Scottish Court of Session Decisions

Subject_1 RANKING and SALE.
Subject_2 SECT. VII.

Purchasers must find caution for the price. - Purchasers' right to the rents. - Effect of a judicial sale as to payment of the price. - Is the purchaser obliged to pay before a scheme of division is made?

Cunison
v.
Ker

1786. April.
Case No. No 35.

Mode of imputing voluntary partial payments made by the purchaser to a creditor.

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Mr Cunison purchased, at a judicial sale, the lands of Jerviston, and granted bond for the price, bearing interest from Martinmas 1773, the term of his entry. By the decree of ranking, Captain Ker stood ranked for L. 2170, with interest from that term, till payment. The ranking being protracted for several years by disputes among the creditors, Captain Ker, whose interest was undisputed, having occasion for money, Mr Cunison offered to make partial payments to him, from time to time, of such sums as he should require to account of his debt. Accordingly, between 1775 and 1782 four different payments were made, for which Captain Ker granted receipts to account; the last of which bore, that in case the sums already paid should exceed the dividend to which Captain Ker should have title by the scheme of division, he bound himself to repay the excess. In a final clearance between Captain Ker and Mr Cunison, a considerable difference arose as to the mode of imputing those payments. The former applied the payments to the extinction of the interest due on his debt at the respective periods of payment, and the excresce to the proportional reduction of the principal sum; carrying down the balance as a new capital, bearing interest until the next payment, and so forward; by which means a balance of about L. 40 appeared still due by the purchaser to Captain Ker. Mr Cunison, on the other hand, contended, That Captain Ker being entitled, by the decreet of ranking, to receive only L. 2170, with simple interest from Martinmas 1773, he, by this mode of accounting, would come to draw a great deal more than that sum; and he urged, that as he the purchaser was under no obligation to have made those partial payments, or to have paid any thing till the ranking was concluded, he was entitled to consider them as so many loans made by him to Captain Ker, on which interest was due; in this view, he brought out a balance of L. 167 due to him by Captain Ker, as exceeding the full payment of his debt, with interest, as in the decreet of ranking. Argued for Captain Ker, That when a bankrupt estate is sold, the price is due from the moment the purchaser is in possession of the lands. If the creditors are all agreed, they can demand their payment immediately; but as most commonly disputes occur, the purchaser is allowed to retain the price, bearing interest, in his hands, till those disputes are settled by a decreet of division. If however the purchaser is anxious to be relieved of his debt, he is entitled to consign the price, or he may, if he chuses, make voluntary payments to the creditors to account of their debts. The creditors receiving these payments appropriate them bona fide, because they get no more than what is their own. To consider such payments as loans is utterly absurd; for no man can lend what is not his own, and no man can owe what is his own. It is true that the purchaser might have retained this money till a decree of division was pronounced; nor could he have been forced to make payment, unless by an interim warrant of the Court; but if he waves that right and voluntarily offer payment, the creditor who receives it applies it bona fide to the extinction of his debt, and owes no interest for it. The Lords sustained the plea of Captain Ker, and allowed his mode of accounting to be just. See Appendix.

Fol. Dic. v. 4. p. 212.