Scottish Court of Session Decisions

Subject_1 COMPENSATION - RETENTION.
Subject_2 SECT. XIV.

Compensation or Retention not Proponable after Decree.

Creditors of Robert Paterson
v.
Patrick M'Aulay

Date: 9 December 1742
Case No. No 109.

Compensation is not competent against a debt, after decree has passed for it, whether the grounds of compensation were acquired before or after the decree.

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Robert Patertson having obtained a decreet against M'Aulay for L. 400 Scots, some of his creditors arrested the same in M'Aulay's hands, who, in order to disappoint them, purchased several bills of Paterson's, due to other creditors of his; upon which M'Aulay raised a multiplepoinding, and suspended the decreet; and having produced several bills accepted by Paterson, and indorsed to him, he proponed compensation thereon, or at least that he should be allowed to retain the money arrested, in respect Paterson was bankrupt, or caution found that he shall be law-biding for the counter claim.

For Paterson's Creditors who had arrested, it was pleaded, That the debts now in M'Aulay's person were all purchased since the decreet against him, on purpose to found this plea of compensation: That none of the bills had been duly negotiate, and all of them had lain over for upwards of three years, without any diligence done thereon, whereby they had lost all their privileges; nay, none of all the indorsations bear a date, therefore it should be presumed that M'Aulay had purchased these bills posterior to the arrestments. Were it otherwise, how easy would it be to disappoint creditors who have done legal diligence by arrestment? And one who finds he is cut out by prior diligence, has no more to do but to indorse his bill to the common debtor, who propones compensation upon it, by which the arresters are excluded. And it would be vain for the arresters to undertake a proof that the indorsation was posterior to the arrestments, since it is done in so private a way. None need be present but the parties, neither are witnesses or date required.

2dly, The decreet against M'Aulay was a decreet in foro; consequently he cannot now propone compensation in a suspension thereof. See 29th June 1739, Anderson, (supra.)

Lastly, With respect to the plea of retention, unless caution is found, it was answered, That supposing Paterson were bankrupt, there would be some reason for M'Aulay's retaining until caution were found, were Paterson himself charging for the debt; but in a competition with other creditors of Paterson, he cannot have any privilege, but must be looked on as a common creditor of Paterson's, and has it not in his power to exclude the prior diligence of the rest, by purchasing and requiring debts of the charger in order to defeat the arrestments.

Pleaded for Patrick M'Aulay, That blank indorsations are always presumed to be of the same date with the bills, as was determined No 90. p. 1501. Rossie; so that the presumption of law lies in his favours: And it is surely very affected in the creditors, to maintain that they can have no proof of the real dates of these indorsations, since none is more easy. The creditors are all alive who granted the indorsations. Their oaths are undoubtedly relevant, as is M'Aulay's oath, which the arresters may have if they insist upon it; so that there is really no danger to creditors, though this privilege is indulged to blank indorsations. Neither has the suspender any occasion to dispute the relevancy of the second point, scil. That he cannot propone compensation in the second instance, even where the ground of it emerged after the decreet, because he offers instantly to pay, upon the creditors finding caution, that Paterson will be law-biding for the counter claim.

It is acknowledged, he could not be bound to pay to Paterson himself (as he is a bankrupt) unless he found caution; and a creditor of his arresting, can be on no better footing. An arrester is in no better situation than an assignee; nay, he seems not to stand upon so good a one. Surely, an arrester is not such a singular successor, as to stand free from exceptions competent against his author. And this privilege competent to the suspender, of retaining the sum in his hands until Paterson the creditor should find caution, was competent against Paterson himself, before the arrestments were laid on; and therefore must be still competent; he cannot be deprived thereof by laying on of the arrestments.

The Lords found compensation not competent after decreet, and that whether the debts on which it was pleaded, were in his person who pleads it, before the decreet, or acquired after it; and remitted to the Lord Ordinary to hear parties on the retention.

Fol. Dic. v. 3. p. 149. C. Home, No 216. p. 358.