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Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Dempster's Trustees v. Dempster [1921] ScotLR 297 (22 January 1921)
URL: http://www.bailii.org/scot/cases/ScotCS/1921/58SLR0297.html
Cite as: [1921] SLR 297, [1921] ScotLR 297
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SCOTTISH_SLR_Court_of_Session
Page: 297↓
Court of Session Inner House First Division.
v.
Facts:
A testatrix by her trust-disposition and settlement directed her trustees to set aside a certain sum, and to purchase from the Government or any Scottish insurance company of good standing a joint annuity payable to her daughters A, B, and C, equally during their joint lives and the lives of the survivors or survivor of them, “which annuities shall be for their alimentary use allenarly, not subject to their debts or deeds nor liable to the diligence of their creditors, and without power of anticipation.” There was no provision for a continuing trust, but “all requisite powers for carrying out the purposes of the settlement” were conferred upon the trustees. Held that A, B, and C were entitled to immediate payment of the sum directed to be set aside.
James Dempster and others, testamentary trustees of the late Mrs Jessie Grant or Dempster, Pollokshields, Glasgow, acting under her trust-disposition and settlement dated 27th May 1913, and codicil dated 25th June 1914, first parties, and Margaret Marshall Dempster, Mary Aitken Dempster or Sharpe, and Annie Mitchell Dempster, daughters of the testatrix, second parties, presented for the opinion and judgment of the Court a Special. Case dealing with a bequest in favour of the second parties.
Page: 298↓
The trust-disposition and settlement provided—“In the seventh place I direct my trustees to set aside the sum of five thousand pounds sterling, and the amount of the appropriate stamp duty exigible in respect of the annuity after mentioned, and to purchase from the Government or any Scottish insurance company of good standing a joint annuity, payable to my daughters Miss Margaret Dempster, Mrs Mary Aitken Dempster or Sharpe, and Miss Annie Mitchell Dempster, equally during their joint lives and the lives of the survivors or survivor of them, which annuities shall be for their alimentary use allenarly, not subject to their debts or deeds nor liable to the diligence of their creditors and without power of anticipation: … And I confer upon my trustees all requisite powers for carrying out the purposes of this settlement and of any codicil hereto.” It further conferred upon the trustees wide powers to retain and vary investments, to lend the trust funds, and to exercise their discretion in connection with the trust affairs.
The Case stated—“4. The second parties have requested the trustees to pay over to them the said capital sum of £5000 and the amount of the appropriate stamp duty on a bond of annuity purchasable for that sum, which the parties agree to be £50. The Post Office Department of the Government do not issue joint annuities upon more than two lives, and the Department refused to give the trustees any quotation. The trustees have obtained quotations from many insurance companies, and ascertained that the highest annuity upon three lives which they can buy for that sum of £5000 is £305. A larger income could be obtained by investing at present the total available sum of £5050 in trust securities. The first parties, however, maintain that under the seventh purpose of the said trust-disposition and settlement they are bound to purchase an annuity, and not bound to make payment of said capital sum to the second parties. 5. The second parties maintain that they are entitled to require the first parties to pay to them the said capital sum of £5050, and that the first parties are bound to pay the said sum to them.”
The questions of law were—“1. Are the first parties bound to purchase an annuity as directed in said trust-disposition and settlement? or 2, Are the second parties entitled to immediate payment of the said sum of £5050?”
Argued for the first parties—The remaining provisions of the deed being for payment only, the wide powers given to the trustees had been conferred upon them to enable them to carry out the directions in the seventh purpose. They were bound to do so although the whole objects of the provision could not be accomplished— Hutchinson's Trustees v. Young, 1903, 6 P. 26, 41 S. L.R. 14. They could maintain the alimentary character of the fund by purchasing an annuity payable to themselves. Where provision was made that the annuity was to be alimentary only, the trustees were not entitled to pay the capital to the beneficiaries— Turner's Trustees v. Fernie, 1908 S.C. 883, 45 S.L.R. 708.
Counsel for the second parties were not called upon.
It is well settled that a direction simply to purchase an alimentary annuity without the provision of machinery, as by a continuing trust, for protecting and effectuating its alimentary character—a simple direction to purchase an annuity which is to be alimentary, and which is to be protected from creditors—leaves the annuitant free to claim the capital sum which was directed to furnish the price of the annuity. As recently as in 1916 a case of precisely that character came before the other Division of this Court. It is reported under the name of Brown's Trustees v. Thom, 1916 S.C. 32. Prior to that there had been many cases to the like effect, of which it may be worth while to cite one decided in this Division of the Court in 1901, and reported under the name of Kennedy's Trustees v. Warren, 3 F. 1087.
Now it is true that in one case, that of Hutchinson's Trustees v. Young, 6 F. 26, where the direction was perfectly specific with regard to the precise class of annuity which the testator had in mind, and to which the testator limited the choice of selection by his trustees, it was held that the trustees were bound to purchase an annuity of the class defined even although all those qualities and characteristics which the testator directed to be attached to the annuity could not be effectually secured and protected by the purchase of an annuity of that particular class. But no question of that kind arises upon the present clause. It is true that the present clause mentions “Government annuities,” the same class of annuities as was concerned in Hutchinson's Trustees, but it by no means limits the choice of the trustees to Government annuities. It is in vain therefore to appeal to the authority of Hutchinson's Trustees. That case is shown by subsequent comments to be of limited application, and it is not one which can govern the decision of the present question. On the contrary, it seems to me that by opening the trustees' selection to the whole range of insurance companies—which are not further defined than as “Scottish” and “of good standing”—the testatrix in effect does no more than direct her trustees to purchase—of course from a respectable source—an alimentary annuity for these ladies.
Page: 299↓
Therefore, as this case presents none of the specialties which were relied on in Hutchinson's Trustees, it appears that we ought to answer the first question in the negative and the second question in the affirmative.
The Court answered the first question of law in the negative and the second in the affirmative.
Counsel for the First Parties— Chree, K.C.— J. Stevenson. Agent— James Gibson, S.S.C.
Counsel for the Second Parties— Wilton, K.C.— Reid. Agents— Tait & Crichton, W.S.