Scottish Court of Session Decisions

Till recently, it was believed that the teinds of the lands of Drumderfit and Wester Kessoch, in the parish of Kilmuir Wester, and county of Ross, belonging to Charles Mackenzie, Esq. of Kilcoy, were bishops' teinds, and consequently that the surplus teinds belonged to the Crown. In 1854 the Crown demanded payment of the surplus teinds of these lands from Mr Mackenzie, and threatened legal proceedings. In consequence, arrears from 1839 were paid. Mr Mackenzie continued to pay the surplus teinds to the Crown down to 1864.

In 1864 the Duchess of Sutherland and Countess of Cromertie discovered that the teinds in question were not bishops' teinds, and that the Crown had no right whatever to them; but, on the contrary, that they belonged to her (the Countess), as patron of the parish of Wester Kilmuir. It appeared that by charter of erection and donation, dated 3d February 1588, which narrates that the teinds of the church of Kilmuir belonged to the Dean of the diocese of Ross, James VI. gifted the patronage of the church of Kilmuir Wester to Sir William Keith. The teinds were by this charter reserved to the then Dean of Ross for his life, and provided to the minister of the parish after his death. The patronage ultimately came into the Cromertie family, who acquired right to the teinds by the Act 1690, c. 23. In the early part of this century a dispute arose between the Crown and the Laird of Cromertie in regard to the patronage of the church of Kilmuir Wester. After a lengthened litigation the right of the Cromertie family to the patronage was sustained by judgment of the House of Lords, dated 27th July 1814. Although these proceedings disclosed the true state of the titularity, for some inexplicable reason it seemed to be taken for granted by all parties that the teinds belonged to the Crown.

On discovering her rights the Countess of Cromertie intimated them to Mr Mackenzie of Kilcoy, who, in consequence, refused to pay any more surplus teinds to the Crown. A formal demand was made upon the Crown on 12th March 1868, and on 26th April 1870 the present action

Page: 641↓

was raised in the joint names of the Duchess of Sutherland and Countess of Cromertie, with consent of her husband, and of Charles Mackenzie, Esq. of Kilcoy, and G. A. Jamieson, C.A., his curator bonis, against the Lord Advocate on behalf of the Crown.

The conclusions of the summons were:—“Therefore it ought and should be found and declared, by decree of the Lords of our Council and Session, that we and our royal successors have no right or title of property to the teinds of the lands of Drumderfit and Wester Kessoch, in the county of Ross, belonging to the said Charles Mackenzie, and that the said teinds do not form part of the patrimony or property of the Crown, or of the hereditary revenues thereof; and it ought and should be found and declared, by decree foresaid, that the teinds of the said lands belong to the pursuer, the said Countess of Cromertie, and that she has a good and undoubted right and title to the property of the said teinds, with and under the burdens specified in the Act 1690, c. 23; and further, the defender ought and should be decerned and ordained, by decree foresaid, to pay to the pursuers, the said Charles Mackenzie and George Auldjo Jamieson, as his curator bonis, the sum of £694, 4s. 10d. sterling of principal, and £357, 19s. 9d. sterling of periodical interest to 12th March 1868, conform to state to be produced at the calling hereof, with interest at the rate of 5 per centum per annum on the said sum of £694, 4s. 10d. from the said 12th day of March 1868 till payment.”

The Crown, finding the claim of the Countess to the titularity was irresistible, agreed to repay to Mr Mackenzie the sums paid by him to the Crown as surplus teinds of the lands, and allowed, without dispute, decree to pass in terms of the declaratory conclusions of the summons. The only question that remained was that of interest. The Crown submitted that interest was due only from the date of the formal demand for repayment, and bank interest only since tender of payment of the principal sum.

The pursuers pleaded—“(3) The pursuer Charles Mackenzie, having paid the surplus teinds of the said lands to the Crown for the period specified under error, is, in the circumstances, entitled to repayment of the sums so paid by him, with interest and expenses as concluded for.”

The defender pleaded—“(1) The claim for the surplus teinds in question having been made in bona fide on behalf of the Crown, and in the reasonable belief that it was well founded, and no objection having been made to it by or on behalf of the pursuers and their predecessors for many years, though they had the same means of knowing the true state of the case as the Crown, the claim for interest, in the circumstances of the case, is not in accordance with equity, and should therefore be disallowed. (2) The pursuers, Mr Mackenzie of Kilcoy and his curator bonis, not being liable to pay interest on the said erroneous payments to the pursuer, the Duchess of Sutherland and Countess of Cromertie, as the right to recover interest in cases similar to the present is derived entirely from the right to receive reparation for loss actually sustained, the claim for interest here is untenable, and should be disallowed.”

The Lord Ordinary pronounced the following interlocutor:—“Finds, decerns, and declares in terms of the declaratory conclusions of the summons: Further, and in reference to the petitory conclusion, finds that the defender and the Commissioners of Her Majesty's Woods and Forests and Land Revenues are bound to pay to the pursuers, Charles Mackenzie, Esquire of Kilcoy, and George Auldjo Jamieson, chartered accountant, as his curator bonis, the various sums paid by the said Charles Mackenzie, or by his predecessor William Mackenzie of Kilcoy, whom he represents, to the Crown as the surplus teinds of the lands of Drumderfit and Wester Kessoch, said payments being made during the years 1855 to 1864 inclusive, all as the same are set forth in the state, No. 5 of process; finds that the defender and the said Commissioners of Her Majesty's Woods and Forests and Land Revenues are also bound to pay to the said pursuers interest on the said sums, at the rate of 3 per cent, per annum, from the respective dates when the several sums of teind above mentioned were actually paid to the Crown, or to its officers on its behalf, down to the date of citation in the present action, and at the rate of 5 per cent, per annum thereafter; and appoints the pursuers to lodge in process a state of said principal sums and interest, made up in conformity with the preceding findings; reserves meantime the question of expenses.

“ Note.—The Lord Ordinary has found the question of interest, being the only disputed question in this case, to be attended with a great deal of nicety, especially as both parties having renounced probation, some of the elements affecting the decision of the question do not appear on record, but were assumed in argument as matters of general notoriety.

If the question regarding the repayment of the surplus teinds of Drumderfit and Kessoch had arisen between the subjects, there would undoubtedly have been room for the plea of bona fide perception and consumption. There seems to be no doubt whatever that the Crown, from 1855 to 1864 inclusive, demanded and uplifted the surplus teind in question in bona fide—the officers of the Crown, as well as all others interested, really believing that the teinds belonged to the Crown. Indeed this belief seems to have existed and been acted on from time immemorial. At least so far as appears from the papers before the Lord Ordinary, it seems to have been always assumed or taken for granted that the teinds in question were bishops' teinds, and were consequently the property of the Crown.

The error under which the teinds were paid to the Crown was an error in point of fact, and the matter was one of a somewhat recondite nature, depending upon an inquiry whether the teinds of Drumderfit and Wester Kessoch were or were not bishops' teinds. If, under an error of this kind, a private titular had uplifted and expended the surplus teinds, there seems little doubt that the plea of bona fide perception and consumption would be available to him as a defence, hot only against payment of interest, but against payment of the teinds themselves so uplifted. See Stirling v. Denny Feuars, as decided in the House of Lords, 25th June 1731, Mor. 1717.

Whether such plea would be competent to the Crown it is unnecessary to inquire, for the Crown has declined to state any such plea, in conformity, as is believed, with its usual practice. There is an obvious distinction between the Crown and its officers holding and administrating the public revenues of the kingdom, and a private individual uplifting rents, teinds, or revenues as his own property, and whether the plea of bona fide perception

Page: 642↓

and consumption would be competent to the Crown or not, it seems quite proper and reasonable that the Crown should decline to state, or should waive, such a plea.

The pleas stated for the Crown are different. It is admitted on behalf of the Crown that the principal sums must be repaid, as having been truly and all along not the property of the Crown at all, but the property of the pursuer, the Duchess of Sutherland and Countess of Cromertie. But it is maintained, that because both parties were under a common and reasonable error, the claim for interest is not in accordance with equity. It is further pleaded that the teinds would not have borne interest to the Countess of Cromertie had they remained undemanded and unlevied in the hands of Mr Mackenzie, and that neither she nor Mr Mackenzie can be said to have suffered loss, and it is urged that the Crown is not bound to do more than repay the principal sums, but without interest.

The very special question thus raised does not seem to be ruled by any previous decision. Very little assistance can be derived from the cases regarding interest generally. It is plain that in the present case interest is not due ex lege, ex contractu, or ex mora. The cases of undemanded and unconstituted debts, unlevied rents, or feu-duties, &c., scarcely touch the present case.

The Lord Ordinary thinks that the true principle applicable to the present case is the equitable principle of restitution. Laying aside the plea of bona fide perception and consumption as inapplicable to the case, or as waived by the Crown, then the rule is, that he who has become possessed of the property of another, however innocently, is bound to restore it, or hand it over to the true owner cum omni causa, that is, with all profit or advantage which has accresced or accrued to it in his hands. If it be a moveable subject, which has increased in value by change of market, by age, or otherwise, the true owner is entitled to the benefit of such increase. So, if the subject, without expense or labour on the part of the bona fide possessor, has produced fruits or increment, such fruits, as an accessory to the subject itself, must be restored along with it. Of course in all these cases there might be the plea of bona fide consumption, but if once that is out of the way, the obligation of restitution applies equally to the fruits as to the subject itself.

On the other hand, it is plain that the Crown, as bona fide uplifter of the teinds in question, ought not to be subjected to any loss or detriment whatever on account of the innocent mistake which has occurred. The Crown cannot be asked to pay back more interest than has actually accrued upon the money in its hands. To exact from the Crown interest which it has not actually received, would be to subject the Crown, without fault, to a loss. This is inadmissible. The Crown, by abstaining from pleading bona fide perception and consumption, has virtually, and it may be generously, stated that it desires no gain; but no ground can be suggested why it should be subjected in loss.

Here the difficulty arises in determining what is the actual gain which the Crown has made by having these monies of the Countess of Cromertie's in its hands since 1855 and downwards. In other words, what interest has actually accrued in the Crown's hands on the sums so paid?

In old times, when the revenues of the country were kept in treasure-chests, of course no interest accrued, and nothing but principal sums could have been demanded in such a case as this. But now the practice is different, and monies paid to the Crown are either invested, or, what is the same thing, they go to diminish the debts due by the Crown or by the country, which bear interest. But the interest which the Crown or the country pays on its debts very slightly exceeds 3 per cent. The Crown can borrow, and does borrow, at very little over 3 per cent.—Three per Cent. Consols selling at 92 to 93 per cent. In the circumstances, therefore, the Lord Ordinary thinks the rate of interest ought to be fixed at only 3 per cent. This will keep the Crown indemnis, which the Lord Ordinary thinks just and equitable in the circumstances.

A puzzle was made as to who would get the interest,—whether the Countess of Cromertie or Mr Mackenzie,—and this was used as an argument why no interest should be paid at all. The difficulty, however, is entirely avoided in the present case by both the Countess of Cromertie and Mr Mackenzie concurring in asking that the teinds and interest shall be repaid to Mr Mackenzie. The two pursuers have made some bargain between themselves, and as they both concur in the action, and as the right is in one or other of them, it is needless to inquire what the result would have been if they had been at variance.

The Lord Ordinary has found it necessary that a state should be prepared in accordance with the principles above explained, and he has reserved the question of expenses.

The correspondence preceding the action was founded on at the debate. The Lord Ordinary has perused that correspondence, but he thinks that it did not result in any conclusive or binding agreement, and that it does not affect the judgment now pronounced. No plea is founded upon the correspondence.”

The Lord Advocate reclaimed.

Solicitor-General and Ivory, for the reclaimer—Mr Mackenzie is not entitled to demand interest. He was bound to pay his teinds to some one, and therefore he has suffered no loss. The Countess cannot demand interest from him ( Scott Moncreiff v. Lord Dundas, 24th November 1835, 14 S. 61; Advocate-General v. Sinclair's Trustees, 15th January 1855, 17 D. 290; Fraser v. Morrice, 28th June 1826, 4 S. 762; Wallace, 13th June 1821, 1 Shaw's Appeals, 42; Monypenny, 9th May 1624; M. 1748); and consequently, if he recovered interest from the Crown, he would be lucratus by the proceeding. The Countess has no right to interest either from the Crown or in a question with Mr Mackenzie. She has been negligent of her rights. Neither of the pursuers, then, has any right to interest, and two non-existent rights cannot, by being combined, form a good right.

Shand and Keir, for the pursuers—Mr Mackenzie is liable to the Countess in interest, though the Countess may, if she pleases, make him a present of the interest. There is no rule that interest is not due on arrears of teinds. Mr Mackenzie has therefore an interest to recover it from the Crown to pay the Countess.

At advising—