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Scottish Court of Session Decisions |
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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Home's Trustees v. Fergusson's Executrix [1921] ScotLR 367 (08 March 1921) URL: http://www.bailii.org/scot/cases/ScotCS/1921/58SLR0367.html Cite as: [1921] ScotLR 367, [1921] SLR 367 |
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Page: 367↓
A testator who died in 1881, after providing in his trust-disposition and settlement for his widow's liferent and for payment of certain legacies on the security of his lands, directed his trustees to accumulate and apply the
Page: 368↓
income of his said lands in payment of the debts secured upon them, and to convey the lands as soon as disencumbered to the eldest son of his brother J. F. and his heirs. In 1920 the husband of the person entitled to succeed to the lands, if the conveyance fell to be then executed, made an offer to the trustees to pay off the debts in return for a conveyance of the lands to his wife, whom failing to her heirs in heritage in their order. Held (1) that the trustees were not restricted to paying off the debts out of income alone; (2) that their duty was to avail themselves of the offer made for their payment; and (3) that they were bound to grant a conveyance of the lands thus disburdened to the person then entitled thereto under the destination. Scarlett v. Lord Abinger's Trustees, 1907 S.C. 811, 44 S.L.R. 525, distinguished.
Major John Hutchison Fergusson Home of Bassendean, in the county of Berwick, died on 27th May 1881 leaving a trust-disposition and settlement dated 23rd June 1879, by which he conveyed his whole means and estate to trustees for the purposes therein set forth. By the fourth purpose he dealt with the estate of Bassendean and others. With regard to it he provided ( first) that it should be held for the liferent use of his widow; ( second) that on her death his trustees should pay certain legacies amounting to £1350, with power to them to borrow that sum on the security of Bassendean. The third and fourth sub-heads of the fourth purpose were as follows—“( Third) I direct my said trustees, after payment of certain legacies in manner before provided, to collect and accumulate the annual income, profits, and produce of my said lands and estate of Bassendean and others, and from time to time as they shall consider expedient to pay and apply the same in and towards payment pro tanto of the debts secured upon the said lands, including the sum or sums of money which may be borrowed as aforesaid on the security of the said lands and estate; and also in payment to each of my trustees, the said Evan Allan Hunter and Patrick Blair, of the sum of £500 sterling each, which legacies shall only be payable at the termination of this trust, but notwithstanding the date of payment thereof shall be held to vest at my own death; and ( Fourth) as soon as the foresaid debts, including as aforesaid, and legacies shall have been fully satisfied, and my said lands and estate of Bassendean and others shall be entirely freed and disencumbered thereof, I direct and ordain my said trustees with all convenient speed to dispone, convey, and make over the said lands and estate of Bassendean and others to and in favour of the eldest son of my brother James Fergusson and his heirs, declaring that in the conveyance and deed of denuding to be executed by my said trustees they shall take the disponee and his heirs bound to use and bear the name and arms of Home of Bassendean, and also shall take him and his foresaids bound never to sell or dispose of the said lands and estate of Bassendean and others in all time thereafter.” The testator declared that the purposes of the trust should take effect only in the event (which happened) of his dying without leaving heirs of his body. He conferred no power of sale on his trustees, but he conferred on them “generally all powers necessary for enabling them to carry this trust into full and satisfactory effect and execution.”
Questions having arisen as to the construction and effect of the trust-disposition and settlement, a Special Case was presented for the opinion of the Court, to which Hew Francis Cadell and another, the trustees acting under the trust-disposition and settlement, were the first parties. The testator was survived by his widow and she enjoyed the liferent of the estate of Bassendean until her death on 28th May 1888. He was also survived by two children of his brother James Fergusson, viz., a son James Johnston Fergusson and a daughter Mary Fergusson or Home. The son James Johnston Fergusson died unmarried on 29th December 1903 leaving a last will and testament by which he assigned and disponed his whole estate, heritable and moveable, to his mother Mrs Clara Johnston or Fergusson and appointed her his executrix and universal legatee. Mrs Fergusson as such executrix and as an individual was the second party to this case. The daughter Mary Fergusson or Home, her husband, and her two children Captain Robert George Home and Clara Josephine Home (who were both of full age) were the third parties to the case. The fourth party was Major Home Johnston Fergusson, who was the only son of the late Major Home Mackay Fergusson, the next younger brother after the said James Fergusson of the testator. The fourth party would in the event of failure of the third parties and their issue be the heir-at-law of the said James Johnston Fergusson.
The Case stated, inter alia—“4. The first parties have duly implemented the first three purposes of the testator's trust-disposition and settlement. On the widow's death they borrowed the sum of £1350 on the security of the estate of Bassendean, and with the proceeds they duly paid the legacies provided for by the second subhead of the fourth purpose of the said trust-disposition and settlement. At the testator's death, and also at his widow's death, the estate of Bassendean was burdened with heritable debt to the extent of £5920. The addition of the aforesaid sum of £1350 raised the amount of the heritable debt to £7270. When the legacies of £500 each to the two original trustees provided for in the third sub-head of the fourth purpose are added, the total amount to be paid off before the estate of Bassendean can be conveyed in terms of the trust-disposition and settlement is thus £8270. As directed by the said third sub-head, the first parties have since the widow's death accumulated the income arising from the estate of Bassendean, and therefrom have been enabled to
Page: 369↓
make the following payments towards reduction of the debt:—
At Whitsunday 1894
£1350
At Martinmas 1899
720
At 15th March 1902
100
At Whitsunday 1902
200
At Martinmas 1918
300
£2670
thus leaving £5600 still to be paid off before the conveyance of the estate can take place. 5. Owing to the increased burdens imposed on all landed estates in recent years there is at present no surplus revenue arising from the estate of Bassendean, and the first parties see little or no prospect of paying off or even of materially reducing the debt affecting the estate out of accumulations of income… 6. In these circumstances the first parties have been approached by Colonel Home, the husband of Mrs Mary Fergusson or Home, one of the third parties, and he has offered to pay off, or provide the first parties with money to pay off, all the debt still affecting the estate of Bassendean, and also the legacies to the trustees, in return for a conveyance of the estate thus disburdened. The second and third parties have all concurred in requesting the first parties to accept this offer, and after the said debt and legacies are paid off with the money provided by Colonel Home, to execute a conveyance of the estate in favour of the said Mrs Mary Fergusson or Home, whom failing the said Captain Robert George Home and the heirs of his body, whom failing the said Clara Josephine Home and her heirs, or in such other terms as may be agreed upon between the second and third parties. The second party has offered, and hereby offers, to execute a renunciation and discharge of any right or interest which she may have or may pretend to in the said estate, and to concur in any conveyance which may be executed by the first parties in the said terms or in such terms as may be agreed upon as aforesaid; and on the first parties executing such conveyance and accounting for their intromissions with the estate, the second and third parties are prepared to grant a discharge to the first parties as trustees foresaid. 7. The first parties, however, are doubtful whether it would be competent for them to accept this offer, and upon a consideration of the offer in the light of existing circumstances the questions after noted have arisen.… There is a further question whether the first parties are restricted to paying off the debt on the estate out of accumulations of income, or whether they are free to resort to other means of disburdening the estate. If the latter view be sound, the question arises whether it is competent for the first parties to accept the offer of Colonel Home, and with the consent of the second party to grant a conveyance of the estate in the terms requested by the second and third parties.…”
The only questions of law which the Court dealt with were—“3. Are the first parties in disburdening the estate of Bassendean of debt ( a) restricted to doing so out of accumulations of income? or ( b) are they bound to avail themselves of the offer mentioned in article 6 of this Case? 4. In the event of question 3 ( b) being answered in the affirmative, are the first parties bound, after the said estate has been disburdened of debt with money provided in terms of the said offer, to grant a conveyance of the estate in the terms mentioned in the said article 6?”
The first parties offered no contention.
The fourth party maintained that the debts affecting the estate fell to be paid off out of accumulations of income only, and that it was not competent for the first parties to accept the offer for payment of these debts. The effect of such acceptance would be to accelerate the date of conveyance of the estate, with the result that the estate would or might fall to be conveyed to a person other than the person who would have taken had the debts been paid off out of accumulations of income. The following cases were cited— Scarlett v. Lord Abinger's Trustees, 1907 S.C. 811, 44 S.L.R. 525; Muirhead v. Muirhead, 1890, 17 R. (H.L.) 45, per Lord Watson at 48, and Lord Herschell at 52, 27 S.L.R. 917. The case of Colquhoun v. Colquhoun's Trustees, 1892, 19 R. 946, was distinguished, in respect that there the operation of the Thellusson Act had rendered further accumulation impossible; similarly in Sinclair's Trustees v. Sinclair, 1913 S.C. 178, 50 S.L.R. 296, it was fully recognised that there was no prospect of the debts being paid off out of income.
The second and third parties maintained, inter alia, that the first parties were not restricted to paying off the debts out of accumulations of income, but were bound to avail themselves of the said offer and thereafter to grant a conveyance of the estate thus disburdened. There was nothing in the will to suggest that the testator intended the debts to be paid exclusively from accumulations of income and from no other source. In this respect this case was clearly distinguished from that of Scarlett. Moreover, in view of the present condition of the revenues there was no hope of disburdening the estate from this source for an indefinite period of time. Counsel referred to the following cases— Tewart v. Lawson, 1874, L.R., 18 Eq. 490; Norton v. Johnstone, 1885, 30 Ch. D. 649; In re Green, 1858, 40 Ch. D. 610; Colquhoun's Trustees ( cit.), Sinclair's Trustees ( cit.); Stainton v. Stainton's Trustees, 12 D. 571, per Lord Moncreiff at 595.
At advising—
Page: 370↓
What has happened is that from Colonel James Murray Home, husband of the said Mrs Mary Fergusson or Home, the trustees have received an offer which would enable them immediately to free and disencumber the lands and estate of Bassendean without continuing to hold the same and accumulate the revenue until the accumulations should enable them to pay the debts on the estate. It is a condition of this offer that the trustees should convey the estate to Mrs Mary Fergusson or Home as heir of the eldest son of the testator's brother James Fergusson. It clearly appears from the present condition of the revenues of the estate that, unless circumstances were greatly to alter, the period at which it could be hoped that the lands would be disencumbered by accumulating the estate revenues is far distant. But acceptance of the offer which is now before the trustees would (if such acceptance is consistent with and permitted by the will) result in bringing about the occasion on which the lands and estates themselves would fall to be made over, and in the ascertainment of Mrs Mary Fergusson or Home as the person favoured under the designation “of the eldest son of my brother James Fergusson and his heirs.” There is no doubt that if the terms of a will like this are such as to show that the testator intended the selection of the favoured heir to be postponed until the time when by means of accumulation of revenue—and by that means alone—the debts are paid off, it would be wrong by acceptance of such an offer as has been made to interfere with the testamentary scheme, for the effect of such interference would be to put one person in the place of another as the heir favoured in the will. The case of Scarlett v. Lord Abinger's Trustees ( 1907 S.C. 811) was a case which presented that feature. The settlement made it clear that what the testator had in view was the payment of the debts by means of accumulation and disposal of the revenue and by no other means; that the trust administration was to continue until the purpose of disencumbering the estates was thus fulfilled, and that it was the person who bore the title as at the date when the trust administration so devised and continued came to an end who was to be the first heir of entail of the estates. But the features which led to that result in Scarlett are absent from the will in this case. There is, it is true, no indication that the testator foresaw precisely the position which the present offer creates. On the other hand there is nothing to indicate that he intended the disponee of the estates to be selected when the debts were paid off by accumulation of revenue only. The disencumberment of the estates was what was uppermost in his mind. I think there is no reason for following here the same line of reasoning as was adopted in Scarlett, and my opinion is that it is the duty of the trustees to accept the offer made to them so as to free and disencumber the estate, and (when that is done) to make over to Mrs Mary Fergusson or Home the estate of Bassendean. It is unnecessary to answer any of the questions with the exception of No. 3—the first branch of which I propose that we should answer in the negative and the second in the affirmative; and No. 4—whereof I propose that we should answer the first alternative branch in the affirmative.
It is evident from the figures which have been given in the case that at the rate of progress made it will take hundreds of years before the debt can be paid off out of the sources indicated in the third clause of the fourth purpose of the settlement.
The case as it appears to me is a clear one. I do not think that the testator intended that the trustadministration should continue in order that the debt might be paid off. I think that if the debt is paid off—and by that I mean that the existing encumbrances are discharged, not merely assigned to a new creditor—then I think that the period will have arrived contemplated by the testator for the execution of the conveyance.
I think that on a proper construction of the present settlement the case is in marked contrast to the case of Scarlett ( 1907 S. C. 811). The ground of judgment in that case appears quite clearly from the opinion of Lord M'Laren at the top of page 822 of the report. It was held that the payment of debt there referred to was payment under a course of administration which the testator had himself prescribed. There was also the additional element that there were other purposes which rendered it necessary for the trust-administration to be maintained. Here we have nothing of the kind. Accordingly I agree that the questions should be answered as your Lordship proposed.
Page: 371↓
The Court answered question 3 ( a) in the negative, 3 ( b) in the affirmative, and the first alternative of question 4 in the affirmative.
Counsel for First and Fourth Parties— Brown, K.C.— Leadbetter, K.C.— J. Stevenson. Agents— Blair & Cadell, W.S.
Counsel for Second and Third Parties— Macphail, K.C.— Henderson. Agents— Tods, Murray & Jamieson, W.S.
