Scottish Court of Session Decisions

William Finlay, cabinetmaker n Edinburgh, died on 10th February 1876, survived by two sons, James Finlay, a farmer in New Zealand, and John Finlay, cabinetmaker in Edinburgh, and leaving a trust-disposition and settlement and codicils dated 3d, 4th, and 8th February 1876. By this settlement he appointed certain persons to be his trustees. He left to his elder son James Finlay various specific legacies, including the rent of some buildings used as workshops, which were to be let by trustees to the younger son John Finlay at a rent of £100 per annum. By the last clause of his settlement, in respect that his son John had for many years assisted him in the active management of his business, he directed his trustees to make over to him (John) the business in Princes Street carried on by him (testator), with the leases of the business premises, stock-in-trade, book and bill debts, &c., and generally the whole of the estate not specially destined—the conveyance to be burdened with his debts due at the time of his death, “and also with a legacy or debt of £2000 sterling in favour of my said eldest son James, to be paid to him by his brother John at the first term of Whitsunday twenty years after my decease (payment of the above legacy or bequest being postponed by me for such a length of time in order that my son John may not be unduly burdened in conducting the said business); and in the event of my son James dying before the said legacy becomes payable to him, then I direct my trustees to pay and divide the same equally among his lawful children.” The testator also provided that in order to protect the interests of his son James Finlay the trustees were to have power, and were directed to take means, to satisfy themselves that the said business was being properly and profitably carried on, and in the event of it appearing that the business was not being carried on to a profit, they were directed to wind up the same, realise the trust estate, and invest the proceeds, “subject always to the foregoing legacy or debt of £2000 to my son James,” for behoof of John, and upon his death to divide the estate among his lawful children, making such provision for his widow, if he left one, as they might think proper.

James Finlay was married, and had several children.

The business continued to be carried on by John Finlay, and from time to time he submitted to his father's trustees statements showing the position of the business, and also exhibited to them the books used for conducting the business, the whole business assets being treated as falling under the settlement and forming part of the testator's personal estate.

John Finlay died intestate on 5th December 1885, leaving a widow but no children. His widow was appointed executrix-dative qua

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relict. In consequence of John Finlay's death the trustees resolved to discontinue the business, and various questions arose as to the duties of the trustees, and the rights of the parties interested, in these circumstances. This Special Case was therefore laid before the Court for opinion and judgment.

The trustees (first parties) maintained that they were in the same position as if they had resolved to wind up the business in virtue of their power to do so in certain events, while Mrs John Finlay (the second party) maintained that the assets of the business formed part of the intestate estate of her husband, and fell to be administered by her as executrix, subject to proper provision for James Finlay's “legacy or debt” of £2000. James Finlay (third party) maintained that he was entitled to immediate payment of his legacy, or otherwise to have it invested on his account, and the interest paid to him till 1896, and then the principal paid over. The trustees, however, and Mrs John Finlay (first and second parties) maintained that the legacy was absolutely postponed till 1896, to which postponement John's death and the giving up the business were immaterial; or else that the £2000 should be invested by the trustees and the interest paid till 1896, and then the principal. The trustees were willing, if the legacy were held vested in James Finlay so that he could discharge it, to arrange with him for an immediate discharge, and James Finlay maintained that he could give such discharge.

James Finlay's children were fourth parties, and they maintained that the legacy had not vested in him, and in any case was not payable till 1896.

The questions stated were the following:—“I. Do the assets of the business carried on under the firm of William Finlay & Son, as at the date of the death of John Finlay on 5th December 1885, fall to be administered by the parties hereto of the first part, as trustees under the trust-disposition and settlement of William Finlay? Or, Do the assets of the said business form part of the estate of John Finlay, and as such fall to be administered by the party hereto of the second part as executrix-dative of the said John Finlay?

“II. Is the effect of the death of John Finlay, and the consequent discontinuance of the business hitherto carried on under the firm of William Finlay & Son, to entitle James Finlay to demand immediate payment of the legacy of £2000 bequeathed to him by his father, or at least to demand that interest be paid to him periodically upon the said sum of £2000 from the date of the discontinuance of the business up to the term of Whitsunday 1896, when the legacy itself becomes payable in terms of the settlement of William Finlay?

III. Has the said legacy of £2000 vested in James Finlay to the effect of his now being in a position to discharge the same under an arrangement for that purpose between him and the parties hereto of the first and second parts?

A fourth question was also stated relating to the administration of certain subjects specially bequeathed to James Finlay, and in which he alone was interested, but the Court having expressed the opinion that the subject was a matter under the discretion and administration of the trustees, the question was withdrawn.

The trustees argued—The event which had occurred, viz., the death of John Finlay and the consequent stoppage of the business, was not provided for by Mr Finlay's settlement. The trustees therefore were in the same position as they would have been if they had resolved to wind up the business during John Finlay's lifetime, as the business really belonged to the trustees.

The party of the second part argued—The business belonged truly to John Finlay, and when he died the assets of the business became part of his estate, and as such fell to his executrix. The £2000 was not to be paid to James Finlay until twenty years after the death of the testator. That was a condition of the legacy.

The party of the third part argued—If the testator had not stated his reason for postponing the payment of the legacy, then it might have been held that the condition was absolute. But here the reason was given that John Finlay should not be hampered in his conduct of the business. John was now dead, and the business about to be wound up, so that the necessity for the condition no longer existed, and the legacy became immediately payable— Annandale v. Macniven, June 9, 1847, 9 D. 1201; Lewis and Others (Alexander's Trustees) v. Waters and Others, Jan. 15, 1870, 8 Macph. 414; Robertson v. Davidson, Nov. 24, 1846, 9 D. 152; Lucas’ Trustees v. Pullar and Others, Feb. 18, 1881, 8 R. 502; Pretty and Newbigging v. Stewart (Hunter's Trustees), March 2, 1854, 16 D. 667. The sum of £2000 vested in James Finlay a morte testatoris. What was to be paid to John's children was to be paid only after the £2000 was paid. This was a present legacy the payment of which was postponed— Waters and Others (Waters’ Trustees) v. Waters, Dec. 6, 1884, 12 R. 253.

The parties of the fourth part argued—The legacy of £2000 did not vest in James Finlay a morte testatoris, and was not payable to James Finlay until Whitsunday 1896— Bryson's Trustees v. Clark, &c., Nov. 26, 1880, 8 R. 142; Howat's Trustees v. Howat, Dec. 17, 1869, 8 Macph. 337; Thorburn v. Thorburn, Feb. 16, 1836, 14 S. 485; Foulis v. Foulis, Feb. 3, 1857, 19 D. 362.