John Napier and Mrs. Scott - Spanki - Wilson v. Lady Gordon and Others - Sandfor - Rutherford [1831] UKHL 5_WS_745

UKHL
John Napier and Mrs. Scott - Spanki - Wilson v. Lady Gordon and Others - Sandfor - Rutherford
[1831] UKHL 5_WS_745
1. An estate was sold under burden of the price, being 60,000 l ., and the interest of 10,000 l ., being part of the price, was to be liferented by the purchaser, (who had married the daughter of the seller,) and the purchaser became bankrupt, and the estate was judicially sold, and produced a sum inadequate to pay the price:—Held, in a question between the three daughters of the seller as heirs-portioners (affirming the judgment of the Court of Session), that two of them were entitled to be ranked on the interest of the 10,000 l ., to the effect of realizing full payment of their shares of the price, to the exclusion of their sister during the life of her husband the purchaser. 2. Circumstances in which (affirming the judgment of the Court of Session) interest on arrears of interest was allowed from the next term after the date of citation of the holder of a fund in a multiplepoinding of which he was the nominal raiser.Glendonwyn of Parton, by minute of sale, dated 22d April 1809, sold to William Scott, his son-in-law, the lands and barony of Parton and others for 60,500 l .; 20,500 l . to be paid on a year's notice; 30,000 l . to be payable a year after Mr. Glendonwyn's death; and the remaining 10,000 l . to be secured to Mr. Scott and Mrs. Scott in liferent, and to the children in fee; also 4,000 l . part of the 30,000 l . was declared to be the absolute property of Mrs. Scott. The minute bore, “That during the life of the said William Glendonwvn, no interest shall be payable by the said William Scott upon the remaining sum of 10,000 l . sterling; which principal sum of 10,000 l . sterling is to be secured to the said William Scott and Mrs. Ismene Magdalena Glendonwyn, spouse of the said William Scott, in manner following, viz. the interest of the said sum is to be liferented by the said William Scott and Mrs. Ismene Scott, his spouse, during their lives, and during the life of the survivor of them, and the said principal sum of 10,000 l . to be the property of and divisible amongst the issue of the marriage, male and female, as their said parents may jointly direct by any settlement under their hands, &c. And, farther, the said William Glendonwyn promises, out of the said interest, to pay to his daughter, the said Mrs. Ismene Magdalena Glendonwyn Scott, during his life, the sum of 200 l. sterling yearly, for her

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Glendonwyn died in June 1809; his three daughters, Lady Gordon, Mrs. Scott, and Miss Glendonwyn, succeeded as heir-ess-portioners to the estate; and as their father had not executed a disposition, they, in 1811, granted a conveyance in favour of Scott, declaring the lands to be burdened with the price as a real burden. Scott entered into possession, and having become indebted to Napier, as representing the Galloway Bank, granted him an heritable bond for 15,000 l ., and in further security of this sum, Mrs Scott, with consent of her husband, for his interest, assigned to Napier her third share of the price of the estate, and the 4,000 l . Napier subsequently received another heritable bond for 10,000 l . from Scott, in security of which Mrs. Scott executed a similar assignation.On 7th January 1814, Napier purchased from Scott the lands of Barwhillanty, part of the lands of Parton, at the price (as afterwards fixed by arbiters), of 14,830 l . bearing interest from 22d November 1813, the date of Napier's entry. Scott afterwards became insolvent, and a process of ranking and sale was raised in 1818. Subsequent to the raising of the action of ranking and sale a process of multiplepoinding was brought in the name of Napier, for the purpose of having the price of the lands of Barquhillanty distributed among the several creditors. As the fund in medio in this process was to be divided among the same

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After the lands had been sold (part of which was bought by Miss Glendonwyn) a decree of ranking was pronounced in 1827, “preferring the creditors, &c. upon the prices of the said lands and estate of Parton sold at the judicial sale thereof, and interest due tnereon, and also upon the sum of 14,830 l ., the price of the lands of Barquhillanty, being the fund in medio in the said multiplepoinding at the instance of the said John Napier, and interest due thereon,” and a remit was made to an accountant to draw up a scheme of division.This was done, and the division was proposed to take place as follows: By the accountant's report, 1. The heritable creditors were to be paid off in terms of their preferences. 2. The 4,000 l . destined to Mrs. Scott was to be paid out of the first part of the lands purchased by Napier. 3. The interest of the 10,000 l . destined to Scott's children was to be divided equally among Lady Gordon, Miss Glendonwyn, and Mrs. Scott. 4. The principal sum of 10,000 l . was to be paid to Lady Gordon, Miss Glendonwyn, and Mrs. Scott, to be held by them in security of the interest, and in trust for the children of Mrs. Scott, who had the fee of it; and, 5. The residue of the price of the lands was to be set apart to these ladies. An interest was accumulated on the price of Barwhillanty, as at Whitsunday 1820. The scheme of division was objected to by the whole parties.Napier insisted that the interest of the 10,000 l . during Mr. and Mrs. Scott's lives belonged to him in terms of his assignations already mentioned: That he was not bound to pay or consign any part of the price of the lands which had been allocated to Mr. and Mrs. Scott till his claims against them were ascertained, as he claimed not only the interest of the 10,000 l ., but the 4,000 l ., and the residue of 8,079 l . 17 s . 11 d ., being the share of the residue belonging to Mrs. Scott, as an heir-portioner, and that there should be no accumulation of interest of his price at Whitsunday 1820.Mrs. Scott pleaded that the 4,000 l . destined to her by her father should be allocated in such a manner as to be secured over the lands, to yield her the annuity of 200 l ., which her father intended

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Miss Glendonwyn (along with Crombie, who alleged that he had right to Lady Gordon's share,) maintained, that as Mrs. Scott's husband was debtor for the price, and as he had right jure mariti both to the interest of the 10,000 l . and of the third part of the price belonging to Mrs. Scott as an heir-portioner, she could not claim that interest, and they were entitled to be preferred to it, in order to liquidate pro tanto any deficiency arising on their shares of the price.
“ The Lord Ordinary repels the whole objections to the accountant's report, with the exception of that made to the proposed payment to Mr. Crombie for 3,333 l . 6 s . 8 d ., being one-third of the sum of 10,000 l ., belonging in fee to the said children; sustains the said objections; and finds that as this sum must continue in the meantime to be a burden on the lands, Mr. Napier and Miss Glendonwyn are entitled to retain it in the proportions allocated on their prices, on granting heritable bonds in security of the same; the bond by Mr. Napier to be for payment to the children of the principal sum of 6,666 l . 13s. 4 d . at the death of the longest liver of Mr. and Mrs. Scott, and for payment, during the lifetime of Mr. Scott, of the interest of one moiety, or of 3,333 l . 6 s . 8 d . to Mr. Crombie, as trustee of Lady Gordon, and of the interest of the other moiety to Mrs. Scott, as one of the heirs-portioners of the late Mrs. Glendonwyn, or to those in her right as such; and if she shall survive Mr. Scott, for payment to her, or those in her right, under her father's settlement, of the interest of the whole sum of 6,666 l . 13 s . 4 d . from the time of her husband's death to the termination of her liferent; and the bond by Miss Glendonwyn to be for payment

Footnote

* Pending the proceedings she raised an action for setting aside the deeds granted by her in favour of Napier.

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This interlocutor having been taken before the Court, their Lordships remitted the case back to the Lord Ordinary to reconsider his interlocutor, and thereafter (July 11, 1829) his Lordship repelled “the objections to that part of the report which assigns to the heirs-portioners of thelate Mr.Glendonwyn the interest due, or which may become due during Mr. Scott's life, on the sum of 10,000 l . belonging in fee to his children by Mrs. Scott; finds, that as the right of the heirs-portioners to this interest arises from the failure of Mr. Scott to pay to them the stipulated price, which is declared a real burden on the lands, the interest, as coming in place of the price, must be held to be real in their persons, so that Mrs. Scott's share of the same does not fall under her husband's jus mariti, therefore repels the claim of Mr. Crombie and Miss Glendonwyn to Mrs. Scott's share of the said interest; sustains the objection to that part of the report which proposes that one-third part of the said principal sum of 10,000 l . be paid to Mr. Crombie, to be retained by him during Mr. Scott's life; and finds, that as this sum must continue in the meantime to be a real burden on the lands, Mr. Napier and Miss Glendonwyn are entitled to retain the respective portions allocated to their prices, on granting heritable bonds in security of the same, the bond by

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Miss Glendonwyn and Crombie reclaimed, and prayed that the whole interest of the 10,000 l . might be assigned to them. Lady Gordon separately prayed to the same effect. Mrs. Scott also resumed her objections, and the common agent insisted that the interest on the price of the lands purchased by Napier

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Mrs. Scott and Napier appealed.Mrs. Scott and Napier as to her right to interest .—The interlocutor finding that Crombie and Miss Glendonwyn. are entitled to the whole interest of the 10,000 l . during the life of Scott, and that Mrs. Scott, and Napier as her disponee, are not entitled to draw or retain any part thereof, is irreconcileable to legal principle, and proceeds on a misapprehension of the facts. Glendonwyn's three daughters had right, in equal portions, to the real burden of 60,500 l . constituted over the estate of Parton by original minute of sale and by the disposition from Lady

Footnote

* 8 Shaw and Dunlop, p. 149.†8 Shaw and Dunlop, 357.

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Answered .—Scott could claim nothing from the prices, or interests of prices, obtained for the estate of Parton, as long as any part of the price originally agreed to be paid by himself was due to any of the co-heiresses of Glendonwyn, seeing that the whole of these prices, and the interests, except in so far as otherwise specially appropriated by Glendonwyn by the minute of sale, were immediately and primarily answerable for payment of the price agreed to be paid by Scott. Under the provision in the minute of sale, the whole interest of the 10,000 l . belonged originally to Scott, either directly or jure mariti; and the third share of that interest, or the right to it, falling to Mrs. Scott as one of the co-heiresses, could not be claimed by her from her husband Scott, seeing that any claim she might have to it fell under his jus mariti, so that it either reverted to him, or continued with him in virtue of his original right under the minute of sale;—and this third of the interest thus belonging to him he was the creditor in, and the only party who could claim it as against the respondents, while the respondents were entitled to retain it as against him, out of the prices in medio, till their shares of the price due by Scott were fully paid up to them. Napier's assignation from Mrs. Scott could convey no right to the third of the interest of the 10,000 l . or any portion of it, seeing that Mrs. Scott had no right to it in any view which did not instantly pass to her husband, or which she could enforce against her husband, and none therefore which she could effectually assign to a third party; and the assignation from Scott was equally unavailable as against the respondents, seeing that he had no claim to assign to the appellant, as long as any portion of the respondents' portion of the price due by him remained unpaid up; and the appellant, as his assignee, can claim nothing which it was not competent to Scott himself to claim.Napier as to accumulation of interest .—There is no principle of law or equity which could entitle the Court to accumulate the interest of the price of Barwhillanty, and convert the same into

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Answered .—By the minute of sale entered into between Napier and Scott he was bound to pay interest on the price of the lands of Barwhillanty from the term of Whitsunday 1813, and half-yearly thereafter, at the terms of Martinmas and Whitsunday, till he made payment of the price itself; but, not having paid any of the interest, he was not entitled to retain both the principal and interest, and make profit thereof at the expense of the creditors of the common debtor Scott.Lord Chancellor .—My Lords, the judgment complained of seems to me well founded, but there is one point that deserves to be considered, namely, the only point substantially relating to the compound interest. I must take it that the decision of the case of Jolly v. M'Neill is not to be held affected by the reversal of the decision of Neill v. M'Neill —I must take it that it only goes to show the jurisdiction of the Court of Session to allow interest from and after the date of the citation in the process of multiplepoinding. But I wish to have time to consider how far that decision in M'Neill v. M'Neill can be taken to throw any light upon the Scotch law upon the subject. I happen to know that the late Chief Baron ( Alexander ) who heard the case here, and mentioned it to me afterwards, took very great pains with it, and I believe had some communication with the Scotch Judges upon the Scotch law of compound interest. I wish to

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The case was thereupon adjourned.Lord Chancellor .—My Lords, this is a case of very considerable importance in one view of it; namely, that relating to the accumulation of interest, which has been given by the ultimate judgment of the Court—interest upon interest. This arose out of a minute of sale, executed on the 7th of January 1814 by Napier to Scott, and in which Scott stipulated for the payment, and Napier bound himself to pay interest from the Michaelmas preceding, namely, 1813, to be paid every half year, till the term of the payment of the principal, which was a sum of about 10,000 l . I think he was only to pay the principal money; and interest up to that date was to be accounted from the period of a certain decreet-arbitral, affixing the amount of the purchase money, and stating the value of the land. Napier appointed an arbitrator, and so did Scott, but the arbitrator appointed by Scott refused to act, and Scott refused to concur in appointing another, so that the laches in obtaining the award was to be imputed to Scott, and not to Napier; but nothing will turn upon that, proceedings having taken place in the Court of Session to ascertain the value, in consequence of the refusal to appoint an arbitrator, in November 1819. The Court of Session, having taken means to ascertain the value, fixed it at a certain sum, which ought to have been paid after deducting 10,000 l ., the balance due from Scott to Napier; and it was on the balance that the interest was to be paid. This goes only to the amount. A process of implement was raised, and after that an action of multiplepoinding—summoning all the parties having claims, with a view to its being determined what was the balance, and to whom it should be paid. The Lord Ordinary having disallowed the account of Mr. Ferrier the accountant, the Court of Session reversed that interlocutor, and allowed the interest upon interest ever since the date of citation in the multiplepoinding. Ferrier appears to have reported, that the interest should be allowed from Whitsuntide 1820; the Court have decreed that interest should be paid from Whitsuntide 1821. I will state to your Lordships what I take to be the reason of the report of Ferrier, referring to Whitsuntide,

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The House of Lords ordered and adjudged, That the interlocutors complained of be affirmed.Napier's Authorities .—Campbell, March 3, 1802 (F. C.); M'Neill v. M'Neil , May 26, 1826 (4 S. & D., No. 386); 22 Dec. 1830,(4 W. & S. p. 455); Jolly v. M'Neill , May 28, 1829 (7 S. & D. p. 666). Common Agent's Authorities .—Quecusberry's Executors, 21 Dec. 1826 (5 S. & D. No. 112).Solicitors: Duthie, Macdougall, and Bainbrigge— Moncrieff, Webster, and Thomson,—Solicitors.