[COURT OF APPEAL]

In re HARGREAVES.

DICKS v. HARE.

[1889 H. 4329.]

Practice - Administration Summons - Creditor - Annuitant - Proof for future Debt - Judicature Act, 1875 (38 & 39 Vict. c. 77), s. 10 [Revised Ed. Statutes, vol. xvii., p. 740] - Rules of Supreme Court, 1883, Order LV., r. 3.

A testator by deed covenanted with trustees to pay an annuity to a woman during her life, to be considered as accruing from day to day, by equal quarterly payments. The testator's estate was not sufficient to pay the estimated value of the annuity as well as his other debts and liabilities, and the trustees took out an originating summons under Order LV., r. 3, as creditors for administration of the estate. At the time when the summons was taken out no quarterly payment of the annuity was due:-

Held (affirming the decision of North, J.), that the trustees of the annuitant were not creditors of the testator, and could not take out a summons for the administration of the estate; although if an administration order was obtained by some other person they would be entitled to prove for the estimated value of the annuity.

BY an indenture dated the 19th of January, 1887, Ernest Hargreavescovenanted to pay to the Plaintiffs, as trustees for Mrs. A. H. Dicks, an annuity of £500 during her life, to be considered as commencing from the 25th of December, 1886, and accruing from day to day, by equal quarterly payments on the usual quarter days in each year with a proportionate part in the event of her death during any current quarter.

E. Hargreaves died on the 21st of October, 1889, and the Defendants were the executors of his will. No arrears of the annuity were due at the time of his death. His estate, after payment of funeral and testamentary expenses, amounted to about £4350; and his debts and liabilities exclusive of the claims of the Plaintiffs

amounted to about £1860. The value of Mrs. Dicks' annuity was estimated at £8386. Under these circumstances the Plaintiffs, on the 13th of December, 1889, took out an originating summons as creditors against the executors for the administration of the testator's real and personal estate.

On the 23rd of December, the executors paid the Plaintiffs £125 for the quarter's payment of the annuity which would become due on the 25th of December.

On the 27th of January, 1890, the summons was heard by Mr. Justice North in Chambers, when his Lordship dismissed the summons with costs, holding that the Plaintiffs were not creditors, there being no debt due to them, and also being of opinion that he had a discretion under Order LV., r. 10, and did not think it a proper case for making an order for administration.

The Plaintiffs appealed from this decision, the Judge having given a certificate that he did not desire to have the case further argued.

Maclean, Q.C., and S. Dickinson, for the Appellants:-

It is beyond dispute that if the value of our annuity be taken into account the testator's estate is insolvent. If therefore the estate was being administered by the Court the annuity would have to be valued, and we should be entitled to prove for the amount under the 10th section of the Judicature Act, 1875, in accordance with the practice of the Court of Bankruptcy: Bankruptcy Act, 1883, s. 37, sub-ss. 3, 7. We are therefore creditors and have a locus standi to bring an action or take out a summons for administration and obtain a decree. The annuity is payable "from day to day" by the express terms of the deed, so that although the executors may pay the quarterly payments as soon as they become due there is really a present debt accruing day by day. Even before the Judicature Act an annuitant might in some cases obtain a decree for administration, for it was not necessary that the debt of the creditor who filed a bill for administration should be such a debt as would support an action at law. It was sufficient if it was debitum in pr¾senti solvendum in futuro: Whitmore v. Oxborrow (1), Blount v. Hipkins (2), Read v.

(1) 2 Y. & C. Ch. 13.

(2) 7 Sim. 51; 4 L. J. (N.S. Ch.) 13.

Blunt (1), Norman v. Johnson (2), Burrell v. Delevante (3), Thomas v. Griffith (4). But here we have a statutory right of proof, and it would be an unreasonable construction of the Act to hold that the executors can prevent us from availing ourselves of our statutory right by refusing to obtain an administration order. The principle of the administration of the assets must be the same whether it take place in Court or out of Court. And now the rules have extended the class of those who may obtain an administration order, for by Order LV., r. 3, an administration summons may be taken out by any one "claiming to be interested as a creditor"; and that a wide interpretation is to be put on the word "claim" is shewn by the rules 44, 46, 46A, of the same order as to advertisements for creditors and claimants.

Mr. Justice North said that he had a discretion whether to make an administration order or not. We contend that he had no such discretion, but was bound to make an order if we proved our claim as creditors; for we have no other remedy, and the question is one of law: In re Powers (5), Wollaston v. Wollaston (6).

Buckley, Q.C., and Farwell, for the Defendants were not called on.

COTTON, L.J.:-

The question here is whether Mr. Justice North was right in refusing to grant an administration decree. It is put in this way, that under the 10th section of the Judicature Act of 1875 there is a right to prove, in the event of an administration order being granted, for the value of this annuity; and then it is said that that enables the trustees for this lady, although of course they have not any right independently, as I read the Act, to have a value put on this annuity. Independently of this section the executors could not pay the annuitant, whether the estate was solvent or insolvent, the value ascertained by the tables; that was not the liability, and they could not pay that; but they must

(1) 5 Sim. 567.

(2) 29 Beav. 77.

(3) 30 Beav. 550.

(4) 2 D. F. & J. 555.

(5) 30 Ch. D. 291.

(6) 7 Ch. D. 58.

wait and pay the sums from time to time as they become due. And under the Act, so far as I can see, the right to prove for the value of the annuity, as properly ascertained, is dependent on an administration order being granted. The section says this:- "In the administration by the Court of the assets of any person who may die after the commencement of this Act, and whose estate may prove to be insufficient for the payment in full of his debts and liabilities, and in the winding-up of any company under the Companies Acts, 1862 and 1867, whose assets may prove to be insufficient for the payment of its debts and liabilities and the costs of winding-up, the same rules shall prevail" (among other things) "as to the valuation of annuities as may be in force for the time being under the law of bankruptcy." That is to say, when the Court is administering the assets of a deceased person whose estate is insolvent, it enables this valuation to be made, and enables the person entitled to the benefit of the annuity to prove for the value as so ascertained. In my opinion that gives no greater right to the annuitant or her trustees to bring an action than they would have had independently of this section. It is very true that when there is an administration order - that is to say, when the Court is administering the assets - it then enables the value of that annuity to be ascertained as it would be in bankruptcy, and proof may be made for that sum. I do not know what the view of Parliament was; it might be this, that the probability was, if the estate was insolvent, that some creditor would obtain an administration order, or, if no creditor obtained an administration order, that the executors for their own protection would do so. But, however that may be, if the Act of Parliament does not give the annuitant a greater right than he had before for the purpose of getting an administration order, we cannot give it him.

What debt could the trustees who applied for this administration order have proved as due to them? It is said that this annuity must be considered as accruing de die in diem. Yes; but that was to meet that which is provided for otherwise by the Apportionment Act, giving the trustees in case of this lady's death a right to prove for the accrued portion of the annuity considering it as an interest accruing de die in diem. In my opinion, as

there is no claim which can be sued for now, as for a sum which is due, the executors having paid the full amount of each quarterly payment as it became due, there can be no right to bring an action at law against the executors, and, therefore, no right to an order for the administration of the estate. I am simply dealing now with this section of the Act of Parliament. It may be that this matter was never thought of by the Legislature when it passed the Act, or it may be that the Legislature did not intend to give the annuitant a right independently of there being an administration by the Court, although, if that had been done, there would be a right to come in and prove.

Then it was said that we must look at the rules and orders, and rule 3 of Order LV. was very much relied on. That is an order enabling certain things to be done on an originating summons which without this order could only be done on action brought. It is said here that an originating summons for the administration of the estate in the nature of a creditor's action may be filed by any person "claiming to be interested as a creditor," and the Plaintiffs say, "We claim to be interested as creditors." But in my opinion they cannot rely on that rule as giving them, if they are not otherwise entitled to an administration order on action brought, a right to obtain it by originating summons. If they claim as creditors and are not creditors, it cannot be said this rule intended to give them a right which they can only have if they are creditors; it cannot mean that a person can come and say wrongfully, "I claim as creditor; therefore I am entitled to this order."

Then other rules are referred to which provide for advertisements for creditors and other claimants, and it is said they shew that these trustees for this lady could come in and prove the debt. So they could; but although in the latter rule the advertisement may be answered, yet it does not mean that we are to construe this rule 3 so as to enable claimants to come in and obtain an administration order as if they were in the same position as creditors entitled under the old law to get a decree for the administration of the estate. It may be a mistake of Parliament, or it may be intentionally done, not to give any right except when there is an administration order; but in my opinion

neither by this Act, nor by force of these rules, can the trustees of this annuitant, as long as what is due to them is paid, come and get an administration order so as to enable them to get the benefit of the rights which they can only get if an administration order is granted.

Then it was said that the cases help the Appellants. It is admitted that there is no case in which a person who is not entitled to say that he or she is a creditor has ever got an administration order. The first case, and I think the best for the Plaintiffs, was that of Whitmore v. Oxborrow (1). In that case there was a debt of £3000 cash, and £2592 cash too, but cash secured by bills of exchange payable at a future time. There was a sum debitum in pr¾senti solvendum in futuro; and, although that was, perhaps, rather a strong decision of Vice-Chancellor Knight Bruce, yet it does not at all apply to this case, where there is no debt due at all to the annuitant, who is simply entitled upon a covenant to pay her this annuity from time to time as long as she lives. That, in my opinion, will not enable us to make the order asked for.

The only other case I need refer to is that of Blount v. Hipkins (2). What the Vice-Chancellor there decided was, that, having regard to the terms of the will and the property left by the will, the liability, although not then due, and not constituting in law a debt, might be considered a debt within the meaning of the will which he had to construe. Here we have to say whether this is a debt which will support a decree for administration, not whether, within the terms of a certain will which we have to construe, and having regard to the property which has been dealt with, this annuity was intended to be provided for by the will of the testator. That case does not help us either; and the other cases which were referred to, if they were rightly decided, would not justify us in making the decree here asked for.

In my opinion the case fails, and the appeal must be dismissed.

LINDLEY, L.J.:-

I am unable to come to any other conclusion, though one cannot help feeling struck with the curious state in which the law

(1) 2 Y. & C. Ch. 13.

(2) 7 Sim. 51; 4 L. J. (N.S. Ch.) 13.

is as regards this matter. The Act of Parliament, after all, is the thing which we must look to for the purpose of determining this question. Great reliance has been placed on Order LV., rules 3 and 4; but notwithstanding all that has been said about those rules I cannot understand them as doing more than enabling persons who might obtain relief by bill to get the same relief by summons. They do not create creditors or claimants or anything of that sort; and we are thrown back on the Act of Parliament, the Judicature Act, 1875, s. 10. That repeals a previous section in the Judicature Act of 1873, and I have looked at that to see what the alteration was. The alteration in reference to this point is immaterial. Under the old Act the section ran, "In the administration by the Court of the assets," and so on; and so it does here. What Parliament has done must be looked at, and what it has not done must be looked at. Let us take the last first. Parliament has not in any way affected the administration of assets, except in legal proceedings. It leaves executors to administer assets out of Court just as they did before; but it says that when you come to administer assets in Court, whether under a winding-up or in bankruptcy, or under an administration order or decree, certain modifications shall be made. Certain alterations are made, and, speaking generally and rather roughly, it says that as regards debts provable and the valuation of contingent debts and so on, the rules in bankruptcy are to apply - that is to say, there is to be one set of rules observed by the Court, whether in bankruptcy or in windings-up or administrations. It says nothing about the duties of executors where there is no administration in Court. Here, unfortunately for the Appellants, there is no order or decree for the administration of this estate by the Court, and the reason is obvious enough, namely, that the executors are in a position to pay all the creditors 20s. in the pound; and there never will be, so far as I can see, any decree or order for administration. The effect of that upon the present Appellants is curious. If there were a decree for administration, then, under this Act of Parliament, this lady would be entitled to say, "Value my annuity and give me the value of it." As there is no such decree for administration, she is not entitled to that, but only to be paid her annuity

as it becomes due, and in time I suppose there will be a deficiency of assets, if she lives long enough; and it does seem strange that her right should be made to depend on whether there is an administration order or not. But that is an anomaly not peculiar to this case. We all know that, until an order is made for administration, executors can prefer one creditor to another to an extent to which they cannot after proceedings have been commenced. That seems to be the case still; the Act of Parliament has not said that executors shall out of Court observe the same rules as they are to observe in Court.

In my opinion this appeal fails, and must be dismissed.

LOPES, L.J.:-

The trustees for this lady are not entitled to an administration decree unless they can establish a provable debt. They have no provable debt, and, therefore, cannot be considered to rank as creditors. All that is due has been paid each quarter day.

Reliance was placed on rule 3 of Order LV. That rule, in my opinion, only applies to that which, before the rule, would have been the subject-matter of an administration action, and does not extend relief further than it would have been obtained by a bill for administration. As has been observed, the state of the law is somewhat anomalous and presses no doubt harshly on this lady; but that is a matter for which this Court is not responsible. I think the appeal fails.

Solicitors: Winter & Co.; Tathams & Pym.

M. W.