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Scottish Court of Session Decisions |
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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Petition - Thomas Jackson for Removal of a Trustee [1865] ScotLR 1_16_1 (8 November 1865) URL: http://www.bailii.org/scot/cases/ScotCS/1865/01SLR0016_1.html Cite as: [1865] ScotLR 1_16_1, [1865] SLR 1_16_1 |
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This was an application by Thomas Jackson, writer in Kirkcaldy, for the removal of Charles Welch, writer in Cupar-Fife, from the office of trustee on the estates of Pearson & Jackson, writers in Kirkcaldy, and David Pearson, and the petitioner, the individual partners of that firm. The parties had been allowed a proof of their averments, and a long proof had been led.
It appeared that on 17th September 1860 Pearson & Jackson had disposed their whole means and estate to Welch in trust, the purposes of the trust being the realisation of the estate, the payment of the creditors of the firm, and paying the residue, if any, to the partners. The deed provided that the trustee was to be remunerated for his trouble. The application for removal was rested on the following grounds:—Part of the estate consisted of the superiority of certain subjects near the south toll-bar of Cupar, the casualties of which were said to be valuable. This superiority had been conveyed to Pearson & Jackson by a person named Andrew Thallon, and had been conveyed to Thallon under burden of a sum of £50 payable to his sisters. Mr Welch exposed the property to sale in his own office on 16th July 1861, and it appeared to have been purchased by Thomas Galloway, who was a clerk in Mr Welch's office, at the price of £181. On 5th August 1861 Mr Welch executed a disposition in favour of Galloway, in which he acknowledged receipt from Galloway of the price, although the price had not yet been paid. He thereafter prepared a notarial instrument in Galloway's favour, which was recorded in the Register of Sasines on 4th March 1862. It was alleged by the petitioner that this sale to Galloway was not a bona fide transaction on Mr Welch's part; that his clerk, Galloway, was a person of most intemperate habits, who had at one time enlisted in the army as a common soldier; that when in the army his father died, in consequence of which he succeeded to some heritable property; that Mr Welch thereupon purchased Galloway's discharge, and took him again into his office; that Galloway was completely under Welch's control; that he had no ready-money or uninvested funds at the time of the purchase with which he could pay the price; and that the purchase was made in his name at the instigation of Mr Welch, and for Mr Welch's own purposes and objects.
It was also stated that a sum of £500 had been borrowed in March 1862 on the security of three heritable subjects—one of which was the right of superiority before referred to, and that a bond had been granted for said sum to the lender by Thomas Galloway his mother, and his brother-in-law. This sum of £500 was received by Mr Welch, and stated by him in his books on the credit side of an account which he had against the Galloway family for advances made to them or on their account. It was therefore averred that this loan transaction was entered into solely for Mr Welch's personal behoof, and that the whole proceedings in reference to the pretended sale to Galloway were a mere scheme on the part of Welsh to get the use of, and to raise
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money upon, the trust property for his own individual behoof, Galloway being a mere tool in his hands. On 25th December 1863 Galloway died, leaving a settlement whereby, passing over his sister, he left his whole means and estates to Mr Welch, burdened with legacies of £50 each to his uncle John Condie and Mr Welch's brother James. It was replied for Mr Welch that Mr Galloway was not the pauper which he was represented by the petitioner to have been, for he was proprietor of a portion of the subjects from which the feus sold to him were payable, and it was for that reason that he wished to purchase the superiority. It was explained that the conveyance was granted to him by Mr Welch, without settlement of the price, because he (Galloway) was threatening to involve the trust estate in an action for implement of the bargain, which it was impossible to settle until a discharge had been obtained of the real burden which Andrew Thallon's sisters held over the subjects. It was also argued that after this course had been taken it met with the approval of Mr Pearson, and came to the knowledge also of Mr Jackson. This Mr Jackson denied, but it had been proved. The petitioner was not, therefore, now entitled to found upon this matter, which he did not object to when he came to know it, as the ground of a charge of corruption against the trustee. Besides, the estate had never suffered to any extent in consequence of what had been done, and had never been in danger of suffering from it. In regard to the bond for £500, it was pretended that the superiority was the valuable part of the subjects conveyed in security. In point of fact, the other two heritable subjects were far more than sufficient to cover the security. It was said that no value was given to the Galloways for the bond, for the sum borrowed went all into Mr Welch's pocket. But the petitioner had nothing to do with that. Mr Welch was at the time their creditor to the extent of £200; he held the balance for their behoof, and it had now been fully accounted for to them.
After a debate which occupied almost the whole day, the Court took time to consider its judgment.
Friday, Nov. 10.
The Court gave judgment in this case this morning. The trustee was removed from office.
The Lord President, who delivered the judgment of the Court, said—This is an application for the removal of Charles Welch, writer in Cupar, from the office of trustee on the estates of Pearson & Jackson, writers in Kirkcaldy. The ground of the application is misconduct on the part of the trustee. It appears that in 1860 Pearson & Jackson dissolved partnership, and appointed Mr Welch as their trustee, conveying to him their whole estates, with power to wind up the estate, and to act as arbiter betwixt the partners in all matters necessary for the winding up. In the course of the following year certain feus belonging to the concern were exposed to sale. The articles of roup are pretty much in the ordinary form. On 16th July 1861 the feus were purchased by Mr Galloway, a clerk of Mr Welch. This person seems to have had some means, but how far these were extant at the time of the purchase does not appear. A disposition in his favour was in a few days thereafter executed and delivered to him by Mr Welch. Sasine was recorded on 4th March 1862. Then it appears that the purchaser, or Mr Welch acting for him, negotiated a loan of £500 on the security of the feus and some other heritable subjects of greater value. That sum of £500 was received by Mr Welch, as appears from his cash-book, on 6th March 1862. Meanwhile the price of the feus had not been paid by Galloway, and the trust estate was not credited with it. A process of multiplepoinding seems to have afterwards depended, and the price was not credited in it either. We are told, however, that the sum has been consigned in this process. It appears that the trust did not go on very smoothly with Mr Jackson. The trustee says he was very obstructive. It appears that Pearson & Jackson, whatever was the case before the dissolution, were after it in anything but a comfortable position towards each other. Pearson and his son seem to have gone into partnership, and Mr Welch seems to have been in consultation with them as to their matters. This petition is then presented for the trustee's removal. Answers are given in both for Mr Welch and for Mr Pearson. Pearson says he is quite satisfied, and does not wish Mr Welch's removal. A condescendence was ordered and lodged, and Mr Jackson there sets forth very distinctly his charge against Mr Welch. In Art. 7 he says that “it was at the respondent's instigation, and at his hand, and for his behoof, that Galloway purchased the said subjects at £181—a sum far below their value.” Then he goes on to state the granting of the disposition and the borrowing of the money. And in Art. 14 he says—“The whole proceedings in reference to this pretended sale were taken for the respondent's own purposes and objects, and were in fact a mere scheme on the part of the respondent to get the use of, and to raise money upon, the trust property for his own individual behoof, Galloway being a mere tool in the hands of the respondent. These proceedings have been studiously concealed from the petitioner. In virtue of the foresaid deed of settlement by Galloway (referring to a settlement executed by Galloway before his death in favour of Welch), the respondent is now ex facie proprietor of the superiority in his own right, without the trust estate being credited either with the price of the feu-duties or casualties which have become payable in respect of Galloway's death or otherwise.” A proof has been led, various documents have been recovered, and a number of witnesses examined. In particular, Mr Welch himself was examined at great length. His examination seems to have extended over several days. Some of the examination may have been unnecessary; but, at the same time, it is to be observed that there appears to have been great difficulty in extracting from him what he should not have been so unwilling to tell. The question we have to decide is, whether the proof discloses sufficient to justify our removing the trustee. This is not the case of a trustee in bankruptcy, nor that of a testamentary trustee, nor that of a judicial factor. It is a trust constituted by two parties which both might put an end to if they pleased. It is not enough to put an end to it that one party wishes it. It was contended for Mr Welch that the ground of this application was that the trustee had acted corruptly, and that a case of corruption must be made out. I think that is an over statement of the petitioner's case. That is, no doubt, stated, but there are other things also stated. It was stated that the subjects were sold at an undervalue. I think that ground was departed from by the Lord Advocate, at all events it has not been supported by evidence. But still, though that is not established, we have before us the whole history of the matter, and the question is whether in the course of that history there was a breach of trust on Welch's part, such as will justify the Court in exercising its power of removal. Some of his proceedings were of a most singular kind. He has most unfortunately, to say the least of it, allowed himself to be mixed up with Galloway in the business in a most unseemly manner. He acted both for the trust estate and for Galloway, and, like most people who act for two parties in the same matter, with opposing interests, he has imperilled the one in attending to the interests of the other. It is a singular fact that on the day of the sale he granted a letter to Galloway giving him an obligation as to the completion of the title, which placed him in a better positon than those who had merely read the articles of roup. It is said that this letter contained nothing that was not in the articles. Then why was it granted? Then, when the purchase was made, the purchaser, whose history, as it appears in evidenoe, shows that he was a party as to whom caution was to be observed
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On the motion of the Lord Advocate, Mr Welch was found liable to the petitioners in expenses, subject to some modification; and it was stated that he would not be allowed to charge his own expenses against the trust estate.
Counsel for the Petitioner—The Lord Advocate and Mr Monro. Agents— Messrs Duncan & Dewar, W.S.
Counsel for Mr Welsh—The Solicitor-General, Mr Clark, and Mr Scott. Agent— Mr David Crawford, S.S.C.
