Scottish Court of Session Decisions

Lord Gillies.—I consider this to be a very important case, in reference to the grounds on which the Lord Ordinary has placed his interlocutor. Whatever may be the age, the sickness, and the destitution of the advocator, he has no legal claim against the Incorporations, if the interlocutor of the Lord Ordinary be well founded. And this is said in a case where there is no tangible impeachment of the conduct and character of the advocator. I cannot subscribe to that doctrine. I cannot think that a corporate body, whose funds are destined to charitable uses, can pretend to any right of arbitrary and despotic rejection of claims, without any reason assigned, save their own absolute will. An individual may, indeed, be as arbitrary as he pleases in distributing his alms, because he is not legally bound to give charity to one person more than another; but a corporation, administering a charitable fund, stands in a very different position. That fund, in their hands, is mere trust-property. The parties who administer it for the time, are but trustees, who are bound to apply it fairly to the charitable uses of the trust. The managers of Heriot's Hospital, for example, or the Orphan Hospital, have no absolute right of refusing admission to an applicant, in the face of the rules of the foundation, and the practice of the institution. It is a charitable fund, no doubt, which they administer; but it is not, therefore, their absolutely arbitrary and despotic will, which is the sole rule of administration. The present case, however, seems to me to be stronger than that of either of these institutions. They originate solely from the charity of the founder; a species of chanty which, in general, is the less to be admired, as it is always to take effect only after the death of the donor, and thereby infers no privation against himself, but only against his surviving relations, Butt, be that as it may, can the managers of such charitable institutions hold out that their arbitrary will, whether influenced by caprice, partiality, or worse motives, is to be the unalterable and uncontrollable rule for administering the charitable funds? I should think it difficult to maintain that doctrine; and the present case is stronger, inasmuch as the funds of the Incorporations did not arise from any gift by an extraneous donor or founder, but from contributions made by the members themselves, including the advocator, who, as far back as 1797, contributed £50 of entrance-money to the common fund. And that rate of contribution was subsequently increased to £100. These sums were paid by intrants, to be applied to the purposes of the institution, including a charitable provision for its indigent members, and their widows, and children. Upon their own statement, in the report to the Royal Commissioners, it appears that the common fund “is applied towards the support of decayed members, widows, and children. The members at present receive an annuity of £10, widows, £9, sons and daughters of deceased members, £4, 10s. The charity thus paid for the year ending at Lammas 1833, amounted to £701, 15s. 6d., there being nine members, sixty widows and thirty-two sons and daughters. The fund is no otherwise applied, except in the repair of property and expense of management.” Now a party who has contributed his £50, or his £100, to these incorporations in his youth, is at last overtaken by sickness, old age, and poverty. But if the interlocutor under review be well founded, it is of no moment how miserable that party may become from age, and want, and sickness, nor how respectable his conduct and character may be, the Incorporations, after being so long enriched by his money, possess an absolute and arbitrary right of rejecting his claim for even the smallest relief. I do not understand this doctrine. I do not like this application of the maxim, “stat pro rationo voluntas.” Nor do I imagine that any man would become a member of the Incorporations upon these terms. Let the Incorporations assign their reasons for rejecting this claim, be they good or bad. I don't say at present what proof of these reasons, when so assigned, the Court ought to require; nor, under what limitations, such reasons ought to be effectual for disposing of the claim. But let the reasons be stated, and, in particular, if they hold that the advocator is a person who has been guilty of criminal habits, let, that appear. As the case stands, I cannot concur in the view of the Lord Ordinary. As to the case of Scotland, it appears to me that there is no sound distinction to be drawn between that case and this. The rule by the Incorporation in that case was “that the annual allowances to reduced members or widows, to commence at Martinmas next, shall in future be, to members, &c. £12,” &c. In the present case, the rule of the Incorporations is that “the rates allowed to pensioners shall at present be, as under; to a member, £15,” &c. These rates were liable to be augmented or diminished according to the state of the common fund. But that a provision at a fixed rate was made, seems equally clear according to the one regulation as to the other. There is no difference between the effect of the word “pensions,” and of the word “allowances.” Persons entering with the Incorporations were therefore entitled to entertain the confident belief, that when they became old and indigent they might look for an allowance out of the charitable funds of the Incorporations, unless some cause could be stated for rejecting them. And in the case of the advocator, if he were to apply to the parish for relief; in consequence of rejection by the Incorporations, I am far from being prepared to say, that, in the circumstances, an action of relief would not be competent at the instance of the parish against the Incorporations for alimenting him. I adopt the doctrine of Lord Lyndhurst in the case of Scotland, though I cannot help differing from his Lordship so far as to think that the case of Paterson was, in reality, in point, and was consequently overturned, as an authority, by the decision in the case of Scotland. And in that case of Paterson, the interlocutor of the Lord Ordinary (Glenlee), of which I approve, was altered by a majority only, and the case was never taken to appeal. In the present case, I think the interlocutor of the Lord Ordinary should be altered.

Lord Mackenzie.—This cause undoubtedly involves a question of very great importance. There are very numerous Corporations existing in this country. Almost the whole of these possess a fund which they administer for charitable purposes. There is not one of all these, as I believe, which conceives or understands that the administration of that charity is liable to review in a court of law. And I apprehend that it is a totally new principle of law, the introduction of which is threatened, when it is proposed to superinduce the control of a court of law, as regulating Corporations in the distribution of their charity. It is a primary principle in regard to proper charity, that it cannot be subjected to legal rule. Lord Stair says that no man can “poind for kindness,” It is impossible to sue at law for charity. Wherevor the legal right begins, there the charity ends. If there be a legal right, there is no charity; if there be charity, there is no legal right. In regard to the alms and bounty of a private individual, these rules are clear enough: but, in regard to the proper charity of a corporation, they apply with equal force. It is impossible to admit the rule, as to an individual, and then stop short and say it does not bold as to a Corporation, There is no poinding for kindness against the one, more than against the other. Take the instance of the Faculty of Advocates', for example, or of the Society of Writers to the Signet. Each of these bodies has been long in the practice of making a charitable allowance to decayed members. But there is as little legal liability in the matter, as there is in respect to the charity of any single individual. There is scarcely any Corporation which does not give charity; for, although it has been said that a Corporation is without a conscience, I am sure it cannot be said, in reference to this matter generally, that its members are without hearts, is it then to be, maintained as a general rule, as to the charity of all Corporations, that whenever any member says he is a proper object for the charity of his Corporation, but they have refused it, that he is to be entitled to bring his action for their charity, and that they must show cause for refusing it? Suppose that any advocate, in reduced circumstances, were to bring his action against the Dean of Faculty, and set forth that the Faculty had been always in the practice of giving charity in similar circumstances, and that the Faculty were bound to relieve his want. The simple answer would be that the subject referred to, was charity; that it had been given under the constraint of no legal obligation, to a party who was armed with no legal right; that it was given by the spontaneous and voluntary will of the Faculty; and that there was no basis on which to rest an action for charity against them. That is the general rule. And in regard to the allusion which has been made to the case of charitable institutions where there are trustees in the management, who have the duty of administering the charitable funds left by the donor, that case may be so different from this, that I can conceive there might be difficulty enough in dealing with questions arising out of their administration. Suppose that a boy who was rejected by the Governors of Heriot's Hospital, brought his action to have it declared that, according to the rules of the foundation, and the established practice of the Hospital, he was entitled to be admitted, and was illegally rejected'; I shall not now state what would be my opinion, because that case is not before me. But I do not see any thing to entitle mo to say, that it would necessarily be a case of which the solution would be free of difficulty, either on the one side or the other. Such a case as that does not, however, appear to be in point to this one. Because, in the present cause, if it be truly charity which is asked from these Incorporations, it certainly is their own charity: and for their own charity, no action will lie against them. That brings me to the question whether this is charity or not? or, if it originally was charity, has it subsequently undergone a change into a legal obligation; a radical change, de genere in genus; a transition, as to the state of the Incorporations, from their being a charitable society, into their being a body of persons, mutually insuring themselves against poverty, in respect of the sums severally contributed by them. Such a change is certainly quite intelligible. It might be made by an Act of Parliament, and probably also by an Act of the Incorporations themselves. But the question of fact is whether the change was made here, either in one way or another. I think it clear, that, originally, these Incorporations were not of the nature of an Insurance Society against poverty, or a society obliging themselves rigidly to aliment their poor members. A monopoly in trade, was the object for which they were originally associated. The payment of dues for admission was made chiefly with a view to obtain that privilege; and as we know that that was one main and primary purpose for which such contributions were paid, I think we are not entitled to overlook the circumstance, whether they themselves overlooked it in their report to the Royal Commissioners or not. Now, I not only hold, that, originally the allowances or pensions granted by the Incorporations were mere charity, but I am satisfied, that, according to their practice, as continued to the present day, the allowances or pensions have been and are granted as more charity still. As to the regulation which was read by your Lordship in the chair, that does not seem to mo to alter the nature of the allowance or pension. It stated a general rule for regulating the rate of allowance to widows and pensioners; bat if that allowance was mere charity, as I think it was, independently of that rule, it could not be converted into something essentially different, by the mere force of that rule. That which is given merely as charity, does not become less purely charity, because of some uniform rule being adopted in the distribution of it, among those who are the objects of charity. And in chapter 14 of the laws, when treating of the provision of a distinct fund for widows, which was to be of the nature of an insurance fund, very different words are employed; for the annuity which was thence to be obtained by widows, was described expressly to be theirs “as matter of right.” Besides this, it appears from the minutes that various attempts have been made, at different times, to render the claim of poor, or aged members, a matter of right, and that these have all been expressly resisted and defeated, on the ground that it ought to be mere charity. And it farther appears that more or less, in point of amount, is given to different persons according to circumstances. Besides which, the rules for distributing the charity were not inflexible; they were altered from time to time.

In deciding this case, I go on the special circumstances of it, as sufficiently evincing, that in its origin the distribution of this fund was of a purely charitable nature, and that there never was superinduced upon it such a change as to give a claim against it, to any of the members, as matter of right. In regard to the decisions, it appears to me that that of Paterson fixed the rule that the charity of a Corporation was not actionable, more than the charity of an individual. The case of Scotland certainly came near to it; but it was not the same, and accordingly Lord Lyndhurst, in giving judgment in that case, expressly stated that he did not mean to touch the case of Paterson. In the case of Scotland, my judgment as Lord Ordinary was altered by the Inner House, whose interlocutor was adhered to, on appeal, and I assume, now, that my interlocutor was erroneous. But still it appears to me, that the case of Scotland was decided on its special circumstances, and does not form a precedent where these circumstances do not apply; and I certainly cannot hold that the affirmance of the judgment in that, case, laid down any general principle to the effect that a Corporation, so soon as it set down rules for the distribution of its charity, was thereby made to suffer a total revolution as to its funds and its rights, and became liable thereafter to actions at law by the claimants for its charity. That would be too strong a proposition to deduce from Scotland's case: and, in the circumstances of this case, I think the interlocutor of the Lord Ordinary should be adhered to.

Lord Corerouse.—I am entirely of the same opinion with Lord Mackenzie. In the case of Scotland, when it went to the House of Lords, Lord Lyndhurst laid down a general principle, which I conceive to be perfectly sound; and the just application of which, to the present case, would lead me to adhere to the interlocutor under review. Lord Lyndhurst stated that the Incorporation had, in that case, agreed that the sum allowed to a certain class of widows should be £5 per annum, reserving a power of restriction which could only be exercised in the single event of a short-coming of funds. His Lordship also laid down, as a general rule, that this was “to be considered as an agreement, and an arrangement, between this society and every individual member of the society, and, so long as this arrangement continues in force, every member has a right to the benefit of it; and if that benefit is attempted to be withheld from him, I apprehend, under such circumstances, he is entitled to come to a court of justice for the purpose of claiming redress.” It is proper, therefore, to examine not merely the bye-laws, when the advocator entered with the Incorporation, but also the by-laws subsequently passed. And what are the by-laws of these Incorporations? There is one which has an important bearing on this subject. It occurs in cap. 12, § 2, and is to this effect: “No petition, or other application for pecuniary aid, shall be received, except at a quarterly meeting. The petitions shall be duly subscribed by the applicants themselves, or some other person of good character, and the necessity or circumstances of the petitioners shall be attested by two members of the Incorporations. When application is made for enrolment as a pensioner, the petition shall be remitted to a committee, who shall inquire into the situation of the petitioner, and report thereupon to the next quarterly meeting, when the petition shall be reconsidered and disposed of by the meeting.” What then is implied under this regulation? It implies that when any member petitions for charity, the application is to be remitted to a committee, who are to inquire into the situation of the petitioner, and report to the next quarterly meeting, who are then to determine whether it is a fit case for granting a pension or refusing it. And by their determination the application is to be disposed of. What is the contract between the individual and the Corporation? That it is in the power of the Corporation itself to dispose of his application. It is true that the word “final” is not stated in this rule; but it is necessarily implied according to the plain import of it, that the determination of the Corporation shall finally dispose of the application. And that regulation I hold to be wise and expedient. It is difficult to foresee what extent of litigation might be produced, of the most unsatisfactory sort, if every rejected claimant could get on the poors' roll, and insist that a court of law should determine whether he was old enough, poor enough, or sick enough, to warrant a reversal of the judgment of the Corporation. The Corporation, in every case, know best the circumstances of it, and are the best judges whether an application should be granted, or how it should be disposed of. A petitioner may be both aged and indigent, yet he may not be a fit object for the charity of the Corporation. His character may be such that it would be improper to give him a pension. All that is for the consideration of the Corporation, and they are entitled to decide on it for themselves, in administering a fund which I hold to be clearly a charitable fund. It appears to me, therefore, that, by the actual compact between the advocator, as an individual member, and the Corporation, the Corporation have the sole right to consider whether they shall give relief or not. The practice of the Corporation has always been conformable to this rule. In regard to the regulation to which your Lordship has specially adverted, it certainly does provide that the allowance to widows and pensioners, when given at all, shall be given at a fixed rate: but these parties must first, by the discretionary act of the Corporation, he found entitled to their charity, before the subordinate question arises as to the amount which they shall receive. It is the subordinate question alone which appears to me to be affected by that regulation. The primary question, whether an applicant has a legal right at all, to any allowance great or small, does not appear to me to be affected by it. It has been said that the common fund is held in trust for charitable uses alone, but I am not sure if that is proved. The report to the Royal Commissioners certainly bears that the fund has been so applied; but it does not bear that the Corporation were under any obligation whatever to apply it exclusively to that object. They might have built a hall, or collected a library, with part of it, for any thing that appears. And as to the case of Heriot's Hospital, and similar institutions, they do not appear to me to be at all analogous, because in them there is a fund delivered over to trustees, to be applied to certain specific purposes, according to certain rules.

In regard to the decisions, it was expressly stated by Lord Lyndhurst, that, in affirming the case of Scotland, he did not mean to touch the case of Paterson. And therefore the case of Paterson, so analogous to the present case, remains of authority as before. I am not aware of the precise words of the by-laws of the Corporation in the case of Scotland; but, so far as I see, they were not such as those in the present case, and may have more nearly approached those of benefit societies. The whole rules were not quoted in the report of the case; but, so far as appears, no such rule existed as that in cap. 14, § 2, already read by me. The rules in Scotland's case might be such as to rear up an express obligation in favour of a party in the situation of the claimant there. But I can see nothing in the rules of the Corporation here to infer an actual obligation, that any sum whatever should be given to every, or any, indigent member. The general rates were fixed, if any allowance was to be given; but there was no obligation to give any allowance whatever. The administration of the charitable fund, or at least the fund which has hitherto been applied in charity, has been committed to the discretion of the Corporation, and I do not see where it could be better placed. I am for adhering to the interlocutor of the Lord Ordinary,

As the Judges were equally divided in opinion, their Lordships pronounced this interlocutor:—“The Lords of the First Division request the opinion of the whole Judges on the case stated in the mutual cases of the parties, and in respect that this is an alimentary case, recommend it to the Judges to give their opinions, if possible, against Wednesday se'nnight.”

The following Opinion was returned by the Lord Justice-Clerk, and Lords Glenlee, Meadowbank, Medwyn, Jeffrey, and Cuninghame:—

“We are of opinion that the interlocutor of the Lord Ordinary is right, and ought to be adhered to. Looking to the nature and object of this fund, and the proceedings of the Incorporation in the management and disposal of it, for at least a century and a half, it appears to have been considered by the members as a charitable fund merely, to be administered by the Incorporation, according to their sound discretion, on the investigation of the circumstances of each individual case, and inquiry into the personal conduct of the applicant; and that the members had no legal claim to relief, as under any special contract with or undertaking by the Incorporation, in virtue of their membership, nor upon the principle of a mutual benefit society, where each contributor has a right to a certain specific payment on the occurrence of the casualty entitling to the relief, in return for the contribution to the funds, made on a calculation of the risk. Here the payment made by each member, at entering with the Incorporation, was to obtain valuable exclusive privileges, connected with their employments as tradesmen, and the claim upon the charity of the Incorporation is only an additional advantage acquired by them as members, but to be dispensed according to the sound discretion of the Incorporation. This opinion does not run counter to the judgment in the case of Scotland, just as little as that case did to the previous case of Faterson. There is a clear distinction between them, which was well pointed out in the case of Scotland; and the material facts in the present case resemble in all respects those of the case of Paterson, and warrant a similar decision.

“We do not say, that in no ease ought this Court to interfere in controlling the conduct of an Incorporation in the management of their charity funds, on the complaint of a member whose claim had been refused; hut it could be only in a very gross case of unjust rejection, proceeding from some obvious and unquestionable motives of personal ill-will, disregarding entirely the grounds of the application, such as can scarcely be conceived to influence such a body relative to such a claim, where, we believe, the fault is much oftener that of listening to importunate solicitations, and being over liberal than niggardly in dispensing charity. The few cases that have ever been brought before the Court similar to the present, mark well both the conduct of Incorporations, and the opinions of the members as to their rights in this matter: and we are of opinion, that it would be ruinous to such charitable institutions, if their funds were liable to be diminished by resisting claims of this kind in a court of law, even if they should be uniformly successful. Actions would be raised, not because the pursuer expected to obtain a judgment in his favour, but to compel the Incorporation to yield rather than contest the matter with a party on the poor's roll.”

To this Opinion, Lords’ Fuller-Ton, Moncreiff, and Cockburn, made the following addition:—“We concur in the above opinion, with this explanation, that though perfectly satisfied of the right of the Court to entertain and investigate any charge of a misappropriation of the funds of the Incorporation, we are not able at present to anticipate any circumstances, in which the refusal of the Incorporation to grant relief to one of their members, could, consistently with the grounds of that opinion, justify the interference of the Court.”

The cause was then resumed by their Lordships of the First Division, who, in terms of the opinion of the consulted Judges, adhered to the interlocutor of the Lord Ordinary.