Scottish Court of Session Decisions

James Normand, manufacturer in Dysart, died on 25th August 1874, leaving a trust-disposition and settlement, by which he made, inter alia, the following disposition—“( Primo) To hold and apply the same for

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behoof of William Normand Newall, Joanna Crestian Newall, and James Normand Newall, children of my daughter, the now deceased Mrs Joanna Normand or Newall, and to pay to them equally, share and share alike, during their respective lives, and for their liferent use allenarly, the annual interest and proceeds of the said sum and of any accumulations which the said trustees may add to capital as hereafter authorised, but with this proviso, that as the education and upbringing of my said grandchildren are sufficiently provided for otherwise, the said trustees, in the event of my death while my grandchildren or any of them are under twenty-five years of age, shall not pay to them the said liferent interest but shall accumulate the same until the children respectively attain the age of twenty-five years, when my said trustees shall in their discretion either pay the said accumulations of interest to my said grandchildren or add them to said capital sum, and administer them as capital. ( Secundo) Upon the death of any one of my said grandchildren, or at any later period of division which he or she may appoint, my said trustees shall pay over his or her share of the said funds to or among his or her children when and as they arrive at majority or are married, whom failing to his or her assignees, whom failing to my own nearest heirs.”

William Normand Newall died on 16th December 1886, survived by his widow and two daughters. After his death Mrs Newall requested the first parties, as trustees of the said fund which had been set apart for his behoof, to pay over to her the income received by them on the investments. It was represented to them that the payment was absolutely required for the maintenance and education of the said William Norm and Newall's daughters. The trustees resolved to accede to the request, and they paid over the revenue received from May 1887, which was the date of their first payment, till November 1897. The sums paid over by them in good faith and for the purpose specified amount in all to £1972, 1s. 10d.

The lady referred to in the trust-deed as Joanna Crestian Newall, but whose name was in reality Elizabeth Maude Newall, married James Tennent Inglis and died in 1897, leaving three children, who were all in minority or pupillarity.

Questions having arisen as to the disposal of the income of the shares liferented by the said William Normand Newall and Mrs Inglis, a special case was presented to the Court in which the first parties were the surviving and acting trustees under the settlement of the said James Normand. The second parties were the residuary legatees under the said settlement, the third parties were the children of William Normand Newall, and the fourth parties were the children of Mrs Inglis. There were certain other parties to the case, representing interests which in the view of the case taken by the Court did not arise for decision.

The second parties maintained that on a sound construction of the said trust-disposition and settlement, the shares of revenue aforesaid do not belong to the respective great-grandchildren of the testator, in respect that the only gift to them in the said trust-disposition and settlement is a gift of capital at the date of their respectively attaining majority or being married, neither of which events may ever happen. The destination-over to the assignees of the liferenters, whom failing, to the heirs of the testator, prevents the shares of the —11,000 from vesting in the great-grandchildren until they respectively attain majority or are married. They further maintained that the income, amounting to the said sum of £1972, Is. 10d., was improperly paid over, and that the same truly belongs to the second parties as the testator's residuary legatees. They further maintained that the income accruing after November 1897, both upon the shares appropriated to Mr William Norman Newall and his family and to Mrs Inglis and her family, until the date of their respective children attaining majority or being married, or dying without having attained majority or married, form part of the testator's residuary estate, and falls to be divided among his residuary legatees. Alternatively, the second parties maintained (1) that on a sound construction of the said trust-disposition and settlement the income accruing on the share set apart for the said William Normand Newall and his family after his death and until the said share becomes payable, and the income accruing on the share set apart for the said Mrs Inglis and her family after her death and until the said share becomes payable, must be accumulated for behoof of the parties who may be ultimately entitled to the said shares; and (2) that in terms of section 1 of the Thellusson Act accumulation cannot take place after the 25th day of August 1895, being twenty-one years from the date of the death of the said James Normand; and they accordingly maintained that the income accruing on said shares after that date until each of the said great-grandchildren shall attain majority, or marry, or shall die without having attained majority or married, forms part of the residue of the testator's estate, and falls to be divided among his residuary legatees.

The third and fourth parties maintained that the whole income of the shares liferented by the said William Normand Newall and the said Mrs Elizabeth Maude Newall or Inglis, may be paid by the first parties to the said Mrs Maria Anna Pritchard Lee or Newall and the said James Tennent Inglis for behoof of their respective children, until they respectively attain majority or are married and become entitled to payment of the capital thereof, in respect (1) that upon a sound construction of the said trust-disposition and settlement the testator's great-grandchildren took a vested right at birth, or at all events upon the death of the said William Normand Newall and the said Mrs Newall or Inglis, in and to the capital of said shares, although payment was postponed until majority or marriage, or otherwise that

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they took such right as aforesaid subject to defeasance in the event of their not attaining majority or being married; (2) that even if vesting be postponed until majority or marriage, the first parties are entitled in their discretion either to pay over the said income to or for behoof of the said great-grandchildren or accumulate the same with the capital of said shares; (3) that the Thellusson Act has no application to the circumstances of the present case; and (4) that if the said Act be held to apply, then the said income falls to be paid over for behoof of the said great grand-children as aforesaid in respect that they are the persons who would have been entitled thereto if they had been of full age and accumulation had been unnecessary. The third party further maintained that the payment of said sum of £1972, 1s. 10d. was properly made.

The questions for the decision of the Court (besides certain other questions which it was found unnecessary to deal with) were—“(1) ( a) Does the income accruing upon the shares of capital set apart for the said William Normand Newall and Mrs Elizabeth Maude Newall or Inglis respectively from the date of their respective deaths to the dates of their respective children attaining majority or being married, or dying without having attained majority or been married, belong to the said children? or ( b) Does it fall to be accumulated for behoof of the said children? or ( c) Does it fall to be accumulated for behoof of the persons who may be ultimately found entitled to the said shares of capital? or ( d) Does it fall into residue? or ( e) Not having been effectually bequeathed, does it fall into intestacy of the testator? (2) Was the income, amounting to the said sum of £1972, Is. 10d., properly paid over by the first parties to the third party for behoof of her children?”

Argued for the first, third, and fourth parties—Vesting took place either a morte testatoris in the great-grandchildren as a class, or at latest on the death of each liferenter with regard to his or her share. The power to assign in the trust-deed must be read as granted to the grandchildren, and, so read, was quite intelligible, because it might very well happen that a grandchild might know that he was likely to die without issue. The opposite contention, that it was a power given the great grandchildren, involved the unlikely assumption of a power to minors to assign a sum, which on that view had not vested in them. So reading the clause, vesting at latest at the death of the liferenters was consistent with the authorities so far as applicable to the specialties of the case— Gillespies v. Marshall, December 7, 1802, M. App. v. Accessorium, No. 2; Alves' Trustees v. Grant, June 3, 1874, 1 R. 969; Waters' Trustees v. Waters, December 6, 1884, 12 R. 253. (2) The payments made by the trustees to Mr Newall's children were properly made, even although the term of payment was thereby anticipated. The trustees could have obtained authority from the Court to make these advances if necessary for the education of the beneficiaries— Baird v. Baird's Trustees, February 24, 1872, 10 Macph. 482; Douglas v. Douglas' Trustees, July 6, 1872, 10 Macph. 943; Muir v. Muir's Trustees, December 10, 1887, 15 R. 170; and what the Court could authorise, it could also ratify when done.

Argued for the second parties—Nothing vested in any grandchild until he or she came of age or was married. The “nearest heirs” of the testator were conditional institutes. There was nothing but a direction to pay at a certain time, with a conditional institution in the event of the heirs first instituted failing. That postponed vesting until the term of payment, as had been held in a series of cases from Bryson's Trustees v. Clark, November 26, 1880, 8 R. 143, to Bowman v. Bownan's Trustees, July 26, 1899, 36 S.L.R. 959. Assuming that the vesting was postponed, the trustees had no right to make advances to Mr Newall's children.

At advising—