William Williams

Name: A Creditor’s Right to His Surety’s Securities
Author: William Williams

A Creditor’s Right to His Surety’s Securities (1888)

Summary

“A Creditor’s Right to His Surety’s Securities”, published in 1888, is a work by William Williams. It explores elements such as surety, creditor and security.

Quotes from A Creditor’s Right to His Surety’s Securities (William Williams)

William Williams, A Creditor’s Right to His Surety’s Securities (1888)

“ One must distinguish carefully between three classes of cases: first, those in which the security is given primarily for the better protection of the debt; second, those in which the surety has the power, though not the duty, to apply the security in discharge of the debt; third, those in which the security is given merely for the purpose of indemnity. In the first class there can be no question that the creditor has the rights of any cestui que trust; in the second, the rights of the creditor must be worked out, if at all, by a proceeding in the nature of an equitable trustee-process. ”

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Source: Wikisource

William Williams, A Creditor’s Right to His Surety’s Securities (1888)

“ It is inevitable that the amount withdrawn from the securities should in its turn become an asset, and it is only just that the bill- holders, whose debt has not yet been extinguished, should be allowed to prove against it in competition with the other creditors. ”

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Source: Wikisource

William Williams, A Creditor’s Right to His Surety’s Securities (1888)

“ An apparent difficulty in applying the Scotch rule arises from the fact that as soon as the acceptor’s estate has been indemnified for the first dividend paid to the bill-holders, the amount thus withdrawn from the security becomes an asset from which all creditors, the bill-holders included, are entitled to another dividend; if any part of the security still remains, the same process is repeated, i. e., the bankrupt estate may reimburse itself to the amount of the bill-holders’ share of the second and other dividends, until the whole of the security has been appropriated to its indemnity. ”

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Source: Wikisource

William Williams, A Creditor’s Right to His Surety’s Securities (1888)

“ According to the Scotch rule the surety has no right to the security except to indemnify himself for payments actually made, nor have the bill-holders any direct claim, though both principal and surety are insolvent; but if the surety’s estate pays a dividend for which it is reimbursed out of the security, a new general asset is created; thus, incidentally, in the winding up of the surety’s estate, all the creditors derive a certain benefit from the indemnity fund. ”

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Source: Wikisource

William Williams, A Creditor’s Right to His Surety’s Securities (1888)

“ It will be seen that in many cases the bill-holders are materially benefited by the fact that the acceptor holds funds for his indemnity, and it may be objected that to allow them to share in any way in the distribution of the latter is inconsistent with the very foundation on which the Scotch rule rests. In reality, however, what they receive is not taken from the securities as such, but from the assets of the debtor. The bill-holders do not occupy the position of preferred creditors, for they share the sums derived from the securities pari passu with the general creditors ”

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Source: Wikisource

William Williams, A Creditor’s Right to His Surety’s Securities (1888)

“ Now the aggregate of all the dividends may be readily determined as follows: The numbers 1,200, 720, 432, etc., will be found to constitute a geometrical progression, the ratio () of the terms of which is 1200 720––– = 3⁄5, and their number infinity. Taking the formula ( being the first term of the progression) we find the sum of the dividends in this case to be £3,000. The total amount of the securities to be divided among all the other creditors will be found to equal £1,200, or the first dividend. ”

William Williams

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