Scottish Court of Session Decisions

By antenuptial contract of marriage Henry Knox Dick conveyed to John Urquhart and others, as trustees, certain moveable estate, and directed them to hold and apply it, in the event of there being a child or children of the marriage surviving the survivor of the spouses, for the liferent use of the child or children until they should severally attain majority, when the trustees should pay and make over to each of them an equal share of the fee thereof, under the declaration “that the spouses or the survivor shall by any writing under their, his, or her hand be entitled to divide and apportion the fee among the children of the marriage, should there be more than one, in such shares as they or the survivor may think proper, and to impose such conditions and restrictions upon the enjoyment thereof as they or the survivor may deem expedient.”

By the said contract of marriage Cecilia Isabella Mackenzie or Knox Dick, the wife, conveyed to the said trustees her whole estate and certain acquirenda (first) for the conjunct liferent and use of the spouses during the subsistence of the marriage, and (second) “After the death of such survivor, and there being issue of the marriage surviving, the said trustees shall hold, pay over, or assign the whole of the said means and estate hereby conveyed to them by the said Cecilia Isabella Mackenzie to or for behoof of the child or children of the marriage, and that in such proportions and subject to such conditions as the said Cecilia Isabella Mackenzie, and whom failing the said Henry Knox Dick, may direct by any writing under her or his hand, and failing such direction, then equally, share and share alike, the issue of any child or children of the marriage always coming in room of the parent deceasing, the shares of sons to be payable on their attaining majority, and of the daughters on their respectively attaining such age or being married: Declaring that the portion or shares of such child or children shall vest only upon and after the decease of the longest liver of the said spouses, and thereupon be payable on attainment of majority or marriage as aforesaid.” This estate proved to be of the value of about £57,500.

Mrs Knox Dick died on 30th August 1902. Mr Knox Dick died on 19th April 1905. They were survived by four children—Mrs Cecilia Cameron, Mrs Agnes Higinbotham, Henry Cecil Knox Dick, and Alice Helen Knox Dick.

Mrs Knox Dick executed a holograph settlement, dated 24th February 1901, by which she appointed certain trustees and directed them to hold the sum of £7000, the interest of which should be paid to her said daughter Cecilia Isabella Dick or Cameron half-yearly, and in the event of her decease to her child or children, if any, on attaining the age of twenty-five. Failing the survival of Mrs Cameron and her child or children the sum of £7000 was to be divided equally between Henry and Alice. She further directed her trustees to hold for her daughter Alice the sum of £20,000, and to pay her until she attained the age of eighteen the sum of £100 yearly, and thereafter, until she attained the age of twenty-five years, the sum of £300 yearly, and thereafter the whole income derived from said sum of £20,000. In the event of her death, being married and having children, the whole of said £20,000 was directed to be equally divided among such children when the youngest attained twenty-five years, but no child or children was to have any vested interest until he or she should have attained the said age of twenty-five years, and failing there being any children at the decease of her daughter Alice Helen, the said sum of £20,000 was to revert to the truster's general estate. The residue of her estate the testatrix bequeathed to her son Henry. She further requested the trustees to pay to her daughter Agnes Higinbotham half-yearly the sum of £50 during her lifetime.

Mr Knox Dick left a deed of apportionment,

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dated 20th July 1904, in the following terms—“I, Henry Knox Dick of Torbrex, 61 Grange Loan, Edinburgh, considering that by my marriage contract with my late wife I have power to apportion the funds thereunder among my family, and in terms of such power I hereby direct the trustees under the said contract to pay each of my daughters the sum of £500, and to my only son Henry the whole residue of the estate. It being my desire, however, so far as consistent with my own private estate, that my said daughters should benefit as far as possible and to such an extent as their mother under her holograph deed of settlement, dated 24th February 1901, desired they should, I hereby declare that my said daughters shall have the option of either accepting the foresaid £500 each or they shall have the right to claim the following increased amounts, but that only on the conditions stipulated for in the said holograph deed of settlement of my said wife,—That is to say, in the case of my daughter Mrs Cecilia Isabel Dick or Cameron the liferent of £7000, and in the case of my daughter Mrs Agnes Mackenzie Dick or Higinbotham the liferent of £3500, and in the case of my daughter Alice Helen the liferent of £20,000, which sums to meet said liferents shall be deducted from the residue of the said estate, and they or each of them shall grant such deed or deeds necessary in favour of the trustees under the marriage contract to carry out the purposes contained in the said holograph deed of settlement, which shall form the basis upon which the liferent and disposal of the fee are to be settled. In regard, however, to my daughter Agnes, who under the will was only entitled to a half-yearly payment of £50 in the event of her electing to take the £3500, it shall be on the same conditions as are specially provided for in the said holograph deed as regards her sister Isabel. The right of election shall be declared within three months of my death, but in regard to my youngest daughter Alice Helen, who is presently a minor, the right of election shall not take effect till three months after she attains the age of twenty-one years, but during such minority she shall receive the interest on the said £20,000 as stipulated in said holograph deed, and any surplus interest shall be annually invested for her benefit, and in regard to the capital sum, should she die before reaching majority, it shall be divided in terms of the said holograph deed, and until she attains twenty-one years the capital shall be set aside till it is ascertained what course she may elect.…

Questions having arisen as to the validity and effect of Mrs Dick's holograph settlement as an exercise of the power of apportionment conferred on her by the marriage contract, and as to the validity and effect of Mr Dick's deed of apportionment, a special case was presented.

The parties to the case were (1) John Urquhart and others, the marriage contract trustees of Mr and Mrs Dick, first parties;

(2) Mrs Cameron and Mrs Higinbotham, second parties; (3) Henry Cecil Knox Dick, third party; (4) Alice Helen Knox Dick, fourth party; and (5) John Baird, the executor under the holograph settlement of Mrs Dick, fifth party.

The second parties maintained that the holograph settlement of Mrs Dick was not intended by her to be an exercise of the power of apportionment contained in the marriage contract, and, separatim. that if it was so intended it was not a valid exercise of the said power. They further maintained that Mr Dick's deed of 20th July 1904 was not a valid exercise of such power, and was invalid. The third party maintained that the settlement of Mrs Dick was not intended to be an exercise, and in any event was not a valid exercise, of the power of apportionment of the wife's estate conveyed under the marriage contract (which alone it could affect), in respect, inter alia, that it favoured persons who were not objects of the power, and imposed restrictions and limitations which were ultra vires of the donee of the power; that the deed of apportionment of 20th July 1904 by Mr Dick was valid in so far as it apportioned the trust funds, £500 to each of the daughters of the marriage and the residue to the third party, but that the rest of the said deed was invalid and ineffectual as an apportionment of said funds and fell to be held pro non scripto, and that accordingly he was entitled to take said residue free of any conditions. The fourth party maintained that by her holograph settlement Mrs Dick intended to and did validly exercise the power of apportionment conferred on her by the marriage contract, and that under it she, the fourth party, was entitled to have paid over to her the sum of £20,000 free of all conditions, or that in any event she was entitled to said sum on the conditions set forth therein. Alternatively, in the event of it being held that the said holograph settlement did not to any effect form a valid exercise of said power, she maintained that the deed of apportionment executed by Mr Dick on 20th July 1904 was a valid exercise of the power of apportionment conferred upon him, and that under the option granted to her by said deed she was entitled to the sum of £20,000 free of all conditions, or at least on the conditions set forth in Mrs Dick's holograph deed of settlement. The fifth party maintained that if the holograph settlement of Mrs Dick was effectual as a valid exercise of the power of apportionment conferred on her by the marriage contract, then he as sole accepting trustee under that settlement was entitled and bound to hold and administer the funds which under said holograph settlement are directed to be held by Mrs Dick's trustees. The first parties maintained that in the event aforesaid the funds fell to be held and administered by them and not by the fifth party. They further maintained that the sums apportioned by either of the deeds in question must be taken by the beneficiaries subject to the conditions annexed to the gifts in the deeds of apportionment which received effect.

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The following questions of law were, inter alia, submitted for the opinion and judgment of the Court—“(1) Does the holograph settlement of Mrs Knox Dick of 24th February 1901 operate as an effectual exercise of the power of apportionment among her children of the means and estate conveyed by her to the trustees under the antenuptial marriage contract entered into between her and her husband Mr Knox Dick? … (3) As regards the marriage contract funds conveyed severally by ( A) Mr Knox Dick, and, in the event of the first question being answered in the negative, ( B) Mrs Knox Dick—( a) Is the deed of apportionment by Mr Knox Dick, dated 20th July 1904, valid in toto? or ( b) Is it valid only in so far as it apportions £500 to each of the daughters and the residue of the estate to his son? or ( c), Is it also valid in granting the option to the beneficiaries? or ( d), Is it entirely ineffectual?”

Argued for the second parties—Mrs Dick did not intend to exercise the power of apportionment. She thought she had to dispose of £57,000 which she had received from an uncle, but subsequent to her death the English Courts had held that this formed part of the marriage-contract estate. That that was her view, and consequently that she was not intending to deal with the funds under the power of apportionment, was seen in that ( a) she had appointed other trustees; ( b) the provision as to the reversion of the £20,000 in certain events to her general estate; ( c) the provisions of her settlement were inconsistent with the marriage-contract. Where there was a general power of appointment, a general settlement exercised that power— Bray v. Bruce's Executors, July 19, 1906, 8 F. 1078, 43 S.L.R. 746, which followed the dictum of Lord Brougham in Cameron v. Mackie, 7 W. & S. 106, at p. 141; English Wills Act 1837 (1 Vict. cap. 26), section 27. The English Wills Act 1837, sec. 27, was intended to be and was declaratory of the Scotch law. It established the presumption in favour of the exercise of a general power of appointment, but, on the other hand, it seemed to follow from section 27 that where there was only a power of distribution among a class the presumption was that a settlement not referring to the power did not exercise it. Almost all the reported cases related to general powers. Thus in Hyslop v. Maxwell's Trustees, February 11, 1834, 12 Sh. 413, there was a general power of disposal. The only two cases which might be said to refer to a mere power of distribution were — Smith v. Milne, June 6, 1826, 4 Sh. 679—but that was a very special case, as the power of apportionment was to be exercised by a liferenter and executor among her children—and Tarratt's Trustees v. Hastings, July 7, 1904, 6 F. 968, 41 S.L.R. 738, in which there was no reference to Whyte v. Murray, November 16, 1888, 16 R. 95, 26 S.L.R. 67, or to Bowie's Trustees v. Paterson, July 16, 1889, 16 R. 983, 26 S.L.R. 676, both of which indicated that a special power of apportionment among a class was not to be presumed to be exercised by a general settlement. In any case the exercise here, even if intended, was bad, because it brought in persons not objects of the gift, and cut down to liferents the rights of persons who were objects of the gift— Gillon's Trustee v. Gillon, February 8, 1890, 17 R. 435, 27 S.L.R. 338; Neill's Trustees v. Neill, March 7, 1902, 4 F. 636, 39 S.L.R. 426; and if the apportionment was bad in part it was bad altogether— Baikie's Trustees v. Oxley & Cowan, February 14, 1862, 24 D. 589; Gillon's Trustees, cit. sup. (2) Mr Dick's deed was also invalid as an exercise of the power. It attempted to give an option between two alternatives; that was no more permissible than to offer a hundred alternatives. In either case there was an attempt to delegate the power of apportionment to the objects of the gift. Moreover, if Alice Helen did not attain twenty-one, she would never be in the position of being able to exercise the option, and accordingly the apportionment as regarded her, and consequently as regarded also the others, would fall. In any case the option was bad, as not offering a fair choice between two equivalents, but being for the purpose of compelling acceptance of liferents which were outside the power.

Argued for the third party — (1) As regarded the holograph deed of Mrs Dick, he adopted the argument of the second party. (2) As to Mr Dick's deed, it was valid in so far as it appointed £500 to each of the daughters, and the residue to the third party, and otherwise it was invalid, i.e., it was valid down to the word “estate,” that being an initial gift complete in itself, and the remainder fell to be regarded pro non scripto — Middleton's Trustees v. Middleton, July 7, 1906, 8 F. 1037, esp. Lord Kyllachy at 1042–3, 43 S.L.R. 718; Dalziel v. Dalziel's Trustees, March 9, 1905, 7 F. 545, Lord President Dunedin at 553, 42 S.L.R. 404.

Argued for the fourth party—(1) Mrs Dick's holograph deed being a general settlement was a good exercise of the power— Tarratt's Trustees ( cit. sup.). The effect was to give the £20,000 free from restrictions, i.e., to give it in fee. There was an initial gift of £20,000, and what followed was merely a burden on the initial gift — Matthews Duncan's Trustees v. Matthews Duncan, February 20, 1901, 3 F. 533, 38 S.L.R. 401. The inclusion of grandchildren did not invalidate it; that portion was simply to be read out. (2) As to Mr Dick's deed, it was wholly good, the same argument applying to it as to Mrs Dick's deed. Alternatively it was wholly bad. It was not a case here as in M'Donald v. M'Donald Trustees, June 17, 1875, 2 R. (H.L.) 125, 12 S.L.R. 635, of attaching to a gift a condition or burden inconsistent with it, but of altering the gift itself to an option, an attempted delegation of the power of apportionment.

At advising, the opinion of the Court (The Lord Justice-Clerk Lord Stormonth Darling, Lord Low, and Lord Ardwall) was delivered by