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SCOTTISH_Shaw_Court_of_Session

Page: 61↓

Condie

v.

M'Donald No. 15.

Court of Session

1st Division

Nov. 20 1834

Ld. Fullerton, Lord Gillies, Lord Mackenzie, Lord Balgray.

James Condie, Petitioner.— D. F. Hope— G. G. Bell. Mrs M'Donald, Stewart, and David M'Donald, Respondents.— Sol.-Gen. Skene.

Subject_Judicial Factor—Proof—Intercst.—

1. Circumstances in which, objections having been stated to the accounts of a curator bonis, the Court held, that the onus lay on the objectors to prove that certain arrears of rent might have been recovered, if the curator had used due diligence. 2. Observed, that there is no general rule requiring a curator bonis to do ultimate legal diligence against debtors. 3. Where a curator bonis fails to lodge his accounts annually, in terms of the Act of Sederunt, 13th February, 1730, he must be subjected to a mulct of not less than one-half of a-years' salary for every year in which the failure occurs. 4. A curator bonis, being in advance for his ward, held entitled to impute the rents of the estate, in extinction, first, of the interest, and next of the principal of these advances, though it was objected that this was equivalent to allowing interest upon interest.

The late Mr George Condie, writer in Perth, was appointed, in 1802, curator bonis on the estate of Mr John Stewart of Lassintullich. In May, 1829, he presented an application for audit and approval of his accounts up to Martinmas, 1828, which was remitted to the Lord Ordinary, before whom appearance was made for Mrs M'Donald or Stewart, the sister of Mr Stewart, and for David M'Donald, her son. These parties stated objections to the accounts, and, before they were disposed of, Mr Condie died. In the mean time, his appointment had been recalled of consent, in November, 1829. His son, James Condie, writer in Perth, lodged a final state of his father's accounts, from Martinmas, 1828, and petitioned for audit and approval. This petition was conjoined with the first, to which James Condie was sisted, as representing his father. The accounts were remitted to an accountant, to whose report objections were stated, on the part of Mrs M'Donald and her son.

The Lord Ordinary reported the case. ^*

1. The first objection was founded on these circumstances: Mr Condie lodged a rental of the estate during the years 1803, 1806, inclusive; but he did not then lodge his factorial accounts. In 1812, he sent a statement of them to the law-agent of the heir of Mr Stewart, at the agent's request, but it was not till 1819 that any accounts were lodged with the clerk. They were then lodged up to that date. No objections were taken until after Mr Condie's petition for the audit of his accounts, which was presented in 1829. One of the items for which he took credit was a sum of £164, 18s. 9½d., being arrears of rent which were not recovered. To this Mrs M'Donald and her son objected, that as ultimate diligence had not been done against the tenants, Mr Condie should be liable for the amount. ¹ Whatever he had recovered, or by ultimate diligence might have recovered, he was bound to account for, with interest, in terms of the Act of Sederunt, 13th February, 1730.

Mr Condie answered, that his father was not bound to do ultimate diligence against every tenant who fell into arrear, and any such general rule would be most injurious to estates under curatory. He had used all the diligence in attempting to recover these arrears, which was consistent with vigilant prudence, and he was not farther liable. But, separately, as the accounts containing these arrears had been lodged in 1819, and no objections were taken till ten years afterwards, the onus lay on the objectors to show that the arrears could have been recovered by diligence; and unless they could prove this, the factor was not liable for their amount.

The Court disposed of this objection before proceeding to the others. ^†

_________________ Footnote _________________

^* His Lordship issued a note of his opinion on the several objections, which will so found subjoined to each of them, so far as applicable.

¹ Hay, Dec. 1. 1826 (ante, V. 62).

^† “ Note.—The Lord Ordinary reports the case as prepared by the accountant's report and documents produced. According to the remit he can only do so.

“His own opinion is, in genera), that the original petitioner, Mr George Condie, who had apparently accepted of the appointment very unwillingly, discharged his duty faithfully and honestly, though some of the forma required by the Act of Sederunt were not accurately observed, and that many of the objections token to the accounts are of so frivolous a nature as to betray strongly an unfair spirit.

“When the particular objections are gone into, there are only two or three questions which appear to him to deserve notice.

“1. As to the unrecovered arrears of rents, brought at last to the credit of Mr Condie. These arrears are all in the early part of the management, previous to 1806. They were included in the accounts made up and rendered to the agent of the respondents, Mr Storie, in 1812, and which were duly lodged in 1819. No objection or demand for more strict diligence having been since made, till the date of the present application, it would seem to be a severe measure of justice to refuse credit for this, in a case where all else is duly accounted for.”

Lord Gillies.—The question is, on whom does the onus probandi lie, of showing that the arrears might have been recovered. The accounts, containing a statement of these arrears, were lodged in 1819, and no objections were taken for ten years afterwards. In the circumstances, I think the onus lies on the objectors; and if they fail to prove that the arrears might have been recovered, there is no ground for subjecting the factor in their amount.

Lord Mackenzie.—I am of the same opinion. The Act of Sederunt does not, in any case, lay on the factor the penalty of making good all arrears. That would have been an extraordinary penalty. But he is made liable for such arrears as he might by diligence have recovered. It must either be proved or assumed that he might have recovered them, before he can be subjected; and the question is, on whom does the onus lie to prove whether they were recoverable. In the circumstances of the case, I concur with Lord Gillies; and as it has been pleaded, that by a general rule, a judicial factor is bound to do ultimate diligence against all debtors to the estate, if payment cannot otherwise be recovered, I think it right to declare my decided opinion that there is no such general rule, which indeed would often be attended with the most injurious consequences.

Lord Balgray intimated that he was of the same opinion. ^*

The Court, in the circumstances, found that the onus lay on the objectors to prove that the arrears might have been recovered.

2. The objectors pleaded, that as the accounts had not been lodged annually, in terms of the Act of Sederunt, the factor was not entitled to any factor-fee. ¹ Though this was of the nature of a penalty, yet as litis-contestation had commenced with the late George Condie, his death could not prevent the objectors from enforcing the penalty in adjusting his accounts with his son.

Condie answered, that a penalty did not transmit against representatives; that full accounts had been lodged at last, and no loss had been sustained by the estate, and the accounts had been repeatedly examined by the law-agent of the objectors. At all events, the whole penalty imposed by the Act of Sederunt could not exceed the salary of one single year. ^†

_________________ Footnote _________________

^* The Lord President was not present.

¹ Hay, Dec. 1,1826 (ante, V. 62).

^† “The factor-fee is objected to, on the ground that the factor did not rigidly observe the Act of Sederunt. The observance of the Act of Sederunt is certainly of importance, but the effect of particular failures in it is a matter in the discretion of the Court. It is not denied that, substantially, full and fair accounts have been rendered from time to time, and to the last. The Court will have to judge whether, in a case where this is the result, and the factor gave unwillingly, at the desire of the respondents, his time and attention to these affairs for about twenty-six years, it is right or decent to propose that his representatives should be left without one sixpence of remuneration, merely because, to save expense, or, as explained, trusting to their own Edinburgh agents, he did not follow out all the precise forms of the Act of Sederunt, intended for very different cases. To the Lord Ordinary it appears very astonishing that any parties could maintain such a plea.”

Lord Gillies.—The words of the Act of Sederunt are, “that the factor shall, once every year, give in a scheme of his accounts, charge, and discharge, to the clerk, &c., wherein, if he fail, he shall be liable to such a mulct as the Lords of Session shall modify, not being under one half-year's salary.” These words are quite imperative; and though I may consider the case to be one of much hardship to Mr Condie, the Court must enforce the regulation. As there was litiscontestation with the late Mr Condie, his son cannot object to the enforcement of the penalty in this accounting; and I conceive that it is a mulct of one-half of the year's salary in each year in which the accounts are not lodged, that the Act of Sederunt has imposed. The Court have a discretionary power of increasing, but not of diminishing this amount, and I would fix it as low as the Act of Sederunt permits. This, of course, leaves the full factor-fee for every year in which the accounts were duly lodged.

Lord Mackenzie.—I concur. If the factor fails to lodge accounts in any one year, the least penalty is the loss of one-half year's salary. If he fails to lodge the accounts the second year, the same penalty is again incurred, and so on—the penalty continuing to be repeated as often as the failure.

Lord Balgray concurred.

3. The objectors disputed the mode in which interest had been computed. Mr Condie had been almost always in advance for the estate. He stated the balances due to him progressively de die in diem, and charged the interest at the rate of five per cent, as at 11th November of each year. The rents received by him exceeded the interest which accrued on the balance due to him in any one year, and were applied in extinction of such interest in the first place, and then in extinction pro tanto of the capital. To this mode of stating the accounts, it was objected that it was equivalent to drawing interest upon interest, which was illegal. ¹

Condie answered that he was entitled to apply the rents, as soon as they came into his hands, first, to extinguish any interest which had accrued on his advances, and, second, towards extinction of the capital of these advances. This mode was supported by general practice. ^*

_________________ Footnote _________________

¹ Bell, 651; Mackenzie's Trustees, May 20,1830 (ante,VIII 781); Hamilton, Feb, 25, 1813 (F. C.); M'Neill, May 26,1826 (ante, IV. 620), and May 28, 1829 (ante, VII 666); also, Dec. 22, 1830; Napier, Dec. 1, 1829 (ante, VIII. 149), and Oct. 3, 1831.

^* “A question of importance arises on the accumulation of interest. There is this peculiarity in the present case, that the factor, far from having monies in his hands, which he should have stocked out, was constantly in advance for the estate except for a few months at two periods. He balances the account at the end of every year, imputing the money received to the growing interest first, and then reckoning interest on the balance in the next year. The accountant's opinion is very decided that this is right and correct. It probably is according to practice. But the Lord Ordinary does not feel sure of the point. If the balances were the other way, the Court have not held that the factor is bound to accumulate more than once in two or three years. The principle of accumulation every year, in the other case, may rest on other grounds, but they are not self evident. It is true that it comes to the same thing, as imputing the payments to interest first. But the same principle might be applied in the other case. Yet the Lord Ordinary still supposes that the accountant is right.

“As to the other minute objections of the respondents, they appear to the Lord Ordinary to be very groundless. It is new to say that a trustee on a Highland estate, or his representative, must be answerable penally if he does not let the shootings!”

Lord Balgray.—The objection is unfounded. Whenever a factor gets in advance, he is entitled to repay himself, interest and principal, out of the first proceeds that he receives. I never saw accounts made out on any other footing than this, and I think the factor in this case has been very ungratefully treated.

The other Judges concurred.

The Court repelled the objection, and refused to award expenses against either party.

Solicitors: W. Fraser, W. S.— R. Anderson, S. S. C.—Agents.

SS 13 SS 61 1834