Scottish Court of Session Decisions

Colonel Celestine Norman Lamont-Camp—bell, institute of entail in possession of the entailed lands of Possil and Keppoch, and certain entailed money, granted a bond of provision in favour of his wife, in virtue of the powers contained in the deed of entail and the Entail Acts, whereby he bound the succeeding heirs of entail to pay to her in the event of her survivance a free liferent annuity equal to but not exceeding one—third of the free yearly rent or value of the said entailed lands and money as the same might be at his death.

Colonel Campbell died in January 1893, and after his death questions arose as to the amount of the annuity and whether it was payable in advance. The circumstances giving rise to these questions sufficiently appear from the opinions of the Lord Ordinary, and from the report of Mr J. P. Wright, W.S.

Accordingly, in November 1893 Mrs Carter-Campbell of Possil, the heiress of entail in possession of the said entailed lands and funds, presented a petition to the Junior Lord Ordinary to have the amount of the annuity or jointure payable to Mrs Lamont-Campbell, the widow of the said Colonel Lamont-Campbell, fixed by the Court.

Answers were lodged for Mrs Lamont—Campbell.

After hearing parties, the Lord Ordinary (Low) pronounced an interlocutor disposing of certain of the questions raised.

The following opinion (which is referred to in the action hereinafter mentioned) was appended to the Lord Ordinary's interlocutor—“1. There is first the question whether certain feu-duties should be taken into account in fixing the income of the estate.

“A feu of 35 acres was granted in 1874 for a feu-duty of £1195. The feu was acquired by the Phœnix Iron Company, which in 1891 granted a trust-deed for creditors. The feu-duty was regularly paid until Whitsunday 1891, since which date no feu-duty has been paid. The late Celestine Norman Lamont-Campbell, the granter of the bond of annuity which is in question in this petition, died on 27th Junuary 1893.

“The petitioner argues that as no feu—duty was received for the year in which the late Mr Lamont-Campbell died, and as the vassals were insolvent, the yearly value of the ground contained in the feu should be taken at its agricultural value, viz., £90.

“I am of opinion that the petitioner's argument is not well founded. The feu—duty was regularly paid for seventeen years, and it was not paid for the year in which Mr Lamont-Campbell died and the preceding year, only because the vassals had become insolvent. I do not think that that is a sufficient reason for not taking the feu-duty as the annual value of the lands. If lands were let under lease, I apprehend that the rent stipulated in the lease would be taken as the annual value, although the tenant might have been unable, from circumstances personal to himself, to pay his rent for the year during which the heir of entail died. It seems to me that a similar principle is applicable here….

“2. In 1891 the Lanarkshire and Dumbartonshire Railway Company took for the purposes of their undertaking some ten acres of land. The amount of compensation has been fixed by arbitration at £9372, with interest thereon at 5 per cent. per

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annum from the date of the statutory notice.

“I am of opinion that the value of the land so acquired by the Railway Company falls to be taken at 5 per cent upon the amount of the compensation. This point seems to be ruled by the decision in Irving v. Irving, 9 Macph. 539….

“5. By the bond of provision the annuity is to be uplifted at Whitsunday and Martinmas by equal portions, beginning the first term's payment at the first of these terms which should happen after the granter's death ‘for the half-year following, and so forth half-yearly and termly thereafter.’

The petitioner contends that the respondent is not entitled to payment of the annuity in terms of the bond of provision as from Whitsunday 1893 in advance, but only as at that date proportionately for the period from her husband's death to the said term of Whitsunday, and thereafter half-yearly at the terms of Martinmas and Whitsunday for the half-year preceding.

“I see no sufficient reason for refusing payment to the respondent of her annuity at the terms specified in the bond. Such an annuity is in its nature alimentary and payable in advance, and the form of the bond is in this respect in the form sanctioned by practice in such cases.”

Mrs Carter-Campbell reclaimed. No objection was taken to the competency of the petition, but the Court, ex proprio motu, dismissed it as incompetent.

Thereafter Mrs Lamont-Campbell raised an action of declarator against Mrs Carter—Campbell to have it found and declared that she was entitled to a free annuity of £3000 or such other sum as represented one-third of the free income of the entailed estate.

Upon 20th March 1894 the Lord Ordinary (Low) remitted to Mr J. P. Wright, W.S., to inquire into the circumstances set forth in the record, and to report.

Mr Wright in his report gave effect to the decision of the Lord Ordinary in the petition with regard to the feu-duties, and the dates at which the annuity was payable. He further reported—“A difficult question arises with regard to certain duplicands of feu-duties. The entailed estate comprises the superiority of lands which have been feued, and under the feu-charters duplicands of the feu—duties are payable at stated intervals. During the year current at the death of the granter of the bond of provision, duplicands amounting to £387, 12s. 11d. fell due. The pursuer maintains that these ought to be included in the rental, but the defenders object on the ground that items of that nature are exceptional, and not to be computed as part of the annual income. There are several ways in which such an item may be dealt with in a case like the present.

“1. The duplicands may be excluded from the computation of the rental, as arising only at long intervals, and consequently not being regarded as part of the ‘yearly rent.’ The defenders say that such casualties fall to capital, and do not belong to a liferenter, as is illustrated in the case of Ewing v. Ewing, March 20, 1872, 10 Macph. 670. But an heir of entail is not a mere liferenter,—he is a fiar, although with restricted powers; and as a matter of fact the casualties in the present case are uplifted and retained by the heir in possession when they become due. The principle of Ewing's case, therefore, seems inapplicable.

“2. Although the actual casualties which happen to fall due in the year of the granter's death may not be strictly part of the ‘yearly rent,’ it is to be kept in mind that in the present case the total amount of casualties falling due in the course of each recurring period of nineteen years in the case of most of the feus, and of twenty—one years in the case of the remainder, is £4984, 3s. 2d. That sum (which is admitted by both parties to the action) is spread unequally over the periods, but the certainty and regularity of the payment may not unreasonably be regarded as having an annual value, such as should be computed for the present purpose. The statnte provides that the free yearly rent is to be taken as at the death of the granter, but this has been construed according to its spirit, and not literally. Thus, instead of taking the actual rent of minerals drawn during the year of the granter's death, the average of years is taken according to circumstances. In the case of Wellwood v. Wellwood, July 12, 1848, 10 D. 1480, and December 20, 1848, 11 D. 248, the average of seven years was taken, which is now a common method. In Douglas v. Scott, December 17, 1869, 8 Macph. 360, the average of three years was taken, being the duration of the current lease; and in Christie v. Christie, December 10, 1878, 6 R. 301, the actual rent of the year was taken, although the lease only lasted for five years in all. The Court held that the latter was a ‘reasonable permanency.’ The words ‘yearly rent’ have been held as equivalent to annual income or produce ( Wellwood's case). In fact, an heir of entail appears to be entitled to give his wife an annuity not exceeding one-third part of what he is entitled to draw himself in the year current at his death, subject to the qualification that regard will be had to equitable average where there are variable items, such, e.g., as mineral rents. It humbly appears to the reporter that in the present case the duplicands have such an element of permanence that they should be computed either by allowing the actual sums which happen to be payable during the year of the granter's death, or according to some principle of equitable average. What that principle of average should be he is not aware of any authority prescribing. In the present case during each of said respective recurring periods, as already mentioned, the casualties amount to £4984, 3s. 2d. If that sum were spread equally over the respective periods—that is, over the nineteen years in the ease of the periods of that duration, and over the twenty-one years in the case of those of the

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latter duration—it would give an average of £259, Os. 2d. in each year. Another way would be to capitalise the value of the duplicands, and take 4 per cent. on that amount as representing the ‘yearly value.’ The three methods thus indicated are accordingly to take (a) the actual duplicands payable during the year of the granter's death, amounting to £387, 12s. 11d.; ( b) the yearly average of the total duplicands spread equally over the respective periods of nineteen and twenty-one years, which would be £259, Os. 2d.; (c) a fixed rate of interest, say 4 per cent., on £7059, 7s. 4d., the capitalised value of the duplicands, which would give £282, 7s. 6d….

“The reporter is humbly of opinion that the duplicands ought to be computed, and he suggests the third method above mentioned, which gives an annual sum of £282, 7s. 6d. If your Lordship should prefer one of the other methods, the state after mentioned can be easily adjusted.

“The next item in dispute is the return from a toom. The parties are agreed that the gross return is £222, 11s. 11d., but they differ as to whether the wages which require to be paid to two men in connection with it, amounting to £104, should be deducted. The reporter considers that these ought to be deducted. It is the free yearly rent that has to be taken, not the gross, and the subject in question is only made rent-producing by expenditure of the wages.

The pursuer claims interest on the amount of compensation money received from the Lanarkshire and Dumbartonshire Railway Company. In the petition your Lordship expresses the opinion that this item should be taken into computation, and that the interest might be at the rate of 5 per cent. The pursuer however agrees to take 4 per cent., which gives £374, 17s. 4d. The defenders do not now object to this, except that they suggest 3 per cent instead of 4 per cent. The reporter considers that 4 per cent should be allowed in consequence of the pursuer restricting her claim on this item to that rate. There are next three, which consist of interest on compensation to be received from railway companies and from the city of Glasgow in respect of lands compulsorily taken, but in which the amount of compensation has not yet been fixed. Possession having been taken, interest was in fact at the granter's death, and still is, running at 5 per cent., and accordingly the reporter considers that that rate should be allowed here. The difficulty is to arrive at a sum upon which the interest should be calculated, as the defenders prefer to allow the arbitration to lie over because of the high rate of interest. As, however, the defenders cannot be allowed to prejudice the pursuer by such a course, the reporter, after hearing the parties, is of opinion that the justice of the case will be met if for the purpose of the present case (without prejudice to defenders in questions with the purchasers) the compensation on the three items is taken as amounting to £1500. Five per cent. on that sum gives an income of £75, which the reporter has accordingly allowed. The pursuer's restriction of claim for interest to 4 per cent. on record does not apply to this item.

“The reporter begs to annex a state giving effect to the views which he has now expressed.” …

Upon 26th September 1894 Lord Low found that the pursuer was entitled to a free annuity or jointure of £2642, 5s. 9d., being one-third of the free yearly rent or free yearly value and income of the lands and estate … payable the said annuity as at the term of Whitsunday 1893 to the extent of one-half thereof, and so for the half-year, and termly thereafter at the terms of Whitsunday and Martinmas during her life; ordained the defender and her successors in the entailed lands … to make payment to the pursuer of the foresaid annuity of £2642, 5s. 9d., and found the pursuer entitled to expenses.