Scottish Court of Session Decisions

John Robertson, junior, manufacturer in Dundee, being insolvent, was incarcerated in the Canongate Jail, on 6th December, 1833, by Blair, his brother-in-law. He was instantly liberated on a sick bill, the Incarceration having been a matter of preconcert with Robertson. On 1st January, 1834, William M'Gavin, merchant in Dundee, a creditor to the extent of £112, having raised horning and caption against Robertson, caused a messenger to search for him, and an execution of search was, of that date, returned. On 28th June, Blair executed arrestments in the hands of parties indebted to Robertson. For the purpose of equalizing these arrestments, and attaching the whole of Robertson's estate for behoof of the general creditors, M'Gavin first caused a second search to be made by the messenger, and an execution of search was accordingly returned on 18th July, and then, on the 9th of August, he presented a petition for the sequestration of Robertson's estates. Robertson, who had all the while remained insolvent, opposed the application as incompetent under the statute, and the Lord Ordinary on the bills appointed the question to be argued on cases.

Pleaded by Roberston—

For the purpose of distributing an insolvent debtor's estate rateably among his creditors, the bankrupt statutes provided certain equalising remedies for cutting down separate diligence. But as this imposed a restraint on the common-law rights of creditors, a given period was in all cases fixed on, within which it was necessary that any steps for equalisation must be taken. This was limited, in the case of arrestments and poindings, to sixty days before, or four months after legal bankruptcy; and it was immaterial whether the legal bankruptcy was created by the provisions of 1696, c. 5, or by the extension of that act, or by sequestration. After the period had expired, the equalising remedies were no longer competent, unless where the debtor had, in the interim, recovered a state of solvency.

Accordingly, after fixing, in the 15th section of the bankrupt act, the requisites of bankruptcy which should found a petition for sequestration, the act declared that such petition should be competent, “at any time within four calendar months of the last step of the said diligence,” referring to the diligence which constituted legal bankruptcy. Whenever the last step of diligence was used, and four months elapsed, a petition for sequestration was no longer competent, except in the case of the debtor's interim restoration to solvency. But for this limitation, it would be in the power of a creditor, by merely repeating an execution of search, or an incarceration on the same caption, once every four months, to keep up a perpetual restraint on the common-law right of all the lieges in the use of their separate diligence against the debtor; for he could thereby keep it open to himself to apply for sequestration at any time, even at the distance of years after the last step of diligence, in the sense of the statute, had been first used by him.

The last step of the statutory diligence was done against Robertson, either when Blair incarcerated him on 6th December, 1833; or, if that could be objected to as collusive, then on 1st January, 1834, when M'Gavin obtained an execution of search against him. Blair's arrestments were not used till 28th June, and it was incompetent for M'Gavin, by the expedient of making a new search on 18th July, to create a new terminus a quo, and apply for sequestration, especially since he had allowed four months to run after his own first search, without sequestrating. ¹

Pleaded by M'Gavin—

The object of the petition for sequestration was to cut down a preference in favour of a conjunct and confident person, and the provisions of the statute should be liberally construed towards effecting that object. By the 15th section, it was provided, that where diligence by horning and caption for debt, together with absconding from diligence shall concur, it shall be competent to apply for sequestration within four months of the last step of the diligence. All these requisites concurred in this case, unless it was to be held that a second execution of search was inept, after a previous one had been made. But without an express enactment to such effect, the second execution of search was valid to all effects, and could be rested upon by a creditor as forming the last step of diligence, and therefore the terminus a quo, in computing the time for presenting a petition for sequestration. If it were held, that after any execution of search, the lapse of four months rendered a debtor not sequestrable, it would be easy to evade the statute by a concerted search, privately made, and kept concealed till four months were run.