bankrupt and the trustee had been discharged. No case could be cited where the Court had appointed a new trustee to deal with estate which had come to the bankrupt during the course of his sequestration or prior to his discharge. This application could not be made under section 103 of the statute. It could only be under section 102, and under that section there was no provision for such an appointment as was here sought. There was no vesting of this stock under the clause in the marriage-contract, for the fee was in Mrs
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Whyte—the children's rights were qualified by the terms of the transfer. No right vested in them till after the death of Mrs Whyte— Kirkland v. Kirkland's Trustee, March 8, 1886, 13 R. 798. This was an appeal to the nobile officium of the Court, and it was a case in which to preserve the interests of all parties a judicial factor should be appointed, for if the sequestration was revived the old trustee would be re-appointed, and this was undesirable, as he would thereby be in a condition to control any proceedings which might be taken against himself relative to the past management of this estate— Thomson, Petitioner, December 17, 1863, 2 Macph. 325; Fleming v. Walker's Trustees, November 16, 1876, 4 R. 112; Taylor v. Charteris, November 1, 1879, 7 R. 128; Abel v. Watt, November 21, 1883, 11 R. 149. At advising—
“What is necessary in order to sustain this application is, first, an averment that there are funds which belonged to the bankrupt at the date of his sequestration, and which have not been divided among his creditors; and second, that there are creditors who were ranked in the sequestration, and who have not been paid in full, who are supporting the petition.
Now, the objection which is taken by the respondent is, that there are no funds to be recovered, and so that the present application is useless. It would certainly be a very awkward matter if a question of this kind fell to be determined in a process like the present. If, however, any difficulty were to arise as to whether or not these funds were to be held as forming part of the bankrupt's estate, that is a matter which the trustee will have to determine after his appointment. In the present case, however, there can be no question that the fund now sought to be brought into the sequestration formed part of the bankrupt's estate at the date of his sequestration. The bank shares in question were thus dealt with by Mrs Whyte, the bankrupt's mother. There was no trust created by the marriage-contract, but she simply conveyed these shares to herself in liferent, and to the children of the marriage in fee. Mrs Whyte thus remained the undivested fiar, while the right of her children was confined to a mere spes successionis. But after her husband's death in 1869 Mrs Whyte in 1870 executed a transfer of these shares, and it is of importance, looking to the contention of the respondent, to see in what way the rights of the children were affected by this transfer. By this deed, which bore to be in corroboration of a transfer already granted by her, Mrs Whyte transferred the said bank shares to herself in liferent, for her liferent use allenarly, and to the children of the marriage nominatim in fee.
Now, the effect of this transfer was to alter materially the relative positions of Mrs Whyte and her children; all that she thereafter had, was a reserved liferent, while the fee vested in the children whenever they accepted the transfer.
It is said that there is a clause in this deed which restricts the right of the children by stipulating that the acceptance of the transfer by the children was not to affect their interests inter se under their father's marriage settlement and trust-disposition, but I can find nothing in the deed of transfer which can in any way qualify these children's right of fee. As regards their father's trust-disposition, it clearly does not carry any right to these bank shares, while all that the marriage-contract provides is, that the fee of these shares is to be in the children of the marriage, if more than one, then equally among them. In neither of these deeds can I find anything which, taken along with the clause in the deed of transfer, can be said to prevent the vesting of these shares in the children as at the date of the transfer. There is not, I understand, any dispute about the proportion of stock which fell to the bankrupt. He was entitled to one-fourth of these shares, and it is equally clear that they formed part of his sequestrated estate at the date of his sequestration. But it may be said if all this is so clear, why did not the trustee take up these shares and realise them, and divide the proceeds among the creditors? and it is now urged by the respondent that in consequence of his not doing so the trustee must be held to have abandoned this asset, and that the sequestration cannot be revived in order that these shares may now be taken up and dealt with by any trustee who may be appointed. Now, the evidence of what the respondent terms abandonment is somewhat remarkable. The trustee seems to have been placed in rather a curious position with reference to these shares, as a Mr David Hill Murray was said to be in right of them under an assignation alleged to be granted by the trustee and commissioners of the residue of the estate of the bankrupt's deceased father. In these circumstances the trustee had some difficulty in determining whether or not this could in any sense be viewed as an available asset. But what satisfies me that there was in the present case no abandonment of this asset is that anything that was done in the matter was done by the trustee alone. Abandonment to be effectual must be by the creditors, or by the trustee with the consent of the creditors. I know of no case where there was held to have been abandonment without evidence of the consent of the creditors, and there is not the slightest trace of anything of that kind here.
But it has been further urged that we should not in the present case follow the procedure which was followed in the case of Thomson, but that we should appoint a judicial factor to protect the various interests which are said to be involved. I can only say that it would require very strong reasons indeed to induce us to adopt any such course.
The appointment of a trustee must lie of course with the creditors, and it has been urged that the petitioners having a majority of votes Will carry their own trustee and commissioners, and will re-appoint to this office the late trustee. This argument is somewhat inconsistent with what was stated in the course of discussion, viz., that the petitioning creditors are almost entirely paid up by collateral securities. If this be so, then their voting power will be proportionately reduced. All this, however, is mere speculation,
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I am therefore prepared to concur in the course proposed by your Lordship.
The Court granted the prayer of the petition.
Counsel for the Petitioners— D.-F. Macintosh, Q.C.—C. S. Dickson. Agent— A. Morison, S.S.C.
Counsel for the Respondent— Gloag—Watt. Agent—Party.