Scottish Court of Session Decisions

A Special Case was presented for the opinion and judgment of the Court by (1) Charles Heron Watson and others, trustees acting under a mutual trust-disposition and settlement by the Reverend Alexander Gordon MacGillivray and his wife, dated 2nd April 1883, and three relativecodicils, first parties; (2) Charles Brodie Boog Watson and others, trustees acting under trust-disposition and settlement of the late Reverend Charles Watson, D.D., father of Mrs MacGillivray, second parties;(3) Hamilton Maxwell, W.S., curator bonis to Duncan MacGillivray, who was one of the two sons of Mr and Mrs MacGillivray, and was unmarried, third party; (4) Charles Watson MacGillivray, Mr and Mrs MacGillivray's other son, fourth party; and (5) the three children of the said Charles Watson MacGillivray, fifth parties.

The following narrative is taken from the opinion of Lord Dundas—“By his said settlement the late Rev. Dr Watson, Mrs MacGillivray's father, after sundry prior purposes, directed the remainder of his estate to be realised and divided equally among his children alive at his death, with the exception that the shares falling to his two daughters were to be held for them in liferent, the capital to devolve at their deaths ‘to all or any of their respective children as my daughters or either of them may direct, and failing such direction, equally among their issue respectively;’ and he empowered his daughters to bequeath a liferent of their respective portions to their husbands so long as the latter did not marry again.

“Mr and Mrs MacGillivray by their said mutual settlement granted and disponed to the Survivor of them in liferent, for his or her liferent use only, and on the death of the survivor to trustees, the whole means and estate which might belong and be addebted to them or either of them or over which they might have power of disposal at the time of their respective deaths; and Mrs MacGillivray, in addition to giving her husband, if he should survive her, the liferent of the other estate belonging to her, bequeathed to him the annual income or liferent of the share or portion of the funds to which she and her heirs had right under her father's settlement. The spouses appointed the survivor of them to be the sole executor of the predeceaser, and the trustees to be the executors of the survivor. The trust purposes, so far as here material, were (second) for payment to their son Charles, after the death of the survivor, of one-half of the free residue of their joint-estate, with certain destinations over in the event—which did not happen—of his predeceasing the survivor of his parents; (third) to hold and retain the other half of the said residue and pay their son Duncan the free annual income and proceeds thereof, as the trustees should think advisable, for his alimentary use only; and (fourth) on his death, to pay to his child or children, equally among them if more than one, the capital of the said share of residue, the issue of any who might predecease taking their parent's share; and if Duncan should die without issue, survived by Charles, the said share of residue was, in that event, to be paid over to Charles or his children as by the said mutual settlement provided. The spouses expressly reserved not only their own liferent use of the premises but full power and liberty at any time of their joint lives to alter, innovate, or revoke the mutual settlement as they should think fit. It was not, and scarcely could have been, disputed that Mrs MacGillivray intended by the said settlement to exercise the power of appointment contained in her father's trust deed, and that it was competent for her to do so by such an instrument; but the primary question in the case is whether she did or did not succeed in validly exercising her power.

On 3rd March 1884 Mr and Mrs MacGillivray made a codicil to their mutual settlement, and altered it, inter alia, by declaring that Mrs MacGillvray should have power to bequeath out of the means and estate then belonging to her, or which might thereafter belong to her, other than the funds falling to her under her father's trust settlement, any legacies or bequests to any persons she might think right by any writing under her hand alone either during her husband's life or after his death. Mr MacGillivray died on 11th May 1889. His wife was duly confirmed as his executrix; and his estate, which amounted to £1013 or thereby, became immixed with her estate, and so remained down to the time of her death. On 29th November 1889 Mrs MacGillivray made a codicil declaring the mutual settlement to be a direction to her father's trustees as to the disposal of her share of her father's estate; but nothing turns upon this codicil, the execution of which seems to me to have been more or less a work of supererogation. On 18th Janury 1902, however, she made another codicil, which is an important factor in the case. By it, in the first place, Mrs MacGillivray—in virtue of the powers reserved to her by the joint codicil of 1884—revoked the bequest of half of the free residue of her estate to her son Charles contained in the (second) purpose of the mutual settlement, and directed the trustees to deal with it, both capital and income, in the same manner as was prescribed in the purpose (third) and (fourth) of the said settlement with regard to the other half of the said free residue. In the second place, Mrs MacGillivray directed her father's trustees to hand over her share of her father's estate to the trustees appointed under the mutual settlement for payment over of the same by them to her son Charles, or, if he had predeceased her—which did not happen — then as in that event by the said codicil provided. The import of the codicil therefore was (1) to give half the free residue of

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her own estate—which was by the mutual settlement destined to Charles—to be held for Duncan's alimentary use, and to be paid on his death to his children, whom failing in the manner mentioned in the (fourth) purpose of the settlement; and (2) to give the whole of the fund over which she had power of appointment under her father's will to Charles, whereas by the mutual settlement it was destined one-half to Charles, and one-half for Duncan's alimentary use and to his children in fee. It appears that Mrs MacGillivray's estate at her death in 1909—including her husband's said estate, amounting to about £1013 — consisted almost entirely of house property in Edinburgh, yielding when fully let about £185 a-year, and the share of her father's estate which she had power to dispose of was about £8500.”

The third party, with consent of all parties, added at the Bar the following statement to the Special Case—“The third party, on behalf of Duncan MacGillivray, has consented to the appointment of the one-half of the share of the Rev. Dr Watson's estate liferented by Mrs MacGillivray, as contained in the third and fourth purposes of the mutual trust-disposition and settlement.”

The contentions of the parties were, inter alia, as follows:—

The fourth party contended that the late Mrs MacGillivray by the codicil of 18th January 1902 validly exercised the power of appointment conferred upon her by her father's trust-disposition and settlement, the said power not having been validly exercised by the mutual trust-disposition and settlement dated 2nd April 1883; and accordingly that the whole of the share of her father's estate liferented by her fell to be paid over to him as his own absolute property.

The third party contended that the exercise of the power of appointment contained in the mutual settlement, or alternatively the exercise in so far as it conferred a liferent on Duncan MacGillivray, was valid and effectual; that the settlement being contractual the exercise of the power, or alternatively the exercise so far as it conferred the said liferent, was irrevocable by Mrs MacGillivray without her husband's consent, and that accordingly the codicil of 1902, in so far as it altered the exercise of the power contained in the settlement, or alternatively in so far as it revoked the said liferent, was ultra vires and ineffectual. Alternatively the third party maintained that there had been no valid exercise of the power of appointment, and that accordingly the said share of the Rev. Dr Watson's estate fell to be divided equally between the fourth party and Duncan MacGillivray.

The fifth parties concurred in the first contention of the third party, viz., that the power of appointment was validly exercised by the mutual settlement.

The questions of law were, inter alia, as follows—“1. Is the appointment of the estate which was liferented by the late Mrs MacGillivray under the trust-disposition and settlement of the late Dr Watson, her father, contained in the said mutual trust-disposition and settlement, ( a) wholly valid, or ( b) only partly valid, and if so, to what extent, or ( c) wholly invalid? 2. In the event of branch ( a) or branch ( b) of the foregoing questions being answered in the affirmative, has the appointment, so far as valid, been effectually revoked by the codicil of 18th January 1902? 3. Is the appointment of the said estate contained in the codicil, dated 18th January 1902, ( a) wholly valid, or ( b) only partly valid, and if so to what extent, or ( c) wholly invalid?”

Argued for the third and fifth parties — A power of appointment could be exercised by a general settlement conveying the testator's estate to trustees, and the mutual settlement here contained a valid exercise of the power— Tarratt's Trustees v. Hastings, July 7, 1904, 6 F. 968, 41 S.L.R. 738; Dalziel v. Dalziel's Trustees, March 9, 1905, 7 F. 545, 42 S.L.R. 404; Bray v. Bruce's Executors, July 19, 1906, 8 F. 1078, 43 S.L.R. 746. The clause conferring the power contained the word “issue.” That would not be held as equivalent to “children” unless the context imperatively demanded it. Even if it were so read, it did not follow that the exercise of the power was bad simply because a liferent instead of a fee was given to one of the objects— Darling's Trustees v. Darling's Trustees, 1909 S.C. 445, 46 S.L.R. 394, per L. P. Dunedin, at p. 449, p. 397. Further, it was jus tertii of anyone but Duncan to challenge the validity of the exercise, and he so far from challenging it consented to it. That being so the exercise was good— Mackie v. Mackie's Trustees, July 4, 1885, 12 R. 1230, 22 S.L.R. 814. Moreover, the exercise of the power contained in the settlement need not involve the introduction of a stranger, for if Duncan died childless and survived by his mother the share liferented by Duncan would fall to his brother, who was an object of the power. The third party further argued — The mutual settlement was contractual, and therefore could not be revoked by the survivor — Kerr v. Ure, June 28, 1873, 11 Macph. 780; Robertson's Trustees v. Bond's Trustees, June 28, 1900, 2 F. 1097, 37 S.L.R. 833; Johnstone's Trustees v. Johnstone's Trustees, October 15, 1907, 45 S.L.R. 1. Therefore even if the exercise of the power attempted in the mutual settlement were invalid, the exercise contained in the codicil of 1902, after the death of Mr MacGillivray, was ultra vires, and the direction as to equal division failing appointment contained in the Rev. Dr Watson's will must receive effect.

Argued for the fourth party—The objects of the power were the daughter's children — “issue” clearly meaning “children.” The exercise of the power attempted in the mutual settlement was bad because it introduced strangers to the power— Gillon's Trustees 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; Lord Inverclyde's Trustees v. Lord Inverclyde, 1910 S.C. 420. There could be no question of partial validity here, because the settlement did not contain a good exercise of the

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power merely coupled with objectionable conditions— Middleton's Trustees v. Middleton, July 7, 1906, 8 F. 1037, 43 S.L.R. 718. The consent of the curator could not avail to make the invalid exercise of the power good, because even assuming a curator could consent on behalf of his ward, the consent must be given at the time the exercise is made, or at least before the death of the party in whom the power is vested. That distinguished the present case from Mackie v. Mackie's Trustees ( cit.). Even if subsequent consent could validate an invalid exercise of a power of appointment it could not do so to the effect of excluding a subsequent good exercise such as contained in the codicil of 1902. (2) Though the mutual settlement was contractual, the contract could not bind the wife to an exercise of the power of appointment that was invalid. The contract only involved that the wife could not revoke a valid exercise of the power. If the exercise contained in the settlement turned out to be invalid, then she was not precluded by the contractual nature of the deed from making a subsequent good exercise. The exercise of the power contained in the codicil was not a revocation of the settlement. It had been revoked as far as the power was concerned by the fact that the exercise therein was invalid. The exercise of the power contained in the codicil of 1902 should therefore receive effect.

At advising—