Scottish Court of Session Decisions

Charles Ferrier, accountant in Edinburgh, was trustee on the sequestrated estates of White, who was a heritable creditor of William Cunningham Cunningham Graham, heir of entail in possession of the lands of Gartmore and others. In 1831, Ferrier raised a ranking and sale of these lands, limiting the conclusions of the action to W. C. C. Graham's own interest as heir of entail in possession, so far as the lands should be found to be held under a strict entail. Alexander Hamilton, W.S. was appointed common agent. Ferrier afterwards sold and assigned his debt and interest to the Scottish Union Insurance Company for the price of £7700. The stamp used in the deed of conveyance was not an ad valorem stamp, but the common deed stamp.

In 1837, an action of reduction and declarator was raised against W. C. C. Graham and the substitute heirs of entail, by Hamilton, as “common agent in the foresaid process of ranking and sale, and, as such, acting for behoof of the whole creditors claimants in the foresaid process;" and by the Scottish Union Insurance Company, as being creditors of W. C. C. Graham.

The right of the Scottish Union Insurance Company was stated in the summons to be founded on, 1st, A disposition and assignation by the Hope Assurance Company in August 1825, conveying to them, for the sum of £12,000, a heritable bond of redeemable annuity for £1311, granted by W. C. C. Graham, under which the Hope Assurance Company were infeft; and a sasine in favour of the Scottish Union Insurance Company, under that disposition and assignation; and, 2d, A heritable bond of redeemable annuity for £926, granted by W. C. C. Graham, to the Scottish Union Insurance Company, in October 1825, under which they were infeft; 3d, A decreet of adjudication, in 1828, of all the right and interest of W. C. C. Graham in the said lands, in favour of the Scottish Union Insurance Company; and, 4th, The conveyance already mentioned by Ferrier and White to the Scottish Union Insurance Company, which contained express power to the Company to use all diligence against Graham's person or estate.

In these heritable bonds a clause was inserted, narrating that as W. C. C. Graham held the lands under a strict entail prohibiting alienations, &c., the heritable creditors bound themselves that no diligence done by them or their assignees “shall any way affect the lands and other heritages before described, or any part or portion thereof, or the rents, maills, and duties of the same, for any longer period than during my life, except the rents, maills, and duties which may be due to me at the time of my death; nor shall these presents, or infeftments to follow hereupon, or any process, diligence, or execution to follow hereon, any way affect the lands and other heritages foresaid, or operate so as to infringe in any manner of way the right of any person or persons when they shall succeed, or become entitled to succeed to me, the said W. C. C. Graham, as heir of tailzie in the foresaid lands and others, excepting always in so far as any such person or persons may otherwise represent me; nor shall my granting hereof be construed in any manner of way as any infringement upon or irritancy of the entails upon which I possess, hold, and enjoy the said lands and others, or any derogation therefrom in any manner of way whatever; hereby farther declaring, that these presents, and infeftments to follow hereon, are meant and intended to have effect no farther than is compatible with the said deed of entail, by which I hold the said lands and others; and also that this present right in security, and infeftment to follow hereupon, and the assignation to the rents, maills, and duties herein after inserted, and all process, diligence, and execution of whatever nature to follow upon the same, or upon the personal obligation herein before written, shall, immediately upon my death, become ipso facto void and null as against the lands and other heritages foresaid, and the heirs of tailzie succeeding thereto, and the rents, maills, and duties thereof, other than those which may be then due, and which would belong to my executors if they had not been assigned by me, in manner herein after written.” It was also declared that these provisions should be inserted in every infeftment under the bonds.

The summons set forth that W. C. C. Graham was “second lawful son of the deceased Robert Graham of Gartmore, and grandson of the deceased Nicol Graham, Esq. of Gartmore.” In calling the substitute-heirs of entail, the summons enumerated among others, Lady Scott, relict of Sir John Scott of Ancrum, “lawful daughter of the deceased William Graham, Esq , eldest son of the said Nicol Graham, Esq. of Gartmore.” The summons also stated that W. C. C. Graham, the defender, was “nearest and lawful heir of the several persons after mentioned, viz. of the said Robert Graham, otherwise styled Robert Cunningham Graham of Gartmore, his father, and also of the deceased Nicol Graham of Gartmore (father of the said Robert Graham), who was vested, infeft, and seised in the several lands and others after described.” The lands described in a subsequent part of the summons, were the lands of Gartmore and others.

The summons also libelled that an entail of the lands of Gartmore and others was executed by Nicol Graham, in favour of himself in liferent, and William Graham his eldest son, and the heirs-male of his body, whom failing, Robert Graham his second son and the heirs-male of his body, &c. in fee: that after the death of Nicol, the said Robert Graham had made up titles as heir under the entail, and, after the death of Robert, the defender W. C. C. Graham, the son and heir of Robert, had also made up a title under the entail. Besides the reason of style that the entail and other writs were vitiated in substantialibus, it was libelled that the entail of Nicol Graham was not duly registered; that Robert Graham was never duly infeft under the entail; nor was any sasine in his favour duly registered, nor was the entail ever duly feudalized; that a renewal of the tailzied investiture which had been expede by Robert Graham was inept and irregular; that the titles of the defender, W. C. C. Graham, had not been effectually made up under the entail, and that his infeftment, as heir of entail, was null. The summons, therefore, concluded that these writs, especially the infeftment of Robert Graham, the renewal of the tailzied investiture by him, and the infeftment of W. C. C. Graham, should be reduced and declared null; and thereafter the lands of Gartmore and others should be declared to be liable to be affected by the onerous debts and deeds of W. C. C. Graham, and by diligence and adjudication led thereon. The summons also contained alternative conclusions for declaring that the entail by Nicol Graham, even though not reduced, had never been duly registered in the register of tailzies, or at least had never been duly feudalized by any valid infeftment following on it, and was therefore ineffectual against the creditors of the heir in possession: or, at all events, that there was no existing tailzied investiture sufficient to protect the estate from such creditors. The summons farther concluded for declarator that the creditors of W. C. C. Graham might follow out all manner of diligence against the lands, for their security or payment.

Robert Cunningham Bontine of Ardoch, the son of W. C. C. Graham, and the next substitute-heir to him, lodged preliminary defences for himself and his family against this action. In regard to Hamilton, he pleaded, that there was no sufficient title to pursue. He was merely the common agent in the ranking and sale. This reduction and declarator was an entirely separate and distinct action, Hamilton, as common agent, had no more right in him than the agents of all the creditors in the ranking and sale would have had, if combined; ¹ and they could not have insisted in such an action as the present, which was competent only to creditors of W. C. C. Graham, and was not competent to the mere agent of any one creditor, or to the common agent of all the creditors. But, separatim if it was competent for the common agent to appear, it was incompetent, in point of form, to conjoin with him any other creditor who was a claimant in the ranking and sale.

In regard to the title of the Scottish Union Insurance Company the following among other objections were stated:—

1. The summons went to cut down the entail of Nicol Graham, and all the titles subsequently made up by his second son Robert Graham, and Robert's son W. C. C. Graham. If these conclusions were successful, the lands would be still in hereditate jacenti of Nicol Graham. But the pursuers had not libelled that their debtor, W. C. C. Graham, was the heir of line of Nicol Graham: and the fact was otherwise. The summons, ex facie, showed this, as in calling the heirs-substitute as defenders, one of them was described as Lady Scott, “daughter of the deceased William Graham, Esq., eldest son of the said Nicol Graham.” If William left no sons, as to which the summons was silent, Lady Scott was heir of line to Nicol Graham, and the effect of the reductive conclusions would be to enable her to take up the estate of Gartmore in that character. But the creditors of W. C. C. Graham had no interest, and consequently no title, to pursue an action which would simply denude him of his estate, without benefiting them.

2. In the heritable bonds held by the Scottish Union Insurance Company, the clause which was inserted to restrain them from adjudging more than the life interest of W. C. C. Graham, as an heir of entail, debarred them from an action reducing the entail itself.

3. The bond of annuity granted by W. C. C. Graham to the Scottish Union Insurance Company was null under the Stamp Acts. The stamp ought to have been £95, and it was only £85. The disposition of the other bond of annuity by the Hope Assurance Company to the Scottish Union Insurance Company was also null under the Stamp Acts, as it

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¹ A. S. Jan. 17, 1756.

should have been written on an ad valorem stamp, of £110, in place of which a stamp of £1, 15s. was used; and the conveyance by Ferrier was liable to the same objection of not being written on an ad valorem stamp.

The pursuers anwered in regard to the title of Hamilton that it was unchallengeable. The object of the present action was to enlarge the common fund for division among the creditors, and it therefore fell within his powers to insist in that action for the common behoof. As to the separate objection that, in point of form, no creditor who was a claimant in the ranking, could be conjoined with the common agent in pursuing this reduction and declarator, it was not only unfounded in itself, but it was jus tertii to the defenders to state it, in respect that no right or interest of theirs could be prejudiced by the union of two pursuers, each of whom could separately have maintained an action with the same conclusions.

In regard to the title of the Scottish Union Insurance Company, the pursuers, for the purpose of obviating the objection that the reductive conclusions swept away the interest of the pursuers to insist, lodged a minute departing from these conclusions so far as they might comprehend a reduction of the entail as a destination, or as in a question inter heredes. And farther, as W. C. C. Graham was already described in the summons as “nearest and lawful heir of the several persons after-mentioned,” viz. Robert Graham and Nicol Graham in the lands of Gart-more, &c.; the pursuers proposed to amend this by stating that he was “nearest and lawful heir-male” of the said persons, and then inserting the words “in the lands and others after described, conform to the investitures and destinations thereof.” The pursuers then contended, (1.) That upon this amendment being allowed, they would have an interest to insist, even if the entail were cut down as in a question with creditors, because W. C. C. Graham was heir-male in these lands, under the existing investiture, if good, inter heredes. And such an amendment was competent, on paying any expense occasioned by it, as it was quite consistent with the remainder of the summons.

2. The clause in the heritable bonds, restricting the right to do diligence except so far as compatible with the entail, was of no effect if there was no valid entail. It had been expressly inserted, on the assumption that there was such entail; and if there were not, the Scottish Union Insurance Company, being lawful creditors, were not to be prevented from recovering payment, while every other creditor of W. C. C. Graham was carrying off his estate and paying himself. But at any rate, the disposal of this question might be reserved till the merits of the cause were before the Court.

3. The stamp of £85 was sufficient on the bond by W. C. C. Graham to the Scottish Union Insurance Company. And when the Hope Assurance Company conveyed their heritable bond to the Scottish Union Insurance Company, there was no need for an ad valorem stamp on the conveyance. The full stamp on the bond was paid, when the bond was originally granted. It was a bond of redeemable annuity. And, therefore, at each subsequent assignation of it, nothing more than a stamp of £1, 15s. was required, because such conveyance was not of the nature of a sale, but a mere mortgage, in the sense of the Stamp Act.

The Lord Ordinary allowed the pursuers' minute, and their proposed amendment of the libel to be seen by the defenders, and additional defences to be lodged by them. In these defences they pleaded that the proposed minute and amendment were incompetent, as occasioning too great a change on the structure of the summons, and throwing it off its original basis. They also contended that as R. C. Bontine had previously obtained a declarator of irritancy and forfeiture of the lands of Gartmore against W. C. C. Graham, for contraventions of the entail, and had got the lands struck out of the ranking; and as they had never been included in the ranking except for W. C. C. Graham's life-interest as heir of entail, the common agent in that ranking was without any title to insist in the present action. The pursuers answered that the amendment of the summons was competent, being consistent with the remainder of the summons; and that the minute of restriction did not throw the summons off its original basis, but merely limited the scope of the reductive conclusions. In regard to the lands being struck out of the ranking and sale, that could not take away the title of the common agent to show that W. C. C. Graham possessed not merely a life-interest in the lands but a right of fee-simple, as in a question with creditors, and to obtain a declarator that the lands were liable to be adjudged in payment of his debts.

The Lord Ordinary pronounced this interlocutor:—“Having heard counsel successively, both on the summons as originally framed and as restricted and amended, allows the restriction and amendment to be received, reserving the effect thereof to be discussed on the merits; finds the defender entitled to the expenses occasioned by the said restriction and amendment, and remits the account thereof, when lodged, to the auditor, to tax and report, with a view to an interim decree therefor being issued: Farther, having resumed consideration of the preliminary defences, Primo, Sustains the objection to the pursuers' title, in so far as it is laid on the bond of annuity originally granted by the principal debtor, William Cunningham Cunningham Graham, Esq. to the Scottish Union Insurance Company, in respect that the same is not written on a stamp to the amount required by law: Secundo, Finds, that the Scottish Union Insurance Company have a sufficient title to pursue the present action, and, in particular, repels the objection to their title in the present action, on the plea, that the assignations by the Hope Insurance Company, and Mr Ferrier, in their favour, are written upon insufficient stamps: Tertio, Sustains the title of Mr Hamilton, as common agent, to pursue this action, in respect that the obvious effect of the action, if successful, will be greatly to enlarge the common fund or estate for division among the creditors, and in that view appears to be warranted by a sound construction of the Act of Sederunt, 11th July, 1794, defining the powers of common agents: Farther, finds that the common agent is not precluded in point of form from being conjoined in the action with other creditors who are claimants in the ranking: Quarto, Finds, that the pursuers are not barred from insisting in the present action, by the judgment in the process of ranking and sale, ordaining the lands to be struck out of the ranking, on the state of the titles as then subsisting, unaffected by any decree of reduction or declarator: Quoad ultra, repels the pleas stated in the original and additional preliminary defences as preliminary, reserving their effect as pleas on the merits, and appoints the defender to satisfy the production within ten days; and in respect the defender has intimated that he does not intend to acquiesce in this interlocutor, finds the pursuers entitled to the expenses necessarily incurred by them in discussing the defences now repelled.”

Both parties reclaimed. Before the reclaiming notes were advised, the Scottish Union Insurance Company had an additional stamp affixed to the bond of annuity granted by W. C. C. Graham to them, for the purpose of removing the objection which the Lord Ordinary had sustained. At advising the cause, it was contended for the defenders that, the adhibition of the new stamp could only have a prospective effect, and could not operate retro, either to validate the title of the Insurance Company, as at the date of raising the action, so far as the title rested on that deed, or to validate the infeftment which had been taken under the bond, or a decree of adjudication which had been led on it, while it was still inadequately stamped, and therefore not pleadable in Court as a legal warrant for infeftment. The pursuers answered, that, by 37 Geo. III., c. 136, § 2, it was provided that when any deed was executed on vellum, parchment, paper, &c., not duly stamped, but which, after having been executed, was brought to the Commissioners of Stamps, and was, by their authority, duly stamped, then “every instrument, matter, or thing, engrossed, printed, or written, on any vellum, parchment, or paper so stamped as aforesaid, shall have, and be deemed of, the like force and validity in the law, as if the vellum, parchment, or paper, so stamped, had been duly stamped before such an instrument, matter, or thing, had been engrossed, printed, or written thereon.” The pursuers were within the benefit of this provision, as appeared, inter alia, from the authority of Coventry ¹ who stated, that the release or other conveyance of an annuity, if redeemable by its original constitution, was exempt from the ad valorem duty on sales, and liable to the common deed-duty only. And the provision was recognised in practice as having a retro-active effect, as it was of daily occurrence in Court that an action was sisted

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¹ Coventry on the Stamp Laws; voce, Annuity, p. 187.

until the document founded on by the pursuer should be stamped, after which the action proceeded.

The other pleas were repeated as they had been stated to the Lord Ordinary.