Scottish Court of Session Decisions

Subject_1 SALE.
Subject_2 DIVISION I.

Sale of Heritage.
Subject_3 SECT. VII.

Lex Commissoria. - Condition that the Purchaser shall find Caution for the Price within a Time.

John Young
v.
James Dunn

Date: 9 March 1785
Case No. No 29.

A house was sold at a price payable at a fixed time, otherwise the sale to be void, and the purchaser to be considered as a tenant at a certain rent. On failure, the seller sold to another without premonition. Found entitled to do so.

Click here to view a pdf copy of this documet : PDF Copy

John Young sold to James Dunn a house belonging to him, at the price of L. 2500, Which was to be paid or secured in a certain manner, at the term of Lammas following; otherwise the agreement to become void, and Mr Dunn to be considered as the lessee of the house, at the yearly rent of L. 225.

Mr Dunn not having implemented the first part of this bargain, Mr Young, sometime after the term of Lammas, proceeded, without any premonition, to dispose of the house to a third party. He then brought an action of removing, in which Mr Dunn

Pleaded in defence; The sale of the house was not a conditional one, to be valid only upon payment of the price within the stipulated period; it was truly a finished sale, with a clause entitling the seller to resolve the bargain, in case the price was not duly paid or secured according to the agreement. It thus resolved into an example of the Lex Commissoria, in which the seller, for putting an end to the contract, must premonish the buyer; it being contrary to reason, that he should be allowed to hold the other party bound, after the ob ligation on his, party has became ineffectual; 1. 4. § 4 D. Be Leg. Commis.

The alternative condition, too, of the extravagant rent to be paid on the sale becoming void, must be an insuperable bar to the present action. In penal irritancies, the intention of him who exacts a stipulation of that sort, is not to derive, from the inadvertency or embarrassment of his neighbour, an unreasonable benefit to himself, but merely to ensure performance of the contract; and to this intention courts of equity have imparted a proper effect, by determining, that upon a fulfilment of the bargain within a reasonable time, or before a decreet of irritancy can be extracted, the other party may be released from the penal consequences of his delay; Erskine, B. 2. Tit. 5. § 25. Dict. voce Irritancy. Neither, for affording this equitable relief, is it necessary that such a method of compelling performance of the contract has been used, by directly stipulating a sum of money in name of penalty. The decision must be the same, where the penalty annexed to a sale is conceived in the form of a rent infinitely greater than the seller could have expected, either from the purchaser or any other person.

Answered for the pursuer; In proper sales, where the agreed price is precisely equal to the value of the subject sold, the doctrine of penal irritancies has never been admitted; Stair, B. I. Tit. 13. § 14.; Bank. B. 1. Tit. 9, § 29. 32.;' Dict, voce Irritancy. There, conditions of the nature here occurring are to be observed in their literal sense; nor can a court of equity interpose, to give any greater latitude than has been precisely stipulated. But there is here, in truth, no penalty, which from equitable notions can be modified or retrenched. By the express agreement of the parties, which no court can convert into another diametrically opposite, it has been provided, that in the event which has really happened, the possession should be ascribed, not to the contract of sale, but to a lease at a fixed rent. As, therefore, it was no longer in the power of the seller to insist for implement of the prior bargain, it would be unjust to enforce against him the counterpart of that obligation. For the same reason, the equity of the rule adopted in, the Lex Commissoria, is not applicable to the present case.

Several of the Judges expressed their opinion, That unless for the secondary bargain of lease, Mr Young could not, without some premonition, have departed from the sale. Others, however, thought, that in that contract the condition here interposed was to be strictly observed.

“The Lords repelled the defences, and decerned in the removing.”

Lord Reporter, Monboddo. Act. Blair. Alt. H. Erskine. Clerk, Home. Fac. Col. No 207. p. 324.