Scottish Court of Session Decisions

Subject_1 FOREIGN.
Subject_2 DIVISION IX.

Foreign Decrees, and other Judicial acts.
Subject_3 SECT. IV.

English Commission of Bankrupt.

John Scott
v.
James Leslie

Date: 28 November 1787
Case No. No 91.

An asssignee under an English commission of bankrupt, by obtaining decree in absence against a debtor of the bankrupt, divests him of the jus crediti, and renders every posterior arrestment ineffectual.

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A commission of bankrupt having been issued against Andrew Mitchell merchant in London, Mr Scott was appointed assignee to the estate. Having learned that one Ferguson, residing in Scotland, was debtor to Mitchell, Scott, in the character of assignee, demanded payment of the debt, of which he immediately received a part, and upon naming an attorney, raised an action for the remainder. After the summons was executed, some farther partial payments were made; and at length decree for the balance was obtained in absence. But before the decree was extracted, Leslie, as a creditor of Mitchell's, raised a process of constitution, and upon the dependence used arrestments in the hands of Ferguson, who then called all the parties in a process of multiple-poinding; in which it was

Pleaded for Leslie; By the judgment of the Court in the case of Thomson and Tabor contra Forrest, No 89. p. 4561, it was indeed found, “That assignees under a commission of bankruptcy had a sufficient title to compear and compete in the action;” but it was likewise found, “That the proceedings under the commission of bankruptcy did not bar the creditors of the bankrupts, whether their debts were contracted in England or Scotland, from affecting by legal diligence, their debtor's effects situated in Scotland.” Though Mr Scott had thus a title to appear and compete, the proceedings which have taken place at his instance are not to be deemed equivalent to an arrestment and decreet of furthcoming. That, in effect, would be to extend the bankrupt laws of England to this country, in direct contradiction to the above mentioned judgment. An Englishman may have effects in Scotland without having any creditors there; in which case there can be no harm in allowing the assignee to carry off the effects; nor in any case would action of repetition lie against him, or against the debtors, were payment to be bona fide made; or such assignee may raise processes of constitution against the bankrupt in Scotland, and may arrest or adjudge, in order more effectually to compete with Scotch creditors; but it would be to supersede the common law of Scotland, to hold an action for payment at his instance as equivalent to the diligence of that law.

In no case is a mere decree for payment considered as equal to legal diligence, or as a ground of preference, where a subject is in medio. Thus, during the six months, “no executor can warrantably pay even to a creditor who has obtained decree, if before actual payment, while the subject is yet in medio, another creditor shall interpel him by citation;” Erskine, b. 3. tit. 9. § 43. Or suppose a decree to follow on English letters of administration, it is clear that would be ineffectual against an executor-creditor who had completed his right by confirmation. In such a case as the present, a decree cannot in its nature mean any thing else, than that it is given for ought yet seen; but if any other competitor steps in while the subject is in medio, a competition must ensue; the merits of which can only be determined according to the rules of preference which are known and established in the law of Scotland.

That the English assignment gives a jus ad rem, or personal claim to the effect of suing for recovery, may be admitted to be the result of the decision in the case of Thomson and Tabor. But that the property becomes transferred the moment that an interlocutor in absence has been obtained in such a process, is a position neither founded in principle, nor supported by authority; for nothing can transfer property from a debtor to a creditor, but either a special conveyance duly completed, or effectual legal diligence.

Answered; If, as has been now admitted, the English assignment gives a jus ad rem, or claim to the effect of suing for recovery, it must evidently follow, that when the jus ad rem so given, or in other words, the transference of the jus crediti under the assignment, was by the decree in question sustained as effectual, and at the same time in the strongest manner intimated to the debtor, the bankrupt being thereby completely denuded, nothing was left to be attached by the competing party. Nor is the decree in this view held as equivalent to a decreet of forthcoming; its operation being, not to produce a preference on the effects of Ferguson in competition with his other creditors, but to complete the transference of the jus crediti which was in the bankrupt. Thus, the instance given, of a decree against an executor not affording any preference on the effects of the defunct, appears foreign to the purpose, since it cannot shew that such a decree in favour of an assignee would not have divested the cedent. Of as little consequence is it, that a decree following on English letters of administration would not confer a preference over a creditor confirming, any more than a decree on a Scotch licence to pursue. In that case the decree could not be extracted without confirmation, which is necessary to take the effects out of the hæreditas jacens of the defunct. With respect to the supposed necessity of arrestment and forthcoming, for vesting the right under the assignment; that diligence, it is plain, could only have proceeded on the footing of the right to the debt remaining in the bankrupt, which is absurd, seeing it has been transferred to the assignee.

The Lord Ordinary preferred Mr Scott, the assignee under the commission of bankrupt.

Mr Leslie reclaimed to the Court against this interlocutor, and his petition was followed with answers; after which, a hearing in presence was appointed. And,

‘Having resumed the consideration of the petition, with the answers, and having heard parties procurators thereon, the Lords adhered to the interlocutor of the Lord Ordinary.’

A petition reclaiming against this judgment having been advised, with answers, was refused.

Lord Ordinary, Eskgrove. For Mr Scott, Blair, Maconochie. Alt. Lord Advocate, Macleod-Bannatyne. Clerk, Home. Fol. Dic. v. 3. p. 227. Fac. Col. No 8. p. 14.