v. Menzies &

2, 1892

2.

that this letter of his was "a draw," i.e., intended to make Mr Jamieson believe that he had independent advice. Could he complain if his "draw" succeeded? There was here a res judicata of the whole case. All that was new in this action the pursuer had failed, in the judgment of the Lord Ordinary and on a sound view of the facts, to prove. That being so, even if he had proved all his other allegations, he could not prevail, for in the former judgment they were assumed to be true. Upon the law of the case-Cases where family arrangements had been impugned fell into two classes. The first was when the father got nothing for himself, but became a party to the arrangement for the honour and in the interest of the whole family. In such cases the advantage, i.e., the preservation of the family honour, is a thing that cannot be estimated in money, and accordingly there are no elements for estimating the individual advantages gained or foregone hinc inde. Such arrangements will be favourably considered and will be upheld if possible-Hoghton v. Hoghton, 1852, 11 Beav. 278; Kerr on Fraud, p. 156; Stapilton v. Stapilton, 1 Atk. 2, and 2 White & Tudor, 920-937; Westly v. Westly, 1842, 2 Drury & Warren, 502; Gordon v. Gordon, 1819, 3 Swans., Lord Eldin at p. 463; Snell's Prin. of Equity, p. 526. This principle had been carried so far that the Court had refused to disturb an arrangement between father and son, tenants of an estate in tail, which was fair in itself, although the bargain between them had been contrived by a solicitor for his own benefit with a view to his purchasing the son's interest when the father had been bought out. The scheme succeeded, and a fortnight after the transaction between father and son the solicitor acquired the estate. The son died without issue and the next remainderman was not allowed to set aside the bargain--Bellamy v. Sabine, 1835, 2 Phill. 425. Now 'Sir Robert here was no gainer; the Lord Ordinary's summary of the result showed that; he was relieved of payment of interest to the extent of £500 per annum, but he became bound to pay £600 to his son. The money charged on the estate was as much for the benefit of the one side as the other. Sir Robert's only aim then, the aim of the whole arrangement, was the preservation of the estate for the family. That made this case quite different from the case where a father got something for himself, a case in which the Court would jealously require the most rigorous good faith and see that the son did not sacrifice anything under parental pressure. It was to that

class of cases that Tennent's case, May 27, 1868, 6 Macph. 840, and 40 Scot. Jur. 408-aff. March 15, 1870, 8 Macph. (H. of L.) 10, and 42 Scot. Jur. 353, and Binny's case, December 5, 1879, 7 R. 332, belonged. But, again, the cases of misrepresentation on which the pursuer relied were all cases of misrepresentations of fact, whereas Jamieson's statement here was a statement of opinion or of law. In Smith v. Chadwick, 1882, L.R., 20 Ch. Div. 27, Jessel, M.R., had said that good intentions would not protect a

person, who made careless statements, in an action of deceit, from the consequences of these statements; but that statement of the law had been corrected in the House of Lords, per Lord Herschell, p. 359 of Denny v. Peck, 1889, L.R. 14 App. Cas. An incorrect statement of law would impose no responsibility in damages-Rashdall v. Ford, 1866, L.R., 2 Eq. 750; Mellish, L.J. p. 802 of Beattie v. Lord Ebury, 1872, L.R. 7 Ch., and Lord Cairns, p. 111 of same case in 1874, 7 Eng. & Ir. App. Mr Jamieson's duty could be taken by no more severe standard than the standard of what was required of a person seeking to effect a policy of marine insurance, and in such a case all that was required was an honest statement of "expectation, opinion, and belief" - Addison on Contracts, p. 686; Arnold's Marine Assurance, pp. 519-21. There was no trace in the correspondence of any request by Captain Menzies for advice as to when, in the abstract, he could obtain assistance. His letters all discussed the best means of getting assistance from his father; that was what he spoke of, and it was that and that alone accordingly that Mr Jamieson spoke of in his answer. That was the well understood footing on which both parties were proceeding, and that must be read into all letters. But further, it was not difficult to maintain that, even in the abstract sense, Mr Jamieson was right in what he said. Post obit bonds were a security which some insurance offices would not look at, and which were perilous for all if the debtor fell bankrupt before his succession opened. Now, if to that risk were added the additional risk of the subsisting bond on the register, it might very well be that Mr Jamieson should honestly think it "difficult, perhaps impossible," to get further advances. Again, where a misrepresentatiion, or at least a concealment, was not fraudulent, the party to whom it was made might very well be bound to make inquiryNew Brunswick and Canada Railway, &c., Company v. Conybeare, 1862, 9 Cl. H. of L. Cas. 716, Lord Chelmsford, 742.

Argued for the pursuer-The issues in fact were-(1) Was à certain representation made, viz., that there was no alternative but ruin if Captain Menzies refused his father's terms? (2) Was this representation, if made, false? (3) If false, was it also fraudulent? (4) If it were false or fraudulent, did it lead to the agreements now under reduction? Two and four could be answered without any difficulty. The representation, if made, was certainly false, for the evidence showed that several insurance companies took such transactions. That some did not, or that such transactions did not afford complete security was nothing to the point; the fact was that companies were found to take such risks as part of their ordinary business, and if they imposed expensive terms to meet the necessary risks these terms were at all events more favourable than those of persons like Engel, and in any event should have been submitted to Captain Menzies for his consideration. Four must also plainly be

answered in the affirmative; it was clear that Captain Menzies would never have consented to the proposed terms had he thought there was any escape, they were so distasteful to him. It was said that Sir Robert was not fraudulent, but he was liable for any wrong committed by his servant or agent in the course of his service and for his benefit--Houldsworth v. City of Glasgow Bank, March 12, 1880, 7 R. (H. of L.) 53, Lord Selborne. Now, the purpose which Sir Robert and Mr Jamieson had in view was to tie the hands of the pursuer for his whole lifetime. Sir Robert's instructions came to this-"Get Captain Menzies tied up; I leave the means of doing it to you." Mr Jamieson from the first put himself forward as Sir Robert's agent, and he never swerved from that position. It had been represented that the measure adopted was the best for all parties, and necessary for the preservation of the family position as Menzies of Menzies. But the answer to that was that the apprehensions of Sir Robert and his agent were quite unsubstantial; some extravagance there had been, but nothing to call for any such heroic remedy. The indebtedness was not sufficient to warrant the placing of the son under curatory for life. The scheme was as old as Sir Robert's letter to Mr Jamieson of 1st December 1882. From that time on there were constant references by Mr Jamieson in his letters to Sir Robert to the alimentary nature of the enjoyment of the estate to be conceded to Captain Menzies, but not a word of such restriction in the letters to Captain Menzies himself, nor in the memorandum laid before the three friends. The reason was obvious, because Captain Menzies was very shy of assenting to be limited even as Sir Robert was, i.e., to the powers of an heir of entail; he would certainly have broken away if the true effect of the arrangement had been explained to him. Mr Jamieson was not under any obligation to give advice to Captain Menzies at all, for he was Sir Robert's agent, but if he volunteered advice he must speak the truth, and if he had not made inquiry, or did not know, he should say so. Captain Menzies was not entitled to ask Mr Jamieson for any advice, but if Mr Jamieson volunteered advice to him it must be honest. It was said that Mr Jamieson believed that Captain Menzies was separately advised. Mr Jamieson could not be heard to say that that was his belief, for no professional man who thought so would have failed at once to reply, asking who the adviser was that he might correspond with him. To do otherwise was a breach of professional usage, of the same kind as the other breach of that usage and duty also committed here by Mr Jamieson, viz., his failure to make sure that Captain Menzies was advised independently. Captain Menzies' confidence in Mr Jamieson was shown by the facility with which he agreed to the former arrangements, and the attitude of Mr Jamieson and Sir Robert to Captain Menzies was indicated, inter alia, by the fact that no account of these previous

transactions had ever been rendered to him. It was said that Mr Jamieson's representation in saying that there was nothing for it but ruin if he refused his father's terms meant that his father would not help him on any other terms. That could hardly be, for he told Captain Menzies that if he did not accept his father's terms he would have to tell Engel he might go on with the bankruptcy proceedings. That showed that Mr Jamieson's alternative was meant to be an absolute alternative. The reference to the three friends did not by any means exclude the notion of a scheme between Sir Robert and Mr Jamieson. As had been pointed out, the memorial laid before them did not notice the crucial point of the arrangement, and Mr Jamieson, who was Sir Robert's agent from first to last, alone attended the meeting with them. Captain Menzies was not represented. Such conduct as this amounted to fraud, but it was sufficient for the purposes of the case to say that Mr Jamieson failed to give information which was or should have been within his knowledge to the pursuer, who was, as Mr Jamieson knew, relying on him for a fair statement of the bargain that was to be made. That Mr Jamieson's statement was a statement of fact was plain; it came to this, "No insurance company will take such security as you have to give." That was not true, and to a professional man, must have been known not to be true-Smith v. Land and House Property Corporation, 1884, L.J. 28 Ch. D., as to distinction between statement of fact and expression of opinion. But Mr Jamieson did not say in the witnessbox that he thought so. He said he had not applied his mind to it; if so, he should not have led the pursuer to think that he had. The nearest case to the present was that of Gray v. Binny, 7 D. 332; the adequacy of the consideration might be different, but the principle was the same. The pursuer accepted Lord Eldin's doctrine in Gordon's case, 3 Swans. 463. The transaction must be perfectly frank. Stapilton's case, Atk. 2, 2 White & Tudor, LC. 920, was said to be against the pursuer's contention. If it was, and in so far as it was, it was met by Hoghton's case, 15 Beav. 278, but it was not true to say that Sir Robert had got no advantage here. He had charged a considerable payment of interest against the estate, and he had charged his son's reasonable allowance to the extent of £300 against the interest which that son himself had in the estate. A statement might be false but yet might be made with good intention; that would still entitle the person to whom it was made to obtain rescission of a contract induced by itAnson on Contracts, p. 141. Nor could he retain the benefit of a contract obtained by a false statement if he might on inquiry have found out that his statement was false-Smith v. Chadwick, 20 Ch. Div. 44; Redgrove v. Hurd, 1881, L.R., 20 Ch. Div. 1. The only questions were, were these representations false, and were they relied on; if so, rescission was due-Adam v. Newbigging, 1868, L.R., 13 App. Cas. 308; Smith v. Land and House Property Corporation,

1884, L.R., 28 Ch. Div. 7. As regarded the res judicata, the Lord Ordinary's view on that point was sound.

At advising

LORD JUSTICE-CLERK-This case is one of very great importance to the parties, and that from more than one point of view. It is an altogether exceptional case, and I doubt if anyone in the least degree resembling it has ever come before a court of justice. The pursuer, who in 1886, when he was thirty-one years of age, signed certain documents along with his father, now alleges that his father entered into a conspiracy with the family agent to defraud him, and that not by merely inducing him to sign documents of which he did not understand the import, but by knowingly stating falsehoods to him, and that both of them did, in pursuance of the conspiracy, actually impose upon him by wilful falsehoods, uttered with fraudulent intent. All this is said, not by mere statement in pleadings but in evidence upon oath—[His Lordship then referred to the pursuer's evidence]. The fraud of which complaint is made is not a fraud by which anything has been taken from the pursuer and given to the defender. The fraud complained of is a fraud whereby the pursuer is protected from the extortions of the money-lender and saved from squandering and bartering away on iniquitous terms the property to which he has the hope of succeeding. The fraud is one by which the pursuer is maintained in the position to which he was born by protecting him against himself, and it is impossible not to concur in the view of the Lord Ordinary that success in this litigation would probably be "the worst thing which could happen to the pur

suer.

The history of the case, in so far as it is necessary for the understanding of the question involved, is not complicated. The defender is proprietor of a large estate in the Highlands, which is considerably burdened, and for which he has incurred much debt for improvements. Shortly before the transactions in question he had also been compelled by the agricultural depression to take large sheep-farms into his own hands and to pay for stocking them. Thus, although his gross rental was large, his actual income was comparatively small, and he was not in the position for the time being of a wealthy proprietor, having to let even his residences and shootings. The pursuer, who is his only son, became an officer in the Guards in the year 1874. The defender, after consulting officers of experience, gave his son an allowance at first of £300 a-year, afterwards raised to £500, and in 1881 to £600. It is now alleged that his allowance was so insufficient that he was driven to gamble in order to increase his income. Whether it was or was not sufficient is of no consequence; the fact is that the result of his gambling was, as any sensible person would have expected, that instead of increasing his income he fell rapidly into debt, so that early in 1881 he was already not only in debt to trades

men to the extent of £1000, but was in the hands of the Jews and pressed for payment of bills to the extent of nearly £4000 for money borrowed at 60 per cent. interest.

He was cleared of these debts at the end of July 1881, he is found only thirteen months afterwards sunk in debt to the extent of no less than £5500, £3650 of which is on promissory-notes at three months to the Jews. He had thus, besides his pay and allowance, which together cannot have amounted to less than £600 at this time, squandered in gambling and by resort to money-lenders for relief, upwards of £5000 in one year, having been relieved of debt to the extent of £5000 only the year before. For these new debts he borrowed money from the Eagle Insurance Company through a firm of solicitors in London upon a post obit bond for £5500 on somewhat unfavourable terms. This transaction came to his father's knowledge through it being necessary that the charge should be intimated to him. The pursuer intended the transaction to be kept secret from his father, as appears from the insurance company's solicitors' letter of 30th April 1883, where they say "he is more than disgusted at your having given notice of his dealings with the Eagle Office to his father." This new revelation of the pursuer's extravagance and folly caused the defender great distress, and he and Mr Jamieson set themselves once more to endeavour to bring matters straight. They endeavoured to induce the pursuer to promise to give up gambling, but he distinctly declined to give any promise to do so, and ultimately arrangements were made by which the pursuer's bond to the Eagle Insurance Company was cleared out of the way. But as the pursuer would give no promise of amendment, it was arranged that the bond should not be discharged but should be transferred to trustees, the purpose, as was clearly explained to the pursuer, being to put an obstacle in the way of the pursuer raising money on his prospects of succession in the future. The father was very anxious that every obstacle should be put in his way for his own sake, and thought himself quite entitled to make a promise in writing not again to bet or gamble on the turf part and portion of the arrangement, "it being the fact," as he said, "that Neil is no sooner, so to speak, out of one scrape than, quite regardless of what has happened, he gets into one just as bad, in fact rather worse, and I should be very unhappy to think that he had left it open for himself to repeat the same misfortune again." As before mentioned, the effort to obtain a promise from him failed entirely. The arrangements, however, for taking up the Eagle bond proceeded, and were combined with certain financial arrangements connected with the estate which it is unnecessary to particularise, except to say that these were such as might quite properly have been carried out between father and son even had there been no question of paying the son's debts. Provision for the pursuer's bond was included, and the bond was ulti

mately taken up, the amount of the bond being charged upon the estate.

These transactions were completed in the end of 1883, and within a year the pursuer was again deep in debt, and had raised money by bill, the amount in the bill being £3000, besides having £700 odd of debts. As he was leaving for Egypt with his battalion he informed Mr Jamieson of these facts.

It was this condition of debt which led up to the transactions which the pursuer now impugns, and it may suffice to say that they eventuated in the agreement and trust-disposition under reduction. It is unnecessary to give any narrative of them at this point, as I shall have to refer to them in what it will be necessary to say in regard to the record in this case and its narrative of these transactions.

Your Lordships will remember that after this case had been heard upon relevancy upon a reclaiming-note from an interlocutor of Lord Wellwood dismissing it as irrelevant, it was thought desirable, without pronouncing any judgment on the relevancy, to allow a proof before answer, so that whatever the future of the case might be it should be finally disposed of once and for all, and the parties not exposed to the risk in a certain possible event of its being sent back to this Court to be put through a new course. I shall not now conceal my opinion that had we dealt with the case directly upon relevancy I should have concurred in the judgment arrived at by the Lord Ordinary. But the case having been gone into upon evidence, it is, I think, desirable to treat it with reference to that evidence on the assumption of relevancy. In doing so, it cannot be left out of view that this is not the first case relating to the same matter between the same parties. It will therefore be desirable to consider first the evidence in regard to those averments of the pursuer, which differ from those contained in that former action which was held by the Lord Ordinary and in this Division to be irrelevant-I mean the first litigation raised on the 18th November 1889, and of which the present action is the sequel. For if these allegations have been proved, then we may be held to have a new case before us, as to which we are not tied up by our former judgment on relevancy.

On the other hand, if the pursuer has failed to prove these averments which are new, or if they have been disproved, then the case before us comes back into the position of the previous case, and directly falls under the operation of our judgment by which the pursuer was held to have no relevant case.

I proceed therefore to consider what are the averments made by the pursuer in the first case, which it has been decided were irrelevant, and what are the averments of the present case differing from those contained in the first.-[His Lordship then narrated these averments].

When we turn to the pleas in the present case it is found that if the adjective "fraudulent" is deleted from them, they are, though not in exact words, yet in their actuality,

an echo of the pleas in the former case. The misrepresentation, the undue concealment, the undue influence, and the essential error are repeated in practically the same connection, the word "fraudulent" being added or substituted in each case.

I turn now to the consideration of the evidence adduced by the pursuer for the purpose of proving his case of conspiracy and fraud. First, is there any evidence of the defender and his agents having conceived a fraudulent scheme to induce the pursuer to confide in the latter and not to take independent advice, and to procure his consent to the defender's wishes by pressure, misrepresentation, and concealment? I have studied the evidence over and over again, and I can find nothing whatever to suggest that the defender and Mr Jamieson formed any such scheme. On the contrary, the evidence satisfies me that there was no scheme arranged or even tacitly adopted between them; that both of them were moved by the most uncorrupt motives, and were sincerely desirous that the best thing that could be done for the true interests of the pursuer as they honestly estimated them should be done, and that neither of them was actuated by any motive but such as was honourable and of kind intention towards the pursuer, and free from all sinister intent. I consider the whole correspondence, which records the feelings and actions of the parties at the time, to be highly creditable to the defender as a kind and forgiving father, who did not allow his just disapproval of his son's gambling and disreputable dealings with the Jews to rouse in him any unfriendly resentment towards the pursuer. Although evidently a man who is stiff in adherence to his own views about business matters, and not very easy to deal with, he throughout never deviated from a friendly attitude towards his son, or allowed his natural distress at the foolish and discreditable conduct of the pursuer to cause him to harbour harsh or unjust intentions towards him. The documentary evidence convinces me that throughout he was actuated by an honest desire worthy of his position, both as a man and a father, to consider what was best for every interest in the circumstance in which he and his son were, he being the heir in possession, and his son the heir to succeed to an estate which he was very anxious to save, that it might go with the baronetcy. I believe also that it was his sincere conviction-a conviction which was, I think, the right one in the circumstances-that unless his son could be placed in a position which would protect him from himself, irretrievable ruin was the certain and speedy end which was before him, and that his refusal to consider any proposal which would not protect the son from himself was the result of this conviction. As regards Mr Jamieson, I can find nothing in the correspondence which took place between him and his client in the slightest degree indicating that they had entered into any arrangement as to how the pursuer was to be dealt with. The correspondence which, it is not

v. Menzies &

2, 1892

disputed, is complete, is exactly such as a father who had a spendthrift son might have with his legal adviser. The father will do nothing unless there is a re-settlement which will save the estates from being squandered, and is at the same time most reluctant to increase his son's allowance for the future. On the other hand, Mr Jamieson pressed strongly upon his client that the allowance should be increased largely so as to remove the temptation to the son to endeavour to add to his available funds by gambling. And so far from there being any appearance of their having combined to concoct a scheme and to force it upon the pursuer, Mr Jamieson had evidently the greatest difficulty in inducing the defender to continue the negotiations, and in getting the defender to sign the documents carrying out the very thing which had, according to the pursuer, been long before concocted as a fraudulent scheme by him with the defender, the defender refusing to sign on grounds relating to minor matters, which would never have been considered by a man perpetrating a great fraud as grounds for refusing to complete the fraud; and Mr Jamieson, the alleged conspirator, had great difficulty in persuading him that they should not be considered objectionable, and as we shall see afterwards, was driven almost to despair by his contentiousness. Nothing is more certain than that the negotiations were begun and carried on without the defender and Mr Jamieson having concocted a scheme, far less a fraudulent scheme of any kind. Upon that matter of fact I have no doubt, and my opinion is the same as that of the Lord Ordinary. Not only does the evidence fail to substantiate the pursuer's averment of a conspiracy-it absolutely negatives it, and that so clearly that I think it quite unnecessary to consider it in detail. If there were any evidence at all pointing in that direction, it might be right to examine and to consider its weight, but there is none that I can discover. An examination of the evidence would only tend to prove a negative-to prove that it contained no evidence to support the conspiracy averment. There are no parts of it which might by a stretch of construction be held even plausibly to support the plea of conspiracy, and which therefore require to be dealt with separately.

There is one particular matter which is alleged to have been part of the conspiracy but which, whether it was done in pursuance of a conspiracy or not, would be very important to the pursuer's case if it were true. It is averred that inducements were used to prevent the pursuer from taking independent advice. Had this been done, either by the defender or by his law adviser, whether by arrangement between them or not, it would have been a very important fact for consideration on the question of fraud. No more deadly adminicle of evidence in support of an allegation of fraudulent impetration of a deed could possibly be brought forward than proof that the party accused of the

impetration or his agent had used artful means to prevent the other party from having neutral advice.

I consider this point to be the most important in the case, for upon the truth or falsehood of the pursuer's evidence in regard to the matter, the complexion of nearly the whole of the rest of the case must necessarily depend. If, on the one hand, it be true that means were used to prevent the pursuer having independent advice, the colour of the fraud would much more easily spread itself over the whole case. On the other hand, if the pursuer's averments on this matter are false, and if he not only never was influenced not to consult a separate legal adviser, but as matter of fact intentionally induced the defender and Mr Jamieson to believe that he was obtaining legal advice elsewhere, he is in the record here either knowingly stating a false case, or had when he instructed his lawyers how to frame his case been afflicted with a sad want of memory. Either of these latter views must necessarily seriously affect the aspect of his own evidence, on which his whole case depends. It seems to me therefore that it may be well at this stage to turn to and consider the evidence as it bears upon this particular point. But in order to do this with effect it will be necessary to consider some general questions in regard to the evidence first. For it is of importance to have it ascertained at the outset which evidence in the case presents itself as most satisfactory in its general aspect. If on the face of it the evidence for one side produces an unsatisfactory impression as to its trustworthiness, whether from witnesses being either forgetful or uncandid or directly untruthful, or from such causes combined, the view to be taken of the evidence on any special point may be very seriously affected. And the same will follow if evidence on one side commends itself generally as straightforward and accurate, either by itself or in contrast with the evidence upon the other side.

Now, there is no evidence which relates to the facts of the case upon the part of the pursuer except that of the pursuer himself. And I feel bound to express the opinion which I have formed after earnest study of the whole case that the evidence of the pursuer is most unsatisfactory and most untrustworthy. It is a very remarkable feature of his case that in order to support it he makes part of it to represent himself as being an untruthful man who makes statements which are inconsistent with facts in order to gain his own ends. It is a somewhat novel way of supporting one's own case, and has the one merit of courage. On not fewer than five occasions, when pressed to explain, if he can, what he said at the time, and bring it into consistency with what he says now, he states with almost brutal frankness that his statements at the time were the reverse of the truth. He indicates that it was quite according to his ideas of honour in dealing with his own father and the family solicitor to state what was false on