Scottish Court of Session Decisions

George Robertson Chaplin of Colliston died in 1869 leaving a disposition and settlement by which he conveyed the lands of Cookston and Unthank, in the sheriffdom of Forfar, to David Souter Robertson of Law-head, in liferent for his liferent right and use allenarly, and after his death to George Robertson Chaplin, son of David Souter Robertson, also in liferent, for his liferent use allenarly, and the heirs of his body in fee; whom failing to Thomas Robertson Chaplin, another son of David Souter Robertson in liferent for his liferent use allenarly, and the heirs of his body in fee; whom failing to Catherine Robertson Kirkland or Hoile for her liferent use allenarly, and the heirs of her body in fee; whom failing to the heirs of the body of the said David Souter Robertson in fee; whom failing to certain other persons named therein in fee. He further conveyed the lands of Auchingray, in Lanarkshire, in similar terms in liferent to David Souter Robertson, and after his death to his sons George Robertson Chaplin, whom failing to Stewart Souter Robertson, whom failing to David Souter Robertson, and their respective issue in fee, whom failing to certain other persons therein named in fee. He further conveyed the lands of Bow-house, in Stirlingshire, in similar terms in liferent to David Souter Robertson, and after his death to his sons Thomas, whom failing to George, and their respective issue in fee, whom failing to the heirs of the body of David Souter Robertson in fee, whom failing to certain other persons therein named in fee.

The said disposition was granted under certain conditions, which were declared to be inherent qualities of the conveyance, and, inter alia, under the conditions that “all parties who shall at my death, or at any time thereafter, have any beneficial interest, contingent or otherwise, under this settlement are hereby prohibited from selling, mortgaging, or otherwise disposing of such interest, excepting always sales or mortgages by parties who are absolute fiars of any of the said estates, and it is hereby stipulated and provided that such sales or mortgages, if made, shall be void, and all deeds or instruments purporting to be a sale or mortgage of such interest, or any part thereof, shall be null and void, and all parties signing such deeds or instruments shall thereby forfeit and lose all right and benefit under this settlement, and shall give place to the next in succession, who shall be entitled to come in the right and place of the party singing such deeds or instruments.”

David Souter Robertson died in 1878. George Robertson Chaplin thereupon succeeded to the lands of Cookston, Unthank, and Auchingray in liferent, and Thomas Robertson Chaplin to the lands of Bowhouse also in liferent. They were both unmarried.

In February 1869 they executed trust-deeds conveying their whole estates, and inter alia their liferents, to George Auldjo Jamieson and Francis More for behoof of their creditors. These trust-deeds were, however, superseded by the sequestration of the estates of George and Thomas on 30th December 1890 and 30th January 1891 respectively, and Francis More was elected as trustee on both estates.

The trustee thereafter, on 7th May 1891, raised an action for declarator that he had right to sell these liferents without incurring a forfeiture.

Mrs Hoile and her children, and the trustee on the bankrupt estate of Stewart Souter Robertson (David Souter Robertson's eldest son) appeared and opposed the action, and pleaded—“(2) Inasmuch as no decision in this action will be res judicata in any action challenging the validity of the proposed sale, the action is premature and incompetent. (3) The liferent interests in question not being adjudgable, no title to the same has passed to the pursuers. (5) In respect that by signing the trust-deeds for behoof of their creditors referred to, the liferenters have forfeited the said interests, the action should be dismissed.”

Mrs Hoile thereafter, on 29th May 1891, raised an action for declarator that, inter alia, George Robertson Chaplin had forfeited his liferent, and Thomas Robertson Chaplin his prospective liferent in the lands of Cookston and Unthank by signing the trust-deeds for behoof of creditors, and that the right to these lands had devolved on her in liferent, and her children in fee, subject to defeasance in the event of George and Thomas dying survived by heirs of their bodies.

Francis More, the trustee on the sequestrated estates, opposed this action, and pleaded—“(2) The defender is entitled to absolvitor, in respect the liferenters did not incur a forfeiture of their rights by granting the conveyances in question.”

The Lord Ordinary ( Low) on 12th August 1891, in the action for declarator of right of sale, decerned in terms of the conclusions of the summons.

“ Opinion.—In my opinion the pursuer is entitled to the decree which he asks, the liferents which are the subject of this action being liferents in possession of the bankrupts.

The case seems to me to depend upon whether by the clause of Mr Robertson Chaplin's disposition and settlement, quoted in the condescendence, the diligence of creditors of liferenters in possession is excluded.

The clause, in the first place, prohibits, inter alios, a liferenter ‘from selling, mortgaging, or otherwise disposing of his interest.’ In the second place, it is provided that ‘such sales or mortgages, if made, shall

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be void, and all deeds or instruments purporting to be a sale or mortgage of such interest, or any part thereof, shall be null and void.’ In the third place, it is provided that ‘all parties signing such deeds or instruments’ shall forfeit their rights, and give place to the person next in succession.

It is to be observed that there is this difference between the clause of prohibition and the clauses declaring the deeds null and the right of the granter forfeited, that the former clause strikes not only at sales and mortgages, but also at ‘otherwise disposing of’ the liferent, while the latter clauses refer to sales or mortgages only.

It was contended for the defenders that the deed should be read as if the words ‘or otherwise disposing of,’ or equivalent words, had been continued throughout all the clauses. If the deed were so construed, it would strike at any sort of disposition, and probably even a gratuitous disposition would infer a forfeiture. In my opinion, however, it is not legitimate to read into the clause any words not inserted by the granter. It may be that the general words were omitted from the later clauses by mistake. But I cannot tell whether that was so or not, and I must assume that what the granter has said is that which he intended to say.

The clause therefore stands thus—‘Selling, mortgaging, and otherwise disposing of’ the liferents are prohibited, but in the case of sales and mortgages only is the transaction to be null, and the right of the seller or mortgager forfeited. In these circumstances it seems to me that a gift of the liferent could not be challenged, and if that is the case I do not think that it is possible to say that the diligence of creditors is excluded.

Even if the general words ‘or otherwise disposing of’ are to be held as implied in all the clauses, I am by no means satisfied that the diligence of creditors would be excluded, because I think that a clause of this sort is directed against voluntary alienations, and not against alienations brought about by operation of law, without the consent and contrary to the wish of the liferenter.

By virtue of the 102nd section of the Bankruptcy Act of 1856 the pursuer is in the same position as if he had obtained a decree of adjudication of the liferents subject to no legal reversion. If therefore the diligence of creditors is not excluded, it follows that the right to the liferents is now vested in the pursuer, and that he is entitled to sell the liferents without incurring any irritancy or forfeiture, because he would sell as in his own right under the implied decree of adjudication, and not as in right of the liferenters.

It was further contended that nothing had vested in the pursuer, because prior to the sequestration a forfeiture had been incurred by the liferenters having granted trust-deeds by which they conveyed these liferents to trustees for behoof of creditors. This question is directly raised in an action brought by Mrs Hoile to have it found that by executing and delivering the trust-deeds Messrs George and Thomas Robertson Chaplin forfeited the liferents. The present case and that at the instance of Mrs Hoile were argued before me at the same time, and I refer to my opinion in the latter case for the grounds upon which in my judgment the trust-deeds did not operate a forfeiture.”

In the action for declarator of forfeiture the Lord Ordinary sustained the defender's defences and repelled the pursuer's pleas.

“ Opinion.—The pursuer in this case seeks to have it declared that Messrs George and Thomas Robertson Chaplin forfeited the liferent rights which they had in certain estates under their father's settlement, by having granted in 1889 trust-deeds for behoof of their creditors, by which they conveyed to trustees the liferent rights in question. It is not disputed that if a forfeiture has been incurred the liferents devolve upon the pursuer.

The pursuer founds upon the clause in the late Mr Robertson Chaplin's settlement quoted in the condescendence.

The clause prohibits inter alios a liferenter taking under the settlement ‘from selling, mortgaging, or otherwise disposing of’ his interest, and it is then declared that ‘such sales or mortgages’ shall be void, that ‘all deeds or instruments purporting to be a sale or mortgage’ shall be null and void, and that ‘all parties signing such deeds or instruments’ shall forfeit their right in favour of the persons next in succession.

The pursuer maintains that the trust deeds to which I have referred are struck at by this clause, and that the execution and delivery of them involved a forfeiture of the rights of the granters in favour of the pursuer.

I am of opinion that the contention of the pursuer is not well founded. It is true that the part of the clause prohibiting alienation refers not only to sales or mortgages, but to ‘otherwise disposing of’ the interest, and the latter words are perhaps wide enough to cover a trust-deed for creditors; but the part of the clause in which the transaction is declared void and a forfeiture to be incurred refers only to ‘sales and mortgages.’ I do not think that it would be legitimate to read into the clause any words which it does not contain, and therefore I am of opinion that no forfeiture is incurred unless the liferent is either sold or mortgaged.

In the present case there was no sale. The trust-deeds are very much in the ordinary form. The estates of the granters, and, inter alia, the liferent rights, are conveyed to trustees, who are authorised to enter into possession and to administer for behoof of the creditors. A general power of sale is given to the trustees, and they are empowered, if they think it expedient, to apply for an Act of Parliament for authority to sell the liferented lands. Such a deed may result in a sale, and a sale by the trustees under it would, in so far as the forfeiture clause is concerned, be equivalent to a sale by the granter; but the deed does not itself constitute or operate a sale.

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Is, then, a trust-deed for behoof of creditors a mortgage within the meaning of the clause? ‘Mortgage’ is not, I imagine, a proper term of Scotch law at all, and I do not know what precisely is the meaning and effect of the word. Prima facie a trust-deed for behoof of creditors is not a mortgage, and certainly is not (to use the words of the clause in the settlement) a deed ‘purporting to be a mortgage.’ I believe, however, that the right of a mortgagee is somewhat similar to that of the creditor in a bond and disposition in security; and I think that the term ‘mortgage,’ as used in the clause, may fairly be taken as referring to the conveyance of the liferent right, or whatever the interest of the party may be, to a creditor in security, and for payment of his debt. But that is not what is done in a trust-deed for behoof of creditors. There is no conveyance to any creditor, but an assignation of the right to trustees, in order that they may administer it for behoof of the general body of creditors. I think that it would be an unwarranted stretch of language to call such a transaction a mortgage.

I am therefore of opinion that no forfeiture has been incurred, and that the defenders are entitled to absolvitor.”

Mrs Hoile and her children reclaimed, and argued—1. In the action for declarator of forfeiture—The conditions in the disposition and settlement had been declared inherent conditions of the right, and by granting these trust-deeds the liferenters had incurred a forfeiture. This had been recognised in Kirkland v. Kirkland's Trustees, March 18, 1886, 13 R. 798, and Chaplin's Trustees v. Hoile, 18 R. 27. This was a sale, as it was an alienation for a consideration, viz., that creditors should abstain from diligence. Alternatively, it was a mortgage in the popular sense, as it was for security of creditors. Further, the irritant clause referred to and embraced the prohibition against “otherwise disposing of the liferent.” The deeds had subsisted for more than sixty days, and creditors had acquired right under them, and therefore the sequestration did not obviate a forfeiture. The intention of the testator was that on alienation the liferenters' right was to determine. This must be given effect to—Lewin on Trusts (8th ed.) 101; ex parte Syston, L.R., 7 Ch. Div. 145; Hurst v. Hurst, L.R., 21 Ch. Div. 278. 2. In the action for declarator of right of sale—This action was premature, as the trustees might never sell these estates. The Court would not therefore decide this question ab ante and on a hypothesis— Lord Galloway v. Lord Garlies, June 26, 1838, 16 S. 1212; Harveys v. Harvey's Trustees, June 28, 1860, 22 D. 1310. The 102nd section of the Bankruptcy Act 1856 did not vest these liferent estates in the trustee, for adjudication could not have touched them, assignees being excluded. The trustee only took the estates tantum et tale as they stood in the bankrupts, and could not assert a power of sale incompetent to the latter.

Argued for the respondent—1. In the action for declarator of forfeiture—The irritant clause alone affected sales and mortgages. Trust-deeds were not struck at by it. In Chaplin's case the Court had not considered the question of forfeiture. The clause fell to be strictly construed— Fairlie v. Cuningham, March 3, 1857, 19 D. 596, and March 28, 1860, 22 D. (H. of L.) 8; Cathcart v. Cathcart, July 18, 1835, 5 S. & W. 315. Further, the sequestration had purged any irritancy—Sandford on Entails (2nd ed.) 454, and Price v. Price, there quoted, p. 461; Abernethie v. Forbes, 1 Rob. App. Cas. 434. The pursuer could not claim the liferent, as the present liferenters might have issue; nor could the income be accumulated, as there was here no trust. The law of England was inappropriate and different. 2. In the action for declarator of right of sale—Here there was a trustee in a sequestration instead of a trustee on a voluntary trust-deed, as in Chaplin's case. He therefore took the estate as if on a decree of adjudication after expiry of the legal—19 and 20 Vict. c. 79, sec. 102. There was here no valid prohibition against gratuitous alienation, as there was no clause strong enough to restrict to a mere alimentary right— Rogerson v. Rogerson's Trustee, November 6, 1885, 13 R. 154—nor any clause carrying over the right to other persons on forfeiture, as in Trappes v. Meredith, November 3, 1871, 10 Macph. 38. Kirkland's case dealt solely with a spes successionis, while here the right was one in possessione. But even if gratuitous alienation were struck at, a deed done in invitum by diligence of creditors was not— Lear v. Leggett, 2 Simon's Rep. 479— aff. 1 Russell & Mylne's Rep. 690; Avison v. Holmes, 1 Johnson & Fleming, 530.

At advising—