Scottish Court of Session Decisions

This was a Special Case, in which Sir James Lumsden and others, trustees of Hugh Wilson, engraver in Glasgow, were the parties of the first part; Margaret Kay Wilson and Mrs Janet Wilson or Haig, two of his daughters, parties of the second part; and the said trustees as tutors and curators of the children of Mrs Eliza Wilson or M'Leod, his third and remaining daughter, parties of the third part.

Mr Wilson, the truster, died on 27th June 1869. His trust-disposition and settlement, dated 2d March 1858, contained the following provision for the disposal of the residue of his estate:—“In the third place, and with regard to the residue of my said means and estate, I direct and appoint my said trustees to hold and apply, pay and convey the same to and for behoof of my three daughters, Margaret Kay Wilson, Mrs Janet Sarah Wilson or Haig, spouse of the Reverend Thomas Haig, presently of Beauharnois, Canada, and Mrs Eliza Wilson or M'Leod, spouse of Donald M'Leod, presently in Melbourne, equally among them, share and share alike, in liferent, for their respective liferent uses and enjoyment thereof allenarly, during all the days and years of their lives after my decease, and to and for behoof of their respective children in fee, the children of each daughter succeeding, equally among thorn, share and share alike, to the share of the said residue liferented by their respective parent, payable and divisible, the said residue, to and among the said children upon their respectively attaining the age of twenty- one after the decease of their respective mothers.”

Mr Wilson had long been, and was up to the time of his death, in business as an engraver in Glasgow. At the time he executed this trust-disposition he was carrying on his business alone. On 2d April 1867, while he was still alone in the business, he executed a codicil to the above mentioned trust-disposition, which contained the following clause:—“I empower my said trustees to carry on my business, or to dispose of or wind up the same, as to them may seem most advisable; and with the view of facilitating a sale of my business on the most advantageous terms for the estate, if my trustees should consider a sale thereof to be judicious, I empower my trustees to lend to the purchaser such sum out of the proceeds of my estate, for such period and on such terms as they may consider reasonable.”

Shortly after executing this codicil Mr Wilson took Mr Andrew Woodrow, his manager, into partnership. The deed of copartnery (which was to last for five years from 1st July 1867) contained the following clause:—“In the event of the death of the first party (Mr Wilson) during the currency of the partnership, the second party (Mr Woodrow) shall, if required by the trustees or representatives of the first party, continue to carry on the business, for behoof of himself and the representatives of the first party, till the termination of the financial year then current, upon the terms with respect to division of profit and loss before written, and thereafter till the termination of the said period of five years, during which latter period the trustees or

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representatives of the first party and the second party shall be interested in the business equally for profit and loss; but it shall be in the power of the representatives of the first party to withdraw at any time from all connection with the business on giving three months' prior notice in writing to the second party; and in the event of their so withdrawing, the whole property, business, stock- in-trade, and assets shall devolve upon and vest in the second party, who shall pay out the first party's interest therein, as the same shall have been ascertained by the immediately preceding balance, by equal instalments at twelve, eighteen, and twenty-four months from the date of such balance, with interest at 5 per cent per annum on each instalment, and for which instalments the second party shall grant bills.” The arrangement between the partners was that Mr Wilson was to contribute two-thirds, and Mr Woodrow one-third of the capital, and that they were to share the profit and loss in these proportions. Interest was first to be allowed at the rate of 7 per cent upon all sums standing at the credit of the partners before the balance of profit and loss was struck. A balance was to be struck every year on 80th June during the subsistence of the copartnery. The amount of Mr Wilson's capital in the business at the time of his death was £3333, 13s. 4d., on which interest was due by the copartnery at the rate of 7 per cent.

The business having hitherto been prosperous the trustees, believing that it was for the advantage of the beneficiaries under the settlement that they should remain connected with it, resolved to hold, for a time at least, an interest therein, under the ninth article of the contract of copartnership above quoted. The business, under the same firm of H. Wilson & Company, engravers, Glasgow, has accordingly, since the death of the said Hugh Wilson, been carried on by the said Alexander Woodrow, for behoof of himself and the representatives of the said Hugh Wilson. The profits accrued for the year ended 30th June 1870, being the only financial year completed since Mr Wilson's death, amount to the sum of £3071, 5s. 7d. (exclusive of the said 7 per cent interest), of which the sum of £1835, 12s. 9 1 2d. belongs to the estate and representatives of Mr Wilson. The share of profits falling to the estate is greatly in excess of any return which could be derived from the capital by investing it in any other way sanctioned by the settlement. The profits and 7 per cent, interest which accrued to the late Mr Wilson as at 30th June 1869, being the first balance after his death, have been treated as capital. With regard to the profits and 7 per cent, interest accruing to Mr Wilson's trust-estate subsequent to the said 30th June 1869, the liferentrices claim that the same shall be wholly dealt with and paid to them as income falling under their rights of liferent. On the other hand, it is contended, on behalf of the fiars, that the right of the liferentrices in the capital embarked in the business is limited to interest at the legal rate of 5 per cent thereon, or, at all events, to the said 7 per cent, interest, and that the profits should be dealt with as capital, only the interest thereof, upon investment in the usual securities, belonging to the liferentrices.

The questions on which the opinion of the Court was requested, were:—

“Do the business profits and 7 per cent, interest accruing since 30th June 1869 to Mr Wilson's trust-estate form part of the income or liferent of the said estate divisible amongst the liferentrices?

or,

Does any portion thereof—and if so, what portion—form part of the capital or fee of the estate, and fall to be treated as such?”

Solicitor-General and Innes for the trustees and liferentrices, the parties of the first and second part.

Watson and R. Y. Campbell for the fiars, the parties of the, third part.

Reference was made to Weddel, January 21, 1812, F. C.; Cochrane v. Black, February 1, 1855, 17 D. 322; and Laird v. Laird, June 26, 1855, 17 D. 984.

The Court held that the question was to be determined according to the testator's intention, as evidenced by the terms of the trust-deed and deed of copartnery, and that his meaning clearly was, that the profits and interest should fall to the liferentrices.