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Cite as: [1907] SLR 781, [1907] ScotLR 781

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SCOTTISH_SLR_Court_of_Session

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Court of Session Inner House First Division.

Friday, June 21. 1907.

44 SLR 781

Macpherson's Trustees

v.

Macpherson.

Subject_1Apportionment
Subject_2Will
Subject_3Construction
Subject_4Direction to Pay Dividends “as Received” — Apportionment Act 1870 (33 and 34 Vict. c. 35), sec. 7.
Facts:

A testator, who died on 9th July, as to certain shares in a company the accounts of which were made up on 30th April, the dividend being declared in the October following, directed his trustees to pay the dividends accruing thereon “as received” to his wife during her life. Held that the widow was entitled, without any apportionment, to the whole of the dividends declared subsequent to the testator's death, irrespective of the period during which they had been earned.

Headnote:

The Apportionment Act 1870, sec. 7, enacts — “The provisions of this Act shall not extend to any case in which it is or shall be expressly stipulated that no apportionment shall take place.”

William Macpherson, managing director of the Globe Express, Limited, died on 7th July 1905, leaving a trust-disposition and settlement whereby he assigned and disponed to his widow Mrs Annie Mitchell or Macpherson and others as trustees his whole estate. At the time of his death the testator held 197 shares of £100 each (fully paid) in his company.

By the sixth purpose of his trust-disposition and settlement he directed his trustees to make over upon his death a number of shares, 50 as it turned out, in his company to certain legatees, “each share carrying with it the current year's dividend corresponding thereto.” The seventh purpose was—“The remainder of my shares in the company shall be retained by my trustees during the survivance of my wife, and the dividends accruing from said shares shall, as received, be paid over to her.…

The Globe Express, Limited, in accordance with its articles of association, made up its accounts to 30th April of each year, and, while there was no provision as to the date of the annual meeting when the dividend should be declared, by invariable custom such meeting had been held in the October following. On 10th October 1905 the annual meeting was held, and a dividend for the year ending 30th April preceding was declared at the rate of 7 per cent. The testator's trustees were subsequently paid £1379, being the dividend on the testator's 197 shares.

A question having arisen as to Mrs Macpherson's right to the dividends declared after her husband's death, a special case was presented for ( first) the trustees, and ( second) Mrs Macpherson.

The case stated—“The second party now maintains that the whole of the said dividend on the remaining 147 shares, amounting to the sum of £1029, should, in terms of the 7th purpose and other provisions of the said trust-disposition and settlement, have been paid to her by the first parties when received by them, or at all events that she is entitled to the whole of the dividend which may be paid by the company for the year ending 30th April 1906, when received by the first parties. The first parties, on the other hand, maintain that the dividends payable in respect of the year ending 30th April 1905, and for the period from 30th April to 7th July 1905, form part of the capital of the trust estate and that the second party is only entitled, in terms of the eighth purpose of the said trust-disposition and settlement, and in accordance with the Apportionment Act 1870, to the free liferent of the sums representing the said dividend for the year ending 30th April 1905, and the portion of any dividend which may be declared for the succeeding year applicable to the period from 1st May 1905 to 7th July 1905, the date of the truster's death.”

The questions of law were—“1. Does the whole of the dividend for the year ending 30th April 1905 on the said 147 shares of the Globe Express, Limited, held by the first parties, fall to be paid to the second party under the provisions of the said trust-disposition and settlement? 2. In the event of the first question being answered
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in the negative, does the portion of the dividend for the year ending 30th April 1906, for the period from 1st May 1905 to 7th July 1905, fall to be paid to the second party under the provisions of the said trust-disposition and settlement?”

Argued for the first parties—The question was one of intention. The provision in the sixth purpose that the shares therein bequeathed “should carry the current year's dividend corresponding thereto” clearly excluded apportionment, and the absence of any such words in the seventh purpose showed that apportionment was intended there. Moreover, the word used was “accruing,” not “accrued,” and that meant dividends actually accruing during her survivance. The words “as received,” founded on by the second party, meant that the widow's share of the dividends were to be paid when they fell due and not when the liferent of the general estate (also bequeathed to her) was payable, and without being debited with any charges affecting the liferent of the general estate. Apart from intention, the Apportionment Act read into every settlement the provision that periodical payments should accrue from day to day, and be apportionable accordingly—Apportionment Act 1870 (33 and 34 Vict. c. 35), secs. 2 and 5; Tyrrel v. Clark (1854), 2 Drewry's Rep. 86; Pollock v. Pollock (1874), L.R. 18 Eq. 329; Oppenheimer v. Boatman, [1907] 1 Ch 399.

Argued for the second party—The words “as received” showed clearly that the dividends in question were to be paid over without any apportionment — Apportionment Act ( cit. sup.), sec. 7; Lysaght v. Lysaght, [1898] 1 Ch 115.

Judgment:

Lord M'Laren—I think the trustees of Mr Macpherson could hardly be expected without the authority of the Court to decide this question for themselves. The Apportionment Act was, I think, primarily intended to regulate the division of termly payments in cases where the division of such payments was not arranged by the parties interested. In such cases the Act of Parliament provides that where parties have not arranged how these payments are to be allocated a proportional part shall vest de die in diem in the parties interested. That principle is applicable alike to contracts and to wills or rights in succession. But then I see no evidence in the Act that it was intended to interfere with, or to have any overruling influence upon, contracts or voluntary provisions which were expressed in clear language appropriate to the division of the termly payments in question. On the contrary, the concluding clause of the statute, providing for the exclusion of the Act where it is expressly stipulated that no apportionment shall take place, makes it evident that it was really intended to supply what the parties had omitted, and was not intended in any way to run counter to the intention of parties where that intention was clearly expressed.

Now, in this case we have to consider a will dealing with a substantial amount of personal property, and dealing with it in reasonably clear terms. Among other things Mr Macpherson, after disposing of 70 shares in the Globe Express, Limited, valued at £7000, directs, with respect to the remainder of his shares in that company, that they “shall be retained by my trustees during the survivance of my wife, and the dividends accruing from said shares shall, as received, be paid over to her.” Now there is here a trust to hold for the benefit of Mrs Macpherson, the testator's widow. He then goes on to say what is to be done with the capital, but that does not enter into the present question, and therefore I do not pursue the subject further. The shares are to be held by the trustees during Mrs Macpherson's life, and the trustees are charged with the duty of paying over to her the annual produce or income of these shares. If the direction had been given in these general terms, that the lady was to receive payment of the income of the shares, I do not doubt that the Apportionment Act would have taken effect upon the provision and would have made it necessary to apportion the termly payment accruing in the year of the testator's death, because in the case supposed there would have been an omission on the testator's part to provide how that particular year's income should be dealt with. But, then, I do not think there has been any omission in this case, because the direction is given that the dividends accruing from the shares shall, “as received,” be paid over to his wife. I think that under that provision the first of the dividends received after the testator's death falls to be dealt with exactly as all the others accruing in the course of her life would be treated. If the trustees, following out the directions literally, had, in the month of October, when a dividend was declared, paid it over to Mrs Macpherson, and if the next-of-kin or anyone having an adverse interest were to challenge the payment, I have difficulty in seeing on what argument such a challenge could be rested. I think the answer would be that the trustees had followed the truster's direction by paying the dividend as it accrued, and that the lady, in accordance with that direction, was entitled to apply the income, “as received,” for her own benefit.

This seems to me to be the preferable view, because in the absence of any direction as to apportioning the year's income, I think it may be inferred that the testator did not contemplate any apportionment, and did not think it necessary to give any direction on the subject. I think that his meaning was that the income should be treated as accruing to his wife as and when it was received by the trustees, and that it should be without delay paid over to her for her own benefit. I am therefore of opinion that the first question should be answered in favour of the second party.

Lord Kinnear—I agree. The statute prescribes the manner in which termly payments, such as the dividends in question, are to be apportioned between parties in the relative positions of the widow and

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the trustees. But it does not prevent the testator disposing of the income of his estate in any manner he thinks fit, provided only that he does so in sufficiently clear and express language; and if he directs in express terms that dividends shall go wholly to a legatee and that no part of them shall be apportioned to the general estate, that is a perfectly effectual testamentary direction which will receive effect. In the case of Tyrrel ( 1854, 2 Drewry's Rep. 86), which was cited to us, it was held that the Apportionment Act was not to be excluded by any inference which might be drawn from the general terms of a will. But, on the other hand, in the case of Lysaght ( [1898] 1 Ch 115), and apparently from the report of a case which was not cited— in re Meredith ( 1898, 67 L. J. Ch. 409)—but which is referred to in the case of Oppenheimer ( 1907, 1 Ch. 399) quoted to us, it was decided with equal clearness that when a testator expressly directs that income which would be otherwise apportionable shall be given to a particular legatee, the Act will not apply. I think the present case falls under the latter rule. The truster says that the dividends accruing from the said shares “shall, as received, be paid over” to his wife. In saying so he gives his trustees a clear and express direction which they are bound to follow.

I entirely agree, however, with the observation which fell from your Lordship in the chair that although we think the direction clear enough it was nevertheless perfectly natural and proper on the part of the trustees to bring this question before the Court in order that they might have judicial authority for the course they might agree to follow.

Lord Pearson—I am of the same opinion.

The Lord President was absent.

The Court answered the first question in the affirmative, found it unnecessary to answer the second question, and decerned.

Counsel:

Counsel for First Parties— D. P. Fleming. Agents— Webster, Will, & Company, S.S.C.

Counsel for Second Parties— R. S. Horne. Agents— P. Gardiner Gillespie & Gillespie, S.S.C.
1907