Catherine Munro - Jeffre - Lushingto - Sandford v. Drummond and Others - Brougha - Kea - Mille - Alison [1831] UKHL 5_WS_359

UKHL
Catherine Munro - Jeffre - Lushingto - Sandford v. Drummond and Others - Brougha - Kea - Mille - Alison
[1831] UKHL 5_WS_359
although the adjudication was not raised or decree obtained thereon until after the entail had been recorded.Held (affirming the judgment of the Court of Session) that an entailed estate held by an heir in possession under a strict entail, on which infeftment had followed in his favour, was liable to be adjudged for personal debt, contracted subsequent to the infeftment, but prior to the recording the entail,

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The case of Smollett, May 14, 1807, (Mor. Dec. App. 12. voce Tailzie,) was not shaken by, nor intended to be shaken by, the judgment in the House of Lords in the case of Agnew of Sheuchan, July 31, 1822.—(1 Shaw's App., page 320.)George Ross of Cromarty executed in 1783 a deed of entail, whereby, under the restrictions and limitations therein contained, he disponed the estate of Cromarty to the heirs-male of his own body, and their heirs-male; whom failing, to the heirs-female of his own body, and their heirs-male; whom failing, to his nephew uterine Alexander Gray, and his heirs-male; whom failing, to Jane Kirk, the entailer's sister, and the heirs-male or female of her body,—the eldest heir-female always succeeding without division, and excluding heirs-portioners; whom failing, over. The deed contains special prohibitions against alienation and contracting of debt; and the resolutive clause declares, that if the said heirs-male or female of the said George Ross's own body, or any of the said heirs of tailzie, shall do any thing in the contrary of these provisions, either by disposing of the said premises, or committing any crime or delict, or by contracting debts, or doing any other act or deed as above mentioned, either before or after his or their succession, under and by virtue of the said tailzie, the said acts and deeds used, and all and every one of them, shall not only be void and null in so far as shall concern the said lands, heritages, and estates, so as they shall not in any manner of way be affected therewith, to the prejudice of the said entail and the heirs entitled to succeed to the said tailzied estate; but also, the said contraveners being descended of the said George Ross's own body, for themselves allenarly, and all other contraveners for themselves, as well as for the descendants of their own bodies respectively, shall amit and forfeit their right and interest in the said lands, heritages, and others, and the same shall immediately devolve upon and pertain to the next heir of tailzie. No commission was granted for recording the entail; but, of the same date, he executed a trust deed in the English form, naming, among others, Alexander Gray and John Ogilvie, trustees, with instructions, out of unentailed funds conveyed to them, to pay off the debts affecting the Cromarty estate, and to record immediately the entail. The trustees accepted, and entered on the management under the trust, but did not record the entail.

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Upon the death of George Ross, in 1787, Alexander Gray took the name of Ross, and, as the first heir of entail under the deed, succeeded to the estate of Cromarty. He was infeft on the deed of entail; and the whole clauses, prohibitory, irritant, and resolutive, were inserted in the body of the sasine. Alexander Ross was a partner in the army agency house in London, Ross and Ogilvie, and contracted the following, among other, debts to Messrs. Drummond, bankers in London:—9,000 l . by promissory note bearing date in the year 1796, in the name of Ross and Ogilvie; 5,000 l . by a joint and several bond by Ross and Ogilvie in the same year; and 10,000 l . in the year 1798, also contained in a promissory note by Ross and Ogilvie. As collateral security of these sums, Ross and Ogilvie put in deposit with the Messrs. Drummond private bonds and exchequer bills to a large amount. In 1803, while these debts remained unextinguished except to a partial extent, and while they remained personal, the entail was recorded at the instance of one of the substitute heirs.In May 1805 a commission of bankruptcy issued against Ross and Ogilvie. In 1805 Messrs. Drummond, by an action in the Court of Session, constituted their debt against Alexander Ross, and thereafter, in 1806, obtained adjudication against the estate of Cromarty; the decree reserving all objections contra executionem. In 1820 Alexander Ross died without lawful issue. * In 1826 Catherine Munro, wife of Hugh Rose, and next heir of entail, raised action of reduction of the adjudication taken by the Messrs. Drummond. Several minor points were involved in the discussion which followed † ; but chiefly the pursuers, founding on the above statement, and particularly on the fact that the

Footnote

* 4 Wilson & Shaw, page 289.† In 1788 and 1800 Alexander Ross had executed heritable bonds over the estate of Cromarty for debts contracted by himself, in consequence of which Catherine Munro brought an action of irritancy against him, and in January 1805 obtained decree in absence. But the decree was kept open by representations, and ultimately proceedings on this point were allowed to sleep. Also, in the discussion under the action of reduction, the pursuer raised the objection of pluris petitio, but the question decided in the House of Lords was that stated in the text.

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Catherine Munro appealed.( Jeffrey ) for Appellant—The present question is of deep interest to the parties concerned, and of even greater importance to the law. It involves the first principles of entail law; at the same time it is simple in its nature, and capable of being presented in a very distinct view. It has been considered as ruled by the case of Smollet; but that decision was not appealed. It was not unanimous; it is single, and in its circumstances does not apply to the question here at issue.There the entail had not been recorded. The heir in possession contracted personal debt; then the entail was recorded. After his death the right heir made up titles to the estate, and served himself heir of entail to the contravener; then the creditor of the deceased heir adjudged the estate. The Court took this view of the question,—that, except as far as the heir is tied up by fetters, he holds in fee-simple. The persons who contract with him look to the record of tailzie, to ascertain in what character he holds the land, and what power he has over the land. They are entitled to rely on the record, and, not finding an entail of the land, are authorized to hold that they can deal

Footnote

† 6 Shaw and Dunlop, p. 945.

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The appellant relies on this great and important point, that, independent of legal principles of genuine equity, the statute 1685 affords an invulnerable protection to all estates, fenced as directed, against all attempts to carry them away for debts contracted by the person on whom the entail is binding. The statute, right or wrong, (we think rightly,) has rendered harmless all adjudications on debts contracted by any heir of entail bound by the entail. There is an immense waste of learning on the part of the respondents, in order to show that the estate is not protected against the entailer's debts; and it is clear that the estate is not (with certain exceptions). Heirs who succeed take titulo lucrativo, and necessarily represent the entailer. It is the statute 1685 which introduces the necessity of recording. Without a reference to the statute, to see what on this point is directed, the respondents have not a shadow of a case. It may be difficult to say whether the recording is an actual enjoinment; but, waiving that inquiry, it is enough to say, that the declarator of irritancy is directed primo loco and alone against contravening. Now, we say that the mere contraction of debt is not a contravention of the entail. If it were otherwise no heir of entail could run an account with a tradesman; he could not live according to the ordinary habits of society. But it is the contracting debt, whereby the estate may be evicted and carried away and adjudged, which the statute contemplated. The mere contraction of debt is not a contravention. It is admitted by the respondents, that, after the entail is recorded, debts contracted subsequently to the recording are not effectual against the estate;

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The statute says, whenever the injunctions are completed, then the entail is a bulwark against all eviction. It is admitted that the entail becomes so if the debts have been contracted after the recording; and why should it not have the same effect before the recording? If the statute is to have this effect upon all debts contracted after recording, of what consequence is it that some debts were personal before? Are we not covered sufficiently if we have the whole panoply of arms on us before the debts are made real? The previous contraction is no contravention. The statute is imperfect in common sense and principle if it did not mean to protect the estate from all debts, if not already made real. The object of the statute was to strike at voluntary conveyances, or allowing an adjudication to be led,

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Various views of the statute lead irresistibly to the same conclusion. The statute clearly had in view, in this enactment, both personal and real creditors; but it directs its injunctions only against the latter. It classes the creditors, and places the creditors whose claims are to be effectual along with singular successors,—“creditors, comprysers, adjudgers, and other singular successors whatsoever.” But singular successors are persons who have bargained for and purchased a right. They stand in contra-distinction to a mere general representative, who succeeds to a right, and takes on him the responsibility of his author. The singular successor has a single title—an onerous right acquired for a consideration; and here it is quite plain that the statute did not contemplate a mere personal right, but a right of the nature of a right vested in a compryser or adjudger. If the heir in possession contracts personal debt, but which debt has not been made real, and the next heir sues (on a valid ground) a contravention, and makes up titles, and records, we deny that there is any authority for holding that the personal creditors of the forfeited heir could claim the character of singular successors, and take the estate. We may here observe, that the argument in Smollet's case was not well treated. Great part of the reasoning by the creditors was founded on a fallacy,—a mere sophistical reading of the act,—that the person who dealt with the heir is to be protected, even if the heir be forfeited; but they carried this too far, for the clause founded on by them does not relate to recording, and it cannot in consistency

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Earl of Eldon .—Are you instructed to state, what has been the dealing out of Court, as to creditor and debtor, in consequence of this judgment; what has followed the decision of Smollet?Jeffrey .—Since that decision transactions have in several instances been entered into, in reliance on Smollet being well decided. I have been consulted, but I have always given my opinion that many doubts existed as to the soundness of the case.Earl of Eldon .—It would be proper for us to know how much our judgment, if a reversal, would be disturbing the practice and transactions of men, and how much we would not be disturbing.Jeffrey .—Speaking from my own experience, I have always found it doubted, whether Smollet's case was well decided, and the

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Brougham .—We shall soon show your Lordships the extent to which transactions have been gone into, and what has been the practice following that judgment.( Brougham )for Respondents.—This is an appeal of a solemn judgment, involving a point already decided by the cases of Grahame, Ferrier, and Smollet; cases which at the time received great and deliberate attention, which ever since have been uniformly acted upon, and repeatedly, and in very peculiar circumstances, sanctioned by the legislature. Under such circumstances we feel no apprehension of failing in satisfying this House that the judgment under appeal rests on sound and legal principles. Let us then take the case where it truly lies:—the consequences of the recording the entail after the debts were contracted, but before they were made real on the entailed estate. Much light will be thrown on the inquiry by attending to the principles which govern cases of this kind. 1. It is clear that wherever an owner of a landed estate, by contracting debts, becomes personally bound to the creditors, he gives to the creditors a right to proceed against that estate, which right they may make real and obligatory upon the estate. Until legal means are taken to tie up the owner, and prevent creditors contracting with him, the estate is a subject from which the debts can be recovered; and although a jus in re be not instantly created, yet, by measures to be adopted, the debts can be fastened on the land. 2. If an heir succeeds to an entailed estate, that heir represents his ancestor, and is liable to the creditors of that ancestor in every case, and to the whole extent of the claims, except in so far as the entail has effectually prohibited the ancestor from contracting debt. But if the entail has permitted or not effectually prohibited debt to be contracted by the ancestor, then the heir of entail is liable, in the same way as the ancestor would have been. We have stated the exception,—“unless effectually prohibited.” If he be not effectually prohibited, then, we repeat, that the next succeeding heir of entail becomes liable, and is liable. In the case of Reidhaugh, because the entail irritated the deed of contravention, but did not irritate the contravener's right, and left no effectual and absolute prohibition

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Then take the case of Phelp. There the substitute heir in possession was obliged to pay a predecessor's debt, because the entail had not been recorded. We have shown, that the case cited before afforded an instance where the same consequence followed from want of the contravener's right being resolved. The same principle was the foundation of both judgments. The case of Baillie confirms this doctrine. In short, if, where, through a defect in the fetters of the entail, the succeeding substitute is liable for the debts contracted by a predecessor, so ought a succeeding substitute, where the entail not having been recorded, the entail has not been perfected according as the statute enjoins. But the appellant says, that there is a class of creditors who, notwithstanding of the imperfection of an entail, cannot go against the estate, and that the respondent is one of that class. But the appellants, while they assume the existence of such a class as a principle, have not attempted to show us a warrant for such a distinction—for a distinction between one kind of debt and another, or between one kind of creditors and another,—nor would it be easy to discover such a warrant. In truth, the position is inconsistent with the principles of the law of Scotland applicable to cases of this kind, and unsupported by decision or dictum. Thus, for a moment, consider the kind of obligations against which the fetters of an entail are directed. The parties named are “creditors, comprysers, and adjudgers.” It is said, the creditor here named is an heritable creditor—a creditor who has by the process of law clothed himself with the character of compryser or adjudger, and therefore, the respondent being only

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( Jeffrey ) for Appellant, in reply.—When examined, the case of Grahame is not an authority for the respondents, worthy of being regarded in the light of a precedent sufficient to fix in our law a rule of law so important as the one attempted to be reared up; and even if the case of Ferrier were free from specialties, it only followed Smollet, and therefore cannot be held to be an authority for Smollet. But it has been contended that the rule is now fixed in our law, and that on the supposition that the rule was fixed, many interests and transactions have been created and concluded, all of which would be vacated if the present case were reversed; and in support of their averment reference has been made to several private statutes. Now, the first of these is dated in 1824, and in some of the cases, we don't know how many, the debts had ceased to be personal. Thus, in the sale of part of Raith's estate, a conveyance had been made to a trustee, and infeftment actually taken; but what sort of authority is this to set up against a single judgment, doubted by every lawyer, and held unsound by some of the ablest judges who ever

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One word more as to Smollet's case, although what we are about to observe may be gathered from our opening. The present case is, in its feature, totally different from Smollet's; for here the creditor is not like the creditor of the individual, as in Smollet's case, who knew that the debtor had no other funds than the entailed estate, but a creditor of a company. The very decree of constitution of the debt was taken against the company; nay, the documents of debt were not at the time a foundation for immediate diligence to follow upon. Even, therefore, if Smollet's case had been appealed and affirmed, it would not necessarily have decided the present case, and we now come for a judgment on a case which, if it resembles Smollet's, has only been decided once, and if it does not resemble Smollet's, is a point perfectly open. Again, we repeat that on the bench, at the bar, and by our ablest writers, the case of Smollet has not been regarded as an authority fixing this very important point. The very decision on the bench, and the known talents of the minority, are sufficient to create in every thinking mind the most serious doubts whether the same judgment would have been pronounced in the present day. It is quite right that we should adhere to precedent, but not to a bad one, where single. The sound view is, to stand by a series rerum judicatarum: but can that be described to be the situation of the decisions on this point? It was expected that Smollet's case would have been appealed, but minority, or some such reason, delayed the measure, and it was ultimately abandoned. We close our argument with calling the attention of the House to one point. The heirs substitutes know nothing of the contractions of debt by the heir in possession, and ought to be protected. But the creditors cannot be ignorant that they themselves are dealing with an heir of entail; are parting with their money; that the heir of entail is borrowing, and the next moment may record the entail. From the former, activity cannot be expected; the other is bound by every consideration of prudence to make his debts real; if he does not, he must suffer for his supineness, and has no reasonable ground of complaint that this penalty falls on him.

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Earl of Eldon .—When an entailed estate is sold at the instance of a creditor, the entail being defective, is there any evidence of what was done with the surplus money? If a debt be contracted, where debts are not effectually prohibited the heir in possession can be called on to pay. If that be ordered by decree of the Court, and the estate be sold, how do the Court deal with the price over the amount of debt? Is the money ordered to be laid out in the same way and to the same uses as before?Jeffrey , in answer, explained the case of Strathnaven.Earl of Eldon continued.—Much pains have been taken, in other cases which came before us, to show the difficulty of laying out the money, but the Court has never told us how they are to carry into effect the principle of jus crediti. No one can doubt that to some extent entails were good before 1685, but to what precise extent it may be difficult to say.Lord Lyndhurst .—My Lords, I am to move your Lordships for judgment in the case of Munro v. Drummond . This case was originally an action of reduction brought in the Courts of Scotland, for the purpose of reducing a decree of adjudication which had been pronounced in that Court. The Court of Session decided in favour of the defendants, and from that decision the pursuer has appealed to your Lordships' House; and the question is, whether the judgment of the Court below, substantially affirming the decree of adjudication, ought to be sustained. My Lords, the circumstances out of which this case originates are shortly these. George Ross was seised in fee of the estate of Cromarty in the year 1783. In that year he executed a deed of strict entail of that estate, by which he entailed the estate upon himself and the heirs of his body, and on default of such issue then upon his nephew uterine Alexander Gray, and the heirs-male of his body; whom failing, to Jean Kirk the entailer's neice, the pursuer's mother, and the heirs of her body; and upon failure of that issue then over. George Ross dying without leaving issue, Alexander Gray became entitled to the entailed estate, and in the year 1787, took infeftment of that estate, and changed his name from Alexander Gray to Alexander Ross. Alexander Ross, in the year 1820, died without male issue, in consequence of which the present appellant, Mrs. Munro, daughter of Jean Kirk, became entitled as next substitute under the deed of entail. My Lords, this is the nature of the estate. Alexander Ross, who took the estate under this deed of entail, in the year 1787, carrying on business at that time in partnership with John Ogilvy in London, as army agents, contracted a considerable debt with Messrs. Drummond,

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Footnote

* The Earl of Eldon.

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My Lords,it is unnecessary for me to trouble you with any observations upon the law of entail as it existed at common law in Scotland, because according to my view of the subject this case turns entirely on the construction of the statute 1685. My Lords, by that statute power was given to His Majesty's subjects in Scotland to entail their estates in certain forms, subject to certain restrictions; and those forms and those restrictions are distinctly and clearly pointed out in the statute; and it is declared in that statute, that those entails shall only be allowed in which irritant and resolutive clauses are inserted in the procuratories of resignation, and the charters, precepts, and instruments of seisin, and which are produced before the Lords of Session for the purpose of being recorded, and which are recorded in the manner stated in the act. It appears to me, that nothing can be more distinct than the language of the act in this respect, that those entails only are to be allowed which are executed, registered, and recorded according to the provisions and directions of the act. The act afterwards goes on to say, (for that is the construction which I put upon the act, and the construction which my noble and learned friend puts on the act,) that those regulations having been complied with, the entail shall “be real and effectual against their creditors, comprisers, adjudgers, and other singular successors whatsoever, whether by legal or conventional titles.” Some doubt has arisen with respect to the construction of those last words; and it is contended by the appellant, that the meaning is this: that they shall be binding on the creditors, whether they are comprisers or adjudgers, or other singular successors, by legal or conventional titles,” thereby excluding personal creditors. But my Lords, I apprehend that that is not the natural construction of the clause. The natural and obvious construction, as it appears to me, is this, that they are to be binding against creditors generally, and not only against creditors generally, but against those creditors who claim by comprising, adjudication, or such other creditors as come under the description of singular successors, whether by real or conventional titles. If then this be the construction which I put upon the act, and which the noble and learned Lord puts upon the act, it is binding upon personal creditors, provided the requisites of the act are complied with; and it follows, therefore, as a matter

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It is declared, by the Lords Spiritual and Temporal in Parliament assembled, That the registration of the deed of entail prior to the date of the decrees of constitution and adjudication does not, in this case, bar the claims of the creditors against the entailed estate in respect of debts contracted prior to such registration; and with this declaration it is ordered and adjudged, That this cause be remitted back to the First Division of the Court of Session in Scotland, to proceed therein as shall be just, and consistent with this declaration, it not being the intention of this House to give an opinion upon any other points arising between the said parties in this cause.Appellants' Authorities .—Grahame, 13th May 1795 (Mor. 15,439); Agnew, House of Lords, 31st July 1822 (1 S. Ap. Ca. 333); Creditors of Smollet, 14th May 1807 (F. C. 13,629, No. 279); Mackenzie on Taillies, vol. ii. p. 489; 3 Ersk. 8, 26; 1 Bell, p. 51; Ferrier, 10th December 1813 (F. C. xvii. 486, No. 131); Case of Sheuchan (1 Shaw's App. p. 356); Syme, 14th February 1801 (F. C.); Denham, Creditors of Carleton, 21st November 1753; 3 Ersk. 8,32;

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Solicitors: Richardson and Connell,— Brougton and White,— Solicitors.