Scottish Court of Session Decisions

This was an action of multiplepoinding and exoneration at the instance of Patrick Blair, W.S., Edinburgh, surviving trustee under the trust-disposition and settlement and codicil thereto, executed by the deceased Dr John Macfarlane, Professor of Medicine in the University of Glasgow (the nominal raiser), against Mrs Christina Ogilvie or Macfarlane, widow of the deceased Alexander Goodsir Macfarlane (the real raiser), and other defenders.

By his trust-disposition and settlement dated June 7, 1866, Dr Macfarlane conveyed his whole estate, heritable and moveable, to certain trustees, directing them, by the fifth purpose, to realise the residue and remainder of his estate, and to divide the proceeds equally among his brothers and sisters nominatim and the issue of his deceased brother Dr James Macfarlane, per stirpes et non per capita, share and share alike.

The said fifth purpose also provided, in regard to the shares of residue falling to the family of the deceased Dr James Macfarlane that the trustees should hold and invest the same in their own names for behoof of said family, until the youngest should attain the age of twenty-one years complete, applying the free interest and income of the said shares for the benefit of the said children, or such of them as they thought might require the same, in such way as the trustees might consider most advisable; and on the youngest child attaining majority the trustees were directed to divide the said share equally among the children surviving at the time, and the issue of predeceasing children, per stirpes, share and share alike.

By a codicil dated December 3, 1869, Dr Macfarlane made the following provision with reference to the fifth purpose of his trust-disposition and settlement:—“I hereby declare that whenever the words ‘family of my said deceased brother Dr James Macfarlane’ are used in said purpose, or reference made to his ‘family,’ it is understood by me that it is the ‘children’ of my said brother who are referred to; and I hereby cancel and revoke the whole directions given in said purpose with regard to the manner in which the share of the residue of my means and estate falling to the children of my said brother Dr James Macfarlane is to be held for their behoof; and in room and place thereof I provide and declare as follows, viz.—My trustees shall hold the said share of residue falling to the said children under their trust, investing the same, or such part thereof as may be necessary, as provided in said settlement, and shall give and make over to or hold and apply for behoof of such of the children of my said brother, or the issue of any of them predeceased, per stirpes, as the trustees may think proper, the said share of residue, interest, and capital alike, and that in such shares and proportions, at such times, and in such way and manner as to the said trustees shall seem proper, as to all which they shall be the sole judges; with special power to my trustees in making said payments to exclude therefrom any one or more of the children of my said brother as they may consider proper, and also, if they see cause, in place of paying over to any one or more of the said children the share or shares which the trustees may apportion to them, with power to my trustees to retain the same under their trust for behoof of such child or children either during their lifetime or during such period as they consider necessary, my intention with regard to the said share of residue falling to the children of my said brother, and interest thereof, being to give my trustees the same powers in apportioning, withholding, or dealing with the same, or interest thereof, as I could have myself were I in life; and the children of my said brother, nor their issue, shall have no vested interest in the provisions in their favour contained in my said settlement and this codicil, but shall be in the matter of the said provisions entirely under the control of my trustees; and I hereby exclude any of said children, or their issue, and all other persons, from interfering with or calling in question the actings of my trustees with regard to the said provisions, and declare that no such interference shall be competent to any one, as the fullest power and authority is committed to my trustees in the matter.”

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Dr John Macfarlane died in 1869, survived by two brothers and two sisters, and also by the children of his deceased brother Dr James Macfarlane, of whom one was Alexander Goodsir Macfarlane. The youngest of the children of Dr James Macfarlane attained majority on 31st May 1881.

The original trustees nominated by the testator having died or resigned, the pursuer and another were appointed trustees by the Court of Session in 1882. At the date of the action the pursuer was sole trustee.

By minute dated July 7, 1885, the trustees resolved that there should be apportioned to and set apart for, inter alios, Alexander Goodsir Macfarlane a certain share of the funds held by them for the children of Dr James Macfarlane, and resolved and directed that the share thus set apart for Alexander Goodsir Macfarlane should be invested for his behoof and the annual income or interest paid over to him. By the said minute the trustees, in consequence of the said apportionment of part of the trust funds to Alexander Goodsir Macfarlane, resolved that a quarterly allowance to him should cease, and that in lieu thereof he should be paid the interest on the sum apportioned to him in quarterly payments, which interest should be a strictly alimentary allowance and should not be assignable nor affectable by his debts or deeds nor liable to the diligence of his creditors. This minute was communicated to Alexander Goodsir Macfarlane, and in accordance therewith the share apportioned and set apart for Alexander Goodsir Macfarlane was retained by the trustees and invested by them in their own names, and the income derived therefrom paid to him.

Alexander Goodsir Macfarlane died on March 6th 1898 survived by his widow Mrs Christina Ogilvie or Macfarlane, leaving a settlement dated January 26th 1891, by which he directed and appointed the trustees for the time acting under the trust-disposition and codicil of his uncle Dr Macfarlane to hold and stand possessed of the said share, and pay the income thereof to his widow, or to expend or apply the same for her behoof.

The fund in medio consisted of the share of the trust funds of Dr Macfarlane which had been apportioned to and set apart for Alexander Goodsir Macfarlane by the minute of the trustees dated July 7th 1888, and which the pursuer as trustee continued to hold, accumulating the income thereof from the date of the death of Alexander Goodsir Macfarlane.

Claims were lodged by (1) the trustees of the late Dr Macfarlane, who claimed to be ranked and preferred to the whole fund in medio to be administered in terms of Dr John Macfarlane's codicil of 3rd December 1869, or otherwise to be ranked and preferred to the fund in medio so far as it consisted of capital as at 6th March 1898, to be administered in terms of Alexander Goodsir Macfarlane's settlement; and (2) Mrs Christina Ogilvie or Macfarlane, the widow of Alexander Goodsir Macfarlane, who claimed (1) the fund in medio, except in so far as consisting of capital as at 6th March 1898, and (2) that the trustees should hold the balance of the fund in medio, and pay over to her the free annual income or interest thereof, or otherwise expend or apply the same for her behoof in terms of the said Alexander Goodsir Macfarlane's settlement and deed of directions dated 26th January 1891.

The claimant the trustee of the late Dr Macfarlane pleaded—“(1) On a sound construction of the testamentary writings of the late Dr John Macfarlane and relative minute of apportionment, the late Alexander Goodsir Macfarlane was not fiar of the fund in medio, and the claimant is entitled to be ranked and preferred in terms of the first alternative of his claim. (2) Esto that a right of fee did vest in Alexander Goodsir Macfarlane, the claimant is entitled under Mr Macfarlane's settlement to be ranked and preferred in terms of the second alternative of his claim.”

The claimant Mrs Christina Ogilvie or Macfarlane pleaded—“(1) On a sound construction of the trust-disposition and codicil of the truster the fee of the fund in medio vested in the said Alexander Goodsir Macfarlane, and the claimant is entitled to the liferent thereof in virtue of his settlement and deed of directions. (2) Esto that the trustees appointed by the Court were entitled to exercise the powers conferred by said codicil, they, on a sound construction of the minute of 7th July 1885, appointed to the said Alexander Goodsir Macfarlane the fee, or in any event the power of testamentary disposal of the fund in medio, and the claimant is entitled to the liferent thereof in virtue of his settlement and deed of directions.”

On June 25th 1903 the Lord Ordinary ( Kyllachy) pronounced the following interlocutor:—“Finds that on a sound construction of the trust-disposition and settlement and codicil of Dr John Macfarlane the truster, and of the trustees' minute dated 7th July 1885, the fee of the share of the truster's estate by said minute apportioned and setapart for Alexander Goodsir Macfarlane vested in him, and now falls to be held and applied in terms of his settlement and deed of directions: Therefore ranks and prefers the claimant Mrs Christina Ogilvie or Macfarlane on the fund in medio in terms of the first branch of her claim: Quoad ultra finds it unnecessary to dispose of her claim: Repels the first branch of the claim for Patrick Blair, trustee of the late Dr John Macfarlane, and sustains the second branch thereof: Ranks and prefers the said claimant in terms of said second branch of his claim; and decerns,” &c.

Opinion.—“The question in this case turns upon the construction of the will and particularly of a codicil which forms part of the will of the late Dr John Macfarlane. The claimants are—(1) The now sole trustee under the will, who as it happens was not named in the deed, or assumed by the trustees named, but was (along with another gentleman now dead) appointed by

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the Court under a petition presented by some of the beneficiaries; and (2) the widow of the late Alexander Goodsir Macfarlane, who was one of the children of the late Dr James Macfarlane, to which children one-fifth of the residue was bequeathed. The widow now claims under her husband's settlement a liferent of the share apportioned to him under a minute of the trustees dated in 1885, which, it is not disputed, fixed the amount of his share. The trustee, on the other hand, claims in effect that Alexander Goodsir Macfarlane's share, although thus appointed to him, lapsed by his death, and that he (the trustee) is entitled to hold and apply the same at his discretion for the benefit of the other members of Dr James Macfarlane's family.

In the view which I take it is not necessary to decide a point which was the subject. of argument, viz., whether the power of apportionment and the other powers contained in the codicil—the powers on which the trustee founds—could or can now be effectually exercised by trustees who were only appointed by the Court. With respect to that point I am bound to say that having considered the question and referred to the authorities I should have great difficulty in holding that on the just construction of the will and codicil the powers in question did not transmit to appointed trustees in the same manner as if they had been named in the will or assumed under its provisions. But I do not propose so to decide, because, assuming that point in the truster's favour, I am of opinion that whatever might have been done to exclude Alexander Goodsir Macfarlane's right, or to create a lapse after his death, nothing of the kind was in fact done while he lived, or can be done now when he is dead.

I do not think it is at all difficult to follow the scheme of the will and codicil. By the will the children of Dr James Macfarlane surviving the majority of the youngest child took on that event an equal share of one-fifth of the residue, and became entitled to immediate payment. Until that event the trustees were to hold for their behoof, and to apply the income for their benefit. But each child took a vested interest, and was entitled to immediate payment on the youngest of the family reaching majority. That was the scheme of the will.

By the codicil, however, the truster, inter alia, revoked and cancelled the whole directions given by him with regard ‘to the manner’ in which the share of residue falling to this particular family should ‘be held for their behoof,’ and the codicil then proceeded to confer powers on the trustees—powers, as they are described, of ‘control’—whereby the rights of the individual children were made subject to what I think I may properly describe as various resolutive conditions—conditions depending on the action of the trustees with respect to certain options which the truster conferred on them.

Now the options so conferred, as I read the codicil, were these—In the first place the trustees had power to fix the share of each child. They could give each child an equal share as bequeathed, or a larger or smaller share as they might think right, or they could make if they pleased what is called an exclusive apportionment, and exclude a particular child altogether. That was in substance their first option. And then the second option was this—They might, with respect to the share of any child not excluded, resolve either (1) to pay over the share at once, or (2) to retain the share under the trust for behoof of the child either during his life or during such (shorter) period as they might think necessary.

These are the options—options which applied both to capital and income; and with respect to their exercise it was, I think, implied if not expressed in the codicil—(1) that they might be exercised revocably or irrevocably, absolutely or conditionally, as the trustees choose; but (2) that if exercised absolutely and irrevocably, that is to say, without reservation, and by a deed delivered or intimated, the trustees could not afterwards go back upon what they had done. In other words, if the trustees resolved, for instance, to fix and set apart a certain sum as a child's share, they could not afterwards exclude such child, or diminish his share, any more than, having resolved to pay over the child's share, they could afterwards resolve to retain it for his behoof during his life. They might resolve to exclude or to pay or to retain for the child's behoof, but whichever course they adopted, that course when once intimated became final.

Now, these being the trustees' powers, what did they in fact do? I mean with respect to Alexander Goodsir Macfarlane's share. By a carefully expressed minute drawn up in 1885, recorded in the Sederunt Book, and intimated to Alexander Goodsir Macfarlane and the other beneficiaries, they exercised their powers thus—(1) They resolved not to exclude Alexander Goodsir Macfarlane, but on the contrary to apportion and set apart a certain sum as his share; (2) they resolved at the same time not to pay the share over to him at once, but to invest the capital for his behoof, and to pay over to him the annual income or interest in quarterly payments as a strictly alimentary allowance. In short, the trustees exercised their discretion exactly as the will and codicil contemplated. They settled and intimated the extent to which they thought it necessary that Alexander Goodsir Macfarlane's rights should be restricted, and they did so without reservation or qualification, and so matters stood until Alexander Goodsir Macfarlane's death in 1898. The question is whether, in respect that Alexander Goodsir Macfarlane died without having obtained actual payment of his capital, the surviving trustee is now bound or entitled to treat that capital as a lapsed interest, and (I presume) to divide it just as if Alexander Goodsir Macfarlane's right had been excluded or confined to a liferent.

Now, I think it follows from what I have

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already said, that in my opinion this question does not admit of doubt. It was not, and I think could not, be suggested that the retention of capital which the codicil permitted, and on which the trustees resolved, constituted Alexander Goodsir Macfarlane a mere liferenter. On the contrary, the capital was to be held, and was held, for his behoof. The trustees might, if they had seen cause, have paid it over to him at any time. It was simply held for him in trust so as to secure the income for his alimentary use. Neither was it suggested that the trustees could not divest themselves of the power of revocation. There is nothing better settled than that such powers as those here in question may be exercised either revocably or irrevocably. Nor, again, is there any difficulty about vesting. The original vesting was postponed, but postponed only to the effect of securing the trustees' powers under the codicil, and if the trustees' minute of 1885 was a final exercise of the trustees' powers, there was absolute vesting from the date of that minute. At all events, there was absolute vesting, subject only to this, that neither the beneficiary nor his creditors could have enforced payment during his life. Again, with regard to the case of Smith v. Chambers, which was referred to at the discussion, I do not, I confess, see how that case raises any difficulty. For the trustees there had undoubtedly the widest powers of restriction and exclusion, and had done nothing to bar their exercise of those powers at the date of the arrestment and furthcoming.

I am therefore of opinion that the claim of the trustee should be repelled, and that of the other claimant sustained.”

The claimant, the trustee of the late Dr Macfarlane, reclaimed.

It was stated on behalf of the reclaimer that he had brought the reclaiming-note owing to the fact that Lord Kincairney, in a question with creditors arising out of the will and codicil of the deceased Dr John Macfarlane, had held that there was no vesting in the children of James Macfarlane.

Argued for the reclaimer—Under Dr Macfarlane's trust-disposition and settlement and relative codicil no right of fee in the fund in medio vested in the late Alexander Goodsir Macfarlane. The powers given to the trustees by the testator to exclude any of the children of his deceased brother James were absolute, and in view of these absolute powers, and the express declaration that these children should have no vested interests, no right of fee could vest in any of the children except by the act of the trustees. The terms of the minute, dated 7th July 1885, conferring on Alexander Goodsir Macfarlane a restricted right to the income of a portion of the fund, did not infer vesting of the fee of that portion of the fund in him— Chambers' Trustees v. Smiths, April 15, 1878, 5 R. 97, and (H.L.) 151, 15 S.L.R. 58 and 541; Yuill's Trustees v. Thomson, May 29, 1902, 4 F. 815, 39 S.L.R. 668; Ross' Trustees v. Ross, May 29, 1902, 4 F. 840, 39 S.L.R. 678; Newall's Trustees v. Inglis' Trustee, July 15, 1898, 25 R. 1176, 35 S.L.R. 908; Kinmond's Trustees v. Mess, November 18, 1898, 25 R. 819, 35 S.L.R. 631.

Counsel for the respondent were not called upon.