Scottish Court of Session Decisions

Alexander1 M'Donald of Vallay succeeded to his father, the late Major M'Donald, in the lands of Glendale and others, in August, 1828, and on the 9th October thereafter he executed a trust-disposition of these lands in favour of the late James Scott, and the pursuer Turner, accountants in Edinburgh, and the survivor of them, for. payment, first, of the debts owing to such of the creditors of his father as should accede thereto within three years from the death of the latter; and, second, of the debts due to the remaining creditors of his father, and to his own creditors, as at the date of the trust-disposition. On this deed infeftment was taken on the 15th April, 1829, and under it the trustees entered into possession. Thereafter, and within three years from Major M'Donald's death, diverse of his creditors obtained decrees of adjudication for their respective debts, and a ranking and sale was also raised by heritable creditors, in which Turner was further appointed judicial factor. The defender Nicolson held a lease of part of the lands of Glendale for nine years from Whitsunday, 1823, at a rent of £410, under a lease granted by a judicial factor, with consent of Alexander M'Donald, Major M'Donald, the father, being then in a state of mental imbecility, and which inter alia provided that Nicolson should be allowed out of the last half year's rent the sum of £45 in consideration of his putting the house on the lands in a proper state of repair, he being taken bound thereafter to maintain and leave it so at the end of the lease. When the last year's rent became due, Nicolson contended that he was entitled to retain upwards of £200, over and above the £45 specified in the lease, in virtue of the following letter by Alexander M'Donald, bearing to be dated 27th August, 1828, which was shortly after his succession to the estate, and before the granting of the trust-deed.

“Vallay, 27th August, 1828. Dear Sir,—On considering your request, and my former promise to you about the improvements you were to make on the lands and houses at Husabost, I entirely approve of what you have done since you became tacksman of the property belonging to my late father under the lease granted by Mr John M'Kenzie and myself, as my father's heir, which has been much beyond any thing which I expected; and to encourage you to do more, and to continue the same system, which will be ultimately for the good of the estate, I hereby promise and oblige myself, as my father's heir, to allow you the sum of £200 sterling for ameliorations at the end of your lease for what you have done, and what is yet to do, in addition to the sum mentioned in the lease for putting the house in repair. But I expect you will do all you can to get a pier erected for the safety and accommodation of the fishermen on the property, the expense of which to be defrayed, three-fourths by the commissioners of the fisheries, and one-fourth by you—the whole expense not to exceed the sum of £90, and a right of access to and from it by land and by sea will be given without any charge on my part for such access. I am,” &c.

Turner declined to allow this deduction, and raised an action for payment of the rent due, minus the £45 stipulated for in the lease; and, while he refused to admit that the letter founded on by Nicolson was granted of the date it bore, he further contended, that not forming part of the title of possession, it could afford no ground of retention in a question with him, either as trustee for the creditors acceding to the trust-deed, or as judicial factor in the ranking and sale for the other creditors, heritable or personal, of Alexander M'Donald, over whom Nicolson could have no right of preference.

The Lord Ordinary pronounced this interlocutor:—“Finds, that the defender, in virtue of the obligatory letter of Alexander M'Donald the younger, dated the 27th August, 1828, and recited in the defences, can only claim and be ranked as a personal creditor of the said Alexander M'Donald the younger, for such meliorations as he may be able to instruct under the said letter; but that he must be postponed to such of the creditors of Alexander M'Donald, senior, the father, as either acceded to the trust-deed, upon which infeftment followed within a few months after the death of the said Alexander M'Donald, senior, or completed adjudications of his heritable estate within three years after the said death: And farther finds, that he can have no preference, under the said letter, over the other personal creditors of the said Alexander M'Donald the younger: Finds, that the pursuer, both as trustee infeft for the interest, primo loco, of the creditors of Alexander M'Donald, senior, and as judicial factor in the depending process of ranking and sale, is entitled to ingather and make effectual all arrears of rents due from the estate in which he is so infeft, and over which he is such factor; and that the defender, as a mere personal creditor of Alexander M'Donald the younger, is not entitled to compensate the present claim of the pursuer for an admitted arrear of rent, or to retain any part of such arrear in satisfaction of his claim under the letter above referred to; and, therefore, and in respect that the state of debt produced with the summons is admitted to be correct, in so far as regards the principal sums, repels the defences, and decerns against the defender to the extent of the said principal sums; but appoints the cause to be enrolled, that parties may be farther heard as to the alleged inaccuracy of the said state, in so for as regards the charges for interest, and also as to expenses.”

His Lordship thereafter repelled the objection there referred to, and found Turner entitled to expenses.

Nicolson reclaimed, praying the Court “to find that the defender is entitled to plead compensation, and to retain the balance of rents in his hands, in extinction of the claim for meliorations expended by him on the said lands of Glendale and others, in terms of the said obligation; or, at least, to find that the defender is preferable for the said claim of meliorations to the creditors of the said Alexander M'Donald the younger; and to find that he has a right of retention accordingly, so far as it may appear that the sum in the defender's hands is a surplus, after the just debts of Alexander M'Donald, senior, shall have been fully paid.”