Scottish Court of Session Decisions

The late William Pagan of Spittaltown executed a trust-disposition, in 1820, conveying his whole property to trustees, and, by a relative deed of instructions, in 1828, he declared the purposes of the trust. Among these purposes, the following was stated:—“Fourth, The sum of £1000 lent on bond to R. D. Horne Elphinstone and Patrick Irvine, is hereby specially vested in the trustees, in trust, to indemnify me, and bear me harmless from loss or damage, on account, or by reason of a guarantee granted by me to Peter Hart; and, in the second place, in trust for the children and grandchildren of my brother, Thomas Pagan, to be paid to them, or either of them, in such proportion or proportions, and at such time or times, as he, by any writing under his hand, duly attested, may direct; mean-while, and until such payment or payments is, or are made, the annual interest of the said sum is hereby directed to be paid to my brother, for the use of the children aforesaid.” By a relative codicil in 1832, William Pagan declared as follows:—“Whereas I have executed a bond, dated the 30th day of April last, to the London Assurance Company, in the penalty of £500, conditioned that Josiah Lowe, if appointed agent of said company in Dublin and places adjacent, shall faithfully discharge the duties of the said office, &c.; and whereas, by the fourth clause of my said subsidiary deed of settlement, I have specially vested in my trustees the sum of £1000 lent upon bond to R. D. Horne Elphinstone and P. Irvine, for the purpose, in the first place, to indemnify and bear me harmless from loss or damage, on account of my bond to P. Hart, and, in the second place, in trust for my brother's children, &c. Now it is my desire, and the trustees are hereby directed to hold the same; that is, the principal sum of £1000, subject to this farther trust, viz. to indemnify me from all loss or damage that may arise, or that I may become subject or liable to, for or on account of the bond before mentioned, granted by me to the London Assurance Company aforesaid.”

In 1834, the bond for £1000 was paid up to William Pagan by the spontaneous act of the debtors. He died in 1836, leaving one child, Mrs Catharine Pagan or Plomer, who had a family. William Pagan was predeceased by his brother, Thomas Pagan, who had two daughters, one of whom afterwards died, leaving a family of children. After the death of William Pagan, his trustees were called on to pay several sums, amounting in all to £113, on account of the above mentioned guarantee, granted by him for Josiah Lowe. The trustees, being uncertain whether the remainder of the sum of £1000 had become to all intents merged in the general estate of William Pagan, so as to pass to his daughter and her family, the residuary legatees, or still stood bequeathed to the children and grandchildren of his brother, Thomas Pagan, notwithstanding the payment of the bond in the lifetime of William Pagan, brought a multiplepoinding, calling the residuary legatees, and the descendants of Thomas Pagan, who appeared and competed.

Pleaded by Mrs Catharine Pagan or Plomer and others, the residuary legatees—

The legacy left to the children and grandchildren of Thomas Plomer was a special legacy. Though there had been a shortcoming of funds to pay the general legacies, still, if the bond of £1000 had been extant, the descendants of Thomas Plomer could have claimed the whole of it (after satisfying the guarantees specified), without suffering any proportional defalcation. On the other hand, though the debtors in the bond had become insolvent, the descendants of Thomas Plomer could not have claimed against the general estate for the deficiency thus arising. These tests proved that it was a special legacy, and as the bond was no longer extant, at the death of William Pagan, the subject of the special legacy was at an end, and the legacy was necessarily evacuated. Both in England and Scotland it was fixed that where a bond was bequeathed, and was afterwards paid up during the testator's lifetime, whether this was done spontaneously by the debtor, or at the demand of the testator, the legacy was adeemed. ¹ And as the bond was paid up for two years before the testator's death, and no new bequest made by him as to its contents, they must be held to have merged in his general estate, for behoof of his residuary legatees.

Pleaded by Mrs Amelia Pagan or Lowell and Others, the descendants of Thomas Plomer—

It was not the mere debt or bond which was bequeathed to them, but the sum of £1000, as to which it was only mentioned descriptive that it was lent on bond to R. D. H. Elphinstone and Patrick Irvine. That the bequest was of this sum, and not of the mere bond, was the more apparent, because it was burdened with the payment of certain guarantees, the obligation for which did not come to an end, though the bond was paid up; and the testator had clearly contemplated the duration of the legacy as being equally permanent with the liability for these guarantees. Accordingly, the terms of the codicil of 1832, relative to the second of the guarantees, clearly showed that he contemplated the legacy as being of a sum of £1000, for he there, after mentioning it as amounting to that sum, and as lent on bond, afterwards directed his trustees “to hold the same, that is, the principal sum of £1000, subject to this farther trust, viz. to indemnify me” against the guarantee for Lowe. These words clearly indicated that the bond was not of the substance of the legacy; that the sum of £1000 was the substance of it; and that the fact of such sum being invested on loan at the time, was a mere accidental circumstance, and, therefore, that the extinction of the bond, especially by the debtor spontaneously paying up the money, as in this case, did not affect the subsistence of the legacy. Accordingly, it had been decided in parallel cases in England, ² that, where a sum was bequeathed, which was, at the time, invested in a particular manner, and was accordingly described or referred to as being so invested, the legacy was not adeemed, though the sum was afterwards called up, and otherwise invested; and this rule was held especially to apply where the investment was changed, not at the request of the testator, but owing to the spontaneous offer of payment by the debtor.

Another plea was discussed, whether the failure of Thomas Plomer to leave any deed regulating the division of the legacy among his children would, of itself, have vacated the legacy.

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¹ 1 Roper on Leg. 286, 292; Jack, July 27, 1742 (11,356); Paip, Dec. 19, 1694 (4 Brown's Suppt. 228); Blair (5 Brown's Suppt. 718); Barker (5 Madd. Rep. 208).

² Le Grice, Meriv. Rep. 350; Mann, 2 Madd. Rep. 223.

The Lord Ordinary “preferred the claimants, Mrs Amelia Pagan or Lowell and others, to the fund in medio, being £1000 sterling, with interest from 8th October, 1836, the date of the death of the testator, deducting therefrom the payments made on account of Josiah Lowe, being £100, 10s. 5d. sterling, paid on the 28th July, 1834, and £12, 15s. 6d. paid on 23d December, 1836, with interest thereon from the said dates respectively, and decerned; and found that the expenses hitherto incurred must be paid out of the trust-funds.” ^*

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¹ “ Note.—Two objections are stated by Mrs Plomer, the residuary legatee to the claim of the other parties.

“The first is, that the trustees were ordered to hold the money ‘in trust for the children and grandchildren of my brother, Thomas Pagan, to be paid to them or either of them, in such proportion or proportions, &c., as he, by any writing under his hand, may direct; that Thomas died without giving any directions, and that this voids or defeats the bequest. The Lord Ordinary does not think it does. The money is to be held in trust for the children and grandchildren, and though their father is allowed to prescribe the proportions, his doing so is not made a condition of the gift. He may direct, but he is not bound to do so, and his failure is supplied by the legal distribution, whatever it may be. The opposite principle would destroy one half of our family settlements. The difficulty stated in argument by the residuary legatee, that it is uncertain how many shares the money is to be divided into, is no difficulty in this case. That question, if ever it shall arise, will be a question between the legatees of this particular sum, who, united at least, exclude the residuary legatee.

“The second objection is, that this was a legacy of a special subject, a bond, and that having ceased to exist by the bond being discharged during the life of the testator, the bequest falls.

“There can be no doubt that the legacy of a specific subject falls by the nonexistence, in the testator's life, of that subject. And this is all the length that the applicable cases relied on by the residuary legatees go. The case of Paip, 19th December, 1694 (Brown's Supplement, vol. iv. p. 228), was decided on the principle of intention; and all that was held was, that the uplifting (that is, the testator voluntarily uplifting) a sum legated is inter modes adimendi legatum. The case of Blair (Supplement, 5718) went on the same ground. So did that of Back v. Lauder, 27th July, 1742 (Dict. p. 11,356). Evidence was taken and held sufficient to show that a testator intended to revoke, and did revoke a legacy, not merely by uplifting the money, but by making a new application of it. In the English case of Barker (in the year 1820, Maddock's Reports, vol. v. p. 208), the import of the bequest was, that the testator gave whatever interest he at his death might have in two policies of insurance on his wife's life. The wife died before him, and he got the insured sum. So that when he died, the policies which formed the subject of the bequest did not exist; and all that was determined was, that a sum equal to what had been insured could not be claimed, because ‘there is an end of a specific gift, if the specific thing do not exist at the testator's death.’

“But did the deceased William Pagan make a gift of a specific thing? The Lord Ordinary thinks not. He expresses his bequest by saying, ‘that the sum of £1000, lent on bond by R. D. Horne Elphinstone, &c., is hereby specially vested in the trustees, in trust for the children and grandchildren of my brother,’ &c., and he was afterwards obliged to discharge this bond. But the author of a settlement, by mentioning a fund out of which, in the circumstances which exist at the date of his deed, he may wish a provision to be paid, does not necessarily make the existence of that precise fund a condition of his gift. In the English case of Le Grice (Merivale's Reports, 350), it was not held to amount to an ademption of a legacy that the circumstance of its being at that time out on mortgage was merely accidental. It is descriptive of the present situation of the money, but the legacy was not at all dependent on the particular security on which the money might be placed.’ In another English case (Mann v. Copland, Maddock's Reports, 2223), the fund, out of which a legacy was directed to be paid, failed, but the Vice-Chancellor (Sir Thomas Plumer) did not hold this to defeat the legacy, because ‘the legacy was not so specific and bo connected with the fund as to fail if there was no such fund.’ The particular property out of which it was to be paid was a secondary thought.

“Now, the Lord Ordinary thinks that this was exactly the case here. He considers the bequest as absolute, the description of the state of the property as accidental. Accordingly, when the testator refers to this matter in his second codicil, he does not say or assume that his trustees are to hold the bond in trust for the legatees, but ‘it is my desire, and the trustees are hereby directed to hold the same, that is, the principal sum of £1000, subject to this further trust,’ &c. But though this be viewed as a general bequest of £1000, and not as a legacy of a specific thing, it was still competent to the residuary legatee to show that the testator meant the discharge of the bond as a revocation of the gift. But there is no averment of this kind on the record. On the contrary, it is admitted, that he did not call the money up, but only discharged the bond from necessity, the debtor having insisted on paying it. And then, there is one particular in which it is certain that he could not believe that this change in the position of the sum could operate a change in the directions of his codicil, viz., the payment of one of his debts. He lays the payment of his debt to an Insurance Company on this fund. Could he think that the directions to his trustees to pay this out of this fund, and to the effect of lessening the legacy ceased merely by the money merging in his general estate?

“The Lord Ordinary directs the costs to be paid by the trustees, because the funds of a testator ought to be at the expense of clearing his will of reasonable doubts.”

Mrs Catharine Pagan or Plomer and Others reclaimed.