Scottish Court of Session Decisions

The North British Property Investment Company were creditors of the Morningside College Company under bonds and dispositions in security granted by the company over their property.

The Morningside College Company were assessed for the relief of the poor within St Cuthbert's Combination, Edinburgh, for the period from Whitsunday 1887 to Whitsunday 1888 in the sum of £34, 9s. 0 1 2d. The assessment notices were issued, and the assessment became due in October 1887, and the last day of payment was 28th January 1888.

On 12th January 1888 the North British Property Investment Company, as heritable creditors of the company, presented a petition of poinding of the ground. On 13th January 1888 the Morningside Company went into voluntary liquidation. On 27th January 1888 decree in absence was pronounced in the action of poinding the ground.

On 5th April 1888 James Paterson, Collector of Poor and School Rates for St Cuthbert's Combination, obtained a warrant to poind and distrain the goods and effects of the Morningside College Company for payment of the poor's assessment. On 14th April 1888 Daniel Mackay, justice of peace constable, in virtue of this warrant, proceeded to poind and distrain certain articles of furniture, belonging to the Morningside College Company for payment of the sum of £34, 9s. 0 1 2d.

The North British Property Investment Company then brought this action in the Sheriff Court at Edinburgh against James Paterson and Daniel Mackay to have them interdicted from proceeding to sell the poinded effects.

The pursuers pleaded—“(1) By the service of the petition in the said action of poinding the ground, and decree following thereon, the pursuers have acquired a real and preferable right to the articles of furniture condescended on, and interdict should be granted as prayed for. (2) The said articles not being poindable or distrainable by the defenders, in respect of the execution of the petition in the action of poinding the ground, interdict should be granted, with expenses.”

Defences were lodged for Paterson, who pleaded—“(1) The pursuers' statements are irrelevant. (3) The poor rates sought to be recovered by the defender Paterson being preferable to the debt alleged to be due to the pursuers, and his diligence for the recovery thereof being orderly proceeded, he is entitled to have the interdict refused, with expenses.”

The Poor Law Amendment (Scotland) Act, 1845 (8 and 9 Vict. cap. 83), sec. 88, provides—“And be it enacted that the whole powers and right of issuing summary warrants and proceedings, and all remedies and provisions enacted for collecting, levying, and recovering the land and assessed taxes, or either of them, and other public taxes, shall be held to be applicable to assessments imposed for relief of the poor.… And all assessments for the relief of the poor shall, in case of bankruptcy or insolvency, be paid out of the first proceeds of the estate, and shall be preferable to all other debts of a private nature due by the parties assessed.”

The Taxes Management Act, 1880 (43 and 44 Vict. cap. 19), sec. 88, provides—“(1) No goods or chattels whatever belonging to any person at the time any of the duties or the land tax become in arrear shall be liable to be taken by virtue of any execution, or other process, warrant, or authority whatever, or by virtue of any assignment on any account or pretence whatever except at the suit of the landlord for rent, unless the party at whose suit the said execution or seizure shall be sued or made, or to whom such assignment shall be made, shall before the sale or removal of such goods or chattels pay or cause to be paid to the collector all arrears of the said duties or land tax which shall be due at the time of seizing such goods or chattels or which shall be payable for the year in which such seizure shall be made, provided such duties and land tax shall not be claimed for more than one year.” The Sheriff-Substitute ( Hamilton) on 25th April 1888 granted interim interdict, and on 28th May pronounced this interlocutor—“Sustains the first plea-in-law for the defender Paterson, recals the interdict previously granted, dismisses the petition and decerns, finds the defender Paterson entitled to expenses.”

“ Note.—The pursuers are not entitled to the interdict craved, for two reasons—(1) Because their debt, being ‘of a private nature,’ cannot compete with that due by the Morningside College Company, mentioned on record, to the defender Paterson as Collector of St Cuthbert's Combination (Poor Law Act (8 and 9 Vict. cap. 83, sec. 88); and (2) because the said company is being wound up voluntarily, and there is consequently no power, even in the Court of Session, to stay the diligence of creditors of the company— Sdeuard v. Gardner, March 10,1876, 3 R. 577.”

On appeal the Sheriff ( Crichton) on 21st June 1888 pronounced this interlocutor:—“Sustains the said appeal; recals the interlocutor of the Sheriff-Substitute of 28th May 1888: Finds in point of fact (1) that the pursuers the North British Property Investment Company are creditors of the Morningside College Company, Limited, under bonds and dispositions in security granted by the Morningside College Company over an area of ground in the south side of Edinburgh, extending to 11 acres, and the buildings thereon, known as the Morningside College; (2) that the Morningside College Company were assessed for the relief of the poor within St Cuthbert's Combination for the period from Whitsunday 1887 to Whitsunday 1888 in the sum of £34, 9s. 0 1 2d.; (3) that the assessment notices were issued and the assessment became due in October 1887, and the last day of payment was 28th January 1888; (4) that on 12th January 1888 the pursuers presented a petition

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of poinding of the ground, praying for warrant to officers of Court to poind and distrain the moveable goods, household furniture, and other effects belonging to the Morningside College Company upon the said area of ground; (5) that on 13th January 1888 the Morningside College Company went into voluntary liquidation, and Andrew Scott, C.A., was appointed liquidator; (6) that on 27th January 1888 decree was pronounced in absence in the action of poinding of the ground at the pursuer's instance against the Morningside College Company; (7) that on 5th April 1888 the defender James Paterson, Collector of Poor and School Rates for St Cuthbert's Combination, obtained a warrant to poind and distrain the goods and effects of the Morningside College Company for payment of the said assessment; (8) that on 14th April 1888 the defender Daniel Mackay, in virtue of the said warrant, proceeded to poind and distrain the articles mentioned in the prayer of the petition for payment of the said sum of £34, 9s. 0 1 2d., and intimated that if the said sum and £3, 8s. 11d. of expenses were not paid within five days thereafter, the articles poinded would be valued and sold: Finds in point of law that by the service of the action of poinding of the ground the pursuers acquired a legal and preferable right to the articles of furniture mentioned in the prayer of the petition in this action: Therefore grants interdict as craved, and decerns: Finds the defender James Paterson liable to the pursuers in the expenses of this action.

Note.—The pursuers, who are heritable creditors of the Morningside College Company, obtained decree against the company in an action of poinding of the ground on 27th January 1888.

On 5th April 1888 the defender James Paterson, who is Collector of Poor and School Rates for the Combination of St Cuthhert's, obtained warrant to poind the goods and effects of the College Company in payment of the poor and school rates then due, and proceeded to carry out the said warrant by poinding the articles mentioned in the prayer of the petition. The pursuers now ask that the defender be interdicted from carrying away the said articles or advertising them for sale.

The defender contended that the pursuers were not entitled to interdict, because under section 88 of the Poor Law Act (8 and 9 Vict, cap. 83), and section 33 of 43 George III. cap. 150, his right to the moveable goods and effects belonging to the College Company was preferable to that of the pursuers. The 88th section of the Poor Law Act provides that ‘all remedies and provisions enacted for collecting, levying, and recovering the land tax and assessed taxes, or either of them, and other public taxes, shall be held to be applicable to assessments imposed for relief of the poor.’ The 44th section of the Education Act (35 and 36 Vict. cap. 62) provides that ‘the school rate shall in all cases be levied and collected in the same manner as poor's assessment, and the laws applicable for the time to the imposition, collecting, and recovery of poor's assessment shall be applicable to the school rates.’ The provision with regard to the recovery of taxes is contained in section 33 of 43 George III. cap. 150, which enacts ‘that no moveable goods or effects whatever belonging to any person or persons, at the time any of the said duties assessed under the regulations of this Act become in arrear, shall be liable to be taken by virtue of any arrestment, poinding, sequestration, or diligence whatever, or by virtue of any assignation, on any account or pretence whatever, unless the party at whose instance the said diligence shall be used, …. shall, before the sale or removal of such goods or effects, pay or cause to be paid to the collector or collectors of the said duties so due all arrears of the said duties which shall be due at the time of arresting, poinding, or seizing such goods or effects, or which shall be payable for the year in which such diligence shall be used, provided the duties shall not be claimed for more than one year.’ It is clear from these enactments that any creditor of the College Company is precluded from taking the moveable goods or effects belonging to the company by ‘arrestment, poinding, or sequestration,’ except on payment of the arrears of the poor and school rates not exceeding one year. It appears to the Sheriff, however, that the poinding mentioned in the statute means a personal poinding. No doubt the words ‘or diligence whatever,’ are used, but this, it is thought, refers to diligence of the same kind as ‘arrestment, poinding (that is, personal poinding), or sequestration,’ and does not include poinding of the ground. It has been said that there are few things which have the same descriptive name, and yet are so essentially different in their nature as the process of poinding the ground, and that of poinding for a personal debt. With regard to the effect of a poinding of the ground, the observations by the Lord President in the recent case of The Athole Hydropathic Company, Limited, in Liquidation v. The Scottish Provincial Assurance Company, 19 th March 1886, 13 R. 818, are of importance. In that case his Lordship said—‘The security which a heritable creditor holds over moveables is of exactly the same nature, and has the same effect as that which he holds over the fundus itself. In extent of course it varies with the amount of moveables on the ground, but his right to them is secured by his infeftment, not by his action of poinding of the ground. A heritable creditor therefore in raising his action is not seeking to obtain a preference, but to give effect to a preference which is already his. A poinding of the ground is a proceeding merely for the purpose of giving effect to a creditor's security, and it is analogous to those other remedies open to heritable creditors, such as adjudication, or sale, or maills and duties. These are all diligences open to an heritable creditor to give effect to his preference which has already been secured to him. He has a preference against all the world. No one can compete with him, and therefore, as far as his security extends, he is entitled to make it effectual.’ These observations seem to be applicable to the present case, and the interdict prayed for has accordingly been granted.”

The defender appealed, and argued—The Sheriff had decided the case upon the statute of Geo. III., but that had been repealed by the Taxes Management Act, 1880 (43 and 44 Vict, cap. 19). The Poor Law Act, 1845, sec. 88, provided that assessments for relief of the poor should in the case of bankruptcy or insolvency be paid out of the first proceeds of the estate, and be preferable to debts of a private nature. The

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debt due to the Investment Company was a private debt, and the assessment was therefore preferable to it. The Act of 1880, sec. 88, provided that no goods should be taken by virtue of any execution, except at the suit of the landlord for rent, unless the arrears of the taxes were paid. The case of the Athole Hydropathic Company, referred to by the Sheriff, was not an authority in this case at all, because there the competition was between the liquidator and a private creditor of the company, so that the question of the public taxes did not come into the case.

The respondent argued—Under a poinding of the ground the moveables upon the ground became accessories to it, and it was not in the power of the rate collector to sell the heritage to pay the rates, but only the moveables. But here there were no moveables to sell— Campbell's Trustees v. Paul, January 13, 1835, 13 S. 237; Lyons v. Anderson, October 21, 1880, 8 R. 24. The execution of the summons in a poinding of the ground fixed the date of the attachment— Benston (Mowbray's Trustee) v. Mowbray, March 11, 1856, 18 D. 846. The respondent had therefore a completed security over the moveables in the College, and the rate collector could not by a personal poinding which was later in date have a preferable claim. If it were true that the poor law assessments were assimilated to the public taxes, then the argument would apply that the taxes must be in arrear before a warrant could be obtained. Here the last day of payment was 28th January 1888, and taxes could not be said to be in arrears until the last day for payment had passed. The assimilation of poor law assessments and public taxes by the 88th section of the 1880 Act was limited to the mode of collecting the rates, and did not give them all the privileges of public taxes— Bell v. Cadell, December 3, 1831, 10 S. 100.

At advising—