Scottish Court of Session Decisions

Mrs Annie Eliza Jane Fleeming Matthews or Hedderwick, wife of and residing with John Hedderwick, with consent and concurrence of the said John Hedderwick as her curator and administrator-in-law, raised an action against Andrew Smith, William Annan, and James Matthews, the trustees under a trust-assignation in their favour granted by Alexander Morison, writer in Lanark, dated 22nd December 1898, as such trustees, and also against the said Alexander Morison. The pursuer concluded for declarator that the trustees were bound to pay her during her life the free annual proceeds and profits of £1000, assigned to them as trustees foresaid by the said trust-assignation, in terms of the deed; that the trust-assignation was of full force and effect; and that the trustees were bound to implement the whole purposes thereof.

The pursuer Mrs Hedderwick was married to the defender Alexander Morison on 3rd February 1891, and was divorced by him on 13th January 1900 on account of adultery with her present husband, whom she married a few weeks after the decree of divorce was pronounced.

By the deed upon which the pursuer based her claim in this action the defender Alexander Morison, upon the narrative that he had “at various times received large sums of money from my wife” (the pursuer in the present action), “and that it is right and proper I” “should make some provision for her and my family,” gave, granted, assigned, disponed, and made over to the trustees mentioned in the deed all and whole the sum of £1000 in trust for the trust purposes therein mentioned. By the deed the trustees were directed, inter alia,

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in the second place, “to hold the said sum of £1000, and to pay and apply the free annual proceeds and profits thereof to and for behoof of” the truster's wife (the present pursuer) “during all the days and years of her life.” Upon her death the fee was to go to her children.

Defences were lodged for the trustees and for Morison.

The pursuer averred that prior to the granting of said deed she “had made large advances to the defender (Alexander Morison) amounting in all to more than £1000,” and that he, “instead of repaying said indebtedness to the pursuer, granted said deed.”

The defender Morison in answer averred that the defender being unable to meet the household expenditure the pursuer contributed thereto to the extent of £200, for which sum the defender, though under no obligation to do so, granted her an I O U on 5th June 1894, payment of which she had received in January 1900; that the “large sums of money received at various times” referred to as the cause of granting the trust-deed were the pursuer's said contributions, amounting to £200, as already set forth; and that the provision in the deed was gratuitous, and had been revoked by the defender as a donation inter virum et uxorem.

The pursuer pleaded, inter alia—“(3) The trust-assignation referred to in the condescendence being granted in respect of onerous considerations, and the pursuer's rights thereunder having vested and not being affectable by a decree of divorce, she is entitled to decree of declarator as concluded for.”

The defender Morison pleaded, inter alia, “(2) The pursuer having been divorced from this defender has no further claim or right under said assignation. (3) Separatim—The provisions in favour of the pursuer, constituted by said deed, being donations inter virum et uxorem, and having been revoked, the pursuer has no right thereto.”

Proof was allowed and led. The facts sufficiently appear from the opinion of the Lord Ordinary ( Pearson).

By interlocutor dated 23rd April 1901 the Lord Ordinary assoilzied the defenders from the conclusions of the summons.

Opinion.—… “The facts are not quite as stated by either party. They appear to be as follows—At the time of the marriage and afterwards the husband was a clerk in the employment of the firm of which his father was a partner. His nominal salary was £100 a-year, but he was much given to drink, and as his salary was suspended during his absences, the result was that he earned in some years only about half of it, and sometimes a good deal less. The pursuer's mother lived with them for a year or two after the marriage, and helped them a little. But the scale of living was through-out extravagant, and much beyond the available income.

“On the death of her mother in January 1894 the pursuer succeeded to her whole estate. This proved to be of the value of over £850, but of this a sum of £578 was derived from heritable property, which was not realised until some years afterwards. In addition the pursuer received legacies of £50 and £80 from friends in 1895 and 1896.

All this appears to have gone in the personal and household expenses of the family, including some rather expensive holiday trips, notwithstanding that Mr Morison senior paid throughout for rent, wages, and coal, besides aiding them otherwise from time to time. There is no trace of any undue pressure, or any pressure at all, by the husband upon the wife to induce her so to spend her money, and it is plain from her evidence that the money was not even committed to him as her steward, but was in the main disbursed by herself directly, though doubtless to some extent on his personal expenses as well as her own. The figures given by the defender in his evidence do indeed throw some doubt upon whether so much of the wife's estate was made away with. He gives what appears to be a fairly complete account of the expenditure from the vouchers extant, and of the money that came in, and the expenditure is all accounted for without drawing upon the wife's estate, except to the extent of about £570. I suspect the difference is to be explained by there having been a large leakage of unvouched expenditure. And as there appears to be none of the pursuer's estate left, except the £200 which she has recovered from the defender since the divorce, I take the case on the footing that it all went as mentioned above.

Two other circumstances must be taken account of in ascertaining the pecuniary relations of the spouses at the time when the husband granted this trust-deed in 1898.

In the first place, in June 1894, after they had been married for three years, the defender granted to his wife an I O U for £200. The pursuer says on record that this was for an advance of ‘a special sum of £200' to the defender. But the fact seems to be, that after the death of her mother in January 1894 the pursuer, having made certain payments out of the estate for household purposes, suggested to the defender that he should settle the furniture upon her, and instead of doing so he granted her the I O U. It did not represent money handed over to him at the time, but was just part of what the pursuer had already paid and was then paying for household expenses. To that extent it may be taken that the husband had acknowledged his wife's money so advanced as a debt, and, as I have said, she sued him for it after divorce, and obtained payment, thereby excluding herself from saying that that £200 was any part of the consideration for which the trust-deed was granted. She says that he did not ask her to hand it back when the deed was signed, that perhaps she ought to have done so, but that she ‘thought he had forgotten it.’ I prefer the defender's explanation, that almost immediately after signing the trust-deed he asked her to give up the I O U, and that she said she did not know where it was, but that she would look for it and destroy it, and that he understood she had done so.

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The other circumstance is, that, as was known to both spouses, the defender had expectations from his father which, on Mr Morison senior's death in 1898, produced him between £4000 and £5000. It was in some sense upon the faith of matters being set right when these expectations were realised that the pursuer went on squandering her fortune. She herself does not put it very definitely. Being asked, ‘Did he say anything about repaying it?’ she replies, ‘He said it would be all right at his father's death.’ Again, she is asked, ‘Did you make it a condition of paying the accounts that your husband would repay the money?’—(A) ‘He said that he would.’ (Q) ‘Did you advance the money upon the faith of his assurance that he would repay it to you?’—(A) ‘Yes, certainly. He was to repay it at his father's death.’ The defender again, while saying that he remonstrated with her about the rate of her expenditure, put it thus—‘I never indicated to her that I would repay her on the death of my father.’ (Q) ‘Did you ever consider that you would be under any obligation to repay her?’—(A) ‘I may have.’ (Q) ‘Did you ever express to her your opinion that you were under obligation to repay her?’—(A) ‘No, not in those words, but I have no doubt I said that I would refund the money.’ This appears to me the most delicate part of the case; for while the defender's counsel objected to this whole line of examination, so far as directed to prove loan by parole, I think it admissible as bearing on the pecuniary relations of the parties, and particularly on the onerosity of the deed of trust; and when so regarded it does appear to me to disclose an onerous cause of granting. The deed may have been voluntary in the sense that he could not have been compelled to grant it, but it was not gratuitous. So far as his children were concerned, it was in fulfilment of a natural obligation; and as regards the wife, even if it be regarded as a donation, it disclosed an onerous cause of granting which showed it to be a remuneratory donation, and therefore not revocable.

The deed itself bears to be a family provision by a husband in favour of his wife and children for onerous causes. Prima facie the words used in the deed do not import that it was granted in respect of any antecedent relation of debtor and creditor as between himself and his wife. The onerous cause set out in the deed is, not that the moneys had been received from her in loan, which was thereby repaid, but that moneys had been received in such circumstances as to make it right and proper that he should ‘make some provision for her and my family.’ Now, the proof shows the money to have been ‘received’ by him only in this sense, that she had made disbursements towards the common expenses of the establishment in the knowledge that his income was altogether inadequate to meet these expenses. To some extent these disbursements had been made for his own personal expenses, but his salary (such as it was) and her own funds had not been kept separate in the matter. All had gone towards the personal and family expenses of spouses living together. Now, I think such payments by her were not recoverable by her from her husband, either as being loans which he was bound to repay, or as being donations which she was entitled to revoke. If they had been payments of her income this would have been quite clear. They were, in fact, payments of capital, but they were all spent in defraying current family expenses. She treated the capital as income, by using it for other than capital expenditure. Nor do I think that the circumstances under which the payments were made created the relation of debtor and creditor between the spouses. There was, I do not doubt, an understanding between them that the money should be ‘refunded’ when he succeeded to his patrimony. But that falls considerably short of an acknowledgment by him that the moneys had been advanced by way of loan. It appears to me that the truth and substance of the matter is to be found in the trust-deed itself. That deed had its inception in the advice given by Mr Smith to the defender to take that means of discharging the moral obligation under which he lay. It was not demanded by the pursuer, but she accepted it as fulfilling her expectations of what he would do when his father's succession opened.

Now, the trust-deed is a deed of provision. It is in form a trust by a husband out of his own estate in favour of his wife in liferent and the children of the marriage in fee, and there is no clause carrying the fee to her or her heirs failing children. I take it that this must be regarded as implementing whatever obligation was incumbent on him. In consideration of her having spent her separate estate on the family and household he makes a postnuptial provision, setting apart £1000 of his own estate for her in liferent and the children in fee.

But this being, both in form and substance, a postnuptial settlement by a husband of part of his own estate in favour of his wife and children, the provisions of it, however onerous, are forfeited in so far as they are provisions for the wife, in consequence of the decree of divorce against her. The only way by which this result can be avoided is by representing the trust-deed as something other than it is. The case for the pursuer truly depends on making it appear (1) that the relation of the spouses at the date of the trust-deed was that of debtor and creditor in a loan transaction, and that the trust-deed was by way of repayment, and (2) that consequently the trust-deed is to be regarded, not as a settlement by the husband of his own property for onerous consideration, but as truly a settlement by the wife of £1000 of her own estate which has been repaid to her by her husband. In this view, the provision being truly one granted at her request out of her own estate in the hands of her husband would not be forfeited through her divorce. I see no reason, however, in the circumstances of this case, why I should draw that inference contrary to the fact.

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The sum of £1000 was in fact his money. And however onerous the trust-deed may have been, it appears to me that the provision of income in favour of the offending wife is forfeited just as if it had been contained in an antenuptial contract.”

The pursuer reclaimed, and argued—She was entitled to decree as craved. The deed was one for onerous causes. On this point the Lord Ordinary was with her. It was something more than a family provision. It was repayment by the husband of money received by him from his wife, and expended in fulfilling obligations which he was bound by law to fulfil, namely, payment of household expenses. He was bound to recoup his wife for this expenditure, and he did so by placing the money in the hands of trustees. It was thus taken as effectually out of his possession as if he had put it in the hands of the pursuer. The deed contained a recital of the onerous cause of granting, and bore in its terms to be a return for money advanced. The deed was therefore of full force and effect notwithstanding the dissolution of the marriage by the divorce of the wife—Ersk. Inst. i. 6. 30; Bell's Prin., sec. 1616; Fraser's Husband and Wife (2nd ed.) ii. 925; Countess of Argyle v. Tenants of Dollar, December 19, 1573, M. 327; Ferguson v. Jack's Executors, January 30, 1877, 4 R. 393. 14 S.L.R. 277.

Argued for the defenders—Whether the deed was held to be gratuitous or onerous the decision of the Lord Ordinary was right. If the deed was gratuitous, then it was a donation and therefore revocable—Ersk i. 6, 29; Fraser's Husband and Wife, ii. 916. Even if it were not gratuitous, it was a matrimonial provision which was forfeited on the divorce of the wife. The wife's money had been applied to the payment of household expenditure. If a wife spent her own money on household expenditure she was not entitled to demand it back from her husband— Edward v. Cheyne, March 12, 1888, 15 R. (H.L.) 37, 25 S.L.R. 422. There was no question here about payment of a debt. The wife was not in the position of a creditor. The deed merely conferred a matrimonial provision. This was revoked by the divorce, the law in a question with the innocent spouse regarding the guilty spouse as having died at the date of the divorce— Johnstone Beattie v. Johnstone, February 5, 1867, 5 Macph. 340, 3 S.L.R. 203; Harvey v. Farquhar, July 12, 1870, 8 Macph. 971, aff. February 22, 1872, 10 Macph. (H.L.) 26, 8 S.L.R. 441, and 9 S.L.R. 421.

At advising—