Scottish Court of Session Decisions

James Francis Souter, bank agent, Inver ness, and another, the trustees of the deceased Alexander Watt, shipowner, Macduff ( first parties); Major Donald Munro Watt and others, the trustees of the deceased Alexander Watt, solicitor, Banff ( second parties); James Watt, San Francisco, and others, some of the next-of-kin of the deceased Mrs Eliza Watt or Ferguson, widow of Dr John Ferguson, Mooltan, Punjab, India ( third parties); Mrs Helen Watt or Jamieson, wife of the Rev. John Jamieson, United Free Church Manse, Canonbie, and others, the other next-of-kin of the said Mrs Eliza Watt or Ferguson ( fourth parties); and George Watt, K.C., Edinburgh, as executor-nominate of the said Mrs Eliza Watt or Ferguson and others, the residuary legatees of the fee of her estate ( fifth parties), brought a Special Case to determine whether the said Mrs Ferguson had or had not validly exercised a power of appointment conferred upon her by the will of her father the said Alexander Watt, Macduff.

The following narrative is taken from the opinion of Lord Dundas, infra—The sole question raised in this case is whether or not a power to dispose of certain funds by way of appointment has been validly exercised by the late Mrs Ferguson. The power was conferred upon her by the trust settlement of her father Mr Alexander Watt, who died in 1874. By that settlement, dated in 1873, Mr Watt, inter alia, directed in regard to a certain share of the residue of his estate that his trustees should hold it in trust “for the use and behoof of my daughters Helen Watt, Eliza Watt” (Mrs Ferguson), “and Jane Watt, equally between them in liferent for their liferent use allenarly, paying to each during her life the annual income or produce of” one-third of the said share, “and on the death of each of my said daughters my trustees shall pay over the capital or fee to her children, if any, in such proportions as she by any writing under her hand shall appoint, or failing any such writing, to and among her children equally between them, share and share alike; and”—here comes the part of the clause which raises the question in this case—“in the case of any of my daughters dying without leaving issue, my ti ustees shall pay over her portion to such person or persons, and if more than one, in such proportions, as she shall by any writing under her hand direct or appoint; and failing such direction and appointment, my trustees shall pay and divide the portion of any daughter or daughters dying without leaving issue to and among her surviving brothers and sisters and the issue per stirpes of any predeceasing brothers or sisters equally among them, share and share alike.” Mr Watt's daughter Eliza became the wife of Dr John Ferguson. She died on 14th July 1911, predeceased by her husband, and without issue. The question whether or not Mrs Ferguson validly exercised the power thus conferred upon her depends upon the terms of her holograph

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last will and testament, dated 2nd April 1910. It is a universal settlement, and begins with the wide and general statement—“I, Eliza Watt or Ferguson, do hereby state and record my wishes as to the disposal of my property and belongings after my death.” Mrs Ferguson dealt, in the first place, with the estate she had received as executrix of her deceased husband; she then proceeded to dispose of what she calls her “own estate” and concluded with a “desire that the residue of estate shall be divided between my sisters Helen Jamieson and Jane or Jeannie Gardner in liferent. At Helen Jamieson's death her share to be divided into three parts, one part to go to Nora Jamieson and two parts to Lena Gardner. If Nora Jamieson is married or engaged to be married at her mother's death, I desire all the three parts to go to Lena Gardner. At Jeannie Gardner's death I desire her share to be divided between Lena Gardner and Leila Gardner. If Leila is married or engaged to be married, then two-thirds will go to Lena and one-third to Leila.” The question of law was—“Has the power of appointment conferred upon the said Mrs Eliza Watt or Ferguson under her father's testamentary writings been validly exercised by her in her said testament and codicils?”

Argued for the third parties—(1) Mrs Ferguson had not exercised the power of appointment because she had not intended to exercise it. All that she professed to deal with was “my property and belongings” and “my own estate,” and the manner in which she disposed of that estate indicated that she believed she was dealing only with estate over which she had absolute control. The presumption that a general disposition of property was an exercise of a power of appointment was a very slight one, liable to be displaced by the facts and circumstances of each particular case— Mackenzie v. Gillanders, June 19, 1874, 1 R. 1050, per Lord Deas at p. 1054, 11 S.L.R. 612, per Lord Deas at p. 615. The following cases were also referred to— Bray v. Bruce's Executors, July 19, 1906, 8 F. 1078, 43 S.L.R. 746; Ramsay's Trustees v. Ramsay, 1909 S.C. 628, 46 S.L.R. 468; Bowie's Trustees v. Paterson, July 16, 1889, 16 R. 983, 26 S.L.R. 676. (2) In any event the power of appointment was merely a power to distribute capital, not a power to give a liferent— Lennock's Trustees v. Lennock, &c., October 16, 1880, 8 R. 14, 18 S.L.R. 36; in re Cotton, Wood v. Cotton, 1888, L.R., 40 Ch. Div. 41; in re Porter's Settlement, Porter v. de Quitteville, 1890, L.R., 45 Ch. Div. 179. [ Lord Salvesen referred to Gillon's Trustees v. Gillon, et al., February 8, 1890, 17 R. 435, 27 S.L.R. 338.] Moreover, the direction which Mr Watt gave to his trustees to “pay over” the capital to the appointees excluded the interposition of a liferent by Mrs Ferguson.

Argued for the fifth parties—(1) Mrs Ferguson had exercised the power of appointment. No inference could be drawn from the fact that she commenced her will by dealing with her husband's estate. The presumption that a general disposition was an exercise of a power of appointment was a very strong one. The cases of in re Porter's Settlement, Porter v. de Quitteville ( cit), and Gillon's Trustees v. Gillon et al. ( cit.) merely concerned powers of apportionment, the exercise of which was not so readily presumed— Paterson's Trustees v. Joy, 1910 S.C. 1029, per Lord Johnston at p. 1034, 47 S.L.R. 844, per Lord Johnston at p. 847. (2) The power of appointment was so wide that a gift of a liferent was a valid exercise of it— Lennock's Trustees v. Lennock, &c. ( cit), per Lord Justice-Clerk at p. 16 (8 R.), p. 38 (18 S.L.R.); Bray v. Bruce's Executors ( cit.), per Lord Low at p. 1089 (8 F.), p. 752 (43 S.L.R.); Paterson's Trustees v. Joy, per Lord Johnston ( cit.)

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