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Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Palmer & Co.'s Assignees v Glas's Trustee [1835] CA 13_308 (24 January 1835)
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Cite as: [1835] CA 13_308
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SCOTTISH_Shaw_Court_of_Session
Page: 308↓
v.
Subject_Interest—Contract—Foreign.—
1.Circumstances in which held, that an agreement to waive interest on an account prospectively, did not extend beyond the lifetime of the party in whose favour it was made. 2. Interest on an account with an Indian house of agency is due at the Indian rate of interest, till final decree in an action brought in this country against the debtor's representatives; and annual accumulations allowed, notwithstanding the death of the debtor, till the raising of such action. But, 3. By the Lord Ordinary, and acquiesced in—no accumulation admitted after that date.
The late Dr Glas carried on at Bhaugulpore, in Bengal, considerable indigo factories, and for the purpose of enabling him to do so, he was accommodated with large advances by his correspondents, Messrs Palmer and Company, agents in Calcutta. In rendering their yearly account,
“The cheerful manner in which you came in to our plan of restricted cultivation, and the zeal with which you gave effect to our measures, have not been unobserved by us; and we are sensible that much sacrifice and exertion were requisite to enable you to realize such a respectable produce as you did last year, upon the advances to which you were limited. We are happy, therefore, to throw any facility in your way to clear off your debt to us; and in consideration of what we have stated, and the heavy expense you are at for life insurance, we have determined to relieve your account this year from all charges of interest, and have accordingly written back to your credit sicca rupees 58,441, leaving the actual balance against you, on 30th April last, sicca rupees 465,603. Farther, to encourage a continuance of these exertions, which we have witnessed with so much pleasure, and which we do not despair of yet effecting your emancipation, we intend that the balance of the account which we now send you shall be relieved from interest altogether for the future, and that the new account shall go on at 8 per cent.”
Palmer and Company accordingly opened a new account, on which they charged 8 per cent interest, and on which, for the year ending 30th April, 1821, a small balance was brought out against Dr Glas. For the year ending 30th April, 1822, however, the balance on this new account was in his favour to the extent of sicca rupees 54,185, which was carried to his credit in the old account, this being balanced of the same date without any charge of interest, leaving as due to Palmer and Company sicca rupees 411,418. Dr Glas died in August of the same year, and the balance brought out on the new account at the close of that year, on the 30th April, 1823, being sicca rupees 66,949, was in like manner carried to his credit in the old account, along with the proceeds of certain life insurances and property belonging to Dr Glas in India, all mortgaged to Palmer and Company in security of their advances. These sums, reduced the balance of Dr Glas's debt on the old account to sicca rupees 128,437; and this old account was balanced on the 30th April, 1823, without any charge of interest.
Dr Glas had during his life transmitted considerable funds to this country, which were chiefly invested in heritable property, and on his death his son, Walter Stirling Glas, made up titles thereto. Till 1827, no accounts were rendered to Walter Glas by Palmer and Company, nor any demand made for payment of the balance due by Dr Glas; but in that year the last of the Indian property having been realized, they made up a final account, not charging interest, and bringing out a balance of sicca rupees 78,312, for which action was raised in the Court of Session against Walter Glas, as representing his father. Shortly after this account had been despatched from India, the omission to charge interest was noticed, and a new account was transmitted, charging interest at the rate of 10 per cent, being the current rate of
During the dependence of the action, Walter Stirling Glas's estates were sequestrated, and a commission of bankruptcy was issued against Palmer and Co., whereupon the trustee of the former and the assignees of the latter respectively sisted themselves as parties to the action.
A remit was made to an accountant, who returned a report, to which various objections were stated by Glas's trustee; but there were only two points deserving of notice.
The accountant proposed to allow interest, at the rate of ten per cent, on the balance of the old account (on which alone there had been a balance against Dr Glas) from the 30th April, 1823, and also to admit of annual accumulations, conformably to the acknowledged practice, in regard to accounts kept with the agency houses of Calcutta.
To this Glas's trustee objected, 1st, That under the letter of Palmer and Co., of date 30th April, 1821, all claim for interest on the old account was altogether and permanently abandoned, as appeared, not only from the terms of the letter itself, but from no charge of interest having been entered by Palmer and Co. on their books at the time, even after Dr Glas's death; 2d, That if interest were due, the Indian rate could not be allowed after the date of the action raised in this country; and, 3d, That annual accumulations should not be allowed, because, although the practice of Calcutta sanctioned these in regard to accounts as to which a course of operation was going on, and which were regularly rendered every year, yet this could never sanction such a charge after the account was brought to a close by the death of the merchant, and there only remained a balance forming a simple debt against his representatives; and this the more especially, in consequence of the long delay to make a legal demand against the representatives in this country, which would have put an end to the accumulations, as was held in the case of Keble v. Graham. *
On the other hand, Palmer and Co.'s assignees pleaded—
1. The waiver of any claim for interest contained in the letter of 30th April, 1821, cannot be extended, according to its plain meaning, beyond Dr Glas's own life, the consideration being the benefit expected from his personal exertions to be thereby encouraged, and the payment of his life insurances
2. As to the rate, it was settled in the case of Keble that the Indian rate in such debts was chargeable till decree. And,
3. The practice of accumulating yearly in accounts with India agency houses (which are really banking houses), is not limited to the case of persons
_________________ Footnote _________________
* July 21, 1820, in House of Lords, and November 28, 1827 (ante VI. 119).
The Lord Ordinary pronounced this interlocutor, adding a note, which, in so far as regards the points above stated, is subjoined.
*—“Approves of
_________________ Footnote _________________
* “The question of interest, in the different views taken, has appeared to the Lord Ordinary to be the only doubtful point. 1. “The most important question is, whether any interest is chargeable on the old account, which, in reality, seems to be the whole account, the balance creating the debt at Dr Glas's death being wholly traceable to that. The plea is, that there was an express contract that no interest should be charged, which, if correct, would not be at all obviated by the prospective bond of 1814. And there certainly was an engagement of a certain sort, which was acted on during Dr Glas's life, to state no interest on that account. But the question is, Whether, attending to the considerations on which that engagement proceeded, it could operate, or be intended to operate after the debtor's death. For the reasons stated by the accountant, the Lord Ordinary thinks that it could not be so meant, and could not take such effect in law; and he should have thought this clear but for the one fact, that the pursuers themselves, when they raised their original action in 1827, four years after Dr Glas's death, charged no interest on the account. It is difficult to relieve the case of the impression created by this fact, that they acted under the idea that this was the meaning, and understood effect of their contract with Dr Glas; and the Lord Ordinary cannot say that all doubt is removed from his mind on this point. But, on the whole, he is of opinion, that, if looking at what was actum et tractatum by the writings and accounts with Dr Glas himself, the stipulation could only be held legally to extend to his lifetime, the pursuers, though, in the hope of payment, they might apply it at first beyond its strict limits, ought not to be precluded from reverting in proper time to their legal rights, more especially in constituting their debt, with a view to a mere ranking on a bankrupt estate. “2. The Lord Ordinary thinks it a doubtful question, whether there should be any annual accumulation after the death of the debtor. But, on the whole, he thinks that this must be admitted as long as the debt continued to be purely an India debt. “3. But he is of opinion, that annual accumulation ought not to be allowed after an action was brought for payment of it in this Court, and against the holders of Scotch funds. If decree of constitution had been immediately obtained, there could have been no subsequent accumulation on that decree simply, however long the debt might have remained unpaid; and though the case has gone into discussion, the Lord Ordinary can see no good reason why there should be annual accumulation in this case, more than in any other action on an open account. But what confirms and determines his opinion on this point is, that the case of Keble against Graham, and afterwards Graham's trustees, in which the mode of charging interest upon an India debt was very particularly laid down by Lord Chancellor Eldon, no accumulation was allowed after the date of the action. This might be inferred from the terms of the judgment itself, as quoted by Mr Shaw, in the report of the case, November 23, 1827. But the Lord Ordinary, upon enquiry, is assured that it was so in fact. The mercantile accounts were accumulated annually till the date of the action. But the libel contained no conclusion for accumulation after its date, and the point having been expressly stated in the appellant's case to the House of Lords, the special judgment pronounced on 21st July, 1820, clearly did not sanction such accumulation; and neither was it admitted by the subsequent interlocutors of Court. “4. The Lord Ordinary would have had doubt as to the continuance of the charge of ten per cent after the action was in Court. But he considers that point to have been settled by the decision in the case, Keble v. Graham's trustees, November 23,1827, under the previous judgment of the House of Lords, above referred to.”
Palmer and Company's assignees acquiesced in the judgment of the Lord Ordinary, finding them not entitled to accumulations after the date of the summons; but Glas's trustee reclaimed.
The Court ordered minutes of debate, at advising which they delivered their opinions as follows:—
The Court accordingly adhered.
Solicitors: J. and C. Nairne, W. S.— Robert Roy, W.S.—Agents.