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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Earl of Buchan v His Creditors [1835] CA 13_1112 (11 July 1835) URL: http://www.bailii.org/scot/cases/ScotCS/1835/013SS1112.html Cite as: [1835] CA 13_1112 |
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Page: 1112↓
Subject_Aliment—Arrestment—Competition.—
An annuity of £1500 a-year was provided to a peer, by a trust-settlement, to be paid termly in advance, and was declared by the granter to be alimentary, and not arrestable by creditors, and the annuitant having contracted debts, arrestments were used in the hands of the trustee—Held, 1. That the annuity was not attachable, except for alimentary debts. 2. That the annuitant himself could not compete for a current term's annuity with creditors for alimentary furnishings, whose claims had arisen during prior terms. 3. That such creditors for such furnishings during the period to which each term's aliment was directed to be applied, were preferable to creditors for alimentary furnishings during prior periods; but that such prior alimentary creditors were preferable inter se, according to the priority of their diligences. 4. That creditors who had used arrestments, and creditors founding on intimated assignations, were to be preferred according to the priority of their arrestments and intimations respectively. 5. That parties who had advanced money to purchase a commission for the annuitant's son, and fit him out for the army, were alimentary creditors. 6. That a gamekeeper, claiming arrears of wages, was an alimentary creditor. 7. Question, whether a party who had undertaken the payment of certain alimentary furnishings, but had made no actual payment, and who founded on an order upon the annuitant's agent for a sum of money, which order was duly intimated, was entitled to be preferred.
In 1822, the late Earl of Buchan, uncle of the present Earl, executed a deed of settlement, by which he conveyed his estates to trustees, for the purposes therein specified. Mr Monypenny, W.S., was the only trustee who accepted. The trustees were directed, inter alia, “To put the person who at the time shall be first in the order of succession to the said lands, barony, and others, if he be, or when he becomes major, in possession (rent free) of the mansion-house, garden, and offices of Ammondell, and park within which the same is situated, and to content and pay to him or her a free liferent annuity of £1500 sterling, at two terms in the year, Whitsunday and Martinmas, by equal portions, beginning the first term's payment at the first of these terms after my death, for the half-year following, and so forth half-yearly thereafter, during the subsistence of the trust.”
By a codicil to that settlement, dated 7th May, 1828, it was declared that the annuity of £1500 “shall be considered as purely alimentary, and shall not be attachable or arrestable by the creditors of the person succeeding.”
The present Earl of Buchan became entitled to the above provisions, by the succession opening to him, in 1829. His Lordship was, at this period, embarrassed in his circumstances; and, in a short time, his creditors proceeded to attach the alimentary allowance of £1500, by arrestment
“Finds, That the late David Stewart, Earl of Buchan, by his trust-settlement, dated the 12th day of June, 1822, directed his trustees, the raisers of this action, to put the person first in the order of succession to the trust property, in possession of the house, garden, and park of Ammondell, and to pay to him an annuity of £1500 per annum; and, by a codicil to the said trust-deed, dated the 7th day of May, 1828, the said Earl declared that this annuity of £1500 should be considered as purely alimentary, and should not be attachable or arrestable by the creditors of the annuitant: Finds, That the claimant, Henry David, the present Earl of Buchan, is the person now entitled to these provisions; that they are not exorbitant, reference being had to the rank and circumstances of the annuitant; and that no part of the annuity is liable to be attached, either on the ground that it exceeds a proper alimentary fund, or that the Earl is entitled, as is alleged, to certain property in right of his present wife: Finds, That the diligence of the creditors for debts contracted to
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* “It is clear, that a fund declared by the donor to be alimentary, is not attachable by creditors whose debts were contracted before the donation; unless, perhaps, it is of an unreasonable and exorbitant amount. It is equally certain that the provision for each year may be attached for aliment furnished within the year, if suitable to the circumstances of the grantee. If so attached, it is applied to its proper purpose, for the convenience of the grantee, and to save him from the hardship which would arise if he were totally deprived of credit, and compelled to deal for ready money only. “But there is room for doubt whether those who furnished articles of aliment, and who allow claims to lie over from year to year, should suffer nothing from their mora, except being postponed to the creditors who follow forth their diligence within the year. In the case of the Countess of Caithness, 10th August, 1757, Lord President Craigie laid it down as law, that a creditor, however alimentary, cannot affect an alimentary provision for furnishings in a prior year. But other Judges thought that diligence within the year only gives a preference in competition with the rest of the creditors; and one of the Judges said, that if the President's rule was law, it was in contradiction to common sense. The Lord Ordinary does not concur in that remark. If claims for articles of aliment are allowed to lie over, it has a tendency to defeat altogether the object of an alimentary provision, by holding out an inducement to the grantee to persevere in a course of unnecessary expenditure, while it exposes him to the danger of being left destitute for a long period, in consequence of the accumulation of arrears. But as no decisions in support of Lord President Craigie's rule are to be found in the books, and as the opinion of the other Judges has recently received the sanction of Mr Bell's authority,
1 the Lord Ordinary does not consider himself at liberty to restrict the diligence of the creditors to the annuity of the years in which the furnishings were respectively made.”
1
1 Bell, 130.
The Earl of Buchan possessed at this time no funds besides the provision above-mentioned. He had a large family by a former marriage. The present Countess of Buchan had a West Indian property, from which his jus mariti was excluded.
His Lordship having contracted new debts, and the creditors used arrestments at each term. In order to avoid the expense of legal proceedings, he executed, in May, 1833, a conveyance of his annuity to the extent of £700 per annum in favour of Messrs Rose, Marshall, and Forbes, as trustees for behoof of his alimentary creditors. It was made a condition of the conveyance, that, if separate measures of diligence should be used by the creditors to attach the alimentary fund, this trust-assignation should cease and fall. The assignation was duly intimated. Notwithstanding this arrangement, certain of the creditors endeavoured to obtain preferences, by using fresh arrestments in the hands of the trustee, in consequence of which the Earl, in virtue of the power he had reserved, on the 4th June, 1834, addressed a letter to Messrs Rose, &c., recalling the assignation. About the same time, the trustee under the late Earl's settlement, raised the present process of multiplepoinding, for the purpose of disposing of the £750, which became payable at Whitsunday, 1834, for the half year running between that term and Martinmas.
His Lordship lodged a claim to be preferred to the whole fund in medio, on the ground of its being payable to himself in advance, and not subject to the claims and diligence of creditors for aliment furnished previous to the half year for which it was destined.
A variety of claims were lodged by creditors.
1. Messrs Rose, Marshall, and Forbes, as trustees for the alimentary creditors, claimed to be preferred in virtue of the conveyance above mentioned, or, otherwise, in virtue of arrestments used at their instance; while Lord Buchan maintained that the trust assignation had fallen in consequence of the letter of recall, and was now without effect.
2. Sir Patrick Walker, and Mr J. Morrison, W.S., claimed on the balance of a debt incurred to them for having advanced the price of a commission in the army, and the expense of outfit, on behalf of Lords Buchan's eldest son.
3. John Reid claimed to be ranked on the fund in medio for the amount of wages, and arrears of wages, as a gamekeeper. In answer to these two claims, Lord Buchan maintained, that the debts were not properly alimentary.
4. Mr Patrick Forbes lodged a claim in virtue of having undertaken the payment of charges for board and education for the Earl's children, and founded on a letter from his Lordship to Mr Monypenny, requesting that a sum of money might be paid to the claimant for the above purpose.
The Lord Ordinary pronounced the following interlocutor (with the note subjoined,
*) setting forth the principle on which the several claims would fall to be ranked, and disposing of those of which the alimentary
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* “There are several points of difficulty in this case, among which, however, the Lord Ordinary can scarcely reckon that as to the Earl's own claim of preference over all the other claimants, in respect that his annuity is payable in advance, and that, if it is attached at the term by creditors for past furnishings, it must be withdrawn from those who made furnishings immediately after, though they alone are entitled to any preference over it. If it be competent for alimentary creditors of former years to attach an alimentary fund where there is no claim by creditors of the current year (which has been held clear ever since the case of Lady Caithness in 1757), the circumstance of the aliment being payable in advance can be no bar to such attachment; and nothing seems more plain than that preferences can only be sustained for creditors who actually come forward to claim them, and that the debtor himself can never be preferred as a constructive trustee or mandatary for such future and contingent creditors. If the Earl's doctrine be right, no alimentary fund, payable in advance, could ever be arrested at all (except the payment was in arrear), since none of those creditors, in behalf of whose preferable claims it was protected from all others, could possibly be in existence till after it was safe in the pocket of the debtor; and the consequence would be, that the owner of such a fund might safely defraud all his alimentary creditors, and that those who had supplied him with the means of existence for the last six months could never have access to the only fund to which they could look for their payment. “The Lord Ordinary is not satisfied with Mr Forbes's statement of his claim as a furnisher of aliment for the six months subsequent to Whitsunday 1834, and is unable to trace the evidence by which it is supported. He thinks it very doubtful whether his having merely undertaken to guarantee the payment of such furnishings would make him such a creditor. If it would, the debtor would have a very easy way of making himself preferable over all competitors. Actual payment would be in a different situation. But the Lord Ordinary sees little evidence of any such payment; and certainly none to any thing like the extent of the claim. That goes to the amount of £250; but this is the whole that the Earl's letter states him to have guaranteed for a whole year, and it is not easy to understand how it should have been incurred, and far less actually paid, in six months. The interlocutor, however, is so expressed, as to leave all this open for future explanation, if the findings now made should become final.”
Lord Buchan reclaimed, and the cause having come to be advised on the 9th June, 1835, the Court expressed doubts whether the whole provision of £1500 should be held to be alimentary. Lord Glenlee referred to the following passage in Stair:
1—“It is also a competent exception (in the process of arrestment) that the thing arrested is a proper aliment, expressly constitute, and not exceeding the measure of aliment;” and to the case of Blackwood,
2 the result of which was, that it does not follow, although the granter of a provision mean to provide aliment for a party, that he intends to make the whole of the sum so provided exclusive of the diligence of general creditors. His Lordship observed, that, before Lord Buchan could be entitled to say that the whole provision was alimentary, he must show that it was really an alimentary fund, and also not beyond the proper measure of aliment. The Court ordered minutes of debate on the question, “To what extent and effect the provision
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1 III. 1, 37.
2 M. 10390.
Pleaded for the Earl of Buchan—
1. In regard to the “extent” to which the provision was to be considered alimentary, it is in the discretion of the Court, in cases where an annuity is not expressly alimentary, but held to be so by construction of law, as in the case of salaries attached to particular offices, to say whether a certain allowance was or was not more than a suitable aliment. But, in the present case, the amount of the allowance was not discretionary with the Court—the provision was given under the condition that it should be considered as purely alimentary, and should not be arrestable, and the question is whether the party giving the allowance had power to attach that condition to it. Here no attempt was made by the granter to place his own funds beyond the reach of creditors, nor was there any attempt at collusion between the heir and the ancestor to have the whole succession secured to the heir, but at the same time placed beyond the reach of creditors, such as occurred in the case of Blackwood. Then, if there was no fraud, the provision was not so grossly extravagant and unreasonable as to require the Court to break down the will of the testator upon the mere question of amount, for it could not be disputed in law that to a reasonable amount he had the power to annex the condition that the annuity should not be arrestable. In judging of this, the Court take various matters into consideration, such as the rank and status of the party, the number of his family, and the consequent number of persons dependent upon him for support, and, looking to the circumstances of the Earl of Buchan's situation, £1500 a-year could not be considered an exorbitant allowance.
2. Again, as to the “effect” of such a provision being held as alimentary, such a fund cannot be attached for debts contracted before the right to the fund existed, nor for debts contracted afterwards, unless they were alimentary; and even in regard to alimentary debts, those contracted for the aliment of the party during any particular term are preferable on the allowance applicable to that term.
1 Thus in the ordinary case of an annuity payable half yearly at the end of each half year, the creditors for alimentary furnishings in the course of that particular term may arrest during its currency, and are preferred on that term's annuity, on the principle that each half year's annuity is to be applied to its proper purpose of alimenting the annuitant during that half year. In the present case there is this peculiarity, that the provision for each half year is payable in advance; and the question is, whether, by the diligence of creditors, the fund can be diverted from its special purpose of alimenting the Earl and his family from Whitsunday
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1
Dick v. Dick, as reported by Direction (10388).
Pleaded for the Creditors—
1. That a provision is not necessarily wholly alimentary in its nature, merely because it is declared to be alimentary in the deed by which its owner acquires right to it; 1 and, in ascertaining whether or not there is any excess, all the circumstances of the party's situation ought to be taken into account—his station in society, the amount of his debts, and the existence of any separate fund for the support of himself and family. 2 Applying these principles to the present case, the great extent of the Earl's debts, the circumstance of his having a free residence, and of the Countess being in possession of a separate fortune, from which the family might be supported, are elements for the consideration of the Court when deciding how far the fund in question is to be held alimentary.
2. The Earl is not entitled to prevent the fund from being applied in payment of alimentary furnishings, or to dispute the validity of his own assignation of part of it towards paying for such furnishings. The law laid down in the case of Lady Caithness 3 is applicable to the present case, viz. that the creditors, for furnishings in a particular year, have a preference on that year's fund over furnishers for previous years, but that the latter are not precluded from attaching the fund; and the circumstance of the annuity being payable in advance does not render this principle of law inapplicable, and means nothing more than that the annuitant should have the benefit of a forehand payment.
The Court adhered to the Lord Ordinary's interlocutor.
Solicitors: A. Monypenny, W. S.— C. H. Miller, W. S.— Horne and Rose, W. S.—Agents.
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1 Stair, ut sup.; Blackwood, M. 10390.
2 Blackwood (Dirleton's Report), M. 10391.
3 Brown's Sup. V. 338.
