Decisions upon the act 5th Parliament 1696, declaring Notour Bankrupts.
Subject_3 SECT. VIII.
Effect of Reduction on the act of 1696.
Alexander Cunnand, v. Adam Turnbull and John Kirkaldie, Creditors of James Cunnand
Date: 31 January 1758 Case No. No 231.
An insolvent person, after calling a meeting of his creditors, and proposing to execute a trust disposition, granted heritable bonds to certain creditors. Other creditors inhibited and adjudged. The bonds were found to afford no preference; but they were brought in pari passu with the adjudications.
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James Cunnand was possessed of some heritable subjects in the town of Inverkeithing, in which his wife was infeft for her liferent. In the year 1750, he called his creditors together, and agreed to grant a trust-disposition to Adam Turnbull and John Kirkaldie, two of his creditors, to be disposed of by them for the behoof of the other creditors; but he and his wife afterwards refused to grant this deed. The creditors proceeded to take separate measures; and John Kirkaldie obtained an heritable bond for his debt; and Adam Turnbull, soon after, obtained heritable bonds for his debts; upon which each of them was infeft, preceding the 12th of April 1751. Alexander Cunnand, another creditor, some months thereafter, executed an inhibition, and also obtained an adjudication against James Cunnand, upon, the 30th of July 1751.
In August 1752, James Cunnand sold his heritable subjects; and the purchaser having brought a multiple-poinding, it was objected by Alexander Cunnand, against Turnbull and Kirkaldie's heritable bonds, That they could not be preferred to him, in respect that these bonds were granted in security of prior debts, and soon after a meeting of the common debtor's whole creditors, at which Kirkaldie and Turnbull were also present, where a trust-disposition was agreed to be granted, and the creditors to be paid proportionally; and that after this agreement, it was a fraud in Kirkaldie and Turnbull to take these heritable bonds.
Upon the 11th of January 1757, “the Court found, That John Kirkaldie and Adam Turnbull could have no preference in virtue of the heritable bonds and infeftments produced for them.”
A question occurred, Whether, in terms of this interlocutor, these bonds were to be considered as absolutely null, so as to give Alexander Cunnand a preference by his adjudication; or if Kirkaldie and Turnbull were entitled to be ranked pari passu with him?
Argued for John Kirkaldie and Adam Turnbull, That they were in this case guilty of no fraud, but were entitled to act for themselves, after the common debtor refused to grant a trust-disposition: That, in this case, the common debtor was not a bankrupt in terms of the act 1696; and was therefore at full liberty to grant the heritable bonds: That though the Court had refused to give them a preference upon their heritable bonds; yet the same equity ought to bring them in equally with the adjudger, agreeable to what was intended by the trust-disposition.
Answered, By the interlocutor of the Court it was found, That the heritable bonds could give no preference; and it is a consequence, that they cannot entitle the creditors to be preferred equally with the adjudger; and, independent of the interlocutor, it is equitable, that those creditors who attempted to take an undue advantage, should be caught in their own snare, and be deprived of every advantage from that security which they had unduly elicited. This is agreeable to the practice of the Court in other cases. A disposition by a bankrupt being reduced on the act 1696, the Court refused to give it the effect of bringing him in pari passu with the other creditors; 2d December 1704, Man against Reid, No 226. p. 1183.; 19th July 1728, Smith against Taylor, No 228. p. 1189.
‘The Lords found, That the heritable creditors are entitled to be ranked pari passu with the adjudger.’ See Fraud.
Act. Geo. Wallace.Alt. Johnstone.
Fol. Dic. v. 3. p. 62. Fac. Col. No 92. p. 164.
