Scottish Court of Session Decisions

By deed of settlement dated 18th June 1827, and duly recorded, Robert Aitken, builder in Glasgow, who died in August 1827, disponed in favour of certain trustees named therein, for the purposes

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of the deed, his whole estates, heritable and moveable, excepting his household furniture, which he made over absolutely to his wife.

By the second purpose of the trust-deed the trustees were instructed to set apart the trustee's house in Gallowgate Street, Glasgow, as a residence for his wife in the event of her surviving him, and they were also directed to pay to her an annual sum of £250 so long as she should continue his widow, and it was left to their discretion to set apart a portion of the heritable subjects in security of this annuity.

By the last purpose of his trust-deed the truster appointed the whole residue of his estate, heritable and moveable, including the fee of the heritable property or stock set apart for the annuity, and also the house left to his widow in liferent, “or the price thereof” “to be divided” by the trustees among his children equally, share and share alike, to be payable to those of full age at the date of his death at the first term of Whitsunday or Martinmas after his death, and to those in minority at his death on their respectively attaining majority, or if daughters being married, declaring that notwithstanding what was before written the fee or the capital sum of the property set apart to meet the annuity, and the house appointed for her residence, should be retained by the trustees “aye and until the same shall be relieved and disencumbered of the rights of the said Jean Shanks or Aitken therein, either partially by her second marriage or by her decease. Thereafter he made this provision—“And with the view of enabling my trustees or trustee to execute the purposes of the trust hereby confided to them, I do hereby confer upon my said trustees or trustee the most ample powers which any proprietor whatever can possess or enjoy, or which if in life I could exercise in the sale and disposal of my lands, heritages, and moveable means and effects, with power to them, as soon after my death as they may think expedient for the benefit of the trust, to convert the whole of my estate, heritable and moveable, into money, but with the exception always of the house or lodging presently possessed by me, to be appropriated as before provided for the residence of the said Jean Shanks, my wife, and which house or lodging shall not be sold until after the death of the said Jean Shanks, and with power also to my said trustees or trustee, notwithstanding anything hereinbefore written, if they shall think fit, to continue to hold and retain the heritable subjects belonging to me, or any part or parts thereof, and to suspend the actual appointment and division of the same among my children as before provided until the death of the said Jean Shanks.”

The testator was twice married. He had six children by his first wife, and five by his second, Jean Shanks or Aitken. He died in August 1827 survived by his wife, who lived until May 1881.

The trust-estate consisted for the most part of heritable property in Glasgow and elsewhere. The trustees from time to time realised the whole of the moveable estate and a part of the heritable estate, and divided the proceeds thereof among the beneficiaries entitled thereto. The only assets retained by the trustees and not divided before the date of this multiplepoinding consisted of certain tenements and shops in Glasgow, the rental of which amounted to more than £700 per annum, and which property was retained by them in security of the widow's annuity. As the rental of these tenements was in excess of the annuity. the surplus rents were divided amongst the parties entitled thereto, except the shares falling to the representatives of Mrs Margaret Aitken or Munro, afterwards Leitch, and Mrs Agnes Aitken or Walker, both daughters of the truster, whose shares were consigned in respect of conflicting claims by their representatives in heritage and in mobilibus. Mrs Leitch was twice married, and with regard to her share, which amounts to about £738, several questions arose—First, as to whether it was to be regarded as heritable or moveable in regard to her succession; and second, whether it was liable to be attached by the creditors of her second husband, who died insolvent, and whose estates were realised by her as executrix under the supervision and management of a committee of his creditors.

Mrs Walker's interest in the surplus rents amount to about £174. The whole amount was claimed by her only son Robert Walker, in respect that it was heritable, while a portion of the sum was claimed by his sister in respect that it was moveable. The amount was accordingly consigned by the trustees, who on July 19, 1882, raised an action of multiplepoinding, calling as defenders all the residuary legatees or their representatives.

The unsold heritable property and the consigned sums of surplus rents formed the fund in medio, and the main question between the parties was—Whether the estate was to be treated as heritable or moveable in relation to the succession of the residuary legatees?

The competition lay between the heirs and the next-of-kin of the issue of Mrs Leitch and Mrs Walker. The heirs of each of these ladies contended that the share falling to each respectively was on a just construction of Mr Aitken's settlement heritable in their succession. Their next—of-kin contended that the share of each respectively was moveable. Archibald Munro, as a grandson and heir-at-law of Mrs Leitch, and Robert Walker, son of Mrs Walker, claimed the fund in medio so far as falling to these ladies respectively, on the ground that it was heritable.

On the other hand, Patrick Walker Leitch and others, the children of Mrs Margaret Munro or Leitch by her second marriage, maintained that upon a sound construction of the trust-settlement the share of residue bequeathed to their mother was moveable, that it fell to their father jure mariti, and that they were entitled to participate in her share of the fund in medio to the extent of two-thirds as representing their father, and of the remaining one-third as having fallen to their mother jus relictœ on his death, and so passed to them.

A claim was also put in by the trustees of Mr Robert Walker of Lethanhill, husband of Mrs Walker. They maintained that the residue should be treated as moveable, and further that as the bequest of residue under the truster's disposition was not declared to be exclusive of the jus mariti of any husband his daughter might marry, Mrs Walker's share therefore fell jure mariti to her husband Robert Walker, and his trustees were thus in right thereof.

On 14th November 1882 the Lord Ordinary pronounced an interlocutor ranking and preferring

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certain claimants on the footing that the heritage which had not been sold by the trustees was to be treated as heritable in the succession of the residuary legatees of the truster.

“ Opinion.—In this action of multiplepoinding the fund in medio consists of heritable property still unsold, part of the trust-estate of Robert Aitken, who died in 1827, and of a share of the proceeds of other estate sold in 1864. The main question is, whether the estate is to be treated as heritable or moveable in relation to the succession of the residuary legatees? Two of the truster's children, Mrs Leitch and Mrs Walker, died leaving issue, and their respective heirs and next-of-kin are competing for the undistributed part of the residue accruing to their families. On the part of the next-of-kin of the ladies it is contended that the heritable property is constructively converted under a direction to sell which is said to be contained in Mr Aitken's settlement. I was referred to various clauses of the settlement, but the only one which I regard as material is the clause commencing—‘And with the view of enabling my said trustee or trustees to execute the purposes of the trust hereby confided to them, I do hereby confer upon my said trustees or trustee the most ample powers which any proprietor whatever can possess or enjoy, or which if in life I could exercise in the sale and disposal of my lands and heritages and moveable means and effects.’ It appears to me that the clause commencing with these words is not an absolute and unqualified trust, but is in the clearest and plainest language a discretionary trust or power to be exercised according to the opinion of the trustees and exigencies of the trust as time and circumstances may determine. I am not sure that the case of a discretionary trust for sale has arisen for decision in any of the recent cases, but it is considered by Lord Westbury in Buchanan v. Angus, 4 Macq. 379, in a passage which has not received so much attention as some of the other observations of that eminent judge in his review of this branch of the law. I refer to those expressions in which his Lordship intimated an opinion that in the case of a qualified trust contingent upon necessity or the exercise of a discretion, then ‘until the discretion is exercised or the necessity arises and is acted on,… there is no change in the quality of the property, and the heritable estate must continue to be held and transmitted as heritable.’ It is, I think, implied in the passage quoted, that when the discretionary power is exercised in a due course of administration, or when in a due administration a necessity has arisen for an immediate sale, conversion will take place in accordance with the testator's will, and the estate will descend as moveable estate, although the estate or its price may be undistributed in the hands of the trustees when the succession opens. I think this is a sound view of the law applicable to such a case as the present; it is simply an extension of the established doctrine of constructive conversion to the case of contingent and discretionary powers, with the necessary qualification,—an important one in my view,—that the effect of the power in altering the succession is suspended until the occurrence of the event or the exercise of the discretion which brings the power into operation. The sale in order to have such an effect must also be in a proper oourse of administration. An unnecessary or capricious sale would not be a valid exercise of the power, and it would obviously be improper to attribute any effect as regards succession to a sale not in terms of the power.

In the present case no question arises as to the validity or propriety of the acts of the trustees. The trust-estate seems to have consisted chiefly of heritage, and sales were made from time to time, apparently with the approval of, certainly without objection on the part of, the beneficiaries. I am informed by counsel that sales were made soon after the truster's death, at least before the year 1829. Several sales of property in Glasgow and Greenock were effected in the year 1864, as shown by the minutes printed with the record. Of the proceeds of these sales, a sum amounting with interest to £738, 1s. 8d., being Mrs Leitch's proportional share, was deposited in bank, and is part of the fund in medio. That this is moveable succession I do not doubt, because the property which it represents was not only constructively but actually converted in Mrs Leitch's lifetime with a view to immediate distribution, although the money was not paid to that lady.

In connection with this sum a subsidiary question arises. Mrs Leitch was previously married to a gentleman of the name of Munro, and there are issue of both marriages. The children of the first marriage claim that the fund should be divided equally amongst Mrs Leitch's children. The children of the second marriage claim the whole fund through their father, to whom they say it passed by the legal assignation of marriage. If my opinion is well founded, that there was no conversion under Mr Aitken's will until the trustees had sold or resolved on a sale, then Mrs Leitch's interest at the commencement of the trust was a heritable interest, and did not pass to her husband by marriage. It follows, on the principle of Cuthill v. Burns, and other cases, that a subsequent conversion of that interest from heritable to moveable would not bring it within the dominion of the husband. On the contrary, the money, unless given to the husband as a donation, would remain the property of the wife, might be reinvested by her in heritable securities, and, even if not restored to its heritable condition, would descend to her representatives as her succession. On this question, accordingly, I find for the representatives of Mrs Leitch, being the children of both marriages.

With regard to the unsold heritable property, which is the chief part of the fund in medio, my opinion is that the interest of Mrs Walker and Mrs Leitch in this part of the residuary estate was heritable in their respective lifetimes, and that their heirs-at-law are entitled to be preferred. The trustees had an absolute discretion to sell or not to sell. It does not appear that they were called upon by any of the beneficiaries to sell off the remaining trust property, and that there was a certain convenience in retaining this property, because it formed a security for the annuity payable to Mrs Aitken, though doubtless larger than was necessary for that purpose. I cannot say that in retaining this property, with the tacit approval of all concerned, the trustees are to be held to have exceeded their discretion. If they were within their discretion, it follows from the principles on which my judgment is based,

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that whether the trustees have sold or have refrained from selling, the quality of the succession is determined by the event.

The remaining entry in the account of the fund in medio consists of the rents of the unsold heritable property. These, in each, so far as accruing in the lifetime of the truster's daughter, will descend as personalty. The rents which have accrued after her death belong to the heir—at-law as fruits of his heritable estate.”

The claimants Patrick Walker Leitch and others reclaimed, and argued—The language used in the residuary and other clauses of the deed bearing on the question was more appropriate for the conveyance of moveables than of heritage. Though no absolute direction was given to sell the heritage, there was an intention in the testator to make this fund moveable, from which a direction might be implied. It was intended that when the widow died the property was to be sold for division. The words in the deed, “or the price thereof,” following the direction that the residue should be divided among the truster's children, favoured the reclaimer's contention. There were three elements favouring conversion—a residuary bequest, a mixed estate, and a number of beneficiaries.

Authorities— Davie, M. 4624; Patrick v. Nichol, December 7, 1838, 1 D. 207; Baird v. Watson, December 8, 1880, 8 R. 233; Lord Advocate v. Blacburn's Trustees, November 27, 1847, 10 D. 166; Smith v. Advocate-General, 14 D. 585; Buchanan v. Angus, May 15, 1862, 24 D. (H. of L.) 5, 4 Macq. 374; Somerville v. Gillespie, July, 6, 1859, 21 D. 1148; Boog v. Walkin—shaw, June 27, 1872, 10 Macph. 872; Fothering—ham's Trustees, July 2, 1873, 11 Macph. 848; Nairn's Trustees v. Melville, November 10, 1877, 5 R. 128; Duncan v. Thomas, March 16, 1882, 9 R. 731; Hogg v. Hamilton, June 7, 1877, 4 R. 845; Auld v. Mahon, December 8, 1876, 4 R. 211; Williamson, March 16, 1843, 2 Bell's App. 89.

Argued for Archibald Munro and Robert Walker—The presumption was that this estate should remain in the same quality as at the testator's death. It was argued on the other side that the direction that the residue should be “divided” among the truster's children was equivalent to an instruction to convert prior to division, but if the discretion of the trustees had not been exercised prior to division, it was not to be exercised for the purpose of division. As a sale was not in the circumstances indispensable, it could not be held as directed by the truster, who admittedly had not expressly ordered it. No conversion had taken place; more definite in structions would be required to warrant it.

At advising—