Scottish Court of Session Decisions

In 1857 an association was formed for the purpose of establishing an industrial school in Falkirk, and funds were raised for the purpose of carrying out that purpose partly by local subscription and partly by a grant of £150 from the trustees of the Ferguson Bequest Fund, the receipt for which bore that it was a grant “on condition that the association should raise £350, and erect a building … from the £10,000 legacy for ragged and industrial schools in Scotland.” A constitution and rules were drawn up, in which it was stated that “It is the object of this school to reclaim the neglected or profligate children of Falkirk and neighbourhood by affording them the means of a good common and Christian education, and by training them to habits of industry so as to enable them to earn an honest livelihood and fit them for the duties of life.”

Certain heritable property was purchased to be used as a schoolhouse, the disposition being granted in favour of the trustees of the Industrial School.

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By the disposition it was, inter alia, declared that “The said piece of ground and the buildings erected or to be erected thereon shall be held, used, and occupied as a school and pertinents for the education and support of destitute children until the same be sold or the destination otherwise changed by a majority of subscribers for the time being to the funds of the said Falkirk Ragged Industrial School, convened for that purpose, and shall be managed under such rules and regulations as presently exist, or shall hereafter be made and agreed on by a majority of subscribers at any general meeting of the subscribers, or by their committee authorised by them, with power to the trustees named or to be assumed, and the survivors and sole survivor, acting under directions of such general meeting convened as aforesaid, to sell and dispose of the said lands and others, or to alter the foresaid destination thereof as such general meeting may direct, and for that purpose to grant and subscribe all writs and deeds requisite and necessary.”

A school was carried on in accordance with the constitution and rules down to 1867, when the school was certified by the Home Secretary as an Industrial School in terms of the Industrial Schools Act 1866 (29 and 30 Vict. cap. 118).

A new set of rules were drawn up and approved by the Home Secretary, which provided, inter alia, that the object of the institution was “to reclaim abandoned boys and girls, and to rescue those whose unhappy circumstances would inevitably lead them to crime and profligacy; such children to be admitted as inmates, to be clothed, fed, and boarded under the powers and provisions of the Industrial Schools Act 1866,” and that its affairs were to be conducted by a committee of subscribers. The School was carried on down to 1898, when it was found that it could no longer be carried on with advantage, the Home Secretary having intimated the withdrawal of the certificate of the school, and suggested that the committee should consider how they should deal with the school funds, &c., in the future, and whether the teachers could not be granted gratuities out of the proceeds of the sale of the property. The available assets at this time were the heritable subjects, valued as worth from £1600 to £1800, furniture, &c., valued at £50, and the balance of the current year's Government grant.

A meeting of subscribers was held at which it was resolved to direct the trustees and Committee of Management to sell the school, and to apply to the Court for its approval. The Committee was also instructed to give certain gratuities to the officials of the school, and to allocate the balance to certain charitable objects.

A petition was presented by the trustees and Committee of Management in which they craved the Court to authorise the petitioners to carry out the sale, to pay the gratuities resolved upon at the meeting of subscribers, and to allocate the balance remaining as provided at the meeting, viz., two-fifths to the Falkirk Town Mission; two-fifths to the Falkirk Cottage Hospital; and one-fifth to the Falkirk Science and Art School Evening Classes. No answers were lodged.

The Court remitted to Mr Charles Cook, W.S., to inquire into the regularity of the proceedings and the reasons for the proposal to sell the subjects, and to report as to the petitioner's proposal as to the disposal of the proceeds of the sale and other free assets.

Mr Cook, after narrating the circumstances giving rise to the petition, stated in his report that “the trustees of the Ferguson Bequest Fund have demanded repayment of their donation of £150 made in 1859 towards the establishment of the school. The grounds on which such repayments are demanded are, that the gift was one for a special purpose, viz., the establishment of the Falkirk Ragged School; and that if the school is now to be sold, the managers are not entitled to divert the money to any other purpose without the consent of the Ferguson Trustees, but are bound to repay the donation of £150 to the Ferguson Trustees, it being ultra vires for them to allow the money to be applied for any purpose other than that for which it was originally granted. The petitioners maintain that Mr Ferguson of Cairnbrock having left a special legacy of £10,000 for ragged and industrial schools, his trustees, out of this fund, made the donation in 1859 of £150 to the Falkirk Ragged School; that this donation was made voluntarily and without condition save that a building should be purchased and converted into a school; that the house in Kerse Lane, Falkirk, was so purchased and converted, and that a Ragged or Industrial School was therein maintained for thirty-nine years: that in these circumstances the Ferguson Trustees are not entitled to repayment of an unconditional donation made nearly forty years ago, but are bound by the resolution of the subscribers formally passed at the meeting of 20th September 1898.”

The reporter, on the assumption that the gift was unconditional, recommended the Court to grant the prayer of the petition.

The Court refused to grant authority to the petitioners to sell the subjects, on the ground that they did not require authority to do so.

The Ferguson Trustees lodged a minute whereby they craved the Court to refuse the prayer of the petition in so far as it proposed to divert the sum received from the Ferguson Bequest from the Ragged or Industrial Schools of Scotland, or to amend the scheme by directing the petitioners to pay the said sum to the minuters, to be applied for the benefit of the said schools.

The minuters averred that Sir John Ferguson had directed his trustees to set apart the sum of £10,000 “to and for the benefit and among such Ragged or Industrial Schools in Scotland as my said trustees shall select,” and that the grant to the Falkirk School had been made out of this fund. They maintained that the division of the funds proposed by the petitioners

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would involve the diversion of the fund specially dedicated by Sir John Ferguson to these schools, to other charities for which he had made no provision. They averred that there were schools in Scotland eligible objects for his bequest.

Argued for petitioners—There was sufficient similarity in the new objects to the original object of the institution to justify the transference of the funds from the committee of subscribers, especially look-to the powers given to them in the conveyance. The distribution of gratuities to the officials of the school was justified by the authority of Governors of Heriot Trust, November 17, 1897, 25 R. 91. The majority of the subscribers convened for that purpose were satisfied, and there was no opposition except on the part of the Ferguson Trustees. But they having made an unconditional gift of this money forty years ago, were not now entitled to oppose its application to cognate purposes to that for which it was originally used. The terms of the Ferguson Bequest were not made a condition of the gift, and the present question had nothing to do with its purposes. As soon as the trustees had made their gift to an industrial school they had discharged their duty and had nothing further to do with it. They were just in the same position as if Sir John Ferguson had left a legacy to the school and they had paid it, and were in no better position than any other donor— Connell v. Ferguson, March 5, 1861, 23 D. 683.

Argued for Ferguson Trustees—They were bound by their trust to give this fund to particular schools, and could not consent to its alienation. The case of Young's Trustees v. Deacon of the Eight Incorporated Trades of Perth, June 9, 1893, 20 R. 778, showed that it was competent to refer to their trust-deed as showing the purposes to which the gift must be applied. So long as the original objects of the trust existed, it was incompetent to divert a gift made from it to other purposes however cognate— Young's Trustees, at p. 786; Mitchell v. Burness, June 19, 1878, 5 R. 954, at 599.