Scottish Court of Session Decisions

Sir David Davidson died on 18th May 1900, leaving a trust-disposition and settlement, dated 7th November 1898, by which he conveyed his whole estate, heritable and moveable, to trustees, and provided, inter alia, as follows—“( Fourth) I direct my trustees out of the income of my estate to pay the premiums necessary in order to keep in force a policy of assurance for £4000, dated 27th November 1849, numbered N—5654, effected in my name on the life of my said wife with the North British Insurance Company, and upon the death of my said wife to divide the proceeds of the said policy of assurance equally among all my children then alive, the issue then alive of each of my children who may have died leaving such issue being entitled to the shares which their respective parents would have taken had they survived; and further, I direct my trustees to pay to my said wife during all the days of her life the whole remaining free yearly income arising from the residue and remainder of my means and estate.” The truster further provided—“( Fifth) At the first term of Whitsunday or Martinmas happening after the death of the survivor of my wife and myself, I direct my trustees to make payment of “legacies of £1000 to one of his daughters and £200 each to two other daughters, and “thereafter to divide the whole residue and remainder of my means and estate into five equal parts, and to pay one-fifth to each of my four surviving sons, Thomas St Clair Davidson, David Albert Davidson, Charles Davidson, and William Davidson, and to set apart and invest the remaining one-fifth and pay the free yearly income thereof to the widow of my deceased son Henry Chisholm Davidson, so long as she remains unmarried, for her alimentary use, exclusive of the rights of creditors, and on her death or marriage to pay, convey, and make over the capital of said fifth to the issue of the said Henry Chisholm Davidson.” The settlement contained no provision for daughters, other than the general bequest to children in the fourth purpose, and the legacies provided by the fifth purpose.

On 4th November 1899 a petition was presented for the appointment of a curator bonis to Sir David Davidson, who had become of unsound mind and incapable of managing his own affairs, and Mr George Dalziel, W.S., was appointed to that office.

Sir David Davidson's mental condition remained unchanged until his death. He was predeceased by his wife, who died on 12th November 1899, and the sum of £4000 payable under the policy on her life, mentioned in the fourth purpose of his trust-disposition and settlement, was received by his curator bonis on 14th December 1899, and was administered by him along with the rest of Sir David's estate.

During Sir David's curatory the total expenditure by his curator on the debts and maintenance of the ward, and the expenses of management, exceeded the total income, and the surplus expenditure was met out of the capital of the ward's estate, and to the extent of £698 out of the proceeds of the policy referred to. The balance of the proceeds was placed on deposit-receipt, and was uplifted on 30th May 1900 so far as necessary to pay for certain stocks which the curator had purchased immediately before his ward's death. In encroaching on capital and making payments out of the proceeds of the insurance policy the curator acted on his own responsibility.

Sir David Davidson was survived by four sons and five daughters, and by the widow and children of a predeceasing son.

After his death, questions having arisen with regard to the £4000 for the disposal of which he made provision in the fourth purpose of his settlement as quoted above, a special case was presented for the opinion and judgment of the Court.

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The parties to the special case were (1) Sir David Davidson's trustees, (2) his surviving sons and the widow and children of his predeceasing son, and (3) his daughters.

The questions of law were—“(1) Does the said sum of £4000, being the proceeds of said policy of assurance, fall to be dealt with in terms of the said fourth purpose? or (2) Does it in the circumstances form part of the general residue of the truster's estate?”

The second parties maintained that the bequest of the proceeds of the policy on Lady Davidson's life contained in the fourth purpose of the truster's settlement had been adeemed in consequence of the predecease of his wife and the merging of the proceeds of the policy in his general estate during his life.

The third parties maintained that there had been no ademption, and that the sum of £4000, which formed the proceeds of the policy, fell to be dealt with in terms of the fourth purpose of the truster's settlement.

Argued for the second parties—The question was the same as if the testator had bequeathed the policy to persons named; and the proceeds having been properly uplifted during the testator's life, the bequest had been adeemed. The fact that the testator was incapax when the policy was paid made no difference. Ademption did not depend upon the intention of the testator but on the existence of the subject of the bequest at the time of his death— Pagan v. Pagan, Jan. 26, 1838, 16 S. 383, Lord Gillies, at p. 388; Chalmers v. Chalmers, Nov. 19, 1851, 14 D. 57; Anderson v. Thomson, July 17, 1877, 4 R. 1101, 14 S.L.R. 654; Stanley v. Potter (1789), 2 Cox Equity Cases 180, at p. 182; Ashburner v. Macquire (1786), 2 Brown's Chan. Rep. 108; Barker v. Rayner (1820), 5 Maddok 208, affirmed (1826), 2 Russell 122; Jones v. Green (1868), L.R., 5 Eq. 555; Freer v. Freer (1882), 22 Ch. D. 622. At the date of the testator's death there was nothing to which the fourth purpose of his settlement could apply—White & Tudor's Equity Cases (6th ed.), ii. 280; Williams on Executors (9th ed.), ii. 1183

Argued for the third parties—There was no ademption. In his testamentary capacity the testator died when he became insane, and at that time the policy was in existence. If the testator had so invested the proceeds of the policy as to mark them as such, there would have been no ademption— Moore v. Moore (1860), 29 Beavan 496; Lee v. Lee (1858), 27 L. J., Ch. 824; Morgan v. Thomas (1877), 6 Ch D 176. When the policy was paid up the testator was unable to express any intention by investing the proceeds so as to mark them, but his intention was clearly indicated by the fact that the only provision he made for his daughters generally was in the fourth purpose of his settlement. A curator bonis could not effect conversion unless by necessary administration, and there had been no necessity of administration in the present case— Taylor v. Taylor (1853), 10 Hare 475; Jenkins v. Jones (1866), L.R., 2 Eq. 323. At least, so far as the proceeds of the policy were traceable at the date of the testator's death, they fell to be dealt with according to the fourth purpose of his settlement. The cases quoted for the second parties did not apply.

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