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SCOTTISH_Shaw_Court_of_Session

Page: 237↓

Campbell's Trustees

v.

Paul. No. 84.

Court of Session

1st Division D

Jan. 13 1835 ^*

Lord Jeffrey, Lord Balgray, Lord Mackenzie, Lord Balgray, Lord Mackenzie, Lords President, and Gillies, Lord Gillies.

Campbell's Trustees, Petitioner.— Skene— Donaldson. William Paul (Boyd's Trustee), Respondent.— G. G. Bell.

Subject_Poinding of the Ground—Right in Security—Bankruptcy.—

The estates of a debtor were sequestrated under the bankrupt act; his land-estate, which was in his own natural possession, was covered by an infeftment under a heritable bond; after the sequestration, but before the confirmation of the trustee, the heritable creditor raised and executed a summons of poinding the ground; held, that the creditor had a real right in the moveables, as accessaries of the lands, and that his executed summons of poinding preserved a preference over the moveables in competition with the confirmed trustee.

The late Miss Campbell was infeft under a heritable bond for £2300, in the lands of Chippermore, in Wigtonshire, belonging to Edward Boyd, of Mertonhall, and in his natural possession. The bond was in the usual terms. A sequestration of the estates of Mr Boyd was awarded under the bankrupt act, on 9th August, 1826. On 28th August, William Paul, accountant in Edinburgh, was appointed interim factor. On the 29th, Miss Campbell raised and executed before the Court of Session, an action of poinding of the ground, for the purpose of attaching the crop, &c, on the lands of Chippermore. On 23d September, Paul was elected trustee; and on the 29th, Miss Campbell presented a petition to the Sheriff of Wigton, founding on her infeftment, and craving sequestration of the crop and stocking, in security, and for payment of the £2300 and interest. The Sheriff granted warrant of sequestration, and ordered answers; in the mean time, the crop and stocking were sequestrated. Appearance was made for Paul, who lodged answers; and, on 7th October, an arrangement was entered into between Miss Campbell and him, to save the expense of separate measures, under which the crop and stocking were sold, reserving the rights of parties. On the 8th, Paul was confirmed trustee. After the sale of the lands, the price fell short of Miss Campbell's debt by above £750, and the trustee having refused to rank her preferably on the proceeds of the crop and stocking, she presented a

_________________ Footnote _________________

* This day Mr Duncan M‘Neill was admitted within the bar, as Solicitor-General, in place of Mr Skene, resigned. Sir William Rae, Bart., at the same time, was appointed Lord Advocate, in the room of Mr J. A. Murray, resigned.

petition and complaint which, on her death, was insisted in by her trustees,

Pleaded by Campbell's Trustees—

1. By virtue of Miss Campbell's infeftment, she had a real right, not only in the land, but also, under certain modifications, in the moveables upon the land, which were to be viewed as accessaries of the ground. The possessor of the land, whether owner or tenant, bad undoubtedly a full right of administration and alienation of the moveables on it, so long as not interpelled; and from this it followed, that his onerous disponee, whether by voluntary or judicial conveyance, could, by completing a real right in the moveables conveyed, exclude the right of the real creditor. But if the real creditor took even the first step of judicially asserting his real right, by raising and executing a summons of poinding the ground, before the disponee of the possessor had completed his right, there was an inherent preference in the nature of the real creditor's right which excluded the competition of the disponee. It would have excluded even a posterior real creditor, and, a fortiori, it must exclude an ordinary disponee. The trustee under the sequestration was not confirmed, until after the summons of poinding the ground was raised and executed. He was therefore in a situation no better than any onerous disponee to the land, or assignee to the moveables, whose right was not complete at the date of the summons of poinding the ground. It could not afterwards be completed to the prejudice of the real creditor, if no mora was imputable to him; and the agreement of parties in this case excluded all imputation of mora; so that if Miss Campbell was in a condition to have made good a preference at the date when she entered into the agreement, she was entitled to assert that preference now. The decree of confirmation could not operate retro, to the effect of overcoming the mid-impediment created by the summons of poinding, which was executed between the date of sequestration and the date of confirmation. ¹

2. The petition for sequestration presented to the Sheriff was sufficient of itself to preserve the preferable right of the real creditor; and it would have been duly followed up, but for the agreement of parties.

Pleaded by Paul—

1. By the decree of confirmation, there was a completed conveyance of the whole moveables of the bankrupt in his favour. It drew back to the date of the sequestration, and no incomplete right of any other party, then in cursu of being made up, could effectually compete with it. If the heritable creditor had taken no step whatever prior to confirmation, the trustee's right to the moveables would confessedly have excluded his.

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¹ 2 Ersk. 8, 32; Lady Kelhead, Nov. 2, 1748 (2785); Parkers, Feb. 5, 1758 (2868); Whyte, June 18, 1817 (F. C.); 3 Ersk. 2, 7, and 6, 24; Samson, May 15, 1822 (ante, I., 407, or p. 381, new edit.); Lyle, June 27, 1827 (ante, V. 845); Bell, Dec. 3, 1831 (ante, X. 100).

But it followed necessarily from this, that the creditor, who meant to vindicate his right, was truly running a race of diligence with the trustee, and nothing but a completion of diligence by the creditor, before the trustee's confirmation, could have the effect of defeating the trustee's right under the confirmation. ¹

2. The petition for sequestration before the Sheriff was an inept procedure.

The Lord Ordinary ordered Cases, and reported the cause. ^*

_________________ Footnote _________________

¹ Hay, July 7, 1824 (ante, III. 223), and 2 W. & S. 77; 2 Bell, 58.

^* “ Note.—The Lord Ordinary reports this case, not only because it involves a general question of importance in the law of sequestration, but because the arguments of the parties bring into apparent conflict the principles of several recent decisions, the true grounds and import of which it is desirable to have settled with as little delay as possible.

“There are many points argued in the Cases which the Lord Ordinary thinks attended with no difficulty. He has no doubt that an heritable creditor, infeft upon a deed conceived in the terms of that held by the complainer, has a right to attach the moveables on the lands covered by the infeftment, by a poinding of the ground, or other competent diligence; and that he may proceed, not only to complete, but to originate such process of attachment subsequent to the first deliverance on a petition for sequestrating the estate of the debtor, provided such attachment is completed before the confirmation of the trustee.

“On the other hand, ho has quite as little doubt, that it is necessary for the heritable creditor to use some process of attachment previous to the confirmation of the trustee, in order to obtain a preference over such moveables; and that if this be not done, they will be vested in the trustee for the whole creditors by the force of the statute.

“Thus much the Lord Ordinary thinks is settled by the decisions (to go no further back) in the cases of Hay against Marshall, affirmed with costs on appeal; and Bell against the Bank of Scotland, since pronounced in this Court. But beyond this he does not conceive that any thing has been finally settled, though principles and reasons have been assigned for these, and other decisions, which would lead to larger, and, he humbly thinks, inconsistent conclusions,—and it is with a view to determine the extent and authority of these conflicting principles that this case is now reported.

“The complainer contends, that under his infeftment, he has a real though accessory right to the moveables on the lands, which requires only to be asserted, or at most extricated, by instituting a poinding of the ground, obtaining a warrant of sequestration, or some other inchoate diligence; and that his preference can only be excluded by the trustee, or personal creditor, obtaining actual delivery of the goods, and removing them from the lands previous to any step of uch diligence; and this doctrine he supports by the cases of Douglas, Heron, and Company, Tullis and others, of dates anterior to that of Hay and Marshall, and by certain expressions in Lord Mackenzie's note in the subsequent case of Bell against the Bank of Scotland; and contends, that the decision in Hay and Marshall proceeded on the plain ground that the goods had been actually sold and removed before any claim was made for the heritable creditor.

“The trustee, on the other hand, maintains that the heritable creditor has by his infeftment no real right to the moveables on the lands, but merely a power to attach them by the peculiar process of a poinding of the ground; and that till this diligence is completed, no preference over them can be held as established; and, at all events, they must be vested in the trustee, under a sequestration if his appointment is previously confirmed; and this, he says, is plainly the ground on which the decision in Hay and Marshall proceeded, especially in the House of Lords, by which the erroneous principles of some earlier decisions were corrected. While in Bell and the Bank of Scotland, although the diligence was not actually completed, it was plainly in the power of the heritable creditor to have completed it before the trustee was confirmed, decreet having been obtained in both cases before the date of the petition for sequestration, and the articles immediately afterwards sold, by agreement.

“The Lord Ordinary humbly conceives that one or other of these views should now be distinctly sanctioned by the Court. As things stand at present, the weight of authority seems to be with the complainer, though, if it is once admitted that an heritable creditor is not entitled to all the privileges of a landlord, the views of the trustee appear most accordant to principle. The confirmation of the trustee seems to the Lord Ordinary to vest the moveables in him, vi statuti, as completely as they would have been vested in any individual creditor by a completed poinding, followed up by sale and actual delivery. It is by this peculiar statutory privilege of the trustee that this case is distinguished from that of an ordinary poinding creditor, referred to by Lord Mackenzie in the case of Bell and the Bank of Scotland; and, consequently, unless the heritable creditor had a complete preference by his infeftment alone, and without the help of any diligence whatever, it is difficult to see how any thing but a previously completed diligence should exclude this right of the trustee. The earlier cases seem no doubt to recognise the sufficiency of the infeftment alone, and equiparate the right of the heritable creditor in all respects to that of an absolute proprietor. But the case of Hay and Marshall evidently discredits that doctrine, and requires the use of some diligence to give the heritable creditor a place in the competition: and then the difficulty recurs, how, if diligence is necessary, any thing but a completed diligence can avail ? The Lord Ordinary is not aware of any principle upon which a preference can be gained (or excluded) by inchoate diligence, except that of litigiosity; and this, it seems to him, could scarcely be pleaded against the privileged and statutory rights of a judicial trustee.

“In any other view, it can operate merely as a notice or intimation of a wish and purpose to obtain a preference—which should rather quicken than exclude the efforts of a lawful competitor.

“If the inchoate poinding of the ground would not bar the vesting of the right in the trustee, the Lord Ordinary thinks that still less effect can he given to the subsequent application to the Sheriff for sequestration. Indeed, there seems much reason to doubt of the competency of such an application at the instance of a mere heritable creditor, under such a deed as that now in question. Since it is admitted that it could not be followed out to the same effect as in the hands of a landlord, and though its competency is recognised in the earlier cases, this seems to be rested on the assumption, which will scarcely be now maintained, that an heritable creditor has all the rights of an absolute proprietor, and has a real preference over moveables, without the need of any diligence, in consequence of his infeftment alone.

“The Lord Ordinary does not think that the agreement of parties in this case can in any way affect the question of law. It was entered into the very day before the trustee was confirmed, and when it was manifestly impossible for the complainer to have completed any process of attachment before that event. The Lord Ordinary cannot suppose that such an agreement can have any effect, because dated on the 7th, which it would not have had if dated on the 9th. In this respect it seems in no respect parallel to the agreement in the case of Bell and the Bank of Scotland.”

Their Lordships, at the first advising, delayed pronouncing judgment, in respect of the general importance of the question raised, and the expediency of authoritatively settling it. At the second advising—

Lord Balgray.—.This is a question of very great importance. The process of poinding the ground is of high antiquity in our law and practice, and it is characterised by many striking peculiarities, which must be carefully kept in view in determining its scope and effects. In such a poinding by a creditor infeft. he may attach the moveables on the land in payment of the interest upon the debt, for any length of arrears, and it is probably on this account that it has been so much more used than the process of sequestration. It has, indeed, been very justly observed by Lord Kaimes, that there are few things which bear the same descriptive name, and yet are so essentially different in their nature, as the process of poinding the ground, and that of poinding for a personal debt. And it occurs to me, that the extent of the difference between these processes has scarcely ever been radically expiscated. By the old law of the country, the heritable creditor infeft, could, brevi manu, seize the moveables upon the lands of the debtor; and this privilege was so strongly acknowledged and acted on, that it required repeated enactments to compel the creditor to seek the authority of a Court, when inforcing his right, so as to prevent the scenes of actual violence and injustice which were otherwise produced. In short, the right of the creditor infeft was held to be as extensive as that of the proprietor, who was in the practice of seizing the moveables on the land in payment of rent, without requiring the sanction of any judicial authority ; and the power of the Baron Courts still remaining, is a vestige of that ancient privilege, for the Baron, upon a decree of his own Court, can poind the ground without giving any previous charge to the tenant. I think a poinding of the ground is not so much a diligence as it is a real action—a declaratory real action, containing no personal conclusions whatever. The persons who are called as defenders, being the owner and possessors of the ground, are not called in respect of any conclusions directed against them, but in respect of their interest in the lands; and the goods of any such owner or possessor (with a limitation in the case of tenants) are liable to the heritable creditor. In the case of a summons of poinding the ground by another creditor infeft, it would be competent for a creditor with a prior infeftment to make appearance, and insist on a preference, in respect of the prior date of his real right; and such is the nature of the right, that the poinding will affect the moveables on the lands, not merely while the lands belong to the original proprietor, but after they pass to a singular successor, or are held by a wadsetter or liferenter. And the peculiar nature of the right appears Still more remarkably, when it is considered, that even in the case of an heir-apparent, a poinding of the ground will proceed without any charge to him to enter, or any transference against him. And in the case of the lands being acquired by a general dispense, mortis causa, the moveables on the lands are subject to the poinding of the ground. When these striking and peculiar properties of this process are kept in view, it does not occur to me how the election of a trustee under a sequestration, and the decree of confirmation in his favour, though drawing back to the date of the sequestration, can cut off the preferable right of the real creditor by his poinding of the ground. Although the confirmation does draw back to the date of the sequestration, so that all the moveables and personal rights of the bankrupt are vested in the trustee as from that date, still the very same judgment of the Court declares the trustee to be owner and proprietor of the ground affected by the real right. From the date of that judgment the trustee is liable, so far as concerns moveables on the lands, in the same manner that any other onerous singular successor would be. For these reasons, I am of opinion, that the heritable creditor in this case ought to be preferred to the trustee, upon the proceeds of the crop and stocking which were sold under an agreement reserving the rights of parties entire.

Lord Mackenzie.—I arrive at the same result, but I do not acquiesce in all the views which have just been expressed; for it would appear to me, that if a trustee in bankruptcy came precisely into the place of any singular successor in the bond, there would be no occasion for a creditor infeft to take any step whatever for attaching the moveables prior to the confirmation of the trustee. By raising his poinding, even after the confirmation, the real creditor's right would be preferable if the trustee were merely in the case of an ordinary singular successor in the land.

Lord Balgray.—I did not intend to express any such doctrine as that the heritable creditor would have been preferred to the trustee, even though he had used no step whatever to attach the moveables prior to the confirmation. In this case a summons of poinding the ground was raised and executed, and that was enough to save the preference as against the effect of the confirmation.

Lord Mackenzie.—I shall now state shortly the views on which I feel inclined to rest my judgment in this case, which involves principles of considerable nicety, as well as importance.

I shall not recapitulate the circumstances farther than to notice, that the competition arises between a creditor infeft, and a trustee under a mercantile sequestration; the creditor having raised and executed a summons of poinding of the ground, between the date of the judgment awarding sequestration, and that which confirmed the trustee in the usual terms. Whether is the real creditor or the trustee to be preferred on the proceeds of the crop and stocking, which have been sold under an arrangement reserving the rights of parties entire ? I conceive that the heritable creditor is preferable, in respect that he had commenced his process of poinding the ground before the trustee had obtained confirmation so as to complete a vested right in the moveables. I think the creditor was thus in a condition to have made good a preference at the date of entering into the agreement with the trustee. Anciently, the moveables upon land were viewed as accessories of the land, without regard to the rights even of free tenants. They seem to have been considered as the fruits, or the surrogate of the fruits, of the land ; and as the tenant's right was merely personal, the creditor of the landlord, by brief of distress,could sweep away all the moveables for the landlord's debt. One remedy against the injustice to which tenants were thus exposed was introduced by 1449, c. 18, which made a tack a real right against singular successors; and another remedy was provided by 1469, c. 36, which restricted the liability of the tenant's moveables, in a question with a creditor of the landlord, to the amount of the rents or maills which he was owing to his landlord. The latter statute, in particular, points out forcibly the state of the law in regard to moveables on the land, as producing “great heirschip and destruction of the Kingis commons, maillers, and inhabitantes of lordis lands, throw the force of the brief of distress,” as the goods and cattle of the tenants were distrained for the debt of the landlord, without reference to the amount of rent due by the tenant. But the remedy of the statute was applicable only to the personal creditors using the brief of distress, and not to real creditors. Where the land was made subject to a real debt, that debitum fundi covered not only the land, but also the moveables on the land as accessories. And even when the authority of a court is employed to give effect to this right, it is to give effect to an existing real right, inherent in the infeftment, and, though limited to the moveables on the land which is contained in the infeftment, good against all the moveables (with some qualifications) on that land. At one time, the right was good even against the moveables of third parties, though neither owners nor possessors, if brought upon the land. A debitum fundi anciently gave a real right over the moveables on the fundus, equal to a right of pledge; and I do not think the decisions can otherwise be accounted for. Nor am I aware of any statute, decision, or even dictum, abolishing this real right. It has been subjected to several limitations, but it has not been abolished. One limitation was, as to the goods of strangers brought upon the farm, established in the case of Lady Ednam, July 11, 1628. Another limitation was, the exemption of the goods of tenants from liability, except for their past and current rents. Again, until the general security of the creditor was made special by poinding, the administration of the moveables on the farm was necessarily left in the hands of the tenant; and as he might fairly alienate to any stranger, it was held that, if such alienation was fully completed before the heritable creditor took any step towards attaching the moveables, the creditor could not afterwards affect them by a poinding of the ground. In the same manner, if a posterior real creditor used a poinding of the ground, and the prior creditor did not come forward in due time, he was cut out of any right to vindicate the moveables attached by the posterior creditor. And, even in the case of an ordinary poinding for a personal debt of the landlord or tenant, if the real creditor allowed this poinder to complete his right without interruption, the poinder effectually carried off the subject of the real creditor's security. And, lastly, in the case of a sequestration in mercantile bankruptcy, it has been held that the trustee for the creditors can take the moveables out of the real creditor's right, if his diligence be completed before any step is taken by the real creditor. This was the case of Hay v. Marshall. The real creditor had a .right, which he failed tempestive to use; the trustee for the creditors completed his title to the moveables by confirmation. And it was held that the real creditor, after allowing this to be done without making any movement, could not afterwards poind the ground, so as to affect the moveables falling under the trustee's confirmation. I am not aware of any case having extended farther the right of an ordinary creditor or disponee against the right of a real creditor. It has never been found that, if the real creditor did come forward to poind the ground, and was in the course of poinding it, he could be excluded by any subsequent alienation, voluntary or judicial, of the moveables on the ground.

All the limitations of the real right of the creditor infeft are consistent with the existence of a real right in the moveables as accessories of the land, and, according to that view, are perfectly intelligible in themselves. If the real creditor stands looking on, till an onerous conveyance of these moveables in favour of any third party is fully completed, his exclusion from all right to them is the natural result of the circumstance that the possessor of the ground is left in the free administration of the moveables upon it, with power to buy and sell. And it is immaterial whether such completed alienation is effected by voluntary or judicial conveyance. But it is essential that it be completed. For if it is to be held that, although the real creditor begins to exercise his right by raising a summons of poinding of the ground, before the other party's right is fully completed, he is, nevertheless, to have no preference, except such as he can acquire by being first in a race of diligence, this is a view entirely destructive of there being any real right in the moveables at all. But any such position, as that a real creditor has no right at all in the moveables on the land, except such as he can create or acquire by being first in a race of diligence with ordinary creditors, is not only unsupported by any authority, but is entirely irreconcileable with our law. It would render our decisions inexplicable, and all the properties which have been recognised as belonging to a poinding of the ground, as well as all the special limitations to which it has been subjected, would be unintelligible. I am for adhering to the doctrine of our ancient lawyers, which is not contradicted, so far as I am aware, by more recent authorities, and which is strongly confirmed in a comparatively modern work, to which I incline to allow much weight, the Notes on Stair, which are generally attributed to Lord Elchies. I think, therefore, that the heritable creditor, in this case, ought to be preferred to the trustee.

Lords President and Gillies intimated, that they entirely concurred with Lord Mackenzie.

Lord Gillies.—I think it right also to observe, that I rest nothing whatever on the petition for sequestration which was presented to the Sheriff. I found entirely on the circumstance, that, before the confirmation of the trustee, the heritable creditor judicially asserted his preferable right, by raising and executing a summons of poinding the ground.

The other Judges concurred in stating this to be the ground of judgment.

The Court preferred Campbell's trustees, and awarded expenses against Paul.

Solicitors: Campbell and Traill, W.S.— T. Sprot, W.S.—Agents.

SS 13 SS 237 1835