Scottish Court of Session Decisions

At advising on 19th July 1935,—

LORD PRESIDENT (Normand).—The late William Hamilton Burns, by the fifth purpose of his trust-disposition and settlement, directed his trustees to retain one third share of his residue during the lifetime of James Henry Burns, and to pay to him the free annual income as an alimentary fund for the better maintenance and support of himself, his spouse, and such of his children who might be unable to provide for themselves, and, after his death, to pay the income to James Henry Burns's spouse, if she survived, for similar purposes, and, after the death of the survivor of the spouses, to divide the share among their children in such proportions as by a writing under their hands, or, failing such, under the hand of either of them, might be directed to be done, or, in the event of no writing being left, equally among their children, share and share alike, the shares of any of them who might predecease the time of division leaving lawful issue being equally divided amongst such issue.

James Henry Burns and his spouse both survived William Hamilton Burns. Mrs Burns predeceased her husband, and died on 8th October 1920 leaving a holograph will dated 17th December 1918. The whole children of the marriage survived her. James Henry Burns died on 16th February 1934 leaving a trust-disposition and settlement, dated 25th August 1932, and relative codicils, dated 27th August 1932 and 31st January 1933 respectively. One of the children of the marriage predeceased him leaving a trust-disposition and settlement, and the trustee acting thereunder is the fourth party to the special case. The remaining parties are, first, the trustees acting under William Hamilton Burns's trust-disposition and settlement; second, the trustees acting under James Henry

Burns's trust-disposition and settlement; and, third, the surviving children of the marriage.

The question at issue is whether the will of Mrs Burns was a valid exercise of the power of appointment of the share of William Hamilton Burns's estate, as the fourth party contends, or whether that share falls to be dealt with under the trust-disposition and settlement of James Henry Burns, as the third parties contend. The rights of the persons represented by the fourth party would be considerably greater if Mrs Burns's will is a valid exercise of the power than they would be if it is invalid and if the express exercise of the power by her husband in his trust-disposition and settlement is to regulate the disposal of the share destined to the spouses and their issue by William Hamilton Burns.

Before turning to the terms of Mrs Burns's holograph will it is necessary to consider a contention which was advanced by the third parties on the construction of William Hamilton Burns's trust-disposition and settlement. They maintained that, on a sound construction of the fifth purpose, the power of appointment was given to the spouses jointly and to the survivor of them. They argued that Mr Burns could not have intended to confer a power to be exercised by the spouses jointly or by either of them stante matrimonio, because such a power might be unworkable, or at any rate might result in conflicting appointments by the two spouses, and that it could not be supposed that, in the event of such a conflict, the appointment of the predeceaser was intended to prevail. Yet that would be the result if the argument of the fourth party were sustained, and if it were held that an appointment becoming final and irrevocable on the death of the predeceasing appointer evacuated the power. The fourth party maintained that the construction put forward by the third parties required that words such as "who may survive" should be read into the testator's will after the word "either," and that there was no justification for such an addition to its terms. While the construction suggested by the third parties is attractive, I think that there is nothing in the terms of the will to compel a construction which departs from their literal meaning, and I am not prepared to adopt it.

It is necessary, therefore, to consider Mrs Burns's holograph will.

The issue comes to be whether the testatrix's direction in her will that, on the death of her husband, her "whole means of every kind" should be equally divided among her children was an exercise of the power. It has now been established that a disposition of "my property and effects" or a bequest of the personal estate of the testator shall be construed to include any personal estate which he may have power to appoint in any manner which he may think proper, unless a contrary intention shall appear from the terms of the will—Bray v. Bruce's Executors . We are here dealing not with a general power to appoint, but with a power to appoint among the members of a limited class. It has been held that a power of that kind also may be exercised by a general settlement or by a general bequest of "all I possess"—Tarratt's Trustees v. Hastings . But in Paterson's Trustees v. Joy Lord Johnston expressed an opinion

(at p. 1034) that a limited power to appoint amongst a defined class is not validly exercised, unless it is expressly exercised or some words are used identifying the exercise with the power. Lord President Dunedin, however, said (at p. 1036) that he was not inclined to draw this distion between general powers and a power to divide. In a subsequent case Lord Skerrington treated the question as still open—Alexander's Trustees. If it were necessary to decide this question in the present case I should be disposed to hold that there is in the law of Scotland no difference between a general power of disposal and a limited power to apportion as regards the mode of exercising the power. Reference may be made to Smith v. Milne as well as to Tarratt's Trustees.

But, even if it is conceded that a bequest of "my whole means of every kind" may be a valid exercise of the limited power of appointment which I think was vested in Mrs Burns, it has still to be considered whether a contrary intention does not appear from the terms of the will as a whole. I have reached the conclusion that, when Mrs Burns spoke of her "whole means of every kind," she intended to deal only with what was in fact her own property. The holograph will confers a liferent of the remainder of her estate upon her husband. That cannot refer to the share over which she had a power of appointment, for it was already liferented by her husband and she could not confer on him any interest in it. I think that, when the testatrix goes on to provide that, on the death of her husband, her whole means of every kind should be equally divided among her children, she cannot be supposed to be dealing with anything else than the fee of the residue of which she had given him the liferent. The provisions dealing with the liferent of the remainder of her estate and the disposal on her husband's death of her whole means of every kind follow a gift of £300 to her daughter, to take effect on the death of the testatrix, and precede special bequests of personal belongings to her daughter and a granddaughter. This also tends to indicate that the testatrix was dealing only with her own actual property.

I may add that this case differs from those which were cited to us in respect that Mrs Burns did not herself enjoy a liferent of the share over which she had a power of disposal. In Smith v Milne Lord Glenlee says, "where the party who has such an interest in the fund as to give him reasonable grounds to consider it as his own property, and, having also the power of distribution, does distribute, it will be an effectual execution of the power." This might be thought to imply that a donee of a power to appoint a fund, who had no present interest in it beyond the power of distribution, should not be presumed to exercise the power unless he refers to it, since he can have no reasonable grounds for dealing with the fund as in any sense part of his means and estate. But this view of the matter is not supported in later cases which were cited. In M'Tavish's Trustees v. Ogston's Executors the testator died in 1901 leaving a will, dated 1894, by which he bequeathed "the whole estate

and effects of every description of which I may die possessed." This was held a valid exercise of a power which was given to him under the settlement, dated 1898, of a relative who died in 1899. It was argued that the testator could not have intended, when he executed his will, to exercise a power which was then non-existent. Lord President Kinross, in negativing this contention, said (at p. 643), "It is presumed that when [the testator] executed the will he intended it to be an exercise of all the rights and powers of disposal which he might have at his death, whether he then knew of them or not," and this agrees with the decision in Bray v. Bruce's Executors . Lord Adam (at p. 643) and Lord M'Laren (at p. 644), however, took a somewhat different view. They considered that it was the testator's knowledge, actual or presumed, at his death that he had the power, which raised the presumption that it was exercised by his general settlement. Even if this principle be applied to the present case, the fact that Mrs Burns had no present liferent interest in the fund, either when she made the will or at her death, is in itself not a sufficient reason for holding that the general bequest of all her means was not an exercise of the power to appoint. Although Mrs Burns did not herself enjoy a liferent of the fund, the liferent was vested in her husband, and on her husband's death she, if she had survived, would have become the liferentrix. It is difficult in these circumstances to suppose that she was so ignorant of the conditions under which the fund was held that she was unaware of her power to apportion if she chose to do so.

But, for the reasons which I have stated, the terms of her holograph will are such as to rebut the presumption that she intended to exercise the power. I am therefore of opinion that the first branch of the question should be answered in the negative, and the second branch in the affirmative.

LORD BLACKBURN .—I accept the statement of Lord President Dunedin in Paterson's Trustees v. Joy that, "where there is a general settlement, it will be presumed, if nothing points to the contrary, that a power which the maker of the general settlement possessed has been thereby exercised," as an accurate statement of the law. There is no doubt that Mrs James Henry Burns had conferred upon her by the testator a power to appoint the fee of a portion of his estate which was to be liferented by her husband and herself, or the survivor of them. This power might have been exercised by both parties jointly, and, failing a joint appointment, by either of them as an individual. During her husband's lifetime Mrs Burns executed a holograph testament which bears to dispose of "my whole means of every kind," and which contains no reference to the power of disposal conferred upon her by the testator, but it must nevertheless be presumed that she intended to exercise the power of appointment conferred upon her by the will of the testator "if nothing points to the contrary," and the first question in the case is, Are there facts pointing to the contrary ? In my opinion there are. Under her holograph will, after giving one small legacy to a daughter, she directed that

her husband should have the liferent of the "remainder of my estate heritable and moveable" should he survive her, and that, on his death, her "whole means of every kind" should be divided equally among her sons and daughter. I do not think that any distinction can be drawn between the "remainder of my estate heritable and moveable" and "my whole means of every kind," and the inference which I think must be drawn from the use of these two expressions is that she did not intend to deal with any estate other than that which she was entitled to convey to her husband in liferent. This appears to me to be in itself sufficient to overcome the presumption that she was dealing also with estate over the fee of which she had only a power of appointment. But I may add that I should have found it difficult to presume that, when she wrote this holograph document, she had any intention whatever of dealing with the fee of an estate which was already liferented by her husband, without consulting him as to whether or not they should exercise a joint right of appointment.

The fact that the presumption is elided is enough to justify the answering of question (1) in the case in the negative; and it follows that question (2) should be answered in the affirmative, as there is no doubt whatever that the deed granted by her husband was ex facie a good appointment of the fund bequeathed to him by the testator in liferent and to his issue as he might appoint.

If, however, I had been of opinion that the presumption that the wife intended to make an appointment had not been overcome, the question whether her appointment was or was not to prevail over that of her husband would have been one of some difficulty. There is nothing in the testator's directions to indicate whether, in the case of two single appointments, the earlier or the later in date is to be preferred, and, indeed, there is nothing in the testament to suggest that any such occurrence as the existence of two conflicting appointments was contemplated by the testator as being possible. His intention would appear to have been that a joint appointment might be made by the parties during their joint lives, and that, failing one of them, it might be made by whichever of them should survive. That would have led to the questions in the case being answered in the way in which I have already indicated that I think they ought to be, but I find it unnecessary to deal with this point.

LORD MORISON .—The late Mr William Burns, by his trust-disposition and settlement, directed that his trustees should hold a share of the residue of his estate and pay an alimentary liferent therefrom to his nephew James Henry. He directed also that, if his nephew should predecease his (the nephew's) wife, she should enjoy the income during her lifetime; and the deed proceeds as follows:—

"After the decease of the survivor the said share shall be divided amongst their children in such proportions as by a writing under their hands or failing such under the hand of either of them may be directed to be done."

Mrs James Henry Burns died on 8th October 1920. She had separate estate of her own of £3600. And she left a holograph will dated 17th December 1918. She never enjoyed any of the income of the said share of the estate of the truster, as she predeceased her husband. He died on 16th February 1934 leaving a trust-disposition and settlement executed in August 1932, in which he professed to exercise the power of appointment conferred upon him under his uncle's settlement.

The question in the case relates to the effect which is to be given to Mrs Burns's settlement, and whether, in particular, she thereby exercised the power to appoint the share of the capital, held in trust for her husband's alimentary liferent, among her children. I confess that I feel some difficulty in holding, on the just construction of the clause in the settlement which I have quoted above, that Mrs Burns had any power conferred upon her to exercise sola an appointment of the trust-estate during coverture. It may be that the intent and meaning of the will is that the word "either" should be read as "the survivor," which, of course, does not bear that meaning. I doubt if this construction of the clause is admissible. However, I shall assume that Mrs Burns was invested with the power to make an appointment independently of her husband, and the question then comes to be whether, under her holograph will, she has exercised it.

In my opinion she has not. I think the plain wording of Mrs Burns's testament shows that she was testing only on her own means and estate, from which she gave her daughter Eva a special legacy of £300 and conferred upon her surviving husband a liferent "of the remainder of my estate." It was not contended that this result was not in accordance with the language of the testatrix. The argument, which was pressed with ingenuity and skill, was that this case fell within the series of cases in which a disposal of "my" property is to be construed as including the power to dispose of, or to appoint a division of, the property of someone else.

I have examined all the authorities quoted to us, and I find that there is no absolute rule to that effect. The cases do settle that there is a general rule to that effect, and it has been applied in cases where a liferenter in enjoyment of the income of a fee is given power to dispose of or to divide the fee itself. But at the best, this so-called general rule is only a presumption, and cannot be applied if a contrary intention appears from the terms of the instrument. And, so far as I have been able to ascertain, it has never been applied to a case in which the appointer has no direct interest in the estate which is to be divided or appointed. In this case, I am satisfied that the presumption—even if it applies—has been successfully overcome by the plain and clear words used by the testatrix. I cannot think that she was compelled by law to say, in so many words, that she did not intend to exercise the power of appointment over the property liferented by her husband, in order that her settlement might receive effect in accordance with its actual terms. I am for answering the first branch of the question in the negative, and the second in the affirmative.