Scottish Court of Session Decisions

Subject_1 DEBTOR AND CREDITOR.
Subject_2 SECT II.

A preferable creditor can do no voluntary deed to prefer one secondary creditor to another; and if he take payment out of one subject, he is bound to assign to postponed creditors.

Southdun, and the other personal Creditors of Sir William Keith of Ludquhairn, and Lady Keith of Ludquhairn,
v.
Sinclair, &c

Date: 17 February 1727
Case No. No 29.

A wife consenting to infeftments of annualrent upon her jointure-lands, the annualrenters, after drawing their payment, must assign her to any other subject in which they are infeft, in order to relieve her of what she suffered, by yielding them the preference.

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By a charter from the Earl of Marshall, several lands are disponed to Sir William Keith, particularly the lands of Boddom, in conjunct fee and liferent, with Dame Jean Smith his wife, for her liferent use of the said lands of Boddom, whereupon Sir William and his Lady are infeft 1692. Some time thereafter Sir William contracted great debts, and granted heritable bonds upon the lands of Boddom, with consent of his Lady, “For all right, title, and interest of conjunct-fee and liferent, she had out of the said lands.” After Sir William's decease, the creditors came into a ranking, where the annualrenters were preferred to the Lady by virtue of her consent; but the Lady insisted, that in so far as she or the factor (the estate being sequestered) should make payment to these annualrenters, out of that fund in which she was truly preferable, she ought to be assigned by them to so much of the annualrents, in order to operate her preference in the price of the estate, preferable to the personal creditors, who had done diligence by adjudication, so as to recover the full value of her liferent.

This was opposed by the creditors adjudgers, who contended, 1mo, That the Lady's consent to the annualrenters preference was simple and absolute; that she could have no recourse against her husband's heirs, for what she suffered by consenting to these annualrents, far less against his creditors. Indeed where a relict is infeft in an annuity out of lands, quæ officit unamquamque glebam, and has consented to heritable debts, which may restrict her annuity, it is a question if she may not, in so far as the annuity is restricted, bring the deficiency or inlakes to be a real burden upon the ground, in the same manner, as if the subject out of which her annuity was constituted, had not been originally of the extent of the annuity; but, in the case of a liferent locality, which of its own kind is a right of property, the wife's concourse and consent with the husband, in alienating the subject, must as much restrict and diminish her right in the subject, as the husband's estate is diminished and restricted by an alienation apart. And in so far as the creditors can discover, it never was made a question, but if the wife had consented with the husband in an absolute disposition of a part of these lands, over which her liferent-locality was constituted, her liferent would thereby be restricted pro tanto of the alienation, without a possibility for her to recover any sum of money equivalent to the right renounced. If this holds in absolute alienations, there is no reason why it should not likewise hold in infeftments of annualrent; and therefore, in the present case, the Lady's consent can afford her no recourse against her husband or his creditors, whether directly upon pretence of eviction, or indirectly, by obliging the annualrenters to assign.

Answered for the Lady; Donatio nunquam præsumitur; when a wife consents to the alienating or burdening her liferent-lands, to assist her husband in his necessities; there is no presumption that she designs absolutely to give away, more than if she had granted infeftment in her own heritage for her husband's debts. These, all of them are of the nature of cautionary engagements, implying a recourse for recompense, from the very nature of the thing.

The Creditors pleaded, in the second place, There is no obligation upon the annualrenters, upon drawing their payment, to assign to the Lady; and supposing their voluntary concurrence, the law stands in their way, which hinders preferable creditors, by arbitrarily granting assignations, to prefer one subaltern infeftment to another. These annualrenters have a preference, both upon the fee and the Lady's liferent of the lands of Boddom; they cannot arbitrarily burden either of these subjects, but if they draw their whole share out of one, must assign proportionally against the other; so that, upon the event, each may be burdened in proportion to his subject. If, therefore, the annualrenters grant assignation of their annualrent rights to the Lady, it can only be proportionally, not for the whole.

To which it was answered; The present case is not that of two infeftments, in two different subjects, and a preferable catholic infeftment over all; the Lady notwithstanding her consent, by the priority of diligence is still preferable; if there is a private paction betwixt her and the annualrenters, that has no effect but betwixt themselves, and can never produce a jus quæsitum to the adjudgers, as if the annualrenters had a catholic preferable infeftment. 2do, Allowing the consent gave an ipso jure preference to the annualrenters, which the adjudgers could plead upon, it would avail them nothing in this case; for here the annualrenters stand bound in an implied, obligation, to assign to the liferentrix upon payment; which obligation is also inferred, from the nature of the cautionary engagement. The Lady impledged her liferent lands for her husband's debts; or, which comes to the same, she consented to the creditors preference in these lands, for their security and payment; it is not conceivable, but in this transaction she designed herself a relief, as far as was consistent with the preference of these creditors, whose security was in view; and to this relief the creditors, who reap the benefit of her funds, are bound ex bono et æquo to contribute, as far as is consistent with their own interest. “Hence arises the obligation upon creditors, in all transactions, where one person intervenes for another, cautionary or the like, to assign upon payment, to the person intervening, for his relief.” If now the annualrenters became implicitly bound, upon the liferentrix her consenting to their preference, to give her assignations for her relief; when they fulfil their engagements, and the assignations are granted, there is nothing like an arbitrary preference of one subaltern infeftment to another; if the adjudgers plead upon the consent, they must take it with its implied condition, sciz. the obligation upon the annualrenters to assign; and they have no sort of reason to repine, since they are not in a worse case than if the consent had not intervened.

It was pleaded in the last place, There are no termini habiles here for an assignation; for, in so far as the factor shall make payment to the annualrenters, the annualrent-rights are in so far extinguished, without a possibility of being assigned.

Answered; The sums paid by the factor to the annualrenters, do properly belong to the liferentrix, which indeed by paction she is bound to communicate to them; but if they go about to uplift as in their own rights, her liferent right stands in the way; and if they again offer to subsume upon her consent, the answer will be, that the consent establishes not the annualrenters in an ipso jure preference, it means no more, than if the liferentrix had obliged herself to communicate to the annualrenters what she should uplift by virtue of her preferable right, till they were satisfied and paid; or more compendiously, allowed them in her name to intromit; which intromission can never operate an ipso jure extinction of the annualrent-rights, since these rights are not the title of the intromission, but a power derived from another; much less will the factor's payments operate an extinction, for the factor pays in name of the Lady; and payments in this shape are of the nature of cautionary payments, upon which assignation is always competent; therefore, as from the nature of the transaction, the creditors are involved in a reciprocal obligation of assigning to the liferentrix upon payment, she is well entitled, both in strict law and equity, to stand in the way of their intromissions or payment, unless they will perform their part, by granting assignations.

‘The Lords, in regard both the heritable creditors and the Lady (supposing she had given no consent to their preference) would have been preferable to the other creditors, found, that in so far as the creditors, to whose rights the Lady is consenter, prejudge and hinder her to draw her full provision out of the subject and price thereof, that she is preferable to the hail other creditors, to whose rights she is not consenting, because of the priority of her infeftment, for the deficiency of the said liferent provision.’

Here the preference was directly granted, without the circuit of an assignation, according to the rule, ‘That in competitions every right is held as made up, which actually made up would found a preference.’

Fol. Dic. v. 1. p. 226. Rem. Dec. v. 1. No 94. p. 185.