Scottish Court of Session Decisions

Messrs Youngs, Aytoun, and Rutherford, W.S. were the ordinary law-agents of John Napier of Mollance, whose title-deeds were in their possession, and who was engaged in a process before the Court of Session, which was carried to the House of Lords by appeal. Youngs, Aytoun, and Rutherford, as Napier's agents, employed M'Dougall, a London solicitor, to conduct the appeal, and M'Dougall entered into the usual recognisances, for payment of any costs which might be awarded in favour of the respondent in the appeal. Costs were awarded in favour of the respondent to the amount of £250, and M'Dougall applied to Youngs, Aytoun, and Rutherford to relieve him of his liability for these costs, which they did by remitting the amount to him. They also paid him £150, being his own professional account of expenses for agency in the appeal. Napier's estates were sequestrated under the bankrupt act, and Robert Kemp, who was appointed trustee, presented a petition, craving that Youngs, Aytoun, and Rutherford should be ordained to deliver up the title-deeds and papers in their possession, reserving to them the full effect of their hypothec. Under this petition, in adjusting the extent to which the hypothec applied, an objection was taken by Kemp, 1st, to its covering the account paid to M'Dougall for the costs awarded to Napier's opponent in the appeal; and, 2d, to its covering the sum paid to M'Dougall as his own account in the appeal.

The Lord Ordinary ordered minutes of debate, and Kemp pleaded, in support of his objections, that, in consequence of the extraordinary and anomalous privileges with which an agent's right of hypothec had been invested by the decisions of the Court, it was of the utmost importance to confine that hypothec within its own peculiar limits. It reached solely to what was strictly the professional account of the agent, including no cash advances excepting the ordinary and necessary outlays, without which the agency could not be performed, such as fees to counsel, &c. Thus it was fixed, not only that an ordinary cautionary obligation, but even the obligation arising from being cautioner in a suspension, when undertaken by the law-agent, was not covered by the hypothec; ¹ and that money advanced to pay the composition for the client's entry as a singular successor, or for feu-duties, legacy-duties, inventory-stamp, &c., did not fall under the hypothec, as not being within “the necessary, or reasonable and ordinary disbursements of a writer in carrying on his business.” ² According to this rule, the objections of Kemp were well founded. It was true that an appellant in the House of Lords required to enter into recognisances for any costs to be awarded to the opposite party, but it was not properly within the professional province of his law-agent to undertake that cautionary obligation. ³ Any other person might equally do so, and if the law-agent chose to undertake it, he did so tanquam quilibet, and had no benefit from the hypothec. If M'Dougall himself had paid the amount he would have had no claim of hypothec, even if the title-deeds had been in his custody in place of that of Youngs, Aytoun, and Rutherford; and they, by remitting to M'Dougall, and enabling him to pay the opposite party, could not plead higher than he could have done if he had paid the amount himself. In regard to Mac-Dougal, own account for agency in the appeal, he had, himself, no claim of hypothec, as the title-deeds never were in his hands; and, as Youngs, Aytoun, and Rutherford might have intimated to M'Dougall when employing him, that he was to look to Napier alone for payment, and as, in any view, Napier was the proper debtor of M'Dougall, and they were mere cautioners, the disbursement made by them in paying M'Dougall's account was not within “the necessary, or reasonable and ordinary disbursements of a writer carrying on his business,” and therefore was not covered by the hypothec.

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¹ Grant, Feb. 28, 1801 (Dicty. voce Hypothec, App. No. I.); Creditors of Lid-derdale, July 5, 1749 (6249), and Elchies, voce Hypothec, No. 15.

² Skinner, May 31, 1823 (ante II. 354; or new ed. 312).

³ Gillon's Forms of Procedure in Appeals, p. 44.

Youngs, Aytoun, and Rutherford averred, that, by uniform practice and understanding, the Edinburgh agent who employed a London solicitor to conduct an appeal, was directly and primarily liable to him for his account. They also averred that when the London solicitor knew the Edinburgh agent to be a person of respectability, and knew the party appellant, it was, in practice, a matter of course for him to enter into recognisances without specially requiring any indemnity either from the agent or the party. They pleaded, in reference to M'Dougall's own account, that they were liable for it to the London solicitor whom they employed; that it was, in every sense, a mere professional account for agency, as much as if it had been incurred in the Court of Session; and, whether M'Dougall held the title-deeds or not was immaterial, as they (Youngs, Aytoun, and Rutherford) had held them all along, and had incurred this liability on the faith of their hypothec, so that, if the account would have been covered by the hypothec, supposing the title-deeds to have been in M'Dougall's hands, it was equally covered in the actual circumstances of the case. ¹ And as it had been decided that, where a country agent employed an Edinburgh agent in a process, and paid him his account, the country agent's right of hypothec covered that payment, ² a principle was laid down which was so much in point, as, necessarily, to rule this question. In regard to the costs for which M'Dougall became liable under his recognisances, there was no just ground for distinguishing between them, and his own account. M'Dougall had acted according to the usual practice of agents in such cases, and he had therefore merely incurred a liability in the ordinary course of carrying on his business. Youngs, Aytoun, and Rutherford held themselves liable to relieve him, and were entitled to protect themselves, under their right of hypothec, against loss, as their liability arose in the common course of their agency.

The Lord Ordinary “made avizandum with the case” ^* to the Court.

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¹ Inglis and Weir, June 27, 1825 (ante, IV. 113, or new ed. 114).

² Walker, June 8, 1831 (ante, IX. 691).

* “ Note.—The present discussion arises on a summary application in the sequestration of Mr Napier, late of Mollance, presented by the trustee against the respondents, as law-agents of the bankrupt, for exhibition and delivery of certain title-deeds and other valuable documents held by them as agents of Mr Napier. These deeds are retained by the agents under a claim of hypothec.

“When the case was remitted to the Lord Ordinary, it was not for judgment, but simply” to enquire into the facts and report.' The case, therefore, being now fully prepared in the Outor-House, must necessarily be sent to the Court for decision.

“The chief, and by far the most important point in dispute between the parties, relates to the right of the law-agents to hold the title-deeds as hypothecated, for a large sum, above £400 sterling, paid by them during their agency, for costs found due in the House of Lords to the respondent in an appeal taken by Mr Napier. In that appeal, Mr M'Dougall was the solicitor in London employed by the respondents (who had conducted the case in the Court of Session); and Mr M'Dougall having entered himself as security under the usual recognisances, for costs, was called to pay the costs. Having claimed these from the respondents, they remitted the amount to Mr M'Dougall, and now plead that their hypothec applies to this, as much as to the other articles of their account.

“The trustee objects that this is a cash advance, or at least a sum paid in virtue of a cautionary obligation, and that the hypothec does not cover such claims. In support of his argument he refers to the opinion of the Court, reported by Lord Kilkerran, in the case of the creditors of Lidderdale, Morrison, p. 6249; and to the case of Skinner, against the creditors of Cochrane of Ashkirk, in 1823, Shaw, 31st May, 1823.

“The law-agents answer, that the sum in question was a debt fairly and necessarily incurred by them in the course of their professional employment—they aver and offer to prove, that it is the usual course of practice for a solicitor in London to sign these recognisances, and for the Scotch agents who employ them to repay the solicitors; and they refer to the case of Inglis and Weir, in 1825 (4 Shaw, p. 113), wherein it was found that an agent had a hypothec over his client's papers, not only for the charges for his own trouble, but for an advance paid to another agent for the stamps and expenses of a loan. Further reference is made by the respondents to the case of Phin against Walker, in 1831 (9 Shaw, p. 691), in which it was found that an agent, in an inferior court in Scotland, can claim an hypothec for the account of an agent in the Court of Session whom he has employed on behalf of his client.

“Upon applying these authorities to the specialties of the present case, the question at issue is certainly one of considerable nicety and importance. Had the dispute occurred solely as to the expenses in the House of Lords on Mr Napier's side, the decision in the case of Phin and Walker would have ruled the case, and supported the hypothec of the Edinburgh agents as covering the account of a London solicitor employed by them. But undoubtedly there is a distinction between costs incurred directly for a client, and costs paid to his adversary under a recognisance, which might be undertaken by any third party as well as the solicitor.

“At the same time, this question is not precisely ruled by the observation reported by Lord Kilkerran in the Lidderdale case, in which his lordship holds it as out of the question for an agent to claim an hypothee for any liability in which he may have been subjected as cautioner in a suspension. There is a clear distinction between a limited recognisance for the costs of an opposite party in a pending suit, and caution judicatum solvi, which is the obligation undertaken in a suspension.

“Whether that distinction is sufficient to meet the trustees' objection in the present case, it is for the Court to determine. Though a law-agent may not be entitled to bring every cash advance within the hypothec, it deserves consideration whether he ought not to have that security for such obligation when incurred for costs, which is not only said to be undertaken daily in practice by solicitors, but may be absolutely necessary to bring the cause to a hearing in the Superior Court.

“In all the courts below the Court of Appeal, it is believed that there is a practice, on the part of agents, to make partial payments to the opposite party, when necessary to facilitate the progress and final decision of the suit. Thus, in our old practice, agents paid the awards imposed for not lodging papers, often incurred from their clients' delay to send proper information; and now, when a party is obliged to pay preliminary costs, or the costs of one branch of the litigation, when he has been in the wrong, before getting a final judgment on the merits of the case, these costs are paid to the opposite party, and included in his professional account.

“It is rather thought that it would be a hardship on agents to exclude that branch of their account from the security of the hypothec. Accordingly, on looking into the English authorities, as our hypothec, if not originally borrowed from English practice, is in many respects the same as the attorney's lien in England, it appears to the Lord Ordinary, if he does not misunderstand a case briefly reported by Mr Campbell, that the English rule, as laid down by Lord Ellenborough, is agreeable to the respondent's plea. See Crouder v. Shee ( 1 Campbell, p. 437), in one branch of which it seems to have been found, ‘That money paid by an attorney for costs, which his client is adjudged to pay, is a disbursement within 2 Geo. III. c. 23;' i.e. a proper part of an attorney's account, subject to all its privileges, and to the statutory regulations prescribed for its recovery.

“No doubt the sum at issue in the present case is of very large amount, as contrasted with most payments by agents for clients in ordinary suits. But it is not said to be beyond the sum usually expended in appeals; and if smaller payments of costs be within an attorney's privilege, it is difficult to exclude larger payments of the same class, when advanced for proceedings in a superior court.”