Scottish Court of Session Decisions

The circumstances of this case are set out in detail in the report of Newlands v. Miller (Laidlaw's Trustee),

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ante, vol. xix. p. 819. As there reported, Mrs Laidlaw, wife of Laidlaw, the bankrupt, became entitled during the subsistence of the marriage to a share in the trust-estate of the deceased William Stewart, excluding therefrom her husband's jus mariti and right of administration. By the marriage-contract between Mr and Mrs Laidlaw the jus mariti and right of administration were also excluded. Mrs Laidlaw, however, as already reported, had assigned her interest in Stewart's trust in security of a loan to her husband of £300, and of another loan of £2000, and eventually these loans were repaid out of that estate. The loans were for the husband's behoof—the money being required for his business as a hotel-keeper, and for building speculation in which he was engaged. He was the sole debtor in the bonds by which the debts were constituted, Mrs Laidlaw, however, being a party to them to the effect of assigning her interest in Stewart's estate as a security for payment of the debt. In all, including the payment of the two bonds above mentioned, Mr Laidlaw obtained the whole sum of £3246, 10s. 5d. coming to his wife from Stewart's trust. She had no separate legal adviser. No part of the £3246, 10s. 5d. was ever repaid. Laidlaw having become bankrupt, as already reported, and Hugh Miller, C.A., having been elected trustee, Mrs Laidlaw on 31st July 1882 lodged a claim with him as trustee for £3246, 10s. 5d., on the ground that she was a creditor of her husband to that extent. She also claimed a sum of £785, 7s. 8d., being interest at 5 per cent. on that sum from 6th May 1873, when her husband obtained possession of her share of Stewart's estate, to 8th March 1878, the date of his sequestration. The trustee rejected the claim, explaining as the grounds of his deliverance that the claim now made by Mrs Laidlaw was for the sum formerly claimed by Mr Newlands, S.S. C., as marriage-contract trustee of Mr and Mrs Laidlaw, which claim was rejected by the Court; that the trustees of Mr Stewart had been discharged of the money by a discharge by the claimant and her husband; that there was no loan by the claimant to her husband; and that the husband's evidence in the previous litigation on Mr Newlands' claim was inconsistent with the present claim by the wife.

Mrs Laidlaw appealed to the Lord Ordinary on the Bills ( Lord kinnear).

The parties agreed by minute that the proof in the former appeal from the trustee's deliverance on Newlands' claim should be held applicable to the appeal by Mrs Laidlaw.

The Lord Ordinary on 18th November 1882 sustained the appeal “to the extent and effect of ranking the appellant for the amount of her claim, exclusive of her claim for interest,” and remitted to the trustee to rank the appellant accordingly.

“ Opinion.—The appellant during the subsistence of the marriage became entitled under the will of the late William Stewart to one-fourth part of the residue of his estate, exclusive of the jus mariti and right of administration of her husband. Her share of the estate amounted to £3246, 10s. 5d., and she now claims to rank as a creditor upon her husband's sequestrated estate for that amount with interest.

It appears that before Mr Stewart's estate was divided she at her husband's request assigned her interest in it in security of two loans—one of £300 and the other of £2000—advanced to him, and applied exclusively to his own uses and purposes. The nature of the transaction is clearly apparent upon the face of the bonds, under both of which the husband is the sole debtor, the appellant becoming a party to them merely for the purpose of assigning her separate estate in security of her husband's debt. It is not disputed that both of these loans were in fact repaid out of the appellant's separate estate, the testamentary trustees having applied her share of residue so far as necessary in extinguishing the bonds. And it is not disputed that the balance was paid to or for behoof of the bankrupt, and applied by him to his own purposes. No part of the residue therefore appears to have come into the appellant's hands, and no part of the sums belonging to her which were paid to her husband, or applied in payment of his debts, has been repaid to her by him.

In these circumstances it appears to me that at the date of the sequestration the appellant was a creditor of her husband for the whole amount of the separate estate belonging to her which he is thus shown to have received.

It is said that she gave the money to her husband, or allowed him to receive it animo donandi. If this were so, the gift would be revocable as a donation inter virum et uxorem, notwithstanding the insolvency of the husband. ( Williams v. Williams, 7 D. 111.) But the assumption of donation is in my opinion excluded by the evidence, since it appears that the appellant trusted entirely to her husband, and acted in utter ignorance of her legal rights.

The case of Cuthill v. Burns, 24 D. 849, on which the respondent's counsel relied, appears to me to have no application, since the appellant received no consideration, so as to give to her loan or donation to her husband the character of a remuneratory grant.

It was conceded that the question raised by the present claim is not ruled by the judgment of the Court upon the previous claim of Mr Newlands.

I am therefore of opinion that the appellant is entitled to be ranked for the principal sum of £3246, 10s. 5d.

But I think the claim for interest is untenable. The appellant could not have compelled her husband to account for the interest of her moneys in his hands if he had remained solvent, and therefore cannot rank for interest upon his sequestrated estate.”

The trustee reclaimed, and argued—By the terms of the marriage-contract the husband was entitled to a liferent of his wife's means, and so to the liferent of anything which she might recover from his estate. Mrs Laidlaw consented to this money being paid to her husband, and signed the discharge to Stewart's trustees. It was therefore a joint-adventure, and she took her chance along with her husband in his business affairs. No claim was ever made for this money until four years after it had been paid over, and the wife was not entitled to rear up this debt against his estate to the prejudice of his creditors.

Authority— Meldrum v. Wilson, Dec. 7, 1842, 15 Jur. 90.

Argued for Mrs Laidlaw—This money was not

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advanced by her to her husband animo donandi; but even if it had been so, the transaction was revocable, and she is now entitled to claim a ranking.

At advising—