William Mackenzie, W.S., Trustee for Donald Hume Macleod, and the said D. H. Macleod, - Appellants; Mrs. Janet orr or Gordon, Widow, and two others, Trustees of William Gordon, deceased, - Respondents
| Jurisdiction | Scotland |
| Judgment Date | 26 March 1839 |
| Date | 26 March 1839 |
| Court | Court of Session |
English Reports Citation: 7 E.R. 927
FROM THE COURT OF SESSION.
7 Scots R.R. 128. See 1 Dunlop 1046.
MACKENZIE V. GORDON [1838, 1839] VI CLARK & FINNELLY. [875] APPEAL from the court op session. WILLIAM MACKENZIE, W.S., Trustee for DONALD HUME MACLEOD, and the said D. H. MACLEOD,-Appellants; Mrs. JANET ORE or GORDON, Widow, and two others, Trustees of WILLIAM GORDON, deceased,-Respondents [July 3, 1838; March 26, 1839]. [7 Scots R.R. 128. See 1 Dunlop 1046.] The owner of an estate in fee in Scotland, granted heritable bonds over it for payment of debts, and subsequently, by deed conveying the estate to his eldest son, further burdened it with annuities for younger children. The eldest son, after corning into possession of the estate, gra-nted a. bond and disposition over it for securing payment of a loan, the lender taking, as collateral security, assignations to the prior heritable bonds from the borrower's trustee, to whom they had been assigned absolutely by the original creditors ; but whether they were paid out of the borrower's funds or O'Utof the loan, was not proved : Held, that the representatives of the lender were entitled, in respect of the prior securities, to be preferred for payment out of the estate before the younger children and mean incumbrancers : Held also, that they were not bound to apply payments of interest on the loan, in discharge of arrears of interest that accrued on the prior incumbrances before they were assigned. The appeal in this case arose in a process of ranking and sale O'f the estate of Harris, in the county of Inverness, and involved a question of competition between the above parties on the price, which was insufficient to pay all the heritable debts secured over the estate. [876] The Appellants founded their claim to preference on a deed of settlement, dated June 1811, by which Alexander Hume Macleod, esq., since deceased, wliO' then stood feudally infeft and seised of the said estate, conveyed the same to his eldest son, Alexander Norman Macleod, subject to burdens therein specified, and, inter alia, to an annuity of 300 to his youngest son, the Appellant, Donald Hume Macleod, for his life; a.nd in the event of his leaving lawful children, to them equally during their lives. On the death of A. H. Macleod in 1812, his said eldest son succeeded to the estate, was duly infeft upon the foresaid deed, and in pursuance and corroboration thereof he executed a. heritable bond, thereby obliging himself, his heirs, etc., to pay the said annuity half yearly, by equal portions, with liquidate penalty in case of failure, and with interest on what should be in arrear. This instrument contained warrant for iiifefting the said Appellant in the estate, in security o f the annuity, and he was duly infeft accordingly ; and by a trust disposition, dated December 1828, he conveyed to the Appellant William Mackenzie, and another, since deceased, the annuity, together with the arrears, which then amounted to 3713 10s. lid., and also the said bond in his favour; and they were duly infeft in the trust disposition in July 1829. For the said sum and further arrears due in 1830 on the annuity, and also for such capital sum, to' be set apart out of the price of the estate, as would yield a yearly income equal to the said annuity, the Appellants claimed to be ranked and preferred on the price of the said estate when sold, and on the rents in the meantime. The Respondents founded their claim; first, on an original security affecting the whole estate, consisting of [877] a heritable bond granted by the said Norman Macleod, in November 1817, for payment of 25,000 to Francis Grant, esq. since deceased ; and, secondly, on four other bonds and infeftments on the estate, dated respectively in 1805, 1807, 1809, and 1811, which had been granted originally by the deceased A. H. Macleod to different persons for securing repayment of monies borrowed, and which were subsequently conveyed to Mr. Grant as collateral securities, for payment of the said 25,000 with interest; and the Respondents contended that as these bonds were prior in date to the instrument on which the Appellants founded, so they were entitled to priority of payment out of the proceeds of the sale. All these bonds, as 927 VI CLARK & FINNELLY. MACKENZIE V. GORDON [1838, 1839] well as the bond of 1817, had been assigned in 1823 by Mr. Grant's trustees to William Gordon, esq. of Melrig, and he was enfeft in the estate of Harris. The main objection made by the Appellants to the four prior bonds was, that they had been long since paid off by the owner of the estate, and therefore extinguished; which the Respondents answered by insisting that they had never been reconveyed to the owner of the estate, but were kept up as separate securities by conveyances to third persons. It appeared that the first of these securities was a bond granted by A. H. Macleod, for 3000, in favour of Mr. John Stewart, and was by him conveyed in 1813 to Mr. William Dallas, who was then trustee for Norman Macleod, on the estate of Harris: the same was afterwards-, to' the extent of 2000, assigned to a, Colonel Deas, to secure a loan made by him to N. Macleod, and was subsequently reconveyed by him to Dallas. Another of the four securities consisted of a heritable bond granted ty A. H. Macleod to the said Dallas, as trust disponee for a Mr. Bowie, for 1500 : Dallas assigned [878] the same to- Mr. Bowie's son, from whom, after some years, Dallas received a reconveyance of it. Another of the said securities was a deed of annuity of 1000 granted by A. H. Macleod to a Mr. Howard of London, for three lives, redeemable for 7500: this security also was conveyed to Dallas by Howard, on being paid the redemption money, and having been assigned to Colonel Deas and a Mr. Newte, as security for loans made by them to N. Macleod, was again renounced and discharged by them in favour of Dallas. All these assignments or reconveyance to Dallas appeared ex facie, to be absolute conveyances to him and his assigns. Dallas afterwards executed conveyances of these collateral securities to Mr. William Inglis, to whom also the fourth security, consisting of a heritable bond granted by A. H. Macleod to a Miss Wallace, for an annuity of 285, was by her or her representative directly conveyed in 1818. All the securities being thus vested in Mr. Inglis-, by whom the negotiation with Mr. Grant for the loan of 25,000 was conducted, were by him, with Mr. Norman Macleod's concurrence, assigned to Mr. Grant's trustees in 1819, Grant having died soon after the terms of the loan were agreed upon. This assignment narrated that in the treaty for the loan, of 25,000 it was stipulated that that sum should be applied in procuring conveyances of the...
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