Scottish Court of Session Decisions

Subject_1 COMPENSATION - RETENTION.
Subject_2 SECT. I.

Nature of Compensation.

Crawford of Bridgend
v.
Hamilton of Grange

Date: 9 December 1735
Case No. No 6.

An illiquid claim not sustainable either in compensation or in retention.

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A charge upon a bond being suspended upon this ground of retention, that the suspender was confirmed executor to the charger's defunct spouse, and was entitled to her share of the moveables in the charger's possession; it was answered, That, by act 1592, cap. 143, liquid debts only are allowed to be pleaded upon by way of exception The act speaks hot of compensation more than of retention; and, as it is triti juris, then an illiquid claim cannot be offered in the way of compensation; to sustain it under the name of retention, would be truly giving it the whole effect it could have when pleaded as a compensation, which would be allowing the thing under another name.

The Lords repelled the reason of suspension.

Fol. Dic. v. 1. p. 159. *** C. Home reports the same case:

Collector Crawford, having right to a debt due by Hamilton of Grange, charged him for payment thereof; who suspended, upon this ground, that he had a claim for a share of the executry belonging to the charger at the decease of his last Lady, who was the suspender's mother by a former marriage; and therefore he ought to be allowed to retain in his hands the sum charged for, until the charger account to him for his share of his mother's executry, to whom he is decerned executor-dative.

Answered for the charger; The demand, is new and unprecedented, that payment of a liquid claim should be stopped upon pretence of an illiquid one; nor can any instance, it is believed, be given, where it was ever sustained. And, if the matter is thoroughly considered, neither compensation nor retention has any place in strict law; seeing every one ought to pay his debt, conform to the precise tenor of his obligation, without regard to the mutual claim he may have against his creditor. Accordingly, compensation or retention is only admitted in those countries where it is introduced by statute, or where the Roman law prevails, and had no place with us before the act 1592, which allows debts de liquido in liquidum to be pleaded by way of exception. When this obtained, it was natural to admit those claims by way of exception, though not liquid, if instantly performable; such as relief of cautionry and other obligations ad factum prastandum. But, if the obligation be not instantly performable, or not liquid, which comes to the same, because time, is necessary for liquidation, there is no reason why a demand instantly performable should be delayed on that account; and therefore, in such a case, neither compensation nor retention ought to be allowed. Besides, it is a point established in practice, that an illiquid claim cannot be pleaded by way of compensation against a liquid debt; and, to sustain it in the shape of retention, would be allowing the thing, changing only the name. It is true, that illiquid claims are admitted, where they are instantly offered to be liquidated by the charger's oath; which, no doubt is competent, here. But it would be extremely hard to stop payment of a liquid debt until the event of a count and reckoning, which may be protracted for several years.

Replied; It is the charger fault that the quantity of the executry due to the suspender is not already liquid, seeing he has hitherto omitted to give in a condescendence thereof; which he alone can do, as the vouchers are in his own hands. If indeed the liquidation depended upon any other, the charger's reasoning would be conclusive, that his liquid claim should not be deferred on account of an illiquid ground of exception; but, where the vouchers are in his own custody, and the proof in a great measure depends upon his own count-books and oath, such a case must surely admit of a different consideration; so that the want of liquidation should not be objected, as it arises from an act which the charger is obliged to perform, but which he has hitherto declined to do. The maxim therefore should take place here, that pro facto habetur per quern stetit quo minus fierit.

The Lords found the letters orderly proceeded.

C. Home, No 2. p. 9.