(1846) 5 Bell 105
CASES DECIDED IN THE HOUSE OF LORDS, ON APPEAL FROM THE COURTS OF SCOTLAND. 1846.
Subject_Consignation. — Payment into Court. —
It is not a proper exercise of discretion, in regard to ordering payment of money into Court, to make such an order, after decree has been made for payment upon production of a title to receive payment, merely on an allegation of obstructions having been thrown in the way of obtaining that title, by the party ordered to pay.
In the year 1827, the respondent, Mrs. Donaldson and her husband, and the trustees of a variety of deeds in relation to her estate, brought an action against the representatives of her father, the deceased Robert Finlay, John Bannatyne, her factor, loco tutoris, during pupillarity, Findlay, Bannatyne and Co., and their partners, merchants in London, and the appellants Smith and Dewar, and other parties, since deceased, trustees under a deed for payment of the creditors of Findlay, Bannatyne and Co. The narrative of the summons in this action was, that Robert Findlay, the father of Mrs. Donaldson, had died in the year 1802, possessed of very considerable property, leaving a son and three daughters; that tutors and curators had been appointed to the other children who had never made up curatorial inventories; that John Bannatyne, as factor, loco tutoris, to the respondent, Mrs. Donaldson, had neglected his duties as such, and never had lodged any inventory, nor invested her estate; that a considerable part exceeding 25,000 l. of the funds of her father, were invested with or due
“The pursuer, Mrs. Donaldson, and the other pursuers acting for her behoof, have the most direct and material interest to have her claims immediately constituted against the various parties before specified.”
That the pursuer, Mrs. Donaldson's share of her father's estate, improperly intromitted with and wasted by the defenders, amounted to 8000 l. less or more with interest since his death; that Findlay, Bannatyne and Co., and their trustees and assignees, had debts owing to them by parties in Scotland, upon which jurisdiction had been founded by arrestment. Upon this narrative the summons contained conclusions for count, reckoning and payment against the tutors and curators of her brother and sisters and their representatives, and against John Bannatyne, her own factor, loco tutoris; and then, as to the other parties, continued thus:
“ Tertio, the said Company O Findlay, Bannatyne and Company, and John Bannatyne, Robert Findlay, and Robert Buchanan Dunlop, the individual partners of that company; and the said Martin Tucker Smith, William Leathley, Henry Lynan, William Tate, and Robert Dewar, as the disponees or assignees in trust, of the said company, ought and should be decerned and ordained, by decree foresaid, to hold count and reckoning with the pursuers for the whole sums due and indebted by the said company to the said deceased Robert Findlay at the period of his death, and to make
payment to the pursuers of the sum of 10,000 l., less or more, as the share of the said debts pertaining to and claimable by the pursuer, Mrs. Donaldson, as one of the children and executors of her deceased father.”
Findlay, Bannatyne and Co., and the trustees for their creditors, put in a joint defence, in which they made the following admission:—
“It is denied that any part of the funds of the late Mr. Findlay were at his death invested in or due by the copartnery of Findlay, Bannatyne and Company, against which the present action is brought. That company was created in the year 1813. It is true that the funds recovered by Mr. Bannatyne acting for behoof of the late Mr. Findlay's three daughters, his executors, were placed in the hands of the company, and that, at their stoppage in 1826, there was owing to those executors, of whom the pursuer is one, the sum of 4,149 l. 12 s. 1 d. For the pursuer's share of that sum, she, or the parties producing a proper title, will of course rank on the estate of the company and of the individual partners. The defender, Robert Buchanan Dunlop, is also concluded against, as having been a curator to the three minor children of the late Mr. Robert Findlay. This was not the case.”
And in a subsequent statement of facts, that admission was repeated in this form:—
“ Stat. 3. Mr. Bannatyne, one of the respondents' partners, recovered and intromitted with certain funds, the property of the late Mr. Findlay's executors, and by him the funds so recovered were placed in the respondents' hands, and the respondents were on this account indebted, at their stoppage in 1826, in a balance of 4,149 l. 12 s. 1 d. Ans. 3. Admitted that the defenders owe to the pursuers 4,149 l. 12 s. 1 d., with interest since Whitsunday, 1826. Denied that that sum is nearly equal to the amount of the debt owing by the former to the latter.— Stat. 4. Beyond this balance, the respondents owe nothing, either directly or indirectly, to Mr. Findlay's executors.”
These admissions were followed
“In no view are the pursuer's creditors entitled to rank on the respondents' estate for more than one-third of the above balance of 4,149 l. 12 s. 1 d., or on the estates of their individual partners for more than the residue of that third, after deducting what they may have received from the company estate.”
After the record had been completed, but while as yet the pleas upon it for the parties were undisposed of, and no proceeding had been taken for that purpose, the respondents, on the 9th of July, 1831, moved the Court, and, without objection on the part of the appellants, obtained a decree in these terms:—
“Having heard counsel for the parties, on the motion for the pursuers for an interim decree, decerns in favour of the pursuers against Findlay, Bannatyne and Company, as a company, and John Bannatyne, Robert Buchanan Dunlop, and Robert Findlay, all individual partners thereof, and against Martin Tucker Smith, William Leathley, Henry Lynan, William Tate, and Robert Dewar, trustees of the said company, for the sum of 1383 l. 4 s. sterling; and allows said decree to go out and be extracted ad interim, the pursuers always producing before extract a competent title.”
The cause was then remitted to an accountant, who in the year 1834 reported that one-third of 4,149 l. 12 s. 1 d., or 1383 l. 4 s. 0 ¼ d., and a third of other sums, amounting to 45 l. 14 s. 9 d., making an aggregate of 1428 l. 18 s. 9 ¼ d., was owing from Findlay, Bannatyne and Company to the respondents. Various proceedings took place upon this report, the last of which was an order by the Court for letters of incident diligence, at the instance of the respondents, for recovery of documents.
While the cause was in this state, the respondents presented the following note:—
“In this process the accountant reported that a balance of 1428 l. 18 s. 9 d. of principal was due to the pursuer, Mrs. Donaldson, as at the 26th day of December,
1826, exclusive of interest, as therein stated. No objections have been stated to that report on the part of the defenders, and the pursuer's right to the above balance has been admitted. In these circumstances it is proper that the said sum and interest thereon should be consigned to abide the orders of the Court. May it therefore please your Lordship to move the Lords of the Second Division of the Court to pronounce an order upon the defenders to consign the said sum of 1428 l. 18 s. 9 d., with interest thereon, to remain subject to the orders of the Court in this process.”
The Court expressed the following opinions upon the hearing of this note:—
This pursuer, years ago, got a decree in causa for the sum in question. She endeavoured to put in force this decree, and in doing so, she says she was obstructed by the present defenders. So she was in one sense,—that is to say, that certain legal objections were taken to her proceedings, and these legal objections were sustained, and, I am bound to hold, rightly sustained by the Commissary of Lanarkshire. His judgment must be held as law while it remains unaltered. So that the amount of the obstruction complained of is just this, that she was prevented from proceeding contrary to law. Then she delays taking any steps to bring that judgment under review for nine years. In the meantime the amount with interest is growing, and now amounts to a large sum (some thousand pounds). After all this delay, she still fails to enforce, or to endeavour to enforce her decree, but makes the present application for consignation of the amount, for which that decree was pronounced. I apprehend a party is not entitled to enforce both these remedies at once. A decree is the strongest remedy the law can give, excepting perhaps consignation. But I do not think that where a party has got decree in causa on the merits of his action, he is entitled to the other remedy of consignation, merely on the ground that the case happens to remain in Court on some incidental point. Suppose a party gets decree on the merits to-day—the decree becomes final, and the case comes before us next session, perhaps on the question of expenses—could the party holding the decree say, that no doubt he had got decree, that is, all he could get under his action, but that the party would not pay, and therefore he must have consignation also. I think not. I do not think consignation applicable to such a case.
“That in the year 1826 the said Robert Findlay's estate was sequestrated, under the authority of our said Lords, and the said company of Findlay, Bannatyne and Company, and the said Robert Buchanan Dunlop, Robert Findlay, and John Bannatyne, as partners of that company, became insolvent, and conveyed their estates, both as a company and as individuals, to Mr. Martin Tucker Smith, banker, in London. Mr. William
Leathley, Mr. Henry Lynan, Mr. William Tate, and Mr. Robert Dewar, merchants in London, as trustees for the payment of their debts.”
The parties are thus alleged to be insolvent before the institution of this action. That is the averment of the party herself who makes this motion. Now, this being the case, it is impossible for us to shut our eyes to the necessary result of this motion. An order for consignation is a much more stringent remedy than an interim-decree. The interim-decree may simply be carried out by the ordinary executorials of the law, but an order for consignation pending the cause has this effect, that it necessarily stops the party from proceeding farther in the suit till the order is complied with, and if it is not obtempered, the result is just that which follows the failure to fulfil any other order of Court, namely, decree against the party for default. Now, the order here proposed is one which the party cannot, and is not entitled to comply with. In case of a sequestration, it would be perfectly clear; a trustee on a sequestrated estate could not be ordered to consign the amount of the debt due by the bankrupt, because he would say, I have no funds to pay all in full, and I must divide rateably among all the creditors. I do not see that this case is at all different; one of the parties has been sequestrated,—the others are averred to be insolvent, and their trustees are called as defenders. They can only pay a dividend. If this motion were for consignation of a dividend on the sum in the interim-decree, it would be different, but we are asked for an order for consignation of the whole amount from insolvent parties who cannot pay, and from their trustees who are not entitled to pay in full. What is the result? This pursuer will return to us and move for decree, in respect of non-fulfilment of this order; and for myself, if such a motion were made, I should hold myself imperatively bound to grant it.
I therefore think the motion must be refused.
Lord Justice Clerk.—In this case an interim decree was pronounced for 1383 l., in 1831, against Findlay, Bannatyne and Co., and the partners of that company, and the trustees or assignees who have intromitted with their funds, but which was admitted to be only against the latter qua trustees. As against the others it was an ordinary personal decree. The company has not been rendered bankrupt—insolvency of all the partners has never been averred. If there had not been the obstructions mentioned to us, thrown in the way of the completion of the title of Mrs. Donaldson, the sum must have been paid in full. I mention this, because there can be no distinction between the right to enforce payment in full, and consignation of the whole sum. Indeed, when parties are not legally bankrupt, but carrying on expensive litigations, whether they may be under trust or not, to which those prosecuting them have not acceded, they must be taken and treated as able and bound to pay in full, until their funds shall be shown to be exhausted, or not paid to others after full notice of this demand.
Then it turns out that the pursuer is not able, and not from her fault, to complete a title. I shall assume the opposition to be by a party over whom the defenders have no controul. I shall assume the opposition of Mrs. Bannatyne does not originate with her husband, and that the interest to prevent and delay payment has no influence in these proceedings. I am willing to lay aside the terms of the inventory proposed by Mrs. Donaldson, which turned out to be perfectly harmless, and to which the usual oath might have been given.
Still, what sort of defence can these difficulties afford to the debtors against consignation of that sum admitted to be due, and for which interim-decree went out in 1831. If legal difficulties occur, not as to the pursuer being the party in right of the money, but to the completion of her title, owing to the proceedings of others who have no claim to the
It was said that this may be followed up by a demand for payment. Whether that is to be made or not can be decided at another stage, and is not now the question.
When the decree was pronounced it was for the full sum. The trustees, if they aver that they have not funds to pay in full, must shew their intromissions, the dates and amount of payments to other creditors, and the partners who are not insolvent must find some legal ground for payment not being made. In the mean time it would be quite ludicrous to allow these parties who have carried on, and are carrying on most
By the accountant's report, the sum is shown to have been 1428 l. in 1826, and for that sum an order for consignation should be pronounced against all the parties named in the interim-decree.
If this had been a sequestration, the law limits the mode of recovery to ranking, if the party is a creditor. If it is an action against the sequestrated estate, the trustee must have funds, else he should not resist. The discussion as to the obstructions to Mrs. Donaldson completing her title as executrix, taking entirely and exclusively the account of it by the defenders themselves, has tended to confirm me in the result which I formerly stated, that the Court ought not, on the merits, to relieve Mr. John Bannatyne of his obligation to make a separate account under the act of sederunt, as factor loco tutoris, and ought to leave him to settle with Findlay, Bannatyne and Company, for the moneys which, I stated that, in my opinion, he ought never to have lent to them. And when the cause returns to us, I trust that point will be reconsidered.”
The following interlocutor was then pronounced, which is the one appealed from:—
“Ordain the defenders, Findlay, Bannatyne and Company, as a company, and John Bannatyne, Robert Buchanan Dunlop, and Robert Findlay, the individual partners thereof, and Martin Tucker Smith, William Leathley, Henry Lynan, William Tate, and Robert Dewar, trustees of the said company, to consign in the Royal Bank of Scotland, or in the Bank of Scotland, the principal sum of 1428 l. 18 s. 9 d. sterling, therein to remain subject to the orders of the Court, and that on or before the second box-day in the ensuing vacation.
Mr. Bethel and Mr. Moncreiff appeared for the Appellants.
The Lord Advocate and Mr. J. Russell for the Respondents.—The decree of 1831 ascertained that 133 l. 4 s. was due from the defenders.
The parties not only did not object but consented to this interlocutor. They were bound, therefore, either to pay or consign in obedience to it, or, as regards the trustees, to show that they had no funds in their hands. Then came the accountant's report, which confirmed the interlocutor in regard to the amount which was due. That report was not objected to, nor quarrelled with, in any way. The parties held the report, on the contrary, to be good for them.
But no objection was taken to the report; this, therefore, was equivalent to an admission by the parties, of the correctness of the sum reported to be due from them.
The decree of 1831 made them liable to pay, unless they could satisfy the Court that they had properly applied the funds come to their hands, and had none remaining. When the order for consignation was asked they should have shown this; the onus lay upon them to do so. The truth is, that the trustees had received funds greatly exceeding the sum in the decree. The action was founded upon arrestments of funds exceeding 8000 l., all of which have been drawn by the trustees.
When the Courts in Scotland are satisfied, from admission of the party or the evidence in the cause, that a certain sum will ultimately be due, they are in use, either to give interim-decree for immediate payment, or to order the money to be consigned subject to the orders of the Court.
No such rule is propounded in Scotland. If the Court is satisfied, quovis modo, that a sum will ultimately be payable, it makes the order which it judges will best secure the fund for the party to whom it is payable. Here the party consented to the decree of 1831, and all that was requisite to enable his opponents to compel payment under that decree was the title of Mrs. Donaldson, as executrix, which the appellants have used every means to obstruct her in obtaining.
We repudiated the trust.
Though in England it would not be competent to sue the trustees without going in under the trust, it is otherwise in Scotland. We were entitled to sue the trustees along with the insolvent, as intromitters with the funds of our debtor. No exception was ever taken upon the ground that they were improperly made parties. If the decree of 1831 was right, and it must be assumed to be so, as it was never complained of, then the order for consignation merely follows up the decree, and is precisely in the same terms with the decree. The decree does not create a personal liability; neither does the order for consignation as against the trustees, for they are merely sued as trustees, and they can at any time relieve themselves by suspension, showing that they have administered all the funds come to their hands. But even if the decree did involve a personal liability, it has never been complained of. The order is in identical terms with it, and therefore cannot either be complained of.
Mr. Bethel in reply.—The decree of 1831 was neither in form nor intention more than one of constitution. That was all, indeed, that the respondents asked by their summons. The decree was not made upon a hearing of the cause, but upon motion, and it did not dispose of any one of the defences set up by the parties, which, if it had been a decree for payment, it
I am anxious, however, to guard myself against its being supposed that I desire to lay down any general rule respecting the payment of money into Court, or as to the force and effect of decrees of consignation, or the force and effect of an interim decree. I do not at all proceed upon that, but upon the general principle, that if there was a discretion here, which all such orders assume, it was not properly exercised in the present case. We lay down no English rule for the government of the Scotch Courts in this matter, but proceed upon this simple ground, that this being a matter in the discretion of the Court, and the Court having a right to exercise that discretion to the effect of ordering payment of money, there was not a sufficient medium concludendi whereupon they ought to have proceeded in the exercise of that discretion, especially with regard to persons filling these peculiar situations. I mention this that, it may not be supposed that we are interpolating the English practice into the Scotch Courts.
Whatever may be the true character of the interlocutor of 1831, it at least declares certain rights of parties as creditors against those who are their debtors, and against certain other persons who are alleged to have trust-funds in their hands, under a deed of trust, the object of which was to make payment among the creditors of that trust. That interlocutor, from the want of the title of the pursuer being completed, from 1831, when the interlocutor was pronounced, to 1844, could not be carried into effect. There was a defect in the title which prevented the party from having the benefit of that interlocutor. Pending that defect of title, the same infirmity remaining in 1844, as existed in 1831, an order was made to pay the money into Court.
Now according to the usual course of proceeding in Scotland, as in any other country, there is a certain process known by which the orders of the Court are to be enforced. That process could not be resorted to under the circumstances of the parties in whose favour the interlocutor of 1831 was pronounced. But this could not constitute a ground for departing from the usual course, and for that reason, and that reason alone, doing that which to the defenders is equally prejudicial, namely, compelling them to pay money into Court, in order to take the money out of their hands.
It would be strange that because you cannot have the benefit by a regular interlocutor, you are to have recourse to an irregular
Then we must look to the practical effect of this order. Whether the parties could or not have the means of protecting themselves against it by applying to the Court by suspension is argued by Mr. Bethel very properly. They could only do so by transferring their trust account from the country, in which it was constituted into another country, merely because the pursuer has there made them parties to this cause, and if it is to operate indirectly as a compulsory means of making them do that, this would be of itself a strong objection to the order which has been pronounced. We do not know whom we might be injuring by such a course. Many other persons are interested in this trust fund, and the effect of this would be to transfer all the administration of the trust here to the jurisdiction of the Court of Session, which may or may not have the means of doing justice between the parties in the administration of the trust fund. If it is to operate as a compulsory process to make the parties pay in all events, it would be obviously unjust, for nothing passed in the cause to show their liability or the right of the pursuers to take out of their hands that which remains in their hands for the purpose of being administered under the deed which constitutes the trust.
These are the great difficulties which occur in coming to a
But, my Lords, looking to what has been done in this case as an exercise of discretion, it seems to me clearly, after all we have heard upon the subject, that the discretion has not in this case been soundly exercised, because as it appears to me, if the law of consignation is at all applicable, I know of no instance to which the law of consignation was ever so applied; for it resolves itself into this, that consignation is
For these reasons I agree with the opinion already expressed by your Lordships, that the order should be reversed.
Ordered and adjudged, That the interlocutor complained of in the appeal be reversed.
Solicitors: Oliverson, Denby, and Lavie — Law and Anton, Agents,