Scottish Court of Session Decisions

This was a petition at the instance of Mrs Ann Adam or Taylor and others, four of the beneficiaries under the trust-disposition and settlement of James Adam, merchant, Lossiemouth, and farmer at Oakenhead, near Elgin, who died in 1853. By that deed the truster appointed his wife Mrs Marjory Riach or Adam, John Adam, farmer at Eastertoun, since dead, William Adam, farmer at Bardon, William Grant, accountant in Elgin, and John Russell, tailor in Lossiemouth, and the survivors and survivor, acceptors and acceptor of them, to be his trustees and executors, and conveyed to them his whole estate, heritable and moveable, for inter alia the following purposes — Second, After selling and disposing of his estate, and converting the same into cash, the trustees and executors were to invest the whole of the free proceeds thereof on heritable or undoubted personal security in their own names, and pay over the free annual interest arising therefrom to the said Mrs Marjory Riach or Adam during all the days of her life. Third, After his widow's death, one half of the residue to be paid over to any person to be named by her, and the other half to the truster's brothers and sisters now alive, equally among them, share and share alike. Fourth, The truster authorised and empowered his trustees and their foresaids, when and so often as the same should be necessary, to assume and nominate other suitable trustees to act along with them in the trust, so that the same might be carried on in a proper manner and brought to a satisfactory conclusion. Fifth, There was inserted the usual clause in favour of the trustees, exempting them from responsibility for omissions, &c.

The petition was at the instance of three of the children of John Adam, a deceased brother of the truster's, and of a son of a deceased sister, and there was further a minute of concurrence from several other beneficiaries.

The truster had six brothers and sisters, all of whom or their families were interested in the residue of the estate.

The petition prayed the Court to remove the trustees from their office, and to appoint a judicial factor upon the estate, and the statement of facts upon which the petitioners founded was, inter alia, as follows:—The truster had before his death carried on an extensive business as spirit merchant and general dealer at Lossiemouth, and he was also tenant of a farm near that. His estate was partly heritable, partly moveable; the former was given up in the inventory as amounting to £2695, 11s. 4d., and the latter consisted of a dwelling-house and shop at Lossiemouth, and fish-curing premises there. The lease of the farm of which the truster was tenant was for nineteen years from Whitsunday 1842 for part of the lands, and for ten and fourteen years for other parts. The petitioners averred generally that though the trustees had entered into possession of the estate and had realised it, they could not, after repeated application, ascertain the amount of it, and that all other information was denied them.

The truster's widow, both before and after a second marriage, into which she entered with a person named Grant, had, contrary to the directions of the deed, carried on the business of grocer and spirit merchant in the premises previously occupied by her first husband; and her cotrustees, it was averred, had sold her by private bargain the house and shop in which it was carried on, although she was at the time a trustee. The business and stock-in-trade had also, it was stated, become hers by private sale, at a nominal price, and advances had been made out of the trust-funds, without sufficient security, to her second husband.

In 1873, a considerable period after the death of John Adam and William Grant, two of the original trustees, a deed of assumption was executed by which Robert Smith, then bank-agent in Lossiemouth, afterwards in Peterhead, and James Adam and Alexander Adam, both sons of and engaged in farm work with William Adam, who, it was averred, was the sole managing trustee, were assumed as new trustees. Smith, immediately on his appointment, removed to Peterhead, and took no part in the management of the estate, and the assumption, it was stated, was effected by William Adam for a purpose adverse to the trust, and was not a bona fide assumption by the other trustees. Before his death William

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Grant had been in the management, and for some time thereafter a clerk of his, named Milne, had retained charge, but had afterwards absconded, and in that way, it was explained, a considerable part of both the capital and income of the estate had been lost.

The trustees, the petitioners stated, had refused to give an account of their intromissions, or of the investment of the trust-funds, or of their account with the bank. They eventually informed them that £2165, 6s. 8d., which constituted the greater part of the estate, was deposited in bank, but the petitioners averred that this course had been taken to satisfy their inquiries, and that it had previously been lent by the trustees to some of their own number. The petitioners further averred that William and James Adam had appropriated the trust-funds to their own uses at different times, and if they granted any documents of debt, these remained in their own hands, and they alone virtually had the control of the estate in their power.

None of the funds were or ever had been invested on heritable security, or on that of personal property, as the truster had directed; portions were held upon promissory-note, and upon bills which it was averred were granted on account of the borrowers' private connections with William Adam the trustee; and the rest was deposited in bank.

The petitioners averred that, notwithstanding their remonstrances, nothing had been done by the trustees, and submitted that as their vested interests were thereby being injured, it was necessary that the trustees should be removed from their office to prevent further loss.

The trustees lodged answers, in which they stated that the free residue of the estate had amounted to about £1745, and that the capital sum now available for division was £3129, 4s. 7 1 2d.; that they, with the assistance of the truster's widow, had carried on her husband's business for more than a year after her death; that the stock in the shop was partly sold off, and partly disposed of to the widow after valuation; that the shop and dwelling-house passed into her hands after valuation by an architect; and that it was the father of two of the petitioners who carried through the sale.

The farm, the trustees explained, was carried on till the end of the lease, and a displenishing sale thereafter carried out. Mr Grant, an accountant of high standing in Elgin, had been entrusted by his co-trustees with the management of the trust till his death in 1867, after which Mr Milne, a clerk of Grant's, continued to conduct it. In 1871 the management was taken out of his hands, and his accounts docquetted and a discharge granted him. It was explained that the estate had suffered no loss through Milne. William Adam's two sons and Smith were assumed as trustees in 1873 with the entire approval of all the trustees. James Adam was especially a good man of business, and after being appointed a trustee took the more active management of the trust before it was given over to Messrs Forsyth & Stewart, solicitors in Elgin, in whose hands it now was. The truster's widow, now Mrs Grant, as liferentrix of the estate, was quite satisfied with the management, as also all the other beneficiaries, of whom there were a large number, with the exception of the petitioners, and the trustees were always willing to give to the petitioners the information which they were entitled to get. The accounts were always open to inspection, and with reference to the loans of trust-funds to trustees, it was explained that they were granted during Mr Grant's management and in ignorance of their illegality; at the same time the securities were good. The sum on deposit-receipt remained so at the desire of the liferentrix, who alone had any interest in the profits of the money.

A correspondence between William Adam, one of the petitioners, and James Adam, the trustee, and latterly between their agents, was produced, the purport of which sufficiently appears from the opinion delivered.

The respondent's counsel were not called on.

At advising—