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Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Arrol & Sons v. Christie [1901] ScotLR 39_171 (04 December 1901)
URL: http://www.bailii.org/scot/cases/ScotCS/1901/39SLR0171.html
Cite as: [1901] ScotLR 39_171, [1901] SLR 39_171
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SCOTTISH_SLR_Court_of_Session
Page: 171↓
Court of Session Inner House First Division.
[Sheriff Court at Perth.
v.
Facts:
A debtor allowed a charge on a decree in absence to expire without payment, and the creditor presented a petition for sequestration. Before the induciæ in the petition for sequestration had expired, the Sheriff, on the motion of the debtor, recalled the decree in absence.
Held that the decree in absence having been recalled there was no evidence of notour bankruptcy, and that consequently the petition for sequestration fell to be refused.
This was an appeal from the Sheriff Court at Perth in a petition for sequestration upon which sequestration had been refused.
On 1st October 1901 Archibald Arrol & Sons, 16 Dixon Street, Glasgow, pursuers, obtained a decree in absence in the Sheriff Court at Perth against Annie Christie, Ancaster Arms Hotel, Comrie, for a debt which they alleged to be due to them by her.
On 14th October the pursuers executed a charge on the decree in absence, which expired without payment by the defender on 21st October.
On 24th October the pursuers presented a petition for sequestration of the defender's estates.
On 25th October, in the original action at Messrs Arrol's instance, the Sheriff-Substitute ( Sym) refused a motion by the defender for recal of the decree in absence.
On 4th November, before the induciæ had expired in the petition for sequestration, the Sheriff ( Jameson) recalled the Sheriff-Substitute's interlocutor of 25th October refusing the defender's motion for recal, recalled the decree in absence of 1st October, and allowed defences to be received.
On 7th November the Sheriff-Substitute pronounced the following interlocutor:—“In respect the decree in absence upon which the defender was charged has been recalled, and the defender reponed in the action at the instance of the present pursuers against the present defender for payment,
Page: 172↓
refuses the sequestration prayed for, and dismisses the petition: finds no expenses due to or by either party; and decerns.” Note.—“The Sheriff-Substitute considers that there is much more difficulty in this matter than the procurator for the respondent appeared to realise; but he has come to think it expedient to refuse the petition, and that in the circumstances he may consider the matter in the light of expediency. The Sheriff-Substitute is strengthened in this view by the considerations ( first) that to grant the petition would be practically to ignore and defeat the judgment reponing the respondent of the learned Sheriff, pronounced almost contemporaneously with the debate on this petition; and ( second) by the circumstance that he does not see that there could be any answer to a petition for recal of the sequestration, in which process certainly questions of expediency are quite competent.”
Messrs Arrol appealed to the Court of Session, and argued—Upon the expiry of the charge on the decree in absence insolvency was to be presumed, and there being consequently insolvency concurring with an expired charge notour bankruptcy had been constituted on 21st October. If the decree in absence had been brought under review by suspension of the charge, that would not have removed the presumption of insolvency or involved the refusal of sequestration— Sutherland v. Sutherland, February 11, 1843, 5 D. 544. A debtor could only get rid of notour bankruptcy by showing himself to be solvent—Bankruptcy (Scotland) Act 1856 (19 and 20 Vict. c. 79), sec, 9; here there was no evidence of solvency— Galbraith v. British Linen Company, December 1, 1898, 36 S.L.R. 139. Though a debtor may be reponed and have his case tried on the merits, nothing that has followed on a decree in absence was affected thereby— M'Lachlan v. Rutherford, June 10, 1854, 16 D. 937. The case was to be viewed as if under the old law the debtor had been imprisoned. On 24th October, the date of the oath on which the petition for sequestration proceeded, the decree in absence, extract of which was the voucher of the respondent's debt, was standing. Applying the provisions of the Bankruptcy Act, which were imperative, to the circumstances of the case, the Sheriff-Substitute was bound to award sequestration—Bankruptcy Act 1856, sec. 30.
Argued for the respondent—There was no proof of insolvency. The decree in absence had been recalled, and the debt on which it proceeded was now disputed, and when the judgment appealed from was pronounced there was no prima facie evidence of notour bankruptcy— M'Nab v. Clarke, March 16, 1889, 16 R. 610, 26 S.L.R. 472. There was no voucher for the alleged debt; extract of the decree in absence, which was relied on, ceased to be a voucher as soon as the decree was recalled. The judgment of the Sheriff recalling the decree in absence was final—Sheriff Court Act 1876 (39 and 40 Vict. c. 70), sec. 14, sub-sec. 4.
The proceedings in the case were begun by an action for payment of an account for goods supplied, in which the present pursuers obtained decree in absence against the respondent on 1st October. They extracted this decree, and thereafter, on 14th October, they executed a charge upon the decree which expired on 21st October without payment. Three days after, on 24th October, the pursuers presented a petition for sequestration of the respondent's estates, and intimation was made of this application on 25th October on seven days' induciæ.
In the meantime the respondent had applied to be reponed, and was on 4th November reponed by the Sheriff against the decree in absence upon which the expired charge had proceeded. The respondent was thus reponed by interlocutor of the Sheriff under section 14 of the Sheriff Courts Act 1876. This section declares (sub-section 4) that an interlocutor recalling a decree in absence under its provisions shall be final and not subject to review. Thereafter, on 7th November, the petition for sequestration came before the Sheriff-Substitute for consideration, and the procedure to be followed by him was that laid down in section 30 of the Bankruptcy Act of 1856. The application was refused, and I think the refusal was justified on the ground now pleaded that the requisites which would have entitled the Sheriff to have awarded sequestration were not before him and did not exist.
The statute requires that there should be notour bankruptcy, and the question was, whether that condition was present. From 21st October, the date of the expiry of the charge on the decree in absence, till 4th November, when that decree was recalled, notour bankruptcy as defined by the statute did exist, and if the application for sequestration had been made between these two dates the Sheriff would have been bound to award sequestration. But then on the last of these dates, the 4th November, the decree was recalled, and the whole foundation of the procedure to render the respondent notour bankrupt destroyed, and on this ground it appears to me the Sheriff could not have awarded sequestration. In my opinion the presumption of insolvency arising from the expiry of the charge without payment of the debt, which would legitimately have been drawn prior to 4th November, no longer existed when the decree upon which the charge proceeded was recalled.
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The chief condition of sequestration is that the debtor shall be notour bankrupt, and the definition of notour bankruptcy includes insolvency as an ingredient. In the ordinary case, if the other elements of notour bankruptcy exist, such as a decree for the debt followed by poinding or evasion of diligence, the Judge who is asked to award sequestration is entitled to presume insolvency, because no rational and solvent person would allow his credit to be destroyed if he had a good defence to the claim, or was able to pay in terms of the charge. Nothing that we decide is intended to throw doubt on the practice of presuming insolvency in the ordinary case. But I agree that this is not the ordinary case. While the reponing of the debtor in the petitory action left the proceedings in the sequestration unimpaired, it took away the presumption, arising from diligence on a decree, that the debtor was insolvent. It is fair to presume insolvency where a debt is left unpaid in face of an expired charge for payment, but after a debtor is reponed, and is prepared to try the question of his liability, are we still to presume that he is unable to pay his debts? I should think the presumption would be lessened very much if not entirely displaced by reponing, and in the present case I am unable to hold that the debtor is insolvent, and therefore I think that sequestration was properly refused.
The
The Court refused the appeal.
Counsel for the Pursuers and Appellants— Ure, K.C.— Younger. Agents— Cairns, M'Intosh, & Morton, W.S.
Counsel for the Defender and Respondent— M'Lennan-Munro. Agent— J. T. Donaldson, Solicitor.