Scottish Court of Session Decisions

Subject_1 BENEFICIUM CEDENDARUM ACTIONUM.

Dunlop, and Other Trustees of Carlyle and Co
v.
Spiers and Others

Date: 8 August 1776
Case No. No 2.

Creditors of a Company drawing dividends out of the estate of an individual partner of the Company, found, in certain circumstances, obliged to assign to the creditors of the individual, in order to operate relief from the estates of the other partners.

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Messrs James Dunlop, Douglas, and White, entered into co-partnery, under the firm of James White and Company; and afterwards, on White's death, a new co-partnery was formed betwixt James Dunlop, Douglas, Carlyle, and Gavin White, under the firm of John Carlyle and Company. This co-partnery failed in 1763; and their creditors following joint measures, named certain of their number trustees for the whole; and the same persons were likewise, at the same time, appointed trustees by Carlyle and Company, for gathering in and dividing their effects. At the time of the failure of Carlyle and Company, the first Company of White and Company stood indebted to them in L. 5072 Sterling; and the whole debts due by James Dunlop to Carlyle and Company, both on his private account, and as a member of the co-partnery of White and Company, amounted to about L. 12,000 Sterling. Spiers, Blackburne, and others, who had been appointed trustees for the creditors of James Dunlop, who had become bankrupt a short time before the failure of Carlyle and Company, in which he was engaged, were pursued by the trustees of the creditors of Carlyle and Company, who claimed to be ranked on Dunlop's funds, both for the debts due by him to Carlyle and Company, and likewise for the whole debts due to the pursuers and their constituents by that Company itself.—Urged in defence, That the pursuers cannot be allowed to claim payment from the estate of James Dunlop, both of the debts due by him to Carlyle and Company, and of the whole debts due by that Company to their creditors; yet this is what they are insisting for. They claim to be ranked on Dunlop's estate for L. 17,000, as the amount of the debts due by Carlyle and Company, and moreover for the sum of L. 12,000, said to be due by him to that Company; not indeed to the effect of drawing full payment of both sums, but with this quality, that in consequence of this double ranking, they shall draw no more than L. 17,000 Sterling, due to the creditors of the Company. But this is not just; for if this last sum be the whole they are entitled to draw, they can have no claim to rank for more; and, being once ranked for that sum, it is not competent to rank them for any other sum whatever. If Dunlop pays the first claim, viz. the debts due by Carlyle and-Company to their creditors, the debt due by himself to the Company, must be extinguished.——The Lords found, That the trustees for the creditors of Carlyle and Company were entitled to be ranked on Dunlop's estate, for the amount of the debts due by him to the said Company and that, after imputing the dividend arising from the debt so due, and the dividend already paid from the Company's effects, in extinction of the Company's debts, along with the other funds of the Company yet undivided, the said pursuers are entitled to be again ranked on James Dunlop's estate, for the balance that will then remain due to the creditors of Carlyle and Company; the trustees of Dunlop being entitled to an assignation from Carlyle and Company's creditors, so far as they shall draw on the said second ranking; for the purpose of operating relief on Dunlop's estate, from the other partners of Carlyle and Company; in so far as the said creditors shall draw from Dunlop's estate more than his proportional share as a partner of the Company.

Fol. Dic. v. 3. p. 71.