Scottish Court of Session Decisions

A Special Case for the opinion and judgment of the Court was presented by the trustees under the trust—disposition and settlement of the deceased George Honey-man Farmer, first parties, five of the six children of the testator who survived him, second parties, and the testator's widow, third party.

The Case set forth—“2. By his said trust-disposition and settlement the testator gave, granted, assigned, and disponed to the trustees therein named ‘all and sundry my whole means and estate, heritable and moveable, real and personal, of every kind and denomination and wheresoever situated, presently belonging and owing to me at the time of my death, including therein all means and estate over which I have or shall have power of disposal by will or otherwise, together with the writs, vouchers, and securities thereof, but in trust always for the ends, uses, and purposes following.’ 3. The said trust purposes were—(First) Payment of debts, &c.; (second) payment of a legacy to each accepting trustee; (third) power to carry on or sell the testator's business; (fourth) conveyance to his wife of his jewellery, personal effects, and furniture, and payment to her of £150 for mournings and interim aliment; (fifth) provision to his wife of the liferent of a dwelling-house or an equivalent thereto; (sixth) payment of certain small legacies; (seventh) payment to his wife of an alimentary annuity of £500, ‘declaring that the foregoing provisions and annuity hereby granted to my said wife are and shall be in full satisfaction to her of terce, jus relictæ, and every other claim competent to her against my means and estate in the event of her survivance;” (eighth) to hold the whole residue and apply the annual proceeds, or such part thereof as the trustees might deem necessary, for the maintenance, education, and advancement of the testator's children until the youngest attained majority; and (lastly) on the youngest child reaching majority, for division of the whole residue equally among the children. The trustees were appointed executors, and clothed with the usual powers of administration and investment. 4. By codicil of 27th June 1910 the testator directed his trustees to convey a heritable property in Great Eastern Road, Glasgow, to his wife in liferent, and to his two youngest children equally between them and their heirs in fee, ‘and that as an additional provision to my said wife and my said two youngest children.’ … 5. The testator nowhere declared that his provisions for his children were to be accepted by them as in full of all claims on his estate for legitim and the like, nor that if they claimed legitim they were to forfeit their testamentary provisions. With regard to the provisions for the widow there is the clause quoted in article 3 hereof, but no clause of forfeiture. Further, there

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is no clause of revocation. 6. Including the items after mentioned as part of the testator's estate, the testator left at his death moveable estate to the gross amount of £35,900, 15s. 10d., and heritage of the gross value of £16,900, making altogether £52,800, 15s. 10d. As part of that total were included the following items:—(1) £87, 18s. on current account with the Clydesdale Bank in name of himself and his wife, payable to either or survivor. (2) £2328, 10s. 2d. on thirteen deposit-receipts with the Clydesdale Bank and two with the Commercial Bank of Scotland, all in name of himself and his wife, payable to either or survivor. (3) £15,107, 2s. 6d. in various shares, bonds, debentures, and assignations in security, some in name of himself and his wife, either or survivor, others in name of himself and his wife and either or survivor of them, others in name of himself and his wife or either or survivor, and others in name of himself and his wife and the survivor of them. These items are set forth in the appendix, which sets forth the terms and dates of the various investments and renewals thereof, and is held to form part of this Special Case. They amountin value with interest as at the testator's death to £17,523, 10s. 8d. The testator's debts amounted to £408, 12s. 11d., and the net value of his estate, including the above sum of £17,523, 10s. 8d., was £52,392, 2s. 11d. 7. All the investments and deposits comprised in the appendix were made by the testator from funds belonging to himself. The securities and scrip were retained by him in his own possession and were found in his safe after his death, and during his life he himself uplifted and disposed of the revenue accruing from them. Certain share certificates standing in names of the deceased and one or other of his children, payable to either or the survivor, were also found in his safe after his death.”

The bequest of residue was in the following terms—“( Eighth) On my death and after providing for payment of said annuity to my said wife should she survive me, I direct my trustees to hold the whole residue of my means and estate … and pay and apply the annual proceeds thereof, or such part thereof as my trustees may deem necessary, for the maintenance, education, and advancement of my children to and among such of my present children, Georgina Farmer, Robert Hannah Farmer, Alexander Farmer, George Honeyman Farmer, Hugh Anderson Farmer, Elizabeth Farmer, and James Farmer, and any child or children that may yet be born to me, that may then be in life, and the lawful issue of such of them as may have predeceased, such issue taking the share which their parent would have taken if in life, until the youngest of my children attains the age of twenty-one years complete; and ( Lastly) on my youngest child attaining majority I direct my trustees to realise the whole of the residue of my means and estate, heritable and moveable, and pay and make over the same … to and among my said children Georgina Farmer, Robert Hannah Farmer, Alexander Farmer, George Honeyman Farmer, Hugh Anderson Farmer, Elizabeth Farmer, and James Farmer, and any child or children that may yet be born to me, equally among them, share and share alike, and the lawful issue of such of them as may have predeceased, such issue taking the share their parent would have taken if in life: Declaring that in the event of any of such respective issue not having reached the age of twenty-one years my trustees shall in that event hold the share of residue falling to such issue in trust for them till each of them respectively attain the age of twenty-one years, when the respective shares shall be paid, but the annual proceeds thereof shall be paid to them during their respective pupillarities and minorities: And with regard to such of the foregoing provisions, or any provision that may be made by me in any codicils hereto, as are in favour of or may fall to females, the same shall be purely alimentary and exclusive of the jus mariti and right of administration of any husband they may marry: And declaring that notwithstanding the postponement of the payment of the respective shares until the youngest of my said children shall attain majority, the same shall be held to have become at my death vested interests in their persons or in the persons of the lawful issue of such of my children as may have predeceased: And further declaring that notwithstanding the postponement of the payment of the respective shares as aforesaid to my said children, my trustees shall have full power to advance if they see fit (of which they are to be the sole judges) such sum or sums out of the capital of my estate to assist any one or more of my children in learning any business, trade, or profession, or in setting them up in any business or profession, or in providing any of my daughters with a marriage outfit or portion, which sum or sums shall form a proper charge against and be deducted from the share of residue falling to the said child or children to whom such advance shall be made.”

Among the powers conferred upon the trustees to enable them to carry out the purposes of the settlement was power “without incurring any responsibility to retain unrealised and unaltered for such period as they may see fit any investments, securities, or property that may be held by me at the date of my death or any part thereof.”

The investments enumerated in the appendix to the case consisted of sums in bank on current account or deposit-receipt, loans to the Glasgow Lunacy District Board, the Trustees of the Clyde Navigation, the Corporation of the City of Glasgow, and the Govan Combination Parish Council, and sums in bonds and dispositions in security over heritage. It was admitted that the sums in bank on current account and deposit-receipt were carried by the general settlement. Some of the other investments had been made before—others after—the dates of the settlement and codicils, and since those dates one or more of the investments had been renewed.

For the second and third parties the following contentions were stated in the

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Case:”10. The second parties maintain (1) that the documents comprised in the appendix are not testamentary writings, nor by law sufficient in themselves to constitute special legacies or donations in favour of the third party; that the testator did not donate to the third party the sums therein contained either inter vivos or mortis causa, and that if he did they were revoked by the trust-disposition and settlement; (2) that if the said documents or any of them operate as special gifts to the third party, the terms of the trust-disposition and settlement put her to her election between them, or such of them as may be held to fall to her, and her testamentary provisions; (3) that the second parties are entitled to take both legitim from the items set out in the appendix and their testamentary provisions. 11. The third party maintains (1) that the special destinations in her favour contained in the documents comprised in the appendix were not evacuated by the trust-disposition and settlement and codicils, but have testamentary effect and fall to be read along with the formal trust-disposition and settlement and codicils; (2) that she is not put to her election between the investments specially destined to her, or any of them, and the provisions in her favour contained in the trust-disposition and settlement and codicils; and (3) that the second parties are not entitled to take both legitim from the items set out in the appendix and the provisions in their favour contained in the trust-disposition and settlement and codicils.”

The questions of law as amended were, inter alia—“1. ( a) Do the investments … enumerated in the appendix, or any and, if so, which of them, belong to the third party in virtue of the special destinations attached to them; or ( b) do they, or any and, if so, which of them, form part of the trust estate to be administered by the first parties? 4. In the event of question 1 ( a) being answered in the affirmative, are the second parties entitled to take the provisions in their favour contained in the trust-disposition and settlement and codicils, and at the same time to claim legitim out of the said … investments? 5. ( a) If question 1 ( a) is answered in the affirmative, and the third party takes the said investments … or any of them, are the said investments … liable to contribute their share of the second parties' claim for legitim so far as such investments … fall to be computed in ascertaining the amount of the legitim fund, or ( b) does legitim fall to be paid primo loco out of the residue of the estate?’

Argued for the second parties—The trust-disposition and the special destinations were notone settlement. The testator had divided his estate into parts, one of which he dealt with by the trust-disposition. That which he there called residue was not residue. Residue was the remainder of a whole estate, whereas the residue here so called was merely the overplus of one portion. The bequest was therefore not residuary, but a special legacy. Those parts of the estate which were conveyed by special destinations were subject to legitim. The children were entitled to legitim therefrom without sacrificing their conventional provisions under the settlement and codicils. Assuming, however, that the children must elect between legitim and the bequests to them, the effect of electing legitim would be that each investment specially destined must bear the proportion of legitim applicable thereto— Houden, 1821, 1 S. 16; Collier v. Collier, July 6, 1833, F.C.; Dow v. Beith, 1856, 18 D. 820; Hood's Executors v. Hood's Executors, 1869, 7 Macph. 774, 6 S.L.R. 503.

Argued for the third party—Legitim as well as testamentary provisions could not be payable to the second parties. They must approbate or reprobate the scheme of settlement constituted by the special destinations and the trust-disposition. The deeds must be treated as one settlement— Breadalbane's Trustees v. Duke and Duchess of Buckingham, 1840, 2 D. 731, at p. 741; Black v. Watson, 1841, 3 D. 522; Crum Ewing's Trustees v. Bayly's Trustees, 1910 S.C. 484, at p. 489, 47 S.L.R. 423 ( 1911 S.C. (H.L.) 18, 48 S.L.R. 401). That principle was not in conflicit with the authorities cited for the second parties— White v. Finlay, 1861, 24 D. 38, per Lord Benholme, at p. 44. In terms and in substance the bequest to the children was a bequest of residue. Legitim was payable primo loco out of residue. Residue was what remained after payment of debts, including legitim— Tait's Trustees v. Lees, 1886, 13 R. 1104, 23 S.L.R. 782. The funds specially destined were on the same footing as special legacies and were payable from dead's part— Trotter v. Rochead, 1681, M. 2375, at 2376.