The solicitors of a limited liability company wrote to a bank-‘We further write to say that we are authorised by the directors, and our London correspondents have our instructions, forthwith to procure from Mr Johnson a debenture or floating charge over the whole of his assets in name of this company for the amount required to secure the debt due by Mr Johnson to our clients. So soon as that debenture reaches our hands we have instructions to make it available to the Bank of Scotland as further and additional security for the repayment by our clients of their indebtedness to the bank, and it is understood in respect of the arrangements made that the bank will give to those interested in the company the benefit of the arrangements referred to in past correspondence.’ Correspondence followed as to whether an assignation or a mortgage should be given to the bank, but though the debenture in favour of the company was granted, nothing more was done before the company went into liquidation.
Held that the bank had no preferential claim on the debenture.
Judges:
Earl of Halsbury, Lord Kinnear, Lord Atkinson, and Lord Shaw
Citations:
[1914] UKHL 229 – 1, 51 SLR 229 – 1
Links:
Jurisdiction:
Scotland
Insolvency, Banking
Updated: 26 April 2022; Ref: scu.620706