Scottish Court of Session Decisions

This was an action at the instance of James Carlin, sometime cab proprietor in Glasgow, against William B. Paterson, writer in Glasgow, concluding for reduction of certain bonds and dispositions in security, which purported to have been granted at various dates in the year 1869 by the pursuer in favour of the defender, over certain subjects in Glasgow then belonging to the pursuer. The grounds of reduction were that the bonds were not subscribed by the pursuer, and not his writ; and further, that they were obtained by fraud.

On 6th April 1870 Carlin applied for and obtained sequestration under the Bankruptcy Act. In the state of affairs given up by Carlin, he stated the heritable subjects before mentioned among his assets, “less heritable securities which are disputed.” At that time he was engaged in defending an action of maills and duties at the instance of Paterson, in which decree was pronounced against him (Carlin) on 10th June 1870.

On 23d June, Paterson exercised the power of sale contained in the bonds, and sold the subjects by public roup. The bonds were given up to the purchaser. The price obtained was sufficient to pay the debt due to him, with interest, and there was a small balance over, which was disposed of by a multiplepoinding.

On 12th September 1870 Carlin made an offer of composition of 2s. 6d. per £, which was accepted by the creditors on 23d September. In the offer of composition he made no mention of the securities held by Paterson.

The Lord Ordinary ( Mure) pronounced the following interlocutor:—

“2 d February 1872.—. . . Finds that in the offer of composition upon which the pursuer was discharged the securities in question were not stated as objected to by him, and that no notice in writing was given by the pursuer to the defender, or to the party to whom the property over which the securities were granted had, without objection, been sold during the sequestration, of the pursuer's intention to object to the securities: Finds, in these circumstances, that the pursuer is barred from now challenging the securities; therefore dismisses the action, and decerns: Finds the defender entitled to expenses.”

His Lordship held that the action was excluded by sec. 143 of the Bankruptcy Act, 1856, which enacts that the bankrupt shall not be entitled “to object to any security held by any creditor, unless in the offer of composition such security shall be stated as objected to, and notice in writing given to the creditor in right thereof.”

The pursuer reclaimed.

Trayner, for him, argued that the spirit, if not the letter, of sect. 143 of the Bankrupt Statute was complied with. Paterson and the other creditors had fair notice that the securities were disputed. Moreover, at the date of the offer of composition the property had been sold by Paterson, and his debt paid, so that the securities were not securities held by a creditor.

Thoms and M'Kechnie, for the defender, were not called upon.

At advising—