Scottish Court of Session Decisions

A Special Case was presented by (1) William Kenneth, sole trustee acting under the trust-disposition and settlement of Miss Janet Shedden, Gourock, dated 11th February 1904, and two codicils thereto dated 11th February 1904 and 5th April 1907 ( first party), (2) Mrs Margaret Shedden or Dykes, niece and sole next-of-kin of the testatrix, with the consent and concurrence of her husband the Rev. Thomas Dykes, D.D. ( second party), and (3) the Royal Hospital for Sick Children, Glasgow, and the honorary treasurer thereof ( third parties), in order to obtain the opinion of the Court on certain questions arising out of the said trust-disposition and settlement.

The trust-disposition and settlement of the testatrix was as follows:—“I, Miss Janet Shedden, … in order to settle the succession to my whole estate in the event of my decease, do hereby assign, dispone, and convey the whole means and estate of every description, heritable and moveable, wherever situated, that shall belong and be owing to me at the time of my decease, to Robert Scott Stewart, solicitor in Glasgow, and Andrew Stewart, solicitor in Glasgow, and the acceptor and survivor of them, as trustees and trustee for the purposes after specified; and I nominate and appoint the said Robert Scott Stewart and Andrew Stewart, and the acceptor and survivor of them, to be my executors and executor—[ By codicil dated 5 th April 1907 the testatrix revoked and recalled the appointment of Robert Scott Stewart as trustee and executor]: But these presents are granted in trust always for the purposes following, videlicet:—(First) I direct my trustees to pay all my just debts, sick-bed and funeral expenses, and the expenses of the trust hereby created: (Second) I give and bequeath the legacies following to the following persons and others respectively, and direct my said trustees to pay the same accordingly, namely—( Primo) £50 to each of my said trustees who shall accept office under these presents—[ Here followed a number of legacies]: And said legacies shall all be paid as soon as possible after the lapse of six months from my decease, with interest from and after the lapse of such six months at the average rate; of interest, if any, that my trustees shall have received from my estate, howsoever the same may be invested or wheresoever the same may be: And my trustees shall be the absolute judges as to what such average rate of interest is or

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shall be; and said legacies and interest shall further be paid without any deduction of or for Government duty of any kind, all which duty shall be paid out of the residue of my estate; … and should there be any doubt as to the respective legatees, or any of them, whom it is my intention to favour, my trustees shall be the only judges in the matter, and their judgment and action shall be absolute and unchallengeable by or at the instance of any person, persons, or others whatsoever; and the mere receipts of the respective persons, officials, or bodies to whom my trustees shall actually pay such legacies respectively shall fully and finally discharge my trustees of the legacies and interest thereon so paid by my trustees: And (Third) I give and bequeath the whole residue and remainder of my estate, and all free proceeds thereof, to my trustees, to be by them paid, divided, and distributed to and among such charitable and philanthropic societies, institutions, and objects in or connected with Glasgow, and in such sums and proportions to each or the whole to any one of such societies, institutions, or objects, all as my trustees in their absolute and uncontrolled discretion shall decide; and I declare that the judgment and action of my trustees in such payment, division, and distribution shall be absolute and unchallengeable by or at the instance of any person or persons or others whatsoever, and that the mere receipts of the respective secretaries, treasurers, or other officials of the respective objects that my trustees shall select as to take benefit under this present provision shall fully discharge and exonerate my trustees of all sums of money that my trustees shall actually pay bearing to be in virtue hereof: And further, I declare that I have not favoured those of my relatives whom I might otherwise have been inclined to favour, because they have not made any attempt to show to me, nor did they attempt to show to my late sister, any such affection or attention as I or she might have expected: And I empower my trustees to sell the whole or any part of my estate by public roup or private bargain, and to employ a law agent or law agents, who may be of my said trustees' own number, or any firm of which they or either of them may be the partners or a partner; and to pay to such law agent or law agents out of my estate all reasonable charges for services rendered, including charges for attending all meetings of trustees, any law or practice to the contrary notwithstanding; and notwithstanding that I have bequeathed to each of my said trustees who shall accept the foresaid legacy of £50, I declare that my said trustees shall have and enjoy all the immunities and privileges of gratuitous trustees.…”

The codicil of 11th February made certain alterations in the amount of certain legacies, and the codicil of 5th April, as above noted, recalled the appointment of Robert Scott Stewart as trustee and executor.

The testatrix died on 3rd June 1910, and the said Andrew Stewart accepted office as trustee and executor foresaid, and proceeded to administer the estate in terms of the settlement. By deed of assumption dated 30th September, and registered in the Books of Council and Session 1st October 1910, Andrew Stewart assumed the first party as a trustee under the said trust-disposition and settlement and codicils, and along with the first party continued to administer the trust estate. Andrew Stewart died on 29th December 1910, and the first party as the sole trustee acting under the said trust-disposition and settlement and codicils since that date continued the administration of the estate.

The estate left by the testatrix consisted wholly of moveables and amounted to £6000 or thereby. It had been fully realised, and after fulfilment of all the other and prior purposes of the settlement and codicils there remained a sum of £3937, 1s. 2d. in bank upon deposit-receipt, representing the residue of the estate. No allocation had been made by the trustees up to the date of Andrew Stewart's death, but the first party by minute dated 22nd December 1911, bearing to be in exercise of the discretionary powers conferred by the said third purpose of the settlement before narrated, allocated a sum of £500 to the third party.

The first party contended that the bequest of residue was valid and not void from uncertainty, and that as Andrew Stewart had, in addition to the powers conferred on him by the settlement, the whole powers conferred by statute on gratuitous trustees, including the power to assume new trustees, the effect of the assumption of the first party by Andrew Stewart was to confer on the first party the whole powers conferred by the testatrix upon her trustees, including the power to select the institutions among which the residue of the estate was to be divided, and to allocate and pay the same to them in such sums and proportions as he should decide.

The second party contended that the bequest of residue was void from uncertainty. [ This was given up at the hearing of the case.] She further contended that as the testatrix made no provision for continuing the trust after the death of the original trustee, the discretionary powers conferred by the trust-disposition and settlement were personal to him, that the first party had accordingly no power to carry out the third purpose of the said settlement, and that the foresaid minute by him was of no effect. She further contended that upon the death of Andrew Stewart without having exercised the discretionary powers conferred upon him by the testatrix, the residue of the trust estate fell into intestacy and was payable to her as sole next-of-kin.

The third parties contended that the bequest of residue was not void from uncertainty, that the residue of the estate had not fallen into intestacy as claimed by the second party, that the first party had the full powers conferred by the testatrix upon her trustees under her settlement, and that accordingly the said minute of allocation was valid and sufficient, and entitled the third parties to payment of the sum thereby allocated.

The question of law for the opinion and

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judgment of the Court was—“2. ( a) Is the first party, as assumed trustee foresaid, entitled to exercise the discretionary powers as to residue contained in the said purpose? Or ( b), Did the residue of the estate of the testatrix fall into intestacy upon the death of the said Andrew Stewart without having exercised the discretionary powers conferred by the settlement?”

The case was heard on the 5th, 18th, and19th November.

Argued for the second party—Where trustees named were given the power, not merely of apportioning a fund amongst certain charities, but also the power of selecting the charities, and where there was no express power given to assume trustees, the presumption was that the discretionary powers conferred were confined to the trustees nominated by the testator. That rule was to be deduced from the following authorities:— Hill's Trustees v. Thomson, October 30, 1874, 2 R. 68, 12 S.L.R. 20; Simson and Others, January 27, 1883, 10 R. 540, 20 S.L.R. 359; Robbie's Judicial Factor v. Macrae, February 4, 1893, 20 R. 358, esp. Lord M'Laren at p. 362, 30 S.L.R. 411; Grieve's Trustees v. Wilson, 1904, 12 S.L.T. 347. In Hill's Trustees ( cit. sup.), where the trust deed did not contain a power of assumption, it was held that the power of apportionment was personal to the original trustees. In Simson and Others ( cit. sup.), where the trust deed gave the trustees the power of making advances of capital, the Court, on the application of a judicial factor, granted him authority to make an advance of capital on the ground that power of assuming trustees was given and that the idea of delectus personæ was thus excluded. In Robbie's Judicial Factor ( cit. sup.) the trust deed did not contain express power of assuming trustees, and discretionary powers were given to select the charitable objects. The Court held that the discretionary powers were personal to the trustees and could not be exercised by a judicial factor. In Grieve's Trustees ( cit. sup.) the trust deed contained a power of assuming trustees, and the discretionary powers were of apportionment and not of selection, and on these grounds it was held there was no delectus personæ, and that the powers could be exercised by new trustees appointed by the Court. The case of Allan v. Mackay & Ewing, November 13, 1869, 8 Macph. 139, where authority was given to a judicial factor to exercise a power of increasing an annuity, was exceptional, because all parties having an adverse interest had consented, and there were accumulations struck at by the Thellusson Act. Reference was also made to Dick v. Ferguson, 1758, M. 7446; Ireland v. Glass, May 18, 1833, 11 S. 626; and Laurie and Another v. Brown and Others, 1911, 1 S.L.T. 84. The law in England seemed to be the same. Thus Sir William Grant, M.R., said in Cole v. Wade, 1807, 16 Ves. 27, at p. 44—“Wherever a power is of a kind that indicates a personal confidence, it must prima facie be understood to be confined to the individual to whom it is given; and will not except by express words pass to others to whom by legal transmission the same character may happen to belong.” This statement of law was approved by Eldon, L. Ch., on appeal, sub nomine Walter v. Maunde, 19 Ves. 423, at p. 424. It was true that Farwell, J., in Eastick v. Smith, [1904] 1 Ch 139, thought that statement of principle was inconsistent with Crawford v. Forshaw, [1891] 2 Ch 261, but that merely decided that -a person nominated executor, but who had not accepted office, was not entitled to prevent nominated executors who had accepted office from exercising discretionary powers. Moreover, it had not been noticed that Cole had been approved in the House of Lords. If the law of England was not now as expressed by Sir William Grant in Cole, it was because of the Trustees Act 1893 (56 and 57 Vict. cap. 53), sec. 36, which did not apply to Scotland, but in any case it accurately stated the law of Scotland. Reference was also made to Sykes v. Sheard, 1863, 2 De G. J. & S. 6; Hibbard v. Lamb, 1756, Amb. 309; Lewin on Trusts (12th ed.), pp. 752–4; Farwell on Powers (2nd ed.), p. 460.

Argued for the third parties—The question here was really one of construction, for the true test was, was there anything in the deed which showed that the testatrix only intended the powers conferred to be exercised by the trustees named and not by their successors in office nor by anyone else— Hill's Trustees v. Thomson ( cit. sup.), per Lord Moncreiff; Grieve's Trustees v. Wilson and Others ( cit. sup.), per Lord Low; Simson and Others ( cit. sup.), per Lord President Inglis at p. 544, and Lord Shand at p. 546. The same test was applied in England— Byam v. Byam, 1854, 19 Beav. 58, per Sir John Romilly at p. 66; Crawford v. Forshaw ( cit. sup.), per Lindley (L. J.), and Bowen (L.J.); Eastick v. Smith ( cit. sup.); Lewin on Trusts (12th ed.), p. 754. This construction was unlikely, as it clearly appeared she did not wish her relatives, whom she had considered lacking in attention, to benefit. Moreover, where the testatrix wished to refer to the trustees nominated by her, she referred to them as her “said trustees,” and where as in the residue clause she simply used the word “trustees” she included therein any holders of the office. For she must be assumed to have known that by the Trusts Acts 1861, section 1, power to assume trustees would be read into her will.—The Outer House case of Blair and Another (Malcolm Macfarlane's Trustees) v. Helen Macfarlane's Trustees and Another, 1896, 4 S.L.T. 23, was on all fours with the present case and ought to be followed. The cases of Hill's Trustees v. Thomson ( cit. sup.) and Robbie's Judicial Factor were distinguishable from the present, because there the terms of the deeds clearly indicated that the testator placed special reliance on the discretion of the trustees named, and, moreover, in Robbie's Judicial Factor the person claiming to exercise the power was a judicial factor and not an assumed trustee. In Cole v. Wade also personal confidence was declared in the persons named, and the dictum of Sir William Grant must be read . As a rule of general application it was dissented from by necessary implication in Crawford v. Forshaw ( cit. sup.), as pointed out by Farwell (J.) in Eastick v. Smith ( cit. sup.).

Counsel for the first party adopted the argument for the third parties.

At advising—