Scottish Court of Session Decisions

This was the sequel of a case reported in the Scottish Law Reporter ante vol. 9, p. 546. The action was one of reduction and declarator of trust, at the instance of William Ainslie, against his brother Henry Ainslie; the brothers were formerly

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in partnership as general merchants at Fort William.

The First Division held the reductive conclusions of the summons to be irrelevant, and, as regards them, dismissed the action; but they allowed the pursuer a proof by writ or oath of his averments of trust; and remitted the case to the Lord Ordinary to take the proof. The pursuer lodged a reference to oath; and the defender, Henry Ainslie, having been examined and the parties heard on the import of the proof, the Lord Ordinary ( Shand), pronounced the following interlocutor and note:—

“ Edinburgh, 17 th February 1873.—The Lord Ordinary having considered the cause, with the deposition of the defender, under the reference to his oath contained in the minute of reference No. 21 of process, and which was sustained by the preceeding interlocutor of 19th November 1872, Finds that the said deposition of the defender is affirmative of the reference to this extent, viz., that the various deeds mentioned in the conclusions of the summons which were granted by the pursuer in favour of the defender, were so granted by the pursuer and accepted by the defender on the admission and acknowledgement on the part of the pursuer, that he was at the date of granting the said deeds largely indebted to the defender, and the said deeds were so granted by the pursuer and accepted by the defender for the purpose of liquidating the debt admittedly due by the pursuer to the defender, but upon the understanding and agreement that if the property thereby conveyed should be of a value greater than was sufficient to pay the debt due to the defender, and should realize such greater value accordingly, the defender should be liable to account in respect of such greater value realized by him to the pursuer. Quoad ultra, and to any further effect, Finds the deposition of the defender to be negative of the reference: Finds neither party entitled to expenses since the date of lodging the said minute of reference on 18th July 1872, and appoints the cause to be enrolled for further procedure.

Note.—By the interlocutor of their Lordships of the First Division of 22d June 1872, the case was reduced to one of declarator of trust, and it was found that the pursuers' averments in support of the conclusions of declarator of trust could be proved only by the Writ or oath of the defender. The pursuer thereafter lodged the minute of reference No. 21 of process, by which he referred his averments in support of the conclusions of declarator of trust ‘to the oath of the defender’ and the reference was sustained by interlocutor of 19th November 1872. After several adjournments of the diet fixed for taking the deposition of the defender, which were to suit the convenience of the parties, the defender was examined before the Lord Ordinary, under the reference to his oath, on 16th January. The Lord Ordinary has delayed disposing of the case, as intimated to the parties, in the hope that the litigation, which is one between brothers of advanced years, and which if protracted may involve large expense to the parties, would be arranged. Having been informed that the parties have been unable to agree on terms of settlement, he has now to dispose of the question, What is the effect of the defender's deposition?

The averments in support of the conclusions of declarator of trust are contained in articles 3 and 4 of the condescendence, and substantially they amount to this, that though the deeds bore to be granted for onerous causes they were really gratuitous, granted entirely for the pursuer's own behoof, as a temporary arrangement, and subject to an obligation on the part of the defender to denude of the whole means and estate conveyed, and to account for his intromissions on being required by the pursuer at any time to do so. It is specially alleged by the pursuer in article 2 of the condescendence that at the time when he granted these deeds he was not indebted to the defender, nor to the firm of H. & W. Ainslie, of which the brothers had both been partners, in any sum whatever, and that the statements to that effect contained in the deeds granted by him were false. The defence is, that there was no trust of any kind; that when the deeds were granted the pursuer was very largely indebted to the defender, and that the property which these deeds conveyed was received in payment and extinction of the debt due. It is not said that there was any valuation made of the property taken over, nor that the defender in respect of the conveyance which he obtained granted any discharge in favour of his brother either in whole or in part of the debt which he alleges was due to him, and the terms of the deeds, on the legal effect of which the parties have not yet been heard, certainly leave it open for contention on the pursuer's part that the defender is liable to account to him, not on the foooting certainly of the existence of a gratuitous trust, but on that of a creditor having obtained a security or fund for payment of his debts, leaving a reversion of the estate or funds conveyed, if such reversion should exist after such payment.

On the one hand the pursuer thus avers that the deeds constituted a gratuitous trust entirely for his own benefit. On the other, the defender denies the existence of any trust, and alleges that the conveyances were absolute, and that he was under no obligation whatever to account with reference to the funds and estate conveyed to him, whatever might be the amount it might realise.