Scottish Court of Session Decisions

This action was raised by George Whyte against the Commercial Bank of Scotland (Limited) and David Hill Murray. The pursuer, inter alia, sought for decree of declarator that he had a right to one-fourth part of 12 1 2 shares of Commercial Bank stock, and one-half share of the stock of the same bank, and that the defender Murray had no interest in the same.

By contract of marriage entered into between Gerge Whyte senior, the pursuer's father, and Mrs Isabella Mess or Whyte, the parents of the pursuer, the latter, in consideration of certain provisions granted by the former, disponed and made over, inter alia, certain shares of Commercial Bank stock, including those now sued for, “to herself in liferent, but exclusive of the jus mariti, and failing her by death to the said George Whyte in liferent, and in either case to the children of the marriage, equally among them if more than one, in fee, subject to the power of division and other conditions” mentioned in the contract. The

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power of division was in these terms—“In case there be more than one child of this marriage the said George Whyte shall have the power, and failing his dying without his exercising it, the said Isabella Mess shall have the power while she remains his widow at any time of his or her life, or on deathbed to divide the provisions hereby made for children in such manner as he and, failing him, she may direct by any writing under his or her hand, and failing any such division the said provisions shall divide equally among the children, male and female, the issue of a child dying before receiving its provisions having right to the parent's share.”

There were four children of the marriage—the pursuer, an only son, and three daughters—who were all alive, and had attained majority at the date of the action. George Whyte senior died in 1869. By trust-disposition and settlement George Whyte senior conveyed his whole estate, heritable and moveable, for certain purposes, inter alia—(1) He provided that a liferent of the whole of his estate should be paid to his wife; (2) he made certain special provisions in favour of his daughters; (3) he directed the trustees to hold “the whole residue and remainder of my heritable and moveable estate for behoof of my son George Whyte and the heirs of his body.” These provisions were not to vest in the children till they attained majority, and till after the death of the survivor of himself and his wife. It was further declared that these provisions should “be in full of all that they can ask or demand by and through my decease out of my real or personal estate or out of the foresaid sum of £1100 or other parts of my said wife's fortune which may be found standing in her name at the time of my death in name of legitim, portion natural, executry, or otherwise, or by virtue of my said contract of marriage; and I declare that I have made the division above written among my children in terms and in virtue of the powers conferred upon me by said contract of marriage.”

By transfer, dated 10th and 11th May 1870, Mrs Whyte, “in implement of the transfer already granted by her in her marriage-contract,” transferred and made over to herself in liferent and her children equally in fee, the shares of Commercial Bank Stock conveyed by her in that contract. The children thereby accepted of the assignation so made subject to this condition, that the acceptance of the transfer was not to affect the rights of the children inter se under the marriage-contract of their parents and the trust settlement of their father.

By bond, dated 10th February 1876, the pursuer conveyed, in security of the sum of £2000, All and whole the residue and remainder of the heritable and moveable estate of the said deceased George Whyte provided to him by his father's settlement.

The pursuer's estate was sequestrated under the Bankruptcy Act 1856, and J. A. Robertson, C.A., was appointed trustee on 21st June 1882.

Mr Robertson was also trustee on the sequestrated estate of Adam Henderson, to whom had been transmitted the right conveyed by the bond and assignation in security granted by the pursuer. As trustee on Henderson's estate, and with consent of himself as trustee on the pursuer's estate, Mr Robertson exposed for sale under articles of roup dated 18th September 1883, the whole right of succession of George Whyte under his father's settlement, and these articles of roup contained the following clause—“ Sexto, the exposer submits herewith, and which is referred to as relative hereto, and signed by the exposer, a rental of the lands and others, which he alleges falls under the conveyance of residue in favour of the said George Whyte, with the value of Commercial Bank Stock, which he also alleges falls under said conveyance, and also a note of bonds and burdens affecting the said subjects, but the offerers must be held to have satisfied themselves not only as to the said rental, but as to the rights of the exposer to the said subjects and others, and also to the amount of the said burdens and deductions, the exposer not holding himself bound or responsible for the accuracy of the rental, or the note of bonds and burdens affecting the said subjects, nor warranting his right and title to the said subjects and others … Value of 2 1 2 Commercial Bank shares, £693, 15s.”

Under the articles of roup the defender David Hill Murray purchased the pursuer's right of succession under his father's settlement, and following upon the sale, Mr Robertson as trustee for Henderson, with consent of himself as trustee in the pursuer's sequestration, granted an assignation to Murray, dated 13th November 1883, conveying to him the pursuer's right of succession under the settlement of his father, together with the residue and remainder of the heritable and moveable estate provided to the pursuer under that settlement, and his whole right and interest as trustee foresaid, of whatever kind and description under the said trust-disposition and settlement in virtue of the bond granted by the pursuer, and subsequent transmissions of the same. No mention was made in this assignation of any conveyance of the bank shares in question.

The pursuer was discharged without composition on 18th March 1884, and the trustee Mr Robertson on 4th November 1887.

The defender Murray pleaded, inter alia—“(1) No title to sue. (5) The said deed of settlement having declared that the provision of residue thereby made in the pursuer's favour was in full of all his rights under the marriage-contract, the pursuer is barred from claiming the bank stock in question as falling under that contract. (6) The pursuer having assigned his reversionary interest in his father's trust-estate in security of advances made to him, and the said bank stock having by the provisions of the deed of settlement been dealt with as forming part of the trust-estate, the defender, as now in right of the reversionary interest, is entitled thereto, and to be assoilzied with expenses. (7) In any event, the said bank stock having vested in the pursuer on the death of his father, passed to the trustee on his sequestrated estate, and the defender as assignee of the trustee is entitled thereto, and to be assoilzied with expenses.”

The Lord Ordinary ( Lee) on 13th July 1888 pronounced the following interlocutor:—“Finds that the bank shares referred to in the summons formed no part of the estate of the deceased Mr George Whyte: Finds therefore that the assignation founded on by the defender Mr

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David Hill Murray is insufficient to support his claim to the said shares, and that he has no title to oppose the conclusions of the summons: Therefore repels the defences for the said David Hill Murray, and decerns and declares in terms of the first and third conclusions of the summons, but without prejudice to any claims upon said shares, so far as belonging to the pursuer, competent to the defenders the Commercial Bank, or to creditors upon the pursuer's sequestrated estate: Finds the defender David Hill Murray liable to the pursuer in the expenses of process, &c.

Opinion.—The pursuer's claim in this case relates to (1) a fourth part of certain shares in the stock of the Commercial Bank, which belonged originally to his mother, and were, along with sundry other properties belonging to her, conveyed by her antenuptial contract with George Whyte to herself in liferent, but ‘exclusive of the jus mariti, and failing her by death, to the said George Whyte in liferent, and in either case to the children of the marriage, equally among them if more than one, in fee, subject to the powers of division and other conditions' therein mentioned; and (2) to a half share of £100 in the converted stock of the Commercial Bank (Limited), which was purchased in 1881 by the pursuer or on his credit in order to make up, with the shares above referred to, the total amount of thirteen shares now standing registered in the books of the bank as belonging to ‘Isabella Mess or Whyte in liferent, for her liferent use allenarly, and to the children of the marriage between her and the said George Whyte (named) in fee.’

The power of division above referred to was in the following terms:—‘And it is further declared that in case there be more than one child of this marriage, the said George Whyte shall have the power, and failing his dying without exercising it, the said Isabella Mess shall have the power, while she remains his widow, at any time of his or her life, or on deathbed, to divide the provisions hereby made for children in such manner as he and, failing him, she may direct, by any writing under his or her hand, and failing any such division, the said provisions shall divide equally among the children, male and female, the issue of a child dying before receiving its provisions having right to the parent's share.’

The marriage was dissolved by the death of George Whyte in 1869. There were four children (the pursuer and his three sisters), and in 1870 a transfer of the original shares was effected in favour of the widow, ‘for her liferent use allenarly,’ and to the children nominatim in fee, but subject to a declaration that the acceptance of the transfer was ‘not to affect the rights and interests of the children of the said deceased George Whyte inter se’, under the marriage-contract, and a trust-settlement left by George Whyte.

The first question raised by the defences for Mr D. Hill Murray is, whether he has shown any title to dispute with the pursuer his right to the shares so standing in name of Mrs Whyte for her liferent use allenarly, and the children of the marriage in fee.

This question involves a somewhat minute examination of Mr Murray's title and of the deeds to which it refers, but I think it must be answered in the negative.

The title of the defender Mr Murray is founded on a sale and assignation of the residue of Mr George Whyte senior's estates in 1883 by Mr J. A. Robertson as trustee for the creditors of a Mr Henderson, and Mr Henderson's right is founded on a bond and assignation by the pursuer, of date 10th February 1876 in favour of one James Robertson, banker in Huntly.

The assignation to Mr James Robertson, banker in Huntly, is limited to ‘the residue and remainder of the heritable and moveable estates of the said deceased George Whyte (the father) provided to me (the pursuer) by the trust settlement of the said deceased George Whyte, and of all my right and interest of whatever kind and description under the same.’

Now, George Whyte's trust-disposition and settlement conveyed to his trustees nothing but the estates therein referred to as his own. These are, in the first place, the lands of Meethill and the other heritable subjects therein described, and also generally his whole estates and effects, heritable and moveable. The deed contains a clause showing that the lands of Meethill had been acquired by the employment of a sum of £1100, which is mentioned as forming ‘a part of my wife's fortune settled by our antenuptial contract of marriage’ (clause fourth). It contains a direction for payment of a provision of £1000 to each of his daughters, and it provides lastly that the whole residue of his estates, after satisfying his widow's liferent and the other special provisions, should be held for his son the pursuer. As to the vesting of these provisions the deed bears—‘And it is hereby specially declared that the foresaid special provisions in favour of my children, as well as the provisions of residue, shall vest in the parties entitled thereto, if sons, on their attaining the age of twenty-one, or if daughters on their attaining said age or being married, whichever shall first happen, but in no case till after the death of the survivor of me and my said wife, or her entering into another marriage, and upon the arrival of the respective periods of vesting of said special provisions in favour of my children and residue, my said trustees shall either pay said provisions or secure the same in manner above mentioned, and shall pay, deliver, or convey the said residue.’ But it conveys no estate remaining vested in his wife.

The deed also contains a clause by which Mr Whyte exercised his power of division as follows:—‘And I declare that the provisions above written in favour of my said children shall be in full of all that they can ask or demand by and through my decease out of my real and personal estate or out of the foresaid sum of £1100 or other parts of my said wife's fortune which may be found standing in her name at the time of my death in name of legitim, portion natural, executry, or otherwise, or by virtue of my said contract of marriage; and I declare that I have made the division above written among my children in terms and by virtue of the powers conferred upon me by said contract of marriage.

It is said that this division includes a right to the bank shares as part of the residue. But I think that this is a mistake. The marriage contract contains a clause declaring that ‘for all the purposes of this contract the capital of the

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sums, and the value of the subjects above conveyed by the said Isabella Mess or Whyte to the extent of her interest therein, shall be held to be £1300, be the same more or less.’ The contract also contained the following clause:—‘Further, the said Isabella Mess hereby dispones, assigns, transfers, and makes over to herself, exclusive of the jus mariti, and to her heirs, executors, and assignees whomsoever, all and whatever other estates and effects, real and personal, now belonging to her, or to which she may succeed during the subsistence of the marriage, and particularly, without prejudice to the said generality … and for effecting the purposes of this contract, the said George White hereby renounces his jus mariti over the subjects and sums of money above conveyed by the said Isabella Mess, exclusive of the jus mariti.”

“The effect of these clauses, in my opinion, was that the power of division contained in the marriage-contract was limited to the £1300, of which £1100 had been paid over, and the other £200 remained a burden merely on the widow's rights.

The bank shares, in my opinion, never became a part of the property of the pursuer's father, and formed no part of his residue. They remained vested in the wife, until, by the transfer effected in 1870, her right was limited to a ‘liferent allenarly,’ and the fee was given to the children.

Considering the terms of the marriage-contract, I see no reason to doubt that this transfer, after the death of George Whyte senior, was effectual to make them the property of the children, subject to their mother's liferent.

So stood the title when the pursuer became bankrupt and was sequestrated in 1882. He was discharged on 18th March 1884; but as his discharge was obtained without composition, the sequestration was not thereby ended, and he was not re-invested in his estates. His mother died in January 1887, but as she had previously renounced by the terms of the transfer all but a liferent allenarly in the bank shares, I do not see that this event affected the already vested rights of the children as in right of the bank shares in fee. I think that she had full power on the death of her husband to restrict her right to the bank shares to a mere liferent, and thus to accelerate the vesting of the fee. But the right so vested was a right derived from her.

Mr Murray's title, therefore, in my opinion, includes no right to these bank shares, for nothing but the residue of the father's estate was conveyed by the bond and assignation to Mr James Robertson, which forms the basis of his right. The fact that Mr J. A. Robertson, as trustee on the pursuer's sequestrated estates, consented in the articles of roup to his own act in selling that residue as trustee on Henderson's estate, seems to be of no effect in enlarging the subject of the conveyance. The same may be said of the consent of the Commercial Bank, who only consented for any interest they had under the bond in favour of James Robertson, banker, Huntly.

It was contended that because the articles of roup (art. 6) mentioned the bank shares as ‘alleged’ by Henderson's trustee to fall also under the conveyance to Robertson, therefore the sale and assignation following thereupon must be held to have included these shares. But the terms in Which this allegation was made and qualified are sufficient to shew that the measure of the defender's right must be ascertained by reference to the original deeds. The exposer expressly declines to warrant his right and title to the said subjects, and requires purchasers to satisfy themselves.

I am therefore of opinion that the defender Mr Murray has shown no title to defend.

It was argued for him that at all events the pursuer had no title to sue, because if the shares were not carried by the sale they must have belonged to the pursuer to the extent of one-fourth part at the date of his sequestration, and must therefore now belong either to his trustee, or if the trustee is functus by reason of his discharge, to his creditors in the still unfinished sequestration. My opinion is that this is a matter with which the defender Murray has no concern. The trustee and creditors in the pursuer's sequestration will no doubt attend to their own interest if they have any.

I am therefore of opinion that, so far as Mr Murray's defence is concerned, the pursuer is entitled to decree in terms of the first and third conclusions of the summons, not only as regards the half share the price of which was paid by him or debited to his account, but also as regards the other twelve and one half shares.

With regard to the defence of the Commercial Bank, my opinion is that decree in terms of these conclusions will not prejudice any right of lien which they may have. But it can do no harm to make the decree expressly bear to be without prejudice to any claims competent either to the bank or to the other creditors of the pursuer at the date of his sequestration.

As the second conclusion of the summons appears to ask more than a transfer of the pursuer's shares into his own name, I think that the Commercial Bank have a right to be heard further upon that, and upon the effect of their ranking in the sequestration. This, however, is a point which may stand over until it be seen whether my judgment on the first conclusion of the summons becomes final.”

Before the case came up for hearing on the reclaiming-note a petition had been presented to the Court for revival of the pursuer's sequestration.

The defender David Murray reclaimed, and argued—The pursuer had no title to sue. The shares in question, if recovered, could only benefit his creditors, as he had been discharged without composition, and so not re-invested in his estate. These shares were vested in him on the dissolution of the marriage at the latest, and so had passed to his trustee— Romanes v. Riddell, January 13, 1865, 3 Macph. 348. There was clearly no abandonment here, as a petition for revival of the pursuer's sequestration was before the Court. The case of Fleming v. Walker's Trustees, November 16, 1876, 4 R. 112, was therefore inapplicable. It was hardly fair to the defender that he should have to argue this question first with the pursuer and afterwards with the creditors. On the merits—In his trust-disposition and settlement George Whyte senior had properly exercised the power of division conferred upon him in the marriage-contract— Smith v. Milne, June 6, 1826, 4 S. 679;

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Mackie v. Mackie's Trustees, July 4, 1885, 12 R. 1230. The shares in question therefore fell into the residue of George Whyte senior's estate, and so were part of the right of succession conveyed by the pursuer under the bond of 1876, and purchased by the defender under the articles of roup and sale in 1883. At all events they were vested in the pursuer at the time of his sequestration, passed to his trustee, and were included in the assignation consented to by the trustee in favour of the defender.

The pursuer (respondent) argued—The pursuer had a title to sue. There was no existing sequestration or trustee. The pursuer's radical right in his estate had therefore revived. Further, the trustee had clearly abandoned any claim to the shares in question— Fleming v. Walker's Trustees, supra. The pursuer had a title to sue were it only for the benefit of his creditors. On the merits—There was no proper exercise of his power of division in the settlement of George Whyte senior. These shares were never part of the residue of his estate, and were therefore not conveyed under the bond of 1876 or purchased by the defender. Under the articles of roup and assignation following thereon, the defender acquired no more than had been conveyed by the pursuer under that bond. On the death of George Whyte senior the fee of these shares remained in his wife, and were not vested in the pursuer. They could never therefore have passed to the trustee in his sequestration, nor have been transferred by him by his consent to the assignation in favour of the defender.

At advising—