Scottish Court of Session Decisions

Francis More, chartered accountant, Edinburgh, trustee on the sequestrated estates of James Somervell of Sorn, in the county of Ayr, and Hamilton Farm in the county of Lanark, brought this action against James Graham, Henry Somervell, and others, children of the said James Somervell, and the tutors ad litem of said children, and others. The Scottish Imperial Insurance Company, Glasgow, were called as defenders for any interest they might have.

The pursuers sought to have it declared that the destination to the heirs of entail contained in the disposition and deed of entail, dated 21st July 1823, granted by the deceased Miss Agnes Somervell of Hamilton's Farm, was evacuated, and that the conditions, provisions, restrictions, and clauses, prohibitory, irritant, and resolutive, or other fetters of entail contained in the said disposition and deed of entail, and which were referred to in the bonds and assignations and dispositions in security after mentioned, became sopited and extinguished so as no longer to affect the lands therein contained from and after 30th November 1899 by the recording on said date in the Register of Entails of a disposition and deed of entail executed by the said James Somervell on 23rd October 1899, and recorded in the General Register of Sasines 6th December 1899; and that the said conditions, provisions, restrictions, and clauses, prohibitory, irritant, and resolutive, or other fetters of entail contained in the said disposition and deed of entail, no longer affect, and have not since said 30th November 1899 affected the lands of Hamilton's Farm, in the sheriffdom of Lanark, being the lands described and contained in certain bonds and dispositions in security granted by the said James Somervell on 16th May 1882, 26th May 1884, and 12th May 1894, now held by the Scottish Imperial Insurance Company as the creditors therein, and that the heirs of entail called to the succession of the said lands of Hamilton's Farm under the destination contained in the said disposition and deed of entail dated 21st July 1823, have no right, title, or interest to enforce the said conditions, provisions, restrictions, and clauses, prohibitory, irritant, and resolutive, or other fetters of entail; and that the declarations in the said bonds that they should not affect the said lands of Hamilton Farm in any way inconsistent with the said disposition and deed of entail dated 21st July 1823, and should not operate to infringe the rights of persons succeeding the said James Somervell as heir of entail, except so far as might be consistent with the said disposition and deed of entail, have since 30th November 1899 been of no force and effect; and that the heirs of entail called in the said disposition and deed of entail have no right, title, or interest to enforce the said declarations contained in said bonds and dispositions in security, and that the rights of the defenders the Scottish Imperial Insurance Company, now the creditors under the bonds and dispositions in security, are not limited to any extent or affected in any degree by the conditions, provisions, restrictions, and clauses, prohibitory, irritant, and resolutive, or other fetters of entail contained in the said disposition and deed of entail granted by the said James Somervell, of date 23rd October 1899, and that the said bonds and dispositions in security, and disposition in further security, affect and form permanent burdens on the fee of the said lands of Hamilton's Farm without any limitation whatever.

James Graham Henry Somervell and others, the children of James Somervell, and their curator ad litem, were the only compearing defenders.

On 11th November 1881 Mr Somervell succeeded to, inter alia, the lands of Hamilton's Farm, Lanarkshire, as heir of entail under the disposition and deed of entail dated 21st July 1823. While possessing said lands under said disposition and deed of entail, Mr Somervell, in consideration of certain sums advanced to him, granted the bonds and assignations and dispositions in security mentioned in the summons.

The said bonds and dispositions conveyed the entailed lands in the usual form of bond and disposition in security granted by heirs of entail in possession, and contained, inter alia, declarations and provisions by the granter James Somervell, in the following terms—“Whereas I hold the lands before disponed by virtue of a deed of entail containing prohibitions and restrictions against alienating and encumbering the same to the prejudice of the subsequent heirs of tailzie, therefore it is hereby declared by me, and the said creditors named therein by acceptance hereof agree for themselves and their foresaids, that neither these presents, nor any adjudication or other process, diligence, or execution to follow hereon, shall affect the said lands or any part or portion thereof, or the rents, maills, and duties thereof, in any way or to any extent inconsistent with the said deed of entail, nor shall the same operate to infringe the right of any person

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or persons who shall succeed or become entitled to succeed to me as heir or heirs of tailzie in the said lands, except in so far as the same may be consistent with the said deed of entail; but the real security hereby constituted, and the assignation underwritten to rents, maills, and duties, and all process, diligence, and execution following upon the same, or upon the personal obligations hereinbefore written, or any of them, shall, in so far as the same may be inconsistent with the said deed of entail, be null and void as against the said lands and the heirs of entail succeeding thereto and the rents thereof, and shall be no further binding against the said lands than is consistent with the said deed of entail of the said lands, so that no irritancy may be incurred by my granting this disposition in security, or by any process, diligence, or execution which may follow hereon; but without prejudice to the effect of these presents in all other respects: … And on default in payment I grant power of sale, but only to the extent of my own right and interest in the foresaid lands, and of my own power to sell the same, and nowise to any extent or effect inconsistent with the said deed of entail, and under the conditions and restrictions above written, and not otherwise.”

The pursuer averred that the said bonds and dispositions in security affected the fee of the lands of Hamilton Farm from the respective dates when they were recorded, subject only to the declarations above quoted.

On 12th November 1898 Mr Somervell, as heir of entail in possession under the said disposition and deed of entail of 1823, made application to the Court of Session under section 4 of the Rutherfurd Act (11 and 12 Vict. cap. 36), for authority to dispone the said lands of Hamilton's Farm by a new disposition and deed of entail mentioned in the petition, and, the requisite consent having been given by the tutor ad litem appointed by the Court to Mr Somervell's pupil son James Graham Henry Somervell, the authority asked for was granted by the Court, and in virtue thereof the new disposition and deed of entail, dated 23rd October 1899, was executed and recorded.

In the deed of entail, dated 23rd October 1899, Mr Somervell disponed the said lands to a different series of heirs to those mentioned in the disposition and deed of entail of 1823, and also included certain subjects of relatively small value which were not included under the entail of 1823. At the date of the action Mr Somervell was institute of entail in possession of the lands of Hamilton's Farm and others under the entail of 1899. Both the deed of entail of 1823 and the deed of entail of 1899 contained the fetters, prohibitions, and declarations usual in strict entails. The pursuer averred that in the proceedings preliminary to the entail of 1899 “no steps were taken for the purpose of preserving the status quo ante of the said bonds and dispositions in security, and the consent of the said bondholders to the said proceedings was neither asked nor given. The deed of entail of 1899 is subsequent in date both as to execution and recording to the said bonds and assignations and dispositions in security and disposition in further security, and in no way limits the rights of the heritable creditors under said deeds. It however evacuated the destination to heirs contained in the deed of entail of 1823, and sopited and extinguished the conditions, provisions, and clauses prohibitory, irritant, and resolutive, or other fetters of entail contained in said deed of 1823.”

The averments were denied by the compearing defenders.

The pursuer further stated that on 8th May 1901 a petition was presented to the Court by the trustee on Mr Somervell's sequestrated estates for authority to disentail the estate of Hamilton's Farm, and that in the proceedings following thereon the defenders maintained that the lands and dispositions in security only affected the estate during the period of Mr Somervell's possession and did not form a permanent burden on the fee of the estate without any restriction or limitation which was effectual against the landholders, and that it was not competent to dispone in the disentail proceedings of the question as to the said deeds. As the value of Mr Somervell's interest in the estate could not be determined or the measure of the bondholders' rights fixed till this question was settled the present action had been rendered necessary.

The defenders averred, inter alia, that the effect of the bonds and dispositions in security granted by Mr Somervell was to convey Mr Somervell's life-interest only in the said entailed estate in security of the advances made to him, and that the rights of the said creditors were in no way enlarged by the granting of the deed of entail of 1899.

The pursuer pleaded, inter alia—“(1) The bonds and assignations and dispositions in security mentioned in the summons having affected the fee of Hamilton's Farm subject only to the fetters of the entail of 1823, and those fetters having been sopited and extinguished by the entail of 1899, decree that said bond and others affect said fee without any limitation or restriction should be pronounced as concluded for. (2) The entail of 1899 having evacuated the destination in the entail of 1823, the heirs called to the succession under the 1823 entail have no right, title, or interest under said 1823 entail in any question relating to Hamilton's Farm. (3) The said bonds and assignations and dispositions in security being antecedent in date both of execution and recording to the entail of 1899, are not limited or restricted in any way by that entail.”

The defenders pleaded, inter alia—“(5) The pursuer's averments are irrelevant and insufficient to support the conclusions of the summons. (6) In respect that the said bonds conveyed only Mr Somervell's life interest in the estate, the decree of declarator last craved should be refused. (7) In respect that the power of sale in said

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bonds was expressly limited to the extent of Mr Somervell's own right as heir of entail, the decree of declarator last craved should be refused.”

On 21st May 1904 the Lord Ordinary ( Kyllachy) assoilzied the defenders from the conclusions of the summons, and decerned.

Opinion.—“This is an action which has been brought to determine a question which was lately raised, but not, I understand, decided, in an entail petition at the pursuer's instance now depending before Lord Pearson. Lord Pearson expressed an opinion upon it—as upon certain other points in the case. But in the Inner House it was observed that the question could not properly be determined in the absence of certain persons, and in particular the Imperial Insurance Company, who are now the holders of certain bonds and dispositions in security to which the dispute relates.

The present action has been brought so as to have all the parties interested in the field. It is an action of declarator, and although the bondholders referred to have not appeared, they have been duly called. The other parties interested, viz., the minor heirs of entail and their curator, have appeared and lodged defences; and they have really the main interest to try the question. They have stated in their defences certain prejudicial pleas, some of them perhaps not wholly without substance. But I may say at once that I do not think it necessary to dispose of those pleas. I see no reason why I should not decide the case upon its merits, especially as the view I take, if it should be upheld, will obviate further procedure and further expense.

The pursuer's author—Mr Somervell of Sorn—is heir of entail in possession of the lands of Hamilton's Farm. He is in course of disentailing these lands, and for that purpose he has to compensate the interests, inter alia, of his eldest son and other children. For this purpose he (or rather the trustee in his sequestration who is the ostensible pursuer) desires (for reasons into which I need not enter, and which may be entirely legitimate) to reduce as far as possible the value of his children's interests. And, as one mode of doing so, he seeks in this action to have it found that (as he maintains in his entail petition) certain bonds for borrowed money (being the bonds now in question held by the Insurance Company) granted by him (Mr Somervell), and secured in the usual form over his life interest in the entailed estate, have now by reason of certain proceedings in the year 1898, which he contends involved a disentail—come to affect the fee of the estate, doing so to the same effect as if when he granted the bonds he had been a fee-simple proprietor.

This somewhat curious contention is based, as I understand, upon two considerations. The first is that, according to the usual style, the bonds in question, although in effect merely conveying the grantor's life interest, yet express, according to the usual styles a conveyance of the entailed lands, with a declaration adjected that the conveyance shall merely operate in so far as the grantor, as heir of entail, had power to convey without contravention of the entail. The second consideration is this—that, by a not unusual proceeding, Mr Somervell in 1898, with the consent of his eldest son, and under the powers of the 4th section of the Rutherfurd Act, made some not very important alterations in the destination in the entail, and at the same time added to the estate certain small parcels of land not previously entailed, these objects being effected by what I should call a supplementary disposition and deed of entail—a deed which was just a repetition of the existing entail with the necessary modifications.

I must say at the outset that, so far as I can see, there is not much substance in this controversy. For supposing the pursuer to succeed upon what is really a conveyancing puzzle, the only result I apprehend would be that there would at once be an action of reduction at the instance of the next heir, under which the proceedings of 1898, including the deed of that year, would, I should expect, be set aside. For there was plainly no intention on the part of anybody to enlarge Mr Somervell's title or the bondholders' security. And neither he, nor they (the bondholders), nor his general creditors, could, I apprehend, be allowed to retain a gratuitous benefit which was the result of a mutual mistake.

But, taking the case as presented as a case raising simply a point of conveyancing, I have come to the conclusion that Lord Pearson's view, as expressed in his judgment in the petition, is, if I may say so, clearly right.

It may be true that if there had been here a disentail—a disentail following upon unconditional consents—and Mr Somervell thus came to possess the estate in fee-simple as a fee-simple proprietor, there might thence have resulted an enlargement of his title, and by consequence an enlargement of the bondholders' title. That would have happened on the principle of accretion, which of course is the only principle applicable. For it is not, I suppose, suggested that a disentail, say after Mr Somervell's death, could have had any effect of the kind suggested. But there was here no disentail,—no accretion or room for accretion. There never was a moment of time at which Mr Somervell was an unfettered and fee-simple proprietor. What happened simply was that he and his son exercised a power which they had,—not indeed conferred by the entail but conferred by Act of Parliament,—a power to make, as they did, by an appropriate deed, certain alterations on the existing entail; alterations not affecting the incidence of the fetters or the rights of Mr Somervell, or the rights of the bondholders to whom he had pledged his life interest, but leaving all these matters exactly as they previously stood.

It was said that the same section of the Rutherfurd Act authorised, subject to the same conditions, a sale of the estate; and it

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was asked what (the entail being thus brought to an end) would have been the position of the bondholders in the event of a sale. As to that, I should think it enough to answer that it may be safely assumed that in the necessary proceedings the position of the bondholders would have been expressly defined and so far as necessary safeguarded, But it might also, I think, be added that the bondholders' rights could not possibly be enlarged by the extinction of the title of their author. As against that extinction, they (the bondholders) might be protected by their recorded infeftment. They probably would. But on the other hand, as against any claim by them to enlarged rights, the purchaser would, I should think, be equally protected by the transfer, implied in the sale, of all rights competent to the consenting heirs of entail.

Altogether, I am quite unable to see that, even from the most critical standpoint, the pursuer is entitled to the declarator which he asks.”

The pursuer reclaimed, and argued—The bonds and dispositions, which were in the usual terms of bonds granted by heirs of entail in possession, were habile to carry the fee of the estate. They could not override an existing deed of entail, but the continued existence of such deed of entail was the only thing which prevented the bonds affecting the full fee of the estate. The bonds created a security over the property, subject only to the condition that they were null in so far as in contravention of the existing entail. An heir of entail in possession was not a liferenter but a fiar subject to the restrictions and limitations of the entail— Montgomerie v. Earl of Eglinton, August 18, 1843, 2 Bell's App. 149, at pp. 185 and 193; Earl of Breadalbane v. Jamieson, March 16, 1877, 4 R. 667, at. p. 670, 14 S.L.R. 420. Accordingly, the moment the entail was out of the way the bonds affected the full fee. The deed of entail of 1899 disponed the lands to a different series of heirs to those in the entail of 1823. It also included certain subjects not included in the earlier entail. It was really a substantive disposition of the whole estate, and not a mere variation of the earlier entail. The old entail came to an end, and a new and different entail containing no references to the former came into existence. Under section 4 of the Entail Amendment (Scotland) Act 1848, an heir of entail in possession held his lands freed and the new entail sopited and extinguished the conditions and clauses, prohibitory, irritant, and resolutive of the earlier entail. The fee of the estate was thereby opened to Mr Somervell's creditors in the bonds as soon as the new entail was executed and recorded. The condition to which the bonds were formerly subject, viz., that they should not operate to contravene the existing entail, flew off, and the security became absolute, as the entail which was not to be contravened had ceased— Paterson v. Brounfield, 1786, M. 15, 618, May 19, 1786, 3 Pat. App. 50; Paterson v. Cuthbert, February 23, 1789, Hume's Dec. 869; Paterson v. Leslie, July 1, 1845, 7 D. 950; Gammell v. Cathcart and Others, November 13, 1849, 12 D. 19, affd. 1 Macq. 362; Christie, June 29, 1888, 15 R. 793, 25 S.L.R. 609. In carrying through the new entail no steps were taken to preserve the status quo ante of the bonds, and the new entail being subsequent in date of execution and recording to the bonds could not limit the right of the heritable creditors under the bonds.

Counsel for the defenders and respondents were not called on.