Scottish Court of Session Decisions

Subject_1 JUS TERTII.
Subject_2 SECT. IV.

Objections, &c. competent to some and not to others.

M'Master, Inglis, and Company
v.
Colin Campbell

Date: 10 July 1788
Case No. No 74.

Effect of a decree setting aside a sale of lands, as in defraud of creditors.

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A redeemable right of lands, in favour of Colin Campbell, was set aside in an action at the instance of the creditors of the seller, as importing a conveyance omnium bonorum in favour of a particular creditor. But Colin Campbell having soon made a compromise with the creditors, by whom the action was brought, he continued in possession for several years.

Some time after these proceedings, M'Master, Inglis, and Company, became creditors to the bankrupt. They deduced an adjudication against the lands which had been sold to Colin Campbell, and then brought a process of ranking and sale; to which he was made a party. In support of this action, it was

Pleaded; An agreement that has been set aside as fraudulent, cannot afterwards be attended with any legal consequences. The rights of all parties thereby become the same as if no such agreement had ever been made. When an illegal transference of property has been attempted, the original owner must therefore be understood to be reinstated in all his former rights; and these must, of course, be liable to attachment, indiscriminately, by all his creditors. Without this, instead of making room for an equal distribution of the bankrupt's effects, the right of the fraudulent acquirer would still subsist, so far as it did not interfere with those persons who had obtained the decreet of reduction; and only such a part of the subjects in dispute, as corresponded to the extent of the debts due to them, could be brought to a judicial sale; a proceeding quite inconsistent with the established practice in cases of this sort.

Answered; Where a sale has been set aside, as injurious to the proprietor himself, the right of obtaining redress, as it is in bonis of him, must be available to his creditors in general. But where an agreement of this sort has been annulled, as hurtful merely to parties having a collateral or transitory interest, the effect of the decreet is and must be so confined, as to afford a proper reparation to them only. With regard to the seller himself, and with regard to those, who, becoming creditors to him at an after period, can only stand in his right, the transference is equally valid as if no objection had been competent. And Where, as in the present case, the right of the persons, at whose instance alone the agreement was reducible, has been united with that of him against whom the action was competent, it is evident every possibility of a challenge must be precluded.

The pursuers farther contended, that as the defender's right was redeemable, they might still, on payment of the sums advanced, carry on the sale. This argument, however, was considered to be inadmissible. As adjudgers of the seller, they might pursue a declarator of redemption, if such an action was competent to him; but they could not immediately bring to a judicial sale lands which ex facie did not belong to their debtor.

The Lords dismissed the action.

Reporter, Lord Dreghorn. Act. Wight. Alt. Cullen, Abercromby. Clerk, Home. Fac. Col. No 30. p. 49.