Scottish Court of Session Decisions

Mrs Parlane, Elmbank Crescent, Glasgow, died upon 11th July 1889. By trust disposition and settlement dated 11th March 1873 she conveyed her whole estate to trustees, and provided, inter alia—“In the third place, my trustees shall, at the expense of my estate, assign, dispone, and convey to the said Thomas Murray, whom failing to his son Walter Murray, or procure a proper title with that destination to the property belonging to me in Cleveland Lane, Glasgow, presently vested in the said Thomas Murray, but qualified by a back-letter in my favour, but always under burden of any heritable securities that may affect the same, and the feu-duty, ground-annual, and other burdens affecting it, with entry as at the term of Whitsunday or Martinmas immediately preceding my death.” She destined the residue to such charities as her trustees should approve of.

In March 1890 Murray brought this action against the trustees to have it declared that they were bound to convey to him the property left him under the trust-disposition, and that without the burden of a bond and disposition in security for £1800, and two ground-annuals of the value of £19, 4s. and £19, 8s. 1d. respectively.

It appeared that the property in Cleveland Lane, called Cleveland Buildings, had been erected in 1863 by Robert Johnston, Mrs Parlane's first husband, and that in 1861 on security of the site he had obtained a cash-credit for £4000 from the Bank of Scotland.

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In 1863, by contract of ground-annual, with consent of the Bank of Scotland, he disponed the property to Charles England, who in turn undertook to pay the above-mentioned ground-annuals to the bank, and in security disponed the buildings to the bank. The conveyance to England, although ex facie absolute, was in reality qualified by a back-letter, in which he admitted that he held the property only in trust for Johnston, and bound himself to re-convey it to him whenever called upon to do so. At the same time England, as proprietor of Cleveland Buildings, on the security thereof, borrowed £1800 from Peter Simons in March 1863. The money, however, was paid to Johnston. Johnston died on 6th May 1868 leaving a settlement, by which he left all his estate to his wife, but on 4th August 1868 England disponed the Cleveland property to the pursuer, who granted a back-letter to the testatrix in the same terms as that granted by England to Johnston. The testatrix paid off the balance of the £4000 cash-credit, and upon 12th April 1871 received a discharge thereof from the bank. This discharge also contained an assignation of the ground-annuals in favour of the testatrix, her heirs and assignees.

By deed of assignation dated on 11th August 1874 Mrs Parlane paid to Peter Simons the debt of £1800, and took from him an assignation to her executors and assignees whomsoever to the bond and disposition in security granted by England in March 1863. In this way all the burdens which up to this time had affected the Cleveland property were now assigned to the testatrix, and she did not replace them with any other burdens.

The pursuer maintained that on the bond and disposition in security and ground-annuals being assigned to the testatrix, the same became extinguished; that the words “affect” and “affecting” in the third purpose of the settlement were employed by the testatrix in the sense of heritable securities which at the time of her death might constitute a claim against her as true owner of the subjects, and not in the sense of heritable securities which though paid by her might stand ex facie of the record undischarged; and in any event, that the testatrix, by speaking of the heritable securities as burdens which “may affect” the property, contemplated the contingency which happened, of her being able before her death, out of her surplus income, to pay up the bond and disposition in security for £1800, and intended, should that event occur, that the pursuer should not be burdened with it. On the other hand, the defenders maintained that the bond and disposition in security for £1800, and the ground-annuals for £19, 4s. 1d. and £19, 8s. 1d. still existed as burdens on the subjects to be disponed to the pursuer, and that he must accept the property under these burdens.

The defenders pleaded—“(4) On a sound construction of the said trust-disposition and settlement, and of Mrs Parlane's title to the said subjects, the defenders are not bound to convey the same to the pursuer except under burden of the said bond and disposition in security. (5) On a sound construction of the said trust-disposition and settlement, and of Mrs Parlane's title as aforesaid, the defenders are not bound to convey the same to the pursuer except under burden of the said ground-annual.”

Upon 6th August 1890 the Lord Ordinary ( Kinnear) found and declared that the defenders were bound to convey the Cleveland property to the pursuer unburdened by the bond and disposition in security for £1800, but that the property was still burdened with the right to exact the ground-annuals.

“ Opinion.—The question depends upon the intention of the testatrix as expressed in her will. She gives the pursuer certain property in Glasgow ‘under burden of any heritable securities that may affect the same, and the feu-duty, ground-annual, and other burdens affecting it, with entry as at the term immediately preceding’ her death. The pursuer is therefore entitled to the property free from the burden of all securities except such as validly affect the land when the will comes into operation. But the bond for £1800 in favour of Peter Simons did not so affect the land. At the date when the will was executed the testatrix, as representing her late husband, was debtor in the bond. But she paid up the money in July 1874, and obtained an assignation in her own favour from the creditor, and the debt being thus extinguished, the land was necessarily disburdened of the security. It is not material that by the form of the title the land was held by the pursuer and not by the testatrix herself, for the pursuer was a mere trustee for the testatrix, and held the lands for her behoof alone. It is said that by taking an assignation instead of a discharge the testatrix indicated an intention that the debt should be kept up as against the estate, but assuming it to be a reasonable inference, the debtor's intention would be unavailing to create or maintain a security upon land. If the land were still affected by the bond after the testatrix had paid the debt, it follows that she must have held a security over her own estate preferable to any later bond which she might have granted to other creditors, either before or after the date of the assignation. This appears to me an untenable position. The sole debtor in the bond being also proprietor of the subjects disponed in security, the security was necessarily extinguished as soon as the debt was paid.

“The ground-annuals are in a different position. These are ex facie irredeemable rights, and no authority has been cited for holding that an irredeemable right in land completed by infeftment can be extinguished confusione. The case of Robertson (Morr. 3044) is distinguishable, because a wadset is a redeemable right. It would appear to me to have been competent for the testatrix to keep up the ground-annuals as separable rights in her own person if she desired to do so; and the only question therefore is, whether she intended them to

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pass to the pursuer along with the property? The terms of the settlement are in my opinion conclusive to the contrary. There is a noticeable distinction between the terms of the direction applicable to the ground-annuals and that which applies to heritable securities. The latter are referred to generally as securities which may affect the property, which can only mean such as may be found to affect it when the will comes into operation. But the ground-annuals are mentioned along with feu-duties as existing burdens, by which the property is actually affected when the will is executed. It does not appear that the subjects were ever burdened with any other ground-annual than that now in question, to which the testatrix had already acquired right at the date of the will. I think it follows that the pursuer must take the property subject to the burden of the ground-annual. The language appears to me susceptible of no other construction.

“The pursuer's claim under the fifth conclusion is in accordance with the express words of the will. It is said that if he takes the rents from Whitsunday 1889 he must be liable for the burdens from the same term. This appears to be just in so far as regards payments exigible from the representatives of the testatrix. But there can be no liability for ground-annuals accruing due during her lifetime.”

The defenders reclaimed, and argued—The estate should be conveyed under burden of this bond and disposition in security for £1800. The intention of the will was that all burdens affecting it should still continue; if the testatrix had wished to remove the burden created by the bond, she would have taken a discharge of it and not an assignation. The burden was not extinguished confusione, as the Lord Ordinary thought. It was not enough that the debtor and the creditor should be the same person in an obligation in order to extinguish it confusione if there was any interest in that person to keep it as a subsisting burden—Stair, i. 18, 9; Bell's Prin. 580; Fleming v. Imrie, February 11, 1868, 6 Macph. 363; Mackenzie v. Gordon, January 16, 1838, 16 S. 311— aff. March 26, 1839, M'L. & Rob. 117. Here the interest was that of the various charitable institutions who might receive the residue, which the testatrix would have wished to make as large as possible. The ground-annuals were in a stronger position, as the testatrix acquired these ground-annuals before she had made her will.

The respondent argued—The testatrix intended that Murray should take the Cleveland property without any burdens upon it, and that that was so she showed by buying up and extinguishing any burdens that were upon it. The reason why she took an assignation of the bond and not a discharge was that the bond had been ex facie granted by England and not by herself. There was no intention to benefit the charities among whom the residue was to be divided in preference to a particular legatee. The bond and disposition had been extinguished con fusione, because after the assignation by Simons to her the real creditor and debtor in the bond were in the same person, and she had no interest to keep up the debt— Dun v. Blantyre, July 1, 1858, 20 D. 1188; Love v. Storie, November 6, 1863, 2 Macph. 22; Bell's Prin. 584. The ground-annuals were in the same position; they were merely an incumbrance on the land. The testatrix when she succeeded to her husband's estate was the real obligant in them. She had paid them off and taken an assignation of them in her own favour; they were therefore extinguished.

At advising—