Sim v Muir's Trustees
| Jurisdiction | Scotland |
| Judgment Date | 19 July 1906 |
| Date | 19 July 1906 |
| Docket Number | No. 163. |
| Court | Court of Session |
Ld. Salvesen, Lord Kyllachy, Lord Stormonth-Darling, Lord Low, Lord Justice-Clerk.
TrustPowersInvestmentPersonal SecurityDeposit-Receipt.
The trustees under an antenuptial contract had power to invest the trust funds on heritable or good personal security.Held (aff. the judgment of Lord Salvesen, Ordinary) that personal security included bonds, &c., depending only on personal obligation, and consequently that investments by the trustees of part of the trust funds on bank deposit-receipts were intra vires.
ProcessAll parties not calledAction ex delictoTrustInvestment.
In an action against the representatives of one of several deceased trustees to have the defenders ordained to replace losses caused by the alleged unauthorised investment of part of the trust funds, the defenders pleaded all parties not called. Observations, per Lord Salvesen, on the rule that where a defender is sued as being liable in solidum in respect of a delict or quasi delict, the pursuer is entitled to proceed against the defender alone, although there may be other persons equally liable with the defender.
By antenuptial contract of marriage, dated 26th September 1864, between Mr and Mrs John Sim, Arbroath, Mrs Sim on her part conveyed to the marriage-contract trustees certain funds for payment of the income thereof to herself during her lifetime and thereafter to her husband if he should survive her, and on the death of both spouses, for payment of the capital to the children of the marriage equally on their severally attaining majority.
The marriage-contract contained a clause of investment in the following terms:And they authorise the before-named trustees, if they see cause, to invest the trust funds on heritable or good personal security for the purposes foresaid, declaring that in so investing and lending the trust funds the trustees shall not incur any personal responsibilities.
The marriage was dissolved by the death of Mrs Sim, leaving issue of the marriage. Mr Sim died on 10th January 1897.
On 7th October 1905, Alexander Sim and others, the children of the marriage, brought an action of count, reckoning, and payment against David Scott Ferguson and others, trustees of the deceased James Muir, merchant in Arbroath, one of the trustees under the marriage-contract, concluding for an accounting of the intromissions of Muir, who died on 16th March 1903, and his trustees with the trust-estate, and for payment of 1000, or such sum as should be found to be the balance due on such an accounting.
The pursuers averred, inter alia;(Cond. 3) The said James Muir all along took an active part in the management of the trust-estate, and continued to do so down to the date of his death, which occurred on 16th March 1903. From the year 1892 he acted as sole trustee, the whole of the other trustees named in the contract having predeceased that date.
The defenders answered:(Ans. 3) Admitted that the said James Muir acted as sole trustee from the year 1892 down to the date of his death on 16th March 1903. Quoad ultra denied, and explained that the representatives of the other trustees are not called as parties to this action.
The defenders pleaded, inter alia;(1) All parties interested not having been called, the action should be dismissed.
The defenders having lodged an account of Mr Muir's and their own intromissions with the trust-estate, the pursuers lodged objections to the account, and the defenders answers thereto, and a record was made up on the objections and answers.
The pursuers stated, inter alia, the following objection:(Objection 3) The account produced shews that the trustees under the said marriage-contract lent certain of the trust funds on deposit-receipts with the following colonial banks, viz., The City of Melbourne Bank (now the Melbourne Assets Company), the Australian Joint Stock Bank, and the New Oriental Bank. The said loans were not such as the trustees were entitled or authorised to make either at common law or under the Trusts (Scotland) Amendment Act, 1884, neither were they within the powers conferred by the investment clause in the said marriage-contract. Persons who lent money to the said colonial banks received no security for repayment of their advances, and the said trustees, including in particular the late James Muir, in so lending out the funds of the trust-estate committed a breach of trust. The sums so invested have been partially lost through the failure of the said banks to meet the said deposits as they fell due, and the pursuers claim that they are entitled to have the accounts restated so as to credit the trust-estate as at the date of Mr Sim's death, viz., 10th January 1897, with the face value of the amount of the deposits. The capital sums so falling to be credited to the trust-estate amount in all to 164, 0s. 4d.
The defenders answered:(Ans. 3) The investments specified in Article 3 of pursuers' objections were authorised by the marriage-contract, and no breach of trust was committed in respect that the trust funds were so invested. The defenders do not admit liability for loss on any of these investments.
On 29th March 1906 the Lord Ordinary (Salvesen) repelled in hoc statu the first plea in law for the defenders, repelled the third objection for the pursuers to the accounts of the late James Muir as trustee under the marriage-contract between Mr and Mrs Sim, libelled in the summons, appointed the case to be enrolled for further procedure, and granted leave to reclaim.*
The pursuers reclaimed, and argued;The sole question was as to the meaning of the term personal security in the investment clause of the marriage-contract; the pursuers did not dispute that the money here had been invested, nor that the...
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