Scottish Court of Session Decisions

James Grahame, C.A., Glasgow, late treasurer of the Glasgow and Carlisle Turnpike Road Trust, and William Henry Hill, L.L.D., Glasgow, late clerk of the same trust, raised an action of multiplepoinding and exoneration against the Duke of Argyll and others, concluding for decree that they were liable in only once and single payment of the sums of (1) £232, 16s. 3d., (2) £4165, 10s. 3d., and (3) £740, 17s. 8d.

Under the private Act of Parliament, 56 Geo. III., cap. 83, 1st July 1816, the road from Glasgow to Carlisle was constructed partly out of public moneys granted by the Exchequer, partly out of the subscriptions of private persons, who thereupon became creditors of the Glasgow and Carlisle Road Trust. In terms of the Act, the revenue of the trust, after defraying the expenses of maintenance and management, was applicable (1) to the payment of interest on the sums subscribed, (2) to the payment of interest on the money advanced by the Exchequer, and (3) ultimately to the extinction of the whole debt by means of a sinking-fund.

In 1846 an agreement was entered into by the Caledonian Railway Company, the Road Trustees, and certain persons acting as trustees for the private creditors, whereby the Railway Company purchased the debts due to the private creditors, amounting to £23,803, for the sum of £15,000, payable at Martinmas 1846, when the right of the purchasers was to take effect. The agreement contained the following stipulation:—“( Fifth) The said second parties bind and oblige themselves and the said trustees and creditors, to concur with the said Railway Company in endeavouring to induce Government to abandon their claim to the accumulated surplus revenue funds now in the hands of the treasurer, and in the event of the same, or any part thereof, being so abandoned, the amount shall be divided between the Railway Company and the present creditors on the said road, who, it is understood, are to participate equally with the Railway Company in any benefit which the trust creditors or railway may derive by the abandonment in any way whatsoever by Government of the claims against the trust now or at any future period.” There followed a declaration, that, as soon as the Road Trustees or creditors had recovered an amount equal to the difference between £15,000 and £23,803, the railway company should be entitled to the whole benefit of any further sums recovered from railway or other companies, or abandoned by Government.

As a matter of fact, the purchase price was not paid, and the debts were not taken over by the Caledonian Railway Company till Whitsunday 1852.

At that date there were certain unsatisfied claims for past due interest, and also claims for dividends outstanding against the Road Trust. Among these was a sum amounting with accumulations up to December 1883 to £232, 16s. 3d., representing the amount unclaimed by sixty-three of the private creditors of their shares of the surplus revenue of the trust for the three years ending 30th June 1848. The total surplus revenue for that period amounted to £3115, 10s. 11d., whereof one-half had in terms of the agreement been paid to the Railway Company. Of the remaining half, £1426, 8s. 6d. had been claimed by and paid to private creditors. The balance was deposited in bank to meet claims not yet brought forward, and was the sum amounting, as above stated, to £232, 16s. 3d., first specified in the summons.

The sums carried to the credit of individual creditors' accounts amounted between April 2nd 1842 and Whitsunday 1852, with balance brought forward at the former date, to £11,677, 11s. 10d. The unpaid and unclaimed balance thereof amounted to £1573, 16s. 3d. To this there fell to be added £77, 17s. 6 1 2d., being the balance not allotted of the sums carried to the credit of the general dividend account during the same period. These two sums with interest amounted at December 1883 to £4165, 10s. 3d., being the second sum specified in the condescendence. It did not appear in what terms these funds were originally deposited. On the termination of the Road Trust under the Roads and Bridges (Scotland) Act 1878, sec. 4, in 1883, they were deposited on deposit-receipts taken, the first in favour of “The creditors of the Glasgow and Carlisle Roads, per James Graham, Esq., Treasurer,” the second in favour of “Glasgow and Carlisle Roads Dividend Account, per James Graham, Esq., Treasurer.”

In 1846, in the course of certain negotiations with the Government with regard to the repayment of advances made from the Exchequer, the Road Trustees reserved in their hands a sum of £600 to meet certain old outstanding debts and claims in Dumfriesshire. The sum was not applied to that purpose, nor was it claimed by Government. In 1887, however, its existence was brought under the notice of the Treasury, which, after some correspondence, resolved to abandon any claim upon it. On 15th June 1893 it amounted to £1481, 15s. 4d., one-half of which was paid to the Caledonian Railway Company in terms of the agreement of 1846, while the remaining half, amounting to £740, 17s. 8d., formed the fund third specified in the summons.

The Roads and Bridges (Scotland) Act 1878 (41 and 42 Vict. c. 51), sec. 11, vested the management of highways in counties in county road trustees, and in bugrhs in the burgh local authority.

Sec. 32 enacts that all the roads, bridges, buildings, works, rights, interests, moneys, property, and effects, rights of action,

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claims, and demands, powers, immunities, and privileges vested in or belonging to road trustees in a county shall, in virtue of this Act, be transferred to and vested in the county road trustees appointed under the Act [now the County Council under the Local Government (Scotland) Act 1889].

Sec. 47 makes similar provisions as regards highways within burghs.

Sec. 108 is as follows:—“All persons acting or who have acted under any of the general or local Acts in force at the commencement of this Act as trustees of any of the turnpike roads, &c. within the county, or as clerks or officers of such trustees who shall, at the commencement of this Act, have in their custody, power, or possession, any moneys collected by virtue of such Acts, or any books, deeds, papers, writings, property or effects belonging to the said turnpike or statute labour trusts respectively, or relating to the execution of such Acts, shall pay and deliver up the same to the county road trustees, or to such person as they shall appoint to receive the same, who shall hold them and be liable to pay them over or make them forthcoming subject to the provisions of this Act.

Secs. 59–70 provide machinery for the valuation and allocation of road debts.

Sec. 69 enacts—“No debts except those valued and allocated as hereinbefore provided shall be a charge upon the trustees of any county or the local authority of any burgh, and all road debts, except as aforesaid, shall be extinguished, but without prejudice to any claim otherwise competent to the creditors therein against any individual or individuals who may have given any personal or collateral obligation in regard to such debts.”

Sec. 89 makes special provision for valuing and allocating the road debt in the counties of Lanarkshire and Renfrewshire.

Sec. 90 provides that when any trust existing at the commencement of the Act comprises a road, highway, or bridge, which is situated partly in Scotland and partly in England, the Secretary of State shall, after a local inquiry by commissioners into the circumstances of the case, determine the manner in which such road, highway, or bridge shall be managed, maintained, repaired, and (in the case of a bridge), if need be, rebuilt, and also the debts affecting such trust, and the property and assets belonging thereto shall be valued and allocated upon or among, as the case may be, the county or counties and burgh or burghs in Scotland, and the road authority in England, to be named in the determination. The section further provides that the determination shall be laid before both Houses of Parliament, and shall come into operation at the expiry of forty days, unless either House within that time resolve that it ought not to take effect.

As a portion of the Glasgow and Carlisle road lies in England, commissioners were appointed under the above section of the Roads and Bridges Act, and they reported to the Secretary for Scotland and the Home Secretary in February 1892. From that report it appears that the Caledonian Railway Company appeared at the inquiry before the commissioners, and claimed these several funds as sole creditors of the Road Trust. The trustees disputed this contention, on the ground that these funds were expressly excluded by the company's title, and that they formed no part of the trust property, but were held by the trustees for behoof of the private creditors whose property they were. The commissioners ultimately found with regard to the third fund, that it should be left with the holder of the fund for distribution among the parties entitled to receive it, and, with regard to the first and second funds, that they “do not fall to be paid to the road authorities as forming assets of the trust, and therefore do not fall to be taken into computation in valuing the debt.”

On 9th February 1893 the Home Secretary and the Secretary for Scotland issued a joint determination by which they found that the three funds in question “do not form assets of the trust to be taken into computation in valuing the debt.” This determination duly came into force.

The present action was subsequently raised by Mr Grahame and Mr Hill to ascertain the rights of parties in the various funds.

On 7th December 1893 the Lord Ordinary ( Wellwood) repelled certain objections taken to the competency of the action by the Corporation of Glasgow, and this decision was acquiesced in. In the competition there appeared (1) the Lord Provost and Corporation of Glasgow, the corporation or commissioners of sundry other burghs, and certain county councils through whose district the Glasgow and Carlisle Road passes; (2) the Caledonian Railway Company; (3) William Alston Dykes and certain other private creditors; making 14 in all out of 154, and representing original contributions to the road of about £13,000; (4) Lord and Lady Ross-more's marriage-contract trustees, private creditors.

(1) The Corporation of Glasgow and others claimed to be ranked and preferred to the whole funds in medio under liability to satisfy all subsisting legal claims, or alternatively to the balance of the funds in medio after the private creditors had been ranked for their legal claims.

(2) The Caledonian Railway Company claimed to be ranked and preferred to the whole funds in medio.

(3) The private creditors submitted claims for each of four groups into which they divided their number. Class A claimed shares of surplus revenue for the period ending 30th June 1848 with interest. Class B claimed the unclaimed dividends specifically allotted to them in the books of the trust from its commencement to Whitsunday 1852 with interest. Class C (embracing all compearing private creditors) claimed a share, in proportion to their original contributions to the Road Trust, of (a) the sum of £77, 17s. 6d., and ( b) the sum of £740, 17s. 8d. Class D (embracing all

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compearing private creditors) claimed, after the creditors claiming in classes A, B, and 0 had been satisfied, to share the whole fund in medio in so far as it might avail to repay to each of them respectively the amount originally subscribed by each of them in so far as not already repaid, with interest.

(4) Lord and Lady Rossmore's trustees claimed a share with other private creditors who might come forward in the first and second funds, proportionate to their original subscription, in so far as these funds were unclaimed by the private creditors primarily entitled thereto. They further claimed a share of the sum of £77, 17s. 6 1 2d., and of the third fund in proportion to their original contribution, and, alternatively, a share of the balance of these two sums, proportionally with other compearing creditors, after the claims of the private creditors primarily entitled thereto had been satisfied.

On 20th June 1895 the Lord Ordinary pronounced the following interlocutor:—“Repels the claims for the Caledonian Railway Company, and the Town Councils of Glasgow and Hamilton and others, being the road authorities of their respective districts: Sustains the claim for the private creditors or representatives of private creditors, William Alston Dykes and others, to the extent of classes A, B, and C of their claim, and quoad ultra repels their said claims: Further, as regards the claim for Lord and Lady Rossmore's trustees, sustains the second branch of their claim, comprising both subdivisions, and quoad ultra repels their said claim: Finds that on the said claimants satisfying the Court as to their title to represent the original creditors, they will be entitled to be ranked and preferred accordingly: Further, as regards the balance of the fund in medio, finds that it must remain consigned in bank to await the orders of the Court, and decerns: Finds the said claimants William Alston Dykes and others, and Lord and Lady Rossmore's trustees, entitled to their respective expenses out of the said balance of the fund in medio.”

Note—… “No doubt great zest has been given to the competition by the fact that the bulk of the fund is found money, consisting as it does of unclaimed dividends which though originally small are swollen by interest to a respectable sum. I refer particularly to the ‘dividends unclaimed and unpaid’ amounting to £1573, 16s. 3d., which with interest form the bulk of the sum £4165, 10s. 3d. The parties who are really entitled to these sums have, with the exception of the claimants Lord and Lady Rossmore's trustees and William Alston Dykes and others, not thought fit to come forward, or perhaps are not aware of their rights. Looking to the improbability of any claim being now made by them, I should be glad to allow the balance which is still unclaimed to be uplifted for aught yet seen. But as it is candidly admitted by the compearing private creditors, who alone of the claimants are in my opinion entitled to any part of the fund in medio, that if the non-compearing creditors had come forward their claim for a proportional share would have been unanswerable, I do not think that as regards that balance there is room for a ranking for aught yet seen.

I shall now explain shortly my views on the different claims.

To deal first with the claim for the new road authorities who are now substituted for the old trust on the Glasgow and Carlisle Road, I shall not attempt to examine in detail the ingenious series of pleas stated on their behalf in the record. Their claim in substance is, that these funds were assets of the old trust, which should have been handed over to them under section 108 of the Roads and Bridges Act of 1878, and allocated among them, leaving the creditors to sue for their debts. It seems to be a sufficient answer to this claim that the only authority (the Secretary of State) who, under section 90 of the Roads and Bridges Act of 1878, is empowered to value and allocate the debts affecting such a trust as this and the property and assets belonging thereto, has refused to deal with the funds in question on the ground that they are not assets of the trust. It is said that the private creditors were not parties to the proceedings before the commissioners appointed by the Secretary of State and the Secretary for Scotland, who was conjoined with him. But it seems to me that the whole provisions of the Act dealing with the valuation and allocation of debts and assets point to the valuation and allocation being made once for all; and if the private creditors' debts and the funds in question can no longer be valued and allocated upon and among the various counties and burghs, I see no means by which the private creditors could make good their claims if the funds were handed over to the road authorities collectively as they now demand. If they sued as creditors, they would probably be met with the objection that they have failed to have their debts valued under the statute, and cannot now have that done. Accordingly, the creditors claim the funds as set apart for and belonging to them. And this position is justified by the determination of the Secretary of State for the Home Department and the Secretary for Scotland, which proceeds on the footing of excluding these funds from the assets allocated, and has now the force of a statutory enactment (section 90 (4).

Apart from this objection to the claim of the road authorities, I am inclined to be of opinion that, looking to the way in which these funds were dealt with ever since they were first deposited, they were, at least in any question between the trust and the private creditors, as completely separated from the assets of the trust as if they had been deposited in bank in an account in name of the private creditors.

To deal next with the claim for the Caledonian Railway Company: The Railway Company now admits the claim of the compearing creditors and representatives of creditors to their own proportions of unclaimed

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dividends, and other sums set aside for private creditors; but it claims the balance effeiring to those creditors who have not appeared as an accessory of the debt which it purchased. In the view which I take, neither the Railway Company nor the compearing creditors are entitled to that balance. It seems to me that by conceding the right of the compearing creditors to their proportions of the funds, the Railway Company has admitted away its claim to the balance. It admits to that extent the claim of the compearing creditors, because the unclaimed dividends and other funds were set apart for the private creditors before the Railway Company's purchase of the debt was completed, and it seems to me that the same reason applies to the balance still unclaimed.

As to the one-half of the sum given up by Government, that by express agreement (the agreement of 1846) belongs to the private creditors; and if the compearing creditors have no claim to the balance now unclaimed, a fortiori the Rail way Company has none. The Railway Company has claimed and received its proper half in the proceedings before the debt commissioners, and in regard to this fund, as well as the others, its claim is specially barred by its actings.

Lastly, to deal with the case of the private creditors I have no doubt that they are entitled to the sums specially allotted to them. I am also of opinion that they are entitled to share in the two sums of £77 and £740 not specially allotted to individual creditors, but set aside for the private creditors as a body in the proportion which their debts bear to the total original debt. But as I have indicated as regards the balance which would have fallen to be paid to the other private creditors, had they appeared, in the same proportions, I do not feel justified in allowing them to share in that.

Before pronouncing a decree of ranking the private creditors must produce satisfactory evidence of title.”

The Corporation of Glasgow and the Caledonian Railway Company reclaimed.

At an early stage of the argument in the Inner House the question was raised whether it was competent for the Court in considering the determination of the commissioners to look at their report of the proceedings before them. The Corporation of Glasgow argued that it was not competent; contra the private creditors.