Scottish Court of Session Decisions

William Kid Macdonald, sole acting trustee under the trust-disposition and settlement of the late John Inglis Chalmers of Aldbar, Forfarshire, raised an action of suspension and interdict against John Milne, trustee on the sequestrated estate of Stewart Dick, farmer, Broomknowe, near Brechin.

The following narrative is taken from the opinion ( infra) of the Lord Ordinary ( Johnston)—In 1906 the trustees of the late John Inglis Chalmers, of Aldbar, let to Stewart Dick the farm of Broomknowe for nineteen years, from Martinmas 1906, at a rent of £235, payable at Lammas 1907 and Candlemas 1908, for crop and year 1907, and so forth thereafter, except that the last term's rent was payable at the Martinmas of removal.

The parts of the lease which are material are—The farm was to be cultivated upon the most approved rules of good husbandry on a seven-year shift; the whole straw and

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turnips grown on the farm were to be consumed thereon by the tenant's cattle, and the whole manure made on the farm to be applied to the land, with the exception of the last or waygoing crop; the tenant was to be entitled to dispose of the whole of the waygoing crop on the ground before it was reaped or to reap the same himself, with the option to the proprietor or incoming tenant of taking at valuation anything up to one-half of both grain and straw; the tenant was bound to leave the turnips of the waygoing crop in the ground to be aid for at valuation on the footing of being consumed upon the farm; the valuation of the grain and straw was to be made in the second week of August and of the turnips in the first week of November; if the proprietor or incoming tenant did not exercise the option of taking the crop, the tenant was to be entitled to dispose of the whole waygoing crop of corn and fodder as he might think fit; manure and unconsumed straw left on the farm made previously to 15th May of the waygoing year was to be the landlord's without payment, and the manure made after that date on payment of one-half its value; the whole of said valuation prices were to be paid or allowed for at the term of Martinmas, being the term of removal, but ‘in no case shall the tenant, or anyone in his right, be entitled to claim payment of any of the said valuation prices until all rents due or payable under this lease, and all obligations prestable by the tenant to the proprietors, shall have been fully implemented or secured.’

With regard to the waygoing, it was particularly ‘declared’ that the proprietors or incoming tenant shall be entitled to ‘enter into possession of each field of the farm hereby let whenever the last crop under the lease shall have been led in, and shall likewise have right to the necessary accommodat ion at the steading for his men and horses, and the tenant hereby agrees to allow the proprietors or incoming tenant to sow, free of charge, grass seeds with any part of the last year's corn crop under this lease, which grass seeds the outgoing tenant shall harrow and roll in, in proper season, free of charge for the labour or privilege.’ Should the tenant sow out the grass seeds of the last crop himself, he was to be entitled to payment for the seeds. And the tenant was not to be entitled to pasture the stubble of the last crop laid down with grass seeds, but bound carefully to preserve the young grass.

The reason why I have somewhat carefully examined the lease, particularly as it bears upon the waygoing, is that I think a careful consideration of the waygoing provisions is necessary for the construction of the clause to which I shall immediately advert, on which the question raised in the present suspension turns. That provision is as follows:—“… [ The provision is quoted supra, in rubric]…”

Stewart Dick, the tenant, was sequestrated under the Bankruptcy Statutes on 20th April 1908, on which day the respondent John Milne, auctioneer, Brechin, was appointed interim factor on the sequestrated estate, and he was elected trustee in the sequestration on 1st May and confirmedon 6th May 1908. At the same time William Kid Macdonald, who had become the sole acting trustee in the late Mr Chalmers' trust, had raised proceedings in the Sheriff Court to have it found that an irritancy of the lease had been incurred, and that the lease had become null and void, and to have the said Stewart Dick ordained to remove from the farm, and for warrant for ejection. Decree in this action was obtained on 24th April 1908, while Milne was interim factor and before he had been appointed trustee. It is disputed whether he was verbally informed of the decree at the meeting of creditors on 1st May when he was elected, but he admits that it was intimated to him on 5th May, the day before he was confirmed. The steps of process in the removing were—It was presented on 22nd April. On the following day the tenant, Stewart Dick, accepted service, dispensed with the inductœ, and consented to decree, and on the 24th decree was pronounced in respect of the consent. He was charged on the decree of removing on 5th May. Disregarding this decree, Milne endeavoured to enter on the farm and to proceed to prepare the ground for green crop and generally to carry on the agricultural operations of crop and year 1908, and to prevent the landlord taking possession and carrying on the cultivation. Accordingly Mr Macdonald, as trustee foresaid, brought this suspension, presented on 6th May 1908, to have the respondent Milne interdicted from (1) entering on the farm of Broomknowe; (2) performing any agricultural operations thereon, and particularly preparing or planting a green crop; and (3) interfering with the complainer or his servants in their performance of agricultural operations on the said farm.

“The species facti thus are—(1) Sequestration was awarded as of date 20th April 1908, there having been necessarily prior notour bankruptcy. (2) Decree of removing of the tenant was granted on 24th April on a petition presented on 22nd April. (3) Prior to the sequestration the grain crop of 1908 had been sown, but in that district it is doubtful whether it had brairded. It certainly could have done no more. (4) Potatoes had not been planted nor turnips sown, though certain work in the way of preparation of the ground had presumably been done. (5) The grass seeds sown out with crop 1907 were coming on for the hay crop of 1908, making the first year's grass of year 1908 on the farm. Grass seeds had not been sown out with the grain crop of 1908. (6) There were breaks of second and third year's grass on the farm. (7) The rent for crop and year 1907, being due at Lammas 1907 and Candlemas 1908, had been paid; the rent for the crop and year 1908 was at the date of Dick's sequestration in no part due.”

The respondent pleaded—“(2) In respect that the respondent as trustee on the said sequestrated estate is entitled and bound to

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take possession of, preserve and realise, the assets belonging to the said sequestrated estate upon the said farm, the note should be refused. (3) In respect that the whole industrial crop and produce of the said farm for the year current at the date of the sequestration of the said Stewart Dick is part of the said sequestrated estate, and that the respondent as trustee on the said sequestrated estate is entitled and bound to enter on the said farm for the purpose of sowing and reaping the same, and for all purposes incidental thereto, the note should be refused. (4) In respect that the crop for which the ground was prepared by the bankrupt prior to his sequestration is part of the said sequestrated estate, and that the respondent as trustee on the said sequestrated estate is entitled and bound to enter on the said farm for the purpose of sowing and reaping the same, and for all purposes incidental thereto, the note should be refused. (5) In respect that the crop sown by the bankrupt prior to his sequestration is part of the said sequestrated estate, and that the respondent as trustee on the said sequestrated estate is entitled and bound to enter on the said farm for the purpose of preserving and reaping the same, and for all purposes incidental thereto, the note should be refused.”

On 15th January 1909 the Lord Ordinary pronounced the following interlocutor:—“Finds in law that on a sound construction of the said lease the respondent had no such right as claimed by him, but that on the bankruptcy of the said Stewart Dick, or in any view, on the decree of the Sheriff declaring the irritancy consequent thereon and removing the bankrupt, the said lease became absolutely void and null; that the bankrupt and those in his right had no longer right to possess or carry on and manage the said farm for his or his creditors' benefit, and that the complainer was entitled to re-enter and resume possession of the same as if the lease no longer existed from and after the date of the said irritancy: Finds that the respondent as trustee aforesaid had by his act and warrant vesting him therein right to remove from the farm and realise any moveable property of the bankrupt which he might find on the farm at the date of the sequestration, but nothing else: Finds that neither the said corn crop, hay crop, second and third years' grass, potato crop, and turnip crop, nor any of them, were at the date of his sequestration moveable property of the bankrupt and as such vested in the respondent, and that the common law right or privilege of the tenant to follow and reap the corn and hay crops which he had sown after he had ceased to have right to occupy the lands under the lease, was one which could be excluded by convention, and was so excluded, in event of the tenant's bankruptcy, by the terms of the lease to the effect of binding not only himself but the trustees for his creditors: Therefore repels the second, third, fourth and fifth pleas-in-law for the respondent, and sustains the reasons of suspension.…”

Opinion.—[ After the narrative supra]—The trustee's demands are on the footing that he is entitled to the whole benefit of the lease for crop and year 1908—that is, to the grain crop sown, to the hay crop growing, to the second and third years' grass, and to plant the turnip and potato crops, and to win the same, and therefore to remain in full agricultural possession for crop and year 1908 as if Martinmas 1908 was the ish of the lease, and then to go out with all the advantages of a waygoing under the lease, but under no obligation to do more than give a ranking for the rent.

I cannot help thinking that the complainer would, assuming Mr Milne a solvent party, have been well advised to let him have his way and adopt the lease. But he has preferred to stand on his right under the lease, has irritated it by reason of the tenant's bankruptcy, removed the tenant, and, as assignees legal and voluntary are excluded, declines to recognise Mr Milne.

The first consideration is, what was the intention of the parties in entering into the lease? I can have no doubt that it was their intention that on legal bankruptcy, which does not necessarily involve sequestration, and certainly on sequestration, the lease was in the option of the landlord to become void and null; that the tenant was to have no further right of possession under the lease, or of carrying on the farm as an agricultural operation either for his own or for his creditors' behoof, and that the landlord was to be entitled to immediate re-entry ‘in like manner as if the lease had come to its natural termination.’ I am not concerned with the fact, made much of by the respondent on record, that he was appointed, or rather that his appointment dates back two days before the Sheriff Court process of removing in which the irritancy was pro forma declared, was raised. It was, in my opinion, the legal bankruptcy of the tenant, not his sequestration, which in the option of the landlord irritated the lease. But if it was only sequestration which did so, the relative dates of sequestration and of decree of irritancy and removing are immaterial.

The contention of the respondent is practically to translate ‘in like manner as if the lease had come to its natural termination’ into, as if the year in which the bankruptcy and irritancy occurred w'as the last year of the lease, or as if the lease was going to come to its natural termination at Martinmas 1908. What the lease clearly means is as if the lease to the full effect of termination had already come to its natural termination. I have read attentively the decision of the Second Division of the Court in the case of Moncreiff v. Say, 5 D. 249, and though the terminology of the lease was different I cannot find any substantial point of distinction between it and the present case. There is one consideration specially noticed by Lord Moncreiff which I think applies with even greater force here. If the lease is null and void as from a certain date neither party can found on it. The landlord's claim for rent is thus at an end. For the rent of crop and year 1908 he

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can neither claim a preference nor a ranking. Yet the tenant in the person of the trustee claims the full benefit of the tenant's side of the lease.

There can be no doubt that the respondent's general contention is untenable. But as a narrower line of defence he maintains that at least he is entitled, if not to continue possession, at least to re-enter for the purpose of reaping the hay crop sown out in 1907 and to mature in the summer of 1908, and to reap and carry away the corn crop of 1908, straw as well as grain, for I do not think that he admits, and probably consistently with his argument cannot admit, that he is bound as regards his dealing even with that crop by the waygoing clause of the lease. This minor contention, though it is far short of the major sweeping claim, yet prevents the above clause in the lease taking its full effect.

From the terms of the Inner House interlocutors of 5th June 1908 I am led to infer that their Lordships were at least prima facie in favour of the respondent on a material part of his contention, as their Lordships exclude the corn crop from the interim interdict granted by Lord Guthrie, though, for some reason which I do not follow, it is left to include the hay crop. It is therefore with hesitation that I give effect to my own opinion. But the question before the Court was merely one of interim interdict, and I do not think that I am absolved by an Inner House judgment on that question, which may have proceeded on practical considerations and is not explained by reasoned opinions, from dealing with the whole case as it is now presented to me on a passed note. I feel the more bound to do so that the same question arose in the case of Moncreiff v. Hay, supra. In the present case, inter alia, a corn crop which at 20th April had barely been sown is in dispute as at that date. In Moncreiff v. Hay a wheat crop which had been sown in October, and at best had just brairded at Martinmas, was in dispute as at Martinmas. The two crops were in pari casu, yet in Moncreiff v. Hay the Court held that the landlord's right of re-entry to the whole farm was not affected by the fact of the existence of this potential crop.

It is necessary, therefore, either to depart from or distinguish the decision in Moncreiff v. Hay, supra. I have no right to do the former, and 1 see no ground for the latter. The contention of the trustee is based on the brocard messis sementem sequitur, and his argument that the crop was therefore the property of the tenant, and as such vested in him by the vesting clause of the Bankruptcy Act. And on this, his minor line of defence, he demands to be allowed to realise this asset as he would a stack of corn already in the barnyard.

It is true that at the date of Moncreiff v. Hay, supra, viz., 1842, the present Bankruptcy Act was not in force. But the then Act contained a vesting clause, and I cannot imagine that the point was omitted by the distinguished counsel for the trustee, afterwards Lord President Colonsay and Lord Deas, or by the learned Judges then on the bench of the Second Division. Nor do I think that the more express right to resume the lands, to be found in the lease in Moncreiff v. Hay, supra—viz., ‘in the state they may then be in without any claim or demand being competent to the tenant or his creditors—really affects the question.

But I am pressed, as a counter authority on this point, with the case of M'Gavin v. Sturrock, 18 R. 576, where the point in dispute was, whether a trustee in bankruptcy had by his action adopted a lease. The tenant's bankruptcy in August 1890 brought the lease to an end at Martinmas of that year. The hay crop had been secured. The corn crop was secured within three weeks after sequestration. The potato crop was ingathered before Martinmas, and the turnip crop was mature at Martinmas, though still, with a small exception, in the ground. The circumstances were therefore very different. At the ish of the lease, viz., Martinmas, the crops, other than the turnip crop, were not only separable but separated. They were not merely constructively moveable, but actually moveable property of the bankrupt estate. The turnip crop was in a different position; but how far this difference was under the notice of the Court does not appear. As a direct authority the case does not determine the present, but it is incontrovertible that the ratio decidendi was that crops in the position in which his trustee found Sturrock's were the property of the tenant.

I cannot reconcile it to myself that ‘property’ is used in this and in other authorities in the full sense of the term. A prospective crop after sowing may have such attributes that to most effects it may be the equivalent of property, but I do not think that it is property of the tenant. If it is so, it must be so from the day it is sown. There is no particular point in its germination when it becomes what it was not before. Yet it is not poindable in the braird ( Elder v. Allen, 11 8. 902), but poindable in the ear ( Ballantine v. Watson, 1709, M. 10,526). The true position I think to be that, labour having been expended, seed provided or bought, it has in equity become customary ( Fleming v. Macdonald, 22 D. 1025, per Lord Justice-Clerk Inglis at p. 1030; Earl of Hopetoun, 1 Macph. 1097), and therefore part of the common law, to allow the executor of the deceased or the creditor of the bankrupt to follow the sowing and reap the crop, as a privilege, which has so much the practical effect of property that it has come to be regarded and spoken of as property, though strictly it is not property. I venture respectively to refer to what Lord Cairns says in Brand's case, 3 R. (H.L.), at page 20, regarding the law of tenant's fixtures. He points out that there are two general rules a correct appreciation of which is necessary to a correct conception of the law of tenant's fixtures—one is, that whatever is fixed to the freehold of land becomes part of the

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freehold. The other is, that what has once become part of the freehold cannot be severed by a limited owner, whether for life or for years. These, his Lordship says, are two rules, not one by way of exception to the other, but two rules standing consistently together. An exception has been made not to the first, but to the second. An exception has been established to the irremovability of things fixed to freeholds for the purpose of trade. ‘Under that exception a tenant who has fixed to the inheritance things for the purpose of trade has a certain power of severance and removal during the tenancy.’ But, as I conceive his Lordship's meaning, he has such power not by reason of his retention of a property in such fixtures, but of the exception to the second rule which enables him to remove, and so to resume the property of that which he has not retained the property. I think that the same chain of reasoning applies to the agricultural crop. Whensown it become pars sofiand naturally irremoveable, but the right to sow implies the right to separate or reap, not as an exception to Lord Cairns’ first rule, but to the second, and equity extends that exception to the executor and to the creditors. It is exercised by the creditors through the trustee, not because of property strictly so termed vesting in him, but by virtue of the exception enabling him to exercise the privilege for their behoof. The result is tantamount to property, and may popularly be called property, but it is not property. Hence, if the right to the growing crop is not strictly a right of property, it is not as property carried to the trustee in bankruptcy, and I agree with Lord Kyllachy in M'Gavin v. Sturrock, supra, where, referring to the maxim messis sementem sequitur, he says—‘I know no authority for holding that the operation of that maxim may not be conventionally qualified, I mean by stipulation in the lease.’ And in the present case I think it is so qualified.

“I should not have ventured to give expression to this opinion, seeing the repeated reference by learned judges to growing crops as property, did it not enable me not merely to follow, as I conceive I am bound to do, but to accept the decision in the case of Moncreiff v. Hay, supra.”

The respondent reclaimed, and argued—According to the ordinary rule of law expressed in the maxim messis sementem sequitur the tenant was entitled to the crop he had sown, and to enter on the land for the purpose of ingathering it—Ersk. Inst, ii, 1, 26. The crop was the moveable property of the tenant from the time when it was sown—Ersk. Inst, ii, 2, 4; Somervel v. Stirling, 1627, M. 5074; M' Gavin v. Sturrock's Trustee, February 2, 1891, 18 R. 576, 28 S.L.R. 414. It was none the less moveable though it could not be poinded till it was in the ear— Elders v. Allen, July 5, 1833, 11 S. 902. Property might be moveable though it could be attached by adjudication— Royal Bank of Scotland v. Fairholm, 1770, M. voce “Adjudication,” App. No. 3; Sinclair v. Staples, &c., 22 D. 600; Ersk. Inst, ii, 12, 48; Stair, iii, 2, 48, More's Notes, p. 299. The crop therefore being moveable property of the bankrupt at the date of his sequestration vested in the reclaimer as trustee—Bankruptcy Act 1856 (19 and 20 Vict. c. 79), sec. 102—and he was entitled to enter on the lands for the purpose of ingathering it. The lease did not take away the tenant's right to the crop he had sown. If the lease could still be founded on to the effect of regulating the right of the parties after its termination, the reclaimer was in virtue of its terms in the same position as an outgoing tenant at the natural termination— Lyon & Co. v. Irvine, February 13,1874, 1 R. 512, 11 S.L.R. 249. That was the obvious meaning of the clause under which the lease had been brought to an end. If there was any ambiguity, the lease must be construed in favour of the operation of the ordinary rules of landlord and tenant. In any event, the tenant could not deprive himself of his common law rights to the prejudice of his creditors and for the benefit of the landlord. The construction of the clause contended for by the complainer could not receive effect, because it involved a security over moveables without possession— M'Gavin v. Sturrock's Trustee, cit. The case of Moncreiff v. Hay, December 6, 1842, 5 D. 249, was distinguishable, and in any event was open to question, as it really gave effect to a security over moveables without possession.

Argued for the complainer (respondent)—It was not disputed that at common law a tenant was entitled to the crop he had sown, and that he might enter on the land for the purpose of reaping it. The sole question was whether that common law rule had been excluded by the terms of the lease, as could competently be done— Moncreiff v. Hay; M'Gavin v. Sturrock's Trustee, per Lord Kyllachy (Ordinary); Lyon &c v. Irvine, cit. Though the lease had come to end, the rights of the parties to it were regulated by its terms— Moncreiff v. Hay, cit. The terms of the irritancy clause here clearly excluded the tenant's common law right. The tenant could not ingather the crop he had sown without being in possession and so violating the stipulation in the lease. The concluding words of the clause in question were not inconsistent with the rest of it, they only provided that on the tenant's bankruptcy the relation of landlord and tenant was to determine absolutely. The construction contended for by the reclaimer could not be sustained, because it was impracticable that a tenant whose tenancy ceased between the terms was to have the same rights as an ordinary way-going tenant at the natural termination.

At advising—