What Diligence sufficient to found Reduction upon the act 1621.
Sir Thomas Moncrief v. Creditors of Cockburn of Lanton
Date: 23 January 1694 Case No. No 146.
Circumstances inferring bankruptcy, although no diligence done, found sufficient to annul preferences. This cause occasioned an act of sederunt to fix the criteria of bankruptcy, which was followed by the act of Parliament 1696.
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The Lords advised Sir Thomas Moncrief's reduction, against the other preferable Creditors of Cockburn of Lanton, whereby he quarrelled all the corroborative securities he had granted in March 1690, (on the noise of his breaking,) to his personal creditors, viz. giving them heritable bonds, whereon they immediately took infeftment, and confirmed, and so were preferable to Sir Thomas's debt. His reason of reduction was, that though the act 1621 did not reach this case, yet fraud was regulate and determined from the common law; and many citations were adduced for proving that a notour bankrupt could give no rights in prejudice of his creditors; and that our decisions had gone on the same principles, as in Street and Mason's case in 1673*, and the Lady Tarpersie and Kinfawn's†, and many others; so that Sir Thomas needs say no more, save that Lanton was a notour bankrupt at the time when he granted these bonds.—Answered, That our law knew no such definition of a bankrupt, unless incapacitate by diligence against him at his creditors instance. The vote being stated, whether Lanton's being notour bankrupt, and fled, at the time of subscribing these corroborations, was a relevant ground in law to reduce them as fraudulent, the receivers knowing the report of his being broken at that time, albeit there was no diligence actually execute against them at the time, but very shortly after, a deluge of hornings, &c.:——The Lords, by a plurality, found, That there was no law yet in Scotland whereupon the securities could be annulled, though granted by a notour bankrupt; in fuga, et qui cessit foro, and had taken sanctuary in the Abbey, seeing we had no standard whereby to render and declare a man bankrupt, save only diligences, &c.: Whereunto some of the Lords were moved, because the creditors who got these corroborations did rely so little thereon, that they betook themselves to the legal security by adjudications. Others thought Lanton was as effectually bankrupt then as now, and that no deed then done by him was to be regarded, unless the Lords would allow him to rank his creditors in the Abbey, by partial preferences; and, after one was reduced to that case, they thought all the creditors should come in pari passu. The Lords were so sensible of the defect of law in this point, that they named a committee to prepare an Act of Sederunt, to fix when one is repute to be such a dyvour and bankrupt as that afterwards he can do nothing that mail subsist in prejudice of any creditor, and that the marches may be so distinct and clear that every man may know it, without leaving it at the arbitriment of judges.
February 8. 1694.—The Lords, upon a bill given in by Sir Thomas Moncrief, and the Creditors of Lanton's answers, re-advised that point decided supra, 23d January 1694; and the Lords now, by a plurality, the Chancellor being present, altered their former interlocutor; and generally agreed in this, that a notour bankrupt could not gratify nor prefer one creditor before another; but they
* Stair, v. 2. p. 197. voce Fraud.
† No 29. p. 900.
differed, as to what they called a notour bankrupt, and if the circumstances alleged against Lanton made him such; for some made a difference between one notourly bankrupt, and one notourly insolvent. They acknowledged that Lanton fell under the last of these two, when he granted the corroborative rights now quarrelled, but that nothing could make him a notour bankrupt but what the law had so declared, by diligence done against him, which was not at that time. At last the Lords fell on this condescendence, that he had before the granting of these rights fled to the Abbey, or absconded; that many bonds and hornings were then given in against him to be passed and registrated; that he disponed his whole moveables, and it was intimated at the cross of Dunse; that he gave these corroborations over his whole estate, so they were like a cessio bonarum, and he broke suddenly and unexpectedly. These circumstances the Lords found, by a vote of five contra four, to be sufficient to make him a notour bankrupt, and incapable after that to grant any heritable bonds; and admitted to sir Thomas Moncrief to prove these qualifications. But a new debate was started, whether this should give Sir Thomas Monciref a preference, or only to bring him and all the rest in pari passu, otherwise these creditors who got the corroborative rights will be ruined, for they rested on their infeftments, and did not so much as adjudge: Now, if there infeftments fall, they will be in no better case than personal creditors; so all should come in equally, except such as before his breaking were infeft, and either confirmed or in possession. Next, many of the corroborations were given by young Lanton, against whom the foresaid qualifications of fraud, and being notour bankrupt, will not militate, though they meet the father. See No 9. p. 884.
