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Scottish Court of Session Decisions |
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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Smith's Trustees v. Scaife and Others [1867] ScotLR 5_79_1 (4 December 1867) URL: http://www.bailii.org/scot/cases/ScotCS/1867/05SLR0079_1.html Cite as: [1867] ScotLR 5_79_1, [1867] SLR 5_79_1 |
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Page: 79↓
A testator died in 1853. His trustees were directed to pay and make over the free residue of his estate to five persons named, equally, as they respectively attained the age of
Page: 80↓
twenty-one years complete. The eldest beneficiary was of age at the death of the testator, The others attained majority in 1854, 1857. 1858, and 1865. Held (1) that vesting did not take place till majority; (2) that the eldest beneficiary became entitled to payment of his one-fifth share of the residue as soon after the testator's death as the residue could be ascertained; and that each of the other beneficiaries was entitled to his one-fifth share of the principal of the residue as at the date of majority, with the interest actually accruing on said share from the testator's death till the term of payment.
Mr Smith, who died in January 1853, directed his trustees, after paying certain legacies, and providing for other purposes of the trust, to pay and make over the whole residue of his means and estate to five relatives named in the deed, “equally among the said five persons, as they respectively attain the age of twenty-one years complete.” One of these residuary legatees attained majority before the death of the testator; the others attained majority in 1854, 1857, 1858, and 1865, respectively. The question between the parties now related to the interest payable to the parties on their shares of residue, the three residuary legatees who were last of attaining majority contending that they were entitled to interest on their shares in such a way as to equalise the payments made to them with the payments made to the older beneficiaries, whose shares had become payable to them earlier, in consequence of their having sooner attained majority.
The Lord Ordinary ( Ormidale) held that vesting took place at majority ill the case of each; that the eldest beneficiary, who had attained the age of twenty-one at the death of the testator, was entitled to one-fifth of the residue as it stood at the testator's death, exclusive of subsequent increase from interest, dividends, and profits, with interest at 4 per cent, on said share of the residue from the time when it became payable; and that the other beneficiaries were to have, as on their respectively attaining the age of twenty-one years, the same sum of residue as that payable to the legatee who first attained twenty-one, with interest at 4 per cent, from the dates of their respectively attaining majority; and that what remained of residue after that payment, arising from the accumulation of interest, dividends, and profits since the date when the legatee who first attained the age of twenty-one became entitled to her share, was to be divided amongst all the five residuary legatees equally. His Lordship held, though the sums to be paid were the same, the dates when the payments were to be made were different; and though this might result practically in giving some legatees an advantage over the others, this must be held to be the intention of the testator.
The younger beneficiaries reclaimed.
Gifford and John Marshall in reply.
Mr Graham Smith died on 1st January 1853, leaving a trust-disposition and settlement, dated 18th May 1841, conveying his whole heritable and moveable estate in favour of certain trustees for the purposes—(1) of payment of his debts, funeral charges, and expenses of the trust; (2) of legacies and provisions as directed by any writing under his hand; and (3) of disponing and paying the residue to the parties therein mentioned. To this he annexed a codicil, dated 3d February 1842, recalling the nomination of one of the trustees.
On 24th February 1852, in consideration of the death of his only child, and other reasons, he appointed certain additional trustees, and made various alterations on the deed of settlement; and by another codicil, dated 25th February 1852, he appointed certain other legacies to be paid. These documents may be read together; but the questions here raised depend on the deed of alteration and direction, dated 24th February 1852. By this deed Mr Graham Smith directed his trustees to secure certain provisions to his different relatives according to their respective interests of liferent and fee as therein set forth. There is no occasion to explain these in detail, as there is no question here raised with reference to these provisions. It is only necessary to observe, in regard to them, that in each case the provisions are payable as the legatees respectively attain the age of twenty-one years; that during the minority the trustees are directed to apply the interest of the principal sum for behoof of the legatees, in such manner as they (the trustees) deem best for their education and advancement in life; but declaring that the legacies shall not vest till the legatees respectively attain the age of twenty-one years. It is obvious that, were it not for the declaration that these legacies should not vest before majority, the effect of the provision for the employment of interest for behoof of the legatees would have afforded a strong, if indeed it would not have been a conclusive, reason for supporting the vesting prior to majority.
By this deed of alteration the residue is thus disposed of:—[ read].
All these five persons, to whom the residue is thus provided by name, are now alive and of full age. Mrs Ferguson attained majority before the testator's death; Mrs Janet Graham or Carruthers attained majority on 29th March 1854; Mrs Margaret Richardson or Smith on 2d February 1857; John Richardson on 21st December 1858; and Robert Graham on 27th June 1865. Mrs Ferguson was paid her share of the residue so far as then ascertained; and payments to account have been made to the other parties interested. The question now before the Court relates to the distribution of the interest accruing on the residue.
As the fund distributable by the trustees is the residue in their hands after payment of the truster's debts and legacies, and of the expenses of the trust, the making payments to account was not an unreasonable proceeding, as it might be some time before the exact amount of residue could be satisfactorily ascertained. It is obvious that any funds which remained in the hands of the trustees after payment of debts, &c., must be held as falling into residue, and consequently as distributable in the manner in which the residue fell to be distributed. If the right to these shares of residue vested at the testator's death, or at the majority of the beneficiary first attaining that age, then there could be no doubt that the annual interest on the residue must be divisible just as the principal sum is divisible, the interest of each share passing with the share.
But I do not think that the case can be disposed
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There are no such indications of intention in this deed, or even in this series of deeds, as can, in my opinion, take the case out of the general rule which I have mentioned. The only alleged indication of such intention pressed on us at the bar as important, is the declaration in regard to the previous particular provisions that they shall not vest, and the absence of such declaration in regard to the residue. But this appears to me to be explained by the consideration that, in the previous provisions the trustees were directed to employ the interest for behoof of the legatees during their minority, and that the declaration that the legacies should not vest was rendered necessary by that direction. As there is no such direction, and no such necessity, in regard to the residue, the declaration that it should not vest was not required, and its absence cannot aid the plea for vesting. I am therefore of opinion that the shares of the resi due did notvest in the beneficiaries until they respectively attained majority.
These beneficiaries are now, however, of age, and their shares have vested accordingly. Each of these five persons became, as they respectively attained majority, entitled to a fifth share of the sum of the residue. Mrs Ferguson having been of age before the testator's death, became entitled to payment of her share as soon as the state of the testator's affairs enabled the trustees to ascertain and divide the residue. Of course, after she received her share, the interest as accessory to the principal was a fruit reaped by herself. The next that came of age was Mrs Janet Graham or Carruthers, and she would be entitled to her share, with interest thereon, from the date of the testator's death; that being the date when the first share became payable; and each in succession would take the share falling to him or her, with interest thereon, from the testator's death till payment. The rate of interest should be the rate actually accruing on the fund in the hands of the trustees. This mode of distribution would, I think, produce as nearly as possible equality in the shares. Now, on a fair construction of the deed, I am of opinion that the equality of these shares of the residue was according to his intent of the testator. His only child had died; the residuary legatees were his near relatives, he directs payment equally among them, and over and above any legacy bequeathed to them, and, in the event of deficiency of funds, he directs a rateable abatement of all legacies and annuities. Again, in the event of Mrs Peter Smith, by her settlement, creating inequality among “the legatees, or residuary legatees, before named,” the testator, Graham Smith, gives directions to the trustees to restore equality. I have therefore no doubt that equality in the shares of the residue was the intention of the testator.
In this view of the case, the question of vesting, which would have arisen in the event of one of the residuary legatees dying in minority, does not practically arise. There is no such question here. I assume—I take it for granted—that there would have been no vesting in such a case. But the question is, What did the testator mean in regard to the distribution of this residue? I repeat, that I think he meant to direct its equal distribution. The principal sum of each share was in the hands of the trustees during the whole period between the testator's death and the payment of the shares and was awaiting distribution as residue. The trustees were bound to pay to Mrs Ferguson her fifth share, because she was of age when the testator died. After that, the trustees held the remainder of the residue as four-fifths thereof till the respective periods of payment should arrive. The accruing interest on these sums—as a fruit or accessory of the principal—was also in the hands of the trustees, and not being otherwise disposed of by the testator, that interest fell into residue, with attachment, or adherence, or accretion, to the principal sums forming the respective shares of residue held in trust for distribution at the respective periods of majority. In short, while the interest on the first share passed to Mrs Ferguson, the first beneficiary, inclosed as it were within the principal, so that she drew the fruits thereafter herself, the interest on the other four shares which remained in trust management, were held, as it were suspended, to await distribution when the respective terms of payment should arrive. On the arrival of the term for payment, the share was due with the interest which had accresced to the principal.—( Glastow's Trustees v. Glasgow, 30th Nov. 1830, 9 S. and D. 87). The death of one of these five beneficiaries after the testator, but in minority, might have raised a delicate question as to the division among the survivors which does not now arise, and on which I do not at present express any opinion. We have before us all the beneficiaries, and all of age, with all their shares vested, and no disposal of the residue otherwise than under this direction for distribution among them. The interest accruing on the fund is accessory to the fund, and the fund being in the hands of trustees as four-fifths of a residue, of which one-fifth had been paid away, I think that the interest must be viewed as impressed with the same character as the principal to which it was accessory, and as in the hands of the trustees for such distribution as will best fulfil the testator's intention to make an equal division.
Therefore, I am of opinion that the proper distribution in this case is, that the ultimate equaily of the shares in the residue should be secured so far as possible, and that this can be done by giving to each beneficiary, as at the date of majority,
Page: 82↓
There is one satisfactory feature in the disposal of this case, and that is, that none of the claimants suffer loss by the decision. This is a competition for a benefit under trust-distribution. It may be that every competitor does not get all he seeks, but each gets a share. No claimant is contending de damno vitando; none is called on to restore what has been already received; and none is made richer at the expense of another.
The other judges concurred.
Solicitors: Agent for Reclaimers— Wm. Mitchell, S.S.C.
Agents for Respondents— C. & A. S. Douglas, W.S., and Dalmahoy & Cowan, W.S.
