Scottish Court of Session Decisions

Subject_1 PART I.

BANKRUPT.

Wilkie's Creditors,
v.
Wilkie

Date: 10 March 1802
Case No. No. 13.

A sequestration suspended till an offer of composition should be considered by the creditors.

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On 17th October 1801, Wilkie's estate was sequestrated, and he was ordained (26th January 1802) to make over all his effects to the trustee on or before the 12th of February, in the usual form; his public examinations were fixed to take place on the 12th and 26th of that month. Having shown an unwillingness to execute the disposition of his effects, the trustee for his creditors required him to do so on 10th February, under form of instrument: Then, as well as at his first examination on the 12th, he positively refused to dispone.

In this situation, the trustee applied by petition to the Court, founding upon § 23. of 33d Geo. III. C. 74. which enacts, “That if the bankrupt shall, with-out reasonable cause, neglect or refuse to obey such order,” (to dispone to the trustee), “the Court may punish him by imprisonment.” And it prayed, to have Wilkie committed to jail, if he persisted in refusing to sign the disposition in favour of his creditors.

Before this application was taken up by the Court, a petition was presented by Wilkie, giving such a statement of his affairs, as he proposed to lay before his creditors at his second examination; which would prove to them that he was not insolvent, although, from temporary embarrassments, a sequestration had been awarded against him. The opposition by his creditors prevented this from being recalled; but he craved that matters might be kept as they were, till the meeting after the second examination, at it is then only that by the statute proposals for a composition can be received: And the proposal in this case will be, that the full amount of the debts, interest and expenses, shall be paid, and that this shall be done likewise six months before the statute authorises the trustee to make any dividend. This, Wilkie contended, was a reasonable cause, according to the expression of the statute, for his declining to convey his estate to the trustee, end was sufficient for the Court to recal, at least to decline enforcing the order for his disponing for the present.

It seemed to be the first time that this question had arisen on the bankrupt act, and it was strenuously urged by the Lord President and some other of the Judges, that this interpretation of the phrase in section 23. reasonable cause, given by the bankrupt was not the meaning intended by the Legislature; that this section referred entirely to the power of disponing or conveying, and applied to those cases only where it was not in the power of the bankrupt to fulfil the appointment of the Court, as where the lands were entailed, or where any other such impediment occurred. This was the only reasonable cause ever intended by the statute; for as to all offers of composition or dividends, these are regulated by other clauses of the act, and are not comprehended under this section 23. which relieves the bankrupt only from the penalties of disobedience, when compliance has not been in his power. After his second examination, offers of composition may be made, and caution for payment may be given; and if these are accepted by the creditors, it may be proper for him then to petition the Court for recalling the sequestration. Since October, he has had sufficient time to settle with his creditors; and if the application were to be successful upon a mere hypothetical statement of his effects, especially when there is no concurrence by any of the creditors, in all cases the same tale would be told, and the act could never be carried into execution.

But it was die opinion of the majority of the Court, that the creditors could not qualify any damage by delaying to enforce the order to dispone till the second meeting, when they would very probably be satisfied with the offers of the bankrupt, and concur with him in recalling the sequestration; that this was a reasonable cause in the meaning of the statute, which therefore left it in the discretionary power of the Court to grant a reasonable indulgence.

Accordingly, the Lords granted the delay.

For the Creditors, A. Campbell, junior. Agent, A. Cunningham, W. S. For Wilkie, H. Erskine, G. J. Bell. Agent, Th. Martin, Clerk, Sinclair. Fac. Coll. No. 37. p. 77.