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Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Dickson & Steuart v. Roy & Paul [1869] ScotLR 7_54_1 (5 November 1869)
URL: http://www.bailii.org/scot/cases/ScotCS/1869/07SLR0054_1.html
Cite as: [1869] SLR 7_54_1, [1869] ScotLR 7_54_1
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SCOTTISH_SLR_Court_of_Session
Page: 54↓
Court of Session Inner House First Division.
v.
Facts:
B. borrowed from C. the sum of £10,000, for which he granted a personal bond. He also granted a bond and obligation in security, in which he bound himself to pay the premiums of certain policies of insurance on his life therein conveyed to B.; and also conveyed, as a security therefor, his life interest in some heritable property. He failed to pay the premiums; and they were paid by C., who obtained a warrant to sell the policies and the obligation to keep them up. Held that, so soon as the personal obligation was at an end, the heritable security, as an accessory to it, fell also; and therefore, that the purchaser of the policies was not entitled to certain funds of B.'s to repay his outlay in keeping up the policies after payment of the original debt, interest and expenses.
Mr Robert Anstruther of Caiplie and Thirdpart, on 17th March 1835, granted a personal bond to
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Mr Christopher Wood for £10,000, and also, in further security of the loan, a bond and disposition in security for the same amount. By the latter deed Mr Anstruther bound himself to pay to Mr Wood the premiums on the policies of insurance on his life as therein mentioned ‘during my life and the not-payment of the said principal sum,” with the legal interest of the premiums while unpaid. The bond also contained an obligation for extra premiums if incurred, and conveyed Mr Anstruther's life interest in the estate of Caiplie and others in security of the obligations undertaken. To the extent of £7900 the loan of £10,000 was actually advanced, and the balance of £2100 was consigned in the Bank of Scotland on 20th May 1835 in name of Mr Paul, agent for Mr Wood, and of Mr Boy, agent for Mr Anstruther. The sum thus consigned formed substantially the fund in medio in the proceedings. At 20th November 1868 it amounted, with interest, to £3495, 7s. 6d.
The interest on the loan and the premiums of insurance having fallen into arrear, Mr Wood raised a process of ranking and sale in February, under which Mr Anstruther's interest in the estate of Caiplie and others was sold. Several sums were paid to Mr Wood in this process, and, in particular, under an act and warrant, dated 31st January 1847, there was paid to him the sum of £10,000, for which he granted a discharge the following day.
On 13th October 1841 Mr Wood brought an action of declarator and extinction, in which, after narrating the past procedure, he set forth that he had advanced the sum of £10,000 relying on Mr Anstruther making regular payment of the premiums in terms of his obligation, but that he had failed to do so; that he had ceased at Candlemas 1837 to pay the interest; that Mr Anstruther had, without giving notice, gone to serve in Canada during the rebellion there; that heavy extra premiums had thus been incurred, and that there was then due to him on that account £4000 besides the principal sum; that adjudication and other diligence had been used at the instance of Mr Anstruther's creditors, and that Mr Anstruther's liferent of the heritable subjects conveyed to him in part security of the debt was in course of being sold; that Mr Anstruther was bankrupt, and unable to implement his obligations. In these circumstances, Mr Wood concluded that it should be found and declared that he was not hound to continue the further payment of the premiums, but was entitled to sell the policies with the obligation by Mr Anstruther for payment of the premiums as contained in the bond, and to apply the proceeds towards payment of the principal sum, interest, and others due by Mr Anstruther.
In consequence of opposition Mr Wood withdrew from his conclusion for sale of the obligation to pay the premiums; and, having got decree for the conclusion thus modified, he exposed the policies to sale. But as he could get no purchaser, or at least only a trifling price, he again brought an action in which he stated the impossibility of selling the policies without the obligation to keep them up; and though opposed by Mr Anstruther, begot the warrant and decree that he prayed for.
The policies with the obligation and security for payment of future premiums were accordingly exposed to sale by Mr Thomson Paul, as commissioner for Mr Wood; and purchased by Mr James Stevenson, commission agent in Edinburgh, from whom Mr Paul subsequently obtained them.
A competition having arisen for the above mentioned fund in medio of £3495, 7s. 5d. between Mr Paul and various creditors, the Lord Ordinary ( Jerviswoode) remitted to Mr Haldane, accountant, to report on a variety of questions of accounting; and the present discussion took place on a note by him asking for direction on the following point:
“Is Mr Paul, in virtue of his right to Mr Anstruther's obligation, and the heritable security granted by Mr Anstruther for payment of premiums, entitled to claim the premiums of insurance stipulated for in the policies of insurance on Mr Anstruther's life, falling due after 1st February 1847, (when the principal sum of £10,000 was paid), and thereafter during Mr Anstruther's life; and that whether the policies were actually kept up by payment of the premiums or not?”
The Lord Ordinary answered the question in the affirmative; and, having given leave to appeal, the point was argued in the First Division.
Lord-Advocate and Johnstone for Mr Paul.
Solicitor-General and Duncan for Mr Steuart.
Shand and Mansfield for Mr Mackenzie.
At advising—
By the bond granted by Mr Anstruther to Mr Christopher Wood, in respect of the loan of £10,000 made by the latter, Mr Anstruther became bound to pay the premiums arising on certain policies of life insurance assigned to Mr Wood in security. I think it clear that this obligation lasted so long as any part of the debt, principal or interest, or any part of the expenses covered by the security in the bond, remained unpaid. Though the deed in one clause seems to speak of the obligation as lasting “during my life and the non-payment of the said principal sum,” I think that this is only a general way of describing the non-discharge of the debt, and does not indicate that when the principal sum was paid the security should not subsist for any arrears of interest and expenses then due. The contrary is made manifest by the terms of the deed otherwise.
On the other hand, I think it equally plain that the obligation to pay the premiums, and so keep up the policies, did not subsist for a single hour after full payment of the debt, interest, and expenses. The obligation was only one in security, and when the debt was fully paid the obligation necessarily fell to the ground.
The policies were ultimately sold under the authority of the Court, and a sum of money thereby obtained to go towards extinction of the debt. The obligation to keep up the premiums was sold at the same time. But the obligation so sold was not, and could not be, more extensive than that contained in Mr Anstruther's bond. There was nothing else within the power of the Court to order to be sold, and nothing else can be held to have been disposed of. The price to be got for the policies would of course be proportional to the extent of obligation lying on Mr Anstruther to pay the premiums, and the corresponding extent to which the purchaser might be obliged himself to pay them, without relief from Mr Anstruther.
The purchaser of the policies, in whose room Mr Paul now stands, cannot, therefore, as it appears to me, be considered as having purchased
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Having this view as to what alone can be considered as having been sold, I hold it necessarily to follow that we should answer the inquiry of the accountant by saying that Mr Paul, as in room of the purchaser of the policies, and as in right of Mr Anstruther's obligation to pay the premiums, is entitled to claim against Mr Anstruther and his estate the whole premiums arising anterior to the period when the debt was paid—principal, interest, and expenses as aforesaid; but is not entitled to claim any premiums arising subsequently. This is not exactly the answer given in the interlocutor of the Lord Ordinary now under review, though I think it is the answer pointed at in his Lordship's note. It seems to me that it is the answer which ought in terms to be now given.
I conceive that for the purposes of the accountant any further answer is unnecessary. A question is indicated by the accountant as to how far premiums could be charged which were not actually paid by the creditor in keeping up the policy. It was stated to us from the bar that in point of fact all the premiums were paid to the insurance office down to the date of Mr Anstruther's death. The contrary of this was not shown. The state of fact has therefore not arisen to which this question is applicable, and we cannot be called on to answer the question contingently and hypothetically.
The other judges concurred with Lord Kinloch, after commenting on some specialties in the history of the case and the position of the parties in it.
Agent for Mr Paul—T. J. Gordon, W.S.
Agents for Mr Steuart—J. & C. Steuart, W.S.
Agents for Mr Mackenzie—Mackenzie & Black, W.S.