Purchaser acquiring an interest not produced in the ranking. - Method of accounting for the price. - Division of the price. - At what time to be made?
The Trustees for Merchiston's Creditors v. Mitchell of Pittedie
Date: 30 Jane 1747 Case No. No 46.
A person being debtor in a sum bearing interest, which he was not obliged to pay, in regard he was creditor in a larger sum with interest, the payment whereof was suspended on a distant event, which sums were imputable in payment of each other; it was found that the excresce of the interests of the larger sum, did not progressively extinguish the lesser.
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Charles Mitchell purchased at a judicial sale the lands of Pittedie, to be entered to at Whhitsunday 1726, and John Lowis of Merchiston being a considerable creditor thereon, he advanced to him several sums on his bills, concerning which, upon Merchiston's bankruptcy, this question arose, Whether these advances should be imputed in payment of the share falling due to him of the price of Pittedie, or Mr Mitchell be considered as a creditor therefor, and debtor in the whole price? The Lords, 4th February 1732, “Found the sums contained in Merchiston's bills were imputable in solutum of the debt due to Merchiston, affecting the estate of Pittedie purchased by Charles Mitchell.” And, in application thereof, the Lord Ordinary found, “That the principal sum in the bills, with the annualrents due thereby, were to be deducted out of the sums for which the Trustees of the Creditors of Merchiston were ranked upon the price of Pittedie, as come in place of Merchiston.
As Mr Calderwood of Pittedie's Lady was infeft for her liferent-annuity, a considerable part of the price fell to be retained by the purchaser, to answer it, in the event of her surviving her husband, and he to be accountable to the creditors for the interest thereof during Pittedie's life, and the remainder only to be immediately divided amongst them,
Of which there fell to Merchiston's share
- -
L. 479
9
86
Bills by Merchiston to Mitchell amounted to
- -
9418
15
1
Deduct Merchiston's immediate draught
- -
4799
8
6
Amount of the bills not reduced by the draught
- -
4619
6
7
Merchiston's share of the retained money, to be paid with interest on the death of the Lady Pittedie,
- -
L. 11467
12
4
By the scheme of division the purchaser was ordained to pay to the creditors, except Merchiston, their share of what part of the price was not to be retained, as also under the same exception the interest of the retained part, till the Lady's liferent should take place; and the reason for not paying Merchiston was given, “That the money drawn by him of the money not retained was compensed at Whitsunday 1726 years, by payment made by the purchaser to Merchiston, and that the said payments exceeded the money drawn by L.4619:6:7, which, and annualrent thereof from Whitsunday 1726, was to be taken out of the share of the retained money, falling to the said trustees and annualrent thereof.”
The Creditors of Merchiston pursued the purchaser, to have it found and declared, that Merchiston's bills, with the interest thereon, were extinguished at Candlemas 1740, at which time their arose some excresce on the interest of their share of the retained price, and that it ought to bear interest to them for the time to come until the commencement of the liferent. This they endeavoured to make out by considering Merchiston as debtor in his bills, in so far as not extinguished by the immediate draught, and creditor in his share of the retained, price; and these two claims being by interlocutor, 4th February 1732, declared imputable to one another, the interest of the retained sum behoved annually to extinguish so much of the principal of the bills, and thus by a progressive account the extinction was made. They pleaded, That they might have insisted for the imputation from the time of the first year's interest falling due on the price at Whitsunday 1727, but they only demanded that the calcul should be made from the date of the interlocutor.
On the other hand, it was contended, That the application ought to be made when the interest arising on the retained price extinguished the bills and interest without any progression.
Two schemes were made by an accountant, agreeably to the demands of the several parties, and the Lord Ordinary, 29th January, and 5th February, 1745, “Approved of the report of the accountant, as stated in the first page of the report,” viz. that agreeable to the claim of the defenders.
On bill and answers, the Lords adhered.
Act. Murray.Alt. A. Hamilton.Clerk, Kirkpatrick.
D. Falconer, v. 1. No 195. p. 260.
