Scottish Court of Session Decisions

This was an appeal from the adjudication of the trustee on the sequestrated trust-estate of the deceased William Stephenson, farmer, Samuelston, Loanhead, on a claim put forward by Messrs Ferme, Ferme, & Williamson, solicitors, Haddington. An action was raised by the executor of a certain Miss Margaret Somerville against the testamentary trustee of William Stephenson for payment of an alleged debt due by Stephenson to Miss Somerville. This action was unsuccessfully defended by Stephenson's trustee, Cornelius Smith, seedsman, Haddington, and the present appellants, whom he had employed as agents in the trust, and who had been the law-agents of the truster, acted in connection with the defence.

The interlocutor, dated 3rd February 1904, whereby the Second Division of the Court of Session granted decree in favour of Miss Somerville's executor was, inter alia, in the following terms:—“Find that in all questions with the pursuer in this action the defender is not entitled to deduct the expenses which he has incurred in the action from the trust estate of the deceased William Stephenson.”

On 22nd June 1904, on a petition presented by Miss Somerville's executor, William Stephenson's trust estate was sequestrated, and the respondent in the present appeal, J. Campbell Dewar, C.A., Edinburgh, was appointed trustee in the sequestration.

A claim was lodged in the sequestration by Messrs Ferme, Ferme, & Williamson, the present appellants, who claimed to be ranked preferably for the amount of their business accounts as agents in Stephenson's trust, including charges in connection with the unsuccessful defence of the action referred to. These latter charges are the subject of this report, for the purposes of which it is unnecessary to notice any further details of the appellants' claim.

The trustee in the sequestration rejected the claim in question, and the present appeal was taken by Messrs Ferme, Ferme, and Williamson.

On 11th May 1905 the Lord Ordinary on the Bills (Low) pronounced the following interlocutor:—“The Lord Ordinary having heard counsel and considered the cause, finds that the appellants are not entitled to make a claim against the sequestrated estates of the deceased William Stephenson in respect of professional services rendered or expenses incurred by them as law-agents for Cornelius Smith, sole testamentary trustee of the said William Stephenson, in connection with the action against the said Cornelius Smith at the instance of the executor of the deceased Miss M. Somerville, and that to that extent and effect the appeal falls to be dismissed and the deliverance appealed against affirmed.”

Opinion.—“I am of opinion that the deliverance of the trustee is right in so far as regards that part of the appellants' account which relates to the expenses of the litigation with the representatives of Miss Margaret Somerville. It is plain that the appellants' client (the defender in that action) could not, in view of the interlocutor of the Second Division, have claimed these expenses, and the appellants cannot be in any better position.

“The claim of the appellants in respect of their professional services in managing the testamentary estate apart from the Somerville claim, and before that claim was known or intimated, may be in a different position. I do not think it can be affirmed as an absolute rule that the claim of the law-agent in a testamentary trust for remuneration for his professional services lies only against the trustees who employed him, and in no case directly against the trust-estate. I think that the result of the Scottish authorities is correctly stated by Lord M'Laren in his work upon Wills and Succession (vol. ii, p. 1233), where he says—‘The presumption is that he (the law-agent of the trust) is employed as agent for the estate, and not on the personal responsibility of the trustees or trustee.’

“The question is no doubt very much one of circumstances, but I think that where, as here, the law-agents in the trust had also been the law-agents of the truster, and were therefore fully conversant with the position of the trust-estate, the case is a favourable one for the presumption to which Lord M'Laren refers.”

[His Lordship then considered details of the appellants' claim which are not dealt with in this report.]

The appellants reclaimed, and argued—The case was the same as if the action had been raised by Somerville's executor against the late William Stephenson, and the reclaimers had acted for him, and after his death for his executor continuing the mandate of the deceased; they acted on the employment of the trust estate, not of the trustee—M'Laren's Wills and Succession, 3rd ed., p. 1234; Cullen v. Baillie, February 20, 1846, 8 D. 511; Shepherd v. Hutton's Trustees, February 24, 1855, 17 D. 516. The English decisions on this question were altogether inapplicable. The interlocutor of February 3, 1904, referred only to questions with the pursuer in the action; it did not affect the rights of the reclaimers, who were not parties to the action. The fact that an agent advising an action by a trustee was in full knowledge of the trust estate did not make him eadem persona with the trustee. The reclaimers were entitled at least to an ordinary ranking.

Argued for the respondent — The reclaimers could have no higher right than Mr Smith, and the present claim if made by him would be effectually barred by the interlocutor of February 3, 1904— Pelly v. Wathen, 1851, 1 De Gex, Macnaghten and Gordon, 16. The reclaimers had no direct

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claim against the trust estate—Lewin on Trusts, 11th ed. 779; M'Laren's Wills and Succession, 3rd ed., sec. 2296; Worrall v. Harford, 1802, 8 Vesey junior 4; Hall v. Laver, 1842, 1 Hare 571; Staniar v. Evans, 1886, 34 Oh. D. 470; Shepherd v. Hutton's Trustees, cit. sup. When they advised the defence of the action raised by Somerville's executor, the reclaimers had full knowledge of the trust estate and must be held to have taken the risk of being unable to recover the amount of their business account.

At advising—