Decisions upon the act 5th Parliament 1696, declaring Notour Bankrupts.
Subject_3 SECT. V.
Of Securities for Debts to be Contracted.
Creditors of James Stein, v. Newnham, Everett, and Company
Date: 14 November 1789 Case No. No 214.
Decided in conformity with Pickering against Wright, &c. supra, p. 1155. Affirmed on appeal.
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By disposition and assignation followed with infeftment, Stein made over to Newnham, Everett, and Company, an heritable bond for L. 12,000, as “a security for the reimbursement of such sums of money as should be drawn from them by orders, receipts, accepted bills, or promissory notes, for behoof of John Buchanan and Company,” (a partnership with which Stein had a concern), in consequence of a credit or cash-account which Newnham, Everett, and Company was to give to them.
Of this conveyance, as having been “granted for security of debts to be contracted for the future,” the Creditors of Stein, who had become bankrupt, instituted a reduction on the statute of 1696.
On the part of the defenders, the topic sometimes resorted to, of a supposed analogy between the unquestionably valid infeftments, for relief of cautionary engagements, for real warranty, or for guaranteeing the due discharge of offices of trust, and such securities as are granted for future debts, was insisted on; an analogy which, it was answered, fails in this, that in all the former instances, a debt is constituted, but in the last case there is nothing but an agreement to lend money, which forms no debt.
The late decision of Pickering contra Smith and others, was particularly appealed to, as being exactly in point for the pursuers; to which nothing new having occurred in the argument, it is sufficient to refer. See No 212. p. 1155.
The cause was reported by the Lord President, as probationer, who observed, That the extent of the cash-credit being indefinite, there was a separate ground for annulling the conveyance, agreeably to the judgement of the House of Lords in 1734*.
It was likewise observed, that expediency could hardly be urged in support of the right under reduction, as bank-transactions, being of a momentary nature, require all those expeditious methods of recovering money which personal securities admit, but which are inconsistent with the tedious, process of ranking and sale, so often necessary before any benefit can be derived from heritable security.
The Lord Ordinary having ‘found, That the infeftment for security of Newnham and Company, could not avail them for any sums paid, or obligations, undertaken by them, posterior to the date thereof,’
The Court adhered to that interlocutor; but remitted the cause to the Lord Ordinary to hear parties on the farther effect of the objection of an indefinite burden.
Lord Ordinary, Swinton.Act. Maconochie.Alt. Hay.Clerk, Colquhoun.
Fol. Dic. v. 3. p. 59. Fac. Col. No 88. p. 159.
* The case alluded to is, Creditors of Merchiston against Charteris, infra h. t.
*** The case was appealed,
25th February 1791.—The House of Lords ordered, That the appeal be dismissed, and that the interlocutors therein complained of be affirmed.
For Newnham, Everett, and Co. Appellants, John Scott, W. Grant.For Stein's Trustee, Respondent, T. Erskine, Alex. Wight, James Boswell.
