Scottish Court of Session Decisions

The pursuer in this case was Mrs Grace Bailie or Harkness, spirit merchant in Glasgow, and the defenders were David Rattray, accountant in Glasgow, trustee on the sequestrated estates of M'Ewen & Nelson, builders in Glasgow, and M'Ewen and Nelson as partners and as individuals. Defences were lodged only by Rattray.

By lease, dated 23d October 1876, M'Ewen & Nelson had let to the pursuer a shop and cellar for five years, with entry at Martinmas 1876, as a wine and spirit shop. The shop had been lately finished, and was not fitted up for the wine and spirit trade, and M'Ewen & Nelson in their lease had agreed to make various alterations and to equip it in a suitable manner. After entering into this lease the estates of M'Ewen & Nelson were, on 9th June 1877, sequestrated, and the defender Rattray appointed trustee. Nothing was done towards the fitting-up the shop, and on 29th August 1877 the defender sold the premises. The purchaser at once made the necessary alterations, which were completed on 8th October following.

The claim in the present action was for a sum in name of damages, as owing to the non-execution of the repairs the pursuer had not got the beneficial use of the premises for nearly a year from the date of her entry.

The pursuer averred that throughout the summer of 1877, before the property was sold, she had several times required the defender to make the alterations, and she stated that in one letter, dated 29th July 1877, the defender wrote asking whether in the event of his at once proceeding to fit up the shop the pursuer would give up any “supposed claim for damage that she might consider herself entitled to.” This she stated she had declined to do, and at last, on 14th August, she had raised an action against the defender to have the alterations executed. The defender's pleas were that the action was excluded by a clause of reference in the lease, and that as he

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had used all reasonable despatch in selling the subjects and getting the premises fitted up, the action was unnecessary. In his statement of facts there was a denial that he had refused to fit up the shop. But before any procedure in that case the estate was sold, the articles of roup taking a purchaser bound to implement all obligations under the lease, and to free and relieve the exposer of all claims. The purchaser made the alterations stipulated. The action was then taken out of Court, the defender in the present action paying the expenses, and the pursuer reserving her claim for damages.

The defender refused to admit the claim for damages, and the present action was raised.

It was averred, inter alia—“That the defender by his actings aforesaid, by his statements and pleas in the action referred to, and by the conditions and obligations he imposed on purchasers in the said articles of roup, adopted the said lease, and adopted and undertook the whole obligations therein by Messrs M'Ewen & Nelson, as individuals and as trustees for their firm.”

The pursuer pleaded—“(1) The pursuer having sustained loss and damage through the failure of the said M'Ewen & Nelson, and of the defender Rattray, to implement the obligation in the lease in her favour as to fitting up the said shop in question, she is entitled to reparation as concluded for. (2) The defender Rattray having by his actings and admissions adopted the pursuer's lease, and undertaken or become bound to fulfil the obligations therein as to fitting up the said shop, and having failed to fulfil the said obligations, is liable in damages as concluded for.”

The defender pleaded—“(1) The action is incompetent, in respect of the dependence of the sequestration; and, separatim, it is incompetent in so far as the damages are claimed through the failure of the bankrupts to implement the obligations in the lease. (2) The averments of the pursuer are not relevant or sufficient to support the conclusions of the summons against the defender, as trustee or as an individual. (3) The defender not having adopted or acted upon the said lease, he did not become liable under the obligations founded on.”

The Lord Ordinary (Craighill) pronounced the following interlocutor:—“The Lord Ordinary having heard parties' procurators on the closed record, and more particularly on the second and third of the pleas in law for the defender, and having considered the debate and whole process—Finds that the lease founded on by the pursuer has not, upon the averments set forth by the pursuer on the record, been adopted by the defender so as to render him, or the bankrupt estate under his administration, liable to the pursuer for payment in full of such damage as may be shewn by the pursuer to have been sustained through delay in fulfilment of the clause of the said lease, but this without prejudice to the right of the pursuer to constitute in this action her claim for damages in the premises, that she may be ranked therefor with other creditors of the bankrupts in the sequestration; and so far, but no further, sustains the said pleas: Appoints the cause to be enrolled, that parties may be heard as to further procedure; and meantime reserves all questions as to expenses of process.”

The pursuer reclaimed and argued — The defender, as trustee, necessarily took over all the obligations of the bankrupt. In most cases he satisfied these by a ranking, but if there were continuing contracts which might be beneficial to the estate, the trustee by taking them over to the effect of deriving the benefit from them that the bankrupt would have derived, necessarily came under all the obligations that they imposed, this being the difference between him and a singular successor. The trustee could not help adopting the lease, except by repudiating the estate, and he had taken over the estate and the lease by the very fact of selling the estate.

If there had been no trustee the seller would have been liable for past obligations and the buyer for future, and the question was, Was there any difference with a trustee? The trustee was liable for the past prestations of the contract. The trustee by selling the estate had taken benefit from all the rents that ever could be derived from it. — Walker v. Masson, July 18, 1857, 19 D. 1099 (Lord Curriehill). It was quite possible that there should be a good claim against the trustee, although there should not have been one against a singular successor, for the latter could have said—“I cut the claim into two, for past prestations against the cedent, for future against me “— Nisbet & Co.’s Trustee, M. 15,268. The obligation to put the subject in tenantable repair was inherent in a lease. No doubt some of the dicta in Harvie v. Haldane (infra) were contrary to pursuer's view, but what was actually decided was not.

Authorities— Cuthill v. Jeffrey, Nov. 21, 1818, F.C.; Kirkland v. Cadell, March 9, 1838, 16 S. 860; Harvie v. Haldane, &c., July 2, 1833, 11 S. 872; Balfour v. Cook, May 20, 1817, Hume 771.

Argued for respondent—The mere fact of selling did not imply any liability— Andersonv. Hamilton Co., Jan. 22, 1875, 2 R. 355; Stead v. Cox, Jan. 20, 1835, 13 S. 280. The trustee could not here be held personally liable, for the result would be that no trustee in bankruptcy could take up any heritable estate without making himself liable to any and all claims, of whatever nature, against the former owner of the heritable estate in connection with it. This would be absurd, but it is only on this footing that the action could stand, for if it was a claim against the bankrupt estate this was not the proper process for it. To this extent the Lord Ordinary's interlocutor was objectionable inasmuch as it reserved right to the pursuer in this action to constitute her claim of damages against the bankrupt estate. On the first question the case of Harvie v. Haldane, quoted above, was decisive.

At advising—