Scottish Court of Session Decisions

This is a question between Mr Clapperton and Messrs Kennington & Jenner, merchants, Edinburgh, and Mr James Rhind Carphin, judicial factor on the estate of Mr and Mrs Johnstone. Mrs Johnstone's father died leaving three children (two daughters and a son) and a will, by which he provided that his estate should be divided into three equal shares, one to be taken by each of his children, the shares to vest in the daughters upon their attaining majority or their being married, and the share in the son at majority. Mr Murray's will declared these shares to be alimentary and exclusive of the jus mariti of the daughters' Husbands. Before majority Mrs Johnstone became engaged to her present husband, and as he had no means wherewith to set up a house, it was arranged with Mrs Johnstone and her father's executors that a sum of £400 should be uplifted from her share in her father's estate, and set apart for the purchase of furnishings for the house. She then entered into a contract of marriage with her husband, by which she conveyed to trustees the balance of her funds, amounting to about £1200, that they might, in the first place, pay to herself the annual proceeds of it, and on her death to her husband, and on the failure of both, keep it for the benefit of children to be born of the marriage. Mr Johnstone, on his part, undertook reciprocal obligations in favour of his wife. The parties were married on the 14th April 1863, and soon after the husband's estates were sequestrated.

Page: 44↓

Mrs Johnstone had made the necessary purchases in view of the marriage; but instead of confining herself to the sum of £400, she expended about £900 in that way. Her father's executors, when they became aware of the amount of the debts she had contracted, and after having paid away about El60 of the appropriated sum, refused to make further payments, and they afterwards brought a multiple poinding to have the rights of parties determined. The various tradesmen to whom Mrs Johnstone had incurred debts prior to her marriage and the judicial factor, who came in place of the marriage-contract trustees, who had failed, were the parties to the process. The factor claimed the whole sum, as representing the marriage-contract trustees, to whom it was conveyed; and the other claimants rested their right to be preferred on the ground that Mrs Johnstone had not by the marriage contract effectually of the fee of estate which she still held. Last year Lord Barcaple repelled this plea, and sustained the claim of the judicial factor to the capital of the fund conveyed by the marriage-contract: and on advising a reclaiming-note for the other claimants, the Judges of the Second Division unanimously adhered. It was then represented to the Court that a plea, stated on behalf of Mr Clapperton and Messrs Kennington & Jenner, had not been argued in the Outer-House, and they asked a remit to the Lord Ordinary to hear parties upon it. The Court acquiesced, and made the remit. The plea was to the effect that the conveyance in the marriage-contract had the effect of rendering Mrs Johnstone insolvent, and that it was a gratuitous alienation under the Act 1621, c. 18, in favour of conjunct and confident persons without a true cause, and to the prejudice of prior creditors, and was also reducible as a fraud at common law. Lord Barcaple repelled this plea, and of new preferred the judicial factor. His Lordship added the following note:—

“The only ground urged for the preference claimed in the plea was that the conveyance by Mrs John- stone to her marriage trustees is reducible under the Act 1621, or at common law, as a fraud upon her prior creditors; and the Lord Ordinary understands this to be the whole import of the plea. It does not appear to him that there is room in the present case for the questions—some of them new, and of great importance—which would have arisen if the creditors of Mrs Johnstone could have maintained that the conveyance by Mrs Johnatone in the marriage-contract was truly granted to their prejudice—they might have done so if her estate had consisted of heritage which would not have passed to her husband by force of the marriage; but her whole means being moveable, the result of setting aside the marriage-contract, or the trust conveyance which it contains, would be to allow her entire estate to be carried to her husband by force of the legal assignation implied in the marriage, and ultimately to the trustee on his sequestrated estate. The conclusions of the summons of reduction, which has now been brought in aid of the plea, and held as repeated, are, in the most general terms, to set aside the marriage-contract in integrum. The effect of reducing the contract either would or to the extent of Mrs John-stone's prior debts, would be just to that extent to place the funds in the position of being unprotected from the legal operation of the marriage, and of now consisting part of the husband's sequestrated estate.

“It may be that in the present case it would have been better for Mrs Johnstone's creditors that her estate should have passed altogether unprotected to her husband—though he was in bankrupt circumstances—as in his hands it would have been liable for their debts, in which he is now their debtor. That must depend upon the amount of his own debts, upon the survivance of one or other of the spouses, and upon the existence of a family. In possible circumstances it may be greatly for the benefit of Mrs Johnstone's creditors that her property has been tied up in terms of the trust. But in any view the true objection, if any exists, to the deed, is not that the property has been conveyed from Mrs Johnstone to the prejudice of her creditors as such, but that it has been conveyed past the husband to the prejudice of parties who could only have reached it as his creditors. It is not that the contract rendered Mrs Johnstone insolvent, for the marriage without a contract would hare effectually done that; but that it did not leave her property to pass to Mr Johnstone and his creditors. Even if this would have been a relevant ground for reducing the deed, it is not the ground stated on record. The ground for setting aside the deed is set forth in the 11th article of the condescendence for Mr Clapperton, which is adopted by Messrs Kennington & Jenner, in these terms:—‘If the said contract was intended to take away, and did take away, from Mrs Johnatone the property of her own funds to the prejudice of the claimants’ prior debts, it was a gratuitous alienation to conjunct and confident persons in prejudice of said debts, and was null under the Act 1621, c. 18. Further, it was a fraudulent alienation by Mrs Johnstone, who thereby rendered herself insolvent, and was intended to defraud, and had the effect of defrauding her lawful creditors, and is null at common law.' It is unnecessary with reference to the case as it is thus stated, to inquire whether a consequential injury of a different kind has resulted to these parties in their character of creditors of Mr Johnstone since the marriage.

“Mrs Johnstone might, by marrying without a contract, have transmitted her whole property to a bankrupt husband, and her prior creditors would have had no legal ground of complaint. On the other hand, her husband's creditors could not complain of any amount of restriction which she might have placed upon his interest in her fortune, for the benefit either of herself or of the children of the marriage. As little, as it appears to The Lord Ordinary, can that complaint be made by the wife's prior creditors, who in that capacity have no interest whether the rights of the husband restricted or not.

“If the creditor could have any case for reducing the marriage-trust, it would appear to be of a complex and peculiar kind, resting not merely upon the alleged gratuitous conveyance of Mr John-stone's property to the prejudice of prior creditors, but likewise upon the legal effect of the marriage in making her husband liable for her debts, combined with the fact that her property was not also made over to him. No such ground. For setting aside the deed is set forth on the record, and the Lord Ordinary is not disposed to think that it could have been relevantly stated. While Mrs Johnstone's property was not attached by her creditors she was entitled to dispose of it in any way she thought most advantageous, subject only to the restraints of the Act 1621, which, for the reasons already stated, cannot, of the Lord in the opinion of the Lord Ordinary, avail in the present case; or to the equitable

Page: 45↓

interposition of the Court to set aside an act of manifest fraud. The Lord Ordinary thinks that it would be carrying this interposition further than either authority or principle would warrant if the Court were to seek for the elements of the alleged fraud, not in the nature of the conveyance which is challenged, and its direct effect upon Mrs Johnstone's prior creditors as such, but in the consequence to them as being now creditors of the husband, of the property not having been transmitted to him either by deed or by the legal effect of the marriage.?”

The creditor reclaimed.

Scott and Watson, for them, argued—It is not denied that the creditors of Mrs Johnstone, who are challenging her contract of marriage, are prior creditors in the sense of the Act 1621; and therefore, even assuming the theory of the Lord Ordinary's judgment to be well founded, it cannot be sustained, because, even if the effect of the reduction was to open up the fund to the creditors of the husband, the claimants, as creditors of the husband as well as of the wife, would participate in the dividend to be paid out of the estate. All the requisites of the statute to ground a reduction are present; but there is at least one or more of them. The conveyance to trustees for the benefit of children nascituiri of the marriage was a conveyance to conjunct and confident persons, but there was no true just and necessary cause to enter into the marriage-contract, and the only effect it had was to render Mrs John- stone insolvent; at any rate, in the circumstances that Mrs Johnstone had incurred a sum of upwards of £600 to the claimants, besides other debts, prior to entering into the contract, the jus crediti which it conferred on children of the marriage was excessive; and quoad excessum the contract should be reduced. And it is impossible to create an alimentary fee—Act 1621, c. 18; Bell's Com., vol. ii, p. 187, et seq., 5th edition; and the case of Duncan v. Sloss there cited; Bell, i, 130; Urquhart, M. 10,403.

Gifford and W. A. Brown in answer—It is admitted that the claimants are prior creditors of Mrs Johnstone, and that may give them a title to challenge her marriage-contract; but the effect of a reduction, if successful, would not be to carry the fund to them, but to open it up to the creditors of the husband by reason of the assignation implied in marriage; and therefore the Lord Ordinary's niterlocutor is well founded. Another view of the case-it may be inconsistent with the last argument, but it is a valid answer to that of the claim- ants-is, that Mr Murray impressed ml alimentary character on Mrs Johnstone's share of his estate, and that prevents it from being attachable by her creditors. It may be incompetent to create an alimentary fee, but it is quite competent to create an alimentary liferent; and if Mr Murray exceeded his power in making the whole capital sum alimentary, Mrs Johnstone cured the defect by restricting that to the liferent. Except the title of the creditors to challenge, none of the requisites of the Act has been established. The conveyance was made to trustees, but only as representing the children nascituri of the marriage; in themselves they were confident, were not conjunct and nor they so in their representative character, because it was impossible to regard children that had a mere capacity of existence as conjunct with any one. But it has never been doubted that marriage is an onerous cause, and the onerosity of the contract is sufficient to sustain it. In itself, its terms are in every respect reasonable, and the creditors and have suffered from the advances which they made have themselves to blame, both for their recklessness and not contemplating the chance of a marriage contract by which Mrs Johnstone's funds would be carried away from them; Bell, ut supra—Ersk., iv, 1, 33— Rollo v. Ramsay, 28th NOV. 1832, 11S. 132.

At advising—