Scottish Court of Session Decisions

In 1841 John Haldane and Walter Scott Haldane, proprietors respectively of four-seventh and three-seventh shares of certain heritable subject in Selkirk, conveyed the subjects in trust to Robert Haldane, writer in Galashiels. The trusts were in the case of both proprietors trusts for creditors, and Robert Haldane was himself the principal creditor. He attempted several times to sell the property, but without success, and in 1846 he himself made offer at a public roup to buy the subjects and distribute the price among the creditors. The requisite consents of creditors, however, not being obtained, this attempted sale became abortive. He died in 1855. His sons and heirs, William and Richard Haldane, writers, and Robert Haldane, farmer, entered on the management and possession of the subjects, and continued to manage them, without making up any title whatever to them, till 1858, when by minute of agreement, in which they designed themselves proprietors of the subjects, they sold them to Alexander Yellowlees for £225, £200 of which price was to be in cash, and £25 by promissory-note at nine days' date, “it being understood that he” (Yellowlees, the purchaser) “is not to be called on to pay this latter sum till a title as after mentioned is ready for delivery to him, said sum of £25 to bear interest at 5 per cent. per annum till paid, the interest to be payable yearly at Whitsunday.” The 5th, 7th, 8th, and 9th conditions of the minute of agreement were as follows—“( Fifth) It having been very fully explained to the said second party (Yellowlees) how the said first parties (the Haldanes) stand in regard to a title to the subjects above mentioned, and that in consequence a title cannot be given at the settlement of the price above mentioned, he hereby agrees to dispense with the same until the said first parties make up as fair a title, taking the circumstances into account, as can be got, it being understood and agreed to that the sellers are not to be bound to give a complete and valid title, and, it being a part of the bargain, the purchaser hereby agrees to dispense with a complete and valid title, and the sellers will not be bound to remove any doubts or admitted defects therein; but it being for their own interests to make up as good a title as possible, they are to employ Adam Paterson, Esquire, Writer to the Signet, Edinburgh, with powers to him to do what he may consider prudent and necessary, taking everything into account in the position in which they are placed, to make up a title in the persons of the sellers, or any one of them, as may seem proper, so that they or he may convey to the purchaser, and that the purchaser may have as good a title in his person as the sellers will be able to get themselves within a reasonable time from the date hereof, and at a reasonable expense, considering the value of the property hereby agreed to be sold: And in the event of any dispute or difference arising between the parties concerning what may be considered a title in terms of this article, or in regard to the interpretation and meaning thereof, they do hereby agree to, and bind and oblige themselves and their heirs and successors to, submit all disputes and differences and the interpretation and meaning hereof, as after mentioned…. ( Seventh) In respect that the said Alexander Yellowlees intends executing considerable repairs and alterations on the property, it is hereby distinctly understood and agreed upon, in the event of the said first parties not being able to give a proper title as above mentioned, or in the event of the subjects being evicted from them or their heirs and assignees by any person or persons, or in any manner of way whatever, that the said Alexander Yellowlees, or his heirs, successors, or representatives, or his assignees, or his or their creditors, are not to have any claim upon the said first parties or their foresaids for any compensation for such repairs or alterations, additions, improvements, or claim for repayment of money to be expended in any manner upon the property; and the said first parties and their foresaids shall only be bound to repay the purchase price of £225 to the party or parties having right thereto, and he hereby accordingly takes all risk thereof upon himself and his foresaids; and in such event taking place, the use and possession of the property, or the rents derived therefrom during the time that the said Alexander Yellowlees and his foresaids shall have been in possession, shall be held to be, and are hereby agreed to be, taken as an equivalent for the interest which the said first parties and their foresaids may receive on said £200 and £25 respectively, and there will thus be no accounting for rents, &c., to and by either party: ( Eighth) In any question or difference which may arise under this agreement or writing, the said second party is not to dispute or question the right of the said first parties to the subjects above mentioned for want of a legal or other title, but is to hold that they are in all respects the proprietors of the same as fully as if they had a complete and valid legal title and were infeft upon the same: ( Ninth) That in event of any dispute or difference arising between the parties as aforesaid concerning what may be considered a title in terms hereof, or in regard to the interpretation or meaning of article fifth hereof, or of any part or the whole of these presents, or with regard to the bargain or sale in any respect or particular, they do hereby submit and refer all such disputes and differences to the amicable decision, final sentence, and decreet-arbitral of the said Adam Paterson, and failing him by death or non-acceptance, to John Romanes, Esquire, Solicitor to the Supreme Courts, Edinburgh, partner of the said Adam Paterson.”

Yellowlees entered into possession of the subjects at Whitsunday 1858, and immediately began to execute certain alterations upon the buildings. In the first of the two actions hereinafter narrated

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he averred that these alterations consisted in rebuilding the front wall, placing a new roof upon part of the subjects, re-flooring a part, and converting the whole into a good shop, cellar, and warerooms. He averred that in these necessary repairs and alterations and improvements he had expended £330, and that the value of the subjects was enhanced to the amount of at least £260. In 1870 he sold the subjects to his brother John Yellowlees for £500, and he possessed the subjects as proprietor till 1879. In 1873 William, Richard, and Robert Haldane. who never made up any title to the subjects, obtained the appointment as judicial factor on the trust estates of John Haldane and Walter Scott Haldane, on which their father had, as already mentioned, been the original trustee, of Mr D. C. Alexander, writer in Selkirk. Mr Alexander obtained warrant to make up a title to the subjects by interlocutor dated 13th and extracted 27th May 1873, but was prevented by various causes from making up a feudal title till December 1878., He thereafter exposed the subjects for public sale, and John Yellowlees bought them from him for £820, the price of £200 which Alexander Yellowlees had already paid for them to the Haldanes being imputed to that sum. In this action John Yellowlees averred that he had been forced to buy them by a threat of eviction from them on the part of Mr Alexander, and that he was in ignorance of his legal and equitable right to the subjects. He maintained and reserved his right to claim repetition of the £620 thus paid to Mr Alexander. At the settling of the transaction the legal rights of all parties both as to this and the other questions between them were reserved. In December 1879 John and Alexander Yellowlees raised this action against Mr Alexander, as judicial factor on the trust estate of John and Walter Scott Haldane, to have it found and declared that they were not bound to account for the rents of the subjects from the first purchase of them by Alexander Yellowlees in 1858 to the purchase by John from Mr Alexander in 1879, or otherwise that all claims in respect of the said rents had been extinguished and discharged. The summons also concluded for payment of the £260 by which the subjects had been enhanced in value by the operations above narrated. The declaratory conclusion of the summons was founded on the bona fide possession of the pursuers under the minute of agreement in 1858.

The pursuers averred that Alexander Yellowlees in entering on the subjects, and making outlays thereon, acted in good faith, and in the bona fide belief that he had acquired the right of property, and that all that remained to be done would be done by the Haldanes arranging to give him a formal conveyance; further, that his possession and that of his brother was in good faith, and open and known to all the creditors.

They also pleaded that the defender, as representing the creditors on the trust-estate, was barred by their mora and negligence, and by their acquiescence in the management of the Haldanes, from demanding any accounting for past rents.

Mr Alexander defended the action, and denied that the subjects had been enhanced in value as stated by the pursuers.

He pleaded, inter alia—“(1) The pursuers' statements are not relevant to support the conclusions of the summons. (3) The pursuers are not entitled to recompense for meliorations, in respect they did not possess in the bona fide belief that they were the true proprietors.”

He also raised a separate action against the Messrs Yellowlees for an accounting for the rents from 1858 to 1879, in the proportions corresponding to their respective periods of possession.

The Messrs Yellowlees maintained in this action pleas similar to those which they maintained in the action in which they were pursuers.

The two actions were conjoined, and the Lord Ordinary (Lee) pronounced this interlocutor:—“Finds, in the action at the instance of David C. Alexander, as judicial factor on the trust-estate of John Haldane and Walter Scott Haldane, that the allegations of the pursuer are not relevant to support the conclusions of the action, and therefore assoilzies the defenders, and decerns, but without prejudice to any claim competent to the pursuer against William, Richard, and Robert Haldane referred to on record; and in the action at the instance of John and Alexander Yellowlees, sustains the first plea-in-law for the defender, assoilzies the said David C. Alexander from the conclusions of the action, and decerns, reserving to the pursuers any claim competent to them, or either of them, against the said William, Richard, and Robert Haldane, and to them their answers as accords: Finds in each case the defenders entitled to expenses down to the date of conjoining the actions; and quoad ultra, finds neither party entitled to expenses,”&c.

His Lordship added this note:—“The agreement between Alexander Yellowlees and William, Richard, and Robert Haldane is of a very peculiar character. It bears that the Haldanes, as proprietors of the subjects, had agreed to sell, and did thereby sell, and that Mr Yellowlees had agreed to purchase, and did thereby purchase, from them ‘All their right and interest in and to All and whole that dwelling-house in the burgh of Selkirk,’ &c

“It is now averred by John and Alexander Yellowlees that after obtaining possession at Whitsunday 1858 considerable alterations and improvements were made upon the subjects by Alexander Yellowlees. The house facing the street was reconstructed, and the brew-house at the back was covered with a new slate roof, and otherwise improved. The expense of these alterations is said to have been not less than £330, and it is alleged that John Yellowlees in 1870 paid to his brother the sum of £500 for his right under the minute of agreement. It is further alleged that in making the said outlays Alexander Yellowlees acted in good faith, and in the belief that the said William, Richard, and Robert Haldane were proprietors, and would so arrange as to grant him a conveyance in terms of the agreement of lease. It is said that he believed he had acquired, in substance and reality, the right of property, and that all that remained to be done was to satisfy the forms of conveyancing. His possession, and that of his brother, the other pursuer, are stated to have been all along in the like good faith. But it is admitted that William, Richard, and Robert Haldane never made up any title, and it is not alleged that either of the pursuers ever had or ever attempted to obtain any title of possession excepting the minute of agreement above mentioned.

It is in these circumstances that John and

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Alexander Yellowlees' claim from the judicial factor on the trust-estate of John and Walter Scott Haldane, in addition to the £200 paid in 1858, and which the factor has recovered from Messrs Haldane, a sum of £260 on account of meliorations, and as the extent to which the factory estates are lucrata by the expenditure; and they further demand to be declared free from all claim for rents or annual profits during their possession. They plead that the factor, as representing the creditors on the trust-estate, is barred by their mora and acquiescence from demanding any accounting for past rents, except upon giving recompense as claimed, and they plead separately that they are entitled to that recompense in respect of the alleged bona fides in making the alteration.

On the other hand, the judicial factor, in the action at his instance, claims from the Messrs Yellowlees a sum of £712, as the yearly rent or annual value of the subjects from the period from Whitsunday 1858 to Whitsunday 1879, when he succeeded in recovering possession and sold the property to John Yellowlees.

Although the action at the instance of Messrs Yellowlees is in one sense the leading action, it appears to the Lord Ordinary to be convenient to consider, firstly, the action at the instance of the judicial factor. If he has any claim against John and Alexander Yellowlees, or either of them, to account for the rents or yearly profits of the subjects, it will naturally fall to be considered upon what conditions, if any, that claim can be enforced. If, on the other hand, no such claim lies against John and Alexander Yellowlees, their demand for recompense on account of the alleged meliorations will have to be considered in a different aspect.

The Lord Ordinary has difficulty in ascertaining the grounds upon which the judicial factor has directed his action against the Messrs Yellowlees. His natural and most obvious course would appear to have been to call to account the trustees of Mr Robert Haldane. In the state of facts set out on record they seem to be clearly liable to account for the trust-estates in Mr Robert Haldane's hands, both in respect of their representing him and also as having actively intromitted with the subjects in question. Nothing is suggested which should lead the Lord Ordinary to doubt that they are responsible for the possession had by Alexander and John Yellowlees. No reason is given for not proceeding directly against them. It is not said that they are persons of no means and unable to account. Nor is it alleged that the Messrs Yellowlees did anything which should make them responsible for the actings and intromissions of Robert Haldane's representatives. The factor seems to have had no occasion to take any notice of the Messrs Yellowlees, unless they had stood in the way of his selling the subjects and obtaining the necessary title and possession.

The only ground of action suggested, either in the condescendence or in the pleas for the judicial factor, is that Alexander and John Yellowlees possessed the subjects, and that these formed parts of the trust estates. But this is in the opinion of the Lord Ordinary insufficient. Their possession from 1858 until they purchased the property from the factor was by virtue of the right which they purchased from Robert Haldane's representatives in terms of the minute of agreement, and for which Robert Haldane's representatives received payment. Neither Alexander nor John Yellowlees had any contract with the judicial factor, and the notion of their being liable to him in recompense for a possession which they obtained from Robert Haldane's trustees is, in the opinion of the Lord Ordinary, untenable. Had it been alleged that their possession was obtained by concert with the Messrs Haldane for the purpose of effecting an illegal appropriation of the subjects, the case might have been different. But in the absence of any suggestion of that kind, and of any intelligible ground for proceeding against them, the Lord Ordinary must hold that the present action is not will laid.

With regard to the action at the instance of the Messrs Yellowlees, the Lord Ordinary is unable to distinguish the present case in principle from that of Barbour v. Halliday, July 3, 1840 ( 2 D. 1279); for he holds that there is no relevant allegation that the alterations and improvements were made in bona fide. It is clear from the minute of agreement that the Messrs Haldane, while calling themselves proprietors of the subjects, knew that they had no title, and had no right which would enable them to obtain a valid title; and it further appears that Alexander Yellowlees was informed how they stood in regard to a title, and agreed to take the subjects on the condition of accepting such a right only as they might be able to give, and of having no claim against them in case of eviction for any compensation for the alterations which they contemplated making, or for the payment of their outlay. He agreed that his only claim should be for repayment of the purchase price, and that the use and possession of the property should be held as an equivalent for the interest during the period of possession. He agreed to take all the risk of making the alterations and expending money upon the property on himself and his heirs, successors, or representatives or assignees. Now, the Lord Ordinary is of opinion that Alexander Yellowlees can have no better claim against the judicial factor than he has against Messrs Haldane, and that the position of John Yellowlees is no better than that of Alexander Yellowlees, from whom he acquired right only to his right under the minute of agreement. It is impossible to consider the allegation of bona fides apart from the minute of agreement to which reference is made, and which was the sole title of possession; for Mr Robert Haldane's purchase of the subjects from himself qua trustee evidently never came to anything. It is not said that the price of £300 was ever paid, or that Robert Haldane's purchase was in fact relied on. The question therefore is, in this case, how far Alexander Yellowlees in making the outlay had, by virtue of the minute of agreement, a title which placed him in bona fide and upon which he could rely. The Lord Ordinary holds that he had no title at all, and that he knew it and undertook the risk of it. As against the true owner, therefore, the claim of Messrs Yellowlees appears to be excluded on the principle stated in Burns v. The Creditors of M'Lellan (M. 13,402), viz.—that ‘no law subjects a man to recompense or remuneration who reaps an occasional or consequential benefit from the deed of another done with no view to his interest.’

But it was argued there was great delay on the part of the creditors in taking up their right, and that ultimately it was upon the application of the

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Messrs Haldane that the judicial factor was appointed. These circumstances may make it appear somewhat hard upon the pursuers that they should now have to pay for the premises a price increased to some extent by their improvements; but it must be observed that the improvements were made at or soon after 1858; that Mr Yellowlees had it in his power to take steps at once to ascertain his position; and that whatever effect may be attributable to the action of the Haldanes in a question with them, it can give to the pursuers no claim against the judicial factor that he was appointed on the petition of the Haldanes, and after considerable delay. The cases of Rutherford v. Rankine (M. 13,422) and Fernie v. Robertson ( 9 Macph. 437) and Nelson v. Gordon ( 1 Rettie, 1093) all appear to the Lord Ordinary to be distinguished from the present by the fact that in each there was a title of possession which could not be ignored by the owner in asserting his right. In the case of the York Buildings Company v. Mackenzie (3. Pat. App., pp. 378 and 579) it was held, on the sale being annulled, that Mr Mackenzie must account for the rents and profits, and might deduct the expenses and outlays so far as beneficial. But he had a title which, though challengeable on the ground of his disability to purchase, was ex facie valid, and indeed judicially sanctioned. The opinion of Lord Young in Reedie v. Yeaman (14 S. L. R. 625) contains a valuable exposition, to which the Lord Ordinary entirely assents, of the principles upon which, in the general case, possessors upon a temporary or precarious title laying out money in improvements are deemed to have done so for their own purposes, and without giving rise to any claim of recompense. The title of the pursuers in the present action was, on the face of it, no title at all against the real owner of the subjects, and the Lord Ordinary is unable to sustain it as affording any foundation for a plea of bona fide expenditure such as should affect the owner with a claim of recompense for improvements made without his consent.

As the Lord Ordinary has held that the judicial factor has no claim against the Messrs Yellowlees for rents or yearly profits, it is unnecessary to consider what conditions would have been attachable to such a claim if sustained.

The result at which he has arrived is that both actions are untenable, and that in each case there must be decree of absolvitor, and with expenses down to the date of conjunction.”

Alexander reclaimed.

The authorities founded on are quoted in the note of the Lord Ordinary.