Scottish Court of Session Decisions

Certain moneys were lodged in the defenders' branch bank at Dundee on account-current in the name of “A. G. Fleming, for behoof of the representatives of the late William Ireland, hardware merchant, Dundee.” The amount standing at Fleming's credit on 30th January 1880 was £413, 5s. 3d., and on that date he presented a cheque, as factor and agent for Mrs Ireland and the executry estate, and countersigned by her as executrix foresaid, for £100, payment of which was refused, and the present action was raised in the Sheriff Court of Forfarshire at Dundee for payment of that sum with interest from that date. The defenders resisted the action, on the ground that the late Mr Ireland died indebted to them in £130, and his estates were sequestrated at their instance on 29th April 1880, and that the pursuer Fleming having executed a trust-deed for behoof of his creditors, they were entitled to retain the funds in their hands until payment, or as security for the payment of their debt or the dividend effeiring thereto, or at least until the pursuers were able to give them a valid and sufficient discharge. They also pleaded that the pursuers had no title to sue, and that the petition was incompetent, in respect that Fleming being insolvent should be required to find caution for expenses. The Sheriff-Substitute ( Cheyne) repelled the defences and decerned in favour of the pursuer Fleming for the contents of the cheque with interest and expenses.

“ Note.—As the balance in defenders' hands is upwards of £400, and as their agent admitted at the discussion that their claim against the estate of the deceased was not above £130, there is plainly nothing in their plea of retention, and that plea being out of the way, I fail to see any excuse for their refusal to honour the cheque, or to find any

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ground on which they can resist decree passing against them in favour of the pursuer Fleming. Mr Hunter relied mainly upon the fact that Mr Fleming had granted a trust-deed for behoof of his creditors, and was still under trust, arguing that this necessitated either that the trustee should be made a party to the action, or that Mr Fleming should be called upon to find caution for expenses; but the simple answer to their argument is, that the trustee has no interest whatever in the money now in question, which is admittedly held by Mr Fleming in trust for others, and that in view of the large sum in the defenders' hands, their demand for caution for expenses is utterly unreasonable and unnecessary. My only doubt in regard to the disposal of the case is occasioned by the fact that since the record was closed the estates of the deceased William Ireland have been sequestrated, but on consideration I do not think that this constitutes a sufficient reason for my sisting the process or refraining from at once giving decree. The executrix's title is no doubt superseded pending the sequestration, and therefore I have not given decree in her favour, but Mr Fleming being the party with whom the defenders contracted, had a perfectly good title to sue by himself, and it seems to me that his receipt will be a sufficient discharge to the defenders, even in a question with the person who may be appointed trustee in the sequestration. It is said, that even granting the propriety of the action at the time it was brought, and the defenders' consequent liability for expenses, Mr Fleming can have no legitimate reason in pressing for decree, as he will be liable to account for the money to the trustee; but I am not quite sure about that. For all I know, Mr Fleming may have a claim against the estate for services rendered, and assuming that to be so, I am not prepared to say that his wish to get this money into his hands is unnatural or illegitimate. Be that, however, as it may, I should be doing him a grievous injustice if I were to act upon the assumption that there was any risk of him not faithfully accounting for all moneys paid over to him for behoof of the estate.” On a reclaiming petition and answers the Sheriff ( Maitland Heriot) adhered. In his note the Sheriff said:—“On the whole, the Sheriff fails to discover any good reason for the defenders' conduct in dishonouring Mr Fleming's cheque. No doubt the estates of the late William Ireland have since been sequestrated at the defenders' instance on the 29th April, but that does not appear to the Sheriff to be any good reason for dishonouring Mr Fleming's cheque on the 30th January; under this sequestration it may be that Mr Fleming or Mrs Ireland may be bound to draw this money from the defenders' bank and convey it to a trustee when appointed. The defenders themselves cannot convey it to the trustee. The money must be drawn out of the bank by those entitled to do so. It seems to the Sheriff that it would lead to great confusion in business if banks were to be entitled to inquire how funds lodged with them by a trustee were to be applied by such trustee. A bank is discharged by the signature of the party who lodged the money. The trustee is liable to account not to the bank but to the beneficiaries under the trust.”

The defenders appealed to the First Division, and argued—The right of the executrix to demand payment is superseded by the bankruptcy Fleming's right is no higher than hers, and the cause should be sisted till a judicial factor is appointed on the deceased's estate, and intimation ordered to be made to him of the process— Gray v. Johnston, L.R., 3 E. & I. App. 1—this is the ordinary course in a depending process.

Answered for pursuers—The bank was not entitled to refuse payment; they do not aver any grounds of suspicion; as depositaries they cannot object to the title of the depositor— Lopez v. Stewart, 1871, 9 Macph. 957.