Scottish Court of Session Decisions

In 1863 an information was lodged by the Crown against Lord Fife, in consequence of which the following special case was prepared to obtain the opinion of the Court on the question with which it concluded:—

The Lord Advocate claims succession-duty on the Innes estates, on the ground that there was a succession to these estates on the death of James Duff, Earl of Fife, on 9th of March 1857.

Predecessor, James Duff, Earl of Fife, who died 24th January. 1809.

Successor, James Duff, present Earl of Fife (fifth Earl).

Annual value, after allowance for all necessary outgoings, £9403, 17s. 7d.

Age of the successor when he succeeded, forty-two.

Value of his succession, £136,128, 5s.

Rate of duty, 3 per cent.

Amount of duty, £4083, 17s

Penalty, £136, 2s. 6d., for having wilfully nelected to deliver, on the 9th March 1858, an account of the succession, and a like penalty for every month after the first month, during which such neglect has continued and shall continue.

(The value of the succession above inserted is not to be held conclusive, but subject to after-adjustment between the Crown and Lord Fife, who reserves right to object to the statement of the mid annual value accordingly.)

The following are the facts as to which the parties are agreed, upon which the question arises for the decision of the Court:—

1. James Duff, second Earl of Fife, was proprietor in fee simple of the estates hereinafter called the Innes estates. He died on 24th January 1809, leaving the testamentary deeds and writings mentioned in the next article, by which the Innes estates were settled on the heris, and in the terms therein mentioned.

2. The said deeds and writings consisted of—(1.) Three deeds of entail, the first dated 7th December 1789, and recorded in the register of tailzies, 18th November 1791; the second dated 29th January 1800, and recorded 30th June 1831; and the third dated 18th November 1801, and recorded 30th June 1831; (2.) Trust-disposition, which comprehended the Innes estates, and all his other heritable and moveable property, dated 28th November 1801, and recorded in the books of Council and Session 9th August 1814; (3.) Deed of declaration and obligation, dated 7th August 1802, and recorded in the books of Council and Session 9th August 1814; (4.) Holograph letter and directions, 23d November 1805, recorded in the books of Council and Session 9th August 1814.

3. These deeds and writings (along with two other writings, the first dated 17th April 1805, and second dated 20th January 1806, which related merely to the nomination of trustees, and which accordingly need not be referred to) formed the will of the mid James Duff, second Earl of Fife.

4. The destinations, in the said deeds of entail, are to be taken for the purposes of this case as identical—viz., “to myself and the heirs-male of my body; whom failing, to Alexander Duff of Echt, my eldest brother-german, and the heirs-male of his body; whom failing, to George Duff of Milton, my second brother-german, and the heirs-male of his body,” &c.

5. One of the said deeds of entail, and the other deeds and writings, are printed in the appendix to this case, and are here referred to, and held as repeated brevitatis causa.

6. Upon the death, without issue, of the said James, second Earl of Fife, on 24th January 1809, the said Alexander Duff of Echt became the third Earl of Fife. He died in 1811, survived by two sons—viz., James Duff, afterwards fourth Earl of Fife, his eldest son, and Alexander, afterwards General the Honourable Sir Alexander Duff. James Duff, fourth Earl of Fife, died on 9th March 1857, without issue. His brother, Sir Alexander Duff, predeceased him, and his nephew, the defender, succeeded him as fifth Earl.

7. Sir James Duff of Kinstair, one of the trustees under the said trust-disposition, and described in the said deed as Lieutenant-General Sir James Duff, Colonel of the 50th Regiment of Foot, died on 6th December 1839.

8. Before the death of James, fourth Earl of Fife, the debts due by the second Earl, his obligations and funeral charges, and all the legacies, donations, and provisions left by him under the

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said writings, were paid as set forth in the denuding deed of entail after-mentioned.

9. The trustees of the second Earl of Fife, who held the Innes estates under the testamentary trust-deed and other instruments before mentioned, denuded of the estates by deed of entail, dated 17th, 18th, 19th, 21st, and 22d December 1857, recorded in the record of tailzies 7th Jan. 1858, and in the books of Council Session 1st February 1858, in favour of the present Earl of Fife, and the heirs-male of his body; whom failing, the series of heirs UI the testamentary entail of 1801, which said denuding deed of entail is printed in the appendix to this case, and is here referred to and held as repeated. The present Earl of Fife (fifth earl) possesses the Innes estates under the said denuding deed of entail, and the said present Earl of Fife (fifth Earl) is a descendant of a brother of the said James Duff, second Earl of Fife, who died in 1809.

10. By the terms of the said testamentary deeds and writings, the trust was to subsist until the truster's debts, obligations, funeral charges, legacies and donations, provisions, and other purposes of the trust, were completely cleared, extinguished, and fulfilled, and, inter alia, during the lifetime of James Duff, last Earl of Fife, the truster's nephew, who was excluded from ever succeeding to the said estates. These estates were accordingly held by the said testamentary trustees until the death of the said James Duff, last Earl of Fife, on the 9th March 1857, and until they were conveyed to the resent Earl (fifth Earl) and the heirs male of his body; whom failing, as above, by the denuding deed of entail above mentioned.

The question for the decision of the Court is, whether the present Earl of Fife became beneficially entitled to the Innes estates, in the sense of the Succession Duty Act, upon the death of James Duff, Earl of Fife, who died on 9th March 1857.

On 6th February 1864, the Lord Ordinary (Ormidale) pronounced an interlocutor affirming this question in the following terms:—“The Lord Ordinary in Exchequer Causes having heard counsel for the parties, and considered the argument and proceedings—Finds that, in the circumstances of this case, the defender, the Earl of Fife, became beneficially entitled to the Innes estates in the sense of the Succession Duty Act, upon the death of James Duff, the late Earl of Fife, who (lied on 9th March 1857; and appoints the case to be enrolled, that parties may be heard in regard to the amount of duty interest, and penalties, for which decree is to be pronounced, as also on the question of expenses.”

Lord Fife acquiesced in this judgment. Another information was then brought by the Lord Advocate to have it ascertained upon what sum Lord Fife should pay succession duty:—

The following is a general account of the estates referred to, and the rental of them on which succession duty is claimed:—

1. Rental of estates in Morayshire distict, crop 1857	£13,100	4	2
2. Do. Delgaty, Down, and Auchintool, crop 1857	14,082	8	7
3. Do. Balvenie, crop 1857	1,060	3	4 3 4
4. Do. Braemar, crop 1857	1,525	2	5 1 2
	£29,767	18	7 1 4

The following are the deductions—viz., ordinary outgoings, and the yearly sums payable by way of interest or otherwise on the prior principal charge on the succession, which are admitted and allowed on behalf of the revence:—

Public burdens, per schedule	£3,317	3	5
Debt of Lord Fife's trustees at the close of the trust, and paid or undertaken by the present Earl, £139, 674, 0s. 2d.
Annual cost, being 5 per cent. on the principal	6,983	14	0
Allowance for maintenance of farm house. and buildings, &c., 6% on rental	1,786	1	5
Allowance for fire insurance	200	0	0
	£12,286	18	10

Also interest at 4 per cent. on the sums for meliorations to tenants which have actually been paid, previous to the date when the first instalment of but became payable. Interest on the payments made afterwards would also be allowed by the Crown by way of repayment or abatement. But Lord Fife maintained that he was entitled to the following additional deductions:—

Annual cost to the defender of the above debt of £139,674, 0s. 2d., consisting of—

(1) Interest thereon at 5 per cent. (6983, 14s., as above admitted).
(2) Premiums on the policies insurance on the life of Lord Fife, as if such policies had been taken out at the time, on the non-participating or non-bonus scale for sums amounting to. $139,674, 0s. 2d	£4441	1	5
Some of the policies assigned in security of the debt were old policies and some were bonus policies; but deduction is only claimed of sums for premiums, as if the policies were all non-bonus, and all effected at the time.
Meliorations payable to tenants at expiry of their leases, granted by trustees before they denuded of the estates, conform to schedule thereof herewith lodged at £18,256 3 1
Value thereof at 22d December 1857 12,772 13 7
Interest on above at 4 per cent	510	17	10
	£4951	19	3

The predecessor, James Duff, Earl of Fife, who died 24th January 1809.

The successor, James Duff, present Earl of Fife (fifth Earl), born 6th July 1814.

Age of successor when he succeeded, which according to the views of the Crown, was on the death of the fourth Earl, on 9th March 186. 42. According to the views of the defender, the succession opened to him on the 22d December 1857, as stated in article VII., and his age was then 43.

Rate of duty, 3 per cent.

The questions for the decision of the Court are:—

1. Whether, in ascertaining the annual value of the succession in question, the defender is entitled to have allowed and admitted the deductions specified in article XIV., or any of the said deductions; and if any, what part thereof, over and above the interest on the meliorations which are referred to in article XIII.

2. Whether the defender's age, when he succeeded, is to be taken at 42 or 43

Rutherfurd (with him Lord Advocated interest or otherwise on the prior principal charge Solicitor-General), for the Crown argued—

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The age of the defender must be taken at forty-two and not forty-three, because on the latter supposition the beneficium of the estate would not be vested in any one for the period between the death of the defender's predecessor and the time when the trustees denuded in his favour. The succession to the defender in March 1857; other-trustees who did not denude till December of that year were holding for the defender. The deductions claimed by the defender cannot be allowed because they form a charge on the capital of the estate which was voluntarily taken upon himself not transmitted by his predecessor.

Young and A. R. Clark, for the defender, relied mainly on the application of the 34th, 35th and 38th sections of the Succession Duty Act.

At advising,