Scottish Court of Session Decisions

This was an appeal from the Sheriff Court of Fifeshire in an action brought by Misses Elizabeth Kermack and Euphemia Kermack against their brother James Kermack.

The following narrative is taken from the note of the Sheriff ( Crichton):—‘By disposition and settlement dated 18th December 1809, the deceased Charles Kermack, feuar, Ceres, disponed certain subjects belonging to him to his eldest son William Kermack. By the said deed he also disponed certain other subjects belonging to him to his sons John and James Kermack, and these he burdened with payments ‘to Elizabeth and Euphemia Kermack, my daughters, equally between them: and in case of one of their deaths without lawful issue, the share of the deceaser to fall into the survivor, of the sum of £500 sterling, payable at the death of the said Barbara Kyd, their mother, if they are major at her death, but if not, payable to them only when they are major,—but said sum is to bear interest from the first term of Whitsunday or Martinmas after their mother's death till the same is payable to them.’

“Mrs Kermack survived her husband, and died in 1831, at which date the Misses Kermack had attained majority.

The present action is raised at the instance of the said Elizabeth Kermack and Euphemia Kermack against the said James Kermack, for payment of the sum of £250 of principal, being the ‘one-half or portion payable by him of the sum of £500 sterling, conceived in favour of the pursuers by disposition and settlement executed by the said Charles Kermack, dated 18th December 1809.’ Since the action was raised, the said Euphemia Kermack died, but her trustees and executors have been sisted in her room and place.

The summons also concludes for a sum of £265 as arrears of interest.

In defence to the action, it is pleaded that the pursuers have lost their right to the provision in their favour contained in their father's disposition and settlement, in respect that more than forty years have elapsed since it became payable on the death of their mother in 1831. To this it was answered that the running of the prescription had been interrupted by the payment by the defender of interest, as averred in the summons, on 25th November 1845, 25th December 1846, 19th May 1848, and 13th April 1850.”

No receipts for the alleged payments of interest were produced.

The Sheriff-Substitute ( Beatson Bell), pronounced the following interlocutor and subjoined note:—

“ Cupar, 5 th May 1874.—The Sheriff-Substitute having heard parties' procurators on the Closed Record, before answer Allows to the pursuers a proof pro ut de jure of the averments in their summons as to payment of interest; allows the defender a conjunct probation thereanent; and appoints the case to be enrolled, that a diet of proof may be fixed.

Note.—This is an action for payment of a testamentary provision, and payment is resisted on the ground that as more than forty years have elapsed since the provision became payable, the right to sue for it is absolutely extinguished by the long negative prescription established by the Act 1469, c. 28, in respect no ‘document’ has been taken on the debt within the forty years. The pursuers reply that payments of interest have been

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made as averred by them in their summons, and that this saves the debt from prescribing. The defender answers that averments of such payments are entirely irrelevant, and, no matter whether interest had been regularly paid for forty years, the debt is absolutely extinguished by the lapse of time without document being taken. The Sheriff-Substitute has thought it right to allow a proof before answer. He does not mean to decide whether the payments of interest averred are sufficient or not to elide prescription, but he thinks that the circumstances under which they were made should be established before their effect is considered. Of course, had he come to be of opinion that the defender was right in his contention—that in no circumstances is it of the slightest importance whether interest is paid or not—he would at once have decided the case in his favour, but he is satisfied that, to say the least, the defender puts his case much too high, and that there may be circumstances under which payment of interest will stop the running of the negative prescription. The strict words of the Act do not include payment of interest as a means of interrupting prescription. At the date of the Act the payment of interest was illegal, and it was not till the Reformation that it was legalised, the first Act fixing a legal rate of interest being apparently 1587, c. 52. But very soon after the passing of the Act 1469, the courts began to interpret liberally the phrase ‘taking documents,’ and any act which clearly implied that the creditor had not abandoned his rights came to be considered equivalent. No express decision was quoted to the Sheriff-substitute in favour of the proposition that paying interest stops prescription, but it is clearly implied in the case of Nicholson, 1667, M. 11,233. Mr Erskine does not distinctly lay it down in his text, but a note to one of the earlier editions, quoted by Mr Badenoch Nicholson (3, 7, 39), lays it down ‘that a payment of annual rent corresponding to the yearly interest of a particular debt necessarily infers that the capital sum of the debt is due at that period, and of course this being an acknowledgment of the debt must operate as an interruption.’ Mr Bell, in his Principles, sec. 616, lays down the same law. It so appears in the 4th edition, revised by himself. In his Commentaries, the parallel passage does not contain the words, ‘or by payment of interest,’ in the 5th edition, the last revised by the author; so that the Commentaries cannot be quoted as an authority in favour of the proposition. Mr Duff, in his Feudal Conveyancing, says (p. 181) ‘prescription is interrupted extrajudicially by partial payments of principal or interest.’

Of living authors, Mr Mark Napier lays down the law clearly in the same sense, and argues in support of the reasonableness of the rule. Napier, (p. 674).

In this state of the authorities, the Sheriff-Substitute thinks it vain to contend that in no case is the payment of interest of any relevancy in considering whether prescription has been interrupted. It may not be conclusive, but that payment of interest in certain circumstances will stop the running of prescription the Sheriff-Substitute cannot doubt.

The next question is, how is such payment to be proved? The defender contends that the proof must be confined to writing. The Sheriff-Substitute is unable to agree with this contention either. If it were sound, the proof of payment would be entirely in the power of the debtor, as the receipt for the interest will naturally be in his hands, and unless he has preserved it, which he was not bound to do, the creditor would be unable ever to prove the payment. In the case where the object of proof is to establish a defence that a sum of money sued for has been paid, the rule undoubtedly is, that payment of money above £100 Scots can be proved only by writing; but here the proof is sought for no such purpose. It is the creditor who is seeking to show that his debt (to the amount of the interest in question) has been paid. In such circumstances the rule is, that proof pro ut de jure is allowed. Dickson on Evidence, sec. 844.”

On appeal, the Sheriff ( Crichton) pronounced this interlocutor:—

“ Edinburgh, 25 th June 1874.—The Sheriff having heard parties' procurators on the appeal for the defender, and considered the record, adheres to the interlocutor of the Sheriff-Substitute of 5th May 1874; dismisses the said appeal, and remits to the Sheriff-Substitute to proceed with the cause, and reserves all questions of expenses.”

In a subjoined Note the Sheriff, after the narrative above quoted, says:—“The first question, therefore, which presents itself for consideration is—Assuming that interest was paid by the defender as alleged, did these payments interrupt the running of the negative prescription? It was very strenuously urged on the part of the defender that they did not; and the argument in support of this view was maintained chiefly on the terms of the statutes 1469, cap. 29, and 1474, cap. 55, which enact, that all creditors by obligation shall follow forth their right, and ‘take document’ thereupon within the space of forty days; otherwise that the right shall prescribe. The payment of interest, it was argued, could not be said to be the taking document upon the obligation. Undoubtedly there is some plausibility in this argument, but after fully considering the authorities on this point, the Sheriff is of opinion that payment of interest does interrupt the running of the negative prescription. Mr Erskine (b. iii. t. 7, sec. 39) says that partial payments made by the debtor interrupt the long negative prescription; and Professor Bell, in his Commentaries (vol. i. p. 352, M'Laren's edition), says that it may be interrupted by an acknowledgment of the debt, or a partial payment of interest. It was maintained that although a partial payment might interrupt the prescription, a payment of interest would not have this effect. The Sheriff is unable to see any principle for a distinction between a partial payment of the debt and payment of interest. Mr Erskine says, ‘Partial payments made by the debtor interrupt the long negative prescription: because that long prescription is grounded on the presumption that a creditor has relinquished his claim, which is plainly elided by his receiving a partial payment.’ The Sheriff thinks that the presumption that the creditor has relinquished his claim is equally elided by his receiving payment of interest upon it.

There are, however, authorities where it is laid down that the payment of annualrent or interest does interrupt the running of the negative prescription—Stair, b. ii, tit. xii. sec. 26; More's Notes, p. 267; More's Lectures, vol. i. p. 423; Bell's Principles, sec. 616; Napier on Prescription, p. 674. Hume in his Lectures, M.S. copy Advocates Library, vol. ii, p. 115, says,” The only

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other way of interrupting prescription is by the creditor's actual enjoyment of his right, such as a partial payment of the sum in the bond, interest, &c. See also cases of Nicolson v. The Laird of Plilorth, Dec. 18, 1667, M. 11,233: Blair v. Blair, July 22, 1671, M. 11,235; Skene v. Campbell, Feb. 1686, M. 11,256; Guthrie v. Nisbet, June 6, 1696, M. 11,257. Hume, however, in his Lectures, considers the case of Skene v. Campbell of doubtful authority.

“The second question which was argued before the Sheriff was as to the proof which was to be allowed of the fact of payment of interest. The defender contended that the pursuers ought only to be allowed a proof by writ or oath. The Sheriff concurs with the views stated by the Sheriff-Substitute on this point. The fact of payment—the transference of a sum of money from one person to another—is not a matter which, in its nature, is incapable of being the subject of parole proof.”

The defender appealed to the Court of Session.

Argued for him—The statute of 1469 was followed by that of 1474, which made an important alteration upon the law, for the words “sal take document thereon” are omitted. Under the latter statute taking document is no longer necessary: and all that is required is, that there shall be a practical admission of the debt, as by payment of interest. The obligation must be followed out, and following out does not mean legal pursuit only, but the doing of something in pursuance of the obligation.

The pursuers argued—The statute of 1474 made no alteration upon the provision of the Act of 1469 as to taking document. The provision still stood that if document was not taken the obligation was absolutely extinguished. The obligation prescribed if it was not followed to the effect of taking document. So the mere payment of money alleged to have been paid on account of the particular debt did not interrupt the prescription of that debt unless it was proved by writ.

Authorities—Act 1469, c. 28; Act 1474, c. 54; Nicholson, M. 11,233; Hislop v. Howden, 5 D. 507, 7th Feb. 1843; Soutar v. Soutar, June 29, 1827, 5 S. 876; Sprott, M. 11,126; M'Tavish v. Saltoun, 25th Jan. 1825, 3 S. 482; Black v. Common Agent, in the ranking of Shand's Creditors, 16th Jan. 1823, 2 S. 118; Garden v. Rigg, M. 11,274, 4 Paton, 409; Hay, M. 12,359; Ersk. 3. 3. 50; Dickson on Evidence, p. 609.

At advising—