Right Hon. Lady Mary Montgomerie, &c. - Tinne - Robertson v. Rundell, Bridge, and Rundell, &c. - Lushingto - Kay - et e contra [1831] UKHL 5_WS_201

UKHL
Right Hon. Lady Mary Montgomerie, &c. - Tinne - Robertson v. Rundell, Bridge, and Rundell, &c. - Lushingto - Kay - et e contra
[1831] UKHL 5_WS_201 · 1825-04-15
Where a lady, as executrix qua relict, gratuitously undertook “the gradual payment and extinction” of the debts of her deceased husband, “by making payment and satisfaction” thereof out of her estate, chiefly by annual payments contemplated to be effected in five years, and after a term of years paid off the greater part of these debts, and in the interim made successive partial payments and adjustments of interest with some of the creditors to a considerable extent, but never paid any interest, arising subsequent to her husband's death, to a certain class of English creditors under bonds or bills; and the House of Lords having found, in a question with the creditors, that the estate was liable for the debts till “paid and extinguished,”—Held (affirming the judgment of the Court of Session), that the estate was liable to the creditors for the interest accruing on her husband's debts while unpaid, although it had cost her a much greater sacrifice of property to pay off the principal than she had any reason to expect at the date of granting the gratuitous obligation.The House of Lords having, in the leading question between these parties, (ante Vol. I. No. 14, where a full detail of the facts is given,) reversed, on the 15th April 1825, the judgment of the Court of Session, and found, “That under the commission bearing date the 16th day of July 1814, and the deed of obligation and assignation, bearing date the 10th day of October 1814, the said Commissioners are bound to apply the rents of the estates mentioned therein, after making payment of the sum therein mentioned to Lady Montgomerie, and of the other sums and expenses therein provided for, in discharge of the debts due from the late Lord Montgomerie, until thereby, and with the other funds mentioned in the foregoing instruments, the same debts shall be paid and extinguished. It is therefore ordered and adjudged, that so much of the said interlocutors complained of in the said appeal as is inconsistent with the above finding be and the same is hereby reversed; and it is further ordered, that the cause be remitted back to the Court of Session in Scotland, to do therein as shall be consistent with this judgment, and as shall be just.”Under a petition to apply the judgment, the creditors, besides payment of the principal, claimed interest on their debts, constituted or unconstituted, from the date of the arrangement. Lady Montgomerie, in order to obtain the unlimited administration of

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Much discussion occurred in the Court of Session, whether the payment of interest had been contemplated by the creditors or by Lady Montgomerie. The evidence on this point was very loose and inconclusive. In a number of cases interest had been paid to Scotch creditors rather peculiarly situated, but the English creditors had not been paid interest; neither did a report by an accountant, whether the calculations, on which Lady Montgomerie brought forward her original offer to the creditors, included interest upon the debts subsequent to Lord Montgomerie's death, or only the principal, give much light, although the reporter, at the same time that he stated that he had been unable to arrive at any certain conclusion, was of opinion that interest had not been taken into calculation at all. The creditors also claimed their whole expenses, including those which had been incurred in the House of Lords. The Lord Ordinary found, “That the claimants are entitled to be ranked upon the fund in medio for the interest due to them upon such debts as were constituted by bonds or bills; but that the claimants, who are all English creditors, are not entitled to interest upon the debts due to them by open account, which, it is admitted, do not bear interest by the law of England: Finds it admitted that the claimants have received payment of the principal sums due to them respectively in terms of the interim decree obtained by them on the 31st of May 1826; therefore, in this multiplepoinding ranks and prefers the following claimants, viz. Rundell, Bridge, and Rundell, &c. all of London, upon the fund in medio, for the interest upon the principal sums which were due to them respectively, as specified in the first article of this condescendence, until the said principal sums were either consigned by Lady Montgomerie in the Bank of the British Linen Company, or paid directly by her ladyship to the claimants themselves, under deduction of property tax while the same continued, and also of any sums paid to account of said interest, and decerns in the preference accordingly; reserving to the claimants who have been found entitled to interest to be heard upon the claims which they make for the difference between the interest allowed by

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Lady Montgomerie appealed on the merits; Rundell and Co. appealed as to expenses.Lady Montgomerie .—It is not disputed that by the law of Scotland interest is due upon almost every debt, and the exceptions only confirm the general rule. Neither is it pretended that, as administrating qua relict, or in executing the agreement which she gratuitously volunteered, there has been any negligence or mora on the appellant's part. The question is merely, whether, by the deed of agreement, obligation, &c., with her husband's creditors, she came under any obligation to pay interest on the debts which she assumed. Separately, and in combination, these documents show that she did not. Demanding payment of the full debt, and not merely the amount that five years' accumulation could raise, (knowing, as the creditors did, that the payment of the full debt, whether the accumulations reached that amount or not, never was in the contemplation of

Footnote

* 8 Shaw and Dunlop, No, 136.

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Lord Chancellor .—Yes. What you state as to interest has been long fixed by the case of ex parte Marlar, but it does not apply to the case of a bond; you do not there exclude the penalty.Tinney .—Still the respondent is trammelled by the legal meaning of the word “debt.” Here there are many creditors founding on bills and promissory notes; (we have nothing to do with the open accounts;—there is no pretence that interest is due on them;) now interest on bills and promissory notes is not a debt. If it were a debt it would be the ground of a petitioning creditor's debt in a commission of bankrupt, but it is incontestible

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Rundells, &c. —By the judgment of the House of Lords the appellant is bound to pay and extinguish the debts due by her husband to the respondents. The debts themselves are not disputed; they are constituted by bond or bill; but on debts so constituted interest accrues either ex contractu or ex lege, and in either view the appellant is liable. When soundly construed, the agreement and other writings which passed between the parties plainly imply that the debt, both principal and interest, was to be extinguished; but even had there been no such agreement there is nothing to take the case from the operation of the common law. Besides, the appellant has been utterly unsuccessful in explaining her conduct in paying some creditors interest, if the obligation had been merely to pay principal. No distinction was taken in the House of Lords between principal and interest, or rather, the terms of their Lordships' judgment necessarily imply that both constituted the debt, and per expressum the debt is ordained to be paid. That interest is not debt, and as the judgment of the House of Lords ordains the “debt,” without saying any thing else, to be extinguished, therefore interest is not included, is a mere subtlety. It may be quite true that in a commission of bankrupt in England, in cases not excepted by statute or otherwise, interest on debt is not proveable; but it is a most illogical conclusion, that therefore a debt undertaken by a Scotch person and by Scotch instruments, and ordained to be extinguished by a judgment of the House of Lords, sitting as a Scotch Court and deciding in a Scotch suit, is not to be considered to include what in almost the universal case is in Scotland regarded as its natural concomitant. Besides, this argument is bottomed on an act of parliament, which, neither in principle nor detail, is known in Scotland. As to expenses, the Court ought, under the circumstances of the case, to have awarded the respondents the whole expenses, both before and after the remit from the Lords.Lord Chancellor .— My Lords, in this case, which is one of considerable importance, I will state shortly the grounds on which

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“So far as the circumstances are at present known, in a statement and minute subscribed by me, of this date, and bearing reference hereto; providing always, that the same commissioners shall be bound to hold just count and reckoning to me for their respective transactions and intromissions in virtue hereof; and, lastly, I hereby declare that this commission shall endure and continue until the foresaid powers are accomplished, so far as concerns the payment and extinction of the foresaid debts.”
The word “foresaid,” the reference to the balance, and the words, “so far as the circumstances are at present known,” are applied to the words, “towards the extinction of the foresaid debts—an account and list of which is to be taken and made up by my said commissioners so soon as the same can be properly investigated,” (so soon as the same—that is, certain expenses—can be investigated,) “until those debts are fully paid and discharged.” Upon the whole, I lean to the opinion expressed in the year 1825 in this House; and that almost disposes of the present question; because, if interest is due upon these debts—upon the specialty debts—in England, and by the custom of merchants, upon promissory notes and bills of exchange, in Scotland as well as England, the question is only, Whether, the principal being disposed of in the former cause, the interest only remaining to be dealt with at the present time, that interest does not come within the scope and meaning of the obligation into which this lady, so honourably to herself, entered, and by which she engaged to pay? I am therefore of opinion that the Court below was right in giving the interest upon these particular kinds of debt. My Lords, I was greatly moved, certainly, by the argument pressed so ably upon the House by Mr. Tinney, and which was a view of the subject taken here for the first time; and I requested, upon that ground, that your Lordships would postpone the consideration till to day, that the counsel might apply themselves to that view;—they have confined themselves strictly to it, and have, in my opinion, displaced Mr. Tinney's position, and shown that it ought not to induce your Lordships to reverse the decision. Throughout the whole of the instruments are to be found the word “debts,” or some word equivalent. Then, says Mr. Tinney, the question is, Shall interest be given for those debts? This is strictly an English question; for it is by the creditors residing in England that the criterion is taken, and so laid down in Scotland. On all hands it is admitted, that the

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While I feel it my duty now to offer my humble advice to your Lordships to affirm the judgment, I shall not recommend that any thing should be said against the interlocutor refusing expenses. The conduct of this lady was above all praise. She has clearly made herself liable to payments which she was little aware of at the time. It is very likely she did not intend to bind herself to the extent to which this House, reversing the first judgment below, has held her liable; and it is quite clear that the amount goes very far beyond her calculations, so that she is placed in a situation of no little hardship. Upon these grounds, also, I should not advise your Lordships to allow any costs of this appeal.The House of Lords ordered and adjudged, That the interlocutors complained of be affirmed.Counsel: Appellant's ( Lady Montgomerie ) Authorities .—Marlar, 1 Atkyns, 150; Cameron, 2 Barn. & Ald. 305.Solicitors: Alexander Mundell, Moncreiff, Webster, and Thompson—Solicitors.