Kinmond, Luke, & Co. v. James Finlay & Co. [1904] ScotLR 41_378 (08 March 1904)

Kinmond, Luke, & Co. v. James Finlay & Co. [1904] ScotLR 41_378 (08 March 1904)

Where a trustee in bankruptcy does not demand assignation of a security held by a creditor, and the bankrupt is discharged after payment of a final dividend, the creditor retains only a security right, not absolute ownership, and the discharged bankrupt is entitled to sue for an accounting and payment of any surplus from the security subjects after satisfaction of the creditor's debt.

Citation
[1904] ScotLR 41_378
Parties
Pursuer: Kinmond, Luke, & Company; Defender: James Finlay & Company
Jurisdiction
Scotland
Judgment Date
08 March 1904
Procedural Posture
Action of Count, Reckoning, and Payment / Inner House, Second Division, Reclaiming Motion (appeal) Against Lord Ordinary's Interlocutor
Outcome
Defenders' pleas repelled; interlocutor of Lord Ordinary adhered to; defenders ordered to lodge accounts of intromissions.
Legal Topics
Right in Security, Assignation of Security, Trust Deed for Creditors, Title to Sue After Discharge, Accounting Between Debtor and Secured Creditor
Bankruptcy Insolvency Property Law Right in Security Assignation of Security Trust Deed for Creditors Title to Sue After Discharge Accounting Between Debtor and Secured Creditor

Case Brief

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Parties

Kinmond, Luke, & Company

Pursuer

James Finlay & Company

Defender

Procedural Posture

Action of Count, Reckoning, and Payment / Inner House, Second Division, Reclaiming Motion (appeal) Against Lord Ordinary's Interlocutor

Legal Issues

  1. 1 Whether a discharged bankrupt can sue a secured creditor for an accounting of security subjects after the trustee in bankruptcy has not demanded assignation of the security.
  2. 2 Whether the secured creditor's right becomes absolute property or remains a security right after the trustee refrains from taking assignation.

Ratio Decidendi

Where a trustee in bankruptcy does not demand assignation of a security held by a creditor, and the bankrupt is discharged after payment of a final dividend, the creditor retains only a security right, not absolute ownership, and the discharged bankrupt is entitled to sue for an accounting and payment of any surplus from the security subjects after satisfaction of the creditor's debt.

Court Disposition

Defenders' pleas repelled; interlocutor of Lord Ordinary adhered to; defenders ordered to lodge accounts of intromissions.

Orders

  • Repel first three pleas-in-law for defenders.
  • Order defenders to lodge accounts of intromissions within one month.