Scottish Court of Session Decisions

This was a note of suspension and interdict brought by the Caledonian Railway Company against Thomas Watt and others, to stop proceedings in an arbitration instituted to settle certain claims made by Mr Watt against the Railway Company.

The following narrative is taken from the Note of the Lord Ordinary:—

“The respondent Thomas Watt claims compensation to the amount of £7500, in terms of the Railway and Lands Clauses Consolidation Acts, 1845, in respect that the property now belonging to him, which is described in the Closed Record, has been injuriously affected by the construction of the Dundee and Perth Railway, under the provisions of ‘The Dundee and Perth Railway Act, 1845.’ Having, on 26th December 1873, given notice of his claim to the complainers, who are now in right of the Dundee and Perth Railway Company, and having afterwards nominated an arbiter for the purpose of determining the amount of compensation to which he is entitled, the present Note of Suspension and Interdict has been presented for the purpose of obtaining suspension and interdict of all proceedings under the arbitration so instituted.

The Dundee and Perth Railway was completed and opened for traffic in 1847. Part of that railway was constructed upon an embankment formed on the bed of the Tay between two points on the north shore. In this embankment there were constructed openings or arches so as to admit of the water ebbing and flowing every tide within that part of the Tay situated to the north of the railway embankment. The property now belonging to the respondent Thomas Watt is situated on the north shore of the Tay so cut off by the railway embankment. In 1847 that property belonged to John Calman, shipbuilder in Dundee, who had acquired it under a feu-contract from the respondent's predecessor at the yearly feu-duty of £150. By this feu-contract John Calman was taken bound to erect houses or embankments, or slips or other buildings of a permanent nature, equal in value to at least £1000, as a security for the feu-duty. The respondent Thomas Watt avers that Calman converted the subjects, which had a frontage to

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the Tay of 400 feet, into a shipbuilding yard, and expended in constructing permanent works and buildings on the property at least the sum of £1000, which he was required by his feu-contract to expend in order to secure the feu-duty. The respondent Thomas Watt also avers that the construction of the Dundee and Perth Railway in the Tay ex adverso of the said subjocts altogether destroyed them as a shipbuilding yard, and otherwise affected them very injuriously.

The estates of John Calman were sequestrated under the Bankrupt Acts on 10th April 1843. The trustee in the sequestration never entered into possession of the subjects, or made up a title thereto.

The granter of the feu-contract to John Calman conveyed by his disposition and settlement the ground so feued to Calman, under exception of that feu-right to Archibald Watt and his wife in liferent, and to the respondent Thomas Watt, and his sister, now deceased, in fee. These parties took infeftment, and the feu-duties not having been paid after Whitsunday 1843, they obtained decree of declarator of irritancy of the said feu-right ob non solutum canonem on 8th November 1853, against William Myles, the trustee in Calman's sequestration, and (Calman having died in 1847 or 1848) also against Calman's heir-at-law. Thereafter, on 12th December 1853, the respondent Thomas Watt completed his title to the subjects. On 19th April 1873 the respondent obtained, without any price being paid for the same, an assignation from the said William Myles, as trustee, with concurrence of the commissioners in Calman's sequestration, whereby there were assigned and conveyed to the respondent all claims for compensation competent or due to or exigible by the said William Myles as trustee on Calman's sequestrated estate, against the complainers, as now owners of the Dundee and Perth Railway, in consequence of the construction of that railway upon the bed of the Tay ex adverso of Calman's feu.”

The complainers pleaded inter alia that the respondent had set forth no sufficient title to insist in the claim.

The Lord Ordinary ( Mackenzie) pronounced the following interlocutor:—

“ Edinburgh, 13 th January 1875.—The Lord Ordinary having heard counsel and considered the closed record and process, sustains the complainers' plea, that the respondent Thomas Watt has not set forth in his answers any sufficient title to insist in the claim for compensation against the complainers set forth in the closed record; Therefore sustains the reasons of suspension, suspends, prohibits, interdicts, and discharges in terms of the note of suspension and interdict, declares the interdict formerly granted perpetual, and decerns: Finds the complainers entitled to expenses, of which allows an account to be given in, and remits the same, when lodged, to the Auditor to tax and to report.”

After the above narrative the Lord Ordinary proceeds:—

“The claim to compensation for any injury done to Calman's feu subjects by the construction of the Dundee and Perth Railway vested in the party then interested in these lands in or prior to 1847. The party so interested was William Myles, the trustee on Calman's sequestrated estate. By the Bankruptcy (Scotland) Act, 1856, section 82, the trustee is bound to ‘manage, realise, and recover the estate belonging to the bankrupt, wherever situated, and convert the same into money,’ according to the directions of the creditors, and if no such directions are given, with the advice of the commissioners. By the 115th section of that statute it is declared competent to the trustee, with concurrence of a majority of the creditors, and of the heritable creditors, if any, and of the Accountant in Bankruptcy, ‘to sell the heritable estate by private bargain on such terms and conditions regarding price and otherwise as the trustee, with concurrence of those parties, may fix;’ and by the 136th section it is provided that, ‘If on the lapse of twelve months from the date of the deliverance actually awarding sequestration it shall appear to the trustee and commissioners expedient to sell the heritable or moveable estates not disposed of, and any interest which the creditors have in the outstanding debts and consigned dividends, they shall fix a day for holding a meeting of the creditors, to take the same into consideration; and the trustee, besides advertising the same in the Gazette, shall, fourteen days before the day appointed send by post to each creditor claiming on the estate a notice of the time and place of the meeting, with the valuation of the estates, and of the outstanding and the consigned dividends; and if three-fourths in value of the creditors assembled at the meeting shall decide in favour of a sale, in whole or in lots, the trustee shall cause the estates, debts, and dividends to be sold by auction, after notice thereof, published at least one month previous to the sale, once in the Gazette, and in such other newspapers as the creditors at the meeting shall appoint.’

Mr Myles, as trustee on Calman's sequestrated estate, did not comply with any of the statutory directions, but entirely disregarded them, and granted, with concurrence of the commissioners on the estate, the above mentioned assignation of 19th April 1873 in favour of the respondent. That assignation is a gratuitous deed. The obligation thereby imposed upon the respondent Thomas Watt, as a condition of the assignation, that he should free and relieve the sequestrated estate of any claims for feu-duties or otherwise competent to him against the same in any manner of way, does not make the deed onerous, because the superior having taken decree of irritancy ob non solutum canonem had no claim for payment of any feu-duties in arrear. It is not averred, and it does not appear, that he had any other claims against the sequestrated estate. If there was any claim for compensation (which is now said to amount to £7500) competent to the trustee against the Dundee and Perth Railway Company, or against the complainers as now in right of that company, it was the duty of the trustee to recover the same for behoof of the creditors in the sequestration, and he was not entitled gratuitously to assign such claim. He was not even entitled to sell the same except in the way and manner pointed out in the 136th section of the Bankruptcy Act. A private onerous sale by the trustee and commissioners of a debt forming part of the sequestrated estate has been held illegal and ineffectual ( Crichton v. Bell and Gillon, 11 Shaw, 781; Robertson v. Adam, 19 D., 502).

The Lord Ordinary is therefore of opinion that the assignation by the trustee on Calman's sequestrated estate does not confer any title upon the

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respondent under which he can insist in his claim of £7500 for compensation against the complainers. He is also of opinion that the respondent Thomas Watt did not acquire any such title in respect of the decree of declarator ob non solutum canonem obtained in 1853, or of the title in his favour following thereon.”

The respondents reclaimed.

Argued for them—The superior by his decree of irritancy got an estate of much less value than he would have got if the works of the railway company had not been carried out, and anything defective in the superior's title was made good by the assignation. But it was not necessary for the respondent to rely on the assignation although that was good. The trustee did not take possession of the subjects, but surrendered them, and suffered decree of irritancy to go out. By that decree not only the right of property passed, but all rights pertaining thereto. But, further, the trustee had perfect right to grant the assignation. He could only have insisted in the claim on condition of incurring liability for the feu-duty. He did not incur that liability, and it was not suggested that he did wrong in refusing to do so, so he was not injuring the bankrupt estate by assigning the claim. All that the trustee did was to help the respondents' title in point of form.

Argued for the complainers—If a superior looses the security for his feu-duty he is entitled to compensation. But if the estate passed to him by the decree of irritancy is sufficient to give security for the feu-duty, then no compensation is exigible. In this case it was not denied that the damaged estate was sufficient security for the feu-duty. The next question was as to the trustee's right to grant the assignation. The claim under consideration was personal to the bankrupt, and the trustee could not by mere renunciation vest that claim in any third party. Nor could the trustee assign the claim gratuitously, for it was a valueable right belonging to the estate which the trustee had to administer.

Authorities— The Scottish Central Railway Company v. M'Alley and Others, June 12, 1850, 12 D. 999; Thom v. Bridges, March 11, 1867, 19 D. 721; Crichton v. Bell & Gillon, 11 S. 721; Robertson v. Allan, Feb. 20, 1857, 19 D. 502; Bankruptcy (Scotland) Act, 1856, §§ 82, 115, and 136.

At advising—