Scottish Court of Session Decisions

But I think it is a totally different case when you come to those works which were dealt with after the death of the testator. Whatever he left after his death and had not dealt with during his lifetime — whether complete manuscripts or incomplete manuscripts—were necessarily of the nature of estate left behind by him, which it was the duty of the trustees to realise to the best of their ability. They might do that in various ways. To a certain extent they were in the hands of publishers as to how it could be accomplished, because everybody who has had anything to do with the publishing of books knows perfectly well that different terms may be given by publishers as regards different books. Even in the case of a book that might turn out well publishers may not be willing to take the risk of paying a price for it. Accordingly sometimes an arrangement is made for royalties, and sometimes an arrangement is made for a sum down and for royalties. It was the duty of these trustees to do their best for the realisation of the works. I assume that they have done their best. Their conduct has not been impugned in any way. Everybody is agreed that nothing has been done that ought not to have been done. I am clearly of opinion that the works which passed into the hands of the trustees as part of the testator's estate, and which he had not dealt with except by leaving it to them, form part of the capital of the estate. I would move your Lordships that we should answer the questions accordingly.

Lord Ardwall—I agree with what your Lordship has said. This is a novel and interesting case. It appears that at his death Dr Davidson left, as might have been expected, a number of literary works. With regard to some of these he had already disposed of the copyright by having come to an arrangement under which in some cases he had got a sum down and in other cases he was to be entitled to royalties or profits from the sale of the books as time went on. In some cases he was remunerated partly in one way and partly in the other. With regard to the literary works published before the testator's death he had been during his lifetime in receipt of the proceeds, so far as they consisted of royalties or profits, by way of income—income available for himself, to spend year by year as he pleased.

In these circumstances he directs his trustees to give his niece the liferent use and enjoyment of the residue of his estate, and to pay to her the free annual income at two terms in the year. I cannot doubt that as a matter of intention we must hold that the free annual income of the estate means the free annual income of the estate as it existed at his death, of which those profits or royalties formed a part. It seems that there is no case exactly on all fours with the present, but I think we derive assistance from and find a very valuable analogy in the cases which have been decided regarding minerals, and in which a distinction has been taken between minerals the proceeds of which formed income before the testator's death, and minerals which had not begun to be worked at the death of the testator. These decisions must be held to proceed on the principle of intention; and likewise in this case I hold we must have regard to the intention of the testator in deciding the question as to the proceeds of royalties on works published by himself before his death. Accordingly, with regard to such royalties and profits I hold that they still form income, and should be paid to the liferentrix.

But with regard to the other works which have been published by the trustees since his death, I think these are in a totally different position. It was the trustees' duty, as has been pointed out by your Lordship, to dispose of the manuscripts carrying with them copyright to the best advantage after the testator's death. At the testator's death they represented part of the capital of the estate. I do not think it can be held that these unpublished manuscripts and the copyright which they bore with them were anything else than capital. Now, what was the trustees' duty with regard to that capital? I find that under the trust deed the trustees have power to sell or dispose of all or any part or portion of the trust estate and effects. I think these literary remains form part and portion of the truster's estate and effects; and the question which the trustees had to decide was how they could best be disposed of. In this matter the trustees were to a certain extent tied by the usages of the publishing trade. Under these usages books are sometimes disposed of in return for a sum paid down, and sometimes, instead of taking payment all at once, by taking payment of the price in instalments in the shape of royalties. The trustees were practically tied up to taking one course or another. But whatever course they did take, whether they were paid by a sum down or by instalments, or partly by a sum paid down and partly by instalments, the proceeds were a surrogatum for the assets left by the testator at the time of his death in the form of literary property. I think that they must be treated, accordingly, as capital and as nothing else—the proceeds being invested as they accrue, and the interest of that capital so invested being paid to the liferentrix. To hold anything else would have this result, that the trustees would have it in their power to alter the respective interests of the liferentrix and the fiars in what was truly part of the capital of the estate at the time of the death of the testator. I think that is a conclusion which we cannot accept. Although this is a novel case I have really no hesitation in deciding it in the way your Lordship has suggested, and the questions will fall to be answered accordingly.

Lord Dundas—I am of the same opinion and have nothing to add.

Lord Low was absent.

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