Scottish Court of Session Decisions

This was a Special Case, in which the parties were Mr John Sloane, commission merchant, of the first part; certain trustees under a post-nuptial assignation for behoof of the first party's wife and children, of the second part; and certain creditors of the first party, of the third part. It was presented in the following circumstances:— On 22d May 1868 Mr Turner of Bothwell died leaving considerable estate, and under the provisions of his deed of settlement the first party, Sloane, succeeded to a share of that estate, uncertain in amount, but which was believed not to exceed £4000. Shortly thereafter Sloane, on the narrative that he had not made any provision for his wife and only child, voluntarily executed a trust assignation in favour of the parties of the second part, whereby he conveyed to them in trust for certain purposes (1) his share or interest in the succession of Mr Turner to the extent of £3000; (2) the balance of said share or interest over and above said sum of £3000, excepting to the extent of £1000. The first purpose was for payment of the expenses of the trust. The second purpose was thus expressed:—

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“The said trustees may hold the residue of said funds first and second hereby assigned for behoof of my said wife, for her liferent alimentary use allenarly, during all the days of her life, and exclusive of my jus mariti and right of administration; and, after her death, for my liferent alimentary use allenarly, during all the days and years of my life thereafter; and I provide and declare that the said liferent in favour of the said Flora M'Lean or Sloane, and of myself, shall be strictly alimentary, not affectable by the debts or deeds of the liferenter, nor attachable by the diligence of creditors; (3) Upon the death of the survivor of my said wife and me, should we be survived by any lawful child or children of me, the said John Sloane, whether procreated of the present or any future marriage, or their issue, I direct the said trustees to hold the residue of said funds for behoof of my said children jointly with the issue of any predeceaser per stirpes, and upon their attaining the age of twenty-one years, in the case of males, and, in the case of females, upon their attaining that age or being married, whichever event shall first happen, to pay over to them their respective shares; (4) In the event of there being none of my children or their issue alive at the death of the first deceaser of me and my said wife, or of their all predeceasing the survivor of us, I direct my trustees to hold the said residue and remainder of said funds for behoof of any party or parties I may appoint, by any writing under my hand, whether mortis causa or otherwise; and failing such appointment, then for behoof of the survivor of me and the said Flora M'Lean or Sloane in fee.” The trust assignation contained an express discharge of the truster's jus mariti and right of administration, and appointed the trustees tutors and curators to any of the beneficiaries under the trust who might be in pupilarity or minority. It also declared that the provision in favour of the truster's wife and children should be accepted by them in full of all claims, whether of terce, jus relictæ, legitim, or otherwise competent to them by, at, or through his decease, in any manner of way. The only consideration for the said trust assignation was the foresaid exclusion, and the truster's natural obligation to provide for his wife and family. The deed contained no reserved power of revocation.

The trustees accepted the trust, and intimated the assignation to Mr Turner's trustees on 29th October 1868. They have received from these trustees £3000, and at the same time they have been informed that Mr Sloane's share in the succession will amount to about £5000, and this special case was presented in order that it might be ascertained whether those sums went to the trustees under the trust assignation to Mr Sloane or his creditors.

The effect of the assignation by Mr Sloane was to make him insolvent, and he has been so ever since.

Mr Sloane now maintained that he executed the trust assignation under essential error as to the amount of his share of Mr Turner's succession, and he claimed that the surplus over and above the £4000 should be paid to himself subject to the claims of his lawful creditors. All the parties to the special case admitted that he did not anticipate that any large surplus would revert to him over and above the £4000. It was also admitted that the error under which Mr Sloane laboured did not arise from neglect on his part to use the information available to him as to the value of his interest in Mr Turner's succession; but from the intricacy of the calculation necessary to ascertain his interest, and the circumstances that there were pending questions involving an increase or diminution of his interest, and that the estate of Mr Turner had not been then realised, and its value could not be correctly ascertained.

The prior creditors of Sloane, on the other hand, maintained that the trust-assignation must be set aside so far as it affected them, until their debts were paid; both under the statute 1621, cap. 18, and at common law.

The following were the questions of law submitted for judgment:—“(1) Was the error under which the party of the first part admittedly laboured, at the time of granting the said voluntary trust-assignation, of such a nature as to entitle him to have that assignation set aside or restricted, in so far as it disposes of the truster's interest in Mr Turner's succession to any greater extent than the sum of £3000, and such further sum as may be required to defray the expenses of the trust; or is the said assignation now restrictable to any extent; and if so, to what extent? (2) Are the parties of the third part entitled to have the said trust-assignation set aside, in whole or in part, to the effect of obtaining payment of their claims, or part thereof, out of the fund thereby assigned, in preference to the claims of the beneficiaries under said trust-assignation; and if so, to what extent and effect.

M'Laren for the party of the first part.

H. J. Moncrieff for the parties of the second part.

Watson and Mackintosh for the parties of the third part.

At advising—