Scottish Court of Session Decisions

By bond and disposition in security dated 10th and recorded 13th September 1883, James Heddle bound and obliged himself to repay to Robert Chambers and others, as trustees of the deceased Robert Chambers, LL.D., the sum of £2300, which he had borrowed from them, and in security of repayment he disponed to the said trustees certain tenements in Water Street, Leith.

The estates of James Heddle were sequestrated on 1st March 1892.

On 5th March Richard Brown, C.A., who had been appointed judicial factor on the trust-estate of the said deceased Robert Chambers, and was in right of the foresaid bond and disposition in security, conform to assignation dated 21st January and recorded

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29th March 1886, raised an action of maills and duties and poinding of the ground against James Heddle, as principal debtor, and against the tenants in occupation of the security-subjects, in order to have the tenants ordained to make payment to him of the rents due by them at the next term of Whitsunday, and the like sums half-yearly or quarterly thereafter, according to the terms of their respective tenancies.

One of the tenants, George Vertue, whose rent was £15, and who was due a half-year's rent at Whitsunday 1892, lodged defences, averring that the rent due by him was subject to the deduction of £5, 17s. 10d., being the amount of an account due to the defender for goods sold and delivered to the principal debtor.

The defender pleaded, inter alia, that the pursuer could have no higher claim than his author, and that the sum condescended on formed a valid set-off against the claims of the pursuer.

On 28th June 1892 the Lord Ordinary ( Wellwood) repelled the defences stated for Vertue, and decerned against him in terms of the conclusions of the summons.

“ Opinion.—This is an action of maills and duties and poinding of the ground at the instance of a heritable creditor in virtue of a bond and disposition in security to which he acquired right. All the tenants or occupants, who are called as defenders, have allowed decree in absence to pass against them with the exception of the defender George Vertue, whose yearly rent is £15. The summons was signeted on 5th March 1892, while the term Martinmas to Whitsunday was current. The defence, which is confined to the rent due at Whitsunday 1892, is grounded on the averment that at the date of the summons the principal debtor James Heddle was due Vertue £5, 17s. 10d., principally for goods sold, and to a small extent in respect of the landlord's share of rates and taxes paid by Vertue. The pursuer does not dispute that on evidence being produced of payment of the landlord's share of rates and taxes a deduction will be allowed from the rent, and therefore the only question is, whether the account for groceries can be set-off against the pursuer's claim for rent? I am of opinion that it cannot, on this simple ground, that the pursuer is not the defender's debtor in that account. To admit the plea of compensation there must be concursus debiti et crediti. If a landlord who is in debt to his tenant assigns the rents to a third party, there is no concursus quoad future rents, because nothing is due and payable by the tenant to the landlord at the date of the assignation. The tenant is simply an unsecured creditor, and the rents when due must be paid to the assignee— Clark's Creditors v. Dewar, M. 2656; Bell's Comm. ii. (M'Laren's ed.) 132; Bell's Prin., sec. 1468.

It is otherwise as to rents which are due and in arrear at the date of the assignation, because as they are payable to the cedent, concourse has taken place and compensation is pleadable— Elmslie v. Grant, 9 Sh. 200.

The defender erlied on the maxim assignatus utiter jure auctoris, but I do not think that that maxim has any application to such a case as the present. It may apply where the debt or obligation founded on as a counter-claim forms one of the outstanding cardinal conditions or obligations of the contract between the parties—landlord and tenant or superior and vassal. I take it that this was the ground on which the case of Arnott's Trustees v. Forbes, 9 R. 89, relied on by the defender, was decided. Here, however, the defender's counter-claim is wholly unconnected with the contract of lease, and falls under the general rule to which I have adverted, viz., that compensation cannot be pleaded unless before the landlord is effectually divested there has been a proper concursus debiti et crediti.

As to intimation, the rents sued for have not been paid away; but further, the demand made in the summons is quite sufficient intimation. The case relied on by the defender, Royal Bank v. Dickson, 6 Macph. 995, is not in point, because in that case what was relied on as intimation was simply a summons of poinding of the ground, which was held not to be equivalent to an intimation of assignation to the rents, the summons not containing any such claim or assertion. This clearly appears from Lord Barcaple's note, p. 997. In the present summons there is an express assertion of right to the rents under the bond and disposition in security, and that is equivalent to an intimation.”

The defender reclaimed, and argued—The Lord Ordinary had omitted to advert to the fact that the principal debtor was sequestrated prior to the raising of the present action; that was prior to the date at which the creditor's right to the rents was intimated to the tenants. But that fact took the case out of the ordinary rule that there must be a concursus debiti et crediti, and the question became one of retention or the balancing of accounts in bankruptcy; and in the case of mutual debts in bankruptcy the right to retain existed, though the claim of the person asserting such right was contingent, future, or illiquid—Bell's Comm. (7th ed.), ii. 118; Bell's Prin. sec. 1410; Arnott's Trustees v. Forbes, November 3, 1881. The defender had therefore a valid right of retention in respect of the debt due to him by the principal debtor.

Argued for the pursuer—The infeftnient of a heritable creditor completed his right to the rents, and was a sufficient intimation to the tenants that the rights were assigned to him—Bell's Comm. (7th ed.) 1, 793; Paul v. Boyd's Trustees, May 22, 1835, 13 S. 818; Edmond v. Magistrates of Aberdeen, November 16, 1855, 18 D. 47. The pursuer's right to the rents being therefore completed and intimated prior to bankruptcy, the defender's contention that he had a right to retain owing to the sequestration of the principal debtor fell to the ground.

At advising—