Page: 114↓
By mortis causa conveyance a testator disponed certain heritable estate to and in favour of his two sons, W. and A., “equally between them, and failing either of them without lawful issue, to the survivor of them, the lawful issue of the predeceaser always coming in place of their parent, iii liferent and for their liferent use allenarly, and to their lawful children equally among them, share and share alike, in fee.”
A. died in 1891 without having had issue. He was predeceased by W. and by W.'s children, but one of W.'schildren left issue, who were alive at A.'s death.
Held ( diss. Lord Kinnear) that each of the liferenters took a fiduciary fee for his own issue exclusively, and that, A. having died without issue, the share liferented by him fell into intestacy at his death, and belonged to the heir-at—law of the testator.
David M'Haffie, hereinafter called David M'Haffie, primus, was the proprietor of several landed estates, including the lands of Skeoch and Overton, in Ayrshire.
By mortis causa disposition, dated 4th of June 1833, which remained undelivered at the time of his death, he disponed the said lands of Skeoch and Overton “to and in favour of my two sons, William M'Haffie and Alexander M'Haffie, equally between them, and, failing either of them without lawful issue, to the survivor of them, the lawful issue of the predeceaser always coming in place of their parent, in liferent and for their liferent use allenarly, and to their lawful children equally among them, share and share alike, in fee.” William and Alexander M'Haffie were respectively the second and third sons of David M'Haffie, primus.
David M'Haffie, primus, died in 1837, and after his death an instrument of sasine was expede in favour of the liferenters and their children in terms of the destination.
William M'Haffie, the elder of the two liferenters, died on 23rd October 1890, having had seven children, all of whom predeceased him. One of his children, David M'Haffie, secundus, left five children, the eldest being William David M'Haffie. None of the other children of William M'Haffie left issue.
Alexander M'Haffie, the younger of the two liferenters, died on 22nd August 1891, without having had any issue. He was thus predeceased by all the immediate issue of his brother, William.
Questions having arisen with regard to the disposal of the fee of the pro indiviso half of the lands liferented by Alexander M'Haffie, a special case was presented by
Page: 115↓
certain testamentary trustees and others who represented certain of William M'Haffie's children, of the first part; the Liverpool Reversionary Company, Limited, as assignees of William David M'Haffie, of the second part; the whole of the children of David M'Haffie, secundus, other than Williaam David M'Haffie, of the third part; and Mrs Agnes M'Haffie or Kerr, who represented the heir-at-law of David M'Halfie, primus, of the fourth part. The questions submitted to the Court were—“Did the fee of the one-half pro indiviso of the lands in question which was liferented by Alexander M'Haffie vest in the children of William M'Haffie as they were respectively born, subject to defeasance in the event (which did not happen) of Alexander M'Haffie having children of his own? Or (2) was vesting suspended till the death of Alexander M'Haffie? In the event of the second question being answered in the affirmative—“(3) Did the said fee on the death of Alexander M'Haffie pass to the parties of the second part? Or (4) Did it belong to the said five children of David M'Haffie, secundus, or their assignees, equally among them? Or (5) Did it belong to the heir-at-law of David M'Haffie, primus?”
The first parties maintained “that there was vesting in each of the children of William M'Haffie as he or she was severally born, subject to defeasance in the event of Alexander M'Haffie having children of his own, and that Alexander's share of the lands falls to be divided between the representatives of said immediate issue of William M'Haffie, on the footing either ( a) that the destination was to the children of both brothers as a group per capita, or ( b) that it was to the children in two groups per stirpes.”
The second parties maintained “that there was no vesting until Alexander M'Haffie's death, and that, in virtue of the conditio si sine liberis the said William David M'Haffie, who was the elder son and heir-at-law of David M'Haffie, secundus, became entitled to the said one-half pro indiviso of the said lands, and that they are in right thereof as his assignees. Alternatively, they adopt the contention of the parties of the third part.”
The third parties maintained “that there was no vesting until Alexander M'Haffie's death, and that the said one-half pro indiviso of the said lands now goes in five equal shares to the four parties of the third part and the said William David M'Haffie or his assignees.”
The fourth party maintained “that vesting was suspended till Alexander M'Haffie's death, and that, as Alexander M'Haffie left no children, and the grandchildren of William M'Haffie, senior, were not destined to take in the event that has occurred, the result was intestacy, and the share fell to the heir-at-law of David M'Haffie, primus, the granter of the foresaid disposition.”
Argued for the first parties—As soon as a child came into existence the fiduciary fee which was in the parents flew off, and a beneficial fee vested in the child for itself and any other children to be born to either William or Alexander. The parenthetical words in the destination, “the lawful issue of the predeceaser always coming in place of their parent,” were mere surplusage. If they meant anything, it was that, until the death of the surviving liferenter, the children of the predeceaser would enjoy their father's liferent— Douglas v. Thomson January 7, 1870, 8 Macph. 374; Otto v. Weir, March 7, 1871, 9 Macph. 660. There was no room for the doctrine si sine liberis, for, vesting taking place on the birth of the children, they were entitled to dispose of, and in point of fact did dispose of, their shares by will. (2) The division intended was per capita and not per stirpes, there being nothing in the destination to take it out of the ordinary rule of presumption — Macdougall v. Macdougall, February 6, 1866, 4 Macph. 372 — aff. March 20, 1868, 6 Macph. (H. of L.) 18. In the case quoted against the doctrine of a joint fiduciary fee, viz., Allen v. Flint, June 15, 1886, 13 R. 975, the point was not seriously considered, and that case was not an authority in the circumstances which existed here.
Argued for the second parties—Vesting being suspended till the death of Alexander, on that event the whole fee was to go to the children of the liferenters. But when Alexander died there was no such class in existence, and accordingly under the conditio si sine liberis, the estate being heritage, fell to the heir-at-law, viz., the eldest son of David M'Haffie, secundus, — Grant's Trustees v. Grant, July 2, 1862, 24 D. 1211. The testator dealt first with the liferent, and inserted the parenthetical clause simply to show that the liferent of the predeceaser was not to accresce, but was to go to his children, and then disposed of the fee, as soon as it was free, to the children of both per capita. The fiduciary fee was in both of the liferenters for a class to be in existence at the time of division— Ferguson v. Ferguson, March 19, 1875, 2 R. 627; Maule, June 14, 1876, 3 R. 831; Turner v. Gaw, February 20, 1894, 31 S.L.R. 447. In the last-named case it was questioned whether vesting subject to defeasance could apply to the case of a direct disposition, such as this one. In Allen v. Flint there were facts and circumstances equivalent to the insertion of the word “respectively” in the dispositive clause, which would be necessary to support the first parties’ contention. The case of Douglas v. Thomson differed from the present, because the conveyance there was to a mother and her children, while here the fiars were to be members of two families; moreover, there the children survived the liferentrix, so without doubt a beneficial fee vested in them.
The third parties adopted the arguments of the second parties as regarded the postponement of vesting, and argued further—(1) The persons entitled to succeed at Alexander's death were his fellow-liferenter's grandchildren, the children all
Page: 116↓
being dead at that time, and they came in as a class— Rhind's Trustees v. Leith, December 5, 1866, 5 Macph. 104. The term “children” had been held to include “grandchildren”—M'Laren on Wills (3rd ed.), i. 692; Ranken, June 17, 1870, 8 Macph. 878. Failing this, the conditio si sine liberis applied and let in the third parties as a class. The case of Grant's Trustee's v. Grant did not apply here, because in it there was a conveyance of a particular estate to a particular son, while here the conveyance was to a class. Intestacy was to be avoided wherever, as here, effect could be given to the testator's intention. Argued for the fourth party—There was a complete separation by the testator of the liferent, and the fee of each divided half was then dealt with. The gift to each son was a separate one, and there could be no accretion to the surviving children or their representatives. The words of the disposition which made a direct gift “equally among them” were clearly against such accretion— Paxton's Trustees v. Cowie, July 16, 1886, 13 R. 1191. The contention of the first parties that there was a joint fiduciary fee in the liferenters was not one which the law would recognise— Logan's Trustees v. Ellis, February 7, 1890, 17 R. 425; Allen v. Flint, June 15, 1866, 13 R. 675. The idea of a fiduciary fee was never carried beyond the children of a liferenter; he could not hold also a “sub-fiduciary fee” for the children of another.
At advising—
I may begin by observing that no trust is here constituted. The destination occurs in a testamentary conveyance to the parties interested; the fee cannot be in suspense, and the decisions relating to vesting under settlements in trust have no application to the case.
Now, as the property is given to William and Alexander in liferent for their liferent use allenarly, and as the fee is given to children unborn or unnamed, each liferenter would by a well-known rule of construction take a fiduciary fee commensurate with his liferent interest. It is not necessary to consider how this rule would be applied in the case of a liferent given to the grantees jointly, because in the present case the liferent interest is given to William and Alexander “equally between them,” and it is quite settled that a gift in such terms is equivalent to a gift to each disponee of one half of the estate or interest pro indiviso. When the testator died in the year 1837 William and Alexander accordingly became pro indiviso liferenters each to the extent of one-half, and fiduciary fiars in the same proportions.
The question then arises, for whose benefit did William and Alexander M'Haffie hold the fiduciary fee? Did each of the brothers take a fiduciary fee for the children of both, or did each take a fiduciary fee for his own children or issue exclusively?
The second alternative, as I think, is the true interpretation of the clause. For this conclusion two reasons may be given—one theoretical and the other practical. The notion of a fiduciary fee was undoubtedly introduced for the purpose of protecting the interests of the issue of the liferenter under destinations in liferent and fee. It is not necessary to affirm that under no circumstances can a liferenter be also a fiduciary fiar for grantees other than his own issue. But it was pointed out by the late Lord President in the case of Allen v. Flint, 13 R. 975, that there are serious theoretical difficulties in admitting a construction which would make each liferenter a fiduciary fiar for his own children in conjunction with the children of the other liferenter. In the present case the supposed construction, for example, would make William M'Haffie fiduciary fiar for Alexander's children as well as his own children. On William's death Alexander had no children, but it was possible that children might be born to him. How is it possible that their interests should be safeguarded, seeing that the fiduciary fee in William's half share comes to an end with William's life? The difficulty—I may say the impossibility—of explicating such a destination, is a very strong argument against the supposition that such rights were intended to be created, and in favour of the supposition that each liferenter was a fiduciary fiar for his own children only to the effect that the children should take collectively the fee of the one-half share which was liferented by the parent. This construction is, I think, consistent with the parenthetical words of the destination, “the lawful issue of the predeceaser always coming in place of their parent,”
But I am also of opinion that under a destination in this form a division per stirpes is most accordant to presumed intention. The intention might of course be made clear by giving the fee to the children of the liferenters “respectively.” But it is to be considered that the testator by giving the property in liferent and fee announced his intention of making a family settlemeat,
Page: 117↓
If the construction which I put on the destination is well founded, it follows that the fee of Alexander's share is undisposed of, because Alexander died without issue.
Now, if this were a case of a destination inserted in a title-deed, I should have held without difficulty that the purchaser, although possessing on a restricted title, took a resulting interest in the fee expectant on, or consequent on, the failure of issue of his body, because in the case supposed the purchaser is the author of the destination, and the person who has the radical right subject to the destination. In such a case we must suppose that the liferent expands, otherwise the fee would vanish altogether.
But in the present case the conveyance is gratuitous and testamentary, and I am unable to admit that Alexander M'Haffie could under any circumstances take a higher right under it than the liferent allenarly which is expressly given to him. The fee remained with the granter, and now belongs to his heir, the fourth party. I propose, accordingly, that we answer the fifth question in the affirmative, and find it unnecessary to answer the other questions specifically.
The facts which raise the question are very simple. The disponer's sons mentioned in the disposition, William and Alexander M'Haffie, both survived him. They are now dead, William having left issue, Alexander never having had issue.
The question is, who is entitled to the fee of the one-half of the estate liferented by Alexander? Now, upon the death of the disponer the destination which came into effect was a destination to William M'Haffie and Alexander M'Haffie, equally between them, in liferent for their liferent use allenarly, and to their lawful children equally among them, share and share alike, in fee. I think that the effect of this destination was that William and Alexander, who had survived the disponer, each took a liferent allenarly of one pro indiviso half of the estate, and a fiduciary fee for their children respectively in the half of the estate so liferented by them. Had there been no other words in the dispositive clause affecting the matter, I do not think there would have been much doubt that this would have been so, but it is said that the substitution therein contained “failing either of them” (William or Alexander) “without lawful issue, to the survivor of them, the lawful issue of the predeceaser always coming in place of their parent” produces a different result. It will be observed, however, that William and Alexander took a liferent only, and it appears to me that the substitution contained in the words “failing either of them without lawful issue, to the survivor,” can only refer to and could only take effect as regards the liferent set free by the death of the predeceaser. If, for example, Alexander had predeceased William, William might have claimed a liferent of the half of the estate previously liferented by Alexander, or it may be that if Alexander had predeceased the disponer without issue, William would have taken the whole estate, both liferent and fee, for himself and his children. But I do not see that this substitution, in the event which occurred, could in any way affect the fee which the law had vested in Alexander for his children nascituri, even although it might be only a fiduciary fee.
Then, as regards the words “the lawful issue of the predeceaser always coming in place of their parent,” it is difficult to put a definite meaning on them. In my opinion they do no more than would have been effected by the words “whom failing,” &c., previously used in the clause, and are therefore mere surplusage. But in any view, it appears to me that by these words the children are substituted in place of their parent, and therefore that the children can only take what the parent could himself have taken. What the children now claim is the beneficial fee of the part of the estate liferented by Alexander, but I do not see how on any construction of the deed their parent could have been entitled to a beneficial fee of the estate or any part thereof. I do not think therefore that the words in question assist the children's claim.
On the whole matter, I am of opinion that on the disponer's death a fiduciary fee vested in Alexander for behoof of his children
Page: 118↓
Page: 119↓
The Court pronounced the following interlocutor:—
“Find that Alexander M'Haffie had under his father's mortis causa disposition a liferent allenarly in one-half of the subjects thereby conveyed, together with a fiduciary fee thereof for his own children; and that on the death of Alexander without issue the fee of that share was in effect undisposed of, and belongs to the heir-at-law of the testator, David M'Haffie, primus, and decerns.”
Counsel for the First Parties— Rankine — Craigie. Agents— J. & J. Milligan, W.S.
Counsel for the Second Parties— Ferguson. Agents— Bruce & Kerr, W.S.
Counsel for the Third Parties — Jameson— Aitken. Agents— J. & J. Milligan, W.S.
Counsel for the Fourth Party— Asher, Q.C.— H. Fraser. Agents— Graham, Johnston, & Fleming, W.S.