Scottish Court of Session Decisions

By a trust-deed, dated 6th December 1869, the Rev. Walter M'Lay, formerly United Presbyterian minister at Strathaven, who was then insolvent, conveyed his whole estate to the defender for behoof of his creditors. The pursuer was a creditor of M'Lay for £499, in security of which he held an assignation of a policy of assurance on M'Lay's life for £500. On the 9th December the pursuer received a letter from M'Lay, intimating that he had granted the trust-deed, and that he expected the pursuer's concurrence. Next day he received a circular from the trustee's agent. He thereupon sent for the agent, and expressed his approval of the trust-deed. M'Lay's debts amounted to about £5000, and his whole estate consisted of his household furniture. All the other creditors acceded to the trust. After due advertisement the trustee proceeded to sell the furniture by public roup on the 16th and 17th December. The pursuer not only attended the sale, and made considerable purchases, but took a leading part in the management of the sale. The sum realised by the sale amounted to £429, 10s. 6d., which sum was arrested on the 1st January 1870 by the pursuer in the hands of the defender, as trustee on M'Lay's trust-estate, on the dependence of an action, in which he obtained decree for £499. He now brought an action of furthcoming.

The Lord Ordinary ( Mackenzie) found that in the circumstances above stated the pursuer was barred from attempting to acquire a preference by diligence over the other creditors; assoilzied the defender, reserving to the pursuer his right to be ranked with the other creditors. His Lordship added the following:—

“ Note.—Prior to the use of the arrestment founded on, the trust had been constituted, the trustee had been in possession of the trust-estate, and he had fully realised the same. The pursuer also was fully aware of all this. Previous to the sale of the debtor's furniture and plenishing, which were, as the pursuer knew, the only assets, the pursuer had expressed to the agent of the trust-estate his approval of the trust; and in the knowledge that these effects were sold by the trustee for behoof of the whole creditors, he attended the sale, and made considerable purchases from the trustee of the trust effects, and otherwise acted as an acceding creditor. The Lord Ordinary considers that it is proved that the pursuer not only acquiesced in the trust, but also so acceded to it as to prevent him from attempting to gain a preference by diligence over the other creditors of the truster, all of whom have acceded. In the case of Croll v. Robertson, 7th February 1791, Dict. 12,404, as the report bears, “Accession to a trust was found sufficiently proved by the creditor having attended a roup of the bankrupt's effects, called by the trustees, bought several articles, and given his bill, payable to the trustees, for the price.” That case, it is thought, rules the present.

The pursuer contended that the trust-deed contained conditions upon the creditors with regard to the decision of the trustee and the effect of accession, to which no creditor who had not expressly acceded can be held bound. But as Mr Bell (Com. 2, 498) points out, there is a distinction between such accession as will bar a creditor from acquiring a preference by separate measures, and that accession which is necessary to bind him to the judgment of the trustee and the discharge

Page: 415↓

of the debtor. In ascertaining whether a creditor is so barred, the evidence is favourably construed for the general body of creditors, so as to secure equal distribution, and to prevent partial preferences. On a fair and reasonable construction of the proof in this case, the Lord Ordinary is of opinion that the pursuer must be held to have recognised and acceded to the trust, and to be barred by personal exception from acquiring a preference by the arrestment libelled on over the whole other creditors.”

Marianski reclaimed.

Pattison for him.

Scott and Reid in answer.

At advising—