Scottish Court of Session Decisions

By mutual last will and settlement executed on 16th August 1872 William Chalmers and Jane Cruickshank or Chalmers, his wife, after providing, inter alia, for payment of an annuity of £20, provided in the third place that, subject to the burden of the said annuity, the testators' whole estate, under deduction of debts and charges, should be divided into twelve equal shares, and apportioned and applied, inter alia, as follows:—“( First) One share to be set aside and the annual proceeds applied in the first instance in payment of the premiums on two policies of assurance, each for £300, Nos. 2563 and 4184, held by us on the life of our son William Leslie Chalmers with the Northern Assurance Company, the surplus, if any, being paid over to the said William Leslie Chalmers for the education and support of his children, and on the emergence of the claims under said policies by the death of the said William Leslie Chalmers, the contents thereof, bonuses accrued thereon, … shall be paid over to and divided equally amongst the lawful children of the said William Leslie Chalmers on their respectively attaining the age of twenty-one years—the annual proceeds till said period being applied for their education and maintenance.” “( Fifth) Four shares thereof to and for the use of our said daughter Jane Elizabeth Chalmers in liferent till she attain the age of thirty-five years or is married, and on her attaining said age without being married for payment of the principal to her, or in the event of her previous marriage, for settlement of said principal on herself in liferent, exclusive always of the jus mariti and right of administration of her husband, free from his or her debts or deeds, and on her children in such proportions as she may appoint, and failing such appointment equally among them share and share alike… . As also that failing the survivance of any of our grandchildren till the period of payment of the provisions in their favour, the same shall fall to and be divided equally among their brothers and sisters, and failing these the same shall revert to and form part of our estate for division.” The testators further conferred upon the survivor of them power to nominate and appoint executors or trustees for the purposes of fulfilling the mutual settlement, and reserved and granted to themselves jointly, and to the survivor of them, full power at any time to alter or revoke

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the said mutual settlement in whole or in part.

William Chalmers died on 27th October 1872.

By codicil to the mutual settlement, executed on 11th June 1874, Mrs Jane Cruickshank or Chalmers, the survivor of the spouses, in virtue of the power conferred on her by the settlement, made, inter alia, the following alteration on the settlement:—“(Second) I recal the fifth direction under clause third of said settlement, and in lieu and in place of the provision or share of the estate thereby declared to be paid to my daughter Jane Elizabeth Chalmers, I direct, appoint, and declare that only two and a-half shares shall be paid to her … and in so far, but only in so far as necessary to give effect to these alterations and directions, I recal the said mutual settlement, and homologate and approve of the same otherwise.” In this codicil Mrs Chalmers appointed trustees for carrying out the mutual settlement and codicil.

Mrs Jane Cruickshank or Chalmers died on 4th August 1879.

Miss Jane Elizabeth Chalmers, the testators' daughter, who was born in 1841, married Dr John Charles Hirschfeld on 9th September 1874. In 1880 Dr Hirschfeld was accidentally drowned along with a pupil son, the only child of the marriage.

William Leslie Chalmers, the testators' son, repudiated the mutual settlement and codicil, and claimed his share of the legitim fund, which was paid to him by the trustees, and in respect of which payment he granted to them a formal discharge, dated 18th July 1881, of all claims competent to him against the trust estate or under the mutual deed and codicil. After settlement of the said claim of legitim the trustees divided the trust-estate into twelve equal shares as directed by the mutual deed, and they set aside one share as directed in head first of clause third of the mutual deed. On the death of the annuitant on 13th July 1895 the capital sum retained by the trustees to provide therefor was divided in the same way. The income of the said share set aside was, so far as necessary, applied in keeping up the two policies of assurance over the life of William Leslie Chalmers, and the surplus income was annually accumulated in the hands of the trustees.

On the division of the trust estate the trustees, in terms of head fifth of clause third of the settlement and the second clause of the codicil, set aside two and a-half shares of the estate for the use and behoof of Mrs Jane Elizabeth Chalmers or Hirschfeld, and paid her the income of these shares.

In 1901 the trust lapsed by the death of the last surviving trustee, and on 25th January 1902 Alexander Duffus was appointed judicial factor on the trust estate.

In these circumstances questions arose relative, inter alia, to (1) the right to the accumulations of the surplus income of the share set apart for the upkeep of the policies of assurance, and (2) the right to the fee of the two and a-half shares set aside for behoof of Mrs Hirschfeld. For the settlement of these questions a special case was presented to the Court.

The first party to the case was the judicial factor, the second parties were William Leslie Chalmers and his children, the third party was Mrs Hirschfeld, and the fourth, fifth, sixth, and seventh parties were the persons other than the second and third parties having interests in the trust estate.

The whole parties were agreed that Mrs Hirschfeld, who was sixty-two years of age, should for the purposes of the case be held to be past the age of child-bearing.

The questions of law were, inter alia—“(1) Was the bequest of the surplus income of the share appointed to be set apart for the upkeep of the policies of insurance absolutely forfeited by the said William Leslie Chalmers claiming and accepting legitim? (5) Has the fee of the said two and one-half shares provided to the third party by the said mutual deed and codicil vested in her, and is she entitled to demand and receive payment of the same from the first party?”

The arguments of parties and the opinions of the Judges are given only in so far as they relate to the two questions dealt with in this report.

Argued for the second parties— On Question 1.—The bequest of the surplus income was a separate and independent bequest intended solelyfor the benefit of the children of William Leslie Chalmers, and the bequest was not affected by the fact that he had claimed and obtained payment of legitim. His children were therefore entitled to payment of the surplus income either direct or through their father. The children were the only persons interested, the income being for their maintenance, and the father only being entitled to receive it as trustee for them. Their rights could not therefore be prejudiced by their father's repudiation of the settlement. On Question 5.—They concurred in the argument of the fourth, fifth, sixth, and seventh parties.

Argued for the third party.— On Question 1.—They concurred in the argument of the fourth, fifth, sixth, and seventh parties. On Question 5.—In terms of the second clause of the codicil the bequest in Mrs Hirschfeld's favour of the two and a-half shares was absolute and unconditional, and vested in her as at the date of the death of the testatrix Mrs Chalmers. No doubt the provision in the mutual settlement gave Mrs Hirschfeld only a liferent, but the codicil recalled that provision in toto and conferred on her a fee.

Argued for the fourth, fifth, sixth, and seventh parties.— On Question 1.—The bequest of the surplus income was a bequest personal to William Leslie Chalmers, and all right thereto was absolutely forfeited by his claiming and obtaining payment of legitim. It was a bequest not to his children but to himself, although it was coupled with the expression of a wish that he should use it in a particular way— Jack v. Marshall,

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January 21, 1879, 6 R. 543, 16 S.L.R. 326; Jarman on Wills, i. 371; Browne v. Paull (1850), 1 Simons, N.S., 92. The accumulations of the income therefore fell to be added to the general estate. On Question 5.—The provisions of the mutual deed restricting the right of the third party to a liferent governed the bequest in her favour. The codicil only changed the amount of the bequest from four to two and a-half shares. No right of fee therefore vested in her.

At advising—