Scottish Court of Session Decisions

This was an action of declarator and removing at the instance of Peter Martin, blacksmith at Crombie, Torryburn, as assignee of David Martin, now residing in America, against the Rev. Peter C. Duncanson, United Presbyterian minister at Hamilton.

On 1st July 1835 David Martin granted a disposition to Andrew Duncanson, smith at Crombie (now represented by the defender), of certain heritable subjects in Dunfermline. This disposition contained the following narrative:—“Considering that by arrangement with Andrew Duncanson, smith at Crombie, he has agreed to free and relieve me of a debt of £45 sterling secured over said subjects in favour of Ann Martin, Janet Martin, Peter Martin, Robert Martin, Andrew Martin, and Amelia Martin, my brothers and sisters, secured to them by disposition and deed of settlement executed by the now deceased David Martin, sometime merchant in Dunfermline, my grandfather, bearing date the 9th of February 1830, and interest due thereon from the term of Whitsunday said year, when the same was payable in consequence of my grandfather's predecease; and that he has further agreed to free and relieve me of a bond and disposition in security, granted by me over said subjects to Captain George Macdonald, residing at Callander, for the principal sum of £55 sterling, bearing date the 28th day of March 1833; and he has now and formerly made payment to me of the sum of £19 sterling, the receipt whereof I hereby acknowledge, renouncing all exceptions to the contrary, the present advances, and said incumbrances, amounting to £130, as the agreed on price and value of said subjects, with which I declare myself fully satisfied.” Upon the same day Duncanson granted to Martin a back-letter in the following terms:—“Sir, Although you have of this date granted me a disposition of your subjects in Gibb's Square for an advance of £19, and under the burden of the debts due to your brothers and sisters and Captain George Macdonald, secured over said subjects, yet it is agreed that in repaying me the advance of £19, and a separate advance of £25, 15s., by bill of this date, at one day's date, and relieving me of said debts affecting the property, presently amounting with interest to £111, I shall be bound to reconvey said property to you when required, at your charges, at any period within seven years from the date hereof. The rents to be retained by me in lieu of interest, and I am at liberty to enforce payment of said bill at pleasure. If not redeemed within said period, the property to be at my entire disposal. Should I require to place a wooden floor in the present shop for the accommodation of the tenants, it is agreed that I shall receive reimbursement of the expense thereof before reconveying the property to you.” The pursuer averred that the considerations set

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forth in the disposition were quite inadequate as the price of the subjects conveyed, and that the right of Duncanson over them was only a right in security. The summons accordingly sought to have it found and declared that the disposition, although ex facie absolute, was truly granted only in security for the more sure payment of the sums advanced and the burdens undertaken by the disponee, and that upon the defender being repaid the loans and relieved of the debts the subjects should be redeemable from him. The summons further contained conclusions for count and reckoning with the pursuer for intromissions with the rents, failing which it should be found and declared that the whole debt had been satisfied, and claim extinguished, and for the removal of the defender from the premises.

The defender maintained that “the consideration given was more than an adequate price for the subjects in July 1835, and so far from any reduction having being made on it by the defenders or his ancestors' possession of the subjects and intromissions with the rents, the reverse was the case. That they had besides expended considerable sums in improving and adding to the property. This they did in the bona fide belief that the property had become their own, as it was not redeemed within the seven years mentioned in the letter of 1st July 1835.”

Upon 2d June 1875 the Lord Ordinary pronounced the following interlocutor:—

“2d June 1875.—The Lord Ordinary having heard counsel for the pursuers, and considered the record and process, sustains the defences, and assoilzies the defender from the conclusions of the summons, and decerns: Finds the pursuer liable in expenses to the date of closing the record, and remits the account when lodged to the Auditor to tax and report.

Note.—(After a short narrative of the facts of the case, the note proceeded):—I think the action cannot be sustained. The time limited for redemption by the only obligation that qualifies the defender's right under his title expired upwards of thirty years ago, and although the Court might I think equitably extend the time, or grant relief after its expiry in circumstances which appeared to warrant such an exercise of the Court's equitable jurisdiction to modify the terms of the bargain which the parties had made, I am of opinion that no such circumstances are here alleged. I may say that even within the time limited I should have given effect to the agreement of the parties, that the rents should be retained in lieu of interest. Such an agreement is quite lawful and binding in the absence of any fraud or unfairness practised, or unconscionable advantage taken by either party over the other. The conclusions for accounting are therefore, I think, untenable, and the pursuer's counsel did not maintain them. With respect to the reconveyance demanded, the pursuer's cedent did not lose the opportunity he bargained for by any calamity or accident or even by allowing the time to expire through oversight, and altogether I can find no ground for the equitable interference of the Court in favour of the pursuer as his assignee. It was argued that the back-letter must by rule of law continue to qualify the right until cleared off by declarator. I am not of that opinion. The title is quite clear, and the back-letter is a mere personal obligation, to to be taken with respect to endurance and everything else according to its terms. Such an obligation does not require declarator to determine it by any rule of law with which I am acquainted.

The equitable jurisdiction of the Court to interpose for the reasonable protection of a party who is suffering hardship from any unconscionable advantage taken, even of his thoughtlessness and imprudence, is another matter, but, as I have said, there is no case here made sufficient to call for the exercise of that jurisdiction.”

The pursuer reclaimed.

Argued for him—The disposition of 1st July, read in the light of the back-letter, shows that nothing but a security was intended to be granted. We have all the elements of a security here,—an advance set forth, a stipulation for payment of interest, an obligation to reconvey upon redemption. The creditor not having obtained a declarator of irritancy, the debtor is in equity entitled to redeem the subjects. If the nature of the transaction is not clear from the documents themselves, the pursuer is entitled to a proof by writ or oath as to meaning of parties, and prout de jure as to the inadequacy of the price.

Argued for defender—The deeds themselves clearly establish that this was a true transaction of sale with a limited right of redemption which has not been taken advantage of. The averment as to inadequacy of price is quite insufficient to entitle the pursuer to a proof thereof, and further, he is barred by the delay which has taken place from any such investigation. Even although there had been nothing here originally but a security granted, it lies entirely within the equitable jurisdiction of the Court to grant an extension of the time during which the debtor may redeem, and no case has been made out for any such extension.

Authorities—Stair ii. 10, 6; More's Notes, 262; Kames' Principles of Equity i. 70; Macdonald v. Stewart, Nov. 26, 1760, M. 7286; Nicol v. Park, March 1767, M. 16,537; Boyd v. Steel, March 7, 1771, M. 7221; Cuttler v Malcolm, Nov. 4, 1788, M. 7215.

At advising—