Scottish Court of Session Decisions

The question in this case is whether a judicial trustee, who acquired seven shares of the western bank stock on behalf of his ward, is personally liable beyond the value of the curatorial estate. The shares were acquired by the defender by a transfer which was executed by him, and produced for the purpose of registration, and recorded in the bank's books, in terms of article 11 of the bank's contract of copartnership. The entry of the transfer in the bank's books bore to be in defender's name as curator bonis. After the date of the transfer the dividends on the shares were paid to the defender, who signed the dividend warrants therefor. The defender further, as a shareholder of the bank, and after it had stopped payment, executed, along with a large number of the bank's share-holders, a deed of alteration of article 35 of the bank's contract of copartnership. These receipts were granted, and the other steps were taken, the defender says, in his curatorial capacity. The ward of the curator was a lunatic, and the estate is exhausted. The lord ordinary (Kinloch) held the defender personally liable, on the ground that by these acts he made himself, and not his ward, a partner of the bank. His lordship added the following note to his interlocutor:—

“The question in the present case is, whether the defender, on whom the shares in question devolved, as curator bonis of Mrs Jane Broomfield, is personally liable in the calls made in respect of those shares, under the authority of the case of Lumsden v. Buchanan, as decided in the House of Lords; M. 2. 695, and 3. 89.

In that case, certain trustees under a contract of marriage invested, under authority of the contract, the trust-funds under their charge in Western Bank stock. The bank contract was subscribed by five out of six trustees, under the designation of ‘trustees for Mrs Ellen Brown, spouse of the said Charles Wilsone Brown, the majority surviving being a quorum.’ The Court, by a majority of the whole Judges, found that this imported nothing more than a liability as trustees, and to the extent of the trust-estate. The House of Lords reversed this judgment, and found that the trustees who subscribed the contract had become partners of the bank, and were personally liable for the calls. The sixth trustee, who had not subscribed, was found not liable.

It appears to the Lord Ordinary that, applying the principle of this decision, the defender, the curator, must be found equally liable in the present case. It is true that he is a judicial trustee-not a trustee nominated by a private party. But it appears to the Lord Ordinary that this circumstance is not sufficient to vary the case. The curator was under no necessity to accept the office; he did so voluntarily, and in the presumable contemplation of all its risks. A part of the funds belonging to the lunatic ward consisted of shares of Western Bank stock, which were transferred to the curator by the executer of Mr Broomfield, the lunatic's deceased husband, in name of her rights as his widow. The curator was under no obligation to register the transfer, and so become a partner of the bank, in whatever capacity. He might have sold the shares, which appear then to have been in the market at a premium (the £50 shares selling at £82), and might have left the purchaser to register himself as partner. In place of doing so, the curator accepted the transfer, registered himself as partner, and drew dividends on the stock. It is true that he accepts the transfer, and is registered under the name of curator bonis of Mrs Broomfield. But the Lord Ordinary conceives that under the judgment of the House of Lords this did not protect him from liability. He was also not an original subscriber to the contract, as were the trustees in the case of Lumsden v. Buchanan. But his registration as a partner placed him, as the Lord Ordinary thinks, in the same position. Whilst described in the transfer as curator bonis, and accepting the transfer as such, he at the same time declares that ‘he, as curator bonis foresaid, hereby becomes a partner of the said bank, and as such binds and obliges himself to implement, perform, and fulfil the whole obligations and conditions, rules, and regulations, contained in the said bank's contract of copartnership, which are held as repeated brevitatis causa; more particularly to the effect of authorising summary diligence thereon.’ He thus accepted all the obligations of the contract, exactly as if he had signed the deed. The ground of judgment against him, as appears to the Lord Ordinary, is the same in the present case as in the former—viz., that however holding and disclosing a trust character, the subscriber to such a contract of copartnery, not guarding himself against liability more than the curator did, is liable personally in the obligation of a partner to his copartners, reserving what relief against others may legally belong to him.

In one point of view, the present case may be said to be more favourable for the application of the principle than that of Lumsden v. Buchanan. In the last-mentioned case, the trustees had full authority to invest the trust-funds as they did. The Lord Ordinary finds it impossible to say the same in the present case. He has a strong opinion that it is not within the duty of a curator bonis to invest the funds of the lunatic in the shares of a speculative company. This is not an investment in a proper legal sense. There can be no doubt that the curator acted in the matter with entire good faith, and in consistency with a very common, but a very inconsiderate, practice of putting the shares of such a bank on the same footing with other investments, properly so called. But legally he had no right (as the Lord Ordinary thinks) to expose his ward to the risks of trade. His duty was to realise the shares by a sale at the earliest possible period; and no request by the lunatic's relatives would justify his not performing this duty. If this be so, it affords an additional argument in favour of personal liability; for if the transaction was against law, the curator could not bind his ward, and could only bind himself.

The Lord Ordinary was of the majority of the Court in deciding the case of Lumsden v. Buchanan. He foresaw that the judgment of the House of Lords would raise many other questions of a serious character, of which the present is one. But it is his duty to give the judgment fair and full effect in every case to which in sound construction it is applicable.

It is only to be added, on the subject of expenses, that although the Lord Ordinary has by no means come to the conclusion that it was incompetent for the liquidators to proceed as they did by way of summary diligence against the defender, he is clearly of opinion that they cannot subject the defender to the full expenses of two actions. The Lord Ordinary has given them, as they requested, decree in the ordinary action, leaving in the suspension a mere question of expenses.”

The defender reclaimed.

D. F. Moncreiff and Orr Paterson for

Page: 23↓

him argued—The defender is not, in the sense of the Joint - Stock Companies’ Acts, a contributory liable in payment of calls. He never became a partner of the Western Bank; and the only partner having been Mrs Broomfield, the lunatic, for whom he was curator, he is not liable beyond the value of the curatorial estate. The curatorial estate being exhausted, there is no personal claim against the defender. Further, the defender is not personally liable, because in the transfer by which the shares were acquired, and by subsequent steps, Mrs Broomfield was recognised as proprietrix by the bank. The case of Lumsden v. Buchanan is not in point, because there the estate was vested in the person of the trustees, who were held to be partners of the bank, whereas, in the present case, the estate remained vested in the person of the ward. The following authorities were relied upon:—Western Bank, 21 D. 110; Gordon, June 13, 1842, D. 639; 1 Bell's Appeals, 428; Ferguson, 16 D. 260, 12 and 13 Vic., cap 41, sec. 13; Scott, 18 D. 624; M'Conochie, 19 D. 366; Forbes, 7 D. 853; Bell's Prin. 1991; Lumsden, 2 Macp. 695; 3 Macp. 89.

Young and A. B. Shand, for the respondent, answered—At the date of the registration of the Western Bank, under the Joint-Stock Companies’ Acts, the defender was a shareholder and partner of the company to the extent of seven shares of its stock; and the fact of his being designed in the register of shareholders of the bank curator bonis for “Mrs Jane Broomfield, Edinburgh,” and being such curator bonis, had not the effect of creating in his favour any limitation on his liability as a shareholder. Lumsden, ut supra.

At advising,