A bankrupt estate being sold, and the creditors ranked, the preferable creditors claimed not only principal and annualrent, but penalties, which cut off the posterior creditors. They were found, primo loco, entitled to the penalties, in opposition to the application of the postponed creditors, made after decree had been extracted.
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Thomas Kincaid of Auchinreoch gives in a bill to the Lords, representing he was a considerable creditor to Cockburn of that Ilk, and that the estate being now sold, and the creditors ranked, the preferable creditors craved payment, not only of their principal sums and annualrents, out of the price in the purchaser's hands, but likewise of their penalties, by which posterior creditors will be exceedingly prejudged; and therefore craved, that principal and annualrents might be allowed to each creditor, conform to his preference, before any get their expenses; and then, if there be a superplus, the same to be divided equally among them for their penalties. It was doubted, on the one hand, how preferable creditors could be cut short of their penalties, especially in so far as they had actually debursed it in diligences against their debtor, it being as due as the stock; and on the other hand, penalties are but due by personal obligements; and in some former roups of Carlourie, &c. the Lords had taken that method, as favourable to posterior creditors. However, the Lords demurred somewhat upon it; for it was alleged, That the former practices were in respect the creditors had consented thereto. But the Lords refused it in this case, because of the decreet of ranking being extracted, it was not debito tempore craved; likewise, if they had been cut off from their penalties on Cockburn's estate, they would have recurred on my Lord Sinclair, whose estate they had likewise adjudged, as cautioner for Cockburn, his father-in-law.
1700. July 4.—In the ranking of the Creditors of the Laird of Cockburn, mentioned 24th February 1697, it occurred to be debated, if the infeftments of annualrent were not only preferable quoad their principal sum and annualrents, but also for their penalties and termly failzies; at least for their debursed expenses, to be modified by the Lords. Some thought them real, and to affect the reversion, seeing the debtor could not redeem, without he likewise paid their expenses. Others thought the buyer at the roup noways liable thereto, but only for the principal and annualrents, and the expenses were personal quoad him; though the price seemed to come in place of the land out of which the annualrent is upliftable. Yet the Lords found the creditor-infefter had no action in law against the buyer, to force him to pay the penalty; but likewise found the buyer could not force the annualrenter to denude or convey his right, till he were satisfied of all, seeing he had provided for his expenses by the same security, whereon he had trusted the sors and stock; but that the annualrenter had right of retention of his right till he were paid, seeing the acts of Parliament, about roups, did not design to take away private parties' rights, or cut them off from the expenses. It was urged against this, That it might disappoint that useful and necessary law of selling by roup; for, where many annualrenters affected such an estate, the buyer could not disburden the lands of these infeftments, without giving them likewise their penalties, which would exhaust more than the price he was to pay; for he could not compel them to take their principal sum and annuals, unless he likewise offered the penalties, But it was answered, That the 6th act 1695, provided a clear remedy for this, where the buyer is allowed to consign the price in the Town of Edinburgh's hands, where the creditors are unwilling; and in that case he is declared free, and the lands disburdened; and the infefters, rather than have their money consigned, only to pay them 3 per cent. will think it better to accept of their principal and bygone annuals; which method makes room for posterior creditors to get something; whereas, if the annualrenters got their expenses, it might exhaust the whole price. I find, by the Roman law, retention was allowed, but action refused to one who has bestowed meliorations in building on another man's ground, where the dominus soli vindicates the whole; § 30. Instit. De Rer. Divis.
Fol. Dic. v. 2. p. 54. Fountainhall, v. 1. p. 770. & v. 2. p. 101.
