Scottish Court of Session Decisions

On 30th June 1909 Henry Moncrieff Steele, C.A., Glasgow, who had in 1895 been appointed judicial factor on the trust estate of the deceased Andrew Ramsay, merchant in Greenock, brought an action of multiplepoinding to determine the rights

Page: 200↓

of parties in a sum of £9000, which formed part of the trust estate.

On 22nd January 1910 the British Linen Bank as assigneesof John Crawford Hunter, one of the residuary legatees under Mr Ramsay's settlement, under bond and disposition and assignation in security in their favour, dated 25th December 1878, were ranked and preferred by Lord Mackenzie to one half of the fund in medio. No reclaiming note was presented against this interlocutor. On 19th March 1910 the pursuer and real raiser presented a claim “to be ranked and preferred on any amount to which the bank may be entitled to the extent of £4051, 2s. 10d.” in respect of alleged debts due to the trust estate by John Crawford Hunter, the bank's cedent under two bonds and dispositions in security granted by him in favour of the trustees dated respectively 15th May 1874 and 17th May 1875. This claim was held by the Lord Ordinary ( Mackenzie), and on 17th May 1911 by the Second Division, to be incompetent—see Ramsay's Judicial Factor v. British Linen Bank, 1911 S.C. 832, 48 S.L.R. 743.

Thereafter the pursuer and real raiser lodged a condescendence of the fund in medio in which he made certain claims of compensation and retention against the one-half of the fund to which the bank had been ranked, in respect of the alleged debts due to the trust estate by Hunter under the said bonds.

The bank lodged objections to the condescendence of the fund and maintained that the pursuer's claims of compensation and retention against the share of the fund to which they had been ranked could not be competently maintained in a condescendence of the fund in medio.

On 26th October 1911 the Lord Ordinary ( Skerrington) pronounced this interlocutor “Finds that any pleas of compensation or retention otherwise competent to the pursuer and real raiser in a question with the British Linen Bank are still open to him notwithstanding the interlocutor of 22nd January 1910: Continues the cause for further procedure, and on the motion of said bank grants leave to reclaim.”

Note.—“At an earlier stage of the present case the Second Division (affirming Lord Mackenzie) decided that after an interlocutor had become final disposing of the whole fund in medio, and ranking and preferring the claimants the British Linen Bank to one-half thereof, it was incompetent for the pursuer and real raiser to lodge a claim alleging that the trust estate was a creditor of the bank's cedent Mr Hunter, and claiming to be ranked and preferred to the amount of the debt on any sum to which the bank might be entitled ( Ramsay's Judicial Factor v. British Linen Bank 1911 S.C. 832). The pursuer now seeks to accomplish the same result by lodging a condescendence of the fund in medio, in which he claims that he has a right of compensation, or otherwise of retention, in respect of the debt which he alleges to be due to the trust estate by the bank's author. The interlocutor appointing a condescendence of the fund to be lodged was subsequent in date to the interlocutor of the Inner House already referred to. No argument was addressed to me, and all questions are reserved as to the relevancy and validity of the alleged claims at the instance of the trust estate against Hunter, and as to the validity of the rights of compensation or retention claimed by the pursuer. The only question argued was whether these rights, if otherwise well founded, were still open to the pursuer, or whether it was incompetent for the pursuer to insist upon them in the face of the final decree of ranking and preference. If the question is still open I see no objection to its being decided upon a discussion of the condescendence of the fund in medio, in the same way as if the pursuer had been only the nominal raiser of the action. See A. S., 11th July 1828, sec. 47; Bell's Comm., vol. ii, p. 278,7th ed.

“The interlocutor of ranking and preference did not contain any decree for payment, but the Court held that it was none the less a final decree completely disposing of the competition and excluding all other parties except those who were ranked and preferred. But the Court did not decide that a decree of ranking and preference is to all effects and purposes the same as a decree for payment. If a litigant allows a decree for payment to go out against him I should suppose that he cannot subsequently suspend the decree upon the ground that at its date he had a counter claim upon which he might have founded a plea of compensation or retention. On principle, however, I see no reason why a merely declaratory decree finally establishing a claimant's right to a part of the fund in medio, and so constituting him a creditor of the fund-holder, should be held to preclude the latter from pleading compensation or retention. No question of compensation or retention could arise in the present case until it had been established that a particular claimant, viz., the bank, was a creditor of the pursuer, or rather of the trust estate. Accordingly I am of opinion that it is still open to the pursuer to plead compensation or retention as against the successful claimant. Obviously, however, as a matter of fair play, notice of any such claims ought to be given at the earliest possible moment by the pursuer and real raiser of an action of multiplepoinding, and no doubt such notice would have been given in the condescendence annexed to the summons if the point had not been overlooked. The pursuer's present position is quite different from that stated by him when he came into Court, and if expense has been caused by this change of front, it will probably fall upon the pursuer to make it good. I shall pronounce a finding that any pleas of compensation or retention otherwise competent to the pursuer and real raiser in a question with the bank are still open to him notwithstanding the interlocutor of 22nd January 1910, and I shall continue the case for further procedure.”

The British Linen Bank reclaimed, and

Page: 201↓

argued—In stating the condescendence of the fund the holder was not entitled to deduct any part of it on the plea of compensation or retention against a particular claimant. The condescendence was simply a statement of the amount of the funds in the holder's hands—A. S., July 11, 1825, sec. 47. This section and the passage in Bell's Comm. (7th ed.), ii, 278, mentioned by the Lord Ordinary, clearly made reference to claims of retention by the holder against the fund as a whole, and not to claims like the present, against the share of a particular claimant. If the procedure followed by the real raiser were competent, the amount of the fund in medio would vary according as it was decided that one or other of competing claimants was entitled thereto. The settling of the condescendence was a cause in itself and a distinct process from the competition— Walker's Trustee v. Walker, Feb. 20, 1878, 5 R. 678, 15 S.L. R. 383. The fund might competently have been approved of before the claimants were ranked; had that been done, the real raiser's plea of compensation could not possibly have been stated. This was just an attempt to get the Court again to consider a claim that had already been held incompetent— Ramsay's Judicial Factor v British Linen Bank, 1911 S.C. 832, 48 S.L.R. 743.

Argued for the pursuer and real raiser—The fund in medio had not been approved of, and the amount thereof was still unsettled. In settling the amount the holder was entitled to discuss—as he did here—any claims of compensation or retention competent to him—Bell's Comm. ( cit. sup.), As., 11th July 1828 ( cit. sup.); Mackay's Practice, vol. ii, 112.

At advising—