Scottish Court of Session Decisions

By feu-contract dated 10th and 25th, and recorded 27th February 1896, between David Johnston, writer in Glasgow, of the first part, and William Brown Alexander, wright, Bridge of Weir, and Hugh Livingstone, wholesale ironmonger, residing at 95 Millbrae Road, Langside, Glasgow, of the second part, the first party disponed

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certain subjects to the second parties. The parts of the feu-contract which are material for the purposes of this report were as follows—“The first party, for and in consideration of the feu duty and other prestations and obligations on the part of the second party hereinafter written, has sold, assigned, and in feu-farm disponed, and hereby sells, assigns, and in feu-farm, fee, and heritage dispones, to and in favour of the said Hugh Livingstone and William Brown Alexander, and the survivor of them, and the heir of the survivor, as trustees and in trust for behoof of the said Hugh Livingstone and William Brown Alexander, and their respective heirs and assignees whomsoever, each to the extent of one-half pro indiviso, heritably and irredeemably, all and whole that plot or area of ground lying within the parish of Cathcart and county of Lanark, formerly county of Renfrew, and on the west side of Millbrae Crescent, Langside, containing 680 square yards and 7 square feet or thereby, and bounded as follows, viz.—… Declaring that the said Hugh Livingstone and William Brown Alexander, and the survivor of them, and the heir of the survivor, as trustees and trustee foresaid, shall have full power, without the consent of any person whatever, to sell and dispose of the said plot or area of ground above disponed, or any part thereof, by public roup or private bargain, with or without advertisement, and at such price or prices as they or he may think proper, and to borrow money on the security of the said plot or area of ground, or any part thereof, and for these purposes or any of them to grant all necessary or requisite deeds or writings containing a clause of absolute warrandice, and that purchasers and lenders, and all other parties paying or lending money to or otherwise transacting with the said trustees or trustee, shall have no concern with or right to inquire into the application of the money so paid or lent, but shall be sufficiently exonerated by the receipt of the said trustees or trustee therefor.”…

A tenement of houses (No. 17 Millbrae Crescent) was erected by Alexander and Livingstone upon the ground disponed in the feu-contract. Disputes having arisen bet ween them as to the adjustment of their accounts, they referred the matters in dispute to Daniel Wilkie, measurer in Glasgow, conform to minute of reference dated 24th April and 23rd May 1897. This minute of reference proceeded upon the narrative that a number of transactions had taken place between the parties thereto, and between Livingstone's firm of A. Craig & Company, plumbers, Langside, and Alexander's firm of M. & W. Alexander, joiners, Bridge of Weir, in connection with the erection of three tenements of dwelling-houses at Millbrae, Langside, one built on joint account (this was the tenement built upon the ground feued by the feu-contract mentioned supra), and the other two on behalf of the parties as individuals, and also work done by the parties in connection with their respective firms elsewhere; and that questions had arisen between the parties as to their accounts incurred to or for each other, and as to the indebtedness of the one party to the other on an accounting.

The arbiter under this reference, after sundry procedure, issued a decree-arbitral dated 18th April 1898, whereby he found Alexander liable to Livingstone in the sum of £184, 19s. 3 1 2d., together with £80 of expenses; and also found him liable for £70 as the expenses of the clerk and legal assessor in the reference.

By disposition and assignation dated 23rd and recorded in the Register of Sasines 25th April 1898, Alexander, for certain good and onerous causes and considerations, assigned, disponed, and conveyed to James Allan and John Allan, both wholesale provision merchants in Glasgow, and their assignees whomsoever, and failing assignees, to the survivor of them and his heirs and assignees whomsoever, heritably and irredeemably, his, the said William Brown Alexander's, one-half, pro indiviso, of the subjects conveyed by the feu-contract above mentioned, together with the buildings erected thereon, and pertinents, and his whole right, title, and interest therein, with entry as at Martinmas 1897.

Thereafter, by agreement between Livingstone, Alexander, and the Allans, the subjects disponed by the feu-contract were conveyed to William M'Luckie Buchan, writer, Glasgow, in trust for the parties interested, in order that he might sell the subjects, and account for the proceeds to the persons entitled thereto. He accordingly sold the subjects in question, and accounted for one-half of the free proceeds thereof to Livingstone, and lodged the other half thereof, amounting to £273, 7s. 10d., in bank on deposit-receipt.

Thereafter Livingstone, as real raiser, brought an action of multiplepoinding in name of Buchan as nominal raiser, in which Alexander, and James Allan and John Allan were called as defenders.

Claims were lodged by Livingstone and by the Messrs Allan.

The claimant Livingstone averred that in or about October 1895 he entered into a joint-adventure with Alexander to feu the ground conveyed to them by the feu-contract and erect a tenement of houses thereon, for the purpose of afterwards disposing of the tenement and dividing the net profits of the adventure equally, after paying or providing for all expenses connected therewith, and that in pursuance and for the purposes of the said joint-adventure they had entered into said feucontract, and proceeded to erect on the said ground the said tenement of houses. He further averred that the reference mentioned above had been entered into mainly in connection with the adjustment of the accounts of this joint-adventure, though it embraced other and earlier joint transactions which had taken place between them, that he had made disbursements in connection with the joint-adventure amounting to £2069 or thereby, and that the arbiter had awarded him a sum of

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£196 as the sum still due to him in respect thereof, the difference between that sum and the award actually given by the arbiter—£184—being a balance found due by the arbiter to Alexander on the adjustment of the accounts in connection with the whole other transactions embraced in the reference.

The claimant maintained that this sum, and the expenses awarded in the decree-arbitral, were proper charges against Alexander's interest in the joint-adventure, and against the other claimants as assignees of his interest. He accordingly claimed the whole of the fund in medio.

The claimants Messrs Allan averred that the disposition granted in their favour by Alexander had been granted in respect of a loan of £250 which they had procured for him from their mother, and payment of which they had guaranteed to the lender, and that the assignation though ex facie absolute was qualified by a relative agreement dated 23rd and 28th May 1898 between Alexander, Messrs Allan, and Messrs Robertson, writers, Glasgow, and produced by the claimants, which narrated that they had procured the loan from their mother on a promissory-note granted by Alexander to them, and endorsed by them to their mother, and provided that the disposition should be held by them in security and for payment of the amount due under the promissory-note, interest and expenses, and secundo loco, for payment of Messrs Robertsons' account, and that the security should not exceed in all £400. They averred that the principal and interest due in respect of the loan amounted to £265. This, with other sums falling under the security, exhausted the fund in medio, the whole of which they accordingly claimed. They denied that the subjects in question were included in any joint-adventure between Livingstone and Alexander, and also maintained that the reference embraced other transactions than those relating to the property in question, and that in any view the amount claimed by Livingstone was excessive.

They pleaded, inter alia—“1. The claimants are entitled to be ranked and preferred in terms of their claim, in respect that (1) by the said disposition and assignation the whole beneficial right, title, and interest of the said William Brown Alexander in the subjects conveyed by the feu-contract condescended on were effectually disponed and assigned to the claimants; (2) the claimants acquired Alexander's right, title, and interest in said subjects for a bona fide onerous consideration, and on the faith of his title as appearing on the public records; (3) the claimant's right, although in security as defined by the agreement condescended on, exceeds in amount the value of the subjects conveyed, and is preferable to all other claims against the said William Brown Alexander; and (4) the fund in medio forms a surrogatum for the one half pro indiviso pertaining to the said William Brown Alexander of the said heritable subjects. 3. The said claimant's (viz., Livingstone's) averments of joint-adventure are excluded by the terms of the title to the property, et separatim they can only be proved by writ or oath.”

The Lord Ordinary ( Pearson) allowed the parties a proof.

Mr Livingstone gave parole evidence in support of his averments in regard to the joint-adventure. He also produced the claim lodged in the reference by Alexander, which corroborated his allegations as to the arrangements between them. The nature of the evidence led by him appears from the summary contained in the second paragraph of the Lord Ordinary's opinion, infra. He also gave evidence as to the accounting between him and Alexander.

The Messrs Allan deponed that they knew nothing of the joint-adventure, and further gave evidence as to the loan in respect of which the assignation had been granted to them.

Alexander was not examined as a witness by either party.

The Lord Ordinary on 7th August 1900 pronounced the following interlocutor:—“Finds that the claimant Hugh Livingstone is entitled to be ranked and preferred primo loco on the fund in medio for the sum of £172, 17s. 6d. sterling, and that quoad ultra the claimants James Allan and John Allan are entitled to be ranked and preferred on the fund in medio for the whole balance thereof, reserving as to the expenses of raising and bringing the action into Court, and ranks and prefers the respective claimants accordingly, and and decerns: And in the competition finds the claimants James Allan and John Allan liable to the claimant Hugh Livingstone in expenses, less one-third of the taxed expenses of the proof,” &c.

Opinion.—“The fund in medio is a sum of £273, 7s. 10d., being one-half of the net proceeds of the sale of a tenement No. 17 Millbrae Crescent, Glasgow. Disputes had arisen among the defenders as to their respective rights in the subjects, and they agreed to convey the subjects to the nominal raiser that he might sell them and account for the proceeds to the persons entitled thereto.

The facts as to the erection of the tenements are shortly these. In or about 1894 three tradesmen—Mr Livingstone, ironmonger, Mr Alexander, joiner, and Mr Emery, mason—combined to build three tenements, each supplying his own department of the work, and each ultimately to have one of the tenements at his disposal. Mr Livingstone had one tenement and Mr Alexander a second. The third was to have been Mr Emery's, but for reasons which are not material, Mr Emery, although he did the mason-work as an outside tradesman was supplanted in the speculation by Livingstone and Alexander jointly, who carried through the erection of the third tenement (No. 17 Millbrae Crescent) on joint-account. It is this tenement which gives rise to the present dispute.

The title to the ground was a feu-contract dated 10th and 25th and recorded 27th February 1S96, by which the subjects were disponed to and in favour of Livingstone and Alexander, ‘and the survivor of them,

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and the heir of the survivor, as trustees and in trust for behoof of the said Hugh Livingstone and William Brown Alexander, and their respective heirs and assignees whomsoever, each to the extent of one-half pro indiviso.’ It was thereby declared that the trustees and the survivor and the heir of the survivor should have full power to sell and dispose of the ground, and to borrow money on the security thereof, and also that purchasers and lenders should have no concern with the application of the money paid or lent.

Mr Livingstone financed this tenement and paid the contractors, and Mr Alexander made certain payments to him from time to time. The tenement was erected during 1896–97, and in May 1897 these two parties having failed to agree as to the accounting between them, submitted their disputes to a measurer in Glasgow as arbiter. The reference included all questions between them arising out of the erection of all the three tenements. The arbiter issued his award on 18th April 1898, finding Alexander liable to Livingstone in £184, 19s. 3d., together with £80 of expenses, and he decerned against Alexander for £70 as the expenses of the clerk.

The tenement having been sold, one-half of the net proceeds has been paid or accounted for to Livingstone.

Livingstone now claims that he is entitled to have the amount due to him by Alexander under the reference paid to him primo loco out of the other half of the proceeds, which is the fund in medio, so far at least as the sum due arises in connection with the tenement in question.

His claim, however, is challenged by James and John Allan, who allege that they hold a security derived from Alexander, which must first be satisfied.

It appears that on 23rd April 1898, five days after the date of the award, Mr Alexander, having borrowed £250 from James and John Allan, or from their mother Mrs Allan, disponed to the Allans his one-half pro indiviso of the subjects in question, ‘being the ground as more particularly described in and disponed by’ the feu-contract dated and recorded as aforesaid, with his whole right, title, and interest therein. This disposition was recorded in the Register of Sasines on 25th April. Though ex facie absolute, it was qualified by an agreement of even date entered into between (1) Alexander, (2) the Allans, and (3) Messrs Robertson, writers in Glasgow. This agreement narrates that the Allans had procured from their mother a loan for Alexander of £250 on a promissory-note for that amount granted by him to them, and endorsed by them to their mother. It provides, inter alia, that the disposition by Alexander should be held by the Allans in security only, and for payment of the amount contained in the promissory-note, interest, and expenses; and, secundo loco, for payment of Messrs Robertson's account. It was agreed that the security thus constituted should not exceed the sum of £400 in all of principal and interest. The agreement professed to confer on the Allans power to enter into immediate possession of the subjects, and also a power of sale.

Mr Livingstone avers that the Allans were not onerous lenders, but were gratuitous assignees. It is true that the £250 advanced was not their money. It was procured by them from their mother's funds for this investment. But they became bound, as part of the transaction, to repay it to their mother; and they endorsed Alexander's promissory-note to her in token thereof. And as the money was certainly advanced to Alexander, I think it clear that the Allans are to be regarded in the matter as onerous assignees.

This being so, they contend that the terms of the title on which the subjects stood are conclusive in their favour, and that it is incompetent to look behind it. Their argument is, that while it is a trust title, it discloses a bare formal trust without purposes, each being beneficial owner of one-half pro indiviso of the subjects, and being entitled at any time to get rid of the trust by an action of denuding. They say that they advanced the money in reliance on the records, and that they are in the position of a bona fide onerous disponee or assignee acquiring from a trustee who is vested in the subject by a title ex facie absolute. It is necessary in considering this question to examine the Allans' title, and it at once becomes apparent that the principle does not apply. They hold no title from the trustees, and it was the trustees who alone had the power to sell that subject or to borrow upon it. The Allans' title is derived from Alexander alone, and although it bears to dispone his one-half pro indiviso of the subjects, and was recorded in the Register of Sasines, it really amounts to no more than an assignation of Alexander's beneficial interest under the trust. No doubt the registration in the sasines would accresce to the Allans so soon as the trustees had conveyed to Alexander his pro indiviso half (as they might ultimately be bound to do), and he had completed his title thereto; but until that time the Allans were merely assignees of Alexander's interest, and were subject to all the qualifications affecting that interest.

Now one of these qualifications was, that Livingstone was not bound to concur in any deed affecting the subjects until he was reimbursed for his outlay on the subjects. This followed from the fact that the tenement was beyond all doubt erected ‘on joint-account;’ and I presume that the original title was taken as it was, not merely for convenience, but in order to secure the rights of the two joint-adventurers interse.

The Allans further object to this view of their rights, on the ground that even as between Livingstone and Alexander it is incompetent to qualify the terms in which the title was taken except by writ or oath, and that this rule holds good whether the case falls within the law of trust or the law of partnership, Wilson v. Threshie, 1826, 4 S. 366, being referred to, Alexander's

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right, they say, is by the title declared to be a full half pro indiviso of the subjects, and this is an attempt to cut it down. I do not think this is accurate. The right of each co-adventurer was and remains a right to one-half of the proceeds of the joint-adventure. While the subjects remain heritable it is accurately expressed as a right to one-half pro indiviso, just as if the subjects had been sold under the power of sale it may be described as a right to one-half of the net proceeds. It does not really alter the copartners' equal rights that there may have to be an accounting between them as partners in order to ascertain what it is that they are to share equally. If writ be necessary at all to shew the relation between Livingstone and Alexander touching this property, it is furnished by the minute of reference between them, which expressly bears that the tenement in question was built on joint-account. It was not suggested that the original site could in this dispute be treated separately from the tenement built upon it. The sale was of the entire subject, and the fund in medio is one-half of the net proceeds of that sale.

In my view, therefore, the Allans cannot compete upon the fund in medio with Livingstone's claim againt Alexander on account of the tenement No. 17 Millbrae Crescent. It remains to ascertain the amount to which this claim is good.

[ His Lordship, after dealing with certain items claimed by Mr Livingstone, and finding that there was a balance due to him of £132, 17s. 6 d., proceeded]—“In addition, Mr Livingstone claims to take credit for the expenses of the arbitration, including (as was explained) (1) a sum of £80, to which the arbiter modified Mr Livingstone's expenses in the reference, and which he ordained Alexander to pay to Livingstone; and (2) a sum of £70, which the arbiter fixed as the amount due to Mr M'Cosh as clerk and legal assessor to the submission, and which he ordained Alexander to pay to Mr M'Cosh. For the latter sum there was no decree against Mr Livingstone; and whether he has paid it or not, I do not see how he can take credit for it here. The former sum (£80) was incurred in reference proceedings which embraced other matters than the tenement now in question; and the evidence bearing on this matter points to an allowance of one-half of it as about the sum which may fairly be attributed to the 17 Millbrae Crescent disputes. The addition of this to the above sum of £132, 17s. 6d. brings out £172, 17s. 6d. as the sum to which Mr Livingstone is entitled primo loco out of the fund in medio

With regard to expenses (in which I include those occasioned by the amendment) I think Mr Livingstone, with whom the main success lies, is entitled to expenses generally, but that he should only get two-thirds of the taxed expenses of the proof, as a substantial part of that was taken up with his unsuccessful attempt to shew that the Allans' transaction was not onerous.”

The claimants Messrs Allan reclaimed, and argued—The relations and interests of Alexander and Livingstone were strictly defined in the feu-contract, under which each party had a half pro indiviso share, and could at any time get rid of the trust by an action of denuding. It was a formal trust without purposes, and constituted merely for convenience of title. It was not competent to go outside the feu-contract, and the measure of the right conferred on an assignee would be precisely that expressed in it— Bailey v. Scott, May 24, 1860, 21 D. 1105; Henderson v. Norrie, March 31, 1866, 4 Macph. 691, at 702; Heritable Reversionary Company, Limited v. Millar, August 9, 1892, 19 R. (H.L.) 43; Redfearn v. Somervail, 1813, 1 Dow's App. 50. This case was outside the rule as to the necessity for inquiring into the conditions of a trust, because all that was required was set out ex facie of the feu-contract. There was accordingly no necessity for the reclaimers to inquire further, and in point of fact they were quite ignorant of the existence of any joint-adventure, and thought they were getting the security of the whole of Alexander's share. The case must therefore be governed by the ordinary rule that where there is an express right to property clothed by something latent, the person with the latent right cannot compete with the onerous assignee of the person having the express right. Moreover, the respondent was only entitled to prove the existence of the joint-adventure by writ or oath— Dunn v. Pratt, January 25, 1898, 25 R. 461. He had tried to rear up a joint-adventure by the evidence of only one of the parties to it. The expression “joint account” in the minute of reference did not prove that the relation was one of joint-adventure, and the Lord Ordinary was wrong in holding it as writ proving the existence of such a relation.

Argued for the respondent—The title granted by the feu-contract was a proper and appropriate one for a joint-adventure in order to secure the rights of the joint—adventurers inter se. All that Alexander assigned was a jus crediti in the partnership estate, which was held under a trust. It was the duty of the assignees to ascertain what were the terms of the trust, the existence of which appeared ex facie of the feu-contract. The real purpose of the trust was to hold the subjects as estate of the joint-adventure, the existence of which it was competent for the respondent to prove in any way, and not merely by writ or oath, and which had been proved by him. Accordingly it was incompetent for Alexander to assign the property of the joint-adventure till all the liabilities affecting it had been satisfied, and the respondent's claim to the fund in medio was prior to that of the reclaimers— Keith v. Penn, February 21, 1840, 2 D. 633; Creditors of M'Caul v. Ramsay and Ritchie, 1740, M. 14, 608; Murrays v. Murray, F.C., February 5, 1805.