Supreme Court of Canada
Robertson v. Junkin, (1896) 26 S.C.R. 192
Date: 1896-05-18
William J. Robertson, Executor of the Will of Samuel Junkin (Defendant) Appellant;
and
John Junkin (Plaintiff) Respondent.
1896: March 6; 1896: May 18.
Present: Sir Henry Strong C.J. and Taschereau, Sedgewick, King and Girouard JJ.
ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.
Will—Legacy—Bequest of partnership business—Acceptance by legatee—Right of legatee to an account.
J. and his brother carried on business in partnership for over thirty years and the brother having died his will contained the following bequest: “I will and bequeath unto my brother J. all my interest in the business of J. & Co. in the said city of St. Catharines, together with all sums of money advanced by me to the said business at any time, for his own use absolutely forever, and I advise my said brother to wind up the said business with as little delay as possible.”
Held, affirming the decision of the Court of Appeal, that J. on accepting the legacy was under no obligation to indemnify the testator’s estate against liability for the debts of the firm in case the assets should be insufficient for the purpose and did not lose his right to have the accounts taken in order to make the estate of the testator pay its share of such deficiency.
APPEAL from a decision of the Court of Appeal for Ontario reversing the judgment of the Divisional Court in favour of the defendant.
The material facts of this case are sufficiently set out in the above head-note and in the judgment of the court.
The trial judge held that the defendant had elected to take the bequest in the will and had no right to an account. His decision was affirmed by the Divisional Court but reversed by the Court of Appeal.
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Aylesworth Q.C. for the appellant referred to Ramsay v. Margrett.
McCarthy Q.C. for the respondent cited Robinson v. Alexander; Lindley on Partnership.
The judgment of the court was delivered by:
THE CHIEF JUSTICE.—For upwards of forty years, from 1848 to March, 1890, the respondent, John Junkin, and his late brother Samuel Smith Junkin, carried on business in partnership. The latter died on the 18th of March, 1890, leaving a will which contained amongst other dispositions, the following bequest:
I will and bequeath unto my brother John Junkin all my interest in the business of John Junkin & Co., in the said city of St. Catharines, together with all sums of money advanced by me to the said business at any time, for his own use absolutely for ever, and I advise my said brother to wind up the said business with as little delay as possible.
The testator appointed the appellant to be the executor of his will. Subsequently to the testator’s death the respondent carried on the business, added to the stock, advertised the business for sale, and by his conduct may well have induced the appellant to infer that he accepted the legacy to which the executor may be taken to have given his assent. The respondent also employed a skilled accountant, a Mr. McCallum, to investigate the accounts which had been kept by the testator. This investigation resulted in a report by Mr. McCallum that the respondent was indebted to the firm. After this report by McCallum the respondent procured another examination of the books to be made by a Mr. Phelps whose conclusion was the reverse of that arrived at by Mr. McCallum, being to
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the effect that the testator was indebted to the firm. The executor having been called upon to pay certain overdue paper held by a bank in St. Catharines brought an action against the respondent, upon the assumption that the respondent having accepted the legacy was bound to indemnify the testator’s estate against the liabilities of the firm. This action was settled, according to the evidence of the appellant, by relations of the respondent giving security for the amount sought to be recovered from him. The respondent then brought this action for an account of the partnership dealings, to which the appellant pleaded as a defence that the respondent had accepted the bequest to him already stated. The action was tried before the learned Chief Justice of the Queen’s Bench Division without a jury and resulted in a verdict for the appellant, and a judgment dismissing the action. The respondent appealed to the Divisional Court of Queen’s Bench by which court the appeal was dismissed. This judgment was, however, subsequently reversed by the Court of Appeal and a decree entered directing the partnership accounts to be taken. From this last judgment the executor has appealed to this court.
The Court of Appeal has held that the respondent has done nothing which debars him from insisting on the right which he undoubtedly had at the time of the testator’s death of having the partnership accounts taken. So far as the question of the acceptance of the legacy is one of fact the finding of the Chief Justice at the trial and of the Divisional Court have been against the respondent, and these findings, proceeding on sufficient evidence, ought to be conclusive unless it can be said to have been established that the adoption of the testator’s gift proceeded from excusable error and ignorance of facts. I am of opinion that there can be no pretense for this as the respondent had in his own
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hands the means of knowing, even if he did not actually know, the state of the accounts between the firm and the respective partners. In all cases in which acquiescence is relied on as binding a party a court of equity requires as an essential element that he should have had actual knowledge of, or the means of knowing, all the material facts. Here the respondent, having the books containing the records of the partnership transactions in his hands, could, if he had chosen to do so, have informed himself of all the facts which he afterwards acquired a knowledge of through the investigation made by Mr. Phelps before accepting the legacy. I agree therefore with the Chief Justice who tried the action, and the Divisional Court, that the respondent accepted the legacy and is in the same position as if his acceptance and the executor’s assent had been expressly recorded in a formal written instrument.
I do not regard the case as one for the application of the equitable doctrine of election, which arises where a testator, while conferring a benefit on a legatee, assumes to give the property of such legatee to another person, in which case it is held that the first legatee cannot claim the benefit conferred upon him by the will whilst repudiating the testator’s attempted disposition of his own property, except upon the terms of compensating the disappointed legatee out of the testator’s gift to himself. The same doctrine is also applicable in the case of gifts by deed. Here, however, the facts do not present a case for the application of any such principle.
The acceptance of a legacy is, however, an act by which the legatee estops himself, and by which he becomes bound to carry out all the consequences which follow from the legacy becoming vested in him. This, however, is not an estoppel of the same nature as an estoppel by representation requiring proof of all the
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elements required to constitute an estoppel proceeding from a statement of particular facts, but it is one of those acts in pais which by themselves, independently of the consequence, are binding on the party. There is in such a case no necessity for proof of the fact that the executor was induced to alter his position; the law presumes that such was the case. Then it is a rule founded on the plainest principles of justice that a legatee who accepts the testator’s bounty thereby undertakes and becomes bound to fulfil any condition coupled with it, and to bear any burden which may be imposed on the subject of the gift. Such a beneficiary cannot afterwards, by repudiating the bequest, exonerate himself from the performance of these obligations but is bound to indemnify the testator’s estate against them. In other words, he is estopped from doing so. This was expressly held in the case of Attorney General v. Christ’s Hospital, decided by Sir John Leach. The law is concisely stated in Jarman on Wills, as follows:
When the legatee has taken his legacy with a legal condition of any kind annexed he is of course estopped by his own act from afterwards insisting on rights which by the terms of the condition he is bound to release, or from declining a duty he is thereby required to perform.
The proposition to be established by the appellant to entitle him to a reversal of the judgment he complains of must therefore be that by the terms of the will there is imposed on the respondent the obligation of indemnifying the estate of the testator against any liability for the debts of the firm in case the assets should be insufficient for that purpose.
The case thus resolves itself into a question of the construction of the will. Has the testator, by the terms of the gift, either expressly or by necessary implication
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made it a condition of the legacy that the respondent shall indemnify his estate against liabilities to creditors in case of the insufficiency of the assets?
Immediately prior to the time of the testator’s death the respondent had the right, the partnership not having been for any limited term but at will, to have determined the partnership and to have insisted on having the accounts taken and the business wound up. This would have involved accounts of the assets, of the outstanding liabilities, the realization of the assets and their application to the payment first of the creditors and then of the advances made by the testator, and the equal division of any surplus between the partners. If the assets should have been found insufficient for the payment of the debts, in other words, if the firm should have been ascertained to have been insolvent, the partners would have been bound to have contributed equally to the payment of creditors, and the respondent would have been liable to the testator for one-half of any deficiency of the assets to repay his advances.
Then what does the testator bequeath to the respondent? It is, in the words of the will, his, the testator’s, “interest in the business together with all sums of money advanced by the testator to the business at any time.” What is the meaning to be placed on these expressions? Manifestly it is that the testator by the gift of his “interest” gives the respondent his share of any surplus of the assets of the estate remaining after all liabilities have been satisfied, and further, by the subsequent expressions, exonerates him from any contribution to the payment of the debt due by the firm (regarded as a distinct personality from the individual partners as it would be in taking the accounts) to the testator for his advances. In terms no liability to pay the creditors in case the firm should
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prove to be insolvent is attached to this gift. Nor can it be said that any such liability is implied. If there is no surplus the respondent’s legacy will be a barren one, the respondent will get nothing, but this is the utmost that can be said. Any deficiency in the assets to pay creditors must be made good in equal proportions by the respondent and the estate of the testator. The respondent, by the inclusion in the testator’s gift of his advances to the firm, is exonerated from contributing beyond his share of the amount due to creditors what he would otherwise have had to make good, namely, one-half of those advances, just as he would have been if, in the case of the partnership having been wound up in the testator’s lifetime, the respondent had been able to produce a release from the testator to himself of any right to call for such contribution to losses. Had this legacy, expressed in the same words, been left to a third person, no one could doubt that such a legatee could not be called upon to contribute to any deficiency of the assets to pay creditors, and this being so, there can be no reason why the construction should not be the same when the gift is not to a stranger but to the surviving partner. The respondent has not, therefore, by accepting the legacy, which was clearly intended by the testator as a benefit to which no burden or liability was attached, undertaken to indemnify the testator’s estate against its primâ facie liability to contribute one-half of any deficiency of the assets to satisfy creditors.
By the acceptance of the legacy the respondent has not therefore lost the right which he would have had on a dissolution of the partnership in his brother’s lifetime of having the accounts taken and the proportions of the respective liabilities of the partners ascertained. It is true that by the acceptance of the legacy the respondent has ceased to have a right to have
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the accounts taken for the mere purpose of ascertaining the amount of any surplus since no one but himself is now interested so far as there may be a surplus, but the legacy and its acceptance not having relieved the testator’s estate from contributing to any deficiency of the assets to satisfy creditors the respondent is still entitled to enforce the right which he originally had and has never lost, to have the accounts taken to that end. That the accounts may be difficult to take and may involve great expense is no argument against the claim of the respondent. The testator was to blame for allowing the partnership accounts to remain open and unsettled during the long series of years from 1848 to his death in 1890. I need not say that the Statute of Limitations did not begin to run until the dissolution on the death of the testator.
It may, however, be well for the respondent to bear in mind that should it appear that the assets were sufficient at the date of the dissolution to pay creditors, he will probably be considered as having enforced at great expense a useless accounting of which he may be compelled to bear the costs.
The appeal must be dismissed with costs.
Appeal dismissed with costs.
Solicitor for the appellant: W.B. Gilleland.
Solicitors for the respondent: McCarthy, Osler, Hoskin & Creelman.
Egg v. Devey 10 Beav. 444.
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