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Scottish Court of Session Decisions |
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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> The Liquidators of the City of Glasgow Bank v. Nicolson's Trustees [1882] ScotLR 19_461 (3 March 1882) URL: http://www.bailii.org/scot/cases/ScotCS/1882/19SLR0461.html Cite as: [1882] SLR 19_461, [1882] ScotLR 19_461 |
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Page: 461↓
[Sheriff-Substitute of Lanarkshire.
A disponed certain heritable subjects to B in security. He afterwards conveyed them to a bank by a disposition ex facie absolute, but (as appeared on proof) really in security of advances. This disposition was recorded. The superior having subsequently obtained decree against the bank for a half—year's feu-duty payable to him— held that the bank had a good claim of relief against B, who had uplifted the rents of the subjects, and applied them in payment pro tanto of the debt and relative interest due to him by A.
By feu—contract, dated 10th and 12th April 1877, James Aiken, engineer, Glasgow, feued out to Peter M'Kissock, builder in Partick, certain heritable subjects situated in Partick for a feu-duty of £27, 11s. 5d., payable in equal portions at Whitsunday and Martinmas yearly.
By bond and disposition in security, dated 8th and recorded 10th October 1877, M'Kissock disponed the said subjects to Thomas Nicolson, writer in Glasgow, in security of a sum of £2200 lent by him to the disponer. Nicolson died, and the defenders in this action were his testamentary trustees.
By disposition, dated 7th and recorded 9th August 1878, M'Kissock conveyed the said subjects to the City of Glasgow Bank. The disposition was ex facie absolute, but it was subsequently established by proof that it was really granted to the bank in security of advances made by them to M'Kissock.
By disposition, dated 10th February 1879, and duly recorded, Aiken conveyed the superiority of the said subjects to the marriage—contract trustees of the Rev. T. H. Turnbull and his wife, who raised a Sheriff Court action against the City of Glasgow Bank, in which they obtained decree for payment of £13, 15s. 8
d., being the half—year's feu-duty due at Martinmas 1880. Nicolson's trustees, in virtue of their bond and disposition in security, entered into possession of the subjects, and collected the rents due and payable at Martinmas 1880, which were more in value than the said half—year's feu-duty due at the same term. They applied the whole rents so received towards payment pro tanto of their said debt of £2200 and interest. 1 2 The present action was raised by the liquidators of the City of Glasgow Bank against Nicolson's trustees, to have the latter ordained to free and relieve the pursuers of the said half—year's feu-duty, and interest thereon from Martinmas 1880 till paid, and of the expenses incurred in the action against them at the instance of Turnbull's trustees.
The pursuers pleaded—“(2) The defenders being in possession of said steading of ground and houses and others erected thereon, and having collected the rents thereof for the period for which the said feu-duty is payable, are liable in the payment of said feu-duty, and are bound to free and relieve the pursuers from payment thereof. (3) The said feu-duty being a real bur-den on said subjects, preferable to the principal and interest in defenders' bond and disposition in security, they are bound to pay the same out of the rents collected before paying said principal and interest. (4) The defenders having funds wherewith to pay said feu-duty, and being bound so to do, are bound to relieve the pursuers of the whole expenses incurred in the action by Mr and Mrs Turnbull's trustees.”
The defenders pleaded—“(1) The City of Glasgow Bank being the proprietor of said subjects, and the last entered vassal, is the proper debtor in the feu-duty, and bound to perform all the conditions of the feu, and has no right of relief for payment of the feu-duty against the defenders, who are merely heritable creditors. (2) Even though the bank, in a question with M'Kissock, is really a creditor, yet, having taken an absolute conveyance, and having been registered and entered as proprietor with the superior, it falls in a question with the superior and all third parties to be treated as absolute proprietor. (3) The defenders having collected the rents in virtue of the assignation to rents in their bond, which is prior to the assignation to rents in the bank's deed, are not bound to pay over any part thereof to the pursuers until they have received full payment of their own debt and interest. (4) In no event should the defenders be held liable in the
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expenses of the action at the instance of Turn—bull's trustees, as the bank should have at once paid the feu-duty, and, if so advised, thereafter brought its action of relief.” The Sheriff-Substitute ( Guthrie), after a proof had been led which established that the conveyance by M'Kissock to the bank, though in form absolute, was in reality only in security, found the defenders liable to the pursuers in relief of the said feu-duty, and decerned against them accordingly; quoad ultra assoilzied the defenders, and decerned.
He added the following note:—“It is not pleaded that the pursuers have not obtained an assignation from the superior to enable them to effect their relief. That technical objection may therefore be set aside, and the case determined according to the equities between the parties. It is sufficiently proved that the infeftment of the pursuers is truly an infeftment in security as well as that of the defenders. Its form of an absolute infeftment has, however, involved the bank in responsibility to the superior of the ground, who is not bound to look beyond the formal title, but is entitled to recover his feu-duty from the person who becomes in feudal form his vassal. The bank, however, while it is under this liability, arising from its relation to Mr M'Kissock, the original vassal, has as yet enjoyed none of the advantages of the position of vassal, and it claims to be relieved of the burden to which it has been subjected by the defenders, who have the sole beneficial possession of the subjects pledged to both parties in security of their debts. The defenders are in possession under the assignation to rents in Mr M'Kissock's prior disposition in security to them; but they say that they are entitled to appropriate the whole rents in payment of the interest on their own bond without deduction of the feu-duty paid by the pursuers. They refer in support of their contention to such cases as Clark v. City of Glasgow Assurance Company, 12 D. 1047— aff. 15 D. (H. of L.); and Gardyne v. Royal Bank, 13 D. 912–15 D. (H. of L.) 45. But it seems to me that these cases go no further than to fix the liability of an ex facie absolute disponee in a question with the superior, and do not touch the present question, in which the real nature of the rights of the parties and the equities between them can be considered. Here the defenders are in possession by virtue of Mr M'Kissock's assignation to the rents, and they can have no higher right than their author. The bank paying the feu-duty would have a claim of relief against him if he were still in possession of the subjects, because, although the bank is feudally proprietor, yet in the case supposed the true owner is yet in the actual possession, and the bank's right is truly but a burden on his right of property. The disposition in security to the defenders is in its very nature subject to the superior's claim for feu-duty, so that it would be giving them more than their just right if they were allowed to throw that burden upon the holder of a postponed security, besides inflicting injustice on the latter, who is deriving no benefit from his security.
“I do not think that the pursuers should be allowed the expenses incurred in defending the action against them by the superior, which was useless.”
Nicolson's trustees appealed to the Court of Session, and argued—The bank by recording their disposition, with warrant of registration thereon, became, in terms of the 1874 Conveyancing Act, the vassal in these subjects, and if vassal in a question with the superior they must be held as vassal in a question with all the world. The bank might or might not have relief against M'Kissock; that did not concern the appellants. Even if the bank had obtained an assignation from the superior, and sued as in his right, they could not prevail, for the superior could assign no rights enforceable against the appellants. The superior's proper remedy was by poinding the ground—he had a right against the ground and against his vassal for the feu-duty, but none against the appellants as bondholders or intro-mitters with the rents.
Replied for the bank—The bank had relief against these bondholders. Though they must in a question with the superior be dealt with on feudal principles, yet they were entitled to their equities in a question with the appellants, being themselves in reality (as appeared from the proof) only security-holders. A superior had a direct right of action against any intromitter with the rents.
Authorities quoted—Stair, ii. 4, 7; Bell's Prin. sec. 62 and sec. 698; “ Wylie v. Heritable Securities Investment Association, December 22, 1871, 10 Macph. 253; Guthrie v. Smith, November 19, 1880, 8 R. 107 Marquis of Tweeddale's Trustees v. Earl of Haddington, February 25, 1880, 7 R. 620; Hislop v. Shaw, May 13, 1863, 1 Macph. 535.
At advising—
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“I assign the rents,” but then the statute has attached to that the full meaning of the old clause of assignation of rents which has been used in this country from a very early period—indeed, from the introduction of that form of security which is now so common, the bond and disposition in security. As early as the year 1787,I find, in the first edition of the “Juridical Styles,” a clause in these terms—“I make and constitute” so—and—so “and his foresaids my lawful cessioners and assignees, not only in and to the whole writs and evidents, writs, titles, and securities of and concerning the lands, mills, teinds, fishings, and other heritages before specified, but also in and to the whole rents,” of otherwise. Now, these are the terms upon which the bondholder in possession is bound to account to the debtor or anyone coming in his place. And the position of the bank is certainly such that they can represent themselves as coming in the place of the debtor with all the rights to demand an accounting against the bondholder which he would have, and if the bondholder is bound to account to the bank as absolute disponee in terms of that clause, then the account must be stated in such a way as to represent the intromissions with the rents, and the application of the rents after paying all feu—duties, public burdens, and expenses. I think that clearly leads to the conclusion that these bondholders were under the obligation of paying feu—duties, and public burdens, and expenses out of the first of the rents, and to appropriate only what remains to payment of interest on their part. Therefore I am for adhering to the interlocutor of the Sheriff-Substitute.
Page: 464↓
That the bank are holders of a security only is clear—clear even if the question were between the owner of the property and the bank to whom he granted the security, and the proof limited to writ or oath under the statute. In a question with third parties, as the appellants are here, the rules of evidence are not so restricted, and there is no doubt on the proof that although the bank held an absolute disposition the conveyance was in security only of the bank's advances. Taking it accordingly, that both parties are holders of securities, and that the first security-holder is in possession under a decree of maills and duties, I agree with your Lordships in holding that he has thereby acquired a limited or qualified right only to the rents of the property. To a certain extent a creditor in that position is an administrator. Having, no doubt, right to obtain what his security gives him, viz., the rents, he is bound, in the first instance, as intromitter with the gross rents, to meet the primary claims affecting these rents, viz., public burdens and feu-duty or ground rent. It was disputed at the bar that there was liability even to the superior for the feu-duty, but the authorities, I think, are perfectly clear upon that point. Intromitters with rents, in respect of their intromission, are liable directly to the superior for his feu-duty. The law is so stated both by the institutional writers and in cases that have occurred, particularly in recent years. It follows that the superior could have required the appellants as intromitters with the rents to pay the feu-duty as a first charge on the rents, and if the appellants had made the payment, could it possibly be maintained that they could have called upon the bank to relieve them of the payment because they had taken a title in the form of an absolute disposition. It would obviously be a conclusive answer that in truth the bank were postponed creditors only, deriving no return from their security.
The superior had, no doubt, right to treat anyone who has registered an ex facie absolute disposition as the proprietor of the lands, for the disponee has practically made himself an entered vassal. But this result which flows from the relation between superior or vassal can have no bearing on a question between two holders of securities over the same property. It happens that from the shape in which the second security-holder has taken his title he has been obliged to pay the feu-duty. It appears to me that just as the superior had a right to make the claim against the security-holder in possession, so the respondent, having paid the amount, may enforce repayment by the respondents, the true and primary debtors; and I agree in thinking that the right to repayment may be enforced without any special title of assignation from the superior. I think it right, however, to add that at the best it appears to me the appellants' argument could only be one founded on want of title, and I am of opinion that in a case of this kind the person making payment of the feu-duty to the superior would be entitled to an assignation of the superior's personal claim for the amount against the intromitters with the rents, assuming that a special title to recover was necessary. The appellants being the principal or primary obligants, the respondents, though also liable to the superior, were in my opinion entitled to an assignation on payment of the debt to enable them to operate relief—Bell's Prin., sec. 558. The Sheriff-Substitute in the note to his judgment says:—“It is not pleaded that the pursuers have not obtained an assignation from the superior to enable them to effect their relief. That technical objection may therefore be set aside, and the case determined according to the equities between the parties.” There was a question raised at the bar as to how far this statement was warranted, but it was explained that the bank could obtain such an assignation at once, and we have since been informed that an assignation has been prepared, and is in the course of being signed and executed. Having got that assignation, the only point which could be possibly pleaded in defence I think would be obviated, namely, that payment of itself would not give a title. This plea, even if well founded, is obviated by the assignation which gives the respondents the superior right to enforce payment. I see no answer to the claim so presented, for the parties who have paid the feu-duty demand payment in the superior's right, and the respondents as primary obligants cannot refuse payment merely because the respondents were also liable to the superior. I put my judgment on these two separate grounds—first, I think the first bondholder in possession intro—mitting with the rents is liable for the feu-duty to a party who has paid the superior the amount, even without special title; and second, even assuming a special title to be necessary, the respondents in this appeal have such a title which gives them both the right and title of the superior.
The Lords dismissed the appeal.
Counsel for Pursuers— Gloag — Lorimer. Agents— Davidson & Syme, W.S.
Counsel for Defenders— Trayner— Robertson. Agents— Webster, Will, & Ritchie, S.S.C.
