Lord Advocate v. Dugald Macneill, Esq., of Kintarbet [1866] UKHL 2_Paterson_1387

UKHL
Lord Advocate v. Dugald Macneill, Esq., of Kintarbet
[1866] UKHL 2_Paterson_1387
L. borrowed in 1838 £6000 from his mother, and gave her a bill of exchange accepted by him for that sum. After the death of the mother in 1844 and of L. in 1852, D., a brother of L., being executor of both, produced the bill indorsed by the mother to D. without any date, and on the back of it were marked receipts for interest up to the mother's death. It was not proved, that the bill had ever left the mother's possession, or that interest had been actually paid. D. claimed the sum as a gift to D. by his mother, therefore, that no inventory duty was due in respect of it as part of the mother's estate.Held (reversing judgment), That as D. had not proved delivery of the bill to himself by his mother, the presumption against donation was not rebutted; and, therefore, that the bill was part of the mother's estate . 1

The facts of this case were shortly these:—

Cross actions had been raised, the object of which was to determine whether inventory duty was payable on a sum of £6000, which had been secured by a bill of exchange, and indorsed to the respondent by his mother, Mrs. Margaret Macneill, to whom the money belonged. In the first action the respondent claimed a return of duty as follows:—He alleged, that he was the

Footnote

1 See previous report 2 Macph. 626: 36 Sc. Jur. 304. S. C. 4 Macph. H. L. 20: 38 Sc. Jur. 350.

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“ Drimdrissaig , 22 nd Nov . 1838.
“One day after date pay to me or order, £6000 sterling for value.
(Signed) “ Margaret Macneill .

(Accepted) L. M. “ Campbell. ”

Indorsed on the back of the bill were the words:—

“Pay the within to Dugald Macneill.

(Signed) “ Margaret Macneill .”

Dugald had held the bill ever since, and it purported to have marked on the back of it for each year from 1839 to 1845 a receipt of interest, signed by him. He received £1000 to account, which was also marked on the back. In January 1833, Mrs. Macneill wrote a letter to Dugald, thus:—
“ My Dear Dugald ,—Circumstances have occurred that have prevented my executing a settlement of my money. Until that is in my power, I now write to say that all I have is yours—you making up Bella's money to £3300, she having all my little trinkets, etc.

(Signed) “ Marg. Macneill. ”

After his mother's death, the respondent paid to Bella, his sister, a legacy of £1300, to make up her money to £3300; and he paid the duty on this sum, but he said it was done under mistake. The mother had no other money beyond the £6000 which she gave to Dugald, except a small annuity. She lived with Lachlan till her death, without paying for her board; and it appeared that no interest was ever paid to her on this bill, but that she got money from Lachlan when she wanted it. The respondent's plea in law was, that, as the £6000 had been given to him absolutely as a gift, it was no part of the mother's estate when she died; and therefore he was not bound to pay duty upon it. On the other hand, the Inland Revenue pleaded, that the money was not given absolutely as a gift, but was put into his hands as a trustee.The Lord Ordinary (Ormidale), by his interlocutor, held, that there was no satisfactory evidence that there had been a donation of this £6000 by the mother to the respondent, and no proper account of what had become of the bill before it was produced. On reclaiming note, this interlocutor was reversed by Lord President M'Neill and Lord Curriehill; but Lord Deas dissented.The Lord Advocate appealed, and in his printed case prayed for a reversal for the following reason:—Because the presumption of law is against donation, and the respondent had failed to prove his averment that the bill for £6000 was transferred to him as a gift.The respondent in his printed case submitted, that the interlocutor of the First Division should be affirmed for the following reasons:—1. The bill for £6000 referred to in the record in the inferior Court, and in the interlocutor of the Lord Ordinary, having been specially and duly indorsed to the respondent by the late Mrs. Macneill, the drawer of the bill, the burden of shewing that the said bill, notwithstanding the indorsement, remained the property of the drawer and chargeable on her death with succession duty as part of her estate, lay upon the Crown. 2. Because the appellant had failed to prove that the indorsement of the bill to the respondent was made in trust for the late Mrs. Macneill, or with any other intention then that of transferring the property of the bill to the respondent. 3. Because the whole evidence in the case is consistent with and supports the legal presumption deducible from the indorsement of the bill for £6000 to the respondent.Lord Advocate (Moncreiff), Solicitor General (Collier), and Agnew , for the appellant—The judgment of the Court below was wrong, for it assumes that the indorsation of a bill of exchange without any proof of delivery, or of any other transaction, between the parties produced long after the death of the indorser, is evidence of a donation to the indorsee. There is a presumption of law against donation—Stair, iv. 45, 17, and i. 8, 2; Ersk. iii. 3, 92. Where a dispute arises whether the handing over of a security amounts to a gift, or was meant to be held as a trust, it is considered strong evidence against the donation, that the alleged donor would thereby have

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If then there was no proof of, or presumption in favour of, donation, the necessary consequence is, that a trust is presumed. The Statute 1696, c. 25, does not apply in a case which is not between truster and trustee, and therefore the proof prout de jure is admissible.Anderson Q.C., and Sir H. Cairns Q.C., for the respondent.—The respondent produces a title to this money which is ex facie correct, and indorsation being the appropriate mode of transferring the right to the money contained in the bill, there is no room for resorting to the presumption of law in such a case as to donation.The case of a bill of exchange is different from a deposit receipt, the mere indorsation of which is not an assignation, for a deposit receipt is not a negotiable instrument; it is merely a mandate to the party named to draw the money—that is to say, the indorsee of a bill of exchange can sue in his own name, but the indorsee of a deposit receipt cannot. The cases cited on the other side are all cases of deposit receipts, except the case in Mor. 3600, and that is unintelligible. As to the institutional writers, Stair (i. 8, 182) expressly says, that bonds and other rights to children are presumed to be donations, because the law assumes a consideration of natural affection. Erskine, iii. 3, 92, says, unless between debtor and creditor donation is presumed; so Bankton, i. 9, 9; i. 9, 19. It is a well settled rule, that so far from the presumption being against donation, it is in favour of donation to children— Murray v. Todd , Hume, 275; Braidwood v. Braid wood , 14 S. 64; Fife v. Kedslie , 9 D. 853.[ Lord Kingsdown .—It is not of much use to refer to the circumstances of other cases. Here we have a certain state of circumstances ascertained to a very small extent, and the rest are inferences to be derived from them.][ Lord Chancellor .—There used to be a number of rules which were held to be important in the construction of documents, such as that the latter part of a will was to prevail, and the earlier part of a deed, and a variety of things of that kind, but they have all come down to common sense at last. It is now held, that you are to look at the whole meaning of a will, and see what the intention of it is, taken all together.]In Mor. 11498 et seq., voce Presumption, many cases are to the same effect. Here, as Dugald's title to this bill was completed by special indorsation, the onus is on the other side to shew, that there was no intention in his mother to transfer the bill. Now, the evidence does not prove that Mrs. Macneill did not intend to pass the bill.

Lord Chelmsford .—There is no evidence in whose possession the bill was.]

There is no evidence, but the natural presumption is, that Dugald had possession. The indorsements of payment of interest confirm this. There is a presumption of law, that the indorsation was made the same day as the drawing of the bill, if no other date appears— Rossie v. ogilvy , Mor. 1501; Smith v. Home , Mor. 1502. It is said there is no evidence of delivery. That point was not made in the Court below, but the presumption is, that it was delivered at the time of indorsation— Maitland v. Forbes , 5 Brown, Sup. 431.No adverse presumption is to be drawn from the fact, that the mother intended to avoid paying inventory duty, for such an object is quite lawful— Per Wood, B. in Attorney General v. Jones , Price, 368; Advocate General v. Brown , 1 Macq. App. 79; ante , p. 138.Lord Advocate replied.Cur. adv. vult.Lord Chancellor Cranworth .—My Lords, this is a claim of inventory duty on a sum of £6000 as part of the movable estate of Margaret Campbell or Macneill. She died on 4th May 844, leaving three children, Lachlan her eldest son, Dugald her second son, and a daughter sabella. Dugald on her death, intromitted with her personal estate as her executor, but no inventory was recorded till 4th October 1852, when he gave up an inventory with an affidavit rating his mother's effects to have amounted to only £198 16 s . 1 d . Lachlan died on 2nd May 1852.After Dugald had given up the inventory, circumstances occurred which led the Crown to claim duty on a much larger sum than £198. The officers of the revenue alleged, that besides that sum Mrs. Macneill was at her death possessed of a sum of £6000 secured to her by a bill of exchanger or that amount bearing date the 22nd of November 1838, drawn by her upon, and accepted by, her on Lachlan, payable one day after date. Dugald denied that this sum formed any part of his

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Two actions were raised, one by Dugald against the Lord Advocate as representing the revenue, claiming repayment of that sum of £70, the other by the Lord Advocate against Dugald, claiming payment of duty on the balance of £4700.It was admitted that the case in both actions depended entirely on the question, whether the £6000 bill did or did not form part of the personal estate of the mother at her decease. If it did, then Dugald was liable to pay duty on the £4700. If it did not, then the Board of Revenue admitted their liability to return to Dugald the £70 which they had received in excess on account of what was due from him as executor of his deceased brother.That Mrs. Campbell was at one time possessed of this bill, and entitled to the money thereby secured, was not disputed; but the case made by Dugald was, that at, or immediately after, its date, it was indorsed by his mother to him by way of gift; and so formed no part of her personal estate at her death. It was not disputed that the bill bears the genuine indorsement of Mrs. Macneill, and a special indorsement in favour of Dugald, and he relies on that as a valid gift to him of the bill and the money secured thereby.But it is to be observed, that mere indorsement, if that word is to be understood as expressing only the writing on the back of the bill, is not sufficient to transfer the bill or its contents to the person named as indorsee. In order to transfer the property in the bill, the indorsee must prove that it was delivered to him, for until delivery the property remains unchanged.In ordinary cases, no question arises as to whether the bill has or has not been delivered. When, as is always the case, the indorsee is the holder, the fact that he is so, is primâ facie primâ facie evidence that the bill was delivered to him according to the indorsement, and no further proof of delivery is necessary. If, therefore, Dugald could have shewn, that he was the holder of the bill in the lifetime of his mother, he would at all events have proved the first proposition, which it was incumbent on him to establish in order to make out his title as donee, namely, that the legal title to the bill had been transferred to him by his mother.But he has failed to make any such proof. There is nothing to shew, that he was the holder of the bill in his mother's lifetime; and inasmuch as he was, or at all events assumed to be, her executor, the fact that since her death the bill has been in his possession proves nothing. That possession may be attributed to his character of her executor just as reasonably as to his alleged title as indorsee. And as the onus of proof was on him to shew a title on the latter head, he has failed to establish that which is the necessary foundation of his claim.The original bill was produced, and there are indorsed on it yearly receipts for interest dated every year on the 22nd of November, beginning on 22nd November 1839, and ending on 22nd November 1845. These receipts are all signed by Dugald, and it was argued, that they afford strong evidence to shew, that the bill must have been in his possession at the time when they were made. This would have been cogent evidence to prove, that the bill had been delivered to him by his mother, if it could have been shewn that the indorsements were made at the time when they bear date, but there is nothing to shew that this was the case. On this head the evidence is a perfect blank, and looking at the bill itself I was satisfied from its appearance, that all the receipts prior to that of 22nd November 1844 ( i.e. prior to the death of the mother) were made at the same time. They are all apparently written with the same ink and at the same time, and seem to have been written shortly after the death of the mother with the object—a very honest one—of shewing that, in some way not clearly explained, all interest was to be considered as satisfied. The two entries of 22nd November 1844 and 22nd November 1845, made after the mother's death, appear to have been written at times different from that when the prior indorsements were made. But they are not important, as the bill had certainly at that time come into the possession of Dugald. The argument, that these indorsed receipts were made for the purpose of excluding any future claim for interest, and not as indicating the actual receipt of money, derives strong confirmation from the fact, that none of them mention any particular sum as having been received, and all of them (seven in number) bear date the exact day on which the interest would be due. It is hardly credible that for seven years, interest should have been paid on the very day on which it became due, more especially when one of these days, 22nd November 1840, fell on a Sunday.The result, therefore, is, that Dugald, the respondent in the first appeal, has failed to satisfy me, that the bill ever was delivered to him by his mother, or that it did not remain in her possession at her decease. The whole foundation, therefore, of his claim, that it was indorsed over to him as a gift, fails. If he had been able to shew, that it was indorsed and delivered to him by his mother in her lifetime, so as to give him the absolute legal title to it, then would have arisen the important question discussed by the learned Judges below, and on which they did not agree, whether the mother, by indorsing and delivering the bill to her son, ought to be considered to

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My opinion is, that the interlocutors complained of ought to be reversed, and that of the Lord Ordinary sustained.Lord Chelmsford .—My Lords, the question upon this appeal being one entirely of fact, if I had found that a majority of the Judges below had arrived at the same conclusion upon it, I should have submitted to their judgment, even if I had felt a doubt as to its propriety. But although there was a majority of the Inner House in favour of the interlocutor appealed from, yet, taking the Lord Ordinary into account, there is an equal division of opinion on the case, and I therefore consider myself at liberty to follow my own judgment upon it.In determining the question it seems to me to be necessary to ascertain with accuracy, upon which of the parties the onus probandi ultimately rested. The summons in the action by the Crown (the only one necessary to be considered) claimed the sum of £88 for inventory duty due and payable by the defender (the respondent) as executor of his mother. Upon this summons it was incumbent upon the pursuer to prove, that the defender had possessed himself of some personal estate of his mother upon which duty was payable. In his condescendence the pursuer alleged, that the estate in the defender's possession upon which the duty attached consisted of money due to the defender's mother at her death, upon a bill or promissory note to the amount of £6000. In the revised statement of facts the defender states, that his brother having contracted a considerable debt to his mother, he, on the 22nd December 1838, granted to her a bill for £6000, and that at or about the same date she indorsed over that bill to the defender and delivered it to him as a gift. The parties being at issue upon this alleged statement of facts, it would have been sufficient for the defender in the first instance to produce the bill of exchange indorsed, and to prove the delivery of it to him before his mother's death. If he had done so, he would not have been compelled to adduce any further proof of the gift of the bill, the special indorsement upon it and delivery to him being primâ facie primâ facie (and if unanswered conclusive) evidence to establish his defence. The defender, however, gave no evidence at all, that the bill was in his possession before the death of his brother. Isabella Macneill, his sister, who was called as a witness for the Crown, never saw the bill, nor did she know of her own knowledge that it had ever been granted. The indorsements of payment of interest from the 22nd November 183910 22nd November 1844, and an indorsement of the payment of a sum of £10,000 on 5th June 1840, appear to have been all written at the same time. Under these circumstances the Crown might, I think, have rested upon the failure on the part of the defender to prove, that the bill had passed from his mother to him, for no presumption in his favour could have arisen by his possession of it after her death.But the pursuer met the imperfect case of the defender by evidence tending to establish the great improbability of there having been an absolute gift of the bill. From the testimony of Isabella Macneill, it appeared that the £6000 represented by the bill was the whole of the mother's property which she could dispose of at her death. She had an annuity, the amount of which did not appear, and a liferent on two sums of £2000 and £1000. On the 23rd May 1837, Mrs. Macneil made an invalid will leaving all her property to the respondent, and instituting him her sole executor. That this will did not contain her final intentions appears from the fact, that on the 21st January 1838, she made a holograph will in the form of a letter to the respondent in these words:
“Circumstances have occurred that have prevented my executing a settlement of my money. Until that is in my power, I now write you to say, that all I have is yours, you making up Bella's money to three thousand three hundred, she having all my little trinkets, etc.”
At the time this letter was written, the £6000 had not been advanced to her son Lachlan. The money was not lent, nor was the bill given until the following November. This money constituted the only fund out of which the £1300 given to Isabella Macneill could be paid. It is therefore highly improbable that ten months only after Mrs. Macneill had made this additional provision for her daughter, she should have deprived her of it by absolutely disposing of the whole of the means available for its payment. That Mrs. Macneill intended to the last that the holograph will should regulate the disposition of her property, appears from the fact of her having kept it in her possession or under her control down to the time of her death, and also from her having placed it in a box which she gave to Isabella Macneill to give to her brother after her mother's death. It may fairly be asked, Why was the will given to the daughter to keep, except on account of the interest

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Upon this evidence on the part of the Crown (if not before), the burden of proof was undoubtedly shifted to the respondent, and he was called upon to prove, that the bill was his property, and not the personal estate of his mother. It may be, that, if the respondent had himself been able to give evidence, he might have explained away the circumstances which press against his case and have clearly proved an absolute gift to him of the bill. But if in consequence of his impaired memory no such explanation can be furnished, and we are left in ignorance (as I believe we are) of the real circumstances of the transaction between him and his mother, the presumption of a gift of the bill not having been raised by its mere production without proof of delivery, or at all events being rebutted by the evidence produced on the part of the Crown, I am compelled to come to the conclusion, that the bill continued to be the property of the respondent's mother down to the time of her death, and that he is bound to pay inventory duty upon it.For these reasons, I think the interlocutors appealed from ought to be reversed.Lord Kingsdown .—My Lords, the question in this case is, whether the respondent has proved, that the sum of £6000 secured by the bill for that amount was given to him by his mother for his own use without any condition or restriction whatever. This is the allegation which he has put upon the record.He alleges the gift to have been made at or about the date of the bill, that is, in 1838. He states, that he was to all intents and purposes the true owner of the bill, and in proof of this fact he alleges, that the bill was delivered to him at the time of the indorsement, and that he received the interest which became due upon it from time to time during Mrs. Macneill's lifetime, and applied it to his own use, and that on the 5th June 1840 he received and applied to his own use £1000, part of the principal money.Supposing these statements to be proved, and no counter evidence to be produced in explanation of them, there can be no doubt, that the respondent has established his case. But all these statements were put in issue on behalf of the Crown, and it was alleged, that any intromissions with the bill by the respondent were merely as custodier in trust for Mrs. M'Neill, who was the true owner of the bill. It was further stated on behalf of the Crown, that the respondent had been called upon to produce the bill. This was in June 1862. When the bill was first produced does not appear. It was produced, however, m the course of the proceedings, and its production with the indorsements upon it formed the only evidence supplied by the respondent in support of his case.I agree with my noble and learned friend on the woolsack, that in the circumstance of this case the indorsements on the back of the bill afford no proof as against the Crown either of the payment of any of the sums, either principal or interest mentioned in them, or of the fact of the delivery of the bill to the respondent in the lifetime of his mother. He acted as the executor of his mother, though under an instrument which turned out to have been informally executed, and the bill may have come into his hands in that character after her death. The indorsements bear an appearance, which, as regards the payment of interest at least, is quite consistent with that hypothesis. The respondent had been challenged to prove these different payments, he had every facility for doing so; he was the representative of his mother, the drawer and indorser of the bill; he was the representative of his brother, the acceptor of the bill; he had access to all their papers: he had his own papers and documents, his agent's and his banker's books, and not the slightest proof is given either, of the delivery of the bill or of the payment of one single shilling upon it.But the conduct of the respondent seems to me quite inconsistent with the case now made. Mrs. M'Neill died in May 1844. The last indorsement of payment of interest on the bill is 22d November 1845. Lachlan, the acceptor of the bill, lived till 1852. During all that time no interest appears to have been paid, or is alleged to have been paid, by Lachlan. Yet the respondent states, that the bill has never been paid, but that the £5000, with an arrear of interest, is still due upon it. In 1852 the respondent became the executor of his brother Lachlan, and returned an inventory of his property under the Revenue Acts, amounting to about £6000. In 1854 he made an application to the Revenue department for return of the duty, on the ground that the executry had been exhausted in payment of debts. The £5000 due upon this bill was not mentioned amongst the debts so paid. So that the respondent, having a right to receive payment of the whole sum with interest from November 1845, had nevertheless not paid himself any part of it.But what makes the case stronger is, that in this schedule of debts paid, he took credit for £3300 principal money, and £2000 interest as paid to his sister out of the executry of Lachlan. Whatever the case might be with respect to the £2000, the £1300 and interest were clearly payable, not out of the assets of Lachlan, but out of the assets of Mrs. M'Neill, unless, what is very possible, some arrangement had been made by the mother with her two sons respecting the £6000 for which the note was given. Nearly half the claim for reduction made by the respondent

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It is said in excuse of all the deficiencies of evidence and the inconsistencies in the respondent's case, that he has lost his memory, and is unable to give the necessary explanations. But the fact of the alleged gift has been in controversy for many years. It was alleged generally soon after the mother's death. It was again insisted on in 1852, when the dispute took place with Miss M'Neill. It was raised again in 1854, when the disputes with the Stamp Office began, and has continued ever since. Law agents have been employed by the respondent during, at all events, a great part of this period. He has himself made several affidavits, and all the circumstances of the case, and the documents to prove them, must no doubt be in the possession of the agents, who could give the proper explanations, if any satisfactory explanation could be given.If the evidence of Miss M'Neill be referred to, so far from proving the case of the respondent, it is quite inconsistent with it. His case is, that the money was the property of Mrs. Macneill in November 1838, and was then given to him by her for his. own use, with no condition, restriction, or trust as to any part of it. Her testimony is, that several years before this date her mother told her, that she had made over all her property to the respondent, subject to the payment of £1300 to her, the witness. That this statement was made by the mother is strongly confirmed by the holograph letter in May 1838, under which the payment of this sum of £1300 has been awarded to her. That some arrangement was made by the mother with her sons with respect to this money for the benefit of the family is extremely probable. It is very likely, that the object was to defeat any claims of the revenue upon it at her death. What that arrangement was it is impossible to say; that it was such as the respondent alleges not only he has failed to prove, but all the facts and all the probabilities of the case, in my opinion, tend to disprove. I have no doubt, that the interlocutor must be reversed.Interlocutors reversed, and interlocutor of Lord Ordinary affirmed .Solicitors: Appellant's Agent , J. Timm, Somerset House.— Respondent's Agents , W. Sime, S.S.C.; Maitland and Graham, Westminster.