Scottish Court of Session Decisions

Subject_1 FRAUD.
Subject_2 SECT. I.

Fraudulent Concealment.

Wardrop
v.
Fairholm and Arbuthnot

Date: 19 December 1744
Case No. No 4.

An assignation of a claim of damages, after arrestment of the same claim before it was liquidated, held to be fraudulent.

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James Grierson and James Gairns merchants in Edinburgh, brought an action in the Court of Exchequer against John Macnaughton collector of the customs at the port of Anstruther, for an unlawful seizure made by him of some goods belonging to them, and obtained a decree for damages and costs of suit; which fund became the subject of a competition amongst their creditors.

Their cause came on in Candlemas term 1741-2, and the verdict and final determination was obtained in Whitsunday term 1743.

In August 1742 Fairholm and Arbuthnot arrested in the hands of Macnaughton; on June 14th 1743, Grierson and Gairns assigned their claim of damages, with all that might follow thereon to John Wardrop writer in Edinburgh, for the behoof of their creditors therein mentioned; and this was intimated on the 15th, and Alexander Arbuthnot and Company arrested on the 17th.

Mr Macnaughton raised a multiple-poinding, in which the Lord Ordinary ‘preferred Fairholm and Arbuthnot primo loco, and Arbuthnot and Company secundo loco, both in the sum decreed for damages, and that for costs of suit.’

Pleaded, in a reclaiming bill for Mr Wardrop, The arrestments were laid on before the judgment in the Exchequer, by which only Mr Macnaughton became debtor, and before the costs were incurred, and consequently longer before they were taxed by the proper officer. Arrestments do not affect acquirenda; and here the damages were plainly a posterior acquisition by the decree of Exchequer, and which Grierson and Gairns could have given up at any time, by desisting from the action; and as the costs were not laid out at the time of the arrestments; so to insist for a preference on them, is a manifest injustice to the other creditors, since these costs were taken out of the debtor's other subjects not arrested, and which ought to have gone amongst his whole creditors. A parallel case occurred, Menzies against Graham, No 95. p. 770, where the Lords preferred an assignation, posterior to an arrestment, of a subject confirmed by the cedent after the arrestment.

Answered, That an arrestment is proper during a dependence; every subject of a debtor is affectable by diligence; and here arrestment was the only proper diligence; and it were odd that the same subject should be capable of being assigned, and not of being arrested. The decision cited does not apply; an executor till confirmation has no right; and therefore the assignee after confirmation, was justly preferred to the arrester before it.

2dly, The assignation was by a bankrupt in fraudem creditorum; he was under diligence by horning and caption at the instance of the respondents; and by the tenor of the assignation, all creditors that arrested, or did not pass from their arrestments, are excluded from any benefit thereof. It was found, that a bankrupt could not bring in all his creditors alike, in prejudice of other diligence, Snee and Company against the Trustees of Michael Anderson's Creditors, No 242. p. 1206; and Earl of Aberdeen against the Trustees of Blair, No 244. p. 1208.

‘The Lords found the assignation reducible on the act of Parliament 1621, there being diligence by horning at the instance of Fairholm and Arbuthnot, and Arbuthnot and Company, prior to the granting the assignation; and therefore adhered.’

For the Assignee, Cross. For the Arresters, Maitland. Clerk, Gibson. D. Falconer, v. 1. p. 30.

*** This case is reported by Clerk Home, No 125. p. 1025.