Scottish Court of Session Decisions

By deed of entail, dated 25th May 1768, Sir Lawrence Dundas, of Kerse, Bart., destined certain lands to his son Thomas Dundas, “in liferent, for his liferent use only during all the days of his natural life after my death, and to the heirs-male lawfully procreated or to be procreated of his body in fee,” whom failing to certain other substituted heirs in their order as specified in the deed. On the death of Sir Lawrence Dundas in 1781, the said Thomas Dundas, afterwards Lord Dundas, succeeded to the estates under the destination to him in liferent. In 1813 he disentailed portions of the estates in virtue of a Private Act. Under that Act other lands of equivalent value were entailed, the destination in the deed of entail being exactly similar to that in the first deed —“To and in favour of myself in liferent, for my liferent use only, during all the days of my natural life, and to the heirs-male lawfully procreated or to be procreated of my body in fee,” whom failing to the same series of substituted heirs as in the above mentioned entail by Sir Lawrence Dundas.

On the death of Thomas Lord Dundas in 1820 he was succeeded by his eldest son Lawrence First Earl of Zetland, who died in 1839, succeeded again by his eldest son Thomas Second Earl of Zetland. He was succeeded by his nephew the present Earl of Zetland, who was duly served and retoured as nearest heir-male of tailzie and provision to his uncle. Certain of the lands and estates were held by him under an arrangement by which they had been disentailed partly in 1852

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and partly in 1865, while other lands were held under contracts of excambion, having been exchanged for parts of the disentailed lands. The disentails were however carried through with the consent of the next heirs entitled to succeed, under deeds of obligation by the late Earl by which he undertook not to alter the order of succession to these lands, as prescribed by the deeds of entail of 1768 and 1813, under which the same were held, without the special consent of the nearest heir, and that in the event of any part of the lands being sold, the price should be applied towards payment of entailer's or other debts affecting the fee of the lands.

This was a Special Case between the Lord Advocate and the Earl of Zetland, and the questions submitted for the opinion and judgment of the Court, arising upon sections 2 and 10 of the Succession Duty Act (16 and 17 Vict. cap. 51) were—“Who is to be regarded, in the sense of the Succession Duty Act, as the predecessor of the said Lawrence Dundas, the present Earl of Zetland—(1) In regard to the lands and estates held under the entails of 1768 and 1813? (2) In regard to the lands and estates held under the disentails of 1852 and 1865? (3) In regard to the lands received in excambion for portions of the disentailed lands?”

The parties were agreed that the lands held under the disentails, and the lands acquired by excambion for part of those disentailed, were to be regarded for the purposes of the case as held under the destinations in the original entails.

The Lord Advocate mantained that the property held under the entails, and also the property held under the disentails or received in excambion for disentailed lands, were taken by the Earl of Zetland by devolution from his uncle the last Earl of Zetland, who was his predecessor, and that, being a descendant of a brother of the predecessor, he was liable to pay succession duty at the rate of three per cent.

The Earl of Zetland maintained that the said estates were not derived by him from the last Earl as predecessor in the sense of the Succession Duty Act, but that the predecessors from whom they were derived were the makers of the two entails, both of whom were his lineal ancestors, and that he was consequently liable in succession duty only at the rate of one per cent.

The Lord Ordinary pronounced the following interlocutor:—

“ Edinburgh, 17 th July, 1876.—Having considered the cause, Finds that the deceased Thomas Second Earl of Zetland, the heir of entail last in possession of the estates in question, is to be regarded in the sense of the Succession Duty Act as the predecessor of Lawrence Third and present Earl of Zetland in the whole lands and estates which are the subject of the Special Case, and that the rate of duty to which the said Lawrence Earl of Zetland is liable in respect of his succession to the said lands and estates is three per cent., and decerns: Finds the said Lawrence Earl of Zetland liable in expenses, and remits the account thereof, when lodged, to the Auditor for taxation and to report.

Note…. The question between the parties is Whether, in the sense of the Succession Duty Act, Thomas Second Earl of Zetland, the last heir of entail in possession of the estates, is the predecessor of the present Earl—as maintained by the Crown—or whether the entailers, Sir Lawrence Dundas, the maker of the deed of 1768, and Thomas Lord Dundas, the maker of the deed of 1813, are the predecessors of the present Earl? The contention of the present Earl practically resolves into this, that the maker of the entail of 1768 was his predecessor in the estates in the sense of the Act, for, as already noticed, the entail of 1813 (like the other proceedings above referred to) was executed under an obligation originally imposed by the deed of 1768.

If the entailer had been a stranger in blood to the present Earl, it would have been the interest of the present Earl to maintain the view now urged on behalf of the Crown, viz., that his predecessor in the estate was his uncle the last heir, for in that case, if the view which he now maintains were sound, it would follow that he was liable in duty at the rate of ten per cent. in place of three per cent.—the amount claimed by the Crown, being the succession duty payable by the descendant of a brother of the predecessor. It happens however in this case that, as an heir-male of the body of Thomas Lord Dundas, the present Earl is also a lineal descendant of the entailer, and he maintains that the entailer is truly his predecessor in the estate, and, being his lineal ancestor, that he is liable only at the rate of one per cent on the succession.

It has been repeatedly said in the cases of this kind that have occurred that the answer to the question, Who is the predecessor of the person who has succeeded? depends on the answer to be given to the other question, Has the person who has succeeded obtained his right by disposition or by devolution, within the meaning of the Succession Duty Act? If the present Earl has derived his right by disposition, the entailer was his predecessor. If he has derived his right by devolution, then his predecessor was his uncle, the last heir in possession.

I am of opinion, both on principle and on the authorities, that the latter of these views is the sound one. The whole subject has undergone a very full discussion in the case of Lord Saltoun, 16th December 1858, 21 D. 124, and April 1860 (House of Lords), 3 Macq. 659; and Gordon, 19th July 1872, 10 Macph. 1015. In the former of these cases it was expressly decided that an heir under a deed of entail, called by name and taking up the estate as a new stirps, or the first of a new series of heirs after the exhaustion of a previous branch or branches of the destination, takes the estate—laying out of view the particular mode of making up his title in accordance with Scotch law —by disposition or conveyance directly to himself, and not by devolution, and that consequently the entailer is to be regarded as his predecessor. The opinions of the minority of the Judges in this Court, which ultimately received effect, as well as those of the learned Judges in the Court of Appeal, in almost every instance contain expressions shewing that, while the head of a new branch in the destination called nominatim takes from the entailer as his predecessor, his heirs, taking as such under that description, ought severally to be regarded as taking by devolution, not by disposition—the result being that the last heir in possession, by whose death the estate devolves, and not the entailer, is in that case the predecessor.

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In the succeeding case of Gordon that view was adopted. The case is a direct decision to that effect. The result is, that in the great majority of instances in the case of entailed estates the predecessor of the succeeding heir in the sense of the Act is the immediately preceding possessor, to whom the succeeding heir stands in relationship by blood, more or less near, and the succeeding heir has thus the advantage of this relationship in fixing the rate of succession duty.

The counsel for Lord Zetland did not dispute that the case of Gordon was decisive of the present question, but stated that it was intended to submit the point for reconsideration. Of course this can only be done before the Court of Review. I can only give effect, as I have done, to the rule already laid down. But I may at the same time say, that even if the question were open I should entertain no difficulty in deciding this case in accordance with the view given effect to in the case of Gordon. If it be suggested that the distinction drawn in the statute between succession by disposition and by devolution is intended to mark the distinction between intestate succession and succession by deed of any kind, and that consequently every one who takes a beneficial interest by deed throughout any course of succession, however long, takes by disposition from the granter as his predecessor, the answer is, this view has been practically negatived after full consideration by the Court of last resort in the case of Lord Saltoun; for in that case the ground of decision was, not that Lord Saltoun took the estate as an heir called by the deed, but that there was a direct conveyance to him nominatim as the head of a new branch of the destination. The idea that the line was drawn between intestate succession on the one hand and succession anyhow by virtue of a deed, received no countenance from any of the Judges, and would have been subversive of the rule which has been applied to succession in entailed estates in England, where the donee or remainder man who takes by purchase is the successor, and the entailer the predecessor; while ‘with respect to the heirs of the body, the donee in tail is the ancestor, and the heir of the body is the successor’ ( per Lord Wensleydale, 3 Macq. 685.

“If, then, a narrower rule is to be adopted, it appears to me that the rule indicated throughout most of the opinions in the case of Lord Saltoun, and which received effect in the case of Gordon, is the only practical one, and is probably the best fitted to do justice in the great majority of cases, leading generally to liability for a smaller succession duty where the immediately preceding possessor of an estate is an ancestor or near relative, than in the case where he was a stranger to the person next succeeding. It was suggested in the argument that where a son immediately followed his father in the possession of an entailed estate, the Court should hold the father to have been the predecessor, but that if the degree of relationship was greater the heirs succeeding should be regarded as taking from the entailer. There appears to be no principle for this view. And even if it received effect the result would probably be, that though it happens that in this case Lord Zetland as a descendant of the entailer would benefit, in the great majority of cases it would be a misfortune for the heir succeeding that he should be held to take by disposition from the entailer—often a stranger in blood to him, and at least not a lineal .ancestor. If it be assumed in the present case that the entailer was a stranger in blood to the persons called under the branch of the destination which still regulates the estate, then, according to the argument submitted for Lord Zetland, each succeeding heir would have to pay ten per cent. as succession duty. The only exception suggested was that of a son following his father in the estates, in which case it was said the rule ought to be different. I am unable to see any principle for the difference, for a person directly succeeding his uncle has in the general case the same reason for claiming that his uncle should be regarded as his predecessor, so as to limit the duty to three per cent. instead of ten. where the entailer is a stranger to him, as a son succeeding to his father would have in maintaining that his father was his predecessor, so as to limit the duty to one per cent. in similar circumstances. It appears to me that the practical and sound rule in the interpretation of the statute is that which has received effect by the judgments of the Court and the practice which has resulted, viz., that in a destination to a person named and his heirs, or in a series of similar substitutions, the head of each separate branch should be held to take by the disposition in his favour from the granter of the deed as his predecessor, while the others take by devolution, and have thus the benefit, in a question as to the succession duty, of the relationship which subsists between the person named and those called as his heirs.”

The Earl of Zetland reclaimed, and in respect he admitted that the case of the Lord Advocate v. Gordon, decided by the Second Division of the Court, July 19, 1872, 10 Macph. 1015, was a direct authority against him, the cause was appointed to be argued “before the Judges of this Division with the assistance of the four Judges of the Second Division.”

He argued—What was decided in Lord Saltoun's case was that nominatim substitutes took by “disposition,” and not by “devolution of law.” The head of a new stirps took by “disposition.” So soon as a divergence to collaterals and their descendants occurred, a new stirps began. That was the position of Lord Zetland. “Devolution by law” was applicable to a case where the same party took who would have taken ab intestato

At advising—