Scottish Court of Session Decisions

This was a suspension and interdict presented by Duff, Ross, & Company, engineers in Glasgow, and John Ross, residing there, against Richard Kippen, now or lately residing in Glasgow, and William Anderson, accountant there, his commissioner or factor. The complainers sought to have the respondents interdicted from advertising or otherwise offering for sale, and from selling or disposing of, and from removing or taking away, the moveable machinery, implements, apparatus, and utensils at present within the premises No. 289 Garscube Road, Glasgow, and known as the Oakbank Engine Works, and which premises are now occupied by the complainers.

It appeared that John Duff was, prior to 1861, proprietor of certain heritable subjects at 289 Garscube Road, Glasgow, in which he carried on the business of an engineer, and that in 1858 he burdened these subjects to the extent of £1700, granting a bond and disposition in security over them for that sum. In 1861 a further sum of £2000 was paid to Duff by the respondent Kippen, and Duff granted a disposition conveying to him “all and whole the foresaid subjects in Garscube Road, known as the Oakbank Engine Works, together with the whole machinery, implements, apparatus, and utensils situated therein, and specified in an inventory thereof, docqueted and subscribed as relative thereto.”

The complainers averred that this disposition, although ex facie absolute, was in reality granted

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in security of a loan of money, and that in so far as it pretended to convey the moveable property, it was ineffectual, because there never had been any change of possession. The complainer Ross had in 1863 become a partner of the firm of Duff, Ross, & Co., and paid his share of the capital thereof on the footing that the tools and machinery were the absolute property of Mr Duff and at his disposal.

The respondents averred that the conveyance was in reality absolute, that no back letter had been granted, and that on the day following the execution of the disposition a lease had been granted by Kippen to Duff of the whole works and machinery, which lease had been followed by possession.

The respondents pleaded inter alia that it was incompetent to qualify or restrict the absolute right conferred by the conveyance, except by the respondent's writ or oath, or to found upon any understanding that the absolute conveyance was merely in security.

The Lord Ordinary (Barcaple) on 3d March 1866 found that it was incompetent for the complainers to prove that the disposition by Duff to the respondent Kippen was granted in trust or as a security, otherwise than by the writ or oath of the said respondent, in terms of the Act 1696, c. 25. His Lordship added the following

“ Note.—The point debated was, whether the Act 1696 applies to the case. The Lord Ordinary thinks that it does. There are two classes of cases to which the statute has not been applied. In the one class a deed ex facie absolute is challenged as having been a fraud in its inception—as where the creditors of a bankrupt, or the trustee in his sequestration, challenge it as having been colourably granted for the purpose of protecting his property from the diligence of his creditors. In the other class of cases the existence of a latent trust is sought to be established by a third party, who is not in right of the truster, for some purpose different from that of enforcing implement of the alleged trust obligation. Middleton v. Rutherglen, 23 D. 526, was such a case. In the present case the complainers claim to be in right of the alleged truster, as purchasers and assignees from him; and in that capacity they seek to make good the latent obligation, which they offer to prove against the respondent as trustee. The Lord Ordinary does not think that there is authority or principle for exempting such a case from the operation of the statute.

“Some reference was made to the first section of the Mercantile Law Amendment Act, but there was no argument as to the application of that clause to the present case, and the Lord Ordinary expresses no opinion on the point.”

The suspenders reclaimed.

A. R. Clark and R. U. Strbchan, for the reclaimers argued that this was neither in form nor substance such a case as was struck at by the Act 1696. The statute did not apply to moveables which could be transferred, and were usually transferred, without writing.

Gifford and Orr Paterson supported the Lord Ordinary's interlocutor.