Scottish Court of Session Decisions

In 1857 Archibald Gardner purchased certain heritable property in Glasgow at the price of £5000, taking the titles in the following terms, viz.:—“To and in favour of the said Archibald Gardner and Mrs Janet Robertson or Gardner, his spouse, and the survivor of them, whom failing to such trustees or trustee as might be appointed by any writing under their, his, or her hands, in trust for behoof of them, the said Archibald Gardner and Mrs Janet Robertson or Gardner, and the survivor of them in liferent, for their, his, or her liferent use of the free annual proceeds thereof only during all the days and years of their, his, or her lives, and for behoof of Daniel Gardner and Jessie Gardner, the children of their marriage, equally between them, and the survivor of them in fee; but declaring that in case either of the said Daniel Gardner or Jessie Gardner should decease leaving lawful issue, such issue should succeed always to their respective parent's shares, original or accrescing; that the share, original or accrescing, of the said Jessie Gardner, and the rents and proceeds thereof, should be exclusive always of the jus mariti and right of administration of any husband whom she might marry, and not be affectable by her debts or deeds, or by the debts or deeds of such husband, or by the diligence of her or his creditors; and that the shares and interests of the said Daniel Gardner and Jessie Gardner, and of their respective issue, should be subject always to such further limitations and restrictions and to such apportionment as the said Archibald Gardner and Mrs Janet Robertson or Gardner, or the survivor of them, might direct and appoint or authorise to be made by any writing under their, his, or her hands, and to the assignees whomsoever of the said disponees, heritably and irredeemably.” The disposition further declared “that the said disponees and their foresaids should have full power and authority at any time to sell and dispose of the said subjects by public roup or private bargain, and to grant, execute, and deliver valid and effectual dispositions and conveyances thereof to the purchasers; and also, so long as both of the said Archibald Gardner and Mrs Janet Robertson or Gardner were in life, but not after the death of either of them, they should have full power and authority to borrow money on the security of the said subjects, and to grant, execute, and deliver valid and effectual bonds and dispositions in security over the same, containing powers of sale and all other usual and necessary clauses, and that as freely, fully, and effectually as if they were absolute and unrestricted proprietors thereof: But it was by the said disposition so produced expressly provided and declared that in case of their said disponees or their foresaids selling or disposing of the said subjects as aforesaid, they should be bound and obliged always to re-invest the prices thereof in the purchase of other heritable property, or on heritable securities, taking the titles thereof always on the terms and in favour of the parties above written; but that purchasers from them, or parties lending money on the security of the said subjects as above provided for, should have no concern or right to interfere with the application of the prices paid or of the money lent.”

On the 29th January 1866 Mr and Mrs Gardner executed a mutual trust-disposition and settlement, which was, by codicil dated 30th June 1875, ratified and approved by Mr Gardner, the survivor of the spouses. By this trust-disposition the trusters disponed to certain trustees “All and sundry lands, tenements, and heritages, and also all debts, sums of money, and effects, and in general all estate, heritable and moveable, real and personal, wheresoever situated, now owing and belonging, or that shall be owing and belonging, to each of us at the date of our respective deaths, and of which we, or either of us, by any deed or deeds already executed, or which may hereafter be executed, have power to dispose, with the whole writings, vouchers, and securities, and the rents, interests, profits, and produce of the premises; and we respectively bind and oblige our heirs and successors to grant, execute, and deliver all deeds and writings which may be necessary or proper for vesting in our said trustees the estate and effects above conveyed.” The only provision in favour of Jessie Gardner, the trusters' daughter, was in these terms—“In the sixth place, upon the death of the survivor of us, in the first place we direct our trustees and their foresaids to pay to Jessie Robertson

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Gardner, our daughter, during all the days and years of her life, a free yearly annuity of £300, payable half-yearly at Whitsunday and Martinmas, and in advance, and beginning the first payment at the first term of Whitsunday or Martinmas after the decease of the survivor of us; but only provided that from and after the death of the survivor of us she lives separate from her husband William Boustead, and has willingly no communication of any kind with him: Declaring that our said trustees, so long as there are trustees acting under this trust, shall be sole judges of the implement or non-implement of the condition on which said annuity is payable, and a minute signed by them or their quorum shall be sufficient evidence of non-implement, and of the said Jessie Robertson Gardner ceasing to have right to said annuity; and in the event of the said Jessie Robertson Gardner not implementing the condition on which said annuity is payable to her, we direct our said trustees and their foresaids to pay to her, for her liferent alimentary use allenarly, a free yearly annuity of £52 per annum, payable weekly and in advance, during all the days and years of her life after the date our said trustees shall fix as the date of non-implement.” In regard to the rest of the estate the trustees were directed to pay over the income to the son Daniel Robertson Gardner, and on his death to divide the residue among his children, whom failing to certain other parties, but in no event to the children of the daughter by her husband William Boustead. These children were to have certain small legacies paid to them.

Mrs Gardner died on the 6th May 1874 survived by her husband, who died on the 6th May 1878. In 1866 they had sold a small portion of the Miller Street property, along with other subjects which belonged to Mr Gardner as an individual, to the City of Glasgow Union Railway Company. The price applicable to the portion so sold was not re-invested in heritage. Mr Gardner had previously entered into two minutes of agreement with his son, by the first of which, dated 30th June 1875, the father had conveyed to his son his whole interest in the business of cabinet-making in which they were partners, on condition that his son should relieve him of the entire liabilities of the business—the father nevertheless to continue a partner, and to be entitled to a share in the profits of not less than £1000 per annum. By the second minute the father entirely ceased to be a partner, and his son undertook to pay him an annuity of £1000.

The present action was raised by Mr and Mrs Boustead against her brother Daniel Robertson Gardner, and also against Mr Parnie, who had been appointed judicial factor on the trust-estate falling under the mutual disposition and settlement by Mr and Mrs Gardner. The action concluded for (1) declarator that Mrs Boustead was entitled to one-half pro indiviso of the Miller Street subjects disponed by the deed of 1857; (2) declarator that she was entitled to legitim; and (3) reduction of the two minutes of agreement between her father and brother relative to their business.

The following were the averments of the pursuers with reference to the reductive conclusion:—“(Cond 6) Mr Gardner and the defender, his son, carried on business in partnership as cabinetmakers in Glasgow for many years, and large profits, it is believed, were earned. Shortly before his death Mr Gardner nominally retired from business. In particular, by minute of agreement between himself and his said son, the defender, dated 30th June 1875, the deceased Mr Gardner assigned and conveyed to his son his whole interest in the stock, accumulated profits, and other assets of the concern of A. Gardner & Son, on condition that the second party, his said son, should relieve the first party of the whole debts and liabilities, present and future, of the said business, and of any business in which he might become a partner with the second party; but that the first party should notwithstanding remain a partner with A. Gardner & Son, and of any extension of the business thereof, and should be entitled as such to a share of the profits, and which profits the second party guaranteed should not be less than £1000 per annum. Reference is made to the minute for its terms and conditions. (Cond. 7) By another minute of agreement between the same parties, dated 22d November 1876, it was agreed that the deceased Mr Gardner should cease to be a partner as on 22d November of that year, and the defender Daniel Robertson Gardner thereby bound and obliged himself to free and relieve his father of the whole debts and obligations of the firm, and to pay him an annuity of £1000 per annum, half-yearly, during the lifetime of the said Archibald Gardner. (Cond. 8) By the effect of the said two minutes of agreement the said Archibald Gardner was ostensibly divested of his whole personal estate, at least of the capital thereof, while receiving in the form of an annuity the profits and income thereof, or of a substantial part of the same. The said minutes of agreement were not bona fide absolute transfers inter vivos of the deceased Mr Gardner's estate. The transaction was nominal and fictitious, and in fraudem of the pursuer's claim of legitim, the object of the minutes being, it is believed, to defeat that claim. It is averred that the property made over by the father to the son under these deeds, and of which he retained the life interest or profits, was of the value of £40,000. One-fourth of this sum is claimed by the said pursuer as her share of legitim.”

The pursuer pleaded—“(1) On a sound construction of the disposition of 1857, and sasine thereon, the pursuer Mrs Boustead has a beneficiary interest to the extent of one-half pro indiviso in the fee of the subjects thereby conveyed. (2) The pursuers are entitled to recover Mrs Boustead's share of the rents of said subjects which have accrued since her father's death from the defenders, or such of them as have intromitted therewith. (2) The pursuer Mrs Boustead is entitled, as a child of the deceased Archibald Gardner, to one-fourth of his moveable estate in name of legitim. (4) The pretended minutes of agreement are reducible in so far as they effect or purport to effect a transfer of the deceased's whole moveable estate to his son, in respect that under said transfer the deceased's life interest in his estate, or a substantial part thereof, was reserved; and that for this and other reasons the said agreements cannot operate to the prejudice of a child claiming legitim. (5) The defenders being indebted and resting-owing in the sums concluded for, the pursuers are entitled to decree of payment and to expenses.”

The defender Gardner pleaded—“(1) The averments of the pursuers, so far as directed

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against the present defender, are irrelevant and insufficient to support the conclusions of the summons. (2) The deeds sought to be reduced being valid and effectual, and the pursuers having no interest in the assets of the said business, the defender is not bound to count and reckon with the pursuers for his intromissions therewith. (3) The defender having been always willing to count and reckon for the sums remaining in his hands due or belonging to the deceased as above set forth, the action, so far as directed against him, is unnecessary and should be dismissed. (4) Upon a sound construction of the titles to the said heritable property and of the said mutual settlement, the said property falls to be dealt with as part of the trust-estate of the spouses, and the proceeds applied in terms of the said mutual settlement.”

The defender Parnie pleaded that as he was ready to count and reckon with the pursuer as soon as her rights were ascertained, he ought to be assoilzied.

On 6th June 1879 the Lord Ordinary ( Rutherfurd Clark) pronounced this interlocutor:—“Finds, declares, and decerns in terms of the declaratory conclusions of the libel: Finds the pursuers entitled to legitim, and before further answer allows the pursuers a proof of the averments contained in the eighth article of the condescendence, and to the defenders a conjunct probation: Meantime reserves all questions of expenses.

“ Note.—In 1857 Archibald Gardner, the father of the pursuer Mrs Boustead, purchased certain heritable property in Glasgow at the price of £5000. He took the title in favour of himself and his wife and the survivor, whom failing to such trustees as they or he or she should appoint, in trust for behoof of himself and his wife and the survivor, for their liferent use only, and for behoof of their children Daniel and Jessie Gardner and the survivor in fee, but declaring ‘that the shares and interests of the said Daniel Gardner and Jessie Gardner, and of their respective issue, should be subject always to such further limitations and restrictions and to such appointment as the said Archibald Gardner and Mrs Janet Robertson or Gardner, or the survivor of them, might direct and appoint or authorise to be made by any writing under their, his, or her hands.’ The deed further declares that the disponees should have a full power of sale, and during their joint lives a full power to borrow, but under the provision ‘that in case of their said disponees or their foresaids selling or disposing of the said subjects as aforesaid they should be bound and obliged always to re-invest the prices thereof in the purchase of other heritable property, or on heritable securities, taking the titles thereof always on the terms and in favour of the parties above written.’ In 1866 a small portion of the subjects was sold to the Union Railway Company, but the power to borrow was not exercised. In 1866 Mr and Mrs Gardner executed a mutual trust-deed by which they disposed of their whole estate. The deed does not per expressum convey the subjects already mentioned, nor does it profess to exercise the powers which were reserved to the spouses. Indeed it makes no reference to them. The benefit which the pursuer Mrs Boustead (Jessie Gardner) receives under this deed is an annuity of £300 provided she lives separately from and has no communication with her husband; but if this condition is not implemented she is to receive an alimentary annuity of £52. The rest of the income is bequeathed to Daniel Gardner. The residue is given to the children of Daniel, subject to certain small provisions in favour of Mrs Boustead's children by her present marriage, and to somewhat larger provisions in favour of her children by any other marriage into which she may enter with the approval of her brother.

The pursuer Mrs Boustead has raised this action, in which she claims—1st, A pro indiviso half of the subjects acquired in 1857, including one-half of the price of the part which had been sold; and 2d, her legitim. It is not doubted that she is entitled to claim legitim, though the parties are at variance both as to the conditions on which this claim may be made and as to the amount of legitim fund.

1. The defenders maintain that the heritable subjects in question belonged to Mr Gardner, or at least to Mr and Mrs Gardner. They do not dispute that the conveyance is taken to Mr and Mrs Gardner in trust; but they contend that a liferent with an unqualified power to borrow is equivalent to a fee. The Lord Ordinary is not able to adopt that view. It is true that a liferent coupled with an absolute power of disposal has been construed into a fee; but in this case no such power exists. For on a sale there is an obligation to invest the price in the purchase of lands or on heritable securities, the titles to which shall be taken in the same terms as the title of 1857. It is true that no similar condition is expressed if the power to borrow is exercised. But even if that power be assumed to be unqualified, it cannot be held that the liferenters have an absolute jus disponendi, and therefore they cannot have a fee. The Lord Ordinary is therefore of opinion that the fee was vested in Daniel and Jessie Gardner pro indiviso, subject to the exercise of the powers which were reserved to Mr and Mrs Gardner or the survivor.

2. But the defenders urged that the mutual trust-deed of 1866 operated as an exercise of the power reserved under the title of 1857. In order to give effect to this argument, it must be shown (1) that it was intended to exercise the power, and (2) that the alleged exercise of it was legal. (1) The trust-deed does not profess to convey or to deal with the subjects in question, or to be an exercise of the reserved power, nor is it necessary in order to satisfy the purposes of the deed to put upon it any such construction. It is not said that the trusters had no heritable estate other than these subjects, and indeed it appears that they had. Nor is it possible to define what interest is assigned to the objects of the power by the alleged exercise of it. Indeed, it cannot be said that the pursuer Mrs Boustead obtains any share of the subjects in question, because the trust-deed gives her nothing but a specific annuity, no part of which need be paid out of the income of the subjects of which she is joint fiar. (2) But the effect of holding the trust-deed to be an exercise of the power would be (1st) to reduce the interest of the joint fiars to a liferent merely; (2d) to exclude the pursuer's claim of legitim, unless she chose to surrender her rights under the disposition of 1857; and (3d) to confer the fee on persons who are not objects of the power.

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Further, it is necessary to hold that it was lawful for the trusters to attach a condition by which the benefit of the pursuer would be diminished if she did not separate from her husband.

The Lord Ordinary is disposed to hold that Mr and Mrs Gardner did not possess the power of restricting the interest of Mrs Boustead to a liferent only. She and her brother were fiars, and the reserved power, although it authorises the parents to apportion the fee as they may think proper, and to fix the conditions under which it is to be enjoyed, does not, as it seems to the Lord Ordinary, enable the parents to alter the nature of the right which was vested in their children. But further, he conceives that it cannot in any view authorise them to give any interest to persons who were not objects of the power. At the best, it is a power to apportion or divide the whole estate between the fiars, but not to introduce new persons into the disposition. And even if it were lawful to limit the interest of Mrs Boustead to a liferent, the effect would be that the fee of the whole would pass to her brother.

Again, it appears to the Lord Ordinary that the power could not be so exercised as to force the pursuer to surrender her legitim. She had two rights—the one under the disposition of 1857, and the other to legitim; and she is entitled to both. Her father could not by an exercise of the reserved power deprive her of one of them. But this is the necessary consequence of holding that the trust-deed is an exercise of the power.

Holding these views, the Lord Ordinary does not think it necessary to consider the effect of the condition which is intended to separate Mrs Boustead from her husband.

3. The pursuer is entitled to legitim. That is not disputed; but the amount of the fund is in dispute. The pursuer maintains that the deed mentioned in the 6th and 7th articles of the condescendence were not intended to express real transactions, and that Mr Gardner remained the true owner of the estate to which they relate. So the pursuer explains the eighth article of the condescendence, and the Lord Ordinary thinks that this is the true reading of it. Hence an inquiry is necessary.”

The defender Gardner reclaimed, and argued—(1) A liferenter by reservation with a power of disposal was equal to a fiar. What the power of disposal was did not matter. Here it was an unlimited power to borrow. (2) Admitting the children were fiars, Mr and Mrs Gardner by their deed of 1866 intended to exercise the power of appointment, and actually did exercise it. It was not necessary that the power or the subject of it should be expressly mentioned. (3) The averments on record were not sufficiently explicit to support the reductive conclusion. The pursuers ought to set forth what secret agreement between the father and the son they proposed to prove.

Authorities— Baillie v. Clark, Feb. 23, 1809, F.C.; Smith v. Milne, June 6, 1826, 4 S. 685; Hislop v. Maxwell's Trustees, Feb. 11, 1834, 12 S. 413; Morris v. Tennant, July 6, 1855, 17 Scot. Jur. 546

The respondent relied on the grounds stated in the note of the Lord Ordinary.