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Cite as: (1894) 2 SLT 27, (1894) 21 R 769, [1984] ScotCS CSIH_1

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JISCBAILII_CASE_SCOT_PROPERTY_TRUSTS_SUCCSESSION

19 May 1894

Welsh
v.
Russell.

vol. xxi.] COURT OF SESSION, &c. 769

No. 146.

May 19, 1894.

Welsh v. Russell.

William Welsh, Pursuer (Respondent).-Ure-Clyde.

James Russell, Defender (Reclaimer).-Johnston-Salvesen.

Sale-Sale of heritage-Warrandiee.-

The purchaser of a heritable subject, holding a disposition containing a clause of absolute warrandice, has no remedy under the warrandice clause other than a claim for indemnity for loss sustained through eviction.

The purchaser of a house and garden, holding a disposition containing a clause of absolute warrandice, two years after the purchase brought an action against the seller concluding for decree ordaining the defender to make payment to the pursuer of £750, " being the present value of the subjects." The pursuer founded on the warrandice clause, and averred that after the purchase the owner of an adjoining property had obtained decree against him establishing the existence of a servitude of way over the garden; that he had thus been evicted from the subjects; that their "present value" was £750; and that he was willing to reconvey the subjects to the defender on payment of £750. Held that in an action upon warrandice a purchaser in a ease of partial eviction was not entitled to obtain from the seller the value of the subjects on tendering a reconveyance, his only right being to obtain indemnification for the loss sustained through the eviction, and that as the present summons contained no averment of the pursuer's loss through the existence of the servitude, and no conclusion applicable thereto, it fell to be dismissed.

Expenses-Taxation-Process-A. S., July 15, 1876, General Regulation 5.-

The A. S., July 15, 1876, General Regulation 5, provides,-

" Notwithstanding that a party shall be found entitled to expenses generally, yet if on the taxation of the account it shall appear that there is any particular part or. branch of the litigation in which such party has proved unsuccessful, or that any part of the expense has been occasioned through his own fault, he shall not be allowed the expense of such parts or branches of the proceedings."

The defender of an action, who, besides denying the pursuer's averments on the merits, pleaded that the action was incompetent, did not reclaim against an interlocutor of the Lord Ordinary repelling the plea to competency and allowing

3 C

770 CASES DECIDED IN THE [fourth series.

No. 146.

May 19, 1894.

Welsh v. Russell.

1st Division.

Ld Stormonth Darling.

a proof. The Lord Ordinary, having heard the proof, gave judgment for the pursuer. At the hearing upon a reclaiming note against that judgment the defender insisted in his objection to the competency of the action, but admitted that his defences on the merits could not be entertained in the absence of a third party. The Court recalled the interlocutor of the Lord Ordinary, dismissed the action as incompetent, and found the defender entitled to expenses. The pursuer objected to the Auditor's report on the defender's account of expenses in respect that under the A. S., July 15, 1876, General Regulation 5, the Auditor ought to have taxed off the whole expenses of the proof. The Court repelled the objection, holding that the question raised was one which it was for the Court to decide when disposing of the motion for expenses, and not for the Auditor, and that the objection came too late, the Court having finally disposed of the motion for expenses.

In June 1890 James Russell, manufacturer in Selkirk, sold a house and back-garden in Selkirk to William Welsh, painter there, for £600, conform to disposition containing a clause of absolute warrandice, and bearing that the subjects were free from all burdens.

On 27th December 1892 Welsh brought an action against Russell, concluding for decree that the defender was bound to free and relieve the subjects disponed of a servitude of passage through the back garden, possessed and enjoyed by Thomas Scott, as proprietor of the ground bounding the subjects on the east, and that by procuring from Scott, and duly recording a renunciation or conveyance of the said servitude right; and failing the defender procuring such recorded conveyance or renunciation, for decree ordaining him " to make payment to the pursuer of the sum of £750 sterling, being the present value of the subjects and others before described "; and further, and in either case, for payment of £20, 4s. 8d., " being the loss and damage incurred by the pursuer by and in consequence of a decree of interdict" obtained by Scott against him.

The conclusions of the summons made no provision for restitution of the subjects.

The pursuer founded on the warrandice clause in the disposition and averred that in June 1892 Scott claimed a servitude of way through the pursuer's back-garden, and that the pursuer on 3d June intimated this claim to the defender; that on 15th August Scott brought a petition for interdict against the pursuer, and that the pursuer on 17th August intimated this petition to the defender; that the pursuer, being advised by Ms agents that Scott's claim was valid in law, intimated this to the defender, and further intimated that the action would not be defended in so far as he (the pursuer) was concerned; that Scott obtained interdict on 7th October 1892; that the servitude right was a legal burden over the subjects, and had existed from time immemorial; that it was not disclosed to the pursuer at the time of the sale; that it was of a very burdensome nature and materially depreciated the value of the subjects. " By and through the existence and exercise of the servitude, .... and the said decree of interdict, the pursuer has been evicted from the peaceable enjoyment and possession of the subjects.....The present value of the subjects (which have been greatly improved by the pursuer at an expenditure of £150 or thereby), free of the said servitude, the pursuer estimates at £750, and he is willing to reconvey them to the defender on payment of the sums now sued for."

The pursuer pleaded;-(1) The pursuer having purchased the subjects from the defender under a disposition containing absolute warrandice, and having been evicted therefrom, as condescended on, he is entitled to have the records purged of the said servitude rights as concluded for. (2) In the event of the defender failing to purge the records as concluded for,

vol. xxi.] COURT OF SESSION, &c. 771

No. 146.

May 19, 1894.

Welsh v. Russell.

the pursuer is entitled to decree in terms of the alternative conclusion of the summons, with expenses. (3) The pursuer having sustained loss and damage to the amount claimed, by and through the breach of warrandice condescended on, he is entitled to decree therefor against the defender, with expenses.

The defender denied the existence of the alleged servitude, and pleaded, inter alia;-(1) The action is incompetent as laid.

On 18th March 1893 the Lord Ordinary (Stormonth-Darling) repelled the first plea in law for the defender and allowed a proof.

The evidence led at the proof was mainly directed to the question whether the servitude existed.

On 10th November 1893 the Lord Ordinary pronounced an interlocutor by which he found that the subjects were burdened with the servitude described in the summons; that the defender was bound to free and relieve the subjects of the said servitude or else to make payment to the pursuer of the present value of the subjects on obtaining a reconveyance thereof from the pursuer; and further, that the defender was bound to make payment to the pursuer of the expenses incurred by Mm in connection with the action for interdict; continued the cause in order that the defender might have an opportunity of disburdening the subjects, if so advised, and granted leave to reclaim.*

* " Opinion.-(After examining the evidence and coming to the conclusion that the existence of the servitude in question had been established)-The question remains whether he [the pursuer] is entitled to the remedy which he asks.

" Warrandice indemnifies against loss from defective right. Although the existence of an undisclosed and unsuspected servitude does not mean want of title, it constitutes a material limitation on the full right of property which the purchaser had reason to think he was acquiring. Accordingly, in Urquhart v. Hidden, 13 S. 844, the discovery of a negative servitude over the ground acquired was held to give the purchaser a right either to have the burden removed or to be relieved of his bargain. It is said by the defender that this rule applies to servitudes only where they are of a very burdensome description, or, to use the words of Erskine, are ' uncommonly heavy' (Ersk. ii. 3, 31). I cannot say that this seems to me a satisfactory distinction, for it lays upon the Court the duty of determining a question of degree, which must depend to some extent on the use which the purchaser intended to make of Ms property. I do not find that it has ever received effect except in three old cases, two of which were cases of thirlage, and the third a case of peat-casting-(Sandilands (1672), M. 16,599; Symington (1780), M. 16,637; Gordonston (1682), M. 16,606). In the first and last of these great stress seems to have been laid upon the fact of the servitudes being of a kind ' notourly known,' but here all argument to that effect is excluded by the circumstance that the defender repudiates all knowledge on his own part, and cannot therefore impute knowledge to the pursuer. It is impossible to describe the servitude in this case as a very serious one, and I cannot help thinking that a very moderate amount of neighbourly forbearance on the part of Scott and the pursuer would have reduced it to a minimum. But, as a question of law, I am not prepared to affirm that a right of passage at all times through a small urban subject is not a material burden on the full right of property, and therefore I think the defender was wrong in taking up the uncompromising attitude which he did. It follows that the pursuer is entitled to his remedy, and I shall adopt the course which was followed in Urquhart's case by allowing the defender time to endeavour to have the servitude removed. I may add that, if the case should result in decree having to be pronounced for rescission of the bargain and payment of the value of the subjects, I am by no means satisfied that the pursuer has proved the full value which he claims,"

772 CASES DECIDED IN THE [fourth series.

No. 146.

May 19, 1894.

Welsh v. Russell.

The defender reclaimed.

At the hearing in the Inner-House the parties ultimately admitted that the question of the existence of the servitude could not competently be determined in the absence of the owner of the alleged dominant tenement.

Argued for the defender;-The action was incompetent in so far as it concluded that the defender, in the event of Ms failure to procure a renunciation of the alleged servitude, ought to be decerned to make payment to the pursuer of £750 as " being the present value of the subjects." Assuming the pursuer's tender of a reconveyance to be read into that conclusion, the conclusion amounted to a claim to have the bargain rescinded. But no relevant grounds were here stated for reduction of the contract. Urquhart v. Haldenl was virtually an action for reduction of the contract, as it proceeded on the ground that the seller there was in bad faith in not disclosing the existence of the servitude. Here, on the other hand, the action was simply an action upon the warrandice clause, which assumed the contract to be effectual and entitled the purchaser to damages merely in the event of eviction. The pursuer's proper remedy, therefore, was an action for damages in compensation of the loss which he had sustained through the eviction. But it was impossible to treat this action as an action of damages; there was neither averment nor proof of the injury which the existence of this servitude caused to the pursuer. The action ought, consequently, to be dismissed.

Argued for the pursuer;-The action was competent. The pursuer's position was, that he had not got what he bargained for, and that consequently he was entitled to return the subjects, receiving in exchange their value. That was the proper course. Eviction from a part of the subjects was eviction from the whole. The defender's contention came to this, that the remedy for a breach of warrandice was the actio quanti minoris. Such an action was contrary to the general principles of the law of sale in the case of moveables, and there was neither authority nor principle for holding that the sale of heritage was in this respect in a different position.

The parties were also heard upon the question, considered in the Lord Ordinary's opinion, whether the existence of the servitude in question amounted to a breach of the warrandice.2

At advising, on 20th March 1894,-

Lord M'Laren.-This is an action founded on breach of warranty of a sale of heritable property in the town of Selkirk. The warranty is contained in a warrandice clause in the usual form, and the breach complained of consists in the successful assertion of a servitude of way or passage through the pursuer's garden by the owner of an. adjoining tenement. An action was brought in the Sheriff Court to constitute the servitude, and the present pursuer, after intimating the claim to the vendor, the present defender (who declined to interfere), allowed decree to pass in absence, and instituted this action with a view to indemnification. The Lord Ordinary allowed a proof, and on a consideration of the title-deeds, and explanatory parole evidence, found that the servitude was proved.

Before examining the case on the merits, it is desirable to consider what are

1 Urquhart v. Halden, June 2, 1835, 13 S. 844.

2 Authorities referred to by the Lord Ordinary, and Stair, ii. 3, 46; More's Notes to Stair, pp. 92 and 93 ; Bell's Prin. sec. 895; Menzies' Lectures on Conveyancing, 3d ed. p. 555; Bell's Lectures on Conveyancing, i 218.

vol. xxi.] COURT OF SESSION, &c. 773

No. 146.

May 19, 1894.

Welsh v. Russell.

the rights of a creditor in the obligation called warrandice, because unless the relief claimed in this action be consistent with the pursuer's rights under the obligation, it is useless to proceed further.

The obligation of warrandice differs from all other obligations in this respect, that it is not intended that it should be performed immediately, or within a definite time, or even within what the law describes as a reasonable time. It remains latent until the conditions come into existence that give it force and effect, and it continues to affect the granter and his heirs until the possibility of adverse claims has been extinguished by the long prescription.

The obligation has also this peculiarity in common with other obligations of indemnity, that its extent is measured by the extent of the injury which the creditor in the obligation may sustain, because such obligations are designed to indemnify the purchaser not only against the consequences of complete eviction, but against the loss of the most inconsiderable fraction of the estate, or its diminution in value by reason of the establishment of a burden of any kind.

If the question were now raised for the first time, how a warranty of title should be enforced, everyone would admit that the remedies of restitution, or repayment of the price, are singularly inappropriate to such a case. To put a case which is quite pertinent to the inquiry, we may suppose that thirty-nine years after the sale of an estate a cottage or an acre of moorland, which had been included in a description of subjects, was found to belong to another proprietor. In such a case, we do not immediately recognise that it is consistent with legal principle or with justice that the heirs of the seller should be required to repay the price, or should be obliged to take back the estate diminished by the evicted acre. If the seller or his heirs should be in a position to purchase the evicted subject and should offer reinstatement, this would seem to be a very satisfactory way of performing their obligation. But again, it is impossible to entertain the proposition that the seller is bound to purchase the evicted subject, because the law does not give him the power of compulsory purchase from the true owner, and the law will not require any man to perform specifically something that is not within his power. It is indeed evident from the nature of the obligation of warrandice that it must in the general case, and probably in all cases, resolve into a claim of pecuniary indemnification for the loss of the subject of sale, or its diminution in value through the existence of real securities, real burdens, servitudes, or other real rights affecting the estate.

Passing to the question of authority, there can be no better authority on such a subject than Erskine, who in Book ii. title 3, treats of warrandice at considerable length, and in section 30 makes it quite clear that in his opinion the remedy is not restitution, but indemnification. He says that "it is incontested that absolute warrandice, after the subject is evicted, founds the grantee in an action of recourse against the granter, for making up to him the Ml damage he has suffered, either through the contravention of the warrandice or any defect in the right. An offer by him who warrants a right, therefore, to put the grantee in his own place by making him full payment of the price he paid for it, with the interest from the time of eviction, is not sufficient. For though this would indemnify the grantee, so that he would be no loser by the bargain, yet the obligation to warrant is not intended barely for indemnifying the purchaser, but for securing him against all the consequences of contravention, and, of course, for making payment to him, in case of eviction, of the full value of the subject at that period, together with the loss he has sustained through the

774 CASES DECIDED IN THE [fourth series.

No. 146.

May 19, 1894.

Welsh v. Russell.

want of it from that time." If, as Erskine points out, there are cases where an offer of repayment of the price with interest would not be a sufficient fulfilment of the warranty, it is perfectly clear that there are cases where repayment of the price would be very much in excess of the true measure of the obligation, and if illustration were needed, I could not desire a better one than the present claim. In the 31st section, Erskine considers the case of servitudes and says (speaking with obvious reference to considerable estates) that " warrandice is not incurred by every light servitude that the granter or his authors may have imposed upon the lands conveyed, such as lands are usually charged with, e.g., aqueducts, passages, or even a moderate thirlage. But, if the servitude be uncommonly heavy, the granter who makes over the estate tanquam optimum maximum, incurs the warrandice." The liability thus incurred is, of course, the liability to make pecuniary compensation, which is the only kind of liability recognised by the author. It may be that in some cases of total eviction, or cases treated as such, the decree obtained has been in form a decree for repayment of the price with or without interest, according as the purchaser had or had not got benefit by the possession of the lands for the period subsequent to the sale. But this would only be because, in the particular case, the value of the property was unchanged, and the price originally paid was considered to be a fair measure of the loss consequent on eviction. It is proper to point out that repayment in the case supposed is really indemnification, not restitution. Restitution supposes that the purchaser reconveys the estate in exchange for repayment of the price. But in the case supposed reconveyance is impossible, because the estate has been evicted, and such cases lend no support to the theory that on the discovery of a servitude or burden whose existence was unknown to the parties at the time of the sale, the purchaser is entitled to return the subjects to the seller and to demand repayment of the price. If he has such a right, it can only be made good by a reduction on the ground of fraud or error, and not by an action on the warranty.

If I have rightly stated the limits of the liability undertaken by the seller, the present action must fail, because it is neither in form nor in substance an action of damages. The first conclusion is that the defender should free and relieve the subjects described of a servitude of passage by procuring a renunciation of that right. I think that in fair construction this conclusion is only expressed in such terms as to give the defender the option of discharging the servitude, and when so interpreted the conclusion is unobjectionable. But the alternative conclusion is that failing the defender producing such renunciation he shall be decemed " to make payment of the sum of £750, being the present value of the subjects and others before described." If the condescendence had contained any specific statement of damage corresponding to the existence of a limited right in the proprietor of a dominant tenement, it might have been possible to treat the second conclusion as a conclusion for an arbitrary sum of damages. But the theory of the condescendence is that the pursuer is entitled to be indemnified as for a total eviction, and it is not made clear whether he is also to keep the subjects or to restore them. There is neither averment nor proof of partial damage, and my opinion is that the claim for repayment of price or value is inadmissible and contrary to law, and that the action ought to be dismissed.

Lord Adam concurred.

vol. xxi.] COURT OF SESSION, &c. 775

No. 146.

May 19, 1894.3

Welsh v. Russell.

Lord Kinnear .-I am of the same opinion. The Lord Ordinary was invited by both parties to determine on the merits the question whether these subjects are or are not affected by a servitude, and he has decided it in favour of the pursuer. It is now admitted that that question of the existence of the seivi-tude is not competently raised in this action, and cannot possibly be decided, for the party really interested in maintaining the existence of the servitude is not a party to the action. It is manifest that if there be any question whether the subjects are burdened by a servitude the true interest of the proprietor is not to maintain the claim but to defeat it; and it is equally clear that no judgment between him on the one hand and the defender on the other could be binding on the owner or alleged owner of the dominant tenement. It came to be conceded, however, I think, at the bar, that that question was not now before us.

The contravention of warrandice, of which the pursuer is entitled to complain, is not the existence of the servitude but a decree in absence obtained by Mr Scott in the Sheriff Court, by which the pursuer's right of property is so burdened as to restrict his use and enjoyment of the subjects purchased. Now, that decree may or may not be well founded, but it cannot be reviewed on its merits in this process. The seller of the subjects-the granter of the warran-dice-having had notice of the Sheriff Court proceedings declined to appear, and accordingly the purchaser brings this action on the warrandice clause; and I think he would be quite entitled to say, that whether that Sheriff Court decree is well founded or not, so long as it stands it is an encroachment on Ms right and a contravention of the warrandice, and therefore that if it is invalid it must be set aside, or if it is well founded he must be indemnified. But I agree with what has been said by Lord M'Laren, that that being the position of his right he has chosen a wrong and inapposite remedy, because the only operative conclusion of the summons which he has brought, after allowing the defender an opportunity of clearing the subjects of the burden, is that the defender should make payment to him of the present value of the subjects described in the summons. Now, that is the ordinary and perfectly appropriate conclusion of a summons upon a warrandice where there has been a total eviction of the subjects from the purchaser, for then the measure of the indemnity which he is asking, and to which he is entitled, is the present value of the whole subjects of which he has been deprived. In such an action the conclusion is not for repayment of the price, as Lord M'Laren has explained, but a conclusion for the present value of the subjects. In the ordinary case, of course, there is no corresponding conclusion for restitution of the subjects, for the assumption of such an action is that they have been carried away.

But such a conclusion is clearly inappropriate to a case where the purchaser remains in possession of the subjects, and complains merely that his use of them is diminished by reason of a servitude right of way. It is impossible that a purchaser of land should recover the entire value of the land from the seller, except on condition of his restoring the land, and in circumstances which will entitle him to do so. It is said that although there is no provision for restoration to be found in the conclusions of the summons, an offer to restore is contained in the condescendence. But however that may be, it is not appropriate to an action for breach of warrandice. That is an action on the contract, and the pursuer of an action founded upon the contract cannot in the same action claim to recover the price and give back the lands, and so to set aside the con-

776 CASES DECIDED IN THE [fourth series.

No. 146.

May 19, 1894.

Welsh v. Russell.

tract. The pursuer does not maintain that he is entitled to reduce the contract. But if he did he could not have decree of reduction in an action founded upon the warrandice clause. The remedy to which he is entitled under the clause of warrandice is not reduction but indemnification. In case of a total eviction he is entitled to demand the whole value of the subjects. In case of a partial eviction he cannot be entitled to the whole value, but only to the value of what he has lost. The action on the warrandice, therefore, where the pursuer is left in possession of the subject, and complains merely of a burden by which its value is diminished, is in effect an action of damages. But if the pursuer has a good claim for damages, there is no conclusion in the summons which will enable us to estimate or give effect to such a claim,

I concur therefore in the opinion of Lord M'Laren.

The Lord President concurred.

The Court pronounced the following interlocutor:-

" Having considered the reclaiming note for the defender against the interlocutor of Lord Stormonth-Darling, dated 10th November 1893, and heard counsel for the parties, recall said interlocutor, dismiss the action, and decern: Find defender entitled to expenses: Remit the account thereof to the Auditor to tax, and to report."

Upon the motion for the approval of the Auditor's report on the defender's account of expenses, the pursuer objected that, under the Act of Sederunt, July 15, 1876,* the Auditor ought to have taxed off the whole expenses of the proof.

Argued for the pursuer;-The proof had been made necessary in consequence of the defender's denial of the existence of the servitude, but he now admitted that the question of the existence of the servitude could not be entertained in the absence of the owner of the alleged dominant tenement. Either, therefore, the proof was a branch of the litigation in which the defender had been unsuccessful, or the expense of the proof had been occasioned by the defender's fault. The defender's account of expenses, quoad the proof, ought therefore to be disallowed.1

Argued for the defender;-The defender did not desire a proof; he pleaded that the action was incompetent; but he was not bound to reclaim at once against the Lord Ordinary's interlocutor of 18th March 1893 repelling that plea and allowing a proof. It was the pursuer who was responsible for the proof in consequence of his having insisted in the action; and as the action had ultimately been found to be incompetent he must bear the expense of the proof. At all events it was too late to raise this question now. It was not a question of taxation, but was a question for the Court when considering the motion for expenses.

Lord Adam .-The objection which is here taken to the Auditor's report does not appear to me to raise a question of taxation. I do not think that " fault," in the sense of the General Regulation, means that the party has stated a plea which he ought not to have stated, so as to entitle the Auditor to determine

* The A.S. July 15, 1876, General Regulation 5, provides,-

"Notwithstanding that a party shall be found entitled to expenses generally, yet if on the taxation of the account it shall appear that there is any particular part or branch of the litigation in which such party has proved unsuccessful, or that any part of the expense has been occasioned through his own fault, he shall not be allowed the expense of such parts or branches of the proceedings."

1 Lord Clinton v. Brown, July 10, 1874, 1 R. 1137; Ralston v. Caledonian Railway Co., Feb. 9, 1878, 5 R. 671.

vol. xxi.] COURT OF SESSION, &c. 777

No. 146.

May 19, 1894.

Welsh v. Russell.

whether the particular plea ought or ought not to have been stated. Nor do I see how it can he said that there is any branch of the case in which the defender has been unsuccessful; on the contrary, he has been entirely successful.

Lord M'Laren.-I agree that the Act of Sederunt does not entitle the Auditor to disallow the whole expense of this proof. If the pursuer desired that the whole expense should be disallowed he ought to have argued the question to us when we were dealing with the defender's motion for expenses ; but if he had raised that question at that stage I am not sure that he would have been successful. The defender's first plea in law gave the pursuer full notice, in the Outer-House, of the objection to the competency of the action, and he must be held to have known that although the Lord Ordinary repelled the plea it was open to the defender to renew his objection at a later stage. It was for the pursuer, therefore, to consider whether he should go on with his action and so take the risk of the defender's objection ultimately proving successful, or abandon the action and raise another which might not be open to the objection of incompetency. Unless we are prepared to hold that a defender, who pleads that an action is incompetent, is bound to reclaim at once against an interlocutor repelling that plea, I do not see how we can say that this proof has been occasioned by the fault of the defender.

Lord Kinnear .-I agree that the question raised is not a question of taxation but is a question for the Court to decide, and I think that it cannot competently be brought before the Court after the question of expenses has been finally disposed of by interlocutor.

The Lord President concurred.

The Court approved of the Auditor's report.

Dove & Lockhart, S.S.C.-E. A. & F. Hunter, W.S.-Agents.

21 R 769

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