M'Bride (Boyle's Factor) v. Stevenson

Subject_1 Bankruptcy Subject_2 Composition-Contract Subject_3 Secured Creditor Subject_4 Valuing and Deducting Security — Bankruptcy (Scotland) Act 1856 (19 and 20 Vict. c. 79), sec. 65. Facts: It is an implied condition of the composition-contract that secured creditors must value and deduct their securities, and claim a composition only on the balance.

The creditors of a bankrupt having accepted a composition, he was discharged from the sequestration. Thereafter a secured creditor who had not claimed in the sequestration sued him for the amount of the composition on his debt without deducting the value of the security. Held that he was only Page: 487 ↓

This was an action at the instance of James M'Bride, writer in Glasgow, as factor loco tutoris to the children of the deceased Neil Boyle, against Samuel Stevenson, timber merchant, Polmadie Saw Mills, Glasgow, for £89, 5s. 7d., being a composition of 6d. in the pound on a total debt of £3571, 13s. 11d.

At Martinmas 1876 the defender had borrowed from the pursuer a sum of £3500, granting in security a bond and disposition in security over certain heritable subjects in Glasgow, the rate of interest to be 5 per cent. Interest was paid down to Martinmas 1878.

On 25th April 1879 the defender's estates were sequestrated under the Bankruptcy Acts, and a trustee appointed thereon. The defender was then owing the pursuer the principal sum in the bond, amounting with unpaid interest to £3571, 13s. 11d. The pursuer, believing his security to be ample, did not claim in the sequestration. The defender made an offer to his creditors of 6d. in the pound, which was accepted by them, and he was discharged and re-invested in his estates on 10th July 1879.