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Scottish Court of Session Decisions |
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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> City of Glasgow Bank Liquidation - (Thomas Case) Thomas and Spouse v. The Liquidators [1879] ScotLR 16_244 (31 January 1879) URL: http://www.bailii.org/scot/cases/ScotCS/1879/16SLR0244.html Cite as: [1879] ScotLR 16_244, [1879] SLR 16_244 |
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Page: 244↓
A married woman succeeded to certain stock in a joint-stock bank of unlimited liability. The terms of the bequest did not exclude the jus mariti and right of administration of her husband, and no claim for a reasonable provision under section 16 of the Conjugal Rights (Scotland) Act 1861 in respect thereof, was made by the wife. She accepted the transfer of the stock, with consent of her husband. The entry in the register of members was in her name only, as was the stock certificate, and she received and signed the dividend-warrants. The dividends were, with the knowledge and approval of her husband, used in the ordinary household expenditure. There was no antenuptial or postnuptial contract.
Held that the husband only fell to be placed on the list of contributories, as ( a) the wife was merely acting as agent for her husband in accepting the transfer and in drawing the dividends of what was in law his, and ( b) assuming that the husband intended to make a reasonable provision for his wife by means of this stock, the effect of such a provision was merely to give her a right to the capital sum at the dissolution of the marriage, contingent upon her survivorship.
Observations upon the cases of Galloway v. Craig, June 22, 1860, 22 D. 1211, and July 17, 1861, 4 Macq. 267; and Rust v. Smith, Jan. 14, 1865, 3 Macph. 378.
This was a petition by the Rev. David Thomas and his wife to have their names removed from the list of contributories.
The deceased Matthew Blackwood, sen., grandfather of the petitioner Mrs Thomas, died on 28th April 1870, leaving certain trust-dispositions and deeds of settlement, and relative codicils, under one of which (dated 13th September 1867) his testamentary trustees were directed to dispone a share of the residue of his estate to his granddaughter, who had been married in 1866 to ‘the other petitioner Mr Thomas. There was no exclusion of the jus mariti or right of administration. The total value of the share (which was moveable estate) was £1600. The trust-estate included £370 of the consolidated capital stock of the City of Glasgow Bank.
In October 1870 it was arranged between the trustees and the petitioners that this £370 stock should be transferred to Mrs Thomas, as being included inter alia in her share of residue. Accordingly a transfer was executed and recorded, in which the acceptance was as follows “And I, the said Mrs Agnes Blackwood or Thomas (with consent of my said husband, and for all his right
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and interest in the premises), and I, the said David Thomas, as administrator-in-law, and as taking burden on me for my said wife, and we both, with joint consent and assent, do hereby accept of the said transfer on the terms and conditions above mentioned,” &c. A discharge by the petitioners in favour of the trustees was at the same time granted. Under the settlement of Mrs Thomas' uncle (Matthew Blackwood junior, who died on 13th May 1873), Mrs Thomas was entitled to a legacy, exclusive of the jus mariti and right of administration of Mr Thomas. The name of Mr Thomas never was upon the stock ledger, or the register of the bank. The entry in the stock ledger was “Mrs Agnes Blackwood or Thomas, wife of the Rev. David Thomas, minister of the U.P. Church, Lockerbie;” and the stock certificate bore “that Mrs Agnes Blackwood or Thomas, wife of the Rev. David Thomas, minister of the United Presbyterian Congregation, Lockerbie, has been entered in the books of this company as the holder of £370 consolidated stock.”
The dividend warrants bore to be signed by Mrs Thomas, but in the case of three of them her signature was at her request adhibited by her husband. One of them was indorsed by Mr Thomas. He never in any character attended a meeting of the shareholders or partners of the bank. The dividends were received by Mrs Thomas, and were, with the knowledge and approval of her husband, used by her in the ordinary household expenditure of the petitioners. There was no antenuptial contract of marriage between the petitioners, and no provision was made in favour of Mrs Thomas by postnuptial contract.
Mrs Thomas pleaded that her personal obligation as a partner of the bank was null and void. Mr Thomas pleaded that he never agreed to become a shareholder, partner, or member of the bank within the meaning of the Companies Act 1862, sections 23 and 38, and both petitioners pleaded that they were not liable in law as contributories.
Argued for them—(1) Mrs Thomas had no separate estate at the time of the transfer, although she afterwards came to have one from an uncle. The case fell under the rule that a married woman could not undertake personal obligations; thus differing from Biggart's, supra, p. 226. (2) It would be contended by the liquidators that Mrs Thomas, if she had no separate estate, must be held to have been acting for her husband and to have bound him. Now, it was not disputed that in the general case, where a wife was trading in the knowledge of her husband, especially when the means traded with were originally his own, she would be held to have been acting for her husband if the public contracted with her in that capacity. But a wife might enter into a contract which would bind nobody; and in the present case it was clear from the terms of the transfer that the bank, in contracting with Mrs Thomas, contracted with her, not as agent for her husband, but as principal, whatever might be the value of that contract. The contract ex figura verborum bound the wife only, the husband being merely consenter. The bank could have objected, but they did not; and in a question with the shareholders the directors might have acted ultra vires. This result was somewhat anomalous; but the anomaly had already occurred in practice— Rhodes, May 26, 1859, 7, Weekly Reporter 510. But (3) alternatively, if only one of the petitioners was entitled to be liberated, then Mrs Thomas must alone remain on the list—( a) in respect of the provisions of the Conjugal Rights Act of 1861 (25 and 26 Vict. 86), section 16 of which enacted that a reasonable provision was to be made to a wife who succeeded to property stante matrimonio; and (b) on the ground that at common law the husband being at the time of Mr Blackwood's death in solvent circumstances, and having made no provision otherwise for his wife, was then entitled to make a reasonable provision for her. If the amount was no more than reasonable, creditors of her husband could not touch it— Rust v. Smith, January 14, 1865, 3 Macph. 378. The nature of the provision here was not against this, as the right of a married woman to carry on a trade the proceeds of which her husband and his creditors could not touch was recognised by the Married Women's Property (Scotland) Act 1877 (40 and 41 Vict. c. 29), section 3. Lastly (4) if Mr Thomas was found to be a contributory, then Mrs Thomas was not.
Argued for the liquidators—The money with which the shares were bought was the husband's, not the wife's; the case therefore was one of that class in which a wife, acting with her husband's knowledge, bound him and not herself. Here he expressly acknowledged and consented to the transfer. No doubt the words of the transfer were inartistically expressed; but knowledge and consent were clear. On the other question, these shares were not intended to be a provision for Mrs Thomas. It was not a habile mode of making such a provision. No prudent husband could have intended to subject his wife to the risks of a trading concern. Further, the petitioners had not brought themselves within section 16 of the Conjugal Rights (Scotland) Act. But assuming it to be a provision, the result was that Mr Thomas was sole shareholder. If Mrs Thomas survived she would then become the shareholder, but while the marriage subsisted her right to the fee was subject to this condition of survivorship, and she had no right to the dividends at all. It was plain therefore that the husband was true owner of these shares— Kemp v. Napier, February 1, 1842, 4 D. 558; Craig v. Galloway, June 22, 1860, 22 D. 1211—July 17, 1861, 4 Macq. 267; Dunlop's Trustee v. Dunlop, March 24, 1865, 3 Macph. 758; Kerr's Trustees v. Justice, November 7, 1866, 5 Macph. 4; Miller v. Learmonth, Nov.21, 1871, 10 Macph. 107. Alternatively, if this was separate estate, the wife must remain on the list.
At advising—
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Now the history of the matter is simple enough. It appears that Mr and Mrs Thomas were married in the year 1866, and that Mrs Thomas' grandfather died in the early part of 1870. Very soon afterwards—that is to say, in October 1870—there was an arrangement made between Mr and Mrs Thomas and the trustees of Mrs Thomas' grandfather as to the way in which her share of the residue of his estate should be made over to her. There was no antenuptial contract of marriage between the spouses, and in the grandfather's settlement there was no exclusion of the jus mariti or right of administration of Mrs Thomas' husband. The money, therefore, that came to Mrs Thomas from her grandfather necessarily fell under the jus mariti of Mr Thomas, and belonged to him. But he and his wife entered into an arrangement by which her share of the residue, which she valued at £1600, should be made over to her, not in money, but in the specific securities or investments in which it stood in the hands of the trustees, and among others there was this £370 stock of the City of Glasgow Bank, which in pursuance of that arrangement was made over to Mr Thomas by the deed of transfer to which I have just referred.
Now the question is as to the effect of this deed of transfer. But it is also important to keep in view that it is admitted by the parties that after Mrs Thomas was registered as holder of this stock the dividends paid in respect of the stock were received by Mrs Thomas, and were, with the knowledge and approval of her husband, used by her in the ordinary household expenditure of the petitioners. Now, it appears to me that the particular form in which Mrs Thomas' residuary bequest under her grandfather's settlement was made over to her does not in the least degree affect the substance of the question before us. For the reasons I have already stated, there can be no doubt at all that that residue belonged to Mr Thomas jure mariti, and it was only in consequence of his consent and authority that the residue was made over in the form in which it was. It seems to me that it would have been exactly the same thing for the purposes of the present question if Mr Thomas had first of all drawn from the testamentary trustees the £1600 to which his wife was entitled, and then had invested so much of it as was necessary in the purchase of £370 stock of this bank, and registered that in his wife's name. If that had been the species facti, I think the result would have been exactly the same in law. Now, if a husband authorises or allows his wife to use funds belonging to him for the purpose of a particular investment, or for the purpose of a particular adventure—a trading adventure or other—I hold that in such a proceeding the wife is acting merely as the agent of her husband, and that so acting she acts for her husband's behoof, and consequently binds not herself but her husband only. That, I apprehend, is the general rule of law applicable to such a case, and I should have had no hesitation in applying that rule of law here, without any further consideration of the matter, if it had not been for an argument presented to us by the petitioners.
It was contended that this £370 bank stock was put into the name of Mrs Thomas, although properly belonging to her husband, with the view of making a provision for Mrs Thomas, and that, that being the intention, the arrangement was not revocable; it was not to be considered in the light of a donation; and just as little was it to be considered that Mrs Thomas in allowing her name to be used in this way was acting as her husband's agent. Now, of course, the question in that state of the fact would be, in the first place, whether it was the intention of the parties to make a provision, and, secondly, if so, what would be the effect of that upon the stock as it stood during the subsistence of the marriage?
If it were necessary to consider whether this was really intended as a provision for Mrs Thomas, I confess I should have felt considerable hesitation in affirming that it was; but I do not think it necessary to dwell upon that, because I am quite prepared to assume that it was intended as a provision for Mrs Thomas. What was the effect of that in law? I think we have the general rule applicable to cases of that kind very satisfactorily and conclusively established by recent cases, and particularly by the cases of Craig v. Galloway and Dunlop's Trustee v. Dunlop, and the result of them is, I think, that no provision of that kind can have any immediate effect during the subsistence of the marriage. It cannot give to the wife the income of the fund. If the income of the fund during the subsistence of the marriage were given to her, it would not be a provision, but a donation. Then as regards the capital, the wife's power as regards the capital is just as completely in abeyance as is her right to the immediate profits. She could not sell the subject though it stands in her name; she could not burden it or intromit with it. In short, her right, in the event of its being considered as a provision, would be nothing more than this—a contingent right to the capital sum upon the dissolution of the marriage, but upon the condition of her survivorship. If she had not survived—if the marriage was dissolved by her death instead of the death of her husband—her right would be at an end, and would not pass to her executors. So that it is not a present right, but a contingent and future right merely, and the consequence is, that during the subsistence of the marriage the property of the fund remains with the husband,—no doubt subject to the right in favour of the wife; but, in truth, the wife has nothing more than a security that that sum shall, in the event of her surviving her husband, belong to her upon the dissolution of the marriage.
Now, that being so, it appears to me to follow of necessity that at present, while this marriage subsists, even assuming that this stock was intended to be settled as a provision upon Mrs Thomas, it belongs to her husband, and that he, and he alone, can be dealt with as a partner of the bank in respect of that stock. The stock
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It has no doubt been held in this Court, in the case of Craig v. Galloway, that the effect of the life policy which was there in question was not operative in favour of the wife, because it was conveyed to her, her heirs, and assignees, and it was to be payable at her husband's death, whether before or after the death of Mrs Galloway; so, according to the terms of the policy, if she died, it would go to her heirs and executors—it would go to her whether she survived her husband or not. But all that was expressly reversed in the House of Lords by a very strong judgment, in which Lords Campbell, Brougham, Wensleydale, and Kingsdown concurred. All the grounds upon which the Second Division came to the conclusion against the wife were gone over and expressly repudiated in the House of Lords. In this case, therefore, if it be held to have been the intention to give this provision to the wife, the mere circumstance that there was income derivable from it, and that in certain events if she died before her husband it would become inoperative—considerations of that kind would not have prevented this capital from being a valid and irrevocable provision in favour of the wife. As I said before, it would have raised a very difficult question, whether, that being the general law with reference to a house, with reference to a sum of money, with reference to a policy of insurance, with reference to almost any kind of provision, a distinction could be taken in regard to stock in a trading company? I say that would have been a very delicate and fine distinction.
But I do not require to go into that question, because the ground of my opinion is twofold. In the first place, I do not think this was intended as a provision for the wife, and in considering whether it was intended as a provision for the wife or not it is a most important element to look at the nature of the subject made over to the wife. It is more difficult to make out an intention on the part of the husband to give stock of this kind to his wife as a provision than it would be to make it out in connection with any other kind of property. Upon the whole matter I think it could not be held to have been so. That is one ground upon which I go. The other ground is this, that according to the opinions in the House of Lords circumstances may occur during the lifetime of the parties which totally change the state of matters, and make that no provision for a wife at all which under other circumstances would have been a provision. That is expressly laid down in all the opinions to which I have referred, and that it might become revocable by the husband in certain events, although in certain other events it would not be revocable. Now, in this case events have occurred which seem to have put an end to it altogether, viz., the bankruptcy and hopeless insolvency of this bank. Suppose we held that this was intended to be a provision for the wife, all the circumstances have totally changed, and the provision is altogether gone. In place of being a source of provision for the wife, the question now is, whether the burden, not only of losing it, but of paying a great deal of money over and above, is to fall upon the wife? I do not hold that. I think the authorities come to this, that a change of circumstances of that kind which totally destroys the provision prevents it from being looked at in that character, although otherwise and in different circumstances it would have been a provision. It would have been a totally different question if the bank had continued solvent and the stock had continued to be a source of profit instead of being a source of loss.
I think that either of these two grounds is sufficient for the judgment which I think we should pronounce, viz., first, that this stock cannot be found to have been intended as a provision for the wife; and secondly, whatever it was, it cannot be converted into a source, not of provision, but of heavy loss to the wife, as it is substantially swept away. I therefore entirely concur in the result at which your Lordship has arrived.
Page: 248↓
It was maintained, as your Lordships have noticed, that a specialty exists here which takes the case out of the ordinary rule of law—that specialty being that this purchase was truly a provision by the husband of reasonable amount stante matrimonio, and which was effectual in favour of the wife. The argument, as I understood it, was presented in this way—that taking it to be such a provision, this portion of the husband's estate was practically set aside for the wife's separate use, and so the decision of this case was ruled by the case of Biggart, in which we held that an estate belonging to a wife and set aside for her separate use, employed in the purchase of stock, infers liability against the wife's separate means, and not against the husband.
I think that argument cannot receive effect here. In the first place, this is not a purchase with a wife's separate estate, but a purchase with the husband's own estate, and it is quite settled, particularly on the authority of the cases of Kemp v. Napier, Galloway v. Craig, and Dunlop v. Johnston, in which the whole subject has been fully discussed, that while a husband by setting aside a particular sum for his wife, may make an effectual provision which shall have effect after his own death, that does not apply to the fruits or interest of the fund, nor to the fee of the fund so set aside, except in the single case of his wife surviving. If it were necessary to decide in this case that this stock must be regarded as a provision in favour of the wife, I should have some difficulty in doing so, because I think it is against the notion or intention of the husband to make a provision of this kind when the subject of it is a share in a bank or trading company, with all the risks and responsibilities which attend a partnership of that kind. But I do not think it necessary to express or to form any final opinion upon that point, for assuming it to be taken as a provision—as intended by the husband to be a provision—the utmost consequence of that is that the wife would have a right to the stock in one event, and in one event only, viz., if she survived her husband. During the marriage the stock remains the husband's property. He has a right to draw the income of it. It is his exclusively, if his wife predecease him. He might be controlled in disposing of it, and must retain it as a quasi trustee for the event of his wife surviving him, but that is the single interest which the wife has in the matter. That follows, I think, clearly from the cases to which I have referred. Kemp v. Napier is a very striking illustration of it, for in that case the Court had to do with two funds. The husband granted his wife an annuity of £200 a-year during his life, and a fund of £500 after his death. It was held after his insolvency that the annuity of £200 during his life was a donation, and was recalled by the bankruptcy, while the provision to take effect after death was held to be good. So in Dunlop v. Johnston it was held that the capital sum there referred to must be held to be a provision in favour of the wife which might have effect after the husband's death, but the income of that fund was expressly held to belong to the husband. The case of Galloway v. Craig is peculiar in this respect, that the subject was a policy of insurance—a subject which yielded no income, and which represented simply a capital sum, and therefore in sustaining that as a good provision the Court were merely following the rule laid down in the other cases. The case of Rust v. Smith, to which Lord Deas has referred, follows the same line. It was held there that the provision of a house made stante matrimonio, and not being in excess of what was reasonable at the time it was granted, was a good provision to the wife; and, as Lord Deas has explained, the Court gave no decision as to the wife's right to the rent during her husband's life.
The result is, that with reference to the argument that this is a provision in favour of the wife, the purchase was made with the husband's funds; the income of the property belongs to the husband; the fee of it belongs to him, subject only to this, that the wife will have a right in the property if she survives. This I cannot think in the least makes the stock the separate estate of the wife, and if it be not made separate estate of the wife then the case does not fall within the rule laid down in Biggart.
It is said that the bank recognised the wife as proprietor of the stock by a number of actings, and I think that is quite true upon the evidence we have; but I agree with the observation made by your Lordship in the chair, that the only result of that would be—the bank being in ignorance whether this lady had separate estate or not—that if they found that in fact this was a dealing with separate estate, and that the lady had separate estate, they would be bound to look to that separate estate. If, however, they found, as was the fact in this case, that there was no separate estate, but that the wife truly acted for her husband and as her husband's agent, she cannot be a shareholder, and he must be held to be so.
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The Court directed the liquidators to remove the name of Mrs Thomas from the list of contributories, but refused the petition so far as David Thomas was concerned.
Counsel for Petitioners— M'Laren— Black. Agents— Mason & Smith, S.S.C.
Counsel for the Liquidators— Kinnear— Balfour— Asher— J. C. Lorimer. Agents— Davidson & Syme, W.S.
