Scottish Court of Session Decisions

Subject_1 PART I.

BANKRUPT.

Ewing's Creditors
v.
Douglas's Attorney

Date: 6 February 1802
Case No. No. 11.

A Scotsman living and carrying on trade abroad does not fall under the Bankruptact.

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Hugh Douglas, originally a native of Scotland, had long carried on business in Demerara, from which he returned in November 1800 to Glasgow, where he resided for two or three months, settling some of his accounts, and arranging his future correspondence. In February, he again returned to Demerara, where the business, during this visit to Scotland, had been continued. A sequestration against him was applied for at the instance of the trustee for the creditors of William Ewing, to whom he was indebted. He was cited, being abroad, at the market-cross of Edinburgh, pier and shore of Leith: And Lord Cullen ordered memorials, which were reported by Lord Woodhousloe, probationer.

Alexander Campbell, as attorney for Douglas,

Pleaded: He is indeed a native of this country; but of all jurisdictions, that founded ratione originis, is unquestionably the weakest; and on the eight of granting a sequestration is an innovation on the common law, it must be limited by the word of the statute introducting it. The late bankrupts act 33d Geo, III. C. 74. is a law, itended for the regulation of Scottiah bankruptcies alone. It applies only to the recovery and disposal of offects under the direction of the Court of Session, and is therefore intended to include Scotish traders alone; so that, in $ 17. which is the material clause in this case, the expression “any person in that part of Great Britain, called Scotland, being a merehant or trader, &c., can mean those only who are marchants or traders in Scotland.” But it was not meant to restrios the remedy to those who were actually in Scotland at the time, proviaions being made for the case of the debtor being out of country, if he really be a Scottish trader. Foreign merchants having estates here, are not to be comprehended within our bankrupt laws, because, without the aid of sequestration, the effects situate in this country are liable to diligence, and the pari passu preference of arrestments prevents all undue prefeences. Douglas is a forgin merchant, carrying on trade at Demerara: His principal effects are situate there; and he was merely paying a transient visit to his native country, without any fixed residence in it. A merchant, wherever he is, is always occupied in his business, buying and selling, and forwarding his various concerns. Douglas, indeed, during his stay in Glasgow, granted two bills, and also sold a small ship, which it is said proves him to have been a merchant trading in Glasgow; but the bills are addressed to “Hugh Douglas, Esq. of Demerara, now in Glasgow.” They are not payable at any house, or house of business of his own, (for he had none), but at the house of his agents; they are clearly granted as by a foregin merchant. With regard to the sale of the ship, one transaction will not fix the character of a Scottish trader upon him; even his description in the deed of vendition, as merchant in Glassgow, the only writting where he is so designed, is still insufficient for the above purpose. Were the Scottish law of sequestration found applicable in this case, a trader might make himself subject to the varying systems of bankrupt law in all the countries to which the prosecution of an extensive commerce might ocasinally conduct him.

Answered: If in the case of a merchant, principally residing abroad, having effects in this conntry, no sequestration could be awarded, partial preferences would thus be given to favourite creditors. But besides, if a forgeign merchant resides for a while in this country, boys and selle here, no matter whether he has a house, or house of business here, or carries on his transactions in an inn or friend's house, and if he has effects here subject to the jurisdiction of the Court of Session, he, in effect, becomes a Scottish trades. The statute requires either that the debtor actually reside in Scotland, or at least had such residence or dwelling-house, or house of business, within a year prior to the application for sequestration. Now Douglas had resided between two and three months here, and he bought and sold goods as a merchant, for which he granted bills. He has also expressly styled himself “merchant in Glasgow” in an authentic and formal deed; and in the power given to his attorney, which entitles him to appear for him in this action, he admits the same thing, designing himself “late of Demerara, presently in Glasgow, merchant.” His journey to Scotland was not so much a visit of friendship, as in prosecution of his trade; and the sound principle of the act of sequestration is, that foreign, like domestic merchants, cannot carry on trade, or hold property as traders in Scotland, without being subject to the bankrupt laws of this contry, and without rendering that justice to their creditors, which the native merchant is bound to rander.

The Lords were of opinion, that § 17. of the statute must be explained, in conformity with § 13. to mean traders in Scotland, and did not reach such cases as the present: Therefore refused to award the sequestration.

Lord Probationer Tytler, Reporter. Act. H. Erskine, Fletcher. Agent, M. Montgomerie. Alt. Solicitor-General Blair, G. J. Bell. Agent J. Campbell tertius, W. S. Clerk, Menzies. Fac. Coll. No. 21. p. 43.