Scottish Court of Session Decisions

On 22nd March 1897 John Imrie, dairyman, Grangemouth, became bankrupt, and his estate was sequestrated. At that date he was tenant on a verbal lease from Whitsunday 1896 to Whitsunday 1897 of the farm of Reddoch belonging to James Charles Calder, Distiller, Bo'ness. The farm consisted solely of grazing ground, no part of it being under crop.

On 2nd April William Drummond Marshall, solicitor, Falkirk, was confirmed as trustee on the sequestrated estate. The trustee advertised the stock and dairy plant for public sale.

On 8th April, at a meeting of the creditors, the trustee read the following offer by Mr Henry Walker, draper, Grangemouth:—

“Grange Street,

Grangemouth, April 7, 1897.

On behalf of Mrs Imrie, I agree to take the stock of cows, milk van, horses, dairy dishes, &c., including all Mr Imrie's sequestrated estate at Reddoch (the pony not included), but all others at valuation prices, as shewn me by Mr Allan, Solicitor; Mrs Imrie to be allowed to carry on the dairy at Reddoch until 28th May, you relieving her of all liability as to rent, wages, &c., till 28th May first. Cash to be paid on Monday first, the 12th April, or any earlier date, if transfer of stock, &c. is completed.

Henry Walker.

Page: 15↓

Shop fittings not included, but I may be able to arrange for party to take them over.”

Thereupon “after full consideration of the offer, the meeting unanimously agreed to authorise the trustee to accept Mr Walker's offer, on the following conditions, viz.— That Mrs Imrie should be allowed to carry on the dairy at Reddoch until 28th May, on payment by Mr Walker, along with the price, of a sum of £12 of rent of houses and pasturage. Mr Walker or Mrs Imrie to relieve the trustee of the proportion of servants' wages from and after the date of the trustee's acceptance. The price to be paid immediately on acceptance. In the event of these conditions not being agreed to of this date, the trustee was instructed to decline the offer, and proceed with the public sale as advertised.” To this conditional acceptance Walker agreed in the following terms—“ Grangemouth, 8 th April.—I agree to the conditions mentioned in the foregoing minute.” In respect of this agreement Mrs Imrie, the bankrupt's wife, continued in possession of the farm till the conclusion of the lease.

On 26th July Calder put in a claim for £50 as half-year's rent, due May 15th, of farm and house at Reddoch. He claimed “a preferable ranking for said debt in respect of the trustee having retained the use and possession of the farm till the expiry of the let for the benefit of the estate.”

On 5th August the trustee pronounced the following deliverance on Calder's claim—“The trustee rejects this as a preferable claim, in respect it is a claim for rent of agricultural subjects, and is not entitled to a preferable ranking. He admits the claimant to a ranking as an ordinary creditor.”

Calder appealed to the Sheriff-Substitute at Falkirk ( Russell Bell), who on 29th September pronounced the following interlocutor—“Finds in fact (1) that at the date of the sequestration (22nd March 1897) John Imrie, the bankrupt, was tenant on a verbal lease, from Whitsunday 1896 to 1897, of the farm of Reddoch belonging to the appellant; (2) that it is admitted that said farm consisted solely of grazing ground, no part of it being under crop; (3) that on 8th April 1897 the respondent, as trustee in the said sequestrated estate, transferred the remainder of the lease of said farm to the bankrupt's wife, as recorded in the minutes of meeting of creditors of that date on page of the sederunt book; (4) that the bankrupt's wife continued in possession of the farm till Whitsunday 1897; Finds in law that the respondent, as trustee foresaid, thereby became liable to the appellant in the rent of the said farm, so far as unpaid up to Whitsunday 1897: Therefore sustains the appeal, and ordains the respondent to rank the appellant as a preferable creditor on the said sequestrated estate, in terms of his claim.”

The trustee appealed, and argued—His actings did not constitute an adoption of the lease. The question whether a trustee in bankruptcy had adopted the bankrupt's lease was one of circumstance. Here the trustee had shown no intention of adopting the lease, and had publicly advertised the stock for sale. The landlord could not have entered into possession till Whitsunday 1897, and no prejudice had resulted to him by reason of the trustee, in the interest of the creditors, having received a sum down from Mrs Imrie for the stock, and having handed over to her the management of the farm for the few remaining weeks of the lease. The case was ruled by M'Gavin v. Sturrock's Trustee, February 27, 1891, 18 R. 576. Indeed the actings of the trustee were mope extensive in that case than the present, as in M'Gavin's case the trustee had sublet some of the pasture, and had received rent for it.

Argued for the respondent—The judgment of the Sheriff-Substitute was right. The trustee had sold to Mrs Imrie an independent right to occupy the farm, and the fact that the unexpired period of the lease was short did not make any difference. There were four courses which might have been followed without the adoption of the lease by the trustee. These were specified at length by Lord Deas in Dobie v. Marquis of Lothian, March 2, 1864, 2 Macph. pp. 800, 801. None of these had been followed here; the trustee had adopted the lease by selling its unexpired term for a sum of money. The transaction in substance amounted to a sale and assignation of the lease— Hamilton v. Sommerville, February 3, 1855, 17 D. 344. The doctrine of M'Gavin's case was that the trustee is entitled to do anything necessary in the way of ingathering and managing the bankrupt's estate, but beyond that is not entitled to possession of any part of the farm. In M'Gavin the subletting was done for the benefit of the creditors whom the trustee represented; here what was done was to transfer an independent right to a farm to a person who paid cash down for it.