Scottish Court of Session Decisions

Mrs Mary Gilmour or Croskery and Mrs Jeanie Logan Sinclair, two of the beneficiaries under their father's trust, sued John Hendrie junior and others, the trustees, for an account of the trust estate, and for payment of their shares, and John Hendrie junior, as an individual and as factor for

Page: 491↓

the trust, for repayment to them or to the trustees of certain sums which the pursuers alleged had been lost to the estate by the default of the trustees.

The late Mr Boyd Gilmour, coalmaster, Galston, died upon 26 th May 1869, leaving a trust-settlement in which he nominated certain trustees. They all accepted office, but two of their number died, one in 1873, and James Hendrie, writer, Galston, in 1880, and in 1883 Allan Gilmour, the testator's nephew, and John Gilmour, his brother, became bankrupt and resigned.

In October 1880 John Hendrie junior, bank agent, Galston, brother of the late James Hendrie, and Joseph Gilmour, coal-master, Hurlford, brother of the said Allan Gilmour, were assumed trustees and accepted office. Hendrie was also appointed factor and law-agent on the trust-estate in succession to his brother. In 1884 Joseph Gilmour resigned office, and Mr Daniel Gilmour, coalmaster, crookedholm, was assumed as trustee, and continued to act along with Mr Hendrie down to the date of the present action.

The pursuers averred that the trust purposes had now been exhausted, and they claimed as their shares of the estate £1000 and £200 respectively, apart from the sums alleged to have been lost. They further averred that in 1880 the defender lent to Allan Gilmour, one of their own number, £3000 of the trust fund at 4 1 2 per cent., taking therefore an assignation in security, dated 3rd September 1880, over some ground in Ayrshire which did not exceed £1000 in value, and the borrower's interest in the lease of a certain coal-field. Again in March 1882 the defenders lent Allan Gilmour a further sum of £2500 of the said trust funds, in security for which additional bonds and assignations were granted over the same subjects. These advances were ultra vires of the said trustees; the security was insufficient; and through the negligence of the defenders the whole of these advances were lost to the trust-estate.

“The trustees also, in November 1876, illegally lent to Boyd Gilmour junior, one of the truster's sons (to whom they had already at that date advanced some thousands of pounds, and beyond his share of the estate) the sum of £100, taking as a security three small houses (two of them built of brick) in Montgomerie Street, Kilmarnock… Since the assumption of the defender John Hendrie junior as trustee a sum of £219 has been advanced by him and his co-trustee or co-trustees beyond Boyd Gilmour's prospective share of the estate, in violation or gross neglect of his duty to the other beneficiaries, as aforesaid… In connection with a loan of £4000 made by the trustees to the Gauchalland Coal Company, and which was repaid by instalments, the said John Hendrie junior, as factor to the trust, has negligently failed to get from the debtors as for interest on various instalments of principal in arrear between Whitsunday 1887 and January 1888, the sum of £35 or thereby.”

The pursuers pleaded—“(1) The pursuers being beneficiaries under the said trust-settlement, and their shares or interest being now due and payable, are entitled to count, reckoning, and payment as concluded for. (2) The defender John Hendrie, and the said James Hendrie, having ultra vires and illegally made or continued the advance of £3000 of the trust-funds, and taken over the Montgomerie Street property as condescended on, to the loss of the pursuers, the latter are entitled to decree of payment against them or their estates, or to have the said sums replaced as concluded for. (3) The defender John Hendrie having ultra vires and illegally made and continued the advance of £2500 and of £219 condescended on, and having failed through negligence to recover the £35 condescended on, the pursuers are entitled to decree for payment or replacement against him. (4) The sums condescended on having been respectively lost to, or unwarrantably charged against, the trust-estate through the default of the defender Hendrie, and the late James Hendrie, the pursuers as beneficiaries are entitled to decree of payment or replacement as concluded for.”

The defender pleaded—“(1) The action is incompetent as laid. (2) All parties interested are not called, and the present action should be dismissed or sisted until the said Allan Gilmour, John Gilmour, Joseph Gilmour, and Daniel Gilmour shall be made parties thereto, and to the operative conclusions of the summons, so far as applicable to each. (3) The defender John Hendrie is not liable in solidum, in respect he was only one of several trustees by whom the alleged ultra vires and illegal or negligent actings were done.”

On 23rd November 1889 the Lord Ordinary ( Kinnear) repelled the defenders' first three pleas-in-law.

“ Note.—The conclusions for accounting are properly directed against the acting trustees, and if there were no other conclusions I do not understand it to be maintained that the trustees who have resigned must also have been called as defenders. But it is said that in so far as the action is brought to enforce personal liability for breach of trust it ought not to be allowed to proceed against one alone of the delinquent trustees while there are others equally responsible who have not been made parties as defenders. The action in this branch is brought to enforce an obligation of reparation arising ex delicto, and if the case is well founded the trustees who were parties to the breach of trust are not correi debendi but joint delinquents. But when an action is founded on delict or joint delinquency the pursuers are entitled to proceed against any one or more of the wrongdoers— Western Bank v. Douglas, 22 D. 447.

The third plea-in-law appears to be intended to specify the ground on which the first two pleas are to be supported, namely, that one of several trustees is not liable in solidum for ‘illegal or negligent actings’ in which all are implicated. This plea therefore falls to be disposed of at the present stage. Notwithstanding its being repelled, it will still be open to the defender

Page: 492↓

to maintain upon other grounds that he is not liable in respect of the matters complained of, either separately or jointly with others.”

On 12th December 1889 the Lord Ordinary allowed the parties a proof of their averments.

The defenders reclaimed against both these interlocutors, and argued — That where, as in the present case, a body of trustees was charged with having acted ultra vires, such actings being quasi ex delicto, it was not sufficient to call as defenders one of their number, but all must be called, because the rule as to joint delinquents did not apply. The true character of the defenders here was not that of joint delinquents but correi debendi. The case cited by the Lord Ordinary did not apply, being one of joint delinquency. An analogy to the present action was to be found in cases arising out of collisions between ships and between coaches, on which see Binny v. Machray, July 18, 1848, 10 D. 1508; Gibson v. Smith, March 10, 1849, 11 D. 1024; Muir v. Collett, June 17, 1862, 24 D. 1119. The defenders were entitled to have their co-trustees called as defenders, and the action should be sisted until this was done— Richmond v. Graham, February 8, 1847, 9 D. 633; Ross v. Baird, July 18, 1848, 10 D. 1493; Pearson v. Houston's Trustees, January 20, 1868, 6 Macph. 286.

Argued for the respondents—The liability of the defenders was not joint, but pro rata, and the rule in such cases was, that where the parties were primarily liable by stipulation or ex lege, then they were liable singuli in solidum. This was settled by the case of Richmond, supra. The obligation here did not arise ex contractu, but what the defenders were guilty of was a quasi-delict—Ersk. iii. 1,13. The defenders were guilty of more than breach of trust, for the lending of trust funds to one of their own number was absolutely illegal— Perston v. Perston's Trustees, January 9, 1863, 1 Macph. 245.

At advising—