Scottish Court of Session Decisions

In April 1903 George Robertson, as trustee on the sequestrated estate of Arthur Forbes, farmer, Mains of Murthill, Tannadice, raised an action against Major John Andrew Wedderburn Ogilvy of Ruthven for £538, 3s. 6d.

The following statement of the facts giving rise to the action is taken from the

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opinion of the Lord Ordinary ( Low)—“The pursuer is the trustee upon the sequestrated estate of Arthur Forbes, who was tenant of a farm belonging to the defender under a lease for nineteen years from Martinmas 1885.

“On 12th June 1902 the defender obtained decree of removing against Forbes, and decree for payment of arrears of rent to the amount of £307.

Forbes' estates were sequestrated under the Bankruptcy Acts on 14th July 1902, and the pursuer was confirmed as trustee on the 30th of that month.

There was a clause in the lease whereby the tenant bound himself and his heirs and successors to leave to the proprietor the last or waygoing crop (with a small exception), the quantity to be ascertained by arbitration while the crop was on the ground, and the price to be fixed according to the highest fiars' prices of the county. The tenant also bound himself and his foresaids to leave to the proprietor at the term of his removal the dung on the farm and the turnip crop (except so much as the tenant required to feed his cattle) at a valuation to be made by the arbiters.

By letter dated 7th August 1902 the defender's law agents intimated to the pursuer that the defender ‘elects to take over the waygoing corn crop, &c., and to deal with the trustee as regards all the valuations.’

Thereafter an agreement was concluded between the pursuer and the defender, conform to minute of agreement dated 21st August 1902.

The agreement first narrates the clause in the lease to which I have referred, and then it proceeds—‘And whereas the said George Robertson, as trustee foresaid, has raised the question as to the right of the landlord to retain any portion of the prices of the said valuations on account of rents in consequence of the estates of the said Arthur Forbes being sequestrated, it has been, and is hereby agreed, that the carrying through of this agreement and valuation shall not in any way affect the rights of parties thereto, the question meantime being left open for future decision.’

The agreement then contained a nomination of arbiters to ascertain the quantity of the grain crop, and to value the dung and turnips.

The arbiters have now made their valuations, and the amount brought out by them is £538, payment of which the pursuer demands in this action. The defender claims to be entitled to set off against the sum sued for the arrears of rent for which he obtained decree, and the half-year's rent due at Martinmas 1902. It was not contended that any distinction can be drawn between the arrears of rent for which decree was obtained prior to the sequestration and the rent for the half-year current when sequestration was awarded.”

On 13th November 1903 the Lord Ordinary repelled the defences and decerned against the defender in terms of the conclusions of the summons.

Note.—[After stating the facts as above narrated]—“The question therefore to be determined is that which was reserved for future decision in the minute of agreement.

I shall in the first place consider what the rights of parties were apart from the minute of agreement. I think (1) that the obligation of the tenant to leave to the landlord the corn crop, dung, and turnips, was of a personal nature only, and imported no real right in favour of the landlord— Stewart v. Rose, Hume, 229; MacGregor v. Hunter, 13 D. 90; Hart, 5 S.L.T. No. 225; (2) that the remedy of the landlord in the event of failure on the part of the tenant to implement the obligation would have been to claim damages; and (3) that the corn, dung, and turnips were the property of the tenant and passed to his trustee.

If these views are sound, then the pursuer was entitled to realise the crop to the best advantage, leaving the defender to rank upon the sequestrated estate as a creditor for his rent, and it may be to claim damages for breach of the obligation in the lease.

But then it was argued for the defender that the minute of agreement was a practical adoption of the lease by the pursuer, because the clause in the lease was narrated as if it was binding upon him as representing the tenant, and what was done in the agreement was simply to appoint arbiters to carry out the provisions of the lease. It was further argued that the only question reserved was whether in these circumstances the defender could set off the arrears of rent against the value of the crop, and that it was plain that he could do so, because the pursuer could not claim payment of the value of the crop under the lease and at the same time refuse payment of the rent due under the lease.

I think that that conclusion would be well founded if the pursuer in fact adopted the lease, or recognised the obligation in question as binding upon him. But I do not think that he did so. The minute of agreement is perhaps not so clearly expressed as it might have been, but when it is read in view of the circumstances under which it was entered into it seems to me that its meaning is plain enough. As I have pointed out, the pursuer was not bound to sell the crop and dung which had vested in him to the defender, but by the agreement he agreed to do so (as being, I suppose, a convenient way of realising the bankrupt estate). It was, however, expressly provided in the agreement that ‘this agreement and valuation shall not in any way affect the rights of parties,’ and the question which was reserved was, whether the pursuer having agreed (although he was not bound to do so) to sell the subjects to the defender at a price to be ascertained in the manner specified in the lease, the defender was entitled to set off arrears of rent against the price?

I think that that question must be answered in the negative. The defender maintains that he can set off the rent against the price, because it is the price of crops and dung which were sold to him

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pursuant upon the obligation in the lease. The position which he takes up, in short, is that this is a case of counter obligations under the lease, and that he is not bound to carry out his obligation to pay the price unless the pursuer, as representing the tenant, fulfils his obligation to pay the rent. It is clear, however, that the foundation of that argument fails if, as I think was the case, the sale of the crop to the defender, and the consequent obligation upon him to pay the price, arose not under the lease at all but under the separate agreement which he made with the pursuer.

I shall therefore give decree for the sum sued for.”

The defender reclaimed, and argued—He concurred in the law laid down in the cases quoted by the Lord Ordinary. But this was different from these in two respects—(1) The case was brought to an end not by the bankruptcy of the tenant but by a decree of removing, and (2) there was a clause in the lease expressly providing for the circumstances that had occurred. Under the lease the landlord was the only person who was entitled to take over the crop. He was the only possible customer to whom the trustee could sell. The obligations both on landlord and tenant were from the same contract, and the trustee was in no better position than his constituent— Jaffray's Trustee v. Milne, February 19, 1897, 24 R. 602, 34 S.L.R. 401.

Argued for the pursuer and respondent—The conclusion arrived at by the Lord Ordinary was sound on the authority of the decisions quoted by him and admitted as correct by the appellant. The trustees had never adopted the lease, and did not hold under it, but by virtue of the bankruptcy, and the agreement with the landlord in express terms kept this matter open— Jaffray's Trustees, supra, was not an authority, as in that case there was no bankruptcy.

At advising—