BAILII is celebrating 24 years of free online access to the law! Would you consider making a contribution?
No donation is too small. If every visitor before 31 December gives just £1, it will have a significant impact on BAILII's ability to continue providing free access to the law.
Thank you very much for your support!
 |
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback] | |
Scottish Court of Session Decisions |
||
|
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Wypers v. Harrison Carr & Co [1877] ScotLR 14_299 (2 February 1877) URL: http://www.bailii.org/scot/cases/ScotCS/1877/14SLR0299.html Cite as: [1877] SLR 14_299, [1877] ScotLR 14_299 |
||
[New search] [Printable PDF version] [Help]
Page: 299↓
[
Held that an arrestment used jurisdictionis fundandœ causa in the hands of a bankrupt's trustee, who deponed that he had not funds sufficient to pay the expenses of sequestration, was ineffectual as it had attached nothing, and as any estate that might afterwards belong to the bankrupt did not vest in the trustee until the date of its acquisition or the
Page: 300↓
succession to it in terms of the 103d section of the Bankruptcy Act. A bought coals from B and paid the price to him; C raised an action against A for that price, alleging that B was merely his agent, and used arrestments in the hands of B.'s trustee in bankruptcy to found jurisdiction against A. Question whether A's claim of repetition from B, available only in the event of C's success in his action, was arrestable jurisdiction fundandœ causa.
P. & R. Wyper, coalmasters at Motherwell, brought this action against Harrison Carr & Company, coal merchants in Newcastle, for the price of two cargoes of coal delivered to the defenders by Prank Lindsay, merchant and shipbroker, of Leith, who was, the pursuers alleged, their authorised and accredited agent. When the account for the coals was rendered to the defenders by the pursuers, they refused payment, on the ground that they had purchased direct from Lindsay, and were not indebted to the pursuer, denying that Lindsay either was or was reputed to be agent for the pursuers. Lindsay's estates were sequestrated in April 1874, and the pursuers on raising this action used arrestments in the hands of his trustee, in order to found jurisdiction against the defenders. The defenders alleged that at the date of the arrestment they had no claim against Lindsay's estate, and their first plea in law was, “No jurisdiction, in respect that the arrestments used have not attached any funds of the defenders in Scotland.” The Lord Ordinary allowed the pursuers a proof of their averment that funds were attached by the arrestments, and to the defenders a conjunct probation. The trustee on Lindsay's bankrupt estate was examined, and gave this account of his position—“All the assets that Mr Lindsay left were his office furniture, which was sold and realised about £50. I do not think that after paying the rent there will be as much left as pay the expenses of the sequestration. There are no funds for division amongst the creditors.” It further appeared from the proof that the defenders paid Lindsay for the coals.
The Lord Ordinary pronounced the following interlocutor and note:—
“ Edinburgh, 6 th July 1876.—Having heard counsel and considered the cause, Finds that by the arrestments used by the pursuers the defenders have become liable to the jurisdiction of the Court in the present action: Repels the defenders' first plea-in-law, and finds them liable in expenses since the record was closed, and remits the account thereof when lodged to the Auditor to tax, and to report.
“ Note.—The evidence appears to me to show that the defenders have a contingent claim against the bankrupt estate of Mr Lindsay, merchant and shipowner in Leith, which would entitle them to have dividends laid aside under the Bankrupt Statute in any division of the estate, and which they would be entitled to have made the subjects of a valuation under the 53d section of the statute.
“The bankrupt in January of this year sent to the defenders two cargoes of coals, one by the ‘Ariel’ of the value of £228, and another by the ‘Dwina’ of the value of £149. If it be assumed that the parties who supplied these coals became creditors to Lindsay only, and not to the defenders, the defenders would be debtors to the bankrupt estate. But the pursuers maintain that Lindsay acted as an agent only, and that the defenders are their debtors, and the parties who supplied the ‘Ariel's’ cargo have intimated a similar claim, although they have not followed it up by raising an action. It is clear that if either of these claims be well founded, the defenders, who paid Lindsay for the cargoes, would have a claim for repayment. They are therefore, I think, entitled now to claim the values of the cargoes in the sequestration, to the effect of having dividends set aside to meet the contingency of the shippers establishing direct liability against them. Their own view is that they must be guaranteed against any claims by the shippers of the cargoes before they can come to any settlement with Lindsay's trustee. In this state of matters I am of opinion that the defenders have an interest in the bankrupt estate which is arrestable, and which having been arrested is sufficient to found jurisdiction. Lindsay v. North-Western Railway Co., 22 D. 571, and Douglas v. Jones, there cited, 9 S. 856.
“It was maintained that even though there might be an arrestable interest in the case of a contingent claim where there was obviously a fund for division, this would not apply to the present case, as the trustee has been unable to realise any estate. I do not think, however, that in a question of this kind the Court can enter on an inquiry as to the probability of a bankrupt estate yielding dividends or not. Estate may yet be discovered; the bankrupt may acquire a succession, or he may succeed in acquiring property in business which he would be bound to make over to his trustee, and these considerations are, I think, sufficient to meet the argument founded on the peculiar circumstances of Lindsay's estate.”.
The defenders reclaimed, and argued—There is no arrestment of a subject sufficient to found jurisdiction; indeed it has been proved that there is nothing at all to arrest here. Now, there is no case where an arrestment has been found effectual except where there are funds in hand or a debt due. The case that goes furthest is the case of Lindsay (quoted by the Lord Ordinary), but there the stock of the Caledonian Railway Company, which was arrested in their hands, was held to be an asset. In Shaw's case, where an opinion was indicated, the trifling sum of £1, 16s. 8d. was sufficient; there was this specialty, that the action was one in rem. The defender was a disponer of Scotch property, and the action concluding for reduction of the conveyance was necessarily brought in foro rei sitœ. In the case of Douglas v. Jones there was a question as to the assets of a partnership; but it was quite ascertained that although these might not be equal to meet the liabilities, still they did exist. Here, on the other hand, if this arrestment is sustained it is perfectly certain that the trustee will have nothing for creditors. And as the existence of any claim by Harrison Carr & Co. on the estate of the bankrupt is contingent on the result of this case, there is as yet at least nothing in the trustee's hands to arrest.
The respondents argued—It is sufficient that, there was between the arrestee and the defenders the relation of debtor and creditor. The Court cannot consider what dividend the estate will pay.
Page: 301↓
Besides, even if there be nothing at present in the trustee's hands, there is a presumption while the sequestration lasts that something may be acquired that will enable the trustee to account. Cases quoted— Douglas v. Jones, 9 Shaw 856, and in the Faculty Collection, 30th June 1831 (the latter said by the Lord President to be much the more correct report); Lindsay v. London and North-Western Railway Company, 22d January 1860, 22 Dunlop 571; and Shaw v. Dobbie, 2d February 1869, 7 Macph. 449.
At advising—
The Lord Ordinary has sustained the arrestments, and in his note he has dealt with two difficulties that arise on this point, and require serious attention. In the first place, it is made quite plain from the evidence that if the pursuers fail in this action the defenders have no claim against the estate of the arrestee. The action being for the price of two cargoes of coal, supplied, as the pursuers allege, through Lindsay as their agent, it is clear that unless the defenders are found liable for the price of these coals to the pursuers they will be debtors for the price of these two cargoes in their accounts with Lindsay, or, if they have already paid to him, will have no claim for repetition of the price from the trustee on his bankrupt estate. On the other hand, if the pursuers succeed in this action, and enforce their claim against the defenders, the state of accounts between the defenders and Lindsay will stand the other way, for in that event they will be entitled to make such a claim. On the result of this action depends the question whether the defenders are creditors or debtors on their account with Lindsay.
Now, this is a very peculiar state of matters, for if the pursuers succeed, the arrestment has attached funds and our jurisdiction is good; if they do not, the arrestment has not attached anything—that is to say, there is no accountability by the trustee to them. If the Court have jurisdiction to pronounce a judgment condemnator they must also have jurisdiction to pronounce one absolvitor. But observe that if it is found as a matter of fact that there was nothing attached by this arrestment, our jurisdiction is at an end, and we could not pronounce that judgment of absolvitor.
I think, however, that on the second point with which the Lord Ordinary has dealt the question stands on much clearer grounds. The evidence shows that the bankrupt has absconded, but does not suggest that there has been any concealment of estate. The state of his affairs comes to this, that so far from there being any assets available to meet the claims of his creditors there is not enough to pay the expenses of his sequestration. The Lord Ordinary very properly says that the Court cannot enter on an inquiry as to the probability of a bankrupt estate yielding dividends or not. And if it were a matter of uncertainty whether the estate is to yield a dividend or not, there is a great deal of force in that observation; but unfortunately it is perfectly certain that this estate will not pay anything. That being so, the arrestment has attached nothing, and I am certainly not aware that the doctrine has ever been laid down that such an arrestment is sufficient to found jurisdiction. Nor am I prepared to carry the doctrine at all further than it has already been carried. But it has been suggested by the Lord Ordinary that something may yet happen which will give the trustee a fund available for creditors. The bankrupt before he is discharged may succeed to an estate, or may set up in business, and the profits of that business or the estate falling to him vest in his trustee. That is quite true, but no such estate can vest in him at the present moment; and by the 103rd section of the Bankrupt Statute it is provided that the right of a bankrupt to such estate shall be held as transferred to and vested in the trustee as at the date of the acquisition thereof or succession, for the purposes of this Act. Can it be said that the bare possibility of something happening in time to come can create arrestability at the present moment? And it must further be observed that the bankrupt's trustee is not at all in the same position as the bankrupt himself. The bankrupt's liability for his debts is absolute, and lasts until they are paid. The trustee is only bound, on the other hand, to discharge himself of the funds he has in his hands, and if he never has any funds his indebtedness never arises. It is therefore a very different question where the arrestment is in the hands of the trustee in bankruptcy from that where it is in the hands of the primary debtor. But, as I have said, I entertain no doubt that where there is no accountability an arrestment attaches nothing; and therefore in the present case I feel myself obliged to differ from the Lord Ordinary's interlocutor.
Page: 302↓
I am still of opinion that the defenders have a contingent claim on the estate of Lindsay which might found an arrestment. The moment such a claim as is made by the pursuers here, and is threatened by Mackie, Koth & Co., who supplied the defenders with another cargo of coals through Lindsay, is made against the defenders, they, as they have already settled with Lindsay for these coals, are entitled to demand that funds should be set aside from Lindsay's estate to await the issue of this case.
On the second point I quite agree with the distinction your Lordship has pointed out between the liability of the bankrupt's trustee and that of the primary debtor; still, if it appeared that the trustee was vested in any estate, I think an arrestment would attach the funds in his hands which he is bound to divide among the bankrupt's creditors. But I find that the trustee is not vested in any estate which can yield him funds to divide, and to that fact I think sufficient weight was not given. I am therefore prepared to agree with your Lordships.
The Court pronounced the following interlocutor:—
“The Lords having heard counsel on the reclaiming note for the defenders against Lord Shand's interlocutor of 6th July 1876, Recal the interlocutor: Sustain the first plea-in-law stated for the defenders: In respect thereof dismiss the action, and decern: Find the defenders entitled to expenses, and remit to the Auditor to tax the account thereof, and report.”
Counsel for Pursuers— J. G. Smith. Agent— Alexander Gordon, S.S.C.
Counsel for Defenders— Lord Advocate (Watson)—M'Laren. Agent— P. Morison, L.A.
