Scottish Court of Session Decisions

By assignation dated 7th June 1859, James Christie, No. 33 Old Broad Street, London, assigned a policy of insurance on his life for £1000, which he had effected with the Scottish Provident Institution, to the trustees under his antenuptial contract of marriage in security of an annuity of £100 sterling, provided by the marriage-contract to his wife, in the event of her survivance during all the days of her life after his decease. The marriage-contract trustees were given full power to recover sums due or which might become due under the policy, and to discharge or convey the same. The granter bound himself to keep up the policy, and the assignation bore that he had delivered up the policy to the trustees. The intimation of this assignation was acknowledged by the Scottish Provident Institution by minute dated 14th June 1859.

On 30th September 1893 James Christie granted a letter of charge to James Whittal, residing in London, wherein he acknowledged being indebted at that date to James Whittal in the sum of £513 sterling, and gave a charge over the above-mentioned policy of insurance to James Whittal in order to secure said sum of £513, and the costs and expenses to which James Whittal might be put in connection with the said letter of charge and the formal security for the assignment of the policy, and agreed to pay interest at the rate of £5 per cent. per annum on all sums due, and undertook to execute a formal assignment. No mention was made in the letter of the fact that the policy of insurance had been already assigned to Mr Christie's marriage-contract trustees. No formal assignment to Mr Whittal followed on the letter of charge.

Mr Whittal died in 1893, and his widow was appointed his executrix.

Thereafter Mrs Whittal used arrestments ad fundandam jurisdictionem against Mr Christie in the hands of the Scottish Provident Institution, and raised an action against him for the said sum of £513, with interest, and for the amount of costs and expenses incurred in connection with the charge given by the said letter of 30th September 1893.

The pursuer averred, inter alia—“Assuming that the policy of assurance is validly assigned in security of the annuity referred to, a large reversionary interest in said policy belongs to, and is the property of the defender. Averred that a reversionary annuity in favour of defender's wife could be purchased for about £300, while bonuses to the extent of £559 have been declared on the policy, and its surrender value is over or about £900. Defender's interest, which is thus very valuable, is only burdened with the payment of £127, a sum which was advanced to the defender by the Scottish Provident Institution on the security of his interest in said policy.”

The defender stated—“The pursuer in order to found jurisdiction, has used arrestments in the hands of the said Insurance Company. The said arrestments did not and could not attach any funds or estate belonging to the defender.”

He pleaded—“(1) No jurisdiction.”

On 20th July 1894 the Lord Ordinary ( Kincairney) pronounced the following interlocutor—“Sustains the first plea-in-law for the defender; dismisses the action and decerns: Finds the defender entitled to expenses, &c.

Opinion.—The pursuer and defender in this case are both domiciled in England. The defender's liability is said to be established by a letter, but the record does not show how the debt arises, nor disclose the reason why the pursuer, an Englishwoman, sues an Englishman in the Courts in Scotland. It was said at the debate that there were considerations which made the Court in Scotland forum conveniens, but these were not explained.

“The pursuer has used arrestments in the hands of the Scottish Provident Institution to found jurisdiction, but the defender denies that any funds belonging or due to him have been thereby arrested. I have found the question to be one of great difficulty.

The defender effected a policy on his life for £1000 with the Scottish Provident Institution, and by assignation dated 7th June 1859 he assigned the policy to the trustees under his contract of marriage, in security of an annuity provided by the marriage-contract to his wife, with full power to them to recover the sum which might become due under the policy, and to discharge or convey it. The granter bound himself to keep up the policy, and the assignation bears that the policy had been delivered. The intimation of assignation was acknowledged by the Scottish Provident Institution by minute dated 14th June 1859.

The defender's wife is still alive. The pursuer avers that the policy has greatly increased in value through lapse of time, and accruing bonuses; that its surrender value is £900; and that a reversionary annuity to the defender's wife of the amount provided might be purchased for £300, and that a large reversionary interest in the policy belongs to the defender.

This is not admitted, but prima facie it is probable, and falls, I think, to be assumed in considering the validity of the arrestments.

Page: 80↓

These being the circumstances, the question is whether an arrestment in the hands of the Insurance Company has attached the defender's remaining interest in the policy.

The interest of a person insured in a policy held by him may be arrested in the hands of the Insurance Company by a creditor of the person insured, notwithstanding that the sum in the policy may not be due at the date of the arrestment, and although it may be uncertain whether it will ever become due. That was first decided in Strachan v. M'Dougle, June 19, 1835, 13 S. D. 934, in which case the question arose where the debtor died before a premium became due after the date of the arrestment.

In Bankhardt's Trustees v. Scottish Amicable Society, January 21, 1871, 9 Macph. 443, it was held by Lord Gifford that an arrestment remained effectual after a new payment of the premium. His Lordship held further that the arrestment might be made effectual by the sale of the policy—a point which I would venture to think might be open to doubt—so that if there had been no assignation of this policy, I would have had no doubt as to the validity of the arrestment.

On the other hand, if the assignation had been absolute, the arrestment would of course have been bad. The difficulty arises in this case from the fact that the assignation is in security. Still the policy has been assigned and delivered, and the assignees have been empowered to receive and discharge the sum insured; and the question appears to be, whether at the date of the arrestment the Insurance Company was under any obligation to pay or account to the defender, or whether they were then bound to account only to the marriage-contract trustees. It appears to me that, in the present circumstances, the obligation of the company is to account to the marriage-contract trustees, and on the defender's death, to pay the proceeds of the policy to them, when they would hold the amount subject to a liability to account to his representatives. There is at present no legal relation between the Insurance Company and the defender.

If it could have been maintained that the marriage-contract trustees were identical with the defender, or that the assignation was a device to protect his own estate, the arrestments might have been sustained, following the eases of Rigby v. Fletcher, January 18, 1833, 1 S. D. 256; Lindsay v. The London and North-Western Railway Company, January 27, 1860, 22 D. 571. But no plea of that kind was stated or seems to be applicable.

Circumstances may yet alter so as to affect the obligation of the Insurance Company. The defender's wife may die, or he may, by purchasing an annuity for her, satisfy the trustees that they are in safety to reconvey the policy. But at present I am unable to see that the Insurance Company are debtors to the defender at all, or are under any obligation to account to him, and I am therefore of opinion that nothing has been attached by the arrestment, and that jurisdiction has not been founded.”

The pursuer reclaimed, and argued— The money contained in the policy of insurance was more than sufficient to pay the marriage-contract obligations. A reversionary annuity in favour of the defender's wife could be purchased for about £300. The surrender value of the policy was at present between £800 and £900, and if the sum of £127, advanced to the defender by the Insurance Company, were deducted, that left about £400 as the amount of the defender's interest in the policy. As far as the defender's interest in the policy was concerned, the company held on behalf of the defender. The property of the verus dominus had therefore been attached in their hands— Lindsay v. London & North —Western Railway Company, January 27, 1860, 22 D. 571— aff. February 28, 1858, 3 Macq. 99; Rigby v. Fletcher, January 18, 1833, 11 S. 256; Herries v. Brown, March 9, 1838, 16 S. 948. It had been held enough to found jurisdiction if there was a liability to account on the part of the person in whose hands the arrestments were used— Douglas v. Jones, June 30, 1831, 9 S. 856. In this case there was an obligation on the part of the Insurance Company to account. The arrestments were validly used, and the first plea-in-law for the defender should be repelled.

Argued for the defender—The judgment of the Lord Ordinary was right. There was no reversion at present due to the defender. The trustees were entitled to payment of the whole sum in the policy, and if the defender died, and there was a competition between the marriage-contract trustees and the defender's representative, the former would be preferred to the whole sum in the policy. When the policy became payable there might not be enough to meet the claims of the trustees and satisfy the annuity of the widow. It was not in point to argue that an annuity could be purchased for the widow from an insurance office at a certain sum. The widow was not bound to accept such an annuity — Wilson v. Beveridge, January 31, 1833, 11 S. 343; and even if she was willing the trustees were not entitled to purchase such an annuity and denude themselves of the trust — White's Trustees v. Whyte, June 1, 1877, 4 R. 786. There was here an irrevocable assignation in favour of the trustees—irrevocable as if it had been inserted in the marriage-contract itself. The defender had no right to a single penny of the sum contained in the policy, and the arrestment had therefore attached nothing belonging to him. The cases of Rigby and Lindsay were different from the present, as in these cases the money in trust belonged to the debtor, and the Court practically said that the debtor was not entitled to protect funds belonging to him from his creditors by putting it into the hands of trustees.