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Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Brown v Rae [1835] CA 13_256 (14 January 1835)
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Cite as: [1835] CA 13_256
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SCOTTISH_Shaw_Court_of_Session
Page: 256↓
v.
Subject_Rightin Security—Payment—Discharge—Proof.—
Held, 1. That a creditor in possession under a first heritable bond is entitled, after applying the rents to payment of the interest thereon, to pay the surplus to the proprietor, and not bound to apply that surplus to extinction of the principal sum, notwithstanding the existence of a contingent heritable security. 2. That a bona fide discharge, by the proprietor, of such surplus is sufficient to bar any accounting at the instance of the postponed creditor. Question, whether such discharge could be obviated, by reference to oath of the first creditor, that the facts there stated were not true?
In 1806, Charles Brown borrowed £200 from his son-in-law, William Buchanan, in security of which he granted a heritable bond, with a power of sale if the debt was not paid before Martinmas, 1812, or if three half-years' interest should run into the fourth, unpaid. In virtue of this bond, Buchanan was infeft in the same year. The bond also gave power to Buchanan to “enter to the possession of the foresaid subjects, by uplifting the rents of the same, for which he shall not be bound to do diligence, output and input tenants, and generally do every thing that I could have done before granting these presents; and that he shall be accountable only for his actual intromissions.”
Buchanan died in 1807, leaving a widow and son in pupillarity, William Buchanan, junior. The bond was not paid at Martinmas, 1812, and soon thereafter Buchanan's widow entered into the possession of the subjects, drew the rents, and managed the property on her own and her son's account. She afterwards married Andrew Rae, and continued to possess the subjects until her son became of age. He then possessed it
In 1811, Charles Brown married again, and, under a marriage-contract, infeft his wife in an annuity of £10, payable, in the event of her survivance, out of the heritable subjects, while she conveyed to him and the heirs of the marriage, whatever she possessed, or might acquire, stante matrimonio. Brown died in 1826.
In 1830, Mrs Brown, his widow, raised a multiplepoinding before the Sheriff of Lanarkshire in name of the tenants, founding on her marriage-contract and infeftment, and alleging that the rents with which Buchanan's widow, his son, and the son's trustee had intromitted, were sufficient to extinguish the whole debt in the bond; and she claimed the rents in the hands of the tenants in satisfaction of her annuity, no part of which had been paid. This claim was opposed by Rae, the son's trustee, who averred, that though the rents annually exceeded the interest on the bond, yet part of the surplus was applied in payment of feu-duty, insurance, &c, and the balance was paid to Brown, the proprietor of the subject, while he lived. In support of these allegations, he produced a discharge, granted in 1821 by Brown to his daughter (the widow of Buchanan), in these terms:—“I, Charles Brown, considering that, in consequence of a heritable debt, &c., Catherine Brown, sometime widow of the late William Buchanan, now spouse of Andrew Rae, has been in use for some years past to uplift the whole rents of these premises, paying out of the same the interest on the said debt, and all necessary charges, burdens, and exactions, lawfully exigible from the premises, and accounting to me for any balance. And, as I am completely satisfied that the said Catherine Brown has fully and fairly accounted, paid, and made satisfaction to me for all her intromissions and actings respecting the subject and matters aforesaid, therefore I hereby acknowledge that now and formerly I have received full payment from her of every sum of money I could ask or demand on account of the subject and matters aforesaid, in any shape; and hereby she is thereof discharged in full accordingly.” Again, at Martinmas, 1825, an account was drawn up, stating the rents received at £10, 10s.; and, after deducting interest on the bond, and feu-duty, &c., bringing out a balance of £4, 10s.6d., for which a relative receipt was granted by Brown. It was said that seven previous receipts and discharges were also granted in similar terms by Brown.
Mrs Brown, on the other hand, alleged that these discharges were fraudulent and collusive, being intended to defeat her annuity; and that no surplus balance had ever been paid, at any term, to Brown; and she offered to refer to the oaths of Buchanan's widow, his son, and the trustee, that they had had intromissions sufficient to extinguish the bond, or that no balance of rents had been paid to Brown, as set forth in
Mrs Brown then raised an action to reduce the decree, containing also conclusions for count and reckoning of all intromissions with the rents, and for declarator of extinction of the bond. In support of these conclusions, she pleaded—
1. She was a creditor of her late husband, in virtue of the provision in her marriage-contract. A postponed creditor is entitled to call a prior creditor, who has entered to possession of the subject, to account strictly for his intromissions. Upon such an accounting, it would appear that the intromissions by parties in right of the prior creditor, had satisfied the bond; and the subject was now free, except for the pursuer's annuity.
2. The discharges granted by her late husband could not bar the accounting, as the creditor, while continuing in possession, was bound to impute every surplus above the interest on his debt, in extinction of his principal sum.
3. The discharges and receipts were a false and fraudulent device, for the purpose of defeating her annuity, and in order to prove this, it was competent to refer to the oaths of Buchanan's widow, her son, and Rae, the trustee, that the surplus balance of the rents had not been paid to Brown, in terms of the discharges. There was no need of a reduction of the discharges, in order to let in the reference.
Rae answered—
1. The intromissions, with the rents, had not sufficed to pay any part of the principal sum in the bond.
2. The pursuer was only a conditional and contingent creditor of her husband until the hour of his death. Her husband, while he lived, was the proper party entitled to the rents of the subject, or to hold count and reckoning with the heritable creditor for their amount; and, if he received the surplus rents, after paying the interest of the heritable debt, his discharge was the proper and only discharge which the creditor could receive. Such discharges by him being produced, down to November, 1825, they barred all accounting prior to that date.
3. The discharges were true documents fairly obtained. But, at any rate, no reductive conclusion was directed against them, and they could not be set aside incidentally. The offer of reference was incompetent, in so far as related to the widow of Buchanan, or his son, who were not parties to the action, and as to the defender, in so far as it embraced facts not within his knowledge.
The Lord Ordinary pronounced this interlocutor:—“Finds that the pursuer was by marriage-contract and infeftment, completed in 1811, an heritable creditor of the deceased Charles Brown for an annuity of £10, from the death of the said Charley Brown, which happened in July 1826.
Finds that the deceased William Buchanan, the husband of Catherine Brown, who was the daughter of the said Charles Brown by a prior marriage, held a prior heritable security by bond and disposition, with infeftment, in 1806, over the same property for £200, which bond was payable in 1812: Finds that the said William Buchanan died in 1807, leaving Catherine Brown, his widow, and William Buchanan, a son, then in pupillarity: Finds it admitted, that the principal sum in the bond having become payable in 1812, Mrs Buchanan soon thereafter entered into possession of the property, ‘on account of her son and herself, and for some years managed the property on her own and her son's account;’ and finds that she so continued to possess after being married to Andrew Rae, her second husband, and at least till her son William Buchanan became of age: Finds that the said William Buchanan possessed the property by himself or his mother until he disponed it to the defender James Rae, as trustee for him and his creditors, the said James Rae being brother of the said Andrew Rae: Finds it averred, that the rents and profits of the property in question, during the period of the possession of these several parties, amounted to a sum from £24 to £30; but that the state of this fact has not been ascertained, in consequence of the interlocutors and decree now brought under reduction: Finds that all those who thus possessed in right of and as representing William Buchanan, the original heritable creditor, were bound to use exact diligence in their intromissions with the rents and profits of the said subject, having a due regard to the interest of the pursuer as a postponed heritable creditor: Finds that the said pursuer was entitled to call the defender and his constituent, William Buchanan, to a strict account, not only for their own intromissions severally, but for the intromissions of Mrs Buchanan or Rae, mother of the said William Buchanan, the defender's constituent, which were had in his right, and for his behoof: Finds that to a certain effect it was competent for the pursuer to demand such an account in the process of multiplepoinding raised in the Sheriff Court, but that it is clearly competent to all effects under the conclusions of the present action: Finds that the instrument bearing to be a discharge by Charles Brown in favour of Catherine Brown, designed as the widow of William Buchanan, and wife of Andrew Rae, and the various receipts by the said Charles Brown produced in the inferior court, do not constitute any bar to the demand for such an accounting generally, whatever effect they may have in the accounting itself: Finds it averred, and offered to be proved by the reference to oath in the inferior court (the same making part of the record in this process), ‘that the whole sum in the bond founded on by Mr Rae has been paid by intromissions, with the rents of the subjects in dispute; or otherwise, that the rents drawn yearly above the interest of the sum in the bond were not paid to Charles Brown, the debtor in the bond, as specified in the said charge, No. 12 of process:’ And finds it averred, in the record in this process that the statements in
_________________ Footnote _________________
* “ Note.—The interlocutor explains the grounds of judgment so fully, that very little need be added to it. The Sheriff has refused to go into the accounting at all, simply because the defender's title stands on written deeds. This is too evidently erroneous to require any observation. But it is plain that the pursuer might have a case in the accounting to some extent, even though the discharge and receipts were to stand undisputed. As to these documents, it may be a question how far a reduction is necessary, at least if the reference to oath were not to be adhered to as applying to them all. But the Lord Ordinary must confess that the whole transaction appears to him to bear strong indications of collusive contrivance. The very granting of the discharge and receipts by a man said to have been living in family with Mrs Rae at the time is extremely suspicious at the least. But the Lord Ordinary only means to say that the case must be inquired into in a different manner from that followed by the inferior court.
“There seems to be some mistake in the pursuer's averment as to William Buchanan, the first, having himself gone into possession, for he died in 1807, and the sum in the bond was not payable till 1812, The Lord Ordinary has taken the admitted facts.”
The defender reclaimed.
The Court pronounced this interlocutor:—“Recall the interlocutor, &c.; find that the creditor in the first heritable bond was, during the life of Charles Brown, justified in paying to him such of the rents and profits of the subjects over which the said security extended, as were by him intromitted with and in his hands after answering the interest of his debt, and that he was not bound to apply the same in extinction of the principal sum of his debt, notwithstanding the existence of the contingent heritable security granted to the pursuer by her husband, the said Charles Brown: Sustain the discharge and receipts founded on by the defender, as, hoc statu, a sufficient bar to the pursuer's demand, &c.”
Their Lordships allowed the pursuer to put in a minute of reference to oath, and, on her failure to do so, assoilzied the defender with expenses.
Solicitors: Wotherspoon and Mackie, W. S.— J. Cullen, W. S.—Agents.