Scottish Court of Session Decisions

Subject_1 FRAUD.
Subject_2 SECT. V.

Latent deeds are presumed to be fraudulent in order to protect against Creditors.

Creditors of Carloury and Halyards
v.
Lord Mersington, &c

Date: 21 December 1694
Case No. No 37.

Heritable securities in relief granted to cautioners, were sustained, although the debtor was insolvent at the time; it not being proved that he was notour bankrupt, and the private knowledge of his circumstances by his cautioner, not being sufficient to affect their rights.

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Rankieler reported the Creditors of Carloury contra my Lord Mersington, Mr Thomas Skeen, and Hugh Brown, for reducing an infeftment of relief given to them by Skeen of Halyards and Drummond of Carloury, after they were obærati et in meditatione fugæ. Answered, They were cautioners and just creditors, and might lawfully take any security for their relief; and, though there were hornings, inhibitions, and other diligences against them, at the instance of others, yet none of these now pursuing had done any before it. Replied, They were in the case of Sir Thomas Moncrieff contra the other Creditors of Lanton, where the Lords found, in February 1694, No 146. p. 1054., not from the act of Parl. 1621, but on the head of fraud, from the common law, that Lanton, after he began to be pressed with diligences, and had retired out of town, and made a disposition of his whole moveables, could not grant heritable securities in favour of one creditor in prejudice of another. But it was contended, That there was a farther qualification required in Lanton's case, which cannot be subsumed here, viz. that he was then holden and repute a bankrupt. The Lords thought it deserved a hearing in presence, that they might settle the limits of bankruptcy, when one should be utterly incapacitated to dispone or grant any rights or gratification in favours of one creditor before another.

1695. January 15. —This was a reduction of heritable bonds of relief granted by these two debtors to the foresaid persons engaged for them in several cautionries, not only on the act of Parliament 1621, but on the common law, and Prætor's edict, Quæ in fraudem creditorum. The qualifications against the bond given by Carlourie was, that he had retired to the sanctuary of the Abbay, and it was signed there, and he was then obæratus and insolvent, his debts exceeding his estate; and there were sundry diligences against him, both hornings and inhibitions, and which, conjoined with the bonds then given in to be registrate against him, exceeded the value of his lands. Answered, Flying to the Abbay is no mark of a bankrupt; for some will retire there for a season, on the account of a very small debt: And quoad the creditors who had done diligence, they acknowledged their right was reducible on the act of Parliament 1621, but not in toto, nor at the instance of those who had not done any prior to their bond; and that the being bankrupt was not enough, unless they joined notoriety to it; seeing a man is not particeps fraudis suum recipere, nec est in dolo qui jure suo utitur; as was lately found between Sir Thomas Moncrieff and Lanton's Creditors, No 140. p. 1054.; and 2d February 1632, Jack and Gray, No 26. p. 897.; and if this were not, we should have no marks nor limits of bankrupts. The Lords found these qualifications not sufficient to reduce, unless they also offered to prove he was then holden and reputed bankrupt. On this, they alleged it was equivalent that the party-receiver knew at the time he got the right that the granter of it was bankrupt. Answered, Private knowledge did not supply the notoriety, unless they would refer to their oath, that they then knew he was commonly holden to be a bankrupt; and what hinders a creditor, when he begins to suspect his debtor's condition sibi vigilare, and to get a security? The Lords did not find private knowledge sufficient, in this case.

Fountainhall, v. 1. p. 652. & 659.