A preferable creditor can do no voluntary deed to prefer one secondary creditor to another; and if he take payment out of one subject, he is bound to assign to postponed creditors.
Brigadier Preston v. Colonel Erskine
Date: 22 February 1715 Case No. No 27.
Creditors not bound to assign, when to their own prejudice.
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Brigadier Preston, purchaser of the estate of Valleyfield, at a roup, gave in a petition to the Lords, representing, that he was preferable creditor, or had paid the whole price to the preferable creditors; and therefore craving up his bond, conform to the 6th act, Parliament 1695.
The Brigadier gave in a scheme of the decreet of preference, and of the rights acquired by him to the debts preferred, whereby it did appear, that some debts preferred, to which the Brigadier had right, were preferable over the whole estate of Valleyfield. Other rights, which the Brigadier had also purchased, were preferable upon particular parts of the said estate, but did not affect the whole or any other part. And the Brigadier, in the scheme of the payment of the price, did pretend to exhaust the value of the particular lands of Valley, field, with those rights that were found preferable over the whole estate.
Colonel Erskine objected, and alleged, That these debts that were preferable upon the whole estate ought to be taken off the whole head of the price, whereby the value of every particular part of the estate would be diminished proportionally; which was just in itself, and whereby Colonel Erskine would get a share of the price, and otherwise would be wholly excluded; because, by the Brigadier's scheme, he pretends to exhaust the value of the lands of Valleyfield entirely, by the sovereign rights that go over the whole estate, and leaves no fund to the Colonel, whose diligence affects the lands of Valleyfield. And again the Brigadier pretends to exhaust the price of the other parcels of the estate, by virtue of the preferable debts upon these particular parts to which he has right, and which parcels are not affected with Colonel Erskine's debts, whereby the Brigadier gets payment of all, and the Colonel wholly excluded; whereas creditors, by sovereign rights over all, affecting any particular part which stand affected with other less preferable diligences, the posterior creditors are entitled to obtain assignations to such sovereign rights, that they may recover out of one part of the estate what they lose in another.
It was answered for the Brigadier; That every creditor is allowed to make the best use he can of his debts and diligences for obtaining his payment, providing it be without emulation of his co-creditor; and therefore it is, that a creditor, having a sovereign right over all, cannot in æmulationem burden any part, to the exclusion of a creditor who has a particular interest in that part, if the posterior creditor be willing to purge and take an assignation to the debt; but, if the preferable creditor upon the whole subject have also other rights upon parts of it, he will not be obliged to assign in his own prejudice, but with a quality that his assignation shall not be made use of to affect the separate subject upon which he hath other rights; for that would be directly to assign against himself. And that is directly the Brigadier's case; for, by some rights and diligences, he is preferable upon the whole subject; and other rights of his do only affect particular parts. If he should take the value of the sovereign rights of the whole head, there would not remain a fund sufficient to pay his other debts affecting parts of the estate only. Whereas, by taking the value of his sovereign right out of such parts as are not affected by his debts, he operates his own payment of all, as far as the price goes. And if, by that method, the Colonel come to be excluded, the Brigadier is sorry the fund falls short. But it is his right to use his preference to the best advantage.
‘The Lords found the Brigadier might exhaust the price of any part of the estate by his sovereign rights affecting the whole; and that he might make the test use he could of his rights, providing the same were not acquired or made use of in æmulationem of the Colonel.’
fol. Dic. v. 1. p. 223. Dalrymple, No 140. p. 193.*** Bruce reports the same case:
The Brigadier having purchased the lands of Valleyfield, Overtoun, Pitfoully, and others, as highest offerer at the roup, and given bond for the price, presents a bill craving his bond may be given up to him, because he had paid the price to the creditors conform to the decreet of ranking. And having also given a scheme of the price and debts, Colonel Erskine, a creditor, gives in this objection against the same, viz. that the Brigadier, by the scheme, laid the whole preferable debts, so as to exhaust the price of Valleyfield, without taking any part of them out of the price of Overtoun and others, upon which these debts are also preferably ranked; and this to the Colonel's prejudice, who is ranked upon Valleyfield, after these preferable creditors, but is not ranked upon Overtoun, &c.
Answered for the Brigadier; That he may use his securities in the most profitable way for himself; nor does thereby any thing in emulation of the Colonel, but only uses his right in a warrantable way, and may draw his full payment out of Valleyfield, without any regard to the Colonel's debt; specially since otherwise the Brigadier would be cut off from the payment of these debts affecting the separate estate, which is untouched by the Colonel's diligence. Whereby it appears, that the Brigadier is not taking this method in æmulationem; nor can any creditor give rules to another how he is to use his diligence, since thereof he is liber moderator et arbiter.
Replied for the Colonel; That as these preferable debts were a general burden affecting the whole estate, so they affected not one part more than another, and therefore the different parts were, according to their value, to confer their proportions for discharging this common burden; and although the creditor might distress any one part for the whole, yet that did not alter the natural tye on the respective parts for conferring their shares to their joint mutual relief. And, in such cases, very often our law, and the Lords practice, order assignations, after the example of the Roman beneficium cedendarum actionum.
Duplied for the Brigadier; That no such assignation was ever ordained to be granted, where there was an evident prejudice thereby the prior creditor, to the exclusion of his other rights; as was decided in the ranking of the creditors of the same estate of Valleyfield, betwixt these same parties contending.
The Lords found, that the Brigadier may affect the lands of Valleyfield with the debts which are preferable on the whole subject exposed to roup, to the effect he may get payment of his other debts, affecting particular subjects, which he may use to his own best advantage, without omulation to Colonel Erskine.
