Scottish Court of Session Decisions

The North British Railway Company brought a note of suspension and interdict against David Salmond Lindsay, farmer at Wormit, Fifeshire, Peter Christie, also a farmer in Fifeshire, and John Heatley Dickson, land-valuator at Saughton Mains, Edinburgh. The object of the Company was to stay proceedings in an arbitration under the Lands Clauses Consolidation (Scotland) Act, 1845, for settling a claim for compensation made against them by Mr Lindsay—Messrs Christie and Dickson being the arbiters nominated. The claim made by Mr Lindsay rested upon the ground that the company had taken compulsorily, for the purposes of their railway, part of the farm of Wormit, of which he was the tenant.

The Company pleaded in support of their note of suspension that Mr Lindsay was not the tenant in possession either at the time when their notice to take the lands was served or when they entered into possession, and that when their notice was given his lease had not been executed by the landlord and delivered. They also maintained that both Mr Lindsay and his landlord were aware prior to the execution of the lease that the Company required and were ready to take the lands.

The Lord Ordinary passed the note, and afterwards, upon 23d March 1875, a proof was taken, when the following circumstances were established.

In 1871 the North British Railway Company, in virtue of their powers under the Tay Bridge and Railways Act, 1870, served a notice upon Mr Wedderburn, of Wedderburn and Birkhill, the proprietor of the land in dispute, intimating the Company's intention to take a certain part of his property. Notice was also served upon Mr Blair, tenant of that part (being the farm of Wormit), under a lease of nineteen years expiring at Martinmas 1882. The land required by the

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Railway Company, to the extent of 1 540 acres, was shortly afterwards taken possession of, and Mr Blair's claim as tenant settled. In the end of June 1873 the Company had prepared further notices of their intention to acquire the remaining portion of the land. By this time Mr Blair was dead, and the farm of Wormit was held by his trustees, who had, however, executed provisionally a renunciation of their lease. In June 1873 negotiations between Mr Wedderburn and Mr Lindsay, the respondent, as to the farm of Wormit, had been entered into, but it was arranged that Blair's trustees should occupy the farm until Martinmas of that year, when, in the event of matters being settled between him and the landlord, Mr Lindsay should get possession. Of these negotiations it appeared that the Railway Company were then ignorant, and on 10th July they served a second notice upon Blair's trustees, the tenants in possession. They had written on the 7th, intimating to the agents of Mr Wedderburn (Messrs Kerr & Macfarlane, Dundee) their intention of serving a notice upon their clients, and asking whether they desired the notice to be sent to Mr Wedderburn or to themselves. Messrs Kerr & Macfarlane, having written a reply which reached the Company's office on the 12th, to the effect that they would accept service, a clerk was sent to Dundee upon that day, who served the notice at their office before one o'clock. One of the firm, Mr Macfarlane, then informed him that Blair's trustees had renounced the farm of Wormit, which had been re-let to a new tenant, Mr Lindsay. In consequence of this information, a notice intimating the Company's intention to take the land, amounting to over sixteen acres, was subsequently served upon Mr Lindsay, but under protest, so as not to prejudice the Company.

Upon 15th July Messrs Kerr & Macfarlane sent a written acceptance of service of notice to the Company's agent.

It appeared from the evidence that a lease of the farm of Wormit had been sent to Mr Lindsay for his signature by Messrs Kerr & Macfarlane upon the 2d of July, and had been signed by him upon the 10th of that month. It was then sent to Birkhill, where it was signed by Mr Wedderburn upon the 12th.

One of the conditions contained in the circular sent to offerers for the farm of Wormit was as follows—“Until the lease be adjusted and signed there will be no binding agreement between the landlord and any offerer.” Mr Lindsay lodged with the Company a claim for compensation and a demand for arbitration, and he nominated as arbiter Mr Christie. The Company, but under protest, also nominated an arbiter, Mr Dickson, and afterwards brought this note of suspension of the proceedings under the arbitration.

The Lord Ordinary, upon 8th June 1875, pronounced the following interlocutor—“The Lord Ordinary having heard the counsel for the parties, and considered the closed record, proof, and whole process—Repels the reasons of suspension; recals the interim interdict; refuses the suspension, and decerns: Finds the complainers liable in expenses; appoints an account thereof to be lodged, and when lodged remits the same to the Auditor of Court to tax and to report.

“ Note.—(After narrating the facts of the case) The first plea in law for the complainers raises a novel and important question under the Lands Clauses Consolidation Act. In the first branch of that plea the complainers maintain that the arbitration should not be allowed to go on, in respect that Mr Lindsay had not and has not any right or interest entitling him to compensation, 1 2he not having been the tenant in possession of the said lands either at the time when the complainers' notice to take the same was served or at the time when the complainers entered into possession.’ If the complainers had been voluntary purchasers, who had bought the property after the date of the lease, but before the tenant entered into possession, the general rule by which such a lease is held not to be binding upon a singular successor might have been applicable. But it has never yet been decided, and apparently the question has never yet been raised, whether a public company taking land compulsorily under their own private Act and the provisions of the Lands Clauses Consolidation Act, is in the same position with regard to leases as a voluntary purchaser. Mr Deas, in his valuable treatise on the Law of Railways, says—‘It is thought that to entitle a tenant to compensation, possession must have taken place upon the lease before the date of the company's notice.’ With great deference, however, to an opinion so justly entitled to weight as that of Mr Deas, I am inclined to think that it is not quite clear that under the clauses of the statutes which deal with lands subject to leases (secs. 112 to 115) possession is required as a title to compensation in the case of a tenant for a term of years unexpired, or in the case of any tenant, except one for a year or less. In the view, however, which I take of the facts of the case, it is not necessary to decide this question, because the general rule as to the necessity of possession does not hold in the case of a singular successor who at the time of his purchase is made aware of the existence of a lease which, though executed, has not been followed by possession— Richards v. Lindsay, M. 15,217. Now, in the present case, the complainers were made aware, at or before the time when the notices were served, i.e., when the contract of sale was concluded between them and the proprietor, that the old lease had been renounced and that the farm had been let on a new nineteen years' lease to the present respondent. The first branch, therefore of the complainers' first plea in law is untenable, and must be repelled.

The second branch of that plea is to the effect that the respondents' claim for compensation is bad, because the lease had not been executed by the landlord and delivered when the notices were served. The evidence shows that the lease was executed by the tenant on the 10th, and by the landlord on the 12th July, on which day the notices were served, and that both parties considered it a binding lease. It does not appear to have been executed in duplicate; and, as is generally the case, the deed remained in the hands of the landlord or his agents for behoof of both parties. This plea also is, in my opinion, untenable, and must be repelled.

It is necessary now to notice the second plea in law for the complainers, to the effect that they were prevented from serving the notices before the execution of the lease through the mala fides of the proprietors' agents. In the record, throughout the proof, and at the debate, the complainers

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maintained strenuously that Messrs Kerr & Macfarlane acted in mala fide in reference to the notices, inasmuch as having been informed by Mr Johnstone's letter of 7th July that the complainers were about to serve the notices for the land required by them from Mr Wedderburn, whereby the Company would become the purchasers of the land, these agents in bad faith delayed answering that letter, for the purpose and with the effect of having the new lease to Lindsay completed and executed before the notices could be served, and to enable Lindsay to make a claim for tenant's profits to which he would not otherwise have been entitled. This plea of course assumes that the completion of the lease before the notices would entitle Lindsay to make such a claim without possession having followed upon the lease. Now, it may be that Messrs Kerr & Macfarlane, seeing that the Company after two years' delay were now proceeding in earnest with the notices, may have pressed on the completion of the lease, but I do not see that they can be charged with bad faith to the company in doing so. It may have been uncourteous in them to delay answering Mr Johnstone's letter of the 7th of July, but I do not think it was dishonest. The matter of the lease had long been the subject of the negotiation with Lindsay, and Mr Wedderburn was in bad health at the time, and it was desirable to have the farm let to a suitable tenant, so as to relieve Blair's trustees from further connection with the farm; and the lease would have been signed on 2d July, several days before the date of Mr Johnstone's letter, had not the tenant unexpectedly raised some objection to the terms of the document.

But even if the landlord's agents had improperly taken advantage of the delay which they had caused in the service of the notices, I do not see how Mr Lindsay, the tenant, can be thereby affected. Messrs Kerr & Macfarlane were not his agents. He knew nothing about the contemplated service of the notices; he was not taking any advantage of the Railway Company, nor was he unduly hastening the execution of the lease. On the contrary, he delayed the execution for several days, because the terms of the lease, as prepared by the landlord's agents, were in his opinion insufficient. And the complainers do not accuse him of any bad faith in the matter. On this branch of the case I am of opinion that the complainers' allegations of mala fides are unfounded, and that, even if well-founded, they are not relevant as in a question with Lindsay, the respondent.

On the whole matter, therefore, my opinion is that the suspension must be refused, and that the arbitration must be allowed to proceed.”

The North British Railway Company reclaimed.

Argued for them—The effect of the notice to take the lands served by the railway was to complete the purchase, and the lease entered into in spite of that notice was in mala fide, and could not stand in a question with a singular successor. Here there was no possession under the lease, which is necessary to make it good against a purchaser. This is not the prorogation of an old lease, but a new one.

Argued for the respondent—The Railway Company assume that they stand in the favourable position of ordinary purchasers. This is not so. They are not treated as singular successors by the Act, which binds them to make inquiry before purchase as to parties having interests, and contemplates that all persons having interests shall be compensated by the Company against whom any equitable claim may be stated. Here the tenant had a most manifest interest. They are not singular successors in the sense of the Act 1449, c. 17, and the test in this case is whether the respondent's right be good against the granter, not if it be good against a singular successor. The position of the Railway Company is rather that of a trustee in sequestration, or adjudger, who takes the estate subject to all the rights and equities affecting it at the time. A mere notice to take lands by the Railway Company does not constitute a contract. The notice is merely a step in the process of purchasing. If after they have given notice they fail to follow it up by taking possession, the lands may be leased to a new tenant. The Company were in knowledge of this lease when they gave the notice.

Authorities—Act 1449, c. 17; Lands Clauses Consolidation (Scotland) Act, 1845; Stair, i. 15,4, iii. 2, 6; Erskine, ii. 6, 23–5; Bell on Leases, 168; Hunter on Landlord and Tenant, i. 473–4; Deas on Railways, 114, &c.; Cranston's Creditors v. Scott, Jan. 4,1757; Creditors of Douglas v. Carlyles, July 2, 1757, M. 15,219; Johnston v. Cullen, Feb. 24, 1676, M. 15,231; Walker v. Campbell, Nov. 16, 1730, M. 2805; Richard v. Lindsay, Jan. 6, 1725, M. 15,217; Campbell v. Edinburgh and Glasgow Railway Company, March 7, 1855, 17 D. 619; Sweetman v. Metr. Railway Company, 1864, 14 M. 543; Carter v. Great Eastern Railway Company, April 25, 1863, 8 Law Times, 197; Haynes v. Haynes, March 23,1861, 30 L. J. ch. 578; Fleming v. Howden, July 16, 1868 (H. of L.). 7 Macph. 113; King v. Hungerford Market Company, 1832, 4 Barn. and Advl. 596; Bogg v. Midland Railway Company, March 2, 1867, 36 L. J. Ch. Rep. 440.

At advising—