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Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Hannah's Trustees v. Hannah [1924] ScotLR 373 (13 March 1924)
URL: http://www.bailii.org/scot/cases/ScotCS/1924/61SLR0373.html
Cite as: [1924] SLR 373, [1924] ScotLR 373
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SCOTTISH_SLR_Court_of_Session
Page: 373↓
Court of Session Inner House First Division.
v.
Facts:
By his trust-disposition and settlement a testator left the liferent of his estate to his widow and the fee to the children who survived him, in equal shares, payable on their attaining majority, with a destination-over in favour of the issue of children who predeceased the period of division, viz., the death of the widow. He further declared that the provisions to his wife and children were to be accepted by them as in full satisfaction of their legal rights, and that if any of them should claim their legal rights “he or she shall forfeit all his or her right, interest, or benefit under these presents; and further, all right, interest, and benefit under these presents which would otherwise have been taken by the issue of any child claiming legitim shall also be forfeited; all of which forfeited rights, interests, and benefits shall thereupon accresce to the other beneficiaries or beneficiary accepting these presents.”
On testator's death his widow and each of his two surviving children elected to claim their legal rights and thereby forfeited their provisions under the trust settlement. Held that as the forfeiture clause was in favour of children who did not repudiate, and as no such children were in existence, it did not take effect, and that accordingly the remainder of the trust estate after payment of the legal rights did not fall into intestacy, but fell to be protected by the trust for behoof of the children's issue.
Gillies v. Gillies Trustees, 1881, 8 R. 505, 18 S.L.R. 323, followed.
Mrs Mary Isabella Brown or Hannah and others, the testamentary trustees of James Hannah, tweed manufacturer, Hawick, first parties, Hector Hannah and Andrew Brown Hannah, the testator's two surviving sons, second parties, and Olive Hannah, pupil child of and residing with Andrew Brown Hannah, third party, presented a Special Case for the opinion and judgment of the Court.
The testator died on 22nd July 1920 leaving a trust-disposition and settlement dated 24th December 1903. A curator ad litem was appointed to the third party.
The Case stated—“2. The testator was survived by his widow the said Mary Isabella Brown or Hannah and two sons, Hector Hannah and Andrew Brown Hannah, both of whom are over twenty-one years of age. The said two sons are the second parties. The said Andrew Brown Hannah is married and has a daughter Olive Hannah, who is in pupilarity and who is the third party to the case. The said Hector Hannah is married and has no family. 3. By the said trust-disposition and settlement the testator directed the trustee to pay to his wife during her lifetime (but subject to the obligation upon her to aliment and educate the children) the annual interest and revenue of the whole residue of his estate with a discretionary power to encroach upon capital, and subject to the declaration that the widow's right should cease upon her remarriage. 4. The testator further provided that on the death or second marriage of his wife, should she be the survivor, or at his
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own death should she predecease him, his trustees should realise and pay over his whole means and estate to the children who survived him in equal proportions, share and share alike, payable on their respectively attaining twenty-one years of age, declaring that should any of his ‘children predecease the foresaid period of division leaving lawful issue, such issue should be entitled equally among them to the shares original and accrescing which their parents would have taken by survivance, and the share of any child dying without leaving lawful issue shall be divided among the surviving children and the issue of such children as may have died leaving such issue in equal shares per stirpes.’ 5. The testator further provided and declared that the provisions in favour of his wife and children should be accepted by them as in lieu and in full satisfaction of terce, jus relictœ, and legitim, ‘and that in the event of any of them claiming his or her legal rights or any of them in my estate he or she shall forfeit all his or her right, interest, and benefit under these presents; and further, all right, interest, and benefit under these presents which would otherwise have been taken by the issue of any child claiming legitim shall also be forfeited—all of which forfeited rights, interests, and benefits shall thereupon accresce to the other beneficiaries or beneficiary accepting these presents and the provisions herein contained in the same manner for the same interests of fee, liferent, or otherwise, and upon the same conditions as the other provisions in their favour …’ 6. The testator left moveable estate valued at £3767, 0s. 9d., and heritage consisting of a house at 48 Weensland Road, Hawick, valued at £510, burdened with a bond and disposition in security for £280. 7. The widow and the second parties elected to claim their legal rights and renounced the conventional provisions under said trust-disposition and settlement. The sums due in name of legal rights were adjusted at the following figures—( a) to the widow £900, 15s. 6d., and ( b) to each of the sons £555, 13s. 5d. By deed of discharge dated 18th and registered in the Books of Council and Session 24th May 1922 the widow and the two sons discharged their legal rights, reserving any claims competent to them as regards the portion of the testator's estate remaining in the hands of the trustees. The said remaining portion consists of moveable estate valued at £1508, 12s., subject to expenses. 8. The second parties have called upon the first parties to pay over the balance of the estate to them as the truster's heirs in mobilibus, and questions have arisen as to the meaning and effect of the said trust-disposition and settlement and particularly as to the rights of the second parties and the third party in the balance remaining in the hands of the first parties in view of the renunciation by the testator's widow and by each of the second parties of their conventional provisions under said trust-disposition and settlement.” The question of law was as follows—“Are the first parties bound to denude themselves now of the balance of the trust estate in favour of the second parties as the testator's heirs ab intestato?”
Argued for the first and third parties—The second parties having claimed their legal rights thereby repudiated the settlement and were barred from founding on the forfeitureclause— Gilliesv. Gillies Trustees, 1861, 8 R. 505, 18 S.L.R. 323. Further, a forfeiture clause had to be read in the light of the purpose for which it was made. Here the purpose was to transfer the shares of the repudiating beneficiaries to the beneficiaries who accepted the settlement. As in fact there were no accepting beneficiaries the purpose failed, and the clause should be treated as inoperative— Wilson v. Gibson, 1840, 2 D. 1236, Lord Cunninghame at 1242, Lord Moncreiff at 1246. The period of vesting had not been accelerated by the widow's repudiation— Muirhead v. Muirhead, 1890, 17 R. (H.L.) 45, 27 S.L.R. 917.
Argued for the second parties—The present case was distinguishable from that of Gillies. In Gillie's the liferent only was given to testator's child whilst the fee went to her issue; here the fee was to go to testator's children with merely a destination—over in favour of grandchildren. Further, the effect of the widow's repudiation of the liferent was to accelerate the period of vesting— Alexander's Trustees, 1870, 8 Macph. 414; Russell's Trustees v. Gardiner, 1886, 3 R. 989, 23 S.L.R. 719; Latta v. Muirhead, 1887, 15 R. 254, 25 S.L.R. 204. The following cases were also cited:— Campbell's Trustees v. Campbell, 1889, 16 R. 1007, Lord Lee at 1012, 26 S.L.R. 699; Rose's Trustees v. Rose, 1916 S.C. 827, 53 S.L.R. 630; Wingate v. Wingate's Trustees, 1921 S.C. 857, 58 S.L.R. 604; Naismith v. Boyes, 1899, 1 F. (H.L.) 79, 36 S.L.R. 973; M'Caull's Trustees v. M'Caull, 1900, 3 F. 222, 38 S.L.R. 778.
In point of fact the sons claimed their legal rights, as also did their mother, and the effect of these claims, coupled with the declaration just recited, was that they discharged once and for all their right to the conventional provisions of the settlement. The sufficiency of words such as are contained
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The testator's settlement, however, does not leave the matter there. It goes on to provide that if the widow or any of the children claim their legal rights “he or she shall forfeit all his or her right, interest, and benefit under these presents; and further, all right, interest, and benefit under these presents which would otherwise have been taken by the issue of any child claiming legitim shall also be forfeited—all of which forfeited rights, interests, and benefits shall thereupon accresce to the other beneficiaries or beneficiary accepting these presents.” As, however, all the beneficiaries had repudiated their conventional provisions (or had had them repudiated on their behalf) there was no one who could benefit by this forfeiture. The testator's sons accordingly claim that the balance of the estate fell into intestacy, and maintain that it should now be divided between them.
The question of the effect of a forfeiture clause of this kind was the subject of consideration in the case of Gillies v. Gillies's Trustees, 8 R. 405. It was there decided, in circumstances very similar to those of the present case, that where the testator's sole surviving child, a daughter, had claimed legitim—thereby finally discharging the whole conventional provisions of the settlement in favour of children—an added clause of forfeiture (applying to the interests both of children and of children's issue) in favour of other children who elected to abide by the settlement failed of effect, on the ground that there were no such children, and that accordingly the daughter's rights as heir ab intestato were liable to exclusion by her issue should she have any. No challenge of this decision has been made in the present case, and it is therefore one which it is proper for us to follow in practically identical circumstances. The clause of forfeiture must therefore be left out of account, and the question decided as if the testator had contented himself with the declaration that the conventional provisions he left to his children should be in full discharge of their rights of legitim. In short, the rights of the testator's sons’ issue who may survive the period of division must be protected by the trust.
In these circumstances it is impossible that any immediate division of the estate should take place, or that effect can be given to the argument that a case of intestacy has occurred, bringing the estate to the two sons as heirs ab intestato of their father, for nobody can tell until the testator's widow dies whether there may not be in existence either the present grandchild or future grandchildren whose rights under the settlement remain unaffected. It seems to me therefore that we have no alternative but to answer the question of law in the negative.
The Court answered the question of law in the negative.
Counsel for First and Third Parties— Cooper. Agents— Macpherson & Mackay, W.S.
Counsel for Second Parties— burnet. Agent— W. C. Dick, S.S.C.