Scottish Court of Session Decisions

In September 1828, Mr William A. Martin, W.S. died, leaving upwards of £5000 of debt, and property, both real and personal, consisting of a house and furniture in Melville Street, a share of some heritable property in Bristo Street, and his business accounts. John Hood, farmer at New Mains, held along with Mrs Hood, his wife, an heritable bond over the house for £1200. On the 4th November, Mr W. Finlayson, Hood's agent, caused a sequestration to be executed of the books and furniture in the Melville Street house for payment of the principal, interest, penalty, and expenses in the bond. At a meeting of creditors on 14th November, Hood was authorized to confirm executor-creditor, and Mr A. Swinton, W.S., was appointed agent for the creditors. In pursuance of instructions given at this meeting, the books and furniture were sold, and the proceeds, amounting to about £700, delivered over to Finlayson, Hood's agent, to be deposited in Sir W. Forbes and Company's bank, on a promissory-note to Finlayson for behoof of those interested. Hood, on the 11th March, 1829, gave up an inventory of the deceased's personal estate, and, on the 29th April, a testament-dative was granted in his favour. On the 20th June, the following letter was addressed by Swinton to Hood:—“As it was at my suggestion and request that you agreed to expede a confirmation as executor-creditor to the late Mr William Alexander Martin, W.S., in order that the debts due to him, and other outstanding funds, might be called in and received under that title, to be deposited by your agent, Mr Walter Finlayson, in the banking-house of Sir W. Forbes and Company, to remain there till divided among those who shall be found to have right thereto at the final winding up of the business, for the purpose of saving expense to the body of the creditors in general, and for superseding all judicial measures, as was fully set forth and approved at the general meeting of creditors held 14th November last. And as, in conformity thereto, you have executed a factory, authorizing him to receive payment at my sight, of those accounts which I am now engaged in settling, and all other funds which may be found due to him; therefore I hereby engage to guarantee you against all consequences of your having done so, and to stand between you and all trouble on that account, it being hereby understood that your own claim, if you have any, upon the proceeds of the household furniture or other moveable effects, are to be reserved equally entire as if there had been a sequestration of the estate, and the funds collected by a judicial factor.”

On the 24th June, Hood, as executor-creditor, granted a factory to Finlayson, empowering him to uplift and recover the debts due to, and pay those due by, the deceased. Finlayson's intromissions with the personal property of the deceased, including the proceeds of the sale of furniture and books, amounted in all to £798, the whole of which was applied in payment of preferable debts, with the exception of a balance, against which was set off his own business account.

The house in Melville Street was sold on the 26th October, 1831, for £1700, Of this price (after paying certain debts preferable thereon), £730, 8s. 5d. was paid to Hood to account of the heritable bond, thus leaving a balance due to him of £559, 11s, 7d. The agent for the creditors, Mr Michael Linning, who had been substituted in place of Mr Swinton, had, in the mean time, realized from other sources some hundred pounds, part of which was consigned in bank; but no money was paid to account of any personal debts, except such as were privileged and preferable.

In these circumstances, Mr and Mrs Hood raised an action against the other creditors, of which the leading conclusions were, that the creditors should be found personally liable in payment of the balance due under the heritable security, and of certain travelling and other expenses incurred by Hood; and, in the event of the creditors not being found personally liable, that it should be found and declared that as much of the funds belonging to the estate, and at present in the hands of the creditors or their agent, as should be sufficient for payment, ought to be made over to Mr and Mrs Hood.

The Lord Ordinary ordered Cases.

The pursuers rested their claim of preference chiefly on the sequestration used by them of the furniture in the house in Melville Street; and founding on the case of Parker against Douglas, Heron and Company, ¹ they maintained, that an heritable creditor, in virtue of his infeftment, had a security over the moveables within the premises over which his security extended, which became active and effectual so soon as he took any step for certifying the public of its existence; that the different modes of procedure by sequestration, poinding of the ground, or otherwise, were regarded merely as a publication of this right of preference, and consequently, any form of procedure which duly certified the personal creditors of this resolution of the heritable creditor to stand on his preference and render his general nexus over the moveables special, was equally competent for preserving his right. ² They also maintained, that the circumstances which occurred in the winding up of Mr Martin's affairs, especially the letter above quoted, entitled them to a preference over the moveable property, and made the other creditors personally liable for the balance of the debt.

The defenders, upon the first point, answered, That, as the pursuer had never raised or executed a poinding of the ground, the moveables on the subject of his security were never validly attached by him, ³ and that the process of sequestration, being a diligence springing from the relation of landlord and tenant, and inapplicable to the case of an heritable creditor, was an incompetent mode of completing his right to such moveables; and upon the second point, That there were no circumstances in this case which entitled the pursuer to a preference in bar of the personal creditors, and much less to a payment from them of the balance of his debt.

The Lord Ordinary pronounced the following interlocutor, adding the subjoined note: ^*—“Sustains the defences, except as after expressed, assoilzies the defenders, and decerns: Finds the pursuer liable in the expenses hitherto incurred, and allows an account to be given in, and when lodged, remits the same to the auditor to be taxed: Finds the pursuer entitled to payment of any sum not exceeding £30 sterling, as concluded for in the summons, and set forth in the 12th article of the condescendence, which he can show to have been fairly expended by him in expeding confirmation or in travelling, or otherwise by the desire or for the benefit of the personal creditors of Mr Martin, the said claim being generally admitted in the defences and answers to the condescendence; and appoints the pursuer to lodge a particular note of the expenses alleged to have been so incurred.”