Scottish Court of Session Decisions

William Bain, accountant, Edinburgh, curator bonis to the late Donald Mackenzie senior, tenant of the Trevelyan Hotel, Leith Street, Edinburgh, raised an action against Donald Mackenzie junior, the son of his ward, carrying on business at the said Trevelyan Hotel, for payment of £298, 17s. 2d., being the sum due and resting-owing to the pursuer in connection with his intromissions with the curatory estate.

The circumstances in which the action was brought are thus narrated in Lord Adam's opinion:—“The defender's father was tenant of certain subjects called the Trevelyan Hotel, under a lease for nineteen years from Whitsunday 1886, entered into between him and the proprietors Misses Alice and Helen Bell. This lease was granted to them by him and his heirs, but expressly excluding assignees and subtenants, without the consent in writing of the Misses Bell or their heirs or successors.

“The defender's father died on 30th November 1894. He left a disposition and settlement by which he disponed and assigned to his wife in liferent and certain persons in fee his whole estate, including expressly the unexpired portion of the lease of the said subjects.

The proprietors do not appear to have given their consent to this proposed assignation of the lease. It was therefore ineffectual to exclude the defender from the benefit of the lease, and he is accordingly, as heir of his father, in possession of the subjects—no writ or other service being needed to give him a title thereto.”

The pursuer pleaded—“(1) The sum of £298, 17s. 2d. first sued for being due and resting-owing to the pursuer in connection with his intromissions as curator bonis to the late Donald Mackenzie senior, or alternatively the same, so far as undischarged, forming proper charges against the curatory estate, and the defender, as heir of the said Donald Mackenzie senior, being lucratus to the amount thereof, the pursuer is entitled to decree in terms of one or other alternative of the first conclusion of the summons, with expenses.”

The defender pleaded—“(3) The lease referred to not being available to the deceased's creditors, the defender incurred no liability to them by taking up the same. (4) The defender not being lucratus by his father's death, is not liable for his father's debts, and ought to be assoilzied from the first conclusions of the summons.”

On the 19th December 1895 the Lord Ordinary ( Moncreiff) pronounced an interlocutor sustaining the third plea-in-law for the defender, and assoilzieing him.

Opinion.—… “By terms of the lease in question assignees and sub-tenants are excluded, the lease passing on the death of the tenant to his heir. The question which, strangely enough, has not been definitely settled by decision is, whether the heir of a tenant who takes up a lease in such circumstances incurs passive representation for his predecessor's debts? If passive representation depended solely upon whether

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the heir was lucratus by taking up the lease, this case would require to be sent to proof on that point; but it seems to me that it is also essential to the doctrine of passive representation that the property or asset which is taken up by the heir is one which the predecessor's creditors could have adjudged or attached had the heir abandoned it. The terms of a lease, including the destination, depend on a contract in which the landlord is one of the parties interested, and therefore apart from statutory provisions conferring power to bequeath a lease, which do not apply to urban subjects, the same rules cannot be applied to the transmission of a lease as apply to succession to other kinds of property. Where assignees and sub-tenants are excluded, the creditors of the tenant have no power to adjudge the lease. If, on the death of the tenant, his heir abandons the lease, the creditors of the tenant cannot compel the landlord to receive them. The lease is in no way available to them should the landlord not consent. It seems to follow that when in such a case the heir of a tenant takes up the lease, he does so, not as representing his predecessor, but more as an heir of provision or heir of entail, although his position is not precisely analogous.

It appears from a note in 1 Bell's Comm. (5th ed.) p. 82—(p. 78, note 5, 7th ed.)—that the question was raised in the unreported case of Campbell of Melford v. Gallanach, 11th July 1806. Lord Newton, in the Bill Chamber, decided in favour of the present pursuer's contention, viz., that the heir incurred a passive title by taking up a lease under which assignees and subtenants were excluded. A petition was presented to the Court but refused on a point of form, ‘the Court regretting that the merits of the question could not be tried.’ I gather from Mr Bell's observations that he doubts the soundness of Lord Newton's judgment. He says—‘It may be questioned whether the heir who succeeds to the lease under such a clause does not take it without incurring any passive title, further than as he can be shown to have taken up a subject which, as properly belonging to the predecessor, his creditors could attach. The stocking of the farm is, indeed, the fund of the creditors, so are all arrears due by sub-tenants, but with regard to future and accruing profits, have the creditors right to them—their debtor's right having expired with his life, like that of an heir of entail?’ I find the law stated to the same effect in Bell's Prin., section 1922 (4).

I also find the same doubt expressed in More's Notes to Stair, 364, in which he says:—‘And here, by the way, it may be observed, that it has never been decided whether an heir succeeding to such a lease will incur a passive title so as to be liable for his father's debts. The principle upon which liability for such debts may be maintained in the ordinary case does not apply here. The heir takes the subject destined to him by a third party, like an heir of entail, and he does not deprive the creditors of his ancestor of any property which they could attach, or make responsible for the payment of their debts’; and then he mentions the case of Campbell v. Gallanach.

Professor Rankine on Leases, p. 151 (1st edit.—p. 159, 2d edit.) says:—‘It seems the better opinion … and to result especially from the fact that the heir to a lease takes as heir of provision (as in entails) and takes nothing of which his predecessor's creditors could make use in the event of his renouncing, that he incurs no passive title by entering, and that these creditors cannot attach the profits of the subject let, so far as accruing subsequently to the death of their debtor.’

On the other hand, Mr Hunter, in his work on Landlord and Tenant, vol. i., p. 231, expresses an opinion to the opposite effect. He says:—‘Although opinions against the heir's liability have been indicated, the view more consonant to principle appears to be in favour of the ordinary rule of representation. The analogy between an exclusive destination in a lease and succession under an entail so far holds good as to cut off the right of the heir of line, and to bar alteration by the lessee. But there are no data for so extending the analogy as to alter the effects of representation as known to the common law. In almost every description of lease, agricultural, mineral, or manufacturing, the predecessor must have invested capital, the profits of which are to be reaped during its currency, and accrue to the successor, who thereby becomes lucratus, which is of the essence of representation. The exemption from liability, in the case of feudal property, is the creature of statute, and is repugnant to the common law, which therefore will not give it an analogical or constructive extension.’

“The question undoubtedly is one of difficulty; but I incline to the opinion indicated by Professor Bell, and the other writers to whom I have referred, who seem to agree with him, namely, that a lease with such a destination, being a subject which the creditors could not attach, an element is a wanting which is essential to the existence of passive representation, and that it is immaterial whether the heir, if he takes up the lease, is lucratus or not.”

The pursuer reclaimed, and argued—The Lord Ordinary was wrong. The original principle of the law was that an heir incurred universal liability—Ersk. Inst. iii. 8, 50. That had been modified by the introduction of the beneficium inventarii—Ersk. iii. 8, 68—which had been given effect to in legislation, e.g., the Conveyancing Act 1874, sec. 12. So that, though a general service implied a universal passive title— Ayton's Creditors v. Ayton, 9732, the test was, Is the heir lucratus?— Baird v. Earl of Rosebery, M. 14,019. There was no doubt that the defender took in the character of heir— Sinclair v. Dunbar, July 18, 1845, 7 D. 1085; Leslie v. Macleod, February 21, 1868, 6 Macph. 445, June 20, 1870, 8 Macph. (H.L.) 99. The only case in which the question had been raised under a lease had been

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decided in favour of the pursuer's contention— Campbell v. Gallanach, 1806, ap ud 1 Bell's Com. p. 78, note 5. It was not necessary to infer passive representation that there must be an estate which creditors could attach; and here if the proprietors had given their consent to the assignation by the defender's father, there would have been something attachable by the creditors in the assignee's possession. Clauses excluding assignees without the landlord's consent were conceived, not in the interest of the tenant's heirs, but solely in that of the landlord— Dobie, &c. v. Marquis of Lothian, March 2, 1864, 2 Macph. 788.

Argued for the defender—The Lord Ordinary was right. Mr Bell had questioned the correctness of the decision in Gallanach, 1 Com. p. 78, Prin. 1922 (4), and so had Mr More, apud Stair, p. 364. The debtor's right had expired with his life, and the heir had taken nothing which his ancestor could have sold. The heir might have renounced, and in that case the creditors could have attached nothing. Why should they be in a better position because he had not renounced? What the heir had taken, he had taken from the landlord, and not as representing his ancestor. His position was analogous to that of an heir of provision under an entail.

At advising—