Scottish Court of Session Decisions

Miss Margaret Hutchinson, Somnerfield Lodge, Haddington, died on 9th May 1902 leaving a trust-disposition and settlement whereby she directed her trustees “to provide and apply the sums after mentioned in the purchase of Government or Savings Bank annuities for the persons after named” (then followed the names of the annuitants, who were all females, and the respective sums bequeathed to each), “which annuities … “shall be strictly alimentary, and shall be payable to the said annuitants on their own receipt.” The truster further “expressly provided and declared that any legacies, provisions, or annuities bequeathed by me in favour of females are granted exclusive of the jus mariti and right of administration and jus relicti of any husband or husbands to whom any of the said female legatees may at any time be married, and shall not be affectable by the debts or deeds of such husbands, or by the diligence of creditors in any way; and such legacies, provisions, and annuities shall be payable to the said beneficiaries upon their own receipts or acknowledgments, and shall not be assignable or affectable by creditors.” There was no provision for a continuing trust.

Certain of the beneficiaries to whom Miss Hutchinson bequeathed annuities having requested her trustees to make immediate payment of the capital sums directed to be invested in annuities, a special case was presented for the opinion and judgment of the Court.

The parties to the special case were (1) the trustees, and (2) the beneficiaries who demanded immediate payment.

In addition to the facts narrated above, the case stated as follows:—“The purchase of Government or Savings Bank annuities is mainly regulated by the Government Annuities Act 1853 (16 and 17 Vict. c. 45). Section 25 of the said Act provides that the ‘right, title, interest, and benefit in and to any annuity … purchased under the provisions of this Act shall not be assignable by the original proprietor thereof so as to enable the assignee to receive the same during the lifetime of the said proprietor, except in the case of the insolvency or bankruptcy of an individual proprietor, when the same shall become the property of his or her assignee or assignees for the benefit of his or her creditors.’ The section farther provides that in case of any such bankruptcy or insolvency the Commissioners for the Reduction of the National Debt shall re-purchase and cancel the annuity, the receipt of the assignee or assignees to the Commissioners being constituted a sufficient discharge thereof. The first parties have applied to the Comptroller of the Savings Bank Department of the General Post Office, and have ascertained that, according to the practice of the Department with regard to annuities issued by it, while the right to an annuity itself cannot, apart from insolvency or bankruptcy, be assigned, the half-yearly payments are made either to annuitants themselves or parties holding powers of attorney granted by annuitants, and further that under their regulations the Department cannot, or at anyrate will not, grant a bond of annuity containing a clause that the annuity shall be strictly alimentary and shall exclude a trustee in bankruptcy.”

The first parties maintained that as alimentary annuities could not be obtained from Government it was their duty to invest the money in annuities made payable to themselves, or to take some other means to maintain the alimentary character of the funds. In any case, they maintained that it would not be in accordance with their duty to pay over the capital sums directly to the second parties, but that they were bound to purchase Government annuities in the ordinary way, because while such annuities would not protect the annuitants against the contingency of bankruptcy, they would at anyrate secure them against some of the contingencies for which the truster intended to provide.

The second parties maintained that in the circumstances they were entitled to have paid over to them respectively the capital sums required to purchase the respective annuities bequeathed to them by the testatrix. Alternatively, they maintained (I) that any Government or Savings Bank annuities purchased under the directions in the settlement should be taken payable to the second parties respectively, and (2) that the first parties had no power to vary the directions of the testatrix as to the purchase of said annuities.

The following were the questions of law:—“(1) Are the first parties entitled or bound to pay to the second parties the capital sums directed by the late Miss Hutchinson to be invested in the purchase of annuities for the second parties respectively? or (2) Are the first parties bound to invest such sums in Government or Savings Bank annuities payable to the second parties according to the directions of the truster so far as these directions can be carried out? or (3) Are the first parties bound to invest the sums in question in annuities in such, and if so what, way as will effectually secure the alimentary character of the rights of the beneficiaries?”

Argued for the first parties—The real purpose of the testatrix could be accomplished by the purchase of Government annuities; such annuities were not at the

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absolute disposal of the annuitants, and therefore were not in the same position as ordinary annuities— Kennedy's Trustees v. Warren, July 19, 1901, 3 F. 1087, 38 S.L.R. 827.

Argued for the second parties—However clear the intention of the testator was, if it could not be carried out in its entirity it could not be carried out at all. The Court could not create a trust for the accomplishment of the truster's intention, and the annuitants were entitled to immediate payment— Allan's Trustees v. Allan and Others, December 12, 1872, 11 Macph. 216, 10 S.L.R. 141; Murray v. Macfarlane's Trustees, July 17, 1895, 22 R. 927, 32 S.L.R. 715.