OUTER HOUSE. (Lord Ormidale.) 13th June 1917. 107. Craig v. The Parish Council of the City Parish of Edinburgh. I. Bankruptcy-Review of Sheriff's interlocutors-Reduction-Bankruptcy (Scotland) Act 1913 (3 & 4 Geo. V. cap. 20), sections 82 and 166-Action by preferential creditors under section 82 of Bankruptcy Act to have trustee ordained to pay amount of their claim -Decree granted by Sheriff-Substitute-No appeal taken to Court of Session-Appeal to Sheriff dismissed as incompetent-Held that an action at the instance of the trustee for reduction of the Sheriff's interlocutors was incompetent. II. Process-Reduction-Reduction of decree in Sheriff Court-Bankruptcy (Scotland) Act 1913 (3 & 4 Geo. V. cap. 20), sections 82 and 166-Application under section 82 of Bankruptcy Act-Sheriff-Substitute ordaining trustee in bankruptcy to make payment of claim of preferential creditors-No appeal taken to Court of Session-Action of reduction of Sheriff's interlocutor dismissed. On 24th May 19.15 Robert Archibald Craig, C.A., Edinburgh was confirmed trustee on the sequestrated estates of James Tough and the Wholesale and Retail Wallpaper Co. In June 1916 the Parish Council of the City Parish of Edinburgh presented an initial writ to the Sheriff of the Lothians and Peebles, in which they craved the Court to ordain the trustee to produce an account of his intromissions with the bankrupt estate, to find and declare that the trustee was bound to pay to the Parish Council the sum of £6, 16s. 5d., being the poor and school rates due by the bankrupts to the Parish Council for the year Whitsunday 1914 to Whitsunday 1915, which were unpaid at the date of the sequestration, and to ordain the trustee to pay to the Parish Council the sum of £6, 16s. 5d. or such sum as should be found to be due on an accounting. Council of Parish of The Sheriff-Substitute (Guy) repelled the plea OUTER The trustee then brought an action in the The pursuer pleaded: "1. The decree, interlocutors, and extract specified in the summons being inconsistent with the pursuer's rights as trustee foresaid and as an individual the pursuer is entitled to decree of reduction as concluded for, with expenses. "2. In any event the pursuer is entitled in the circumstances condescended on to decree of reduction of said decree, interlocutors, and extract specified in the summons in so far as they are decernitures against him as an individual for the defenders' said debt." The defenders pleaded, inter alia : "1. The action being incompetent should be dismissed. "2. The pursuer, having failed to avail himself of the statutory procedure for bringing under review the interlocutor of the SheriffSubstitute now sought to be reduced, is not entitled to insist in the present action." Section 166 of the Bankruptcy (Scotland) Act 1913 (3 & 4 Geo. V. cap. 20) is sufficiently set forth in the opinion of the Lord Ordinary (Ormidale), infra. Avizandum, 8th June 1917. The following authorities were cited at the hearing: Henderson v. Henderson's Tr., 1882, 10 R. 188; M'Adam v. Martin's Tr., 1884, 12 R. 358; Duke v. More, 1903, 6 F. 190; The Parish Council averred that at the date Donaldson v. White, 1871, 9 S.L.R. 65; Earl of of the sequestration the rates in question were Camperdown v. Presbytery of Auchterarder, 1902, payable to them by the bankrupts; that they had 5 F. 61; William Stirling & Sons v. Holm, 1873, lodged a claim in the sequestration claiming a pre-11 M. 480; Lamb v. Thompson, 1901, 4 F. 88; ference in terms of the Bankruptcy Act 1913, section Macleod v. Collie, 1869, 42 S.J. 62; Watt Bros. 118; and that the trustee had in breach of his duty & Co. v. Foyn, 1879, 7 R. 126. paid certain other debts of the bankrupts, and had declined to pay the rates in question or to adjudicate on the claim of the Parish Council. The trustee admitted that the rates were due, and produced an account of his intromissions, which shewed a balance of £34, 4s. 10d. in his hands which was subject to charges for the expenses of the sequestration, amounting to £34, 2s. 11d., and for his (the trustee's) commission amounting to £21, in all £55, 2s. 11d.thus bringing out a debit balance of £20, 18s. 1d. The trustee pleaded that the action was irrelevant, but did not plead that it was incompetent. On 13th June 1917 the Lord Ordinary sustained the second plea in law for the defenders and dismissed the action. Lord Ormidale.-The proceedings in the Sheriff Court in which the interlocutors now sought to be reduced were pronounced must be taken to have been a petition under section 82 of the Bankruptcy (Scotland) Act 1913. Section 82 was directly invoked in the third plea in law for the pursuers (Henderson, 10 R. 188), and the 1917. OUTER action was, without a plea as to its competency HOUSE. being stated, dealt with by the parties and by the Sheriffs as raising a question under that The Parish section and nothing else. Craig v. Council of Edin June 13, 1917. the City The ground on which the Sheriff-Substitute's Parish of decree of 1st March 1916 is now sought to be burgh. reduced is that it is inconsistent with the pursuer's rights as trustee and as an individual, and that it is to his prejudice and hurt. I assume that that is so, and, indeed, although in the view I take it is not necessary to decide the question, the Sheriff-Substitute was in my opinion wrong in pronouncing the decree he did. There is no warrant, it seems to me, under section 82 for an order passing against the trustee to satisfy Although the circumstances were entirely different the principle underlying the decision and judicial dicta in Watt Bros. & Co. (7 R. 126) appear to me applicable to the present case. I shall sustain the second plea in law for the defenders and dismiss the action. Counsel for Pursuer, Maclaren; Agent, Malcolm Graham Yool, S.S.C.-Counsel for Defenders, Chree, K.C., Gentles; Agents, R. Addison Smith & Co., W.S. 108. SECOND DIVISION. and Guthrie.) 8th June 1917. Muirhead v. Meikle. Bankruptcy Bankruptcy Scotland) Act 1913 (3 & 4 Geo. out of his own pocket the claim of any particular (The Lord Justice-Clerk, Lords Dundas, Salvesen, The enactment in section 166 of the Bankruptcy (Scotland) Act 1913 is that "it shall be competent to bring under the review of the Inner House of the Court of Session or before the Lord Ordinary in time of vacation any deliverance of the Sheriff" (i.e. Sheriff or SheriffSubstitute) "after the sequestration has been awarded (except where the same is declared not to be subject to review), provided a note of appeal be lodged with and marked by the sheriff-clerk within eight days from the date of such deliverance, failing which the same shall be final." That is a special code giving a restricted and conditional right to have a deliverance of the Sheriff-Substitute reviewed, and, in my opinion, infers the exclusion of review in any other way (cf. Earl of Camperdown, 5 F. 61; Stirling, 11 M. 480). Having thus a right to obtain a judgment of the Inner House of the Court of Session it seems to me an ill-founded proposition to say that a party having that right can by ignoring it, or failing to exercise it, bring the decree complained of, on grounds that would have been open to the Inner House, under review in the first place by the Outer House by way of reduction. I say nothing about the competency of a suspension, but the contention of the pursuer founded on the cases of Lamb (4 F. 88) and Macleod v. Collie (42 S.J. 62), that where suspension is competent a reduction is necessarily and always also competent, is much too broadly stated. II. V. cap. 20) sections 67 and 166.-Election of Trustee Appeal from the Sheriff Court of Lanarkshire at In the sequestration of John Edward Younger, Glasgow, Robert Wilson Muirhead and John Meikle, accountants, Glasgow, were competitors for the office of trustee. Objections for the competitors were considered by the Sheriff-Substitute at Glasgow (Fyfe). Among the documents founded on by the competitor Robert Wilson Muirhead were the unstamped assignations after-mentioned. In the course of the scrutiny he offered to consign the amount of the stamp duty and of the appropriate penalty. The Sheriff-Substitute refused to allow this to be done. After the Sheriff-Substitute had made avizandum, Muirhead "moved the Court to grant him leave to uplift (1) the assignation granted by Robert Deuchar Ltd., brewers, Edinburgh, in favour of the Licences Insurance Corporation and Guarantee Fund Ltd., dated 6th and 7th November 1916; and (2) the assignation granted by William Kerr & Co., wholesale wine merchants, 93 Ingram Street, Glasgow, in favour of the Scottish Licenses Mutual Insurance Association Ltd., dated 5th March 1917, in order that said assignations may be stamped with the appropriate stamp duty." On 3rd April 1917 the Sheriff-Substitute pronounced the following interlocutor, viz.: "Finds under reference to the annexed note that upon a scrutiny of the votes the valid vote for the competitor John Meikle, accountant in Glasgow, is £1527, 16s., and that the valid vote for the competitor Robert Wilson Muirhead is £93, Os. 8d., shewing an apparent majority for the competitor the said John Meikle of £1434, 15s. 4d.; Refuses the motion No. 35 of process for the competitor Robert Wilson Muirhead." Sheriff Fyfe.—. . . . The result of the scrutiny of Meikle's votes is that his recorded vote of £1616, 158. 9d. is reduced by £88, 19s. 9d., making Meikle's vote in the competition £1527, 16s. ... The result of the scrutiny of Muirhead's votes is that his recorded vote of £3063, 14s. 4d. is reduced by £2970, 13s. 8d., making Muirhead's vote in the competition £93, Os. 8d. Meikle's valid vote in the competition being thus £1527, 16s., and Muirhead's £93, Os. 8d., there is an apparent majority in favour of Meikle of £1434, 15s. 4d., and the usual practice is to conclude the Sheriff's statement of his opinions on the objections taken in the course of a scrutiny with the formal words which are used in declaring the election of a trustee; but if I do this I will of course foreclose appeal, if appeal is competent; and having regard to the peculiar situation I do not desire to do this or to seem to prejudge the question whether the thirty opinions I have expressed upon objections in the scrutiny are each an interlocutory deliverance, or that the statement of the majority arising upon the vote is an interlocutory deliverance, subject to review. At the same time it is a statutory direction that the election of trustee is to be declared "with the least possible delay" (section 67), and as my own personal opinion is that my opinions expressed in the course of a scrutiny are not appealable deliverances, I hesitate very much to refrain from declaring the election of the trustee. The circumstances, however, in this case are very exceptional, and I take it upon myself to delay declaring the election (1) because probably it is not for me, but for the Court of Session, to say whether appeal is competent; (2) because a great many of the questions discussed and decided in the scrutiny are very important bankruptcy questions upon which it would be exceedingly useful to obtain the opinion of the Supreme Court; and (3) because whilst section 67 directs the Sheriff to declare the election of a trustee "with the least possible delay," and although the practice is to make this declaratory deliverance along with the determination of the question where the majority of votes lies, the statute does not absolutely bar the formal declaration of the election of trustee being deferred. If I do not declare the election now, I cannot of course do so till the appeal days have elapsed; but, as I am taking a very unusual course in not now declaring the election, I shall expect the parties not to cause the election to be deferred for eight days if neither of them proposes to attempt an appeal. The competitor Muirhead put in a motion two days after the scrutiny of votes and the discussion upon the objections had ended, and he desires me to deal with v. Meikle. June 8, 1917. that motion. I do not think it is necessary to do so, 2ND DIV. for I have pointed out in my note that in the course of Companies whose votes he had were quite willing the scrutiny this competitor and the Licenses Insurance Muirhead vouchers founded on, but that I declined to interrupt either or to consign the stamp duty for the unstamped the progress of the scrutiny to enable the documents to be stamped, or to order consignation because I thought neither course was competent under the Bankruptcy Act, to enable a claim to be reckoned for voting purposes, and because I considered that the Stamp Act did not apply to a scrutiny of votes in a dealt with, obviously I must simply refuse it, because bankruptcy. If the motion does require to be formally it asks me to do the very thing I hold I have no power to do, and which the Court in Tennent's case held the Sheriff at Hamilton had no power to do. I think also this motion would in any event have to be dismissed upon two technical grounds-(1) It was not timeously made. It might perhaps appropriately have been put in immediately upon the lodging of the note of objections for Meikle, intimating the want-of-stamp objection. I am afraid it was too late after the scrutiny proceedings had been closed, and I had made avizandum upon the notes of objections; (2) I do not think the competitor Muirhead, who makes this motion, had a title to make it, even assuming it to be a competent motion at all, which I gravely doubt, clearly Muirhead I do not think, however, that this motion is really of could not make it but only the interested creditors. any consequence at all. It was in my view quite unnecessary, even if competent, and the situation is not in any way affected either by the motion having been put in or by my refusing it. Session "in terms of section 166 of the . . . Muirhead lodged an appeal to the Court of statute" (Bankruptcy (Scotland) Act 1913). The Bankruptcy (Scotland) Act 1913 (3 & 4 Geo. V. cap. 20) enacts: Section 67. The judgment of the Sheriff declaring the person or persons elected to be trustee or trustees in succession shall be given with the least possible delay; and such judgment shall be final, and in no case subject to review in any Court or in any manner whatever. Argued for the Respondent: The appeal was incompetent. Section 67 did not allow any review of the Sheriff's judgment in regard to the appointment of a trustee. In any view an appeal was excluded in the present case because the Sheriff had not declared any person to be elected trustee and there was thus no interlocutor to appeal against. If there had been a question in regard to procedure an appeal might have been competent at an early stage (Tennent v. Crawford, 1878, 5 R. 433). In the present case the Sheriff had decided the merits of the competition and had refrained from discharging his duty of declaring a trustee to be elected. To allow an appeal would be equivalent to sustaining an appeal against an interlocutor which had not been pronounced. The Sheriff had decided the questions raised with reference to the different votes and his judgment on these was final. Wylie v. Kidd (1884, 11 R. 968) was an appeal on the merits and not on competency. Muirhead June 8, 1917. 2ND DIV. The cases of Galt v. Macrae (1880, 7 R. 888), Reid decided by the case of Tennent v. Crawford v. Strathie (1887, 14 R. 847), Yeaman v. Little (5 R. 433). That decision has, so far as I am v. Meikle. (1906, 8 F. 702), and Grierson v. Ogilvy's Tr. (1908 | aware, always been accepted as authoritative, and, S.C. 959), shewed that the case of Tennent was a though regret has been expressed by high bad precedent and should not be extended. No authorities that the law should be as was settled doubt an appeal had been held competent where in that case, no change was made when the the Sheriff had exceeded his jurisdiction, as in recent Bankruptcy Act was passed. Farquharson v. Sutherlands (1888, 5 R. 759), but there was no excess of jurisdiction in the present case. On the merits I do not think the written motion for Muirhead ought to have been granted. I think that also was decided in Tennent v. Crawford. But the Sheriff-Substitute in his note says: "In the case of Tennent it was not under the Bankruptcy Act, but under the Stamp Act, that the Court proceeded. But the view of the scrutiny of votes proceedings which I have set forth was not presented to the Court; nor was the question raised whether the Stamp Act applies to a scrutiny of votes in a sequestration. That was not argued nor decided. It was assumed that the Stamp Act applied." In my opinion the Sheriff-Substitute erred in not allowing the appellant to consign the sum required to pay for the assignation being stamped. That also appears to me to have been determined in Tennent's case. I cannot accept the Sheriff-Sub Argued for the Appellant: The appeal was competent under section 166 of the Bankruptcy Act. The competency of an appeal in regard to the election of a trustee in a sequestration was sustained in Moncur v. Macdonald (1887, 14 R. 305). Further, under section 47 of the Act, if an oath or claim was defective it was the duty of the Sheriff to call for its rectification. Here a motion was made to allow the documents to be after-stamped, or alternatively to permit consignation of the stamp duty, and that was a motion which, being made orally, the Sheriff was bound to accede to under section 47, no improper motive being present It was made in the course of the proceedings and therefore timeously. It had been unlawfully refused. If the docu-stitute's views as to the decision in that case. ments were subsequently stamped the vote in respect thereof was valid (Mories v. Glen, 1843, 6 D. 97). If the document was capable of being after-stamped it ought to have been received on consignation of the stamp duty. In any event the appeal had been taken at an early stage of the proceedings because no trustee had been elected. There had been an irregularity on the part of a judge of an inferior court, and in such circumstances the Court of Session could inter-claimant, if so advised, to pay into the hands of vene and put him right. Avizandum, 1st June 1917. On 8th June 1917 the Court pronounced this interlocutor: Lord Deas expressly refers to the Bankruptcy Statute in his opinion on the merits. There is, in my opinion, disclosed on the face of the present proceedings a failure to observe the proper procedure. I am of opinion that we should repel the objections to the competency of the appeal, sustain the appeal, recall the deliverance appealed against, find that the assignation may still be stamped, and remit to the Sheriff to allow the the Clerk of Court the stamp duty and penalties,. and thereafter to receive the document in evidence. I do not think in so doing we in any way impinge on what was said and done in Reid v. Strathie (14 R. 847). All the Judges in the latter case were parties to the decision in Tennent "Repel the objections stated by the respon- v. Crawford. Lord Shand in the case of Reid dent John Meikle, accountant in Glasgow, to (14 R. 847, at p. 848), said: "If the objection the competency of the appeal: Sustain the had been one that admitted of instant verificaappeal: Recal the deliverance of the Sheriff- tion by production of documents, or if a diligence Substitute appealed against dated 3rd April had been asked to recover specified documents, 1917: Find that the assignation No. 17/1 of the Sheriff might have allowed that." I think process lodged with the claim No. 17 of process for the Licences Insurance Corporation and Guarantee Fund Ltd. may still be stamped with the appropriate stamp: Remit to the Sheriff Substitute to allow said claimants, if so advised, to consign with the clerk of Court a sum sufficient to cover the appropriate stamp duty on said assignation and penalty, if any, chargeable: Remit also to the Sheriff-Substitute to proceed further as accords. . ... The Lord Justice-Clerk.-The competency of this appeal was objected to, and the point was fully argued. In my opinion the point is that quite warrants what we now propose to do even apart from the decision in Tennent. The Sheriff-Substitute here thought he ought to disregard Tennent's case for the reasons he assigns, and I think, therefore, he rightly took such a course as allowed his decision to be brought under review. But I venture to express the view that in the general case when a Sheriff has arrived at a decision in the course of the scrutiny as to the validity of the votes to be considered, he ought to give full effect to his opinion by declaring the person elected to be trustee, even though he may have doubts as to the soundness of the conclusion at which he has arrived. Lord Dundas.-I agree with your Lordship on both points. Upon the merits of the question involved, I think Tennent v. Crawford (5 R. 433) is an authority, binding upon us, in the appellant's favour. The Lord President there held the document under consideration to be stampable, and that the Sheriff ought, in a competition of votes for a trusteeship, to have allowed it to be received on payment of the duty and penalties. Lord Deas said: "As to the competency of allowing such a document ... to be stamped, in a competition of this kind, there can be no doubt." Lord Mure was of the same opinion; and Lord Shand had "nothing to add on the question of stamping documents." As regards the respondent's objection to the competency of the appeal, I think Tennent's case is an authority for holding that it is not incompetent. The question, which the Sheriff Substitute seems to have thought worthy of consideration by this Court, was timeously raised during the scrutiny of votes by the appellant's verbal motion for leave either to take the documents away and get them stamped or to consign the stamp duty. If the motion had been made in writing, and refused not verbally (as it was), but by a written deliverance, an appeal might, I apprehend, have been competently taken to this Court. By the interlocutor appealed against, the Sheriff-Substitute, inter alia, refused a written motion by the appellant for leave to uplift the documents and get them stamped. He was right, as I think, in refusing the motion so made; but I consider that, in the circumstances above summarised, it is not incompetent for the appellant to raise before us by this appeal his alternative motion for leave to consign. I desire to guard myself by adding that I could not, in the general case, think it right that a Sheriff should deliberately refrain from following the "usual practice" of concluding "with the formal words which are used in declaring the election of a trustee," simply in order to leave open a right of appeal which would otherwise be foreclosed. But the course of procedure here adopted has been so odd and exceptional that it does not seem likely to occur again; and, in the circumstances which have occurred, and for the reasons stated, I do not think the appeal is incompetent. We should, therefore, in my judgment, so find, and remit to the Sheriff-Substitute as proposed by your Lordship. Lord Salvesen.-The Sheriff-Substitute has, in this case, heard and decided a number of questions arising on claims for voting for the election of a trustee in a sequestration. In terms of the Bankruptcy Act 1913 he has written a very careful and elaborate note, setting forth the grounds upon which he rejects certain claims by creditors who supported the appellant. The duties of the Sheriff-Substitute are regulated by 1917. section 66 of the Bankruptcy Act 1913, which 2ND DIV. is in the same terms as section 70 of the former Muirhead Act of 1856. The last part of that section v. Meikle. provides: "If there be competition or objection, June 8, the parties shall, within four days from the date of the said meeting" (that is, the meeting for the election of trustee), "lodge in the hands of the sheriff-clerk short notes of objections, and the Sheriff shall forthwith hear parties thereon viva voce, and give his decision, and state the grounds thereof in a note, which note, as well as such short notes, shall form part of the process." The Sheriff-Substitute while, as his note shews, he has decided a large number of questions as to the validity of certain objections, has embodied the result only in a finding, and has not proceeded to follow up the finding by declaring the competitor John Meikle-who, as he holds, has established a valid vote to the extent of £1527, 16s., as against a valid vote for the appellant of £93, Os. 8d.—to be elected as trustee. If he had done so, his judgment is, under the 67th section, declared to be final, and in no case subject to review in any Court or in any manner whatever. It follows, I think, that we are not entitled to review on the merits the various decisions which the Sheriff-Substitute has arrived at on the objections stated by each competitor; the obvious intention of the statute being that, so soon as the Sheriff-Substitute has ascertained that there is a majority of votes for one competitor, he shall proceed to declare that competitor elected as trustee, and as this judgment cannot be reviewed, neither can the grounds upon which it has been pronounced where the Sheriff-Substitute has refrained from following up his finding by declaring one of the competitors elected. In short, I hold that the SheriffSubstitute must make up his mind for himself, and that he is not entitled, even in a case of difficulty and importance, to permit the unsuccessful party to submit his finding to review by one or other of the Divisions of the Court of Session. Accordingly, if the procedure followed by the Sheriff-Substitute had been in every respect regular, I do not think we could have entertained this appeal, although it is not in form excluded by the 67th section of the Act of 1913. But it appears from his note that two objections related to claims by creditors which were said to be evidenced by defective vouchers as being unstamped. The Sheriff-Substitute records that the claimants offered, in the course of the scrutiny, either to take the documents away and get them stamped, or to consign the amount which the Sheriff-Substitute might order to be consigned as the stamp duty appropriate. The Sheriff-Substitute refused either alternative, and has rejected both claims. If he had embodied this refusal in an interlocutor, I cannot doubt that such an interlocutor would have been appealable. The very point was decided in the |