Scottish Court of Session Decisions

Alexander Young died on 21st October 1875 leaving a trust-disposition and settlement by which he conveyed his whole estate to trustees. The deed contained, inter alia, the following provisions:—“ In the eighth place—I direct and appoint my trustees, at the first term of Whitsunday or Martinmas that shall happen six months after my death, to assign, transfer, and make over twenty-one City of Perth Annuity Bonds belonging to me … to and in favour of the Deacons of the Eight Incorporated Trades of Perth, as trustees of Stewart's Free School, to be held by them or the proceeds thereof in trust in all time coming for the purpose and under the obligation after mentioned, viz., that they shall apply the yearly interest or produce thereof in supplementing the salary of the teacher for the time being of said Stewart's Free School, declaring that the foresaid provision shall be paid to and accepted by the said trustees of Stewart's Free School only on condition of their undertaking to retain the management of said school in their own hands, and that in the event of their declining to accept payment of said provision on this condition, the amount thereof shall fall into and form part of the residue of my estate, it being my desire that the said provision shall be applied in providing moral and religious instruction for as many boys or girls, the children of members of the Eight Incorporated Trades of Perth, as the fund will admit; and I direct that before handing over said bequest my trustees will make such arrangements with the trustees of said Free School as may be necessary for giving effect to my intentions: In the ninth place—I appoint my trustees, at the first term of Whitsunday or Martinmas that shall happen six months after my death, to assign, transfer, and make over thirty City of Perth Annuity Bonds belonging to me … to and in favour of the School Board of the burgh of Perth, constituted under the ‘Education (Scotland) Act 1872,’ to be held by them or the proceeds thereof in trust in all time coming for the purpose and with and under the obligation after mentioned, viz., that they shall apply the yearly interest or produce thereof in supplementing the salaries or annual income of the teachers in the Perth Academy to whatever extent and in such proportions as the said School Board may think advisable, or apply the said yearly produce in whatever other way or manner may be thought most advisable for promoting the moral, religious, and intellectual training and upbringing of the young In the twelfth and last place, after all the foregoing purposes are satisfied and fulfilled or duly provided for, I appoint my trustees to assign, dispone, refer, and convey or pay and deliver the free residue and remainder of my said means, estate, and effects, heritable and moveable, real and personal, before conveyed, or the prices or produce thereof as that shall be fixed by my trustees themselves on a final winding-up of the trust, to and in favour of the said David Playfair, Patrick Playfair, and Margaret Playfair, and survivors and survivor of them, and the respective heirs, executors, and representatives whomsoever of such survivors, whom I hereby constitute my residuary legatees.”

After Alexander Young's death his testamentary trustees, in terms of the 8th purpose of the settlement, transferred the 21 City of Perth Annuity Bonds to the Deacons of the Incorporated Trades of Perth, who granted a discharge in which the conditions of the trust were expressed. Thereafter down to August 1891 the Deacons of the Incorporated Trades applied the interest as provided by the testator. By that time, however, owing to the passing of the Free Education Act, the attendance at Stewart's Free School had greatly diminished, and the school had been rendered practically useless for the objects for which it was carried on. In August 1891, accordingly, the school was closed in conformity with a resolution of the trustees. The school had originated in a charitable bequest made in 1810.

In May 1891 the present action was raised by James Ritchie, the sole surviving trustee under Alexander Young's settlement, with the concurrence of David Playfair, Patrick Playfair, and Margaret Playfair, the residuary legatees, against the Deacons of the Eight Incorporated Trades of Perth, for declarator that the legacy of twenty-one City of Perth Annuity Bonds, bequeathed by Alexander Young under the 8th purpose of his settlement, had lapsed, and now formed part of he residue of his estate, and that the defenders were bound to reconvey the said bonds or repay the amount of said legacy to the pursuer, together with the interest thereof, so far as not applied in terms of the trust, and for decree ordaining them to do so.

The defenders pleaded (1) that the bequest in their favour had not failed.

On 26th November 1892 the Lord Ordinary ( Kincairney) pronounced this interlocutor:—“Finds (1) that the deceased Alexander Young directed his trustees to transfer certain City of Perth Annuity Bonds to the defenders as trustees for Stewart's Free School, Perth, to be used by them for the purpose of supplementing the salary of the schoolmaster of said school; (2) that he declared that the said provision should be paid to them only on condition of their undertaking to retain the management of the said school in their own hands, and that in the event of their declining to accept payment of the provision on that condition, the amount of it should form part of the residue of his estate; (3) that he directed that the residue of his estate should be paid to David Playfair, Patrick Playfair, and Margaret Playfair, and the survivor of them, and the respective heirs, executors, and representatives of such survivor; (4) that the defenders accepted said provision under said condition,

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and that the fund bequeathed was transferred to them, and has been administered by them since the death of the truster in 1875; (5) that the said school has been discontinued by the defenders, and closed; and (6) that as the defenders have ceased to fulfil the condition of the said bequest, they have ceased to become entitled thereto, and that the right thereto has devolved on the pursuer, Mr Young's trustee, for behoof of his residuary legatees.”

“ Opinion.—…. It is maintained, on the one hand, that the bequest is for the general object of promoting the education of the children of the members of the incorporated trades, and that as the mode of doing so selected by the truster has become impracticable, it belongs to the Court to adjust some other scheme by which that object can be effected. It is maintained, on the other hand, that the bequest has been given for a special purpose, to be administered in a particular way, and that if that cannot be done the gift fails; or rather they maintain that the circumstances have happened in which, according to the directions of the truster, the gift over to the residuary legatees is to take effect. The pursuers seem entitled to a judgment on that question without waiting for any application to the Court by the defenders.

The bequest when scrutinised and analysed, presents somewhat remarkable features. It consists of several distinct parts which are not expressed in their most natural sequence. It mentions the motive which led the truster to make the bequest, viz., his desire to provide instruction for children of members of the incorporated trades. It confers the gift to the defenders. It states the primary object of the gift, viz., the increase of the salary of the teacher of Stewart's Free School. It annexes a condition to the gift, viz., that the defenders shall undertake to continue the management of the school, and foresees and provides for the event of the defenders declining to accede to the condition attached to the gift by providing that in that case the fund shall form part of the residue, which is, in my opinion, the same thing as a destination in favour of Patrick, David, and Margaret Playfair nominatim, who are the residuary legatees.

Now, there are one or two points about this bequest which deserve special notice. In the first place, the ordinary rule applicable to charitable bequests that a sum once devoted to charity is so devoted in all events and can never be withdrawn or withheld from charity cannot apply to it, because the truster has expressly said that in certain events it should be withheld. In the second place, it cannot be affirmed that the truster has preferred charity to his residuary legatees, and he has preferred those residuary legatees to every other charity, and even, as I think, to the particular charitable object mentioned unless it is carried out in the manner which he has selected. In the third place, he has most distinctly put it in the power of the trustees to whom the gift is made to defeat the trust, a somewhat remarkable peculiarity, because it seems to infringe on what is one of the most general rules applicable to charitable bequests, viz., that no such bequest shall fail for want of trustees. What appears to me to be the specialty of greatest consequence, however, is that the truster has conferred a positive right, exigible in certain circumstances, on his residuary legatees Patrick, David, and Margaret Playfair, so that in fact the bequest cannot lapse unless the residuary legatees shall fail. It is not a bequest to the defenders only—there is a destination-over. It is a bequest to them, whom failing to Patrick, David, and Margaret Playfair, and I think the effect would have been the same had the destination-over been in favour of someone who was not residuary legatee, or of some other charity. This is a very important specialty, and seems to interpose a great difficulty in the way of applying what is called the doctrine of cy pres. For plainly it cannot be applied if the application of it would defeat a right expressly given to another.

In this connection it seems legitimate to remark that when the truster wished to confer a wide discretion on his trust legatees, and to secure that his charitable intention should not be defeated by the failure of his method of effecting it, he did so by express provision in the bequest to the school board.

Suppose that the present state of matters had existed at the truster's death, or before the funds had been transferred, and that the defenders had then said we cannot continue the management of the school, nor apply the fund to supplement the schoolmaster's salary, for there is now no school or schoolmaster, but we are willing to apply the funds in purchasing bursaries for the benefit of the class of children whom the truster designed to favour, it seems to me that it would be impossible to deny that the very ease had occurred in which the truster had called the residuary legatees. But for that provision there might, I think, have been room for the contention that the object of the bequest had not failed, but only the mode, but it appears to me that this express direction for disposal of the fund otherwise than in charity, in the events specified, makes all the difference. Suppose the fund had been destined to some other charity in the event of the defenders refusing to comply with the express conditions of the gift, there would have been no room for an application of the fund cy près, it would go to the substituted charity however dissimilar to that first favoured. But I cannot see that such a case would be materially different from the present.

In this case, however, there was at first no difficulty. The fund was handed over and duly administered, and the impossibility of exact compliance with the conditions of the trust has newly emerged. But I think it settled that that makes no difference, and that the right of the representatives of the truster will arise equally,

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whether the object of the bequest fails before or after the death of the truster if the bequest be special and not a general bequest for charitable purposes— Clark v. Taylor, July 7, 1853, 1 Drewry, 642; Walsh v. Secretary of State for India (Clive's Trust), 10 H.L., 367; Randall v. Dixon, February 9, 1888, 38 Ch. Div. 213; Jarmyn on Wills, vol. i.p.247.

I think that none of the English decisions which were quoted support the claim of the defenders. The purport of the decisions appears to be that there is no room for application of a charitable bequest cy près unless there be an absolute dedication of the fund to the purposes of charity generally, express or implied, or unless it can be affirmed that the truster has preferred the general object of charity to his residuary legatees— Fish v. Attorney-General, July 1, 1867, L.R., 4 Eq. 521–8; in re Ovey, April 17, 1885, 29 Ch. Div. 560; Whyte's Trust, July 17, 1886, 33 Ch. Div. 449; Mayor of Lyons v. Advocate-General of Bengal, 1876, 1 App. Cases 91; M'Laren on Wills, 431; Boyle on Charities, 147.

Neither of these characteristics of a proper charitable bequest appear in this case. The specialty of a destination-over on failure of the primary bequest, which appears to me to present so strong an obstacle to any proposal to an application of this fund cy près, did not occur in any of the cases.

The defenders founded strongly on the case of Grant v. Macqueen May 23, 1877, 4 R. 734, and the sequel to it, reported under the name of M'Dougal, June 29, 1878, 5 R. 1014. That case certainly bears a considerable resemblance to the present; but there was not the specialty in it that the truster contemplated and provided for the failure of his bequest by making a destination-over. There the testator directed that the interest of a certain sum should be paid to the person officiating at the time as schoolmaster in connection with the Established Church in a particular parish. Some years after the truster's death there ceased to be such a schoolmaster. It was held in the circumstances that the bequest had not failed, and on an application being afterwards made to the Court a scheme was adjusted for employing the fund in the purchase of bursaries. I have a good deal of difficulty in understanding that case. The Lord President expressed the opinion that the question was whether the object of the charity had permanently failed, and he held that it had not, because there might in some future time come to be a schoolmaster who might answer the description in the trust-deed, the inference being, I think, that the trustees were bound to hold the fund in order to meet that contingency. But apparently that view was somewhat lost sight of when the case came before the Court again, when a scheme for the payment of bursaries was approved of.

It is not suggested in this case that the fund is to be retained indefinitely on the chance that on some future occasion Stewart's Free School might be reopened, and no offer has been made to resume the management of the school. I have dealt with the case on the footing that the school has been finally abandoned, and that the defenders are now in the position of declining or of being unable to undertake its management—that is to say, are declining to fulfil the condition on which, in my view, the bequest to them was bestowed.

I should have had some difficulty in distinguishing this case from Grant v. Macqueen but for the fact that the truster foresaw and provided for the failure of his scheme. That is the important specialty which distinguishes this case from Grant v. Macqueen. Another specialty is to be found in the contrast between the bequest under consideration and that to the school board. On the whole I construe this bequest as expressing the truster's desire that his money should be spent in providing instruction for the class of children which he favoured, but not in every event or any way, but only in the particular way and manner which he pointed out, and his desire that if that could not be done his favoured legatees should take the fund.”

The defenders reclaimed, and argued—The key to the intention of the testator in the 8th purpose of the settlement was to be found towards the end of the purpose, where he declared that his desire was to provide moral and religious instruction for the children of members of the incorporated trades. No doubt a particular mode was pointed out in which the bequest was to be applied to secure that end, but the failure of that mode did not void the bequest. Another mode would be found for giving effect to the testator's intention. The testator never intended to make the bequest conditional on the continuance of Stewart's Free School, but only to provide that so long as it existed that school must be kept by the trustees under their own management. Further, if the bequest was made subject to the condition that Stewart's Free School should be carried on by the trustees, that condition applied only to the time of acceptance, and had been fulfilled, for the bequest had for 20 years been applied in the prescribed way. The bequest therefore had not lapsed— Walsh v. Secretary of State for India, L.R., 10 H. of L. Cas. 367; Grant v. Macqueen, May 23, 1877, 4 R. 734.

Argued for the pursuer—The bequest was made subject to the resolutive condition that the trustees should continue to carry on and manage Stewart's Free School. This condition had not been fulfilled, and accordingly the bequest fell into residue as the testator had directed. The clause relied on by the defenders towards the end of the purpose was merely introduced narrative, and could not be held to control and override the express condition on which the bequest was made. The doctrine of cy près was founded on the desire to carry out the testator's intentions—M'Laren on Wills, i. 431. Clearly, therefore, it did not apply where a bequest was

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granted subject to a certain condition, and provision was made by the testator by a destination-over for the event of the condition not being complied with. The cases cited by the defenders had no application, as in neither of them was there any destination-over.

At advising—