Disposition by a Bankrupt in favour of his whole Creditors.
Mudie v. Dickson and Mitchell
Date: 14 November 1764 Case No. No 252.
A disposition omnium bonorum, found ineffectual to prevent diligence.
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Strahan failing in his circumstances, executed a trust-disposition to some of his creditors of all his subjects, for behoof of his whole creditors. The trustees took possession, and sold the subjects; but before proceeding to a division of the value, they were stopped by Elisabeth Mudie, the sole non-acceding creditor; who had charged Strahan with horning three days before the date of the trust-disposition, raised caption, and obtained several executions of search against him, all within 60 days of the date of the disposition; upon which, this creditor now pursued a reduction of that deed, and a furthcoming upon arrestments which she had used against the trustees, and sundry debtors of the common debtor.—It was chiefly insisted for the trustees, in bar of these actions, That the act 1696 was intended solely to prevent partial preferences, and not to invalidate general dispositions for the good of the whole creditors; and that, supposing the disposition were to be reduced, the pursuer would not, on that account, be entitled to a preference, as the rest of the creditors had been prevented from using the same diligence which she had done, from an opinion that the disposition was a sufficient security.—The trustees insisted, That at least they were entitled to retain the subjects, or prices thereof, of which they were lawfully possessed, for their own behoof, and that of the other creditors, before the period of the pursuer's arrestments.—Answered, That the debtor was rendered bankrupt precisely in terms of the act; and the disposition being to the prejudice of the pursuer's lawful preference, was reducible upon that act; that the trustees and other creditors had themselves to blame, as they trusted to an illegal deed.——The Lords reduced the disposition, and preferred the pursuer, in virtue of her diligence, to the effects in the hands of the trustees.
