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Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> M'Rae and Another (Mackenzie'S Trustees) v. Gray and Others [1895] ScotLR 32_172 (10 January 1895)
URL: http://www.bailii.org/scot/cases/ScotCS/1895/32SLR0172.html
Cite as: [1895] SLR 32_172, [1895] ScotLR 32_172

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SCOTTISH_SLR_Court_of_Session

Page: 172↓

Court of Session Inner House First Division.

Lord Kyllachy, Ordinary.

Thursday, January 10 1895.

32 SLR 172

M'Rae and Another (Mackenzie'S Trustees)

v.

Gray and Others.

Subject_1Process
Subject_2Trustees
Subject_3Exoneration and Discharge
Subject_4Multiplepoinding — Competency.

Expenses — Trustees — Incompetent Action for Exoneration and Discharge — Personal Liability.
Facts:

Trustees were about to distribute a trust-estate among the beneficiaries when a claim was made against it, which certain of the beneficiaries refused to admit, while others desired that it should be paid. The trustees thereupon brought an action of multiplepoinding against the beneficiaries and the claimant for the purpose of obtaining their exoneration and discharge. They did not aver that the beneficiaries had refused to grant them extrajudicial exoneration and discharge.

Held (rev. judgment of Lord Kyllachy) that the action was incompetent.

Held that trustees who had brought an action of multiplepoinding for their exoneration and discharge which was found to be incompetent, were personally liable for expenses.

Headnote:

George M'Rae, stone polisher, Peterhead, and others, were the testamentary trustees of the late Hector Mackenzie, who died in 1893. The trust-estate amounted to about £300 (less legacies of £40, Government duties, and expenses of administration), and

Page: 173↓

consisted entirely of certain rights of succession vested in the testator as heir-at-law to two brothers, who had predeceased him, and had died abroad. For ten years prior to 1892 Mackenzie had received relief from the Parochial Board of Peterhead, amounting in all to £64, which had been paid in ignorance of his rights of succession. This sum the Parochial Board sought by action to recover from the trustees. Of the four beneficiaries, two were willing to acquiesce in the claim being met, while two refused to sanction payment. The trustees, who were prepared to distribute the estate among the beneficiaries, thereupon raised an action of multiplepoinding against all the beneficiaries and the Parochial Board of Peterhead, in which the whole trust—estate formed the fund in medio, to have it found and declared that they were only liable in once and single payment of the estate, and in order to be exonered and discharged of the office of trustees.

The pursuers stated that, having been advised that the claim of the Parochial Board was unfounded, they had considered it their duty to state a defence to the action, and had called upon the dissentient beneficiaries to relieve them thereof. “The pursuers do not desire, in view of the antagonistic positions taken up by the beneficiaries, to act longer in the trust, and they have therefore called the whole parties claiming to participate in said estate in the present action for the purpose of obtaining judicial exoneration of their intromissions as trustees foresaid, and to enable the respective claimants of the fund in medio to be ranked and preferred thereto according to their respective rights and interests.”

They pleaded, inter alia—“((2) Questions having arisen in regard to the distribution of the trust-estate, as condescended on, the pursuers and real raisers are entitled to raise the present action for their exoneration, and decree should be pronounced therein as concluded for.”

The dissentient beneficiaries pleaded—“((1) The action is unnecessary. (2) There being no double distress and no competing claims among the residuary legatees the action is incompetent. (3) The claim made upon the trust-estate by the Parochial Board of the parish of Peterhead being one that can competently be decided in the action raised at their interest, the pursuers have no interest to insist in the present proceedings, and the action should therefore be dismissed. (5) In the circumstances, the pursuers should befound individually liable in expenses.”

The pursuers subsequently allowed the action at the instance of the Parochial Board to go against them by default, the dissentient beneficiaries having refused to take up the defence.

Upon 12th December 1894 the Lord Ordinary ( Kyllachy) pronounced the following interlocutor:—“Repels the objections to the competency of the action: Finds the pursuers liable in only once and single payment, and Appoints all parties claiming an interest in the fund in medio to lodge their claims within ten days: Finds the pursuers entitled to the expenses of the discussion of the competency as against the objectors,” &c.

The dissentient beneficiaries reclaimed, and argued—The action was incompetent. There was no double distress— Russel v. Johnston, June 1, 1859, 21 D. 886, especially judgment of Lord Kinloch, Ordinary, which was approved in Fraser's Executrix v. Wallace's Trustees, February 15, 1893, 20 R. 374. There was no allegation that the beneficiaries had refused to grant extrajudicial exoneration and discharge; indeed, they were quite willing to do so. In any case, the whole estate should not have been thrown into Court, but only the £64, as to which the difficulty had arisen— Macnab v. Waddell, May 30, 1894, 21 R. 827.

Argued for the trustees—The action was competent— Dunbar v. Sinclair, November 14, 1850, 13 D. 54; Blair's Trustees v. Blair, December 12, 1863, 2 Macph. 284; Jamieson v. Robertson, October 23, 1888, 16 R. 15. The cases in which such actions had been held incompetent had been raised by beneficiaries, not by trustees. This was not merely an action of multiplepoinding, but was also an action for exoneration and discharge. A dispute as to the distribution of the estate having arisen, the trustees necessarily brought this action for their own protection. They might have been held personally liable by the one set of beneciaries if at their own discretion they had unsuccessfully contested the claim of the Parochial Board, and by the other if they had paid the claim without litigating. That claim being for £64, with possible expenses of litigation, bore such a large proportion to the whole estate it was right to make the whole estate the fund in medio.

At advising—

 Judgment:

Lord Adam—The question in this case is as to the competency of an action of multiplepoinding raised at the instance of two gentlemen, who are the trustees of the late Hector Mackenzie. There are two grounds stated upon which the action is said to be competent—first, because there was double distress; and secondly, that in any view the trustees were entitled to throw the estate into Court because they required judicial exoneration. The first reason for bringing the action, which is mixed up with the second reason, arose in this way— The late Hector Mackenzie received parochial relief for ten years in ignorance, until shortly before his death, that a brother had died leaving him a considerable sum. The Parochial Board brought an action against Hector Mackenzie's trustees for repayment of £64, the amount of relief granted by them. Two of the beneficiaries objected to this claim being met, and it is in respect of that claim against the trustees that there is said to have been double distress. It is said that there was a claim by the Parochial Board and a claim by the beneficiaries as to the same money, and that that constituted double distress. Now, the claim of the Parochial Board if good was only a claim of debt against

Page: 174↓

the trust-estate, and was not in the class with the claim by the beneficiaries. There was therefore not double distress in the ordinary sense of the term.

But then it is said that of the four residuary legatees two were for admitting the claim of the Parochial Board, while two were for resisting it, and the trustees say that they did not know what to do. They go on to state that “having been advised that the said claim was unfounded, they considered it their duty to state a defence to the action” brought to enforce it, “and they have called upon the present defenders to relieve them thereof.” After having done that, and without taking any steps to find out whether or not they would experience any difficulty in getting their discharge, they bring this action. No question having arisen as to their discharge, which we are now told the defenders were quite willing to give, they bring this multiplepoinding, and the ground which they state for doing so is this—“The pursuers do not desire, in view of the antagonistic positions taken up by the beneficiaries, to act longer in the trust, and they have therefore called the whole parties claiming to participate in said estate in the present action for the purpose of obtaining judicial exoneration of their intromissions as trustees.” The only reason they give, therefore, is, that they apprehend some trouble in administering the estate in the future, and they propose to put an end to their administration by this multiplepoinding. This procedure is altogether premature. If they had been able to say that the beneficiaries refused to grant them an extra judicial discharge the case would have been different, but they are not entitled, merely because they anticipate trouble, to take this course. I am unable therefore to concur with the judgment of the Lord Ordinary, and think this multiplepoinding should be dismissed as incompetent.

Lord M'Laren—It is not maintained here that there was any difficulty of construction of the trust-deed under which the trustees are acting. This is always recognised as a ground on which the trustees, acting after due reflection, and in order to benefit the trust, may institute an action of multiplepoinding. There was no competition between the different sets of beneficiaries; there was no competition between creditors, which in general would only arise where the estate was insolvent. So far as we know the estate is solvent, and there is only one creditor, viz., the Parochial Board, who claim as alimentary creditors in respect of relief granted to the deceased.

It is not very clear on what grounds the right to institute this action is maintained, but the proposition seems to be that, whenever one of a body of beneficiaries objects to the trustees satisfying a claim made against the estate, this is equivalent to an objection to their administration such as would justify the trustees in bringing an action of multiplepoinding. I should be sorry if any such idea got abroad or were countenanced by the profession. It would be fatal to the private administration of trust-funds, which is in general the most economical and the best. If a beneficiary objects to a claim being met, I am not prepared to say that the objection should have weight given to it if the trustees are persuaded that the claim is well-founded. That is why the administration has been put into their hands for them to deal with the estate as they think right. They must have the courage of their opinions; they are entitled to take legal advice if they think it necessary. If the trustees are satisfied the debt is due, it is their business to pay it notwithstanding the remonstrances of discontented beneficiaries, or they may call upon the creditor to constitute his claim. I am not disposed to say that trustees are to defend the claim and put the estate to expense unless they think that they have a fairly arguable defence. Here, I assume, they thought they had none, because they have allowed decree to go against them by default.

It was suggested that a multiplepoinding might have been brought as to the part of the trust-estate in dispute, but I cannot look upon this £64 as a separable part. I rather think it is a case where the trustees, if they saw good grounds for doing so, might defend the action brought by the Parochial Board, making their expenses a valid charge against the trust—estate.

In the circumstances I agree with Lord Adam in thinking that a multiplepoinding was not a competent form of procedure, and that the action should not be allowed to proceed further.

Lord Kinnear—I agree, although at one time I thought the point a narrow one. If it had appeared that the trustees could not obtain complete exoneration without judicial procedure, I should have desired further time for consideration. But it now appears from what Mr Abel has stated, and nothing was said to the contrary, that there will be no difficulty in the trustees obtaining an extrajudicial discharge. If that be so, the position is that the whole trust-estate has been thrown into Court because of a single claim of debt, the validity of which is said to have been disputed by some of the beneficiaries. Now, I am not prepared to say that, if beneficiaries object to a claim against the estate, the trustees are bound to decide the question for themselves, and to make payments upon their own responsibility which they know may be challenged by the beneficiaries when they come to give an account of their trust. Gratuitous trustees are not bound to run any such risk. If they think a claim should not be resisted, although it is disputed by the beneficiaries, I think they are entitled, for their own safety, to obtain a judicial decision of the point in dispute, and if they raise a multiplepoinding for that purpose, its competency does

Page: 175↓

not depend upon double distress, but upon the right to exoneration. But then it has been decided that the mere existence of a dispute as to a single debt of the testator's is not a sufficient reason for throwing a whole trust-estate into Court, and, although it does not appear that in any of these cases the trustees themselves were the real raisers of the multiplepoinding, I do not think that should make a difference, unless it can be shown that the multiplepoinding was required for their exoneration. It is not reasonable that every creditor and every special legatee should be compelled to come into Court and lodge a condescendence and claim before he can obtain payment because of a question about some other claim—it may be of inconsiderable amount—with which he has no concern, and which cannot affect his own either in principle or amount; and therefore, if this action had been otherwise well founded, it appears to me that the fund in medio should not have included the entire estate. There is nothing alleged to make the process competent, except as to the particular sum in dispute. But I agree that even as to that sum the multiplepoinding is unnecessary. The averment is that the trustees informed the beneficiaries that a claim had been brought against the estate which they were advised was not well founded. It is not surprising that some of the beneficiaries should have said that, if that were so, it ought not to be paid. But it now turns out, as we were told at the bar, that it is a good claim, and that it must be paid. I agree that in these circumstances the action was premature.

The Lord President concurred.

The Court recalled the interlocutor of the Lord Ordinary and dismissed the action as incompetent.

The reclaimer moved for expenses against the trustees as individuals.

Lord President—My view is that these trustees would have got exoneration and discharge in due course without resorting to this unusual procedure for their own protection, and, as they have used inept and inappropriate means, I think they must be held personally liable.

Lord Adam and Lord M'Laren concurred.

Lord Kinnear—I have doubts, but on a question of expenses I am not prepared to dissent.

 Counsel:

Counsel for the Pursuers— Cheyne— Cook. Agent— Horatius Stewart, S.S.C.

Counsel for the Defenders— Abel. Agent — Alex. Morison, S.S.C.

 1894

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