Scottish Court of Session Decisions

By contract of marriage between James Ramsay and Mrs Euphemia Wilson Baxter or Ramsay, second daughter of Edward Baxter, merchant in Dundee, with the special advice and consent of the said Edward Baxter, dated 23rd July 1851, James Ramsay made certain provisions for Euphemia Wilson Baxter, for which causes, and on the other part, Euphemia Wilson Baxter assigned, disponed, and made over to Mr Ramsay, and his heirs and assignees, all and sundry lands and heritages, goods, gear, debts, and sums of money, and generally the whole property, heritable and moveable, then belonging or resting-owing to her, or that should pertain and be owing to her during the subsistence of the said marriage, excepting always her provisions provided to her by Mr Ramsay and before specified in the said contract of

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marriage. In the marriage-contract there was no exclusion of the jus mariti or right of administration.

By mutual settlement, dated 14th December 1887, executed by Mr and Mrs Ramsay, they gave, granted, assigned, and disponed to trustees all and sundry lands, heritages, goods, gear, debts, and sums of money, and in general the whole means and estate, heritable and moveable, of what kind or nature soever, or wheresoever situated, then belonging and addebted to them, or that should belong and be addebted to them at the time of their deaths, with the whole vouchers and instructions, writs, titles, and securities of and concerning the same, and all that had followed or that might be competent to follow thereon; and particularly, and without prejudice to the said generality, Mrs Ramsay assigned to the trustees the provisions in her favour in the trust-dispositions of her aunt Miss Baxter of Balgavies, her father Edward Baxter, and her uncle Sir David Baxter of Kilmaron, Baronet.

The purposes of the trust constituted by the said mutual settlement were, inter alia, for payment of the trusters' just and lawful debts, deathbed and funeral expenses, and the expenses of executing the trust, to pay over to the survivor of the spouses the interest or annual proceeds of the residue of the trust-estate during all the days of his or her lifetime, but for his or her liferent use allenarly, for payment to the survivor of them, as soon as the trustees could conveniently do so, of a legacy of £1000, to give certain specific articles as legacies to certain persons therein named, and to divide the residue among certain persons also therein named. The trustees by the said settlement were nominated sole executors of the moveable estate. The parties reserved right jointly at any time during their joint lives to alter, innovate, or revoke the said settlement in whole or in part as they should see fit.

By codicil to the said mutual agreement, dated 17th September 1891. Mr and Mrs Ramsay, in virtue of the power reserved to them by the said settlement, revoked and recalled that part thereof which authorised the trustees to apply the trust funds for payment of all their just and lawful debts, deathbed and funeral expenses, and also that part directing the trustees to pay to the survivor of them as soon as they could conveniently do so a legacy of £1000, and in lieu and in place thereof they directed the trustees to pay to the survivor of them as soon as they could conveniently do so a legacy of £2000, to be applied by him or her in payment of the just and lawful debts, deathbed and funeral expenses, of the predeceaser, and the balance, if any, to be applied for his or her use as he or she should think proper.

On 11th August 1892 Mrs Ramsay insured her life for £1750 with the Northern Assurance Company. By the policy of assurance the said company, provided Mrs Ramsay year by year during the subsistence of the policy should pay or cause to be paid the premium therein stipulated, undertook to pay and make good the said sum of £1750 to Mrs Ramsay, her executors, administrators, or assignees, after her decease.

In or about the month of August 1892 Mr Ramsay borrowed from the said Northern Assurance Company a sum of £1500, and by bond and assignation in security, dated and ratified by Mrs Ramsay on 16th August 1892, he granted him to have instantly borrowed and received from the Northern Assurance Company the sum of £1500, which he bound himself to repay, and in security of the personal obligations therein contained, Mrs Ramsay, with her husband's special advice and consent, and Mr Ramsay for himself and for his own rights and interests under the marriage-contract, or otherwise or howsoever constituted or arising, and also as taking full burden on him for his spouse, assigned, conveyed, and made over to the company the policy of assurance, and also in further security assigned, disponed, and conveyed, and made over to the company the annual income payable to her out of the share of residue of the estate and effects of Miss Baxter of Balgavies. The premiums on the said policy of assurance were paid by Mr Ramsay from moneys received by him from Mrs Ramsay out of the separate estate held by her exclusive of her husband's rights. The receipts were granted and taken in name of Mrs Ramsay. The greater part of her income was derived from her father's and her aunt's trusts, and the income from them was payable to her strictly exclusive of her husband's jus mariti and right of administration.

Mrs Ramsay died on 18th October 1897, and the trustees under the mutual settlement gave up an inventory of her personal estate and obtained confirmation thereto. In the inventory they included the sum of £1750 due under the policy of assurance effected on her life, but deducting therefrom the £1500 which had been borrowed from the said company, together with a small sum of accrued interest due upon the loan. The surplus received by the trustees from the company was £212. At the settlement with the company the policy of assurance was discharged, and a discharge of the bond and assignation in security was also taken

Questions regarding the insurance policy arose between the trustees under the mutual settlement and Mr Ramsay, and for the settlement of these questions a special case was presented to the Court by (1) the trustees, and (2) Mr Ramsay.

The questions of law were—“(1) Does the sum payable under the said policy of assurance belong to the first parties subject to the security held by the company, or does it fall within the conveyance by Mrs Ramsay in favour of the second party under the said marriage-contract? (2) Is the second party entitled to revoke the mutual settlement, and if so, would be upon revocation be entitled under the marriage-contract to the amount in the said policy of assurance, or

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would he be entitled to the sum of £1500, being the amount of the debt due by him under the said bond and assignation in security? (3) In the event of the sum in the policy being held to belong to the first parties, is the second party bound to repay to them the amount of the second party's debt deducted by the insurance company in paying the policy?”

Argued for the first parties—The policy of assurance formed part of the executry estate in their possession. The policy was not conveyed by Mrs Ramsay to her husband in the marriage-contract. By that deed she conveyed only to him the property then belonging to her or that should pertain to her during the subsistence of the marriage. The sum in the policy did not fall due till after her death, when the marriage had ceased to subsist. The policy did not fall under the goods in communion; the mere fact of its existence during the marriage did not make it do so— Wight v. Brown, Jan. 27, 1849, 11 D. 419, opinions of Lord Justice-Clerk Hope, 462 and 463, of Lord Medwyn 467, of Lord Moncreiff 469, and of Lord Cockburn, 472; Smith v. Kerr, June 5, 1869, 7 Macph. 863, opinions of Lord Justice-Clerk Patton 867, and of Lord Neaves 873. The sum due under the policy was carried to the trustees by the mutual settlement. The money was addebted to Mrs Ramsay at the time of her death. Both under the settlement as trustees, and in terms of the policy as Mrs Ramsay's executors, the first parties had right to the policy— Muirhead v. Muirhead's Factor, Dec. 6, 1867, 6 Macph. 95. The second party had no power to revoke the mutual settlement, as it was provided in that deed that the revocation must be joint. The result of the bond and assignation in security was to make Mr Ramsay the primary debtor under it, and as such bound to relieve Mrs Ramsay, whose policy had been conveyed in security of his debt. The second party was therefore liable to reimburse the first parties for the payment made by them. It was contended by the second party that by being a cautioner Mrs Ramsay became a creditor, and that her jus crediti was conveyed to her husband by the marriage-settlement. This argument was fallacious, because a cautioner was not a creditor.

Argued for second party—The life assurance effected by Mrs Ramsay fell within the conveyance by Mrs Ramsay in his favour contained in the marriage-contract. Even if it did not, there was no exclusion of the jus mariti, and the policy of insurance during the subsistence of the marriage fell within the communion of goods. If Mrs Ramsay had wished the policy to be exclusively her own she should have insured her life in terms of the Married Women's Property Act. But she did not. This was just an ordinary policy, and the husband had full right to use it in any way the law allowed him. The money obtained by him on the security of the policy fell within the jus mariti— Thomson's Trustees v. Thomson, July 9, 1879, 6 R., opinion of Lord Justice-Clerk, 1227. With regard, therefore, to the £1500 obtained during Mrs Ramsay's life, the second party was entitled to do with it what he pleased. Even supposing that he was a debtor to his wife in the obligation arising out of the bond, the debt in which his wife was creditor was assigned in the marriage-contract conveyance. In any event, the second party was entitled to revoke the mutual settlement pro tanto so as to give effect to his rights either under the marriage-settlement or under his jus mariti.

At advising—