A heritable security company, the objects of which were to lend money on heritable security, and to ‘receive money by way of loan by cash-credit, debenture, deposit, or otherwise,’ and to do all such things as were conducive to these objects, received through their manager a loan, which he applied to the purchase of heritable property over which the company had lent money on a postponed bond, and which the prior bondholder had brought to sale. There being a doubt as to the company’s power to hold heritage, the manager made the purchase in his own name; he also granted the lender a bond for his money over the subjects. The company and its liquidator afterwards disputed liability for the loan, on the ground that the company had no authority to purchase or hold heritable property, that the manager was the proper debtor, and that he had no authority from the directors for the transaction. Held that the company having borrowed the money through its proper officer, who was entitled to accept money on loan, the lender had no concern with inquiring into its powers to apply it, and was therefore entitled to demand repayment.
Opinions that the purchase by such a company of heritage in order to avoid a sacrifice of its loan was not ultra vires.
Judges:
Lord M’Laren, Ordinary
Citations:
[1885] SLR 23 – 238
Links:
Jurisdiction:
Scotland
Company
Updated: 08 August 2022; Ref: scu.580404
