Scottish Court of Session Decisions

On June 25, 1906, the Lord Advocate, on behalf of the Commissioners of Inland Revenue, raised an action against Mr Justice Robert M'Killiam Routledge, Port of Spain, Trinidad, and others, trustees of the late William Jamieson Routledge, manufacturer, Aberdeen, under his trust-disposition and settlement dated May 2, 1894, and with two codicils thereto dated respectively May 29 and October 29, 1895, recorded in the Books of Council and Session September 16, 1897.

The conclusions of the summons were for an accounting in respect of half of the residue of the testator's trust estate life-rented by his late sister Miss Mary Routledge, sometime of Aberdeen, over which she had a power of appointment, and for £350 in name of legacy-duty on the same.

The circumstances were as follows:—William Jamieson Routledge, manufacturer in Aberdeen, died on August 20, 1897, leaving a trust-disposition and deed of settlement and two codicils. By his settlement he conveyed to the defenders his whole means and estate for the purposes therein set forth. Inter alia, by the third purpose of his trust deed the said William Jamieson Routledge directed his trustees to realise his whole estate, heritable and moveable, and to hold one-half of the free balance or residue thereof for payment of the free revenue to his mother during her life, and after her death for the payment of the said free revenue to his sister Mary Routledge in the event of her surviving and being unmarried. If his said sister married her right to the revenue was to cease at the expiration of one year from the date of her marriage. On her death unmarried the trustees were directed “to pay the capital of the said half of my estate to the person or persons to whom she may bequeath the same by any will or other deed under her hand, and failing any direction by her, to the legatees after mentioned.” Lastly, the trustees were directed to divide and pay the other half of the residue, as well as the half to be liferented by his mother and sister, in the event of its being set free by his sister's marriage, or by her death without disposing of the same, equally between his brothers and sisters (including the said Mary Routledge, if then alive), and the survivors of them, and the lawful issue of such of them as might have died, equally among them per stirpes.

The testator's mother predeceased him. Mary Routledge died unmarried on 2nd July 1905, leaving a will dated 5th February 1904. After narrating the directions given by her brother to his trustees, and referring particularly to the power of appointment conferred upon her, and to the effect of her failure to exercise that power, she made the following declaration of her will with regard to the disposal of the one-half of the residue—“I now hereby declare that it is my wish and desire that the capital of the said half of the said deceased's whole estate shall be divided among the legatees appointed by him under his said trust-disposition and deed of settlement.” Her will then further proceeded to dispose of her own means and estate.

The pursuer's claim was founded on the Legacy Duty Acts 36 Geo. III, c. 52, and 55 Geo. III, c. 184, schedule part iii, and also upon section 4 of 8 and 9 Vict. c. 76.

He pleaded—“(1) The said Mary Routledge having exercised the general power of appointment conferred upon her, the fund in question is chargeable with legacy duty as a bequest by her to the appointees. (2) The duty claimed being due by the defenders as trustees in respect of residue under their administration, they are bound to deliver an account as required, and the pursuer is entitled to decree as concluded for, with expenses.”

The defenders pleaded—“(1) The said Mary Routledge not having exercised the power of appointment conferred on her by her said brother's trust-disposition with reference to the estate in question, no legacy duty is payable thereon at her death. (2) The estate in question having passed under the will of the said William Jamieson Routledge, and legacy duty having been paid on his death, no further duty is payable.”

On November 15th, 1906, the Lord Ordinary ( Johnston) ordained the defenders to deliver the account called for in the summons, and decerned.

Opinion.—“The late William Jamieson Routledge, who died in 1897, by his settlement directed his trustees to hold one-half of the residue of his estate for payment of the income to his sister Mary Routledge so long as she remained unmarried, and on her death unmarried ‘to pay the capital to the person or persons to whom she may bequeath the same by any will or other deed under her hand, and failing any direction by her, to the legatees after mentioned.’ The other half of the residue, and the half destined as above mentioned for the liferent use of his sister, in the event of its being set free by her marriage

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or by her death, without disposing of the same, he directed his trustees to divide equally between his whole brothers and sisters, including Mary Routledge, should she be then alive.

“Mary Routledge survived the testator, did not marry, and died in 1905. She left a will in which, after narrating the provision in her favour contained in her brother William's settlement, she thereby declared ‘that it is my wish and desire that the capital of the said half of the said deceased's whole estate,’ i.e., the half over which she had a power of appointment, ‘shall be divided among the legatees appointed by him under his said trust-disposition and deed of settlement.’

Mary Routledge thus received from her brother a limited interest in the half of his residue, short of a liferent, for it was determinable by her marriage, and she received a general power of appointment contingent on her remaining unmarried.

It is said that legacy duty, as on a legacy from William J. Routledge, has been paid upon the half of the residue in which Miss Routledge was interested, but the record does not disclose what duty was paid or on what principle the payment was made, and at present I am not called on to inquire. Mary Routledge had not during her life either an unconditional liferent or an unconditional power. But, as the event happened, the condition which would have determined the liferent did not occur, and the contingency affecting the power was purified, so that the power became absolute.

The Crown now claim legacy duty on half of the residue of William J. Routledge's estate, as passing under Mary Routledge's will, in respect that she exercised the power, though in favour of the legatees named in her brother's settlement, who would equally have taken had she not exercised it, and that therefore they took as her legatees and not as his.

I think that the claim must be sustained. Mary Routledge might have remained passive. She might have confined her will to her own proper estate by so expressing herself as to show that she did not wish to exercise the power conferred upon her, and her brother's contingent legatees would then have taken under his will only. But she has chosen to express her wish and desire—that is her will—that the subject of the power should go to the persons named by her brother, and they therefore take immediately by her bounty, and only mediately by her brother's. She possibly wished her surviving brothers and sisters to know that they took by her goodwill as well as by her brother William's. In fact I cannot understand her course of action if this was not the case. But she having acted as she did, they cannot escape from the result of her exercise of testamentary volition.

The sections of the Legacy Duty Act 1796 (36 Geo. III, cap. 52) referred to were:—Section 12, the marginal note of which is, ‘How duty on legacies enjoyed by persons in succession or having partial interest therein charged.’ This section appears to me to deal entirely with the duties said to have already been settled on the bequest by William J. Routledge, the testator, which conferred the power. Section 18, ‘How duties on legacies subject to power of appointment charged,’ provides—‘Where any property shall be given for any limited interest, and a general and absolute power of appointment shall also be given to any person or persons to whom the property would not belong in default of such appointment, such property upon the execution of such power shall be charged with the same duty and in the same manner as if the same property had been immediately given to the person or persons having and executing such power, after allowing any duty before paid in respect thereof’. This section also appears to me to bear entirely upon the duties said to have been already settled on the bequest by William J. Routledge, the testator, which comprised the power.

I do not think that these sections aid in the solution of the question before me. But they are preceded by section 7 (now replaced by 8 and 9 Vict. cap. 76, sec. 4), which enacts that ‘Every gift by any will or testamentary instrument, which by virtue of any such will or testamentary instrument, is or shall be payable, or shall have effect or be satisfied … out of any personal or moveable estate or effects which such person hath, had, or shall have power to dispose of … shall be deemed a legacy within the true intent and meaning of all the several Acts granting or relating to duties on legacies in Great Britain and Ireland respectively, and shall be subject and liable to the said duties accordingly.’

This provision is the operative one in the present circumstances. It would have been more natural had it succeeded sections 12 and 18. But it leaves it quite clear that, whatever duties are exigible from prior limited interests, and from the donee of the power as taking from the original donor of the power, further duties are exigible, independently, from those taking from or through the donee of the power. That I hold to be the position of the legatees named as destinees-over in default of appointment by Mary Routledge, because they take, not in default of appointment, but by her appointment, not by virtue of William J. Routledge's will but by virtue of Mary Routledge's will in conjunction with it. The case is ruled by Attorney-General v. Brachenbury, 1 H. & C. 782, if it is not indeed a fortiori of it.”

The defenders reclaimed, and argued—The deceased Miss Routledge had not exercised the power. All she had done, or meant to do, was to approve of what had already been done by her brother. The case of the Attorney-General v. Brackenbury, 1 H. & C. 782, 32 L.J. (N.S.) Exch. 108, was distinguishable (the defenders' argument on this case is stated by the Lord President infra). A conveyance of “my means and estate” included estate over which a testator had a power of appointment, unless the intention not to include it

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was otherwise indicated— Bray v. Bruce's Executors, July 19, 1906, 8 F. 1078, 43 S.L.R. 746, sub nom. Bray and Others v. Peterkin (Bruce's Trustee) and Others. Here, therefore, the express recital of and reference to the power was necessary in order to indicate that the estate to which it applied was not included in the subsequent disposition of her whole means and estate.

Argued for the pursuer and respondent—The power of appointment had been effectually exercised as evidenced by the words, “it is my wish.” The testatrix and her advisers must be held to have known that a general settlement of her estate was an exercise of the power of appointment, and the obvious course if she did not intend to exercise the power was to exclude, in the dispositive clause, estate over which she had that power. The case was ruled by the Attorney-General v. Brackenbury, cit. sup.