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Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Special Case - Andrew Heatlie's Trustee and Others [1871] ScotLR 8_344 (8 February 1871)
URL: http://www.bailii.org/scot/cases/ScotCS/1871/08SLR0344.html
Cite as: [1871] SLR 8_344, [1871] ScotLR 8_344
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SCOTTISH_SLR_Court_of_Session
Page: 344↓
Court of Session Inner House First Division.
Facts:
Circumstances in which it was held that the ordinary rule of law, viz., that where both heritage and moveables are left under a general trust-disposition and settlement the legacies are payable out of the moveable estate, should receive effect, as the truster had not clearly manifested his intention to invert that rule; but that, contrary to the general rule, the trustee had manifested his intention of making the heritage security for full payment of the legacies in case of the moveables proving insufficient.
Held, farther, that an annuity, being a recognised burden on heritage, and not inconsistent with its nature, the presumption of law was, that the truster intended to lay it upon the heritable estate, as in the former case, and lay the legacies on the moveable.
The parties to this Special Case were John Henderson, the only surviving and accepting trustee, and the beneficiaries under the trust-disposition and settlement of the late Andrew Heatlie, weaver in Selkirk. The questions submitted to the Court arose upon the construction of this trust-deed.
By it Heatlie disponed to his trustees (1) a small heritable subject in the Kirk Wynd of Selkirk, worth about £14, 10s. per annum gross rental; (2) another small heritable subject in the Town Head of Selkirk, worth about £18, 17s. per annum of gross rent; and (3) his moveable property, which was stated as amounting to about £135, after payment of debts, funeral expenses, and expenses of the trust. The main purposes of the trust were thus expressed:—“ Secondly, I appoint my said trustees, from the rents, profits, and interests of my said estate, to pay to Isabella
Page: 345↓
Fairgrieve or Heatlie, my wife, in case she shall survive me, an annuity of £20 sterling during all the days of her life or widowhood, and that at two terms in the year, Whitsunday and Martinmas, by equal portions, beginning the first payment thereof at the first of these terms which shall happen after my death, and so forth yearly and termly during the life or widowhood of the said Isabella Fairgrieve or Heatlie, with a fifth part more of each termly portion of liquidate penalty in case of failure in the punctual payment thereof, and the legal interest of the same from and after the respective terms of payment until payment thereof. Thirdly, I appoint my said trustees, after my decease, to dispone and convey to William Henderson, son of the foresaid John Henderson, the subjects in the Kirk Wynd of Selkirk first above disponed, and to dispone and convey the subjects in the Town Head of Selkirk, second above disponed, to James Heatlie or Thorburn, son of Jessie Thorburn, residing in Selkirk; declaring always that the houses, yards, and others above specified are hereby disponed under the express burden of the foresaid annuity in favour of my wife, and of the sum of £50 which I hereby bequeath, and which I appoint my said trustees to pay to Andrew Henderson, son of the said John Henderson, and of the sum of £60 which I hereby bequeath, and which I appoint my said trustees to pay to Jane Henderson, daughter of the said John Henderson, and which annuity of £20, and the foresaid sums of £50 and £60, are hereby declared real and preferable burdens affecting the said houses, yards, and others above disponed, and are appointed to be engrossed in the infeftments to follow hereupon, and in all the future transmissions and investitures of the said houses, yards, and others, aye and until complete payment be made thereof; Declaring always that my said trustees shall dispone and convey the said subjects to the said William Henderson and James Heatlie or Thorburn respectively, and pay the said sums to the said Andrew Henderson and Jane Henderson at such time after my decease as they may think proper and expedient, and the state of the trust funds will allow. Lastly, I appoint my said trustees to pay the residue of my means and estate to Basil Henderson, James Henderson, and Helen Henderson, children of the foresaid John Henderson, and the children of my brother, Robert Heatlie, equally amongst them, share and share alike.” Among the powers conferred upon the trustees there occurred the following clause:—“With power also to the said trustees to sue for, uplift, and receive the principal sums of the debts, heritable and moveable, hereby conveyed, to discharge and assign the same, and to renounce or dispone the securities held therefor; as also to sell and dispose of all or any part of the said trust-estate and effects, and that either by public roup or private bargain, upon such advertisements and after such prorogations and adjournments as to them shall seem proper; and for that purpose to enter into articles of roup or minutes of sale, to grant dispositions containing all usual and necessary clauses, and to execute all and whatever deeds may be necessary for rendering the said sale or sales effectual, in the same manner and as amply as I could have done myself.”
The questions which arose upon these clauses in carrying the trust purposes into execution were as follows:—“1. Is the annuity of £20 per annum directed to be paid to the said Mrs Isabella Fairgrieve or Heatlie, the testator's widow, payable (1) primarily out of the rents of the heritable property which belonged to the testator, or (2) primarily out of the income of the balance of his moveable estate pro tanto, and out of the rents of the heritable estate secundo loco, or (3) rateably out of the income of the whole estate, heritable and moveable? 2. Are the legacies of £50 to Andrew Henderson and of £60 to Jane Henderson payable out of (1) the heritable property of the testator, or (2) out of his personal estate, or (3) rateably out of his whole estate, heritable and moveable? 3. Are the said legacies of £50 and £60 payable immediately or only on the termination of the annuity to the testator's widow, and until payment are the legatees entitled to interest?”
The parties chiefly interested in the decisions of these questions were the two beneficiaries who were to receive the heritable property—viz., William Henderson and James Heatlie or Thorburn, on the one side, and the residuary legatees, Basil Henderson, &c., on the other. The truster's widow and the two special legatees had no particular interest to appear, as there was no allegation that the estate was insufficient to meet their claims, whatever view was taken of the questions in dispute.
Shand, for the trustee and the residuary legatees, referred to Carter v. Macarthur, 4th Feb. 1870; 7 Law Reporter, 282, and argued that the burden of the special legacies had been validly thrown by the truster upon the heritable estate by the terms of the clause above quoted.
J. M'Laren, for the heritable legatees, contended that the ordinary rule of law must be applied, and the legacies paid out of the moveable estate, primo loco, so far as it went, and that the effect of the above-mentioned clause was only to place the heritable legatees in the position of cautioners for the sufficiency of the moveable funds. From the fact that the legacies would almost exhaust the moveables, he had no interest to argue the question as to the annuity. He referred to Erskine, 3, 9, 48; Douglass' Trustees v. Douglas, Jan. 17, 1868; 5 Law Reporter, 154.
At advising“
Page: 346↓
Which, then, of these two things was meant here? With regard to the annuity left to his widow, I think there can be little doubt. When a man directs an annuity to be paid out of heritage, or secured on heritage, he is not doing anything which is unusual; he is not doing anything which is inconsistent with the nature of heritable property; he is only laying upon heritage one of its recognised legal burdens. Therefore, on this part of the question I do not feel any doubt. I think that it was the testator's intention to burden the heritage with this annuity, and to relieve the moveable estate, and that he has validly succeeded in doing so, because he was just following one of the ordinary rules or presumptions of our law. But when we come to deal with the two legacies, I think our conclusion with regard to them must be different. The laying of a legacy as a burden upon heritage would be the inversion of the ordinary rule, which, as I have stated, is, that legacies are paid out of moveable estate, and are burdens upon it only, notwithstanding any deficiency. Now, it seems to me that, when it is a testator's purpose to invert a recognised rule, it is his duty to express himself so clearly and decidedly as to satisfy the minds of all concerned. All I can say is that the testator in the present case has failed to do so. On the contrary, there are a number of circumstances indicative of a different purpose altogether, and there are several clauses in the deed which I find it very difficult to reconcile with the view that he intended to make these legacies simply burdens upon the heritage, if the burden of the legacies were to be laid upon the heritage in addition to that of the annuity, the result would be most calamitous to the beneficiaries who are to receive the heritable properties. Both of them are but of small value, and the free annual rental is almost swallowed up by the widow's annuity. Now, were the burden of the legacies thrown on them as well, the question would immediately arise, are the legacies intended to be paid at once, or at least is interest to run upon them from the truster's death? If so, there would in all probability be nothing left, even eventually, to the heirs in heritage. This, I think, would be quite inconsistent with the apparent intention of the testator. There is good evidence of the persons for whom it is designed having been personæ delictæ, and it is not to be supposed that he would so have dealt with them in favour of persons in whom his interest was not apparently so warm. Then, again, if we consider when the legacies are to be payable, which indeed is one of the questions put to us, I think we shall find nothing to contradict the view that they were intended to be paid at once, or at any rale that interest was to run on them from some date, say six months after the testator's death; and yet I do not see how this could be arranged without a sale of the properties, which would be practically to annul the security given to the annuitant. I cannot think that this was the intention of the truster. No doubt a power of sale is given, but I am clear it was not to be exercised in this way. In short, upon the consideration of all the clauses of the deed, I cannot come to the conclusion that the testator had any purpose of relieving the moveables at the expense of the heritage. On the contrary, I think he had another, and much more reasonable purpose—namely, to provide for any insufficiency there might be in the moveables, by making the heritage, so to speak, caution or security for full payment.
I therefore answer the first question put to us by saying that the widow's annuity is to be paid out of the rents of the heritable property only; the second, by saying that the legacies are to be paid out of the moveables so far as they go, and that the balance, though there seems no likelihood of their being any, is to become a burden on the heritable estate; and the last question, by saying that the legatees are entitled to immediate payment.
The other Judges concurred.
Solicitors: Agent for the Trustee and the Residuary Legatees— James Milne, W.S.
Agent for James Heatlie or Thorburn and William Henderson— D. Curror, S.S.C.