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Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Cowan (Ferrie's Curator Bonis), Petitioner [1897] ScotLR 34_877 (26 June 1897)
URL: http://www.bailii.org/scot/cases/ScotCS/1897/34SLR0877.html
Cite as: [1897] SLR 34_877, [1897] ScotLR 34_877
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SCOTTISH_SLR_Court_of_Session
Page: 877↓
Court of Session Outer House.
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(Sequel to Bringloe (Ferrie's Curator Bonis), February 26, 1897, ante, p. 449).
Facts:
A curator bonis was found liable for loss incurred on an investment of curatorial funds in a debenture granted by a harbour trust. The debenture bore interest at 4 per cent., but this had for some years been in arrears. Held ( per Lord Pearson, Ordinary) that in accounting the curator was bound to debit himself with the interest at 3 per cent. on the sum invested from the date of the investment until payment, but was entitled to retain all payments of interest actually made on the debenture.
The late Mr James Cowan was appointed curator bonis to Mr J. C. Ferrie in 1855. In 1882 he invested part of the curatorial funds in mortgage debentures granted by the Greenock and Port Glasgow Harbour Trust, bearing interest at 4 per cent. In 1895, when on Mr Cowan's petition, Mr F. A. Bringloe, C.A., was appointed curator bonis, these lands had greatly diminished in value, and it was held, as appears in the preceding report, that they were not a legitimate investment of curatorial funds, and that the trustees and executors of Mr Cowan were liable for any loss which had been incurred or might be incurred thereon. The case was remitted to the Lord Ordinary for further procedure.
Cowan's trustees lodged a state of accounts, from which it appeared that interest at 4 per cent. had been paid on the debentures until 1887, since when interest at rates varying from 2
Opinion.—“It having been determined that the Harbour Trust bonds were not legitimate investments of the curatorial funds, and that the petitioners are liable for the loss thereby incurred, the question is, how is that loss to be ascertained? The capital, as I understand, is to be replaced, and the liability of the petitioners as to interest has now to be ascertained. This involves the decision of two matters—one as to the rate of interest to be charged against the curator, and the other as to how the interest already received and credited to the curatory is to be dealt with.
On the first question, my opinion is that
Page: 878↓
The mortgages having been 4 per cent. investments, and the interest having been paid on some of them for a time, the next question is, whether the estate is entitled to hold to the 4 per cent. so far as paid, and to charge 3 per cent. quoad ultra, or whether the whole account should be restated to the effect of charging 3 per cent. from the beginning, the petitioners being credited in account with the higher interest received. I am in favour of the latter view. This is not a case of a person in a trust position making or seeking to make a profit by the use of the trust funds. Nor does the restatement of the account involve any actual repayment of moneys paid away as income so as to raise a question of bona fide perception. It is a case where an ultra vires investment is repudiated by the new curator, and where it is claimed that the estate should be put in as good a position as if the funds had been properly invested all along. This, in my view, will be done by the course proposed. The loss incurred by the bad investments will be made good to the estate, and the investments will be taken over by the late curator's representatives at their own expense.”
Counsel for the Petitioner — Balfour, Q.C.— W. K. Dickson. Agents— Menzies, Black, & Menzies, W.S.
Counsel for the Curator Bonis— H. Johnston— Dewar. Agents— Cornillon, Craig, & Thomas, S.S.C.