Your Committee has given the most anxious consideration to the case thus presented, for the exemption of superiors and owners of feu duties. It is impossible, in the opinion of your Committee, to accede to the claim. The legal relation between superior and vassal, and their relative rights in the land are familiar and well ascertained in the law of Scotland. When a superior feus land he is not truly divested of the lands contained in the grant. His right in the land continues unimpaired, except in so far as the grant conveys what is called the dominium utile or property to the feuar. The effect of the feu contract is to disintegrate the right or jus dominii and to partition it so that part remains with the superior, and part goes to the grantee. In all questions with third parties the granter's infeftment, as it is called, still subsists, notwithstanding the grant made to the feuar, and his heir is entitled to be vested not in the superiority merely but in the lands themselves. And whether the vassal interferes or not the superior is entitled to challenge encroachments on the feu. In short, after granting the feu the superior can exercise all acts of proprietorship against everybody except the vassal and those deriving right from him. In every definition or description given by the institutional writers in the law of Scotland of the term "feu," it is carefully stated that, after the grant of lands has been made, the radical right in the lands still remains to the granter of the feu. The estate in the land, which was undivided before the grant, becomes a joint estate after the grant. And this is still an inherent principle in the Scots system of land rights. A prohibition against the alienation of land is not in the law of Scotland violated by a grant of feu. Your Committee find it impossible, therefore, to accept the view that the superior is not an owner of land, but is a mere creditor of the owner, with a security over the land. He is, in fact, the owner of an interest in the land, and his title, which is, indeed, a title ex facie to the land itself, is such as to enable him to prescribe, by the requisite possession, the full right of complete ownership.

It is, in the opinion of your Committee, equally clearly established that the feu duty, which is the annual return from the vassal to the superior, is truly a rent for the land. And the superior's right to the feu duty is preferable to the vassal's right to the lands. In the words of a well-known writer of authority in this branch of the law of Scotland, "the superior, having a real legal estate in the lands, having, in fact, the right to the lands and to eject the vassal if he does not fulfil the condition by paying the feu duty, the feu duty is a real and preferable burden on the lands - a debitum fundi. It is part of the reserved estate in which the superior stands infeft; and the superior's claim for payment of the feu duty is ranked as a burden on the feu, in preference to the claim of any third party upon the feu made through the vassal" (Bell's "Lectures on Conveyancing," p. 634). If this be sound law, as your Committee believe it to be, then it is impossible to regard the feu duty in any other sense than as the rent of land just as the superior must be regarded as the owner of land.

The conclusion arrived at by your Committee, that a superior is the owner of lands, that feu duty is truly the rent of land, and that the proposed burden is new in character and incidence, would be sufficient to warrant the inclusion of existing feu duties in the new rating standard proposed to be set up. But on more general grounds the same result is reached. To the extent of the feu duty the vassal is not himself in receipt of the full return from the lands. To the extent of the feu duty the superior shares with the vassal the yearly return from the lands. If so, on what stateable grounds can the feuar be asked to pay rates in respect of the full yearly return from the land - a return which he does not and cannot receive? As between a feuar after and a feuar before the measure comes into force, the result of excluding existing feu contracts would be most inequitable. The one would, and the other would not, be in a position to claim relief from the new rate in respect of the amount of his feu duty. No reasonable ground exists for such inequality of treatment. Nor has the proposal to rate a superior on a feu duty which he may receive, but has not yet received, and to free him from rating on a feu duty of which he is in actual receipt, anything at all to recommend it.

Your Committee desires to place on record its strong opinion that, although the question discussed in the immediately preceding paragraphs is of great interest and importance, there is another aspect of the subject, the importance of which is not always adequately appreciated. The desirability of taking land as the basis of valuation does not depend solely upon the question of the allocation of the burden between parties. The most valuable economic advantages of this reform follow from the change of the basis of rating. We have already referred to the nature of these advantages, which may be thus summarised : First. - Houses and other improvements would be relieved from the burden of rating. This would encourage building, and facilitate industrial developments.

Secondly. - As regards the large towns, it would enable land in the outskirts to become ripe for building sooner than at present, and would thus tend very materially to assist the solution of the housing problem. It would also have a similar effect in regard to housing in rural districts.

In our opinion these advantages depend upon the alteration of the basis of rating, and are not dependent upon the question as to what proportion ought to be contributed by the various persons interested in the property. Without seeking to minimise the importance of that question, we think it right to point out that the taxation of land values is advocated equally strongly by persons who take different views upon this aspect of the question.

Your Committee will now proceed to summarise the conclusions at which they have arrived. They consider that the new standard of rating, based upon the yearly value of land, apart from the building and improvements upon it, is sound, and would prove advantageous; that to set it up, by estimating the value of land apart from buildings, is practicable; that in making the valuation regard must be had to all restrictions validly imposed on the land, and to recent expenditure in preparing it for use; that exemptions such as are proposed in clause 6 of the Bill are proper, but that to these exemptions ought to be added railways, canals, docks, piers, and harbours; that, so far as both occupiers and owners are concerned, the new standard of rating should be substituted for the present standard, and that within the category of owners ought to be included owners of feu duties whensoever created. Your Committee therefore agree to the following

Recommendations

I. That the Bill referred to the Committee be not further proceeded with.

II. That a measure be introduced making provision for a valuation being made of land in the burghs and counties of Scotland apart from the buildings and improvements upon it, and that no assessment be determined upon until the amount of that valuation is known and considered.