SMITH V. PATRICK, H.L.

of justice and law, treat that document as entitled to the slightest value in any respect? It is undoubted that Alexander Dawson Smith was a debtor to this trust estate, and the only ground upon which he claims his discharge is this document. subject to what I am going to say. I agree with what I see Lord Adam said, that "By so doing" (that is, by signing the discharge) "it appears to me that, as trustees, they knowingly or deliberately sacrificed the interests of the estate under their charge in their own personal interest as debtors to the trust. By so doing, it appears to me that they not only committed a breach of trust, but a fraudulent breach of trust."

I will not say anything about the construction of the will, because I entirely agree with what has fallen from my noble and learned friend. There can be no doubt in my mind that a power to lend to a firm consisting of certain individuals does not authorise a loan to a firm differently constituted, whether including more individuals or less. Still less does it authorise it when the suggestion is that the trustees having by the death of one of their number been reduced to two persons and the partnership by the retirement of one of the partners having been reduced to the same two persons, those gentlemen jumble up their character of trustees and their character of partners, take the trust estate into their own hands and use it for their own business under the pretence that they have lent it to themselves.

I think it is perhaps due to Mr. Levett that I should say one word as to his argument that by proving against the partnership estate the present trustees have debarred themselves from suing Mr. Alexander Dawson Smith, the defender. It appears to me, as I have already said, that Mr. Alexander Dawson Smith, being a party and privy to what was really a breach of trust (because on the face of it he knew that he had got that discharge by means of a breach of trust), cannot set up that discharge, and being a debtor to the trust estate has not discharged himself, and therefore is liable. But it is quite consistent with the power of the trustees to follow the trust estate into the place where it has improperly got

namely, into the partnership funds-and claim the amount of the trust estate against the partnership estate. It is everyday knowledge that you may sue a person who is liable to replace trust estate, and you may also pursue your other remedies against the trustees who have improperly dealt with it. I need say no more about it, but merely add that I entirely agree that the appeal ought to be dismissed.

LORD BRAMPTON.-I entirely concur, and have nothing to add.

LORD ROBERTSON.-It would be strange if the law allowed a transaction so plainly unfair as that which is now in question. This trust estate was made to release one of three debtors without his giving or providing to the estate anything whatever that it did not have before, this release being the act of the two remaining debtors, who were the sole trustees, and were at the time insolvent.

The demerits of the proceeding, so far as the trustees are concerned, are too flagrant to require comment. They had no right gratuitously to release a debtor of the trust estate, and they had no right, as I hold, under this trust deed, to lend to any other firm than that existing at the testator's death; still less had they a right to do this, for the furtherance of their own convenience, by ridding themselves of a partner whom they found censorious of their own irregularities, and by carrying out their obligations to him at the expense of the trust estate. The act was clearly a breach of trust, and I think the First Division had adequate grounds for holding it to be fraudulent.

I may in passing say that I am not deterred from this conclusion by the circumstance that those two trustees were not parties to the action, and were not witnesses. In the practice of Scotland it frequently happens (as in the case of wills and of forged instruments) that the fraud of a third party is the medium concludendi, and the mere fact of his fraud gives him no proper place as a party to the cause, and imposes no obligation on the party asserting his iniquity to offer his testimony.

This being the nature of the discharge,

SMITH V. PATRICK, H.L. the defender cannot hold his discharge, however innocent he may be, unless he gave valuable consideration-and of consideration he gave none. Everything which the new firm gave, their estate and the liabilities of its partners, the trust estate, had already-not, of course, to each item the identical and specific assets of the new firm, but the corresponding and, so far as appears equivalent assets of the old firm. The attempt of the appellant to found on this point only derives plausibility from splitting up what is really one transaction-the dissolving the old firm, and the making the new firm the sole debtors.

The appellant has endeavoured to found an argument on the change of circumstances which has occurred as disentitling the respondents to the remedy they seek. This seems to me to be a fallacy arising from the merely formal circumstance that the respondents' summons includes a reduction. This is not an action of rescission of a contract obtained by fraud, although, like such actions, it takes the form of a reduction-it is a demand for payment of a debt, backed with appropriate formal procedure for parrying a defence founded on a valueless discharge. It was within the rights of the creditors to take as much payment as they could get from the estates of the remaining debtors without impairing their rights to enforce the several liability of the third. Even if the appellant were right in saying that the respondents were not entitled to rank on the estate of the new firm, this has in no way prejudiced the appellant, and cannot be pleaded by him as answer to the present demand.

an

I am entirely satisfied with the judgment of the First Division, and consider the reasoning of Lord Adam and Lord M'Laren to be unimpeachable.

Appeal dismissed.

Solicitors-William Robertson & Co., agents for J. W. & J. Mackenzie, W.S., Edinburgh, for appellant; Flux, Thompson & Flux, agents for Simpson & Marwick, W.S., Edinburgh, for respondents.

[Reported by J. Eyre Thompson, Esq., Barrister-at-Law.

1900. Nov. 7, 8, 9. 1901. Feb. 16.

SECRETARY OF STATE FOR

FOREIGN AFFAIRS v. CHARLESWORTH, PILLING AND CO. AND OTHERS.*

Zanzibar Exterritoriality Land Abroad Compulsorily Acquired by British Government-Ascertainment of PriceBritish or Local Law-Judicial Notice of Foreign Law.

By the Zanzibar Order in Council, 1884, British subjects in civil and criminal matters are to have their cases tried by their own Consuls. In bankruptcy or on death their property is to be administered according to British law, and their houses may not be entered by the Zanzibar authorities without the Consul's permission :— Held, that these privileges do not confer on land purchased by a British subject the character of absolute exterritoriality, and that the incidents of such land are governed by the law of its site. Consequently, when the land is compulsorily taken by the British Government under the Indian Land Acquisition Act, 1894, the owner is not entitled to compensation for the value of the buildings erected, without lawful authority, on behalf of the Government thereon, before the notice to treat, that being the rule of the Mohammedan law which prevails in Zanzibar.

Although by virtue of the treaty grant the British Sovereign becomes an authority in Zanzibar, exercising powers independently of the Sultan, Zanzibar remains foreign territory, and the British Sovereign acts in all respects as a Zanzibar authority; and a British Judge acting within these limits is a Zanzibar Judge, and bound to take judicial notice of the Zanzibar law, and not to treat that law as mere matter of evidence.

The Indian Land Acquisition Act, 1894, provides that land required by the Government is to be taken at its market value on a given day, and that the Court is not bound to give more because the object for which it is taken is likely to increase the value, or less because the same object is likely to add to the value, of the owner's

Coram, The Lord Chancellor (Earl of Halsbury), Lord Hobhouse, Lord Macnaghten, Lord Shand, Lord Davey, Lord Robertson, and Lord Lindley.

Appeals and cross-appeals from Her Britannic Majesty's Court, Zanzibar. The facts fully appear in the judgment of the Board.

The Attorney-General (Sir R. B. Finlay, Q.C.), The Solicitor-General (Sir E. H. Carson, Q.C.), Mayne, and H. Sutton, for the appellants.

Haldane, Q.C., and J. H. A. Branson, for the respondents.

LORD HOBHOUSE delivered the judgment of their Lordships:

These appeals relate to the amount of compensation to be paid for land in the Island of Mombasa, taken by the Government under statutory powers. The suits were commenced by two claims lodged with the collector by the firms of Charlesworth, Pilling & Co. and T. D. Charlesworth & Co., who were respectively owners of different plots of the land so taken. The collector, Mr. Craufurd, who was also acting on behalf of the Government, made awards which the plaintiff's did not accept, and which therefore were referred to the Consular Court of Mombasa. The ViceConsul, Mr. Cator, awarded larger sums, which the defendant has not disputed. But the plaintiffs were still dissatisfied, and they appealed to the Court for Zanzibar. The Court again enhanced the amount of compensation, with the effect that both parties are dissatisfied, and both appeal from the decrees. There are therefore four appeals-two original and two crossappeals in the two suits. They have all been consolidated, and have been argued as one case falling under the same considerations, with the exception that one important item of claim is peculiar to one plot belonging to Charlesworth, Pilling & Co.

Mombasa is a small island adjacent to the coast of Continental Africa, and it forms part of the mainland dominions of the Sultan of Zanzibar. The authorities who have dealt with this case are

established and regulated by Her Majesty's Order in Council passed in 1884, and founded on a previous treaty, and by a subsequent treaty with the Sultan of Zanzibar in the year 1886. There have been later transactions between the Sultan and an English company and the Queen, which are referred to in the judgment of the Vice-Consul and in the case lodged by the defendant, the Secretary of State. They confer on the Queen's Government extensive powers of administration during the continuance of existing agreements. But they are expressed not to affect the Sultan's sovereignty, and, for the purpose of deciding questions of an international character in these suits they have not been discussed in the Courts below, and need not now be discussed.

The Order in Council dated October 17, 1884, is founded on the usual form of recital that by treaty, grant, usage, sufferance, and other lawful means Her Majesty the Queen has power and jurisdiction in relation to Her Majesty's subjects and others within the dominions of His Highness the Sultan of Zanzibar. The passages material for the decision of the present questions will be found in sections 6, 7, and 8. Section 6 shews that the Order applies to British subjects in Zanzibar, to British ships in Zanzibar waters, to Zanzibar subjects and foreigners in specified cases, and to British-protected persons in so far as by treaty or the other means mentioned Her Majesty has jurisdiction in Zanzibar in relation to them.

"Section 7. All Her Majesty's jurisdiction exerciseable in Zanzibar under the Foreign Jurisdiction Acts for the hearing and determination of criminal and civil matters . . . shall be exercised under the provisions of this Order, so far as this Order extends and applies.

"Section 8 (a) ... Subject to the other provisions of this Order, and to any Treaties for the time being in force relating to Zanzibar, Her Majesty's Criminal and Civil Jurisdiction in Zanzibar shall, so far as circumstances admit, be exercised on the principles of, and in conformity with, the enactments for the time being applicable, as herein-after mentioned, of the Governor-General of India in Council, and of the Governor

of Bombay in Council, . . . and so far as such enactments, are inapplicable, shall, so far as circumstances admit, be exercised under and in accordance with the common and statute law of England in force at the commencement of this Order.

"(b) . . . declares certain Indian enactments not affecting this question to be applicable to Zanzibar.

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(c). . . Any other existing or future enactments of the Governor-General of India in Council, or of the Governor of Bombay in Council, shall also be applicable to Zanzibar, but shall not come into operation until such times as may in the case of any of such enactments respectively be fixed by the Secretary of State."

The subsequent treaty, concluded in 1886, has the following provisions :

"Article V. Subjects of Her Britannic Majesty shall be permitted throughout the dominions of His Highness the Sultan to acquire by gift purchase intestate succession or under will or in any other legal manner, land houses and property of every description whether moveable or immoveable, to possess the same, and freely to dispose thereof by sale barter donation will or otherwise."

"Article XVI. Subjects of Her Britannic Majesty shall, as regards their person and property, enjoy within the dominions of His Highness the Sultan of Zanzibar the rights of exterritoriality.

"The authorities of His Highness the Sultan have no right to interfere in disputes between subjects of Her Britannic Majesty amongst themselves or between them and members of other Christian nations. Such questions whether of a civil or criminal nature shall be decided by the competent Consular Authorities. The trial and also the punishment of all offences and crimes of which British subjects may be accused within the dominions of His Highness the Sultan, also the hearing and settlement of all civil questions claims or disputes in which they are the Defendants, is expressly reserved to the British Consular Authorities and Courts, and removed from the jurisdiction of His Highness the Sultan.

"Should disputes arise between a sub

ject of His Highness the Sultan or other non-Christian power not represented by Consuls at Zanzibar, and a subject of Her Britannic Majesty in which the British subject is the Plaintiff or the Complainant, the matter shall be brought before and decided by the highest authority of the Sultan, or some person specially delegated by him for this purpose. The proceedings and final decision in such a case shall not however be considered legal unless notice has been given, and an opportunity afforded for the British Consul or his substitute to attend at the hearing and final decision."

"Article XX. Should a British subject die within the dominions of His Highness the Sultan of Zanzibar, or dying elsewhere leave property therein moveable or immoveable, the British Consul shall be authorised to collect realise and take possession of the estate of the deceased to be disposed of according to law."

Article XXI. The houses, dwellings, warehouses and other premises of British subjects or of persons actually in their regular service, shall not be entered or searched under any pretext by the officials of His Highness without the consent of the occupier, unless with the cognisance and assistance of the British Consul or his substitute."

Article XXIII. provides for the free exercise of religious worship.

In the year 1895 the Government were planning railway communication from some point in Mombasa into the African mainland. In December, 1895, the plaintiffs entered into agreements by which they acquired title to three of the plots of land in question. The fourth plot was purchased in April, 1896. At the close of the year 1895 the engineers of the Government entered on the land and began to erect railway offices on one of the plots, known in these proceedings as Said-bin-Rashid. This was done without any lawful authority; and it has given rise to questions of some subtlety on which the Consular Court and the Zanzibar Court have differed in opinion. Their Lordships will first address themselves to these questions.

It was not till May 27, 1896, that the Indian Land Acquisition Act of 1894