Scottish Court of Session Decisions

Subject_1 ANNUALRENT.
Subject_2 ANNUALRENT due by Executors.

The Countess of Caithness, and Lady Dorothea Primrose,
v.
The Earl of Rosebery

Date: 3 June 1747
Case No. No 75.

An executor is not entitled by his commission, to lend out the executry funds upon interest. He is bound to gather in, in order to distribute. If he lend, it is at his own peril. Consequently he cannot be liable for interest.

An executor found liable for interest from a certain date, nomine damni, on account of malversation in the execution of his office.

An executor, by the later practice of England, is liable for interest.

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James, Earl of Rosebery, was confirmed executor to his father, 24th May 1724, and a process was raised against him by the Ladies Margaret and Dorothea, his sisters, to account for the half of the executry due to them by the defunct's disposition, and a decreet obtained; but this being opened, and in the review, the charge given up by him in inventory considerably restricted, there occurred a question, How far he was liable in interest for principal sums, and money upon government securities uplifted by him, especially the executry having been so long in his hands, and also for other subjects, though not bearing profit, when intromitted with; on account of certain special circumstances to be afterwards noticed?

Pleaded for the pursuers: An executor is a trustee, and it is agreeable to the nature of a trust, that it be managed in the most beneficial manner for the persons interested; he is indeed to pay the debts; and if the dead subjects will not do that, he may make use of part of those that are profitably employed; but it is contrary to his engagement wantonly to uplift money bearing profit, to the prejudice of the owner, and employ it perhaps to his own advantage, and by delaying his accounting by litigious objections, draw more out of the executry than will fall to the person having right.

Pleaded for the defender: The business of an executor is to call in the effects, pay the debts, and distribute the remainder: He cannot lend out; for he ought to have money to answer when called for; and if he do lend it, he must run the hazard. From which it follows, that he is not liable in the interest of sums uplifted by him; and a condesendence is now made of L. 14,000 Scots, and more, of principal sums uplifted by the Earl, which would have been of little value, if left in the same hands till this time; neither has he been in mora, as the long process which has till now depended, was owing to the pursuers insisting to charge the defender with much more than he is found liable in; and he in the beginning offered to assign them to a proportional share of the inventory.

Pleaded for the pursuers: He must also be liable for interest on the unprofitable subjects from these circumstances, which conclude stronger with regard to the securities.

The late Earl of Rosebery disponed his heritable estate that was unentailed, and whole moveables to his four younger children; but the Earl made a transaction with the two eldest, who conveyed to him their right, and he granted a bond for L. 1800 Sterling to John his brother, and L. 900 to Lady Mary his sister.

The pursuers, then minors, were confined in his house of Barnbougle, where access was denied to their friends and curators named by their father, and to a messanger who came to execute a warrant of the Lords of Session, and they were concussed to sign a declaration before a justice of peace, that they were not detained by force; in these circumstances they were prevailed with to chuse the the Earl and two of his confidents their curators, he being sine quo nan, 24th April 1724. On the 24th of May he was confirmed executor, and on the 28th, the Ladies, with consent of their curators, gave him an ample factory, and executed a renunciation in his favour of their father's executry, in consideration of his bond to each of them for L. 900 Sterling, being a third less than be purchased the other half for from their brother and sister; besides which they granted a renunciation of any claim they had to any Scots equivalent debenture notes, due to the Lady Semple their aunt, whereby they lost two notes to the value of L. 1117 Sterling, assigned by the Lady to them, in which the other children had no interest.

Upon a petition from two of the young ladies' relations, and afterwards from themselves, and a reduction repeated, these deeds were set aside, and the ladies reponed, who brought a process against the Earl, to account for their share of the executry, and obtained judgment therein, against which a representation was offered; but upon expiration of the stop, according to the sense in which the act of Sederunt was then understood, the decreet was extracted in 1726, and adjudication obtained.

A reduction was raised of this decreet in 1734, which is the process now in dependence, and the Earl has obtained considerable defalcations of the charge given up by himself in inventory.

Thus, it appears that the Earl got into possession of the whole executry, while he was curator to his sisters; and therefore, if they had never brought any process against him, he must have accounted to them in that character, since it was his duty to have confirmed them with himself, or if he did not, he must be held to have confirmed himself on their account; and though his title of curacy was reduced, he, under it, got himself confirmed, and still keeps possession of the excutry, whereof the pursuers share exceeds L. 38,000 Scots.

Pleaded for the defender: When the late Earl of Rosebery made the settlement abovementioned on his younger children, he had contracted the disease of which he died; so that it was understood they could have no interest in the heritable estate; the subject of the transaction, therefore, was only the moveables, in which it would have been difficult to have shewn that the Ladies were leased, and it was reduced solely on this, that he could not authorise a deed in favour of himself; but during the standing of that bargain, and while he had in him the universal title to the executry, he rashly gave up an inventory containing many debts, that either never existed, or were paid. Upon the process against him to accompt, a decreet was pronounced in absence; against which he gave in a representation, shewing, 1mo, That the inventory ought not to be the rule of valuing the subjects, as they were mostly still in medio, and manifestly of less value. 2do, That several heritable debts given up, ought to be deducted. As, 3tio, ought the funeral charges: And offering to assign. This was ordained to be answered; instead of which, an extract was irregularly taken out, and afterwards an adjudication. Of this a reduction was raised in 1734, and the dependence has since been occasioned by the Ladies insisting against him for the full inventory, from which he has obtained great defalcations.

If the Ladies were leased by the transaction with their brother, that is now set aside, and they have been left to exact their share of the executry, for which he must accompt by the common rules of law; nor can he be said to be in mora, considering there was a charge brought against him of L. 216,285 Scots, the sum in the inventory; and now, upon a strict examination, he has been found liable in no more, as the charge, than L. 69,841, notwithstanding many disadvantages his doers lay under from lost vouchers, distance of time, and circumstances of health. He cannot surely be blamed for not paying the half of so large a sum, when, at the same time he offered to assign their share of the inventory, instead of accepting whereof, they irregularly took out a decreet against him.

The question put was, Whether annualrent was due nomine damni?

The Lords, 23d January, ‘Found the Earl of Rosebery, the executor, not liable for the interest of sums uplifted by him.’

On a bill, which was answered, insisting, besides the above topics, on the Ladies having been obliged to borrow money on interest, and that whatever might have been pleaded by the Earl, if he had preserved the money in his custody, or so secured as to be ready on a call, yet he could not claim the right of an executor, when he had broken the trust, and squandered the subjects.

The Lords, 20th February, found, ‘That the Earl was liable in interest upon the balance now found due, from the date of the decreet of constitution in the year 1726.’

Pleaded in a reclaiming bill: That the foundation of finding the Earl liable in annualrent from that period, being his having dissipated the executry funds; the interlocutor could not be supported, unless it were shewn that he had then committed the dissipation; for that if he had not, the Ladies' claim could then have been made forthcoming to them; and that it was not, was only occasioned by their own extravagant demand. 2do, It was a sufficient answer, if now when accompts were adjusted, he had money ready to replace what he had spent; and this was condescended on, to wit, rents of his estate in the factor's hands, and some other funds sufficient to answer the claims of his sisters without interest, and the other adjudgers in the same rank with them.

It occurred, that interest had been found due to the Ladies from the date of their decreet of constitution; whereas it was only the adjudication that entitled them to compete with other creditors, to whom it was of import that the sum to which it was restricted should only bear interest from the date thereof, as if that had been the sum adjudged for.

The Lords refused the bill, without prejudice to the Earl's other creditors, to be heard how far they ought to be preferable upon their diligence with regard to the annualrent of the sum now found due to the Ladies, arising thereon, before the date of their adjudication.

Reporter, Elchies. Act. H. Home. Alt. Ferguson. Clerk, Forbes. Fol. Dic. v. 3. p. 29. D. Falconer, v. 1. No 177. p. 236. *** The same case is thus reported by Lord Kames.

1747. January 23.

The late Earl of Rosebery having five children, the eldest of whom, the present Earl, being to succeed to the entailed estate, settled upon his other children, September 1723, his whole funds real and personal, the entailed estate excepted. Having died within the sixty days, the deed was reckoned unavailable as to the real estate; and, as to the moveables, two of the children being of full age, made a transaction with their eldest brother, the present Earl, surrendering to him their interest in the said deed for a sum certain. The same transaction was afterward made with the other two children; upon which the present Earl obtained a confirmation as executor-dative to his father, and proceeded to intromit. The confirmation is dated in the year 1724; and, in the 1725, a reduction was brought of the transaction by the two youngest of the children, as to their interest in the moveables; and, upon evidence brought of some indirect practices by the Earl in bringing about the transaction, joined with the minority of the pursuers, the transaction was set aside as to them. This produced a compt and reckoning, which subsisted many years, betwixt them and their brother the Earl, about his management as executor-dative. All the other points being settled, it came to be a question, Whether the Earl was liable for interest upon the ascertained balance? The Lord Elchies Ordinary pronounced the following interlocutor:

“Finds, That such sums as did bear annualrents to the late Earl of Rosebery, and have been uplifted by the present Earl, ought, in the accounting betwixt the parties, to continue to bear annualrent; and, in like manner, that the profits of equivalent debentures, or other public funds, disposed of, or intromitted with by the present Earl, ought (as well as these funds themselves) to continue to be charged against him, unless it appear that there was a necessity to uplift and apply such sums bearing annualrent, or funds, for payment of pressing debts of the late Earl, and when he had no other sums of the executry in his hand. But finds that he is not chargeable with annualrent for what part of the executry did not bear annualrent or profit to the late Earl.”

But afterward, having taken the case to report, the reasoning that determined the Court was to the following purpose.

As there is no proper succession of moveables like what there is in heritage, a trustee or administrator is appointed to ingather the moveable effects of the deceased, to turn all into money, and to make distribution among the parties concerned. This management is implied in the very nature of the office, and is expressed in the commission granted by the commissaries:

“With full power to the said executor to intromit with the goods, gear, debts and sums of money contained in the above inventory, uplift, receive and dispose upon the same, grant discharges thereof, and, if need be, to pursue therefor, &c; provided always that he render just compt and reckoning of his intromissions, where and when the same shall be legally required.”

This commission binds the executor to execute the testament, by taking decrees against the debtors, and by proceeding to execution in order to force payment. Hence it is, that, if an executor die before the money be levied, the testament is reckoned so far not executed, and there is place for a new executor ad non executa. Upon the same plan of administration it is tritissimi juris, that an executor is not entitled, by his commission, to lend out the executry funds upon interest: if he does, it is at his own peril; for his duty is not to lend out, but to gather in, in order to make a distribution: he ought to have the money in his hand, ready at the call of the persons interested. And thus it was found July 1730, Creditors of Thomson contra Monro, No 74. p. 534. that an executor-creditor, having lent out money upon interest, was liable to account to the other creditors for the neat balance only, not for the profits; because an executor is not bound, like a tutor, to lay out upon interest the sums he uplifts; and, if he does, the risk is his own.

From these premises it follows necessarily, that an executor is not liable for interest. If, on the one hand, he is bound to uplift, and, on the other, cannot lend out, there can be no place for this demand; nor can there be any difference betwixt sums bearing interest and not bearing interest as to this particular. Executors have, oftener than once, been found liable for allowing the funds to lie out upon interest; a decree is not reckoned sufficient execution; and consequently, if the debtor prove insolvent, the executor must make good the debt.

Inspecting the records of the Commissary-court, and the decrees of exoneration there found without number, in no case was interest ever decerned or so much as demanded. This shews the universal sense of the nation as to this point.

“Found the Earl of Rosebery, the executor, not liable for the interest of the sums uplifted by him.”

N. B. The pursuers reclaimed, giving up in a good measure the general point; but insisting upon several articles of malversation committed by the Earl in the execution of his office; upon which ground, they said, interest ought to be due nomine damni. Answers having been given in, interest was found due from a certain period retro. This judgment was founded upon the special circumstances of the case, without intention to alter the foregoing interlocutor pronounced upon the abstract point.

Inspecting the law of England, I observe it to be a rule there as with us, that an executor is not liable for interest. But of late years the Court of Chancery has begun to find interest due. The reason given is, that the objection of the executor's running the risk of the money he lends out, vanishes where a man may insure his money for one per cent. See General Abridgement of cases in Equity, p. 238. § 23.

This argument was not moved for the pursuers; and it is uncertain what influence it might have had. As the intercourse betwixt the two parts of the united kingdom is daily opening more and more, it is probable that we will follow the judgments of the Court of Chancery in this particular; for which there are two reasons: 1mo, The opportunity of insuring in Scotland as well as in England. 2do, Our respect to the judgments of the House of Lords; which, in an appeal, would probably be directed by the practice of the Court of Chancery.

Rem. Dec. v. 2. No 79. p. 123.