Scottish Court of Session Decisions

Subject_1 BANKRUPT.
Subject_2 DIVISION III.

Decisions upon the act 5th Parliament 1696, declaring Notour Bankrupts.
Subject_3 SECT. I.

Circumstances which infer Notour Bankruptcy.

Snodgrass and Haldane
v.
The Trustees of Beat's Creditors

Date: 13 November 1744
Case No. No 174.

Found, that a bankrupt who was under act of warding, might effectually dispone, in trust for behoof of his whole creditors; altho' it was contended, that an insolvent person had no title to deprive creditors of their right of obtaining preference by diligence. The act specially requires, that the debtor be under caption. An act of warding is not equivalent.

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David Beat, merchant in Edinburgh, being under diligence, disponed all his effects to trustees, for the use of his creditors, referring to a signed list of them, of the same date: And this disposition was intimate to his principal debtors.

A full year after the date of the disposition, John Snodgrass and John Haldane, two of the creditors, arrested; and a competition thereupon arising, the Lord Ordinary, 27th July 1743, “Repelled the objections to the disposition in favours of the trustees, that the persons, sums and subjects, were not specially therein enumerated: And found that the hornings, act of warding, and other circumstances condescended on, did not bring the foresaid disposition under the description of the acts of Parliament 1621 and 1696: And therefore, and in respect the intimations of the said disposition to the debtors of the said David Beat, were prior to the arrestments used by the said John Snodgrass and John Haldane, preferred the said trustees to the arresters.”

Pleaded in a reclaiming bill for the arresters: Notwithstanding the specious pretences, which frequently do not hold true in fact, of saving money to the creditors by dispositions to trustees, it would be very odd, if it were in the power of a bankrupt to disappoint a vigilant creditor of all the methods the law has provided for his indemnity, and put him upon an equal footing with the most indolent. This would be more unjust, when one creditor has parata executio, which another has not; and therefore the first ought to be left to make out his own preference.

The objections to the disposition, are, 1mo, It is no more than a factory; the goods are not disponed in solutum of the creditors debts, but are to be levied by the trustees, who are each to be liable only for their own intromissions: So that, according to what is pleaded, the diligence of the law is stopt, by the bankrupt's naming a factor on his own state.

2do, in so far as it is said to give a jus pignoris to the creditors, it is null for uncertainty; they being only mentioned generally; and though it refers to a list of the same date, the list produced might have been made up by the debtor at any time afterwards, having no witnesses authenticating the subscription.

Suppose him at the time to have been under no diligence, he was insolvent, and could not give a partial preference to any, by equalling those who had no parata executio, to those who had it, and so frustrate the effect of the law.

Answered for the trustees: When a debtor becomes bankrupt, it is certainly better his effects be divided proportionally amongst his creditors, than carried off by one or two. The whole intention of the law, and the very objection made by the arresters, in so far as it is good, is directed against such partial preference; for though an insolvent debtor cannot establish this in favours of one creditor, he can equally prefer them all; and even partial dispositions have been set aside only in so far as they were so, and the other creditors brought in pari passu with the disponees; December 18. 1673, Creditors of Tarpersie against Kinfawns, No 29. p. 900.; January 18. 1678, Kinloch against Blair, No 14. p. 889.; and lately, February 25. 1737, Crammond against Bruce and Henry, No 20. p. 893. The disposition cannot be looked upon as a factory; for the granter is thereby divested, and the property of his effects conveyed to the trustees. And the other objection of uncertainty is no stronger; for supposing the list to have been made up ex post facto, of which there is no presumption, a disposition to trustees for the behoof of creditors in general, would be an effectual deed, and the effects vested in the trustees. If there had been a preference given to such as had parata executio, it would have been a much stronger objection; and no doubt others of the creditors had as ready execution as the complainers. Lastly, The disposition is not omnium bonorum; for though it contains debts and sums of money, it wants the clause, Of all goods and gear whatsoever; and for want of this clause, a partial disposition was not reduced; — December 1728, Duchess of Buccleugh against Sir James Sinclair and Patrick Doull, No 19. p. 893. and much less ought this fair and equal one.

Pleaded, in the second place, for the arresters:—The disposition is reducible by the act 1696, as the granter had acts of warding taken out against him, which ought to be sustained equivalent to caption, that being pitched on by the act of Parliament as ultimate diligence, and shewing why the debtor absconds, the goal-mouth being then open for him. A town-officer can seize a man as effectually as a messenger; and it makes no difference, that a caption cannot be procured without a registered denunciation; for the notoriety required by law is the debtor's declaring himself a bankrupt, by flying, &c. and the mentioning caption, does not exclude other ultimate diligences: However, if the Lords think caption absolutely necessary to bring this disposition under the statute; yet, as the fraud is as notorious in the one case as the other; the circumstance of the diligence that is here, ought to be of force to annul this disposition, granted of purpose to enervate the effect of the law, and containing in reality no more than a factory; whatever might be the fate of a disposition of a particular subject made to a particular person.

Answered: The act 1696 requires caption; and there is a great difference betwixt that and an act of warding, both as to the notoriety and effects thereof: And besides, such a disposition as this made by a bankrupt, in terms of the statute, was found not reducible; Competition of the Creditors of Mr David Watson, Rem. Dec. v. 1. No 61. (infra h. t.) And though the contrary was found in the year 1734. John Snee against the Trustees of Anderson's Creditors, (infra h. t.); yet as there were several partialities in that disposition, though it is owned the general point was determined, the question might deserve to be reconsidered in a case free of these specialties.

The Lords adhered.

Act Ch. Areskine. Alt. Ferguson. Clerk, Gibson. Fol. Dic. v. 3. p. 53. D. Falconer, v. 1. p. 4.