Scottish Court of Session Decisions

In 1832 William Gloag was manager of the Perth Insurance Company; and Robert Bisset, writer in Perth, Malcolm Stewart of Atholl-Bank, and George Lawson Cornfute, manufacturer in Perth, were the three junior ordinary directors. It was provided by the contract of copartnery, that “all dispositions, assignations, securities, and other writings whatsoever, to be executed in favour of the company, shall be taken to and in name of the manager and the three ordinary junior directors, or those standing at the bottom of the list of such directors for the time, or such other three of the ordinary directors as the directors or major number of them may appoint, and to the survivors or survivor of them, and their or his assignees; but in trust always, for themselves and the whole other partners of the company, future as well as present; and which trustees and their foresaids, in whose favour such securities and writings shall be taken and conceived, shall be bound, at any time when required, to denude themselves by habile conveyances of the said trust property, but that always at the expense of the company, and to convey the same to such person or persons, and upon such terms, and under such conditions and declarations, as shall be appointed by the directors, with warrandice from their own facts and deeds: And all dispositions, assignations, renunciations, bonds, contracts, submissions, and other deeds whatsoever to be executed by the company, shall, in like manner, be signed and executed by the manager and the said three ordinary directors at the bottom of the list for the time being, as aforesaid, or such other three of the ordinary directors for the time, as the directors or majority of them may appoint, unless the same shall happen to relate to any of the subjects or matters vested in trust, as above written; in which case the said deeds to be executed by the company shall be signed and executed by the proper trustees, but always under the control and superintendence of the directors, as aforesaid.”

The company, in that year, acquired right to a heritable bond for £1400, in which John Campbell of Kinloch was the debtor. The disposition and assignation to the company was conceived in favour of the parties above named, in trust for the whole partners, and they were, nominatim, infeft, in trust, for behoof of the company. In April, 1834, Malcolm Stewart sold his shares in the company, and ceased to have any interest in it. Kinloch, afterwards, in the same year, intimated that he was ready to pay up the debt on obtaining a valid discharge. A deed was then prepared by the agent of Kinloch, setting forth “that we, William Gloag, Esq., manager of the County and City of Perth Fire Insurance Company, Robert Bisset, Esq., writer in Perth, Malcolm Stewart, Esq. of Atholl-Bank, and George Lawson Cornfute, Esq., manufacturer in Perth, three of the ordinary directors of the said company, for ourselves, and the whole other partners of the said company, future as well as present, considering that John Campbell, Esq. of Kinloch, by his heritable bond,” granted a real right in security, which came into the person of Thomas Trotter, the immediate author of the said William Gloag and others, by whom it was afterwards, in 1832, “sold, alienated, and disponed, to and in favour of us, as manager and directors of the said company, in trust always for ourselves and the whole other partners of the said company, future as well us present, and to the survivor and survivors of us, and our and his assignees, heritably but redeemable always,” &c.; “and now seeing that the said John Campbell has, by the hands of instantly made payment to us, as trustees and directors foresaid, and for behoof foresaid, and through the hands of me, the said William Gloag, who received the same as manager foresaid, of the foresaid principal sum of £1400 sterling, with the sum of, being the annual-rent or interest due thereon at the date hereof, all prior annualrents or interests having been formerly paid and discharged, amounting, the sum now received, to, whereof we do hereby acknowledge the receipt, renouncing all exceptions in the contrary: Therefore we, as trustees, and for behoof foresaid, have exonered and discharged, as we do by these presents not only exoner, acquit, and simpliciter discharge the said John Campbell,” &c.—“but also we, as trustees, and for behoof foresaid, have renounced,” &c. the annualrent; “and we declare the foresaid annualrent of £70 sterling to be duly and lawfully redeemed from us, as trustees, and the whole other partners of the said company, future as well as present,”—“and farther, we, as trustees and for behoof foresaid, have renounced and released the foresaid lands,” &c.:—“which discharge and renunciation above written, we, as trustees foresaid, and for behoof foresaid, bind and oblige ourselves and the whole other partners of the said company, future as well as present, to warrant to the said John Campbell and his foresaids, at all hands, and against all mortals, as law will.”

This deed after being signed by the other parties was sent to Malcolm Stewart for his signature. He refused to sign it, and besides other objections, he stated that the deed, both in its narrative and throughout its tenor, set forth, contrary to the fact, that he was a director and partner of the company; and it also imposed a personal obligation of warrandice upon him which he was not bound to undertake. The company then offered to guarantee him against all responsibility if he signed the deed; but he still refused. The company therefore raised an action before the Sheriff of Perth, narrating the circumstances, and setting forth that the concurrence of Stewart was essential, along with the manager and the other two directors, in order to execute a valid discharge, and enable the company to uplift the consigned money, upon which a loss of interest was now accruing: and therefore concluding that the defender should be “ordained to grant, execute, and deliver to the pursuers, the foresaid discharge and renunciation, to be produced at calling hereof.” The deed here referred to was the deed of discharge already quoted, which was produced with the summons. The action also concluded for decree subjecting the defender for the loss of interest which was suffered by the company in consequence of the sum in the bond, while unemployed, yielding only bank interest.

The defender pleaded, that the terms of the deed produced were objectionable on the grounds already stated, and that he could not be compelled to sign that deed.

The pursuers, before closing the record, craved leave to amend the libel by inserting, after the conclusion for ordaining the defender to execute the deed of discharge produced, the words “or such valid and sufficient discharge and renunciation of the said debt as the debtor therein is bound to receive.”

The defender objected to this amendment as incompetent, and the Sheriff “found that the same was incompetent, because changing and extending the nature and conclusions of the libel.” The record was then closed, and the pursuers pleaded, that, in so far as the deed, libelled on, set forth the defender as a director or partner of the company, they were willing to alter it, so as to correct his designation, and this did not affect the substance or identity of the deed libelled on; and that in so far as the deed imposed absolute warrandice not only on the partners of the company, but also on the defender, they were willing to alter it so that the warrandice should be laid only on the partners, and not on the defender at all; that this restriction of the obligation did not change the substance or identity of the deed; and therefore, as the effect of these alteratious would be to obviate all the defences on the merits, and as, in substance and identity, the deed, so corrected, would still be the discharge and renunciation libelled, it was competent, in point of form, to ordain the defender to sign it, even though the original libel remained unamended; and a judgment to that effect ought to be pronounced. The defender answered, that the substance and identity of the deed libelled on were no longer the same after the proposed alterations should be made; that the libel was not so framed as to apply to a discharge in any respect different from the discharge produced; and that it necessarily followed, from the judgment refusing to allow an amendment of the libel, that if there were good defences against signing the deed as originally produced, the action, as laid, must fail of success.

The Sheriff found that the defender, having accepted the office of director, was bound to execute all writings necessary for the ordinary management of the business of the company, and especially for the transfer and discharge of all such securities as might have been taken in his name, as one of the directors, and, as such, one of the trustees for the company; and that, after altering the terms of the deed, so as, on the one hand to set forth, consistently with the fact, that the security had been conceived in his favour, as one of their directors, and in trust for behoof of the company, and, on the other hand, to impose the obligation of warrandice not on the defender but on the company, the whole of his objections to sign the deed, would be obviated. The interlocutor pointed out the specific alterations of the deed which were requisite to produce this effect; enjoined them to be made; and directed the deed, when so amended, to be of new engrossed, and produced in process, and thereupon decerned the defender to subscribe the same.

The alterations thus required by the Sheriff were, the deletion from the deed of all those words which stand, printed in italics, in the clauses of the deed above quoted; and farther, at that part of the deed where the acquisition of the security from Trotter, the immediate author of the company was narrated, the words “to and in favour of us as manager and directors” were changed by deletion, and by inserting new words, into “to and in favour of me, the said William Gloag, manager of the said company, and to and in favour of us, the said Robert Bisset, Malcolm Stewart, and George Lawson Cornfute, three of the then ordinary directors.”

An extended discharge, framed in this manner, was produced, and the Sheriff, after allowing the defender an opportunity of stating special objections to it, which he did not do, “decerned the defender to subscribe the amended deed of discharge;" but assoilzied him from any liability for the loss of interest which had accrued in the mean-time, or for expenses.

The defender brought an advocation, and the Lord Ordinary “sustained the reasons of advocation, advocated the cause, recalled the interlocutors of the Sheriff; found that the advocator was not bound to sign the only deed which he was called upon by the summons to subscribe: sustained this defence, assoilzied the defender, and decerned and found him entitled to expenses incurred by him in this and in the inferior court.” ^*

The respondents reclaimed.