Scottish Court of Session Decisions

William Smith Storie and another, as trustees acting under a deed of nomination and conveyance by the testamentary trustees of James Potter of Glenfuir, Falkirk, first parties; Mrs Janet Wilson Potter or Allan, widow of the deceased Andrew Allan, solicitor, Falkirk, and a daughter of James Potter, second party; and Robert Andrew Craig Allan, Elizabeth Craig Allan, and Janet Evelyn Allan, the surviving children of the second party, third parties, brought a Special Case to determine questions relating to the rights of the parties under the testamentary writings of James Potter, who died on 6th May 1890, leaving a trust-disposition and settlement and three codicils.

The trust-disposition and settlement, dated 1st November 1887, disponed and conveyed the testator's whole means and estate to William Snell Anderson, Andrew Allan, and the Rev. William Smith Storie as trustees for various purposes.

The first codicil, dated 5th April 1899, directed the trustees to pay to the testator's widow the profits of his shares in a certain coal company in order to increase her provision.

The second codicil, dated 4th November 1899, revoked the testator's directions in his trust-disposition and settlement as to the disposal of the residue of his estate, and in lieu thereof directed his trustees, in the first place, to pay at the first term after his death, to his son James Thomas Potter, whom failing his issue, the sum of £750, and further provided—“And in the second place I direct that my trustees shall hold, pay, or convey the residue of my said means and estate, including the funds employed in and free proceeds of any business or interest in any business continued as mentioned in the foregoing trust-disposition and settlement, together with the annual profits or income thereof, and any funds that may have been set apart to meet the annuity before mentioned as the said funds, proceeds, and profits are realised and set free, to or for behoof of my other lawful children, Mary Henderson Potter, Janet Wilson Potter or Allan, and Christina Isabella Potter or Storie, equally among them, the lawful issue of any of said children predeceasing me being entitled equally among them to the share which would have fallen to their parent if alive; declaring that the share of my daughter Janet Wilson Potter or Allan shall in the event of her and her daughter Mary Wordie Allan surviving me suffer deduction of the sum of Five hundred pounds sterling, which sum my trustees shall pay to the said Mary Wordie Allan; notwithstanding what is before written I empower my trustees to retain in their own

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hands should they consider it desirable in the interests of any of the beneficiaries under these presents the whole or any portion of the share of the said beneficiaries other than the said James Thomas Potter as alimentary provisions, and to apply the annual income of such share for behoof of such beneficiary so long as they consider it expedient; with the foregoing alteration I hereby confirm the said trust-disposition and settlement and relative codicil.”

The third codicil, dated 10th April 1890, provided—“I, James Potter of Glenfuir, having reconsidered the trust-disposition and settlement and codicils before written, with reference to the share of the residue of my estate bequeathed to my daughter Janet Wilson Potter or Allan, do hereby alter and vary the said bequest to the following extent and effect, viz., I direct my trustees to hold and apply or pay the said share of residue and income thereof to or for behoof of the said Janet Wilson Potter or Allan and her children or any of them in such portions and at such times as my trustees may think most for the advantage of them or any of them, or otherwise in their option to pay and convey the said share or any portion thereof remaining unpaid to such person or persons as shall be named by my trustees, to be held by him or them in trust and applied or paid to or for behoof of the said Janet Wilson Potter or Allan and her children or any of them in such portions and at such times as the said person or persons so named may consider most for the advantage of the said Janet Wilson Potter or Allan and her children; declaring that my trustees' discretion in the nomination of such person or persons to act as aforesaid shall be absolute, and the receipt or discharge of the person or persons so named shall be a sufficient exoneration to my trustees; and with these alterations I ratify and confirm the said trust-disposition and settlement and codicils.”

The Case set forth—“1. James Potter” left “estate of the nett value of £13,000. The testator was survived by his widow Mrs Mary Bow Wordie or Potter, who died on 15th June 1905, and by four children, viz., James Thomas Potter, who died in 1896, and Mary Henderson Potter, Mrs Janet Wilson Potter or Allan, and Mrs Christina Isabella Potter or Storie, who all survive. 2. The testator's daughter Mrs Janet Wilson Potter or Allan is aged 57, and is the widow of the deceased Andrew Allan, solicitor, Falkirk, who died on 30th May 1899. At the date of the testator's death she had two children, Robert Andrew Craig Allan and Mary Wordie Allan. Since that date two other children have been born to her, viz., Elizabeth Craig Allan and Janet Evelyn Allan. The said Mary Wordie Allan died intestate and unmarried, at the age of twenty-one, on 20th May 1906. All the other children have attained majority…. 6. By a deed of nomination and conveyance dated 20th, 22nd, and 25th September 1905, and registered in the Books of Council and Session 26th September 1905, William Snell Anderson, William Smith Storie, and John Craig Allan, the surviving original and assumed trustees of the testator, on the narrative of the directions contained in the last-mentioned codicil, and on the further larrative that they had decided to exercise the said option, named and appointed themselves and Robert Andrew Craig Allan these being the surviving trustees of Mrs Allan's husband Andrew Allan) ‘to hold and apply the share of the estate of the said deceased James Potter bequeathed or falling to his daughter the said Janet Wilson Potter or Allan and the income or interest: lue, or which may hereafter become due, thereon, to or for behoof of the said Janet Wilson Potter or Allan and her children or any of them in such portions and at such times as the said John Craig Allan, William Snell Anderson, William Smith Storie, and Robert Andrew Craig Allan or their fore-saids may consider most for the advantage of the said Janet Wilson Potter or Allan and her children.’ The said deed also contains an assignation and conveyance by the testator's trustees to the said trustees therein nominated (who accepted office) of the said share of the residue of the testator's estate. 7. The trustees acting under the said deed of nomination and conveyance still hold the share of the residue thereby conveyed to them. No payment of the said sum of £500 or of interest in respect of the same was made to the said Mary Wordie Allan by the said trustees or by the trustees acting under the testator's testamentary writings. The whole income accruing from the said share of residue since the date of the testator's death has been paid to or for behoof of the said Mrs Allan and her children, but no payment has been made from the capital thereof, nor has any appointment as to the said share been executed, by the trustees acting under the said deed of nomination and conveyance.”

The first parties contended that “on a sound construction of the testator's testamentary writings no right vested in the said Mary Wordie Allan; that no right in the share of residue dealt with in the third codicil or in any part of the said share which may from time to time remain in the hands of the first parties has vested or will vest in the second or third parties or any of them so long as it remains in the hands of the first parties; that in any event the second and third parties are not entitled to demand payment cf the said share or any portion thereof, and that the same is payable only to such of the second party and her children and in such portions and at such times as the first parties in the exercise of their discretion may determine.”

The second party contended that “the direction as to the payment of the said sum of £500 to Mary Wordie Allan has not been revoked but vested in her (Mary Wordie Allan), and is now distributable as her intestate estate; that the said share of residue (under deduction of the said sum if the said direction has not been revoked) vested on the death of the testator in the second party and her children who were alive at the testator's death in equal shares to the exclusion of any children born to her thereafter; that the directions in the third codicil

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are not effectual to limit their rights in the said share, and that they are now entitled to payment thereof.”

The third parties concurred in the contention of the first parties, and further contended that “the direction as to the payment of £500 to the said Mary Wordie Allan contained in the second codicil was revoked by the third codicil. They also maintain that if the said share of residue has vested it vested equally in the second and third parties and the said Mary Wordie Allan.”

The questions of law were—“1. Is the direction contained in the codicil dated 4th November 1889as to the deduction from the share of the second party, and payment to the said Mary Wordie Allan of the sum of £500, revoked by the terms of the codicil dated 10th April 1890? 2. In the event of the preceding question being answered in the negative, had the said Mary Wordie Allan a vested right in the said sum of £500? 3. ( a) Did the share of residue referred to in the said codicil dated 10th April 1890 (or the said share subject to the deduction of £500) vest equally in the second party and her children who were alive at the date of the testator's death to the exclusion of any children born thereafter? or ( b) Did it vest equally in the second and third parties and Mary Wordie Allan? or ( c) Will it vest only in those of the second party and her children to whom it maybe paid or made over by the first parties, and that at such times and in so far as it is paid and made over? 4. In the event of branches ( a) or ( b) of the third question being answered in the affirmative, ( a) are the first parties bound to make payment of the shares of the said share of residue to the parties in whom the same have vested when required by them to do so? or ( b) are the first parties entitled to continue to retain the shares of the said share of residue whether payment is or is not demanded by the parties in whom the same have vested?”

Argued for the first and third parties—(1) The second codicil contained a bequest of £500 to Mary Wordie Allan, but also earmarked the fund from which it was to be paid, viz., her mother's share. That was a demonstrative legacy, which would fail if the mother never took a share. In the third codicil the testator was expressly rearranging his testamentary bequests, and he therein treated the mother's share as a share equal to that given to each of her sisters, and ignored the deduction of the legacy to Mary Wordie Allan contained in the second codicil. That was a revocation by implication of that bequest, for if not the mother could not take an equal share with her sisters. (2) The proper objects of the power of appointment contained in the third codicil were Mrs Allan and her children or any of them. There was no hint of an intention to limit the proper objects to children born at any particular date. Any person de facto a child of Mrs Allan whenever born was a proper object. In such a case the class of proper objects was closed only when and in so far as the donees of the power exercised it— Ross v. Dunlop, 1878, 5 R. 833, per Lord President Inglis at p. 836, 15 S.L.R. 580. Thus if the donees of the power made a partial distribution children born thereafter could not challenge that distribution so far as it had operated on the funds, but they were entitled as proper objects to share in the funds remaining undistributed. If the donees of the power made no distribution all the children whenever born would take equal shares— Hill's Trustees v. Thomson, 1874, 2 R. 68, 12 S.L.R. 20. Everything depended on whether there was a direction to pay at a certain date. If there was, then the class of proper objects was closed at that date. Farwell, Powers (3rd ed.), pp. 534 and 536, was referred to. (3) As to the power of delegation conferred upon the trustees in the third codicil there were no authorities in point, but in any event the original trustees were still in the saddle and might still act themselves. Otherwise the nominees in the deed of nomination had a position very similar to that of assumed trustees, and it had been decided that assumed trustees could validly exercise such a power as that in question— Shedden's Trustees v. Dykes, 1914 S.C. 106, 51 S.L.R. 115. In a case where there was a delegation to trustees to distribute amongst relations it had been observed that if all the trustees died without distributing the Court would find a substitute to exercise the power— M'Cormack v. Barber, 1861, 22 D. 398, per Lord Deas at p. 407. Hill v. Burns, 1826, 2 W. & S. 80, was referred to.

Argued for the second party—(1) The terms of the third codicil were silent as to the legacy to Mary Wordie Allan, but when the testator meant to revoke a bequest he did so expressly. The “share of residue” referred to was the share of residue given to Mrs Allan subject to deduction of the bequest of £500. That legacy vested in Mary Wordie Allan at the testator's death, as there was nothing to suspend vesting. (2) The share of residue was gifted to Mrs Allan and her children or any of them subject to a power of apportionment. The result was that that share vested a morte in a composite class consisting of Mrs Allan and her children alive at the date of the testator's death, subject to the fixing of the shares of the bequest by the donees of the power of appointment. Such discretionary powers did not suspend vesting in the class. Vesting took place a morte subject to defeasance operated by an exercise of the discretionary powers— Chambers' Trustees v. Smith, 1878, 5 R. (H.L.) 151, per Lord Blackburn, at p. 161, 15 S.L.R. 541; Hill's Trustees v. Thomson ( cit.), per Lord Justice-Clerk Moncreiff and Lord Neaves at 2 R. p. 70; Macfarlane's Trustee v. Macfarlane, 1903, 6 F. 201, per Lord President Kinross at p. 206, and Lord M'Laren at p. 210, 40 S.L.R. 64. There was no destination-over and no need to continue the trust. The trustees could have acted at once and paid away all the funds and the post nati could not have objected. Different periods of payment were not contemplated by the codicil. Further, under the second codicil vesting was undoubtedly a morte in the fund in question. The third codicil dealt with the same fund, and there was no indication of a different intention as regards

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vesting. Consequently the post nati had no right to a share as proper objects of the power— Wood v. Wood, 1861, 23 D. 338; Stopford Blair's Executors v. Heron Maxwell's Trustees, 1872, 10 Macph. 760, 9 S.L.R. 490; Weir v. Young, 1898, 5 S.L.T. 233. (3) The power of delegation given to the trustees was invalid. There was no case in which such a power had been sustained. No doubt assumed trustees might be held entitled to exercise such discretionary powers, but in Shedden's case ( cit.) the validity of conferring such powers on trustees to be assumed was not argued. Here, however, the nominees were not in the position of assumed trustees, but were trustees of the trustees, there being really a double trust. But in any event the powers belonged to those who were actually in the office of trustees under the testator's deed— Eastich v. Smith, [1904] 1 Ch 139, per Farwell, J., at p. 142. Crichton v. Grierson, 1828, 3 W. & S. 329, was referred to.

At advising—