Scottish Court of Session Decisions

Major-General A. M. M'Donald on 13th November 1877 presented a petition to the Court under the Acts 11 and 12 Vict. c. 36, 16 and 17 Vict, c. 94, and 38 and 39 Vict. c. 61, for authority to record an instrument of disentail of the estates of Dalchosnie and others, of which he was heir of entail in possession.

The petitioner was born on 22d March 1830, and the three nearest heirs of entail who at the date of the application were entitled to succeed were the petitioner's brother Captain John Alan M'Donald, born March 1834, and his two sisters Misses Elizabeth Moore Menzies M'Donald and Adriana M'Donald, born respectively on 10th June 1827 and 30th November 1828. The only other heir of entail in existence was another sister Miss Jemima M'Donald, born in June 1832.

The petitioner produced a consent to the disentail by Captain M'Donald, but the two next heirs, the Misses M'Donald, refused their consent.

The Lord Ordinary ( Adam) remitted to Mr T. B. Sprague to inquire and report as to the value of the “expectancy or interest” of these two ladies in the entailed estate.

Mr Sprague's report was, so far as need be noticed, to the following effect:—The valuation roll was taken as the basis of calculation, and under it the net annual value of the estate was brought out to be £1672, 7s. 1d., and the actual value £48,000.

It was stated that a sum of upwards of £5000 had been expended on improvements which had not been yet constituted and charged on the estate, as, though a petition had been presented for that purpose, proceedings in it had been suspended since the present application had been made. This charge was objected to, and the actuary made his calculations on the alternative principles of allowing and disallowing it as a deduction.

The petitioner was a bachelor, and Captain M'Donald was married without issue. The latter was stated to be in good health, but to have formerly suffered from ailments which would tend to shorten his life. Upon a report by a medical man who had examined Captain M'Donald, who had offered no objection to that course being taken, the actuary in calculating Captain M'Donald's interest added twenty years to his actual life, making his calculations on the assumption that he was sixty-four instead of forty-four years of age The actuary further, looking to the fact that there was only one heir of entail in existence after the second and third substitute-heirs, added to the money value of their interest the value of the chance of their succeeding to the estate in fee-simple, which had the effect of more than doubling the estimate of their interests.

To this report both parties lodged objections, the objections for the petitioner being as follows:—1. Because the sum expended on improvements had not been allowed as a deduction. 2. Because the value of the privilege of delaying the charging of that expenditure for twenty years under the Entail Amendment Act 1875 had not been taken into account. “3. In respect that the actuary has made any deduction whatever in estimating the value of the life of Captain John Alan M'Donald … and has not made the valuation of his interest and expectancy, enuring to the petitioner by virtue of Captain M'Donald's consent to the disentail on the footing of his being of his actual age. 4. Alternatively to the last objection, in respect that the actuary has greatly over-estimated the number of years which should … be added to Captain M'Donald's age … and has dealt therewith as if he were ‘dealing with proposals for insurance on the lives of persons whose expectation of life is below the average.’... 5. In respect that the actuary in estimating the expectancy of the second and third heirs has assumed that Captain M'Donald will have no issue, and has greatly under-estimated the expectancy of the petitioner having issue. 6. In respect that the actuary has made his calculations on the footing ‘that the ages of the several heirs to be employed in the calculations should be those at the birthday, whether last or next, which is nearest to the’ 14th November 1877, the date of the first interlocutor in the application. 7. In respect that the actuary has estimated the value of the ‘chance’ of the second and third heirs ‘acquiring the fee-simple of the estate by surviving all the other heirs in the entail,’ and

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has thereby valued their interests as expectant fee-simple interests instead of confining the inquiry to the value of their expectant interests as heirs of entail. … It is understood that upon this principle the actuary has allowed to these heirs for this ‘chance’ a resulting value more than double what, on a proper interpretation of the Entail Statutes, and in particular of the ‘Entail Amendment Act 1875,’ sec. 5, the said heirs are entitled to as the ‘value in money of the expectancy or interest in the entailed estate’ of such heirs. 8. In respect that the actuary, by estimating the value of the expectancy of Miss Jemima M'Donald, and taking her existence, age, and probability of issue, into account, has introduced a fourth heir into the calculations… . 9. In respect that the actuary has calculated the value of the expectancies of the second and third heirs as a ‘combined interest,’ and has assumed as a matter of certainty that if the second and third heirs were the only surviving heirs of entail, on the event happening of the second heir coming into possession of the entailed estates the third heir would voluntarily consent to a disentail, and that (in the words of the report) ‘the fee-simple could be dealt with by … the two, if both survived.’ 10. Generally, that the petitioners's and Captain McDonald's interests were valued too low, and the second and third heirs too high.”

The second and third heirs objected—1. Because the report proceeded on the basis of an assumed annual value instead of the actual value; and 2, because the reporter proceeded on the assumption that the petitioner's was an average life, without taking into account the fact that he was in the army, and liable to be sent upon foreign service.

The Lord Ordinary ( Adam) pronounced this interlocutor:—… Finds, with reference to the first objection for the petitioner, that the sum expended by him (prior to the presenting of this petition) on permanent improvements on the entailed estate proposed to be disentailed, of the nature contemplated by the Entail Acts, and capable of being constituted a burden on the said estate, ought to be allowed as a deduction from the value of the said estate: Repels the petitioner's second objection: Repels the petitioner's third objection: Sustains the petitioner's sixth objection: Repels the petitioner's seventh objection: Repels the petitioner's eighth objection; and quoad ultra reserves consideration of the petitioner's objections in so far as not disposed of: Further, sustains the first objection for the Misses M'Donald, and repels their second objection; and grants leave to the petitioner to reclaim.

“Note.—With reference to the petitioner's first objection, the petitioner alleges that at the date of presenting this petition he had expended a sum of £5401, 4s. 9d. on improvements on the entailed estate, and that a petition was in dependence for the purpose of constituting that expenditure a charge on the estate. To the extent to which this sum has been expended on improvements of the nature contemplated by the Entail Acts, either the petitioner himself, or anyone to whom he may expressly bequeath it, has it in his power to charge the estate with the amount. The estate is in fact indebted to the petitioner in the amount, and it is to that extent a less valuable succession to the next heirs of entail. It therefore appears to the Lord Ordinary to be a deduction which ought to be allowed in estimating the value of the succession, in the same way as if it had been already made a burden on the fee of the estate.

The petitioner explained that he had not proceeded with the petition for having this improvement expenditure made a charge on the estate, because it appeared to him to be unnecessary to do so if the estate were to be immediately disentailed. It does not appear to the Lord Ordinary to be necessary that the sum should be actually charged upon the estate; but it will be necessary for the purposes of this petition that the sum with which the petitioner is entitled to charge the estate should be ascertained, and to that effect it may be desirable that the proceedings in the petition to charge should be resumed.

The petitioner's second objection appears to be clearly unfounded.

The question involved in the petitioner's third objection is one of great importance, and will be of constant occurrence in this class of cases. The question is, Whether under the 5th section of the Entail Amendment Act of 1875, when an heir of entail has declined to consent to a disentail, and the duty falls upon the Court of ascertaining the value in money of the expectancy or interest in the entailed estate of such heir so declining, the actual age of the heirs of entail is in all cases to be taken as the basis of the calculations which may require to be made?

What the Court has to do is to ascertain the value in money of the expectancy or interest of the heir of entail declining to consent. It is obvious that the most material element to be taken into consideration in ascertaining this value is the probable duration of the lives of the other heirs of entail. But it is equally obvious that the probable duration of life of a person depends upon his state of health as well as upon his actual age. Were the Court to refuse to take into consideration the state of health of the person the probable duration of whose life is in question, it appears to the Lord Ordinary that great injustice would be done to the heirs of entail declining to consent to the disentail, and who by the Act of 1875 are compelled to sell their interest in the entailed estate. Suppose, for example, that the heir in possession or the nearest heir for the time was known to be hopelessly ill of an incurable disease, and had only a few months to live, it would be manifestly unjust to calculate the value of the interest or expectancy of the two next heirs on the footing that such heir in possession or nearest heir would attain to the average duration of human life. That, no doubt, is an extreme case, but it illustrates the principle contended for by the petitioner.

That great difficulties may be encountered in ascertaining the state of health of the person the probable duration of whose life is the subject of inquiry is no doubt true. It is said, for example, that a medical examination is a necessary element in the inquiry, but that it could not have been the intention of the Legislature to compel heirs of entail to submit to a medical examination when, as in this case, they had no interest whatever in the question at issue, so that it would come to depend on the willingness or unwillingness of an heir of entail to submit to examination whether any reliable evidence could be got as to the state of his health.

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Whether the Court would compel an heir of entail to submit to a medical examination does not require to be determined in this case, because Captain M'Donald, the heir the state of whose health is in question, does not object to being examined; but the difficulty of the inquiry does not, in the opinion of the Lord Ordinary, absolve the Court from the duty of ascertaining by the best available means in its power the value of the interest or expectancy which may be the subject of inquiry.

The Lord Ordinary has reserved for further consideration the petitioner's 4th objection. He may state that, in his opinion, the question whether or not the expectation of life of Captain M'Donald is below the average is not one which should be investigated by way of a proof before the Lord Ordinary, as the petitioner suggested. He thinks, however, that the petitioner is entitled to further inquiry. It appears to the Lord Ordinary that a medical man of eminence and experience in such matters should see Captain M'Donald, and communicate with Mr Sprague, who would then report to the Lord Ordinary how many years, if any, ought to be deducted from the average duration of life in Captain M'Donald's case, or, in other words, how many years, for the purpose of calculation, ought to be added to his life.

It is obvious, however, that no inquiry at all will be necessary if the petitioner's views are right as to the 3d objection.

The Lord Ordinary has communicated with Mr Sprague with reference to the 5th objection, and has ascertained from him that the state of Captain M'Donald's health does enter into the question of the probability of his having issue. The Lord Ordinary has therefore, for the same reasons, reserved the consideration of this objection.

With reference to the 6th objection, in calculating the average of a large number of lives, the method adopted by the reporter no doubt is practically correct, but it was explained to the Lord Ordinary that it happened in this case that the birthdays fell on the same side of the line, and therefore that the method adopted became practically unjust. That being so, it appears to the Lord Ordinary that the petitioner is entitled to have the calculations made on the footing of the age of the parties, either at their last or next birthdays, as may be thought right. The Lord Ordinary has therefore sustained the objection.

The Lord Ordinary thinks that the 7th objection falls within the principle of the case of Wilson v. De Virte, Dec. 19, 1877, 15 Scot. Law Rep. 239, and must therefore be repelled. It appears to the Lord Ordinary that if an heir of entail who shall succeed to an entailed estate shall either have the power of acquiring it in fee-simple by disentailing it, or, as in this case, shall be entitled to hold it in fee-simple as being the only heir of entail in existence, the interest of such heir of entail in the estate is much more valuable than if he had succeeded merely to a life interest in it. In the one case he can at any time sell the estate if he chooses for its full value; in the other case, his interest may or may not be of great value, as, being merely a life interest, its value will vary according to the time which from age or otherwise it is probable he will live to enjoy it. But if an heir of entail is thus in a position to acquire an estate in fee-simple, the Lord Ordinary does not see why, in calculating his chance of succeeding to it, that element should be left out of view.

The Lord Ordinary has communicated with Mr Sprague with reference to the 8th objection, and has ascertained from him that in calculating the expectancy of life, &c., of Miss Jemima M'Donald, he has only done so in so far as it affects the interests of the previous heirs of entail. It was necessary to ascertain the probability of Miss Jemima M'Donald predeceasing her sisters in order to estimate the probability of their acquiring the estate in fee-simple by becoming the last heir or heirs of entail in existence. The Lord Ordinary has therefore repelled the objection.

The Lord Ordinary understands from Mr Sprague that in calculating the interests of each of the Misses M'Donald the elements which he has taken into consideration are, as stated in the note to his report—(1) The chance of each succeeding to the estate and receiving the rental during her lifetime; and (2) The chance of each acquiring the estate in fee-simple by outliving all the other heirs. The Lord Ordinary has already expressed the opinion that both these chances ought legitimately to be taken into consideration. Mr Sprague has further informed the Lord Ordinary that the mode he has adopted in calculating their interests as a combined interest does not affect the result—which would have been the same had he calculated each of their interests separately. It would appear, therefore, that this objection is not well founded, and the Lord Ordinary has repelled it.

The 10th objection is a general objection, and cannot be disposed of at present.

The Lord Ordinary has sustained the first objection for the Misses M'Donald, because he thinks that the actual rental should be taken as the basis of the calculations, and not the rental from the valuation roll. The parties should have no difficulty in adjusting this matter.

If the Lord Ordinary is right in holding that the chance of the objectors acquiring the estate in fee-simple is an element to be taken into the calculation, it is obvious that the value of the estate is material. The Lord Ordinary thinks that it ought to be ascertained by a remit to persons of skill in such matters.

The Lord Ordinary has ascertained from Mr Sprague that it was not suggested to him by either party that the life of General M'Donald was other than an average life, and that he made his calculations accordingly. The Lord Ordinary has also ascertained from Mr Sprague that the fact that a general officer is liable to be ordered on active service is not considered as reducing his life below the average, if it be otherwise an average life. The Lord Ordinary has therefore repelled this objection.”

The petitioner reclaimed, and argued—(The argument was chiefly in regard to the third and seventh objections). The petitioner's objections were mainly referable to the fact that the actuary had valued something which was not included under “expectancy or interest,” the words of the statute.

In regard to the third objection, the actuary had dealt with it, not only from an actuarial but also from an insurance point of view, and in insurance offices the lives insured were all selected. In assessing the values of expectancies under the

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statute it was necessary to make a general rule for future guidance on which to proceed. It would be impossible to lay it down as a general rule that the special circumstances and condition of every heir of entail should be looked into when calculating the value of the chance of succeeding heirs. The heir might refuse to be examined, and he could not be compelled, for he was no party to the proceedings. The only possible general rule was that the average chance of life should be taken at the then actual age of the heir.

On the seventh objection—It was only the value of the expectancy as heir of entail that was to be valued—the chance of succeeding in fee-simple was outside the entail altogether. The petitioner no doubt was near the end of the destination, but he should not be the worse off for that. His chance of being the last survivor and becoming heir in fee-simple was at least as good as any, and the value of his chance of this might swamp the value of the sisters' chances, and, as far as could be seen, the actuary had not taken this into account. An heir might have a claim to succeed in a number of different capacities—he was surely not to get compensation for all those, and afterwards be paid for his chance of succeeding as an “heir whomsoever.” He was only entitled to get compensation for the capacity in which he was called in the entail. The purpose of the Statute of 1875 was to afford facilities to heirs of entail in possession and to encourage disentailing, and therefore any ambiguities should be interpreted in their favour— Wilson v. De Virte, December 19, 1877, 5 R. 328; 15 Scot. Law Rep. 239.

Argued for the Misses M'Donald—The expectancy or interest that the Court was to value must be held to be equal to a reversion, and therefore what was to be ascertained was the interest of a reversionary. The expectancy was worth what it would bring, and surely no intelligent dealer would enter into such a transaction without more particulars in regard to prior heirs than the age alone. What they wanted was not an inquisitorial inquiry, but such an inquiry as a man of business would make. Things which were notorious must be taken into account. Here all difficulty was removed, because the first heir had no objection to be examined.

In regard to the seventh objection—It was necessary to take into account and value all that the substitute heirs had a chance of succeeding to. Their “expectancy” was equivalent to their chance of succeeding plus what they got when they did succeed—Lord Ordinary (Rutherfurd Clark), in Wilson v. De Virte, quoted supra.

Their Lordships before advising the case pronounced an interlocutor remitting of new to Mr Sprague to report as to the footing on which several of his calculations had been made. The report was boxed on 21st December 1878, and the purport of it sufficiently appears from the opinions of the Court.

At advising—