Scottish Court of Session Decisions

Lord Kinloch—The substantial question raised by this action is, What is the amount of the professional account due to the respondents Murray & Ferrier, in their own right, and in that of certain preceding firms, by the trust-estate of the deceased Hugh Munro of Barnaline? A decree in absence was obtained by Messrs Murray & Ferrier, in February 1852, against Messrs Archibald Macarthur, Alexander Campbell, and Walter Ferrier, the then trustees of Mr Munro, for the sum of £620, 6s. 1d., as the amount due on this account. This decree was opened up by a suspension, at the instance of Messrs Macarthur & Campbell, Mr Walter Ferrier being by this time dead. In this process the Lord Ordinary, having received a report from Mr Edmund Baxter, as auditor and accountant, has reduced the sum due on the account to £492. 1s., for which sum he has decerned against Mr Frederick Hayne Carter, accountant, the judicial factor on Mr Munro's trust-estate, appointed in consequence of Mr Macarthur having also died, and Mr Campbell having left the country.

I am of opinion that the Lord Ordinary has arrived at a right result in this case, although, in point of form, his interlocutor may require a slight alteration.

The decision of the case turns on the effect to be given to three general objections stated against the accounts, the whole of which the Lord Ordinary has sustained, in conformity with Mr Baxter's report.

1. The first of these objections is that the accounts sued for were incurred to a succession of firms, of which Mr Walter Ferrier, one of the trustees, was a partner, and that, according to a well established rule, all the charges contained in these accounts must be disallowed, except in so far as they were actual outlays. In other words, no part of the professional profits of Mr Walter Ferrier, or his firms, can be charged against the trust-estate.

The general rule is not disputed, nor its application to the case, except for the circumstance relied on, as excluding its operation. That circumstance is, that Mr Archibald Macarthur, one of the trustees, and also a beneficiary under the trust, approved, as is alleged, of the accounts, and made a partial payment to account of them to the extent of £500.

In so far as any actings by Mr Macarthur, as trustee, are concerned (or the actings of any other of the trustees), it is plain they cannot be effectual to obviate the objection. One trustee cannot effectually authorise another to make charges against the estate which the law does not sanction. There is nothing to prevent one trustee employing another as law-agent. But this must always be with the understood legal disability. The employment cannot legally be granted on any other terms.

On the other hand, there is no doubt that the beneficiaries under the trust may dispense with the objection, and allow the charges. This is only another form of their doing what they please with their own. But I do not perceive sufficient grounds on which this can be held to have been done in the present case. Mr Archibald Macarthur, whose actings are alone relied on, did not represent the beneficiaries, that is, did not represent the whole beneficiaries under the trust. He was only institute in the entail, which the truster directed to be executed. He could not, by any act of his, compromise the rights of the substitutes. In other words, Macarthur did not represent the beneficiary interest under this trust. But the question at present in issue is not with Macarthur individually. It is with the trust-estate; in other words; with the whole beneficiary interest in the estate. This consideration seems by itself sufficient to dispose of the case on this point.

If Macarthur or his representatives were individually parties to the process, the question might be raised, Whether the objection was not to be held obviated, so far as regarded Macarthur's individual interest, supposing such interest capable of accurate appreciation? But no such question is, or can be raised. The only question is with the trust-estate; and as to such estate Macarthur's individual acts are of no relevancy.

I would desire to add that, so far as I am concerned, I perceive nothing done by Macarthurtocompromise, with any certainty, even himself individually. The mere knowledge in a general way that the Messrs Ferrier were agents for the trust would not by itself involve an obligation to sanction illegal charges. As to his payment of £500, it is clear that it was an indefinite payment to account, made before the accounts were rendered to Macarthur, and which therefore can import neither knowledge nor approbation of specific charges. It was said that the payment was made subsequently to the date of the decree in absence, and that Macarthur, as defender in the process, must be presumed to have known all the details of the account libelled. I am not' prepared to hold this to be a necessary sequence to a decree in absence. Proceedings in absence imply ignorance rather than knowledge: But the question, in reality, is not one of legal presumption. It is one of actual intentional approbation, and nothing short. None such, as I think, can be held to have taken place.

It was maintained in argument before us that the payment of £500, considered as an indefinite payment', hot being specifically appropriated by the debtor, could be appropriated by the creditor to the items worst secured, or at all events to those first in date. But I think it a sufficient answer to this plea that a creditor cannot appropriate any payment to items not legally chargeable, at whatever point of the account they occur. Until these receive legal existence by-force of approbation, they are, properly speaking, not in the account at all, and so can have no appropriation made for their extinction. This result is sanctioned by the authorities, and approves itself to sound principle.

2. The next objection sustained was to the mode of stating interest on the account, the account being balanced yearly, and the interest accumulated with the principal at the end of each year. The objection was, that this was incompetent where the account was not rendered with such accumulation distinctly set forth on its face. I agree with the accountant and the Lord Ordinary in thinking that this mode of charging interest is inadmissible, and that all that can be charged is simple interest, stated on the account on both sides of it, as one account all downward. There are special and exceptional cases in which yearly accumulation will be allowed, even where accounts are not rendered. The case of bankers is gene—rally held one of these; and the principle of the allowance is, that the practice of bankers to balance their books and to accumulate interest at the end of the year is so universal and so well known that every one transacting with them will be presumed to do so on that footing. But, except in such

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