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Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Stewart v. Chalmers [1904] ScotLR 42_135 (30 November 1904)
URL: http://www.bailii.org/scot/cases/ScotCS/1904/42SLR0135.html
Cite as: [1904] SLR 42_135, [1904] ScotLR 42_135
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SCOTTISH_SLR_Court_of_Session
Page: 135↓
Court of Session Inner House First Division.
v.
Facts:
Where a trustee, being a solicitor, demanded from his sole co-trustee, who was also the law-agent of the trust, one half of the fees of the agency, and upon refusal declined, without giving any reason, to approve of an investment of the trust funds, and thereafter refused to assume new trustees or to resign, the Court granted the prayer of a petition presented by the beneficiaries for his removal, and continued the cause until the sole remaining trustee had lodged in process a deed
Page: 136↓
of assumption assuming new trustees whose names had been suggested in the petition. Observations ( per Lord M'Laren and Lord Kinnear) on the inexpediency of permitting a trust to fall into the hands of a sole trustee.
Peter Stewart, of the Kinnoull Arms Inn, Perth, died on 6th January 1897, leaving a trust-disposition and settlement dated 3rd October 1892, whereby he assigned and disponed his whole means and estate to certain trustees for the benefit of his widow and children. From 18th April 1904 the trustees under the trust were Thomas Chalmers, solicitor, Perth, one of the original trustees, and Robert Stewart, solicitor, Perth, an assumed trustee. Stewart was also law-agent to the trust, having been appointed to that office at a trust meeting held upon the 10th March 1904.
Upon 15th September 1904 Mrs Mary Ann Munro or Stewart, the widow; Ann M'Farlane Stewart, Mary Stewart, and Joan Stewart, the three unmarried daughters; Christina Scotland Stewart or Watson, the married daughter, with the concurrence of her husband; and William Stewart, the son of the testator, being all the beneficiaries under the trust, presented a petition in which they asked the Court to remove the said Thomas Chalmers from the office of trustee, or otherwise to appoint John Anderson Stewart, solicitor, Perth, and John Munro, jeweller, Perth, or such other persons as their Lordships should think fit, to be trustees. They averred—“His,” i.e Chalmers', “whole conduct has been improper and unjustifiable and hurtful to the interests of the beneficiaries. He has persisted in preferring his own personal interests to those of the trust. While he will not demit office or assume new trustees, as he has been requested to do, he has continued to hinder trust investments and to obstruct the administration of the trust.” The facts relied on by the petitioners are given in the opinion of the Lord President.
Chalmers lodged answers, in which he expressed regret for the terms of his letters, caused, as he alleged, by irritation at Stewart's conduct, and in which he denied that he had impeded the administration of the trust. He admitted that it might be better that a third trustee should be appointed, and expressed his confidence in John Anderson Stewart, who, however, he stated, had expressed unwillingness to assume the office.
Argued for the petitioners—The conduct of the respondent has been such that they, the beneficiaries, could have no confidence in him. He would not resign, so they had no other alternative but to ask for his removal and the appointment of other trustees Dick v. Dick, December 16, 1899, 2 F. 316, 37 S.L.R. 232.
Argued for the respondent—The conduct of the respondent might have been injudicious, but did not amount to malversation or gross negligence. These were the only grounds upon which the Court would remove a trustee— Gilchrist's Trustees v. Dick October 20, 1883, 11 R. 22, 21 S.L.R. 17; Harris v. Howie's Trustees, October 20, 1893, 21 R. 16, 31 S.L.R. 33.
The trustees nominated in the trust-disposition and settlement were three in number, all solicitors in Perth, and after the death of the truster on 6th January 1897 all the persons nominated trustees accepted office. The trust was not a large one, and there need not have been any difficulty in its administration if everyone connected with it had been reasonably desirous of doing his duty, and not of making profit out of it for himself.
The incidents with which we have specially to deal began in the month of April 1904, when Robert Stewart, who after the death of the respondent's two original cotrustees was assumed as a trustee, and was appointed law-agent to the trust, wrote to the respondent what seems to me to have been a perfectly proper letter expressing his desire to consult him as his co-trustee in regard to the investment of the trust estate. The respondent's answer to that letter was not of a proper or I hope of a usual character. He said in it—“As your position and mine as trustees are now equal, I am to insist on half fees for all business to be done by you for this trust. On hearing from you that you agree to this condition I will consider the question of investing the trust funds.” The ruling consideration to which the respondent refers was not the interest of the trust but of the respondent himself. He insists on receiving half fees, for which he had not given and was not to give any professional service, and he makes payment of this indefensible claim a condition of his attending to the business of the trust which he had accepted. It would be difficult to conceive of anything more improper than this proposal, that a trustee should make a profit out of the execution of his trust and at its expense. He insists that if he allows Mr Stewart to receive professional fees for work done by him (Stewart) for the trust, the respondent shall receive half of them. I have seldom known of anything more improper than this proposal by a trustee that he be allowed to pocket a portion of the trust funds. The proposal was quite indefensible, and shows that the respondent is unfit to be trusted with the position of a trustee. Mr Stewart's reply to the respondent's proposal was this—“I presume that I
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The correspondence goes on and Mrs Stewart wrote on 4th May to the respondent suggesting that two new trustees should be assumed. And on 6th May the respondent replied that he could not see his way to agree to assume new trustees at present, and on the same date he wrote to Mr Stewart that he has objections to assume any new trustees at present, and upon being asked by Mr Stewart what his objection was he wrote on 7th May that he did not feel called upon to give him any further reason for refusing to assume new trustees. I do not know what his reason could have been unless to create a deadlock in the management of the trust with the view of concussing the trustees to allow him to receive half the fees payable to the agent of the trust.
On 6th May Mrs Stewart wrote to the respondent that her nephew Mr Robert Stewart informs her that “you insist on getting half fees for all the business to be one in my late husband's trust, and unless he agrees to the conditions you will not consider the question of investing the trust funds”; and that she does not “consider this any reason for delaying the business of the trust.” In reply to this letter the respondent wrote expressing regret that he could not discuss with Mrs Stewart the question to which she refers, “which is entirely a personal one between Mr Robert Stewart and myself.” If anything had been necessary to show that the respondent's object was to get a private profit for himself out of the trust funds, this last letter would have been sufficient to do so. The respondent said that if he was not allowed to commit a breach of trust he would bring the trust to a deadlock. When Mr Robert Stewart wrote on 14th May suggesting a particular investment the respondent replied:—“I do not approve of this investment”; but he gave no reason for his disapproval. When on 22nd June he wrote asking Mr Robert Stewart to arrange for a meeting of trustees for the purpose of appointing a law-agent, he said nothing about the proposed investment or his objections to it, and he made no suggestion in regard to it.
I do not think it is necessary to go further into the details of this case except to repeat that the position taken up by the respondent was quite indefensible, and that he not only displayed a total disregard of the benefit of the trust, but also acted in a way contrary to its interests and calculated to bring it to a deadlock, all for the purpose of getting some of the trust funds for himself. If he thought Mr Stewart was acting wrongly with regard to the investment, it was his duty to say so, and to take steps for obtaining a proper investment, but instead of doing this he sought to prevent anything at all being done. Such an attitude on his part was quite indefensible, and it appears to me that the proper course is to remove him from the office of trustee.
I cannot accept the explanations offered as in any way sufficient. The respondent can have been under no misapprehension as to the nature of his proposal, for every law—agent knows perfectly well that he is not entitled to make a profit for himself as trustee out of the administration of the trust. The attitude of the respondent here towards the trust seems to have amounted simply to the desire to make what money he could out of the trust funds for distribution among the lawyer trustees. If, then, responsible and suitable persons are willing to act as trustees, I think that the respondent should be removed from his position and they should be appointed. It is never a good thing that a trust should be left in the hands of a sole trustee, and, whatever confidence the Court may have in the ability and integrity of the remaining trustee, it is always unwilling to bring about such a state of affairs.
The Court pronounced an interlocutor on 22nd November removing Chalmers from the office of trustee, and continuing the cause to allow Robert Stewart, the remaining trustee, to lodge in process the deed of assumption to be executed by him in favour of the two persons whose names were suggested in the petition, and on 30th November another interlocutor finding in respect that the deed of assumption referred to had been lodged, that it was no longer necessary to continue the cause.
Counsel for the Petitioners— A. J. Young. Agent— Isaac Fürst, S.S.C.
Counsel for the Respondent— Campbell, K.C.— Graham Stewart. Agent— J. T. Donaldson, Solicitor.