Scottish Court of Session Decisions

Thomas Turnbull of Crailing, Fenwick, and Briery Yards, died unmarried and intestate on 15th October 1874. He had for many years been of unsound mind and under curatory, and his personal estate had been accumulating till it had reached the sum of £205, 235, 8s. 1d. An inventory of his estate was given up by his executors, upon which they paid the full amount of legacy and inventory duties demanded by the Commissioners of Inland Revenue, amounting together to £16, 330, 1s. 4d.

In 1855 seven persons then alive—viz., Andrew Pringle, Mrs Beatrix Scott alias Piper alias Oyston, Janet Pringle, Robert Pringle. John Armour junior, Margaret Fulton, and William Barclay David Donald Turnbull—all stood in equally near degrees of relationship to Thomas Turnbull, being all children of cousins-german of his father William Turnbull. In the event therefore of all these persons surviving Thomas Turnbull, each of them would be entitled, as one of his next-of-kin, to one-seventh share of his moveable succession; but in the event of any of them predeceasing him the representatives of such predeceaser would not be entitled to any share of the succession, which would all belong to the surviving next-of-kin. In order to obviate this result as far as possible, and to secure to the representatives of predeceasers an interest in the succession, a joint arrangement and deed of agreement was entered into in 1855 by five of them—Margaret Fulton and William Barclay David Donald Turnbull declining to be parties to the agreement. The substance of this agreement was that the representatives of any predeceasers should have the same interest in the estate of Thomas Turnbull as would have belonged to the party they represented if he or she survived Thomas Turnbull. The two who were not parties to the agreement predeceased Thomas Turnbull, and accordingly their representatives were not entitled either as next-of-kin or under that agreement to any part or share in Thomas Turnbull's succession. Of the parties to the agreement two predeceased Thomas Turnbull, viz., Janet Pringle and Robert Pringle, and but for the agreement their representatives also would have been excluded from all interest in Thomas Turnbull's succession, the whole of which would have belonged absolutely to the three surviving next-of-kin, viz.—Andrew Pringle, Beatrix Scott alias Oyston alias Piper, and John Armour junior. These persons, however, after being decerned executors-dative to Thomas Turnbull, and expeding confirmation, and paying the inventory and legacy duties on the succession, were bound to divide the clear residue into five equal portions, and to pay one such portion, amounting it appeared to upwards of £37, 000, to Andrew Pringle, as executor-dative and legal representative of Janet Pringle, who had died unmarried and intestate, and another portion to himself as an individual.

Janet Pringle had died intestate on 13th November 1858, and her brother Andrew Pringle was decerned her executor-dative qua next-of-kin on 5th February 1863, on which date he took oath to an inventory of her personal estate and effects. In that inventory her right and interest under the agreement was included as one of the items of her moveable estate. The agreement was narrated in the inventory, and the nature of the right and interest was clearly described—the entry concluding as follows:—“which right and interest may at present be valued at £20.” The other items of the inventory amounted to £29, so that the whole did not exceed £49, upon which a stamp-duty of 10s. was paid, that being the amount payable on inventories in cases of intestate succession where the whole estate is above £20 and under £50. Janet Pringle's estate at her death fell to her two brothers Andrew and Robert, but as Robert died on 11th December 1859, and therefore predeceased Thomas Turnbull, Janet's interest in Thomas Turnbull's estate fell to be divided between her brother Andrew Pringle, her executor, and the children of Robert.

This action was now brought by the Lord Advocate, as representing the Crown, against Andrew Pringle, as his sister Janet's executor, and concluded that he should be ordained to exhibit upon oath and to record a full and true inventory of Janet Pringle's estate, or for decree for £784, 10s. as inventory-duty payable on a full and true inventory of her estate, if such inventory had been duly exhibited and recorded; and (2) for £1132, 11s. 3d. as residue-duty upon the estate as handed over to the heirs ab intestato.

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It was averred by the Crown that the share of Thomas Turnbull's estate falling to Janet Pringle was £37, 035, 17s. 8d., and it was upon this sum that duty was claimed.

It was admitted by the defender that by assignation dated 31st January 1863 he sold for an annuity of £350 and a sum of £3000 his individual spes successionis, together with any right he might have as one of Janet's next-of-kin.

The defender pleaded, inter alia—“(2) The alleged agreement of 1855 was null and invalid, in respect that Mrs Beatrix Scott alias Piper alias Oyston could not, according to the law of England (to which she was subject), enter into such a transaction, and in respect that John Oyston, who was then her husband, did not sign it. (4) Any interest which at the time of her death Janet Pringle had in the estate of Thomas Turnbull having been merely a spes successionis, the action is groundless. (5) The defender having in the inventory condescended on truly described and fairly valued the interest of Janet Pringle in Thomas Turnbull's succession, and the Crown having assented to the said valuation and accepted duty thereon, the present action is groundless. (7) Assuming that the sale of 31st January 1863 is to be taken as the criterion of the value of Janet Pringle's interest in Thomas Turnbull's estate, any duty payable by the defender falls to be calculated on the value so ascertained. Separatim—In no view can the duties claimable from the defender for his half of Janet Pringle's interest be calculated on an amount exceeding the price obtained by him.”

The Lord Ordinary found for the pursuer, adding this note:—

“ Note.—[ After stating the facts]—And the first question now to be determined is, Whether the right and interest which Janet Pringle had in said succession in virtue of the agreement with her relatives, and which thus came to be exigible by her executor, formed part of her moveable or personal estate. After much consideration, I have come to be of opinion that this question must be answered in the affirmative.

It is true that Janet Pringle's interest in the succession of Thomas Turnbull was prospective and contingent. It could not be realised until the death of Thomas, and whether it would ever realise any sum at all depended upon various contingencies, viz.:—(1) upon Thomas dying without recovering mental health, and therefore without leaving a valid testament; (2) upon his dying without issue; (3) upon one or more of the parties to the agreement surviving Thomas. And the amount which might be realised was further contingent upon Margaret Fulton and William Barclay David Donald Turnbull, or either of them, surviving or predeceasing Thomas Turnbull. But notwithstanding these contingencies, the right of Janet Pringle was absolute as against the other parties to the agreement. It was a right which she purchased from those parties to call upon such of them as might survive Thomas Turnbull to pay to her, or her heirs, executors, and successors, one-fifth part of their shares in the succession of Thomas—the price paid being her own obligation to surrender to the other parties and their representatives corresponding shares of the succession in the event of her succeeding to the whole or a part thereof by her survivance of Thomas. The contract was a highly onerous one, and I have no doubt that it formed in her a vested fund of credit which she could have disposed of by will, or could have sold during her life, and which might have been attached by her creditors either during her life or after her death. The agreement was truly a pactum de hereditate viventis, belonging to a class of transactions which are of by no means rare occurrence, and to which the law does not refuse effect; and although in almost all cases of the kind the right acquired is more or less contingent, i.e., liable to be defeated by occurrences beyond the control of either of the parties to the transaction, the right such as it is has generally an appreciable value, and is regarded as forming part of the estate of the party acquiring the right, even although it may not be capable of realisation during the life of that party. Thus, a post obit bond granted to a creditor by an expectant heir-of-entail is contingent upon the debtor surviving the heir-of-entail in possession, and the contingency may not be purified during the lifetime of the creditor. But the bond is part of the creditor's estate, and it is made payable to the creditor or his heirs, executors, and successors, and it cannot be enforced by the creditor's representatives—at all events by those who succeed to him—by will or ab intestato without making up a title to the creditor. It appears to me that the position of Janet Pringle under the agreement now in question is in no essential respect different from that of the creditor in such a post obit bond… … .

The pursuer now claims inventory stamp-duty upon the value of the said right and interest as actually realised by the defender as Janet Pringle's executor; but the defender resists the claim on the ground, first, that the said right and interest was not truly part of Janet Pringle's estate, and was erroneously included in the original inventory thereof; and second, that assuming the said right and interest to be liable to inventory-duty, the claim of the Crown for such duty has been satisfied by the payment already made, and that the pursuer is not entitled to demand payment of duty in addition to what has already been paid.

If I am right in holding that Janet Pringle's right and interest under the agreement truly formed part of her personal or moveable estate, it follows that the first of these grounds of defence cannot be sustained. I have more difficulty as to the other ground of defence, which cannot be satisfactorily disposed of without a careful examination of the various statutes on which the demand of the Crown is based.

By the Act 48 Geo. III. cap. 149, sec. 38, it is required that every person who, as executor, nearest-in-kin, creditor, or otherwise, shall intromit with or enter upon the possession or management of any personal or moveable estate or effects in Scotland of any person dying after 10th October 1808 shall, on or before disposing of or distributing any part of such estate or effects, uplifting any debt due to the deceased, and at all events within six months after having assumed such possession or management in whole or in part, and before he shall be confirmed executor, testamentary or dative, exhibit upon oath or solemn affirmation in the proper Commissary Court of Scotland ‘a full and true inventory, duly stamped as required by this Act, of all the personal

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or moveable estate and effects of the deceased already recovered or known to be existing.’ And if at any subsequent period a discovery shall be made of any other effects belonging to the deceased, an additional inventory of the same shall, within two months after the discovery thereof, be in like manner exhibited upon oath or solemn affirmation, and the person refusing or neglecting to exhibit any such inventory or additional inventory is subjected to certain penalties besides being made liable in double duty. By section 42 of the same statute it is enacted that confirmation shall not be granted of any testament, testamentary or dative, or eik thereto, of or for any estate or effects of the deceased ‘unless the same shall be mentioned and included in some such inventory exhibited and recorded as aforesaid, ’ and that it shall not be competent to any executor to recover any debt or other effects in Scotland of the deceased unless the same shall have been previously included in some such inventory. The rates of duty are now regulated by the Act 55 Geo. III. cap. 184, schedule, part 3. And by the Act 23 and 24 Vict. cap. 80, sec. 5, it is enacted that the inventory and additional inventory of the personal estate of the deceased shall be stamped with duty according to the value of the property contained therein at the time they shall be respectively sworn to, including the proceeds accrued thereon down to that time.

It cannot be doubted that if in the inventory of Janet Pringle's estate given up by the defender as her executor in 1863 her right and interest under the agreement had not been specified and valued, and charged with duty, the defender could not have resisted the pursuer's present demand for inventory stamp-duty on the value thereof as actually realised by him with the proceeds and interest accruing thereon up to the date of giving up an additional inventory— Lord v. Coloin, L.R. 3 Equity, 737. But in point of fact the defender did include the said right and interest in the inventory given up by him, and duty was paid by him on the amount of the inventory, including said right and interest. It is true that the sum at which it was valued was only £20, and that the addition of that sum to the value of the other personal estate of Janet Pringle, viz., £29, did not require a higher stamp-duty than would have been chargeable on an estate of only £29. But the fact remains undoubted, that Janet Pringle's ‘right and interest’ now in question was included in the inventory of her estate in 1863, and if that inventory was a ‘full and true’ inventory as at its date, the case of Lord v. Colvin seems to be an authority for holding that subsequent increase in value would not render an additional inventory or payment of additional duty necessary. The decision of the present question therefore appears to me to turn upon one of fact, viz., Whether the inventory given up by the defender was a ‘full and true’ inventory of Janet Pringle's estate? When the case was originally debated I was inclined to hold that as the right and interest in question was of a highly speculative and contingent character, and as no undue concealment on the part of defender was alleged by the Crown, the inventory as given up was sufficient, and that the subsequent increase in the value of the estate was not a discovery of new funds requiring the exhibition of an additional inventory or the payment of additional stamp-duty. But in consequence of an inquiry which I found to be necessary in order to ascertain the amount actually realised by the defender in order to fix the amount of residue-duty with which he was chargeable, a most important fact was brought to light, and has now been added to the record by way of amendment. It now appears, and it is not disputed by the defender, that before he gave up the inventory in 1863 in which he valued the right and interest in question at only £20, he had actually sold it along with his own individual right and interest under the agreement, to Mr William Barclay David Donald Turnbull for an annuity of £350, payable to himself from the date of sale and during his life, and a sum of £3000 to be paid to him three months after Thomas Turnbull's death. This important fact was not disclosed by him to the Inland Revenue officers at the time, and they passed the inventory on the footing and in the belief that the then present value of the right and interest in question was, as the defender then stated it to be, only £20. Now, it is plain that this was not a true statement, because the actual value at that date was at least one-half of the said annuity and of the said sum of £3000. I am therefore of opinion that the inventory given up by the defender in 1863 was not a full and true inventory of Janet Pringle's estate as at that date, and that he is now bound to give up an additional inventory, and to pay additional stamp-duty upon the actual value of the said right and interest as realised by him, with the interest and proceeds thereof from the date of realisation till the date of oath to the additional inventory. It is now said by the pursuer that the defender has realised still further sums than those above specified in respect of the sale of said right and interest; but that is a matter for future inquiry.

The second conclusion of the summons is for payment of residue-duty on the amount of the said right and interest as actually realised by the defender. The main defence to this part of the claim is that founded on the Succession-duty Act (16 and 17 Vict. cap. 51) sec. 14, by which it is provided that ‘where the interest of any successor in any personal property shall before he shall have become entitled thereto in possession have passed by reason of death to any other successor or successors, then one duty only shall be paid in respect of such interest, and shall be due from the successor who shall first become entitled thereto in possession.’ The defender maintains that he here takes as Janet Pringle's successor a succession to which Janet herself never ‘became entitled in possession.’ I think, however, that the defender misapprehends both the Succession-duty Act and the true nature of his own position. The 14th section of the Succession-duty Act cited applies to a case where the ultimate successor takes the succession as the successor of a party who, if he had survived the opening of the succession, would have himself reduced it into possession, but who predeceased that event. Thus, where A, having a vested reversionary interest in a property under a disposition or will, settles it upon B, and dies before the property falls into possession, B, who takes the property, does not pay one succession-duty in respect of A's succession and another on his own; he pays only one duty. But the present case is not a case of succession-duty at all. Janet Pringle had no right

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of succession to Thomas Turnbull, and the defender does not take up her right and interest as her successor in the sense of the Succession-duties Act. He takes that right and interest as her next-of-kin ab intestato—her estate consisting not of a succession created by disposition, but of a debt due to her by the parties to the agreement who survived her and acquired the estate of Thomas Turnbull. The defender could not enforce the debt as against those parties except by making up a title to Janet Pringle by confirmation. He thus takes up Janet's right and interest as an estate of residue on which duty is payable under the Acts 36 Geo. III. cap. 52, and 55 Geo. III. cap. 184, schedule, part 3. The remark of Mr Hanson (p. 276), in dealing with the 14th section of the Succession-duties Act, appears to me to state correctly the import and effect of both sets of statutes. He says—‘The present section does not, however, in any way interfere with the operation of the Legacy-duty Acts, according to which, as has been pointed out …. the duty is payable under the will or intestacy of every person through whom it is necessary to make a title to the property in order to enable the ultimate owner to receive and give a discharge for it when the time of payment comes.” The defender is therefore, in my opinion, liable in legacy or residue-duty at the rate of £3 per cent. upon the amount realised by him in respect of Janet Pringle's right and interest under the agreement, with interest upon the duty till paid; but as the amount of the residue is not admitted the case is appointed to be enrolled in order that the amount may be ascertained.

I should here state that I do not think the defender is liable for either inventory, stamp-duty, or for residue-duty, upon a larger sum than he has actually realised or may realise as executor of Janet Pringle, and for behoof of her executry estate, from the sale of her right and interest in Thomas Turnbull's succession, or otherwise in respect of that right and interest. He may have made a good or a bad bargain for the executry estate by the sale; but the purchase by Mr Turnbull was a speculative one, which might have proved unprofitable, and the defender is not bound to pay inventory or residue duty on the profit realised by the purchaser.” …

The defender reclaimed.

In the course of the argument it was intimated for the Crown that there was no desire to claim anything more in name of inventory-duty than was due upon a fair valuation of Janet Pringle's expectancy at the time the inventory was sworn to.

At advising—