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Scottish Court of Session Decisions |
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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Playfair's Trustees v. Playfair [1894] ScotLR 31_671 (1 June 1894) URL: http://www.bailii.org/scot/cases/ScotCS/1894/31SLR0671.html Cite as: [1894] SLR 31_671, [1894] ScotLR 31_671 |
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Page: 671↓
A testator whose estate consisted of moveable property to the value of £30,000 and heritage valued at about £56,000 directed his trustees to hold the residue for behoof of the whole children he might leave, share and share alike, to pay or expend for behoof of such children the interest of their shares until they attained twenty-five years of age, or in case of daughters until they were married; and on the children attaining that age, or being married if daughters, “to make payment to them of their respective shares.” He declared that the shares should not become vested until the period of payment, and there was a clause in favour of survivors. The truster also gave his trustees a full and unlimited power to sell his heritable property. The deed contained no direction to sell. The trustees never exercised the power to sell.
The testator died leaving nine children. Two sons died before reaching the age of twenty-five. One of his daughters died unmarried and intestate after having attained that age. She was thus entitled to one-seventh of the residue.
Held that the whole of her share was moveable quoad succession, and belonged to her heirs in mobilibus— Advocate-General v. Blackburn's Trustees, November 27, 1847, 10 D. 166, followed.
By mortis causa trust-disposition dated 2nd September 1859, Patrick Playfair conveyed his whole estate, heritable and moveable, to trustees. After making provision for his widow he directed his trustees “to hold and apply the whole residue and remainder of my whole means and estate for behoof of my whole children whom I may leave, equally among them, share and share alike, and to pay or expend for behoof of such children respectively the interest or annual proceeds of their shares, or such part thereof as my trustees shall think necessary for their board, education, and maintenance respectively, accumulating the remainder until they shall respectively
Page: 672↓
attain the age of twenty-five years complete if sons, and until they shall respectively attain that age or be married whichever of these events shall first happen if daughters; and on my children respectively attaining said age of twenty-five years if sons, or attaining that age or being married if daughters, I direct my said trustees to make payment to them of their respective shares, … Declaring that the shares of such of my children as are sons shall not become vested in them until they shall respectively attain the said age of twenty-five years, and the shares of such of my children as are daughters shall not become vested in them till they attain that age or are married, whichever of these events shall first happen; and I provide that in the event of any child or children predeceasing me, or surviving me and dying before the term of payment and vesting of their shares without leaving lawful issue, then the shares of such deceasing child or children shall accrue to and be divided equally between and among my surviving children and the lawful issue of such as may have died leaving issue equally among them per stirpes: But in the event of the deceasing child or children leaving lawful issue, such issue shall in every such case receive (if more than one equally among them share and share alike) the share or shares which would have fallen to their deceased parent or parents had he, she, or they survived.” The deed also contained a clause in the following terms. “And I hereby commit to my trustees herein named or to be nominated as aforesaid, or assumed as after mentioned, full power to enter into possession of my whole means and estate, heritable and moveable, real and personal, hereinbefore conveyed and to sue for, recover, receive, and discharge the same, and the rents, interest, fruits, and profits thereof; to compound, transact, and agree to refer to arbitration any questions or differences which may arise in the course of their management of the said trust-estate; and with power to my trustees to lend the means and estate hereby conveyed, or the proceeds thereof, and the whole funds which shall from time to time form part of my trust-estate, on good and sufficient heritable security, or to invest the same in public funds or other undoubted stock (but not in any railway company or joint-stock or other banking company); to change and vary the said securities and investments from time to time, and to take other securities and investments of the same description as they shall think necessary, and to reduce the rate of interest on such securities to the current rate. And I grant full and unlimited power to my trustees from time to time, as they shall think proper, to sell and dispose of all or any part or parts of my estate and effects, heritable and moveable, real and personal, hereby conveyed, and all other estate and effects, heritable and moveable, which may at any time form part of my trust-estate by public roup or private bargain at such price or prices, and with or without advertisement as they shall think proper.” The deed contained no direction to sell. Mr Playfair died on 21st November 1879. The trust-estate at the time of his death included both moveable and heritable property, the latter consisting of the estate of Ardmillan, and a house in Glasgow. The trustees never exercised the power of selling any portion of the heritable property.
Nine children of Mr Playfair survived their father. Two sons died before reaching the age of twenty-five. Miss Anna Mary Playfair, one of the testator's daughters, died unmarried and intestate on 15th February 1892, after attaining the age of twenty-five on 26th June 1883. She was thus entitled to one-seventh of the residue. At her death the value of the moveable property belonging to the trust-estate was about £30,000, and the heritable property was valued at about £56,000.
Walter Playfair, the immediate younger brother of Miss Anna Mary Playfair, claimed as her heir-at-law the whole of her share of the residue, in so far as it consisted of heritable property, while her six brothers and sisters, being her heirs in mobilibus, contended that conversion had taken place so as to make the whole share moveable in a question of succession, and that it should accordingly be paid over to them.
For the decision of the point a special case was presented to the Court by (1) Mr Playfair's trustees; (2) Walter Playfair, as heir-at-law of Miss Anna Mary Playfair; and (3) the heirs in mobilibus of Miss Anna Mary Playfair.
The questions at law were as follows—“(1) Are the first parties, as Mr Playfair's trustees, bound to convey or pay over the share of the trust-estate falling to the late Miss Anna Mary Playfair, so far as it consists of heritable property, to the second party, as the heir-at-law of the said Miss Playfair? or (2) Are the said trustees bound to pay over the whole share of the said Miss Anna Mary Playfair in the said trust-estate to the third parties, who are her heirs in mobilibus?”
Argued for the third parties—The terms of the deed showed that the intention of the testator was that a sale of the heritage should take place. There was contained in the deed a power to sell, and it did not matter that there was no express direction to sell in the deed if it contained provisions showing that it was the intention of the testator that the power of sale should be exercised by the trustees before dividing the estate. The case was ruled by that of Advocate-General v. Blackburn's Trustees, November 27, 1847, 10 D. 166. That decision had never been overruled, and the opinion of Lord Fullerton who delivered the leading judgment, had been quoted with approval by Lord-Chancellor Westbury in Buchanan v. Angus, May 15, 1862, 4 Macq. 380. Other authorities— Fother—ingham's Trustees v. Paterson, July 2, 1873, 11 Macph. 848; Baird v. Watson December 8, 1880, 8 R. 233; Brown's Trustee's v. Brown, December 4, 1890, 18 R. 185.
Page: 673↓
Argued for the second party—There was only a power of sale contained in the deed. That did not operate conversion. The exercise of the discretionary power of sale conferred on the trustees was not indispensable to the trust, and not having been exercised there was no conversion— Sheppard's Trustee v. Sheppard, July 2, 1885, 12 R. 1193; Aitken v. Munro, July 6, 1883, 10 R. 1097; Buchanan v. Angus, supra.
At advising—
The general law is settled by the case of Buchanan v. Angus. The rule is that a direction to sell operates conversion, but that a power to sell does not, unless it is exercised, or unless the exercise of it is “indispensably necessary to the due execution of the trust.” In the latter case the power is equivalent to a direction to sell. But however clear the law may be, the cases show that the just application of it is not an easy matter.
We have seen that the whole residue is held for the children in equal shares, and that the share of each child is to be paid at a different time.
Of course I do not attach importance to the fact that the trustees are directed to pay and not to convey. The phrase in itself is not material, as the case of Buchanan shows. But we must be satisfied that the trustees may lawfully convey a share of the heritable estate to a child in part payment of his share, and that the child is bound to receive it. These are convertible propositions. For beneficiaries are bound to submit to what the trustees may do in execution of the powers committed to them.
The second party says that the trustees might execute the trust without a sale, and in this way. When the period arrived for the payment of the first share they could dispone the heritage pro indiviso to themselves and the child in the proportion of six-sevenths and one-seventh. They could convey to the next child one-sixth of their own share, one-fifth of the remainder to the third child, and so on, as the several periods of payment arrived, till the whole was exhausted. There is no warrant in the trust-deed for giving to each child successively a separate part of the heritable estate on a separate title, and it is plain that equality could not be obtained in that way. The only possible mode of equal division is by the creation of successive pro indiviso estates.
It is not likely that the trustees would act in this manner, which I think could hardly fail to be very detrimental to the beneficiaries. It is sufficient for the second party to show that it would be lawful for them to do so. For in that case they would be acting in conformity with the powers conferred on them by the truster, and a sale would not be necessary for the execution of the trust.
We must consider the effect of the creation of the several pro indiviso estates. The child in whose favour the first conveyance is granted becomes the joint-proprietor along with the trustees of the whole heritable property, and being joint-owners only, the trustees would cease to have the exclusive management of the largest portion of the trust-estate. They could neither sell nor let without the consent of the other joint-owner, while he on his part could when he pleased force a division or a sale. The trust-management would cease and be superseded by the management of the joint-owners. The evil would obviously become greater as each child received his pro indiviso share, and indeed when a second conveyance was granted the trustees would be in a minority in a council of co-owners.
I do not think that the truster contemplated the possibility of such a state of things. He could not have meant that a stranger should be introduced into the management of a large portion of his trust-estate, and I do not think that he gave any power to that effect. It may be said that the joint-owner would be one of his own children; but that would be true only so long as the pro indiviso share was not sold. But whether a child or a stranger be owner, the creation of the joint-estate is so entirely subversive of the trust-management which the truster has set up, that I cannot hold it to be within the power of the trustees. No doubt there are cases in which the trustees may convey to all the beneficiaries pro indiviso. But in doing so they are denuded of the trust, and their management ceases.
Again, it appears to me that a child could not be compelled to take his share as joint owner with the trustees. When he reaches the specified age he is entitled to require the trustees to pay him his share. In my opinion he is entitled to demand that his share shall be separated from the trust-estate and put under his own absolute control. It may well be that a conveyance to all the beneficiaries satisfies a direction to pay in equal shares. The trust is brought to an end and they are joint proprietors, not with the trustees, but with one another. Here the direction is to pay one child an equal share, leaving the rest of the estate to be held for the others. I can put no other construction on such a direction than that the share is to be separated from the trust-estate. The word “share” has here I think its natural meaning, and denotes something that is shorn off.
The share of each child is to be paid when he attains twenty-five, or in the case of daughters, when they marry. If all the children had lived there might have been nine “payments” to make, and it is certain that there must be several—each at a different time. I do not see in what manner this direction could be accomplished otherwise than by paying the shares in money, or in other words, the exercise
Page: 674↓
The present case seems to be substantially the same as that of the Lord Advocate v. Blackburn's Trustees, in which Lord Fullerton held that the trust could not be executed without a sale, and therefore that there was conversion. I have not observed nor have I been informed that in any subsequent case his decision has been questioned. It was fully under the notice of the House of Lords in Buchanan v. Angus when the decision of the Court of Session was reversed. Lord Fullerton's judgment was quoted with approval as correctly expressing the law, and it was not said that he had applied it erroneously. I think that we must follow it.
The
The Court answered the first question in the negative, and the second question in the affirmative.
Counsel for First and Third Parties— Jameson— Grahame. Agents— Fraser, Stodart, & Ballingall, W.S.
Counsel for Second Party— Rankine— Napier. Agents— W. & F. C. Maclvor, S.S.C.
