Stewart v Jarvie
| Jurisdiction | Scotland |
| Judgment Date | 18 February 1938 |
| Docket Number | No. 26. |
| Date | 18 February 1938 |
| Court | Court of Session (Inner House - First Division) |
1ST DIVISION.
BankruptcyNotour bankruptcyPari passu ranking of arrestmentsArrestment by individual creditor within sixty days prior to notour bankruptcySequestration within four months after notour bankruptcyWhether arrestment preferable to sequestrationWhether arrester entitled to preference over other creditorsBankruptcy (Scotland) Act, 1913 (3 and 4 Geo. V, cap. 20), sec. 10 and 104.
The Bankruptcy (Scotland) Act, 1913, by sec. 10, enacts that all arrestments used within the period of sixty days prior to and four months after the constitution of notour bankruptcy shall rank pari passu. Sec. 104 enacts that a sequestration shall, at the date thereof, be equivalent to an arrestment, and that no arrestment executed on or after the sixtieth day prior to the sequestration shall be effectual. A proviso to the latter section enacts that any arrester before the date of the sequestration who shall be thus deprived of the benefit of his diligence shall have preference for the expense incurred by him in executing it.
The estates of a company were sequestrated within four months after its notour bankruptcy. A creditor who had used arrestments within the sixty days prior to notour bankruptcy, but more than sixty days prior to the sequestration, claimed that his arrestment was preferable to the sequestration, or, alternatively, that he was entitled to be ranked pari passu with the trustee as an individual.
Held that the arrestment must be ranked pari passu with the sequestration, and that the sequestration was equivalent, not to an arrestment by the trustee as an individual, but to an arrestment by all the creditors claiming against the estate; and, accordingly, that the only preference to which the arrester was entitled was the preference as to expenses conferred by the proviso to sec. 104.
George Stewart, contractor, Riggend, by Airdrie, appealed to the Sheriff of Lanarkshire against a deliverance of J. W. Jarvie, C.A., trustee on the sequestrated estates of the Craigelvin Coal and Fireclay Company.
For the purposes of the appeal, the parties, by joint minute, made the following admissions in regard to the facts of the case:"(1) An action at the instance of the appellant against the Craigelvin Coal and Fireclay Company for 273, 13s. was raised in this Court on 12th October 1936 and was tabled on 23rd October 1936. (2) On 16th October 1936 (being within 60 days prior to the constitution of notour bankruptcy after condescended on) the appellant arrested on the dependence of said action in the hands of Messrs J. & A. Towers, Grahamston Firebricks Works, Falkirk. (3) The amount attached by said arrestment was 136, 14s. 3d. (4) Notour bankruptcy of the Craigelvin Coal and Fireclay Company was constituted on 27th November 1936 by expiry (without payment) of a charge served on 12th November 1936, on a decree of the Court of Session in an action at the instance of Mrs Jane Stanley. (5) Sequestration of the estates of the Craigelvin Coal and Fireclay Company was awarded on 4th January 1937, being within four months after the said constitution of notour bankruptcy. (6) The respondent was confirmed as trustee in said sequestration on 21st January 1937. (7) The respondent declined to sist himself as a party to appellant's said action against the Craigelvin Coal and Fireclay Company. (8) Interim decree was granted in said action on 4th December 1936 for 131, 2s. 8d., with interest, and on 19th February 1937 decree was granted for 135, 4s. 9d., with interest and expenses. On 4th March 1937 the taxed expenses of 25, 17s. 9d. were approved of. (9) The sum attached by the said arrestment on the dependence was paid to the respondent, under reservation of the appellant's claim to a preferential ranking thereto in the sequestration, which claim was not admitted by the respondent. (10) Appellant's claim to a preferential ranking in said sequestration for 136, 14s. 3d. and to an ordinary ranking for 161, 14s. 2d. was duly lodged with the respondent."
The deliverance appealed against was in the following terms:"The trustee rejects the claim for preferential ranking as lodged, on the grounds that the arrestment and the sequestration both fell within the period of 60 days prior to and 4 months following the constitution of notour bankruptcy by expiry of a charge served on 12th November 1936 on a decree in the Court of Session in an action at the instance of Mrs Jane Stanley, as a result of which, in terms of section 10 of the Act,1 there is an equalisation of the claimant's diligence with the sequestration, which, in terms of section 104 of the Act, is equivalent to an arrestment in execution and decree of furthcoming. The trustee admits a part of the claim, representing expenses of procuring warrant for and executing diligence, amounting to 4, 12s. 11d., to a preferential ranking, and the balance of 293, 15s. 6d. to an ordinary ranking under deduction of 3, 2s. 9d., being interest from 4th January 1937 (date of sequestration) to 31st March 1937."
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Burnett's Trustee v Grainger and another
...trustee acts under the statute for each and every one of Mrs Burnett's creditors, not for himself as an individual: Stewart v Jarvie, 1938 SC 309, 316, per Lord Moncrieff. So the contest is more accurately seen as one between the appellants and the general body of Mrs Burnett's creditors. I......