Scottish Court of Session Decisions

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Cite as: [1879] SLR 16_645_1, [1879] ScotLR 16_645_1

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SCOTTISH_SLR_Court_of_Session

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Court of Session Inner House First Division.

Friday, June 27. 1879.

[ Lord Adam, Ordinary.

16 SLR 645_1

Gordon Hat, Petitioner.

Subject_1Entail
Subject_2Rutherfurd Act (11 and 12 Vict. c. 36), sec.2 6
Subject_3Entailer'sDebts
Subject_4Money Expended on Part of an Entailed Estate subsequently Sold — Meliorations.
Facts:

Part of an entailed estate was sold by an heir of entail to pay entailer's debts. held ( reversing Lord Adam, Ordinary) that it was competent under section 26 of the Ruther—furd Act (11 and 12 Vict. cap. 36) to apply a portion of the price which remained after the entailer's debts were paid in repayment of money beneficially expended before the sale upon that part of the entailed estate which was subsequently sold, and also in payment of certain ameliorations due to tenants under leases granted by the predecessor of the original entailer and by the entailer herself.

Headnote:

The petitioner James Gordon Hay was heir of entail in possession of the lands of Seaton and others
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by a deed of entail granted by his mother Elizabeth Forbes Lady James Hay, dated 16th February 1859. tinder the provisions of the Butherfurd Act (11 and 12 Vict. cap. 36), sec. 25, the petitioner sold part of the lands for £56,500, and that sum was thereupon consigned in bank. Warrant was granted by the Court to uplift £63,321, 8s. 1d., and to apply it in the payment of entailer's debts. There thus remained consigned the sum of £3175, 11s. 8d. A petition was presented by Mr Gordon Hay for warrant to uplift and apply this sum in payment of improvements on the estate. The Lord Ordinary ( Adam) after remits pronounced an interlocutor disallowing two items specified in the petition—1st, “Amount of tenants' ameliorations, £759, 5s. 3 1 2.,” due under the terms of leases granted some by the entailer and others by her father, to whom she succeeded as heiress-at-law; and 2d, “amount expended on Waterton estate, being the lands sold to Messrs Pirie, £1211, 11s. 0 1 2d.” He added this note—

“ Note.—. . . The sum of £759, 5s. 3 1 2., disallowed above, consists of money paid by the petitioner to tenants on the estate in respect of ameliorations due to them under their leases. This appears to the Lord Ordinary to be clearly not money expended by the petitioner in improving the entailed estate, and he has therefore disallowed it.

“It was maintained, however, by the petitioner that the sum so paid was truly an entailer's debt, and that authority might be granted to apply the consigned money in payment of it on that ground. It is said that the leases were granted by the petitioner's predecessors before the estate was entailed, but that the claims for payment of the meliorations due under them only merged after the petitioner had become heir of entail in possession of the estate. The claims were paid by the petitioner, and discharged by the tenants as they became due.

It does not appear to the Lord Ordinary that these were entailer's debts. It appears to him that the petitioner was himself liable in payment of them. If, however, the money is to be applied in payment of them on that ground, the petition will have to be amended, as such an application of the consigned money is beyond its scope.

The further sum of £1211, 11s. 0 1 2d., which the Lord Ordinary has disallowed, consists of money expended on improvements executed, not upon the entailed estate of which the petitioner is in possession, but on that portion of it which he sold to Messrs Pirie, and which is now in their possession. It appears to the Lord Ordinary that such an application of the consigned money is not competent under the statute. The statute only contemplates the repayment of money expended on the estate of which the petitioner is in possession at the time of the application, and not in repayment of money which may have been expended by him on an estate of which he may have been at some former time in possession.”

The petitioner reclaimed, and argued—The improvements allowed and those disallowed were of the same kind, only carried on in different parts of the estate. The whole estate was benefited by them, and at the time they were made the petitioner was clearly in the position of having a claim on the entailed estate. The burden was not a burden on the one part of the estate on which the improvements was made, but was chargeable over the whole. The expenditure here came under the provisions of the Butherfurd Act (11 and 12 Vict. c. 36), sec. 26, which enabled the heir of entail to lay out consigned money in circumstances like the present “in or towards payment of entailer's debts, or in or towards payment of any money charged on the fee of such entailed estate under this or any other Act, or in redemption of the land tax affecting, such entailed estate, or in permanently improving the same, or in repayment of money already expended in such improvements.”

Authorities— Maitland, Feb. 23, 1851, 16 D. 651; Macdonald Lockhart, Dec. 15, 1835, 14 S. 150; Mackenzie v. Mackenzie, Feb. 15, 1849,11 D. 596; Cochrane, Dec. 11, 1850, 13 D. 293.

At advising—

Judgment:

Lord President—The fund proposed to be applied here arose from the sale of part of an entailed estate. It was sold to Messrs Pirie, of Aberdeen, for the sum of £56,500. That sale was approved by Lord Adam as Lord Ordinary, and the price was consigned. It was applied to the extent of £52,000 in paying off entailer's debts, that being the true object of the sale. This, of course, left a considerable balance, £3175, 11s. 8d. remaining consigned. It was proposed to apply this balance to several different purposes. As regards two of these, objections were suggested by the Lord Ordinary and given effect to. Against his Lordship's interlocutor the petitioner has reclaimed. The Lord Ordinary has disallowed expenditure to the amount of £2215, and one portion of that to the extent of £1383, 0s. 10 1 2. is the value or expense of improvements made on the entailed estate before the sale to Messrs Pirie, and the peculiarity of this point is that the improvements were made on that portion of the lands which'was afterwards sold. The Lord Ordinary has disallowed that, but I am disposed to differ with him, and to think that it is properly an improvement expenditure within the statute. The 26th section of the Act 11 and 12 Viet. cap. 36 (Butherfurd Act), authorises an heir of entail to lay out consigned money such as we have here “in or towards payment of entailer's debts, or in or towards payment of any money charged on the fee of such entailed estate under this or any other Act, or in redemption of the land tax affecting such entailed estate, or in permanently improving the same, or in repayment of money already expended in such improvements.”

Now, when money was expended on the estate before the sale, there can, I think, be no doubt that it was expended on the whole estate, and therefore at that time the heir became potentially a creditor of the estate and of the heirs of entail. Until he took steps to charge the debt on the estate or to get payment of it he was only potentially a creditor, but still he was in such a position as to entitle him to repayment of the money from the heir of entail or from the estate. Can it be said that the fact of a part of the estate being sold so altered that position as to deprive him of the right? I venture to doubt the soundness of that principle. It does not follow that improvements on a particular farm or field are only local in their effect—that is to say, only benefit the land on which they are made. They might very possibly benefit the whole estate, as,

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for example, the making of a road or an embankment. I do not say that is the ease here, but it shows that in certain cases local improvements may be made which will have a very wide effect. It is very hard if, where that part of the estate on which the improvement is made is sold, the heir has no rights under the statute against the other heirs, and yet if the Lord Ordinary is right I am afraid we should have to go that length; that consideration renders me doubtful of the soundness of the principle. To my mind the safest way of dealing with this Act of Parliament is to adhere reverently to it. The heir here has made improvements that put him in a position to assert certain rights, and I cannot see that though he has sold a part of the estate there is either justice or equity in relieving the succeeding heirs from that claim—for if the improvements were judicious, as we must assume them to have been—they having passed through the ordeal to which all such cases are subjected before they are allowed—does it not follow as matter of course that the value of the land was thereby enhanced, and consequently that the lands sold for a higher price than they would otherwise have done. The fund realised by the sale was thereby enlarged, and that fund is the property of the heirs of entail; therefore the whole body of them was benefited by the enhanced price. According to the letter and spirit of the statute, I am therefore of opinion that the heir in possession is entitled to be repaid for these improvements.

The other part of the Lord Ordinary's note relates to the payment of certain meliorations paid to tenants due to them under their leases. The question is, whether these are not of the nature of entailer's debts? The state of the facts was not very clearly brought out either in the petition or in Court, and we requested counsel to furnish further information. A minute was put in by the petitioner in which it is stated that certain of these meliorations were granted under leases granted by James Forbes of Seaton, the father and predecessor of the entailer, Lady James Hay, in the estate of Seaton, and from whom she acquired the same as heiress-at—law. The remainder of the payments were made under obligations in leases granted by Lord James Hay, the husband of the entailer. He had no written commission or authority from his wife, but during the whole period of her possession he administered it as if he were owner, and any obligations undertaken by him were invariably fulfilled by her. The leases having expired, the tenants were by their leases entitled to be repaid money expended upon their farms. Assuming that Lord James Hay was entitled to bind his wife in making leases, it is clear that Lady James Hay was debtor as regards leases made both by her father and her husband, and if so it is difficult to say that these meliorations were not entailer's debts. They were obligations by which she was personally bound, and for which her estate had she held it in fee-simple, would have been liable. But when they are upon an entailed estate, that is just the position in which entailer's debts always are. Creditors might have attached the estate, and therefore the heir of entail was entitled to pay these debts so as to free the estate from the burden. Apart from the fact that these leases were granted by Lord James Hay without express consent from Lady James Hay, I think they must be allowed. As regards the authority of Lord James Hay, there might be a nice ques—‘tion, but I cannot help thinking that, as he and his wife were living together, and he was managing the estate, and possession followed the leases made by him, the authority implied is sufficient to come in place of an express mandate from the wife. I am therefore for recalling the Lord Ordinary's interlocutor.

Lord Deas, Lord Mure, and Lord Shand concurred.

The Court therefore recalled the Lord Ordinary's interlocutor, and remitted to his Lordship “to allow the two items of expenditure, amounting respectively to £759, 5s. 8 1 2 and £1,211, 11s. O 1 2.; to allow the petition to be amended, if necessary, so as to embrace more clearly the said item of £759, 5s. 3 1 2d.; and to proceed further as shall be just.”

Counsel:

Counsel for Petitioner (Reclaimer)— Balfour— Keir. Agents— Webster, Will, & Ritchie, S.S.C.
1879