63 J. P. 179. HOUSE OF LORDS. December 8, 1898. NEW YORK BREWERIES COMPANY, LIMITED, V. THE ATTORNEY-GENERAL. Revenue-Probate duty-Executor de son tort-Penalty-Foreign executor-Stamp Act, 1815 (55 Geo. 3, c. 184), s. 37— Revenue Act, 1862 (25 & 26 Vict. c. 22), s. 39-Customs and Inland Revenue Act, 1881 (44 & 45 Vict. c. 12), ss. 39, 40Revenue Act, 1884 (47 & 48 Vict. c. 62), s. 11-Crown Suits Act, 1865 (28 & 29 Vict. c. 104), s. 57. Upon the death of a shareholder in an English company the company are not justified in transferring the shares of the deceased to persons purporting to be his executors, unless English probate or administration has been, or is intended to be, taken out; and, if the company transfer them, they become executors de son tort of the shares as transferred, and are liable to pay probate duty in respect of them. This was an appeal from the Court of Appeal (A. L. Smith, L.J., Rigby, L.J., and Collins, L.J.), reported at 62 J. P. 132. The defendant company, an English company incorporated under the Companies Acts, had their registered office in London, where their register of shareholders was kept, but the whole of their business was done in the United States. Henry Clauser, an American citizen and a shareholder in the company, died, leaving a will, which was proved by his executors in New York, but not in England. At the request of the executors the defendants transferred into their names certain shares and debentures in the company which formed part of the estate of the deceased, and paid to them certain dividends. An information was filed by the AttorneyGeneral against the defendants (the present appellants) claiming a declaration that probate duty was payable by them upon such shares, debentures and dividends as English assets of the estate of the deceased, and that penalties were payable under the Stamp Act, 1815 (55 Geo. 3, c. 184), and the Customs and Inland Revenue Act, 1881 (44 & 45 Vict. c. 12), on the ground that the defendants, by transferring the shares and debentures and paying the dividends to the American 63 J. P. 179. executors without probate having been taken out in England, had "taken possession of and administered" part of the estate of the deceased, and thereby constituted themselves executors de son tort and became liable to a penalty, and also that they had "neglected to obtain probate," and thereby became liable to pay double probate duty. The Queen's Bench Division (Wills, J., and Grantham, J.) dismissed the information. The Crown appealed and the appeal was allowed. (See 62 J. P. 132.) The defendants appealed. Moulton, Q.C., Asquith, Q.C., Bremner and Gore-Browne, for the appellants. and Sir R. E. Webster (Attorney-General), Sir R. B. Finlay (Solicitor-General), Vaughan Hawkins, for the Crown. Earl of HALSBURY, L.C.-My lords, in this case I suggest to your lordships that the judgment of the Court of Appeal is perfectly right, and that this appeal ought to be dismissed with costs. It appears to me that the question is in a somewhat narrow compass. A good deal appears to have turned, in the course of the argument, upon the peculiar nature of the property to which the act here complained of, as an act of administration, related. But, apart from that question of the peculiarity of the form of property, let me deal with the case first as if those considerations did not arise. The property-I will explain presently what I mean by the word "property "-is in England, and belonged to a person who is now dead. That property could only properly be taken possession of or administered by a person who, by law, was qualified to deal with it. It is idle to suggest that, in the Taxing Acts, where they are dealing with English finance, the words "executor or administrator," which terms we use popularly as applicable to a person who fills that character to whatever country he belongs, are used in those statutes in any other sense than as meaning an English executor or an English administrator dealing with our own financial system. Undoubtedly, the persons who are concerned in this case, having the control and dominion over the property in question, did an act whereby the title to the property belonging to the deceased person became vested in somebody else, and they are not either "executors" or "administrators" in the sense in which those words are used in the Taxing Acts. Primâ facie, NEW YORK BREWERIES Co., LTD., v. THE ATTORNEY-GENERAL. therefore, they are executors de son tort, and, primá facie, as it appears to me, they have taken possession of and administered the property in respect of which this question arises. My lords, I do not suppose that, if the case had arisen in this way, that it had been something which was capable of a physical handling, and that the company had handed over that thing to persons who claimed to be possessed of it by reason of the will of someone in New York, any doubt could have arisen that they, in so handing over those subjects of property, capable of a manual treatment, were executors de son tort, and liable probably under each one of those sections which have been brought before us. Then that brings us to the question whether the point, which I have reserved for consideration, when I use the word "property " makes any difference here. In one sense it is true that you get into a difficulty by treating the word "property" as meaning something necessarily connected with physical possession, and capable, therefore, of being treated by manual delivery; but, if one comes to analyse its meaning it is manifest that a great many things, choses in action, with which we are dealing, are, in the ordinary sense of the word, "property," and capable of being treated, not, indeed, by physical handling, but by documents of title and instruments recognised by the law as transferring the title, the incorporeal right to sue that is what is strictly comprehended in such phrases-documents which are capable of being enforced and treated as subjects of property. The condition of things here is this: Here is an incorporated company, and the deceased person is entitled to his aliquot share of the profits earned by that company. He dies, and, according to the constitution of the company when a shareholder is dead, the only person who is to be recognised as having a right to deal with his share is-I will put the word which, by implication, is manifestly there-an English executor or an English administrator. The company, therefore, being now in possession of the share of the profits which belong to the deceased person, are bound to see that they do not hand it over, or hand over anything that represents it, to any person who is not entitled to deal with it. That is their duty according to their constitution and according to law, because they are in possession of 63 J. P. 179. something which is available as assets of the testator's estate, bona notabilia, in this country. Then what do they do? They think proper to create a title in a person who has no authority to receive it on behalf of the dead person, even according to the constitution of their own company. I cannot doubt that, if we were dealing-that is the reason why I quoted the case of Hiort v. Bott (1874), L. R. 9 Ex. 86, to Mr. Asquith at the conclusion of his argument-if we were dealing with an action of trover, and you had improperly indorsed the document of title to goods, although you had done it innocently, and thereby enabled one person to obtain property which, in truth, belonged to another, you would be liable to damages in trover by reason of that erroneous indorsement. It was so held in the case I have mentioned, in the Court of Exchequer, and also in another case in this House. (See Hollins v. Fowler (1875), L. R. 7 H. L. 757.) That is the state of the law. Well, then, suppose this same transaction to have so taken place that, innocently, the appellants had been induced to do this, notwithstanding the innocence of intention, it might well have been that they would have erroneously and improperly created a title in somebody else, the result-the natural and intentional result of which was to enable a stranger to take possession of property which did not belong to him but belonged to somebody else, then the question might have arisen whether, even in that event, the company would not have been liable. But your lordships are not called upon to decide that extreme case, because here it is manifest, from the record before us, that the company have acted with their eyes open. I do not mean to make any reflection upon them, for they appear to have taken a very natural and sensible course in order to have the question of law tried, but, in order to have the question tried, it is to be assumed against them that they have acted with full knowledge of the facts, and that full knowledge of the facts imported this-that they knew that, by the entry in their register which they made, they enabled property to be diverted from one person who, in this country, was, by law, entitled to it, to another person who had no such title at all. Under these circumstances I feel very great difficulty in understanding what is meant by some of the expressions used in the court NEW YORK BREWERIES CO., LTD., v. THE ATTORNEY-GENERAL. below. "All I can say," says Wills, J., "is that it appears to me that the defendants have not really intermeddled with the administration of this estate." In what way could a person, dealing with this particular class of property, otherwise intermeddle with the estate? The appellants have done that which, as I say, has created a new title in somebody else. The peculiar character of the property is such that it does not admit of its being manually and physically handed over; but they have done a legal act, and, by virtue of that legal act, they have enabled it to be dealt with by somebody else, and made available by him for any purpose he desires. It seems to me, therefore, that the words of the learned judge are a little difficult to understand. Then the learned judge goes on: "They have simply done that which the common law of England gives them the right to do, namely, to pay an executor." They have done nothing of the sort. The learned judge must forgive me for saying, when he says they have paid the executor, they have done no such thing. They have paid a person whom the learned judge calls an executor, but who is not an executor within the meaning of this Act; and when the learned judge says that they "have simply done that which the common law of England gives them the right to do," namely, to pay an executor without asking him for proof of his title by the production of the probate, I am afraid he forgets for a moment that what was done here was done with the full knowledge that the person whom they paid, not only was not an executor, but had given distinct notice that he never intended to become an executor within the meaning of the English law. Therefore, I have considerable difficulty in following the learned judge's argument. I find that the other learned judge, Grantham, J., says: "This company are not administering the estate in any way; they are not the persons who ought to administer the estate"-in those latter words I quite agree -they ought not; but as to whether they did administer the estate or not, I have already dealt with that point-" they are not the persons who ought to take out probate, and, therefore, under those circumstances I cannot see how they can be liable." To my mind the scheme of the Act, in fact the whole of the Act, is very plain indeed, and I think the words of which we have heard so 63 J. P. 179. much, namely, the "person taking possession of and administering' the estate, are very sensible words, and very clear words, to indicate what the Legislature meant. They are dealing with a subject-matter which involves this that in this country no person is entitled to deal with an estate unless he is one of the persons who are, by law, entitled to deal with it. namely, in the case of personal property, an executor or an administrator, and the law says that if a person, without being so entitled, takes possession of and administers it, certain consequences shall follow. I have already, for another purpose, called attention to the fact that the mere indorsement of a warrant for delivery of goods has been treated as a conversion, and it really would be frittering away the meaning and substance of language to suppose that, where the person happens to be actually in possession of the document, the title which enables the estate to be dealt with, he does not take it, because it is already in his possession. If he alters the character in which he holds it, and gives the property in it to one person rather than another, it appears to me that the moment he has done that he has "taken possession of and administered" it in the sense which this Act of Parliament is intended to involve. It appears to me, therefore, that the appellants are clearly within those words, and are liable to the duties and the penalties indicated by this section. I do not think that the matter admits of elaborate exposition. We have had a long argument upon the subject, but it all comes to this-that, because this particular form of property is conveyed in a particular way, so that, under particular circumstances, you have not what I may call a physical act of handing over the property, but you have merely a signature in a book, if you alter in the register the name of the person entitled to the goods, then, although that has the effect of creating a new title, giving the complete command over the property with which you are dealing, that (it is said) is not "taking possession of and administering" within the meaning of the law. It appears to me that so to treat it would be entirely to alter the ordinary use of language, and to suppose it to be fenced round with technicality, from which, I think, it is happily free. In my opinion, there was here a "taking possession," and there was an "administering" within the NEW YORK BREWERIES CO., LTD., . THE ATTORNEY-GENERAL. meaning of the law, and, therefore, the persons who have done that are liable to these penalties, and liable to the payment of this duty. Accordingly, I move your lordships that the judgment be affirmed, and the appeal dismissed with costs. Lord WATSON.-In my opinion the appellants in this case have not only taken possession of part of the estate of the deceased, but have proceeded to administer it. I think they have taken possession of it in this sense, that, having a share which belonged to the defunct in their hands for certain purposes, they did take possession of it for other purposes, which were not legitimate, and for which they had no authority, and without the express sanction of the executors named after they had obtained letters of probate. The result of it is that, having taken that possession, they have used it for this purpose-for performing the first act of administration which executors, having probate, would have performed for themselves, with a view to, and as the first step towards, their administration. I do not think that the 57th section of the Act 28 & 29 Vict. c. 104 requires or prescribes that the persons who are there described as taking possession of and administering" the estate of a deceased should, in order to bring them within the sweep of the clause, be persons who could, if they had chosen, have taken out probate in their own name. I do not think that is necessary. It may be that some of the persons who are within the purview of the clause are persons who might have taken out probate, but do not, within the period prescribed by the Act. If so, they are within the scope of these enactments; but they cannot remove themselves beyond the reach of these enactments by simply showing that they are persons who are interfering without any legitimate title, and who could not have possessed themselves of a legitimate title. The clause gives them a defence within a certain period if they have a title to take out probate. They are entirely without that defence if they act as executors without having that title. That is the position of the present appellants; and, in my judgment, the order of the Court of Appeal is in strict compliance with the Act, and ought to be affirmed. Lord SHAND.-I am of the same opinion, and, as the House is affirming a decision of 63 J. P. 179. the Court of Appeal, I shall only add a few words to what has been said by your lordships in giving the grounds of judgment. It is to be observed that this company have transferred a share and a debenture which belonged to the deceased owner in America, not only without having any title presented to them by an executor who has obtained probate in this country but they have done so after a distinct intimation that there was no intention on the part of the persons who obtained the transfer to apply for English probate, and, in fact, knowing that they meant not to do so. This last circumstance is of importance, because it displaces entirely the application of those cases in which persons who were debtors to a deceased have been found entitled to deal with an executor nominate, although he had not taken out probate, on the assumption that the executor did mean to take out probate, and, therefore, that the transaction between the parties would be valid so far as concerns the probate duty. It is clear that there was no such intention here; and, therefore, those cases, which made the action good in respect of bona fides, have no application. In that state of matters, if this question had arisen in regard to a movable estate of a different character from a share in a joint stock company-for example, in regard to goods or furniture of value in the hands of a custodian or warehouseman-I cannot suppose that any argument such as has here been raised on the part of the appellants could have been maintained. Suppose a person in possession of furniture thinks fit to act upon a foreign nomination of an executor without probate being taken out, he hands away the goods or delivers the furniture to that person, who has no title as an executor in this country. What is the position of matters in that case? It appears to me that the custodian has himself changed the possession which he had. He had possession for the deceased; he has taken the possession himself, and, having got possession, he has transferred that possession to someone else. It is quite true that in that case he has not taken possession for his own behoof, and never intended to use the possession for his own behoof. It is also true that the possession was of a temporary character only; but although both those elements are present, it is nevertheless a conversion-there is on his part a taking possession of, an intermeddling with, these NEW YORK BREWERIES CO., LTD., v. THE goods and a dealing with them, or administering them, in the act of handing them over to a third party who had no right or title to them. I think it would be very unfortunate if there was a different law applicable to shares in a joint stock company or choses in action in this country. There is no real difference in principle. It is clear that, without the act of the intervener, without the act of what I call the intromitter, in a case of that kind, whether as regards goods or company shares, the possession could not have been changed, and a fresh title in another party could not have been created. Therefore, I concur with your lordships in thinking that this company, in agreeing at their own hands to transfer to a third party, who had no title to it as executors, the property of deceased were "taking possession of and administering" that estate. It may be that the expression "take possession of" admits of the criticisms made upon it at the bar as applicable to a company's shares, but in substance it is impossible to show that that case is different from the other case which I put with regard to movable subjects, of which a transfer of this kind is made. I am, therefore, of opinion with your lordships that there was here a "taking possession" on the part of this company. The right could never have been transferred if they had not interposed or intervened, and to that extent intromitted to that estate. I think, therefore, that the result was that they became executors de son tort. Something has been said about an information not lying in a case of this kind. For my part I think it is right to say that the decided cases which have been cited seem to me fully to warrant such an information. Those cases, no doubt, were of this class, where an executor who had a title had given an insufficient return, and the Crown required by an information that the estate, which had been underestimated, should, in the new proceedings, be estimated at its proper value and duty paid upon it. There were no special enactments in the statute that hit that particular case, and so warranted an information; those cases proceeded upon the broad principle that, the executor being liable to make a larger return, an information would lie, although there was no provision that it should do so in the statutes. It appears to me that an executor de son tort, a 63 J. P. 179. person who has intermeddled with an estate and so made himself liable to duty, is in no better position than an executor who had a right, but who had given insufficient return. I think that the principle of those cases applies to the case we now have to decide; and, therefore, I am of opinion that an information lies, and that effect should be given to it, and that the decision of the Court of Appeal should be affirmed. It seems to me, further, that, by the terms of section 40 of the Customs Act, probate duty is made a debt due by the person who intromits with the deceased's estate, as was here done. Lord DAVEY.-I also concur in the judg ment proposed, and I will put the grounds of my opinion very shortly. In my opinion the company, by the action which they took of altering the name in the register, taking the shares out of the name of the deceased shareholder and putting them in the names of two gentlemen who requested them to do so without the authority of an executor or administrator duly authorised to give such direction by the laws of this country, did appropriate in their hands, and took upon themselves to exercise control and dominion over, both the shares and the debenture and also the dividends. I think, in principle, the same considerations must apply to all the three. If a man who owes money to a deceased person takes upon himself to pay that money to someone who has no authority to receive it, I think he does an act which is an appropriation in his own hands, and asserts a right to exercise control and dominion over the debt. I am therefore of opinion that the company did take possession of and administer these shares, debenture, and dividends within the meaning of the section of the Act of Geo. 3, which has been referred to. I also think, on section 40 of the Customs Act, 1881, that an executor de son tort is a person who ought to obtain probate or letters of administration. It is quite true that an executor de son tort is not entitled of his own right to take out probate or to obtain letters of administration, but the section in the Act does not say a person who is entitled to take out probate or obtain letters of administration-it says, a person who "ought" to do so. Now a person who takes upon himself to administer an estate is a person who ought to obtain proper authority to do so before he takes upon himself to administer the estate, and I do not |