Scottish Court of Session Decisions

John Johnstone, tenant of the Bourgois Hotel, Fleshmarket Close, Edinburgh, died on 17th October 1894, leaving a trust-disposition and settlement dated 28th December 1892, and relative codicil dated 22nd September 1894, by which he conveyed his whole estate and effects, heritable and moveable, to trustees, for the purposes therein mentioned. The first trust purpose was payment, inter alia, of all his just and lawful debts. By the second trust purpose he directed as follows—“They“ (the trustees) “shall, so soon after my death as they think right, realise, and shall hold, apply, pay, and convey the whole rest and remainder of my means and estate, and interest and produce thereof, as follows, viz.—One-third thereof to my wife Mrs Ann Wright or Johnstone if she survives me, payable to her so soon after my death as my said trustees and executors think right.” If his wife survived him, the remaining two-thirds, and if she predeceased him the whole, was to go to such of his children, David William Johnstone and Jessie Margaret Johnstone, as should survive,

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jointly per stirpes with the issue of the predeceasing child or children. He gave his trustees power to sell and power to carry on his business.

In June 1887 the testator bought a house in Haddington Place. On this property at the date of its purchase by him there was a bond for £100, and it was agreed that it was to be taken over in part-payment of the price. The subjects were disposed “to and in favour of the said John Johnstone and Anne Wright or Johnstone, his spouse, equally between them, and to their respective heirs and assignees whomsoever, heritably and irredeemably.” The testator and his wife bound themselves to repay the sum of £100 in the bond, and agreed that the personal obligation should transmit against them in terms of the Conveyancing (Scotland) Act 1874, section 47.

Subsequently the testator desired to borrow a further sum of £130, and this was effected by a bond on the property in Haddington Place dated 29th July 1891. The acknowledgment of receipt and the personal obligation in the bond were by Mr Johnstone alone, and the disposition in security by him and Mrs Johnstone with joint consent and assent.

In connection with the property the following liabilities were incurred during the testator's lifetime, viz.—(1) a law-agent's account in connection with an ineffectual attempt to sell the property in 1891–2; (2) compositions upon several past transmissions of the property the right of relief for which was valueless, and on the transmission to the testator and his wife; (3) the expense of a minute confirming the title, which had been irritated in respect ( a) of an omission to refer fully to burdens, &c., in a deed of gift from the Crown in March 1886, and ( b) of failure timeously to pay the compositions; (4) taxes, feu-duty, and incidental expenses.

The testator was survived by his widow and the two children above mentioned.

The trustees, with consent of the widow, sold the Haddington Place subjects for £390. They also realised the whole of the deceased's other estate, including his business and business premises, but excepting the household furniture, which was left for the use of the widow and children.

In these circumstances disputes arose between the trustees and the widow as to her rights.

Mrs Johnstone maintained that the bonds for £100 and £130 on the property in Haddington Place were debts due by the truster at the date of his death and payable out of the residue, and that she was entitled to receive one-half of the price without deduction in respect of these bonds, interest, and expenses of discharging them. The trustees maintained that the bonds, with interest and expenses, formed a charge against the whole price, and, to the extent of one-half, the amount of them should be deducted from the widow's share.

The widow and the trustees also differed as to whether one-half of the law-agent's account, compositions, expense of minute, and feu-duty, taxes, and incidental expenses above referred to, were to the extent of one half payable out of her share of the price or were wholly payable out of residue.

The present special case was therefore presented to the Court. The parties to the case were (1) the trustees, (2) the widow, (3) the children.

The opinion of the Court was desired upon the following questions :—“2. ( a) Are the first parties, in accounting to the second party for her share of the proceeds of the said subjects in Haddington Place, entitled to debit her with one-half of all or any of the following items, viz.—(1) the bond for £100, interest, and expenses of discharging the same; (2) the bond for £130, interest, and expenses of discharging the same; (3) the amount of Millar, Robson, & Co.'s said business account; (4) the compositions, amounting to £52, 10s.; (5) the expense of the minute confirming the title; and (6) the feu-duty, taxes, and incidental expenses connected with the said property, down to the date of truster's death? or, ( b) Is the second party entitled to receive payment of one-half of the price of the said subjects, without any or what deductions?”

Argued for the first and third parties—The first alternative of the second question should be answered in the affirmative. The gift to the wife was subject to the burdens on the property at the date of the gift. This disposed of the question as to the bond for £100. As to the second bond, the gift was a donation by a husband to his wife, and as such was liable to be revoked. By burdening the subjects with this bond the husband had by implication revoked the gift pro tanto—Stair, i, 4, 18; Ersk. i. 6, 31; Fraser's Husband and Wife, vol. ii. p. 954. The other items were liabilities incurred in connection with the property, and they were chargeable on the wife's share, the gift to her being cum onere.

Argued for the second party—On the second question, the husband was the real debtor, and his representations were bound to relieve the widow. The first purpose of his settlement was payment of debts. The husband never intended his gift to he subject to the burden of the bond which was on the property at the date when he bought it. With regard to the second bond, this was a question of intention, and intention could not be presumed merely from the bond being placed on the subjects, and there was no other evidence of such intention; indeed, the direction to pay debts was evidence to the contrary. The wife was simply granting a security for her husband's debt. In such case a wife was entitled to relief out of her husband's estate— Erskine v. Williams, November 15, 1844, 7 D. 110. With regard to the other items, (3) was an ordinary debt due by the husband, and (4), (5), and (6) should have been paid by him during his lifetime, when he was in the full beneficial enjoyment of the property and dealt with it as his own.