Scottish Court of Session Decisions

Mrs Mary Anne Westwood or Drysdale, widow of the late William Drysdale, Dunfermline, and others, the accepting trustees acting under his trust-disposition and settlement, first parties, the said Mrs Mary Anne Westwood or Drysdale, second party, Charlotte Wilhelmina Drysdale, Campbell Westwood Drysdale, and William Douglas Drysdale, children of the said William Drysdale and Mrs Drysdale, third parties, and Miss Amalia Brichta and others, the directors of the First Church of Christ Scientist, Edinburgh, fourth parties, brought a Special Case for the opinion and judgment of the Court upon questions as to the application of the said trust-disposition and settlement to certain investments of the testator.

By his trust-disposition and settlement dated 10th August 1018 the testator, who died on 20th April 1921, conveyed to trustees for certain purposes “the whole means and estate, heritable and moveable, real and personal, of what kind soever and wheresoever situated, which shall belong to me at the time of my death, including all means and estate held by me at my death, under special destinations, and all means and estate of which I may at my death have the power of disposal or appointment.” The fifth purpose directed the trustees, after the death of his wife, to pay the income of the estate, to the extent of £750 to the third parties, and to divide any balance after said payment between the fund for disabled soldiers and sailors and the fourth parties until the youngest of the children attain the age of thirty-five, when the estate was to be realised and divided equally amongst them. The testator expressly revoked in the trust-disposition and settlement all former testamentary writings made by him.

The Case set forth (the words in italics having been added by amendment), inter alia—“7.… Throughout the period from 1906 until February 1920 the testator was ordinarily resident in Java. During that period he had from time to time lodged sums on current account with ( a) the London branch of the said corporation (The Hongkong

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and Shanghai Banking Corporation) in name of himself and the second party; and ( b) the Royal Bank of Scotland (Dunfermline branch) in name of the second party, to meet household expenses of the second and third parties. The second and third parties had no private means, and all the sums lodged as aforesaid were the property of the testator.… 8. On 1st February 1912 the testator deposited on what is known as fixed deposit-receipt with the said corporation the sum of £5000 belonging to him in name of the second and third parties. Said sum belonged absolutely to the testator. The interest on the said sum was periodically paid to credit of said joint current account with said corporation, and the deposit-receipt itself was held by the said corporation on behalf of the testator, conform to testator's instructions, until 1st February 1918. On or about 21st January 1918 (while on holiday in Scotland) the testator, with concurrence of the second party, instructed the said corporation to invest the principal sum (viz., £5000) contained in the said deposit-receipt, together with £100 from the said joint account, with the said corporation, in 5 per cent. National War Bonds 1927, registered as transferable by deed and repayable on 1st October 1927, in favour of the third parties to the extent of £1700 each, and to place the interest paid under the said bonds to the credit of the joint account last mentioned, and to hold the bonds themselves for safe custody. The testator's instructions to the said corporation are contained in the following letter—viz. (the terms of the letter, signed by William Drysdale and Mary Drysdale, were then set forth). Owing to the requirements of the Bank of England the said bonds could not be registered in the sole names of the third parties, they being minors at the date of registration. Accordingly the testator (with concurrence foresaid) in order to satisfy the said requirements instructed the said corporation to register the said bonds in names of the second party and each one of the third parties respectively. The application forms for the allotments of said holdings are dated 25th January 1918, and are signed by the second party. The said forms were in the following terms—(the terms of the form signed by the second party, with endorsement for registration in the names of the second party and Miss Charlotte Wilhelmina Drysdale, were here set forth). The other two applications were in precisely similar terms except that the names of the other two minor children were inserted, one in each. These instructions were complied with, and in compliance with the mandates annexed to these applications the interest on these investments was paid into the said current account. Certificates relating to the said bonds were issued on or about 18th March 1918 and on the testator's instructions were thereafter held by the said corporation in safe custody on his behalf. Particulars thereof are set forth under the heading Group A in the schedule appended to and forming part of this Case. 9.… On or about 8th September 1920 he (the petitioner) instructed the said corporation to purchase £12,900 Registered 5 per cent. War Stock 1929–47 in name of the third parties to the extent of £4300 each. The testator's letter of instruction, dated 8th September 1920, and addressed to the manager of the London branch of said corporation, is as follows—(The terms of the letter in which the testator, inter alia, stated—… ‘The above mentioned are my three children for whom I act, so please arrange that the half—yearly interest on the above stock is paid direct to your bank and credited to my current account with you’—were here set forth).… These instructions were carried out and the necessary transfers and the mandates for payment of the dividends were signed and delivered by the third parties. The sums required for these investments were provided wholly by the testator. Upon 12th October 1920, the said corporation advised the testator that they had received from the Bank of England the ‘securities’ for the said investments to be held in safe custody on his account. Particulars of the said investments appear under the heading Group B of the said schedule. 10. On or about 2nd October 1920 the testator instructed the said corporation to purchase £10,400 5 per cent. Registered War Stock, 1929–47. The testator's letter of instruction is as follows:—‘It appears to me that the 5 per cent. War Loan Stock at the present price will give a better return— in the long run—than National War Bonds at about 95 per cent. Unless I am entirely wrong in that view, will you please purchase £10,400—of British Government 5 per cent. War Loan registered or inscribed Stock 1929–47 at best market price in the name of William Drysdale and/or his wife Mrs Mary Ann Drysdale, repayable to either or survivor, and arrange that the half-yearly interest is always paid to the Hongkong & Shanghai Banking Corporation for our credit in current (joint) account beginning with the interest due on 1st December. Please debit our current a/c for the cost of above stock.’ Further, on or about 12th February 1921 the testator instructed the corporation to purchase for account of himself and the second party £4000 of the said stock. Said letter of instruction is as follows:—‘Will you please purchase for our account £4000 (say four thousand pounds) of the 5 per cent. War Loan Registered Stock 1929/47 at the lowest price obtainable. This stock is to be registered in the names of William Drysdale & or his wife Mrs Mary Ann Drysdale and the cost of same to be debited to our joint current a/c with you. Please fill up and send us an interest or dividend mandate form giving instructions that the full amount of interest on above stock shall be regularly paid to your bank for the credit of our joint current a/c address c/o H. & S.B.C., London. Kindly see that there is no delay this time in obtaining the certificates for this stock and send us your safe custody receipt for same as soon as possible.’ Transfers relating to the said stock—in both of which the names of the transferees are given as William Drysdale and Mary Ann Drysdale, and in

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neither of which do the words ‘or’ ‘and/or’ and ‘either or survivor’ appear—were duly executed by the testator and the second party along with mandates in the form requested by the testator. Upon 8th November 1920 the said corporation wrote to the testator that they had received from their brokers the certificate for £10,400 5 per cent. War Loan Stock. Upon 12th March 1921 the said corporation advised the testator that they had received the certificate for the £4000 stock last mentioned, to be held in safe custody on his account. It is admitted by the parties hereto that the testator provided the funds for purchasing the said stock, particulars of which are furnished under the heading Group C of the said schedule. The parties admit that according to the practice of the Bank of England stock registered in the names of two or more persons is held at the disposal of the survivors or survivor of them, and that it is not the bank's practice to enter these or similar words in certificates relating to such holdings, or to record them in their books. Parties are agreed that there is no evidence bearing on the questions submitted except the terms of the certificates, the facts set forth in this Special Case, the letters and application forms herein quoted, and the terms of the testator's said settlement. 11. Under the heading Group D in the said schedule are comprised the whole investments (other than those before mentioned) made by the testator and the other assets left by him. The total value of the items under Group D is estimated at £4807. 7s. 11d. It is admitted by the parties to this case that all the said items belonged absolutely to the testator. The testator's debts amounted to £248, 9s. 1d. and the Government duties payable are estimated at £2300. Apart from the writings before mentioned, the testator left no writing affecting or which may affect the succession to his estate. In the event of the investments to which this Case relates being excluded from the trust estate of the testator the income of said estate will not amount to the sum of £750 which the first parties are directed in the fifth purpose to divide among the third parties after the death of the second party.”

The certificates for the WarStock included under Group C were in the names of “William Drysdale, gentleman, and Mary Ann Drysdale, married woman, both care of Hongkong and Shanghai Banking Corporation, 9 Gracechurch Street,” without the words “or,” “and/or,” or any words of survivorship.

The questions of law were—“1. Whether the investments enumerated in Group A of the schedule appended hereto form part of the trust estate of the testator or belong to the third parties whose names appear in the respective destinations thereof, or jointly to the second party and to the said third parties respectively, or alternatively to the first and second parties jointly? 2. Whether the investments enumerated in Group B of the said schedule form part of the said trust estate or belong to the third parties whose names they respectively bear? 3. Whether the investments enumerated in Group C of the said schedule form part of the said trust estate, or belong ( a) to the second party, or ( b) to the extent of one—half to the said trust estate and of the other half to the second party?”

Argued for the third parties—The third parties were entitled to the investments included in Groups A and B. The trust-disposition and settlement did not convey these investments or revoke the destinations in which they were taken. The dispositive clause was in mere words of style—Burns, Conveyancing Practice, p. 821—and did not apply to investments which were not in the testator's name and possession. All the testator had here was the custody of the writs. The presumption was against a general clause of revocation affecting special destinations created prior to the will by the testator himself, and such a clause could not affect a special destination created at a date later than that of the will— Perrett's Trustees v. Perrett, 1909 S.C. 522, per Lord President Dunedin at p. 527, 46 S.L.R. 453; Webster's Trustees v. Webster, 1876, 4 R. 101, per Lord Justice-Clerk Moncreiff at p. 102, and Lord Gifford at p. 104, 14 S.L.R. 51; Connell's Trustees v. Connell's Trustees, 1886, 13 R. 1175, at p. 1183, 23 S.L.R. 857; Turnbull's Trustees v. Robertson, 1911 S.C. 1288, per Lord Kinnear at p. 1294, 48 S.L.R. 1033. There was nothing here to redargue the presumption as to Group A, and the principle in Perrett's Trustees admittedly applied to Group B. Alternatively a jus quœsitum tertio had been created in the third parties as regards Group A through Mrs Drysdale as their agent, and as regards Group B by their being themselves made parties to the contract with the bank. As regards Group A there was sufficient intimation, Mrs Drysdale's knowledge being the knowledge of the third parties— Carmichael's Executrix v. Carmichael, 1920 SC (HL) 195, per Lord Dunedin at pp. 201 and 202, 55 S.L.R. 547; Cameron's Trustees v. Cameron, 1907 S.C. 407, per Lord Kyllachy at p. 416, 44 S.L.R. 354.

Argued for the second parties—The second party was according to the law of Scotland entitled to one-half of the investment in Group C— Connell's Trustees v. Connell's Trustees. The special destination in the certificates could not be revoked by the settlement of prior date— Perrett's Trustees v. Perrett; Turnbull's Trustees v. Robertson—nor was the investment carried by the dispositive clause as estate at the disposal of the testator or held by him under special destination. Special destinations in the dispositive clause meant those created by a third party, and estate “held by” the testator meant such as was held by him alone, and not, as in the case of Group C, by the testator and his wife. As regards Group A this party supported the contention of the third parties. As regards Group B this party had no contention. (The Finance (No. 2) Act 1915 (5 and 6 Geo. V, cap. 89), sec. 48, was referred to.)

Argued for the fourth parties—The investments in Groups A, B, and C all fell to be included in the trust estate. It was admitted

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that the funds in these investments belonged to the testator, and that if they were excluded the purposes of his settlement could not be carried out. This with the clause of revocation was sufficient reason for including Group A— Perrett's Trustees v. Perrett; Turnbull's Trustees v. Robertson. But without either Group B or C the estate would still be insufficient, and if Group B fell to be included so also did Group C. The dispositive clause of the settlement was quite wide enough to cover these groups. They were estate held by the testator at his death under special destinations. Further, the documents were not of a proper testamentary character, as were those in Perrett's Trustees v. Perrett, and merely created tentative destinations, which were ineffective as against a proper testamentary settlement. The argument that a jus quœsitum tertio had been created was not supported by the decision in Carmichael's Executrix v. Carmichael ( cit.), per Lord Dunedin at p. 199. There was nothing here to indicate an intention of donation. The taking of certificates with destinations in favour of children was not sufficient. The certificates had been kept under the control of the testator, and the children could not have dealt with the investments during his life— Hill v. Hill, 1755, M. 11,580. There had been no proper intimation here, and in any event it was not said in Carmichael's Executrix v. Carmichael that intimation alone could create a, jus quœsitum tertio.

At advising—