The lessee of a small farm having, by desire of his creditors, sold his stock by auction, for their behoof, and indorsed the bills for the price to one of their number who was to hold them as trustee for the whole, it was found, that a non-acceding creditor could not obtain a preference by arresting in his hands.
Click here to view a pdf copy of this documet : PDF Copy
Thomas Shield, the lessee of a small farm, having become embarrassed in his circumstances, his stock was sequestrated, and about to be sold by his landlord, when his neighbours, who were likewise creditors to him, named two of their number as cautioners for the rent.
In order to relieve the cautioners, and divide the residue equally among his creditors, Shields, at their desire, exposed his small stock to public sale. The whole was sold for little more than £50. Sterling.
By the articles of sale, which were subscribed by Shields, and attested by witnesses, it was declared, that the sale was “for behoof of his whole creditors only,” and that the purchasers were to grant bills to Robert Lochhead, one of the creditors, or to Robert Gillies, the auctioneer, “who is to be the collector “thereof, for behoof of the said creditors.”
The bills, however, were taken payable to Shields himself, but he immediately indorsed them to Lochhead, who gave them to Gillies to collect payment.
John Sinclair, the only creditor of Shields who had not taken a share in the previous measures, afterward arrested in the hands of Lochhead and Gillies, and brought a forthcoming; upon which they raised a multiplepoinding.
The sheriff preferred Sinclair.
In an advocation, the creditors
Pleaded: A trust was here created, bona fide, for behoof of the whole creditors. It was not reducible on the act 1696; and the funds were transferred to a trustee for their behoof before the arrestment, which, therefore, can give no partial preference; 8th December 1791, Hutchison against the Creditors of Gibson, No. 256. p. 1221. A formal deed of transference was not necessary, as the funds were moveable; Dictionary, voce Presumption, more particularly as they were of small value, and the transaction took place inter rusticos.
Answered: As the sale was brought by Shields himself, and the bills taken payable to him, the mere indorsation of them to Lochhead could not create a trust sufficient to prevent a non-acceding creditor from obtaining a preference by diligence.
The Lord Ordinary repelled the reasons of advocation.
But the Court, at advising a petition with answers, on the grounds stated for the creditors, preferred the trustee.
Lord Ordinary, Craig.For Sinclair, Maxwell Morison.Alt. Ja. Ferguson.Clerk, Pringle.
Fac. Coll. No. 88. p. 203.
