Scottish Court of Session Decisions

In 1835 a loan of £10,000 was agreed to be made by Mr Wood of Leith to Major Anstruther of Thirdpart. The loan was negotiated by Mr Thomson Paul, W.S., as agent for Mr Wood, and Mr Robert Roy, W.S., as agent for Major Anstruther. The loan was made on the security of Major Anstruther's liferent interest, as heir of entail in the entailed estate of Thirdpart, and of certain policies of insurance on Major Anstruther's life. The transaction was guarded by certain agreements to secure the application of the loan to the payment of existing encumbrances on the estate—which was already burdened with various securities,—and to prevent any part of it going into the hands of the borrower or his personal creditors till the estate had been made perfectly clear from all burdens, and an undoubted security for the loan. In order so far to carry into effect the conditions of the loan, Mr Wood agreed to apply the sum of £7900 in redeeming certain heritable annuities over the estate, and in paying off other heritable and preferable debts. As this left a sum of £2100 applicable to other purposes specified in the agreement, it was arranged that the money should in the meantime be placed in the Bank of Scotland in the joint names of Messrs Paul and Roy, and this was accordingly done. At the date of this deposit, Messrs Dickson & Steuart, W.S., were personal creditors of Major Anstruther in the sum of £433, 13s. 5½d. due on open account, and they proceeded thereafter to raise an ordinary action in the Court of Session against the debtor to compel payment. Upon the dependence of the action they raised letters of inhibition and arrestment against Major Anstruther, and on 13th June 1835 they executed an arrestment against Messrs Paul and Roy as debtors to Major Anstruther. This arrestment was followed by an action of furth-coming against Mr Roy and Mr Paul, and in it the Lord Ordinary pronounced an interlocutor, allowing the defenders to raise an action of multiplepoinding, calling all parties interested. Accordingly, Mr Roy and Mr Paul, in 1840, brought a summons of multiplepoinding against Major Anstruther, Messrs Dickson & Steuart, Mr Wood, and

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others, which summons was conjoined with the action of furthcoming. In these actions disputes arose as to the amount of the fund in medio, which was the balance of the £2100 consigned in bank by Messrs Roy and Paul, as above narrated; and the amount having been judicially ascertained, the Court appointed Messrs Roy and Paul to consign the same in bank, and found them liable for the expenses of the discussion relative to the amount of the fund. As Mr Roy had gone to reside in England, Mr Paul was compelled to consign the whole balance of the fund in medio, amounting to £1357, 12s. 9d., and to pay the whole expenses, to the amount of £270, 2s. 11d. In these circumstances, Messrs Dickson & Steuart, and others, the parties in right of the foresaid decree of consignation and expenses, assigned the same and their whole rights thereon to Mr Paul, in 1846, who thereupon raised letters of horning and poinding, and also warrant or letters of caption and imprisonment, against Mr Roy. Mr Paul was also sisted as assignee of Mr Wood in the above-mentioned actions of multiplepoinding and furthcoming, and these actions ultimately came to depend between him, as assignee foresaid, and Mr Roy. Mr Paul, as in right of Mr Wood, claimed the whole fund in medio. The Court held this claim to be well founded, and also found Mr Paul entitled to his expenses as against Mr Roy, to the amount of £110, 13s. 8d.

In 1846 Mr Paul had filed a bill in Chancery against Mr Roy, praying for relief against him for the loss he had sustained through his (Roy's) absence in the action of furthcoming and multiplepoinding, as above narrated. The Right Honourable the Master of the Rolls dismissed this bill, and found Mr Paul liable in expenses to the amount of £203, 0s. 1d. Mr Paul not having paid these expenses, Mr Roy raised the present action against him for the amount, and interest from the date of decree.

The Lord Ordinary ( Mackenzie), pronounced this interlocutor:—

“ Edinburgh, 21 st February 1872.—The Lord Ordinary having heard the counsel for the parties, and considered the closed record and process, repels the seventh plea in law for the defender, and remits to Mr William A. Brown, advocate, to prepare a case with reference to the question between the parties in regard to the interest claimed by the pursuer upon the sum sued for, in respect of the order in Chancery of the Right Honourable the Master of the Rolls in England, and relative certificate of costs by the Taxing-Master of the said Court libelled on, in order that the same may be laid before counsel learned in the law of England, for opinion.

Note.—The defender does not challenge the validity or regularity of the order or judgment in Chancery of the Master of the Rolls, and of the relative certificate of costs of the Taxing-Master; and while he does not dispute the pursuer's claim for the principal sum sued for, he denies liability for interest thereon.

The Lord Ordinary is of opinion that the question whether interest is due to the pursuer upon the order of the Master of the Rolls and certificate of the Taxing-Master, must be ruled by the law of England, and he has therefore repelled the defender's seventh plea in law.

The defender pleads compensation, and he maintained in argument that, as the pursuer was indebted to him in the sums of expenses, amounting to £135, 11s. 7½d., including one-half of the dues of extract, with interest; and to £110, 13s. 8d., with interest, as set forth in the revised defences, and as the sum due in respect of these expenses and interest exceeds the amount for which the pursuer concludes in his present action, there ought to be no inquiry into the question whether, according to the law of England, the pursuer is entitled to interest at the rate of five per cent. per annum on the amount of the costs sued for from the date of issuing and filing the Taxing-Master's certificate. But the Lord Ordinary cannot adopt that view. The pursuer is entitled to have the amount due to him clearly ascertained, so that if the defender can compensate the same, the difference between the two debts may be fixed. This is all the more necessary where the defender claims to be a creditor of the pursuer for sums exceeding in amount the sums sued for, and has letters of horning and poinding, and of caption, under which he can do immediate diligence against the property and person of the pursuer. In order that the plea of compensation may be received and obtain effect, the amount of the debts on both sides must be clearly beyond dispute, so that the amount of the debts extinguished, and the amount remaining unextinguished and due, may be known when compensation is received, ‘he who owed the greater sum is afterwards debtor in no more than the balance or difference between the two debts.”—Erskine, 3,4, 11 and 16.

The defender reclaimed.

Duncan and Johnstone, for him, pleaded that, as the pursuer owed the defender the sum of £135, 1s. 5½d., being half the expenses found against them in the conjoined actions of furthcoming and multiplepoinding, and also the sum of £110, 13s. 8d., as the expenses found against the pursuer in a later stage of the action, the pursuer's claim was extinguished by compensation. Also, that as the defender had used diligence against the pursuer for a greater sum than that concluded for in the summons, the pursuer was not entitled to prosecute the action against him, but that he (the defender) was entitled to have the amount due by him to the pursuer imputed to the debt owed by the pursuer to him.

Miller and Guthrie Smith for the defender.

During the dependence of the cause parties agreed that interest was due on the expenses given to the pursuer in the Court of Chancery under 1 and 2 Vict. c. 110, sec. 17.

At advising—