Decisions upon the act 5th Parliament 1696, declaring Notour Bankrupts.
Subject_3 SECT. V.
Of Securities for Debts to be Contracted.
Creditors of Sir James Dunbar, v. Sir George Abercrombt
Date: 30 July 1789 Case No. No 213.
An heritable security for sums posterior to its date, but prior to the delivery of it to the creditor, found valid.
Click here to view a pdf copy of this documet : PDF Copy
In autumn 1774, Sir Robert Abercromby, the predecessor of Sir George, having agreed to advance L. 5000, on 20th December ensuing, to Sir James Dunbar upon a security over his estate; an heritable bond for that sum was executed in the month of October, and in November infeftment followed. The bond and the instrument of sasine were deposited in the hands of a person who was the man of business of both the parties.
The money was advanced at different times until spring 1775, when the sum of L. 5000 having been completely paid, the heritable security was delivered up to Sir Robert Abercromby.
In a competition of Sir James Dunbar's creditors, it was objected, That as this money had not been all advanced prior to the date, either of the bond or of the infeftment, they being so far a security for a future debt, fell under the sanction of the statute of 1696, cap. 5. And in support of the objection it was
Pleaded: The sum of money, in security of which the bond was granted and the infeftment taken, not having been paid for several months posterior to the date of the latter, it was, in the terms of the statute, as much a future debt as if the payment had not been made for years after. In the case of Kinloch against Dempster, Rem. Dec. v. 2. p. 233. voce Right in Security, a preference claimed under an infeftment in security of L. 20,000, was restricted to L. 8000, that part of the money which only was paid prior to its date; and in the late case of Pickering contra Smith, No 212. p. 1155. an infeftment, in security of money to be drawn in consequence of a cash-credit with a banker, was not sustained.
Answered: If securities for future debts had hot been precluded, the enactment of the statute of 1696 respecting the sixty days prior to bankruptcy, must have become nugatory, as often as the precaution was taken of having such previous securities ready to supply the place of those prohibited. But as an artifice of this kind, the security in question could never be employed. None of the parties ever meant that it should be given or received for any future debt; and in fact it was not delivered sooner than the whole of the money was paid; it having been retained till then in the custody of the granter's agent, who happened, which is a circumstance of no moment, to be likewise the agent of the creditor. The delivery no doubt was posterior to the date of both the bond and the infeftment; but this was equally necessary, and consistent with the regular practice of business. By that practice, which is essential to the absolute safety of the creditor, the debtor, before he receives his money, must have the bond executed, the infeftment taken, and the latter likewise put on record; so that in such cases it is the date of the delivery of the security which is alone considered.
The decision in the case of Kinloch regarded a future and uncertain debt; the ground of that judgment, as stated by Lord Kilkerran, being, that neither the residue of the sum had been paid, nor the holder of the security laid under any such obligation to pay it, as could be the subject of diligence to the granter or his creditors; Kilkerran, voce Personal and Real, p. 393.* The same observation is applicable to the case of Pickering contra Smith.
The Lord Ordinary sustained the objection.
But a reclaiming petition having been presented, and afterwards a hearing in presence appointed,
The Lords repelled the objection.
Lord Ordinary, Swinton.Act. Wight, et alii.Alt. A. Abercromby, et alii.Clerk, Gordon.
Fol. Dic. v. 3. p. 60. Fac. Col. No 80. p. 155.
* Under Lord Kames's report of the same case, voce Right in Security.
