British Linen Bank v. City of Edinburgh [1911] ScotLR 127 (18 November 1911)

British Linen Bank v. City of Edinburgh [1911] ScotLR 127 (18 November 1911)

The statutory scheme authorised the Corporation to borrow by issuing redeemable stock, with a period for redemption to be fixed by resolution not exceeding sixty years. The Corporation exercised its option by fixing thirty years from 15 May 1897. The language and context of the statutes, resolution, and certificate imposed an obligation to redeem the stock at par immediately after 15 May 1927. The Corporation could not convert the stock into a perpetual obligation by inaction; the right to redeem became a duty at the expiry of the fixed period.

Citation
[1911] ScotLR 127
Parties
Pursuer: British Linen Bank; Defender: City of Edinburgh (Corporation)
Jurisdiction
Scotland
Judgment Date
18 November 1911
Procedural Posture
Action of Declarator / Inner House, Extra Division, Reclaiming Note (appeal) Against Lord Ordinary's Interlocutor
Outcome
Interlocutor of Lord Ordinary recalled; decree granted in favour of pursuers (British Linen Bank).
Legal Topics
Municipal Borrowing, Redeemable Stock, Statutory Construction, Obligation to Redeem Municipal Stock
Municipal Law Banking Law Statutory Interpretation Municipal Borrowing Redeemable Stock Statutory Construction Obligation to Redeem Municipal Stock

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 3 Authorities cited 7 Party arguments 2 Amounts and remedies 2
Sign in to unlock

Parties

British Linen Bank

Pursuer

City of Edinburgh (Corporation)

Defender

Procedural Posture

Action of Declarator / Inner House, Extra Division, Reclaiming Note (appeal) Against Lord Ordinary's Interlocutor

Legal Issues

  1. 1 Whether the City of Edinburgh Corporation was bound to redeem the 2.5% stock immediately on the expiry of 15 May 1927 on the application of the holders under the relevant statutes, resolution, and certificate.
  2. 2 Whether the statutory language 'redeemable at the option of the Corporation' created a mere faculty or imposed an obligation to redeem at the fixed period.

Ratio Decidendi

The statutory scheme authorised the Corporation to borrow by issuing redeemable stock, with a period for redemption to be fixed by resolution not exceeding sixty years. The Corporation exercised its option by fixing thirty years from 15 May 1897. The language and context of the statutes, resolution, and certificate imposed an obligation to redeem the stock at par immediately after 15 May 1927. The Corporation could not convert the stock into a perpetual obligation by inaction; the right to redeem became a duty at the expiry of the fixed period.

Court Disposition

Interlocutor of Lord Ordinary recalled; decree granted in favour of pursuers (British Linen Bank).

Orders

  • Declare that the Corporation is bound to redeem the stock immediately on expiry of 15 May 1927 on application of the holders.
  • Declare that the Corporation is not entitled to postpone the right of holders to have the stock redeemed after 15 May 1927.