Scottish Court of Session Decisions

This was an action of multiplepoinding brought in the Sheriff Court of Lanarkshire at Glasgow by John Watt, agent of the Bank of Scotland in Trongate, Glasgow, and George Phillips, wholesale grocer, Trongate, Glasgow, the surviving testamentary trustees of the late William Kirk, tea merchant, Candleriggs, Glasgow, who died in the beginning of August 1884. Kirk by his trust-disposition and settlement, dated 15th April, and recorded in the Books of Council and Session 16th August 1884, conveyed his whole means and estate to the said John Watt, the said George Phillips, and John Connell, Sandyford Place, Glasgow (who predeceased the testator), and the acceptors and acceptor, survivors and survivor, as trustees in trust for certain purposes, inter alia—“ (Second) For payment at the first term of Whitsunday or Martinmas after my death of the following legacies, all free of legacy duty, namely, to each of my trustees who shall accept office a legacy of £100 sterling; to my nephews Thomas Kirk and Ebenezer Kirk, sons of my late brother Thomas Kirk, equally between them, the sum of £1000, but declaring that it shall be in the power of my said trustees to withhold payment of this legacy in whole or part for such time as they may think proper, and to apply the income, or such part of the capital as they may think proper, for the benefit of the legatees, declaring that the trustees shall be entitled to exercise an absolute discretion as to the extent and manner to which this legacy, and the income thereof, shall be paid to or applied for the benefit of the legatees, and in the event of either of the said Thomas Kirk or Ebenezer Kirk dying leaving lawful issue my trustees shall be entitled to apply such deceaser's share of the legacy for behoof of such issue in any way they may think proper, and failing such issue they shall be entitled to hold the share of such deceaser for behoof of the survivor of my said nephews in like manner and subject to the same conditions as are applicable to the original legacy.…

—“ Lastly, with regard to the residue of my means and estate, I direct my trustees to divide the same among the legatees before named in proportion to the legacies hereinbefore bequeathed to them respectively—that is to say, in the event of my estate being more than sufficient to provide for payment of all of the said legacies, then the said legacies shall all be proportionally increased; and on the other hand, in the event of the amount of the legacies being found to exceed the amount of my estate, then the same shall suffer proportionate diminution.”

The testator's nephew, the said Thomas Kirk, died on 11th May 1902, intestate, leaving a widow—Mrs Margaret Warnock or Kirk, who subsequently married Alexander Walker, baker, East Crawford Street, Dennistoun, Glasgow—and also surviving issue—Agnes Kirk, Mrs Mary Kirk or Anderson, Thomas Kirk, and John Kirk. His share of said legacy of £1000, and the accompanying proportion of residue, amounted together to £951, 18s. 2d., and from this the trustees made regular payments to him during his life to account of the capital and revenue thereof. On his death the balance in the hands of the trustees amounted to the sum of £305, 6s. Id. Two-thirds of this sum— i.e., £203, 10s. 9d.—the trustees divided amongst the said issue, and they stated they were ready and willing to divide also the remaining one-third— i.e., £101, 15s. 4d. This sum—which formed the fund in medio—was, however, also claimed by the widow, Mrs Margaret Warnock or Kirk or Walker.

The widow—the said Mrs Walker—claimed the whole fund in medio, on the ground that, as the widow of Thomas Kirk, she was entitled, “in terms of the law of Scotland in intestate succession, to succeed to one-third of the clear moveable estate left by her said husband, being the jus relictœ due to her from her deceased husband's moveable estate which she succeeded to on the said Thomas Kirk's death.”

The said issue claimed that they were entitled equally among them to payment of the whole fund in medio, or that the fund should be held by the trustees for their behoof, in terms of the trust-disposition and settlement.

The Sheriff-Substitute (M.G. Davidson), on 21st February 1905, repelled the claim for the said Mrs Walker, and sustained the claim for the said issue.

“ Note.—The competing claims here are those of the widow and children of the late Mr Thomas Kirk, who was one of the beneficiaries of his uncle's will. In that settlement the testamentary trustees were empowered to retain in their own hands the legacy bequeathed to the said Thomas Kirk for an indefinite period; and there is a provision that in the case of his death the legacy may be paid to his issue. I have no doubt whatever that the money never vested in Thomas Kirk, and that he could

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not have tested upon it. In these circumstances I disallow the claim of his widow, and prefer the other claimants to the fund in medio.”

The claimant Mrs Margaret Walker appealed to the Sheriff ( Guthrie), who adhered to his Substitute's interlocutor of 21st February 1905, with additional expenses to the successful claimants.

“ Note.—This is a case which raises a question of nicety, and I am sorry not to have had the benefit of Sheriff Davidson's reasons for holding that the legacy did not vest in Thomas Kirk. I have considered many, though probably not all, of the cases bearing on the subject. It was contended that it fell within the class of cases among which Chambers v. Chambers' Trustees, 5 R. (H.L.) 151, is the leading case, and that so a conditional vesting should be held to have taken place. If that were so, it would still have to be determined how far Mrs Walker, taking jure relictœ— i.e., as a creditor—is affected by the condition attached to her husband's rights. I think, however, that the condition under consideration was a suspensive condition, and that no vesting in Thomas Kirk could take place before payment to him. That part of the legacy, therefore, which was not paid at his death never vested. Paterson's Trustees v. Paterson, 1870, 8 Macph. 449, although a comparatively old case in the law of vesting, seems to be in point and not to be shaken by any later decision. The trustees have paid and are willing to pay to Thomas Kirk's issue, so that no question arises except as to the widow's claim.”

The defender and claimant Mrs Margaret Walker appealed to the Court of Session, and argued—The Sheriff's judgment was wrong and should be recalled. (1) The half-share of the legacy of £1000 had vested in Thomas Kirk absolutely a morte testatoris. There was nothing in the clause (2nd clause), “but declaring” to “applied for the benefit of the legatees,” to take away this gift, for the power to withhold payment had no such effect— Macfarlane's Trustees v. Macfarlane, December 10, 1903, 6 F. 201, 41 S.L.R. 164 (which, after the trustees had exercised their option, and “apportioned and set aside,” came to be in a similar position to this case, where there was a direction to pay); Wilkie's Trustees v. Wright's Trustees, November 30, 1893, 21 R. 199, 31 S.L.R. 135; Greenlees' Trustees v. Greenlees, December 4, 1894, 22 R. 136, 32 S.L.R. 106, especially Lord M'Laren's opinion. The clause (3rd clause) beginning “and in the event” was a conditional institution (or at most a substitution); “dying” in that clause meant dying before the contemplated period of distribution, the first period of Whitsunday or Martinmas after the testator's death, i.e., practically meant “predeceasing me;” “dying” had reference to the period of testator's death, and not to one legatee surviving another— Wood v. Neill's Trustees, November 6, 1896, 24 R. 105, 34 S.L.R. 107; Hunter's Trustees v. Dunn, January 27, 1904, 6 F. 318, 41 S.L.R. 251; Greenlees' Trustees (supra). The power of the trustees to give to the issue flew off as soon as Thomas survived the testator, after which the clause, “in the event,” had no application. Even if it was a substitution it could be evacuated, and the contention of the other claimants that “dying” meant “dying before full payment” involved adding after “deceaser's share,” the words “or portion of a share.” It also involved reading “shall be entitled” as imperative, otherwise the fee would not be disposed of at all. (2) Assuming that “dying” did not mean “predeceasing me,” but meant “dying before full payment,” full payment of the legacy had been made, and what remained was not legacy but residue, for of legacy and residue which together amounted to £951, 18s. 2d. (£500 of this being legacy), what remained unpaid at Thomas' death was £305, 6s. Id., and as legacies were paid before residue this balance must be considered residue. But there was no imposition at any rate on the residue of restrictive powers, and accordingly this unpaid balance was subject to jus relictœ.

Argued for the claimants, the surviving issue of Thomas Kirk—(1) There was no gift to the legatees except through the trustees, who had an absolute discretion either to pay or withhold, and the case was ruled by Paterson's Trustees v. Paterson, January 29, 1870, 8 Macph. 449, 7 S.L.R. 247 (sub nomine Jamieson v. Paterson). [ The Lord Justice-Clerk here pointed out that the distinction was that the present case started with a direction to pay.] If anything vested, it was not an absolute fee, but a conditional fee subject to the exercise of the trustees' discretion to withhold payment. The trustees, so far as they had not paid, had exercised their discretion not to pay, and therefore the sums remaining in the trustees' hands at the date of Thomas' death had not vested in him, and were not accordingly subject to jus relictœ— White's Trustees v. White, June 20, 1896, 23 R. 836, 33 S.L.R. 660; Russell v. Bell's Trustees, March 5, 1897, 24 R. 666, 34 S.L.R. 497. (2) No distinction could be drawn between the interest in the legacy and the interest in the residue. The latter followed the former.