Scottish Court of Session Decisions

This was an action by the Reverend Angus Cameron and others, the trustees, original and assumed, of Mrs Sarah Louisa Liddall M'Laren or Denholm, now deceased, formerly residing at No. 45 Manor Place, Edinburgh, and wife of the deceased George Denholm of Press, Hillend, and Bee-Edge, in the county of Berwick, and of Yorke Lodge, Dunbar, in the county of Haddington, and formerly residing at No. 15 Duke Street, Edinburgh, acting under mutual trust-disposition and settlement executed by her and the said George Denholm, dated 10th day of November 1891, and executors ad non executa of the said Mrs Denholm, against Mrs Isabel Dunlop or Denholm, widow of the said George Denholm, and others, the trustees and executors of the said George Denholm, acting under his trust-disposition and settlement, and two relative codicils, dated respectively 17th April 1902, 9th March 1903, and 24th October 1904.

The action, inter alia, sought to have the defenders, as trustees and executors of George Denholm, decerned and ordained to produce accounts of his intromissions as trustee or executor of his said first wife under their mutual trust-disposition and settlement with her estate, and to have them decerned and ordained to make payment to the pursuers of the sum of £12,000, or of such other sum as should be ascertained to be due as the balance of his intromissions.

By the mutual settlement George Denholm conveyed his whole estates to his trustees for, inter alia, payment to his wife during her lifetime if she should survive him (which she did not) of the net income of the trust estate subject to certain annuities, with power to his trustees to pay over to Mrs Denholm from time to time for her own use such portion of the capital as they might deem necessary, or which they thought she might require. The settlement further provided as follows:—“And in like manner and in consideration of what is before written, I, the said Sarah Louisa Liddall M'Laren or Denholm do hereby give, grant, assign, and dispone to and in favour of the said George Denholm, my husband, in the event of his surviving me, all and sundry my whole estates, heritable and moveable, real and personal, of whatever description, together with the whole writs, titles, vouchers, and instructions thereof, but under burden always of paying my just and lawful debts, deathbed and funeral expenses, and the expenses attending my executry; also under burden of paying to my two aunts, Mary Beatrice Walker and Clementina Walker, at present residing at number 25 Marlock Road, Saint Peter's Park, London, should they or either of them survive me, a free annuity of ten pounds sterling each during all the days of their respective lives …; also under burden of maintaining my whole children, including the said William Benjamin Liddall M'Laren, until they are capable of maintaining themselves, and of educating them in a manner befitting their station, with full power to my said husband to consume such parts or portions of the capital during his lifetime as he may find or think necessary, and also power to him to realise, sell, and dispose of my said estates, heritable and moveable, by public roup or private bargain, as he may think proper, and in general to deal and intromit therewith as freely as I could have done myself, and in the event of his surviving me I appoint my said husband to be my sole executor, and to be tutor to the said William Benjamin Liddall M'Laren should he be in minority at the date of my decease: And upon the death of my said husband, if he should survive me, or upon my own death if I should survive him, I give, grant, assign and dispone to and in favour of the said Reverend Angus Cameron, George Dalziel, Victor Reissich, and Marcus John Brown, and their foresaids, hereinafter denominated ‘my trustees,’ all and sundry my said estate, or such portion as may be unconsumed by my said husband, but that in trust only for the uses and purposes following videlicet…. And we hereby reserve full power at any time during our joint lives, by writing mutually executed, to alter or revoke these presents, and also, with full power and faculty to the survivor of us to alter or revoke these presents, but only in so far as regards our separate estates, but in so far as not altered or revoked as aforesaid the same shall remain effectual. …”

Mrs Denholm died in 1893 survived by her husband, who accepted the office of executor conferred upon him by the mutual settlement, gave up an inventory, and confirmed thereto.

The pursuers averred that it was unnecessary for him to encroach, and that in point of fact he had not encroached or consumed any part of his wife's estate which remained in his hands till his death. This the defenders denied and averred that in any case he realised the whole of his first wife's estate and immixed it with his own property, and that it was now impossible to trace or identify her estate, and that thus, at any rate, it was consumed.

George Denholm died in June 1905 leaving a will dated 17th April 1902. This will had not been printed at the date of the hearing in the Inner House, but pursuers averred it revoked all former testamentary writings executed by him including the mutual settlement, and disponed and conveyed his whole estate to certain trustees therein named.

The defenders pleaded, inter alia—“(4) The defenders are under no obligation to account to the pursuers, and should be

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assoilzied from the remaining conclusion in respect ( a) that under the mutual settlement of the late Mr Denholm and his first wife he took a full vested right in and to her whole estate.”

On 5th June 1906 the Lord Ordinary ( Dundas) pronounced the following interlocutor:—“Finds that upon a sound construction of the mutual settlement executed by the deceased George Denholm and his spouse the deceased Sarah Louisa Liddall M'Laren or Denholm, dated 10th November 1891, Mr Denholm did not take a full vested right in and to the whole estate of his said wife: Therefore repels head ( a) of plea 4 stated for the defenders: Quoad ultra before further answer allows the parties a proof of their averments and the pursuers a conjunct probation.”

Opinion.—“The question for decision at the present stage of this case is whether or not upon a sound construction of the mutual settlement of the deceased George Denholm and his also deceased spouse Sarah Louisa Liddall M'Laren or Denholm, dated 10th November 1891, Mr Denholm took a full vested right of fee in and to the whole estate of his said wife. I have come without much difficulty to the conclusion that the answer to this question must be in the negative. By the mutual settlement Mrs Denholm ‘in consideration of what is before written,’ i.e., of her husband's settlement of his estate, gave, granted, assigned, and disponed to her said husband if he should survive her, which in fact he did, her whole estates, heritable and moveable, but under burden as therein set forth. So far, no doubt, her conveyance would amount to a gift of the fee to her husband. But Mrs Denholm went on to say ‘with full power to my said husband to consume such parts or portions of the capital during his lifetime as he may find or think necessary, and to confer upon her husband power to realise, sell, and dispose of her said-estates. She then appointed her husband in the event of his surviving her to be her sole executor, and upon his death, so surviving her, she disponed to trustees named, who are now represented by the pursuers, her whole estates ‘or such portion as may be unconsumed by my said husband,’ in trust for certain purposes which are set forth in the settlement. That document also contains a clause reserving to the spouses full power during their joint lives by writing mutually executed to alter or revoke it, and full power and faculty to the survivor to alter or revoke, ‘but only in so far as regards our separate estates.’ The combined effect of these clauses appears to me to entirely negative the idea that Mr Denholm by the fact of survivance took a full and unrestricted fee in his wife's estate. At the debate in the procedure roll counsel for the parties were agreed that, if I should hold the opinion which I have expressed inquiry would be necessary before the remainder of the case could be decided. I do not propose at present to attempt to define the limits of the restriction upon Mr Denholm's right of fee, or those of his power to ‘consume’ his wife's estate. It would, I think, be imprudent and inadvisable to do so. Nor do I intend now to discuss or comment upon the authorities to which I was referred, some of which may probably be important in the questions which will arise at the proof. I propose at this stage simply to find that, upon a sound construction of the mutual settlement, Mr Denholm did not take a full vested right in and to the whole estate of his said wife; to repel the plea which the defenders state to a contrary effect; and to allow the parties a proof in the ordinary manner.”

The defenders reclaimed, and argued—The subsequent powers given to the husband did not derogate from or limit the original gift of the estate in fee. He was to have power to deal with the estate as fully as the wife had had she had been an unlimited fiar, he was equally to be fiar. The destination-over might possibly be a substitution to moveables but it did not limit the husband's rights. The fact of the deed being mutual did not affect its construction. It might with equal truth be said that it was pars contractus that the husband should have a fee, as that it was pars contractus that the portion unconsumed by the husband should go to the wife's trustees. Accordingly the husband's right of fee was unlimited— Davidson and Others, May 27, 1870, 8 Macph. 807, 7 S.L.R. 498; Nicolls' Executors v. Hill and Others, January 25, 1887, 14 R. 384, 24 S.L.R. 271; Mickel's Judicial Factor v. Oliphant, December 7, 1892, 20 R. 172, 30 S.L.R. 209—and the defenders were under no obligation to account to the pursuers. In Barr's Trustees ( cit. infra) the initial gift was a gift of liferent and not as here a gift of fee.

Argued for the pursuers (respondents)—Even assuming the deed had been unilateral, the gift to the husband was qualified by the powers given. The power to the husband to consume was merely during his lifetime, the other powers were mere powers of administration. The wife's estate vested in her heirs and assignees at her death subject to defeasance by consumption by her husband. The husband's right was in effect limited to a liferent plus a power of consumption during his lifetime— Barr's Trustees v. Barr's Trustees, February 19, 1891, 18 R. 541, 28 S.L.R. 387; Forsyth (Stephen's Executrix) v. Forsyth and Others, February 25, 1905, 12 S.L.T. 778. The clause of return was not defeasible by the husband's gratuitous alienation. But in any case this was a contract and not a unilateral deed and must be construed strictly. The destination-over was a stipulation of the contract, a condition of the gift, and the husband was not entitled to defeat it by gratuitous alienation— Corrance's Trustees v. Glen, March 20, 1903, 5 F. 777, 40 S.L.R. 526; Maddever v. Maddever's Trustees, July 18, 1903, 11 S.L.T. 343; Davidson and Others ( cit. supra) was special in that the wife defeated her own representatives; Mickel's Judicial Factor ( cit. supra) was decided on title to sue; Nicoll's Executors ( cit. supra)

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was of doubtful authority and had never been followed.

At advising—