Scottish Court of Session Decisions

John Sproul, journeyman joiner, 244 Cumberland Street, Glasgow, raised a process of cessio in the Sheriff Court there. He stated that he was notour bankrupt, was unable to pay his debts, and that his inability to pay his debts arose through misfortunes and business losses.

According to the state of affairs Sproul's only assets were worth £3, 5s. The furniture in the house he occupied was stated to be his wife's. The state showed that there were five creditors, whose debts amounted in all to £56, 7s. 3d. The chief creditor was James M'Cusker, commission agent, to whom Sproul owed £27, 10s. 3d. He opposed the granting of cessio. One of the others was Sproul's mother-in-law, to whom he owed £11, and his landlord, to whom he owed £13, 10s. The other two were tradesmen. The state of affairs also showed that Sproul had previously been in business as a grocer, but in 1889 had been obliged to grant a trust for creditors, under which they received 3s. per pound.

From the examination of Sproul it appeared that M'Cusker, the objecting creditor, was then a creditor for the same debt, and had received the dividend. The debt arose from M'Cusker having signed bills for Sproul to enable him to buy out his partner in the grocery business. The other creditors under the trust-deed had discharged Sproul on receiving their dividend, but M'Cusker had not. The application for cessio was brought in consequence of arrestments of wages and a poinding used by M'Cusker, whereby he had obtained £1, 18s., or other 2s. per pound on his debt. The other creditors at the date of the application for cessio were not pressing their claims. Sproul deponed with regard to the creditors other than M'Cusker—“I intend to pay them when I am able;” further, with regard to M'Cusker—“I have already offered to pay M'Cusker £18,10s. M'Cusker offered to accept £15 in full of his debt before the presentation of the petition. I do not propose to make any arrangement now.” Sproul's wages, when fully employed, were 34s. a-week, but on an average over the year about 25s. per week. He offered to assign them to the extent of £5 for behoof of his creditors.

Upon 17th September 1891 the Sheriff-Substitute ( ) gave decree of cessio.

“ Note.—If the case of Hairstens, 13 R. 207, is to be read as meaning that cessio is incompetent in the absence of substantial assets, this cessio is incompetent; but Lord Shand differed in that case, and, as I read the succeeding case of Reid, 1890, 17 R. 757, there is no one absolute rule. As explained by Lord Shand in both cases, cessio is the equivalent of sequestration in small estates, and is the commencement of discharge, and it is a question of circumstances whether it ought to be granted or not. In the decisions, so far as reported, either in the Supreme or the Sheriff Courts, the Verdict has generally been against the debtor, but in the present case no improper conduct is averred. The opposing creditor has already obtained more than 5s. per pound, and he is the only creditor opposing. It seems to me the debtor ought to be permitted in such circumstances to commence the proceedings necessary for his discharge. When he applies for his discharge, it will then be open to consider if he should not give over some portion of his income to the opposing creditor. In some instances debtors have been ordained to do so as a condition of obtaining cessio— Calderhead, 1890, 17 R. 1098; Simpson, 1888, 16 R. 131—but the present debtor has no sure income, and might fail innocently in any obligation taken by him.”

M'Cusker appealed to the Sheriff,

Upon 21st November 1891 the Sheriff ( ) recalled the interlocutor and dismissed the petition.

“ Note.—The question whether a petition for cessio should be granted is one of discretion, depending on the circumstances. I give great weight to the opinion of the Sheriff-Substitute, who in the present case has thought that the circumstances are such as to justify the grant, but after a careful consideration of the debtor's deposition, along with the statement of affairs he has lodged, I have come reluctantly to the conclusion that it ought not to be granted in hoc statu. The debtor is a working joiner earning weekly wages, which he states at present at 34s. per week. His liabilities are given at £56, 7s. 3d., and his assets at £3, 5s. The largest creditor is Mr M'Cusker, to whom £27, 10s. 3d. is due, and who opposes the debtor's application. Besides Mr M'Cusker there are only four creditors, one of whom, Mrs Gillies, the debtor's mother-in-law, is not, as he says, pressing him, and the others, including his landlord Mr Armour, he says that he means to pay in full. It would thus appear that while paying other creditors in full, he proposes to make no provision for the debt of Mr M'Cusker, his principal creditor. ‘I do not,’ he says, ‘propose to make any arrangement now,’ i.e., for Mr M'Cusker. From the existing assets, as set forth in the debtor's statement, it is plain that no means of satisfying any of the debts can be looked for. Even if the £3, 5s., at which his assets are estimated by the debtor, were realised from the articles of household furniture and joiner's tools of which they are said to consist, nothing, after payment of the trustee, would remain for the creditors. There are, in truth, practically no assets for distribution. In refusing the application at present, it is not, I think, necessary to say that a grant of cessio is incompetent where there are no assets, but the fact of there being no

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assets leads one to look carefully at the position of the debtor before granting his application. Here it is not favourable to the application that the debtor avowedly contemplates making no provision towards the payment of one creditor, while intending to pay other creditors in full. It would, in my opinion, be an abuse of the process of cessio to allow a debtor, who comes forward with a statement that he has in effect no assets, to make it a handle for defying a particular creditor, as the debtor here proposes.”

Sproul appealed to the Second Division of the Court of Session.

Authorities— Ross v. Hairstens, November 16, 1885, 13 R. 207; Reid v. M'Bain, May 16, 1890, 17 R. 757; Calderhead v. Freer & Dobbie, July 9, 1890, 17 R. 1098.

At advising—