Scottish Court of Session Decisions

In 1878 the deceased James Thomas of Transy granted in favour of Mrs Mary Anne Nicholson and others (Alexander Nicholson's trustees) a bond and disposition in security, whereby he conveyed to them the lands of Pinnacle in security of a loan of £6000.

In 1883 Nicholson's trustees assigned and disponed to Mrs Catherine Kenmore or M'Laughlin and others the bond and disposition in security, and also the lands of Pinnacle, but only to the extent of £2000. The assignation contained, inter alia, the following clause—“Declaring always … that these presents and the said sum of £2000 … shall in all respects rank and be preferred pari passu with the said bond and disposition in security and the remainder of the said sum of £6000.” …

After Mr Thomas' death in June 1883 his trustees granted bonds of corroboration and dispositions in security, whereby they confirmed the original bond and disposition in security to the extent of £4000 as regarded Nicholson's trustees, and of the £2000 as regarded Mrs M'Laughlin, and in further security they conveyed to them the lands of Transy. Each bond of corroboration contained this clause—“Declaring that the foresaid principal sum of £4000, and interest and penalties herein contained, and the said sum of £2000, the balance of the foresaid sum of £6000 contained in the said bond and disposition in security (with interest and penalties), now due to the said Miss Catherine Margaret Kenmore, and secured over the subjects and others before described, conform to bond of corroboration and disposition in security executed by us in her favour of even date herewith, shall be ranked and preferred pari passu on the said subjects and others above conveyed, and the rents, feu-duties, and casualties thereof, and also on the prices and proceeds to be realised therefrom, and that irrespective of the order of priority in which these presents and the said bond of corroboration and disposition in security in favour of the said Miss Catherine Margaret Kenmore have been or shall be registered in the register of sasines.”

In 1887 Nicholson's trustees and Mrs

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M'Laughlin, after having called up the loan, entered into possession of the lands of Pinnacle and Transy under an action of maills and duties. The free rents of Transy were not, however, sufficient to meet the interest upon prior bonds, and the free rents of Pinnacle were not sufficient to pay the interest upon the bond to which Nicholson's trustees and Mrs M'Laughlin had right.

In 1889 an agreement was entered into between these parties and the trustees of Mr Thomas, whereby the latter undertook to convey certain other lands in security, and also to grant a deed of authority containing the fullest powers of management and sale. Accordingly a deed of authority, dated 6th and 9th November 1889, was executed by the trustees, whereby they granted, as regarded two-thirds pro indiviso of the security subjects to the pursuers and as regarded one-third pro indiviso to the defender, full power to realise the several security subjects as if they were absolute and uncontrolled proprietors, including power in their own names, as proprietors or as heritable creditors, or as factors and commissioners for Mr Thomas' representatives, to sell the security subjects. It was declared that the powers granted in the deed of authority should be in addition to, but should not in any way prejudice or curtail, the powers and rights of the pursuers and the defender as heritable creditors under the original bond and disposition in security. Mr Thomas' trustees were unable to pay the sum contained in the bond, and after the usual requisition the lands of Pinnacle were several times exposed for sale at a price first of £11,500, but without finding a purchaser.

Nicholson's trustees desired again to expose Pinnacle for sale at the price of £10,000, but Mrs M'Laughlin objected to the sale at that price, and refused to concur in a sale, on the ground that she believed that by holding the property for a time a larger price might be got.

The present action was accordingly raised by Nicholson's trustees against Mrs M'Laughlin and others, in which they sought to have it declared, inter alia, that they (the pursuers) were entitled, after due advertisement, and otherwise fulfilling the requirements of the Titles to Land Consolidation (Scotland) Act 1868, the Conveyancing (Scotland) Act 1874, and other statutes in reference to sale of lands by a creditor under a heritable security, so far as such requirements had not already been fulfilled by them, “to sell and dispose in whole or in lots of the said lands and estate of Pinnacle by public roup at Edinburgh, or at the place or places pointed out by said statutes; and that the defender Mrs Catherine Margaret M'Laughlin, as creditor in the said bond and disposition in security to the extent of the said principal sum of £2000, interest and consequents, conform to assignation aforesaid, and the defender Henry J. M'Laughlin for his interest, are bound to consent to and concur in such sale or sales, and failing their doing so within fourteen days after the date of the decree to that effect to follow hereon, that the pursuers are entitled to dispense with such consent and concurrence, and to proceed to sell and dispose of said lands and estate as if the same had been granted; and that on a sale being so carried out, or upon each sale so carried out, if the lands are sold in lots, the pursuers, or their assignees or representatives, either alone or with consent and concurrence of the defenders Mrs Catherine Margaret M'Laughlin and Henry J. M'Laughlin, are and shall be entitled to grant in favour of the purchaser or respective purchasers at such sale or sales, or to his or their assignees or representatives, an absolute irredeemable disposition or dispositions of said lands and others, or of the parts thereof so sold, containing all usual and necessary clauses, and all other deeds necessary for completing the right and title or rendering the sale effectual to a purchaser or purchasers;” or otherwise, that they were entitled to bring the lands to a judicial sale, and to divide the proceeds in the proportion of two-thirds to themselves and one-third to the defenders; or otherwise, that the Court should sequestrate the estate conveyed by the bond and disposition in security and appoint a judicial factor thereon.

The pursuers explained that they pressed the sale of the estate as they were anxious to wind up the trust, and also in the belief that the value of the security subjects would fall rather than increase.

The defenders alleged that looking to the original price of Pinnacle, and the sums which had been laid out on it, a much larger price than £10,000 could be obtained for it if it was not forced on the market, and they refused to consent to a sale at that price.

The pursuers pleaded—“(1) The pursuers being in virtue of their bond and disposition in security libelled on, and separatim of the deed of authority above mentioned, in the positition of joint or common holders pro indiviso of the said subjects of security, they are entitled to insist in the present action against the defenders. (2) The pursuers, in respect of the defenders Mrs M'Laughlin and Henry J. M'Laughlin refusing to concur in the proposed sale under the bond and disposition in security, are entitled to carry through the sale at their own hands and grant a complete and unencumbered title to the purchaser upon the footing of accounting to Mrs M'Laughlin for the proportional share of the price effeiring to her assignation in security. (3) The said lands being incapable of division according to the just rights and interests of all concerned, the pursuers are entitled to have decree of sale, as also decree relative to the disposal of the price, as concluded for.”

The defenders pleaded—“(1) The state-ments of the pursuers are not relevant and sufficient to sustain the conclusions of the summons. (2) The action as laid is incompetent both at common law and under the statutes libelled. (3) The pursuers having

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assigned to the defender Mrs M'Laughlin a portion of the sum in the said bond, are not entitled either to bring the security subjects to sale at their own hand, or to compel these defenders to concur in bringing them to sale, except upon the footing of providing full payment to these defenders of the portion of the bond so assigned to Mrs M'Laughlin.”

On 30th June 1891 the Lord Ordinary ( Low) found the pursuers' averments irrelevant and dismissed the action.

“ Opinion.—[ After stating the circumstances as above]—The pursuers maintain that this is truly a case of common property, that the ordinary rule of law that no one can be forced to remain in communione applies, that as the subject is indivisible it must be sold and the proceeds divided, and that the only way in which that can be accomplished is by a sale of the lands which are the subjects of the security.

The question is one of novelty, but I have come to the conclusion that this is not a case to which the rules in regard to common property upon which the pursuers found apply.

The parties are not common proprietors of the lands which the pursuers desire to have sold. They have a joint infeftment in the lands in security, but that infeftment is only a burden upon the right of the granter of the security, and they can never under the bond and disposition in security themselves acquire a right of property in the lands. It is true that they can give an absolute right of property to another, but they can do that only by virtue of the mandate which they hold from the granter. It is therefore difficult to see how the lands, of which the parties are not and never can be proprietors, can be sold on the ground that they are common property, and yet it is these lands and nothing else which the pursuers seek authority to sell.

The summons contains a variety of alternative conclusions, intended, no doubt, to meet different views which might be taken of the rights of parties; but, as I have pointed out, the pursuers' case was entirely rested upon the argument that the claim was one of the sale of common indivisible property. If I had been of opinion that that view was sound, I should have thought that the proper conclusion to give effect to would have been the second alternative conclusion, viz., that for a judicial sale. The first series of conclusions contemplate the pursuers being authorised to sell under the bond without the defenders consent. Such procedure would not be appropriate to the sale of common property, and it was not maintained that if the argument that there was here common property failed, it was in the power of the Court (at all events in the circumstances disclosed on record) to dispense with the consent of the defender and authorise the pursuers to sell, and to grant a good title to the purchaser without her consent.

It may be that there is some hardship to the pursuers in not being able to realise the security subjects, but they have themselves to blame, because by the terms of the assignation which they granted to the defender they put her into the position of being joint mandatory with them under the power to sell, and deprived themselves of the right of selling without her consent. There might be a case in which the refusal of a person in the position of the defender to concur in a sale was so manifestly unjust and prejudicial to the other creditors that the Court would, in the exercise of its equitable jurisdiction, be entitled to interfere. But no such case is disclosed here. The property has fallen in value, and the pursuers think that it is better to sell now in case of further depreciation, while the defender is hopeful that by holding the property for a time a better price may be obtained. Both these views are intelligible and reasonable, and as the right of the parties to sell rests upon a joint mandate, I do no think that it is possible for the Court to interfere with what is no more than a reasonable exercise of discretion upon the part of one of the mandatories.

Under the additional powers given to the parties by the deed of authority, I do not think that the pursuers take any advantage, because although in a question with the granters of that deed the parties to this action are entitled to deal with the lands as if absolute proprietors, they are not in a question inter se in a materially different position from that which they occupy under the bond and disposition in security. As under the latter deed they hold a joint mandate to sell, so under the former deed they hold a joint factory and commission to deal with the estate as if they were absolute proprietors. But under neither deed are they actually proprietors, and under both deeds the powers which they possess are joint powers, and must be exercised jointly.

I shall therefore dismiss the action.”

The pursuers reclaimed, and argued—Although a portion of this bond had been assigned, this portion and the remaining part still remained one bond, and in order that a valid title to the security subjects might be given to a purchaser a decree of declarator by the Court was necessary. This was a case of urgency, as there was a pressing necessity for a sale of the security subjects in order that this trust might be wound up. If effect was to be given to the argument on the one side, then the hands of a very large bondholder might be tied by one who had a very small pecuniary interest in the bond. The rights of heritable creditors were statutory, but the Conveyancing Statutes had not provided for a case like the present. The pursuers' right here was to realise the bond and the security subjects, and all that the defenders were entitled to demand was a pari passu ranking on the price. The position of the pursuers and defenders was that of joint proprietors of a common subject, and the circumstances that a portion of the bond had been assigned, and a bond of corroboration granted by the trustees of the original debtor to the assignees, did not affect the true relation of the parties to one another.

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As the parties were joint proprietors of a common subject, which was indivisible, it could be sold at the instance of either party, and the price divided. The defenders were not entitled from anything contained in the assignation or bond of corroboration to interfere with the pursuers in realising the security subjects—Titles to Land Act 1868 (31 and 32 Vict. cap. 101), secs. 119, 123, and 124; Conveyancing (Scotland) Act 1874 (37 and 38 Vict. cap. 94), sec. 48; Bell's Comm. i. 61–2.

Argued for respondents—The pursuers had taken an erroneous view of their rights over the security subjects. These were held by the bondholders in security only, and no right of property could be acquired by the bondholders in the security lands, nor had they any right to sell them. No doubt if the lands were sold by the bondholders jointly a good title could be given to a purchaser, but if one of the bondholders should refuse to consent to sale the Court could not compel him. A bondholder was not bound to give up his security and take cash against his will. The defenders did not desire to obstruct realisation of the subjects; all they wished was not to be made losers by hasty action. When a portion of this bond was assigned the deed contained a power of sale. Each bondholder possessed this power; it was a concurrent and not an indivisible right, which either bondholder might use apart from the other. But one bondholder could not give premonition for the other; nor could premonition by one affect the security over lands held by the other bondholder. The only course open to the pursuers was to bring a ranking and sale under the Act 1681, cap. 17, as the lands could not be sold without judicial authority. The alternative conclusion in the summons for sequestration of the estate was one which would only be granted by the Court in very exceptional circumstances, and such had not been made out in the present case—Conveyancing Act 1874 (37 and 38 Vict. cap. 94), sec. 48; Henderson v. Wallace, January 7, 1875, 2 R. 272; The Scottish Heritable Security Company v. Allan, Campbell, & Company, January 14, 1876, 3 R. 333.

At advising—