Scottish Court of Session Decisions

John Miller, Esq., of Leithen, died on 8th May 1883. He was predeceased by his wife, and was survived by four daughters, Miss Miller, Mrs Cunningham, Mrs Webster, and Mrs Thomson. He left a trust-disposition and settlement by which he conveyed to trustees his whole estate, heritable and moveable, and further appointed them to be his sole executors.

By the fifth purpose of the trust-disposition and settlement he directed his trustees to hold £16,000 for his daughter Miss Miller, paying over to her while unmarried so much of the interest as they should consider proper, and accumulating the balance. He gave her power to dispose by will of £5000 of the capital, and directed that the capital so far as not disposed of by her will, and the accumulations so far as not disposed of by will by her, should be held in three shares for behoof of the children of Mrs Webster and of Mrs Thomson, and for behoof of Mrs Cunningham in liferent and her children in fee, declaring that the share of it falling to Mrs Thomson's children should be dealt with in the manner provided for them by the seventh purpose of the deed.

The seventh purpose was in these terms—“In the seventh place, I direct and appoint my trustees to implement and fulfil the pecuniary obligation for £10,000 sterling undertaken by me in a bond and discharge entered into between my daughter Mary Miller or Thomson and the said Alexander Thomson and myself in contemplation of her marriage with the said Alexander Thomson … And further, I direct my trustees to hold and administer for behoof of the children (who may be alive at my death) of my daughter the said Mrs Mary Miller or Thomson, equally share and share alike, the sum of £4000 sterling, and in regard to the management and disposal thereof, I hereby direct my trustees to hold the same as above mentioned for the children of my said daughter Mary Miller or Thomson who may be alive at my death, equally share and share alike, and (with the exception under mentioned) yearly to receive and accumulate and invest for behoof of the said children respectively the annual income, interest, or proceeds of the said sum of £4000, and on the said children respectively attaining majority, to pay and make over to them respectively, not only their equal shares of the said principal sum of £4000, but also any income, interest, or proceeds that may have been accumulated in respect of their said shares, and in the event of any of the said children surviving me, but predeceasing majority, the share of such child shall accresce and belong to his or her surviving brothers and sisters equally among them; but I hereby declare, notwithstanding what is above written, that in the event of the said Alexander Thomson predeceasing me, or on his death if he shall survive me but predecease the majority of all or any of the said children, then my trustees shall have power to pay to the said Mary Miller or Thomson, or in the event of the death of the said Mary Miller or Thomson, whether before or after the death of the said Alexander Thomson, to lay out at their own discretion, for behoof of the said children respectively, the whole, or such part or portion as they may think right, of the income, interest, or proceeds of the shares of the said children, for the education, maintenance,

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and upbringing of the said children respectively, aye and until they respectively attain majority, but that always only after the death of the said Alexander Thomson.”

In the thirteenth purpose of the trust he directed his trustees to dispose of the residue of his estate by dividing it into four portions, one-fourth to be held invested for behoof of Miss Miller, one fourth for behoof of Mrs Webster, one-fourth for the children of Mrs Thomson, and one-fourth for her granddaughter Mrs Marjory Cunningham or Home. The fourth falling to Mrs Thomson's children was to be dealt with in the manner provided as to them in the seventh purpose above quoted.

In contemplation of marriage between the truster's daughter Mrs Thomson and her husband, the truster had bound himself by bond and discharge (referred to in the seventh purpose quoted above) entered into between him and Mrs Thomson, dated 1st June 1814, to pay the sum of £10,000 sterling to the trustees therein named, Mrs Thomson accepting this provision in full of legitim or other claims on her father's estate; of this £10,000 the annual income was to be paid to Mrs Thomson, and on her death the capital was to be paid to her children, in such shares as she might appoint, or failing such appointment equally. There were four children—a girl and three boys—born of the marriage, of whom the eldest was born on 19th September 1875, and the youngest on 22d July 1879.

It was estimated that the residue of Mr Miller's estate would amount to about £40,000 sterling, one-fourth of which, or £10,000 sterling, fell to Mrs Thomson's children in addition to the capital of the provision of £10,000 on the death of the mother and the further sum of £4000 provided for them under the trust-deed. They had also a contingent right to one-third of the sum of £26,000 provided in all to their aunt Miss Miller under the deed.

In December 1883 this petition was presented by Mrs Thomson and by her husband Alexander Thomson for himself and as administrator-in-law for his children, praying the Court to authorise and direct Mr Miller's trustees to pay to the petitioner for his children's behoof so much of the “free annual income and produce of the sums of money and share of residue provided for the said children by the said John Miller in his said trust-disposition and settlement as your Lordships may deem sufficient for their proper maintenance and education, having regard to their position and prospects in life; or, alternatively, to authorise and grant warrant to the” trustees “to advance and pay to the petitioner the said Alexander Thomson, as tutor and administrator-in-law, and for behoof foresaid, the following sums out of the capital of the said sums and share of residue, viz.,” the sum of £60 payable at two terms of the year for each of the three elder children, and the sum of £40 at two terms for the youngest child, these payments to be continued for such time as the Court should determine, “and to direct the expense of this application and all relative procedure to be charged against the shares of the trust estate of the said John Miller provided to the said” children of Mrs Thomson.

The petitioner averred that the petitioner the said Alexander Thomson had not been successful in business, and had sustained severe losses in farming operations during the past few years, and his affairs had consequently become embarrassed. The only income on which he and his wife could rely for their own maintenance and the maintenance and education of their children was that derived from the interest on the said sum of £10,000 payable by the said John Miller under the bond and discharge above referred to. The average income to be derived from this source, after deduction of the expenses of the trust, could not, it was believed (looking to the rate of interest on first class landed securities) exceed £350 per annum or thereby. That sum, it was submitted, was insufficient to enable the petitioners, the said Alexander Thomson and his wife, both to maintain themselves and to maintain and educate their said children in a manner suited to their position and prospects in life. [After stating the nature of the children's expectations under their grandfather's settlement as above explained]. —In consequence of the direction in Mr Miller's trust-disposition and settlement to accumulate and invest the annual income of the sums provided to the said children, Mr Miller's trustees felt unable, without judicial authority, to apply any portion of the annual income to the maintenance and education of the said children, and as the result would be injurious to the interests and prospects of the said children, the petitioner the said Alexander Thomson had felt it incumbent on him to present this application.

By The Trusts (Scotland) Act 1867 (30 and 31 Vict. cap. 97), section 7, it is enacted—“The Court may from time to time, under such conditions as they see fit, authorise trustees to advance any part of the capital of a fund destined either absolutely or contingently to minor descendants of the truster, being beneficiaries, having a vested interest in such fund, if it shall appear that the income of the fund is insufficient or not applicable to, and that such advance is necessary for, the maintenance or education of such beneficiaries, or any of them, and that it is not expressly prohibited by the trust-deed, and that the rights of parties, other than the heirs or representatives of such minor beneficiaries, shall not be thereby prejudiced.”

If it was considered inconsistent with the directions contained in the foresaid trust-disposition and settlement to authorise Mr Miller's trustees to pay a proportion of the annual income of the shares provided to the said children under the said deed, the petitioner submitted that authority should be given to the trustees to make, in virtue of the powers conferred upon the Court by the aforesaid Trusts (Scotland) Act 1867, to or for behoof of the children as a provision for their suitable maintenance and education, viz., the payments out of capital alternatively prayed for in the petition. As the accumulated interest in the latter case would fall into capital, these payments would not diminish the amount of residue as it at present stood.

Answers were lodged by the trustees, who maintained they were not entitled to make the payments asked in the prayer of the petition without judicial authority, and further pleaded—“(2) The payments asked by the petitioners are, the respondents submit, expressly prohibited by the said trust-deed, to which reference is hereby made. (3) The payments craved in the prayer of

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the petition being expressly prohibited by the trust-deed, are not such as can be authorised under section 7 of the said Trusts (Scotland) Act 1867.”

The petitioner argued—(1) At common law the trustees were bound to pay him the sum necessary for the maintenance and education of the children out of the income— Mackintosh v. Wood, July 5, 1872, 10 Macph. 933. (2) If, however, such was considered inconsistent with the truster's direction in the trust-deed, then the trustees were bound, under sec. 7 of the Trusts Act 1867, to make such payments out of the capital of the fund— Pattison and Others, Petitioners, Feb. 19, 1870, 8 Macph. 575.

The respondents replied—(1) The truster had the whole position of affairs in his contemplation when he executed the deed. It was too soon (within six months of the truster's death) to come and ask the Court to order to be done something which he had not provided for in that deed. (2) The 7th clause of the Act only contemplated such advances as were here craved where they are “not expressly prohibited by the trust-deed.” The prohibition was clearly by implication made by the trust-deed.

At advising—