Scottish Court of Session Decisions

By trust-disposition, dated 2d February and recorded 7th September 1835, the late Lord Douglas Gordon Hallyburton conveyed to trustees therein named (with power to himself to add to their number should he see fit) his lands of Pitcur and others in the counties of Perth and Forfar, the ultimate purpose of the trust being that the trustees should convey the estates to such person as the truster should appoint. By a trust-disposition and deed of entail executed by him, of date 13th August and recorded 27th August and 15th November 1839, after sundry purposes, the truster provided,—“And further considering that for the preservation of my family and memory, and for the continuance of my lands and estate of Pitcur in the family of Huntly, and in testimony of the regard and affection I bear to my brother George Marquis of Huntly, and to my nephews, the sons of the said Marquis of Huntly, I have resolved to execute an entail of my said lands, and to settle the same upon a certain series of heirs, and in the exercise of the powers specially reserved to me by the foresaid trust-disposition, dated the 2d day of February 1835, to nominate and appoint the persons for whose behoof the said Hunter Gordon and Patrick Chalmers, my trustees foresaid, hold my said lauds under the said trust-disposition; therefore I hereby direct and appoint the said Hunter Gordon and Patrick Chalmers, and their successors, as soon as they shall have executed the trusts reposed in them by the said trust-disposition, and other the trusts hereinbefore specified, to denude of my said lands and estate, and to give, grant, and dispone, heritably and irredeemably, to Lord John Frederick Gordon, third son of George Marquis of Huntly, and the heirs-male descending of his body, whom failing to the most noble George Marquis of Huntly, my brother, whom failing to Charles Earl of Aboyne, the eldest son of the said Marquis, and the heirs-male descending of his body,” whom failing as therein mentioned. This deed contained also a reservation of power to the truster to revoke and alter the foresaid course and order of succession as to all the heirs of tailzie except his nephew Lord J. F. G. Hallyburton and the heirs-male of his body, and to recal the said disposition and deed of entail in whole or in part, and to sell or burden or gratuitously dispose of the estate. The same deed contained this further clause:—“And for the preservation of the growing timber and plantations on my said lands and estate of Pitcur, I hereby direct and appoint the said Hunter Gordon and Patrick Chalmers, my said trustees, to reserve the timber and plantations on my said estate when they convey the said lands to the said Lord John Frederick Gordon and the other heirs before mentioned: And it is hereby provided and conditioned that it shall not be lawful to the said Lord John Frederick Gordon, or the whole heirs of entail, to cut down the growing timber or plantations, or any part thereof, without the consent and authority of my said trustees; and that my said trustees shall not be empowered to give such consent unless the growing timber or plantations on my said estate shall require such cutting down or thinning for their better preservation: Declaring also that the produce of all fallen trees, or cut timber, or bark, shall be applied in discharge of the various burdens charged on my said estate: But reserving to myself full power at any time during my life to direct and appoint my said trustees to cut down and dispose of such parts of the said growing timber and plantations as I shall think fit, the proceeds thereof to be disposed of as I shall direct.”

By deed of ratification and explanation, dated 20th and recorded 28th March 1839, the said Lord Douglas G. Hallyburton ratified and confirmed his trust-disposition of 1835, and of new conveyed the lands of Pitcur to the trustees for the purposes and under the conditions and declarations specified in the previous deeds. This deed contained the following clauses:—“ First, I declare that the principal sums of all debts, legacies, and provisions shall be charged and chargeable upon and affect only the fee of my said lands and estate of Pitcur and others, and that the rents thereof shall be chargeable with annual payments only; and I further declare that the free revenues of my said estates shall not be accumulated during the subsistence of this trust, nor applied in the payment of capital debts or provisions, but, on the contrary, shall be regularly paid over to my nephew Lord John Frederick Gordon and the heirs of entail substituted to him, as the same shall arise—that is, the rents and revenues of these estates after deducting

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all public burdens, interest of debts, and provisions, jointures, annuities, and other annual charges: Second, Notwithstanding my injunction on the trustees to denude in favour of my said nephew Lord John Frederick Gordon and the heirs of entail substituted to him, only after the other purposes of the trust have been fulfilled, I now hereby authorise and direct my said trustees to denude as soon as possible after my wife's decease without issue, taking care, however, when doing so, to secure heritably on the estate such of the debts and provisions or annuities as may then still exist and remain unpaid: Third, And even during my wife's liferent I authorise my said trustees to denude as aforesaid, provided the same be done with my wife's concurrence, and upon an opinion given by counsel that her provisions, and the other provisions made by me, have been duly secured. … Sixth, As the intention of keeping up the foresaid trust is merely to secure payment and fulfilment of the various provisions made by me, I hereby declare that, so far as may be consistent with that object, and under reservation always of my said wife's right to the mansion-house of Pitcur and adjoining grounds, as provided by the said deed of 1838, the whole management of the said lands and estate of Pitcur and others, situated in the counties of Perth and Forfar, shall, notwithstanding the subsistence of the said trust, be given to my said nephew Lord John Frederick Gordon and the substituted heirs of entail in their order, who shall have full power, under the limitations of the prescribed entail, to grant leases, to excamb grounds, and to make provisions on his or their wives and children or grandchildren, as permitted by the prescribed entail, in the same manner as if they were actually infeft and possessed of the said lands and estate, and to avail themselves of the statute 10th George the Third, chapter 51, made to encourage the improvements of entailed estates in Scotland, and the later statutes of the 5th George the Fourth, chapter 87, and the 6th and 7th William the Fourth, chapter 42, and generally to exercise all the powers of administration competent to an heir of entail in possession which may not be inconsistent with the purposes of the said trust, hereby directing my said trustees to concur in and to give full effect to all such acts and deeds as aforesaid of my said nephew Lord John Frederick Gordon, or the existing heir of entail beneficially entitled to my said estate for the time being.”

By second deed of ratification, dated 16th June 1840 and recorded 20th January 1842, the said Lord Douglas G. Hallyburton, inter alia, directed as follows:—“I hereby direct that the name of my brother, the most noble George Marquis of Huntly, shall be entirely omitted in the substitution in the said prescribed deed of entail, hereby expressly revoking my former nomination of him or in his favour, and declaring that my said estates of Pitcur and others shall be conveyed by strict entail to my said nephew Lord John Frederick Gordon and the heirs-male descending of his body, whom failing to Charles Earl of Aboyne, the eldest son of the said Marquis, and the heirs-male descending of his body, whom failing” as therein mentioned.

Lord Douglas G. Hallyburton died on or about 25th December 1841, and the trustees entered on their office. The woods on the Pitcur estates were very extensive, and the trustees from time to time cut down considerable quantities of timber, acting, when they did so, on the advice of persons skilled in forestry, to the effect that the wood was ripe for cutting or required thinning in the course of judicious management. They dealt with the proceeds of the sales of timber as revenue, applying the same towards meeting the annual charges on the estate, and paying over the surplus, when there was any, to Lord J. F. G. Hallyburton. In taking this course they acted on an opinion of counsel given by Mr (afterwards Lord) Rutherfurd.

In 1854 the trustees raised a multiplepoinding in the Court of Session to obtain exoneration of their past actings, and in order that the deed of entail to be executed by them in favour of Lord J. F. G. Hallyburton and the other heirs might be judicially adjusted. The said deed was duly executed and recorded, and contained the following clause:—“Reserving always the timber and plantations on the said estate, which, for the preservation of the growing timber and plantations on the said lands and estate, we are by the foresaid deed, called a trust-disposition and deed of entail, directed and appointed to reserve when we convey the said lands and estate to the said Lord John Frederick Gordon Hallyburton and the heirs before mentioned; and it is hereby conditioned and provided that it shall not be lawful to the said Lord John Frederick Gordon Hallyburton, or the whole heirs of entail, to cut down the growing timber or plantations, or any part thereof, without the consent and authority of us as trustees foresaid, or of our successors in office, which consent, it is declared by the said last-mentioned deed, we shall not be empowered to give unless the growing timber or plantations on the said estate shall require such cutting down or thinning for their better preservation; by which deed it is likewise declared that the produce of all fallen trees or cut timber or bark shall be applied in discharge of the various burdens charged on the said estate.” Among the defenders and claimants in the action of multiplepoinding were Lord J. F. G. Hallyburton and the late, and also the present, Marquis of Huntly. In 1855 a remit was made to the Auditor of the Court of Session to audit the trust accounts for the preceding year; and in his report the Auditor observed—“It has been seen that in the trust-deed of 1838 there is a direction to the trustees, when executing the entail, to reserve the timber, a declaration that the heir of entail should not be entitled to cut timber without the previous consent of the trustees, and a provision that the produce of such timber as might be cut should be applied towards extinction of the truster's debts. In the subsequent deed of March 1839, again, there is a declaration that the free revenues of the truster's estate should be paid to the heir of entail for the time. In accordance with this last declaration the annual produce of the woods has been held as revenue, and applied as directed. In framing the deed of entail, however, the trustees have properly inserted the reservation and declaration made by the truster; and as this implies the continuance of the trust in so far as relates to the protection and superintendence of the woods, it may be requisite to qualify the exoneration of the trustees by an exception from

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its operation of this partial subsistence of the trust.”

On 14th February 1856 the Lord Ordinary approved of the trust accounts for 1854 as audited, and ordained the trustees to pay to Lord J. F. G. Hallyburton, in terms of his claim, the whole free revenue for the year 1854. In like manner the revenue for 1855 was subsequently paid to him. On 9th January 1869 the Lord Ordinary exonered and discharged the trustees of their whole actings and intromissions between 31st December 1854 and 31st December 1867. Since then no active steps had been taken in the process.

Lord J. F. G. Hallyburton died on 29th September 1878, and was succeeded in the estate, in terms of the said deed of entail, by the Marquis of Huntly, who disentailed and sold the estate.

The present action was raised by Lord Huntly's trustees against the trustees of the late Lord J. F. G. Hallyburton. The summons concluded for declarator that Lord J. F. G. Hallyburton, as heir of entail in possession of the lands and estate of Pitcur, was, in terms of the deeds above set forth, bound to apply the whole proceeds realised by him from the sale of the fallen trees or cut timber or bark on the said estate in extinction of the debts, legacies, and provisions, &c., charged upon and affecting the fee of the said estate; and to have his trustees ordained to produce an account of his whole intromissions with the proceeds realised from such sales during the period of his possession—31st January 1856 to 29th September 1878; and to pay the pursuer £15,000, or such other sum as should be ascertained to be the amount of the balance of these intromissions.

The pursuers pleaded—“(1) The said deceased Lord John Frederick Gordon Hallyburton having been bound to apply the whole proceeds realised by him from the sale of the timber on the said lands and estate of Pitcur in extinction of the debts, legacies, and provisions, &c., charged upon and affecting the fee of the said estate, and having failed so to do, decree ought to be pronounced in terms of the declaratory conclusion of the summons.”

The defenders pleaded—“(3) There being no obligation imposed upon the late Lord John Frederick Gordon Hallyburton by the trust-settlements of the late Lord Douglas Gordon Hallyburton, or by the entail of the estate of Pitcur, to apply the proceeds of the sale of wood to the extinction of the burdens upon the fee of that estate, the defenders are entitled to be assoilzied from the conclusions of the summons. (4) The late Lord John Frederick Gordon Hallyburton having bona fide received and consumed the proceeds of the sales of wood on the estate of Pitcur, so far as not necessary for estate purposes and to keep down the annual charges upon the said estate, and in accordance with the construction of the trust-settlements of Lord Douglas Gordon Hallyburton, sanctioned by the interlocutors of the Court in the action of multiple-poinding and exoneration, the defenders are entitled to be assoilzied from the conclusions of the summons. (5) The Marquis of Huntly having, in the full knowledge of the circumstances, acquiesced in the receipt and application of the said proceeds by the said Lord John Frederick Gordon Hallyburton, the pursuers, as claiming through him, are barred from raising the present action.”

The Lord Ordinary ( Rutherfurd Clark) found, decerned, and declared in terms of the declaratory conclusions of the libel, and appointed the defenders to lodge in process an account of the late Lord J. F. G. Hallyburton's intromissions with the proceeds of such sales during the period in question. His Lordship added this note:—

“ Note.—The question in this case turns on the construction of two deeds executed by the late Lord Douglas Gordon Hallyburton, dated respectively 27th August 1838 ^* and 28th March 1839. By a previous inter vivos trust-deed Lord D. G. Hallyburton had vested the estate of Pitcur in trustees, and the deeds which have been just mentioned contained his instructions with respect to the disposal of it. It is sufficient to say that he directed his trustees to entail on the late Lord John Frederick Gordon Hallyburton as institute, and a series of heirs. This was accordingly done by a deed of entail executed on 16th and 17th July 1855, and on the death of Lord J. F. G. Hallyburton the Marquis of Huntly succeeded as heir of entail. He subsequently disentailed the estate with the necessary consents, and has sold it.

The question is, whether under the clause contained in the deed of August 1838, and quoted in the condescendence, the ‘produce of fallen trees or cut timber or bark’ was appropriated to the payment of the capital of the burdens on the estate, of which a considerable number remain undischarged. It is admitted, on the one hand, that Lord J. F. G. Hallyburton cut down a considerable quantity of timber; and, on the other hand, it is not disputed that the cutting of the timber was an act of ordinary and proper administration, the timber so cut being either ripe wood or thinnings.

(1) The defenders objected to the pursuers' title. Assuming the claim to be otherwise well founded, they contended that the title to sue was not vested in the Marquis of Huntly alone, but in him and the heirs of entail with whose consent the estate was disentailed. The Lord Ordinary cannot adopt that view. By the disentail the Marquis became the absolute proprietor of the estate, and has right to all the dispositions which have been made in favour of the heirs of entail. If the produce of the timber is applicable to the payment of the debts which are charged on the estate, and if it had been so applied, the Marquis would have been so much the richer. It is suggested that he would have had to pay more for the consents of the next heirs, and that in consequence they have an interest. But the defenders, it is thought, have no title to raise any such question. By the disentail the next heirs have surrendered all their interest, and it seems to be impossible in this case to enter on the conditions of the surrender.

(2) Again, the defenders maintain that the meaning of the truster was that the produce of the timber was to be applied in keeping down the interest of the debts on the estate, and they point to a clause in the deed of 1839, called a ‘deed of ratification and explanation,’ in which it is directed that the free rents and revenues shall not be accumulated, but paid over to Lord J. F. Gordon Hallyburton.

The Lord Ordinary is of opinion that the case

_________________ Footnote _________________

* On page 47, line 16 from foot of first column, for 1839 read 1838.

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of the pursuers is well founded. He thinks that the just construction of the deed of 1838 is, that the produce of the timber was to be applied in the payment of the capital of the debts affecting the estate, and this direction was not recalled by the subsequent deed of 1839. It is true that the produce of ripe timber and of thinnings would fall to the heir in possession, and that it may be regarded as a part of the revenue of the estate; but it is thought that the deed of 1839 did not refer to the income derived from this extraordinary source, but only to the ordinary rents of the estate; for the truster directed the trustees to ‘reserve the timber and plantations on the estate.’ The timber was thus to remain in their hands, and the deed of 1838 contains the only direction as to the application of the produce. This special direction was not, it is thought, recalled by the general direction that the rents were not to be accumulated. It is true that the reservation of the timber would not reserve any separate feudal estate in the trustees; but it very strongly indicates what the truster meant as to the application of the money derived from time to time from this source.

The defenders point out that the purpose of the direction to reserve the timber was for the ‘preservation of the growing timber and plantations.’ So it was; but this cannot, it is thought, affect the construction of the clause which disposes of the proceeds of the cut and fallen timber.

(3) The defenders pleaded that the proceeds of the timber had been bona fide received and consumed by Lord J. F. G. Hallyburton, and that in consequence they are not bound to account for them. But the Lord Ordinary thinks that the plea is not well founded. It is certain that the trustees and Lord J. F. G. Hallyburton believed that the latter had absolute right to the proceeds of the timber; that they entertained this belief in bona fide; and that in consequence Lord J. F. G. Hallyburton received and consumed the proceeds. But there is here no competing title. The rights of the parties must be. determined by the directions of the truster only, and any error in the construction of the trust-deed cannot affect the rights of the beneficiaries under it.

(4) The defenders also pleaded acquiescence. But in the opinion of the Lord Ordinary there is no foundation for this plea.”

The defenders (Lord J. F. G. Hallyburton's trustees) reclaimed, and argued—(1) On a sound construction of the deeds set forth, Lord J. F. G. Hallyburton as heir of entail in possession was entitled to cut down and sell the wood and use the proceeds as his own. (2) Bona fide perception and consumption of the profits. A colourable title was a foundation for this plea; there was no necessity for a case of competing titles—Ersk. Inst. ii. 1, 27; Duke of Roxburghe, Feb. 17, 1815, F.C.; Menzies v. Menzies, July 3, 63, 1 Macph. 1025; Duke of Buccleuch v. Hyslop, March 10, 1824, 2 Sh. App. 43; Leslie v. Earl of Moray, Feb. 2, 1827, 5 S. 284; Johnston v. Johnston, July 20, 1875, 2 R. 986; Scott v. Heritors of Ancrum, Feb. 25, 1795, M. 15,700; Lord Advocate v. Drysdale, April 24, 1874, 1 R. (H. of L.) 27; Haldane v. Ogilvie, Nov. 8, 1871, 10 Macph. 62; Carnegie v. Scott, Dec. 9, 1830, 4 W. & S. 431. (3) Acquiescence. Lord Huntly was barred from this action by the proceedings in the multiplepoinding to which he was a party. He had acquiesced in the receipt and application by Lord J. F. G. Hallyburton of the proceeds of the timber sales.

The pursuers (respondents) replied—(1) The Lord Ordinary's construction of the deeds was sound. The direction of the deed of 1838 was not recalled by that of 1839. (2) There was no room in this case for the application of the doctrine of bona fide consumption. That applied only to cases of possession on an apparently valid title and subsequent eviction from the subject. There was here no competition of titles. Hence the authorities cited on the other side did not apply—Stair ii. 1, 23; Agnew v. Stair, July 22, 1828, 3 W. & S. 286. (3) The actings of Lord Huntly did not ground a plea of acquiescence.