Scottish Court of Session Decisions

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Cite as: [1878] SLR 16_211, [1878] ScotLR 16_211

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SCOTTISH_SLR_Court_of_Session

Page: 211↓

Court of Session Inner House First Division.

Friday, December 13. 1878.

16 SLR 211

Special Case — Watson and Others (Munro's Trustees).

Subject_1Trust
Subject_2Intention
Subject_3Deduction of Liferent Interest of Heritable Subject in Estimating Division of Estate where One Share Bequeathed to Liferenter.
Facts:

By trust-disposition and settlement the truster's wife was liferented in the truster's house, and the furniture and plenishings therein. The trustees were further directed after certain payments as mentioned in the deed “to make up a state and valuation of my trust-estate, heritable and moveable, wherever situated, including that part thereof in which my said wife is liferented as aforesaid … and on a valuation and corresponding state being so made out showing the free amount or balance of my said trust-estate, to convey, assign, or pay over one just and equal third part or share of such free amount or balance of my said trust-estate to and in favour of my wife.” held ( diss. Lord Shand) that the value of the widow's liferent interest in the house, furniture, &c., was a proper deduction from the trust-estate preparatory to a division thereof among the beneficiaries.

Headnote:

This Special Case was submitted for the opinion and judgment of the Court by William Watson and others, testamentary trustees of the deceased Alexander Munro, parties of the first part; and the accepting and acting trustees under the antenuptial contract of marriage between Mr A. C. Ponton and Miss J. R. Munro, only child of Mr Alexander Munro, on the second part.

Mr Alexander Munro died on 11th July 1877, survived by his wife Mrs Isabella Munro and by an only child by a former marriage. On 8th September 1871 Mr Munro and Mrs Isabella Munro his wife had entered into a mutual trust-disposition and settlement, the first three purposes of which were in the following terms:—“ First, For payment of my just and lawful debts, deathbed and funeral expenses, and the expense of carrying this trust into effect, including the expense of maintaining and upholding in repair the heritable property hereby conveyed, and defraying the feu-duties, taxes, and other annual charges thereon. Second, In the event of my wife, the said Isabella Younger or Munro, surviving me, I direct the said trustees to give and allow her the liferent use and enjoyment during all the remaining years of her life thereafter of the dwelling-house,
Page: 212↓
offices, and garden and pertinents belonging to and presently occupied by me, called Viewfield House, situated at Merchiston, Edinburgh, together with the household furniture, silver plate, pictures, jewellery, bed and table linen, books, and other effects, which shall be situated in said premises and belonging to me at the time of my death, and that free of all feu-duty, taxes, rates, repairs, and other burdens and charges of maintenance, all of which shall be paid and defrayed by the said trustees out of the residue of my trust-estate and funds. Third, In the event of my said wife surviving me, I direct the said trustees at the first term of Whitsunday or Martinmas which shall happen after my death, and after paying or making provision for paying my said debts, &c., as mentioned in the first purpose of this trust, to make up a state and valuation of my trust-estate, heritable and moveable, wherever situated, including that part thereof in which my said wife is liferented as aforesaid, and the rents, profits, and issues of the said estate down to the said term, and if necessary to take the assistance of practical valuators or other men of skill, and on a valuation and corresponding state being so made out, showing the free amount or balance of my said trust-estate, to convey, assign, or pay over one just and equal third part or share of such free amount or balance of my said trust-estate to and in favour of the said Isabella Younger or Munro absolutely, which provisions in favour of my said wife in the event of her surviving me are hereby declared to be made irrespective of her entering into a second marriage, which event, should the same happen, shall no ways affect the said provisions or any part thereof: And further declaring that the foresaid provisions in favour of my said wife shall come in room and place of the provisions in her favour in the foresaid contract of marriage, and are in full satisfaction of all claims and demands which she as my widow can make or pretend against my heritable or moveable estate, or against my heirs and representatives.”

It was contended by the second parties that before dividing the estate in terms of the trust-disposition and settlement there should be deducted from the gross amount the capitalised value of the liferent given to Mrs Munro in Viewfield House and furniture, and that Mrs Munro was only entitled to one-third of the nett estate after making that deduction.

The parties of the first part urged that the sum in question was not a proper deduction in the ascertainment of the estate for division, and that they were bound as trustees to pay Mrs Munro one-third of the free estate after such deductions only as were specially directed to be made in the clauses declaring the trust purposes.

The following question was submitted to the Court:—“Is the value of Mrs Munro's liferent interest in Viewfield House and furniture a proper deduction from the trust-estate under the administration of the first parties preparatory to a division thereof between Mrs Munro and the second parties? Or, Is Mrs Munro entitled to one-third of the said estate without deduction of the value of her said liferent interest?”

At advising—

Judgment:

Lord President—The question in this Special Case depends for its answer on the construction of certain clauses of the trust-disposition and settlement of the late Mr Alexander Munro. The general scheme for dividing the estate, which consists chiefly of house property, is set out in three purposes in the following terms—[ His Lordship here quoted the purposes as supra]. The question which arises from the peculiar expressions in the deed, taking into consideration the intention of the testator as gathered from the general scheme, seems to me to be easily answered. The question is, whether the value of Mrs Munro's liferent interest in Viewfield House and furniture is a proper deduction from the trust-estate preparatory to a division thereof—that is to say, whether in estimating the amount of the three portions the subject Viewfield House and the furniture within it is to be brought into the valuation as if unburdened with the liferent, or whether the amount is subject to that deduction prior to the valuation. As an ordinary rule, I should say without hesitation that in estimating the free amount of an estate each subject must be dealt with separately, and the burdens on each part deducted before the valuation is made out, and that therefore Viewfield House being subject to a liferent interest could not be said to be a free subject. In short, it would be the reversionary interest after deduction of the liferent burden that would form a part of the testator's free estate. But it may be said, and was earnestly argued, that the peculiar expression of the third purpose of the deed takes it out of the common rule. That peculiarity is that in mentioning that the trust-estate shall be valued the trustee says “including that part thereof in which my said wife is liferented as aforesaid,” and it is said that these words show that something different from the ordinary rule was present in the mind of the testator, and that therefore the ordinary rule cannot be applied for its interpretation.

There can be no doubt that Viewfield House and the furniture are to be included in the valuation. That would have been the case even if these words were not present, and on that ground the widow says the words must have been put there for a special purpose, and that purpose she says is, that Viewfield House is to be brought into the valuation as if there were no liferent interest upon the house. I cannot assign that meaning to the clause. It is true that the words are of no particular use. I cannot ascribe to them any particular effect, but I cannot think that by merely using them the testator meant anything different to what would have been the meaning if the words had been omitted. When he says that the different objects of the trust-estate are to be valued, he must, I think, mean that they are to be taken with reference to existing value subject to any burdens that may be laid upon them. If one house in the trust-estate is subject to some burden, such as an heritable security, it cannot be said that it is to be valued without deduction of the burden; but what is a liferent interest but a burden. What the general trust gets after the first and second purposes are fulfilled is simply the reversionary interest, and therefore it only appears fair to me that the subject liferented by the wife should be valued on the same principle as everything else—that is to say, should be valued subject to any burdens with which it is charged. On that ground I think that the first question should be answered in the affirmative.

Page: 213↓

Lord Deas and Lord Mure concurred.

Lord Shand—In this trust-deed the provisions are certainly not happily expressed, but having applied my mind to the question I have formed a different opinion to that stated by your Lordship as to the effect of these words. The question is one of intention, and I think that, taking the three purposes together as a whole, the evident intention of the truster was to give his wife a third of the gross amount of his estate including the value of her liferent interest, and in addition to give the use of Viewfield House and furniture over and above. If that be so, the widow would be entitled to have the third without any deduction. I do not think it is necessary for me fully to enter upon all the clauses, but I think the scheme was shortly this. Under the first purpose provision was to be made for the payment of feu-duties, &c., as the trustees should think fit, and thereafter, and after all debts were paid, under the third purpose the trustees were directed to make a state and valuation of everything that was left. There the important words occur. In directing that this valuation should be made the truster expressly provided that in the estate there shall be included “that part in which my said wife is liferented.” In seeking to discover the intention of a testator it is a cardinal rule to give effect to any special words, and the difficulty I feel in concurring here is that I think the judgment pronounced gives no effect to these special words. I think the truster meant that the liferent subject should be valued, and has specially said so, while he has not added “but deducting the widow's liferent.” The presence of the special clause that the liferent subject is to be included, and the absence of other deduction, is the determining element in my difference of opinion.

The Court therefore affirmed the first alternative of the question put.

Counsel:

Counsel for First Parties— M'Laren. Agent— David Cook, S.S.C.

Counsel for Second Parties— Rutherfurd. Agent— J. T. Mowbray, W.S.
1878