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Scottish Court of Session Decisions |
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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Caithness Highland Friendly Society v Macmillan, &c [1834] CA 13_135 (6 December 1834) URL: http://www.bailii.org/scot/cases/ScotCS/1834/013SS0135.html Cite as: [1834] CA 13_135 |
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Page: 135↓
Subject_Friendly Society—10 Geo. IV. c. 56.—
Alterations under the 10 Geo. IV. of rules and rates of previously existing friendly societies do not affect widows whose rights have emerged prior to such alterations.
The Highland Friendly Society of Caithness was originally established under rules confirmed by the Justices of the Peace, in 1821, in virtue of the 33 Geo. III. c. 54. These rules, inter alia, provided to widows of members, after seven years' contribution, an annuity of L.10, and contained the following stipulations:—“Should the funds, at the expiry of seven years,” (the period before which it was stipulated that no annuity whatever should be made by the society, and which was afterwards extended to ten,) “prove inadequate for the purposes of paying the annuities and allowances to sick members, each member shall contribute, in addition to his quarter payments, such sum as a majority of the society shall determine, until the funds shall be deemed sufficient for any purposes of the institution.” “That should the capital, in consequence of the increase of members, or from any other cause, ever fall below the proportion stated in the last article, one-tenth of the deficiency shall be made up at the first annual meeting after such deficiency occurs, and that by additional contributions from the members, in so far as the improvement of the funds shall fall short of the said tenth of said deficiency, and so on, at every succeeding annual meeting, until
There was also a provision for making alterations and amendments on these rules, the same being always confirmed by the Justices of the Peace; and in 1825, under this provision, the period of contribution, before any annuity should be claimable, was extended from seven to ten years, and the sanction of the justices was interponed to the alteration. No stipulation was made in these rules for the settlement of disputes by arbitration or otherwise.
In 1829, it having been found that the rates adopted by friendly societies generally throughout the country had proceeded on erroneous and unscientific calculations, the act, 10 Geo. IV. c. 56, was passed for regulating such societies in time to come, and providing for the remodelling of those already existing. By this act, the prior statutes were repealed, with a reservation as to existing societies, until they should conform to the provisions of the new act; and it was also declared, (sec. ],) “That such repeal shall not invalidate or affect any thing which has been done before the passing of this act, in pursuance of any of the said acts.” This statute (sec. 2) gave power “to and for the several members of each society, from time to time, to assemble together, and to make, ordain, and constitute such proper and wholesome rules for the better government and guidance of the same, as to the majority shall seem fit; and also, from time to time, to alter and amend such rules, as occasion shall require, or to annul or repeal the same, and to make new rules in lieu thereof, under such restrictions as are in this act contained.” It also provided, (sec. 8,) “That all rules from time to time made, and in force for the management of such societies as aforesaid, and duly entered in such book as aforesaid, and confirmed by the justices as aforesaid, shall be binding on the several members and officers of such society, and the several contributors thereto, and their representatives, all of whom shall be deemed and taken to have full notice thereof, by such entry and contribution as aforesaid.” It farther provided as to the dissolution of such societies as follows:—“That it shall not be lawful for any such society, by any rule, at any general meeting or otherwise, to dissolve or determine any such society so long as the intents and purposes declared by such society, or any of them, remain to be carried into effect, without obtaining the votes or consent of five-sixths in value of the then existing members of such society, to be ascertained in manner herein after mentioned, and also the consent of all persons then receiving, or then entitled to receive relief from such society, either on account of sickness, age, or infirmity, to be testified under their hands individually and respectively.”
In terms of this statute, the Caithness Friendly Society had a new set of rules drawn out, which were submitted to the advocate-depute, appointed under the act to revise such rules, but without a copy of the previous rules being laid before him; and his certificate having been obtained, they were duly sanctioned by the Justices of the Peace, on the 1st of May, 1832. Among the alterations from the old rules were a provision reducing the annuity of widows from £10 to £4, and a stipulation, “that all matters in dispute between the society, or any person acting under them, and any individual member or members thereof, or person claiming on account of any member, shall be submitted and referred to arbitration.”
The husbands of the two respondents, Helen Macmillan and Isabella Keith, widows, had been members of the society, and the yearly contribution had been paid by them or the widows after their death, for ten years, entitling the widows, under the original regulations, to annuities of £10. In 1831, while the new rules were still unconfirmed, Isabella Keith raised an action for payment of this annuity before the Sheriff of Caithness, who, after some procedure, pronounced a judgment in December of that year, (being still before the confirmation of the new rules,) decerning for payment of the annuity at the rate of £10, “till the benefit thereof is legally forfeited or withdrawn.” This interlocutor was acquiesced in, and the annuity paid till after the new rules were sanctioned, when the society offered the reduced annuity of £4. This the widow declined, and she also declined a proposal to arbitrate in terms of the new rules; and in 1834, she charged the society for payment, whereupon they presented a bill of suspension.
The other respondent, Helen Macmillan, had in like manner refused the reduced annuity, and declined to arbitrate; and she, in 1832, after the new rules had been sanctioned, raised an action for payment at the rate of £10, before the Sheriff of Caithness.
In defence against this action, it was pleaded, 1st, That the Sheriff had no jurisdiction in respect of the provision for arbitration in the new rules, in terms of the 10 Geo. IV.;
1 and, 2d, That under the new rules the rate of annuity was effectually altered, so as to affect all parties, whether their
_________________ Footnote _________________
1 Cooper, March 11, 1825 (ante, III. 648); Lindsay, February 11, 1831 (ante, IX. 426.)
To this it was answered, that, prior to the new rules being adopted, the widow's right had emerged—that she was not a member of the society, liable to be affected by alteration of their rules, but a creditor, with a certain vested interest, which they had no power under the new statute to diminish; and, in like manner, that they could not by such subsequent operations deprive her of the privilege previously competent to her of enforcing her rights in the ordinary courts of law.
The Sheriff-substitute, after a contrary judgment, pronounced the following interlocutor, which was adhered to by the Sheriff, on the grounds. stated in the subjoined note. *
“The Sheriff-substitute having resumed consideration of this process, and considered the reclaiming petition and answers, finds, that the rule of the society ordering the settlement of disputes by arbitration is not binding on the pursuer, in respect that, at the date of such rule, she was not a member, or officer thereof, or contributor thereto, and is not the representative of any (then existing) member, officer, or contributor, on which persons alone new or altered rules appear to be binding; therefore recalls the interlocutor of 18th March last, and repels the preliminary defence, and sustains jurisdiction; finds the pursuer will be entitled to
_________________ Footnote _________________ * “The Sheriff concurs generally in the principles laid down in the note annexed to the Sheriff-substitute's last interlocutor, with the following explanation. It appears to him that the defender founds, and must found, the Society's right to diminish the pursuer's annuity solely on the new regulations obtained by them under the 10 Geo. IV. c. 56, since no proceedings, except those adopted under that statute, have been taken to set aside the former regulations, or the rights arising under them. But the Sheriff is of opinion, after a careful examination of that statute, that It relates exclusively either to the establishment and future operation or amendment of rules for new societies to be established under the statute, or to the prospective establishment and operation or amendment of rules for the future government of pre-existing societies; but that it provides, that the repeal of the former statutes ‘shall not invalidate or affect any thing which has been done before the passing of this act, in pursuance of any of the said acts;’ and that it does not point out, or appear to contemplate, any process by which actual rights, which have arisen to persons not members, through the regulations established under former statutes, can be abrogated or infringed. None of the clauses in this statute which are referred to have, or were intended to have, any effect on such rights. As the right, therefore, on which the pursuer founds is of this description, and as the Society, in establishing the new regulations which they plead against it, has proceeded entirely under the 10 Geo. IV. c. 56, the Sheriff does not conceive that the pursuer's claim can be touched by such regulations. “For the same reason, sec. 27, regarding arbitrations, cannot be applied to claims founded on rights, such as those now referred to, which have come into operation under former statutes. “But, at the same time, the Sheriff-substitute has very properly allowed a proof of any facts inferring consent by the pursuer to relinquish her annuity for a smaller one.”
The society thereupon presented a bill of advocation. In the mean time, the bill of suspension in the other case had been advised, with answers, by Lord Jeffrey, Ordinary, who refused it, adding the subjoined note;
* and a second bill having been presented, it was, in like manner, refused by Lord Moncreiff, Ordinary, who added the note below.
† The bill of advocation, with answers, having also come before
_________________ Footnote _________________ * “If the Lord Ordinary had any doubt on the case, or even thought there was any serious chance of the suspender persisting in litigation, he would have passed the bill (caution being found) as the speediest and safest way of establishing the right of the respondent; but not having the slightest doubt on the merits, he does not think himself entitled to stay the lawful diligence of the respondent.” † “Caution was required, and no doubt found, under the first bill; so that the offer of caution in this second bill makes no difference on the state of the case. But though the argument for the complainer is certainly very able, the present Lord Ordinary so entirely concurs with the former (Lord Jeffrey), that he does not think that he would be justified in involving this charger in a protracted litigation for her annuities, by passing the bill. The short state of the point is, that there appears to be nothing in the statutes, and certainly there is no principle at common law, to warrant the conclusion, that the power given to the societies to make new rules, and to alter the rates of contribution or payments, was intended to enable them to take away or diminish the previously vested interests of persons not members of the society, but creditors, whose interests had already emerged by the death of the contributors. It may be true that the representatives or widows of contributors may be affected by the new rules; but the question is, can this apply to the case of a widow whose husband died before the new rules were even framed, that is, who died under the old system, and by his death gave a vested right according to it? This is very satisfactorily argued in the answers. And, in addition to the conclusive differences in the situation which are there pointed out, it may be observed, that, when the existing members deliberate on the expediency of particular alterations, each of them, being still alive, has his own chance of advantage or relief, as well as his risk of loss to his family, by the change. But the widow of a man, already dead, could have nothing but the certainty of loss, while, in regard to her, all the benefit is to the existing members, who, without her intervention, make the rule against her. “The rule about arbitration must evidently go with the principle applicable to the other point. “In writing the above note, the Lord Ordinary had supposed that the advocation referred to in the papers was an advocation on a passed bill. But he has since advised a bill of advocation in Mrs Macmillan's case, and finds that it is against an interlocutory judgment, repelling a preliminary defence of want of jurisdiction in the Sheriff, founded on the arbitration clause in the new rules. As the complainer may reclaim in the present case, and the Lord Ordinary's judgment would be final in the advocation, he has thought it proper to report that case. The opinion of the Court will in this way be obtained.”
Pleaded fir the Society—
The object of the statutes regarding friendly societies was to secure the purpose of their institution—equal benefit from equal contribution. If, however, the widows or children of former members were to be entitled to draw a larger share of the funds of the society than others, not only would great inequality and. injustice result, but the societies would in many cases be ruined, and the whole funds swept away, thus completely defeating the object of the 10 Geo. IV. The words of that statute, however, lead to no such inconsistent conclusion, for they provide, that the new rules shall affect not only contributors, but their “representatives,” which description truly embraces the widows of members deceased.
Pleaded for the Widows—
The society here was truly an association of mutual assurance, the security for payment of the benefits stipulated for not being limited to the contributed funds of the society, but extending to the private funds of the members, who were, by the original regulations, bound to make up any deficiency in the contributions. Under this mutual contract of
_________________ Footnote _________________ * “It is not from entertaining any doubt on the merits of this case, that the Lord Ordinary reports it. He advised a bill of suspension, by the same parties, in the case of another widow, where a final decree of the Sheriff had been pronounced in her favour; and in that ease he pronounced a judgment concurring with a previous interlocutor of Lord Jeffrey, on advising a first bill and answers, and refusing the bill; and he is of opinion, that the plea against the jurisdiction of the Sheriff, in the present case, must depend on the same question, which is involved in the defence against the widow's claim on its merits, viz. Whether the statute can be held to enable the society, by new rules, to impair the previously vested right of the widow by the death of her husband? It is in vain to refer to the 27th section of the act, as if it created absolutely an alternative jurisdiction in arbitrators to be named, or in the justices. It directs the society, in making new rules, to declare their choice between the two alternatives. Here the society has done so, by fixing on a very operose system of arbiters of their own nomination, Any jurisdiction in the justices, therefore, is entirely out of the question; and the simple question is, Whether the society could, by new rules made after the widow's right as a creditor was fully vested, either reduce her annuity from £10 to £4, or bind her to an arbitration of their own selection? The Lord Ordinary is of opinion, that neither the statute nor the common law affords any ground for such a position. “But the Lord Ordinary is aware, that, if he were to pronounce a judgment refusing this bill of advocation, it would be final, and the case would go back to the Sheriff, to be dealt with on the supposition, that the rule of arbitration was not binding on the respondent, while, in the mean time, the complainer might reclaim against the interlocutor in the suspension. It is therefore thought expedient to report the present case.”
The Court refused the reclaiming note and the bill of advocation.
Solicitors: A. Snody, S. S. C.— Gordon and Stewart, W. S.—Agents.
