Scottish Court of Session Decisions

Donald M'Nicol died in the year 1888, leaving a trust-disposition and settlement whereby he conveyed his whole estates to the trustees therein named. After providing

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for the payment of his debts, and bestowing a liferent of his house and furniture and an annuity of £60 upon his wife, and providing for the upbringing and maintenance of his two sons Nicol M'Nicol and John Clark M'Nicol until they attained majority, the said Donald M'Nicol directed his trustees as follows—“And upon the youngest of my said two sons, or the survivor of them, attaining majority subsequent to my decease as aforesaid, or in the event of my decease not taking place until after the said youngest son, or the survivor, arrives at twenty-one years of age, I hereby provide and declare that my trustees shall, in either of these two cases occurring, and within twelve months thereafter, fix and determine whether in their opinion it would be prudent or expedient to give both or either of my said two sons the uncontrolled command and disposal of their understood or expected interest in my succession; and if my trustees shall resolve that it would be inexpedient or imprudent to entrust both of my said sons with such uncontrolled command or disposal, I, in that case, hereby authorise and direct my trustees to set aside for each of my said sons one equal moiety or half of the reversion of my estate, and to place each of said shares under such restrictions and limitations as my trustees may from time to time deem advisable, giving to each of my said sons an alimentary liferent of the whole or of part only of their said respective shares as my trustees may think proper, and making, if thought advisable, such advances out of the capital stock of each share for setting my said sons respectively up in business as my trustees may conceive can be done without much danger of ultimate loss; but if, on the other hand, my trustees shall resolve that only one of my said sons ought to be placed under such restrictions or limitations, I, in that case, direct and appoint my trustees to confine the limitations and restrictions accordingly to that particular son's said share, with similar reserved powers of making advances therefrom, and to assign and make over unconditionally to my said other son his moiety or half of the reversion of the trust: And if my trustees shall resolve that the shares of the succession falling to both of my sons should be unrestricted and without any limitation whatever, I, in like manner, direct and appoint them to assign and make over the same unconditionally, and in accordance with such resolution: And if either of my said sons shall die before his said share is made over or paid to or on his account without leaving heirs of his body, I hereby, in that case, provide and declare that the survivor shall succeed to the whole of the reversion of my estate: … And I hereby give the most full and unlimited power to my trustees to judge and decide not only on the fitness or unfitness of my said sons, or either of them, for having such uncontrolled command or disposal of their interest respectively in my said succession, but of the propriety or expediency of all restrictions and limitations to be placed thereon, and of all advances, if any, to be made out of the capital or stock, hereby excluding all courts of law or equity from interference therewith: … And I also provide and declare that if both of my sons shall die without leaving heirs of their body before my estate is finally and completely exhausted, that one moiety or half of the reversion shall be paid over and divided equally among my own nearest of kin, and the other moiety or half equally among the nearest of kin of my said spouse, the children of any one of the said nearest of kin predeceasing always succeeding to their parent's share.”

Donald M'Nicol was survived by both his sons, Nicol and John Clark. After his death the trustees named in his settlement entered upon the administration of his estate.

In January 1866 John Clark M'Nicol, the youngest of the testator's sons, came of age, and the trustees subsequently paid over to him his share of his father's succession.

In July 1866 a curator bonis was appointed to the elder son Nicol M'Nicol, and by assignation and transfer, dated 10th and 18th October, and 7th and 14th November 1866, the trustees, with the consent of the said curator bonis, assigned and made over to Nicol M'Nicol, his heirs and assignees, his share of his father's succession. The narrative on which the deed of assignation proceeded contained the following passage—“And whereas we the said trustees … being satisfied that the said John Clark M'Nicol, youngest son of the truster, who attained majority in the month of January last, was clearly entitled to have his interest in his father's succession made over to him free and unfettered, have found so accordingly, whereas as regards the share and interest falling to his elder brother the said Nicol M'Nicol, who showed symptoms of imbecility of mind during his father's lifetime, and which still continued, we considered the same ought to be placed under restrictions agreeably to the said provision in said deed of settlement, but the said Malcolm Turner Clark having been appointed curator bonis to the latter, the necessity for further interference on the part of us the trustees is thus superseded.”

On 18th October 1866 a discharge and ratification was granted by John Clark M'Nicol and Nicol M'Nicol's curator bonis in favour of the trustees.

Nicol M'Nicol remained under curatory until the day of his death. He died intestate and unmarried on 15th February 1890. He was predeceased by his brother, who died unmarried.

After the death of Nicol M'Nicol, Christina M'Nab was appointed his executrix-dative, and having received payment from Nicol M'Nicol's curator bonis of the estate which he had held for the said Nicol M'Nicol's behoof, she thereafter raised the present action of multiplepoinding and exoneration for the determination of competing claims which had been made to said estate.

Claims to the whole fund in medio were lodged on behalf of Grace M'Nicol or

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Mitchell and others, the next-of-kin of Nicol M'Nicol, and counter claims to part of the fund were lodged by Margaret Clark or M'Nicol, the next-of-kin of the widow of the testator Donald M'Nicol.

The latter claimants pleaded—“(2) In respect that both of the testator's sons died without leaving heirs of their bodies before the said trust-estate was finally and completely exhausted, one moiety thereof falls to be divided equally amongst the neatest of kin of the testator's widow.”

On 13th July 1892 the Lord Ordinary ( Kyllachy) repelled the claim for Margaret Clark or M'Nicol and others, and sustained the claim for Grace M'Nicol and others, and ranked and preferred said last mentioned claimants in terms of their claims.

“ Opinion.—The question in this case is, whether the share of the estate of the late Donald M'Nicol, piermaster at Dunoon, which fell to his son Nicol M'Nicol, falls to be divided in terms of a destination-over contained in the father's settlement, or falls to be paid to the next-of-kin of the son, as having vested in him prior to his decease?

The question happens in this way. The share in question, which was paid over to the son's curator bonis under the assignation quoted in the fourth article of the condescendence, is to be held as having been paid over without restriction, or is to be held as having been all along subject to the restrictions which by the father's will his trustees were entitled to impose. In the one case it is conceded that the father's estate was ‘fully and completely exhausted’ in the sense of the settlement, so that the destination-over did not apply. In the other case it is contended that the share must be considered as being de jure in the hands of the trustees, and so subject to the destination-over as a still unexhausted part of the father's estate.

I am of opinion that upon the just construction of what the trustees did—that is to say, on the just construction of the assignation which they in fact executed in favour of the curator bonis—the share of Nicol M'Nicol was paid over to the curator without restriction. In other words, if Nicol M'Nicol had convalesced, I do not see that there could have been any doubt as to his right to get full and absolute possession of the fund. And indeed I may go further and say that I do not see that the trustees had any power to convey the share to the curator, or any third party under a trust or under restrictions. If they resolved to impose the restrictions, it rather appears to me that they require to continue the trust in their own hands. If therefore the assignation is to receive effect, I must, I think, prefer the claim of the son's next-of-kin. But then it is said further, and perhaps this is the real question in the case, that looking to the terms of the narrative of the assignation, and particularly to the opinion there expressed under the hand of the trustees, that ‘Nicol M'Nicol's share ought to be placed under restriction as provided in the settlement,’ it was a breach of trust on the part of the trustees to hand over the money to the curator, or to do anything else than retain the fund in their own hands. In other words, the conditional institutes under the settlement appeal to the maxim, quod fieri debet infectum valet, and say that the fund being still extant, the trustees' breach of trust cannot prejudice their (the conditional institutes) rights under the settlement.

I cannot say that I regard this question as free from difficulty, and I have hesitated a good deal as to how I should deal with it. But in the end I have come to think that regard must be had rather to what the trustees did than to inferences deduced from the execution of their deed as to what they thought. They had an absolute discretion, and I think that reading their attitude fairly it comes to this, that they would not have paid over the share of Nicol M'Nicol if he had been sui juris, but that being under curatory, and likely to remain so during his life, they were satisfied with the restrictions which were thereby necessarily imposed, and did not think it necessary to impose restrictions provided by the settlement. In short, they resolved, on grounds reasonable enough, not to keep up the trust, but to close it, paying over the share absolutely to the curator, and taking their chance—probably they knew not a great chance—of the ward convalescing. If this be so, they cannot, I think, be held to have committed any breach of trust, and not having done so, the estate must be held de jure as well as de facto to have been, in the words of the settlement, ‘fully and completely exhausted.’

I must therefore prefer the claim of Nicol M'Nicol's next-of-kin, and repel the claim of the conditional institutes.”

The claimants Margaret Clark or M'Nicol and others reclaimed, and argued — The trustees appointed by Donald M'Nicol were required to determine whether it was prudent that Nicol M'Nicol should have the uncontrolled command of his share. If they decided that question in the negative, as they in fact did, they were bound by the terms of the deed to restrict his right to an alimentary liferent, and in paying Nicol M'Nicol's share over to his curator bonis they acted beyond their powers. The maxim quod fieri debet infectum valet applied, and Nicol M'Nicol's share must be treated as if his interest had been restricted to an alimentary liferent. If this view were correct, Donald M'Nicol's estate was not finally exhausted, as the share liferented by Nicol M'Nicol had still to be disposed of, and under the terms of Donald M'Nicol's settlement his wife's next-of-kin were entitled to a moiety of that share.

Argued for the claimants Grace M'Nicol or Mitchell and others—It was left entirely to the discretion of Donald M'Nicol's trustees to decide whether or not they should give Nicol M'Nicol the uncontrolled command of his share, or what restrictions and limitations it was proper and expedient should be placed upon it. In acting as they

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had done they had merely exercised the discretion entrusted to them, and as they had handed over to Nicol M'Nicol formally and legally the uncontrolled command of his share of his father's succession, that share fell now to be dealt with as part of Nicol M'Nicol's succession. The fact that when the share was assigned to Nicol M'Nicol he was under curatory was immaterial— Yule v. Alexander, November 25, 1891, 19 R. 167.

At advising—