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You are here: BAILII >> Databases >> United Kingdom House of Lords Decisions >> William Burridge Cabbell, Cashier to the Glasgow Bank Company, and Others - Lord Advocate (Jeffrey) Dr. Lushington v. James Brock, Archibald Newbigging and Co.'s Trustee - Mr. Rutherfor - Mr. Kaye [1831] UKHL 5_WS_476 (23 September 1831)
URL: http://www.bailii.org/uk/cases/UKHL/1831/5_WS_476.html
Cite as: [1831] UKHL 5_WS_476
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SCOTTISH_HoL_JURY_COURT
Page: 476↓
(1831) 5 W&S 476
CASES DECIDED IN THE HOUSE OF LORDS, ON APPEAL FROM THE COURTS OF SCOTLAND, 1831.
2 d Division.
No. 39.
v.
Innrr House.
Subject_Lease — Right in Security. —
A mercantile company in possession of a lease borrowed money from a private bank, and granted an assignation of the lease in security to the bank, which was intimated to the landlord; the bank thereupon granted a sub-lease to the company, who remained in possession and paid the rents; and no possession was taken by the bank:—Held, (affirming the judgment of the Court of Session,) in a question with the trustee on the sequestrated estate of the company, (without deciding the general question with respect to the sufficiency of intimation without possession,) that the assignation was not effectual against the creditors.
This was the sequel of the case reported ante vol. iii. p. 75. The Second Division of the Court of Session (15th Nov. 1821) had found “that, under the whole circumstances of this case, the assignation founded on cannot be effectual against the petitioner (respondent), the trustee for the creditors of the cedents; and therefore, in the suspension, find the letters orderly proceeded, and decern; and in the declarator decern and declare in terms of the libel, and find no expenses due, so far as hitherto incurred.” On appeal, the House of Lords (13th May 1828) “ordered and adjudged, that the cause be remitted back to the Court of Session in Scotland, to review generally the interlocutors complained of in the said appeal.” And it was farther “ordered, that the Court to which this remit is made do require the opinion of the Judges of the other Division and of the Lords Ordinary on the matters and questions of law in this case, stated in writing, which Judges of the other Division and Lords Ordinary are so to give and communicate the same; and, after so reviewing the interlocutors complained of, the said Court are to do and decern in this cause as may be just.”
The cause having thus returned to the Court below, their Lordships ordained the parties to give in cases, and to subjoin thereto a draft of such questions as they deemed fit to be put to the consulted Judges in pursuance of the judgment of the House
Page: 477↓
The respondent proposed the following questions:—
“1. Whether, the original tenant continuing in possession, assignation of a lease may be completed by bare intimation to the landlord, without any possession, natural or civil, on the part of the assignee? On the contrary, whether, in a competition between two assignees, the assignee first obtaining bonâ fide possession, would not be preferred to the assignee who had merely intimated his title to the landlord? 2. Whether this would not hold à fortiori where the assignation attempted to be completed by
Page: 478↓
intimation merely stood qualified by an understanding between the parties (the landlord included), that the assignee should not enter into the possession, but that the possession of the original tenant should remain undisturbed? 3. Whether the original tenant, without ceding possession, natural or civil, of the subject, can, by a mere deed of assignation, erect his lease into a security for debt in favour of a creditor who does not enter into possession, nor at all take up the subject in the character of a real and bona fide tenant; and whether, if it be competent thus to assign the original lease in security to one creditor, there be any principle for at all restricting the number of creditors who may hold such securities over the same lease, if actual and bona fide possession be not required as an essential in the constitution and completion of the assignee's right; in a word, whether it be consistent with the nature and purpose of the right of lease, and with the relations thereby created between landlord and tenant, that that right may, by several assignations, be conveyed in security to different creditors of the tenant, not one of these creditors ever entering into actual possession as assignee to the right of lease in the only legal and proper sense of the term. 4. Whether, in the whole circumstances of the present case, the assignation executed in favour of the Glasgow Bank was a validly completed assignation of the leases in dispute so as to transfer the whole right of the tenants, Newbigging and Company, over to the Bank, qualified merely by their back-bond in favour of Newbigging and Company? or whether, on the contrary, the right of lease did not at the date of the bankruptcy still stand vested in Newbigging and Company? and whether it was not preferably carried by force of the sequestration, and of the right completed by the trustee under the same, followed, as the trustee's right was, by the first real possession of the subject? 5. Whether, supposing the assignation in favour of the Bank to have been duly completed, so far as regards the leases, the right to the machinery and utensils was also carried as an accessory to the leases? or whether, on the contrary, the machinery and utensils, so far at least as they are to be held movable property did not remain with the bankrupts, the assignation in regard to them being of no effect, as being an assignation of movables retentâ possessione.”
The consulted Judges, having considered the cases, returned
Page: 479↓
“It is a general rule in the law of Scotland that possession, natural or civil, is necessary to complete the transference of a real right. A tack is a real right, by force of the statute 1449, in a question between assignees and adjudgers from the tenant; and to that case, therefore, the general rule applies. This is vouched by the concurrent authority of every institutional writer, and by an uninterrupted series of decisions for more than two centuries. When the transference depends on natural possession, a difficulty can seldom occur; but it is otherwise with regard to civil possession, which is of a less palpable nature, and not so well defined in law. If a principal tenant, wishing to transfer his lease, should intimate an assignation of it to his landlord and to his sub-tenant, and if the sub-tenant, after this, should pay rent to the assignee, it is clear that the real right in the assignee would be complete. Further, it may be granted, that if, after due intimation in the manner which has been mentioned, the question should arise before a term's rent became payable, the assignee might still be held to have attained civil possession; for, by the intimation itself, he had assumed the control of the sub-tenant's management, put himself in titulo to sequestrate for current rents, and maintain other possessory actions, and, in short, asserted his possession in every way which the nature of the case admitted.
But, in the present case, we are of opinion that no possession, natural or civil, followed on the assignation by Newbigging and Company to the Glasgow Bank. The avowed object of the transaction was to interpose the Bank as a principal tenant between the landlord and Newbigging and Company, solely to create a security for an advance of money made by the Bank to Newbigging and Company, who were to continue in the natural possession of the subject. Accordingly, it is admitted that the Bank never attained natural possession. With regard to civil possession, Newbigging and Company never paid rent, nor performed any prestation of the tack to the Glasgow Bank; nor did the Glasgow Bank pay any rent, or perform any prestation to the landlord. There was no opportunity of intimating an assignation to a sub-tenant, for there was no sub-tenant distinct from the cedents and the assignees. There was an attempt, indeed, to constitute the cedents sub-tenants to the assignees; but that attempt proved entirely abortive. The intended missive of
Page: 480↓
subtack was informal and null; it was not written on stamped paper, and it did not specify any rent, which is inter essentialia of the contract of lease. No possession followed or could follow upon it different from the possession which Newbigging and Company had attained, and were holding, by virtue of the principal tack. Therefore the case plainly resolves into a collusive device to create a latent security over a real right, without change of possession, either naturally, civilly, or symbolically; an attempt at variance with the first principles of the law of Scotland, and which, if it could be accomplished, would give rise to mischievous consequences. The same reasoning applies to the utensils, holding them to be heritable, and therefore part of the subject of the lease. Holding them to be movable, a security over them, retentâ possessione, is manifestly ineffectual.”
Page: 481↓
To prove this, it only seems necessary to resort to the earliest enactment on the subject, that of 1449, c. 17. It is in these words:— ‘It is ordained, for the safety and favour of the poor people that labours the ground, that they, and all others that has taken or shall take lands in time to come from Lords, and has terms and years thereof, that suppose the Lords sell or annalzie that land or lands, the takers shall remain with their tacks unto the issue of their terms, whose hands that ever the lands come to, for sicklike mail as they took them for.’
Thus it appears, 1. That by the common law the landlord or proprietor of lands could not effectually grant a lease to endure beyond the period of his right. 2. That the extension of the right of the tenant by positive statute, and in express deviation from the common law, is confined to the case of buyers, or singular successors, in the property of the lands.
And so in practice the statute has been understood. Where lands fall into the hands of a superior in virtue of any of the feudal casualties, or in the case of a lease granted by a wadsetter when the right of reversion has been exercised, and in every case where the right of the lessor is set aside, the current leases flowing from him are of no effect for ensuring possession to the lessee.
It is the more necessary to attend to this, because in many of the books of authority there are expressions from which it has been inferred, that, by the statute, leases had become real rights, and that they could not in any case be effectual to third parties, unless followed with natural and actual possession. The very opposite proposition, as it humbly appears to me, is the true one.
Properly speaking, a lessee of lands has no right to the lands. He has a right of possession merely; and so it must be governed by the properly attested agreements between those who have an interest in it. A lessee may renounce his lease, in whole or in part, to take effect at a certain term not yet come; or the lessor may give up a part of the rent due to him; and in both cases the renunciation will be effectual against an after assignee, without publication or intimation of any kind; and why should not an assignation be attended with the same effect, if made bonâ
Page: 482↓
To this general doctrine there is only one exception to be considered in the sequel; namely, where by undue delay in taking possession, according to the nature and purpose of the right on the part of a lessee, or the assignee of a lease, a third party has been induced bonâ fide to make a separate agreement, and has thereafter been introduced into the full and peaceable possession of the lands contained in the lease, before the prior lessee or assignee, and without knowing that such prior right existed. If he is aware of the prior lease or assignation, he is accessory to the wrong of granting double rights, and can take no benefit by it.
In the case where a lease is assigned by the original tacksman by virtue of power, either expressly given, or where, from the endurance of the lease, such a power is presumed to have been given, there are three individuals who alone are immediately interested. 1. The cedent, who, after delivery of the assignment has in the ordinary case no right whatever, and ought to have none, whereby he may injure the assignee. 2. The assignee, who, after acceptance, comes under all the obligations prestable by his author to the landlord, and who, therefore, ought to have all the benefits of the right; as to him, the case is the same as if he had obtained a new lease from the owner of the lands; and, 3. The owner of the lands, who, although entitled in every case to object, if an unfit person is made assignee, is in all other respects bound to the assignee as much as the assignee is bound to him.
It is no doubt necessary to create a direct obligation upon the landlord, that he should be informed of the assignment; but for this no particular form is necessary. If, de facto, he knows that such a right has been granted, which he may do in many ways as well as by direct communication, the transfer is as effectual, both for and against him, as if it had been intimated to him by a notary, or in the form of an executed summons. This, as it humbly appears to me, is a case quite independent of the late
Page: 483↓
Where two assignations of the same lease are given to different persons, without possession following upon either, the prior assignation is preferred to the later one.
Such being the state of the parties immediately interested in the transmission of a lease, and in most other rights purely of a personal nature, it would seem to require a positive enactment to overturn the whole transaction in favour of an individual who, at the time of the assignment, had no interest in the subject to which the lease relates. In this view, it would seem to be necessary that some publication should be required by the public law, as in the case of real rights; and it has been sometimes proposed that there should be such a record as to leases; but the expense which would thus be created, and the trivial nature and value of leases, until a late period, have always been considered to counterbalance any advantage that could thereby be obtained; and when it is kept in view how easily any one desirous of acquiring right to a lease may obtain information from the owner or possessor of the lands, it would seem to be very unnecessary. It must be justly held, therefore, in this as in other cases of personal rights or contracts, that unusquisque debet scire conditionem ejus cum quo contrahit. In such a case as the present the right of the assignee could not in the smallest degree interrupt the facility of transferring the use of the lands, or other real property, to one who had occasion for it; and as to those who looked to the lease merely as a subject of security, they could be at no loss, by proper inquiry, to ascertain how the right stood.
And holding that no publication in the case of leases is necessary or required by law, it seems rather extraordinary that, upon notions of expediency, some other intimation of a more limited and most imperfect kind should nevertheless be considered
Page: 484↓
It has also been said, that in the case of a sub-lease granted by assignees to the cedents, besides the rent payable to the landlord, some surplus tack-duty should be paid to the assignees; but if the additional rent were of considerable amount, it would resolve into an usurious transaction; and, at all events, such payment could not be more easily known to third parties than the sub-tack itself. The only appropriate obligation in such a case is the same as is binding on the original tenant; and one having right to a lease by a total sub-lease or assignment must hold it under the same conditions as his author, so that it is quite unnecessary to say any thing concerning it.
It will be remembered that even in the case of personal rights to lands, it was long held that the first conveyance completely divested the disponer. This was only departed from in 1737 in the noted case of Bell against Gartshore, and chiefly, as it appears, in consequence of the statutes requiring the publication of all land-rights in certain registers established for that purpose; which would have been in a great measure ineffectual if, after the granting of a personal right which did not enter
Page: 485↓
It is a mistake to say, generally, that an adjudication of a lease is preferred to an assignation, unless followed with actual possession. The decision referred to was rested upon specialties; the assignation, which had been granted by one brother to another, having remained dormant and latent, and entirely unknown either to the landlord or sub-tenants, and, as it would appear, intended merely as an assignment to the rents. There has also been a mistake in the quotation from Lord Kilkerran in the same case; the reasoning at the bar, in which a lease is held out as a real right, having been brought forward instead of the concluding part of the report, which truly contains the opinion of the Court, viz. that in such competitions it was civil possession in opposition to natural or actual possession which was chiefly regarded; and that the former might be sufficiently attained, either by payment of the rent to the proprietor, or by enrolment of the assignee as tenant; and in many other ways the reality and fairness of the transaction, as between the cedent and assignee, may be established with equal certainty.
There is a case reported by Dirleton which may appear at first sight to favour the pursuer's argument. It was a question between a singular successor and the trustee for a wife who had obtained from her husband a lease, to commence at his death; the right of the former, which was preferred by the Court, having been followed with infeftment before the husband died. But even there, as stated by the reporter, the determination was partly rested upon the circumstance, that the lease had been granted for a period commencing in futuro. And Lord Stair (24th February 1676), who reports the case at greater length, says, ‘that if the tack had been to the wife, or her trustee to take present effect, the husband's possession would have validated the same, and so have enjoyed the benefit of the same jure mariti.’ In short, although latent, or exclusive, or fraudulent
Page: 486↓
But, since the date of these cases, the law appears to me to have been completely fixed by a series of decisions commencing more than forty years ago, which have been followed in practice in innumerable instances, and are at present known to affect property and commerce to a great extent. I refer to the case of 8th July 1783, not reported, but referred to in the subsequent case of Hardy, Douglas, and others, 6th June 1794, which was decided upon the same principle; and it was followed by an unanimous decision in 1813, in the case of Yeoman v. Elliot and Foster, the rubric of which is as follows:— ‘A right to a lease by assignation is completed by entry of the assignee's name as tenant in the landlord's rental-book.’ In this last case it will be remembered that no rents had been paid by the assignees nor by the sub-tenants after the date of the assignation, the first term of payment not having arrived before the cedent's public bankruptcy. But that circumstance should have rather operated against the validity and fairness of the assignation. In these cases the authorities of Stair and Kilkerran referred to were stated by the parties objecting to the assignation, but disregarded, and, as it humbly appears to me, with great propriety and justice.
My opinion therefore is, that there may be an effectual assignation of a lease of lands in security of a debt, although it may not be followed with actual and natural possession, such as is required by the statute in 1449, in a question with a singular successor in the lands; and it would be most inexpedient at this time if a different opinion were to prevail. Indeed, the abstract point seems now to be hardly disputed. If there had been a formal sub-lease by the assignees to a third party, or if the assignees had been acknowledged by sub-tenants put in by the original lessee, or if, after assignation, the cedent had obtained a formal sub-lease by which some tack-duty, however small, had been directly payable to the assignees, it is not said that the assignment could have been liable to challenge. The objections now brought forward appear to be, 1. That the
Page: 487↓
The circumstances do not appear to have been attended to with sufficient care. The assignation (dated the 12th of March 1816) was ex facie absolute, though qualified by a back bond of the same date. By it the assignees became directly and expressly liable to the landlord for the rent, and all the other prestations of the lease. On the 14th of March the assignation was formally intimated to the landlord, and as formally acknowledged and ratified by him, and the assignees entered in the rental of factory accounts of the same year. On the 15th of March the sub-lease
Page: 488↓
After this detail it may be thought almost unnecessary to advert at any length to the case where the assignee of a lease has unduly delayed to make any use of his right, and where a second assignee, having been thereby encouraged to acquire a second conveyance, has obtained possession before any overt act of possession on the part of the first assignee.
The principle of such decisions as are to be found in the books on this subject is perfectly sound. It is not confined to the assignation of a lease, but applies to every case in which, by the careless and dilatory exercise of a legal right, heavy loss is occasioned to a third party. Before the acts requiring the registration of real rights it was applied to base or subaltern grants of land, though followed with infeftment, Ersk. 2, 7, 10; and it is analagous to that which has lately been recognized, although perhaps in some instances carried too far, where the managers of a banking company, having allowed their agent to act in opposition to his duty, without giving due notice to the agent's cautioners, were held barred, personali exceptione, from having recourse against the cautioners. But in a case like the present, and under all the circumstances which have been stated, the objection appears to be inadmissible; for,
1. Holding that a lease may be assigned in security of debt,
Page: 489↓
2. In the question which here occurs the competition is not between two voluntary assignees, one of whom, though prior in right, has not (as it is contended) entered into possession as he ought to have done; and where the second assignee can plead prior, actual, and exclusive possession. It is a question between assignees to a lease and a statutory trustee under a sequestration, whose only title to the lease arises from the general adjudication, which is for the benefit of all the creditors of the bankrupt, and comes in the place of those adjudications which would have otherwise followed in virtue of the separate debts and obligations of the bankrupt; and which separate adjudications, it must be kept in view, have been prevented by the statute.
Before the general adjudication the trustee had no right to the lease. The bankrupts had none, except as sub-tenants, until the debt due to the assignee in security had been discharged. But long before this, and while the estate was under the administration of the statutory factor, the right of the assignees was fully known and recognized, the sequestration having taken place in the month of July 1819, and immediately followed with a communication between the landlord and the assignees and the statutory factor, and the payments made to the landlord by the factor, as coming in the place of the sub-tenants.
Under the sequestration, the state of the parties at the date of the sequestration must be the rule. The possession of the judicial factor or of the trustee must be held as the possession of all and each of the creditors according to their rights at the time; and the general adjudication which follows can give no right, or even a title of possession, which would alter or diminish the rights of any of the creditors; and holding, that in this case the assignees were preferable, unless actual or exclusive possession had been obtained by the trustee in favour of the
Page: 490↓
It often happens that a trustee enters into the management of lands covered with heritable securities; but this makes no difference on the preferences or privileges competent to the heritable creditors. In this case it is hardly possible to imagine that the judicial factor paying for the sub-tenants the rents, which by their sub-lease they were bound to pay, and had been in the use of paying, could in the smallest degree affect the interests of the parties.
In a late case it was justly decided (and the decision has been affirmed in the House of Lords) that the adjudication in favour of a trustee upon a sequestrated estate gave the same preference to the creditors of the ancestor over those of the heir which would have been competent if each individual creditor had led a separate adjudication, and upon the same principle the case of Holmes v. Reid was lately decided.
Before leaving this subject it may be proper to advert to the situation of the prior assignees, in reference to the landlord, if the statutory trustee were to be preferred to him. Can it be said that the prior assignees, after being deprived of their security, are liable for the rents and other prestations of the lease, as they certainly were, after having been accepted by the landlord? Could the sub-tenants admitted to possession by the assignees, supposing them different from the cedent, be removed by the trustee? An authority has been quoted for showing that the creditors of a bankrupt may, under a sequestration, reject a lease, or the assignation of a lease, if they judge it expedient. But are they empowered, at the same time, to oust a prior assignee in security, who must still remain subject to the obligations arising from the lease?
On these separate grounds, and in the particular circumstances of this case, I am humbly of opinion that the trustee was not authorized or entitled, by the general adjudication, to exclude the assignees in security from the full enjoyment of a prior and bonâ fide right, known to him, as well as to all the parties immediately interested, long before the general adjudication was obtained. In such a case the trustee cannot put the general body of the creditors in a better situation than the assignees
Page: 491↓
I have yet some observations to make upon two cases lately decided, where the same question occurred. In the case of Russell v. the Earl of Breadalbane I concurred with the other Judges in thinking that, on the specialty more distinctly brought into view in the last stage of the proceedings, the preferable right of the Earl could not be justly disputed. But I also thought he ought to be preferred, 1. Upon the general grounds already stated; 2. Because the action was brought in virtue of a voluntary and general trust-deed, by which the interests of the non-acceding creditors could not be affected; and, 3. Because the Earl's prior assignment was specified in the trust-deed itself; so that the creditors, knowing of it, could not avail themselves of the trust-conveyance, to disappoint a prior right.
Again: the other case, that of Paul v. Inglis, I had no opportunity of considering until a majority of the Court had formed and given their opinions. Perhaps it may have been rightly decided upon the footing that the assignees of the lease had been improperly dilatory in communicating their right to the parties interested; but I must say that the circumstances of the case were not ascertained as they ought to have been. On the one side it was stated that Macfarlane, to whom intimation of the assignment had been made, was proprietor of the subjects, and also entitled to a quit-rent payable by the assignee; while, on the other side, it was averred that this person, to whom only before the sequestration, intimation had been made, was no proprietor, but had been a prior assignee, and had made a general assignment to the bankrupt. In the one case it humbly appears to me that intimation to Macfarlane ought to have been held as sufficient, and especially in a question with the statutory trustee; in the other case it could hardly be said that the assignation had been either intimated or followed with possession, as it might have been in justice to third parties.
“As to the question raised respecting the machinery and utensils found at the date of the sequestration upon the subjects
Page: 492↓
Page: 493↓
To complete the transference of a lease, then, it appears to me that there must be, in the first place, a conveyance of the title or personal contract, in regard to which, I think intimation to the landlord not merely competent, but indispensable, as, by the law of Scotland, intimation is the appropriate and requisite act by which the substitution of the assignee for the cedent in every personal contract is effected; and, secondly, that there must be such possession as can be legally ascribed to the title so transferred.
The measures necessary to effect these objects may vary according to the circumstances of each particular case. When the principal tenant assigns, and places the assignee in possession, the transference is perhaps complete without a formal intimation to the landlord, because intimation admits of equipollents, and the public assumption of possession by the assignee may be viewed in that light. If the cedent has already granted a sub-tack in addition to intimation to the landlord, intimation or some equivalent to intimation to the sub-tenant may be required; because actual possession being unattainable by the assignee, that measure, or some equivalent having the effect of completing the substitution of the assignee for the cedent in the contract with the sub-tenant, may be requisite to render the possession of the sub-tenant constructively the possession of the assignee; and, in this view, actual payment of rent by the sub-tenant to the assignee does not seem to be indispensable, although it may supply the absence of a formal intimation to the sub-tenant. In the case of a sub-lease previously granted by the cedent, I consider the true test of the transference of possession to be the existence of some act by which the possession of the sub-tenant becomes referable to the right of the assignee to the principal lease. In a third supposable case, where the assignee grants a sub-tack to the cedent, the original tenant, the transference may become effectual without any ostensible change of possession. But there ought to be, in that case, some separate intimation to the landlord, because there is no public change of possession which admits of being construed as an intimation to the landlord of the assignation by the original tenant.
Page: 494↓
These views seem to be supported by the two decisions chiefly founded on by the parties, and indeed seem to afford the only means of reconciling them.
In the first case, that of Wallace against Campbell, the tenant assigned a lease from the Duke of Argyll in security of a debt, and took a sub-tack from the assignee. A competition arose between the assignee and an adjudger, which was determined in favour of the latter. But it does not appear from the reports of that case, that the circumstance of there being no ostensible change of possession was held to be conclusive; for the Court remitted to the Lord Ordinary to inquire, inter alia, ‘what evidence Inverasragan (the assignee) could give, that any part of the yearly rent payable to the Duke of Argyll had been paid on his account as assignee to the tack, or that he was enrolled as tacksman in the Duke's rental;’ and Lord Kilkerran, in remarking upon the decision, and obviating the assignee's plea, that the case did not admit of or require any further intimation, observes, ‘for still, as has been said, the civil possession was what completed the right; for, as the remit to the Lord Ordinary supposes payment might have been made of the Duke's rent by the disponee, or he might have been enrolled as tenant, which ought to have served for intimation.’ I rather consider the fair inference from that decision to be, that if there had been an intimation, or any thing equivalent to an intimation to the landlord, the assignation would have been supported.
And this inference seems to be warranted by the later decision in the case of Yeoman v. Elliot and Foster, 2d February 1813. There the tenants had assigned certain leases from the Duke of Buccleuch in security of advances to the extent of 1,000 l., and received sub-tacks from the assignee. But, in addition to these circumstances, the assignee had enrolled his name in the Duke of Buccleuch's rental books—a step which was equivalent to intimation. In that case the assignations were sustained, though unquestionably they were granted merely in security, and although no rent was paid, or indeed could have been paid, either by the assignee to the landlord, or by the cedent or sub-tacksman to the assignee, as the competition arose before the first term of payment had arrived. I must confess my inability to discover how this decision could have been pronounced,
Page: 495↓
On applying these principles to the decision of the present question, I am of opinion that the assignation in favour of Messrs. Cabbell and Brown is effectual. There can be no doubt that the title was effectually transferred. There was an assignation to the lease ex facie absolute, and that assignation was formally intimated to the landlord. There was, in addition, a missive of sub-tack granted by the assignees to Archibald Newbigging and Co., and an acceptance by Archibald Newbigging and Co. written, and, as I presume, signed by Archibald Newbigging, in whose name I understand the original lease stood in trust, as it is said, for the company. Now, although these last-mentioned documents are in many particulars informal, I am inclined to think that they are sufficient to constitute an exercise of the assignees' right, to which the subsequent possession of Newbigging and Co. may and must be legally ascribed. In a question between the assignees and Archibald Newbigging and Co., it appears to me that these missives would have been sufficient to support the possession of the latter from year to year, on payment of the ‘whole rent exigible by the landlord,’ with all ‘taxes, burdens, and duties affecting the property and possession,’ being the terms specified in the missive. As Newbigging and Co. had been divested of the original title, the principal lease, by the assignation and intimation to the landlord, and as the missives of sub-tack, though informal, were capable of forming a title of possession, I think the subsequent possession of Newbigging and Co. may be legitimately ascribed to these missives of sub-tack, and consequently must be held as the constructive possession of the assignees.
In arriving at this conclusion, it is hardly necessary to mention that I have thrown out of view entirely the charges of collusion and undue concealment made against the assignees. I see no ground for any such charges; and in regard to the supposed danger of giving effect to a security over a lease, without any public change of possession, I think, in the first place, that
Page: 496↓
Upon the other point, the machinery and utensils, I hardly think that the information afforded by these papers is satisfactory or conclusive. It appears to me at present that, in so far as concerns the utensils, the claim of the assignees is ill founded. The assignation, no doubt, conveys the utensils; but no possession seems to have been taken of them by the assignee; and it is quite impossible, even in the most favourable point of view for these assignees, to hold the subsequent possession of Archibald Newbigging and Co. as their possession, as the missives of sub-tack do not mention the utensils.
The circumstances regarding the machinery are somewhat different. The machinery is expressly mentioned in the missive of sub-tack; and I am rather inclined to think, that if it truly consists of articles which, according to the usage of the manufacture, are held to be accessory to, and generally go along with the buildings, the proper subject of a lease, the assignation and disposition, followed by the missive of sub-tack, might be sufficient to support the claim of the assignees.”
The cause was now put out for advising by the Second Division.
Lord Justice-Clerk.—“I have read the cases with every attention in my power; but I remain of the opinion which I delivered when the cause was formerly before us, that the assignation is not effectual against the creditors.”
Thereafter (5th March 1830), “the Lords, having resumed
Page: 497↓
Cabbell appealed.
Appellant.— 1. A lease is a mere personal right. The only real rights known in the common law of Scotland are property, servitude, pledge, and perhaps exclusive privilege; but a lease does not belong to any of these classes. It is a personal contract, effectual against the parties contracting and their heirs, but not ex suâ naturâ effectual against third parties. Hence it followed, that if the landlord sold the property, or if it was adjudged by his creditors, the purchasers or adjudgers were not affected by the leases which he had granted, but could remove the tenants at pleasure; and the latter had no redress, except a claim for damages against the granter of the lease. This was felt to be a great grievance; and attempts were sometimes made to convert the personal into a real right, by granting seisin of the land to the tenant. But the form of a seisin was unavailing; for the right being radically personal, mere seisin or delivery did not change its nature, and the tenants were still removable at the will of the landlord's singular successors. As, therefore, the common law furnished no remedy, the legislature found it necessary to interpose; and accordingly, by the act 1449, chap. 17, leases were made effectual against purchasers. The only alteration of the common law by the statute was to secure tenants from removal by the landlord's singular successors; but in all other respects, the legislature left the lease still a personal right. The protection afforded by the statute was of the nature of a personal privilege bestowed on “the poor people that labour the ground;” but it left their title unchanged in its nature and character. In order, however, to entitle them to this privilege, it was necessary that they should
_________________ Footnote _________________ * 8 Shaw and Dunlop, p. 647.
Page: 498↓
2. Personal rights are transferable by assignation, and the right of the assignee is completed, either by intimation, or by some act which in law is held to be equivalent to intimation. But assignation alone is not sufficient to complete the title of the assignee to the right or subject-matter of the assignation, and the mode of completion depends on the nature of the right or thing assigned. When moveables are the subject of the assignation, there is no party but the cedent and the assignee, and therefore the right must be perfected by possession or delivery. But, if a right or obligation constituted by a third party in favour of the cedent is assigned, the proper mode of completing the assignation is by intimation to such third party. But, though intimation is the most unexceptionable mode of completing an assignation, yet equipollents are admitted to supply its place. Of these, natural possession is one. But if the natural possession by an assignee completes his right as an equipollent of intimation, it follows, that the assignation of a lease is perfected, without the necessity of intimation, as soon as such possession is attained by the assignee. Other equipollents to intimation are admitted. Thus an enrolment of the assignee in the landlord's rental will supply the place of intimation. Without intimation, therefore, or some one of its equipollents, such as the natural possession or enrolment, an assignation of a lease is ineffectual; while, on the other hand, such intimation, or possession, or enrolment in the landlord's rental, completely vests the assignee in the right, and of course divests the cedent, so that no right
Page: 499↓
3. Even if intimation to the landlord were not sufficient per se to complete the security, still if a tenant, who has sub-set or given the natural possession to another, grant a security by assignation, the right of the assignee will be completed by intimation, both to the landlord and to the sub-tenant, or other person holding possession under the principal tenant; and there was such a sub-set and intimation in the present case.
4. The granting of a sub-lease by the appellants to Archibald Newbigging and Company, was an act of civil possession, which, according to the view of the Court below, was sufficient to perfect the assignment, even though there had been no intimation.
5. The right of the appellants to the machinery and utensils is not distinguishable from their right to the leases.
Respondent.—1. The assignation to the tacks, never having been clothed with possession in the appellants' persons, is a merely personal right, and so affords but an imperfect and uncompleted title, which cannot stand against the real right vested in the respondent. But an assignation of a tack, without possession of any kind, is altogether insufficient in competition with a singular successor, whose right has been duly clothed and completed by possession, to operate any effectual transfer of the real right under the lease. Possession is just as necessary to establish a real right of tack, whether in the original constitution of it, or in any transfer by assignment, as seisin is in the case of a feudal subject. The appellants' pleas rest entirely on the assumption that a lease is merely a personal right, overlooking altogether the important distinction, founded on the statute 1449, c. 18, between the lease before it is perfected by possession, in which case it is a mere personal and uncompleted right, and the lease after it is so perfected, in which case it becomes what the law recognizes as a real right. It is now indisputable, that in the case of competing leases, the lease first clad with possession is the only effectual one; and that, in the same way, in competitions between assignations to leases, or between sub-tacks, or between an assignation and a sub-tack, that right upon which possession has first taken place, to all intents and purposes, cuts out the rest; or, to put the matter in a general shape, the
Page: 500↓
2. The intimation of their assignation to the landlord will not avail the appellants; for though intimation may be all very good when there is something belonging to the cedent in the hands of the person to whom intimation is made, and the right to which something is meant to be transferred over to the assignee, as the party who thereafter shall be entitled to demand it, it is obvious that where the subject assigned is matter not of personal claim but of real right, and in itself directly capable of delivery from the cedent to the assignee, intimation is altogether out of the question. Indeed it is laid down by every authority that the legal transmission of a lease, as a real right, is by possession, and not by intimation.
The respondent denies that there is either authority or principle for the appellants' doctrine, that bare intimation to the landlord, unaccompanied by any possession, natural or civil, on the part of the assignee, and unsupported by any sub-tack or other change of title, so as to fix on the tenant's possession the restricted character of a possession as sub-tenant to the assignee, is sufficient, in any legal sense, to complete the assignee's real right, or to vest him in the full right of the lease.
But in addition to the argument founded on intimation, the defenders affect to lay great weight on the circumstance of their assignation being noticed in what they are pleased to term the landlord's rental book.
Page: 501↓
But this circumstance, even had it occurred in the most regular and unimpeachable shape, cannot possibly be regarded.
3. The alleged sub-tack cannot avail the appellants. It is informal and improbative, but even had it been liable to no such objections, ex facie, it could not, from the latency and collusion of the whole transaction, avail the appellants in the least. There was never any real or bona fide purpose, on either side, that the subjects should be sub-set; and accordingly, neither did the appellants in any one particular act as tenants in chief, nor did any change of possession ever take place, to fix on the bankrupts the character of sub-tenants.
4. The assignation in the defenders favour was altogether a collusive transaction, having a totally different object from what it bore on the face of it, and being in truth a mere cover for an arrangement, which, if openly entered into, the parties were aware the law would not have recognised.
5. The conveyance to the appellants of the machinery and utensils, as considered apart from the real subject, is unavailing, as being a conveyance of moveables, retentâ possessione.
Page: 502↓
On a future day.
Your Lordships recollect that it appeared to be a case of some importance, though it can be stated in a very few words. There was a lease for the term of one hundred years of premises employed as a valuable bleach-field, held by Hopkirk and Company, which was assigned by them to Archibald Newbigging; and the Company of which Newbigging was a partner having borrowed 7,000 l. from the Glasgow Bank, and being to receive 5,000 l more if wanted, they assigned, when in manifest difficulties, this lease to the Bank. An intimation of the assignment to the lessor followed; but there was no possession taken by the Bank in any way. The Bank then granted a sub-tack to Newbigging and Company, and under this sub-tack it is said, that they, the original lessors and assignors, held under the Bank, their assignees. The Bank also granted a back-bond, setting forth what had taken place, and clearly showing that the assignment to them, the Bank, had only been in security. Now, to say nothing more about the informality of this sub-tack, it is enough for me to observe, that the most important part of the whole, the rent—the render—is blank in the instrument. Newbigging and Company became bankrupt, and the question arises as between the Bank, the assignees of the lease, and the trustee of the sequestrated estate of the assignors of the lease, which shall have the term in question; it being, on the one hand, contended for the Bank, that they have a valid assignment; and it being, on the
Page: 503↓
“Therefore the case plainly resolves itself into a collusive device to create a latent security over a real right, without change of possession, either naturally, civilly, or symbolically; an attempt at variance with the first principles of the law of Scotland, and which, if it could be accomplished, would give rise to mischievous consequences.”
Lords Balgray and Gillies do not go the full length of the earlier part of this opinion, which I have not troubled your Lordships with, namely, that a tack in Scotland, which is a real right by force of the statute of 1449, can only be validly carried to an assignee, if there is, beside intimation, possession by the assignee: which point was the principal ground of the remit to the Court of Session; when it seemed an extraordinary thing, as it occurred to me, that such a matter never had been settled before. Their Lordships state, “We therefore cannot affirm that it is the law of Scotland, that an assignation of a lease duly intimated is per se an imperfect right, unless followed by natural or civil possession.” That is the opinion of those learned Judges; they do not go so far as their learned brethren in saying that intimation is not sufficient without possession; but in the opinion of those other Judges, so far as it is founded on the special circumstances of the case, they entirely concur. Now, my Lords, I take the same view with those learned Judges (without deciding a question which it does not appear to me necessary for the Court below, in the circumstances of the case, to have decided, and which I do not think it is necessary for your Lordships to deal with)—that there is nothing here, which, by
Page: 504↓
The House of Lords ordered and adjudged, That the interlocutors complained of be affirmed.
Solicitors: Richardson and Connell,— Moncrieff, Webster, and Thomson,— Solicitors.