Scottish Court of Session Decisions

The Entail (Scotland) Act 1882 (45 and 46 Vict. c. 53), sec. 18, enacts—“Where any heir of entail in possession is entitled to disentail the estate, with the consent of any other heir or heirs, or upon such consent being dispensed with by the Court, any creditor of such heir in possession, in respect of debt incurred after the passing of this Act, who has obtained decree against him for payment and charged upon the decree, shall, in the event of the debt so incurred not being paid for six months after the expiration of the charge, be entitled to apply to the Court, and the Court shall, if the said debt is not paid within three months after the date of the application, order intimation to be made to the heirs whose consents would be required or must be dispensed with by the Court in an application for disentail by the heir in possession, and in the event of any of the said heirs or his curator ad litem appointed in terms of this Act refusing to give his consent, the Court shall ascertain the value in money of the expectancy or interest in the entailed estate of such heir, and shall ordain the heir in possession to grant a bond and disposition in security over the estate for

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the amount so ascertained in favour of such heir, and if he refuses or fails to do so, the Court shall grant authority to the Clerk of Court to execute such a bond and disposition in security, and such bond and disposition in security so executed shall be as valid as if it were executed by the heir in possession himself; and the Court shall thereafter ordain the heir in possession to execute an instrument of disentail of the estate; and if he refuses or fails to do so the Court shall grant authority to the Clerk of Court to execute such instrument, and after provision is made for the interests of any other creditors whose debts are secured on the estate, the creditor aforesaid shall be entitled to affect the estate for payment of such debt, and shall have the same rights and interests therein as if an instrument of disentail had been executed and recorded by the heir in possession himself. If the estates of such heir of entail in possession of an entailed estate shall be sequestrated for debt incurred after the passing of this Act, the trustee on his sequestrated estates shall be entitled to apply to the Court for authority to disentail the estate, and the Court shall forthwith proceed in the same manner as is directed in this section with regard to the application of a creditor.”

On June 6th 1901 Guy Duke, trustee on the sequestrated estates of James Somervell of Sorn, presented a petition under the above-quoted section of the Entail (Scotland) Act 1882, for the purpose of having disentailed the lands of Sorn, Dalgain, and Daldorch, in the county of Ayr, of which the bankrupt was heir of entail in possession. During the course of the proceedings Duke was succeeded as trustee by Francis More, C.A., and More, by John Scott Tait, C.A., who were in turn sisted as parties to the petition.

The bankrupt Somervell lodged answers to the petition, objecting to the disentail, inter alia, on the ground of lack of necessity.

The facts are given in the opinion of the Lord Ordinary on the Bills (Low), who on 7th August 1906 remitted to Lockhart D. Corson, S.S.C., to inquire into the circumstances, and whether the procedure had been regular and proper, to Joseph Harling Turner to value the estate for the purpose of the petition, and to George MacRitchie Low, actuary, to value the interest or expectancy of James Graham Henry Somervell, Agnes Marion Somervell, and Elizabeth Julia Somervell, the next heir and heiresses of entail under the petition.

Opinion.—“The estates of Mr Somervell of Sorn were sequestrated under the Bankruptcy Acts on 12th February 1901. Mr Duke was appointed trustee on the sequestration, and in June 1901 he presented the present petition for the disentail of the estate of Sorn. Mr Duke resigned office in 1902, when the deceased Mr More was appointed, and he in turn was succeeded by the present trustee Mr Scott Tait. The latter was sisted as petitioner in February 1906, and he is now desirous of proceeding with the application. Apparently the long delay which has taken place has been due partly to the opposition of the bankrupt and partly to the unwillingness of the successive trustees, and especially the present trustee, to force a disentail and realisation of the estate of Sorn if it could possibly be avoided. The trustee, however, is satisfied that it is now absolutely necessary that the disentail should be carried through.

“The bankrupt opposes the application upon the grounds set forth in the revised answers which he has lodged, and I have heard counsel upon the petition and answers….

In his answers the bankrupt in the first place founds upon a reserved power in the deed of entail, and upon a deed of appointment which he has executed purporting to be in execution of the reserved power.

Now the power reserved to the bankrupt in the entail only comes into operation in the event of James Graham Henry Somervell predeceasing him without issue, an event which has not happened, and which may never happen. The deed of nomination therefore can have no effect unless and until James Graham Henry Somervell predeceases the bankrupt without issue, and in the meantime James Somers Jones ( who was made heir of entail in the said deed of nomination) is not an heir of entail at all.

I think that that was practically decided in the case of Somervell's Trustee v. Dawes, 5 F. 1065, 40 S.L.R. 802, and the judgment in that case also established that in valuing the expectancies of the daughters of the bankrupt, who are called as second and third heirs in the petition, the circumstance that the bankrupt has power to bring the entail to an end in the event of his son predeceasing him without issue is an element to be taken into consideration.

The bankrupt further contends that it is unnecessary to disentail the estate of Sorn, because there are other funds available for payment of his debts in full. The bankrupt was heir of entail in possession of another entailed estate called Hamilton's Farm which has been disentailed, and which the bankrupt avers may be realised for a sum which will be sufficient to meet all his liabilities. If there were reasonable grounds for believing that that was the case, and if there had been a prospect of the sale of Hamilton's Farm being carried through within a reasonable time, I should have thought that the proper course to follow was to sist the present application to await the result.

There is, however, no prospect of Hamilton's Farm being sold or even re-exposed for sale for at all events many months to come, and that by reason of proceedings for which I have no doubt the bankrupt must be held responsible. There is at present pending in the Court of Session an action of reduction of the disentail of Hamilton's Farm and of all that has followed thereon at the instance of Amy Elizabeth Jones on behalf of her pupil son James Somers Jones. The bankrupt, I believe, lives with Amy

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Elizabeth Jones, and I think that it may be confidently assumed that the action has been brought at his instigation, or at all events with his knowledge and consent. He is therefore not in a very good position to urge that this application should be delayed until Hamilton's Farm is sold.

But further I am satisfied that there is practically no chance of Hamilton's Farm being realised for an amount which will be sufficient or anything like sufficient to pay the bankrupt's debts. The estate was valued in July 1906 by Mr Barr, a gentleman of great experience, at £26,500, but although the fact that the estate was for sale appears to have been brought very prominently before the public, it has been found to be impossible to sell it at that figure, or at a reduced price of £25,000, and further I understand that there have been practically no inquiries (I think one was mentioned) in regard to the property.

Now if the estate could be realised at the full amount of Mr Barr's valuation, that would, so far as I can judge, give funds very nearly sufficient to pay the bankrupt's debts and the expenses of the sequestration, if a debt of £26,616 to the Clydesdale Bank were left entirely out of view.

It is, however, impossible to disregard that very large debt. It has been decided (I think by the First Division) that in a question with the Clydesdale Bank the bankrupt is debtor for the full amount, and I am informed that the Court have actually ordained the trustee to give the bank a ranking for the amount. It is true that there are several co-obligants liable along with the bankrupt, but so far as I can judge upon the extremely vague information furnished to me, the liability of the bankrupt estate must be regarded as amounting to a very large sum.

In these circumstances I think that the trustee is justified in asking that some progress should now be made with the proceedings for disentail. His counsel moved that I should find that the answers for the bankrupt are irrelevant and dismiss them. I do not think that it would be safe for me to follow that course, because some of the questions which are raised would probably necessitate inquiry, and would demand, in any view, more consideration for their disposal than I am in a position (acting temporarily as Lord Ordinary on the Bills) to give to them.

I think, however, that without disposing of the answers considerable progress may be made before the Winter Session, and accordingly I shall remit to a man of business to make the usual report in regard to procedure, to an actuary to value the expectancies of the next three heirs, and to a man of skill to value the estate.”

Reports by Corson and Low having been received, the Lord Ordinary ( Mackenzie) heard parties and made avizandum, and on 15th January 1907 pronounced this interlocutor:—“Repels the answers for James Somervell designed in the petition …: Finds that the procedure has been regular and proper and in conformity with the statutes and relative Acts of Sederunt:

Ascertains and fixes the value in money of the expectancy or interest of James Graham Henry Somervell mentioned in the petition in the entailed estates of Sorn, Dalgain, and Daldorch mentioned in the petition at the sum of £30,632 sterling, the value in money of the expectancy or interest of Agnes Marion Somervell mentioned in the petition in said entailed estates at the sum of £7 sterling, and the value in money of the expectancy or interest of Elizabeth Julia Somervell mentioned in the petition in the said entailed estates at the sum of £1 sterling: Ordains the bankrupt James Somervell, as heir of entail in possession of said entailed estates to execute and deliver a bond and disposition in security over the said estates of Sorn, Dalgain, and in favour of the said James Graham Henry Somervell for said sum of £30,632 sterling, the said bond and disposition in security to be executed also by John Scott Tait, Chartered Accountant, Edinburgh, as trustee on the sequestrated estates of the said James Somervell as consenting and concurring therein, and as a party to the disposition in security therein contained for his interest in the said estates: Remits to Mr Corson to adjust the terms of the said bond and disposition in security, and to see the said bond and disposition in security in favour of the said James Graham Henry Somervell executed and recorded in the appropriate register of sasines: Of consent of parties ordains the said John Scott Tait, as trustee of the said James Somervell, to lodge on deposit-receipt with the Bank of Scotland in name of the said Agnes Marion Somervell the sum of £7 sterling, and to lodge on deposit-receipt with the said bank in name of the said Elizabeth Julia Somervell the sum of £1 sterling, and decerns: Quoad ultra continues the petition.”

Opinion.—“By the interlocutor of 7th August 1906 consideration of the amended answers for Mr Somervell was superseded, and remits were made to a man of business, a man of skill, and an actuary. These gentlemen have now reported, and the question for determination is whether an interlocutor should be pronounced in terms of Mr Corson's report. Before such an interlocutor can be pronounced it is necessary that the amended answer for Mr Somervell should be disposed of. Two questions are raised in those answers. The first is as to the effect of a reserved power in the deed of entail and of a deed of appointment which Mr Somervell has executed purporting to be in execution of the reserved power. An opinion was pronounced upon this by the Lord Ordinary on the Bills (Lord Low) with reference to the interlocutor of 7th August 1906, and in view of this opinion I was not asked by the counsel for Mr Somervell to deal with this question.

The second point raised by the amended answers is that it is unnecessary to disentail the estate of Sorn, because there are other funds available for payment of the bankrupt's debts in full. This question was reserved in the opinion given by Lord Low.

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It appears to me, after hearing a full argument from counsel, that the bankrupt has no title to raise this question with the trustee for his creditors. Under the Bankruptcy Statute the trustee has a duty to realise and ingather the assets of the bankrupt and to pay the creditors. The view now taken by the trustee and the commissioners is that it is necessary that the estate of Sorn should be disentailed and sold in order that the debts may be paid. What the bankrupt proposes is that the disentail proceedings should be indefinitely delayed. He maintains that the trustee must first of all enter into an accounting with him and justify to the Court the view taken by him and the commissioners that the disentail and sale of Sorn is necessary. I am unable to find any warrant in the Bankruptcy Statute for this position. It may be that under section 86 of the Bankruptcy Act the bankrupt has a title to present a petition to call the trustee and commissioner to account for their intromissions and management. I am unable to hold that he has a title to prevent the realisation of the estate by raising such a question.

The present petition for disentail is under sec. 18 of the Entail Act of 1882, which appears to me to give an absolute right to the trustee in a sequestration to disentail. The language of the section is imperative, and there is no statutory requisite which has not been complied with. In these circumstances I think the bankrupt has no title to object.

A motion was made by Mr Somervell's counsel that he should be allowed to put in fresh answers dealing with the state, which has been put into process since the amended answers were lodged. In these answers it is proposed to raise just the same point. As I consider the bankrupt has no title to raise such a question I am of opinion this motion should be refused. Nor do I consider it necessary to go into the figures, as I consider the trustee has a statutory right to proceed….

I am accordingly of opinion that an interlocutor should be pronounced in terms of Mr Corson's report.”

Somervell, respondent in the petition, reclaimed, and argued—The Lord Ordinary had erred in looking to the Bankruptcy Statutes for authority for the reclaimer's position— v. opinion. The petition was not under the Bankruptcy Statutes, and indeed the estate was no longer bankrupt, but under the Entail Acts. These Acts did not contemplate any sale of an entailed estate save where absolutely necessary, e.g., Entail Act 1848, sec. 30. There was here no necessity, for sufficient to pay the debts would be realised from other property. The result of the Lord Ordinary's judgment was to allow anyone with a judgment debt unpaid six months after expiry of a charge, to bring about the disentail of an estate. That would be inequitable.

The petitioner (respondent) was not called upon.