Scottish Court of Session Decisions

By antenuptial contract of marriage executed in 1885 Charles Jameson Christie bound himself, and his heirs, executors, and successors, to pay to his promised spouse Janet Anderson Rintoul after his death “a free yearly jointure or annuity of £300” so long as she should survive him, or in the option of his said spouse, and in place of the said annuity, to convey to her “in liferent for her liferent use allenarly” one-third of his whole estate, heritable and moveable. The annuity or liferent, as the case might be, was to be restricted to £120 in the event of his widow contracting a second marriage, and it was declared that such restricted annuity “shall be purely alimentary and not alienable or assignable by” the wife.

In security of the foregoing provisions Mr Christie assigned to certain trustees a policy of insurance for £2000, in trust for the following trust-purposes—“First, for payment of any expenses which may be incurred in the execution of the trust hereby created; second, that the said trustees may hold and apply the said policy of assurance, sums of money therein contained, and bonuses and additions, and others before assigned, after fulfilling the preceding purposes of this trust, in security to the said Janet Anderson Rintoul for implement and satisfaction to her of the provisions hereinbefore conceived in her favour.” Mr Christie bound himself to pay the annual premiums on the policy, and declared that in the event of the provisions to his wife being otherwise secured to the satisfaction of the trustees they should be bound to execute any writings necessary to reinvest him in the policy.

In the same deed Janet Anderson Rintoul on the other part made over to and in favour of herself and her husband and the survivor in liferent, and the children of the marriage in fee, all her property and acquirenda “other than the provisions before specified.”

By assignation in security dated 29th October 1879 Mr Christie for himself, and as administrator-in-law for his wife, and the said Mrs Janet Anderson Rintoul or Christie his wife, assigned to John Hardie and his heirs and assignees whomsoever, all right, title, and interest which Mrs Christie had or might thereafter have in the said annuity of £300, and also in the said policy of insurance. The assignation proceeded upon the narrative that “I, the said Charles Jameson Christie, am presently justly indebted to John Hardie.… the sum of £1321, 2s. 3d., and that we both [i e., Mr Christie and his wife] are desirous of securing him in payment thereof, as well as of legal interest now due and to become due.”

The marriage-contract trustees never accepted office, and on Mr Christie's application a judicial factor was appointed or the trust-estate in 1871.

Mr Christie died on 7th March 1897, survived by his wife and ten children. Mr Alexander James Paterson, C.A., the judicial factor, received payment of the sum contained in the insurance policy, amounting with bonus additions to £3600, and raised an action of multiplepoinding with a view to the distribution thereof.

Claims were lodged (1) by Mr Paterson, who, as judicial factor, claimed the whole fund in medio “in order that he may administer and apply the same in implementing the provisions contained in the said antenuptial contract in favour of Mrs Christie and the children of the marriage;” and (2) by Mr Hardie, who claimed to be ranked and preferred to the extent of £2386, being the amount of the debt due to him by Mr Christie, plus interest at five

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per cent. from 1879, when the money was lent.

The judicial factor pleaded, inter alia—“(2) Mrs Christie having no power to burden or renounce, stante matrimonio, the provisions in her favour constituted by her antenuptial contract of marriage, the claimant is entitled to be ranked and preferred in terms of his claim.”

Mr Hardie pleaded—“(1) The claimant being validly vested in the whole rights of the spouses under the said antenuptial contract of marriage in the fund in medio, is entitled to be ranked and preferred in terms of one or other of the branches of his claim.”

On 25th June 1898 the Lord Ordinary ( Kyllachy) ranked and preferred Mr Hardie in terms of his claim, and repelled the judicial factor's claim.

Opinion.—“This multiplepoinding is brought to distribute a sum of £3000, which represents the proceeds of a policy of insurance on the life of the late Mr C. J. Christie, who was formerly a farmer in East Lothian, and is now deceased. The fund is claimed in the first place by the judicial factor under Mr Christie's marriage trust, who seeks to retain the whole sum for the security of the marriage-contract provisions for the deceased's widow. On the other hand, a portion of the fund—amounting to £2300—is claimed by Mr Hardie, a merchant in Haddington, who some time ago obtained, in security of a certain debt, an assignation to Mrs Christie the widow's interest under the marriage-contract. And the question I have to decide really is, whether it was within the power of Mrs Christie, stante matrimonio, to assign to Mr Hardie her marriage-contract provision.

I had a very careful argument on that question, which involved the usual reference to the case of Menzies & Murray on the one hand, and the case of the Standard Investment Company v. Cowe on the other. And what I have to decide is, whether this case belongs to the class of cases in which it has been held that a wife cannot, even with her husband's consent, during the subsistence of the marriage, part with her marriage-contract provision, or do anything to qualify her marriage-contract rights.

Now, there can be no doubt as to the nature of the lady's interest in this marriage-contract. Her interest is just this—Her husband binds himself to pay her an annuity of £300 a-year, restrictable on her entering into a second marriage. He binds himself to pay her that annuity, and does so absolutely. She gets it without any restriction or qualification, except that it is (in the event of her second marriage) declared to be alimentary; and as we all know, such a declaration, unless protected and fortified by a trust, is of no effect. So far, therefore, as Mrs Christie's primary right under the contract is concerned, it was certainly a right which was absolute, and which she might assign or deal with as she pleased.

But then it is said that in the case of Menzies Murray, following the case of Torry Anderson, and that class of cases, it has been decided that where a marriage-contract provision is protected by a trust—the provision being to be held by trustees and administered for the widow's behoof—that is held to imply as part of the contract an exclusion of the widow's right to alienate during the marriage; and of course that is a doctrine about which there is no dispute as applicable to the case of a marriage-contract provision duly protected by a trust. But the difficulty in the present case is, that the only trust which is created by this marriage-contract is a trust for the ingathering of the security subject—viz., the policy of insurance which the husband effected in order to secure his wife's rights. The trustees are not directed to recover the proceeds of the policy and to hold these for the widow, and to pay her therefrom an annuity from year to year. The trust is simply a trust to levy and hold the proceeds of the policy for her security; and, indeed, it is provided that if her annuity is otherwise secured, the trustees are immediately to hand over the proceeds of the policy to the husband. I am not, therefore, able to hold that this is a case in which the wife's annuity is protected by a trust in the sense of the cases referred to; and accordingly I have come to the conclusion that Mr Hardie's claim is a claim to which there is no good answer, and that he must be ranked and preferred to the proceeds of the policy, I think, in terms of the first head of his claim. Of course his claim does not exhaust the proceeds of the policy. He merely recovers out of the proceeds the amount of the debt for which he holds the assignation in question—granted jointly by the husband and the wife. The policy being the property of the husband, subject to the wife's security, and the wife's assignation disburdening the proceeds of any claim on her part, the result is that Mr Hardie's debt is a first charge on the fund.

Another question was raised as to whether the trustees here might not have certain rights on behalf of the children of the marriage, and be entitled to recover their provisions for their behoof. It was suggested that they were in the position of creditors of Mr Christie for the children's provisions, and so entitled to retain for the benefit of the children the proceeds of this policy. I thought at first there might be something to say for this view, but on reading the contract, and looking into the matter, I see that it will not hold. There is no security created in favour of the children; and in any case the trustees hold primarily for the security of the wife, and they cannot interpose any claim of retention to the prejudice of her or her assignees.

The only other matter about which there was some discussion was as to the rate of interest to be allowed on Mr Hardie's debt. I am afraid I cannot decide that question very satisfactorily, because the rule on the subject is somewhat unsettled, and I have to fix a rate of interest which shall be applicable both to recent years and to a period going back as far as 1879.

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I am far from saying that with regard to debts unpaid there is any absolute rule that 5 per cent. any more than 4 per cent. shall be the rate of interest to be implied. On the other hand, 5 per cent. has for a long time been the rate of interest implied; and in this case, the transaction going back to 1879, I have come to the conclusion that there is no sufficient reason for restricting the rate below 5 per cent. I am less disposed to do so because of this circumstance, that the debt here is of long standing, and that there have been annual or periodical accumulations. The creditor has not got his interest paid regularly. It has been allowed to accumulate, and he cannot get compound interest. Now, 5 per cent. is not more than 4 per cent. with annual accumulations, and therefore I doubt whether this case quite raises the general question.

On the whole, I propose to sustain Mr Hardie's claim in its first head, and to find both parties entitled to their expenses out of the trust estate.”

The judicial factor reclaimed, and argued—1. The Lord Ordinary's interpretation of the marriage-contract was wrong. There was something more in it than a mere obligation to pay; there was a trust to secure the fulfilment of that obligation; in short, there was a proper marriage-contract provision, and such a provision was irrevocable. This case fell within the same category as Hope, &c., March 15, 1870, 8 Macph. 699; Menzies v. Murray, March 5, 1875, 2 R. 507; and Ker's v. Trustees v. Ker, December 13, 1895, 23 R. 317. It was distinguished from the other class of cases represented by Ramsay v. Ramsay's Trustees, November 24, 1871, 10 Macph. 120; Standard Property Investment Co. v. Cowe, March 20, 1877, 4 R. 695; Laidlaws v. Newlands., February 1, 1884, 11 R. 481; Reliance Mutual Life Assurance Society v. Halkett's Factor, March 4, 1891, 18 R. 615; Watt v. Watson, January 16, 1897, 24 R. 330. If the true meaning of the contract was to put funds into the hands of trustees to secure the wife in an annuity, the form in which that meaning was expressed did not matter. 2. In any event, the rate of interest allowed by the Lord Ordinary, viz., 5 per cent., was too high; 4 per cent. was quite high enough— Greig v. Magistrates of Edinburgh, March 12, 1879, 6 R. 801; Ross v. Ross, June 16, 1806, 23 R. 802; Melville v. Noble's Trustees, December 11, 1896, 24 R 243; Camplbell's Executor v. Campbell's Trustees, March 4, 1898, 25 R. 687; Grant v. Grant's Trustees, June 4, 1898, 25 R. 948.

Argued for Mr Hardie—1. The Lord Ordinary was right. The annuity which the husband came under an obligation to provide to his widow was not declared to be alimentary, and indeed did not fall under the trust at all. So far as it was possible to exclude the annuity from the trust the spouses did so. There was no attempt to protect the wife against herself. The marriage-contract trustees had no duty to the wife when the marriage was dissolved. In the class of cases of which Menzies v. Murray was typical, the attempt was always to terminate or break down a trust. Here, if the claimant should be successful, the trust would still go on, and the factor would hold and administer the balance of the fund in medio in terms thereof [The cases cited supra were referred to and commented upon by the claimant.] (2) On the question of the rate of interest, the claimant supported the interlocutor of the Lord Ordinary, and referred to Bishop's Trustees v. Bishop, March 17, 1894, 21 R. 728; Dunn & Co. v. Anderston Foundry Co., Limited, June 8, 1894, 21 R. 880.