Scottish Court of Session Decisions

Mrs Mary T. G. Thom or Grant or Heath, wife of and residing with Charles J. Heath, Morningside Park, Edinburgh, with her husband's consent and concurrence, pursuer, brought an action against Mrs Jane E. Beattie or Grant, Baronhill, Forfar, and others, the trustees acting under the trust-disposition and settlement of her deceased husband William Grant, sometime farmer at Letham Grange, Arbroath, defenders, in which, inter alia, she craved that the defenders, the trustees, should be decerned and ordained to produce an account of their intromissions with the estate under their charge in order that the balance due to the pursuer in name of jus relictæ, terce, and otherwise might be ascertained, and failing production of such account that the trustees should be ordained to pay the sum of £4000, which in that case should be held to be the sum due to the pursuer in respect thereof. The trustees lodged an account showing the amount of the widow's legal rights, in which they deducted from the amount available for jus relictæ (1) a bond or debenture for £1000 of the Alliance Trust Company, Limited, bearing interest and repayable at Whitsunday 1912, or such subsequent day as might be mutually agreed on, to William Grant or to his executors or assignees, and (2) a similar bond for £4000 repayable at Martinmas 1912.

The pursuer lodged objections, in which she stated, inter alia—“Obj. 1 (2) The bonds p. £1000 and £4000 with the Alliance Trust Company, Limited, are moveable estate, and would have been moveable estate according to the law prior to 16th November 1641. They ought, therefore, to be added to the jus relictæ fund. Reference is made to the terms of said bonds. Obj. 1 (3) To meet the event of the said bonds p. £1000 and £4000 being held not per se to form part of the fund for the pursuer's jus relictæ, it is explained that the bond p. £4000 was on 7th July 1909 assigned to trustees for the Royal Bank to the extent of £2500 by absolute assignation. An advance of £1000 was granted by said bank to the deceased on the faith of said assignation, and the bank undertook to account to the deceased and his executors for the balance of the sum recoverable by them under said bond after deducting the amount of the advance and interest thereon. The total amount of said advance at the date of deceased's death with interest accrued thereon was £1000 and interest £2, 10s. This sum forms a deduction from the sum recoverable by the bank under the bond assigned, and does not therefore fall to be deducted from or to diminish the fund for jus relictæ. Further, the balance of £1497, 10s. being a claim by the deceased against said bank is moveable as regards the deceased's succession. Pursuer is entitled to her third thereof. Obj. 3.The pursuer objects that the debts affecting the moveable estate are charged against the jus relictæ fund entirely; as the result of which the general moveable estate is relieved entirely of the

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debts which would naturally affect it. Pursuer claims that the debts which fall upon the executry fund should be borne by it proportionally, and that only a proportion thereof should be laid upon the fund which yields jus relictæ.”

On 25th June 1912 the Lord Ordinary ( Hunter) pronounced the following interlocutor;—“… (2) Finds that the bonds p. £4000 and £1000 respectively, granted by the Alliance Trust Company, Limited, in favour of the deceased William Grant, do not pertain to the pursuer jure relictæ to any extent: (3)Finds that the pursuer is not entitled to claim jus relictæ out of the £2500 portion of the bond p. £4000, which the deceased, on 7th July 1909, assigned in security of advances to trustees for the Royal Bank of Scotland, or out of the proceeds thereof in the hands of the bank or of the said trustees: (4)Finds that the said bank advanced to the deceased William Grant on the faith of said assignation £1000, and that the balance due by the deceased in respect thereof (after taking into account sums standing at the credit and debit of the deceased in the books of said bank), viz., £867, 15s., is a charge upon the portion of said bond p. £4000 assigned as aforesaid, and does not diminish the fund available for payment of jus relictæ.… (7)With reference to the third objection, finds that in a question with the pursuer the debts affecting the moveable estate fall to be borne entirely by the fund available for jus relictæ, and that exclusive of the said bonds p. £4000 and £1000 and all bonds and dispositions in security pertaining to the deceased William Grant; therefore repels said objection.…”

Opinion—“…The second head of the first objection raised the most important point that has to be determined. Part of the estate of the late Mr Grant consisted of two bonds for £4000 and £1000 respectively, granted by the Alliance Trust Company, Limited, in favour of Mr Grant, his executors or assignees. The defenders have left these bonds out of their statement of the fund available for payment of jus relictæ on the ground that by the common law of Scotland such bonds are heritable, and that, although by the Act 1661, c. 32, they are made moveable for certain purposes, they remain heritable so far as the fisc and widow's claims are concerned. The pursuer, on the other hand, maintains that the bonds would have been moveable according to the law prior to 16th November 1641, the date taken in the Act 1661.

The bonds are granted by a Scots company, and bear interest from their date, interest being paid periodically prior to the date stipulated in the bonds for repayment of the principal sums. Interest had in fact been paid on both bonds during Mr Grant's lifetime. According to the institutional writers—I quote from Erskine, ii, 2, 9—‘Personal bonds bearing interest were by a general rule of our ancient law, accounted heritable as quasi feuda, because by the fixed yearly profits arising from them they bore some degree of resemblance to rights properly feudal.’ The author then points out that bonds payable on a determinate date are deemed moveable, as the creditor is presumed to have an intention of realising his bond upon that date. This rule also obtained where there was a stipulation for interest being paid along with the principal sum. ‘But if the bond was so conceived as to make the term of payment of the interest prior to the term of payment of the bond the sum descended to the heir, if the creditor survived the period at which the interest fell first due, though he died before the principal sum was payable; because he was, after the first term of payment of the interest, presently entitled to a yearly profit on his bond, which was accounted sufficient to make the bond heritable.’ These words appear to me to be entirely applicable to the two bonds in this case. The pursuer, however, relied upon the circumstance that the sums in the bonds are made payable to the executors or assignees of the creditor, no mention being made of heirs. He founded upon this as evidence that the creditor himself must be taken as having considered the sums in the bonds as moveable, and that therefore the rule as to their heritable character did not apply. I do not doubt that the ordinary destination in a personal bond was to A, and his heirs, executors, or assignees. But the not mentioning of heirs does not exclude them; and I do not see why the destination actually used should not be read as giving the property to the executors in the event of there being no heir. The law as to the heritable character of personal bonds has been fully considered in the three cases of Downie, 4 Macph. 1067; Dawson, 23 R. 1006; and Bennets, 1907 S.O. 598. In the first of these cases a mortgage by the Glasgow Water-works Commissioners in favour A B, his executors, administrators, and assigns, payable at a term three years after its date and bearing interest at 4 per cent. payable half-yearly, was held heritable as regards the rights of the creditor's widow. There was it appears, no expressed obligation tore-pay. Although this was so, the Lord President held that the mortgage was plainly of the character of an obligation to repay. I think the obligation was to repay those in whose favour the mortgage was granted, and that therefore I am bound by that case to hold the bonds of £4000 and £1000 heritable as in a question with the deceased's widow claiming her legal rights.

“The pursuer, however, maintains that as regards a portion of the bond for £4000 it ought to go to increase the fund available for payment of jus relictæ. This argument arises in this way. On 7th July 1909 the deceased assigned this bond to trustees for the Royal Bank to the extent of £2500 by absolute assignation. Although in form absolute, the assignation was granted admittedly in security of advances to be made by the bank. At the date of his death the deceased was due a considerable sum to the bank. This sum was repaid by the defenders to the bank, who re assigned the bond to them. The pursuer

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says that the effect of the transaction with the bank was that the deceased, after assigning the bond, had merely a right to an accounting from the bank so far as the £2500 is concerned, and that this claim for an accounting is moveable. The defenders, however, cited to me an old case— Bartlett, F.C., 21st February 1811, and 27th November 1812, as an authority for the proposition, which I think is sound, that where a debtor grants his creditors security for a debt, he does not thereby alter the character of the succession to him in the security subjects, or rather in his reversion thereto.

In the last place, the pursuer argued that the debt to the bank ought to be met out of the subjects assigned. The defenders place the whole of this debt on the fund available for payment of jus relictæ. No authority upon the question was cited to me by either party.

By disponing the bond to the extent of £2500 and interest thereon absolutely to trustees for the bank, the deceased burdened the £4000 bond with payment of such advances as the bank might make to him. I think, therefore, that if he had made a special gift of the bond the legatee would have succeeded subject to the burden of payment, and would not have been entitled to call upon the executors to pay off the amount due to the bank.

In Bell's Principles, S. 1936, the author says, ‘The heir or executor paying a debt secured on a particular estate or laid on a particular heir is entitled to relief.’ The cases referred to in support of this proposition appear to deal with debts secured on land. 1 do not, however, see why the same rule should not apply where a valid burden has been created over moveable estate. If this is sound, I think that the executor paying the secured debt out of executry funds must, in a question of the proper distribution of the estate among parties interested therein, place the debt upon the affected fund. I am, therefore, of opinion that what was due to the bank should, for the purpose of estimating the pursuer's jus relictæ, form a charge upon the proceeds of the bond for £4000 to the extent to which it was assigned to the bank.…”

“III. The pursuer complains that the defenders have charged the whole of the moveable debts of the deceased against the estate available to meet her claim of jus relictæ, and not against the general moveable estate. The result in the present case certainly seems hard upon the pursuer. The words of the Act 1661, c. 32, are, however, that no part of such bonds shall pertain to the relict jure relictæ where the bonds are made to the husband. I think that the defenders are right when they say that these words can only be given effect to by treating the bonds in a question of apportioning debt as though they were heritable. To apportion any part of the deceased's moveable debts upon the bond would have the effect, contrary to the Act, of increasing the widow's jus relictæ. I therefore repel this objection.…”

The pursuer reclaimed, and argued—The bonds were moveable quoad jus relictæ. The destination to executors or assignees showed the testator's intention that their proceeds should be treated as part of his moveable estate. Esto, however, that the bonds were heritable, the assignation to the bank of the bond for £4000 took away £2500 from it which the bank could have realised at any time. The owner's right, therefore, was simply to call for an accounting with the bank— Downie v. Downie's Trustees, July 14, 1866. 4 Macph. 1067; Union Bank of Scotland, Limited v. National Bank of Scotland, Limited, December 10, 1886, 14 R. (H.L.) 1, 24 S.L.R. 227. Bartlett v. Buchanan, F.C., February 21, 1811, November 27, 1812, was distinguishable, because in that case there was a back bond—M'Laren, Wills and Succession (3rd ed.), p. 767. Further, the whole estate should bear its debts proportionately, and if the bonds fell to be treated as moveable in all respects except quoad the widow and the fisc, they must bear their share of the moveable debt—Fraser, Husband and Wife, ii, 984

Argued for the defenders—The bonds were heritable as regards the widow's rights— Downie v. Downie's Trustees (cit. sup.); Dawson's Trustees v. Dawson, July 9, 1896, 23 R. 1006, 33 S.L.R. 749; Bennett's Executrix v. Bennett's Executors, 1907 S.C. 598, 44 S.L.R. 486; Erskine, ii, 2, 9, 10, iii, 9, 22; Stair, iii, 4, 24 and 8, 47. The case of Stewart v. Stewart, December 10' 1891, 19 R. 310, 29 S.L.R. 907, which was apparently against defender's contentions, was only an Outer House decision. Pursuer's contention that the bonds were moveable in any event to the extent of £2500 was not supported by any practice known to the Court. What deceased had was a jus in re, and not merely a jus actionis, and the present case was not distinguishable from Bartlett v. Buchanan (cit. sup.)

At advising—