Scottish Court of Session Decisions

In February 1893 Mrs Jardine purchased from Mr and Mrs Grandison's marriage-contract trustees the house No. 17 Newton Place, Glasgow, at the price of £1850. The date of entry was Whitsunday 1893, and the price was to be paid at that date.

Mrs Jardine entered into possession of the house at Whitsunday 1893, but did not pay the price, the sellers being unable to

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give her an unencumbered title at that date. The defect in the title having been removed, the price was paid on 28th March 1894. Along with the purchase money Mrs Jardine offered to pay bank-interest from the date of entry till the date of payment. Mr and Mrs Grandison's trustees declined to accept this, and claimed interest at 5 per cent. upon the purchase money from the date of entry till the date of payment. As Mrs Jardine refused to pay at this rate, the trustees delivered her a title to the property in exchange for the price and deposit—receipt interest thereon, without prejudice and under reservation of the trustees' claims as regards the balance of interest claimed by them.

Thereafter the trustees brought an action in the Sheriff Court at Glasgow against Mrs Jardine for the sum of £50, 1s., being the difference between interest at 5 per cent. and deposit-receipt interest for the period above mentioned.

The defender stated—“(Stat. 7.) … Of said sum of £1850 £1400 was being lent to the said Mrs Jardine, and the money could be obtained only on delivering to the bondholder the disposition in her favour, the title-deeds, and the bond and disposition in security, all of said premises. (Stat. 8.) The said sum of £1850 was lodged in bank on deposit-receipt, but the vouchers or deposit-receipts are not in the custody or possession of defender.” …

On 4th August 1894 the Sheriff-Substitute ( Guthrie) pronounced the following interlocutor:—“Finds that by missives dated 3rd February 1893 the defender Mrs Jardine bought the house libelled from the pursuers, with entry at Whitsunday 1893: Finds that at the date of entry stipulated the defender entered upon and has since possessed and occupied the house, although the price was not paid until 28th March 1894 owing to a certain difficulty in completing the title: Finds that the said defender in the circumstances is barred personali exceptione from objecting to the validity of the missives of sale, and that she is liable in payment of interest at 5 per cent. from the stipulated date of entry till the said 28th March, 1894: Repels the defences, and decerns as craved.”

“ Note.—… The defender having occupied the house became liable to pay interest at the legal rate during the non-payment of the price. The rule is well settled and is implied even in the case (Rodger v. Brown, 21 D.) referred to by the defenders' agent. It was in her power to guard again st this by stipulation in the missive of sale or by consigning the money when it became apparent that some delay must take place in settling. The pursuers' agent said that his clients were disposed to claim only a modified rate of interest; but this offer not having been accepted when made, I have to decern for the sum in dispute, interest at the legal rate.”

The defenders appealed to the Sheriff, who adhered.

“ Note.—… The case is covered, as it seems to me, by the rule as stated in Ersk. iii. 3, 79. It is there said that ‘in a sale of lands the purchaser is, by an Act of the law, bound to pay interest for the price from the term at which he enters into the possession, as long as he retains the price,’ and that ‘this obtains although the delay of payment should be owing to the seller, who had not furnished the pursuer with a connected progress of title-deeds sufficient for his security.” …

The defender appealed, and argued—If the pursuers had given a good title the price would have been paid at entry. Owing, however, to the pursuers' inability to fulfil their part of the contract, the defender could not obtain the money which the lender had promised to advance, but by arrangement between her and the lender the amount had been deposited in bank in their joint names. This was equivalent to consignation, for the defender was deprived of all use of the money, and it was on this ground that consignation was held to relieve a purchaser of liability for interest at a higher rate than was earned on deposit. The defender was accordingly entitled to proof of her statement that the money had been placed on deposit-receipt. As the delay in payment had been due to the pursuers' fault they were not entitled to interest at a higher rate than the money was earning on deposit-receipt— Durie's Trustees v. Ayton, November 3, 1894, 22 R. 34. It would clearly be unfair that the defender should not only have to pay interest on the loan, but also interest at the rate of 5 per cent. on the price, which would have been paid but for the pursuers' failure to implement their contract.

Counsel for the pursuers were not called upon.

At advising—