Scottish Court of Session Decisions

George Coats, of Staneley, Paisley, died on 9th October 1901, survived by his widow and by two sons, both major, Peter Herbert Coats and Ernest Symington Coats, and two daughters, one married and the other a minor.

Mr Coats died possessed of (1) the estate of Staneley, Paisley; (2) a field adjoining the Staneley estate, purchased by the truster in 1896 from Mr John A. Brown, starch manufacturer, Paisley; (3) the estate of Lounsdale, Paisley; (4) one-half pro indiviso of a dwelling-douse at Innellan, called Lilybank; and (5) moveable estate of the net value of £469,900.

On 16th September 1901 Mr Coats, who was ill for some months before his death, executed a trust-disposition and settlement whereby, having in the first place given directions for securing a marriage-contract provision of an annuity of £300 to his wife, he directed his trustees as follows:—“( Second) Besides the above, my trustees are to pay my wife four thousand pounds a-year as long as she lives, and this is to be a first charge on the balance of my estate. ( Third) The balance of the income of my estate to be divided equally among my children. ( Fourth) On the death of my wife my estate to be equally divided among my four children. ( Fifth) In the event of the death of any of my children (being married) without leaving any family, the widow or widower to be liferented in their portion. ( Sixth) My wife to be liferented in my house Staneley, and also in Lilybank, Innellan, in so far as it belongs to me. ( Seventh) At the death of my wife my son Peter Herbert, or failing him my son Ernest Symington, to have the option of buying Staneley as it then stands, including silver-plate and everything else, for the sum of fifteen thousand pounds, and my share of Lilybank, Innellan, for the sum of fifteen hundred pounds; failing them my daughters to have the same option; and failing them the properties to be sold and the money put into my general estate; my brother Peter, of course, to have first option of buying Lilybank. ( Eighth) The field last bought from John A. Brown between Staneley and Lounsdale to form part of Staneley, and to be

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included in the price—fifteen thousand pounds—already mentioned. ( Ninth) The estate of Lounsdale to be offered in turn at the cost price of eight thousand pounds, which sum is to be added to my general estate, to my sons Peter Herbert and Ernest Symington, or failing them to my daughters, or failing them to be sold and proceeds treated as above stated.”

Questions having arisen as to the true meaning of the truster's settlement, a special case was presented for the opinion and judgment of the Court.

The parties to the special case were—(1) the trustees under his settlement; (2) the truster's eldest son Peter Herbert Coats; and (3) the truster's son Ernest Symington Coats, the elder daughter with the consent and concurrence of her husband, and the younger daughter with consent and concurrence of her curators.

In addition to the facts narrated above, the case stated that the sum required to secure the widow's annuity would not exceed £150,000.

The questions of law for the opinion and judgment of the Court were—“(1) Has the right to the capital of the trust estate vested in the second and third parties a morte testatoris, or is vesting postponed till the death of the testator's widow? (3) If vesting has taken place, are the first parties entitled or bound to distribute among the second and third parties now the capital of the trust so far as not required to secure the widow's provisions? (4) Can the option of electing to purchase Staneley and Lilybank at the widow's death under the seventh purpose be validly exercised now, or is the option limited to the truster's children alive at the widow's death? (6) Does the option to purchase Lounsdale under the ninth purpose fall to be exercised now, and are the first parties bound to convey Lounsdale to the purchaser immediately on payment of the price, or is the exercise of said option postponed until the widow's death?”

The contention of parties were as follow:—With regard to vesting and payment of the capital of the trust estate, the first parties contended that vesting was postponed until the death of the widow, and that no distribution could take place before that event. The second and third parties contended that vesting took place a morte testatoris, and that immediate division might be made among them of the balance of the capital after setting aside a sum sufficient to secure the widow's annuity.

The second party contended that though the seventh purpose of the settlement could not be carried out until the death of the widow he was entitled to exercise the option therein conferred upon him immediately for himself and his successors. The third parties contended that this option was exercisable only at the widow's death, and was confined to the truster's children then surviving.

The first parties maintained that the option of purchasing Lounsdale could not be exercised until the period of division. The second and third parties maintained that this option fell to be exercised immediately, even though vesting and distribution should be held to be postponed.

Argued for the first parties—There was no gift apart from the direction to divide, and therefore no vesting until division— Bryson's Trustees v. Clark, November 26, 1880, 8 R. 142, 18 S.L.R. 103. If vesting was not postponed distribution could not be postponed— Yuill's Trustees v. Thomson, May 29, 1902, 4 F. 815, 39 S.L.R. 668; therefore postponment of vesting was necessary to protect the rights of widows or widowers under the fifth purpose of the settlement, in which the truster necessarily referred to children predeceasing his widow, he himself being on his deathbed when he executed his settlement.

Argued for the second party—The destination to “my four children” was equivalent to a nomination destination, and vesting took place a morte testatoris— Matheson's Trustees v. Matheson's Trustees, February 2, 1900, 2 F. 556, 37 S.L.R. 409. The presumption in favour of immediate vesting was fortified by the consideration that the truster's widow was an annuitant, not a liferentrix— Pursell v. Newbigging, May 10, 855, 2 Macq 273; Waters' Trustees v. Waters, December 6, 1884, 12 R. 253, 22 S.L.R. 176. The case satisfied the test of Miller's Trustees v. Miller, December 19, 1890, 18 R. 301, 28 S.L.R. 236, and Yuill's Trustees v. Thomson, cit. sup., and the trustees were bound to distribute the estate immediately so far as not required to secure the widow's annuity.

Counsel for the third parties adopted the argument of the second parties on the question of vesting and distribution.

The arguments of parties on the other questions in the case sufficiently appear for the purposes of this report from their contentions as stated above.

At advising—