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Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Gray v Gray [1835] CA 13_866 (4 June 1835)
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Cite as: [1835] CA 13_866
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SCOTTISH_Shaw_Court_of_Session
Page: 866↓
v.
Subject_Trust—Testament—Legacy.—
A trust-deed having provided that certain special legacies should be “set apart,” after which the residue of the estate was to be divided into four portions, to be also “set apart” for particular legatees; held, that any loss which might arise upon the trust-estate, by the mode of investment adopted by the trustees prior to all the shares being separately invested, must be charged upon the portions of the residuary legatees.
The late Alexander Gray, tacksman of Lyne, executed, in 1813, a trust-deed of settlement, under which the Reverend Charles Findlater, and Mr Thomas Cranstoun, W.S., were named trustees. The deed, after directing the trustees to make payment of the testator's debts, and to convey certain special portions of the trust-subjects to his eldest son, Alexander Gray, and to his second son, William Gray, proceeded as follows:— “4 to, The whole residue of my means and estate, I direct my trustees, as soon as may be convenient after my decease, to convert into money; and, over and above the above provisions, they are to set apart for Alexander Gray, my eldest son, the sum of £1000 sterling, and that independently of any debts that he may be owing to me at my death, which are hereby discharged; to William Gray, my second son, the sum of £2000 sterling, and that also independently of any debts that he may be owing to me at my death, which are also hereby discharged; to Jane Gray, my youngest, and only unmarried daughter, the sum of £400 sterling, and that over and above her share of the residue after-mentioned; to Margaret Paterson, daughter of James Paterson, tenant in Eddlestone Mill, the sura of £50 sterling, payable at the first term after her attaining majority, but bearing interest from the first term after my death; and the whole residue of my estate, after setting apart the above sums, I direct my said trustees to divide into four equal portions, and to set apart one equal portion thereof to each of my daughters, Janet, Grizel, Margaret, and Jane Grays. But it is hereby specially declared, that the interest only (commencing at the first term after my death) of all the above provisions, both to my sons and daughters, shall be paid to them during their own lifetimes, and even the interest of the sums belonging to my said daughters shall be exclusive and independent of the jus mariti, or the debts of their husbands, and the fee or capital of all these moneys shall remain in the hands of my trustees for behoof of the children of my said sons and daughters, share and share alike, to
After the death of Alexander Gray, in 1813, the trustees entered upon the administration of the trust-estate, and made annual payments of the interest due on the special legacies, and also payments to account of the daughter's shares of the yearly proceeds of the residue of the trust-funds. According to their state of accounts, in 1832, the residue divisible among the testator's four daughters in liferent, and their children in fee, amounted to £2600. But, in the course of their management of the funds, for the general behoof, the trustees had invested £2200 in loan to the city of Edinburgh, which sum, from the state of the city's affairs, is not at present tangible.
In 1833, certain of the children of the testator's daughters having attained majority, and their shares of the capital of the residue of the trust-funds becoming, in consequence, payable, the trustees, with the view of bringing the trust to a close, and clearing up the rights and interests of all concerned, raised an action of multiplepoinding and exoneration. In this action the different parties interested in the above provision of the trust-deed, put in their respective claims; and Mr John Brown, S.S.C., produced a claim, as a riding interest, on the sum which might be found due to John Tweedie, son of Mrs Grace Gray, one of the defenders.
With reference to the probability of the loan to the city of Edinburgh turning out a bad investment, it was pleaded for the testator's daughters, and particularly for Mrs Janet Gray, that the claims of the special legatees, as well as those of the residuary legatees, ought to be subject to a proportional deduction for whatever loss may be suffered in consequence of the manner in which the trust-funds have been, and are now, invested, for the general behoof.
On the part of the special legatees, it was maintained, that, by the conception of the deed, the sums specially provided to them must, ante omnia, be “set apart,” and that any diminution of the capital of the trust-estate must be charged upon the shares of those to whom the residue of the estate was provided.
The Lord Ordinary (24th February, 1835) sustained the claim of Mr Brown, and decerned against the raisers, ad interim, for payment of the sum of £70, due to him by John Tweedie; and (11th March, 1835) pronounced upon the principal cause the following interlocutor, adding the note subjoined. *
_________________ Footnote _________________
* “The point chiefly contested at the last debate, was that embraced in the third finding, the daughters contending that, after their shares were defined by being ‘set apart’ in terms of the trust-deed, they should be, in all respects, in parl casu with those of the sons, which were liquidated and defined from the beginning, and insisted on the hardship of throwing hazards on them exclusively, by which they might lose all, while their brothers lost nothing.
“The Lord Ordinary thinks the point not without difficulty, the case contemplated (and not yet actually occurring) being most probably casus incogitatus, and therefore not easily to be settled as a questio voluntatis. One thing, however, is plain, that there was no purpose of equality between the sons and daughters in this family settlement, and that the former were clearly the personæ predilectæ. If the funds of the truster had fallen short of his estimation, the daughters might have got nothing, while the provisions to the sons suffered no abatement whatever. Nay, if losses had occurred in realizing the funds subsequent to the death of the truster, and prior to the ‘sotting apart,' which is only directed after all is realized, the same consequence might have followed; and if it be therefore plain, that the father did deliberately expose his daughters exclusively to those risks for the sake of His sons, is it not reasonable, in a questio voluntatis, to suppose that he meant also to lay on them any similar risks which might arise (though after the setting apart), previous to the final distribution of the residue among their children? in short, that he meant, that the residuary character which he had imposed on their share of the succession, with all its hazards, should continue to belong to those provisions, till they were finally paid over to the grandchildren. It is plain that, along with the hazards, all the benefits of such residuary character would so continue. If, after the sotting apart, debts due to the trust-estate, and then thought desperate, are recovered—or if, on the funds lodged in certain banks, a largo bonus is paid—there can be little doubt that the benefit would accrue to the daughters exclusively—the sons getting nothing but their special provisions. Why then should they not suffer, if, by opposite casualties, the amount of the trust estate, and, consequently, of their residue, is diminished?
“ Much, certainly, will depend, in deciding this question, on the object which the truster is held to have had in view in directing the shares of the daughters to be ‘set apart,' when the funds are realized. They maintain that the object was to put them for the future on the footing of special legatees, as the sons were from the beginning. But, to the Lord Ordinary, it rather appears that the only object was to ascertain the capital sums, upon which interest was to be paid to them, from that time forward, and that there is no idea of seeming them, or their children, agaiust any defalcation that might afterwards occur in the residue to which alone they were entitled; and setting apart to this effect, ho thinks might even have taken place, before the funds were finally realized, and when any ultimate loss in realizing them must confessedly have fallen on them exclusively. Suppose the lands had been sold at a fixed price, but the purchaser indulged with two years’ delay in the payment—in such a case, the shares of the daughters would probably have been ‘set apart,' and their interests actually paid, ad interim, on the supposition that the price would be forthcoming. And yet if, by the unexpected bankruptcy of the purchaser, a great loss had arisen, the setting apart must have been rectified while the son's portions would have been unvaried. None of the parties seemed to object to the fifth finding, which the Lord Ordinary is sensible rests chiefly on its plain equity.”
“Finds, lmo, That the general expenses of management are to be charged against the gross annual proceeds of the whole trust-funds, and a corresponding deduction made from the share of such proceeds payable to each and every of the parties beneficially interested therein, until such time as, by mutual agreement, the share of each such person shall be separately lent out or invested, but that any special expenses, arising from the discussion or adjustment of the rights of any particular persons, or classes of persons, are to be charged against the shares of such persons exclusively: Finds, 2do, That any loss or deficiency in the annual proceeds of the trust-funds, arising from the necessary lowering of interest on any part of the said fund, or the difficulty of recovering arrears, or any such cause, shall, until the shares of each person shall be separately invested, be charged against the whole persons entitled to receive such proceeds, rateably and proportionally to their respective interests in the same: Finds, 3tio, That prior to such separate and conventional investment, any loss which may arise beyond the amount of the annual proceeds, and occasioning a diminution of the capital of the trust-estate itself, must fall and be charged upon the residuary shares or interests of the daughters of the truster and their children exclusively, and not upon the special provisions of the sons, so long as funds arc left sufficient to answer those provisions: Finds, 4to, That the children of Mrs Tweedie, (one of the daughters of the truster,) being now all of full age, are entitled to receive present payment of the share provided for them and their mother, in respect that she has arranged with them for her liferent interest, and as a concurring party in their application for such payment: Finds, 5to, That the only surviving child of the truster's eldest son (now deceased) is entitled, though still in minority, to receive the interests or annual proceeds of the fund provided, and formerly payable to his father, upon his finding security, to the satisfaction of the trustees, that any sums which may be so advanced, shall, if required by the other parties interested, be paid back to the trust-estate, in the event of the said child dying before the right to the principal shall open to him, by his attaining the age of majority, or being married; and, before farther answer, appoints the cause to be enrolled, that parties may be prepared to state what decree of ranking and preference will be required to give effect to those findings, with reference to the present state of the fund in medio.”
The residuary legatees reclaimed against the Lord Ordinary's first interlocutor, in so far as it related to Mr Brown, and against the third finding of the second interlocutor.
The Court adhered to the above interlocutor of the 11th March; but remitted to the Lord Ordinary to hear parties farther as to Brown's interest.
Solicitors: David Brown, Jun., W.S,— G. Turnsull, W.S.— W. Horseurgh, W.S.— Graham and Anderson W.S.— John Brown, S.S.C.—Agents.