Scottish Court of Session Decisions

The Industrial and General Trust, Limited, a financial company carrying on business in London, on 12th September 1889 made an advance to the Coats Iron and Steel Company of Coatbridge of £7500, who in return therefor granted a letter of obligation in the following terms—“We, The Coats Iron and Steel Company, hereby acknowledge the receipt from the Industrial and General Trust, Limited, of the sum of £7500, which sum we hereby agree to repay on or before the 12th day of March 1890, together with interest thereon at the rate of six per cent. per annum. By way of security for the repayment of the said loan and interest we have to-day transferred to the said Industrial and General Trust, Limited, 100 debenture bonds of £100 each, fully paid, Nos. A 649 to A 748 inclusive, of and in the undertaking called Goodwins, Jardine & Company, Limited, and we hereby expressly agree that there shall always be a margin of at least fifteen per cent. in the value of the security so given to the said trust for the said loan over and above the amount of the said loan, and that if the debentures now transferred to the said trust should at any time during the currency of the said loan show on their market value a margin of less than fifteen per cent., we will on demand repay so much of the said loan as may be necessary to bring the margin of security up to the said minimum of fifteen per cent. Dated this 12th day of September 1889.”

The borrowers failed to repay the advance on its due date 12th March 1890, and the Trust Company on 11th June following presented a petition to the First Division of the Court of Session for authority to sell the debenture bonds held by them in security, in order to reimburse themselves for the said advance with interest and expenses.

At the date of the application the estates of the Coats Iron and Steel Company, as well as the estates of those of its individual partners were sequestrated, and a trustee had been duly appointed on the sequestrated estates.

The petitioners prayed for authority to sell by public roup or private bargain, and after such advertisement, if any, as the Court might see fit, the debenture bonds held by them in security of the loan above mentioned.

It was mentioned at the bar that there were no other parties interested in these securities except the creditors and the debtors; and the Court granted warrant to sell at the sight of the chairman of the Stock Exchange at Edinburgh, Glasgow, London, Manchester, and Liverpool, or any one of them.