Scottish Court of Session Decisions

By trust-disposition and settlement, dated 6th September 1839, David Neill, who died in 1847, conveyed to trustees his whole estate, heritable and moveable, then belonging or which might belong to him at the time of his death, for the trust purposes therein set forth. The material parts of the trust-disposition and settlement were as follows:—“ Third, Out of the remainder of my said estate, after paying all my debts and others foresaid, and any legacies or sums which I may by any memorandum, promissory-note, or any other writing under

Page: 108↓

my hand order to be paid, and for which such document, though not formal or tested, shall be full authority, I appoint my said trustees or their foresaids to lay out and invest a sum of £4000 on good heritable or personal security, or set aside funds or property out of my estate to that amount, or as nearly, less or more, as may be, and to continue the full control and management of said fund ay and until my youngest daughter reach the age of twenty-one years, or if dead before that time, then at the period at which she would, if alive, have reached that age, on which event, or at all events at the first term of Whitsunday or Martinmas thereafter, I appoint my said trustees to apportion the said fund as follows, viz.—To pay my son William £500, Robert £800, and my said daughter Margaret, but subject to the directions after mentioned, £1000, or the heirs and assignees of my said sons and daughter respectively; which legacies are granted in order to equalise the provisions of my said children with those already made to my daughter Susan through her mother's relations and me, and to complete the education of Margaret, and the balance thereof shall be equally divided amongst all my children, the said William and Robert Neill, my said daughter Susan, spouse of the said Peter Ballingall, and Margaret aforesaid, their respective heirs or assignees; and until the period of said division arrives, I appoint my said trustees to pay over the annual interest or proceeds of the fund so to be invested to my said four children and their foresaids in the same proportions as the said capital sum is to be divided, each child drawing interest or proceeds according to the amount of his or her legacy and shares respectively: Fourth, At the first term of Whitsunday or Martinmas making twelve months after my death, or as soon thereafter and from time to time as the same may be realised, to divide and pay over the residue of my estate equally amongst all my four children above named, their heirs or assignees respectively, the share of my daughter Margaret, including her share and interest in the fund to be set aside under the preceding article, to be subject to the conditions after mentioned: Fifth, I appoint the whole provisions above mentioned in favour of my said daughter Margaret to be retained and managed by my said trustees, and lent out and invested, so far as not invested under article third, in their names on good heritable or personal security for her hehoof until her marriage or attaining the age of thirty-two years complete; meantime to apply the annual proceeds thereof for her maintenance, and in particular to the completion of her education, for which purpose I have given her a larger legacy under article third, and therefore with power to encroach on her capital for that purpose to an extent not exceeding £200, with power to my trustees on the marriage of my said daughter (should that occur prior to her reaching the said age of thirty-two years), and after advancing her a reasonable outfit, to settle and secure the whole of her means and estate then remaining in their hands by contract of marriage or otherwise on herself and the heirs of the body, whom failing, her own nearest heirs or assignees, but expressly secluding the jus mariti of any husband she may marry, and declaring that the same shall not be subject to his debts or deeds; with power nevertheless to my said trustees, should they deem it expedient or the party be deserving, to lend to any husband she may marry any sum not exceeding one-third part of her free capital, taking security for the amount by life insurance or otherwise, as they may see fit; and with power also to my said trustees, if thought expedient, to create a trust under such contract of marriage, and to denude of my said daughters funds under the directions above mentioned in favour of the trustees therein appointed; but in the event of my daughter Margaret not being married by the time she reached the foresaid age of thirty-two, then I direct my said trustees, should they deem it advisable and conducive to my daughter's comfort, to lay out a sum, not exceeding one-half of her free capital, in purchasing an annuity on her own life, and then to pay over to her the balance or the whole of her funds then in their hands, as the case may be: Lastly, In the event of any of my said children dying leaving lawful issue, the provisions hereby made in their favour shall fall to such issue respectively in such shares as their parents may have appointed by any writing under their hands, which failing, equally among them; and in like manner, should any of my said children die without being married or leaving lawful issue, then the provisions hereby made in their favours shall fall to and be divisible amongst my other surviving children, including the issue of anyone who may have died, such issue always coming in their parents' room: Which provisions to my said children are hereby declared to. be in full of all legitim, bairns' part of gear, executory, or others, which they or any of them can demand by and through my death or the death of their mother: And in case any of them shall repudiate their settlement and claim their legal rights, whether legitim or their mother's share of the goods in communion at her death, in place of the provisions herein, or by any means prevent this settlement from taking full effect, then such child or children shall forfeit all right to that part of my heritable and moveable estate which I am by law entitled to dispose of, and which I hereby accordingly dispone, assign, and convey to my other children and their foresaids who may abide by these presents.”

In 1848 the trustees, on the narrative of the powers given them in the trust-disposition and settlement, conveyed the whole provisions to which Margaret Brand Neill, the testator's daughter, above referred to, was then or might thereafter become entitled under the trust-disposition and codicil of her father, under deduction of advances, to her marriage-contract trustees, and bound themselves, as consenters to the marriage-contract, to pay over Margaret's

Page: 109↓

share to the marriage-contract trustees from time to time as the same was realised.

In 1861, upon the petition of Mrs Margaret Brand Neill or Smith, a judicial factor was appointed on the marriage-contract trust-estate, and after his death in 1892 William Alexander Wood, C.A., Edinburgh, was appointed judicial factor in his place, conform to act and warrant in his favour dated 6th June 1895.

In the year 1847 David Neill purchased a piece of ground with a house thereon, taking the title to the subjects in the following terms:—“To and in favour of Mrs Susan Laird Neill or Ballingall, wife of Peter Ballingall, farmer, Aytoun, and Margaret Brand Neill, residing at Bridge of Allan, both daughters of the said David Neill, and the survivor of them, in liferent, for their and her liferent use allenarly, and declaring that the said Susan Laird Neill or Ballingall shall be entitled to the exclusive liferent use and enjoyment of the said piece of ground and others hereby disponed during the whole period of her lifetime, and to and in favour of the said David Neill, his heirs and assignees whomsoever, in fee.”

Mrs Susan Laird Neill or Ballingall died on 20th January 1852, and Mrs Margaret Brand Neill or Smith died on 9th September 1895.

The subjects acquired by David Neill in 1847 were sold on 19th January 1896, for £750.

In these circumstances Mr William Alexander Wood, as judicial factor on the marriage-contract trust estate, brought the present action concluding (1) for declarator “that the pursuer, as judicial factor foresaid, had full and undoubted right and title to one-fourth pro indiviso” of the subjects acquired by David Neill in 1847 above referred to, or alternately to one-fourth of the price or proceeds of the subjects, in the event of the same being sold or otherwise realised by the trustees of David Neill, and (2) for decree ordaining the trustees “to transfer, habili modo, the foresaid one-fourth pro indiviso of the said subjects to the pursuer as judicial factor foresaid, or alternatively, in the event of the same being sold or otherwise realised, to pay and deliver to the said pursuer, as judicial factor foresaid, one-fourth of the free proceeds of said subjects.

The testamentary trustees of David Neill, the surviving descendants of David Neill, the children of Margaret Brand Neill or Smith, her executors-nominate, and the beneficiaries under her settlement, were all called as defenders, but David Neill's trustees were the only defenders who lodged defences.

They maintained that “on a sound construction of the trust-disposition and settlement of the deceased David Neill, read in the light of the destination in the said disposition of the heritable property in question, and especially in view of the survivorship clause contained in the said trust-disposition and settlement, vesting was postponed until the date of the death of the liferentrix, Mrs M. B. Neill or Smith, on 9th September 1895, and that in consequence of the testator's children having all predeceased Mrs Neill, the last liferentrix, the succession thereto has devolved on their issue per stirpes as conditional institutes, and that if the vesting was so postponed, the division of the proceeds of the property in question would be tripartite, and the pursuer would have no interest in the present case.”

The pursuer pleaded, inter alia—“(2) The said Mrs Margaret Brand Neill or Smith having had right, as one of the four children of her said father, to one-fourth of the residue of his estate, the pursuer, as her assignee, in the circumstances condescended on, is entitled to decree in terms of the conclusions of the summons.”

The defenders pleaded—“(1) Vesting having been postponed as stated in the defences, the pursuer never acquired any interest in the property in question.”

After a discussion in the procedure roll the Lord Ordinary ( Kyllachy), by interlocutor dated 4th July 1896, sustained the first plea-in-law for the defenders, and assoilzied them from the conclusions of the summons.

Opinion.—“This case raises a question under the settlement of the late David Neill, who died so far back as the year 1847. The question is as to the date at which vesting took place in a certain part of his succession, viz., a house which he had bought at the Bridge of Allan. There is no doubt that, although subject to a liferent created by the deceased himself, that house formed part of the residue of his estate, and with respect to that residue, his settlement, which we have here to construe, contains the following provision:—His trustees are directed, at the first term of Whitsunday or ‘Martinmas making twelve months after my death, or as soon thereafter and from time to time as the same may be realised, to divide and pay over the residue of my estate equally amongst all my four children above named, their heirs or assignees respectively.’ Now, here it will be observed that there is, on the one hand, no gift of any share in the residue until the period of realisation. On the other hand, there is a destination-over, or what is called a destination-over, ‘to heirs and assignees,’ and therefore if this clause had stood alone there would have been room to argue, on the one hand, that there was vesting a morte—heirs and assignees being merely called as substitutes after vesting. There might, on the other hand, have been room to argue that the ‘heirs’ at all events were conditional institutes, and that therefore there was postponement of vesting until the period of realisation. How that question should have been decided had the clause in question stood alone I do not think it necessary to inquire, because the settlement contains in its last purpose a further provision in these terms—‘Lastly, in the event of any of my said children dying leaving lawful issue, the provisions hereby made in their favour shall fall to such issue respectively in such shares

Page: 110↓

as their parents may have appointed by any writing under their hands, which failing, equally among them; and in like manner should any of my said children die without being married or leaving lawful issue, then the provisions hereby made in their favours shall fall to and be divisible amongst my other surviving children, including the issue of any one who may have died, such issue always coming in their parent's room.’ There is here, it will be noted, first a destination-over to issue, and then failing issue a clause of survivorship among the original legatees.

Now, the question is, whether this destination-over and clause of survivorship can be read as referring to the event of prededecease of the testator, or must, according to the general rule of construction, be read as referring to predecease of the period of distribution—that is to say, in the case of this residue to the period of realisation.

I am of opinion that there is nothing in this present case to take it out of the general rule—the general rule which I take to have been settled as far back as the case of Young v. Robertson. And the fact which I have pointed out, that there is here no gift prior to the period of realisation appears to me to create a special difficulty in the way of holding that vesting to this residue took place a morte testatoris.

The pursuer no doubt founds on the third purpose of the settlement, which deals with the sum of £4000, as to which the direction is that the sum is to be set aside until the youngest daughter reaches the age of twenty-one, and then divided in certain proportions amongst the sons and daughters or their ‘heirs and assignees.’ It seemed to be argued that in this third purpose vesting was plainly a morte, and that the presumption is against different periods of vesting as applicable to different parts of the fund. All I can say is, that it does not appear to me to be by any means clear that vesting under this clause was a morte. On the contrary, I think the question is practically the same question which arises with respect to the residue, and I see no more reason for holding that vesting took place under this clause before the period of distribution than I see reason for holding that the residue vested before distribution.

The pursuer, however, also founds on the special provision in the fifth purpose of the settlement, which deals with the whole provisions (residue included) in favour of Margaret Neill, whose share, as it happens, is that specially in question. It is certainly true that the trustees are here directed to retain and manage the whole of Margaret Neill's provisions until she attains the age of thirty-two years or is married; and in the event of her marriage before she reaches thirty-two, to settle the whole of her means and estate then remaining in her hands by contract of marriage on herself and the heirs of her body. That is quite true, and, but for the provision in the last purpose of the settlement to which I have referred, I do not doubt that the result would have been to make Margaret's provisions vest at latest at the date of her marriage. But then I cannot leave the last clause out of view in construing this clause, any more than I can leave it out of view in construing the other clauses, and the scheme of the settlement being for vesting at the period of distribution, I am not able to hold that Margaret's provisions formed an exception. It is true that her whole means were directed to be settled at her marriage by marriage-contract, but I apprehend that there may quite well be a conveyance, by marriage-contract or otherwise, of unvested and contingent rights—a conveyance quite as effectual (or which may be quite as effectual) as a conveyance of absolute rights. Therefore I am not prepared to hold that the provisions with respect to the share of Margaret derogate from the general scheme of the settlement as expressed in the last purpose. I think that vesting took place only at the period of distribution, and that being so, I suppose what happens is that I assoilzie the defenders from the conclusions of the summons.”

The pursuer reclaimed, and argued—The whole scheme of this settlement was consistent only with vesting a morte. The contrary view involved (1) different periods of vesting in different parts of the estate, according to the period at which it was realised and paid over, which would be somewhat extraordinary; (2) ultimate inequality in the shares of different children, whereas the prevailing idea of the deed was equality in their provisions; (3) that the period of vesting (would be made to depend on the accident of when the trustees saw fit to realise (as to which see Ferrier v. Ferrier May 18, 1872, 10 Macph. 711, at p. 714). An interpretation which involved such consequences ought not to be adopted. On the other hand, the view that vesting took place a morte was supported by the words used in referring to (1) the children's shares at the end of the third purpose, and (2) to Margaret's share of residue in the fifth purpose, and also (3) by the fact that the provisions of the settlement were declared to be in full of legitim. Even if the period of vesting was determined by the period of realisation, it took place not at the actual period of realisation and distribution, but at the earliest period at which realisation and distribution could have lawfully taken place— Scott v. Scott's Executrix, January 27, 1877, 4 R. 384. In this view the pursuer would equally be entitled to decree. This house might have been sold subject to the liferents long before the death of the last liferentrix, or she might have renounced her liferent for or without consideration. The case of Young v. Robertson, February 14, 1862, 4 Macq. 314, was entirely different from the present. There it was expressly provided that the trustees were to pay on the death of the liferentrix only.

Argued for the defenders—It was a settled rule of construction that words of survivorship occurring in a settlement should be referred to the period of distribution, which in this case could not arrive till the estate had been realised— Young v. Robertson, cit. per Lord Westbury, L.C., at pages 319 and

Page: 111↓

320. This case was practically the same as Howat's Trustees v. Howat, December 17, 1869, 8 Macph. 337. The only difference was that there the survivorship clause contained the expression “dying before receiving payment of their shares.” That case, though commented on by Lord Young, was nevertheless followed in Macdougall v. M'Farlane's Trustees, May 16, 1890, 17 R. 761. There might be more periods of vesting than one under a settlement— Marshall v. King, October 30, 1888, 16 R. 40, per L.P. Inglis at page 43, foot. Where, as here, there was no right conferred except by way of a direction to divide and pay, nothing could vest until actual payment or division took place— Bryson's Trustees v. Clark, November 26, 1880, 8 R. 142. As to the effect on vesting of the renunciation of a liferent, see per Lord Watson in Muirhead v. Muirhead, May 12, 1890, 17 R. (H.L.) 45, at page 48, on the result of the law laid down in Pretty v. Newbigging, March 2, 1854, 16 D. 667.

At advising—