Scottish Court of Session Decisions

The estates of William and Robert Laurie were sequestrated on 25th March 1865, and Mr Lindsay, the pursuer of this action, was appointed trustee. The bankrupts were tenants of the farm of Bellcoman, and also of Bankhead, to the latter of which they entered at Martinmas 1864. On the 28th of October 1864 the defender William Beveridge, acting on behalf of other parties, exposed for sale at Bankhead, by public roup, certain farm stock, &c. At this sale one of the bankrupts bought a horse, two cows, two rollers, and a boiler. The price of these together amounted to £43. He also bought a thrashing mill for £5 by private bargain. Delivery of the cattle was obtained at once, and of the thrashing mill at Martinmas, when the bankrupts entered on the farm. The bankrupts also purchased some manure for £20, which was left on the farm when they entered at Martinmas. No price was asked or paid for all these articles, notwithstanding a condition in the articles of roup that either money was to be paid, or a bill with a sufficient cautioner to be granted. On the 13th January 1865 petitions for sequestration for rent of the bankrupt's farms were presented to the Sheriff, and sequestration was granted. On the 5th of January Mr Beveridge had made the first application for payment of the cattle, &c., purchased from him. He then made an attempt to induce him to return the cattle, &c.; and, this demand not having been complied with, he presented a petition to the Sheriff, praying, inter alia, for restoration of the cattle, &c. The bankrupts entered appearance in this process. They were afterwards persuaded to sign a letter in the following terms:—“Bellyconan, by Dunfermline, 13th March 1865. Sir,—Referring to the petition at your instance against us for delivery of a horse and two cows, we beg to state that we have withdrawn our defence, and you may have the animals by sending for them.—Your obedient servants, (signed) Wm. and R. Laurie.” The Sheriff, on 14th March, gave decree in terms of the prayer of the petition. Mr Beveridge sent and took away the cattle, &c. The present action concluded for reduction of the letter of 13th March, and of the decree of 14th March, and for delivery of the cattle, &c., or, in case of failure to do so, for their price.

The pursuer pleaded: The letter and decree foresaid having been granted and obtained in defraud of the bankrupt's creditors, and for the purpose of obtaining an illegal preference over the bankrupt's estate, confer no right on the defenders, and the pursuer is entitled to decree of reduction and declarator as concluded for. The said letter and decree being reducible, as preferences under the Act 1695, c. 5, the pursuer is entitled to decree of reduction as concluded for.

A proof was led before the Lord Ordinary ( Barcaple), who found that the horse, cows, thrashing—mill, manure-rollers, and the boiler, mentioned in the conclusions of the summons, were, at the dates of the letter and decree sought to be reduced, the property of the bankrupts: that the said letter was granted by the said bankrupts within sixty days of their bankruptcy in favour of the defender William Beveridge, who was their creditor for the price of the horse, cows, and other articles in question, for satisfaction of his debt, in preference to their other creditors; that on 13th March 1865, when the said letter was subscribed by the bankrupts, they were, and were known by the defender to be, insolvent; that, for the purpose of carrying out and giving effect to the said letter and illegal preference, the said defender obtained the said decree; the bankrupts, in terms of the said letter, not insisting further in their defence against the application under which the same was produced: that the said letter was reducable under the Act 1696, c. 5, that the said decree having been obtained in the circumstances, and for the purposes foresaid, and contrary to the legal rights of parties in the property of the said horse, cows, and other articles, the same was reducible at Common Law; reduced, decerned, and declared in terms of the reductive and declaratory conclusions of the libel; and, in respect that the said horse, cows, and other articles had been sold by the defender, and could not be restored to the pursuer, decerned against the defender William Beveridge to make payment to the pursuer, as trustee on the sequestrated estate of the bankrupts, of the sum of £63, 15s. 5d., being the admitted price for which the same were sold. The Lord Ordinary, in his note, explained that the subjects were the property of the bankrupts, and, if so, he did not doubt that the letter was a document falling under the Act 1696, c. 5. He read it as an obligation

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by the bankrupts to deliver the animals, and not to insist further in their defenoe against the the petition—that is, to allow the defender to vindicate his demand for the whole subjects sold, to the prejudice of the other creditors ( Wilson v. Drummond 16 D., 275). It appeared to the Lord Ordinary that the question as to reducing the decree was attended with more difficulty. He did not think the decree itself was a document to which the Act 1696 could be held to apply. If the letter was struck at by the Act the carrying out of the transaction by the bankrupts not resisting the petition, and the defender obtaining decree by default, seemed to be a proceeding for the purpose of giving effect to an illegal preference which the common law will set aside.

The defender reclaimed.