Scottish Court of Session Decisions

Subject_1 DEBTOR AND CREDITOR.
Subject_2 SECT II.

A preferable creditor can do no voluntary deed to prefer one secondary creditor to another; and if he take payment out of one subject, he is bound to assign to postponed creditors.

Jean Pitcairn, Relict of Mr John Ainsworth Merchant in Edinburgh,
v.
Thomas Haliday Bailie of Selkirk

Date: 21 December 1710
Case No. No 25.

The Lords found, where a posterior creditor pays a prior out of his own money, then he ought to assign simply; but if he has left him only to get his payment out of the debtor's means, he is not obliged to assign, except with a quality and reservation that it should not prejudice his other debts and rights, though posterior to those of the party craving the assignation.

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In the poinding of the ground at the instance of Jean Pitcairn, as having right to an infeftment of annualrent effeiring to 1000 merks of principal, granted by James Mitchelhill in his lands of Kingscroft, dated and registered in the year 1704; Thomas Haliday, who had an infeftment of annualrent out of the same lands in anno 1701, and also out of James Mitchelhill's burrow-lands in Selkirk in the year 1700, for the principal sum of L. 1280, and another infeftment of annualrent out of the foresaid lands of Kingscroft, and burrow-lands in the year 1707, for the accumulate sum of L. 2000 compeared and claimed the whole annualrent of his L. 1280 out of the lands of Kingscroft, by virtue of his first and preferable infeftment.

Alleged for Jean Pitcairn: Seeing Haliday stands infeft both in the Kingscroft and burrow-lands, if he takes his whole annualrent out of Kingscroft, he must assign her to his infeftment out of the burrow-lands, to the end she may get payment of her annualrent.

Replied for Thomas Haliday: Seeing he hath another infeftment furth of both lands for the accumulate sum of L. 2000 posterior to Pitcairn's infeftment in Kingscroft, he may take his first infeftment subservient to the other, and cannot be obliged to assign it to her to affect the burrow lands till he get payment of both. For albeit a preferable creditor who having right to poind the ground of several lands for one and the same annualrent, maliciously, without any benefit arising to himself, exacts the whole out of one, to the prejudice of a posterior creditor infeft therein, may be ordained to assign the posterior creditor to his right upon the rest, in so far as may extend to the proportion of annualrent that fell to be taken furth thereof, had he poinded all equally; cum jus civile non indulgeat malitiis; yet when a person can shew any prejudice he may sustain by doing such a neighbourly office, he may very well say, Egomet mihi proximus, charity begins at home, and he cannot be obliged to assign to his own loss, Nemini enim fraudem facit, qui jure suo utitur, l. 55. ff. de Reg. Jur. And it was so decided in a parallel case, February 11th 1676, Bruce contra Mitchell, No 19. p 3365.

Duplied for Jean Pitcairn: One is not indeed obliged to assign a prior personal right, in prejudice of a posterior competent to him; there being no record of personal rights to certiorate creditors thereof; but since the real burdens upon heritage are patent upon record, a person having an universal infeftment cannot bona fide acquire any new right in prejudice of an anterior particular infeftment competent to another, and therefore if he draw his payment by virtue of the transcendent infeftment out of the particular subject affected by that other, in æmulationem vicini, he must assign to the party so excluded. Otherwise, a debtor granting a general infeftment to one creditor, would be obliged to grant general infeftments to all: whereas law hath rather encouraged the taking special rights, and therefore introduced special adjudications of lands equivalent to the sums.

The Lords were all clear that an annualrenter might take his payment out of any tenement in which he hath got infeftment from the debtor, and that if he get payment out of the debtor's effects, it extinguisheth the security; so as it cannot be assigned to another creditor. But found, That if Haliday receive payment from Pitcairn out of her own means, he is obliged to assign to Pitcairn for a proportionable relief, with this quality, That the same should not be made use of against Haliday's other infeftment.

Fol. Dic. v. 1. p. 223. Forbes, p. 458. *** Fountainhall reports the same case:

Jean Pitcairn being infeft in an annualrent corresponding to the principal sum of 1000 merks out of the lands of Kingscrofts, belonging to Bailie Mitchell of Selkrig, and pursuing a poinding of the ground, compearance is made for Thomas Haliday, who produces two infeftments, both out of the Kingscrofts, and likewise some acres and tenements of land, the first for L. 1200 Scots prior to her's, and the second made up by accumulation of the annualrents of the first sum, and some accessions, for L. 2000, but posterior to her infeftment. The ranking of these rights were very plain, his first bond primo loco; her infeftment secundo loco; and his second bond tertio loco. But the difficulty arose, that she contended that he having two subjects for uplifting his first annualrent, he ought not to lay it all on the lands of Kingscrofts, wherein she was only infeft; but, having likewise the burrow-acres and houses, whereto she had no right, he should take his annualrent out of both; and if he would ex æmulatione and invidiously burden her lands by taking the whole out of them, then he ought in reason to assign her to a proportion, so far as she wanted, and was evicted to him, that she might be indemnis by getting it made up out of the other subject. Answered, No law obliged him to assign where he was paid by the debtor's own means, rents, and effects; for that extinguished the debt pro tanto, and were to assign a non-ens. But much less when the assignation would be to his evident hurt; for, he having a posterior infeftment out of both lands, he spared the burrow-acres as to his first debt, and affected them with the annualrents of his second bond, which she could neither hinder nor quarrel, not being infeft therein; and if he did assign, it must be with this express quality and condition that she should not make use of his assignation to the prejudice of his other rights; and this cannot be reckoned malice, seeing nemini fraudem facit qui jure suo utitur, and it was so decided 11th, February 1676, Bruce contra Mitchell, No 19. p. 3365. She alleged, That in so far as his second bond was made up of the bygone annualrents of the first she allowed them to be privileged, but the anatocismus, making these to bear annualrent, was unfavourable in law. The Lords found where a posterior creditor pays a prior out of his own money, then he ought to assign simply; but if he left him only to get his payment out of the debtor's means, he was not obliged to assign, but with a quality and reservation that it should not prejudge his other debts and rights, though posterior to the party craving the assignation.

Fountainhall, v. 2. p. 612.