Scottish Court of Session Decisions

In June, 1836, James Allan, slater in Edinburgh, obtained a cash-account for £500 with the Royal Bank, and granted bond to the Bank, along with Robert Dixon, grocer, Charles Hay, plumber, and John Lunn, builder, all in Edinburgh. These parties were co-obligants as to the Bank, but were cautioners in a question with Allan. On applying for the cash-credit, Allan, besides proposing the security of these parties, and a security over certain heritable subjects, offered to assign to the Bank a policy of insurance for £499, 19s. 6d., which he had effected on his life in July, 1835, with the United Kingdom Life Assurance Company. When the bond was executed, Allan placed the policy in the hands of the Bank, but the Bank were satisfied with the security of the co-obligants, and did not require any assignation to the policy, but merely retained it in their custody. Allan died in July, 1836, at which time the sum of £325, besides certain interest, was due to the Bank. In October, 1836, Mrs Allan, the widow, was confirmed executrix qua relict, for behoof of her husband's creditors, and she called on the Bank to deliver up the life-policy, which she had specially included in the inventory. In February, 1837, a multiplepoinding was raised in name of the United Kingdom Life Assurance Company, in which a decree was pronounced against the Bank, in whose hands the policy still was, ordaining them to exhibit it “reserving to them, and all concerned, their rights in virtue of the policy.” The Bank produced the policy in process, but under the express reservation of their own rights, and the rights of the co-obligants under the bond; and they stated, in a minute, that when Allan placed the policy in their hands, he stated “that he was afterwards to execute an assignment of it in favour of his co-obligants in the bond, for their security and relief; and the secretary of the Bank accordingly indorsed on the back of the policy the following marking in pencil: ‘Policy to be assigned by Mr Allan to his Co-o.’ Mr Allan died soon after, and matters were in this state at his death.” Subsequently to this, Dixon and Hay paid up the amount due under the bond to the Bank, and obtained an assignation to the bond, and also to “any right or claim competent to the said Bank in or to the said certificate or policy of insurance, and sums of money thereby due.” But it was declared that there was no warrandice of “any right or title on the part of the said Bank to the said certificate or policy of insurance, or sums of money thereby due.”

Dixon and Hay now claimed the contents of the policy, as being in the full right of the Bank, and therefore entitled to retain the policy until relieved of their whole advanees under the bond to the Bank. Mrs Allan, the executrix, pleaded, that a policy of insurance did not circulate from hand to hand, by mere delivery; ¹ that the Bank acquired no right to it, or its contents, by becoming custodiers of the corpus of the policy, and, therefore, that they had transmitted no right to Dixon and Hay their assignees. The policy and its contents had been simply in bonis of the defunct until confirmed by her, and she alone could uplift and discharge the policy, and should therefore be preferred to it, in this competition; she being subject, of course, to account for its contents, to the creditors of her husband.

The Lord Ordinary “preferred the claim of the claimant, Mrs Allan, to the fund in medio, and decerned and found her entitled to expenses.” ^*

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¹ June 19, 1835 (ante, XIII. 954).

^* Note.—“When the late Mr Allan applied to the Bank for a credit, he offered the security of certain cautioners,—of certain house property,—and of a life-policy of insurance. Nothing was done under this offer in reference to the houses; and though the policy was delivered to the Bank at the time of granting the bond for the credit, it was not assigned; and the secretary states, in his letter of 11th August, 1836, that the Bank did not desire any assignation, as they were perfectly satisfied with the co-obligants proposed by Mr Allan for his cash-account. In point of fact, however, the policy remained in the hands of the Bank.

“Mr Allan died in a few weeks, in debt to the Bank under the credit. The cautioners paid the debt, and have got an assignation from the Bank to this policy, which, however, warrants nothing, and merely conveys any right that the Bank had. The cautioners, both in virtue of their own right, independently of this assignation, and under it, claim to be preferred to the policy. They are opposed by Allan's widow, who maintains that it belongs to her as executrix, and must be accounted for to the creditors generally.

“The Lord Ordinary has preferred the claim of the widow, and upon the simple ground, that a policy is not a thing that passes like a bill from hand to hand, and that an assignation or some other form of conveyance was necessary to take this ex bonis of Allan, and make it the Bank's. He conceives this question to be, a fortiori, settled by the case of Strachan, 19th June, 1835, where a policy really was assigned as a security; but even this was found to be ineffectual, because the assignation had not been intimated. No doubt, it was only found ineffectual as against an arrestment. But there is no arrestment here, and the doctrine of that case was, that the mere depositation of the policy operated no transference.

“The cautioners say that it was understood and agreed that the policy should be lodged with the Bank for their behoof. But they offer no proof of this beyond what is already in process; and it appears to the Lord Ordinary, 1st, That there is no sufficient evidence of the averment, which depends chiefly on a few words written on the back of the policy in pencil, which are unsigned, but are not alleged to have been written by Allan. 2d, That even though there had been such an arrangement, as nothing was done during Allan's life to carry it into effect, but it rested upon a mere understanding, this cannot give any preference to the cautioners over the other creditors.”

Dixon and Hay reclaimed.