Scottish Court of Session Decisions

By trust-disposition and settlement dated 7th April, and codicils thereto dated respectively 7th and 9th April 1869, the deceased James Mackie, physician in Greenock, conveyed his whole estate to trustees for the purposes therein specified, and, inter alia, he directed his trustees, out of the fund or sum to be set aside to meet an annuity of £300, “payable in advance, and free of legacy-duty,” which he had by separate bond of provision dated 22d May 1866 provided to Miss Emily Vaux Jenney, at the first term of Whitsunday or Martinmas after her death, to “make payment to the professors, for the time being, of the Medical Faculty in the University of Edinburgh, … which professors, so hereby designated as trustees, are hereinafter styled the ‘bursary trustees,’ of the sum of £2000, to be held by them in trust in perpetuity, and laid out and invested for providing and securing two bursaries in the said University, to be called ‘The Mackie Bursaries,’ all in terms of a codicil and deed of foundation which, for purposes of convenience, has been separately prepared, and is to be executed by me of equal date herewith, and to which reference is here made.”

By the said codicil and deed of foundation therein referred to, and executed on 7th April 1869, Dr Mackie, after narrating the provision in the trust-disposition, provided as follows—“And now, seeing that, with the view of enabling the bursary trustees the more easily and effectually to carry out my intentions in regard to the said bursaries, I have resolved to execute this codicil and deed of foundation in manner underwritten: Therefore, and without prejudice to the provision in my trust-disposition and settlement before recited, but in corroboration and supplement thereof, I, of new, direct my trustees nominated in my said trust-disposition and settlement, at the term or time therein provided, to make payment to the said professors, for the time being, of the Medical Faculty in the University of Edinburgh, including and excluding as before written, and herein styled the bursary trustees, of the sum of £2000, to be held by them in trust in perpetuity, and laid out and invested for providing and securing two bursaries in the said University, to be called “The Mackie Bursaries,” and the bursary trustees shall annually make payment of the interest or annual proceeds of the said sum of £2000 equally to and between two young men attending the medical or surgical classes, or of any of such classes, in the said University, during the winter sessions of the University, such payment to be made on the 30th day of November in each year, or as soon thereafter as conveniently may be, and to continue during two years to each bursar so prosecuting his studies.” Prior to the execution of the said trust-disposition and codicils, Dr Mackie had executed a holograph trust-disposition dated 5th August 1867, by which he directed the trustees therein named, inter alia, “( Thirdly) to pay to Frederick James Fuller the sum of £500, and a like sum to Isabella Mackie Fuller, children of Mr John Fuller of Trinidad, these last bequests, to be paid free of legacy—duty.”

James Mackie died on 9th June 1869, and the annuity payable to the said Miss Emily Vaux Jenney was thereafter paid to her in terms of the said trust-disposition and settlement until her death on 12th June 1886.

By the deeds executed in 1869 Dr Mackie did not dispose of the residue of his estate, and an action of multiplepoinding and exoneration was brought by his trustees to settle, inter alia, to whom the said residue was payable. In that process the residue was claimed, inter alios, by his next-of-kin, and their claim was sustained by the Lord Ordinary ( Lord Mure) by interlocutor dated 14th May 1874, which became final. By that interlocutor the University of Edinburgh were ranked and preferred to the sum of £2000 out of the fund or sum set apart by Dr Mackie's trustees to secure the annuity of Miss Emily Vaux Jenney. In that action it was found by interlocutor of the First Division dated 3d March 1874 that the said holograph trust-disposition had been impliedly revoked by Dr Mackie's trust-disposition and settlement of 7th April 1869.

A question having arisen as to whether the legacy of £2000 was payable free of legacy-duty, a Special Case was presented for the opinion of the Court, to which the bursary trustees were the first parties, the next-of-kin of Dr Mackie were the second parties, and the sole surviving trustee of Dr Mackie was the third party

The question of law submitted was—“Are the first parties entitled to payment of the said legacy of £2000 from the estate of the said Dr James Mackie, free of legacy-duty?”

The first parties maintained that on a sound construction of Dr Mackie's trust-disposition and codicil the sum of £2000 fell to be paid free of legacy-duty. They argued that here the codicil was the leading deed. This appeared from the reference in the trust-disposition, and from the nature of the codicil itself. It was the more elaborate deed. Looking to the character of the bequest, moreover, it was plain that it was the testator's intention that as little should be deducted as possible. “Free” must have some meaning, and if it did not mean freedom from legacy-duty, it was impossible to say what its meaning was. There was no direct authority, but the case of annuities was analogous, and in the following cases similar expressions had been held to import freedom from legacy-duty— Mackie's Trustees v. Mackie, January 15, 1875, 2 R. 312 (“free from all burdens, taxes, and deductions whatsoever”); Banksdale v. Gilliat, May 21, 1818, 1 Swanston's Rep. 562 (“without deduction”); Gosden v. Dotterill, December 14, 1832, 1 Mylne & Keen's Rep. 56 (“free from all expense”); Baily v. Boult, November 13, 1851, 14 Beavan, 596 (“one clear yearly rent-charge or annuity”); Warbrick v. Vasley, June 27, 1861, 30 Beavan, 241 (“free from any charge or liability”); Haynes v. Haynes, February 19, 1853, 3 M. & G. Rep. 590 (“clear”); in re Cole's Will, July 2, 1869, L.R., 8 Eq. 271 (“clear income or sum”).

The second parties maintained that the first parties were entitled to payment of the said sum after deduction of £200, being the amount of legacy-duty at the rate of 10 per cent., payable thereon. They argued that the decisions were contradictory, and the case of an annuity was not analogous, for an annuity must be paid whether the capital yielded a return sufficient to meet it or not. Thus a clear annuity was wholly different from a clear legacy— Sanders v. Riddell, November 24, 1835, 7 Simon's Rep. 536 (“clear”);

Page: 595↓

Banks v. Braithwaite, June 6, 1863, L. J., 32 Ch. 35 (“clear”); Kinloch's Trustees v. Kinloch, February 24, 1880, 7 R. 596 (“whether income-tax included in ‘burdens and deductions’”); Rodger's Trustees v. Rodger, January 9, 1875, 2 R. 294 (“free”), per Lord President. The question depended on the deeds themselves. Had the first deed stood alone there could have been no difficulty. The aim of the clause founded on by the first parties in the second deed was to prevent the possibility of double legacy, not to increase the sum bequeathed.

At advising—