Scottish Court of Session Decisions

John Graham, farmer at Kirkconnel, in the stewartry of Kirkcudbright, died on 4th December 1891, leaving a trust-disposition and settlement dated 18th November 1891, by which he conveyed his whole property, heritable and moveable, to trustees for the following purposes:—“ First, For payment of all my just and lawful debts and the expenses of executing this trust. Second, I direct my trustees to continue on the management of the farms of Kirkconnel, Bargatton, and Auchengashel, and any other farms which may be in my occupation at the time of my death, until my son William Graham arrives at the age of thirty years, and during that time my trustees shall maintain and uphold the farmhouse of Kirkconnel as a residence for all the members of my family. Third, Upon my said son William arriving at the age of thirty years, I direct my trustees to assign the leases of the farms of Kirkconnel and Bargatton, and any other farms I may occupy at the time of my death, to my sons, the said William Graham and Robert Graham, and deliver over to them the whole stock, crop, implements, and all other effects thereon. Fourth, Upon my said son William attaining the age of thirty years, I direct my trustees to convey over to him my properties of Auchengashel and Tannymaws, in the parishes of Twynholm and Borgue, but he shall be bound immediately on receiving such conveyance to pay to my second son, the said Robert Graham, the sum of four thousand pounds sterling, or to execute a bond and disposition in security for that sum over the said properties in favour of the said Robert Graham. Fifth, I hereby leave and bequeath to my youngest son John Graham a legacy of four thousand five hundred pounds sterling, but the same shall not be paid to him until he arrives at the age of thirty years, but my trustees shall pay over to him the interest of the said legacy at the rate of four pounds per centum per annum half-yearly from the time he reaches the age of twenty-five years. Sixth, Upon my said youngest son reaching the age of thirty years, I direct my trustees to assign, dispone, and make over to him the lands of Bankend and Hardmanor belonging to me, situated in the parish of Newcastle in the county of Cumberland. Seventh, To each of my daughters Mary Graham and Jane Graham I bequeath a legacy of four thousand pounds sterling, but the same shall not be paid to them until they respectively attain the age of thirty years, but my trustees shall pay over to each of them the interest of their legacies at the rate of four pounds per centum per annum half-yearly from the time each of them arrives at the age of twenty-five years. Eighth, To my daughter Isabella Kyle Graham I bequeath a legacy of four thousand pounds sterling, but the same shall not be paid to her until she reaches the age of twenty-five years. In the event of any of my daughters dying before receiving payment of their legacies without leaving issue, the legacy of my daughter so predeceasing shall be divided equally among her brothers and sisters; but in the event of any of my daughters predeceasing the time of payment of their legacies and leaving lawful issue, such issue shall succeed to their deceased parent's share: Declaring that the legacies to my sons and daughters shall not bear interest until the dates when the same are made payable except as above provided for. Ninth, Upon my said son William Graham attaining twenty-five years of age, I direct my trustees to deliver over to my said daughters my whole household furniture, bed and table linen, and other effects in the farmhouse of Kirkconnel. Tenth, Upon my said daughter Isabella Kyle Graham attaining twenty-five years of age, or at the date when she would have arrived at that age, I direct my trustees to realise my whole estates and to divide the same equally among my sous William Graham, Robert Graham, and John Graham. In the event of my trustees considering it for the interest of my children at any time during this trust, they shall have power to make such advances to them from the provisions in their favour under the settlement as they may consider beneficial for their interest and advancement in life.”

The truster was survived by the following children:—(1) William, born on 4th September 1869, died unmarried and intestate on 16th November 1894—had he survived he would have arrived at the age of thirty upon 4th September 1899; (2) Robert Kyle, born 13th June 1871; (3) Mary, born 16th July 1874; (4) Jane, born 26th July 1876; (5) John, born 22nd July 1879; (6) Isabella, born 8th November 1885.

At the date of his death the testator was proprietor and in occupation of the farms of Auchengashel and Tannymaws, in the stewartry of Kirkcudbright. He was also proprietor of the lands of Bankend and Hardmanor, in the county of Cumberland. He was also in occupation as tenant at the date of his death of the farms of Kirkconnel and Bargatton in the stewartry of Kirkcudbright. The leases of these two farms were taken in name of John Graham (the testator), William Graham and Robert Graham (his sons), and the survivors and survivor of them, and the heirs of the survivor, excluding assignees. The stock, crop, and implements on the farms were the property of the testator.

In terms of the trust-deed the trustees

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continued in possession of the farms, and maintained the house at Kirkconnel as a residence for the family, and handed over the household furniture in the house at Kirkconnel to the truster's daughters.

At 4th December 1898 the trust-estate, exclusive of heritage and of farm stock, crop, and implements, and of the household furniture foresaid, amounted to £11,750, 13s. 6d.

Various questions arose with reference to the interpretation of the trust-deed. These questions had reference to (1) the bequest of the estates of Auchengashel and Tannymaws to the late William Graham on condition of payment of £4000 to his brother Robert; (2) the directions in regard to the leases and farm stocking; (3) the time of payment of the provisions to John Graham, Mary Graham, and Jane Graham; (4) the interest payable upon the said provisions; and (5) the destination of William's share of residue.

For the settlement of these points a special case was presented to the Court by (1) the trustees of John Graham, (2) Robert Graham, (3) John Graham with consent of his curators, (4) Mary Graham and Jane Graham, and (5) Isabella Kyle Graham with consent of her curators.

The questions at law were—“1. ( a) Did right to the estates of Auchengashel and Tannymaws vest in the late William Graham at the death of the truster? or ( b) do the said estates fall into residue? 2. In the event of the second part of the first question being answered in the affirmative, is the second party entitled to a payment of £4000 out of the proceeds of the said estates? 3. Is the second party entitled to an assignation of the truster's interest in the leases of Kirkconnel and Bargatton, or otherwise, is he entitled to succeed to said leases in terms of the destinations therein contained, and to delivery of (1) the stock, cropping, and others thereon? (2) the stock, cropping, and others upon Auchengashel and Tannymaws? or alternatively, is he entitled to one-half of said stock, &c., under (1) and (2), or either of them? 4. In the event of the second alternative of question 3, or either part thereof, being answered in the affirmative, does the other half of said stock, &c., fall into residue, or is it intestate succession of the late William Graham? 5. Are the third and fourth parties respectively entitled to demand payment out of their pecuniary provisions or a rateable share thereof on attaining the age of twenty-five? 6. Are the sixth parties bound to pay interest out of the trust-estate to the third and fourth parties upon the said provisions after they respectively attain the age of twenty-five at the rate of 4 per cent. per annum, even although the trust funds are insufficient to satisfy all the specific bequests, and if so, out of what part of the trust-estate does any deficiency in the amount of interest yielded by the funds invested to satisfy these provisions fall to be made good? (7) Did William Graham's share of residue accresce to the second and third parties, and if not, is it intestate succession of William Graham or of the truster?”

Argued for the second party— On the first question—The estates of Auchengashel and Tannymaws vested in William Graham a morte testatoris, and he as William's heir-at-law was entitled to a conveyance of the same at the date when William would have attained the age of thirty. The whole tenor of the deed showed that it had been drawn by the testator in contemplation of the arrival of the period when William would attain thirty, and that he had never contemplated that William might not attain that age, or that the provision to him would fall into residue. The trustees were also given power to make advances to the children from the provisions to them, which direction favoured vesting a morte. If vesting of the bequest to William was held to take place at thirty, there would be several periods of vesting under the will. The sole reason for the postponement of the date of payment was to keep the family together. By fixing thirty years of age the testator did not intend to make the attainment of that age a condition-precedent of the gift, but merely fixed a point of time at which payment was to be made— Hay's Trustees v. Hay, June 19, 1890, 17 R. 961, was an authority in his favour, the only distinction between it and the present case being that the date in Hay's Trustees was not one which might never arrive. But in Mackinnon's Trustees v. MacNeil, June 29, 1897, 24 R. 981, the estate was held to have been vested, although the directions were to pay on the attainment of majority, which was an uncertain event— Boss's Trustees v. Boss, Nov. 16, 1897, 25 R. 65; and Ballantyne's Trustees v. Kidd, Feb. 18, 1898, 25 R. 621, also favoured his contention. On the second question—Should it be found that the estates of Auchengashel and Tannymaws did not vest in William Graham, but fell into residue, he was entitled to payment of £4000 out of the proceeds thereof. Otherwise he alone of all the family would get no legacy, and the third party, who was a younger brother, would get a great deal more than himself. This was certainly not the intention of the testator. The right of a legatee to his provision was not affected by the lapse of the gift to the heir on which it was charged—M'Laren on Wills (3rd ed.), i. 574; Wylie v. Ross, June 12, 1857, 2 W. & S. 576; Jarman on Wills (5th ed.) 314; Wigg v. Wigg, 1739, 1 Atkyns, 381. On third and fourth questions— Robert was entitled to the leases of the farms of Kirkconnel and Bargatton in virtue of the destination in the leases. Notwithstanding the predecease of William without attaining the age of thirty, the bequest of the farm, stock, crop, implements, and effects was valid. The bequest included the stock, &c., on Auchengashel and Tannymaws, which were in occupation of the testator as proprietor at the date of the settlement and of his death. If nothing was held to have vested in William, then the bequest was joint, and William's share accresced to Robert—Stair, iii. 8, 27; M'Laren on Wills,

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(3rd ed.) i. 663. On seventh question—If the third share of residue bequeathed to William was held not to have vested in William, it must be held to have accresced to the second and third parties— Menzies' Factor v. Menzies, Nov. 25, 1898, 1 F. 128.

Argued for third party— On first question—The estates of Auchengashel and Tannymaws never vested in William. There was no direct gift to William, only a direction to convey—Bryson's Trustees v. Clark, Nov. 26, 1880, 8 R. 142. The date at which the conveyance was to be made was uncertain, and therefore the presumption was against vesting— Alves' Trustees v. Grant, June 3, 1874, 1 R. 969. The power to make advances did not of itself show that there was vesting— Fyfe's Trustees v. Fyfe, Feb. 8, 1890, 17 R. 450, opinion of Lord Rutherfurd Clark, 453. In the present case there was a destination-over in this sense, that there was a clause dividing the residue among the three sons— Brodie v. Brodie's Trustees, June 13, 1893, 20 R. 795. That case was so similar to the present that it might almost be held to be a ruling authority. The general intention of the deed was in favour of no vesting. The intention of the testator was that the two eldest sons should get equal shares, but he never contemplated that if the eldest died the second should take so large a proportion of his estate as he now sought to acquire. The whole tenor of the trust-deed supported the argument for postponement of vesting. On second question—If these estates did not vest in William, then the second party was not entitled to payment of the sum of £4000 out of the proceeds of the estates, but the legacy of £4000 lapsed along with the bequest of the estates. It was a condition-precedent of the second party getting his legacy that William should attain the age of thirty and succeed to the estates. The second party had only a personal right as against William to get a bond and disposition over the estates. The case of Ross, supra, did not bear out the doctrine founded upon it in M'Laren on Wills (3rd ed.) i. 574, and the English case of Wigg, supra, failed to meet the circumstances of the present case. On third and fourth questions—The bequest of the leases, farm stock, and others failed because the death of William without attaining the age of thirty had made it impossible that the condition of the bequest could be purified. The subjects of this bequest therefore lapsed to residue. There was no room here for the application of the principle of accretion. This bequest did not include the stock, crop, &c., on the farms of Auchengashel and Tannymaws; it only included the stock, &c., on the farms leased by the testator at the time of his death. If the condition that William should attain thirty were held not to suspend vesting, then the right to one-half of the farm stock, &c., vested in William, and passed to his heirs in mobilibus. On fifth question—As the whole beneficial interest in his legacy of £4500 belonged to him on attaining the age of twenty-five, he was entitled on that event, upon the assumption that the estate was sufficient to pay all the pecuniary legacies in full, to immediate payment thereof, or to payment of a rateable share if the estate proved insufficient— Miller's Trustees v. Miller, Dec. 19, 1890, 18 R. 301; Ballantyne's Trustees v. Kyd, Feb. 18, 1898, 25 R. 619. On sixth question—The trustees were bound to invest at 4 per cent., and pay over the interest on the sum invested. After investment they were not entitled to require the first parties to encroach on the capital of the trust-estate to make up deficiencies in the interest. On seventh question, he adopted the argument of the second party.

Argued for fourth parties— On the first and second questions they adopted the argument of the third party. On third and fourth questions they maintained that the right to one-half of the farm-stock was vested in William, and passed to his heirs in mobilibus. They did not press for an affirmative answer of the fifth question. On sixth question— They were entitled to be paid interest at the rate of 4 per cent. per annum whatever might be the annual return from the invested funds of the trust, even although the trustees in order to pay this interest had to encroach on the capital of the trust-estate. If the trust-estate had been yielding more than 4 per cent. they would have been entitled only to 4 per cent. on their provisions; therefore if it yielded less than 4 per cent. they were nevertheless entitled to that interest. On seventh question—There was here no room for accretion, as the residue was left to persons named, “equally among” them— Paxton's Trustees v. Cowie, July 16, 1886, 13 R. 1191. William's share of residue was therefore either intestate succession of William, as having vested in him, or intestate succession of the truster.

The fifth party adopted the argument of the third party on the first, second, and sixth questions, and the argument of the fourth party on the third, fourth, and seventh questions.

On behalf of the first parties it was mentioned that if the first part of the sixth question was answered in the affirmative the payment of interest at 4 per cent. might to some extent encroach on capital.

At advising—