Scottish Court of Session Decisions

Mr Stopford Blair and others, trustees under the marriage-contract of Mr and Mrs Heron Maxwell, being desirous of resigning their office, presented a petition to the Court, praying for the appointment of a judicial factor and the discharge of themselves. To this Mr and Mrs Maxwell lodged answers, in which they objected to the appointment of a judicial factor as a needlessly expensive way of managing the trust property, and objected also to the discharge of the trustees without an accounting.

The Lord Ordinary ( Gifford) pronounced the following interlocutors:—

“ Edinburgh, 7 th July 1874.—The Lord Ordinary having heard parties' procurators, and having considered the petition, answers, minute for the respondents, and whole process—On the motion of the respondents, nominates and appoints William James M'Haffie, Esq. of Torhousemuir, in the county of Wigtown, Robert Jardine, Esq. of Castlemilk, in the county of Dumfries, John Johnstone, Esq. of Halleaths, in the county of Dumfries, and John Robert Heron Maxwell, Esq., younger of Springkell, residing at Carlisle, to be trustees under the antenuptial contract of marriage between the respondents, Edward Heron Maxwell and Helen Stopford Blair or Heron Maxwell, his spouse, dated 14th October 1847, with all the powers competent to trustees under the said antenuptial contract of marriage, and decerns: Appoints the petitioners to intimate this appointment to the parties hereby named as trustees, and them to intimate whether they accept of the office, and that within eight days after such intimation: And, quoad ultra, continues the cause for further procedure, reserving all questions of expenses.

Note.—The Lord Ordinary cannot help thinking that the conduct of the respondents in this case has been somewhat unreasonable, and that they have thrown undue obstruction in the way of the petitioners' resignation.

The Lord Ordinary is of opinion that the petitioners are entitled to resign the office of trustees now held by them. It is true that the marriage-contract confers on the trustees only a limited power of resignation, and it was ingeniously urged that when this is the case the Trusts Act of 1861, of 1863, and of 1867 cannot be held as conferring any wider or ampler power of resignation. The Lord Ordinary cannot so read the statutes. They are all expressly declared to apply to past trusts, whatever be the date of the trust-deed, or whensoever the trust came into operation; and although it may be true that an express prohibition against the resignation of trustees who accept under that condition might form a special contract and take the case out of the statutes, it would be very strong indeed to hold that a limited power of resignation deprived the statutes quoad this matter of all effect whatever. If no power of resignation at all had been given by the deed, it was conceded that the statutes now confer that power. It would be very strict indeed to hold that when a limited power of resignation is given, the statutes cannot extend it

In the next place, the respondents contended that, although a sole trustee may resign under a petition like the present, such petition is incompetent where there are two or more trustees, all of whom are desirous of resigning at once. The Lord Ordinary thinks that this view also is founded on a reading of the statute which is much too strict and technical. Two or more trustees are often called, and rightly called, ‘sole accepting and acting trustees,’ and the world ‘sole’ is not necessarily confined to a single individual. That was its primary meaning, but in common use it has the force of the word ‘only,’ and has a collective as well as a singular meaning. Besides, there is no reason in the statute for the construction contended for by the respondents. At best it would only lead to a circuitous form of resigning, for all the trustees excepting one might resign by minute, and then the very same day the single trustee left might resign by petition. It would be absurd to insist upon this roundabout process.

The Lord Ordinary therefore came to the conclusion that the petition was competent, and that the petitioners were all entitled to resign.

The Lord Ordinary then, under the 10th clause of the Act of 1867, called upon the respondents to say whether they wished new trustees appointed, or whether he must appoint a judicial factor; and by interlocutor of 9th June he allowed the respondents to lodge a minute stating the names and designations of any parties whom they might wish to be appointed trustees. On 16th June the respondents lodged the minute No. 9 of process, which gives a somewhat uncertain sound, for while it names certain gentlemen, all of whom are quite unexceptionable, as trustees, it does so with reference to the answers, and makes the nomination ‘on the footing therein expressed.’ The Lord Ordinary does not know the precise meaning of this, and although he invited the respondents to make their minute more explicit, they declined to do so.

The truth seems to be, and it was scarcely disguised by the respondents, that the respondents wish to compel the petitioners to enter into a count and reckoning before they resign, and as a condition of being allowed to resign. There might be some reason in this if there were any person in titulo and in a position to grant the petitioners a full and effectual discharge. But the accounts will be best adjusted, and the discharge best granted, by the new trustees or by the judicial factor, and the statutes do not make any count and reckoning a pre-requisite to resignation. On the contrary, the statute contemplates that the count and reckoning shall follow, and not precede, the resignation.

In the circumstances, therefore, and assuming, notwithstanding the ambiguity of the respondents pleading that they would prefer the new trustees suggested by themselves rather than a judicia

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factor, the Lord Ordinary has appointed the persons suggested in the minute. But the respondents themselves suggested a doubt whether these gentlemen would accept, and this has made it necessary to call for their acceptance. The Lord Ordinary is of opinion that, unless the respondent's name parties willing to accept, he must appoint a judicial factor.”

“ Edinburgh, 21 st July 1874.—The Lord Ordinary having resumed consideration of the petition, answers, and whole process—In respect that the whole persons nominated and appointed as trustees by the interlocutor of 7th current have failed or declined to accept the office, and in respect that the respondents decline to name or suggest any other persons as trustees, nominates and appoints Mr Thomas Martin, chartered accountant in Edinburgh, to be judicial factor upon the trust-estate created by the antenuptial contract of marriage between the respondents Edward Heron Maxwell and Helen Stopford Blair or Heron Maxwell, his spouse, dated 14th October 1847, with all the usual powers, he always finding caution before extract: Quoad ultra continues the cause for such further proceedings as may be competent: Finds the petitioners entitled to payment of the expenses hitherto incurred by them in the present petition and proceedings, and that out of the trust-estate, and remits the account thereof, when lodged, to the Auditor of Court to tax the same, and to report.

Note.—Assuming the Lord Ordinary to be right in the views expressed in his note of 7th current, it seems to follow that he must appoint a judicial factor. The petitioners are entitled to resign. They cannot resign without previously obtaining the appointment either of new trustees or of a judicial factor. New trustees willing to accept cannot be had, so that the appointment of a judicial factor is the only alternative.”

The respondents reclaimed, and argued—The circumstances did not warrant the appointment of a judicial factor, looking either to the terms of the marriage-contract or of the Trusts Act 1867, 30 and 31 Vict., cap. 97. The trust-deed itself contained the machinery for keeping up the trust or relieving any trustee who wished to give up his duties, and therefore the Act by its own terms was not to be used as an alternative machinery. The marriage-contract was executed before the passing of the Trusts Act 1867. The only circumstances in which a trustee was entitled to apply for the appointment of a judicial factor was when he was sole trustee, and desirous of resigning, and failed to find other trustees whom he could assume. Even if the appointment of a judicial factor was competent, it was inexpedient. The trust-deed intended that the trustees should have no power to resign, except upon the footing of providing for the continuance of the trust. The trustees contemplated the continuance of the trust by the exercise of the power of assumption. It was plain, therefore, that no power of resigning in a body was ever contemplated to the effect of bringing the trust management to a close. The power of resignation was a relaxation of legal duty, only granted on condition of providing for the continuance of the trust.

Argued for the Trustees—Section 19 applied only to trust-deeds executed after the passing of the Act. The machinery provided by the deed for discharging a resigning trustee was adequate only up to a certain point. The case of there being only one trustee left was a casus improvisus—a state of things which the trustees were quite at liberty to bring about at any moment. They were either in the position of a single trustee, or they were entitled to resign in a body. The Act of 1861 conferred an absolute right of resignation on gratuitous trustees. That right was not limited and not meant to be limited by the Act of 1867, which was only meant to deal with the administration of the trust. The provisions of section 10 only applied to two cases, of which this was not one; and the Act of 1867 did not take away the individual right of each trustee to resign. The case must turn on the construction of the Act of 1861; and its purpose was to enable trustees who wished to do so to relieve themselves of office. The trustees by resigning did not shake off responsibility; they could not divest themselves of the estate without providing some one to take it up, and they proposed to do so by applying for the appointment of a judicial factor. They objected to count and reckon with Mr and Mrs Maxwell, who had only a life interest in the trust, and could not give them a discharge sufficient to protect them from a similar claim by future trustees, who would represent the whole interests under the trust.

At advising—