William F. Home, Esq. of Billie, and David Milne, Esq. Judicial Factor on the Estate of Billie v. John Pringle, Trustee of the deceased William Pringle v. John Hunter and Others, Representatives of James Hunter deceased [1841] UKHL 2_Rob_384

UKHL

William F. Home, Esq. of Billie, and David Milne, Esq. Judicial Factor on the Estate of Billie v. John Pringle, Trustee of the deceased William Pringle v. John Hunter and Others, Representatives of James Hunter deceased

[1841] UKHL 2_Rob_384

William F. Home , Esq. of Billie, and David Milne , Esq. Judicial Factor on the Estate of Billie, Appellants v. John Pringle , Trustee of the deceased William Pringle, Respondent v. John Hunter and Others, Representatives of James Hunter deceased, Respondents

[ 22d June 1841 .]

Counsel: [ Sir F. Pollock — Knight Bruce .] [ Lord Advocate — Pemberton .]

[ Sir W. Follett — W. Buchanan .]

Subject_ Trust.—

The appointment by trustees of one of their number to be factor to the trust, is not a breach of trust, so as per se to make those appointing liable for the acts of the factor, as if the acts of a co-trustee, for which they would be liable; but will infer against those appointing a liability for the acts, as if those of their agent.

Subject_ Id.—

The mere fact of trustees allowing balances to remain in the hands of their factor at the annual settlement of his accounts, where there must necessarily have been current accounts between the trust and third parties, without any knowledge by the trustees of fraud, in contriving that the balances should be greater than necessary, will not infer against the trustees liability for the balance owing by the factor at the ultimate settlement.

Subject_ Id.—

General dealing between trustees and their factor held not to infer a liability by them for the balance upon the factor's accounts, lost to the trust by the factor's bankruptcy.

Subject_ Id.—

to the trust, incur any liability, in regard to the management of the trust, beyond that to which he was already subject qua trustee.

A trustee does not, by accepting the office of cashier

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Subject_ Id.—

Trustees ought not to have any allowance or salary in respect of offices held by them under the trust; but circumstances under which the House of Lords refused to disturb accounts, in which such allowances had been passed.

Subject_ Costs.—

Though affirming judgment, the House of Lords will not meddle with costs below, although the question may have been brought up by cross appeal.

Statement.

On 16th July, 1816, George Home executed a deed of settlement, by which he conveyed to David Renton, William Pringle, and John Renton, and such persons, as might afterwards be appointed by him, the lands of Billie and others, upon trust, to settle the lands by entail upon a series of heirs, (of whom the appellant was the institute,) after payment of debts and legacies, the former of which amounted to nearly L.100,000.

The powers given to the trustees were expressed in the following, among other clauses:—

accounts of his or their intromissions, during the period of the factor's accounts, and get the same examined and approved of by an accountant of character in Edinburgh; and if the accounts are approved of by the said accountant, such approbation is hereby declared to operate as a full exoneration of the said trustee or trustees, for their whole management during the currency of said account: Secundo, With power to the said David Renton, William Pringle, and John Renton, or other trustee or trustees acting for the time, either to compromise, transact, or agree, or to submit and refer, any questions that may arise betwixt them, and any other person or persons, touching the execution of the said trust; which transactions or submissions, with the decreet-arbitral to follow thereon, are hereby declared valid and sufficient, to all intents and purposes whatsoever: As also, with power to him and them to sue and insist in all actions that shall be found necessary for effectually answering the purposes of the said trust: It is hereby provided and declared, that in case any of the said three trustees should fail to accept, or that they should all die before the execution of the said trust-right, the same shall not thereby become void, but shall subsist, with the infeftments thereon, until all the ends, uses, and purposes thereof shall be fully completed; and it shall be competent and lawful for any of the said three trustees herein named, acting for the time, when he shall think it proper, to nominate and appoint, from time to time, such a succession of other trustees for executing the said trust as he shall think necessary; and which trustees, so to be named by the said acting trustee, shall be as fully invested in the right of the whole lands, and others hereby conveyed, and in all the powers hereby committed to the trustees before named, as if they had been expressly named and appointed trustees by the said deed, or as the said trustees herein named might and could have done had they lived, and continued to execute the trust hereby committed to them; with power also to the said acting trustee for the time, to appoint how many of the trustees, so to be named by him, shall be a quorum, in case he should think proper to name two or more persons to act together: As also, it is declared that the said David Renton, William Pringle, and John Renton, or other trustee or trustees named, or to be named, as aforesaid, shall noways be obliged to do diligence, otherwise than as he or they shall think fit; nor shall he or they be liable for omissions, but only each of them for himself, and his own actual and personal intromissions; nor shall they be farther liable for their factors, than that they shall be habit and repute responsible at the time of entering upon their office.”

“With power to name and remove factors, from time to time, with such powers, and liable to such diligence as the said trustee or trustees shall think proper, and to give such salaries to the factors, and gratifications to any other persons who shall be employed in relation to the premises, as the said trustee or trustees shall think expedient at the time, and to settle accounts annually with the said factors, and upon payment of what shall be found due, to exoner and discharge them of their intromissions and management; and within six months after each clearance with the factors, the said David Renton, William Pringle, and John Renton, or other trustee or trustees for the time, shall make up the

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Such of the purposes of the trust as it is necessary to notice, were expressed in these terms:—

to the management of the present trust, and of the yearly sum of L.100 sterling, as a gratification to the acting trustee or trustees, for their trouble o in the management,—it being hereby declared; that in case there shall be at any lime more than one acting trustee, the said yearly sum of L.100 sterling shall be equally divided among the said acting trustees.”

“For payment of all the public burdens affecting the estates hereby conveyed, and the due and lawful interest of all bonded debts, or other debts due by the said George Home, and of all necessary charges and expenses, to be disbursed by the said trustees, or their factors, in executing the said trust-right; which charges and expenses are to be taken on the honest word of the acting trustee or trustees for the time, and not to be subject to challenge on any account or pretext whatever; and for payment of such salaries and gratifications as the said trustees shall give to factors, lawyers, arbiters, or others, who shall be employed with relation

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On the 6th day of August, 1819, George Home executed a supplementary trust-disposition, by which he revoked the nomination of David Renton and John Renton, and conveyed the lands of new to William Molle, William Pringle, and James Hunter, upon the trusts of the original deed:—

“Declaring that a majority of my said trustees, accepting and surviving, shall at all times form a quorum, for executing the purposes of the said trust, ratifying and approving the said nomination; and declaring that the said William Molle, William Pringle, and James Hunter, as trustees foresaid, shall have the same powers, and be subject to the same declarations, conditions, provisions, and reservations, as if named and appointed as such, in gremio, of the foresaid trust-right, to which this supplementary trust-deed is declared to have an express relation, excepting in so far as hereby altered.”

On the same day, 6th August, 1819, George Home, by his last will, reciting the two deeds of 16th July, 1816, and 6th August, 1819, bequeathed his whole moveable estate to Molle, Pringle, and Hunter, as trustees, for payment of certain legacies and annuities.

The maker of these instruments died on 10th February, 1820, and thereupon Molle, Pringle, and Hunter, accepted of the office of trustees, and entered upon the

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On the 10th of March, 1820, Molle and Pringle wrote from Edinburgh to Hunter, and also to the appellant, intimating that the first meeting of the trustees would be held on the 16th of that month. A meeting was accordingly held on that day, and was attended by Molle, Pringle, and the appellant: Hunter being absent, in consequence of communications from the appellant, inducing him to think that he, the appellant, would not attend, and that he would procure the meeting to be adjourned to a farther day.

At this meeting the appellant proposed himself to be factor for the trustees. Molle and Pringle did not assent to this, but appointed Molle to be factor, with a salary of L. 180 a year; and on the 22d March, 1820, they executed a formal deed of factory in his favour. They likewise appointed Pringle to be cashier of the trust, with a salary of L.50 a year; Messrs Molle, Turnbull, and Brown, Writers to the Signet, a firm of which Molle was the chief partner, to be the law agents of the trust in Edinburgh; Hunter to be the agent in the country; and Brown, the nephew of one of the members of the firm of Molle, Turnbull, and Brown, to be the accountant. At the date of these appointments, Molle was possessed of considerable landed property and respectable practice in his profession, and he was otherwise of undoubted credit and respectability.

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William Foreman Home, as first heir of entail of the trust lands, brought action against John Pringle, the trust-disponee and executor of William Pringle and his legal representatives; John Hunter, and the other representatives of James Hunter; and William Molle, and Alexander Low, trustee on his sequestrated estate, — setting forth the deeds executed by George Home; that Molle had never been required to find caution for his intromissions as factor; that his accounts had not been annually settled, but large balances had been retained by him and applied to his own purposes, with the knowledge of his co-trustees, and more especially of Pringle, as cashier; that notwithstanding of these defalcations, Molle was allowed to retain his office of factor; that with the knowledge and connivance of Pringle and Hunter, the grossest system of malversation and neglect had prevailed in every department of the trust; that Pringle and Hunter, after endeavouring to obtain payment of the balances owing from Molle, at last took alarm on their own account, and on the 29th of October, 1830, recalled the factory in his favour; that on the following day, Molle intimated his bankruptcy, and admitted that the final balance owing from him amounted to L.5729, after taking credit for about L.11,000 paid for salaries and other charges; that these charges were illegal, and, if disallowed, would thus make the balance owing to the estate amount to L.16,729; that in December, 1830, James Hunter threatened proceedings against William Pringle, to make him liable for Molle's defalcations, in respect of his omission as cashier to make him regularly account; that in consequence of these proceedings, Pringle, on 7th January, 1831, denuded of the trust in favour of Hunter, — Molle having previously taken the

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Upon this narrative the summons concluded for payment of the admitted balance of L.5749, and also of L.11,000, as improperly taken credit for; that it should be found that the trustees were not entitled to make any charge for trouble, as cashiers, factors, or agents, and that they had forfeited all claim to the allowance of L.100 per annum, given by the trust-disposition; that the defenders should be ordained to pay L.10,000 for malversations committed by the trustees, and to hold count and reckoning of their intromissions since the commencement of the trust, and to pay whatever balance might appear by the accounting to be owing to the estate.

The gross rental of the trust lands during the management of the trustees, varied from L.7234, 11s. 6d., the amount in the year 1820, to L.7900, 12s. Id., the amount in the year 1829, giving an average of L.7635, 19s. 7d. This revenue was receivable from seventy-nine tenants, and one hundred and eight feuars. The personal funds left by the truster amounted to L.19,520, 9s. 6d.

The debts and legacies left by the truster, for payment of which the trust estate was made applicable, amounted to L.87,987, 11s. 11d.; and in respect of these, annual payments of interest and otherwise had to be made to thirty creditors, twenty-two annuitants, and seventeen legatees.

With regard to the averment in the summons, that Molle's accounts as factor had not been annually settled, and that large balances had been retained by him, the evidence shewed, that the accounts of Molle as factor,

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Accounts transmitted to the Auditor.

Dates of Auditor's Reports.

1820.

1821, May 1.

1822, July 30.

1821.

1822, July 19.

1824, Nov. 30.

1822.

1823, Aug. 7.

1824, Dec. 4.

1823.

1824, July 5.

1825, April 13.

1824.

1825, April 22.

1826, Feb. 3.

1825.

1826, July 28.

1827, Jan. 15.

1826.

1827, July 14.

1830, August 30.

1827.

1828, July 17.

1828.

1829, prior to Aug.

1829.

1830, April 10.

1830.

1831, Jan. 25.

1832, Jan. 9.

The delay in reporting upon the accounts, as far as appeared, arose from the inability of the accountant to overtake them by other engagements. In regard to the accounts of the factor and cashier, the balances upon them in each year appeared to be as follows:—

Dates of Balances.

Balances due to Mr Pringle.

Balances due by Mr Pringle.

Balances due to Mr Molle.

Balances due by Mr Molle.

£ s. d.

1820, Dec. 31,

119 4 7

906 3 4 3

1821,

18 18 l 3

247 17 0 10

1822,

102 10 8 9

983 9 2 8

1823,

83 14 6 9

764 9 7 7

1824,

0 7 9 9

910 1 1 3

1825,

79 1 9 9

2258 16 6 8

1826,

3 5 8 3

1970 2 0 2

1827,

32 3 4 3

1851 18 2 3

1828,

79 11 1 3

2172 17 9 11

1829,

2 1 0 6

1634 3 0 9

1830, Nov. 2,

3775 1 11

— Dec. 31,

59 7 8 6

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In Molle's accounts, made up to 31st December, 1827, he debited himself with L.1970, 2s., the balance on the previous year's accounts, and with interest at four per cent; and in each subsequent year's account, the balance of the previous year, with interest, was debited to him.

With regard to the averment in the summons, as to malversation and neglect of the trust, this was limited to a charge of improper abatements of rent having been allowed to tenants, and the facts as to this were, that the trustees had taken the opinion of land valuators as to the rents for which the lands were let, in consequence of claims of abatement having been made by some of the tenants, and, acting upon the opinions of these persons, had given abatements, amounting in the whole, during ten years, from 1819 to 1829, to L.3319, 16s. 1d. giving an annual average of L.331, 19s. 7d.

The position of the trustees individually, in regard to the matters charged against them, was this, —

The meeting of the trustees were, with few exceptions, held at Edinburgh, where Molle and Pringle chiefly resided, and they were seldom attended by Hunter, his cotrustees having refused to put the trust to the expense of his journies to Edinburgh, unless to attend an annual meeting, at the time at which the accountant's reports should be given in. Accordingly, few of the meetings were intimated to Hunter beforehand, unless business of particular importance was intended to be done, but copies of the minutes of the meetings appeared to have been sent to him from time to time. This arrangement was made subject of complaint by Hunter, in a letter addressed to the agents of the trust, on 9th January, 1821, in these terms:—

taken place under the designation of Mr Home's trustees, without my receiving the most remote notice of it. This I was certainly entitled to have had notified, though I could not have conveniently been present.”

“I was surprised to find by your letter of the 22d ultimo, that any meeting had

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That letter produced an answer from Molle and Pringle on 15th January, 1821, in these terms:—

“With regard to your not having had intimation of the last meeting, we considered it unnecessary, because we could not think of bringing you to town at the expense of the trust, and we could not suppose that you would have come at your own expense. The business must evidently be done in Edinburgh, where the majority of the trustees reside; and it is only on very extraordinary occasions, that we can ever think of troubling you to come from Dunse, at the expense of the trust.”

On the 10th of April, 1822, the agent of the trustees, in a letter to Hunter, said:—

“I am desired to say, that if you would inform us previously of your intention of being in town at any time, a meeting of the trustees would be called on such an occasion.”

To this Hunter replied on the 12th April, 1822:—

such notification should be given, that I may know, otherwise than from copies of minutes, what is going forth in the trust. I shall, however, attend to what you have been desired to state, and give intimation when I am to be in Edinburgh on other occasions, that subordinate meetings may then be held.”

“Yesterday's post brought me your letter of the 10th, accompanied by copy minutes of Billie trustees. If it could be so arranged as to have two general meetings in the year, I would wish to be present at both of them. It was in the view of Mr Home, that the three trustees named by him should convene at any meeting to be held relative to his affairs; and though I am advised by unexceptionable authority, that meetings held without due notification being given to me, are irregular, I have no wish to have any altercation thereanent. It is, however, fair and reasonable that

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On the 28th May, 1822, Molle and Pringle wrote Hunter in these terms:—

“Dear Sir, Mr Turnbull communicated to us your letter to him of the 12th ulto. We shall certainly give you notice of our meetings, so that you may have it in your power to attend; but we do not consider ourselves authorized to charge the trust-funds with your expenses for coming to town more than once a-year, when L.5 may be allowed. This annual meeting, we conceive, should take place when the accountant gives in his annual report, and when the trustees must arrange matters for the succeeding year.”

Here the matter was allowed to rest.

The means of knowledge by Molle's co-trustees, in regard to the balances retained by him, and the conduct pursued by them upon this subject, appeared to be thus:—

1st, In regard to their means of knowledge, the accounts of the different officers of the trust were transmitted to the accountant for audit, and were reported on by him, as shewn in the table which has been already given.

In the notes which were issued by the accountant in April, 1825, upon the accounts ending at 31st December, 1823, there were the following remarks:—

And there had previously fallen due, of the rents of crop 1823, the following amounts, part of which, it is presumed, must have been collected before the end of the year, viz. —

“There is a balance in the factor's hands, at 31st December, 1823, on the rendered account, of L.760 8 0 3 ⁄ 4

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Payable at Whitsunday, 1823,

L.220 10 0

Lammas,

475 0 0

Martinmas,

1096 18 7

Christmas,

383 7 1

L.2175 15 8

The factor should not retain in his hands more than sufficient to answer the current demands of the estate. Under this necessary deduction, the rents should be paid over to the cashier as actually received, and, of course, no balance should appear in ordinary cases, in the factor's hands, at the end of the year.”

So in the notes issued in February, 1826, upon the accounts ending 31st December, 1824, the accountant observed:—

“The auditor has formerly had occasion to remark to the progressive state of the factor's payments to the cashier, and to the extent of the balances which appeared in his hands at the end of the yearly accounts. And from the factor's answers to the auditor's last notes on the subject, he anticipates that there will be no more occasion for remark in future. There is no improvement in the point alluded to in the accounts for 1824, which, it is presumed, has arisen from the last notes not having been communicated in sufficient time to produce their due effect.”

Molle put an answer upon the notes in these words,— “To be attended to.”

In the notes issued in January, 1827, upon the accounts ending 31st December, 1825, there was this entry:—

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“ Molle's Accounts .

Credited payments to the Cashier.

31st December, 1825,

L.260

Do. Do.

1000

L.1260

These payments were not made to the cashier till the 3d and 5th of January, 1826, and of course they cannot pass through the report for 1825, without deranging the bank account, and producing confusion. They will, however, be noticed at the end of the factor's account. With reference to former remarks, it is observed that the factor's balance has increased a little this year. The auditor proposes to have a meeting with the factor on this subject.”

In the notes issued in August, 1830, the accountant observed:—

course, due effect. The auditor considers it indispensable that the rents shall be made over to the cashier as received, so as no balance may lie in the factor's hands more than is required for the current expenditure of the estate. And in reference to such an arrangement, he is of opinion, that a progressive statement of the receipts and payments ought to be exhibited with the annual accounts, as long ago suggested by him. In the meantime, it is proposed to debit the factor with interest at four per cent on the balances, from 31st December, 1826.”

“Crops 1826 and 1827.

I.—Account for crop 1826.

The auditor had formerly occasion, more than once, to advert to the state of the balances on the factor's accounts; and the situation of those on the accounts ending December, 1827, and December, 1828, compels him to resume the subject. When the accounts ending December, 1826, were under audit, the factor suggested that interest at a fair rate might be added to the balance against him, and this will no doubt be so far satisfactory; but the auditor cannot admit this to be a correct mode of accounting;—besides, it is evident from inspection of the payments to the cashier, that very considerable balances have been retained by the factor throughout the year, which are lessened by payments made in December, and to this extent the statement of interest has not, of

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2d, The conduct of the trustees, in regard to requiring payment of the balances owing by Molle from time to time, appeared from the following correspondence:—

On 26th April, 1828, Brown, the accountant, wrote Molle on these terms:—

“I beg to mention that I have now completed my audit of the Billie trust-accounts for the year 1826, and prepared the usual states; but, before closing them, it will be necessary that some arrangement be come to for the settlement of the balance on your accounts. It occurs to me, that the best plan is for you now to pay up the balance with interest, which I can state in a note in my report. Feeling the responsible and delicate situation in which I am placed, I could not docquet the accounts, as approving of them, till a settlement takes place.”

On the 13th May, 1828, Pringle wrote Molle:—

following, when you know heavy demands will be made upon me for the interests of the estate.”

“I expected that you would have put me in cash for L.1000 by this time, in addition to the same sum I formerly received. I called upon you this forenoon, but unluckily missed you. I therefore hope, and request that the above sum be paid up into my hands some time to-morrow, the term-day being the day

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On the 11th June, 1828, Brown wrote Pringle in these terms:—

“I beg to mention, that my report on Billie trust-accounts for the year 1826, is extended, and ready to be docqueted whenever a settlement of the factory balance is provided for. In the meantime, as my part of the work is done, I hope you will have no objection to pay the fees, for which the bearer has a receipt.

I think it right to subjoin the copy of a letter addressed by me to the factor, on the 26th April last, with reference to his balance.”

On the same day, Pringle again wrote Molle:—

on your own account, as well as in reference to my official duty as a trustee.”

“I received a letter from Mr James Brown, the trust-account's auditor, a copy of which I subjoin to this. You see the accounts for the year 1826 are ready to be docqueted whenever the balance due by you upon these accounts is settled. This has been once and again urged upon you, and it is absolutely and indispensably necessary that it be done, and that within a short time. In the situation in which I stand, I cannot possibly agree to let the matter lie longer over unsettled; it is not consistent with my duty that I should. Not only must the balance above referred to be settled and paid up, but I must be furnished with a note from you of the precise sum in your hands, in the view that this also may forthwith be made a part of the tangible trust-funds, to be applied for the purposes of the trust; and I beg leave to repeat what I formerly stated, that neither you as factor, nor I as cashier, ought to retain any of the trust-money in our hands for any length of time. I must request your particular attention to what I have stated. I do so

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On the 15th September following, Pringle acknowledged to Molle the receipt of L.1000, but pressed him for a farther payment before the expiration of the month, and at the same time told him, that at the next meeting of the trustees, he would insist upon immediate payment of all that was owing.

On the 5th February, 1829, Hunter wrote Molle in these terms:—

“I will thank you to favour me with a sight of those reports in the Billie trust which Mr Brown has already completed.”

At this time Molle was absent in England, and the request to see the reports went off upon an answer by Molle, that on his return home he meant to have a meeting of the trustees.

A meeting was accordingly held on 4th March, 1829, and was attended by the three trustees; the entry in the minutes of the meeting upon the subject of Molle's accounts, was,— “The agents reported that the factor and cashier's accounts up to 31st December, 1827, had been laid before the accountant. The accounts for 1828 will also be soon made out, and laid before the accountant.”

On the 18th March, 1829, Brown wrote Pringle,— “I propose now to docquet the report on the accounts, ending 31st December, 1826. The balance thereon of L.1971 will be introduced into the subsequent year's account, with interest; and a note will be inserted in the account 1826, stating that the balance was carried forward, and settled with interest in March, 1829, or something to this effect. I presume the fact warrants such a statement.”

About this period private communications took place between the appellant and Hunter, in regard to the

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“I have never yet seen any of the yearly reports of the accountant, and I certainly feel most anxious to peruse them, to note the progress of the trust, which I fear is extremely tardy, if not stationary.”

This letter was followed by very urgent letters to the same effect, addressed by Hunter, sometimes to Molle, and at other times to Pringle and Brown. At last, on 21st January, 1830, Brown wrote Hunter in these terms:—

“With regard to the Billie trust, I must own that I am to blame for so long keeping in my hands the reports on the affairs. I am now using them, and probably you will allow me to keep them in preparing a general view of the management, for the annual meeting of the trustees, to be held next month, and at that time the whole may be delivered to you. I hope that this arrangement may suit you, as it will greatly increase the trouble of preparing the view alluded to, if I must have recourse to the drafts instead of the extended reports.”

Mr Hunter acceded to the request in this letter.

On the 10th March, 1830, Molle wrote Brown:—

“I think that Mr Pringle and I had better make out our accounts to 31st December, 1829, before you make your report of the progress of the trust.

I know Mr Pringle has paid from L.4000, to L.5000, of debt during last year, and it is certainly desirable that your report should be brought down to as late a period as possible. I have already begun these accounts.”

On the 10th April, Pringle wrote Brown thus:—

being delivered you; but I happened to see Mr Molle early in the forenoon, who told me that he was busy in preparing his factory accounts, also to be laid o before you, and expects to have them ready in a few days. He therefore requested that I would not lodge my accounts till his also were completed, so that they might be all before you at one and the same time. In the circumstances of the case, I thought there was no harm in doing so. I should wish, however, that when his accounts appear, you would drop him a note, desiring him to hand you a precise state of the balance in his hands, brought up to the present time, so as you may have a complete view of matters at making out your report upon the trust-affairs. I have made out a note to that effect, regarding my own transactions, and put it up alongst with the account.”

“I had prepared my accounts 1829, and yesterday put them up with the vouchers for the purpose of their

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On the 30th April, 1830, Molle sent Brown his accounts for the year ending 31st December preceding.

On the 1st of June, 1830, Brown wrote Molle:—

“I have been expecting your answers to my notes on your factory accounts with Billie trustees, crops 1826 and 1827, the reports on which I cannot close without them. I will be obliged by your supplying them without delay, as I am very much pressed, indeed, to furnish not only those reports, but my report on the trust-management since its commencement. In trans-mining his accounts for last year, Mr Pringle has accompanied them with a note, shewing the balance on his intromissions to the day on which the accounts were rendered, and he suggests that a similar note should be supplied by you, shewing the present balance on the factory accounts. Have the goodness to supply this with the answers.”

Oil the 4th June, 1830, Molle wrote Brown:—

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“I send you my answers to your notes, with sundry documents called for.”

On 18th June, 1830, Brown wrote Hunter:—

“I have prepared my report on the Billie trust-accounts for the year ending 31st December last, and will immediately draw up the general reports, formerly ordered, on the whole trust-management since its commencement, so as the fullest information may be before the trustees at their annual meeting, which I understand it is proposed to hold in about a fortnight.”

On the 29th July, 1830, Hunter wrote Molle:—

“I am glad to learn there is now to be a meeting in regard to these affairs, and that it is proposed to be held in the country. It should not again be so long postponed, nor does it appear to me that the want of Mr Brown's report was a sufficient reason for this. Be so good as give me a few days' notice of the period you and Mr Pringle may fix for the meeting, that I may be at home; and if, in the interval, you could furnish me with a note of the different matters likely to come before us, it would be very satisfactory.”

On the 7th September, 1830, Pringle wrote Hunter:—

funds belonging to the trustees, shewing the amount of debt at that period, and that there, has been a decrease of debt in the intervening period betwixt 1820 and 1829, to the extent of L.8075, odds.

“I lately received a letter from Mr Brown, along with which he transmitted me one from you to me, of date 31st ult. in which you mention that you had completed your intended report respecting the state of the Billie trust affairs, and brought them down to 31st December, 1829. Mr Brown, (to whom you sent the states,) handed me an excerpt from the general view of matters which you have exhibited to the trustees, and which shews the sum of debts, &c. as at Whitsunday, 1820, soon after the commencement of the trust, the balance of the debts and claims as at 31st December, 1829; and after application of certain

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I observe that you estimate the personal funds as applicable to the debts due, both as at Whitsunday, 1820, and December, 1829, at so much; and, in like manner, you take an annual sinking fund, commencing at Whitsunday, 1820, at a particular sum, and the accumulation thereof for nine years at 4 per cent, compound interest, at a very large sum. This may be all perfectly proper and right, as, having not yet seen the states themselves particularizing matters, I cannot form any thing of a correct judgment. I would only just beg leave to say, that I could have wished that the details of the trust, and of what has actually been done, of the receipts of rents, abatements made to the tenants, arrears severally due by them, and precise yearly payments made by the trustees, whether of interests, annuities or a variety of other expenditures, had been simply pointed out; I mean a statement of things just as they actually appear, and what the result upon the whole in the first place; and afterwards pointing out any plan that might appear to be more proper for conducting the affairs of the trust, than the mode that has hitherto been adopted. Most likely all this and more may appear to be done by the view of things now given. Very great pains, I am sure, must have been taken in framing the report, owing to its great length.”

On the 21st September, 1830, a meeting of the trustees was held in the house of Hunter, to whom the accountant's reports had been previously sent, but being from home when they were sent, he had not, according

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The minutes of the meeting bore, that the factor and cashier's accounts, up to 31st December, 1829, had been audited by the accountant; and that “he had completed his view of the progress of the trust, from its commencement to 31st December last; which the meeting desire the agents to communicate to Mr W. F. Home, the heir of entail, for his information.”

On the 27th September, 1830, Pringle wrote Hunter thus:—

was made, I believe, (though not distinctly stated to be so,) toward reduction of the above-mentioned balance. I own that I was a good deal pleased that o this was done, from whatever quarter it was procured; in consequence thereof, there remained some hundred pounds to be accounted for; and I hoped and flattered myself, that this sum also would not be long being made furthcoming, as by far the greatest part of the debt had been got rid of; and that, after what I had said upon the subject, and expressed myself in no ambiguous terms, matters would thereafter go on in their proper channel. In this, however, I have been disappointed; and notwithstanding my repeated remonstrances to have the balance, which I vexatiously saw again increasing, paid up many months ago, I found I was quite unable to effect it, notwithstanding many promises that it should be so. I am most sorry to state, that the sums constituting the present balance of L. 1684, due by the factor to the trust-estate, have been most unguardedly applied to purposes altogether foreign to what they should have been. Upon this there cannot remain a doubt. At same time, I must say, that I entertain as little doubt, that when Mr Molle did so, upon different occasions, he just took the readiest, whether it belonged to one or another, or was part of his own funds; and if it was not, he just satisfied himself, that out of these funds, when they came round, he would be able to return and restore what had been most inconsiderately and rashly misapplied. Unfortunately, however, that day has not yet arrived. I do not, in the smallest degree, justify his conduct; on the contrary, it has my most decided disapprobation; and I told him that nothing could possibly vindicate or excuse it. Unquestionably a factor has no right or title to retain any considerable sum in his hands, no more than to answer exigencies, say L. 150, or L.200 he has a paid and certain stipulated allowance for his factory trouble, and he has nothing farther to demand. All monies, therefore, received by him ought to be handed over to the trustees' cashier, and by him applied for the benefit of the trust estate, in the best possible manner. Having got this length, I find that I must endeavour to contract what I have farther to say within pretty narrow bounds. I do not see any necessity in our transmitting a joint letter to Mr Molle upon the subject before me; my idea is, that you may write him yourself as a trustee, and state to him, that after hearing what was expressed by me at the meeting on Tuesday last, and after examining the accountant's report, and taking into full consideration the large balance ascertained to be due by him, it appeared to be indispensably incumbent upon him, in his capacity of factor, to pay up that balance, with interest, since December, 1829; and in order to make it more easy and convenient for him, that you had no objection that he pay it by two instalments, Martinmas and Candlemas next; L.600 at the first of these terms, (as being only six weeks from this time,) and the remainder at the other term; and that unless this was done, and the first instalment made good, satisfactory security behoved to be required for the sum then falling due, and for the subsequent instalment, with interest till payment; and should this not be obtained, and as matters could not be allowed to go on longer in the way that they have been with regard to the factor's payments, some other mode must necessarily be adopted, to render the management more efficient, and the rents more regularly and punctually paid by the factor, upon their coming into his hands. If you incline to adopt those ideas I have thrown out, let me know, or say what else may, in your opinion, be thought proper to be done. I have a great personal regard for Mr Molle; and it distresses me much to think that the measures which I have now proposed, or something similar, may be thought necessary; but, in the circumstances in which I am placed, I must put out of the question my own personal feelings and sentiments of regard, when these interfere with, or come into competition with, my duties in society. In addition to what I mentioned, I would also strongly recommend, (as I stated at the meeting,) that it be made a point that the factor should, at the end of every three months, render to the cashier a particular note of the sums he has received within that period, also of his disbursements, and forthwith pay over what balance is in his hands, with the exception of L.150, or so, to answer contingent demands; and that he should lodge a note immediately of the precise sums so received and delivered since December, 1829, when the balance duo by him was struck, and that what sums may appear to be due in the intervening period should be added to that balance, and included in the first instalment to be exacted at Martinmas, or divided betwixt it and the other; and that the afterstates should commence from the 1st of October, and go on progressively every three months. The state of each (year's) arrears due by each tenant should, as you observe, be also regularly handed alongst with the other. I intended to have despatched this on the day of its date, but I was out of town in course of the forenoon, and had not time to complete it in course of the evening. I leave this on Thursday, and go to Knowsouth, the Sheriff's residence, where I shall remain till Sunday, when I intend being in Jedburgh, and to remain there till the week following, say 14th proximo, when I mean to make my departure for Edinburgh. Post town for Knowsouth, ‘Jed-burgh.’

“Dear Sir, — I yesterday had yours of the 24th. I can assure you, that the circumstance of the balance due by Mr Molle, the factor on the Billie trust-estate, is fully as distressing a circumstance to me, as it can possibly be to you. Neither that balance, nor a former one, I mean as it stood some time ago, and which amounted to about L.2000, I think, escaped my observation, when directed to it. I urged Mr Molle again and again, and pressed it upon him, in the strongest manner, by letter, to have it paid up. Before I say any thing farther, I may lay before you a note of the sums I received from Mr Molle, annis 1828, 1829, and 1830, so far as it is come. This I do from my note-book, which I have with me; and though I cannot positively vouch the accuracy of it, not having my books before me, it would appear to stand thus:—

Sums received in 1828,

L.3613 14 0

Do. Do. 1829,

6706 2 0

Do. Do. 1830, as at September,

4339 18 0

In the payments 1829, L.1500 was paid on 13th March, that year. I had previously stated the necessity of paying up the balance of L.2000, or thereabout, in the factor's hands, and the above payment

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P.S.—I need hardly say, that what I have stated must be received by you in perfect secrecy, and communicated to no individual whatever; of course the letter not left exposed to inspection, it being a most vexatious and distressful matter. Of course, you will be upon your guard not to make it to be understood by Mr Molle that I have taken any part whatever in what you may write. I must also beg leave to put you in mind, that nothing be started in any other quarter, which shall be construed as interference in any respect in the management, except in reference to the sale of lands, (which, I suspect, is one of the questions at present, as a partial sale would do no good.) The trustees must stand aloof from this, and be directed by their own judgment; and I shall ever, while connected with the trust, protest against any interference whatever.”

On 1st October, 1830, Hunter wrote Pringle:—

one day; and there must be considerable funds in his hands at the present period, independent of this balance. However strong our regard may be for Mr Molle, we have a duty to perform here, for the satisfaction of conscience, and the protection of character, as well as for those more directly interested. To propose to him to receive payment by instalments, would be a virtual declaration of our impression of inability on his part, which I do not wish even to insinuate; and, moreover, a direct charge of mal-appropriation of the trust-funds, the bare supposition of which would never warrant us in continuing him in that office, without security for intromissions; as the funds belonging to the trust, in the hands of any of the trustees, or their agents, ought never to be diverted to any other purpose, but should be tangible on demand. I hope he will at once see the necessity of remitting immediate payment to you, and of furnishing a correct state of his receipts and disbursements, to the date of our last meeting. If, however, I do not hear within ten or fourteen days from you, that this has been complied with, some other plan must be adopted; while I will, though very reluctantly, conclude that a certain unpleasant surmise is not altogether without the shadow of foundation. This solely for your own eye.

“Dear Sir, — I was duly favoured with your most particular letter of the 27th ultimo. I have since addressed a letter to Mr Molle, a double of which I annex. He ought, beyond a doubt, immediately to pay over the balance of L.1634 against him in December last. The system has continued too long, from motives of delicacy and feeling. I hold it to be a complete breach of faith, and an evident misapplication of the trust-funds, to withhold payment for

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P.S. —I really do submit, that in a trust-business such as this, the factor should be called upon to find security for his intromissions, &c.”

The letter written by Hunter to Molle, referred to in the foregoing letter, was in these terms:—

recent meeting. But, after giving it every consideration, and examining the reports by the accountant, I cannot avoid concurring with Mr Pringle in the impropriety of so large a balance being due by the factor, and of the necessity of its being immediately paid over to the cashier. The case of Mr Ainslie, to which you referred, where wealthy estates are under his management, is totally different, and the circumstance of being charged four per cent interest, I cannot regard as any sufficient reason for so enormous a balance being due. I am sure this must be fully apparent to yourself. With the exception of what I mentioned to the meeting, of the hint I got on the subject, the two reports, or views of the accomptant, contained the first positive intimation I had; and I would have been pleased, when the matter was talked of, had you readily given the cashier an order on your account for the balance against you in December last, being L.1634. I shall be most happy to learn that you have, ere now, done this. But I have nevertheless deemed it my duty to apprize you of my written sentiments, in a matter so essentially important to the trust. The other verbal recommendations of the meeting, as to furnishing Mr Pringle with a state of the rents realized at that date, and of those in arrear, and to quarterly render a state of accounts in future, you will no doubt give attention to, and pardon my anxiety and candour; for I shall never hesitate to express my sentiments in the trust, as I have hitherto done, whoever may be concerned, and however disagreeable, in some instances, this may be to me.”

“Dear Sir,—It is with some degree of reluctance and painful feeling that I advert to the subject which last engaged the attention of the Billie trustees at their

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On the 16th October, 1830, Pringle and Hunter wrote Molle a joint letter, in these terms:—

—At the general meeting of the trustees on the Billie estates, held at Dunse a few weeks ago, it was noticed, amongst other things, that our auditor of accounts had, in the state of the trust-affairs lately made up by him, and laid before us, reported that there was no less a balance than L.1634 due by you, as the factor to the trust-estate, as on 31st December last, and which has never yet been paid up. You were some time ago apprised (and that repeatedly) of the necessity there was that this sum should be put into the cashier's hands for the benefit of the trust; and it was hoped that this would have been complied with before the meeting took place; but the urgent recommendations which were given were not attended to, and matters remain at this moment as they did in December last. Upon the matter being stated at the meeting, you remarked that it was a pretty general practice for factors being permitted to retain, from time to time, considerable sums in their hands; and as an instance of this, you mentioned the case of Mr Ainslie, Lord Douglas' factor, who you understood was allowed to do so; and besides, that four per cent interest was charged against you by the auditor, so that, in fact, the trust-estate did not sustain any loss. But in reference to the first of these, it may be answered, that Lord Douglas' factor was in the use of receiving large sums from his Lordship's estates, which perhaps were not needed for immediate use; that the constituent was himself the proprietor, and was entitled to do with his own as he chose; that he might grant this indulgence from personal favour to the factor; besides, that there were no debts or encumbrances to provide against. Be this, however, as it may, the trustees are most decidedly of opinion, that a factor ought not to be permitted to retain sums to any extent in his hands at any one time, but pay them over to whoever is authorized, or has right to receive them from him. Trustees have very serious and solemn duties to perform,, upon their acceptance of the trust; they themselves are not the proprietors, but hold the estates intrusted to them for behoof of numerous and large creditors, (as is the case here,) and also for behoof of the legitimate proprietor, whose interest they are bound to attend to, to the best of their power. With regard to the case of interest, which was stated as meant to shew that no loss has accrued to the trustees from withholding the monies, the trustees possess no funds which can be allowed to lie at interest, (with the exception of the bank deposits from time to time;) and instead of any thing like a loan bearing interest, (which the balance before mentioned had the appearance of, while it remains in your hands,) it is most incumbent on the trustees to apply whatever funds are tangible, or ought to be so, towards the extinction of the very heavy debt affecting the trust-estate. urged the indispensable necessity there was of our meeting, in order to consider as to what it would be right and expedient to do in regard to this very vexatious affair. We accordingly did agree to meet this day for the above purpose; and after having deliberately considered the state of matters, and viewed them in all their bearings, we have come to the following conclusions:—1st, That you should forthwith pay up the balance of L.1634 ascertained to be in your hands, with interest at four per cent from December last. 2d, That you hand over to the cashier an exact account of your receipts and expenditure in relation to the trust affairs and management since December to this date, and settle what balance may appear to be due thereupon. 3d, That you also, in future, render to the cashier, at the end of every three months, a statement of accounts, shewing the sums then in your hands, and pay over the same, with the exception of what may be considered absolutely necessary to be retained for periodical and occasional advances; that statement to be accompanied also with a correct note of what arrears may be due by the tenants on the estates, or any of them. And lastly, That you should find proper security for all your intromissions during the subsistence of your factory. The rendering a state of your accounts quarterly, also the propriety of granting security as above, have been before now signified by Mr Brown, the auditor, as a proper thing which any factor should be obliged to do. that attention to it which it may deserve; but it must be such as will be efficient, and will, with certainty, accomplish the purpose, which, in the character of trustees, and acting, as we are bound to do, for the benefit and advantage of the trust-estate committed to our charge and management, we have in view to promote to the best of our power.

“Dear Sir,

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One of us (Mr Hunter) lately transmitted a letter to the other, mentioning, that at the end of last month, he had wrote you upon the subject of the balance in your hands, as appearing from the report, and of the necessity there was of this being paid up; that it was also most necessary to render to the cashier a state of the rents received by you since rendering your last accounts, and not yet accounted for; and likewise, that you should quarterly put the cashier in possession of a state of your accounts at the time. To the contents of this letter, he complained that he had received no answer whatever; and, therefore, he

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If there is any other satisfactory mode which you can propose for extricating matters, and putting them henceforth upon a more desirable footing, and which we can consistently approve of, we will certainly pay

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We request your answer to this in the course of a few days, and you will be so good as transmit a duplicate of it to each of us.”

On the 23d October, 1830, Pringle and Hunter complained to Molle of not having received any answer to their letter of the 16th. And on the 29th of October, Pringle wrote Hunter:—

upon the dependence, so as to strike against future contractions; and concluding against him, 1st, For the ascertained balance of L.1634; and, 2d, For count and reckoning on account of his whole intromissions, and libelling for payment of a random sum on that account, in the meantime; but more must be done. The factory must most undoubtedly immediately be recalled. There is a little difficulty in accomplishing it, so as that it may be done as quietly as possible, as we have so many tenants to do with. In the view of the summons and consequent inhibition, I mentioned it to Mr George Turnbull, W.S. who has been all along acquainted with the business, and I find he has no objection to undertake raising the action. It has also occurred, that if we can get Mr Molle to resign at once, without absolutely certifying him that we have absolutely recalled his powers of factory, it would be the best and most agreeable mode of accomplishing our object; and in that case, he himself might notify to the tenants, or such as it may be necessary to do so to, at the time of his having determined to sign a resignation of his factory, and of his having actually done so; and in that view, and in order to expedite matters, I think it advisable that Mr Turnbull, who has been long in habits of intimacy with him, and formerly connected with him in business, should go out in the Union Coach to-morrow, call upon Mr Molle at Netherbyres, explain to him the reason of his coming out, and endeavour to prevail with him forthwith to subscribe a letter of resignation, which may save a good deal of trouble. As to the notifications which may be necessary to be given to the several tenants, Mr Turnbull, returning by Dunse, will inform you of the result of his application. Should it so happen, however, (though I hardly think it will,) that Mr Molle refuse to comply with what is required of him, then we must address another joint letter to him, explicitly recalling his powers under the factory, and declaring it at an end. And upon the supposition that this may be necessary, I beg leave to enclose you a letter signed by me, and to be also signed by you, and addressed to Mr Molle, to the above effect; and upon this, intimation must be made to the tenants as quietly and delicately as possible, so as to be an interdict in the meantime against their making any payments. I have, in like manner, enclosed an authority, under both your and my hands, for adopting the mode which may seem most proper and suitable for the purpose. intimation to the tenants, I will deliver them to him to be put into your hands, and after seeing Mr Turnbull, and hearing what may have passed betwixt him and Mr Molle, you will be enabled to judge whether the steps alluded to should be forthwith taken, or not; or whether you may delay them till your coming here and meeting with him; or whether, if Mr T. may inform you that he is disinclined at present to resign, you may consider it proper to despatch to him our joint letter of revocation of the factory. It would, no doubt, be extremely distressing to break him down, if the interest of our trust did not positively demand without delay, the adopting of the most compulsory measures.

“Dear Sir, — Before I despatched on Saturday last our joint letter to Mr Molle, I received one from him, of date the 20th, saying that he had received ours of the 16th, (from Kelso;) that he proposed being in Edinburgh in a fortnight, when he would advise with his friends on the subject, and write me. Of this letter, he mentions having sent a duplicate to you. Before sealing our letter, I addressed a postscript to him, that this was treating the trustees in a very extraordinary manner; that I held his letter as a mere nothing; and that it only confirmed me more and more in what we must now absolutely do. The eight days which we gave for the performance of what we required of him, will expire to-morrow. I am quite satisfied that things are now come to that point when decisive steps must positively be taken. It has occurred to me that one necessary mode to be adopted is forthwith to raise an action of count and reckoning against him, in one respect, for the purpose of immediately obtaining letters of inhibition

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“I am most dreadfully teazed with this business, what with thinking, writing, and copying, there is no rest. Since writing the above, I have received another letter from Mr Molle, of yesterday's date, as follows:—

“The letter by you and Mr Hunter, dated 23d inst. has distressed me much, and I would have come to town immediately on receipt of it, but I had made some previous engagements on business, which has prevented me. I shall, however, be in town on Wednesday or Thursday next, when I shall make a payment, and enter on the consideration of future arrangements.”

This is perplexing in the extreme. What payment, or to what extent he means to make the same, I know not. Still I think it right that Mr Turnbull go out, so as that matters may not be slackened, and he may produce some decided favourable effect upon him; and in place of enclosing the letter before mentioned by us for Mr Molle, and the other, respecting the

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As you are to be in town against Tuesday, I wish you would take breakfast with me on the morning of that day, at half-past nine or ten.

P.S.—Upon second thoughts, I think it as well to enclose you the letter and intimation, which you will keep till you see Mr Turnbull, and have some conversation with him.”

Turnbull accordingly went to Molle's house, as suggested in Pringle's letter; and on the 30th of October, he procured, and sent to Hunter, Molle's resignation of the factory in his favour.

From this time Molle ceased to have any intromission with the trust-estate, and on the 30th of November, 1830, he resigned the office of trustee. Molle's accounts were then put into the hands of Brown the accountant to be audited, and according to his report, the balance owing from Molle to the trust-estate, at the date of his renouncing the factory, on 30th October, 1830, was L.3775, Is. 11d.

From the correspondence admitted as evidence, it

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It farther appeared, in regard to the trust generally, that so early as the year 1821, and throughout the period of the correspondence which has been given, the conduct of Molle and Pringle in the management of the trust was from time to time the subject of communication between the appellant, W. F. Home, and Hunter, the latter using his character of trustee to obtain information from his co-trustees, that he might communicate it to the appellant.

On Molle's resignation of the trust, Hunter and the appellant, W. F. Home, contrived together how Pringle might be induced to take the same course. In consequence, Hunter wrote Pringle some angry letters, imputing the loss sustained through Molle to his (Pringle's) account, and threatening legal proceedings against him. The result was, that Pringle resigned the trust on the 7th January, 1831. Hunter then became sole trustee and continued such until his death in January, 1833.

It was in these circumstances that the appellant brought his action; and in the course of it, the appellant, Mylne, was appointed judicial factor on the trust lands, and was allowed by the Court to sist himself as a pursuer of the action. Upon advising the record, the Lord Ordinary, on 17th March, 1836, pronounced the following interlocutor: 1 —

of the late George Horne of Wedderburn and Paxton, William Molle, writer to the signet, the late William Pringle, and the late James Hunter, were appointed trustees for carrying those settlements into effect: Finds, that on the 17th of March, 1820, being the first meeting of the said trustees after the truster's death, William Molle was appointed factor, and the said William Pringle cashier, each with a salary, in addition to the sum allowed to them by the trust-deed for ‘their trouble in the management:’ Finds, that in virtue of this appointment, Mr Molle had large intromissions with the rents of the trust-estate: Finds, that from December, 1822, large annual balances were due by the factor on his intromissions, and were never fully paid up: Finds, that the management, in terms of the above mentioned appointments, continued until the 29th of October, 1830, when the said factory was recalled by the co-trustees, the late William Pringle and the late James Hunter: Finds, that on the following day, the bankruptcy of the said William Molle was declared, and that a large balance was then due by the said William Molle, as factor to the trust-estate, amounting, according to the pursuer's statement, to the sum of L.5729 sterling: Finds, that the object of the first conclusion of the present summons is to fix upon the defenders, the representatives of the said William Pringle and of the said James Hunter, a liability for the said balance: Finds, that the said late William Pringle being not only a trustee, but having been appointed cashier, with an additional salary, undertook in that double character the special duty, and had the special means of superintending and controlling the actings and the accounts of the factor and co-trustee, Mr Molle: Finds it established by the documents in process, that the late William Pringle was apprised of the factor's irregularity in failing to pay up and account for the annual balances of his intromissions: Finds, that the said William Pringle, though thus aware of the factor, Mr Molle's, violation of his duty, took no steps, either by requiring caution, or insisting for payment, or recalling the factory, for securing the trust-estate against the consequences of the irregularities of the factor, of which he was so cognizant: Finds, that in these circumstances, the late William Pringle did incur a liability for the loss ultimately occasioned to the trust-estate by the failure of the said factor, William Molle: Therefore, finds the defenders, the representatives of the said William Pringle, liable for the balance due by the said William Molle as factor, and appoints the case to be called, that this balance may be precisely ascertained, but assoilzies the said representatives from the other conclusions of the libel, and decerns; and in regard to the defenders, the representatives of the late James Hunter, assoilzies them from the whole conclusions of the libel, and decerns: Finds them entitled to their expenses, and allows an account thereof to be given in, and to be taxed by the auditor.

Finds, That by the settlements

Footnote

1 “ Note .—There are various conclusions in this summons which present no difficulty, and which, indeed, were hardly touched on in the argument before the Lord Ordinary.

1st, Considering the large discretionary powers conferred by the trust-deed on the trustees, in regarl to the expenses of management, the Lord

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Footnote

Ordinary sees no ground for questioning the amount of the salaries allowed to the cashier, factors, or agents; upon which it may also be remarked, that comparing the present system of management followed by the pursuers themselves with that under the trust, the former is considerably the more expensive of the two.

As to the appointment to those offices of persons holding the situation of trustees, the Lord Ordinary has to observe, that the impropriety, inexpediency, and hazard of such a course, is well exemplified in the present case. Considering the evident consequences of such nominations, by which the interest of the same individual, as an officer under the trust, may, and in many cases must, be placed in opposition to his duty as trustee, much might be said against their legality. But, taking into view the notoriety of the practice, and the extent to which it has been carried in this country, without any attempt at challenge, the Lord Ordinary does not consider himself warranted in sustaining this circumstance as a substantive objection to the trust-management.

2dly, In regard to the conclusion for ‘malversations’ committed by the trustees, it must be at once dismissed, as the record contains no specific statements of any malversations requiring farther inquiry.

3dly, The same remark applies to the general conclusion for accounting. The whole accounts, audited by an accountant of character, are now, and have been from the beginning, in process, and in so far as the Lord Ordinary is aware, there is no objection to any of the articles of them, except those connected with the balance due by the factor, Mr Molle.

Indeed, from what took place at the debate, that appears to the Lord Ordinary to form substantially the only ground of dispute between the parties; and in regard to it, he has found it necessary to make a material distinction between the case of the late Mr Hunter and that of Mr Pringle. Against the former and his representatives, the claim seems to be groundless. Mr Hunter, though a trustee, took, or rather was allowed, little or no share of the management. He was resident in Berwickshire, and acted as the country agent of the trust. Mr Pringle and Mr Molle, the other two trustees, resided in Edinburgh; being a quorum, they had the means of carrying on the management, without requiring the presence of Mr Hunter at their meetings; and the inference fairly to be drawn from the correspondence is, that they were not disposed to admit him into the management, farther than was absolutely necessary. Accordingly, the Lord Ordinary is satisfied, on a perusal of the documents, that the late Mr Hunter was, from the year 1822, entirely in the dark as to the true state of the factor's accounts, and the continued balances allowed to remain in his hands. It also appears, that from the 5th of February, 1829, he made constant attempts, though unsuccessfully, to get access to those accounts, and it was not until the end of September, 1830 that they were put into

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Footnote

his hands. From that time he did every thing in his power to obtain payment from Mr Molle; and, indeed, it is to his exertions that the ultimate recall of the factory may be ascribed.

In these circumstances, considering the exuberant confidence reposed in the trustees by the trust-deed, the reliance Mr Hunter was fairly entitled to place in the acting quorum of the trustees, Mr Pringle and Mr Molle, two professional persons of the first respectability, the backwardness of those gentlemen to communicate with Mr Hunter, his ignorance of the factor's balances, and his anxiety and activity from the moment his suspicions were roused, and his attention called to the matter, the Lord Ordinary must hold, that Mr Hunter and his representatives are fully entitled to the benefit of the protecting clauses of the trust-deed; and he may farther observe, that the charge made in this clamorous summons against the late Mr Hunter, of entering into a corrupt compact with the late Mr Pringle, by which he, Hunter, abandoned the action he had raised against Mr Pringle, in consideration of Pringle resigning the trust in his favour, seems most absurd and unwarrantable, now that it is established by the documents in process, that Mr Hunter truly acted in those matters as the instrument of the pursuer, the heir of entail, and an instrument which, considering the somewhat extraordinary and unscrupulous proposals made to him in the course of those proceedings, the pursuer evidently viewed as completely under his power. Upon all these grounds, the Lord Ordinary. has thought himself bound to award expenses to the representatives of Mr Hunter.

The case of Mr Pringle is very different, though, in one particular, viz. the fairness and good faith of his actings, his character stands perfectly unimpeached. The whole charges made against him in the summons, of wilful violation of his duty, and corrupt connivance at the dilapidation of the trust-funds, appear to be utterly without foundation, and might have been spared. At the same time, the Lord Ordinary is compelled to hold, that there was such a constructive violation or neglect of his duty, as to render him liable for the consequences. It is true, that by the trust-deed, the trustees are protected from any farther liability for their factor, than that he shall ‘be habit and repute responsible at the time of entering upon office;’ and it also appears, that Mr Molle was habit and repute responsible, not only at the time of entering upon his office, but until a very short time indeed, before the public declaration of his bankruptcy. But the present case, like every other of the kind, must depend upon its special circumstances. Now here, Mr Pringle was not merely a trustee receiving the allowance granted by the truster, he was the cashier, appointed by himself and his co-trustees, with an additional salary. It was his duty, and he had the power, to ascertain the state of the factor's accounts, and to restrict his a balances within a reasonable amount, whatever delay might occur in the

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Footnote

formal auditing of those accounts by the accountant,—a delay which, in this case, occasionally extended to years after the accounts were given in,—the cashier, whose province it was to collect and apply the trust-funds to the proper purposes of the trust, was bound to inquire, and to know how the factor's account stood. It is proved by the documents in process, that he did know, and that the irregularity of the large balances retained by the factor was repeatedly noticed by the accountant. Mr Pringle's case, then, is not merely that of a trustee, relying on the circumstance of a factor being habit and repute responsible; for Mr Pringle, as trustee and cashier, had the means of knowing, and knew that whatever might be Mr Molle's general character for solvency, he was in the habitual violation of his duty as factor, and was either unable or unwilling to account properly for the trust-funds. Having this information, Mr Pringle neither required caution, nor communicated the matter specially to his co-trustee, Mr Hunter, for the purpose of recalling the factory; but knowing, as he did, at the end. of the year 1829, the large balance in the account of that year due by the factor, he allowed him to go on collecting the rents for the year 1830, thus increasing the balance to a great amount, if not to the sum actually coneluded for. It is quite possible, and indeed there is no reason to doubt, that this conduct on the part of Mr Pringle proceeded from an ill founded reliance on Mr Molle's solvency, and from a reluctance to take strong measures against a person with whom he was on a footing of intimacy and confidence. But it appears to the Lord Ordinary, that the consequences of this mistaken confidence must be borne by him and not by the trust-estate, of which he was the guardian.

Before concluding, the Lord Ordinary feels himself called upon to notice the enormous accumulation of documentary evidence with which this process has been encumbered. That of the pursuer extends to 300 pages of print, while on the part of the defenders there are about 200 more. It is true, that this case, turning much upon written evidence, required the printing of documents to a certain extent. But he must say, that this mass of pretended evidence, whether the indiscriminate admission, or confused arrangement of its contents be considered, has had the effect of obscuring, rather than of elucidating, the points in dispute, and may form a fit subject of consideration in discussing the point of expenses.”

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“ John Fullerton .”

Judgment of Court.

The appellant and Pringle's representatives reclaimed to the Inner House. The Court ordered cases for the parties, and on advising these, pronounced the following interlocutor:—

“Recall that part of the interlocutor complained of, which finds the representatives of the late James Hunter entitled to expenses, and finds no expenses due to either party; quoad ultra, adhere to the interlocutor, and refuse the desire of this note.”

And upon the reclaiming note for Pringle's representatives, their Lordships pronounced the following interlocutor:—

“Recall the interlocutor reclaimed against, assoilzie the complainers from the conclusions of the libel, and decern; but find no expenses due to either party.”

Against this interlocutor the appeal was taken, and at the same time Hunter's representatives took a cross appeal against that part of it which found them not entitled to expenses.

Appellant's Argument.

The Appellant .—1. As to the balance on Molle's accounts. The general rules of law preclude trustees from appointing one of their number to be factor under them. The trust-estate is entitled to the supervision of

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If the general principles be as stated, it is only the special terms of the deed under which the trustees act which can warrant a deviation from the rule. Here the terms of the deed preclude the notion of any intention by the truster to authorize the appointment of one of the trustees to be factor, and lead to the opposite conclusion.

With regard to any practice that may have prevailed in Scotland, or have been sanctioned by the Courts there, the law is not conclusively settled until it has the authority of this House, Montgomerie v. Wauchope , 4 Dow. 109; and if the practice be against principles, upon which all laws are founded, this House will not hesitate to correct it; Stewart v. Fullerton , 4 W. and S. 196.

Here the trustees appointed one of their own number to be factor, and with a salary; and were thus guilty, not of a moral, but of a legal fraud upon the trust, as it is viewed by Courts of Equity. Though Hunter was not present at the appointment, yet he concurred in it so far, that he never took any measures to disturb it, which he was bound to have done. Molle, therefore, was the agent of his co-trustees, and they are bound by his acts; and in this view they are liable to make good the deficiencies upon Mode's accounts; Moffat v. Robertson , 12 S. D. and B. 369; Blair v. Paterson , 14 D. B. and M. 361. It is no answer to this, that the duty of settling the accounts was devolved upon an accountant. It was never intended that the accountant was to

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2. The giving of salaries to trustees in the character of officers of the trust, is contrary both to law and principle; Brocksopp v. Barnes , 5 Madd. 90; Sheriff v. Axe , 4 Russ. 33; Ayliff v. Murray , 2 Atk. 58; Robinson v. Pett , 3 P. Wms. 249. The respondents, therefore, are liable to make good to the trust the allowances to Molle as factor, and Pringle as cashier, from the commencement of the trust.

3. There ought to be a general accounting and inquiry into the whole management of the trust. This the appellant was entitled to, without the necessity of stilting any objection to the accounts rendered. The delegation to the accountant by the trust-deed cannot deprive the party beneficially entitled of an inquiry, unless the deed so declares, which it does not; besides, though the accounts of the individual trustees may have been examined by the accountant, it does not appear

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[Four counsel appearing at the bar for the respondents, the Lord Chancellor intimated, that the rule of the House was to hear one counsel for each party; but if the cases of the two parties differed, the House would hear counsel on the points of difference, otherwise the rule must be observed.]

Sir W. Follett .—We will confine ourselves to the points which distinguish Hunter's case from that of Pringle.

Respondent's Argument.

The Respondent Pringle .—The question here is one purely of Scotch law, upon which English authorities cannot have any bearing. Whatever may be the rule in England, there is nothing in the law of Scotland to prevent trustees appointing one of their members to be their factor. In Wauchope v. Montgomerie's Trustees , 4 Dow. 130, Lord Eldon recognized the difference in the law of the two countries, as he did also in Stair's Trustees, 2 Wil. and Sh. 622. The appointment of one of their own number to be factor, does not alter the self-liability of the other trustees. The case, therefore, must be judged on the same principles as if a third party had been appointed.

Trustees are not liable for mere negligence, but for negligence amounting to culpa lata. This non-liability arises from the gratuitous nature of the office, and was introduced by the act 1696 in regard to curators for minors; Ersk. I. 7. 27; the same principle applies to

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At the time at which Molle was appointed factor, both his character and his credit were above suspicion. To require security from him appeared, therefore, to be superfluous, and the trust-deed did not prescribe that security should be taken from the factor. Can the omission to require this security be called crassa negligentia?

[ Lord Chancellor .—The question is, whether the act of appointing one of their own number is not an act of intromission by the trustees, by placing in the hands of the factor, one of their own number, funds, which, otherwise, would not have been in the hands of the trustees.]

There is not any authority for saying that the mere signing of the factory would make such an act of intro-mission as must subject the trustees signing. In all the cases, the appointment was made without authority by the trust-deed, under which the parties were acting. The factor, therefore, was the mere agent of the trustees, for whose acts they were liable. But here there was a power given to appoint, and the party appointed is thus the factor of the trust. But can the appellant, Home, be allowed to challenge the appointment. He was himself present at the meeting at which it was made, and though he did not concur in the appointment at the time, because he wished the office for himself, yet he did not object to it then, nor afterwards, during the ten years which Molle held it.

If the appointment were not in itself invalid, so as to make the trustees liable for the consequences, there was

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With regard to a general account, it was no part of the case in the Court below that this had not been gone into,—the only ground there taken was liability for Molle's balance.

The cross appeal, though on the subject of costs, is competent, inasmuch as the rest of the case was brought up by the original appellant. This was decided in Tod v. Tod .

Hunter's Representatives .—Hunter did not hold any office under the trust; and even as such, there were few of the meetings at which he was present,—his co-trustees had refused to allow the expense of his coming to Edinburgh, where their meetings were held, and in effect excluded him from any interference,—he was forced, therefore, to rely on the others; and if he had gone into Court to complain, he would have been remediless, as the others were a quorum, and, as such, had the full powers. In this way Hunter knew nothing of the balances until 1829, and immediately he became active and urgent in insisting upon payment.

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Lord Chancellor . — My Lords, it appears in this case, that by the first deed of the 16th of July, 1816, George Home disponed and made over his estates to, and in favour of, three trustees, David Renton, William Pringle, the respondent, and John Renton, who were to execute and manage the trust in succession, without the interference of the others; and it was provided, amongst other things, that they should have power to name and remove factors from time to time, with such powers, and liable to such diligence, as the trustee or trustees should think fit; and to pay such factors such salaries as they should see fit; and to settle accounts annually with such factors, and upon payment of what should be found due, to exonerate the factor; and within six months after each clearance with the said factors, to make up their own accounts, and to get the same approved by an accountant of character in Edinburgh; and if such accounts should be approved by the said accountant, such approbation was to operate as a full exoneration of the trustee or trustees during the currency of such account; and it was provided, that such trustees should nowise be obliged to do diligence, otherwise than as they should think fit; nor should be liable for any omissions, but only each of them for himself, and his own actual and personal intromissions; nor should they be farther liable for their factors, than that they should be “habit and repute responsible at the time of entering upon their office.”

Amongst other trusts for the application of the income, was the payment of the yearly sum of L. 100, as a gratification to the acting trustee or trustees for their trouble in the management. The trusts, it appears, only affected the rents; these were to be applied in payment of the

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By another deed, dated the 6th of August, 1819, George Home appointed William Molle, the respondent, William Pringle, and James Hunter, trustees, in the place of those named in the former deed, but with a declaration that the majority should be a quorum for executing the trusts, and not in other respects altering the provisions of the former deed.

Soon after the truster's death, in 1820, the three trustees met, and, Mr Home, the pursuer, being present, appointed William Molle to be factor, with a salary of L.180 per annum; and William Pringle cashier, with a salary of L.50 per annum; and on the 22d of March, 1820, a regular deed of factory was granted to Molle accordingly.

The real question in the cause, is the liability of Pringle and Hunter for the sum due from Molle as trustee, or factor, at the time of his insolvency in October, 1830; and the grounds upon which the charge is sought to be maintained, are principally, — 1st, That the appointment of one of the trustees to be factor, was of itself a breach of trust, and subjected the parties to it to all the consequences resulting from it; and 2d, That there was such gross negligence in Pringle and Hunter, in permitting Molle to keep balances in hand, as to subject them to liability for the balance due from him.

Such, at least, are the points into which the claims of

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As to the first, it is said that there is a difference between the law of England and of Scotland. In England, the appointment by trustees of one of their body, to act exclusively in any part of the trust, under the authority of all, would, as to the others, have the effect of making the trustees appointing responsible for the act of the one appointed; that is, they could not treat acts done, or sums received by such appointee, in the character so conferred upon him, as the acts or receipts of a co-trustee, for which they, as co-trustees, would not be liable, but as acts and receipts of their agent, for which they would, or would not, be liable, as there might be proof of culpable neglect in their dealings with such agent. The allowance of a salary to such appointee would clearly be a breach of trust, and would therefore be disallowed.

But it is said, that the practice, if not the law of Scotland, sanctions such appointment, and the case of Montgomerie v. Wauchope , Faculty Collection, June 4, 1822, is referred to in proof of that proposition. Nothing was decided in that case upon that point, but the Judges stated, that such appointments were not inconsistent with the law of Scotland, and that a trustee, appointed by his co-trustees, was entitled to the usual remuneration of an agent or cashier. This is the real question, because it is not necessary to hold that the appointment is illegal, in order to maintain the principle, that the party who, having accepted the office of trustee, which; unless otherwise provided for by the trust, must

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In the view I take of the present case, there will not be any necessity for expressing any farther opinion upon that point. In England, the appointment of one of the trustees to act as receiver, and manage the property, and collect the rents, would not, per se, make the other trustees responsible for his acts; but it would make the trustee so appointed, the agent of the other trustees for those purposes, and render them responsible for his acts, so far as they would have been responsible for the acts

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The first ground, therefore, upon which the appellant seeks to fix Pringle and Hunter with the balance due from Molle, I think, wholly fails. But, secondly, considering Molle as the agent and receiver of the other trustees, have they, in their transactions with him, been guilty of such negligence as to make them responsible for the acts of their agent ? For I have not been able to follow the reasoning by which it seems to have been supposed, that Mr Pringle, by accepting the office of cashier, incurred any additional responsibility as to the acts or receipts of Mr Molle. That office may indeed have afforded him opportunities of knowing the state of Mr Molle's accounts, and have given him earlier notice of his malversations; and such knowledge and notice may be important in considering his liability, but such liability must attach to his office of trustee, and not of cashier.

The question, then, is, What is the case established against Mr Pringle and Mr Hunter, of culpable negligence in dealing with their factor, Mr Molle. The trust deed directs, that the trustees should settle accounts annually with their factors, and upon payment of what should be found due, exonerate and discharge them from their intromissions and management, and within six months of each clearance with the factor, make up their

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It appears, accordingly, that in Mr Molle's accounts for 1822, considerable balances were in his hands on the 31st of December of each year; but that in each of those years such balances were more than paid by the month of March or April in the following year, excepting the year 1827, in which the preceding balance was not exceeded by subsequent payments till the month of September. It is true, that in the interval he had received sums equal to, or exceeding, his subsequent payments, so that his actual balance, was not reduced; but of that the trustees had not necessarily the means of information. The balance to the 31st of December, 1829, was L.1634, which was more than covered by subsequent payments by the 7th of April, 1830.

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A passage in Mr Pringle's letter of 22d of September, 1830, has been much relied upon as shewing that he had been aware of Mr Molle's bad circumstances in 1828. He says, speaking of a payment of L.1500, received in 1828, “I own I am a good deal pleased that this was done, from whatever quarter it was procured.” The meaning of this is very doubtful; it may mean that he doubted Mr Molle's having means of his own to pay that L.1500, or it may mean that it might have been paid out of subsequent receipts, so as not in fact to reduce the amount of balance due on the preceding December. It is much too slight a piece of evidence to support the case of Mr Pringle's having at that time been so cognizant of Mr Molle's difficulties, as to have made it his duty to interpose, for the purpose of preventing his receiving any farther part of the property; and to institute legal proceedings for the purpose of compelling payment of the existing balance, the credit and

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In 1828, the trustees, finding their factor retaining balances in hand beyond what they thought proper, press him by every means short of legal proceedings to keep down such balances, which course continues till December, 1830, when, finding their efforts ineffectual, they recall his appointment, which produces his bankruptcy, without any previous proof of his being insolvent.

The result is, that in my opinion the judgment below was correct in holding, that Mr Pringle's estate is not liable for the loss sustained by the insolvency of Mr Molle; and if he did not make himself liable for such loss, it is clear that Mr Hunter did not, for every circumstance from which the responsibility of Mr Pringle could arise, exists in a less degree in the case of Mr Hunter.

If the case fails so far, there is, I think, no ground for the general account, for if Messrs Pringle and Hunter are not chargeable with Mr Molle's balance, their own accounts have been regularly examined and settled according to the provisions of the trust-deed, and no case is made for opening them.

It is indeed said, that Mr Pringle has in those accounts been allowed a salary of L.50 per annum, to which, as trustee, he was not entitled; and if that question had

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I think also, that the House would be very reluctant, when the principal object of the suit fails, to give any relief upon so small a part of the case, particularly where the record is loaded with charges and accusations of personal fraud and wilful dereliction of duty, against Mr Pringle and Mr Hunter, of which there is not only no proof, but for which there does not appear at any time

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This leads to the only remaining question, that of costs, the only one upon which I entertained any doubt; and if I had been sitting in the Court below, considering the failure of the case made against the trustees, and the unjustifiable charges brought against them, I should perhaps have thought it just that they should be indemnified in costs, by directing the pursuers to pay them. But in this house the case is different. A court of appeal does not interfere in the question of costs without reluctance in any case, and generally will not entertain an appeal for costs alone, and the question of costs can only arise upon the cross-appeal. I am therefore of opinion, that both appeals should be dismissed with costs.

Judgment.

Ordered and Adjudged, That the original appeal be dismissed this House, and that the interlocutor of the Lord Ordinary, of the 17th of March, 1836, in so far as not recalled by the two interlocutors of the Lords of Session of the First Division, of the 30th of November, (signed 1st of December,) 1837, or either of them, be affirmed; and that the two interlocutors of the 30th of November, 1837, be also affirmed, with costs: And it is farther ordered and adjudged, That the said two cross appeals be dismissed this House, and that the two interlocutors of the 30th of November, 1837, so far as therein respectively complained, be affirmed with costs.

Solicitors: Spottiswoode and Robertson — George Webster — Richardson and Connell, Agents.