Scottish Court of Session Decisions

By his will the late Robert Blackburn Turner of Goosery, Bengal, India, who died, domiciled in Scotland, on 17th March 1906, directed his executor to pay to his Scotch trustees the sum of Rs. 10,000, to be invested by them in the purchase of an annuity for the benefit of Margaret Fernie, then residing in Glasgow, for her life. He also directed his executor to pay to the said trustees a sum sufficient for certain purposes therein mentioned, to be held upon the trusts therein declared, inter alia—“To set apart three several sums of Rs. 15,000 each, and to invest each of the said three sums of Rs. 15,000 in the purchase of three several annuities, that is, Rs. 15,000 to be expended in the purchase of each such annuity, one in the name and for the benefit of my sister Jane Wilson, wife of William Wilson, residing in Possil Park in Glasgow aforesaid, another for the benefit and in the name of my sister Jane Fleming, the widow of Joseph Fleming of Glasgow aforesaid, and the third for the benefit and in the name of my sister Martha Morgan, the wife of James Morgan, at present residing in Slottville, in the state of New York, in the United States of America.”

The testator further provided—“And I declare that all annuities which by this my will I direct to be purchased by my executor or my Scotch trustees shall be purchased by him or them from the British Government or from the Scottish Widows' Insurance Company, Limited, of Edinburgh, in Scotland, and any other first-class company or annuity office, as my said executor or Scotch trustees shall in this behalf think fit, and that such annuities shall be made payable to the persons in whose names and for whose benefit they have respectively been purchased, in equal half-yearly or quarterly portions, and shall be enjoyed by them respectively as their respective separate property, free from the control of any husband to whom any of them respectively may be married.”

The annuitants having called on the trustees to pay them the principal sums instead of investing the money in the purchase of annuities, a special case was presented for (1) the trustees, who were in doubt as to their power to make such payment, and (2) the annuitants.

The case, inter alia, stated—“(6) The purchase of Government annuities is mainly regulated by the Acts 16 and 17 Vict. cap. 45, and 45 and 46 Vict. cap. 51, section 2. Section 25 of the former Act provides that ‘the right, title, interest, and benefit in and to any annuity … purchased under the provisions of this Act shall not be assignable by the original proprietor thereof so as to enable the assignee to receive the same during the lifetime of the said proprietor, except in case of the insolvency or bankruptcy of an individual proprietor, when the same shall become the property of his or her assignee or assignees for the benefit of his or her creditors.’ The section further provides that in case of any such bankruptcy or insolvency the commissioners for the reduction of the national debt shall repurchase and cancel the annuity, the receipt of the assignee or assignees to the commissioners being constituted a sufficient discharge thereof. (7) The first parties have ascertained that according to the practice of the Department with regard to annuities issued by it, while the right to an annuity itself cannot, apart from insolvency or bankruptcy, be assigned, the half-yearly payments are made either to annuitants themselves or parties holding powers of attorney granted by annuitants; and further, that under their regulations the Department cannot, or at any rate will not, grant a bond of annuity containing a clause that the annuity shall be strictly alimentary and shall exclude a trustee in bankruptcy.

In these circumstances the first parties maintain that they are not bound to pay over said sums to the second parties, and that they are bound to purchase the annuities on behalf of the second parties; or otherwise, that they are entitled in their discretion to purchase annuities for the second parties, or such of them as they

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may consider proper. The second parties respectively maintain that having intimated a demand for payment of the said capital sums… the first parties, as trustees foresaid, are bound to make payment.”

The questions of law were—“(1) Are the first parties bound to purchase annuities for behoof of the second parties as directed by the will? (2) Are the first parties entitled in their discretion to purchase annuities for behoof of the second parties or such of them as they shall consider proper? Or (3) Are the first parties bound to make payment to the second parties respectively of the capital sums directed to be invested in the purchase of annuities on their behalf?”

Argued for the first parties—The first parties were willing to pay over the principal sums if they were in safety to do so. The direction to purchase annuities, however, indicated an intention on the part of the testator to protect his beneficiaries against loss, and in these circumstances the trustees were bound, looking to the recent case of Hutchinson's Trustees v. Young, October 29, 1903, 6 F. 26, 41 S.L.R. 14, to purchase annuities. The present case was distinguishable from those of Tod v. Tod's Trustees, March 18, 1871, 9 Macph. 728, 8 S.L.R. 445, and Murray v. Macfarlane's Trustees, July 17, 1895, 22 R. 927, 32 S.L.R. 715, where it was held that trustees were not bound to purchase annuities in face of a demand by the beneficiaries for payment of the principal sums—for the terms of this bequest clearly inferred a direction to the trustees to purchase such annuities as were alimentary and not assignable. As to the effect of declaring an annuity alimentary, reference was made to Cosens v. Stevenson, June 26, 1873, 11 Macph. 761, 10 S.L.R. 526.

The second parties were not called upon.