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

UKHL
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 · 1828-05-13
[1]Holding that a lease may be assigned in security of debt, Page: 489 ↓ it appears that in this case the assignees did every thing that could be required from them for the completion of their right according to its nature and purpose. If the question, therefore had been between them and a second voluntary assignee, who might upon the slightest inquiry have obtained information in so many different ways as to the existence of such an assignment, the loss, if any, would have been attributable to him, and not to the prior assignees; but,[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 ↓ general body of creditors, there seems to be no pretext for resorting to the doctrine upon which so much stress has been laid, as to priority of possession. 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 ↓ of the lease. The creditors may claim generally the benefit of possession through the trustee pari passu with the assignees, if standing in the same circumstances; but, unless they prove a prior possession, the prior assignee ought to prevail. 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 ↓ under lease, it does not seem to have been in the view of the Judges of the Second Division when the opinions of the Court were required.” Lord Fullerton .—“Although a lease of lands be, like any other contract of location, in itself personal, yet it has become, in virtue of the statute 1449, a real right—a character uniformly assigned to it by our institutional writers, and confirmed by a series of decisions which it is impossible now to disturb. As a consequence of this, and upon the same authority, it may be assumed that possession is necessary for the effectual constitution and transference of the right. In this respect, there may be some ground for the supposed analogy between possession in relation to a lease, and sasine in the case of a right of property. But the analogy is imperfect. In the latter case, the sasine, being attested by a written instrument, is necessarily connected with the special grant on which it proceeds. Possession, in the case of a lease, does not admit of any such distinctive connexion with a particular title; and as the title consists of a personal contract, on the terms of which the existence, duration, and value of the right depend, the possession may remain ostensibly the same, although the right receive every possible modification. By a transaction with the landlord, a tenant holding a lease highly beneficial both as to rent and endurance, may, without any change or suspension of possession, reduce its value in both particulars to any given extent; and there seems no reason to doubt that, by assigning the lease, intimating the assignation to the landlord, and taking a sub-lease from the assignee, he may descend from the situation of tenant under a beneficial lease to that of a sub-tenant at a rack-rent, without affording, by the discontinuance of his former possession, any means of detecting the change. Although, therefore, a lease may, in consequence of its character as a real right, require possession to complete its transference, it does not seem that an apparent change of possession is indispensable to effect either its transference, alteration, or extinction. Neither is this attended with any dangerous practical consequences; for, as possession under a lease implies merely a right, of which the value depends on the terms of the personal contract forming the title, it never can raise a credit in behalf of the possessor, while the nature Page: 493 ↓ and terms of the title remain uninvestigated; so that it is a case to which the principle ‘unusquisque debet scire conditionem ejus cum quo contrahit,’ seems most clearly to apply. 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 ↓ unless on the principle already referred to, that the title or personal contract being effectually transferred by assignation and intimation to the landlord, the sub-tack had the necessary effect of rendering the subsequent possession by the cedent and sub-tacksman constructively the possession of the assignee. 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 ↓ the danger, if it existed at all, is inseparable from the very nature of a lease; and, secondly, that it is entirely imaginary, in as much as a lease, considered as a subject capable of raising credit, never can be relied on, and has no value independent of the terms of the title of possession, into which terms the party giving the credit must be presumed to inquire. 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.” Lord Glenlee .—“I am also of the same mind.” Lord Pitmilly .—“I likewise think the former interlocutor well founded, and entirely concur in the opinion of the Lords President, &c. I have always thought assignation of a lease without possession ineffectual; and but for the specialty in the case of Russell, on which the decision actually proceeded, I would have been for adhering to my original interlocutor.” Lord Cringletie .—“I have not altered my opinion.” Thereafter (5th March 1830), “the Lords, having resumed Page: 497 ↓ consideration of the cause, with the opinions of the consulted Judges, adhered to the interlocutor of this Court, prior to the appeal therefrom to the House of Lords,—but in respect that the present judgment proceeds under a remit from the House of Lords, finds, that nothing should now be pronounced as to additional expenses, since the date of the interlocutors appealed from.” * 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 ↓ be in possession at the time of the alienation by the landlord; and, indeed, this was indispensably requisite for the security of purchasers, because if a latent lease, known to no other persons than the landlord and tenant, and the existence of which is not indicated by any intimation or publication, were to be effectual against singular successors, a door would be opened to innumerable frauds. The appellant, therefore, denies the soundness of the opinion expressed by several of the Judges in the Court below, that 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.” Other of the Judges express an opinion much more correct, when they say of a lease, that its “creation and its transmission are to be regulated, as if it were, what it truly is, a personal right.” 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 ↓ remains in him to be either voluntarily conveyed or attached by the diligence of his creditors.[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 ↓ respondent maintains, that wherever a real right of lease comes in competition with a personal one, the former must of necessity be allowed the preference. Nor is there any equivalent which can be substituted in the place of possession, so as to have the same effect of thus perfecting a lease into a real right. Possession is essential as a solemnity. It is just as indispensable to the completing of the real right of lease, as the taking of sasine is to complete a feudal right; and since, where any proper solemnity is established for perfecting a right, equipollents are not to be admitted, as in the case of feudal rights, in which no equivalent can supply the want of a sasine, possession is no less essential, and no less incapable of being supplied by equivalents in perfecting a right of lease. It is by the authority of statute alone that leases were raised into the class of real rights. But the same statute which produced this change has ever been held to declare, that possession is an indispensable requisite. 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. Lord Chancellor .—My Lords, this is a case which involves matters of considerable importance to the law of Scotland, and upon which there has been a difference of opinion among the learned Judges in the Court below. It is strange that there should be any doubt whether or not there has been a decision upon a transaction similar to the one in question, of the assignment of a lease, which occurs of leasehold premises in towns as well as of farming lands in the country almost daily in England, and which must have occurred very often in Scotland. One cannot help being surprised at not finding a decision distinctly referred to, disposing of the question, an intimation of an assignment, and actual possession also, or something equivalent to actual possession, is necessary to constitute a valid transfer? The learned Judges, a very considerable number on both sides, appear to have considered the question, and to have taken different views of it. The opinion of Lord Balgray and Lord Gillies is given very shortly, and very generally; but they so far plainly differ from their learned brothers, that they do not seem to hold possession so necessary as the others do to the transfer of lease, at the same time that they entirely express their concurrence in the opinion of the Court; but this I can only treat as an indication that they consider the assignment not to have been a real but a collusive and colourable transaction, as the party assuming Page: 502 ↓ to assign continued in possession, to all outward appearance, as before. It appears he accounted for the rent to the landlord, and there is no evidence of the other party to whom the assignment is made having done so. It seems like raising up a man of straw between the party assigning and the party entitled to claim. This difference of opinion among the learned Judges below makes me wish to look more particularly into this case. I shall therefore very reluctantly propose to your Lordships to postpone for a short time stating what occurs to me upon the subject. On a future day . Lord Chancellor .—My Lords, this case is one not unattended with difficulty. When it was formerly before you, your Lordships were pleased to remit it to the Court below, for the learned Judges of the First Division to consult with the learned Judges of the Second Division; and we have now the benefit of the judgment of the Court below upon that consultation. They adhere to the original view of the question; but we have light let in upon the case by the expressed opinions of all the consulted Judges, who it seems differed as to the grounds, and some of them also as to the result of the decision. 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 ↓ other hand, contended that there was no valid assignment, nor any instrument that could pass an interest. In support of the argument for the validity of the assignment, it was mainly urged that the requisite intimation had been made to the landlord. On the other hand, it was contended against the validity of the assignment, that intimation was not sufficient, until the right was clothed with possession in the assignee. In order to supply that defect, admitting for argument's sake that intimation without possession is not sufficient, the Bank contend that they had possession, that Newbigging and Company having assigned, they took the subjects back again as sub-tenants, and that their possession was no longer to be ascribed to their own original assignation as principal lessees, but to the sub-tack as derivative lessees, that their possession was the Bank's possession, and that there was not therefore only intimation but possession also to clothe the assignment. These are shortly the facts, and the bulk of the arguments on each side of the case, with which the Court below has dealt; and the conclusion which I have drawn coincides with that of the Lords President, Meadowbank, Mackenzie, Corehouse, Newton, and Moncreiff, who thus express themselves:
“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 law of Scotland, can be said to vest a bonâ fide right in the assignee of the Bank, to the exclusion of the rights of the creditors, as represented by the trustee on the sequestrated estate; that it was the setting up of a fictitious person between the one party and the other, by a collusive transaction, and by means of such latent right as is always reprobated in the Scotch law of real property; that the right was not validly passed in such way as to exclude the trustee from entering into competition for it; that there was no parting with the possession, though the transaction purported to part with it; and as to the sub-tack, it appears to me, instead of mending the case on the part of the Bank, greatly to impair it; for I cannot conceive any more flimsy expedient as a right of possession, than to make the possession become, by virtue of a sub-tack, no longer the possession, such as Newbigging had before under his landlord at first, as main lessee, but a possession under his own assignee of the term, taking back from the Bank a sub-lease collusively and latently, to defeat the proper right of the parties. Upon these grounds, and in the circumstances of this case, and without advising your Lordships to decide the general question with respect to the sufficiency of intimation, without possession, I am of opinion your Lordships ought to affirm the judgment now complained of. The House of Lords ordered and adjudged, That the interlocutors complained of be affirmed. Solicitors: Richardson and Connell,— Moncrieff, Webster, and Thomson,— Solicitors. 1831