The Trustee on the Estate of Walter Monteath, against Colin Douglas
and Others.
Decisions of the Court of Session 1794. December 12.
The Trustee on
the Estate of Walter Monteath, against Colin Douglas and Others.
Walter Monteath was nearly related to the late Duchess of
Douglas, who, at different times, lent him above L. 12,000: For
the greater part of this sum, Ihe got heritable security over
his estate of Kepp, the value of which, however, was not equal
to the sums stie had lent upon it.
The Duchess died in 1774,
leaving a settlement vesting her whole funds in trustees, who
were directed, after paying her Grace's debts and legacies, to
employ the residue of her fortune in the purchase of land, to be
entailed in favour of her nephew Archibald Douglas and certain
other substitutes. It was farther declared, That the trustees
lhould hold the lands, in their own names, till the heir for the
time stiould arrive at the age of 22; and that after that event,
they lhould not be obliged to denude, till required by him.
In 1782, the Duchess's nephew had arrived at the age of 19, and
the trustees having consulted counsel, how far they were bound
to purchase lands with the trust-funds, they were advised to do
so.
.The trustees having accordingly set about recovering the
trust-funds, they applied to Mr Monteath for payment of what he
owed, and threatened him with diligence. He, on the other hand,
repeatedly begged delays, until a peace with America, where the
greater part of his funds were locked up, and at the fame time
proposed to sell to the trustees his estate of Kepp on.
reasonable terms.
At a meeting of the trustees in July T783,
Mr Monteath offered to find security to pay the debt at
Martinmas 17S4, in so far as it exceeded the value of his
estate, upon the trustees consenting to supersede personal
diligence against him till that term.
This proposal having
been agreed to, Thomas Monteath, his brother and partner,
granted the'tnrstees one bond of corroboration for L. 1250, and
Colin, Robert, and Campbell Douglases, his brothers-ih-law, '
for their further security,' granted them another for the like
sum. This.last bond was signed by Colin andCampbell Douglas, 9th
March 1784, and by Robert at London on the 20th of j^o 206, that
month.
On the 26th March, Walter Monteath granted his
brothers-in-law an heritable bond of relief over his
dwelling-house in Glasgow, the value of which was from L. 600 to
L. 700 Sterling. This bond referred to the bond of
corroboration, which it was declared had been granted on the
faith of it.
On the 5th February 1785, Mr Monteath fold his
estate for L. 9723 : 17s. to the trustees, who were infest on
the 24th March thereafter. r Infeftment was taken on the bond of
relief, 17th October 1785, and the saline afterwards recorded.
On the 7th December 1785, Mr Monteath was rendered bankrupt in
terms of the act 1696. His estate was afterwards sequestrated,
and the trustees for his creditors founding on that statute,
brought a reduction of the heritable bond of relief granted by
him to the Messrs Douglas, the sasine on it not having been
taken till within 60 days of his bankruptcy; and
Pleaded, ift,
The bond of relief was not a security for a novum debitum. The
defenders had a personal claim for relief, independent of it,
against Mr Monteath from the 20th March, the last date of the
bond of corroboration; whereas, it was not signed till the 26th,
so that it was granted in security of a debt which had subsisted
for at least six days. Besides, in questions on tfye act 1696,
it is not the date of the bond, but of the sasine, which is
regarded, so that in fact, the right now under reduction was
granted in security of a debt which had existed nearly eighteen
months. If persons so nearly related to Mr Monteath as the
defenders, had taken immediate infeftment on the house in which
he lived, it would have excited the suspicions of his creditors,
he would instantly have been made bankrupt, and would thus have
been prevented from prosecuting trade, and contracting further
debts to their prejudice. Expediency, therefore, requires that
the statute fliould reach this case. $ee also Dalrymple, p. 232.
and 244. 29th January, and 12th December 1717, Grant against
Duncan, (infra, h. t.); 19th January 1726, Chalmers against the
Creditors of Riccartoun, (infra, h. t.~)
But, zdly, The bond
of relief was indirectly a security to the Duchess's trustees
for the old debt due to them, and so comes under the very words
of the statuteIs it hud not been for this debt, it never would
have been necessary, and although it was directly granted to the
defenders, the trustees alone were benefited by it. If
securities like the present were supported, a person on the eve
of bankruptcy, who wilhed to give a preference to a favourite
creditor, would find no difficulty in getting some person to be
cautioner for him, as he could be secured from loss by taking an
heritable security in relief, and thus the object of the act
1696 would be entirely frustrated.
..Jinswered, 1st, It may
be true, that a claim of relief arose to the defenders on
signing the bond of corroboration; but as it contained no
obligation of relief, a separate bond became necessary for that
purpose, because otherwise, the defenders, upon paying the debt,
could not have rendered their claim effectual without Vol. III.
'7 G
No 206. a process at law. Both bonds, howeveT, were
executed, unico ccrJextu; the bonc> of corroboration was signed
by Robert Douglas at London on the 20th March, and supposing it
to have been sent off next day, it could not, according t© the
arrangement of the posts at that time, have reached Glasgow till
the 26th, the date of the bond of relief; it is impossible
therefore to consider the bond of relief, otherwise than as a
security instantly given for a novum debitum.
The attempt
made by the pursuer to split the bond into two parts, and to
hold the infeftment afterwards taken on it as a security for the
debt contracted by the personal obligation, h a refinement which
has no foundation in the statute, and. has-been long ago
exploded; Kilkerran, voce Bankrupt, p.-64.; 29th January J751,
Johnston against Burnet and Home, No 200. p. H34.
•idly, If
there had been any thing fraudulent in the transaction; if the
security had been granted to the defenders in trust for the
Duchess's trustees, or as thirdparties interposed, in order to
elude the statute, as. in the cafe, Blaickie against Robertson,
No 12. p. 887. it would then have been justly liable to
reduction. But all parties in this cafe, were in optima fide.
The trustees made a demand on Mr Monteath, from a fense of duty,
that they might be enabled to lay out the money on land
agreeably to the terms of the trust, and to the opinion of
counsel; and when security was offered for it, they accepted it,
not so much from any apprehension of Mr Monteath's
circumstances, as that they might be secure of the money being
paid at certain terms, so as to leave sufficient time for
realizing it before the trust expired.
The motives of the
defenders were equally pure. Their view was to serve Mr Monteath,
not the trustees; and although they stipulated a security over
the house, it is clear they had no suspicion of his failure, as
it is scarce worth half the sum they engaged for. The heritable
bond did not afford even an indirect security to the trustees.
Its obligation was merely contingent. If the defenders had
failed, without paying any part of the debt, the house would
have remained unburdened to Mr- Monteath and his creditors.
Neither could the trustees have prevented the defenders frorrr
renouncing this security at any time. Were it therefore in these
circumstances to be reduced, no man could with safety be
cautioner for another.
The Lord Ordinary reported the cause
on informations.
The Court, by a great majority, found, That'
the heritable security in question « fell under the act 1696.' %
When the cause however came again before the Court, on a
reclaiming petition and answers, in which the circumstances
attending the transaction were more fully brought ojit, it being
thought to involve a new and important point, a hearing in
presence was ordered. .
When it was afterwards advised, the
Court were much divided in their sentiments.
A majority were
for sustaining the security.
The bond of relief, (it was
observed), certainly does not come within the letter Ko 2C6. of
the statute, being a novum dcbitum, quoad the cautioners; and,
in determining whether cafes of this fort fall under its spirit,
each must depend in a great measure on its own circumstances. In
the present case, no evasion of the statute was intended. At the
time the two bonds were granted, neither the trustees, nor the
defenders, nor Mr Monteath's other creditors, had any suspicion
of his approaching bankruptcy. The trustees accepted a personal
bond of corroboration for a similar sum from his brother and
partner. The defenders accepted a security not more than half
sufficient to relieve them; and so good was Mr Monteath's
credit, that his other creditors did not proceed to diligence
against him, although they . *' saw his estate fold, and
infeftment publicly taken on it. If in such circumstance^ the
bond of relief were reduced, no person could with safety become
cautioner for a merchant, and many cases might be figured where
this would be attended with the greatest hardship. For instance,
bankers are not fond of security on land at any time, indeed
till the present bankrupt act, it could not be given for future
advances on a cafli-account, yet were the pursuer's doctrine
well founded, even merchants possessed of land would find it
difficult to get their friends to be-' come personally bound
with them, (especially in times of general distrust, when such
aid is most needed), as the validity of the heritable security
which they could give in relief, would depend on their remaining
solvent for sixty days.
On the other hand, several of the
Judges remained of opinion, that the interior cutor should be
adhered to. Nothing, it was observed, would tend so much to
narrow the beneficial operation of the statute, as to make every
cafe of this fort a question of botta or mala fides. There are
certain leading features in every, transaction, by which it is
easy to distinguish whether it . falls within its spirit.
Although, in this cafe, both ftit trustees and the defenders are
much above any suspicion of planning a fraud, still the effect
of the transaction was to give a security for an anterior debt,
and although the defenders were not fully secured by, the bond
of relief, yet it was the only security which Mr Monteath.had to
give.
The Court found ' That the heritable security in
question did not fall Under 'the act 1696/
A reclaiming
petition was refused without answers.
Lord Ordinary.,
Alcrcromly. Act. SoRciior-Gcneral Blair, Arch, Campic/l, Moodic.
Alt. Lord Advocate Dandat, Rolland, Macomthie, Arch. ■Campbell,
junior. Clerk, Menmiet.
v * Fol. Die. v. 3. p. 56, Far. Col.
No 144. p. 328. k. Davidson. ■
2 7 G 2 4.'
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See also:
1.
Testament of Margaret, Duchess of Douglas
2. Douglas Support
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