Scottish Court of Session Decisions

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Cite as: [1895] ScotLR 32_542, [1895] SLR 32_542

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SCOTTISH_SLR_Court_of_Session

Page: 542↓

Court of Session Inner House Second Division.

[Sheriff Court at Glasgow.

Friday, June 21. 1895

32 SLR 542

Grandison's Trustees

v.

Jardine.

Subject_1Sale
Subject_2Sale of Heritage
Subject_3Retention of Price until Title Cleared
Subject_4Interest — Interest from Date of Entry — Consignation.
Facts:

The purchaser of a house entered into possession at Whitsunday 1893, but, owing to the seller's inability to give an unencumbered title prior to 28th March 1894, the purchase money was not paid until that date.

The seller having sued the purchaser for interest on the price at the rate of 5 per cent. for the period intervening between entry and payment, the latter stated in answer that she had arranged to borrow the greater part of the price; that owing to the seller's failure to give a good title, she had been unable to obtain payment of the loan, but that by arrangement with the lender the money had been placed in bank upon deposit—receipt in her own and the lender's names. She submitted that this deposit was equivalent to consignation, and that the delay in payment having been due to the fault of the seller, he was only entitled to the interest which the money earned on deposit-receipt.

Held that the deposit in bank made by the lender and purchaser was not equivalent to consignation in a question with the seller, as it afforded him no security for payment of the price, and that the purchaser was liable in interest at the rate sued for.

Headnote:

In February 1893 Mrs Jardine purchased from Mr and Mrs Grandison's marriage-contract trustees the house No. 17 Newton Place, Glasgow, at the price of £1850. The date of entry was Whitsunday 1893, and the price was to be paid at that date.

Mrs Jardine entered into possession of the house at Whitsunday 1893, but did not pay the price, the sellers being unable to
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give her an unencumbered title at that date. The defect in the title having been removed, the price was paid on 28th March 1894. Along with the purchase money Mrs Jardine offered to pay bank-interest from the date of entry till the date of payment. Mr and Mrs Grandison's trustees declined to accept this, and claimed interest at 5 per cent. upon the purchase money from the date of entry till the date of payment. As Mrs Jardine refused to pay at this rate, the trustees delivered her a title to the property in exchange for the price and deposit—receipt interest thereon, without prejudice and under reservation of the trustees' claims as regards the balance of interest claimed by them.

Thereafter the trustees brought an action in the Sheriff Court at Glasgow against Mrs Jardine for the sum of £50, 1s., being the difference between interest at 5 per cent. and deposit-receipt interest for the period above mentioned.

The defender stated—“(Stat. 7.) … Of said sum of £1850 £1400 was being lent to the said Mrs Jardine, and the money could be obtained only on delivering to the bondholder the disposition in her favour, the title-deeds, and the bond and disposition in security, all of said premises. (Stat. 8.) The said sum of £1850 was lodged in bank on deposit-receipt, but the vouchers or deposit-receipts are not in the custody or possession of defender.” …

On 4th August 1894 the Sheriff-Substitute ( Guthrie) pronounced the following interlocutor:—“Finds that by missives dated 3rd February 1893 the defender Mrs Jardine bought the house libelled from the pursuers, with entry at Whitsunday 1893: Finds that at the date of entry stipulated the defender entered upon and has since possessed and occupied the house, although the price was not paid until 28th March 1894 owing to a certain difficulty in completing the title: Finds that the said defender in the circumstances is barred personali exceptione from objecting to the validity of the missives of sale, and that she is liable in payment of interest at 5 per cent. from the stipulated date of entry till the said 28th March, 1894: Repels the defences, and decerns as craved.”

“ Note.—… The defender having occupied the house became liable to pay interest at the legal rate during the non-payment of the price. The rule is well settled and is implied even in the case (Rodger v. Brown, 21 D.) referred to by the defenders' agent. It was in her power to guard again st this by stipulation in the missive of sale or by consigning the money when it became apparent that some delay must take place in settling. The pursuers' agent said that his clients were disposed to claim only a modified rate of interest; but this offer not having been accepted when made, I have to decern for the sum in dispute, interest at the legal rate.”

The defenders appealed to the Sheriff, who adhered.

“ Note.—… The case is covered, as it seems to me, by the rule as stated in Ersk. iii. 3, 79. It is there said that ‘in a sale of lands the purchaser is, by an Act of the law, bound to pay interest for the price from the term at which he enters into the possession, as long as he retains the price,’ and that ‘this obtains although the delay of payment should be owing to the seller, who had not furnished the pursuer with a connected progress of title-deeds sufficient for his security.” …

The defender appealed, and argued—If the pursuers had given a good title the price would have been paid at entry. Owing, however, to the pursuers' inability to fulfil their part of the contract, the defender could not obtain the money which the lender had promised to advance, but by arrangement between her and the lender the amount had been deposited in bank in their joint names. This was equivalent to consignation, for the defender was deprived of all use of the money, and it was on this ground that consignation was held to relieve a purchaser of liability for interest at a higher rate than was earned on deposit. The defender was accordingly entitled to proof of her statement that the money had been placed on deposit-receipt. As the delay in payment had been due to the pursuers' fault they were not entitled to interest at a higher rate than the money was earning on deposit-receipt— Durie's Trustees v. Ayton, November 3, 1894, 22 R. 34. It would clearly be unfair that the defender should not only have to pay interest on the loan, but also interest at the rate of 5 per cent. on the price, which would have been paid but for the pursuers' failure to implement their contract.

Counsel for the pursuers were not called upon.

At advising—

Judgment:

Lord Justice-Clerk—The defender purchased a property from the pursuers, but after the purchase a difficulty arose about the title. The defender however took possession of the house at Whitsunday 1893, and occupied it from that time although the price was not paid unti 28th March 1894. The question in the present case is what is to be the rate of interest payable upon the price for that period, and it is admitted that the ordinary rate is 5 per cent.

The defender however maintains that she should not be called upon to pay interest at all upon the price. She says that not having money to pay for the house she entered into a bargain with the person who was going to lend it to her on the security of the house, that as she could not get a good title to the property at Whitsunday when she took possession of the house the lender should consign the money in bank in his own name and hers, and she says that that is equivalent to consignation of the price in a question with the pursuers.

I do not think it can be held that that is at all equal to consignation in the proper sense of the term, and I do not see what a bargain between the defender and the lender of the money has to do with a question between the pursuers as sellers, and the defender as purchaser of this property.

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The money was in no way in the control of the sellers. Accordingly, the occupation of the defender for ten months was without any return to the pursuers except the interest on the unpaid price. I think the Sheriff has arrived at the right result.

Lord Young—I am of the same opinion, and I should not like to think that the law on the matter is doubtful. The law is laid down by the Sheriff in his note in these words—“The case is covered, as it seems to me, by the rule as stated in Ersk. iii. 3, 79. It is there said that ‘in a sale of lands the purchaser is, by an Act of the law, bound to pay interest for the price from the term at which he enters into the possession, as long as he retains the price,’ and that ‘this obtains although the delay of payment should be owing to the seller who had not furnished the pursuer with a connected progress of title-deeds sufficient for his security.’” The defender here was impecunious, and depended upon borrowing the price or at least a part of it as a necessary condition of paying it, and she entered into an arrangement to borrow it. She entered into possession of the house at Whitsunday, but she did not get the titles at once, and she, while having all the advantages of a possessor of the house, says that not having the security ready the lender would not advance the money. But that bargain has nothing whatever to do with a question between the seller and the purchaser of the property, and has no bearing upon the question of her liability for interest upon the contract price from the time at which she had taken possession of the house.

Lord Adam—If the consignation averred upon record had been in the names of the seller and the purchaser of the property, the seller could not have claimed the legal rate of interest on the unpaid price after its date, but the consignation here was not of that character. The money was lodged in bank in the names of the purchaser and the person from whom she was to borrow the money. Under such a consignation as that the money could have been removed at any moment, and was no security for the payment of the price.

Lord Rutherfurd Clark and Lord Trayner were absent.

The Court dismissed the appeal.

Counsel:

Counsel for the Pursuers— C. S. Dickson—A. O. M. Mackenzie. Agents— J. & J. Ross, W.S.

Counsel for the Defenders— Salvesen—Crabb Watt. Agents— Sturrock & Sturrock, S.S.C.
1895