Scottish Court of Session Decisions

This multiplepoinding was before the Court on two previous occasions, in March and May of 1868 (see ante, vol. v, 402 and 539), when the Court, disposed of certain legal questions which had arisen between those beneficiaries in the trust estate who were claimants in the action. Mr Ralph Erskine Scott, the accountant, to whom a remit had been made in the case, had meantime issued his first report on March 17, 1868. Objections to this report were lodged for the different parties, and were all disposed of by the Lord Ordinary in June of the same year, excepting the second objection for Mr Humphrey Graham, on which the Lord Ordinary made a farther remit to the accountant to report. Mr Humphrey Graham reclaimed against the interlocutor of the Lord Ordinary disposing of the objections to the report, and on October 29, 1868, the Court pronounced an interlocutor in the following terms:—“Recall the interlocutor, so far as it repels the first objection stated by Humphrey Graham, and finds that any debts due to the said Humphrey Graham by the late Mrs Isabella Farquhar or Graham, however chargeable against Mrs Graham's own liferent interest, are not chargeable against the fee of the trust estate or any part thereof; and, with reference to the said objection, before farther answer, remit to the accountant to examine the accounts to which the said objection refers, and report in like manner as in regard to the second objection stated by the said Humphrey Graham, and direct the accountant to report to the Court quam primum, instead of reporting to the Lord Ordinary,” &c.

The two objections for Mr Humphrey Graham referred to in this interlocutor of the Court are as follows:—(1) “That the balance due by the late Mrs Isabella Farquhar or Graham to the claimant (Mr Humphrey Graham) has not been deducted from the fund for division, the said balance amounting to the sum of £4898, 4s. 2d., as specified in the accounts Nos. 93, 94, and 95. (2) That the accountant has not given effect in the accounting to the sums paid by the claimant to the several beneficiaries, or for their behoof, as specified in accounts lodged in process in the conjoined actions of multiplepoinding and count and reckoning between the same parties, in reference to the estate of the late George Farquhar. The claimant (Mr Humphrey Graham) accordingly claims that the said sums should be deducted from the whole amounts now payable to the said several beneficiaries, in respect of their shares, both of the estate of the said Colonel and Mrs Graham, and of tho estate of the said George Farquhar.”

In accordance with these directions from the Court, the accountant, in June 1870, made his supplementary report, in which he says:—“The objections Nos. 1 and 2 for Mr Humphrey Graham above narrated have involved the examination of the following accounts —

“ Under Objection No. 1.—The account between the claimant and Mrs Colonel Graham in respect of one-sixth share of the annual produce of the estate of the late Mr Farquhar from Whitsunday 1830 to Whitsunday 1853 inclusive, being £19 half-yearly, and amounting, with interest to 31st Dec. 1865, to £2294, 7s. 8d. Mr Humphrey Graham supported this claim to the one-sixth of the produce of the Farquhar estate during his mother's liferent by reference to the following clause of the mutual trust-disposition and settlement of Colonel and Mrs Graham:—‘And I, the said Isabella Graham, in case I shall survive the said Humphrey Graham, my husband, and in case any one or more of our children before named shall marry, do hereby, with advice and consent foresaid, bind and oblige myself to renounce my right of liferent over such share of my said deceased father's estate and effects as I have by these presents appointed to belong to such child or children respectively, so that such child or children so marrying may receive and enjoy such share or shares upon their entering into such marriage, if the same shall be contracted after the decease of the said

Page: 108↓

Humphrey Graham, or upon his decease if it shall have been previously contracted.” This claim on the part of Mr Humphrey Graham raised a legal question, of which the accountant could not dispose; but, at the request of parties, he did not at once crave the instruction of the Court, but completed this interim report, and now raises the question, whether any part of the income of the Farquhar estate, during the period of Mrs Graham's liferent, should be placed to the credit of Mr Graham and his representatives in the present accounting. If the Court sustain Mr Graham's claim for one-sixth of the free produce of the Farquhar estate, and if the other parties object to the amount, as estimated by Mr Graham at £19 half-yearly, it will be necessary for the accountant to separate Mrs Graham's liferent account into two distinct accounts, showing the receipts and disbursements applicable to the Graham and Farquhar estates respectively.” Farther, in this claim of Mr Graham's the interest has been calculated and accumulated annually at five per cent.; this the accountant is of opinion ought not to be allowed.

Next, the general accounts of Mr Graham, with the year produce of the two estates.

1. Farquhar Estate.—The accountant finds that Mr Graham uplifted, and retained in his own hands from the year 1842, the sum of £3500 of the capital of the estate. The accountant is of opinion that Mr Graham falls to be charged with interest at five per cent, upon this sum from Whitsunday 1842, accumulated half-yearly, under deduction of income tax. He has made up an account accordingly.

2. Graham Estate.—Mr Graham uplifted and retained in his hands, from 1849 downwards, various sums belonging to this estate, amounting at that date and subsequently to £5500. The accountant has followed the same principle here as in the former case and charged Mr Graham with interest on this sum at five per cent., accumulated half-yearly. At the same time, the accountant has only debited Mr Graham with interest at five per cent. without accumulation upon the floating balances in his accounts with these estates. He has similarly credited him with interest at the same rate without accumulation, when the balance has been in his favour.

“ Under Objection 2.—The accountant has carefully examined the accounts between Mr Humphrey Graham and the various beneficiaries under Colonel and Mrs Graham's settlement. The results however, are not material to the present questions before the Court.” The report concludes:—“The accountant cannot hoc statu, and until the decision of the Court is obtained on the various legal points involved in the accounting between the parties, make up any state showing the bearing of the results of the present accounting on the claims of parties. At a meeting with the agents for the parties of this date (January 10, 1870), it was proposed that the present report by the accountant should be printed, but as it may be materially altered by any decision the Court may pronounce in regard to these legal questions, the accountant was requested to state at the conclusion of the report the questions requiring decision bearing upon the accounting, and to crave the Court to dispose thereof before further procedure. These questions appear to the accountant to be as follows:—(1) Are Mr Humphrey Graham's representatives entitled to one-sixth of the annual produce of the Farquhar estate, from Whitsunday 1830 to 31st March 1864, and if he be found so entitled, are the other married children of Colonel and Mrs Graham entitled to the like sum during the joint existence of their marriage, and of Mrs Colonel Graham's liferent? (2) In the event of their being so entitled, are the alimentary payments, etc., to them, alluded to before, to be charged against the sum so found due to them, or are these payments to be considered as free gifts to them by Mrs Colonel Graham out of her liferent? (4) Is Mr Humphrey Graham entitled to set off such balances as may be found due to him on the several accounts between him and the other beneficiaries against the capital sums of the Graham and Farquhar estates uplifted by him, and remaining in his hands? Or, is the accountant correct in accumulating interest on these capital sums, and only allowing interest without accumulation on the fluctuating balances on the accounts-current? (6) In the event of it being ultimately found that, in place of there being a balance of liferent due to Mrs Colonel Graham's representatives as brought out by the accountant, there should be a balance due to the representatives of Mr Humphrey Graham, as contended for by them, is such balance chargeable against the capital of either estate, or any part thereof?” For the explanation of the present point at issue, it only remains to notice a letter from Mrs Graham to her son Humphrey, the bearing of which upon the said question is most important. Its terms are as follows:—‘ Feb. 5, 1835.— My Dear Humphrey,—I have for sometime felt very uncomfortable under a sense of retaining what (by your father's settlement, signed also by me) does not belong to me. I allude to the clause where it is mentioned that such of our children as marry are then to receive each their share of the six equal portions allotted to them of my father's property left in liferent to me. Three are married, and, of course, three shares are due—to yourself, to Frederic, and to Bella, one each. This clause your father intended to alter, thinking it unjust that, if all our family married, I should be deprived of all my father left me, and reduced to a much smaller income than they intended I should possess; but that is of no consequence, as no alteration took place. Nor do I regret its not doing so, only as depriving me of any opportunity to show my free goodwill in time of need; for I dislike responsibility, and wish no more for myself than is necessary to keep me a little comfortable for the short period it is likely I may now require it. I have been thinking, if just enough for that purpose could be properly settled for me, I should wish to give up the rest to those who may have more occasion for it at present, and to whom it will ultimately belong, only I would be afraid that some of them might not just at this time be able to manage their share very prudently. However, I wish you to consider, and give your advice as to this matter. At all events, I am determined to relinquish the three shares above mentioned, and request, if you do not approve of the other plan, you will set about arranging that one. The present aspect of political affairs seems favourable for seeking military justice. If my pension could be gotten, it would be useful amongst us.—I ever am, my dear Humphrey, your affect, mother. (Initialed) J. G. It grieves me beyond measure that I have no way in the least adequate, or that you would accept, of testifying my grateful sense of your dear Johnie's hospitable kindness to all of us. The unwearied attention we receive, I

Page: 109↓

can assure you, is justly appreciated, and nothing could afford me more unspeakable satisfaction than being able in any way to assist or benefit yourselves or your dear children. To such a heart as yours, I know, being serviceable to your only dearest and nearest relations is rich gratification; and I trust you will yet be rewarded, even in this world, for all your goodness, with health, peace, and ready-money in plenty. I know not how far Bella's marriage-contract allows of her concern in the arrangement I have mentioned of the three shares.”

Millar, Q.C., and Kinnear, for Humphrey Graham's Representatives, argued that their clients were entitled, as in right of Mr Humphrey Graham, to be credited in the accounting with one sixth of the free produce of the Farquhar estate during Mrs Graham's liferent of it. And that the other children of Mrs Graham must be charged with the sums paid them during her lifetime, even though alimentary, which ought not to be looked upon as free gifts when the clause in the settlement dealing with her liferent is considered. They further contended that their clients were hardly dealt with by the accountant, in as much as Mr Humphrey Graham was charged with 5 per cent. accumulated interest upon the sums uplifted by him and retained in his hands. This interest should only have been at four per cent., and should not have been accumulated; there should also have been set off against it the large sums which he was paying to Mrs Graham and the beneficiaries, both with and without Mrs Graham's order. The payments to Mrs Graham must be looked upon as the annual produce of these funds. The accountant does not set these sums year by year against the interest with which Mr Graham is charged, on the contrary, he charges him in an account apart with interest, and with interest upon interest on these sums, while he deals with Mr Graham's intromissions with the liferentrix and with the beneficiaries separately, and treats him in the matter of interest on quite a different footing, allowing of no accumulations. The proper view to take is to consider Mr Graham during this period as the family banker, and charge him with the due rate of interest, but give him credit in each year for any set-off there may be, and this without any accumulation of interest upon interest. They referred to Russell v. Mackie's Trustees, 20 Nov. 1869, 7 Law Reporter, 99.

The Solicitor-General and George Webster, for Mr W. H. Graham, argued that had Mr Humphrey Graham been entitled to claim a share in the annual produce of the Farquhar estate he should have retained it out of that produce as it passed through his hands. He neither did so nor acted as though he had right to do so. He or his representatives now come forward and plead that they have a condictio indebiti, and are entitled to reclaim this share. That cannot be; for, first, it is open to argue that the supposed provision of one-sixth of the liferent of the Farquhar estate was recalled. The deed containing this provision was executed in 1815, and contained most ample powers of revocation. The deed which properly disposed of the Farquhar estate is dated 1817, and contains no reference to this renunciation of Mrs Graham's liferent. We know from other sources that Colonel Graham contemplated altering that provision, and it is open to say that it was tacitly recalled by the subsequent deed. Mrs Graham may have been unaware of this, but it was her son's duty to inform her of it on receiving the letter of 1835. But without pressing this point, Mr Humphrey Graham should either have made his claim at that date, or must be held to have waived his right. He did not suggest any claim, but continued to pay over to his mother, &c., the rents, and profits of the estate for eighteen years subsequently. We are entitled to presume that Mr Graham knew of his father's intention to alter, and that even if he did not consider that he had actually done so, he was willing to give effect to his father's intention, and voluntarily relinquished any claim which he might otherwise have had. Without shewing essential error, his representatives cannot have this condictio indebiti.

On the second question, that of accounting with the several beneficiaries, they contended that the accountant was right in holding that this must be done separately with each. They were all indifferent positions, and particularly their client Mr W. H. Graham, who had only succeeded to his father's share. The trust accounts should first be made up as proper trust accounts, including with the Graham estate the income only of the Farquhar estate. And when this is done, and the share of each beneficiary ascertained, Mr Humphrey Graham may prefer his claims against each of them separately.

Lee, for Frederick Graham's trustees, stated that his interest in the question was the same as that of Mr W. H. Graham.

Macdonald, for Misses A. and M. Graham's executors, contended that there was much danger of confusion arising from this mixing up the Farquhar estate in the Graham multiplepoinding, whereas it was only the annual proceeds of that estate which were to be accounted for in this action. Even if Mr Humphrey Graham is successful in obtaining an alteration in the basis of the accounting as against W. H. and Frederick Graham, in respect of his advances to them, a different principle must be applied in dealing with his clients, viz., the one on which the accountant had proceeded, for to them no advances had been made.

At advising—