Scottish Court of Session Decisions

The antenuptial contract of marriage between Sir William Eliott of Stobs, Bart. and his wife Dame Hannah Birkett or Kelsall or Eliott dated 24th March and recorded 22nd July 1879 was in the form of a bond of annuity in favour of Dame Eliott, and contained the following provisions—… “Therefore I the said Sir W. F. A. Eliott, in terms of said agreement, and in contemplation of our said marriage, do hereby bind and oblige myself, and my heirs, executors and representatives whomsoever, … to pay to the said Mrs Hannah Birkett or Kelsall, to be applied by her towards the expenses of my household and establishment, and that during all the days of my life, an annuity or yearly sum of £1000 sterling, free of all burdens and deductions what so ever, … and in security of the personal obligation before written I dispone to and in favour of the said Mrs Hannah Birkett or Kelsall heritably all and whole the lands and barony of Stobs and others, … and I assign the rents so far as necessary for supporting the right and security hereby granted: … And further, I bind and oblige myself, … to grant and deliver to the said Mrs Hannah Birkett or Kelsall a bond and disposition, … providing and securing to her in case she shall survive me, … a yearly annuity of £2000 sterling free of all burdens and deductions whatsoever: … Moreover, I do hereby renounce and discharge my jus mariti and right of administration of and in relation to the estate and effects now belonging or which may pertain and belong to the said Mrs Hannah Birkett or Kelsall, including the foresaid annuity payable to her during my lifetime, declaring that the same shall be and remain a separate estate in her person free of any right or claim on my part whatsoever.”

In May 1886 Sir William Eliott executed a trust-deed in favour of creditors, the trustees under which paid Lady Eliott the annuity of £1000 until Martinmas 1887, and a lesser sum for the next two years, when they stopped payment altogether on the ground that the income from Sir William Eliott's whole means and estate was insufficient to pay his creditors.

In June 1893 Lady Eliott, with concurrence of her husband, brought an action against Robert Purdom, solicitor, Hawick, sole trustee surviving and acting under said trust-deed, for payment of the arrears of the annuity with interest thereon. She averred that she had repeatedly demanded payment of the sums due to her, but had always been refused.

The defender pleaded—“(2) The said bond of annuity being ineffectual to give the pursuer a preference in a question with her husband's creditors, the defender should be assoilzied. (3) The said bond of annuity, amounting to an attempt to place a portion of the granter's means extra commercium, while retaining a participation in the enjoyment of it, is ineffectual in a question with the granter's creditors.”

Upon 14th March 1894 the Lord Ordinary ( Kyllachy) assoilzied the defender.

“ Opinion.—The question in this case is whether Lady Eliott is a creditor under the antenuptial contract between her and Sir William for an annuity of £1000 per annum, which is provided to her during Sir William's life. There is no dispute as to the annuity provided to her in the event of her widowhood. The question is whether she can rank as a creditor for £1000 per annum, which Sir William undertook to pay to her, ‘to be applied by her towards the expenses of my household and establishment, and that during all the days of my life.’

The defender, who is trustee for Sir William's creditors, contends that this is not a proper marriage-contract provision conferring upon Lady Eliott an individual and independent right, but is, on the contrary, truly a trust for Sir William's own behoof. The express purpose of the provision, he says, makes that clear. The pursuer, on the other hand, contends that the purpose expressed does not qualify her (Lady Eliott's) right, but merely expresses the motive of the trust, Lady Eliott being no doubt expected to apply the money in the way mentioned, but not being bound to do so, and this being, it is said, made clear by the subsequent clause in the contract by which Sir William renounces his jus mariti and right of administration, inter alia, over the foresaid annuity, ‘declaring that the same shall be and remain a separate estate in her (Lady Eliott's) person, free of any right or claim on my part whatsoever.’

Now, I do not doubt that if this annuity had been granted to Lady Eliott simply for her separate use, she would have been a creditor for its amount. That, I understood, was conceded. Neither am I prepared to say that the result would have been different if the annuity had been granted for her separate use to be applied by her for the upkeep of the joint establishment of the spouses while they both survived and lived together. It may be (I have not considered the question) that

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there would thereby have been constituted an independent interest in the pursuer's person which, as one of the conditions of the marriage, she might have been entitled to vindicate. But the difficulty is that the application in fact prescribed is not even in terms an application for the lady's benefit. She might come to live apart from her husband, and yet the annuity would, I suppose, still be applicable to the upkeep of the husband's establishment. Moreover, the upkeep of the husband's establishment is after all simply payment of the husband's debts, and therefore if the application expressed is obligatory, I do not, I confess, understand how the pursuer's position is to be maintained. Accordingly the pursuer's proposition really comes to be, as I have said, that the purpose or application of the annuity is not expressed as part of the contract, but only mentioned by way of expressing the granter's motive and expectation. Now I am not able to so read the contract. I think the words used must, if possible, be read as operative, and as expressing part of the contract. And that being so, I think the result is that the pursuer has no independent right which can compete with that of her husband's creditors. I think the arrangement in question comes in fact merely to this—that Lady Eliott should receive during the marriage a fixed allowance for housekeeping, and should also be free from her husband's control in its disposal. Now, that may have been a quite good agreement between husband and wife, but it is not an agreement which in my opinion is good against the husband's creditors. I must therefore assoilzie the defender from the conclusions of the summons, with expenses.”

The pursuer reclaimed, and argued—This annuity was separate estate of the wife, secured to her by onerous deed, viz., antenuptial contract of marriage. The husband had no control over it whatever, unless possibly a right to a bare subsistence. The Lord Ordinary had laid undue stress on the words “my household,” as if there were some imaginary household of the husband separate from that of the wife. The adjective merely meant the household which would be set up after the marriage, but over the expenditure of which to the extent of £1000 the wife was to have unfettered control. She was not merely a trustee for her husband. She was entitled to arrears, because she had again and again demanded payment, which had apparently not been done in the case of Muirhead, relied on by the defender. If she got the money it would be expended in paying outstanding debts.

Argued for the respondent—This was merely a device to benefit the husband at the expense of his creditors. It was a trust for him. The wife was not free to expend the annuity upon herself; she got it under condition it should be applied to the keeping up of the husband's house. It is for “my household” during all the days of “my life.” Lady Eliott was in no more favourable position than any other trustee for the husband— Wood v. Begbie, June 7, 1850, 12 D. 963; Ker's Trustees v. Justice, November 7, 1866, 5 Macph. 4 (espec. Lord Deas' opinion on p. 10); Learmonth, &c. v. Miller, May 3, 1875, 2 R. 62, although no doubt there the marriage-contract was postnuptial. In any case, Lady Eliott had no right to arrears, for the annuity was alimentary. She had been alimented, and it was not averred that any alimentary debts were still unpaid— Muirhead v. Miller, July 19, 1877, 4 R. 1139.

At advising—