Scottish Court of Session Decisions

This is a sequel to the action reported ante, vol. xxxvi. p. 704, and 1 F. 896.

The proof allowed by the interlocutor of Court of 7th June 1899 was taken before the interim Sheriff-Substitute ( Harvey), who on 13th November pronounced the following interlocutor “Finds in fact (1) that the deceased Mrs Jane Smith or Charlton or Ward, formerly residing at 5 South College Street, Edinburgh, died on 17th July 1897; (2) that the pursuer in the present action was duly confirmed executor-nominate upon the estate of the said deceased Mrs Ward, and was the sole accepting trustee under her trust-disposition and settlement; (3) that by minute dated 16th August 1897 he appointed W. R. Mackersy, W.S., to be law-agent in the trust; (4) that the sole beneficiary under the said trust was Miss Mary Elizabeth Ward, daughter of the said deceased Mrs Ward; (5) that the trustee having duly made up a title in his own name, by disposition dated 13th and recorded 14th December 1897, disponed and conveyed the heritable estate falling under the trust to Miss Ward; (6) that the executry funds were uplifted and administered by Mr Mackersy, and were never in the personal possession of the trustee; (7) that by discharge, dated 9th March 1898, proceeding upon accounts duly audited, the trustee was discharged of his intromissions and actings with the executry funds by Miss Ward; (8) that after the date of this discharge neither the trustee nor his agent had any executry or trust-estate in his possession; (9) that no notice is proved to have

Page: 291↓

been received either by the pursuer or by the said agent in the trust of the defender's claim upon the trust-estate until June 10th 1898; (10) that an action was raised by the present defender for payment of the said claim in the Small Debt Court against the present pursuer on 16th October 1898, and that decree was pronounced therein on 26th October following; (11) that the warrant for the poinding and sale, against which interdict is craved in the present action, was contained in the said decree, and that the subjects poinded were the personal property of the present pursuer: Finds in law that the said decree cannot be construed as a decree against the present pursuer as an individual, and that it does not constitute a valid warrant for the poinding and sale of his private property: Therefore grants interdict as craved: Declares the same to be perpetual, and decerns,” &c.

Note.—“1. As regards the result of the proof led before me, I find that the defender has failed to show that his claim against the trust-estate was intimated to the trustee or to his agent Mr Mackersy, or was otherwise brought to their knowledge, prior to the 10th of June 1898, when Mr Mackersy received the letter of that date. The defender says he posted an earlier intimation to Mr Mackersy on 9th September 1897, and there is an entry in his books to this effect. Mr Mackersy denies that he received this letter, and I do not think his evidence is rebutted merely by proof of the fact that a letter was posted to him. I also think there is nothing in Mr Mackersy's books or in the evidence to contradict his statement that he was not aware that any other doctor than Dr Donald (whose account has been paid) attended Mrs Ward in her last illness.

“(2) As regards the date at which the trustee parted with the trust-estate, there is a distinction between the part of it which was heritable and the executry. The former consisted of the house previously occupied by Mrs Ward at 5 College Street. This was transferred to Miss Ward in terms of her mother's settlement by disposition, dated 13th and recorded 14th December 1897, and I can see no grounds, and none are stated, on which this transfer could be challenged as a breach of duty on the part of the trustee to the creditors of the deceased. If the defender's claim had been timeously made there were ample executry funds to meet it without trenching on the heritable estate. After the disposition of 13th December this property no longer formed part of the trust, and it is clearly irrelevant to attempt (as the defender does) to trace what became of the price. In point of fact the property was sold after it came into Miss Ward's hands, and the price was paid to Mr Mackersy as her agent. At the proof I refused, in accordance with the views just stated, to order Mr Mackersy to produce his accounts with Miss Ward for the purpose of showing how he accounted to his client for this money.

The executry estate was recovered and administered not by the trustee directly but by Mr Mackersy, as agent of the trust, and on 9th March 1898 the beneficiary Miss Ward granted a discharge to the trustee of his actings and intromissions. The accounts, which were duly audited, bring out a balance in favour of the trustee of £5, 19s. 7½d. I do not think this discharge can now be challenged by the defender, or that it is relevant for him to show (as he attempts) that there is a mistake in the accounts in favour of the trustee to the extent of which he must still be held to hold trust-funds. The trustee was entitled in the absence of claims by creditors, and after six months, to transfer the balance, if any, to the beneficiary, and if she is satisfied that this has been done, and has granted a discharge, that is conclusive of the matter. A sufficiently anxious scrutiny might disclose a compensating error the other way. I therefore hold in fact that no trust-funds were in the trustee's hands subsequent to 9th March 1898, a date prior to the first intimation he had of the defender's claim. Nor do I think that either as regards the heritable or moveable estate was there any impropriety as regards the time at which the transfers were made.

“(3) The facts established by the proof may be used for two purposes—First, to aid in the construction of the small-debt decree, and, Second, after this is fixed, to determine its effect in validating diligence. The competency of using evidence of this kind, to interpret the decree seems to be implied in the case of Jaffray v. Gordon (10th February 1831, 9 S. 416), and if I have rightly interpreted the evidence in this case it shows that there was no ground upon which a decree against the trustee as an individual could be justified. It must, therefore, be held that the decree was directed against the present defender as trustee merely, and imposed upon him liability only to the extent of the trust-funds at the date of the decree. As there were none it could impose no liability, and the diligence used upon it was without warrant. Whether, if there had been trust-funds, diligence could competently have been directed against the personal effects of the trustee is a question of difficulty, which in the view I take of the facts it is not necessary to determine.”

The following entry occurred in Mr Mackersy's business journal for business done on account of Mrs Ward's trust— “Nov. 11,1897. Writing Dr Donald in answer in regard to his claim, and that I have shown same to Miss Ward, who stated that you could not have any claim upon this estate as your account had been paid, and immediately thereafter Dr Matheson was called in to attend; and that he might give me his explanation in regard thereto.” The letter sent by the defender to Mr Mackersy on 10th June 1898 was in the following terms—“I shall feel obliged if you will let me know when the estate of the late Mrs Ward, 5 College Street, is likely to be wound up; I understand you are the agent.” On 2d September 1898 another letter was sent by the defender to Mr Mackersy in the following terms—“I wrote to you some time ago in regard to my account

Page: 292↓

against the estate of the late Mrs Ward, College Street. You did not answer my letter; will you kindly do so within three days, otherwise I shall give the matter into the hands of my agent.” Mr Mackersy received both these letters but replied to neither.

The defender appealed, and argued— Under the decree in question the pursuer was personally liable. The decree being in the Small Debt Court a personal decerniture against him must have been meant, and not a decree against him in his representative capacity. The form of a small-debt decree was prescribed by the statute, and in inserting the words “as libelled” the Sheriff-Substitute had gone beyond his powers. The case was ruled by the case of J affray v. Gordon, February 10, 1831, 9S. 416, which was exactly in point. Even if it were held that it was competent to sue a trustee in the Small Debt Court in his representative capacity, that had not been done here. M'Mahon had not been sued “as trustee,” and the omission of the word “as” made the designation personal— Graham v. Macfarlane & Co., March 11, 1869, 7 Macph. 640. The proof disclosed that the trustee held trust-estate in his hands, or at least that he had parted with it to the beneficiary without providing for all debts due by the executry estate. The evidence of Dr Matheson and the entry in his books, taken along with the excerpts in Mr Mackersy's business journal, conclusively showed that the trustee's agent, before the trust-estate was wound up, must have been aware that Dr Matheson had a claim against the trust-estate. [ Lord Justice-Clerk—Mr Mackersy's business journal only shows that Dr Matheson was called in to attend on Miss Ward, but he might very well have been paid a consultation-fee on the spot. In his letter of 2nd September 1898 Dr Matheson referred to his account, and the trustee's agent had never repudiated having received it till after the action was raised. In these circumstances the trustee must be held to have paid away the estate to the beneficiary without taking due care to see that all claims against the trust-estate were provided for; he was therefore liable— Lamond's Trustees v. Crum, March 8, 1871, 9 Macph. 662, opinion of Lord President Inglis, 668.

Argued for pursuer— The small-debt action was brought and the decree was granted against him in his representative capacity, and the use of diligence against his private estate was incompetent. This had been authoritatively settled by Craig v. Hogg, October 17, 1896, 24 R. 6. A trustee could be legally sued in his representative capacity under the Small Debt Act. The word “as” before trustee was immaterial; if a defender was designed trustee or executor of some-one, the action was brought against him in his capacity of trustee or executor, and diligence following on such an action used against his personal property was without any warrant at all— Wilson v. Mackie, October 22, 1875, 3 R. 18. The case of Jaffray was very special. It was the case of a trustee on a sequestrated estate, and from the session-papers it appeared that he had become personally liable as cautioner. If the case had any bearing it had been overruled by Craig, supra, which was a decision of seven judges finally settling the law on the subject. The proof had been allowed only with a view to discover whether the trustee had any trust-estate in his hands when he first became aware of Dr Matheson's claim. It had been conclusively proved that the first intimation of Dr Matheson's claim which the trustee had received was on 10th June 1898, which was eleven months after the truster's death and three months after the trustee's discharge.