Scottish Court of Session Decisions

Subject_1 BANKRUPT.
Subject_2 DIVISION IV.

Disposition by a Bankrupt in favour of his whole Creditors.

Snee and Co Merchants in London, and John Bogle, their factor,
v.
The Trustees for the Creditors of Michael Anderson, Merchant in Edinburgh

Date: 12 July 1734
Case No. No 242.

Found, that no disposition by a bankrupt can disable creditors from doing diligence.

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A bankrupt having granted a disposition of his whole effects, to certain trustees, for the behoof of all his creditors; in a reduction of it, upon the act 1696, the reasons were, that a bankrupt was disabled from granting such a right, tho' not directly in preference of one creditor to another, yet indirectly, by putting all upon an equal footing, the most remiss with the most vigilant. 2do, The trustees were of the bankrupt's own naming, and his nearest relations; and these trustees invested with most unreasonable powers, such as, to adopt creditors or not at their pleasure; to divide the price of the effects among the creditors, without being liable to any check; being impowered to do so as arbiters, and in that capacity to determine also the expences of management: Also it was declared, that they should not be made liable for omissions: And lastly, That there should be a forfeiture upon the creditor, who should quarrel or impugn the right granted to these trustees, or who should use separate diligence.——The Lords found the reasons of reduction relevant, and, at the same time, laid hold of this opportunity to declare their sentiments against all such dispositions in general, and, in that view, caused insert the following clause in their interlocutor: And further find, That no disposition by a bankrupt debtor can disable creditors from doing diligence.

Fol. Dic. v. 1. p. 85.

*** The opinion upon the general point, expressed in the above interlocutor, renders it immaterial what were the particular circumstances of the case. There were, however, some not mentioned in the above report.

Bogle, factor for Snee and Co. had obtained from Anderson a bond of corroboration of the debt due to his constituents, upon which, and upon two bills due to Jeremy Lupton and Samuel Dawson, he charged Anderson with horning. He was proceeding to poind, when he was stopt by Anderson's trustees, as having right, by the disposition in their favour, which was dated the day posterior to Bogle's charge.

Bogle instituted a reduction upon the second branch of the act 1621. He prevailed in so far as regarded Lupton and Dawson's bills; but it was pleaded by the trustees, that at the time Anderson granted the bond of corroboration of Snee and Co's debt, he was bankrupt in terms of the act 1696, consequently the bond upon which was founded the title to pursue the reduction, was itself inducible.——The Lords found accordingly, and the reduction was abandoned.

Bogle then obtained a decree of constitution of the original ground of debt, and arrested in the hands of the disponees. In the forthcoming, the question of the effect of the disposition omnium bonorum, was brought forward.

In addition to the specialities of the case enumerated in the above report, it was likewise objected, That the debts due to the bankrupt were not specially assigned in the disposition, so as to be traced, or capable of intimation, consequently the creditors had no check upon the trustees, and no security to prevent the bankrupt from privately taking up the money.

The answer of the creditors, upon the general question, was similar to that urged in former cases, (supra). As to the specialties; they argued, that no trust-deed could be perfectly simple; that objectionable conditions were not challengeable on the act of 1696, whatever they might be on that of 1621. The grounds of challenge of such deeds are either in respect of undue preference, proceeding upon the act 1696, or on account of the injustice of the conditions imposed, proceeding upon the act 1621. The circumstance merely, that there are conditions, is no objection. They must be unjust to be objectionable. It was necessary for the bankrupt to name the trustees, in order to give form and effect to the deed. The trustees are not impowered to assume what creditors they please; they are only entitled to communicate the benefit of the deed, to creditors appearing within a certain time, though not named in the deed. The forfeiture, upon using diligence, is not reducible on the statute 1696, as it is applicable to all the creditors. If it be not strictly legal, it ought to be held pro non scripto. Utile per inutite non vltiatur. The clause relative to freedom from the consequences of omission, was necessary to induce trustees to accept: But there have been no omissions. As to the circumstance that the assignation is general; it refers to an inventory. The trustees rendered the assignation special, by inventorying and rouping the effects at the fight of a magistrate. A disposition omnium bonorum in favour of one creditor, in exclusion of another, is challengeable. Such a disposition for behoof of all the creditors is not so. It cannot be pretended there was simulation. Possession was not retained a moment.

For Snee & Co. Jas. Ferguson. For Anderson's Creditors, Ro. Craigie, Jas. Graham. Session Papers in Advocates' Library.