Davidson v. Scott [1915] ScotLR 736 (19 June 1915)

Davidson v. Scott [1915] ScotLR 736 (19 June 1915)

The sale by Krall, as assignee of the security, to a company in which he was interested, at an inadequate price and for an ulterior purpose, was not a bona fide exercise of the power of sale. The onus was on the seller to show the sale was fair, which was not discharged. Therefore, the defender was entitled to challenge the sale and resist the pursuer's claim to attach rents for the balance of the debt.

Citation
[1915] ScotLR 736
Parties
Pursuer and Reclaimer: Donald Davidson; Defender and Respondent: Miss Jessie Scott
Jurisdiction
Scotland
Judgment Date
19 June 1915
Procedural Posture
Civil / Appeal (reclaiming Motion) From Lord Ordinary's Judgment
Outcome
action dismissed
Legal Topics
Heritable Security, Power of Sale, Bona Fides in Sale by Creditor, Onus of Proof, Challenge to Sale by Security Holder, Adequacy of Price, Assignment of Security, Rights of Cautioner
Property Law Secured Transactions Scots Law Heritable Security Power of Sale Bona Fides in Sale by Creditor Onus of Proof Challenge to Sale by Security Holder +3 more

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Parties

Donald Davidson

Pursuer and Reclaimer

Miss Jessie Scott

Defender and Respondent

Procedural Posture

Civil / Appeal (reclaiming Motion) From Lord Ordinary's Judgment

Legal Issues

  1. 1 Whether a sale by a security holder (heritable creditor) to a company in which he is interested at an inadequate price is challengeable by the proprietor of another part of the security subjects.
  2. 2 Whether the onus is on the seller to show the sale was fair when there is a conflict of interest.
  3. 3 Whether the pursuer, as assignee, can enforce the balance of the debt against the defender after such a sale.

Ratio Decidendi

The sale by Krall, as assignee of the security, to a company in which he was interested, at an inadequate price and for an ulterior purpose, was not a bona fide exercise of the power of sale. The onus was on the seller to show the sale was fair, which was not discharged. Therefore, the defender was entitled to challenge the sale and resist the pursuer's claim to attach rents for the balance of the debt.

Court Disposition

action dismissed

Orders

  • Action dismissed with expenses.
  • Defender to consign within seven days the full amount of rents recoverable under the action in a Scottish chartered bank in the joint names of the parties, pending further proceedings.