Scottish Court of Session Decisions

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Cite as: [1872] ScotLR 9_377, [1872] SLR 9_377

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SCOTTISH_SLR_Court_of_Session

Page: 377↓

Court of Session Inner House First Division.

Friday, March 15. 1872.

9 SLR 377

Special Case—Pringle's Trustees and Others.

Subject_1Succession
Subject_2Heritable and Moveable
Subject_3Trustee.
Facts:

A trust was constituted partly for administration of the truster's estate during his lifetime, and partly for its disposal after his death. Held that a sum which had been invested by the trustees on heritable security, with the truster's knowledge, and allowed to remain undisturbed till his death, did not form part of his moveable estate in estimating the fund for legitim.

Subject_Policy of Insurance.
Facts:

Held that two current policies of insurance, which had been effected for the benefit of a deceased on the life of his wife, who survived him, were to be included in his moveable estate in estimating the fund for legitim, and that for this purpose the policies were to be taken at their real actuarial value as at the date of his death, and not at their surrender value at that date.

Headnote:

Page: 378↓

The late Sir John Pringle of Newhall died on 16th June 1869, survived by his second wife, Lady Elizabeth Pringle, and by children of both his marriages. It is sufficient to state that, the children of the second marriage having claimed legitim, their right to the same not being excluded by antenuptial contract, certain questions arose with regard to what should be included in Sir John's moveable estate, in estimating the fund for legitim.

By various trust-deeds Sir John Pringle conveyed property, both heritable and moveable, to trustees, partly for administration of the same and payment of debts during his life, and partly for the disposal thereof after his death. The trust in operation at his death was constituted by a trust-disposition in 1850, and a supplementary trust-disposition in 1855. Various deeds of direction, and other deeds in connection with the trust, were executed from time to time by Sir John. By assignation dated December 1853, three policies of insurance, each for £5000, were conveyed to the trustees, two of them being on the life of Lady Elizabeth Pringle, dated 16th March 1841 and 8th January 1850, and the third on the life of James Pringle, the truster's eldest son, also effected 8th January 1850. The latter died in 1865, and the proceeds of the policy on his life, with bonuses, were paid to the trustees, who invested the whole in heritable securities on or before Martinmas 1866. These investments have remained undisturbed. They were expressly referred to in a deed of assumption of new trustees, executed in 1867, to which Sir John Pringle was a consenter.

The following questions were submitted to the Court:—

“(1) Whether the £5888, 16s., received under the policy on Captain Pringle's life, and invested on heritable security by Sir John Pringle's trustees, ought to be included as part of the moveable estate of Sir John Pringle in estimating the fund for legitim?

(2) Whether the two policies on the life of Lady Elizabeth Pringle with the North British Insurance Company and the Edinburgh Life Assurance Company respectively, ought to be included as part of the moveable estate of Sir John Pringle before estimating the amount of said estate forming the fund for legitim?—And if so

(3) Whether, in estimating the moveable estate of Sir John Pringle for legitim, the said policies should be taken (1) at the amount which would have been obtained for them if surrendered to the respective insurance companies as at the date of Sir John Pringle's death; or (2) at the amount which would have been obtained for them if publicly sold as at the date of Sir John Pringle's death; or (3) at their real actuarial value at said date, as the same may be ascertained by a remit to the respective offices, or otherwise?”

Adam, Paul, Watson, Millar, Q.C., and Marshall, for the various parties.

At advising—

Judgment:

Lord President—The first question is, Whether the sum received under the policy on Captain James Pringle's life, and invested on heritable security, ought to be included as part of the moveable estate of Sir John Pringle in estimating the fund for legitim? James Pringle died in 1865, and the proceeds of the policy of insurance which had been effected on his life, in favour of Sir John Pringle, were paid by the insurance company to Sir John Pringle's trustees. They proceeded to invest it in heritable security. The whole was invested on or before Martinmas 1866, and the investments have remained undisturbed. We are also informed that in a deed of assumption of new trustees in 1867, reference was made to the heritable securities, upon which large portions of the trust-funds were invested. Sir John Pringle was a consenter to this deed, and it must be inferred that he was acquainted with the state of the investments. The ground on which it is maintained that this sum is to be treated as moveable is that nothing which the trustees did in the administration of the estate can be held to have had the effect of altering the nature of the estate in a question of succession. The principle to which the parties appeal is well known, but I doubt whether it is applicable to the case before us. The position of Sir John Pringle's trustees was peculiar. They were in a much more proper sense than usual the mandatories of the truster. They were administering the estate, not as a trust for behoof of creditors, though one of the objects was the payment of debt, but in the best way for Sir John's interests, and also for the disposal of the estate after his death. This is not the case of trustees doing an act which should have the effect of altering the succession of an intestate. Sir John did not die intestate, and moreover, it was quite inconsistent with the object of the trust that he should die intestate to any extent, although, no doubt, the event which has happened of some of the children claiming legitim has, to a certain extent, disturbed the trust. The trustees draw a perfectly fair inference from the fact that Sir John was a party consenter to the deed of 1867, which distinctly brought under his notice the mode of investment. This mode of investing the money must be held just as much the doing of Sir John as it would have been had it been done under his superintendence and authority. I am therefore for answering this question in the negative.

The second question is in regard to two policies of insurance on Lady Elizabeth Pringle's life, the first dated 16th March 1841, and the other dated 8th January 1850. The peculiarity of the question raised here is that Sir John Pringle, for whose benefit the policies were effected, predeceased his wife, and in fact she is still alive. The question is, Whether these current policies are part of the moveable estate of Sir John Pringle? I am of opinion that they are, and on much the same grounds as those on which the decision in Muirhead v. Lindsay, 6th December 1867, 6 Macph. 95, was based, which I take leave to say was a very well considered judgment. In that case the policy was not a current policy; the event had occurred on which it became payable. Even there it was contended that the policy was not part of the moveable estate of the deceased at his death, inasmuch as the policy was not payable till three months after his death. The difference in the present case is that Lady Elizabeth Pringle is still alive, and was of course alive at the date of Sir John's death, when his moveable estate falls to be ascertained. Beyond question, a policy effected in 1841 and another in 1850 were, during Sir John's life, valuable portions of his estate. He survived the commencement of the policies for many years. At the time of his death these valuable policies belonged to him through his trustees. They were of marketable value, they could be sold or surrendered—in short, they were capable of being converted into money. I cannot say that a subject thus capable of present value is not an asset of the person to whom it belongs. Even if a man dies without any other property

Page: 379↓

than a policy of insurance, on which premiums have been paid for twenty or thirty years, and on which bonuses have accrued, it cannot be said that he dies without moveable estate, in a question either with creditors or with heirs and executors. These policies, as they stood at the date of his death, must be taken as part of his estate. Then occurs the question, How is their value to be estimated? Three ways are suggested. The first, the value which would be obtained for them if surrendered to the insurance companies, is not a fair mode. It is a matter of notoriety that the surrender value of a policy is always considerably under what it would fetch in the market. I doubt whether the second and third modes of valuation are really alternative or different at all. What the policies would have sold for at the time of Sir John's death can only be ascertained by taking their actuarial value at that date. The parties will adjust this for themselves.

Lord Kinloch—With regard to the questions put to us in the Amended Case, my opinion is as follows:—

1. With reference to the sums recovered under the policy on Captain Pringle's life, and invested on heritable security by Sir John Pringle's trustees, I think they formed heritable succession of Sir John Pringle, and cannot be included as part of his moveable estate. The trustees were acting as Sir John's mandatories; and I see nothing to induce me to think that they acted against their mandate when investing on heritable security, as they did, with his full assent, with regard to the larger part of the estate. Sir John lived for about three years after the investment, and may be fairly presumed to have been aware of it. No disapprobation being found expressed by him, but approbation rather given, I think that this investment must be taken just as if it was an investment made by Sir John Pringle himself, and so left at the date of his death, when there can be no doubt it would enter into his heritable succession.

2. With regard to the two policies on the life of Lady Elizabeth Pringle, I am of opinion that these formed part of Sir John Pringle's moveable estate at his death, on which the legitim is to be estimated. They were Sir John's property, and by their nature payable to his representatives in mobilibus. They were capable of being alienated, sold, or mortgaged by him during his lifetime. The date of payment of the sum in the policy was, indeed, not come at his death, and is not yet come, Lady Elizabeth being still alive. But this only made the debt future; it did not make it contingent, in the proper legal sense. It was a fully vested right. The premium must, of course, be paid, in order to keep up the policies; but this is not a legal contingency. It is a condition or burden often attachable to fully vested claims, such as the condition of paying the price in the case of an article purchased, and the like, which never makes the right contingent in a legal sense. There is no arbitrary discretion in Sir John's executors about paying the premium. This, if not done by them, must be matter of arrangement, or judicial order. The policies have a present value in the market, and that value could be raised by a sale. It appears to me that they are as fully part of Sir John's moveable estate as any part of that estate whatever. If they had been policies on the life of any third party, can there be a doubt that they would form assets of Sir John's executry? But if so, it makes no difference that they are on the life of Lady Pringle. If these policies are not part of Sir John's executry estate, I do not see what they are, or to whose estate they belong, or under what legal category they fall.

That these policies are part of Sir John Pringle's executry estate, on which legitim is to be calculated, flows, I think, directly from the decision of this Division in the case of Muirhead v. Lindsay, Dec. 6, 1867, 6 M. 95. I think that this is an unquestionably sound judgment, and not overruled by any other since pronounced.

3. With regard to the mode of valuing the policies, I do not understand that either party insists for a present sale. The only question is one of value. I am of opinion that the value to be taken is not the surrender value in the office, for this is not the true value, but a consideration for the office taking them back. I do not see how their value on a public sale could be ascertained, except by an actual sale. I think their true value is what is called their actuarial value, that is, their real value as documents of obligation, with the condition of paying the premium, as estimated by men of skill.

The other Judges concurred.

The Court answered the first question in the negative; the second in the affirmative; and, in regard to the third question, found that the policies should be taken as at their real actuarial value as at the date of Sir John Pringle's death.

Solicitors: Agents— John N. Forman, W.S., Davidson & Syme, W.S., and Robert Smith, S.S.C.

1872