Scottish Court of Session Decisions

Thomas Dobie died in 1872 leaving a trust-disposition and settlement by which he appointed George Rogerson and David Dobie his trustees. After Thomas Dobie's death his widow and one of his sons remained on the farm of Scalehill, which formed part of his estate, as tenants, until January 1879, when the property was sold by the trustees. The waygoing of the widow and son gave rise to certain questions between the purchaser and the trustees on one hand, and the tenants and the trustees on the other. The questions between the purchaser and the trustees were referred to arbitration, and resulted in a payment by the purchaser of £248, 14s. 4d. The questions between the tenants and the trustees were the subject of an action in the Court of Session at the instance of the tenants, concluding for £466, which was defended only by David Dobie, who had undertaken the management of the trust all along. After an

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order for proof this action was settled on the morning of the proof by a joint-minute setting forth “that the defender David Dobie had agreed to pay, and had paid, the pursuers the sum of £330 in full of the sums sued for in the action.” This sum of £350 was paid by a cheque on David Dobie's private account, and the sum of £248, 14s. 4d. recovered in the arbitration was paid into his private account.

In 1897, George Rogerson and David Dobie having died, Mrs Stewart, a daughter of the deceased Thomas Dobie, and James Stewart her husband, to whom Joseph Jardine Dobie, one of Thomas Dobie's sons, had assigned his share of his father's estate, raised an action of count, reckoning, and payment against George Rogerson's trustees, David Dobie's trustees, and David Dobie and Joseph Jardine Dobie, the acting trustees of Thomas Dobie.

An account of the intromissions of Thomas Dobie's trustees was lodged for the defenders, David Dobie's trustees and the defender David Dobie, in which the above sums of £248, 14s. 4d., and £350 appeared as credit and debit entries respectively. To these and to other debit entries, being payments of expenses in connection with the reference and action referred to, the pursuers objected on the ground that all the transactions in connection with the reference and action were carried through by the deceased David Dobie alone, on his own responsibility, and without consultation with his co-trustee.

After a proof the Lord Ordinary ( Stormonth Darling) pronounced an interlocutor sustaining, with certain exceptions, the pursuers' objections, so far as applicable to the account of intromissions lodged for the defenders David Dobie's trustees and the defender David Dobie.

The objections sustained included the credit entry of £248, 14s. 4d., the debit entry of £350, two debit entries of £47, 14s. 10d. and £71, 0s. 10d., representing the expenses incurred in the action at the instance of the tenants against the trustees. Objections to debit entries of £79, 0s. 10d. and £28, 13s. 8d., representing the expenses incurred in connection with the reference between the purchaser and the trustees, were repelled. With regard to these two last entries no question was raised in the Inner House.

Note,—“I have found some difficulty in deciding the questions raised by this note of objections, chiefly because most of the events out of which they arise occurred eighteen years ago, and are now involved in considerable obscurity.

Thomas Dobie of Scalehill died in 1872, leaving a widow and family, and an estate which consisted almost entirely of heritable property. The accepting trustees under his will were his brother David Dobie and Mr Rogerson of Pearce by hall, but from the first Mr David Dobie seems to have undertaken the entire management of the trust. For some years there was very little to do, because the widow and family remained in occupation of Scalehill, under a lease granted by the trustees to the widow and the eldest surviving sou. This arrangement came to an end in January 1879, when the property was sold for £9000 to Sir Robert Jardine. On receipt of the price, an interim division was made among the family, the trustees reserving £2500 to meet the widow's annuity. A further division was made after her death in 1891, but there still remains a balance for final division, and the questions raised by the pursuer, who is one of the beneficiaries, relates to certain items which the present trustees (Mr David Dobie and Mr Rogerson both having died) propose to charge against the trust-estate.

The first of these consists of a credit entry of £248, 14s. 4d., and a debit entry of £350, connected with the waygoing of the widow and son when they left the farm at Whitsunday 1879. This waygoing gave rise to questions between the purchaser and the trustees on the one hand, and the tenants and the trustees on the other. The questions between the purchaser and the trustees were referred to Mr Asher, the arbiter appointed in the articles of roup, and the reference resulted, not in a formal award, but in findings by the arbiter which were acquiesced in, and which led to payment by the purchaser of £248, 14s. 4d. The questions between the tenants and the trustees gave rise to an action at the instance of the tenants in this Court, concluding for £406. This action was directed against the trustees, but it was defended only by Mr David Dobie. It was raised in May 1880, and after sundry procedure a proof was ordered, but on the morning of the proof the case was settled by joint-minute, and the Lord Ordinary was craved to assoilzie the defenders and to find neither party entitled to expenses, the first head of the joint-minute bearing ‘that the defender David Dobie had agreed to pay, and had paid, the pursuers the sum of £330 in full of the sums sued for in the action.’ It appears that the sum was paid by cheque on Mr Dobie's private account; that the sum of £248, 14s. 4d. received from Sir Robert Jardine was paid into the same account; and that neither of these sums ever appeared in the accounts of the trustees until after the raising of the present action. On the other hand, it appears that the two business accounts of £147, 14s. 10d. and £71, 0s. 10d., representing Mr Dobie's expenses in connection with the action, formed part of a sum of £197, 16s. 6d., which was paid by cheque on the trust account in September 1880, a year before that gentleman's death.

I do not think that the different manner in which these payments were treated can form any ground in principle for distinguishing between them now. If Mr David Dobie settled the tenants' action on his own responsibility, and out of his own pocket, his costs in the action must form a charge against his own estate and not against the trust. No reason completely satisfactory to my mind has been suggested why he should have taken this burden on his own shoulders. I discard the suggestion that he was at fault in not

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taking the purchaser bound to pay for all the outgoings for which the trustees were bound to pay. I have looked at the clause in the articles of roup, and it seems to be in the ordinary form. Moreover, I think the pursuer and the other beneficiaries are barred by the discharge of 3rd March 1880 from challenging any acts or omissions of the trustees prior to 10th November 1879, and the articles of roup were prior to that date. I also discard the suggestion that there was any special agreement outside the joint-minute to the effect that Mr Dobie should pay the expenses of the action out of his own pocket. I do not think that any such agreement is proved. But there may have been reasons which it is difficult to estimate now for Mr Dobie undertaking this responsibility. It appears from the oral evidence, confirmed by the discharge to which I have alluded, that he had previously paid out of his own pocket the defenders' expenses in an action of count, reckoning, and payment brought by the beneficiaries against the trustees in October 1879. Moreover, one reason, and I think the principal reason, why Sir Robert Jardine had not to pay the full amount of the tenants' claim was that Mr Asher held him bound to take over only 29 acres of white crop, while the tenants claim was for 45 1 2 acres. This plainly shows that there had been miscropping by the tenants to that extent, and possibly Mr Dobie may have held himself personally responsible for allowing the tenants to do this. There is also some reason to believe, from the evidence of Mr Cormack (a witness for the defenders), that counsel's advice to settle the action was, in part at least, dictated by a desire to save Mr Dobie from worry in the then highly nervous condition of his health, which ended in his dying in a lunatic asylum.

These, however, are all more or less matters of speculation. The substantial fact is that it was Mr Dobie, and not the trustees, who defended the action and settled it. He, and not they, gave the instructions which resulted in the expenses being incurred. He, and not they, agreed to pay, and did pay, the sum of £350 by way of settlement. I do not for a moment doubt that an individual trustee intervening personally for the defence of a lawsuit directed against a trust, might afterwards succeed in showing that his action had been beneficial to the trust, and so might recover his expenditure from the trust estate. But the onus of explaining his action and of proving benefit would be entirely on him. If the proof in this case were to be viewed as an attempt by Mr Dobie's representatives to discharge that onus, it would be difficult I think to say that they had succeeded. I see from the condescendence in the tenants' action that the pursuers offered before the closing of the record to deduct £30 from their original claim of £406, in respect of certain questions as to second year's grass which Mr Asher in the reference had decided in favour of the purchaser. It would thus have been better, so far as the interests of the trust estate were concerned, to have allowed decree to pass for £376, together with the small amount of expenses then incurred by both sides, than to carry on the action till the morning of the proof, and then to pay £350 in addition to a sum of £118, 15s. 8d. as the expenses of the defence. I therefore come to the conclusion that none of the items connected with the tenants' action are chargeable against the trust estate.

None of these considerations, however, apply to the items of £79, 0s. 10d. and £28, 13s. 8d., being the expenses incurred in connection with the reference to Mr Asher. These were proper trust expenses, and the pursuer has shown no reason for disallowing them. The mere fact that the smaller of these two sums was not brought into account until after the raising of the present action seems to me of no consequence.”

The defenders David Dobie's trustees and David Dobie reclaimed, and argued—Though only one trustee lodged defences in the action against the trust, the trust was properly brought into Court. The deceased David Dobie did not profess to be more than one of two trustees, and no objection was taken by the pursuers in the action, or by the co-trustee, or by the beneficiaries. The fact that only one trustee defended the action did not lead to the inference which the Lord Ordinary had drawn, that that trustee intended to pay the expenses of the action out of his own pocket; nor was that inference justified by the fact that he paid the expenses by a cheque on his own account, that having been done as a mere matter of temporary accommodation while there was not a sufficient sum at the credit of the bank account of the trust. The onus having been discharged of showing that the debts paid were trust debts, the only question that remained was as to the propriety of the payments; and their propriety had been unchallenged for eighteen years, and was not challenged on record or in the proof; the defenders ought therefore to be assoilzied.

The defenders Rogerson's trustees adopted the argument presented by the reclaimers, and maintained further that in any case no responsibility attached to them.

Argued for the pursuers—One of two trustees had no power to act without the concurrence of his co-trustee, and a compromise effected by one trustee in such circumstances in an action against the trust was not a trust act. Even if both trustees had acted in the reference entered into and the action defended by the deceased David Dobie, the trust estate had suffered by his actings, and there had been fault on the part of the trustees, for the consequence of which their representatives were liable.