The Cleland Trustees v Dalrymple's Trustee
| Jurisdiction | Scotland |
| Judgment Date | 18 December 1903 |
| Docket Number | No. 42. |
| Date | 18 December 1903 |
| Court | Court of Session |
Ld. Stormonth-Darling, Lord President, Lord Adam, Lord M'Laren, Lord Kinnear.
BankruptcySequestrationVesting of Estate in TrusteeAssignation in SecurityPreference MultiplepoindingCompetition.
Section 102 of the Bankruptcy (Scotland) Act, 1856 (19 and 20 Vict. cap. 79), enacts that the act and warrant of confirmation in favour of the trustee shall ipso jure transfer to and vest in him,to the effect following,(1) the moveable estate and effects of the bankrupt subject always to such preferable securities as existed at the date of the sequestration, and are not null or reducible.
In an action of multiplepoinding raised in name of trustees who held a fund belonging to A, competing claims were lodged (1) by A, and (2) by certain creditors who held assignations in security granted by A which had been duly intimated to the trustees. After the record was closed A was sequestrated, and his trustee lodged a claim to the fund in mediofor the purpose of administering the same as part of the bankrupt estate, without prejudice to such preferences as may be established.
Held that the trustee was entitled to be preferred in terms of his claim, as the competing claimants held merely rights in security.
The Cleland Trust was created by the testamentary writings of the ninth Earl of Stair, and an act and decree of the Court of Session, dated 7th December 1899 and 20th March 1900. The original object of the trust, as created by the ninth Earl of Stair, was the purchase of land to be settled and held under a strict entail. The trust came into operation in 1864, but no land had been purchased and entailed between that date and 1899.
In 1899 the Hon. George Grey Dalrymple, who would have been the heir in possession if an entail had been executed, presented a petition to the Court under the Entail (Scotland) Act, 1882 (45 and 46 Vict. cap. 53), for the purpose of having the funds vested in trustees under sections 23 and 26 of the Act, and the testamentary trustees of the ninth Earl of Stair brought an action of multiplepoinding and exoneration. Under the proceedings in that action the funds were handed over to the trustees appointed to administer the Cleland Trust, to be held as entailed money in terms of the Entail (Scotland) Act, 1882, in trust for the Hon. George Grey Dalrymple, and the heirs whatsoever of his body, whom failing, for the other heirs who would or might have become heirs in possession if an entail had been executed.
The Hon. George Grey Dalrymple died on 30th November 1900, and his son, George North Dalrymple, became entitled to the income of the trust funds.
On 10th March 1903 an action of multiplepoinding was raised by Roland Gideon Israel Barnett, 3 Duke Street, London, in name of Ralph Dundas, W.S., Edinburgh, and others (the trustees appointed to administer the Cleland Trust).
The fund in medio consisted of(1) the free income of the Cleland trust funds from 30th November 1900 to 8th September 1902, amounting to 3247, and (2) the additional income accruing until the action should be finally disposed of.
The claimants to the fund were (1) George North Dalrymple himself, who claimed the whole fund in medio, and (2) Joseph Alexander, banker, Sudbury, and other creditors of George North Dalrymple, who claimed upon assignations of various dates, in security for debt, which were alleged to have been duly intimated.
Alexander pleaded;(1) In respect of his mortgage the claimant is entitled to be ranked and preferred to the fund in medio for the sum claimed. (2) The claimant is entitled to be ranked and preferred preferably to the fund in medio in respect of the intimation made by him to the pursuers as said trustees.
The record in the action was closed on 27th February 1903.
The estates of George North Dalrymple having been sequestrated on 18th March 1903, James Craig, chartered accountant, Edinburgh, was on 4th April 1903 appointed trustee in the sequestration.
The trustee lodged a claim in which he claimed to be ranked and preferred to the whole fund in medio for the purpose of administering the same as part of the bankrupt estate, without prejudice to such preferences as may be established in the bankruptcy proceedings, and upon 10th June 1903 the Lord Ordinary allowed the claim to be received and of new closed the record.
The trustee averred;(Cond. 3) The competing claims lodged in the present case are very numerous and of large amount. They are all founded on deeds bearing to have been granted by the bankrupt in the course of the two years between July 1878 and April 1880, immediately after he attained majority, and in most cases the deeds purport to convey in security the granter's interest in the entailed estate, to which he had then a spes successionis. The bankrupt had committed an act of bankruptcy at the very beginning of this period, and was liable to immediate adjudication in bankruptcy. The deeds are stated by him to have been granted in almost every case without any consideration, for the purpose of enabling money to be raised to stave off bankruptcy, but he states that no such money ever was raised. On 11th March 1879 he was adjudicated bankrupt under the English Bankruptcy Act of 1869, and has never since been discharged. That bankruptcy was closed under the operation of the Bankruptcy (Discharge and Closure) Act, 1887, and such closure has important effects on the rights of creditors whose debts were proved or proveable under the bankruptcy. Many of the creditors now seeking to be ranked did not lodge claims in the English bankruptcy, though they might have done so, and very large sums of interest are claimed as having accumulated on the alleged debts. Further, in most cases the claims are founded upon a complicated series of transmissions of the rights originally granted. In these circumstances it is obvious that the claims will demand at the instance of the trustee the closest scrutiny and the most searching inquiry. He further averred that even if he had the necessary information at his disposal, it would be contrary to his duty to take up a hostile attitude to claims, which in the sequestration he was bound to investigate and adjudicate upon impartially as a Judge, and pleaded;(1) The claimant's title to administer being preferable to a title founded either upon inhibition or upon an assignation in...
To continue reading
Request your trial