Scottish Court of Session Decisions

On 4th April 1907 Henry Constable Smith, manufacturer, London, and others, the testamentary trustees of the late Lewis Smith, wholesale stationer in Aberdeen, acting under his trust-disposition and settlement dated 13th March 1860 and registered with relative codicils 15th December 1880, raised an action of multiplepoinding and exoneration. The fund in medio was the portions of the trust estate which the trustees under the trust-disposition and codicils had retained in their hands on account of Frederick Smith, a son of the testator, who—a lunatic—had been an inmate of Murray's Royal Asylum, Perth, and had died on 27th December 1906 unmarried and intestate.

Claims were lodged by (1) the trustees of Alexander Rae Smith, and others—these claimants were the children of the testator who survived him and were still alive (other than Lewis Smith, another lunatic son), and the heirs in moveables of such surviving children who had since died, or their assignees; (2) by William Fiddes Smith and others—these claimants were the issue (surviving Frederick) of five children of the testator who had survived him but predeceased Frederick; (3) by Henry Vagliano Smith, executor-dative of the said deceased Frederick Smith; (4) by the testator's trustees, claiming to retain a portion of the fund in medio in the interest of Lewis Smith, the other lunatic son.

The facts of the case are given in the opinion ( infra) of the Lord Ordinary ( Dundas), who on 15th December 1907 pronounced this interlocutor—“Finds upon a sound construction of the settlement and codicils of the deceased Lewis Smith referred to upon the record (1) that the shares of the truster's moveable estate and of the proceeds of his heritable estate destined to his son Frederick did not vest in him prior to his death on 27th December 1906; and (2) that the said shares vested as at that date in the children of the truster then surviving and the issue of children who had predeceased leaving issue, equally among them, share and share alike, per stirpes.… Reserves all questions of expenses, and grants leave to reclaim.”

Opinion.—“Mr Lewis Smith, wholesale bookseller and stationer in Aberdeen, died on 24th October 1880, leaving a trust-disposition and settlement dated in 1860, and two codicils thereto, dated respectively in 1875 and 1879. The pursuers and real raisers of this action of multiplepoinding are the trustees surviving and acting under the settlement and codicils. The testator was survived by his widow, and by ten children, all of whom had attained majority prior to their father's death. A daughter, Elizabeth, died in 1883, unmarried and intestate. The widow died in 1884. The fund in medio is the part of the truster's estate which has been retained by the trustees for behoof of one of the sons, Frederick Smith, who died on 27th December 1906, unmarried and intestate, and who had for a period of years prior to his death been an inmate of James Murray's Royal Asylum at Perth. At Frederick's death there survived, and there still survive, three children of the testator, and families of five other children who had died between 1884 and 1906 leaving issue. By the settlement the truster disponed to his trustees all and whole the estate, heritable and moveable, which should belong to him at his death. By the second purpose, the trustees were directed to pay to the truster's widow the whole free annual proceeds of the heritable estate during her life. By the third purpose they were directed to pay to her one-third part of the free residue of the personal or moveable estate. The fourth purpose directed the trustees … (narrates purport, v. sup. in rubric) … It may be noted, for what it is worth, that the testator at some subsequent period wrote and initialed on the margin opposite this fourth purpose the following words—‘I also direct my trustees to make similar and equal provision for my son Frederick, being of weak mind and requiring to be protected in his just rights.’ The fifth purpose contained, inter alia, the following provisions:—‘… ( quotes, v. sup. in rubric).…’ By the sixth purpose the trustees were directed.… ( narrates, v. sup. in rubric) …’ Later on these clauses occur—‘And which provisions above written conceived in favour of my said children shall be accepted of by them in full of all legitim, portion natural, bairns’ part of gear, executry, or others whatsoever, which they or any of them can ask or demand by and through my decease, or by and through the death of their mother, or in any other manner of way: And further, I do hereby provide and declare that in case any of my said children shall repudiate this settlement, and claim their legal provisions in place of the sums hereby provided for them respectively, or shall by any means prevent this settlement from taking effect in whole or in part, then such of my said children as shall so repudiate this settlement shall thereby forfeit all right to any share or shares of those parts of my estate and effects which I may freely dispose of by law, and they shall have right only to their legal provisions, exclusive of the dead's part and my heritable estate, which shall in that event accresce and belong equally to my other children who shall abide by this settlement and accept of the provisions herein contained.’ The testator's second codicil explains, inter alia, ‘that as regards my son Frederick, the provisions for him I direct my trustees to make the same as the provisions made by me for my son Lewis in all respects, and I recal my settlement as to Frederick quoad ultra.’ It is stated that the trustees set aside a share of the truster's moveable estate, and of the proceeds of the sale of the heritage, for behoof of Frederick Smith, and applied the income thereof and part of the capital towards his maintenance until his death.

In these circumstances competing claims are made to the fund in medio. It is claimed, in the first place, by the executor-dative of Frederick Smith. This claimant maintains that the fee of one-tenth share of the truster's moveable estate vested in Frederick a morte testatoris, and that the fee of one-ninth share of the proceeds of the heritable estate vested in him upon his mother's death in 1884, his sister Elizabeth having predeceased Mrs Smith unmarried and intestate. The theory of the claim, as presented by Mr Lippe, was that Frederick had attained majority prior to his father's death; that the ‘period of payment’ of the shares of moveable estate was, in the case of sons, majority; that Frederick's share therefore became a vested interest in him at the said ‘period of payment’; and that similarly, as regards the proceeds of the heritable estate, Frederick's share vested in him by his survival of the date of his mother's death. I think these arguments are unsound. It is true that in the normal case each son's share vested in him on his survival of the appointed period of payment, viz., the death of his father as to the moveable estate (he being then major), and that of his mother as to the heritable estate. But a special code was expressly provided for the case of Lewis, and made applicable by the codicil to Frederick, by which the share was not to become payable unless in the event of his recovering his reason. Frederick died without having recovered his reason. I think, therefore, that no right vested in Frederick, because he died before the period of payment, and therefore of vesting applicable to his case, had arrived. If this view is correct, a question next arises as to the period at which the beneficiaries entitled to Frederick's share fall to be ascertained. Mr Chree, on behalf of one set of claimants [ the claimants first mentioned in this report], argued that Frederick's share of moveables vested a morte testatoris, and his share of the proceeds of the heritable estate vested on his mother's death in his brothers and sisters who were surviving at those dates respectively, subject only to possible defeasance in the event of Frederick recovering his reason. Mr Kemp, for a different set of claimants [ the claimants second mentioned in this report], maintained

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that vesting in Frederick's share did not take place until his death, when his shares both of the moveable and the heritable estate of his father vested in his brothers and sisters surviving at that date, viz., 27th December 1906, and the children of predeceasers, per stirpes. I am of opinion that the latter contention is well founded, and that the former is erroneous. The difference between them in practical result is not great. It is only, as I understand, that in the one view the representatives of Miss Elizabeth Smith would, and in the other view would not, be participants in Frederick's share of the moveable estate. But I consider that Mr Kemp's argument is to be preferred, because I think the words ‘my surviving children’ ought, according to ordinary canons of construction, to be read as referring to the event, viz., the death of a son before the term of payment of his share, upon the occurrence of which the division of his share amongst other persons was to take place. In reaching this conclusion I have not left out of view that in the case (which has not occurred) of a son dying before the term of payment leaving issue, his provision is directed to be divided equally among his issue ‘alive at the period of my death.’ It seems to me that this direction might have created considerable difficulty, supposing, for example, that a son of the truster had married after his father's death and died in minority leaving issue. By the strict terms of the settlement that issue would apparently have been excluded from any share of the residue; while, on the other hand, the share could not, I apprehend, have been claimed by the surviving children of the testator, who are only called in default of issue. But I think that speculation as to events which might have occurred, but have not in fact happened, ought not to affect my construction of that part of the clause which has, as events have turned out, come into operation.… [ His Lordship here dealt with another matter on which the case is not reported.] …

Counsel for the parties desired that I should at this stage do no more than make findings expressive of my opinion upon the various points raised at the debate, and this I shall accordingly do.”

The claimants John Rae Smith's trustees and others reclaimed, and argued—The share of moveable estate conditionally destined to Frederick vested in his brothers and sisters on their surviving the testator, and similarly the share of heritable estate conditionally destined to him vested on the death of the liferentrix in those of his brothers and sisters who survived that event, subject in each case to defeasance in the event of Frederick recovering his reason. Frederick never had a share that came into existence. The only provision for him (other than that providing for his maintenance) was a contingent burden upon the other children's shares and the contingency never occurred.

Argued for the claimants William Fiddes Smith and others—Vesting of Frederick's share did not take place until his death, on which event the shares, both of the heritable and moveable estate of the testator, destined to Frederick vested in his brothers and sisters surviving at that date, and the children of predeceasers per stirpes. The testator himself described Frederick's share as a share.