Scottish Court of Session Decisions

John Finlay, printseller, Glasgow, was married in 1845 to his present wife, a daughter of Mr Alexander, of the Theatre Royal. Mr Alexander died in Dec. 1851, leaving a considerable fortune. Mrs Finlay's share of legitim from her father's estate was afterwards ascertained to amount to £2600. In February 1852 Mr and Mrs Finlay executed a postnuptial marriage-contract, by which Mr Finlay bound himself, on or before 1st January 1862, to pay £1999 to trustees, and in the meantime to insure his life for that sum, and assign the policies to the trustee; and further, to aliment the children of the marriage, of whom there were then three, till twenty-five years of age. Mr and Mrs Finlay by that deed conveyed to the trustees the whole estate, heritable and moveable, then belonging to Mrs Finlay, or which she should acquire or succeed to, and particularly all that she had succeeded to or should succeed to or acquire from her father and mother or any other persons. The husband renounced his jus mariti right of administration; the wife did not renounce her legal rights. The trust purposes, after payment of expenses, were—To give the husband an alimentary liferent of the whole trust property, a similar alimentary liferent thereafter to the wife, and the fee to the whole children of the marriage. The whole provisions to the spouses and children were declared alimentary, and not attachable for debt. Mr Finlay did not pay the £1999, nor did he assign policies of insurance for that amount to the trustees. The whole sum to which Mrs Finlay had become entitled was the £2600 before mentioned, which had been attached before coming into the hands of the marriage-contract trustees. Mr Finlay was sequestrated in 1860, and the whole of this sum was claimed by the trustee in his sequestration. In an action brought in 1863, and concluded in the House of Lords in 1870, it was decided that in the marriage-contract “the assignation by Mr Finlay of the legitim (£2600) was, in the circumstances of Mr Finlay, no more than a reasonable provision for his wife and children,” and that the marriage-contract trustees were entitled to administer the fund for the trust purposes. But the question now raised by the claim of Mr Finlay's trustee was expressly reserved, viz., Whether the liferent alimentary right of Mr Finlay was not carried to his creditors by the sequestration. This claim was made on the ground that Finlay was not entitled to confer on himself, and place beyond the reach of his creditors a liferent alimentary provision out of a fund that (though coming through his wife) had become absolutely his own before the marriage-contract was executed.

The Lord Ordinary ( Mackenzie) pronounced the following interlocutor:—

“ Edinburgh, 27 th May 1871.—The Lord Ordinary having heard the counsel for the parties, and considered the closed record, proof, and process, Finds that the liferent interest or provision made in favour of John Finlay by the postnuptial contract of marriage between him and his wife libelled on fell under the sequestration of the estates of the said John Finlay, and is vested in the pursuer as trustee for behoof of the creditors in the said sequestration: Therefore finds, declares, and decerns in terms of the declaratory conclusions of the libel, in so far as regards the whole interests, dividends, or other annual profits or proceeds which have accrued upon the sum of £2600 libelled from and since 15th December 1851, and also in so far as regards the whole interests, dividends, or other annual profits or proceeds which shall accrue or become due upon the said sum of £2600 solongas the said sequestration shall subsist during the life of the said John Finlay, together with any interest which has or shall become due upon the said interest, dividends, or other annual profits and proceeds; and appoints the cause to be put to the roll in order that it may be proceeded with in accordance with these findings.

Note.—On 30th June 1845 John Finlay married Mary Aune Alexander, eldest daughter of Mr Alexander, proprietor of the Theatre Royal, Glasgow.

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There was no antenuptial contract of marriage entered into between them. Mr Alexander died on 15th December 1851, and as there was no contract of marriage between him and his wife, his daughter Mrs Finlay had right to her share of the legitim out of her father's moveable estate. On 28th February 1852 Mr and Mrs Finlay executed a postnuptial contract whereby they conveyed to the defenders, and certain other persons, as trustees, the whole estates, both heritable and moveable, belonging, or which should thereafter belong, to Mrs Finlay, and particularly ‘all right, title, and interest which she or the said John Finlay, her husband, now have or may hereafter have in the succession or estates’ of her deceased father, or of her mother, or of any other person. By this deed Mr Finlay also bound himself to pay £1999 to the trustees for the trust purposes therein mentioned, and to open and keep up policies of insurance, or to grant security over his heritable estate in their favour for that sum. He also thereby renounced his jus Mariti over the estate, means, and effects then belonging, or which should thereafter belong, to his wife, and the same are thereby expressly declared to be unaffectable by his creditors or by his debts and deeds. The second purpose of the trust created by the said postnuptial contract is, ‘for payment of the free yearly proceeds of the trust-estate to the said John Finlay during his life for his liferent use allenarly.’ And it is expressly declared by the contract that the whole provisions therein contained ‘shall be nowise attachable for debt, but the same shall be considered alimentary.’

In an action raised in 1853 by the defenders, as trustees under the postnuptial contract, against Mrs Alexander, widow and executrix of Mr Alexander, and the trustee on her sequestrated estate; and also against Mr Finlay and Mr Miller, the pursuer of the present action, as trustee on Mr Finlay's sequestrated estate, it was decided by judgments of this Court and of the House of Lords that the defenders are entitled to recover and receive the sum of £2600, being the amount of legitim due to Mrs Finlay from the estate of her father, with interest from 15th December 1851, and to hold and administer the same for the purposes of the trust declared in said deed, all questions in reference to the right to the interest or annual proceeds of the said legitim fund from that date being reserved entire.

The present action has been raised by the trustee on Mr Finlay's sequestrated estate for the purpose of having it found and declared that he has right to the whole annual proceeds of the said sum of £2600 from 15th December 1851, and so long as the sequestration shall subsist during Mr Finlay's life, and of obtaining decree against the postnuptial contract trustees, ordaining them to make payment of the same to him accordingly.

The legitim to which Mrs Finlay had right vested in her on 15th December 1851, the date of her father's death, and then fell under the jus mariti of her husband, and vested absolutely in him— Macdougal v. Wilson, Feb. 20, 1858, 20 D. 658. It was his sole and exclusive property at, and for upwards of two months prior to, the date of the postnuptial contract containing the provision that the liferent mentioned in his favour should be alimentary and not attachable for debt. The Lord Ordinary considers that the said provision is inept, because no one can so settle his own property as to reserve part of it for his own use and to withdraw it from the diligence of his creditors—Bell's Com. i. 128 and 130; Keir's Trustee v. Justice, Nov. 7, 1866, 5 Macph. 4. Mr Finlay's liferent of the proceeds of the legitim was therefore carried by the sequestration of his estates on 6th January 1860, and is now vested in the pursuer, as the trustee on the sequestrated estate by virtue of his act and warrant of confirmation.

It is said by the defenders that the interest of the funds conveyed to them as trustees under the postnuptial contract was truly conferred by that deed upon Mr Finlay for the aliment of his wife and children. There is nothing in the deed to that effect, and even though the liferent of the sum which vested in Mr Finlay as his wife's share of the legitim had been thereby expressly given to his wife for the support of herself and children, and had been declared alimentary, and not affectable by the debts of her husband, it would, in the Lord Ordinary's opinion, be carried by the sequestration of the husband as a donation inter virum et uxorem, revocable by him, and revoked by the sequestration— Kemp v. Napier, Feb. 1, 1842. 4 Dict. 558; Johntone v. Dunlop, March 24, 1865, 3 Macph. 758.

It is further maintained by the defenders that as Mr Finlay has failed to pay them the sum of £1999, or to deliver to them and keep up policies of insurance on his life, or to grant heritable security for the said sum, he and the pursuer, as coming in his place, are not entitled to receive the liferent proceeds of the legitim fund, and that the defenders are entitled to retain the same as against these unimplemented provisions. The Lord Ordinary is of opinion that this claim of the defenders is untenable under the postnuptial contract. The obligations undertaken by Mr Finlay, which have not been fulfilled, are not the consideration and counterparts of the liferent provision of the legitim fund. On the contrary, they all flowed from him. The liferent of the legitim fund is also by the express terms of the postnuptial contract payable to him, and the defenders are not entitled to withhold implement of that trust purpose, and to retain the proceeds in security or satisfaction of his unimplemented obligations— Keir's Tr. v. Justice, supra; Boswell v. Boswell, Feb. 4, 1846, 8 Dict. 430.

The defenders further plead that Mrs Finlay and they, as the trustees under the postnuptial contract, are entitled both at common law and under the Conjugal Rights Act 1861 to the liferent of the legitim fund in question, which they say is no more than a reasonable provision out of her own patrimony, and of which neither her husband nor the pursuer, as his trustee, has ever obtained possession. The Lord Ordinary is of opinion that at common law Mrs Finlay and the defenders have no such right. The legitim fund became the absolute property of Mr Finlay when the right thereto opened to his wife, and the interest thereof now belonged to the pursuer as the trustee on his sequestrated estate free from any claim on her part for aliment. The claim for such a provision cannot, it is thought, be maintained at common law by Mrs Finlay in prejudice of her husband's creditors— Turnbull, Nov. 25, 1709, Dict. 5895; Robb, March 8, 1794, Dict. 5900; Lee v. Watson, Dec. 1, 1795, Dict. 5889; Bell's Com. i. 634. The Conjugal Rights Act does not, the Lord Ordinary considers, apply. Mrs Finlay and her husband acquired right to the legitim, and it was conveyed to the defenders as trustees under the postnuptial contract long before that Act became law. It is expressly enacted by section 21 of that Act

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that it shall come into operation on 1st November 1861, and the words of section 16, which is founded on by the defenders, have not any retroactive effect. Further, it is provided by section 16 that a wife shall have no claim for a reasonable provision for her support and maintenance out of property which she has succeeded to or acquired ‘if before it be made by her the husband, or his assignee or disponee, shall have obtained complete and lawful possession of the property, or in the case of a creditor of the husband where he has before such claim is made by his wife attached the property by decree of adjudication or arrestment, and followed up the said arrestment by obtaining thereon decree of forthcoming, or has poinded and carried through and reported a sale thereof.’ It cannot be said that Mr Finlay has obtained complete possession of the legitim fund. But by the Bankruptcy Act 1856, sec. 102, the act and warrant of confirmation of the pursuer as his trustee transferred to and vested in him absolutely and irredeemably as at 6th June 1860, the date of the sequestration, with all right, title, and interest, his whole moveable property, so far as attachable for debt, ‘to the same effect as if actual delivery or possession had been obtained, or intimation made at that date, subject always to such preferable securities as existed at the date of the sequestration, and are not null and reducible,’ and it is declared by sections 107 and 108 of that statute that the sequestration is equivalent to a decree of adjudication of the heritable estates of the bankrupt, and to an arrestment in execution and decree of forthcoming, and to an executed or completed poinding.”

The marriage-contract trustees of Mr and Mrs Finlay reclaimed.

The Dean of Faculty ( Gordon), Millar, Q.C., and Guthrie for them.

The Lord Advocate ( Young), Balfour, and Lorimer for the respondents.

At advising—