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Scottish Court of Session Decisions |
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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Morrison v. Kirk and Others [1911] ScotLR 36 (04 November 1911) URL: http://www.bailii.org/scot/cases/ScotCS/1911/49SLR0036.html Cite as: [1911] ScotLR 36, [1911] SLR 36 |
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Page: 36↓
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The three pro indiviso proprietors of a heritable property entered into an arrangement under which a bond was obtained over the whole property on condition that so long as the interest and an annual instalment of £500 in reduction of the principal were punctually paid, the bond should neither be called up nor paid up for five years. In an action of division and sale of the property brought by one of the proprietors before the expiry of the five years, held (1) that the pursuer was not barred by the arrangement, and (2) that though the bondholders refused to allocate in the event of division, no such prejudice to the interests of the defenders would result from division as to entitle them to insist on sale.
Thom v. Macbeth, November 26, 1875, 3 R. 161, 13 S.L.R. 94, distinguished.
Mrs Margaret Hannah Kirk or Morrison, with the consent and concurrence of her husband Patrick Sandeman Beveridge Morrison, raised an action against Robert John Kirk and George Mackintosh Kirk, concluding for division and sale of certain heritable properties in Leith of which the pursuer and the defenders were pro indiviso proprietors.
The defenders averred that in the beginning of the year 1909 there were bonds over the property amounting to about £21,000, due to several creditors who desired repayment; that accordingly under arrangement between the pursuer and the defenders the sum of £22,000 was borrowed on the security of all the properties from the Edinburgh and Leith Gas Commissioners, the debtors in the personal obligation in the bond being the pursuer and the defenders.
The defenders further averred—“(Stat. 2) It was made a condition of this loan that the loan was not to be called up or repaid prior to Whitsunday 1914, and this condition was confirmed in writing by a back-letter dated 15th May 1909, granted by the clerk to the said Commissioners. It was a further condition of the loan, confirmed in the same way, that the sum in the bond should be reduced by the sum of £500 annually. The pursuer was a party to and cognisant of the imposition of the said conditions, and they are binding on her.”
The defenders pleaded, inter alia—“(1) The pursuer is barred by personal exception, in respect of her actings set forth in the defences, from insisting in the present action in hoc statu. (2) In view of the bond over the subjects, and the agreement with regard thereto condescended on, division or sale of the subjects is presently impracticable. The action is premature and ought to be dismissed.”
On 17th March 1910 the Lord Ordinary ( Guthrie) remitted to Mr William Ormiston, land valuator, Edinburgh, “to consider the summons and whole procedure and also to examine the subjects libelled, and to report whether they are incapable of division among the pro indiviso proprietors thereof, and whether it is proper and necessary that they should be sold, with due regard to the interests of the parties.”
Mr Ormiston reported, inter alia, as follows—“IV. That the subjects libelled are capable of division among the pro indiviso proprietors thereof. V. That they can be divided among three proprietors in three nearly equal divisions, either by choice or by ballot, the one receiving the properties with the slightly larger values paying over the difference in money to those receiving the lesser valued lot. VI. That to attempt to sell the properties now would be greatly to the disadvantage of the estate.”
The bondholders, on being approached by the pursuer, intimated that they would not consent to allocate their bond in proportion to the division suggested by the reporter.
On 8th July 1910 the Lord Ordinary pronounced an interlocutor dismissing the action.
Opinion.—“In this case the pursuer proposes that certain properties in Leith, held pro indiviso by her and the defenders, should be divided. A remit was made to Mr Ormiston, ordained surveyor, to consider and report whether the properties are incapable of division among the pro indiviso proprietors thereof, and whether it is proper and necessary that they should be sold with due regard to the interests of the parties. Mr Ormiston reports in favour of division and against sale. Had I nothing to consider but his report I should find that the properties can be divided, and give effect to the division which he proposes. All parties agree in the fairness of the division proposed by him, and they also agree that to attempt to sell the properties at present would be to the serious disadvantage of the estate. Nobody proposes that I should order a sale; the question is whether I should order a division in view of the bond for £22,000 in favour of the Edinburgh and Leith Gas Commissioners which was borrowed on the security of the properties at Whitsunday 1909. The Commissioners not unnaturally have declined to allow an allocation, and insist on the obligations at present existing against the pursuer and defenders remaining down to the expiry of the loan at Whitsunday 1914. The pursuer says that notwithstanding she is entitled to have a division of the properties. The defenders reply that division in these circumstances would lead to an inequitable interference with their rights, and therefore should be refused.
In the leading case of Brock v. Hamilton ( 19 D. 704) Lord Rutherford observed—‘He
Page: 37↓
In this case Mr Wilson maintains that, looking to the interests of his clients, the defenders, the division proposed is not reasonably practicable, because it would prejudicially affect their legal rights. He pointed out that at the present moment, although each of them is liable for the whole debt, nothing can be done without joint consent; each of them has full control of the whole properties subject to the debt. If the proposal is carried out, and the property is divided, and the debt is left unallocated, then each of them will have full control over his own portion, but no control over the other two-thirds. In the parts of the properties not under their control dilapidation might take place; the subjects might be applied to speculative and unremunerative purposes, and even such a matter as keeping up the fire insurance might from inattention not be looked after. In short, the defenders say that they would lose all control of the other parts of the property, a control which is in the market recognised as representing a valuable asset.
It seems to me that, following the views which were given effect to in the case of Thom v. Macbeth, I am bound to hold that the division here, although physically practicable is not reasonably practicable, with due regard to the interests of the parties, and in particular the interests of the defenders. I must therefore dismiss the summons.”
The pursuer reclaimed, and argued—A pro indiviso proprietor was always entitled to have the property divided if that was practicable, and if not to have it sold— Anderson v. Anderson, March 11, 1857, 19 D. 700, at p. 704; Brock v. Hamilton, January 27, 1852, 19 D. 701. It could not be said that division was impracticable here. Neither the bond itself nor the arrangement under which that bond was granted was any obstacle to division. If after division the bondholders were to enforce their rights against any one of the three proprietors, he could get an assignation from the bondholder— Nicol's Trustee v. Hill, February 8, 1889, 16 R. 416, 26 S.L.R. 327. The case of Thom v. Macbeth, November 26, 1875, 3 R. 161, 13 S.L.R. 94, was distinguishable, for there division would have affected the market value of the property.
Argued for the defenders (respondents)—Though the existence of a bond over a pro indiviso property did not necessarily exclude division and sale, the pursuers' demand was excluded here, because the arrangement under which the bond was obtained impliedly bound all the proprietors to remain in communion for the five years. At all events division would so prejudice the defenders' interests that the Court would not order it. If the property were divided, then each part would remain burdened with the whole debt, since the bondholders refused to allocate, and would thus become unmarketable. That entitled the defenders to resist division— Thom v. Macbeth, cit.
At advising—
In my opinion this judgment cannot stand. Unless a pro indiviso proprietor has barred himself by contract from resorting
Page: 38↓
In my opinion there is no relevant averment of any agreement by the pursuer that she should not resort to her common law rights as a pro indiviso proprietor. A division of the properties now cannot affect in any way the rights of the bondholders. All the properties will continue to be the subject of their security, whether they form a common property or are divided among the owners. The personal obligation of the three borrowers will also be available to the bondholders. The Lord Ordinary seems to have taken the same view, because it is not on this ground that he has dismissed the action. He seems, however, to be apprehensive that if the subjects were divided one or other of the owners might allow dilapidation to take place or apply the subjects to speculative and unremunerative purposes. That is a risk, however, which the pursuer runs just as much as the defenders; and it might be said in every case where there was a bond over undivided properties which could not be called up or paid up for a period of years. The risk, besides, does not appear to be a very real one, as it is of course in the interest of each proprietor to make the most out of his or her property. The matter of the fire insurance, I think, need scarcely be considered, because the bondholders will of course see to it that the premiums are duly paid. Considerations of this kind have never been regarded as sufficient to exclude the common law right to have the property divided, and the case of Thom v. Macbeth, to which the Lord Ordinary refers, is no authority for such a view. There the estate was a feuing estate, the full value of which could only be realised if it were feued as a whole; and while division was refused as inequitable to some or all of the parties, the Court directed the property to be sold and the price divided. In the face of Mr Ormiston's report it would never do to resort to a sale of the properties with which we are here dealing in the present state of the property market, and the only alternative seems to be to grant the pursuer's demand for division.
The only point which at one time gave me a little concern has reference to the stipulation that a sum of £500 is to be repaid annually to the bondholders towards reduction of the principal sum half-yearly. These instalments have hitherto been paid out of the surplus rents belonging to the whole proprietors pro indiviso; and it is conceivable that the pursuer might not contribute her proportion out of the property which was handed over to her on a division with the result of endangering the continuance of the loan. I cannot think that there is very much substance in this objection. In the first place the pursuer runs exactly the same risk as the defenders in this matter. Either or both of them might equally fail to contribute his proportion of each instalment. If so, however, any of the proprietors might pay up the balance or leave the bondholders to take action against the proprietor who had failed to pay his or her proportion of the instalment due. It is scarcely to be assumed that the bondholders would act capriciously or inequitably in such a matter, or that if one proprietor paid up more than his share of an instalment, he would not be entitled to a remedy against the defaulting proprietor quoad that proportion. At all events I think it cannot be affirmed that division will sacrifice the interests of some or all of the parties, which was the ground on which it was refused in Thom's case. I am therefore of opinion that we must recall the Lord Ordinary's interlocutor and remit to him to give effect to the division which Mr Ormiston proposes.
Page: 39↓
The Court recalled the Lord Ordinary's interlocutor and remitted to him to give effect to Mr Ormiston's report with due regard to the interests of the parties, and to proceed.
Counsel for the Pursuer (Reclaimer)— Graham Stewart, K.C.— Armit. Agents— Clark & Macdonald, S.S.C.
Counsel for the Defenders (Respondents)— Wilson, K.C.— Jameson. Agents— Garden & Robertson, S.S.C.
