Scottish Court of Session Decisions

By the 11th section of the general Turnpike Act (1 and 2 Will. IV. c. 43), which re-enacts the relative sections of 4 Geo. IV. c. 49, it is provided, that the trustees under the several trusts shall take sufficient security from their treasurer “for the due and faithful execution of his office,” and “shall limit the sum, beyond which he shall not retain any money belonging to the trustees.” By the 16th section it is enacted, “that the trustees of every turnpike road may pursue and be pursued in all actions or processes, in the name of their clerk or treasurer for the time being; and that no action or process brought or commenced by or against any trustees of any turnpike road, by virtue of this or any other Act of Parliament, in the name of their clerk or treasurer, shall cease by the death or removal of such clerk or treasurer.” The 17th section provides, “that all such officers as shall be appointed by any trustees of any turnpike road shall, as often as required by the trustees, render and give to them, or to such person as they shall for that purpose appoint, a true, exact, and perfect account in writing under their respective hands, with the proper vouchers of all monies which they shall respectively, to the time of rendering such accounts, have received, paid, and disbursed, by virtue of this or any turnpike act, for or on account or by reason of their respective offices; and in case any money so received by any such officer shall remain in his hands, the same shall be paid to the trustees, or to such person as they shall in writing under their hands authorize and empower to receive the same.” And by the 18th section it is provided, “that the trustees of every turnpike road shall, and they are hereby required, either by themselves or some committee of their number, annually to examine the vouchers, and audit and settle the accounts of the respective clerks and treasurers appointed by them,” &c.

In the end of July, 1827, Robert Rankin, junior, formerly writer in Irvine, was appointed treasurer to the road-trustees of the district of Lochlibo in Ayrshire, and, on 2d August, a bond of caution was executed by him as principal, and by the late Robert Dunlop and the late Patrick Creighton as cautioners, whereby, on the narrative that, in pursuance of the local road act for the county, the trustees for the Lochlibo district had appointed Rankin to the office of treasurer, on his finding caution, they bound and obliged themselves, jointly and severally, and their heirs and executors, “that I, the said Robert Rankin, junior, shall not only duly and faithfully execute the said office of treasurer, but also from time to time, and as often as may be required, hold just count, reckoning, and payment to the said trustees, or quorum of them, of my intromissions with the funds of the said road, and any other road which may be put under the management of the said committee, and of all monies that shall be paid over to me as treasurer foresaid, so long as I shall be continued in office; and particularly, that all monies to be received by me shall from time to time be lodged in a bank, in an account-current to be opened in my name, for behoof of the said road, and that I shall at no time keep in my hand more than £20 for answering contingencies,—all this under the penalty of £200 attour performance.”

Besides the Lochlibo road, these trustees were appointed at a general meeting of county trustees, on 1st August, to take charge of the Monk-redding line of road, which was a tributary line in course of formation, and was included in the Ayrshire Act; and accordingly, the management of the Lochlibo district trustees and the intromissions of Rankin as their treasurer had reference to both lines. The accounts of the two roads were kept separately in the books, but they were annually examined and audited at the same time by the trustees.

The treasurer's accounts for the year were closed annually on the 26th May, in terms of the Ayrshire local act, and were audited early in June. On the Lochlibo road accounts there was, from the first, a considerable annual balance against the treasurer. But on a combined view of his intromissions for both roads, deducting the balance of the one from the other, and taking into view the sums in bank, the balance was in his favour in the years 1828, 1829, and 1830. In 1831 and 1832, on the 29th July respectively, there were balances in the treasurer's hands, of upwards of £200 in the first of these years, and of a somewhat smaller sum in the second. At the auditing of accounts, on 8th June, 1832, the balance had been reduced for the two lines of road to the sum of £77. The trustees neither required these balances to be paid over to themselves or to their account in the bank, nor gave specific directions as to the application thereof.

Before the time when the accounts fell to be examined for the year 1833, the treasurer absconded with road-trust funds in his hands to the extent of about £370. At a meeting on 14th June, the district trustees authorized the respondent Rankin, their clerk, to uplift and discharge the balance due to the trust by the treasurer, “and, if necessary, to sue him and his cautioner for any defalcation there may be;” which authority was minuted.

Thereafter, in July 1833, the respondent, as “clerk of the committee of road-trustees for the Lochlibo district, and representing the said committee, and as duly and specially authorized by the meeting above mentioned to raise and pursue this action,” brought an action before the Sheriff of Ayr against Rankin, junior, the treasurer, as principal, and against Patrick Creighton, and the representatives of Robert Dunlop, now deceased, as cautioners, setting forth Rankin junior's appointment to the office of treasurer, the relative bond of caution, and his subsequent withdrawal from the country, subsuming against all the parties to the bond nominatim, and concluding to have Rankin, as principal, and Dunlop's representatives (Creighton being omitted to be mentioned) as cautioners, defenders, ordained, 1st, to exhibit and produce a state of the treasurer's intromissions; 2d, to make payment for behoof of the committee of trustees of the balance due upon the said intromissions, with interest; and 3d, to make payment of the penalty in the bond. A minute of compearance was put in for Murdoch, clerk to the general meeting of road-trustees, who sisted himself as joint pursuer of the action, for his interest, in terms of the 16th section of the general turnpike act. Murdoch, however, did not appear in the subsequent stages of the proceedings.

Defences to this action were lodged by Creighton (the other defenders making no appearance), who pleaded that the respondent had no title to pursue, and had admitted his want of title by having recourse to the compearance of Murdoch; and that the road-trustees had so neglected the duty incumbent on them by statute, and implied in the bond of caution, of exercising a proper control over the intromissions of their treasurer, and especially of having the surplus annual balances paid over to them, as to liberate the defender from his cautionary obligation.

There was no plea as to the omission of Creighton's name in the conclusions of the summons; but in order to supply this defect a supplementary summons was thereafter brought against Creighton, who in his defences thereto maintained, in addition to his former pleas, that the original summons having contained no conclusions against him was inept, and that it was incompetent to amend such summons by a supplementary action. The Sheriff repelled this preliminary defence and remitted to the original action ob contingentiam; and at the same time in the original action he sustained the instance. In the course of the proceedings, Patrick Creighton died, and his brother the advocator George Creighton sisted himself as his representative.

The Sheriff pronounced the following interlocutor:—“Finds it averred by the pursuer, and not denied by the defender, that the treasurer's accounts were regularly and yearly lodged with the pursuer, as district clerk of the road-trustees, from his appointment in 1827, until the year previous to his elopement in the end of May or beginning of June, 1833, and that the same were examined and docqueted by the trustees, and afterwards by a committee appointed by the general meeting, by whom the same were passed from year to year: Finds that the cautioners were bound, with the treasurer, Robert Rankin, junior, that he should not only duly and faithfully execute the said office of treasurer, but also from time to time, and as often as might be required, hold just compt and reckoning and payment to the said trustees, or quorum of them, of his intromissions with the funds of the road mentioned in the extract bond produced, and any other road which might be put under the management of the said committee, and of all monies that should be paid over to him as treasurer foresaid, so long as he should be continued in office; and particularly, that all monies to be received by him should, from time to time, be lodged in a bank in an account-current to be opened in his name, for behoof of said road, and that he should at no time keep in his hands more than £20 for answering contingencies: Finds, therefore, that it was the duty of the cautioners to see that the said Robert Rankin, junior, duly and faithfully executed the duties of his office of treasurer by accounting for his intromissions, and complying with the terms of the bond which they came under: Therefore, repels the Defences for the compearer and defender, George Creighton, as to his liability as representative of the original cautioner and defender, Patrick Creighton.”

Thereupon Creighton brought an advocation, in which the Lord Ordinary ordered cases. In support of the pleas stated by him in the inferior Court, Creighton contended,—

1. The respondent, as clerk of the Lochlibo district trustees, had no title to pursue, the authority given to road-trustees by the turnpike act (§ 16) extending merely to the general road-trustees for the county. ¹ The minute of 14th June, 1833, was insufficient to give him a valid title, as the committee of trustees could not, by any minute of their own, constitute themselves a corporation to the effect of suing and being sued in name of any of their office-bearers, more especially in a question with a third party not one of their own number.

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¹ Williamson v. Goldie, March 2, 1832, ante, X. 413.

2. There were no termini habiles for pronouncing decree against Creighton. His deceased brother, in whose stead he was sisted, was not effectually made a party to the original action, his name not appearing in the conclusions of the summons. This objection was not obviated by Creighton appearing as defender, and pleading on the merits, since compearance by a party not concluded against, cannot authorize decree being pronounced against him. ¹ Nor was it competent to cure the defect in the original summons, which was in essentialibus, by a supplementary summons. ² The supplementary action was besides never conjoined with the original action; the interlocutor remitting it thereto not being tantamount to a conjunction, and homologation by the subsequent pleading being insufficient to remedy the defect. ³

3. The cautioners were relieved of liability in respect of the negligence and misconduct of the trustees. Contrary to the directions of the turnpike act, and especially of the 17th section, they allowed their treasurer to retain possession of large sums of money, instead of requiring, at the successive audits, actual payment to themselves of the growing balances in his hands; thus laying temptation in his way, and enabling and encouraging him to act in the manner which led to his absconding with their funds. And, contrary to the terms of the bond of caution, the trustees allowed him to retain sums in his hands beyond the amount of £20. Cautioners for officers have frequently been liberated by the Court from liability under circumstances much less favourable than what occur in the present case; ⁴ and the case of M'Taggart was reversed by the House of Lords, without the principles of law on which the Court of Session proceeded being called in question, but because there was a defect of facts admitted or proved to which those principles could be applied. ⁵ The law affecting cautioners for a precise and subsisting debt is not to be confounded with the law applicable to cautioners for the discharge of an office. The obligation of the latter is prospective, undefined, and contingent. No debt may ever be contracted for which the cautioner is to be answerable; but if it should appear that the officer has been authorized to perform the office otherwise than according to its acknowledged regulations, in consequence of which a debt has arisen, it would be contrary to justice to hold the cautioner responsible. ⁶

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¹ Wedderburn v. Town of Dundee, Jan. 4, 1740, M. 11986.

² M'Indoe v. Lyon, Dec. 7, 1826, ante, V. 92 (new ed. 85).

³ Cumming v. Munro, Nov. 19, 1833, ante, XII. 61.

⁴ Duncan v. Porterfield, Dec. 13, 1826, ante, V. III (new ed. 102); Mein v. Hardie, Jan. 19, 1830, ante, VIII. 346; Smith v. Bank of Scotland, 1 Dow, 296; Thomson v. Bank of Scotland, ante, I. 275 (new ed. 257), reversed, 2 Shaw's Appeals, 316; Leith Bank v. Bell, ante, VIII. 721, affd. 5 W. and S. 703; Dalzell v. Menzies, Feb. 15, 1831, ante, IX. 434; Thistle Friendly Society v. Garden, June 17, 1834, ante, XII. 745.

⁵ Ante, XII. 333, and 1 Shaw and Maclean, 553.

⁶ Bell's Principles, § 287, 288; Fell on Guarantee, p. 157.

To this it was answered by the respondent,—

1. The obligation in the bond of caution, prestable as it is to the Lochlibo district trustees or their quorum, could have been enforced in their own name, without reference to the general body of trustees for the county; ¹ and if so, the respondent's title to pursue cannot be subject to any real question, having regard to the special power and authority delegated to him by the trustees to pursue the action, and also to the provision in the 16th section of the general turnpike act. Williamson v. Goldie was a very special case, and is not an authority to the effect contended for by the advocator.

2. Independently altogether of the supplementary action, there are termini habiles under the conclusions of the original libel to support the Sheriff's decerniture against the advocator as coming in place of his brother Patrick Creighton. Even if the libel had not once mentioned Patrick Creighton's name, his voluntarily sisting himself as a defender in a cause in which he was so materially interested, would have warranted judgment against him; ² and the advocator having sisted himself in his stead, and thus adopted the conclusions of the action as applicable to himself, must be held personally barred from urging the plea that his brother had not been formally called ex facie of the summons. But the defect in the original summons was cured by the supplementary action, which, although there was no formal interlocutor of conjunction, was virtually conjoined with the first; and the regularity of the whole procedure has been so recognized by the parties as to bar the objection of the want of such interlocutor. ³

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¹ See Low v. Arbuthnot, June 1, 1826, ante, IV. 650 (new ed. 657); Oswald v. Lawrie, Feb. 17, 1827, ante, V. 381 (new ed. 353).

² Boyd v. Lang, Jan. 20, 1832, ante, X. 213.

³ Ferrier v. Ross, March 7, 1833, ante, XI. 531 (rubr. 2); Kerr v. Martin, Feb.6, 1836, ante, XIV. 444.

3. Neither by statute nor by the terms of the bond of caution was there any express and imperative duty laid upon the Lochlibo trustees, in reference to the treasurer's accounts, which they neglected. Even supposing that the statutory regulations are to be held integral parts of the covenant of parties, the cautioner was not entitled to rely upon the trustees jealously watching over the treasurer's bank-account, and demanding payment of the balance at each annual audit, as duties which they, in execution of their office, were by the statute bound to perform. They might indeed have enforced implement of the obligation in the bond as to depositing in bank, and might have more rigidly examined the treasurer's accounts, with that view, during the last years of his office. But the mere omission to enforce this obligation cannot have the effect of liberating cautioners, themselves expressly bound conjunctly and severally with their principal for its performance. The present is not a case of gross negligence or culpa lata, so as that the trustees might be subjected to personal liability; the fault or omission alleged simply amounting to the non-enforcement of an obligation in the bond against the treasurer, for which the cautioners were as much bound as their principal. The present question is to be ruled by the view adopted by the House of Lords in deciding the case of M'Taggart, which was a legitimate application of a principle acknowledged in the law of Scotland (though in some measure lost sight of in certain previous cases), viz. that to liberate a cautioner from his obligation, there must be some act done by the party secured, by which the cautioner's situation is made worse without his consent, or his relative position under his original obligation of cautionry changed to his injury and loss; and that mere want of due diligence in enforcing against the principal the obligation for which the other is bound as surety has no such effect. ¹

The Lord Ordinary reported the cause to the Court, issuing the note subjoined. ^*

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¹ M'Taggart, supra; Hamilton v. Calder, June 18, 1706 (M. 2091; Wallace v. Saunders, Feb. 20, 1707 (M. 2006); Eadie v. How, Feb. 3, 1829 (ante, VII. 356); Bell, II. 360; Fell on Guarantee, c. 7, p. 181; Nares v. Powell, 14 East, 510.

* “The Lord Ordinary thinks this case attended with some difficulty, both as to the preliminary points and the merits; and as the cases are already printed with an obvious view to an ultimate judgment of the Court, he thinks it best to put it in the way of such a decision, with as little delay and expense as possible. He has not of course formed any decided opinion, but shall state generally the views which have occurred to him.

“As to the respondent's title to pursue as a district clerk under the general road act, the Lord Ordinary is rather inclined to support the title, on the grounds stated at p. 10 et seq. of Rankin's case. The case of Williamson, however, he thinks was rightly decided in the circumstances which there occurred; and though the opinions ascribed to the Judges in the printed report appear to go upon a more general view, he has a strong impression that they should be understood as referring to these circumstances. As it is very important, however, that the point should be finally settled, the doubt which he humbly entertains as to the larger application of these opinions would of itself have determined him to report the cause without a decision.

“The Lord Ordinary is also inclined to support the pursuer's, title, on the special mandate or authority contained in the minute of the trustees of 14th June, 1833, by which he is expressly empowered and directed ‘to uplift and discharge any balance due by the treasurer, and, if necessary, to sue him and his cautioners for the amount.’ The advocator represents this as a mere mandate to a law-agent to raise an action for his employers; in which, of course, the only competent pursuers would be the employers, and not the agent: And from the want of any express direction to sue in his own name, the matter is no doubt attended with some difficulty. The Lord Ordinary, however, must observe, 1st. That the authority is plainly given to the respondent, not as a law-agent, or with a primary view to litigation, but as their clerk or attorney, and in order that he might himself act on their delegated authority; and 2d. That there is accordingly an express power, not only to require payment of the balance, but to discharge it, which of course he could only do by a receipt signed by himself as commissioner and attorney, or per procuration of the trustees; and consequently that the alternative authority to sue, if payment could not be obtained extrajudicially, must be held to have been granted in the same character. The parties may look, upon this point, to the cases of Wilson, 8th February, 1822 (1 Shaw, 304); Gemmell, 19th November, 1830 (9 Shaw, 33); Low, 1st June, 1826 (4 Shaw, 651),—and Oswald, 17th February, 1827 (5 Shaw, 381).

“As to the alleged nullity of the whole proceeding, in respect of the omission of Creighton's name in the conclusion of the original action, there is also very considerable difficulty; but the Lord Ordinary, on the whole, and chiefly on the strength of the decision in the case of Boyd, 20th January, 1832 (10 Shaw, 213), and on the grounds stated in Lord Glenlee's opinion in that case, would have been disposed to over-rule that objection. As things now stand, he is of opinion that the respondent can get no aid from the supplementary action, though it may still he competent for him to waken it, and advocate ob contingentiam.

“On the merits, the Lord Ordinary is disposed, though with great hesitation, to go into the views of the advocator. The omission of the trustees to require the treasurer to lodge the money drawn by him regularly in the bank, might not perhaps have been sufficient to liberate the sureties. But what weighs with him is their neglecting at the successive audits, either to require actual payment to themselves of the growing balances in his hands, in terms of the 17th section of the act, or at least to direct and enforce the application of these balances, after reserving what might be immediately necessary for outlay on the road, towards payment of the heavy accumulating interests on the large debts with which they were burdened, and which they had been urgently required by the general body to keep down by such an application. The Lord Ordinary docs not adopt the advocator's construction of the 17th section to the full extent of holding that every farthing in the hands or bank-account of the treasurer must have been paid over at every audit, although the necessary outlay on the road might have required the greater part of it to be instantly paid back to him. He thinks, on the contrary, that a reasonable sum for meeting current expenses might, and indeed ought, always to have been left: But if the statements at the bottom of page 34 and top of page 35 of Creighton's case are at all correct (and from any view the Lord Ordinary has been able to take of the account in process he is disposed to think they are so), he apprehends that under the true meaning of that section, as well as by the express direction of the general trustees, the district committee was bound to have taken out of the hands of their treasurer by far the greater part of what they improperly left with him; and that in so conducting themselves they violated both an express injunction of the statute, and a very plain and obvious duty as at common law; and therefore, and without questioning the authority of any thing said or decided in a higher quarter in the recent case of M'Taggart's Trustees, the Lord Ordinary must think that they have given the cautioners a fair ground for maintaining that they have been relieved of their responsibility.”