Thursday, June 28.

FIRST DIVISION.

[Lord Kincairney, Ordinary. MANN AND BEATTIE v. EDINBURGH NORTHERN TRAMWAYS COMPANY.

Process-Reclaiming-Note-CompetencyLeave to Reclaim-Court of Session Act 1868, secs. 27, 28, and 54.

The record in an action of accounting was closed in 1889 and a proof allowed. In 1894 the Lord Ordinary remitted to the Taxing Master of the House of Commons to report on certain objections to the accounts. Against this interlocutor a reclaiming-note was presented within six days, but without the leave of the Lord Ordinary.

Held that the reclaiming note was by sec. 54 of the Court of Session Act 1868 incompetent, as the interlocutor reclaimed against was not pronounced under sec. 27 of that Act.

The Court of Session Act 1868 (31 and 32 Vict. cap. 100), by sec. 27 enumerates what interlocutors as to future procedure the Lord Ordinary may pronounce at the closing of the record. Section 28 provides that against an interlocutor pronounced under section 27, a reclaiming-note may be presented within six days without leave of the Lord Ordinary, and section 54 enacts that against all other interlocutory judgments a reclaiming note can only be presented with leave.

The record in an action of accounting brought by the Edinburgh Northern Tram-. ways Company against Mann and Beattie -see June 26, 1891, 18 R. 1140, and H. of L. November 29, 1892, 20 R. (H. of L.) 7—was closed in 1889 and a proof allowed.

Upon 13th June 1891 certain objections to the defenders' accounts having been lodged by the pursuer, the Lord Ordinary (KINCAIRNEY) pronounced the following interlocutor:-.. "Remits also to C. W. Campion, Taxing Master of the House of Commons, to report on objection XI." . . Against this interlocutor the pursuers reclaimed without leave upon 19th June.

They argued (1) The reclaiming - note was competent, because it was virtually an interlocutor fixing the mode of proofQuin v. Gardner & Sons, Limited, June 22, 1888, 15 R. 776. This was really a new litigation in which new facts had to be ascertained. (2) The Taxing Master of the House of Commons was not a suitable person in the circumstances. He had not the necessary experience, and would pass

the accounts as a matter of form. A civil engineer should have been nominated.

Argued for respondents-The reclaimingnote was incompetent, as the leave of the Lord Ordinary had not been obtainedCourt of Session Act of 1868, secs. 27, 28, and 54, and A.S., March 10, 1870.

At advising

LORD PRESIDENT-In the Single Bills notice was taken by the counsel for the respondents in the reclaiming-note that this reclaiming-note was in his judgment incompetent, and we sent the case to the roll, reserving that objection. That objection falls now to be disposed of. In my opinion it is well founded. The reclaiming note is presented without leave of the Lord Ordinary, and that raises the question whether it is a reclaiming-note falling under section 28 of the Court of Session Act 1868; because, if it is not, then it is excluded by the 54th section of that Act as being without leave. Now, the question whether it is a reclaiming-note under section 28 seems to me to be very easily decided. Section 28 provides that any interlocutor pronounced by the Lord Ordinary under the 27th section shall be reclaimable without leave within six days of its date. I have stated it shortly, but that is the substance of the provision. Accordingly, unless this interlocutor is an interlocutor pronounced under section 27, this reclaiming-note against it is not competent under section 28. Now, the broad facts of this case seem to preclude the idea that this is an interlocutor under section 27. Section 27 is dealing with that stage of the case at which the record is being closed, and the future procedure in the case determined. At that stage parties are allowed to reclaim against an interlocutor of the Lord Ordinary without leave. But then we find in the present case that so long ago as 1889 the closing of the record stage of the case was reached and passed, and the Lord Ordinary in actually closing the record pronounced an interlocutor sending the whole cause to probation. It seems to me that that was the first, last, and only interlocutor reclaimable under section 28 of the Court of Session Act in this case. It is true that the interlocutor reclaimed against is but a mode of ascertaining certain facts; but it may very well happen that in the incidental stages of a case, which has gone to proof and been judged of after proof, there will arise certain matters of detail to be ascertained, and these are just the kind of cases where it seemed very proper that the leave of the Lord Ordinary should be required before another appeal is taken to the Inner House. But it seems to me that while the reason of the Act applied to cases which have somewhat detailed procedure is entirely sound, the more direct and conclusive reason for refusing this reclaiming-note is that on the terms of sections 28 and 27, compared with section 54 of the Act of 1868, this is not a reclaiming-note under section 28.

Tramways

LORD ADAM-I am of the same opinion. It is very clear that this is not an interlocutor pronounced by the Lord Ordinary as provided for in the 27th section of the Act, and it therefore follows that a reclaiming-note under the 28th section is not competent.

LORD M'LAREN-If I had been considering the question of practice which the Lord Ordinary has disposed of, I should not have had the smallest hesitation in making a remit to Mr Campion, if I believed him to be the most suitable person, without asking the consent of the parties; because in this interlocutor the direction to remit to an engineer is merely administrative, and a proposal to remit to an unnamed person can never fetter the discretion of the Court when the actual remit comes to be made. But I agree with your Lordship that this reclaiming-note is not competent, because the leave of the Lord Ordinary has not been obtained as required by the statute. I mentioned my impression about the authority of the Lord Ordinary in order that Mr Šalvesen's clients may not think that they have suffered any prejudice by the circumstance that their agent had not taken the necessary steps to have obtained the Lord Ordinary's leave.

LORD KINNEAR-I agree with your Lordship that the reclaiming-note is incompetent for the reasons which your Lordship has stated.

The Court refused the reclaiming-note as incompetent.

Counsel for Pursuers and ReclaimersSalvesen. Agents-Graham, Johnston, & Fleming, W.S.

Counsel for Defenders and Respondents -Johnston. Agents-A. & G. V. Mann, S.S.C.

ROSS'S TRUSTEES v. ROSS. Succession-Vesting-Period of PaymentEffect of Wife's Repudiation of Testamentary Provisions by Husband.

A truster directed his trustees to pay to his widow an annuity during all the years of her life and as long as she remained unmarried, and "on the death or second marriage of my said wife" he appointed his trustees to realise the residue of his whole estate, and to pay one-half to his brother W. R. and divide the other half equally among the three children of his late brother C. R., and "in the event of the said W.R. dying before the period of payment, which shall be the period of vesting," not leaving lawful issue, the whole residue of the testator's estate was to

be divided equally among the children of C. R. or the survivors and their issue per stirpes. The testator further provided and declared that the interests of the residuary legatees should vest in them "at and only upon the arrival of the period when the residue of my estate falls to be realised and divided.'

The widow repudiated the annuity provided for her, and took her legal rights.

Held (diss. Lord Young) (1) that the widow's repudiation of the annuity had not the effect of hastening the period of payment of residue to the residuary legatees, and that the periods of vesting and of distribution did not arrive until the death or second marriage of the widow; and (2) that the trustees were bound to accumulate the income of the residue until the period of distribution.

Muirhead v. Muirhead, May 12, 1890, 17 R. (H. of L.) 45, followed.

Douglas Ross died on 23rd March 1892, leaving a trust-disposition and settlement dated 2nd October 1889. By the trust-deed he conveyed his whole estate, heritable and moveable, to trustees. After making provision for the payment of debts, sickbed and funeral expenses, and certain legacies, the testator in the third purpose of the deed directed his trustees "to make over to my wife Christina Cunningham or Ross, as her absolute property, the whole household furniture and plenishing of every description belonging to me at the time of my decease; and to pay her an annuity of £50 sterling per annum during all the years of her life so long as she continues to remain my widow, which sum of £50 stg. per annum shall be paid to her in such proportions and at such times as my trustees may think proper or necessary, and shall be held to be in full satisfaction to her of all claims she may have against my estate; and in the event of my said wife marrying again, said annuity of £50 stg. shall be discontinued. Fourthly, On the death or second marriage of my said wife, I direct and appoint my trustees to realise the whole residue and remainder of my estate, heritable and moveable, real and personal, and to pay and divide the same between my nephew William Ross, son of my late brother William Ross, who shall be entitled to one-half, and the other half shall be equally divided among the said Charles Ross, John Ross, and Jessie Ross, the children of my late brother John Ross, and in the event of the said William Ross dying before the period of payment, which shall be the period of vesting, not leaving lawful issue, then the whole residue of my estate shall fall to and be divided equally among the said Charles Ross, John Ross, and Jessie Ross, and the survivors or survivor of them and their respective issue, the issue in each case being entitled to the share which their parent would have been entitled to on survivance; and I provide and declare that the interests of the residuary legatees shall vest in them at and only upon the arrival of the period

when the residue of my estate falls to be realised and divided."

The testator was survived by his wife. She claimed her legal rights as his widow, and the amount to which she was legally entitled was paid over to her by the trustees. Charles Ross predeceased the testator without issue.

In these circumstances a question arose as to the disposal of the residue of the trust-estate. The trustees maintained that they were bound to hold the residue for the benefit of the residuary legatees who might survive the death or second marriage of the testator's widow.

William Ross, John Ross, and Mrs Jessie Ross or Stoney maintained that the testator's widow having claimed and been paid her legal rights, the period of vesting and of division and payment of residue had arrived.

For the decision of the point a special case was presented to the Court by (1) Mr Ross's trustees, (2) William Ross, John Ross, and Mrs Jessie Ross or Stoney, and (3) the children of William Ross, John Ross, and Mrs Jessie Ross or Stoney.

The questions at law were-"(1) Are the second parties, in respect that the testator's widow has claimed her legal rights, entitled now, and without waiting till the death or second marriage of the testator's said widow, to have the residue of the testator's estate divided and paid to them in the proportions provided by his said trustdisposition and settlement? (2) If the trustees are bound to hold until the death or second marriage of the truster's widow, are the said residuary legatees entitled to periodical payment of the income thereof until the occurrence of such death or second marriage, or must it be accumulated ?"

Argued for the first and third partiesBy the special terms of the will the period of vesting and payment of residue could not arrive till the death or second marriage of the widow. The case was ruled by Muirhead v. Muirhead, May 12, 1890, 17 R. (H. of L.) 45. Indeed, the present case was more favourable, because the testator had specially directed that the period of vesting was to be the period of payment. Eventual interests had also in this case to be safeguarded, and therefore the trustees were bound to hold the estate till the period of distribution _ mentioned in the deed Hughes v. Edwardes, July 25, 1892, 19 R. (H. of L.) 33. The trustees were also bound to accumulate the income of the residue till the date of payment.

Argued for the second parties - The repudiation by the widow of her testamentary provisions under the husband's will had hastened the vesting and period of payment. It was obvious that the only object that existed for postponing the date of payment till the death or second marriage of the widow was to provide for the payment of the annuity to the widow. According to the will, vesting was to take place on "the arrival of the period when the residue of my estate falls to be realised

and divided." If the Court decided in favour of their contention, that period would have arrived. The case of Muirhead could be distinguished from the present case, as in that case there was a distinct direction to accumulate the income till the wife's death. Even if it was held that the period of payment had not arrived, the second parties were entitled to payment of the income of the residue until the period of payment of the residue arrived. At advising

LORD JUSTICE-CLERK-In view of the case of Muirhead, I do not think we can dispose of the first question otherwise than by deciding that the term of payment has not arrived.

As to the second question, I am of opi nion that the income must be held to be in the same position as the capital. The first alternative of the question must be answered in the negative, and the second in the affirmative.

LORD YOUNG-I do not think the case is by any means unattended with difficulty. I should rather have been disposed, irrespective of the authority of Muirhead and Hughes, to think that the payment was postponed till the death or second marriage of the widow, only because the death or second marriage of the widow was contemplated by the testator as the sole events which would terminate her annuity in the event of her surviving him. But these two dates could not possibly have been fixed upon by the testator with any intelligent purpose of determining the particular relations who were to take the capital, because the two events have no connection with the determination of such a matter. The only intelligible explanation of these periods having been taken, as fixing the terms of payment to the residu ary legatees, is, that the testator knew that on either of them his estate would he available for division, and unburdened of the annuity which exhausted the income. But a third event has occurred which has left the estate free, viz., the repudiation of the provision by the widow, and her claiming her legal rights.

It is suggested that the amount required to satisfy the legal rights of the wife will make a hole in the estate which might be filled up by accumulating the income during her lifetime. But the amount of filling up would depend upon whether the widow married a second husband or not, as the moment she married again the period of

distribution would have arrived.

It is therefore impossible to attribute to the testator in fixing the death or second marriage of his wife as the period of distribution, the purpose of determining who were to be the objects of his bounty. I should have been disposed to think that it was clear to ordinary understanding, that the postponement of the division of the estate to the two periods named was made in order to secure the payment of the annuity. I can conceive no other purpose. If that is the only purpose the testator

Trs. v. Ross

28, 1894

had in view, I think the good sense of the thing is that the period of distribution is hastened by the wife having repudiated the settlement and claimed her legal rights. For my part I should also be disposed to hold it to be also the law, the law generally being supposed to be in accordance with good sense. But your Lordships think that the case is ruled by prior decisions, and that we must follow these authorities.

LORD RUTHERFURD CLARK-I think the case of Muirhead is an absolute rule, and we must follow it.

I am not at all sure that the testator did not mean to make the period of distribution depend upon the second marriage of his widow. It is evident that if she took her annuity there could be no vesting during her lifetime as long as she remained unmarried, but the moment she married a second time the term of payment arrived. So by the very form of the deed the period of distribution depends on the second marriage of the widow.

LORD TRAYNER was absent.

The Court answered the first question in the negative and the first alternative of the second question in the negative, and the second alternative in the affirmative.

Counsel for First Parties-Crabb Watt. Agents-Mackenzie & Black, W.S.

Counsel for Second Parties-WilsonGuy. Agents-Clark & Macdonald, S.S.C. Counsel for Third Parties - Younger. Agents-Clark & Macdonald, S.S.C.

DRUMMOND'S FACTOR, PETITIONER. Judicial Factor-Nobile Officium-Power of Sale by Private Bargain failing Public Roup-Petition for Confirmation of Sale by Private Bargain without Public Exposure.

A judicial factor who had obtained power from the Court to sell certain heritable property by public roup at an upset price of £9750, and failing such sale, to sell by private bargain at a price not less than the upset price, without exposing the property to public roup, sold it for £9800 by private bargain with the approval of all the creditors. A petition for approval of the sale was refused.

Opinions expressed that it was within the power of the Court to grant the prayer of the petition.

The judicial factor on the trust-estate of Drummond Brothers applied to the Court for power to sell certain heritable subjects at 82 George Street, Edinburgh, belonging to the factory.

Upon 19th October 1893 the Lord Ordi

nary authorised the judicial factor to expose them for sale by public roup, after due advertisement, at the upset price of £9750, and if not sold at or above said upset price, to re-expose the same for sale by public roup, after due advertisement, at such reduced upset price as the Accountant of Court might fix, or to sell the same by private bargain at a price not less than that at which they had been publicly exposed for sale.

The judicial factor duly advertised the property, but did not expose it for sale by public roup, and in May 1894 sold it by private bargain for a sum of £9800. All the heritable creditors, including postponed bondholders who would not receive any part of their debt, approved of the sale, and Mr Hippolyte Blanc, architect, reported that in his opinion the transaction was a judicious one. The purchaser, however, was apprehensive of the validity of the title he would get, and accordingly the judicial factor presented a petition praying the Court to approve of the sale. Along with the petition he lodged a report by the Accountant of Court, saying that in his opinion the factor's acting in selling by private bargain might be approved of.

Upon 23rd June 1894 the Lord Ordinary (Low) having heard counsel for the factor and for the purchaser, reported the case to the First Division.

"Opinion. — The petitioner is judicial factor upon a trust-estate. In May 1893 he obtained authority from the Court to sell certain house property in George Street, Edinburgh, belonging to the trust by public roup at the upset price of £9750, and if the property was not sold at or above that price, to re-expose it for sale at such reduced upset price as the Accountant might fix, or to sell the property by private bargain at a price not less than that at which it had previously been publicly exposed.

"The petitioner, before he had exposed the property for sale by public roup, received a private offer to purchase it at the price of £9800. He accepted the offer, and has now presented the present application for approval of the sale. The Accountant of Court reports in favour of the application being granted.

"The purchaser appeared, and referred to a judgment of the First Division in petition Clyne, June 5, 1894, in which it was held that although trustees might obtain authority from the Court to sell, they could not first conclude a contract of sale and then ask the approval of the Court. The purchaser in this case is quite willing to implement his contract, but he contended that in view of the decision referred to, it was doubtful whether the Court had power to confirm the sale, and he naturally desires to have an unimpeachable title.

"The parties asked that the case should be reported to the Inner House, and as it raises a question of importance not only to the parties, but in regard to the administration of trust-estates in the hands of judicial factors, the Lord Ordinary has thought it right to do so.

"There is this distinction between the present case and that of Clyne, that there the trustees had not, before entering into the contract of sale, obtained any authority to sell, while here authority was granted to the judicial factor to sell, and the present application has only been rendered necessary because he did not proceed precisely in terms of the powers which were conferred upon him."

Argued for the petitioner-He had obtained power to sell from the Court, and that by private bargain failing sale by public roup. No doubt he had sold by private bargain without publicly exposing the property, but he had secured £50 more than the upset price, had acted in the best interests of the estate, and with the approval and consent of all interested. În Clyne's case, June 5, 1894, 31 S.L.R. 692, a testamentary trustee, without any power of sale in the trust-deed, had sold, and asked the Court to confirm the sale. Here there was a power of sale in the original trustdeed, and the factor had obtained a power of sale from the Court. If the course followed was not in entire conformity with that indicated by the Court, it was in substantial accordance with it, and might well be confirmed. In the case of Gilray, March 18, 1876, 3 R. 619, the Court had approved a sale effected by a curator bonis without any powers.

Argued for the purchaser-He was perfectly willing to buy the property, but he was entitled to an unimpeachable title. The factor here had practically sold without power, because he had received power under a definite limitation, which he had disregarded. The power in the original trust-deed was no good to a judicial factor; he required authority from the Court before he could sell. It was doubtful whether the Court could approve of what had been done, although they might authorise its now being done.

At advising

LORD PRESIDENT This application raises a point of general importance in the administration of property by a judicial factor. This judicial factor, vested in the heritable property in question, came to the Court and asked authority to sell the subjects either by public roup or private bargain. Now, the Lord Ordinary, exercising the power of the Court, considered the question whether power to sell should be given, and the further question, by what mode that power ought to be exercised in the interest of the estate.

The Lord Ordinary had before him all the facts of the case, and on these he came to the decision that public roup was the proper method and not private sale, at least until the state of the market had been tested by a public exposure. Now, we find that the factor, who had taken this power, did not exercise it, but, on the contrary, without ever exposing the subjects for public sale, sold them by private bargain for £9800, a £50 note above the upset price. I cannot say that the difference of price is very impressive, or much

June 30, 1894.

distinguishes the sale from one at the upset price. The factor in so acting took upon himself a very grave responsibility. One of the merits of our law with regard to estates under judicial management is that not merely formally, but in fact, no important or extraordinary step can be taken by the factor at his own hand, the Court having first to consider the expediency of what is proposed. I regard it as a grave error and a gross departure from proper practice for any officer of the Court to take upon himself to exercise powers which the Court has refused to him.

The next question is, what are we to do now? Is it competent for us to grant the authority which the petitioner asks? I am prepared to assume, and I believe that this would be within our competency. But then we must first be satisfied that it would be for the interest of the estate that we should take this step. The Lord Ordinary has decided that it was best for the interest of the estate to test the market by a public roup. I have heard nothing to indicate that the Lord Ordinary was wrong, or that a different course would now be right. Nothing has been said to reconcile me to the idea that people wanting to buy this George Street property are too shy to go to an auction; the guarded expressions of the Accountant of Court do not suggest this, and proceed upon the same meagre information which we have now had before

us.

I see no ground, therefore, in the interest of the estate for supposing that they will be injured by our adhering to the ordinary and salutary course, and I am for refusing the prayer.

LORD ADAM-I think we might approve of such a sale as the present if there were very special circumstances leading us to do so, but I agree with your Lordship that we should not grant the prayer of this petition. We were told by Mr Sym that in his original petition the judicial factor had asked for power to sell by public roup or private bargain. Well, the Lord Ordinary in considering that petition did not grant authority as craved, but gave authority to sell by public roup, and failing such a sale-but then and then only-to sell by private bargain. The reason for that is perfectly obvious. The Court think it proper that the market should be tested by public competition before a property administered by a judicial factor is sold by private bargain. There might be special circumstances, such as the remoteness of the property to be sold, in which the Court would approve of sale by private bargain without public exposure, but the ordinary case, as here, is to require public roup in the first instance. This condition of a sale by private bargain was not observed. I see no reason for departing from the course prescribed by the Lord Ordinary. The only reason for doing so submitted to us is the report of Mr Blanc. He is no doubt a very competent man, but his opinion is not conclusive. I think the judicial factor has gone quite wrong here. It is very much as