Scottish Court of Session Decisions

By trust-disposition and settlement Thomas Dunn, who died in 1865, gave and disponed to and in favour of certain trustees his whole means and estate for certain trust purposes.

These purposes were the payment to his widow of the free income of his whole estate, and upon her death the division of his estate among his children in equal shares. The testator was survived by his wife and eight children.

On the death of the widow, who was the sole surviving trustee of her husband, in 1893, the pursuer and real raiser of the present action was appointed trustee by the Court. The trust estate when realised amounted to £1193, 4s., and constituted the fund in medio.

Certain questions having arisen with regard to the distribution of the trust estate, the trustee raised an action of multiplepoinding to determine the rights of the several claimants.

A claim was lodged among others for Mrs Marion Brodie or Tait, formerly Mrs Smith, who averred—“(Cond. 2) The claimant Mrs Tait was the sister of the late Mrs Agnes Brodie or Dunn, wife and afterwards widow of the truster, and was on friendly terms with the truster Thomas Dunn during his life. She from time to time made loans of money from her separate estate to the truster, several of which were of small amount; but in particular, on or

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about 1st February 1865, she advanced him on loan a sum of £200, as is instructed by her cheque of that date in his favour, which is herewith produced. The total amount of the advances made by the claimant to the truster due at the date of his death, including said sum of £200, but exclusive of interest, was £390. (Cond. 3) No part of said debt of £390, and no interest thereon, has been paid to the claimant. During the lifetime of the said Mrs Agnes Brodie or Dunn, and her enjoyment of the liferent of the deceased's estate, the claimant, out of regard for her sister Mrs Dunn, abstained from enforcing her claims to principal and interest. These claims were, however, all along well known to and acknowledged by Mrs Dunn and the family of the deceased. In particular, these claims were acknowledged by Mrs Dunn as the only acting trustee under the settlement of Thomas Dunn, the truster, and by the truster's son Robert Dunn, by the minute of agreement dated 31st March 1869, between Mrs Dunn as trustee foresaid and the said Robert Dunn, to which reference is made in article 4 of the condescendence annexed to the summons. There was annexed to the said minute of agreement, and signed as relative thereto by Mrs Dunn, as trustee foresaid, and by Robert Dunn, a state of the trust funds falling under the trust of the said Thomas Dunn, and among the outstanding debts due by the trust there is entered in said state the said capital sum of £390 as a debt due to the present claimant. Further, the said state of trust funds has appended thereto a docquet signed by five of the truster's children, namely, the defenders John Dunn, Thomas Dunn, Marion Dunn, now Mrs Hardy, Rachel Dunn, now Mrs Shaw, and Agnes Dunn, now Mrs Renton, whereby the said five children approved of the said minute of agreement, and also approved of and held as correct, and duly vouched the said state of trust funds, including the debt due to the claimant. The said debt was also known to and acknowledged by the other two children of the truster, viz., William Dunn and Jean Dunn, now Mrs Glover, who did not subscribe the docquet in consequence of their being under age at the date thereof. The claimant's claim is thus instructed and proved by the writ of the deceased's trustee and legal representative, and also by the writ of six out of the eight parties beneficially interested in the estate of the deceased Thomas Dunn. No sum, either of principal or interest, has been paid to the claimant to account of the said debt by any of the said parties, and the claimant has never had any intromissions with any part of the trust-estate.”

The claimant accordingly claimed to be ranked and preferred primo loco on the fund in medio to the extent of £390 and interest thereon, and pleaded—“(1) The principal sum claimed by the claimant having been advanced on loan by her to the truster, and the said sum being still due and resting-owing, and no interest having been paid thereon since the truster's death, the claimant is entitled to be ranked and preferred in terms of her claim. (2) The claimant is entitled to be ranked and preferred as aforesaid, in terms of her claim, in respect that the same is proved by the writ of the trustee and legal representative of the truster, and also by the writ of the parties beneficially interested in the trust-estate (3) Alternatively, in respect of the written adminicles founded on, the claimant is entitled to a parole proof of the validity of her claim.”

The minute of agreement above referred to was one between Mrs Dunn, the widow of the testator, and Robert Dunn, his son, who had succeeded his father in the tenancy of a certain farm, whereby the said Robert Dunn took over the crop, stocking, &c., of the farm at a valuation of £1491, under deduction of £718, which he undertook to pay in discharge of debts due from the trust-estate.

In addition to the aforesaid minute, the state of funds of the testator's trust-estate, both duly tested, and the docquet signed by six out of eight of the testator's children, which was not tested, all referred to in the condescendence above quoted, Mrs Tait produced the cheque drawn by her in 1865 on the Union Bank in favour of the testator or bearer for £200, marked paid by the bank but without any indorsation, and an excerpt from an affidavit and schedule for return of inventory-duty, showing among debts due by the deceased at his death and actually paid by the executor—“Voucher No. 25.—Mrs Margaret Smith, £200.”

The other claimants, being the children of the testator, the marriage-contract trustees of his son John Dunn, the trustee on the sequestrated estate of John Dunn, and the assignee of another son, Robert Dunn, concurred in maintaining that Mrs Tait's claim was wholly unfounded. They averred, inter alia—“The alleged debt to Mrs Tait being for loans which she is said to have made to the deceased, can only be proved by writ, and no sufficient writ is produced by her to establish constitution and restingowing of the alleged debt.” They pleaded—“The constitution and resting-owing of the alleged debt in respect of which Mrs Tait claims can only be proved scripto.”

On 19th December 1895 the Lord Ordinary ( Moncreiff) allowed Mrs Tait a proof of her averments, and to two other claimants a conjunct probation.

Opinion.—“The claimant Mrs Tait (formerly Mrs Smith) was the sister-in-law of the truster Thomas Dunn, being the sister of his wife Mrs Agnes Brodie or Dunn. Thomas Dunn died on 2nd March 1865, and Mrs Tait avers that at the date of his death he was due her £390, being the amount of various advances in loan made by her to him. The truster's widow died on 28th October 1893. During the interval which elapsed between the death of Mrs Dunn's husband and that of Mrs Dunn herself, Mrs Tait did not claim payment of the debt, principal or interest, which she now alleges to be due. She now, however, claims payment out of the fund in medio of the principal sum of £390, with interest from the date of the truster's death.

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As a general rule loan must be proved by the writ or oath of the debtor. Writ there must be, but if writ under the hand of the debtor is produced which prima facie bears to be an acknowledgment of the debt, but which is not in itself conclusive, or which depends for its effect upon circumstances which require to be ascertained, the rule requiring writ is held to be satisfied and parole evidence is let in to set up the writing and complete the proof.

Mrs Tait produces a cheque for £200, dated 1st February 1865, granted by herself to the truster, which she alleges instructs a loan of £200 made by her to him on that date. The cheque, taken by itself, simply instructs the fact that money passed. Haldane v. Speirs, 10 Macph. 537, has decided that it cannot be regarded as the writ of the payee to the effect of proving loan; and that parole evidence is incompetent to prove quo animo it was granted. I do not say that if a general proof is allowed the granting of the cheque is of absolutely no importance, but certainly by itself, apart from other writing, it does not instruct loan.

The writing, however, which is relied on is No. 24 of process, which contains, it is maintained, an acknowledgment of an outstanding debt of £390 due to the claimant. It is dated in 1869, and is under the hand of Mrs Dunn, who was then the sole trustee and executrix of the alleged debtor. The entry is not a casual jotting; it was made in connection with a formal family transaction, and bears to have been signed before witnesses by Mrs Dunn. It appears from the minute of agreement that in 1869 Robert Dunn, one of the truster's sons, having obtained for himself a lease of a farm, of which his father was tenant at the date of his death, purchased from Mrs Dunn, as sole acting trustee, the stock, cropping, and implements upon the farm at a valuation of £1491, 18s. Of this sum it was arranged that he should pay the trustee £773, 9s. ll 1 2d., and become responsible for and pay accounts payable from the trust—estate amounting to £718, 8s. O 1 2d. Appended to the agreement is a state of the trust-funds as at Martinmas 1868 signed by the widow, in which, among the ‘outstanding debts’ is entered—‘2. Sum of debt due to Mrs Margaret Smith £390.’ (I understand that there is no dispute that by ‘Mrs Smith’ the claimant is meant.) Then follows a schedule of the accounts paid or to be paid by Mr Robert Dunn, and the whole concludes with a docquet signed by five of the truster's children, in the following terms:—‘We, the undersigned children of Mr Thomas Dunn, approve of the arrangement for conveyance of crop, stocking, and implements mentioned in the foregoing minute of agreement, being satisfied that the same is more to advantage than a sale of those by public roup, and we also approve of and hold as correct, and duly vouched, state of the trust-funds of our father as at Martinmas 1868 hereto prefixed.’

Now, this is not an acknowledgment made direct to the alleged creditor—but that is not essential. An entry in the debtor's books, if sufficiently specific, is enough even if the creditor was ignorant of the existence of the entry until he recovered it under a diligence. In the case of Briggs v. Swan's Executors, in 16 D. 385, an illustration will be found of the effect attributed to a document of this kind. The question there was not one of loan, but whether a debt had been cut off by the long negative prescription. It was held that certain states prepared for and docquetted by the executors, and an inventory given up to the Stamp Office, in which the debts in question was entered as due, were sufficient to preserve them from the negative prescription. In that case a proof was allowed of the circumstances connected with the preparation and signing of the states. On consideration of the proof it was held, as I have stated, that the debts were saved from prescription.

Again, in the case of Williamson v. Allan, 9 R. 859 (for the purpose of establishing loan) a proof was allowed to set up an IOU, which was open to the objection that, although it bore the date of 22nd May 1876, it was really granted in April 1880, by which time the granter was insolvent, although the document was signed more than sixty days before his bankruptcy. The sum also in the IOU was incorrect. Therefore taken b y itself, the IOU, although ex facie a document of debt in the creditor's possession, was utterly insufficient to instruct loan. But parole proof was allowed of the circumstances in which the IOU was granted, and the alleged lender and the granter of the IOU were both examined on oath. On a consideration of the evidence the creditor was held to have established loan to the extent of £1554, 17s. 2d. Lord Kinnear remitted to the trustee to rank him accordingly; and the First Division of the Court adhered to that interlocutor with a slight variation.

In the present case I think that the writing founded on is prima facie a sufficient acknowledgment of debt to let in parole proof. The other claimants have given no explanation as to how the entry which I have quoted came to be made. I therefore allow the claimant Mrs Tait a proof of her averments. The main object of that proof is to ascertain the circumstances in which the entry founded on was made; and the effect to be given to the writing may depend on the evidence adduced on the one side or the other; but I may add, to prevent misunderstanding, that I do not intend to exclude the evidence of the claimant herself.”

The claimants Mrs Hardy and others, children of the testator (four of those who signed, and the two who did not sign the docquet), reclaimed, and argued—There was no writ produced by the claimant Mrs Tait sufficient to prove the constitution of the debt. (1) With regard to the cheque, that in itself was clearly not sufficient to entitle her to a proof— Haldane v. Speirs, March 7, 1872, 10 Macph. 537. (2) As regards the other documents, the minute of agreement had never been delivered, and the claimant did not even profess to be a party to it. Delivery was necessary— Duncan's Trustees v. Shand,

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January 7, 1873, 11 Macph. 254. Briggs v. Swan's Executors, January 24, 1854, 16 D. 385, was quite special, and totally distinct from the present case. The party to whose oath the constitution and restingowing of the debt might be referred was not the trustee, but the beneficiary— Ker, M. 12,478; Eccles, M. 16,270; Stewart v. Syme, December 12, 1815, F.C.; Farquhar v. Farquhar, February 23, 1886, 13 R. 596. No doubt the beneficiaries had signed the docquet, but that was only binding between them and the executrix, and could not be founded on by a creditor. Besides, the docquet founded on was not probative, and therefore could not be looked at for any purpose— Alexander v. Alexander, February 26, 1830, 8 S. 602; Miller v. Farquharson, May 29, 1835, 13 8. 838; Hamilton's Executors v. Struthers, December 2, 1858, 21 D. 51, per Lord Curriehill, p. 60; Bowe & Christie v. Hutchison, March 19, 1868, 6 Macph. 642, per Lord Deas, p. 646; M'Adie, &c. v. M'Adie's Executrix, March 9, 1883, 10 R. 741. The only case decided to the contrary was Bryan v. Butters Brothers & Company, February 23, 1892, 19 R. 490, which was not well decided, and where the opinion of Lord Young, who dissented, followed precisely the same line of reasoning as Lord Corehouse in Miller. As for the state of funds, the books of the debtor himself would not have been sufficient to instruct the loan; how then could the state do so?— Waddel v. Waddel, 1790, 3 Pat. App. 188; Wink v. Spiers, March 23, 1868, 6 Macph. 657. The document founded on must be in the hands of the creditor.

Argued for the claimant Mrs Tait—It was quite true that there must be written adminicle of proof. But if there was such adminicle, parole proof would be allowed, and the two combined might instruct the debt— Williamson v. Allan, May 29, 1882, 9 R. 859. No doubt if a party rested his case solely on a document, it must be holograph or tested; but here the question was with reference to the docquet, whether a document neither holograph nor tested might not be enough to justify the admission of parole evidence. That question had been decided in the affirmative in Bryan, ut supra. As regards the nature of the other documents, there was a complete state of Mr Dunn's funds signed by the trustee. [ Per Lord Kinnear—But can a trustee's or executor's writing in such circumstances be better than the parole evidence which he will give?—See Farquhar, ut supra, per Lord Shand, p. 598.] The case of Briggs, ut supra, showed that executors were the proper parties to acknowledge debts of a deceased testator. Entries in the account books of the debtor had been held sufficient, though they were written by different hands— Laivrie v. Drummond, M. 12,622; Purveyance v. Cunningham, M. 12,623; Ersk. Inst. iv. 2, 4. It was not necessary that the document should pass from debtor to creditor— Gordon v. Glendonwyn, February 23, 1838, 16 S. 645. A writ of the creditor found in the debtor's possession had been held to be writ of the debtor— Wood v. Howden, February 7, 1843, 5 D. 507. Among the writings which had been held sufficient to establish loan and the like obligations were the signature of the debtor in his creditor's bank passbook— Fraser v. Bruce, November 25, 1857, 20 D. 115; a schedule of debts given up by an executor to the Inland Revenue— M'Calman v. M'Arthur, February 24, 1864, 2 Macph. 678; letters from the creditor to the debtor, and entries in the debtor's private account book— Thomson v. Lindsay, October 28, 1873, 1 R. 65; a letter from the debtor's agent to the creditor— Laidlaw v. Shaw, March 5, 1886, 13 R. 724. A “fitted account” was expressly said by Erskine to be an exception to the general rule as to probative writings (Inst, iii. 2, 24). The case of Boss v. Fidler, November 1809, F.O., referred to with approval by the Lord President in Haldane, ut supra, was a direct authority in the present case, to the effect that parole proof was admissible. The case of Wink, ut supra, merely illustrated the limitations of the doctrine.

At advising—