Scottish Court of Session Decisions

James Grieve, hotel-keeper, Edinburgh, was a subscriber to the guarantee fund of the International Exhibition Association of Electrical Engineering, Inventions, and Industries, 1890, incorporated under the Companies Acts 1862 to 1886, to the extent of 250. The number of subscribers to the fund was upwards of 450. The association went into voluntary liquidation on 5th November 1890, and on 13th November 1890 the liquidation was placed under the supervision of the Court. The liquidator was James Alexander Robertson, C.A., Edinburgh.

On or about the 24th day of October 1890, the British Linen Company Bank, through their agents, Messrs Mackenzie & Kermack, W.S., Edinburgh, intimated to Mr Grieve that the Executive Council of the said association had hypothecated to the bank in security of advances the letters of guarantee granted by the subscribers to the guarantee fund of the exhibition, and that his letter of guarantee was then in the hands of the bank; and that in the event of there being any call upon him under his guarantee, the amount of such call would fall to be paid to the bank. On or about the 28th day of October 1890, Drysdale & Gilmour, contractors, Edinburgh, used arrestments in the hands of the pursuer, of, inter alia, all sums of money in the pursuer's hands pertaining and belonging to the association. On or about the 15th day of November 1890, James Alexander Robertson, addressed a letter to Mr Grieve, intimating that he had been appointed liquidator of the association, and that in order to meet the loss or deficiency which had arisen from the exhibition he had found it necessary to call up the whole of the guarantee fund of the association, and requesting him to send him in course a remittance for the said sum of £250, being the amount of his subscription to the guarantee fund. On or about the 18th day of November 1890 Messrs Mackenzie & Kermack addressed a second letter to Mr Grieve, in which they referred to their intimation, of date 24th October 1890, and also to the letter by the liquidator of the association, of date 15th November 1890, above mentioned. They then proceeded to state that the liquidator had no authority from the bank to take payment from the guarantors, and that he was not in a position to deliver up or discharge Mr Grieve's guarantee, and that they were directed to inform him that the bank claimed the sum due by him under his letter of guarantee, and would not recognise any payment to the liquidator, and they requested him to make payment of the said sum of £250 to the bank.

In these circumstances Mr Grieve raised an action of multiplepoinding in which he called as defenders James Alexander Robertson, the liquidator of the association, the British Linen Company Bank, and Drysdale & Gilmour.

The liquidator lodged defences to the action, in which he averred, inter alia—“The liquidator and the said bank respectively claim right to the exclusive possession of the letters of guarantee, and to the guarantee fund of the said association, and by the letters referred to in the condescendence the liquidator and the said bank did no more than intimate their respective claims to the pursuer and the other guarantors, of whom there are upwards of 450. There was no double distress, and the question of preference between the two claimants fell naturally and properly to be decided in the course of the liquidation, and by the summary procedure prescribed by the Companies Acts, and neither of the claimants, as the pursuer well knew, intended to raise proceedings. in Court against him. On 22nd November the liquidator presented a note to the Court to have the said bank ordained to deliver forthwith into his hands the letters of guarantee, and to find and declare that the said bank have no valid security or preference over the guarantee fund or the letters of guarantee. Answers to this note were on 25th November lodged by the said bank, and the question between them is now in dependence before the Court. The decision

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of the question in the liquidation proceedings will supersede the necessity of proceeding with the present action, which is wholly unnecessary and uncalled for. By sections 87 and 151 of the Companies Act of 1862, it is provided that no suit, action, or other proceeding shall be proceeded with or commenced against a company in liquidation except with the leave of the Court and subject to such terms as the Court may impose. The pursuer commenced the present action without obtaining leave of the Court, and the association is not called as a defender.”

The liquidator pleaded—“(1) The action is incompetent as laid. (2) the action is irrelevant. (3) The action having been commenced without the leave of the Court being first obtained, falls to be dismissed. (4) There being no double distress, the action should be dismissed. (5) The present proceedings are inconvenient and unnecessary, in respect the rights of the claimants fall to be, and are in course of being, decided by the Court in a summary proceeding in the liquidation, and the action should in consequence be dismissed, or at all events sisted until the respective rights of the claimants shall have been settled in said summary proceeding. (6) In the circumstances the action should be dismissed with expenses.”