Scottish Court of Session Decisions

This was an action at the instance of Sir Robert Drummond Moncreiffe, proprietor of the farm of Hilton, Perthshire, against William Scott Ferguson, farmer, concluding for payment of the sum of £380, being a year's rent of the farm up to Martinmas 1895.

The original tenant of the farm of Hilton was Mr Thomas Richmond, under a lease from the pursuer dated July 1886. The endurance of the lease was for three years from Martinmas 1886, and from year to year thereafter until it should be terminated by one year's written notice. The lease excluded “all assignees, whether legal or voluntary, and all sub-tenants or trustees, or managers for behoof of creditors.” It further provided that in the event of the

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tenant becoming bankrupt or executing a trust-deed for creditors the pursuer should have the option of declaring the lease null and void at the ensuing Martinmas. The rent was £480 per annum. By subsequent agreement dated in June and July 1889 the parties agreed to prolong the lease, so that it should be construed as if the period of endurance had been ten years, and the date of termination Martinmas 1896, and the rent was reduced to £380.

Mr Richmond on 13th May 1895 executed a trust-deed for behoof of his creditors in favour of the defender, to whom he disponed and assigned his whole estate, heritable and moveable, including his lease of the farm, with power in particular to take charge of and manage the farm with the stock and cropping thereon, purchasing and selling from time to time such live stock as might be necessary for the proper management of the farm, and to carry on the lease until the natural expiry thereof, or to renounce and give it up at such time as he should consider expedient. Application was made to the pursuer for his accession to the trust-deed and consent to the assignation of the lease, and these were given by a document dated 20th May 1895 on the footing “that the lease may be renounced by Mr Ferguson as from Martinmas next, and a formal renunciation delivered within three weeks from this date.” Subsequently on 29th June 1895 the defender executed a renunciation of the lease in favour of the pursuer. The defender entered into possession of the farm, and continued in possession of it till Martinmas 1895. He managed and cultivated the farm during that time and reaped the crop of the year.

The pursuer maintained that the defender as assignee aforesaid was liable to pay the whole rent of the year 1895, and on his declining to admit liability raised the present action.

The defender maintained that the pursuer having acceded to the trust-deed and intimated a claim thereunder, including the sum sued for, was bound to rank on the estate as an ordinary creditor.

He pleaded—“(4) No benefit under the lease having been assigned to the defender or the trust-estate, and the pursuer having consented to the assignation only conditionally for the limited purpose of enabling the defender to execute the trust by realising the stock and crop of 1895, the pursuer is not entitled to found on said assignation as inferring personal liability against the defender.”

The Lord Ordinary ( Stormonth Darling) on 17th June 1896 decerned against the defender in terms of the conclusions of the summons.

Opinion.—“Questions of difficulty have sometimes arisen (as in the case of M'Gavin v. Sturrock's Trustees, 18 R. 576) where it was necessary to gather from the conduct of parties whether a trustee for creditors had adopted the lease of a farm so as to render himself personally liable for its prestations.

“Here the question of adoption or non-adoption is to be solved not by conduct but by documents, and the material documents are (1) the trust-deed in favour of the defender dated 13th May 1895; (2) the accession by the pursuer dated 20th May 1895; and (3) the renunciation by the defender dated 29th June 1895. The combined effect of these writings is that the lease was assigned to the defender as at 13th May 1895, that the pursuer consented to the assignation on condition that the defender renounced the lease as at the term of Martinmas following, and that the defender did so renounce, expressly reserving to the pursuer his whole rights and claims under the lease, so far as applicable to the tenancy down to that term.

The defender had full possession under the deeds for six months. His acts of possession are fully detailed in the joint-minute, No. 20 of process, and they probably amounted to nothing more than what was necessary for working and reaping the crop of 1895, with a view of realising and distributing the estate among the creditors. It is probably also true that if there had also been no consent by the landlord, and no renunciation by the trustee, the same results could have been achieved, because by the terms of the lease the landlord could not have exercised his option of terminating the tenancy till Martinmas 1895, and, in the meantime, he could not have prevented the tenant continuing in possession and managing for the trustee.

But the parties chose to arrange matters differently. The assignation in the trust-deed was validated by the landlord's consent. The trustee thereupon became himself the tenant, and in that capacity he renounced the lease. I cannot doubt, therefore, that he became personally liable for the rent payable during the period of his possession.

It was argued for the defender that if so, he must also be liable for arrears of rent. That is a claim which may sometimes be made against a trustee who adopts a lease, but a landlord by his conduct may very easily waive it, and here it is not made. Certainly, what I am deciding by no means implies that it could be successfully made in the present case.”

The defender reclaimed, and argued—Personal liability was not created by the mere assignation to a trustee, and the only question was whether he had adopted the lease as a tenant. All that had been done by the defender was quite consistent with the view that he had merely occupied the farm for the purpose of realisation, and not as a tenant, and had accordingly not rendered himself personally liable for the prestations of the lease. If the deeds here could be read consistently with the decision in M'Gauin v. Sturrock's Trustees, Feb. 27, 1891, 18 R. 576, then the present case was ruled by that decision, there being no actings on the part of the defender such as would constitute an adoption of the lease. Nor were the deeds inconsistent with this view. The pursuer had consented to the assignation, not in order to receive the defender as an assignee of a continuing contract—the terms of the accession expressly excluding such an idea—but merely

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to confirm his title to get a valid renunciation, which was the only thing the defender could not do without the pursuer's aid. The pursuer did not thereby give any consideration such as would induce the defender to increase the extent of his liability, since it was to the pursuer's interest to get back the farm so as to be able to re-let it, and accordingly the defender could not be held, either by receiving the consent and accession or by executing the deed of renunciation, to have rendered himself personally liable.— Kirkland v. Sharpe, March 1, 1833, 6 W. & S. 340, at 351. And yet if the Lord Ordinary were right, the defender would have rendered himself liable for arrears of rent as well as for the rent for the current year.— Dwndas v. Morison, Dec. 4, 1857, 20 D. 225; Ersk. ii. 6, 34; Boss v. Monteith, Feb. 15, 1786, M. 15, 290. Such a claim could not be made, and was not made here, and the defender having done nothing which showed he had absolutely adopted the lease, could not be held liable.— Kirkland v. Cadell, March 9, 1838, 16 S. 860; Munro v. Fraser. Dec. 11, 1858. 21 D. 103; Strathmore's Trustees v. Kirkcaldy, June 21, 1853, 15 D. 752.

Argued for respondent—The cases quoted for the defender were those of a trustee in a sequestration, with statutory rights and duties. Here there was a trustee deriving his rights from a voluntary trust deed, with a deed of accession by the landlord, and of renunciation by himself, and the question must be decided by these deeds. The result of the deeds was to make the defender a tenant. The trust deed had been conceived, not with a view of instant renunciation by the defender, but of his carrying on the lease to its natural termination, and accordingly the question really was more, what were the powers of the defender, than what he actually did.

By the deed of accession the pursuer had given up an actual right, viz., that of suing the tenant for breach of contract in giving up the lease, and had validated the assignation. The defender had possession under these deeds, and had the full benefit of the crop for the year, so there was no hardship in holding him personally liable.

The fact that the pursuer had not sued for arrears did not deprive him of the right to sue for the year's rent.

At advising—