Scottish Court of Session Decisions

The late John Ferguson of Cairnbrock died on the 8th January 1856 leaving a trust-disposition and settlement dated 13th May 1853, with relative codicil or deed of instructions dated 22d September 1855. By the last purpose of the codicil he directed his trustees “to hold, retain, set apart, and invest, as after written, the rest, residue, remainder, and reversion of my whole subjects, property, means, assets, estates, funds, debts, effects, and sums of money, heritable and moveable, real and personal, as a permanent fund, to be called the Ferguson Bequest Fund; and to pay, apply, and appropriate the interest and other annual income, profits, and produce thereof, in and towards the maintenance and promotion of religious ordinances and education and missionary operations; in the first instance, in the county of Ayr, Stewartry of Kirkcudbright, and counties of Wigton, Lanark, Renfrew, and Dumbarton; and thereafter, if my said trustees in Great Britain shall think fit, in any other counties in Scotland; and that by means of payments for the erection or support of churches and schools (other than and excepting parish churches and parish schools) belonging to or in connection with quoad sacra churches belonging to the Established Church of Scotland, and belonging to or in connection with the Free Church, the United Presbyterian Church, the Reformed Presbyterian Church, and the Congregational or Independent Church, all in Scotland, or any or either of them; or in supplement of funds collected for these purposes; or in supplement of the stipends or salaries of the ministers of the said quoad sacra and other four churches; and by payments of salaries, or in supplement of the salaries of religious missionaries and of teachers of schools of or in connection with the said quoad sacra churches, and the said Free Church, United Presbyterian Church, Reformed Presbyterian Church, and Congregational or Independent Church; and by payments for forming and maintaining, or in aid of funds raised for forming and maintaining libraries for the use of the general public; such missionaries, schools, and libraries

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being under the superintendence or management of members in full communion with one or other of the said five churches: Declaring that the application and appropriation of the trust-funds shall be entirely at the option and discretion of the quorum of my said trustees as to the proportions thereof to be applied to the said several objects … And in respect it is my desire that the trustees for the execution and management of the permanent trusts hereby created shall be thirteen in number, and shall consist of members of the said five churches, in the following proportions—namely, three members of the Established Church, four members of the Free Church, four members of the United Presbyterian Church, one member of the Reformed Presbyterian Church, and one member of the Congregational or Independent Church, all in Scotland, I hereby direct and appoint my said trustees in Great Britain, at or before the first term of Whitsunday or Martinmas which shall occur after the lapse of twelve months from the date of my decease, to nominate, assume, and appoint, by a writing under their hands, such a number of persons, members in full communion with one or other of the said five churches, as shall be necessary to make up the number of trustees to thirteen, and to complete the above proportions of church membership, to be trustees along with and in succession to my said trustees in Great Britain, for the execution and management of the permanent trusts hereinbefore created; and also, in the month of January in each successive year thereafter, to nominate, assume, and appoint, by a writing under the hands of the then surviving trustees, or their quorum, one or more persons, a member or members in full communion with the church or churches with which any trustee or trustees who may have died during the preceding twelve months shall have been a member or members, to be trustee or trustees in the room and stead of such deceased trustee or trustees, for the execution and management of the said permanent trusts, along with and after the death of the then surviving trustees.”

The method in which the trustees dealt with the residue was as follows:—The free yearly income was allocated at the outset of the trust among the five churches in proportion to their representation in the body of trustees, i.e., the free income was divided into thirteenths, of which the Established Church was allocated three parts, each of the Free and United Presbyterian Churches four, the Reformed Presbyterian Church one, and the Congregational or Independent Church one. Applications for grants out of the money so allocated were received by the trustees from the various congregations of the five churches. These applications were dealt with and disposed of by the trustees, the sums granted being paid to the applicants preferred.

The free revenue expended in carrying out the provisions of the trust from 1858 to 1883 amounted to £399,164, 10s. 9d.; and it was apportioned among the three general objects as follows:—

Religious ordinances.	307,214	0	0.
Missionary operations.	37,144	0	0.
Grants for school building and repairs, and teachers' salaries in connection with the churches, including libraries.	54,776	10	9.

These schools were under the direct management of congregations belonging to the different churches specified by the testator. Many of them were either in remote country districts or in poorer quarters of large towns. The education and religious instruction given in them was substantially the same as that given in parish schools, except in the case of those of them which were mission schools. There the education was largely religious in character.

The annual appropriation of the sum of £54,776 10s. 9d. above-mentioned varied not only in amount, but in the objects to which it was applied. In 1858 the sum of £3290 was appropriated to school building, school repairs, and teacher's salaries. But after 1867 nothing was given to school building, and after 1871 nothing was given to school repairs. After 1873, and for several years, nothing was given to teachers, but grants for that purpose at the rate of £300 a-year were renewed after 1881; on school libraries about £200 a-year was spent in years prior to 1881, and after that year from £200 to £300.

The Commissioners appointed under the Educational Endowments (Scotland) Act 1882 (45 and 46 Vict. c. 59) submitted to the Scottish Education Department, under section 25 of the said Act, a scheme for the future administration of the Ferguson Bequest Fund. The scheme provided for the constitution of a governing body to consist of fifteen persons, of whom a certain proportion was to be elected by the trustees of the Ferguson Bequest Fund, by the Senatus of each of the four Scottish universities, and by the chairmen of school boards in certain districts respectively. Further, it provided that the trustees of the Ferguson Bequest Fund should pay annually the sum of £1600 to the said governing body to be applied in maintaining the Ferguson scholarship, in continuing, if they thought fit, an annual grant to the Normal Schools of Glasgow, and as regards the remainder of the free income in making grants to assist schools in giving higher instruction in the counties of Lanark, Ayr, Renfrew, Dumbarton, Kircudbright, and Wigtown.

The case now reported was a Special Case to which the trustees of the Ferguson Bequest Fund were the first parties, the representatives of officials of the five churches specified by the testator were the second parties, and the Commissioners were the third parties—presented for the purpose of having the objections made by the first and second parties to the scheme decided.

The judgment of the Court was asked upon the following question—“Whether the said scheme, in so far as it ordains £1600 per annum out of the residue of the Ferguson Bequest Fund to be paid to the trustees thereby created, is in terms of the Educational Endowments (Scotland) Act 1882?”

These objections were—“(1) that the Ferguson Bequest Fund is not an ‘educational endowment’ on a sound construction of section 1 of the Educational Endowments (Scotland) Act 1882; (2) that on a sound construction of section 8 of the said Act, the said residue is not within the scope of the Act; (3) that the scheme of the third parties is not in terms of the said Act, and particularly section 10 thereof, in respect that it diverts from other charitable purposes money in use to be applied to the same; and (4) that it is contrary

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to the terms of the said Act, and particularly section 15 thereof, in so far as it does not have regard to the spirit of the founder's intentions in respect that ( first) it renders impossible the exercise by the trustees of that absolute discretion which it was a cardinal point of the founder's scheme should be reserved to them, and supersedes them by a body whose members are not required to have the qualifications of membership of the respective churches which the testator thought essential; ( second) it disintegrates the Ferguson Bequest Fund, which it was the wish of the testator to preserve ‘as a permanent fund;…( third) it diverts to secular education what the founder enjoined should be devoted to denominational purposes controlled by the various churches alone.”

By section 1 of the Act it is provided that “‘Educational endowment’ shall mean any property, heritable or moveable, dedicated to charitable uses, and which has been applied or is applicable in whole or in part, whether by the declared intention of the founder or the consent of the governing body, or by custom or otherwise, to educational purposes, but shall not, except with the consent of the governing body, include the funds, whether capital or revenue, of any incorporation or society contributed or paid by the members of such incorporation or society by way of entry-moneys or other fixed or stated payments, nor burgess fines paid to any such incorporation or corporate society, except as hereafter provided. ‘Governing body’ shall mean the managers, governors, or trustees of any endowment or other persons having the administration of the revenues thereof.”

Section 4 of the Act provides for the appointment of Commissioners, and by section 5 it is enacted—“Subject to the provisions hereinafter contained the Commissioners shall have power to prepare drafts of schemes for the future government and management of educational endowment, which schemes may provide for altering the conditions and provisions of such endowments, including the powers of investing the funds thereof, or amalgamating, combining, or dividing such endowments, or altering the constitution of the governing bodies thereof, or uniting two or more existing governing bodies, or establishing new governing bodies with such powers as shall seem necessary, and to insert in such schemes clauses incorporating the governing bodies, whether new or old.”

Section 8, sub-section (3), provides that the Act shall not apply “to any endowment solely or mainly applicable or applied for the purposes of theological instruction or belonging to any theological institution.”

Section 10 provides that “where any part of an endowment is an educational endowment within the meaning of this Act, and part of it is applicable or applied to other charitable purposes, the scheme shall be in conformity with the following provisions (except so far as the governing body of such endowment assent to the scheme departing therefrom).… (2) The proportion of the endowment or annual income, for the time being, so applicable to such other charitable uses shall be deemed to be the proportion which, in the opinion of the Commissioners, is the proportion which has according to the average of such number of years as the Commissioners shall determine been appropriated as regards capital, or applied as regards income, to such uses.”…

Section 15 provides that “in framing schemes it shall be the duty of the Commissioners, with respect alike to the constitution of the governing body and to educational provisions, to have regard to the spirit of founders' intentions, and in every scheme which abolishes or modifies any privileges or educational advantages to which a particular class of persons is entitled, whether as inhabitants of a particular area or as belonging to a particular class in life or otherwise, they shall have regard to the educational interests of such class of persons: Provided always that where the founder of any educational endowment has expressly provided for the education of children belonging to the poorer classes, either generally or within a particular area, or otherwise for their benefit, such endowment for such education, or otherwise for their benefit, shall continue, so far as requisite, to be applied for the benefit of such children.”

Section 30 provides that “(1) If the governing body of any endowment to which a scheme relates, or any person or body corporate directly affected by such scheme, feel aggrieved by the scheme on the ground of the scheme being one which is not within the scope of, or made in conformity with this Act … such governing body, person, or body corporate may, within one month after the first publication of the scheme or amended scheme, submit a case to the Court of Session, to which the Commissioners shall, and any others directly interested may be parties, for the opinion of the said Court on the question or questions therein stated, and if the Court is of opinion that the scheme is contrary to law on any of the grounds in this section mentioned, the Scotch Education Department shall not approve thereof, but they may, if they think fit, remit the same to the Commissioners with a declaration as hereinbefore provided.”…

For the first parties, the Ferguson trustees, it was argued that what the testator had in view was a denominational and a religious object. Both these elements were essential. It was denominational as opposed to undenominational and secular. The parish churches and schools were already so equipped as to serve his purpose— i.e., to secure Presbyterian religious instruction. It was religious, both expressly and by implication. The schools were to be under the control of certain churches, both as regarded management, and the character of the instruction to be supplied. Moreover, the qualifications prescribed as essential in the trustees pointed in the same direction. Thus the testator's intention was clear, and that was always to be regarded in the formation of a scheme—Educational Endowments Act 1882 (45 and 46 Vict. c. 59), sec. 15; The Ferguson Bequest Fund case, January 16, 1879, 6 R. 486. But according to the scheme proposed, the fund might be appropriated to provide instruction from which religion was systematically excluded, while the members of the governing body might be of any or no religion. The provisions of the testator's will taken along with the history of the trustees' administration showed that the fund was not an “educational endowment” in the sense of section 1 of the

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Act. The Court had the power and ability to review the Commissioners—to discriminate between the letter of the will and its spirit. The Commissioners had ignored both.

The second parties adopted the first parties' argument.

It was argued for the third parties that the question was whether this scheme was within the scope of Act, or in conformity with it— Forrest's Trustees v. Commissioners on Educational Endowments, March 18, 1884, 11 R. 719. (1) Was the fund within the scope of the Act? This fund had always been applied in part to education. The churches were merely the means of a larger purpose, namely, education. It was true that the testatormade it essential that his trustees shouldbe members of the religious bodies; but “expressly” there was not a word in the will about “religious education.” And if religious education had exclusively been meant, the trustees would by their actings have been guilty of breach of trust. The testator wanted to promote education in certain districts. He wished to make a provision where parish schools were insufficient, and where the denominations were doing good work; and he made them hisinstruments. That certainly could not take his bequest out of section 1 of the Act. (2) Was the scheme in conformity with the Act? Did it violate the spirit of the founder's intention? In order to answer these questions the main object of the testator must be considered, and the statutory powers of the Commissioners. These powers were so wide that the matter was really wholly within the discretion of the Commissioners— Donaldson's Hospital v. Commissioners on Educational Endowments, Oct. 31, 1885, 13 R. 101. The Commissioners had full power under section 10 to fix a proportion by taking an average of years. They had arrived at the sum of £1600 by taking the average of the whole years during which the fund had been in existence.

At advising—