Scottish Court of Session Decisions

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Cite as: [1890] ScotLR 27_858, [1890] SLR 27_858

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SCOTTISH_SLR_Court_of_Session

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Court of Session Inner House First Division.

[Sheriff of the Lothians and Peebles.

Wednesday, July 9. 1890.

27 SLR 858

Calderhead

v.

Freer and Dobbie.

Subject_1Cessio
Subject_2Earnings
Subject_3Assignation to Creditors.
Facts:

An agent of a building firm applied for cessio, his debts being £276, 10s. 6d. and his free assets £3, 10s. From his deposition it appeared that he was in receipt of a salary of £3, 15s. per week, out of which he had to pay his travelling and personal expenses, and that he also received a small addition to his income by payments on commission.

Held that he was entitled to the benefit of cessio on assigning £20 a-year to his creditors.

Headnote:

This was a petition for cessio, presented in the Sheriff Court at Edinburgh by Robert Calderhead against John Dobbie, Janet Freer, and others, his creditors. He averred that he was notour bankrupt in the sense of the Debtors (Scotland) Act 1880, sec. 6.

From the state of affairs lodged by the pursuer it appeared that his liabilities were £267, 10s. 6d., and that his assets consisted of his house furniture, valued at £12, 10s., and subject to a preferable claim for rent amounting to £9.

The pursuer deponed as follows—He was agent for a building firm, Benson & Company, quarrymasters, Corncockle, Dumfriesshire, from whom he received £3, 15s. per week. Up to the previous February his salary had been £3, 10s. per week. He also made a little money on commission. The salary given him was to cover his travelling and personal expenses. These had amounted to £110 the previous year, leaving him a net income of £89. He had a wife and six children.

On 12th May the Sheriff-Substitute ( Hamilton) pronounced this interlocutor;—“Having considered the oath and deposition of the pursuer and having heard party's procurators, Finds the pursuer entitled to the benefit of cessio, but only on condition that he assigns to his creditors out of his earnings the sum of £20 a-year: Decerns and ordains the pursuer to execute a disposition omnium bonorum, and also an assignation in the above terms, to and in favour of Mr James Craig, C.A., Edinburgh, who is thereby appointed trustee for behoof of the creditors of the said pursuer, in terms of the statutes and Acts of Sederunt.

The pursuer appealed, and argued—The Sheriff had no power under the Debtors (Scotland) Act 1880 (43 and 44 Vict. cap. 34) to make it a condition of granting cessio that the debtor should assign a portion of his income to his creditors. That Act did not contemplate that any condition should be adjected to the granting of cessio. Under the former law fees earned by personal labour could not be attached for debt— Barron v. Mitchell, July 8, 1881, 8 R. 933, opinion of Lord Fraser 934, and cases there cited. The pursuer's earnings were precarious and did not stand in the same position at all as the permanent incomes of officers or schoolmasters and the like.

Argued for the defenders—Before 1880 a debtor could be compelled to assign a portion of his earnings to his creditors as a condition of having cessio granted— Brechin v. Taylor, March 9, 1842, 4 D. 909; Mitchell v. Macfarlane, July 13, 1875, 2 R. 930; Robertson v. Wright, &c. November 29, 1873, 1 R. 237. The recent Acts had made no change in the law— Simpson v. Jack, November 23, 1888, 16 R. 131.

At advising—

Judgment:

Lord President—The question in this case is whether, in the first place, it was competent for the Sheriff-Substitute to annex to the granting of decree of cessio any condition, or at least such a condition as we have here, and in the second place, whether the amount of income which he has required the debtor to assign is reasonable in the circumstances.

Now, I do not think the question of the competency of annexing such a condition has been at all affected by the change of law operated by the recent statutes of 1880 and 1881. The process of cessio remains as it was before these Acts, a benefit to the bankrupt. The bankrupt in his petition craves the benefit of cessio, and the Sheriff finds him entitled to the benefit of the process. No doubt the benefit is not now so great as it was because of the abolition of imprisonment for debt, but the exemption from imprisonment was only one of the benefits afforded to the debtor by the granting of cessio. It also protected his estate against being affected by other diligence. The debtor conveys to the trustee his whole existing estate, and is protected against any part of that estate being made the subject of diligence. He is also, I take it, protected against diligence directed against his earnings, and therefore it is quite necessary that the Sheriff should have the power to make the condition that part of these earnings should be assigned for the benefit of the creditors, if they exceed what is necessary for the debtor's subsistence. The present is, I think, an ordinary case, and there is nothing, as I have said, in the recent statutes to alter the former rule.

The question how long such a condition will remain in operation, is, I think, easily solved. As soon as the petitioner for cessio comes to ask his discharge, which he can do in six months, he will find himself met with the condition that if he cannot pay 5s. in the £ he will not receive it unless he can show that his failure arises from circumstances which make it in the eye of the law

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excusable. Supposing he can neither pay 5s. in the £ nor prove his failure justifiable, his only alternative is to make up the necessary amount some way or other, and if the assignation of part of his earnings contribute to this result, the debtor will thus, at the time he gets his discharge, obtain full benefit corresponding to the loss of income he has in the meantime sustained. On the other hand, if the assignation of income has not that effect, it must just continue in force till it has, when the debtor will be discharged. The moment discharge is granted the assignation will come to an end, because it is granted for the benefit of the creditors, and when the debtor is discharged he has no longer any creditors, and his debts cease to exist. He is entirely relieved of them, just as much as if he had never contracted them. Therefore the working out of the assignation ultimately affords no difficulty at all.

The remaining question is as to the amount which the Sheriff has ordered to be assigned, and I see no ground for saying it is an unreasonable amount. On the contrary, it is, I think, quite a fair proportion to be assigned.

On these grounds I am of opinion that we should adhere to the Sheriff's interlocutor.

Lord Shand—Unquestionably prior to the recent somewhat curious Cessio Acts it was the practice to grant cessio under conditions, one of which was that the debtor should make over for a time a certain portion of his income to his creditors. This rule not only extended to the cases of persons having a fixed income, but also to persons possessing salaries and incomes of that class, and I see no reason to doubt that where a man's income consisted partly of commissions and partly of salary, this condition might lawfully be appended to the granting of cessio in his favour. I think also that no change has been operated by the recent statutes, and that it is settled by the case of Simpson v. Jack, that such a condition may still be appended to the granting of cessio,

That being so, what are the circumstances of the present case? The petition for cessio is presented by the debtor who is seeking to have an order of Court which will restrain his creditors from doing diligence against his property. In former times the chief purpose of the applications for cessio was to save the debtor from imprisonment, but as I said in a recent case, the Act of 1880 which abolished imprisonment for debt enacted that it should be competent for anyone who was notour bankrupt to apply for cessio, and the meaning of the enactment must be, that while a debtor who obtains decree of cessio must grant a disposition omnium bonorum, his earnings, if he is making any, are saved from the diligence of his creditors. I see no reason accordingly, why the Sheriff should not have power to append such a condition to the granting of cessio.

On the question whether the amount to be assigned is reasonable I concur with your Lordship.

Lord M'Laren concurred.

Lord Adam was absent.

The Court adhered.

Counsel:

Counsel for the Appellant— Crole. Agent— Edward Nish, Solicitor.

Counsel for the Respondent Freer— A. S.D. Thomson—Agents— W. R. Patrick & Wallace James, S.S.C.

Counsel for the Respondent Dobbie— A. S. D. Thomson. Agents— Miller & Murray, S.S.C.
1890