Disposition by a Bankrupt in favour of his whole Creditors.
Farquharson v. Creditors of Cumming
1729.
July. Case No. No 241.
A disposition by a bankrupt to trustees for his whole creditors, was sustained, notwithstanding of a prior charge of horning, and the trustees preferred to the charger.
Click here to view a pdf copy of this documet : PDF Copy
Mr Alexander Farquharson, writer to the signet, held in trust, for others, various debts due by George Cumming, Vintner in Edinburgh. He executed a horning against Cumming, and thereupon used arrestments in the hands of Douglas.
Douglas pursued a multiple-poinding, and condescended, that he held the price of goods which had belonged to Cumming, and had been sold by public roup, by trustees to whom Cumming had disponed his whole effects for behoof of his creditors.
The disposition to the trustees was intimated before Farquharson's arrestment; but his horning was executed a day before the date of the disposition.
The Lord Ordinary had ‘preferred the trustees.’
Pleaded for Farquharson, in a reclaiming petition:—The disposition in favour of trustees was fraudulent, as being obtained without an onerous cause, and granted in security of antecedent debts, in prejudice of prior diligence. It tended to give a partial preference. If such dispositions were allowed, diligence would no longer be of any avail. The recent decisions tending to support dispositions omnium bonorum, had respect to the act 1696, which annulled only dispositions granted by one creditor in preference of other creditors : But this case depended on the act 1621, which provides, That the creditor using the first lawful diligence by horning, shall be preferred to voluntary rights granted by the bankrupt.
Answered for the trustees:—The scope of the statute 1621, and that of 1696, was the same. No more was intended than to disappoint partial preferences, by voluntary deeds, to some creditors in prejudice of others. But rights, equal and impartial, in favour of all the creditors, were not meant to be prevented. The petitioner can have no benefit from his diligence, as a charge of horning can, of itself, attach no particular subject. There is no iniquity in a debtor doing what is to benefit, and save expence to his whole creditors. Diligence ought never to be used, but as an extraordinary remedy : Here it is unnecessary, and would be vexatious. The debtor has voluntarily done what diligence would have effected.
An arrestment, prior to the disposition, might perhaps have frustrated it as to moveables, or an inhibition as to real rights; but a simple charge of horning can have no such strong effect.
The Lords adhered to the Lord Ordinary's interlocutor, preferring the trustees.
A second petition was refused without answers.
For Petitioner, Alex. Garden, William Grant.For Respondents, Alex. Hay.
Fol. Dic. v. 1. p. 85. Session Papers in Advocates’ Library.
