Scottish Court of Session Decisions

On 26th July 1895 Alexander Sime, who was tenant of the farm of Moncur, Perthshire, under Lord Kinnaird, in terms of a lease which expired at Martinmas 1896, granted a deed in favour of John Mess, C.A., Dundee. The dispositive clause was in the following terms:—“I do hereby dispone, assign, convey and make over to and in favour of John Mess, chartered accountant, Dundee, as trustee and in trust and as my commissioner (but hereinafter called trustee), for the uses, ends, and purposes after specified, and to the assignees and disponees of the said trustee, all and sundry lands and heritages, leases, stock, crop, implements of husbandry, machinery and machines of every description, policies of insurance, book and other debts, contracts of every kind, and goods and gear, debts and sums of money, and all other funds, estates and effects, heritable and moveable, real and personal, of whatever kind or denomination and wheresoever situated at present belonging or addebted to me, or to which I have right or title, or in which I am interested in any way, with the whole vouchers, titles, and securities of and concerning the same, and with all that has followed or is competent to follow thereon, with full power to the said trustee to enter upon and take possession of, and to do everything in the premises which I could have done before granting hereof; surrogating hereby and substituting the said trustee in my full right and place, but declaring that these presents are granted for the uses, ends, and purposes following.”

The deed conferred powers of management and sale, including power to act, transact, and manage with regard to the farm of Moncur and the lease thereof, and the stock, crop, and implements of husbandry and others thereon, and also to give up or renounce the lease on such terms as the trustee should think right. The deed also conferred power to sue and defend actions, to pay preferable debts and the expenses of the trust (including such allowances to the granter for any services of his to or in the trust as to the trustee might seem right), and to pay the debts of “my whole just and lawful creditors as to the date hereof,” with other powers usual in a trust-deed for creditors.

Mr Sime's estates were sequestrated on 10th July 1896, the first deliverance on the petition being dated 2nd July.

In that sequestration Mr Mess lodged an affidavit and claim for £898, 16s. 7d., with a relative account of his intromissions “as factor and commissioner for Alexander Sime, farmer, Moncur, and as trustee upon his estate, acting under trust-deed for behoof of creditors, dated 26th July 1895.” The affidavit set forth that at the date of the sequestration of Mr Sime's estates “the deponent held the said estates in security and for payment of all his advances and expenses, and remuneration as trustee foresaid,” and that the trustee in the sequestration took the estates as they stood in the bankrupt. He therefore claimed to be ranked primo loco on the whole estate for full payment. And he further specially claimed that, having paid for the seed and labour of crop 1896, he should be preferred upon the fund realised from that crop to recoup him for his advances, expenses, and remuneration.

The trustee in the sequestration sustained the claim to the extent of £775, 11s. 4d., being the balance still due for advances and outlays and interest on advances made to and for Sime in the course of Mr Mess's actings under the deed above mentioned, but only to an ordinary ranking, rejecting the claim for a preference on the ground “that the claimant has never held the sequestrated estates in security, and that any payment by him for seed and labour for crop of 1896 did not entitle him to a preferable ranking.”

The trustee rejected Mr Mess's claim altogether to the extent of £123, made up as follows:—(1) Accounts for law expenses incurred after the date of sequestration, £52, 8s. 4d.; (2) Account incurred to J. C. Dow, solicitor, Perth, in causa Kinnaird v. Sime, for appointment of manager, £12, 0s. 11d.; (3) Trustee's remuneration and postages charged at £111, 6s., rejected on the ground of overcharge to the extent of £58, 16s.

Mr Mess appealed to the Lord Ordinary on the Bills (Lord Pearson), and craved that the trustee's deliverance might be recalled, and that the trustee should be ordained to rank the appellant as a preferable creditor on the said estate, and to make payment to the appellant of his full claim of £898, 16s. 7d., under deduction of the sum of £12, 0s. 11d., being the amount of an account incurred in connection with the case of Kinnaird v. Sime for appointment of manager, which it was admitted had now been paid by Lord Kinnaird.

The appellant in the statement of facts annexed to his note of appeal set forth the material parts of the deed granted by Sime in his favour, and also made certain averments with regard to the relations between him and Sime and Sime's creditors on which he based his claim to a preference. The nature of these averments, with the exception noted below, and of the pleas-in-law stated for the appellant and for the respondent, the trustee, sufficiently appears from the Lord Ordinary's opinion, infra.

A letter was produced, in which the appellant, when writing to the landlord's factor requesting to know if he had any recommendation with regard to the scheme

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of farming to be adopted for the last year of the lease, signed himself “John Mess, Commissioner for Mr Sime.”

On 14th December 1897 the Lord Ordinary on the Bills pronounced the following interlocutor:—“Finds the averments of the appellant are not relevant to sustain the preference claimed by him in the sequestration, and affirms the deliverance of the respondent appealed against in so far as it rejects said preference: Further, affirms the said deliverance in so far as it disallows the three following items claimed by the appellant, being law expenses incurred by him, viz., (1) J. C. Dow, solicitor, Perth, 17s. 6d.; (2) J. Smith Clark, S.S.C., Edinburgh, £32, 2s. 1d.; and (3) Thomas Thornton, Sons & Company, Dundee, £18, 8s. 9d.: Further, in respect of the appellant's admission in statement 11 of the record, disallows the sum of £12, 0s. 11d. of law expenses incurred in connection with the action Kinnaird v. Sime, the disallowance of which was also appealed against, and affirms the respondent's deliverance regarding the same: Further, as regards the sum of £58, 16s., being the portion of the appellant's remuneration which has been disallowed by the respondent, before further answer remits to the Accountant of Court to inquire into the whole claim of the appellant for remuneration, and to report thereon: Reserves in the meantime all questions of expenses, and grants leave to reclaim against this interlocutor.”

Opinion.—[ After summarising the facts as narrated above]— “Mr Mess now appeals, and asks in the first place to be allowed a proof of his averments instructing that he held the estate in security.

His averment is that he accepted the trust created by the trust-deed and commission, and in virtue thereof immediately entered into the possession and management of Mr Sime's whole estates and effects, and continued to possess and manage the same down to the date of the sequestration.

The relevancy of the appellant's averments is challenged by the respondent, who contends that although this general averment may be relevant enough, an examination of the trust-deed on the one hand, and of the appellant's detailed averments on the other, discloses that he has no relevant case to go to proof in support of his claim for a preference. It is urged that, alike in the trust-deed and in the affidavit and claim, the appellant appears in two characters, in one of which it was admitted he has no claim to a preference, but that even assuming him to have had a title as trustee, it was never made public, was not completed by intimation, and was not followed by possession as trustee.

Now, the bulk of Mr Sime's estate seems to have been the lease, and the farm stocking, crops, and implements. As to the lease itself, it is not averred that the appellant ever completed his title to it as assignee by intimation to the landlord. He explains that the landlord ‘was aware generally of the appellant's relation to the said Alexander Sime, and notwithstanding the terms of his lease took no steps to bring the same to an end.’ In other words, although the lease contained a clause of irritancy (optional to the landlord) in case the tenant should assign the lease or divest himself of his property by trust-disposition or otherwise, the landlord refrained from exercising this power, the result being that Mr Sime remained tenant. The appellant did not adopt the lease.

The largest item in the claim of the appellant is a sum of £676 advanced by him on 16th August 1895, in payment of two years' rent of the farm. The rent had fallen into arrear, and at the date of the trust-deed a decree of sequestration for rent had been obtained at the instance of the landlord. On payment of the arrears and expenses, and consignation of the current term's rent, the sequestration was recalled. The appellant avers that he advanced the money on the faith of a letter which he obtained from Mr Hay (afterwards trustee in the sequestration), dated 14th August 1895, agreeing as a creditor of Mr Sime to postpone his own debt to Mr Mess's claim for repayment out of the first proceeds of the farm when realised. But with reference to this and various other averments pointing to personal exception against Mr Hay, I may say that they do not appear to me relevant to the present question, which is, whether Mr Mess is entitled to a preference against the estate generally.

The appellant's detailed averments of possession are contained in the fifth and following statements. He there avers that, in virtue of the powers conferred on him by the trust-deed and commission, he continued to manage the said Alexander Sime's whole affairs, and in particular did the things there set forth. There was obviously no change in the actual possession, for the appellaut says that he cultivated the farm ‘by means of the said Alexander Sime as farm manager.’ His statement is that he made numerous visits to the farm, sold stock and produce off the farm through Mr Johnston, an auctioneer, Mr Hay and ‘Mr Sime as his manager,’ gave and sanctioned orders for manure and other supplies, paid taxes, accounts, and wages (in addition to the rents), defended actions raised against Mr Sime, and among others an action by the landlord for appointment of a manager on the farm, and corresponded with all the other creditors and arranged that they should hold over their claims against Mr Sime. He also states that in March 1896 he arranged with Mr Johnston that, in order to resume his own advances, the latter should give him a bill for £500 on the crop and effects being made over and assigned to him for sale, and that thereupon Mr Johnston should enter into possession of the farm, stocking, crop, and others, and sell the same at such time and on such terms as he should think fit, or otherwise at such time and on such terms as he and the appellant should agree upon. The effects were inventoried by Mr Johnston, and on 24th March 1896 a docquet was appended to the inventory bearing that the effects ‘are hereby made over and consigned

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to John Johnston, licensed valuator and auctioneer, Dundee.’ This was signed ‘John Mess, trustee and commissioner to Alexander Sime.—A. Sime.’ The bill was granted, but was retired by the appellant. Then on 17th July Johnston advertised a displenishing sale to take place at Moncur on 22nd July, but this was stopped by interdict, in respect that sequestration had been applied for on 2nd July and awarded on 10th July, and that the meeting to elect a trustee had been fixed for 21st July.

In addition, the appellant avers generally that he tilled the farm, and manured, sowed, and planted it for crop and year 1896, and generally provided and cared for the said crop down to the date of the sequestration, paying for all labour, manure, and seed.

On this latter averment the appellant claims a special preference over the proceeds of that crop, but I am not aware of any principle applicable to such a case as the present which would entitle him to such a preference. I think this must stand or fall with his general claim for a preferable ranking.

On the general claim the case intended to be made by the appellant is clear enough. It is fully and specifically stated, but in my opinion it fails on relevancy. Taking all the appellant's averments together, and reading them in connection with the admitted documents, including the trust-deed, I do not think that they set forth a case of a trustee having (when sequestration was awarded) the trust-estate in his hands, subject to his lien for outlays and remuneration.

But further, the respondent has rejected certain items of the appellant's claim, and an appeal is taken against that. (1) He has rejected a sum of £52, 8s. 4d., being the law expenses incurred after the date of the sequestration. These were incurred wholly in connection with the note of suspension and interdict above referred to against the displenishing sale. I think that the appellant resisted that interdict at his own risk, it being then obvious that the sequestration which had already been awarded would carry the estate to the trustee in the sequestration subject to all just preferences previously acquired by the appellant. These expenses seem to be rightly disallowed. (2) The claim for £12, Os. 11d. is departed from on record. (3) As to the appellant's claim for a hundred guineas in name of remuneration, of which the trustee has allowed one-half, I think this should be remitted to the Accountant of Court.

The appellant asked that questions of expenses should meanwhile be reserved, and I see no objection to that course, though the reservation does not imply any doubt that the respondent will be found entitled to expenses generally.”

The only averment not referred to in this opinion which was founded upon specially in argument, was one to the effect that one of Sime's creditors having poinded and taken steps with a view to selling a portion of Sime's effects, was stopped by interdict at the instance of the appellant as trustee and Mr Johnston.

The appellant reclaimed, and argued— (1) The averments in the appellant's statement of facts were relevant averments of such possession under a trust-deed as was sufficient to give the appellant the preference claimed by him. The appellant was no doubt bound to denude in favour of the trustee in the sequestration, but only under reservation of all his claims and preferences. In Thomson v. Tough's Trustees, June 26, 1880, 7 R. 1035, where the circumstances were similar, the preference of the trustee under the voluntary deed was sustained, and that case ruled the present. The deed here was primarily a trust disposition whereby the insolvent's whole estates were conveyed to the appellant. Such a deed was never granted in favour of a factor and commissioner. The appellant's actings as averred were those of a trustee for creditors—getting the sequestration for rent withdrawn, interdicting a poinding creditor, and consigning the insolvent's effects for sale. No meetings of creditors were held, but the deed was no secret to them. They all knew of it, and acquiesced in the appellant acting under it. If the creditors acted as alleged they must be held to have acceded to the trust-deed. No other creditor was entitled to found upon the want of intimation to the landlord of the assignation of the lease, as that was a matter which concerned no one but the landlord and the appellant. If the appellant was and acted as a trustee for creditors, then his possession of the estate through Sime was sufficient. (2) Apart, however, from the question whether the appellant was in possession of the estate, he was entitled to a preference for his advances and outlays. He had secured and preserved the estate for behoof of the creditors, and it was unfair that he should now be left with a mere ordinary ranking for what he had expended in doing so— see Thomson v. Tough's Trustee, cit. Neither in the report of that case nor in the session papers was there any indication that there was any definite arrangement between the trustee and the creditors as to carrying out the contract. (3) As regards the first item rejected altogether by the trustee, if there was to be inquiry, that question might as well be left for decision after proof had been led. The appellant did not object to the question of the amount of his remuneration being remitted to the Accountant of Court.

Argued for the respondent—The appellant's averments did not amount to more than that the appellant was acting as a professional man financing a client in difficulties, and did not unequivocally set forth such actings as were only consistent with his being a trustee for creditors in possession of the insolvent's estates. The deed appointed the appellant commissioner for Sime as well as trustee. He could not be both commissioner for the bankrupt and trustee for his creditors. The two positions were inconsistent with one another. The

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appellant's averments showed that the capacity in which the appellant really acted and put himself forward was as commissioner for the bankrupt. There was no trace here of the usual administration under a trust-deed for behoof of creditors. There was no publication or intimation of the deed. The appellant never took the creditors as a body into his counsels. Nothing was done to give the creditors any right under the deed. The appellant never really got possession of the estate. The only way in which he could have done so would have been to get himself accepted as tenant in place of Sime. No doubt the lease was conveyed to the appellant under the deed, but he never took possession. Therefore the tenant still remained in possession under the lease, and it was not possible for the appellant to have possession of moveables upon a farm still in the possession of Sime. It was not indeed maintained that the appellant had actual possession, but it was alleged that he had possession through Sime as his agent. If, however, the appellant was really acting as Sime's factor and commissioner he could not have possession through Sime, because a factor could not have possession of his constituent's property through the constituent as his agent. The appellant might have taken possession under the deed, but probably to avoid personal liability he preferred not to do so, and to hold himself out as Sime's commissioner. The result was that he was not entitled to any preference for his advances, outlays, and remuneration. (2) As a mere negotiorum gestor and disburser he was not entitled to any preference. (3) The expenses incurred subsequent to the sequestration were incurred by the appellant in defending himself against an interdict brought for the purpose of preventing him from selling the bankrupt's effects in order to pay himself, and he was not entitled to get from the general body of creditors the expense of maintaining unsuccessfully his own interest against theirs.