, Main

,

assignation was ever executed, they assimilated the case to that of an agent who, having received money from investment, and having invested it, and obtained a bond or other security therefor, becomes bankrupt before the actual security writ is handed over. But apart from the essential difference between the two cases, arising from the execution in the one case of a deed in favour of the creditor, and the absence of any such deed in the other, I do not think the averments of parties, read along with the documents produced, raise any such question. Both parties concur in stating that when the reclaimers agreed to release the golf balls in favour of the British Linen Bank they agreed to take "in lieu thereof" (these are the words both of reclaimers and respondents on record) bills for £3000 by Hutchison, Main, & Company on F. A. Johnson. No doubt the reclaimers seem to allege that their surrender of the golf balls was on the faith of the arrangement, not only as to the bills for £3000 being handed to them, but also that they should obtain the debenture for £17,000; and this is denied by the respondents, who say in reply that "the security of the said debenture was not offered as a part of the arrangement concluded on 3rd February 1910 for the . . transference of said goods to the British Linen Bank and the substitution of undiscounted bills in lieu thereof." I read the letter of 3rd February 1910 from the respondents' agents to the reclaimers' Glasgow managers, taken along with both parties' averments as to the antecedent arrangement about the surrender of the golf balls and the absence of any reference to the golf balls and the substituted bills in the agreement, in accordance with the view presented by the respondents.

But even if the reclaimers' view of the arrangement is correct their case seems to me to fail. I agree with Lord Salvesen that it cannot be supported by an unqualified application of the broad proposition stated by Lord Westbury in Fleming v. Howden (6 M. (H.L.) 121). That is sufficiently clear from an admission made by the reclaimers. They did not dispute that they would have no case if the obligation in question had related to property of the respondents' own. But, read literally, Lord Westbury's generalisation would equally cover such a case. I may add, in reference to this admission of the reclaimers, that it seems to me that the elements of contingency and futurity, which are necessarily involved in such an obligation as the one in question, make the present case a fortiori of the one conceded by the reclaimers.

The respondents must bring up their case either to one of principal and agent or to one of fiduciary relation. Neither is averred on record, nor do the circumstances which are averred seem to me to involve, on principle, or on authority, either the one case or the other. The relations were those of debtor and creditor, in which the creditors, instead of making their position immediately impregnable,

chose, through their own fastidiousness about technicalities connected with the deed assigning the debenture actually in the hands of their debtors, to allow their opportunities to secure themselves by a completed security to pass.

LORD JUSTICE-CLERK -- Your Lordships have so fully and clearly stated the circumstances in which this case arose that I feel it unnecessary to recapitulate them. I concur in the opinion of your Lordships. To me it appears to be clear that at the date of the liquidation the debenture in question was still held by the company, and that the Bank had no right to it, but had only a right to enforce a contract by which it was bound to assign the debenture to the Bank. Nothing can be more certain than that in similar circumstances in the case of an individual becoming a bankrupt, a company in the position of the Bank here could not possibly make good a preferential right on the subject as in this case, it being plainly an asset not made over while the person becoming bankrupt could do so legally to the prejudice of his other creditors. It lies upon the Bank to show that any different legal rule is to be applied where the insolvency is that of a limited company, as distinguished from a private individual or from a private firm. It is difficult to see that there can be any distinction in principle. The protection of the general body of creditors against noncompleted preferences is as great in the case of a liquidation of a company unable to continue business from financial weakness as it is in the case of a trustee in bankruptcy. No equitable or reasonable ground for a difference can be suggested, and none was pleaded so as to be even plausible. Having read your Lordships' opinions I express my concurrence in the views expressed in them.

LORD DUNDAS was not present, being engaged in the Extra Division.

on by any party in a cause, all objections thereto may be stated and maintained by way of exception without the necessity of bringing a reduction thereof."

In a petition in the Sheriff Court under section 10 of the Conveyancing (Scotland) Act 1874 to have the petitioner infeft in certain lands to which his deceased father had a personal right, the general disponee under the will of the deceased lodged objections on the ground that under the will he was entitled to the estate. On the petitioner's pleading that the will had been impetrated from the deceased, and should be set aside ope exceptionis in virtue of rule 50 of the First Schedule to the Sheriff Courts (Scotland) Act 1907, the Court repelled the plea, holding that the will was not a document "founded on" by a party in the cause within the meaning of the rule.

The Sheriff Courts (Scotland) Act 1907 (7 Edw. VII, cap. 51), First Schedule, enacts

"Rules for Regulating Procedure in the Ordinary Court.-Forms of Process.1. Subject to the provisions of the Titles to Land Consolidation (Scotland) Act 1868 and the Conveyancing and Land Transfer (Scotland) Act 1874 as regards service of heirs and completion of title, all actions shall be commenced by writ as nearly as may be in the Form A hereto annexed. Defended Causes — . 50. [quoted in rubric]."

James Alexander Donald, Dumbreck, Glasgow, presented a petition in the Sheriff Court at Dumbarton under section 10 of the Conveyancing (Scotland) Act 1874 (37 and 38 Vict. cap. 94), in which he sought to have himself infeft as heir-at-law of his father in certain lands in Dumbartonshire to which his father, who had died uninfeft, had a personal right. Alexander Donald, Duntocher, a cousin of the deceased, lodged a note of objections, in which he averred that the deceased had executed a will in his favour, in virtue of which he was in right of the whole heritable estate of the deceased, but had been hindered from taking steps to procure himself infeft by the action of the petitioner or the default of the law agents of the deceased in withholding the title-deeds from him. The petitioner lodged answers to the note of objections, in which he averred that the will had been impetrated from the deceased by the objector, and pleaded, inter alia2. The said pretended settlement having been impetrated from the deceased while he was weak and facile in mind and easily imposed upon, by the fraud and circumvention of the objector, to the lesion of the said deceased Alexander Donald secundus and his heir-at-law, should be set aside ope exceptione."

The objector pleaded, inter alia-"4. Reduction ope exceptionis being incompetent in the present proceedings, the prayer of the petition should be refused, with expenses.'

On 10th July 1912 the Sheriff-Substitute (MACDIARMID) repelled the plea for the objector, found the answers relevant, and allowed a proof.

Note.This is a petition under section 10 of the Conveyancing (Scotland) Act 1874, at the instance of James Alexander Donald, the only son of the deceased Alexander Donald (tertius), who was a cousin of Alexander Donald (secundus), who died uninfeft in certain lands in which the petitioner now seeks to have himself infeft."

"Alexander Donald, grocer, Duntocher, who seems from the will after mentioned to be a cousin of the deceased, appears as an objector, averring that the deceased executed a will in his favour dated 17th October 1911, in virtue of which he is now in right of the whole estate, heritable and moveable, of the deceased, but has been hindered from taking steps to have himself infeft by the action of the petitioner's law agents in withholding the title-deeds from him. His contention is that the will is an absolute bar to the present proceedings until reduced by action in the Court of Session. The petitioner has lodged answers in which he avers that the said will was impetrated by the objector from the deceased on the evening immediately preceding the latter's death. His contention is that the will can competently be set aside ope exceptionis in this process.

"This is the only point in dispute, the objection founded on a general service of 20th June 1848 being obviously bad.

"It was argued for the objector that this being a special process under the Conveyancing Act 1874, sec. 10, and the Titles to Land Act 1868, secs. 27 to 42, rules 50 and 51 of the Sheriff Courts Act 1907 did not apply.

"But these rules apply in actions in the Sheriff Court, and section 3 (d) of the Act of 1907 defines 'action' as including every proceeding competent in the ordinary Sheriff Court.' This is such a proceeding. Moreover, it seems to me that rule 1 of the First Schedule regards this proceeding as an action.' No doubt it is an 'action' in which the procedure varies to some extent from procedure in an ordinary petitory action. Objections if lodged are to be disposed off summarily-Titles to Land Act 1868, sec. 40--but not necessarily without proof. The 'real question' is to be disposed of--Sim v. Duncan, January 25, 1900, 2 F. 434, per Lord M‘Laren at p. 438, 37 S. L. R. 332, at p. 334. Here the real question cannot be disposed of without proof. This proceeding, therefore, being an 'action' within the meaning of the 1907 Act, and there being nothing in the particular Acts to exclude the application of rules 50 and 51, it appears to me that they apply.

But then it is said that as confirmation has proceeded upon this will the petitioner is really striving to set aside ope exceptionis a decree of Court, and that is incompetent- Leggat Brothers v. Gray, 1912 S.C. 230, 49 S.L.R. 189.

"The argument is, I think, fallacious. It is to the will, not to the confirmation,

v. Donald

29,

that exception is taken. The reasoning of the learned Sheriff Depute (Mackenzie) in Roberts v. Fettes, December 23, 1901, 18 S.L. Rev. 290, at p. 292, appears to me to apply directly here, and if that be so this case does not fall under the rule of Leggat Brothers v. Gray.

"Lastly, it is argued that in any event the will cannot be set aside ope exceptionis in this process. In support of this contention the case of Dickson v. Carter, July 6, 1878, 5 R. 1023, was cited.

"Now it is admitted that an action of reduction of this will would be competent at the instance of the petitioner, and it appears to me that the document sought to be set aside is not a decree of Court but a 'deed or writing.' If that be so, rules 50 and 51 seem to apply in terms. The will is a 'deed or writing.' It is founded on by a party in a cause, and an objection is stated to it by way of exception. It is true that the objection is stated in reply, but I apprehend that to be competent--rule 50; Dickson v. Murray, June 7, 1866, 4 Macph. 797, per L.J.-C. Inglis at p. 799.

66

Looking, therefore, to the wide phraseology of rules 50 and 51, I have come to be of opinion, although not without hesitation, that it is competent in this process to set aside this will ope exceptionis.

"No argument was addressed to me to the effect that the petitioner's averments in answer were irrelevant. They appear to me to be relevant. I shall therefore allow a proof."

The objector appealed to the Second Division of the Court of Session.

[When the appeal was heard there was before the Court another appeal by the objector in an action brought by him in the Sheriff Court at Glasgow against the deceased's law agents, and also against the petitioner who had been sisted as a defender, which concluded for delivery of the title-deeds of the estate. In that action also the same question had been raised as to whether the will could be set aside ope exceptionis, and the action had been sisted to await the decision in the present case.]

Argued for the appellant-It was incompetent to reduce the will ope exceptionis in the present proceedings, and they should be sisted until the petitioner brought a reduction of the will in ordinary form. Rule 50 of the First Schedule of the Sheriff Courts (Scotland) Act 1907 (7 Edw. VII, cap. 51) did not apply to the present proceedings, because they were not a cause within the meaning of the rule. The petitioner was seeking merely an administrative act by the Sheriff, but a "cause meant a litigation between parties. The rules in the First Schedule of the Act of 1907 were designated "Rules for Regulating Procedure in the Ordinary Court," but the procedure in the case of petitions for infeftment was still regulated by section 40 of the Titles to Land Consolidation (Scotland) Act 1868 (31 and 32 Vict. cap. 101), and was not "procedure in the ordinary Court." Rule 1, indeed, expressly exempted such petitions from its operation. The rules were obviously inapplicable to much of

the procedure in such petitions. For example, the rules could not apply to the provisions for appeal for jury trial contained in section 41 of the Act of 1868. In any event, even if rule 50 was applicable to the present proceedings, the will which the petitioner was seeking to set aside was not a document "founded on "in the cause. The rule was intended to apply only to such documents as receipts or discharges. The will was a document of an entirely different character, being a document which was of the very essence of the cause itself -Neil v. M'Nair, June 7, 1901, 3 F. (J.) 85, per Lord Moncreiff at p. 89, 38 S.L.R. 804, at p. 808. The Sheriff could not set aside the will for certain purposes without at the same time setting it aside quoad omnia, and there was no proper record in the present proceedings for an action of reduction. There was no precedent for a Sheriff's reducing a will ope exceptionis. The case of Sim v. Duncan, January 25, 1900, 2 F. 434, 37 S. L. R. 332, was different, because in that case the validity of the objection to the petition depended on the construction of the terms of a deed itself. The case of Roberts v. Fettes, December 23, 1901, 18 S.L. Rev. 290, was also different, because in that case the document which it was sought to set aside was not a will but the probate of a will, and the proving of a will was merely an administrative act. If reductions of wills were competent ope exceptionis, there would often result a great multiplication of process, and therefore it was unlikely that such an interpretation of the rule was sound.

Argued for the respondent-It was competent to reduce the will ope exceptionis. Rule 50 of the First Schedule of the Sheriff Courts (Scotland) Act 1907 did apply, because there were no special words in the rule which exempted the reduction of wills. The will sought to be reduced was undoubtedly a "deed or writing." Moreover, the petition was a "cause" within the meaning of the rule. A petition for infeftment was not an administrative proceeding. It came in place of the old procedure by inquest and was a judicial proceeding. In Crozier v. Macfarlane & Company, June 15, 1878, 5 R. 936, 15 S. L. R. 630, a petition for cessio bonorum was held to be "a civil proceeding competent in the ordinary Sheriff Court." The words "Procedure in the Ordinary Court" were intended to exclude small debt actions only, and the rules applied to petitions for infeftment. Rule 1 so applied. The word "cause" and the word "action" were interchangeable, as was shown by the use of the word "cause "in section 39, where it was clear that "causes" meant "actions." Moreover, the rules provided all the procedure necessary for a reduction. Thus, for example, rule 65 made provision for the recording of the evidence; rule 68 gave the Sheriff power to order the production of documents; and rule 71 provided for the citation of witnesses. Moreover, by section 41 of the Titles to Land Consolidation (Scotland) Act 1868 it was competent for any of the parties to have

the case removed to the Court of Session for jury trial. In Gardiner, Petitioner, November 12, 1886, 3 S. L. Rev. 100, and Roberts v. Fettes (cit. sup.), it was held competent to set aside a will ope exceptionis, and in Nivison v. Howat, November 16, 1883, 11 R. 182, 21 S. L. R. 104, it was held competent so to set aside an award and submission. The will sought to be reduced was a document "founded on" in the cause, because "founded on" meant founded on not only in limine but also during the hearing of the cause. It was quite competent to reduce the will for certain purposes without reducing it quoad omnia-Dickson v. Carter, July 6, 1878, 5 R. 1023; Dickson v. Murray, June 7, 1866, 4 Macph. 797, per Lord Justice-Clerk, at p. 799, 2 S. L. R. 70 at p. 71--and in the present case the decision of the Sheriff-Substitute would not be res judicata against all parties. The case of Leggat Brothers v. Gray, 1912 S.C. 230, 49 S. L.R. 189, decided no more than that a decree in foro could not be objected to ope exceptionis-per Lord Johnston at p. 235 (S.C.), p. 192 (S. L. R.) The setting aside of the will ope exceptionis was not necessarily inconvenient, but even if it were inconvenient it was competent, because rule 50 was quite unambiguous.

At advising

LORD JUSTICE-CLERK-Alexander Donald brought an action in the Sheriff Court to obtain a decree ordaining the defenders to deliver up to him as executor-nominate and general disponee of the deceased Alexander Donald title-deeds and other documents which belonged to him in that capacity, particularly those relating to certain subjects known as Colbreggan Dairy, at Hardgate, Duntocher. The main ground of defence set up is that the settlement on which the pursuer bases his title is bad, having been obtained by fraud and circumvention of the pursuer, while the deceased was weak and facile and easily imposed upon. The defence thus amounts to averment that the settlement is reducible upon that ground.

This action was sisted to await the result of proceedings taken by the defender James Alexander Donald, who had presented a petition under the Conveyancing Act 1874, section 10, in the Sheriff Court at Dumbarton-the original action being in Lanarkshire-praying the Court to find that he, James Alexander Donald, was entitled to procure himself infeft in certain lands, including the lands claimed by Alexander Donald in the action in the Sheriff Court of Lanarkshire. To this petition Alexander objected, founding on the settlement as excluding the heir-at-law.

In this latter petition the question is raised whether the title produced by Alexander Donald, viz., the settlement already referred to, can be set aside by way of exception without the petitioner taking steps to have it set aside in a proper process of reduction. Both parties stated pleas of objection to the opposite party's title to sue, and the Sheriff-Substitute has repelled those pleas, and has allowed the parties a proof of their averments,

Objection was taken to the petition as not being a "cause," but this objection seems to me to be ill-founded. I cannot hold that the petition is not an "action," and if an "action" then it is a "cause." Under the Sheriff Courts Act 1907 action is defined as including "every civil proceeding competent in the ordinary Sheriff Court" (section 3). I have therefore no doubt that this objection is unsound. Further, it appears to me that the contention that rules 50 and 51 of the Sheriff Courts Acts 1907 cannot be grafted on to the procedure prescribed in the Titles to Land Act 1868 (section 27 et seq.), applicable to petitions under section 10 of the Conveyancing Act 1874, is erroneous. The objection is also taken that as confirmation has been obtained on the settlement the petitioner is endeavouring to set aside a decree of Court. I agree with the SheriffSubstitute that this contention is unsound. It is the will that is challenged, and the case of Leggat Brothers (1912 S.C. 230, 49 S. L.R, 189) has no application.

But although I hold that these contentions of the objector, as he is called in the process, cannot receive effect, it is a different and separate question whether the petitioner, whose right to be infeft as heir-atlaw is challenged by the production of the settlement cutting down his title, can in this process be allowed to challenge that settlement by way of exception, on the ground that being a "deed or writing" it can be dealt with as falling within the scope of rules 50 and 51 of the Sheriff Courts Act 1907. The Sheriff-Substitute has held that the will itself can be set aside in this process. In that I cannot agree with him. The purpose of allowing documents produced in a process to be set aside ope exceptionis was to prevent unnecessary complications and delays in procedure when adminicles of evidence were put forward and their genuineness or validity was challenged, as, for example, in a question where a claim for payment was met by the production of a receipt. Here the attack which is made is upon a document which is not merely a piece of evidence, but is the very foundation of the defence set up by the objector to the petitioner's being declared infeft. If allowed and successful it would not and could not be res judicata in other proceedings. That being so, it is evident that the rules of the Act, which were intended to simplify procedure and prevent delays, might and indeed would, if applied to the setting aside of the settlement in this particular proceeding, lead to complication, trouble, and expense rather than to the facilitating of procedure.

The contention of the petitioner here would practically set aside the law by which reduction is not competent in the Sheriff Court, for it is plain enough that if the contention to which the SheriffSubstitute has given effect were sound, every debtor, when sued by an executor, could have a trial for setting aside the executor's title, and practically there might be a succession of inquiries in different sheriffdoms. It is, I think, plain that no

v. Donald

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such thing was intended by the Legislature, and although the rule has been in operation for nearly half a century no such thing has ever occurred.

In my opinion the law by which documents may be set aside ope exceptionis in the course of proceedings, and which has been most beneficial in its operation, was never intended and is not in the enactments so expressed as to apply to a document forming the basis of a party's alleged right of action or the basis of a defence against an attack on title, in neither of which cases could a decision on exception have any effect beyond the then proceeding litigation. It could not invalidate the document. The statutory change in the law was intended to enable a judge, even in the Inferior Court, to take out of the way what might be brought forward in a process, so as to exclude it from being of weight in the proceeding before him. The intention was to enable the judge to purge out what might be produced to affect his mind-if, for instance, it could be shown that the deed was not what it bore to be, or was invalid for want of formalities in signature, or vitiated by erasure. It was never intended to give the power to consider questions of weakness and facility in the case of a will or settlement, which would be setting up a different process inside a process-a course which would have the very opposite effect from the intention of the statute, namely, to simplify procedure.

It appears to me that the interlocutor of the Sheriff-Substitute should be recalled, and that procedure in the case should be sisted to admit of the petitioner, if so advised, taking proceedings in the proper Court to have the settlement in question brought to the test of reduction.

LORD SALVESEN-This is an application presented under the Titles to Land Act 1868 and the Conveyancing Act of 1874, in which the petitioner asks the Sheriff to find certain facts proved with regard to his relationship to the deceased Alexander Donald secundus, and that he is entitled to procure himself infeft in two heritable properties belonging to the deceased, but to which he had only a personal right. The petition was presented in the knowledge that the respondent is executornominate and general disponee of Alexander Donald secundus under a will dated 17th October 1911, which is ex facie regular, and that he had been confirmed as such by the Sheriff of the county of Dumbarton. The petitioner was fully aware that standing the will in question he has no title at all to present the petition, and accordingly he challenges the validity of the will in the present process. He makes averments which the Sheriff-Substitute has held to be relevant to the effect that at the date of executing the will the deceased was weak and facile, and that it was impetrated from him by the respondent. The interesting question of procedure is whether it is competent in a process of this kind to set aside the will so far as it constitutes a

bar to the granting of the crave of the petition. The Sheriff-Substitute has held, although with some hesitation, that it is competent, and has accordingly allowed parties a proof of their respective averments relative to the will dated 17th October 1911, the petitioner to lead. It is this judgment which has been brought under

review.

son-"

It was conceded by the petitioner's counsel that an action of reduction of a will cannot competently be brought in the Sheriff Court, but reliance is put upon rule 50 of the First Schedule to the Sheriff Courts (Scotland) Act 1907, which is in these terms-"When a deed or writing is founded on by any party in a cause all objections thereto may be stated and maintained by way of exception without the necessity of bringing a reduction thereof." This rule, which has the force of statute, only slightly differs from section 11 of the Sheriff Courts Act of 1877, the terms of which I quote for the purpose of compari-"When in any action competent in the Sheriff Court a deed or writing is founded on by either party, all objections thereto may be stated and maintained by way of exception without the necessity of bringing a reduction thereof." The argument for the petitioner to which the Sheriff-Substitute has given effect is that the will in question is a deed or writing," that the petition is a "cause" within the meaning of the rule, and that the will is founded on by a party in that cause. It is therefore maintained that the course which the Sheriff Substitute has sanctioned is expressly within rule 50, and that whatever inconvenience may result in any particular cause from the application of the rule the Act of Parliament must be given effect to.

The respondent's counsel argued that the petitioner was in effect trying to set aside the decree of confirmation, and that it was decided in the case of Leggat Brothers (1912 S.C. 230, 49 S. L. R. 189) that this is incompetent ope exceptionis, as a decree of Court is not a "deed or "writing" within the meaning of rule 50. I agree with the Sheriff-Substitute in rejecting this argument. What the petitioner is challenging is not the decree but the probative will on which it proceeds, and that a will regularly executed is a deed I think it is impossible to deny. Then again it was maintained that the rule applies only to actions in the ordinary Court of the Sheriff, and that a proceeding for completion of title is rot an action in the ordinary Court. On this point also I am against the respondent. The word "cause," although not defined by the statute, must, I think, be held to be equivalent to "action," and an action is defined as including every proceeding competent in the ordinary Sheriff Court. The very fact that rule 1 exempts petitions like the present from the provision that they shall be commenced by initial writ appears to me to imply that the procedure otherwise shall be regulated by the first schedule except in so far as it is prescribed by the statutes mentioned. No doubt it is