Scottish Court of Session Decisions

The Friendly Societies Act 1896 (59 and 60 Vict. cap. 25), section 50, enacts—“Upon the death, resignation, or removal of a trustee of a registered society or branch, the property vested in that trustee shall, without conveyance or assignment, and whether the property is real or personal, vest, as personal estate subject to the same trusts, in the succeeding trustees of that society or branch either solely or together with any surviving or continuing trustees. …”

Robert Mitchell, Glasgow, ropemaker, complainer, brought a note of suspension against Wiliam Allardyce, caretaker, Robert Hamilton, cartwright, and Fleming Jackson, woodcarver, all of Glasgow, respondents, seeking to suspend a charge to make payment of the principal sum of £800 contained in a bond and disposition in security granted by him at Whitsunday 1896, to Thomas Dickie, bellhanger, Glasgow, Donald Ross, blacksmith, Partick, and John Archibald Macmillan, manager to wine merchant, Glasgow, the then trustees of the St Mungo Lodge of the Loyal Order of Ancient Shepherds.

The complainer, inter alia, pleaded—“(3) The respondents not being the creditors specified in the bond, were not entitled to charge the complainer without first having obtained letters of horning.”

The facts are given in the opinion ( infra) of the Lord Ordinary ( Anderson), who on 9th December 1915 repelled the complainer's third plea-in-law.

Opinion.—“At Whitsunday 1896 the then trustees of the St Mungo Lodge of Ancient Shepherds lent to the complainer, on the security of heritable subjects, the sum of £800. The bond and disposition in security granted by the complainer, and duly recorded for publication in the Division of the General Register of Sasines applicable to the county of the barony and regality, was duly recorded. At the date of the said bond the trustees of St Mungo Lodge, which is a friendly society registered under the Friendly Societies Act 1875, were Thomas Dickie, Donald Ross, and John Archibald Macmillan. …

On 24th September 1914 intimation was made to the complainer on behalf of the present trustees of the Lodge, who are the respondents called in this action, that repayment of the said loan would be required at the expiry of three months from the date of the intimation. A correspondence thereupon ensued between the complainer on the one hand and the secretary of the Lodge, and thereafter the Society's solicitors, on the other.

The position, however, taken up by the complainer in July 1915 was, in effect, a refusal to pay the sum due.

The respondents accordingly on 8th July 1915 registered the bond for execution in the Sheriff Court books of the county of Lanark and obtained an extract.

On 10th July the respondents applied, under the Courts (Emergency Powers) Act 1914, to the Sheriff of Lanarkshire at Glasgow for leave to proceed with diligence against the complainer for the enforcement of the decree contained in said extract registered bond. The complainer opposed this application, but after proof had been led the Sheriff-Substitute on 22nd July granted the application.

On 23rd July the respondents charged the complainer, on an inducice of six days, to make payment to them of (1) the principal sum of 800 contained in the bond; (2) a fifth part more of liquidate penalty incurred through failure in the punctual payment thereof; and (3) interest of the said principal sum at the rate of five pounds sterling per centum per annum from the term of Whitsunday last until payment.

The complainer, in the argument which was addressed to me, maintained that a debtor in the position of the complainer is entitled to be assured of his creditor's identity so that he may receive a proper discharge of his debt—that is to say, in the present case, that the respondents are duly appointed trustees of St Mungo Lodge and the successors of the three trustees who were parties to the bond. I entirely assent to this, but it is for the debtor to take the necessary steps to satisfy himself on this point. If there had been dubiety as to this matter the complainer could have raised the point in the proceedings before the Sheriff-Substitute or in this process, but he has not done so. On the contrary, his averment in statement 1 is that the respondents are the present trustees of the Lodge. I must therefore proceed upon the footing that the respondents were properly appointed trustees of the Lodge, and that they are the successors in office of the grantees of the bond.

The complainer's reasons of suspension are highly technical and thus are not calculated

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to evoke sympathetic consideration, but they require to be weighed and determined as propositions of law.

The complainer did not insist on his second plea-in-law, which is based on the provisions of the Act 1693, cap. 12, but he maintained that he was entitled to suspension of the diligence on the ground (1) that the charge ought to have proceeded on letters of horning, and (2) that the complainer ought not to have been charged to make payment of the liquidate penalty specified in the charge.

I. On the first point the law seems to be well settled to the following effect—If the original creditor in a bond has died or assigned his right before registration of the bond the executor or assignee must register the bond, obtain an extract, and then apply in the Bill Chamber for letters of horning, on which diligence then proceeds. The executor or assignee in the case supposed is debarred from obtaining a warrant of diligence by following the procedure prescribed by the Personal Diligence Act (1 and 2 Vict. cap. 114), sections 7 and 12, that procedure applying only to cases where an extract of the registered bond has been transferred.

On the other hand, summary diligence is competent, not only by a contracting party, but by one in whose favour a clause in a deed is conceived— Lord Whittinghame v. Spence, M. 14,999.

The complainer maintains that there has been a change of creditors, and that as the respondents have not connected themselves with the original creditors by any document produced, they were not entitled to do summary diligence by the method resorted to.

The respondents, founding on the contract contained in the bond and on section 50 of the Friendly Societies Act of 1896, assert their right to proceed in the manner adopted.

I am of opinion that the respondents' contention is right. If the terms of the bond be considered, it appears that the complainer agreed to subject himself to summary diligence at the instance of the three persons therein named, ‘and the survivors and survivor of them, and their respective successors in office for the time being, as trustees and trustee for behoof of the said Saint Mungo Lodge.’ The creditors in the bond are thus declared to be the trustees of the Lodge, whoever they may be.

Section 50 of the Friendly Societies Act 1896 provides that … [ quotes, v. sup.] …

The test as to whether it is necessary to apply for letters of horning seems to be whether a conveyance, assignation, or other deed is necessary to connect the person desiring to do summary diligence with the original creditor. Thus in the case of an executor a confirmation is necessary, of an assignee an assignation, of a new trustee a deed of assumption, and so in all these cases letters of horning must be applied for. A public statute, assuming that the provisions of the Act of 1896 are necessary to complete the respondents' right to the bond, is in a different position from the deeds before mentioned, and does not require to be produced and founded on as evidence of title. On the foregoing test, accordingly, the respondents are not in the position of successors who require to connect themselves by deed with their authors, and do not therefore require to proceed by letters of horning.

II. The second point taken by the complainer had reference to that part of the charge which demands payment of a fifth part of the principal sum as liquidate penalty. He maintained that this part of the charge was bad, and that it ought to have been limited to the amount of the expenses actually incurred by the respondents. I am against the complainer on this point. …”

The complainer reclaimed, and argued—The point was whether there was a valid charge. This could not be maintained by the respondents unless they connected themselves by proper legal evidence with the trustees of Saint Mungo Lodge named in the bond and disposition in security. The charge was at the instance of the trustees of the Lodge as at 23rd July 1915, but they were entirely different persons from the trustees named in the bond and disposition in security. No proper legal evidence connecting the trustees in 1896 with the trustees in 1915 was narrated in the charge as founded on or produced. The Friendly Societies Act 1896 (59 and 60 Vict. cap. 25), section 25 (2), provided for trustees being appointed at a meeting of the society, and by a resolution of those present entitled to vote, and by sub-section (3) for the sending to the registrar of a copy of every resolution appointing a trustee, signed by the trustee himself and by the secretary. Similar information had to be sent to the registrar under section 9. Section 50 merely transmitted property to the successive trustees, and did not dispense with a document of appointment of trustees to act from time to time. Failing the production of a document of appointment, the title to use diligence was defective, and letters of horning could not proceed without such a connecting link. The Personal Diligence Act 1838 (1 and 2 Vict. cap. 114), by sections 7 and 12, required that legal evidence of an acquired right must be produced before diligence could be used. No difficulty existed to prevent the respondents producing legal evidence of the acquired right claimed by them, but no such legal evidence had been produced. This was a case where some other document besides the decree of Court or of registration was required, and letters of horning were necessary.

Argued for the respondents—There was no change of creditors. The lodge was the creditor. It was a statutory body with perpetual succession by statute, as distinguished from a private trust. In any event, section 94, sub-section 3, of the Friendly Societies Act 1896 ( cit.), showed that the respondents had a good title. It also showed the distinction between a friendly society, which the Lodge was, and an ordinary litigant, and gave perpetual succession to the Lodge. Section 25 of the Act provided for a return of officials, but no provision existed

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for giving out the names of trustees. In the case of assumed trustees a deed of assumption was necessary to complete title, but in the case of friendly societies no deed was necessary. Sections 7 and 12 of the Personal Diligence Act 1838 ( cit.) did not apply to the present case, but to the case where a right to extracts had been acquired.