Scottish Court of Session Decisions

The Act of 1592, cap. 143, enacts—“That ony debt de liquido ad liquidum instantly verified be writ or aith of the party before the giving of the decreete, be admitted be all judges within this realme, be way of exception, bot not after the giving thereof in the suspension, or in reduction of the same decreete.”

Miss Mary Fowler, residing at Mount Clare, Rothesay, complainer, brought a note of suspension and interdict against James Campbell Brown, house factor, Glasgow, as assignee of John Fowler, Argyle Street, Glasgow, conform to assignation by the said John Fowler, dated 24th and intimated 25th February 1915, respondent, in which she craved the Court to suspend a charge at the instance of the respondent for payment of £44, 4s. 6d., being the taxed amount of an account of expenses incurred by John Fowler, his author, in a petition at the instance of the complainer and another, and that in respect that the respondent was owing to the complainer a liquid sum of a larger amount than that claimed.

The complainer pleaded—“1. The complainer is entitled to have the said charge suspended in respect that (1) the cedent John Fowler was and is liable to her in liquid sums of far larger amount than the sums assigned

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by him to the respondent; (2) there was concursus debiti et crediti between the cornplainer and the said cedent prior to the assignation founded on by the respondent; (3) the respondent, as assignee of the said John Fowler, is liable to all pleas competent against his author when the assignation was made; (4) the complainer is not due any sum to the respondent.”

The respondent pleaded—“(4) The complainer is barred by the exception of competent and omitted from now pleading compensation in the present proceedings.”

The facts of the case appear from the opinion of the Lord Ordinary ( Hunter), who on 13th November 1915 sustained the first plea-in-law for the complainer and suspended the charge complained of.

Opinion.—“Miss Fowler, the complainer in this suspension, seeks to suspend a charge at the instance of Mr J. C. Brown as assignee of Mr John Fowler, brother of the complainer, for payment of sums of £44, 4s. 6d. and £1, 9s.

In 1869 William Fowler, brother of the complainer and Mr John Fowler, conveyed to the said John Fowler his whole estates, heritable and moveable, under burden of certain debts, annuities and conditions mentioned in the disposition. Among the annuities was one of £150 payable to the complainer during her lifetime, beginning at the term of Whitsunday 1870 for the half-year succeeding and thereafter half-yearly.

The annuity payable to the complainer appears to have fallen early into arrear. In 1892 she raised an action against her brother for payment of the amount she claimed as due to her. This action was settled by John Fowler granting a bond and disposition in security over his heritable property for payment of £2000 and interest at 2 1 2 per cent per annum, the principal sum being payable at Whitsunday 1907. Of this sum there still remains due to the complainer £1935 of the principal sum. The annuity which was payable independent of the bond has further fallen into arrear. The respondent admits that payment has not recently been made of this annuity, as a heritable creditor has taken possession of the heritable property which constituted the main assets conveyed by William Fowler to his brother John Fowler. It is explained that this heritable creditor is the respondent, who manages Mr John Fowler's heritable properties.

In 1913 the complainer presented a petition to the Junior Lord Ordinary to have a factor appointed upon John Fowler's heritable properties. Answers were lodged in the name of John Fowler. The prayer of the petition was refused by the Lord Ordinary and the complainer was found liable to John Fowler in the expenses incurred by him in connection with the application. These expenses were taxed at the sum of £44, 4s. 6d., the dues of extract being £1, 9s.

By assignation dated 24th February and intimated to the complainer 26th February 1915 the said John Fowler assigned these sums to the respondent, who, after receiving liberty to proceed with diligence, charged the complainer on 29th April 1915 to make payment thereof. The complainer maintains that she is entitled to compensate the amount for which she is charged to make payment by an equivalent amount of the much larger sums due to her as she maintains by John Fowler at the date of the assignation.

The first point taken by the respondent is contained in his fourth plea to the effect that the complainer is barred from pleading compensation as she did not plead it at the time when decree was pronounced. According to the respondent compensation is not pleadable at common law, but only under the Act 1592, cap. 143, which provides that any debt be admitted by way of exception before giving decree but not thereafter in a suspension or reduction of the decree. The complainer founded upon certain cases— Pollock v. Scott, 1831, 9 S. 432; Fleeming v. Love, 1839, 1 D. 1097, more fully reported in Faculty Decisions 1097, and, 1865, 3 Macph. 938—as showing that compensation could be pleaded in a suspension of a charge for payment of expenses decerned for. I propose to refer in detail only to Fleeming v. Love.

In that case A held a decree for a debt against B, who afterwards obtained decree against A for the expenses of a certain process which were of smaller amount than the decree held by A. The decree for expenses was extracted in the name of B alone, and a charge for payment was given in his name alone. A presented a bill of suspension on the ground of compensation; appearance was made for the agent of B in support of the charge, who pleaded that he could not be affected by any plea of compensation as between A and B, and that the charge was truly given for his behoof. The Court held, reversing the judgment of Lord Fullarton, that the agent's appearance was too late, that A had already a jus quæsitum in compensating the debt of expenses due to B, and that the letters ought to be suspended. It may be noted that the plea of competent and omitted was put forward by the charger and repelled both by Lord Fullarton and the Inner House. In dealing with this point Lord Fullarton said “The plea of the charger is the more untenable here, as the decree charged on was for a sum of expenses, which from the form of procedure did not admit of any defence on the ground of compensation.” The judges in the Inner House do not appear to have dealt in their opinions with this point, but they could only have reached a conclusion adverse to the charger on the footing that this view of Lord Fullarton's was sound. It was argued that this decision was not authoritative, because it does not appear that the Act of 1592 was founded upon. I do not agree. The record in the present case has no reference to the Act, and the plea which I am now asked to sustain is identical with one of the rejected pleas in that case. No counsel was able to refer me to any case in practice where a plea of compensation had been put forward by a party at the time when decree for expenses was given against him. I am satisfied that the invariable practice of the

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profession has been to plead compensation against a decree for expenses in a suspension. The next case to the present argued in the procedure roll before me was a suspension of a decree for expenses on the ground, inter alia, of compensation. It was not argued that it was incompetent in a suspension to plead compensation against a decree for expenses, and it appeared to be a matter of as great surprise to counsel in that case as to myself that such a plea was maintainable. I consider the decision of Fleeming binding upon me as an authority for repelling the fourth plea of the respondent.” [ His Lordship then proceeded to deal with another point on which the case is not reported.]

The respondent reclaimed, and argued—Compensation was not pleadable at common law, but only under the Act of 1592, cap. 143, under which it must be pleaded before decree, and could not be raised afterwards in a suspension—Bell's Prin., sec. 572; Ersk. iii, 4,12; Stair, i, 18, 6; Karnes' Principles of Equity (1828 ed.), vol. i., 395; 2 Bell's Comm. 120 (M'Laren's ed.); Balfour's Practicks, p. 349; Nicoll v. Blair, 1664, 2 Brown's Sup. 340; Gordon v. Melville, 1707, Mor. 2642; Anderson v. Shaw, 1739, Mor. 2646. The statute was express authority on the matter, and left no room for a development of the common law in a contrary sense. Equity was in the reclaimer's favour, because he had been deprived of an opportunity to propone an argument which he otherwise might have done. Fleeming v. Love, 1839, 1 D. 1097, founded on by the Lord Ordinary, had not been recognised in the books as laying down anything with regard to compensation—Mackenzie's Institutes, iv, 3, 368; Bankton, i, 493; Mackenzie's Observations on the Statutes, 269. Compensation did not operate ipso jure— Cowan v. Gowans, 1878, 5 R. 581, 15 S.L.R. 315—but required to be pleaded and sustained. There was no distinction between a decree for a principal sum and expenses. In Fleeming v. Love ( cit.) there was nothing to show that the Court differed from Lord Medwyn's opinion in the Outer House. The Court in that case were really concerned with the appearance in the process of a third party, viz., the agent. Pollock v. Scott, 1831, 9 S. 432, and Gordon v. Davidson, 1865, 3 Macph. 930, cited by the Lord Ordinary, were not in point. No doubt the Act had been relaxed to a certain extent, e.g., balancing of accounts in bankruptcy— Shiells v. Ferguson, Davidson, & Company, 1876, 4 R. 250, 14 S.L.R. 172—and where a suspender was out of the country. In these cases, however, the reason for relaxation was want of opportunity for pleading the statute. In the present case there had been an opportunity to propone the plea of compensation, and it could be pleaded against a finding for expenses— Lochgelly Iron and Coal Company, Limited v. Sinclair, 1907 S.C. 442, 44 S. L. R. 364; Grieve's Trustees v. Grieve, 1907 S.C. 963, 44 S.L.R. 737. There was a further apparent exception in the case of illiquid claims, but this was to be explained not on the principle of compensation but of retention—Bankton, i, 24, 4; Ersk. Inst., iii, 4, 19; Logan v. Couts, 1678, Mor. 2641; Paterson v. M'Aulay, 1742, Mor. 2646. It was therefore too late to raise the question in a suspension, and the plea of competent and omitted applied— Rennie v. James, 1908 S.C. 681, 45 S.L.R. 528. In any event, before any plea of compensation had been pleaded against the reclaimer the case had passed into the region of a judgment debt and decree had been extracted, and compensation could not be pleaded against a judgment debt— Paolo v. Parias, 1897, 24 R. 1030, 34 S.L.R. 780.

Argued for the complainers—The exact meaning of the Act of 1592 was not vital to a decision of the case. Erskine and Bell took different views of the Act, but it was sufficient for the complainer to say it was doubtful whether the Act introduced the law of compensation or merely regulated it. The presumption, however, was that it existed prior to the Act because it existed in the Roman law on which Scots law was based. But in any event the Act had no bearing on a decree for expenses— Brownlee v. Tennant, 1855, 17 D. 422, per Lord Cowan at p. 424. At the date of the Act it was not the custom to conclude in a summons for expenses. The matter was for the equitable jurisdiction of the Court and its rules and practice— British Motor Body Company, Limited v. Thomas Shaw (Dundee), Limited, 1914 S.C. 922, 51 S.L.R. 812. A decree for expenses was not a liquid claim till the reclaiming days had expired and the Auditor's report had been approved. A mere finding for expenses was not sufficient. It must be an extracted decree. The statute clearly contemplated that everyone should have an opportunity at least once of stating his intention as regards compensation. It being clear, therefore, that a litigant could not have this opportunity as regards expenses in the original action, he must have it later, and the appropriate occasion was in a suspension. In the present case the decree had been assigned to an assignee, and the cases on agent-disbursee, who was not regarded as a true assignee, had nothing to do with the case. The case of Gordon v. Davidson, 1865, 3 Macph. 938, showed that expenses could always be compensated except in the exceptional case of agent-disbursee, which was merely an expedient and illogical. The present cases was ruled by Fleeming v. Love ( cit. sup.) Lord Fullarton's opinion in that case was authoritative on the question, and the Court could not have reached the conclusion they did if they had not adopted it. The Act in any event had been subject to many common law modifications, e.g, the rule as to instant verification— Seton, 1683, Mor. 2566; Ross v. Magistrates of Tayne, 1711, M. 2568; Munro v. Macdonald's Executors, 1866, 4 Macph. 687.

At advising—