Scottish Court of Session Decisions

On 25th October 1913 Mrs C. M. Downie or Colville, widow of John Colville of Cleland, Lanarkshire, and others, Mr Colville's testamentary trusteees, first parties, Miss C. H. Colville, the testator's daughter, second party, and David J. Colville, his son, third party, presented a Special Case for the determination of certain questions as to the second party's rights in her father's estate.

By his settlement Mr Colville, who died in 1901, directed his trustees to pay a legacy of £5000 to his daughter, the second party, the legacy to be payable on her attaining twenty-five years of age or being married, whichever should first happen, and to vest as at the term of payment.

He further empowered his trustees to carry on any business in which he was engaged at the time of his death and to continue all or any part of the trust estate in the state or investment in or upon which the same should be at the time of his death, and that for such time as they might in their absolute discretion think proper.

The trustees having entered upon the administration of the trust estate, resolved in 1902 to apply £5000 in making investments to meet the legacy of £5000 to the second party. They accordingly made the following investments at the following expenditure:—

(1)	£1200 3 per cent. debenture stock of the London and North-Western Railway Company	£1,216	14	4
(2)	£1500 2 1 2 per cent. debenture stock of the Midland Railway Company	1,260	18	3
(3)	£950 4 per cent. debenture stock of the Caledonian Railway Company	1,269	0	2
(4)	£1250 3 per cent. debenture stock of the North British Railway Company	1,239	9	2
		£4,986	1	11

At the date when the trustees came to said resolution the second party was under fifteen years of age, and the legacy of £5000 had not vested in her. In arriving at the said resolution the trustees were not constrained thereto by any necessity for immediate distribution of the trust estate, or any part thereof, and they came to it merely because they considered it expedient so to set aside and secure in such investments a sum to meet the legacy.

The second party having attained twenty—five, and considerable depreciation having occurred in the capital value of the investments set apart to meet the legacy, inter alia questions arose as to the right of the trustees to make the appropriation in question, and as to the incidence of loss on the investments so appropriated.

The contentions of parties as stated in the Case were:—“The first parties maintain that they were bound, or at any rate entitled, to set apart and appropriate the investments in question to the second party's legacy of £5000, and that the depreciation on said investments falls to be borne exclusively by said legacy. The third party concurs in these contentions. The second party maintains that in the absence of any direction to the trustees to set aside investments and appropriate them to the said legacy, and of any necessity requiring them so to do, the first parties were not entitled to appropriate the investments in question to her legacy. She therefore further maintains that she is entitled to payment of her legacy of £5000 in full, and that any depreciation which may have arisen on said investments does not fall to be borne by her.”

The questions of law were—“1. Were the trustees entitled to set aside and appropriate said investments to the second party's

Page: 205↓

legacy of £5000? 2. Does the depreciation “in the investments appropriated by the trustees to the second party's legacy of £5000 fall to be borne by the second party?”

Argued for first parties—The trustees were entitled to make the appropriation in question, for it was consistent with proper trust administration to do so— Robinson v. Fraser's Trustees, August 3, 1881, 8 R. (H.L.) 127, 18 S.L.R. 740. Where, as here, the trust estate was exposed to the risks of a fluctuating business the trustees would not have been in safety to leave the second party's legacy so invested. That being so, the depreciation on the trust securities in which they invested it fell to be borne by the second party.

Argued for the second party—The second party was entitled to a legacy of £5000, and not to investments which might be worthless. Where, as here, there was no direction, express or implied, to appropriate investments to the legacy, and where, as here, there was no necessity for an immediate realisation or division, the trustees were not entitled to set aside specific investments to meet it— Scott's Trustees v. Scott, November 1, 1895, 23 R. 52, at p. 59 foot, 33 S.L.R. 65; Vans Dunlop's Trustees v. Pollok, 1912 S.C. 10, 49 S.L.R. 7. That was especially so where, as here, the business in which the estate was invested was a prosperous one.

At advising—