Scottish Court of Session Decisions

By antenuptial contract of marriage between Colonel, afterwards General Sir James, Simpson and Miss Elizabeth Dundas, second daughter of the late Sir Robert Dundas of Beechwood and Dunira, Bart., the former assigned £7500, and the latter £10,000, to trustees, directing them to pay the produce of the money to Colonel Simpson during the subsistence of the marriage. On its dissolution the trustees were directed to set apart certain provisions for the child or children of the marriage, and to pay the produce of these provisions and the balance of the trust funds to the survivor of the spouses.

In the event of there being no children of the marriage, nor their issue, alive at its dissolution, the £10,000 contributed by Miss Dundas were to go to her disponees, or if she left none, to her heirs, after the termination of Colonel Simpson's life-rent. Of this sum of £10,000, £6500 were heritably secured at the date of the marriage and at its dissolution. The trustees were empowered to convert the various securities into money, and were directed to pay the provisions to the children rate-ably out of the funds contributed by the spouses.

Mrs Simpson died on 27th November 1840, leaving no deed nor will; and no children were born of the marriage. On General Simpson's death, a competition arose between Mrs Simpson's heir-at-law and the next of kin for the possession of the £10,000.

The Lord Ordinary ( Barcaple) found that the £3500, as being moveable, went to the next of kin, but the £6500, as being heritably invested, went to the heir-at-law, and found no expenses due by either party. His Lordship added the following note:—“The Lord Ordinary could have had no hesitation in repelling the claim of Sir David Dundas, as heir-at-law, to the sum of £3500, which was invested on moveable bonds at the constitution of the trust. The subsequent investment of that portion of the trust-funds on heritable security was mere matter of trust management, for the better preservation of the funds, and was not done either in obedience to a direction of the truster or from any necessity arising in the execution of the trust. This part of the claim was not insisted in at the debate.

“The question which remains for decision is, whether Mrs Simpson's heir in heritage or her next of kin have right to the sum of £6500, which was invested on an heritable security at and prior to the constitution of the trust, and was conveyed in that form to the marriage trustees. If this question had arisen upon the construction of a mere testamentary trust-deed by Mrs Simpson, containing trust directions as to the disposal of the fund identical with those which occur in the marriage-contract, the Lord Ordinary would have had no doubt that it was not intended to make the sum of £6500 moveable by destination, as regarded her heirs, who were to take on the failure of children, and that, there being no direction to convert that sum into moveable estate, and no necessity for its conversion having arisen, it must have been held to be heritable, and to go to the heir in heritage. He thinks that the authorities against conversion in such circumstances would have been entirely applicable and conclusive, and he sees no ground for holding that a mere testamentary destination to the heirs of the truster on the failure of the children for whose benefit the trust was created, is to be read as excluding the heir-at-law in regard to any portion of the trust-funds which are heritable.

The question in the present case, however, relates to a trust executed in implement of an obligation in a marriage-contract, the trust purposes, including the destination to the truster's heirs, being contained in the contract. In the case of Meiklam's Trustees, 15 D., 159, where an heritable bond was conveyed by the husband to marriage-contract trustees in implement of an obligation in the marriage contract to content and pay £30,000 to them, it was held that a surplus of that sum beyond what was required for the purposes of the trust, which the trustees were directed to pay and make over to the husband and his heirs and successors, was not heritable, and did not go to the heir-at-law, in respect of the heritable form in which it was conveyed to the trustees. In that case the Court looked to the obligation out of which the trust originated, which was simply to pay a sum of money. It was held that the character of the trust-fund was not altered by the fact that the trustees accepted, in implement of that obligation, an heritable investment which the husband offered them, any more than it would have been by their procuring such an investment from any other quarter. It appears to the Lord Ordinary that, in this respect, the present case is different in principle. The obligation undertaken by Mrs Simpson was to convey to the marriage trustees the sum of £10,000 contained in three several bonds specially set forth, viz., an heritable bond for £6500, and two moveable bonds for £3500, being her whole fortune, which then stood on these investments. This being so, the Lord Ordinary thinks that the constitution of the trust, and the directions for disposal of the fund, must be held to have relation to the estate as it was actually invested. The ultimate destination of the fund, on the failure of children, is truly a testamentary provision, and no part of the contract between the spouses, and must be dealt with on the principles applicable to such provisions. If Mrs Simpson had survived her husband, there being no children of the marriage, the sum of £10,000 conveyed by her to the trustees would, by the express terms of the trust, have been ‘at her absolute disposal.’ There can be no room

Page: 13↓

for doubt that in that event she would have been entitled to insist upon the trustees denuding in her favour of the several investments conveyed to them if they were still extant. The Lord Ordinary thinks that the same right must be held to have passed to her heirs, who are called to take in place of her, in consequence of her having predeceased the termination of the trust; that is to say, if the original investments had been now in existence her heirs would have been entitled to require the trustees to make them over to them. The right of the heirs being of this nature, and not a mere jus crediti for a certain amount of money, and the destination being in general terms to heirs, the Lord Ordinary thinks that it must be interpreted by reference to the nature of the subject, so as to give what was heritage at the constitution of the trust to the heir-at-law, and what was moveable to the next of kin. It is of no consequence that in fact the investments have been changed in the course of ordinary trust management, and that the whole funds are now heritably invested. In making the destination to her heirs, the truster must be held to have had in view the condition of the fund as it existed at the constitution of the trust, and as it might have continued to exist to the present time. She took full powers to alter or modify that destination in any way she pleased. It is only on her failing specially to dispose of the fund that it is to go to her heirs. The Lord Ordinary thinks that such a destination must be read as importing that, failing a special disposal of the fund by the truster, the right of succession in regard to it is to take place according to law. He sees nothing from which it can be inferred that Mrs Simpson intended by the conception of the trust in the marriage contract to set aside the ordinary rules of succession to her property as it then existed, in the event of the failure of issue of the marriage.”

The next of kin reclaimed.