Scottish Court of Session Decisions

Alexander Morrison, Dunesslin, St Andrews, pursuer, one of the heirs-portioners of the late Very Reverend Andrew Bell, D.D., LL.D., brought an action against the School Board of the Burgh of St Andrews, defenders, whereby he sued the latter for an account of their intromissions with the rents of the heritable subjects known as 123 and 125 South Street, St Andrews, in order to ascertain the true balance due to him as one of the above heirs, and failing an accounting for payment of £3500.

The defenders pleaded, inter alia—“4. The defenders having received the rents of the subjects in question prior to 3rd May 1888 from the trustees of the endowment, the defenders are under no liability to account therefor to the pursuer; et separatim, the said rents having been received and applied or consumed by the defenders in good faith, the defenders are not bound to account therefor, and they are entitled to absolvitor. 5. The defenders having received the rents accruing after 3rd May 1888 in virtue of their statutory title, and having consumed or applied the same in good faith, ought to be assoilzied from the conclusions of the summons.”

The facts are given in the opinion ( infra) of the Lord Ordinary ( Hunter), who on 12th January 1917 sustained the fourth and fifth pleas-in-law for the defenders and assoilzied them from the conclusion of the summons.

Opinion.—“The pursuer, who is one of the heirs-portioners of the late Dr Bell, sues the School Board of St Andrews for an account of their intromissions with the rents of the heritable subjects known as 123 and 125 South Street, St Andrews, whereby the true balance due to him as one of said heirs may be ascertained, and failing an accounting for payment of £3500. The circumstances under which the action is brought are these—In 1831 Dr Bell purchased the subjects in question, taking the disposition in name of the Provost of St Andrews and certain other gentlemen in trust ‘for the use and behoof of the Infant School of St Andrews, and with a view to maintain and perpetuate the Madras system of mutual instruction and moral discipline there, but on failure of that school, or on the discontinuance of that system of education therein, then to and for the use and for behoof of the Provost and Magistrates, Town Council, and ministers of the Established Church for the time being of Cupar in Fife, and the clergyman of the Episcopal Chapel there, for similar purposes, and their respective successors in office, and on failure of them, or on the discontinuance of that system there, then for the use and behoof of the said Dr Andrew Bell himself and of his heirs and successors whomsoever.’

Dr Bell was the founder of the Madras College in St Andrews, and the originator of the Madras system of education by which more advanced pupils in schools were employed in the instruction of younger pupils. In 1872, when the defenders came into existence as a corporate body under the Education Act of that year, this system of education was not, or at all events ceased from that date to be, in operation in the Infant School of St Andrews or in any school or institution in the burgh of Cupar.

From 1872 until 1874 the trustees of Dr Bell collected the rents of the subjects, and are said by the pursuer to have paid them over to the defenders, who employed them for their own, i.e. (I presume) educational, purposes. This statement is denied by the defenders. It is not, however, important, as the negative prescription would preclude any claim by the pursuer for rents prior to 19th October 1876.

In 1874 the trustees of the Infant School at St Andrews, with consent of the Board of Education, transferred that school to the defenders. At the same time, ‘with regard

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to the dwelling-house and garden in South Street, St Andrews, which were purchased by the late Rev. Dr Andrew Bell in 1831 and conveyed by his direction to the trustees in trust for the use and behoof of the Infant School of St Andrews, the trustees being of opinion that under the terms of the deed of conveyance they are bound to hold the property for the support of an infant school in St Andrews, and considering that the Education (Scotland) Act contains no provision so far as the trustees can observe empowering them to transfer the endowment to the Burgh School Board, resolved to authorise the School Board to receive the rent of said house and garden and to apply same towards the support of the Infant School in St Andrews on condition that the School Board shall maintain the property in good repair to the satisfaction of the trustees, and defray the usual rates and taxes connected with the property and the cost of fire insurance.’ This appears from an excerpt of a minute of those trustees dated 20th February 1874 and incorporated in an excerpt of a minute of the School Board dated 10th March 1874. In the same document it is set forth that it was unanimously resolved by the Board to accept of the endowment on the terms indicated, and to record the thanks of the Board to the trustees for the gift.

Upon 3rd May 1888 a scheme for the administration and management of the Madras College, St Andrews, made by the Commissioners under the provisions of the Educational Endowments (Scotland) Act 1882, received the sanction of the Crown, and by clause 23 of this scheme it was provided as follows—‘The house in South Street, St Andrews, presently held under disposition to William Haig and others for the use and behoof of the Infant School, St Andrews, under disposition dated 10th May 1831 and instrument of sasine in favour of the said William Haig and others recorded in the Burgh Register of Sasines at St Andrews 21st May 1831, shall be transferred to and vested in the Burgh School Board of St Andrews without the necessity of any new conveyance or instrument.’

On 29th January 1913 the defenders, who were anxious to sell the subjects, and who were apparently ignorant that any claim to the property might be made by Dr Bell's heirs, presented a petition to the Second Division of the Court to alter the scheme relating to the Madras College by deleting clause 23 and substituting another clause vesting the property in them absolutely and freed of the trust purposes contained in the disposition authorised by Dr Bell. The Court having ordered service to be made upon the heirs of Dr Bell, the pursuers lodged answers to the petition, which was then sisted to allow of the question of right to the said subjects being determined in a suitable process. Thereafter the pursuer raised an action before me against the defenders and others to have it, inter alia, found and declared that the said heritable subjects belonged heritably in property to the heirs and successors of Dr Bell, and in particular to the extent of one-fourth thereof to the pursuer, and that the defenders should be ordained to denude of the subjects and convey them to the pursuer and the other heirs-portioners of Dr Bell. No question as to the defenders' right to the rents derived from the subjects was raised in that action. On 19th November 1913 I gave effect to the declaratory conclusion of the summons. That interlocutor was adhered to in the Inner House, and on 23rd June 1916 I pronounced decree of denuding.

To the claim now made by the pursuer several defences are put forward. It was maintained that the pursuer has no title to sue quoad in any event rents collected prior to his succession. The pursuer relies on the fact that he has recently served himself heir to Dr Bell. This circumstance would not, however, in my opinion, necessarily give him right to insist in his demand in its entirety. The defenders indicated that the pursuer's father, who during his lifetime was one of the heirs of Dr Bell, had left a settlement giving trustees the right to ingather his estate. Before I could satisfactorily dispose of this plea the record would require to be amended so as to set forth the facts having a bearing upon the plea.

The main defence upon which I heard argument was that as the defenders had received and applied or consumed the rents in good faith they were entitled to be assoilzied. There is no doubt that the law of Scotland recognises that in certain cases where a bona fide possessor of property has had to restore the subject possessed it is inequitable that he should be called upon to restore the fruits of the subject which he has ingathered and consumed during the period of his possession. The applicability of this doctrine, known in the civil law as the doctrine of fruges bona fide perceptæ et consumptæ, does not appear to have been authoritatively considered in many Scotch cases. In Darling's Trustees v. Darling's Trustees, 1909 S.C. 445, it was held not to protect a liferentrix from restoration of the liferent to which she had been invalidly appointed by the donee of a power, the ground of judgment being that the doctrine of bona fide consumption applies only to the fruits of a subject and not to the subject itself. In that case the Lord President (Lord Dunedin) said—‘I thought it was long ago settled, and indeed is clear law, that the doctrine of bona fide perceptæ et consumptæ is a doctrine which deals with fruits. It deals only with the case where the subject is given to a wrong person in bona fides, which subject can be restored as a whole, and then the doctrine deals with the fruits while they were in the wrong hands, and by that doctrine such fruits are not bound to be repaid.’ In Evans v. Harkness, 13th June 1890, 17 R. 931, Lord M'Laren indicated a view, contrary to Lord Shand, that the doctrine was only applicable where parties are contending on competing titles. I do not think that there is good ground in the authorities for such a limitation of the doctrine.

In Hunter's Trustees v. Hunter, 6th July 1894, 21 R. 949, an annuitant who had

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received from trustees an annuity in excess of what she was entitled to was held not bound to repay the over-payments which had been made and received in bona fide ignorance of any doubt as to her right. Lord Young said that the case fell within the equitable rule or principle of property received and consumed in good faith. It may be doubted whether the Court did not in that case apply the doctrine to a case where the subject itself, and not merely the fruits yielded therefrom, had been consumed. In Darling's Trustees the Lord President said about the case—It ‘was decided upon its own terms and conditions. I most respectfully say I am not to be held to agree with what it is said was there laid down as a general principle.’

The present case raises no such difficulty to the application of the equitable doctrine as was presented in the case of Darling's Trustees. The subject itself has been restored to the pursuer, and the only question is as to his right to recover rents ingathered by the defenders during the period of their possession. Erskine in his Institutes, ii, 1, 25, says—‘In order to explain the strong effects given by law to bona fide possession, the difference between bona and mala fide possession must be shortly stated. A bona fide possessor is one who, though he be not truly proprietor of the subject which he possesses, yet believes himself proprietor upon probable grounds, and with a good conscience.… A mala fide possessor possesses a subject not his own, and knows at the same time, or, which comes to the same account, may upon the smallest reflection know, that he is not the rightful owner.’

The pursuer maintained that as the destination in the disposition authorised by Dr Bell as interpreted by the Court gave the property to that gentleman's heirs in the events which had occurred in 1872, the date of the defenders' corporation, they must be held to have ingathered the rents as constructive trustees for behoof of the heirs of Dr Bell, and cannot be treated as bona fide possessors. There is no doubt that persons may incur the responsibility of trustees although they have not been appointed by deed and have not expressly undertaken such duties. Illustrations of this were afforded by some of the cases to which I was referred (see cases collected in Menzies on Trusts, secs. 1271–3). I do not, however, think that there is any room for holding that a constructive trust was set up in the circumstances of the present case. Dr Bell's trustees in 1874 assented to the defenders receiving the rents from the property on condition that they maintained the Infant School. It is not suggested that the defenders did not observe this condition. Any claim by the pursuer for rents ingathered prior at all events to 1888 should be directed against Dr Bell's trustees, who have the title to prefer a claim against the School Board, but I do not see how such a claim could be successful. The case would be different if it were suggested that the defenders received the rents on a representation contrary to fact that they were continuing the system of Madras education in the school. No such suggestion is made. I do not find in the record any relevant averment of mala fides on the part of either Dr Bell's trustees or of the School Board. Both bodies appear to have treated the bequest as primarily intended for behoof of the Infant School, and not to have appreciated the effect thereon of the discontinuance of the Madras system of education. In my opinion the defenders are entitled to be treated as bona fide possessors of the subjects between 1874 and 1888. Any other view would certainly operate hardly upon the present ratepayers, as it is not disputed that the rents were applied for educational purposes from year to year.

The situation is somewhat different subsequent to 1888. In that year the property itself was transferred to the defenders in virtue of clause 23 of the scheme for the administration and management of the Madras College, St Andrews—a scheme sanctioned by the Crown. This was done without any objection by Dr Bell's trustees, or anyone claiming as his heir. The defenders continued to apply or use the rents in the same way as they had been doing previously, and although the Court has held that they must convey the subjects to the heirs of Dr Bell, I think that their liability does not extend to restoring the rents during the period when they remained in unchallenged possession and applied the rents to educational purposes in the belief that they were entitled to do so. I propose to sustain the 4th and 5th pleas-in-law for the defenders.”

The pursuers reclaimed, and argued—The doctrine of bona fide perception and consumption had been erroneously applied in this case, for in it the rights of the beneficiaries had been simply ignored—Ersk. Inst. ii, 1, 25; Whyte v. Ballantine, (1825) 3 S. 451 (315); Bontine v. Graham, (1838) 1 D. 286. The trustees knew that a trust for Dr Bell's heirs existed at the date when the Madras system came to be discontinued in the Infant School, and they were bound to act within the trust purposes. A trustee who was in breach of trust could not plead good faith in answer to an action by a beneficiary— Donaldson v. Kennedy, (1833) 11 S. 740. The onus was on the defenders to prove their case, and this onus they had not discharged. The statutory title which they took in their favour in 1888 was merely a trust-title, and they were fully aware of Dr Bell's disposition of 1831. If this trust was misapplied, the defenders were bound to restore the past fruits which they had enjoyed. To escape they must show that they had consumed them in good faith, believing in fact that they were the full owners, and had had a colourable title thereto. If the defenders proffered the 1888 title as giving them unfettered ownership, they could not then plead good faith, because the title convicted them of knowledge of a trust. They took the statutory title without giving any notice to the beneficiaries that the trust was to be sopited, and it was not sopited. If, on the other

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hand, they admitted that what they took in 1888 was a trust, they could not now hold that they in good faith as owners consumed the fruits. The scheme of 1888, moreover, merely transferred the subjects from the original trustees to the defenders, who still held them for behoof of the Infant School, for the limited purpose set forth by the truster. It was only a link in the title of trust administration, and did not constitute, even colourably, a competing title to possess— Morrison v. The School Board of St Andrews, (1914) 51 S.L.R. 215, per Lord Dundas at p. 219. Counsel also cited Scott v. Heritors of Ancrum, (1795) M. 15,700; Duke of Roxburgh, February 17, 1815, F.C.; Duke of Buccleugh v. Hyslop, (1824) 2 Sh. App. 43; Carnegy v. Scott, (1830) 4 W. & S. 431.

Argued for the defenders—The defenders had at least a colourable title here, and they believed in it, and that according to the institutional writers was sufficient—Stair, ii, 1, 23; iv, 30, 7; Ersk. Inst. ii, 1, 25; Prin. ii, 1, 13–14. A person who had lain by instead of coming forward to claim his rights could not well plead equity where the opponent also pled equity. Council cited Menzies v. Menzies, (1863) 1 Macph. 1025, per Lord Neaves at p. 1036; Lord Advocate v. Drysdale, (1872) 10 Macph. 499, 1 R. (H.L.) 27, 9 S.L.R. 308; Andrews v. Ewart's Trustees, (1886) 13 R. (H.L.) 69, per Lord Watson at p. 73, 23 S.L.R. 822; Evans v. Harkness, (1890) 17 R. 931, 27 S.L.R. 755; Huntly's Trustees v. Hallyburton's Trustees, (1880) 8 R. 50, per Lord Rutherfurd Clark at p. 55, the Lord President at p. 59, Lord Mure at pp. 62–63, 18 S.L.R. 46; Hunter's Trustees v. Hunter, (1894) 21 R. 949, per the Lord Justice-Clerk at p. 952, 31 S.L.R. 837. The doctrine of bona fide perception and consumption was always applicable to the fruits of a subject of which the corpus was possessed— Darling's Trustees v. Darling's Trustees, 1909 S.C. 445, per Lord President Dunedin at p. 451, 46 S.L.R. 394. It was essentially a doctrine founded upon principles of equity, and therefore it should be applied without reference to what were only pure conveyancing technicalities. This was not merely a case of a competing title, but one involving the construction of a deed. Counsel further referred to Carnegie v. Scott. 4 W. & S. 431, per Lord Chancellor Brougham at p. 440; Dick v. Carmichael, (1752) M. 9954; Creditors of Kinminity v. Sutherland, (1751) M. 1727; Thomson & Co. v. Pattison, Elder, & Co., (1895) 22 R. 432, 32 S.L.R. 339; Crichton v. Henderson's Trustees, (1898) 1 F. 24, 36 S.L.R. 22.

At advising—