Scottish Court of Session Decisions

William Neilson, iron and coal-master, Mossend, died on 24th May 1882. He left a trust-disposition and settlement, dated 1st December 1880, by which he nominated as his trustees and executors his wife Mrs Ann Yule or Neilson; his brother Hugh Neilson, iron and coal-master, Summerlee, near Glasgow; his son James Neilson; James Thomson, engineer; and James M'Creath, mining engineer.

The trust-disposition contained certain special powers, and, inter alia, the following:—“ Third I provide and declare that in all matters in regard to which the interest of any of my trustees as an individual is in conflict with the interest of any beneficiary under these presents, and in transactions with partnerships or companies in which they are partners or shareholders, the vote of such trustee shall not be counted in the determination of such matters, but the adverse interest of any trustee, or the fact of his being an interested party, shall not otherwise affect his power to act.”

At the time of his death William Neilson was a partner of the Mossend Iron Company. After his death a question arose between his trustees and executors on the one hand, and the Mossend Iron Company on the other, as to the right of his trustees to avail themselves of an option given by the contract of copartnery to the executors of a deceasing partner to become partners of the company, on their intimating their intention to the surviving partners in writing within two months after the day of decease. By the terms of the trust-disposition and settlement this was a question on which two trustees (Hugh Neilson and James Neilson) were disqualified from voting through being partners of the Mossend Iron Company.

A meeting of trustees took place on 21st July 1882, at which Mrs Neilson and Mr M'Creath (being a majority of the trustees who were entitled to vote upon the question) determined to intimate to the Mossend Company that they elected to claim the right to become partners in William Neilson's stead. Mr Thomson did not vote. The Mossend Iron Company did not admit the alleged right of the trustees to become partners of the concern, and Mr M'Creath resigned while the dispute was pending, and before any proceedings were taken to enforce the claim, and thereafter an action of declarator to have the question determined was raised by Mrs Neilson, with her children's consent, as beneficiaries, which was, at the time when the present note was presented, depending before the Court. On 17th December 1883 Mrs Neilson, while this action was in court, received a letter from Messrs Mitchell, Cowan, & Johnston, writers, agents for the trustees, calling a meeting of William Neilson's trustees for the 21st of December, to consider “the proposed assumption of Mr James Bunten, Anderston Foundry Company, as a trustee in room of Mr M'Creath, resigned.”

Mrs Neilson presented the present note of suspension and interdict against her co-trustees (Hugh Neilson senior, James Neilson, and James Thomson), to have them interdicted from assuming into the trust Bunten or any other person who was nominee of or identified in interest with Hugh Neilson senior and James Neilson, and to interdict Hugh Neilson senior and James Neilson from voting on the question of the proposed assumption of Bunten, or on any question of the assumption of a trustee entitled to vote on matters touching the Mossend Company or the share of the late William Neilson therein; further, to interdict Bunten, if assumed, from voting as trustee and executor in any matter touching the interest of William Neilson or of his trust-estate in the Mossend Iron Company, or in any other matter in which the interest of any trustee as an individual was in conflict with the interest of any of the beneficiaries under William

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Neilson's settlement, or in any transaction with the Mossend Company, and meantime to grant interim interdict. She presented the application with concurrence of her children, as beneficiaries under the will.

The complainer averred that the proposal to appoint a new trustee originated with Hugh Neilson sen. and James Neilson, who were trustees under the trust-deed and also partners of the Mossend Iron Company, and that the object of the proposed assumption was to strengthen the defence of the company in the action then pending, and to hamper the complainer in pursuing it. She also alleged that Mr Bunten was not a neutral person, but as nominee of Hugh Neilson sen. and James Neilson, was friendly to them, and would give effect to their views in the trust matters affecting the copartnery; that the effect of Mr Bunten's election would be to throw the voting power of the trust entirely into his hands and those of Mr Thomson, and that there were no grounds, either of expediency or propriety, to justify the assumption of Mr Bunten into the trust.

The respondents averred that it was owing to the complainer's ceasing to attend the meetings of the trust, and to Mr M'Creath's resignation, that it was proposed to assume a new trustee. The business of the trust was at a standstill. Mr Bunten had a high social standing and great experience and ability, and had no interest or bias in the question of the partnership in the Mossend Company. They further averred that their power of voting upon matters connected with the trust was regulated by the provisions of the trust-disposition above quoted, and that they had had no communication with Mr Bunten, who had been asked by the agents of the trust whether he would be willing to act as a trustee.

The complainer pleaded:—“(1) Pendente lite nihil innovandum. (2) The intended assumption of Mr Bunten not being a fair or bona fide exercise of the powers of assumption vested in the trustees, but being proposed solely for the purpose of furthering interests adverse to the trust, the same should be interdicted.”

The respondents pleaded:—“(2) The respondents, being a quorum of the trustees, are entitled, in the due exercise of their powers, to assume Mr Bunten, or other properly qualified person, as a trustee. (3) Separatim. In the circumstances, it is advisable that an additional trustee should be assumed into the trust, and Mr Bunten being well qualified for the office, and being completely neutral and unbiassed, the note should be refused.”

The Lord Ordinary ( Kinnear) granted interim interdict, and this interdict was on 10th June 1884 continued by Lord Lee, to whose interlocutor the First Division adhered on 1st July 1884. There-after (as reported supra, p. 265) on 19th December 1884 the action of declarator was decided by a decision of the First Division finding that Mrs Neilson had no title to sue. By interlocutor of 20th January 1885 the Lord Ordinary ( Lee) recalled the interlocutor granting interim interdict, “in respect that the litigations referred to in the inter locutor of 10th June 1884 are now at an end, and that the averments of the complainer are not now relevant and sufficient to support the continuance of the interdict as formerly granted,” and repelled the reasons of suspension.

The complainer reclaimed, and argued that the interdict should be continued.

The respondents replied that the circumstances had considerably changed since the pleadings in the interdict were prepared; that Hugh Neilson had died, and that the trust in its present condition was unworkable. The trustee proposed to be assumed was in every way suitable, while the allegations against him were of the vaguest kind and unsubstantiated. The respondents were willing that anyone whom Mrs Neilson wished should be assumed into the trust.

At advising—