Sir John Muir v. Forman's. Trustees [1903] ScotLR 40_404 (03 March 1903)

Sir John Muir v. Forman's. Trustees [1903] ScotLR 40_404 (03 March 1903)

Persons who rendered professional services in the promotion and attempted formation of the company, including promoters acting in a professional capacity, are creditors entitled to rank pari passu on the deposit-fund, as the only asset of the company, regardless of whether they acted before or after incorporation or whether the board was fully constituted. The statutory scheme and legislative history show no basis for distinguishing between 'meritorious' and 'non-meritorious' creditors in this context.

Citation
[1903] ScotLR 40_404
Parties
Petitioner: Sir John Muir; Respondent: Forman's Trustees; Respondent: Philip Grierson Keyden and David Reid (Keydens, Strang, & Girvan); Respondent: Martin & Leslie; Respondent: Blyth & Westland; Respondent: Mitchells, Johnston, & Company
Jurisdiction
Scotland
Judgment Date
03 March 1903
Procedural Posture
Exchequer Petition / Inner House, First Division, Court of Session – Reclaiming Motion Against Lord Ordinary's Interlocutor
Outcome
Petition refused; all respondents entitled to rank pari passu on the deposit-fund for their duly audited claims.
Legal Topics
Distribution of Deposit Fund, Creditor Ranking, Promoters' Liability, Remuneration for Professional Services, Company Winding Up, Statutory Interpretation
Company Law Insolvency Law Railway Law Distribution of Deposit Fund Creditor Ranking Promoters' Liability Remuneration for Professional Services Company Winding Up +1 more

Case Brief

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Parties

Sir John Muir

Petitioner

Forman's Trustees

Respondent

Philip Grierson Keyden and David Reid (Keydens, Strang, & Girvan)

Respondent

Martin & Leslie

Respondent

Blyth & Westland

Respondent

Mitchells, Johnston, & Company

Respondent

Procedural Posture

Exchequer Petition / Inner House, First Division, Court of Session – Reclaiming Motion Against Lord Ordinary's Interlocutor

Legal Issues

  1. 1 Are claimants who rendered professional services in the promotion and attempted formation of a railway company entitled to payment out of the statutory deposit-fund after abandonment of the undertaking?
  2. 2 Does the status of a claimant as a promoter or as a person employed by a promoter affect entitlement to rank on the deposit-fund?
  3. 3 Does the irregular constitution or continuation of the board of directors affect the validity of claims for services rendered after the prescribed period?

Ratio Decidendi

Persons who rendered professional services in the promotion and attempted formation of the company, including promoters acting in a professional capacity, are creditors entitled to rank pari passu on the deposit-fund, as the only asset of the company, regardless of whether they acted before or after incorporation or whether the board was fully constituted. The statutory scheme and legislative history show no basis for distinguishing between 'meritorious' and 'non-meritorious' creditors in this context.

Court Disposition

Petition refused; all respondents entitled to rank pari passu on the deposit-fund for their duly audited claims.

Orders

  • All respondents to be ranked pari passu on the deposit-fund for the amount of their claims as audited.
  • Case continued for appropriate remits to audit and settle claims.