Pursuers Clay and Midgley, merchants in Liverpool, purchased tobacco on several occasions from McKittrick and Company, located in Virginia. To pay a balance due to Clay and Midgley, McKittrick and Company sent a shipment of tobacco to them in November 1761. Clay and Midgley obtained insurance on this shipment from defender James Coulter, a merchant in Glasgow. The ship sailed from Virginia for Liverpool, but it was captured by a French privateer in February 1762. Learning of the capture, Clay and Midgley sought to recover their losses from the insurance policy. Coulter insisted on retaining the sums he underwrote in the insurance policy, claiming that he was also a creditor of the McKittrick Company. Coulter argued that the insurance payments were debt payments to him. He contended that the cargo remained the property of McKittrick and Company until it was delivered at Liverpool to the consignees. As such, the cargo was claimable by creditors. Clay and Midgley respond that, under the established law of merchants, the consignees had an exclusive interest in the goods that the consignor's creditors could not defeat.

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