Scottish Court of Session Decisions

The Bankruptcy (Scotland) Act 1856 (19 and 20 Vict. cap. 79), sections 90 and 91, is quoted in the rubric. The Bankruptcy and Cessio (Scotland) Act 1881 (44 and 45 Vict. cap. 22), section 10, authorises the Sheriff in proceedings under the Cessio Acts to exercise the powers and grant the warrants and commissions which in sequestrations he is empowered to exercise under the 90th and 91st sections of the Bankruptcy (Scotland) Act 1856.

George M'Culloch, trustee in the cessio of the estate of William Jacks, Arnold Avenue, Bishopbriggs, presented a petition in the Sheriff Court at Glasgow, in which he craved the Court to fix a date for the public examination of Mrs Ferguson Steven or Jacks and others, the testamentary trustees of William Jacks, and to grant warrant requiring them then to appear in terms of section 10 of the Bankruptcy and Cessio (Scotland) Act 1856.

The trustees of William Jacks in answer to the petition lodged a minute in which they stated, inter aila—“The minuters make the following explanations:—(1) Under the before-mentioned trust-disposition and settlement of the said deceased William Jacks, a legacy of £500 will become payable to his nephew, the bankrupt William Jacks (a son of his late brother, Richard Jacks), provided he, the bankrupt, survive the testator's widow, who still lives. The legacy is directed by the testator to be payable ‘upon the death of my (his) said wife, or should she surrender her liferent over any part thereof to admit of payment, then for payment of such part upon such surrender: … Declaring that in the event of any of my (his) said nephews and nieces, children of my brother Richard … dying before the date of vesting, leaving issue then surviving, such issue shall be entitled to the legacy which their parent would have taken on survivance.’ The testator's widow has not seen fit to surrender her liferent to admit of said legacy of £500 or any part thereof being paid to the bankrupt before her death. So the legacy has not vested in the bankrupt; it may never vest in him; it may be carried by the destination—over. He has a mere spes successionis, which forms no part of the bankrupt's ‘estate’ under the Bankruptcy Acts; and has not been transferred to the petitioner as trustee in his cessio. ( Reid v. Morison (1893), 20 R. 510, 30 S.L.R. 477; Bradshaw v. Kirkwood (1904), 7 F. 249, 42 S.L.R. 187.) And as already stated, whoever succeeds to said legacy will succeed at the date of the widow's death, being the date of payment.

“(2) The object of the petition is not to get information ‘relative to the bankrupt's estate’ (the minuters know of none), but to compel them (as trustees of the late Mr William Jacks) to supply the petitioner with the following information regarding the estate under their charge, viz.—‘(1) How the trust funds are invested. (2) Whether Mrs Jacks has claimed her legal rights, or is taking the provisions contained in the settlement; and (3) the amount of debts on the estate.’ This information, according to letter of 28th April 1909, addressed by Mr John Martin, the petitioner's law agent, to Mr Charles France, the minuters' law agent, ‘is required for the purpose of enabling the trustee to sell his claim in respect of the legacy bequeathed to the bankrupt.’ And Mr Martin adds—‘Of course, if you will give me this information out of Court, I shall be pleased to dispense with your and the other trustees' attendance.’ The minuters being advised that the petitioner has no right or title to make this demand or to enforce it as he is attempting to do, also that they are not entitled to give the information asked regarding the valuable estate under their charge for the purpose mentioned or any purpose, they decline to do so.”

On 5th May 1909 the Sheriff-Substitute ( Glegg) sustained the competency of the petition and granted leave to reclaim.

Note.—[ After discussing the nature of the bankrupt's interest in his uncle's estate the Sheriff-Substitute came to the conclusion that the legacy had vested and was not a mere spes successionis, and proceeded]—“It follows, therefore, that neither Morison v. Reid, 20 R. 510, nor Bradshaw v. Kirkwood, 7 F. 249, assist the testamentary trustees' case. These cases decide that a spes successionis does not fall to a trustee in bankruptcy; and a trustee in a cessio is at least in no better position, but in both it was clear that vesting had not taken place.

It is unnecessary to notice in detail the nature of the proposed examination, as the competency or propriety of particular questions will arise at the proof. But it may be noticed that the trustee stated that he required to ascertain the probable value of the legacy before exposing it for sale. This appears to be a relevant inquiry, and technically to justify the application.

As it was intimated that the trustees wished to appeal, and as probably a decision either way on the competency will render further Court proceedings unnecessary, there is no need to fix a diet of proof.”

The respondents appealed to the Sheriff ( Millar), who on 22nd July 1909 adhered to the interlocutor of 5th May and remitted to the Sheriff-Substitute to proceed as accorded.

Note.—“It may be that it [ i.e., the bankrupt's right or interest in the legacy] would be construed as vesting subject to defeasance. Another question was raised as to whether the fact, if it be true, that the widow has renounced her testamentary provisions might not have the effect of hastening the period of division in the event of it being held by the Court that there was a vested and indefeasible right in the bankrupt; but in my view this process is not one suitable for the determination of either of these questions. What has happened is that the bankrupt in giving up his state of affairs has entered in it this legacy which is said to have been left by his uncle. I think the trustee was bound to make inquiry into this on behalf of the creditors. Before taking action he is entitled to know all the facts and circumstances

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which might affect this claim, if he had any. It might affect his final judgment to have information as to whether this estate is sufficient to pay all the legacies, and whether the widow had renounced her right under the will. It may be that the bankrupt would be prepared to assign this right to an intending purchaser, though I agree that he is not bound to do so. As this petition is only to obtain information, I think the trustee in the process of cessio is entitled to have it. The appellants desired leave to appeal to a higher Court. As the question may be of importance, I think the motion should be granted.”

The respondents appealed to the Court of Session, and argued—The petition should be dismissed. The petitioner was not entitled to know more than the terms of the bequest. The present process was not a proper one for determining the nature and quality of the bankrupt's right. The purpose of sections 90 and 91 of the Bankruptcy (Scotland) Act 1856 (19 and 20 Vict. cap. 79) was to discover the whole of the bankrupt's estate, not to inquire into collateral matters which might affect the value of the subjects as to which there was disclosure.

Argued for the petitioner—The words of section 90, “information relative to his” [ i.e. the bankrupt's] “estate,” covered the information here desired, for that information affected the value of the legacy. It was for the Sheriff to see that irrelevant questions were not put to the trustees. Reference was made to Selkirk v. Service, October 22, 1880, 8 R. 29, 18 S.L.R. 9.