Scottish Court of Session Decisions

Subject_1 BANKRUPT.
Subject_2 DIVISION I.

Reduction of Alienations made by Bankrupts where the Reducer has done no Diligence.
Subject_3 SECT. V.

Gratuitous Alienations by persons solvent at the time.

M'Kenzie
v.
Fletcher

Date: 15 January 1712
Case No. No 52.

A disposition to a sister and her husband, found not reducible on the act 1621, if the granter had at the time an estate equal to payment of his debts. There was here a mora on the part of the pursuer of the reduction.

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James Fletcher of Cranston grants bond for L. 1000 Scots to Sir George Lockhart, in 1678. The very next day he gives his sister, Alison Fletcher, a bond for 8000 merks; and, in 1681, he dispones the lands of Gilkerston to the said Alison, and John Grahame her husband. On Sir George Lockhart's bond he is denounced and registrate in 1689; and the said bond, by progress, comes in the person of my Lord Prestonhall, who leads an adjudication for it in 1699: And pursuing for mails and duties, Jean Fletcher and Captain Hary Straiton, her husband, as come in her sister Alison's right, crave preference as first infeft, which necessitated Prestonhall to raise a reduction of James Fletcher's right to his sister and brother-in-law, upon both the branches of the act of Parliament 1621, as being an anterior creditor, and the deed being inter conjunctas personas and gratuitous: Next it impinges on the second clause of that act, declaring all dispositions null, granted by debtors, after they are denounced and registrate to the horn, in so far as concerns the creditor-user of that diligence; but so it is James Fletcher was at the horn before he gave that disposition to his sister and her husband. Alleged for Jean, 1mo, It is not yet clearly decided, if a brother-in-law be a conjunct person in the eye, sense, and construction of that act. 2do, This deed is not wholly gratuitous, for it is in satisfaction of a bond of provision given her by Sir John her father. 3tio, That act annuls only rights made by dyvours and bankrupts; so that if the man had a clear visible accessible estate at the time, sufficient for paying all his debts, the right cannot be quarrelled, though by a supervenient insolvency he come to be obæratus. How many does every age produce, who, by mismanagement and prodigality, from opulent estates, fall into the very gulph of poverty; and yet will any man say, that when he bruiks a flourishing estate of L. 1000 Sterling per annum, that he cannot provide his children, or give a gratuity to his friends and relations, because ex post facto, he dies a beggar? What embarrassment would this lay on all commerce and bargaining; if eventual insolvency, occurring many years after, were sufficient to annul these deeds? And by the actio Pauliana he only is repute insolvent, who, at the time of the deed, or by the granting it, is incapable to pay his debt; as Justinian determines § 3. instit. quib. ex caus. manumittere non licet. Now Mr Fletcher, at the making this disposition, had the lands of New Cranston, with a jointure of 1200 merks yearly, and a post in the army, which were funds more than sufficient to pay all his debts. And Prestonhall may sibi imputare that non sibi vigilavit, in affecting these funds till his debtor began to sink: And this is no new doctrine; for the Lords on the 30th June 1675, Clark contra Stewart, p. 917. found it relevant to assoilzie from the act of Parliament, that he had a sufficient unincumbered estate at the time: And the like, the Creditors and Children of Mousewell competing, (infra h. t.); and 6th March 1632, Garthland contra Ker, No 45. p. 915. See also 8th February 1681, Neilson contra Ross, (infra h. t.); and in Langton and Cockburn's case No 9. p. 884. it is required they be altogether insolvent, at least difficilis conventionis, and the estate so overburdened, that it cannot extricate itself without a sale.—Answered, Where a debtor's estate is reduced to that condition that it cannot satisfy all; it is more reasonable that the bankrupt debtor's relations should be at the loss, than extraneous onerous creditors put to expiscate their debtor's concealed means; and though decisions have varied on this head, yet they have, in many cases, reduced these voluntary deeds, without regarding the debtor's solvency at the time, if ex post facto, he turn insolvent. See the 25th January 1681, Bathgate and Bouden, (infra h. t.) And 10th February 1665, Lady Greenhead contra the Lord Lowrie, (infra h. t.) And Sir John Nisbet, (Dirleton) relating the decisions of Clark, (p. 917.) and Mousewell, (infra h. t.) cited by the other side, adduces irrefragable arguments to convell them with great penetration and closeness. And where there appears such variety of opinions among the Lords, though the plurality makes a res judicata, yet it affords ground to examine the reasons on both sides, when they come to be cited as precedents and practics, especially when the point is only carried by a vote or two, and on the absence of some of that first sederunt, the Lords come to alter; therefore some have proposed this expedient, that these dubious cases should be reviewed, either by a full bench, or else by the same who sat in the first interlocutor, which would prevent the frequent alterations that daily occur; but this is scarce practicable, seeing some are detained, at the second review, from the house, by sickness; others are in the outer-bench, side bar, or on the bills. See Dirleton's reasonings, at page 140 and 207. Sir George Mackenzie does also concur with him, in his observations on the said act 1621, and thinks sufficiency of estate, at the time, not relevant, if eventual insolvency superveen, and that it is better that conjunct persons suffer, than strangers who lent their money bona fide on the view of a clear estate.—The Lords thought there was no doubt but a brother-in-law was a conjunct person in the sense of our law; but yet, by plurality, having balanced the inconveniencies on all sides, they found, if James Fletcher had a visible unincumbered estate, at the time of his disponing to his sister and her husband, more than would have paid all his debts, the said disposition could not be annulled on the act 1621, especially considering that Prestonhall was in mora, not having adjudged the lands for seventeen years after the said disposition; and it seemed to have some resemblance of an onerous cause, like a tocher given ad sustinenda onera matrimonii.

Fol. Dic. v. 1. p. 69. Fountainhall, v. 2. p. 703. *** Forbes reports the same case thus:

Mr Roderick Mackenzie of Prestounhall, one of the Senators of the College of Justice, having 20th January 1699, obtained an adjudication against the representatives of James Fletcher of Cranstoun, upon a 1000l. bond granted by him as principal, and Kenneth Earl of Seaforth, as cautioner to the deceased Sir George Lockhart, 5th February 1678, and assigned by progress to the adjudger, who thereupon did charge, denounce, and register James Fletcher at the horn, in December 1680: Prestounhall raised a reduction against Jean Fletcher and her husband, upon the act of Parliament 1621, of a gratuitous bond of 8000 merks, granted by James Fletcher to the said Jean his sister, February 6, 1678; and of a disposition granted by him in August 1681, of the lands of Kilgirstoun, to her and John Graham, post-master, then her husband, in conjuct-fee and liferent, in satisfaction of the gratuitous bond, clothed with infeftment in September 1682: In respect, 1mo, The bond quarrelled was of a day's date after the bond granted to Sir George Lockhart, the pursuer's author, and being a deed for love and favour inter conjunctas personas, could not prejudice a prior onerous creditor, by the first part of the said act of Parliament, the granter having in eventu proved insolvent; and the disposition inter conjunctas could not be supported by the onerosity of the precedent gratuitous bond. 2do, The disposition was quarrellable upon the second clause of the statute, whereby no voluntary right by a debtor to his creditor can prejudice the more timely diligence of a co-creditor.

The Lords sustained this answer to the reason of reduction upon the first part of the act of Parliament 1621, That James Fletcher had, at the time of granting the bond to his sister, a sufficient separate unincumbered estate, for payment of all his debts: And also sustained this answer to the reason, on the second part of the said statute, That the diligence, by simple horning and denunciation, was not habile to reduce the disposition, not being duly prosecuted for many years by real diligence.

Albeit it was alleged for the pursuer: 1mo, Mens circumstances are known very quickly to alter, and if the such debtors prove eventually insolvent, the just creditor is equally disappointed, as if his debtor had been bankrupt from the beginning. 2do, Tis no novelty in our law for a conveyance that was good when first made, to fall under the act of Parliament 1621, through the granter's supervenient insolvency; more than for a disposition within the half of ward lands, without consent of the superior, though valid, when granted, to become thereafter null by more of the lands being disponed. 3tio, By the civil law, all deeds and rights in prejudice of creditors are null, at least may be reduced actione pauliana, if prejudicial to them ex eventu et re, though not fraudulent consilio, which being in animo is per-difficilis probationis. L. 6. § 11. ff. quæ in Fraud. Credit. L. 5. C. de Revoc. his quæ in Fraud. Cred. How hard is it to put creditors to dispute their debtor's condition the time of making donations: Men of the best credit being frequently found to manage most closely? Is it not more just, that, in the case of eventual insolvency, a donatary who hath but a lucrative title, should suffer rather than a just anterior creditor? 4to, As it cannot be pretended in reductions ex capite inhibitionis, that the party inhibited did nothing in prejudice of his creditor, in respect the time of the alienation he had sufficiency of estate beside: So a pari, the like allegeance ought not to be sustained to take off or enervate the effect of the act of Parliament 1621.

In respect it was answered for the defender: 1mo, It were more unreasonable that a right good from the beginning should depend upon after events, than that a creditor should lose thereby who had it in his power to prevent the same by calling for his money, or securing the same by diligence. 2do, The pursuer's parallel from recognitions, where partial alienations good in initio may ex eventu become void, ariseth from the nature of the feu, which every partial purchaser or creditor taking security out of it, is bound to know, and contracts with his hazard: But no second creditor, though gratuitous, is bound to consider any thing, but that his debtor at the time, has sufficiency of means to pay all former debts. 3tio, All commentators upon the actio pauliana allow consilium fraudandi that is where the debtor was insolvent when he made the deed, to be a ground of restitution in all cases, and fraudem in eventu absque consilio, that is when he became insolvent by the deed, to take place in causis lucrativis, § 3. Inst. qui et ex quib. caus. man. non poss. So an fraudentur in the L. 6. § 11. ff. quæ in Fraud. Cred. imports only, That either the debtor is actually insolvent when he does the deed, or becomes so by doing it. 4to, Inhibitions are legal remedies stricking against all posterior voluntary alienations, according to the express will of the letters issued out from sovereign authority, whatever be the debtor's circumstances: Whereas the act of Parliament is calculated only against alienations of persons in certain circumstances, which therefore must be subsumed. See Ker against Scot, p. 690.

Forbes, p. 573.