Scottish Court of Session Decisions

John Scotland and others, testamentary trustees of the late Colin Brown, sometime solicitor, Airdrie, who died unmarried on 14th January 1914, acting under his trust-disposition and settlement dated 3rd October 1912 and relative codicil dated 3rd September 1913, of the first part; William Brown and John Dochard Brown, brothers of the deceased, and James Dunn Russell as their attorney, of the second part; and Daniel Thom, universal legatary and sole executor of his wife Mrs Isabella Forrester Brown or Thom, sister of the deceased, of the third part, presented for the opinion and judgment of the Court a Special Case dealing with a bequest in favour of the late Mrs Thom.

The trust-disposition and settlement provided—“And with regard to the remaining half of the residue of my estate I direct my trustees to purchase therewith from some well-established insurance company an annuity on the life of and payable to my sister Isabella Forrester Brown or Thom, for her own absolute use and behoof and exclusive of the jus mariti and right of administration of her husband: Declaring that the said annuity shall be purely alimentary, and shall not be assignable or alienable by the said Isabella Forrester Brown or Thom in any manner of way or affectable by her debts or deeds or attachable by the diligence of her creditors; and in the event of the said Isabella Forrester Brown or Thom predeceasing me I direct my trustees to pay and convey to the said William Brown or his lawful issue the share of his estate which would have been invested in the purchase of an annuity as aforesaid for the said Isabella Forrester Brown or Thom had she survived me. … And in general I empower my trustees to do everything which in their discretion they may conceive to be for the interest of my estate.….”

The Case stated—“5. The truster was survived by his brothers, the said William Brown and John Dochard Brown, and by his sister Isabella Forrester Brown or Thom. He left no other brothers or sisters, and no issue of predeceasing brothers or sisters. The said Isabella Forrester Brown or Thom died two days after the date of the death of the truster, viz., on 16th January 1914, survived by her husband Daniel Thom (the third party), but without issue. By her disposition and settlement, dated 28th September 1903, the said Isabella Forrester Brown or Thom, inter alia, assigned and disponed in favour of her husband, the said Daniel Thom, for his own absolute use and behoof, her whole estate, heritable and moveable, and appointed him to be her sole executor. The said Daniel Thom was duly confirmed as executor of his said wife conform to confirmation in his favour dated at Glasgow 2nd October 1914.

6. The trustees of the truster entered on the possession and administration of the trust estate, which consisted entirely of moveable estate, and were duly confirmed as executors, conform to confirmation in their favour dated 29th July 1914. Owing to the shortness of the time (two days) which elapsed between the death of the truster and the death of the said Isabella Forrester Brown or Thom, the trustees were unable to give effect to the truster's said direction to purchase with the remaining half of the residue of his estate an alimentary annuity on the life of the said Isabella Forrester Brown or Thom, and no such annuity was purchased. No demand was made by the said Isabella Forrester Brown or Thom for payment by the trustees to her of the amount of said remaining half of said residue. The exact amount of said one-half of the residue of the estate which would have been available for the purchase of said annuity has not yet been definitely ascertained, but the parties estimate that it will amount to the sum of £450 or thereby. …

12. The second parties maintain that the said Mrs Isabella Forrester Brown or Thom was not entitled on her survivance of the truster to demand and receive payment of the remaining one-half of the residue directed to be expended in purchasing an alimentary annuity for her; that in any case no right to demand and receive payment thereof passed to the third party; that in the events which have happened the said remaining half of said residue must be regarded and dealt with as intestate estate of the truster; and that the second parties, William Brown and John Dochard Brown, as two of the next-of-kin of the truster, are entitled to two-thirds thereof, the third party as representing the only other next-of-kin of the truster being entitled to the remaining one-third thereof.

13. The third party maintains that on a sound construction of the said trust-disposition and settlement the said Mrs Isabella Forrester Brown or Thom became entitled on her survivance of the truster to demand and receive payment from the said trustees of the one-half share of the residue of the said estate directed to be expended in purchasing an annuity for her; that whether or not she had actually made the demand for payment of the said one-half share of residue prior to her death, her whole right therein was on her death transferred to the third party; that her right to demand and receive the capital of the said one-half share is not affected by the declaration that the annuity was to be alimentary; and that the right so vested in her to make the said demand, and whether or not the said demand had been made by her, the right to receive the said capital validly passed to the third party as executor and universal legatary of his wife, and that he is now entitled to payment of the said one-half share of the residue.” …

Page: 61↓

The questions of law were—“1. In the events which have happened, does the said remaining half of the residue of the trust-estate which the truster directed his trustees to apply in purchasing an alimentary annuity for his sister Isabella Forrester Brown or Thom fall to be divided, as intestate estate of the truster, equally among the second parties William Brown and John Dochard Brown, and the third party as executor of the said Isabella Forrester Brown or Thom? or (2) is the third party, as executor and universal legatary of the said Isabella Forrester Brown or Thom, entitled to unconditional payment of the whole of said remaining half of said residue?”

Argued for the third parties—Mrs Thom's executor was entitled to the money directed to be applied for the purchase of the annuity. The trust deed did not provide for a continuing trust, and an alimentary annuity could only be secured by a continuing trust— Kennedy's Trustees v. Warren, 1901, 3 F. 1087, 38 S.L.R. 827; Murray v. Macfarlane's Trustees, 1895, 22 R. 927, 32 S.L.R. 715; White's Trustees v. Whyte, 1897, 4 R. 786, per Lord President (Inglis) at 790, 14 S.L.R. 499, at 500; Tod v. Tod's Trustees, 1871, 9 Macph. 728, 8 S.L.R, 445; Brunning, In re, Gammon v. Dale, [1909] 1 Ch. 270; Robbins, In re, Robbins v. Legge, [1907] 2 Ch 8, per Cozens-Hardy, M.R., at 11. Hutchinson's Trustees v. Young, 1903, 6 F. 26, 41 S.L.R. 14, was distinguishable. There the direction was to purchase a Government annuity. That form of security had a certain statutory protection which supplied the place of a continuing trust, for the statute was binding on all the lieges. Moreover, in the subsequent case of Turner's Trustees v. Fernie, 1908 S.C. 883, 45 S.L.R. 708, opinions were reserved as to the effect of a statutory provision of that sort. Since the truster had not provided in the trust-deed for a continuing trust, the Court could not create one— Clouston's Trustees v. Bulloch, 1889, 16 R. 937, 26 S.L.R. 644.

Argued for the second party—(1) There was an intention to make the annuity alimentary, and that implied the creation of a continuing trust. In the cases relied on by the third party there was no intention to create a continuing trust. In Kennedy's Trustees v. Warren ( cit.) there was an express direction to take the annuity in name of the parties themselves. In the present case the annuity could be purchased in name of the trustees, although payable to the annuitant— Dow v. Kilgour's Trustees, 1877, 4 R. 403, 14 S.L.R. 285, was referred to. (2) The bond of annuity could be taken in terms so as to create the insurance company trustees, and thus its alimentary character would be duly protected— Hutchinson's Trustees v. Young ( cit.); Turner's Trustees v. Fernie ( cit), per Lord President (Dunedin) and Lord M'Laren.