Scottish Court of Session Decisions

This was a petition at the instance of Messrs Drybrough & Company, brewers in Edinburgh, for the election of a new trustee on the sequestrated estates of Messrs J. & A. Macdonald, bottlers in

Page: 434↓

Melrose, and of James Macdonald and Alexander Macdonald, the individual partners of said firm.

The petitioners stated that the estates of the firm of J. & A. Macdonald and of the individual partners thereof had been sequestrated in December 1874; that thereafter a trustee had been elected, and the sequestrated estates, so far as known and available at the time, had been realised and divided among the creditors of the bankrupts, the dividend paid being elevenpence in the £; that the trustee in the sequestration had been discharged in 1877, but that the bankrupts had not been discharged or reinvested in the sequestrated estates; and that it had lately come to the knowledge of the petitioners that Alexander Macdonald was proprietor of heritable property in Hawick, with a rental of £120 per annum, and was also possessed of personal estate of large amount.

Answers were lodged by Alexander Macdonald, in which he stated, inter alia, that in 1877 “he started business as a grocer in Hawick, and continued as such till 1882. From 1882 until Whitsunday of last year, he carried on a wine and spirit business in Hawick. He has recently retired from business and gone to live in Liverpool. The income from his savings is not more than sufficient for the support of himself and his family. Any property which Alexander Macdonald now possesses has been acquired by his own industry since the year 1878. The petitioners also allowed James Macdonald to carry on the bottling business of J. & A. Macdonald for many years after the sequestration, and never asked him to account for the profits of that business. The petitioners knew that the said Alexander Macdonald was carrying on business in Hawick, but during the last nineteen years they have shown no disposition to avail themselves of their rights, and have allowed Alexander Macdonald to keep possession of his estate and deal with it as he pleased, and they are now barred by lapse of time and the implied discharge which they gave Alexander Macdonald, from insisting in the present petition.”

Argued for the petitioners—The bankrupt never having been discharged and being possessed of considerable property, the petitioning creditor was entitled to have the sequestration revived by the appointment of a new trustee. The contention of the respondent that the petitioners had abandoned their claim against him did not fall to be considered under the present petition, but was a matter for the consideration of whoever might be appointed trustee— Heritable Securities Investment Company, Limited v. Whyte, November 21, 1888, 16 R. 100.

Argued for the respondent—It would be an extreme hardship for the respondent if the sequestration were revived after the long lapse of time which had occurred. The 103rd section of the Bankruptcy Act was open to construction, and cause might be shown why the claims of creditors should not receive effect. It might be shown that they had abandoned their claims— Whyte v. Northern Heritable Securities Investment Company, June 16, 1891, 18 R. (H. of L.) 37, per Lord Watson, 39. Creditors would be held to have abandoned their claims if they had acquiesced in the bankrupt's trading for his own behoof— Taylor v. Charteris, November 1, 1879, 7 R. 128, per Lord President, 131; Abel v. Watt, November 21, 1883, 11 R. 149; Christie v. Louden, December 19, 1835, 14 S. 191. In the present case the petitioners had allowed the respondent to carry on business for his own behoof for 15 years, and they were therefore barred from laying claim to the estate he had so acquired. The case of Abel v. Watt, supra, was an authority for taking the objection at this stage. In England the decisions seemed to proceed on the theory that the bankrupt was not to be made the mere slave of his creditors. Creditors were accordingly held to have no claim upon the personal earnings of a bankrupt after sequestration, but the profits of any business carried on by a bankrupt with the assistance of employees were deemed open to their claims.

At advising—