Scottish Court of Session Decisions

The property which belongs to this Incorporation has been created, and is kept up by contributions of members of the Incorporation. In short, the whole property of the Incorporation, I understand—at least so far as the history of that property can be ascertained—is the accumulation of entry-money paid by corporators to the Incorporation. Now, the first thing that the petitioners have got to establish is that this property so created is legally appropriated to charitable purposes; and these words “legally appropriated” seem to have a very clear and distinct meaning—a meaning which has been given effect to in a previous case. They mean that the property is so appropriated as to create a legal obligation upon the part of the administrators of the property to apply it in a particular manner. If the property is so legally appropriated, it follows of necessity that the administrators of the fund are under a legal obligation to apply the funds in their hands in a particular way; and so, in order to bring the case within the meaning of this exempting clause, the petitioners must make out that the funds in the hands of the corporation are so appropriated that the corporation is legally bound to apply them in a particular way. When there is a legal obligation, it follows again as a matter of necessity that there must be somewhere a legal right to enforce, the obligation. It may be that the legal right to enforce the obligation may belong to individuals, or it may be that the legal right belongs to a class; and I think it will be found, from the terms of the bye-laws of this Incorporation, that the legal right to enforce this obligation belongs to a class. But in that I am anticipating, because the next question is whether the purpose to which this fund is legally appropriated and must be applied is a charitable purpose. Now, charity generally means—I mean the application of a charitable fund generally means—that the object of the charity has no right to demand anything from the party who administers the fund. But still further, it generally means that he has given nothing for it—that the bestowal of the charity is entirely gratuitous on the part of the administrator of the fund. In the present case the fund is legally appropriated, within the meaning of this section, to the maintenance of decayed members of his Incorporation, and of their widows and children. Therefore the body, the corporators generally, have aright to demand that this fund shall be so applied, and shall not be applied to any other purpose whatever, and their right to require this depends upon the consideration they have given for the right; and that consideration is the payment of entry money. Now, these different considerations seem to me to exclude the notion of charity altogether. The corporators and members of the body generally contribute, upon becoming members, to the funds and property of the Incorporation, and these funds and that property are applied to one purpose and one only, namely, providing for decayed members and their widows and children, and so there is, so far as I can see, a complete obligation on the one hand and a complete right on the other. There is an obligation on the part of the administrators of the fund to apply it in a particular way, and no other way, and there is a right on the part of the whole members of the corporation to insist that it shall be so applied—and it does not seem to me to interfere with that view of the case, that according to the bye-laws of the society, an individual has no legal title, as it is called, to insist on the fund being so administered as to give him a permanent right. The bye-laws contain this provision among other things, and it is the most important of all:—“It is declared and enacted that pensions may be awarded to decayed members and the widows and children of deceased members in indigent circumstances, or an amount expended for their behoof, to such extent as the Deacon and Masters consider suitable; and this allowance shall be payable only during their pleasure, and no person shall have or acquire a legal title to share the funds of the Incorporation as a pensioner or otherwise.” There is a very large discretion undoubtedly left in the hands of the Deacon and Masters of the Incorporation. They have an entire control, in so far as regards each particular individual applying for the benefit of this fund. The amount to be given is in their discretion, and it is also in their discretion to say whether a particular individual shall not have the benefit of the funds at all, for reasons which of course must not be capricious or unreasonable, but for fair reasons. The discretion is a very large one, but like the discretion vested in almost all administrators, it is not to be abused, and if it is abused the administrators will be subject to the control of this Court, but, notwithstanding that large discretion, it is here made abundantly clear what is the destination of the annual income of the property.

It is to be awarded in the shape of pensions to decayed members and the widows and children of deceased members in indigent circumstances. There is no other lawful application of the money. There is no other purpose for which this corporation now exists, and therefore it appears to me that notwithstanding the wide discretion vested in the Deacon and Masters as regards each individual case, this is nothing else in its real character, in its present circumstances, since it ceased to have any privileges of exclusive trading, than a provident society, and therefore it cannot answer the description of the exempting clause of the statute as being a corporation whose funds are legally appropriated to charitable purposes. I think the decayed members and their widows are not receiving charity when they get the benefit of this fund, but, on the contrary, are receiving benefit in consequence of the payment by either the members themselves who are now receiving aid, or by the husbands and fathers of the widows and children who are receiving aid. It differs from most provident societies of the same description in respect of that peculiarly large discretion which is vested in the Deacon and Masters; but I can see no other distinction, and that distinction is not sufficient to take it out of the category of a provident society, or to make the pensions and allowances payable under it charitable in any proper sense of the term.

I am therefore for confirming the assessment.

Lord Mure—I am of the same opinion. It appears to me that your Lordship has very distinctly explained the position of this society as regards the creation and application of its funds. The fund in question was created by the contributions of the members of the association, paid in in terms of the regulations applicable to these matters, and it is distributed by the managers of the Incorporation in terms of the bye-laws among decayed members, or the widows and children of deceased members, but the extent to which relief is to be given is to be entirely in the discretion of the managers. Strictly speaking, therefore, it is a benefit conferred upon the poorer families of the Incorporation in return for the money which they and the other members of the Incorporation have contributed towards the creation of the fund. In these circumstances I agree with your Lordship in thinking that it is not a charitable purpose in the sense in which that word is used in cases of this description. Reference was made to the case of the Fleshers' Incorporation of Glasgow, but there the rules were different, and the case has no direct bearing here. Because by those rules a fixed sum of money was provided for each widow when she became poor. There was, moreover, no discretion as to the amount to be paid, but an absolute right given to the widow, if she was poor, to have a certain fixed annuity paid out of the funds; and her title to sue was sustained on that ground. There was no question raised in that case similar to that which is here in dispute; and I do not think we are in the least degree trammelled by that decision.

Lord Shand—I am quite of the same opinion, and your Lordship has so clearly and exhaustively stated the ground upon which my opinion rests, that I should be guilty of repetition if I added a word to what your Lordship has said.

Lord Adam—I am entirely of the same opinion.