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Cite as: [1961] ScotCS CSIH_1, 1961 SLT 305, 1961 SC 205
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05 May 1961
| Douglas-Hamilton |
| v. |
| Duke and Duchess of Hamilton's Trustees |
It may be convenient to consider first the question whether the renunciation by the Duchess of her alimentary annuity is valid. The defenders do not dispute that if an alimentary interest is given under a will, the alimentary interest can be disclaimed ab ante. But it is equally clear that once the donee has entered into the enjoyment of the annuity, it cannot be disclaimed. The principle is that if a truster gives an alimentary interest, the annuitant cannot take benefit from the bequest except under the conditions on which it is given—White's Trustees v. Whyte, (1877) 4 R. 786. In Smith and Campbell, Petitioners, (1873) 11 Macph. 639, it appears that the alimentary interest had been enjoyed for a number of years, and it was held that the annuitant had no power to grant a discharge of the alimentary provision. Lord Deas, at p. 646, said:
"The legacy must be taken under the condition on which it is given, or rejected altogether."
In Hughes v. Edwardes, (1890) 18 R. 319, (1892) 19 R. (H. L.) 33, the liferent had been enjoyed for seventeen years. At p. 35, Lord Watson said:
"The learned Judges of the Inner House … do not suggest that a trust duly constituted for payment of an alimentary annuity can be brought to an end by the joint action of the annuitant and the parties having beneficial right to the fee. A rule to the contrary has long been settled, and was recently enforced in White's Trustees v. Whyte (sup. cit.), and Duthie's Trustees v. Kinloch, (1878) 5 R. 858 … It was held that the combined action of all parties interested could not defeat the settlor's intention to make the annuitants' right alimentary, a result which could not be attained except by continuing the trust."
It is clear therefore that once an alimentary interest has been accepted, it cannot be disclaimed. The pursuer attempts to distinguish the principle upon which these cases were founded by saying that the alimentary interest which the Duchess is renouncing has never come into possession and she can therefore validly renounce it. But, in my view, the test is whether she has accepted the alimentary annuity. If she has, then she must take it subject to the condition upon which it was granted. The deed under which she became entitled to the provision was a contract signed by her under which she accepted the provisions in her favour in full satisfaction of her legal rights. Having accepted the alimentary provision, she is, in my view, bound by the condition attaching to the provision.
The pursuer argued that this was a novel point not covered by authority. But, in my view, the decision in Kennedy v. Kennedy's Trustees, 1953 S. C. 60, is adverse to the pursuer's contention. An alimentary liferent had been constituted in favour of a husband, whom failing his wife, on the husband's funds, and upon the death of the survivor for the surviving issue of the marriage, whom failing for himself and his heirs. Similar provisions, mutatis mutandis, were made in respect of funds contributed by the wife. There were no children of the marriage and there was no prospect that there ever would be children. The husband and wife jointly requested the trustees to denude in their favour. The Court held that in view of the alimentary nature of the provisions, they were irrevocable stante matrimonio, and the trustees were not entitled to denude. The argument for the pursuer in this case proceeded on the view that if the wife in Kennedy had disclaimed the alimentary liferent, the decision would have been different—in other words only the formal step of disclaimer was missing. But a request by the parties to the trustees to denude is, in my view, equivalent to a disclaimer. I take the case to decide that an alimentary liferent accepted by a wife in an antenuptial contract of marriage cannot be disclaimed. It follows, therefore, that the renunciation by the Duchess of her alimentary liferent is ineffectual.
If these views be sound, this would be sufficient for the decision of the case. The first defenders would not be entitled to denude if the renunciation was invalid, because they would be bound to hold the trust funds for the fulfilment of the trust purposes, namely the payment of the alimentary liferent. But as an argument was advanced on the question of the vesting of the funds, it is proper that I should refer to it. The pursuer contended that the funds had vested in him indefeasibly in virtue of the deed of appointment. This question involves a consideration of the terms of clause In the Fourth Place of the marriage contract. This clause obliges the Duke, if he or his brother succeeds to the dukedom, to provide, not later than six months after the decease of the survivor of the spouses, for the children (other than his own (if any) who shall succeed to the title and his issue), and to the lawful issue of predeceasers, certain sums which have been previously mentioned. So far the clause has dealt only with the objects of the Duke's obligation and the measure of his obligation. Questions of vesting and payment have not been referred to. It was argued that as the objects of the clause were uncertain until the death of the Duke, as it could not be ascertained until then which of the children would succeed to the dukedom, vesting could not take place until the death of the Duke. There is, however, authority for construing such words as "who shall succeed" as equivalent to the phrase "entitled at the date of the appointment to succeed to the title"—see Douglas v. Douglas, (1864) 2 Macph. 1008; Johnston v. Johnston, (1868) 7 Macph. 109. I therefore conclude that the objects of the clause are the sons other than the heir apparent to the dukedom at the date of the appointment. Proceeding further with the clause, I find that the sums provided are divisible in such proportions among such children as the parties shall jointly appoint, or as the survivor may appoint or, failing appointment, in equal shares, "Declaring, however, that unless otherwise provided by any deed or writing granted in exercise of the power of appointment hereinbefore mentioned the shares of such child or children or issue shall not vest in or be payable to them during the lifetime of the parties nor after the death of the survivor of them, until such child, children or issue respectively attain the age of twenty-three years, upon the arrival of which event each share shall be payable." This clause gives complete freedom to the appointee to direct in the deed of appointment the date of vesting and payment. It clearly envisages that the deed might provide for earlier vesting and payment than the death of the Duke. Both might be during the lifetime of the spouses. I am reinforced in my view of the construction of this clause by reference to the clause at the top of page seventh of the extract of the contract of marriage:
"Further, in the event of the death of the (Duchess) survived by the (Duke), without leaving lawful issue of the said intended marriage who shall take a vested interest the said trustees shall denude themselves of the Trust Funds and reconvey the same to (the Duke)."
This clause clearly envisages that the children might take a vested interest in the lifetime of the Duke. Moreover, if the objects of clause four are not to be ascertained until the death of the Duke, when the successor to the dukedom would be known, the Duke would not be able to execute a valid deed of appointment, because he would not know during his lifetime who were the objects of the power.
A great many authorities were cited on this branch of the case, but none of them are directly in point. The construction of clause four depends upon a consideration of the whole provisions of the clause. The important distinction between this case and the cases cited is that the clause gives power to the appointee to fix the period of vesting and payment. It was argued for the defenders that, although there might be vesting, this was subject to defeasance in the event of the pursuer succeeding to the dukedom. It is true that in some of the cases referred to vesting was held subject to defeasance, such as Douglas v. Douglas and Johnston v. Johnston, (sup. cit.); Robertson v. Robertson and Others, (1869) 7 Macph. 1114. But where the power of appointment gives the appointee power to fix the date of vesting and payment, the vesting and payment are controlled by that deed. The defeasance, if there be defeasance, must be found in the deed of appointment, not in the parent deed. It is helpful to refer to an opinion, albeit obiter, of Lord President Clyde, in Lord and Lady Strathmore's Trustees v. Lord Glamis, 1932 S. C. 458, at p. 464, where he said, "Where, for instance, there is a provision in favour of children, and (owing to the exclusion of ‘the heir entitled to succeed’ to such and such an estate) it is uncertain whether a share should go to one child or another, that circumstance may—or again may not—materially affect the question whether the class of children is ascertained. The cases of Douglas v. Douglas, Johnston v. Johnston and Robertson v. Robertson (sup. cit.), may be referred to. Where the vesting date is definitely fixed by the settlement itself (or by a deed of appointment duly authorised by it) and that date happens to precede the date when the heir succeeds, there may be no alternative but to construe the expression as referring to the heir apparent at the vesting date—Clarke v. Clarke, (1832) 11 S. 220." Lord Sands reserved his opinion on the point, but Lord Morison concurred with the Lord President.
Upon a consideration of the whole terms of clause four, my view is that vesting in the funds has, in virtue of the deed of appointment, taken place indefeasibly in the pursuer.
The result is that I shall sustain the first plea in law, the second plea in law quoad head (a), and the third plea in law, for the pursuer. I shall sustain the first plea in law for the first named defenders quoad head (b) of the second conclusion and the fourth conclusion of the summons, and sustain the third plea in law and also the fourth plea in law, so far as directed against the fourth conclusion of the summons, for these defenders.
The pursuer reclaimed against the refusal of the Lord Ordinary to grant declarator in terms of conclusions 2 (b) and 4, and the reclaiming motion was heard before the First Division (without Lord Sorn) on 23rd and 24th March 1961.
At advising on 5th May 1961,—
The matter arises in this way. By an antenuptial marriage contract, entered into on 30th November 1937, a trust was set up, the trust estate being contributed by the husband, the Duke of Hamilton. Under the marriage contract the Duchess is entitled during the Duke's lifetime to an annuity, which is not declared alimentary and which admittedly she could and has discharged. The balance of the income of the trust funds, after meeting this annuity, was to be paid over during his lifetime to the Duke. This provision he could and has discharged. The clause in the marriage contract in regard to which the present question arises provides for an alimentary annuity or jointure in favour of the Duchess, payable upon the death of the Duke survived by the Duchess. The annuity is to be "such a sum as after deduction of income tax at the rates current from time to time and all other Government duties which may be payable in respect thereof (other than surtax) shall yield in each year the sum of three thousand pounds," or in certain events four thousand pounds. Under the marriage contract, provision is made for certain capital sums being available for the younger children of the marriage, divisible among them in such shares as the spouses or the survivor may appoint. There are certain further provisions for other eventualities, but in no case is any part of the capital under the trust destined to pass to the Duchess. She has in the marriage contract accepted the provisions in her favour as in full satisfaction of her legal rights. There are five sons of the marriage.
By two deeds of renunciation, dated 6th November 1959, and granted respectively by the Duke and by the Duchess, they each irrevocably released and renounced the whole provisions in their respective favours contained in the antenuptial contract of marriage, including so far as the Duchess was concerned "the said alimentary annuity of three thousand pounds or of four thousand pounds free of income tax and other duties as aforesaid, to which I am prospectively entitled," but only to the extent of the capital and income of a block of Mexican Eagle Oil Company shares, which forms a part of the trust estate. By deed of appointment and supplementary deed of appointment the spouses thereafter jointly executed an appointment, declaring that the capital of these shares should vest in their second son immediately. This son is the pursuer in the present action, and the first defenders are the trustees under the said marriage contract. It is not now disputed that, as the Lord Ordinary held, these shares have indefeasibly vested in the pursuer, if the renunciation by the Duchess of her prospective alimentary annuity is effectual. I turn therefore to consider the question whether or not it is effectual.
The doctrine of an alimentary annuity is a survival from an age when the ius mariti and the ius administrationis gave a husband virtual control over his wife's property. Without some such provision the weaker partner in the marriage could be compelled to hand over to her husband to pay his personal debts moneys which were intended for her benefit and use. The provision of an alimentary annuity under a trust, however, enabled funds to be put beyond the reach of matrimonial importunity—see Lord Justice-Clerk Moncreiff in Menzies v. Murray, at p. 511. For the existence of the trust and the alimentary nature of the annuity placed a restriction on the wife disabling her from anticipating the termly payments and getting them into her hands before they were due. For once in her hands, they were subject to her husband's control.
But as time has gone on, the basis upon which this whole doctrine was founded has been undermined. "The restricted capacity of the married woman in relation to property rights has passed into legal history. She is now ‘a free agent’. Her will and mind are no longer ‘in abeyance’. Her husband is no longer her guardian. She can contract, and sue or be sued, as if she were unmarried. The ius mariti and the ius administrationis have been abolished"—see Lord President Cooper in Beith's Trustees v. Beith at p. 71. The circumstances in which an alimentary liferent is required have therefore gradually been narrowed, and the whole doctrine has become eroded, since its justification is largely based upon a situation which no longer to-day exists in law. It follows, therefore, that existing decisions, in so far as based on a fundamentally different legal concept of the rights of a married woman, have been superseded, just as if they had been based on a statute which has since been repealed—see Lord President Cooper in Beith's Trustees, at p. 73. To-day, the Courts have a duty to approach the question of the capacity of a wife to renounce an alimentary liferent in the light of the present position and status of a married woman in the eyes of the law. But even to-day, the doctrine of an alimentary liferent has not disappeared altogether.
It has long been settled that a liferentrix in current enjoyment of an alimentary liferent constituted by a trust cannot, by a renunciation of her alimentary provision or by an arrangement with other beneficiaries, secure to herself an unfettered right to the capital or income of the fund. It is unnecessary for present purposes to consider whether this is based on the doctrine of approbate and reprobate, or upon the principle that the recipient of a gift must enjoy it on the terms on which it is given. This latter view gains some support from Lord Deas in Smith and Campbell, Petitioners, at p. 646, where he says:
"The legacy must be taken under the condition on which it is given, or rejected altogether."
(Compare White's Trustees v. Whyte, per Lord Deas at p. 791.) The same principle is illustrated in Duthie's Trustees v. Kinloch . In that case a testator conferred an alimentary liferent in his trust-disposition and settlement on a lady to whom under a later codicil he also gave the fee of his estate. She did not discharge or renounce her claim to the alimentary liferent, but contended that it was swallowed up in the gift of the fee to her. The Court rejected this contention and held that the only benefit she could immediately enjoy in the estate was the alimentary liferent.
The same results have followed in the cases of alimentary liferents enjoyed under marriage contracts. In Hughes v. Edwardes, under an antenuptial contract of marriage, a trust was duly constituted under which a surviving husband was enjoying an alimentary liferent payable to him on his wife's death out of funds contributed by her. He sought to make an arrangement with the fiar of the funds, whereby he ceased to enjoy his alimentary liferent of the funds, and thereafter secured a different interest in them. The House of Lords negatived his right to do so. As Lord Watson said, at p. 35:
"The learned Judges of the Inner House … do not suggest that a trust duly constituted for payment of an alimentary annuity can be brought to an end by the joint action of the annuitant and the parties having beneficial right to the fee. A rule to the contrary has long been settled, and was recently enforced in White's Trustees v. Whyte and Duthie's Trustees v. Kinloch . In both instances the parties entitled to the fee had a vested interest, which is not the case here; and in Duthie's Trustees v. Kinloch the alimentary liferenter and the beneficial fiar were one and the same person. Yet it was held that the combined action of all parties interested could not defeat the settlor's intention to make the annuitants' right alimentary, a result which could not be attained except by continuing the trust."
In this case Lord Watson was considering the case of an existing alimentary liferent being enjoyed by the liferenter, which he was seeking to end in the course of its existence, and for which he sought to substitute a different interest in the trust estate. In Eliott's Trustee v. Eliott and Main's Trustees v. Main the Court decided that a predeceasing spouse cannot, by a testamentary settlement, revoke the alimentary protection provided for a liferent in favour of the other spouse in a marriage contract. These were both cases in which the surviving spouse sought to acquire an interest in the marriage contract funds freed of the alimentary restriction. In Kennedy v. Kennedy's Trmtees the spouses had jointly requested their antenuptial marriage contract trustees to denude in their favour, after it was clear that there would be no issue of the marriage. Under the contract each spouse had contributed funds for payment of an alimentary liferent for each (and the survivor). Each was enjoying the alimentary liferent at the time of their request. The fee of the funds was to go to the issue of the marriage, whom failing the spouses or their heirs. The Court refused to give effect to their request. As the Lord President (Cooper) said, at p. 64:
"The weight of opinion is, I think, in favour of the view that ‘the combined action of all parties interested will not avail to cancel an alimentary restriction or to terminate the trust upon which its efficacy depends.’"
In Chrystal's Trustees v. Haldane a renunciation by a wife of an alimentary liferent interest while it was being enjoyed was again regarded as being invalid.
It appears from these decisions, accordingly, that once an alimentary provision is being enjoyed the beneficiary can only enjoy it subject to the alimentary condition. The wife enjoying an alimentary annuity under a marriage contract cannot, either at her own hand or by arrangement with the other beneficiaries, convert it into an ordinary liferent or secure from the trust estate some interest in the estate of a different kind. For to do so would be quite inconsistent with the very nature of an alimentary provision. She would be converting a gift subject to a restrictive condition into a gift of a different kind which had no such restriction imposed on it.
There are, however, two features in the present case which, in my opinion, take it outside the ambit of these decisions. In the first place, the alimentary annuity which the Duchess is renouncing or discharging is not at present being enjoyed by her. She may never enjoy it. Her enjoyment thereof is dependent upon her survivance of her husband. Her right to it is, therefore, purely contingent. In the second place, she is not seeking to convert her right or interest in this contingent annuity into an interest or right of any other kind in the trust funds. On the contrary, she is gratuitously surrendering now her whole personal interest in the shares provided to meet the annuity.
These two features seem to me to constitute a clear distinction between these cases and the present one. Here, the Duchess is not seeking to continue to enjoy the gift, while freeing it of a fetter; nor is she seeking to substitute a different gift from the marriage trust in place of the alimentary liferent to which she is contingently entitled under the marriage contract. She is repudiating the contingent gift before she has any right to enjoy it. I can see no justification for the law forcing her to take in the future a gift which is not hers now and which she does net wish at all.
It has never been contended that merely because a wife is left an alimentary liferent under her husband's trust-disposition and settlement, the law will compel her to take it, and will deny her the right to repudiate it and claim her legal rights in his estate instead. Similarly, it seems to me that if a wife is entitled under a marriage contract to an alimentary liferent from the husband's funds on his death if she survives him, it would follow that she can during his lifetime repudiate that gift, and decide in advance not to take it. In both cases a trust has been deliberately set up to place the alimentary funds beyond the control of the beneficiary. This factor, however, in the case of the gift under the trust-disposition and settlement, is not fatal to her repudiating it; the same factor cannot therefore prevent her repudiating the gift under the marriage contract. It might be suggested that there is a distinction between an alimentary liferent given under a trust-disposition and settlement, and one given under a marriage contract by one spouse to the other on the death of the former. For, in the case of a marriage contract, an element of contract is involved on the wife's part. But nowadays wives are free to contract on their own. The mere fact that a wife has contracted in certain events to take a certain interest in the funds of another is to-day no necessary barrier to her renouncing that interest before it emerges.
Of the many cases quoted to us there are only two in which any reference was made to a contingent alimentary liferent. The first of them is Kennedy v. Kennedy's Trustees . What was fatal to the denuding requested of the trustees in that case was the fact that the wife was then enjoying an alimentary liferent which she had not discharged or renounced. But there was in the marriage contract in that case a further provision for a contingent alimentary liferent for the wife, if she survived the husband, out of his fund. The Lord President (at p. 64) does indicate that this also precluded renunciation, as, in his view, it was immaterial that this interest was deferred and contingent upon the wife's survivance of the husband. But this view is obiter; it is not adopted by the other members of the Court; and it was not necessary for the decision of the case. There is, in my opinion, no warrant for it in principle or in authority. The only other case in which the matter of a renunciation of a contingent right to an alimentary liferent is mentioned is Chrystal's Trustees v. Haldane where the point is left open. In this situation, therefore, the Duchess, in my opinion, in the present case was entitled to renounce her contingent alimentary liferent, particularly as she did not seek to substitute any other right in the trust's funds in place of it.
It was argued for the marriage contract trustees that the criterion of the irrevocability of an alimentary provision was not whether the beneficiary is enjoying the benefit, but whether the beneficiary has accepted the benefit. Once this has taken place, so it is contended, the benefit is irrevocable. The Duchess's signature to the marriage contract constituted her acceptance of the benefit.
This argument appears to me to be wrong in principle. An alimentary liferent is merely an ordinary liferent with a restriction on the anticipation of its benefits. If a liferentrix takes the benefit she must accept the conditions, and cannot evade them by unilateral action on her own, or by some arrangement with the other parties to the deed conferring the liferent. But I am unable to see why she should not be able on her own to say to the trustees, before she is entitled to any liferent payments:
"I do not want this liferent at all."
The mere fact that she has signed the deed under which the alimentary liferent is conferred cannot in itself preclude her from subsequently renouncing it while matters are still entire. If the marriage contract confers upon her a contingent liferent after her husband's death, the mere acceptance of this contingent right will not preclude her from renouncing it—see Lord and Lady Strathmore's Trustees v. Lord Glamis . For no one can be forced to take a benefit under a contract where his own interest only is involved. The same result must apply whether the benefit is an unqualified one (an ordinary liferent) or a qualified one (an alimentary liferent).
The Lord Ordinary appears to have taken the view that he was precluded from reaching the conclusion to which I have come by the decision in Kennedy v. Kennedy's Trustees . He did so because "a request by the parties to the trustees to denude is, in my view, equivalent to a disclaimer." With this conclusion I do not agree. The request by the parties in that case to the trustees to denude involved no disclaimer or renunciation by the wife, but an attempt on her part, jointly with her husband, to bring the trust to an end and get some other rights in place of her alimentary interest in the trust estate. This is just what Lord Watson in Hughes v. Edwardes, at p. 35, said could not be done. In the present case, the Duchess is taking no such course. She is now seeking gratuitously to renounce a right (to an alimentary liferent) which she may never enjoy, and she is asking nothing in return. In my opinion, she can do so, and her doing so does not run counter to anything decided in Kennedy v. Kennedy's Trustees .
Two subsidiary matters still fall to be dealt with. They were mentioned in the course of the argument before us. They arise out of two provisions in the marriage contract which, it was contended for the defenders, have a bearing on the main issue. The first matter arises out of a subsidiary clause in the liferent provision made in the marriage contract in favour of the Duke himself. This liferent benefit in the Duke's favour is to be paid to the husband during his lifetime and solvency, but "in the event of his insolvency or bankruptcy the said income and revenue shall be paid to the second party (i.e., the wife) as an alimentary allowance so long as such insolvency or bankruptcy shall continue." This provision, however, in my opinion, is an invalid one and can be disregarded. It would not be effective to exclude creditors of the husband. So far as the Duchess is concerned, her right to this alimentary provision is purely contingent, and can therefore, in my view, be discharged or renounced now.
Secondly, an argument was founded on a clause in the alimentary liferent provision for the Duchess in the event of her surviving her husband. The clause in question provides that the payment is to be "for her alimentary use allenarly and for the maintenance during pupillarity and minority of the children and issue, if any, of the said intended marriage, but without any obligation on the second party (i.e.the Duchess) to account for the manner in which she may expend the said annuity or jointure." The argument was that this clause showed that the alimentary annuity was not simply for the Duchess herself, but that third parties (i.e. the children) had rights in this alimentary provision. Consequently, it was said, the existence of these rights precluded the Duchess from herself renouncing the annuity.
But, in my opinion, this is not so. The exclusion of any liability on her part to account for the way in which she expends the annuity gives her a complete discretion as to what she does with it, and deprives the children of any right or interest in anything connected with the annuity except what payments she may choose to give them. The existence of this clause therefore does not prevent her discharging or renouncing the annuity. As Lord Keith said in Sturgis's Trustee v. Sturgis, at p. 648:
"To confer on children any right or interest in the maintenance of a widow's liferent as alimentary, such a right or interest would have, in my opinion, to be manifest in the language of the marriage settlement."
In my opinion, the clause in question here, so far from making that right manifest, deprives it of any content at all by excluding the Duchess's liability to account for the way in which she expends the annuity.
On the whole matter, accordingly, the pursuer is, in my opinion, entitled to succeed. The Lord Ordinary's interlocutor should be recalled and decree granted in terms of the first four conclusions of the summons. I should add that in reaching this result I have assumed that the liferent in question, substantial as it appears to be, is not merely alimentary in name, but falls within the legal conception of a true alimentary liferent. No argument on this matter was presented to us, and there are no figures or facts in the case upon which we could determine whether the liferent conferred was, in the circumstances, more than sufficient for the maintenance of the Duchess. If it was, this would constitute an additional reason for the conclusion to which I have come.
I have been troubled by the fact that such considerable funds, even so far as disclosed to us, can be covered by the cloak of the term "alimentary". That word must, it seems to me, be still related to reality, and, although to some extent the social status of the person enjoying the benefit conferred can be taken into consideration, I can see an opportunity for abuse unless the Court keeps some control of the amounts involved in the cases which come up for consideration before it.
The relevant facts are clearly and sufficiently set forth in the opinion of the Lord Ordinary, who has also stated the effect of the deeds which have to be considered in answering the questions raised by the conclusions. He has granted declarator, in terms of the first conclusion of the summons, that the Duke and Duchess validly and irrevocably appointed to the pursuer, by a deed of appointment dated 6th November 1959, the capital of the trust estate held by the trustees under the antenuptial marriage contract, but only to the extent of four hundred and thirty ordinary shares of the Mexican Eagle Oil Company, and that by virtue of that appointment the pursuer has acquired a vested and indefeasible right of fee in these shares. He has also declared, in terms of the first head of the second conclusion, that by a deed of renunciation, dated 6th November 1959, the Duchess has validly and irrevocably renounced an annuity of £2000 by way of pin money, provided to her in the antenuptial marriage contract, but only to the extent of disburdening and discharging thereof the income and capital of these shares. Declarator was also pronounced, in terms of the third conclusion, that the Duke has validly and irrevocably renounced and assigned to the pursuer his liferent interest in the balance of the income of the trust funds not required to meet the pin money, but only to the extent of the Duke's liferent interest in these shares. The trustees have not reclaimed against these parts of the Lord Ordinary's interlocutor, in which he has decided in favour of the pursuer. The Lord Ordinary, however, refused the declarator sought in terms of the second head of the second conclusion, that the Duchess by her deed of renunciation validly and irrevocably renounced, but only to the extent of disburdening and discharging thereof the income and capital of these shares, her prospective right on the death of her husband to an alimentary annuity of £3000, or £4000 in the event of male issue of the marriage surviving the Duke. In consequence of this decision, the Lord Ordinary also refused declarator in terms of the fourth conclusion, that the trustees are bound to denude themselves of the holding of these shares in favour of the pursuer, since he was of opinion that the trustees were bound to hold the trust funds for fulfilment of the trust purpose of payment of the alimentary annuity to the Duchess. The pursuer has reclaimed against the interlocutor of the Lord Ordinary in so far as it refused the declarators concluded for.
It is important to note that the Duchess has not renounced her right to pin money and to her alimentary annuity under the provisions of the antenuptial marriage contract. The effect of the deeds of renunciation and appointment, dated 6th November 1959, if carried out, would have been to remove from the trust certain shares forming part of the trust estate, leaving the trust administration in being over the remainder of the estate, and also leaving in force the antenuptial marriage contract. We were not informed as to the financial consequences to the trust or to the Duchess of this partial renunciation of her annuities to the extent to which they are or will be payable out of the shares. The trustees did not dispute that the renunciation, in so far as relating to the pin money, was valid. The arguments on the reclaiming motion did not, as I understood them, refer particularly to the validity of an attempt to effect a partial renunciation of the provision for an alimentary annuity and a partial release of funds from the trust. The case was debated as raising a general question which can be stated thus, whether a wife can, stante matrimonio, with the consent of her husband effectively disclaim by deed of renunciation a provision in their antenuptial marriage contract, whereby she was to receive, in the event of her survivance of her husband, an alimentary annuity during her widowhood out of funds made over by her husband to the trustees under the marriage contract, with the result that the trustees are obliged to denude themselves of part of the trust funds in favour of a child of the marriage having a vested right of fee in that part of the funds.
In the debate important questions were raised as to the law of Scotland relating to alimentary interests under a trust created by an antenuptial marriage contract. As some of the contentions for the pursuer and reclaimer seem to me to be contrary to the rules of our law, I think that it is necessary to go back to first principles in dealing with them.
The argument for the pursuer and reclaimer, stated briefly, and, I hope, fairly, was that the interest of the Duchess in the annuity payable to her during widowhood was at present future and contingent on her survivance of her husband, and, therefore, did not have at present the character of an alimentary right. She could not have an alimentary right in the trust funds until her actual enjoyment of the income began. Therefore, the condition in the marriage contract which made her future right alimentary was irrelevant in considering her capacity to disclaim it ab ante when she granted the deed of renunciation on 6th November 1959. The question as to her right to disclaim her interest must be answered by having regard to the nature of the "alimentary fetter", which was a restriction on enjoyment, so that it did not restrain the prospective beneficiary until enjoyment began. In this matter of the capacity of a prospective beneficiary to disclaim, there was no difference between testamentary provisions and provisions under an antenuptial marriage contract. It had been decided that a beneficiary under a will cannot accept the benefit of an alimentary liferent or annuity, and disregard the conditions imposed by the testator as to the nature of the right conferred—Smith and Campbell, Petitioners, per Lord Deas at p. 646;White's Trustees v. Whyte Therefore, the principle applied was approbate and reprobate. It followed that a condition that a liferent or annuity was to be alimentary did not apply until the gift was received and enjoyed, since only then did approbation take place. A person could not be compelled to accept a gift against his will. Therefore, the fact that a provision was alimentary did not prevent the prospective beneficiary fron disclaiming it ab ante. Similarly, a person was entitled to waive a right conferred upon him by a contract before actual possession of it. What he could not do was to substitute in his own favour a different benefit from that provided by the contract. In this case, there had been a deed of disclaimer by the Duchess, and the circumstances were different from those of any previous case, and, in particular, from Kennedy v. Kennedy's Trustees, relied upon by the Lord Ordinary. In that case, there was no deed of disclaimer by the husband and wife who called upon the marriage contract trustees to deliver the trust estate to them. By her deed of disclaimer the Duchess did not seek to obtain any advantage to herself, and was, therefore, not attempting to substitute a different benefit from that provided by the contract. She was not barred, accordingly, from disclaiming her future and contingent interest by the principle of approbate and reprobate.
The contentions in favour of this submission were presented in excellent speeches, but, after careful reconsideration of them and reference to the authorities cited, I am of opinion that the argument for the reclaimer is unsound in principle, and contrary to authoritative decisions.
At the outset I have to observe that it is incorrect, in my opinion, to speak of an alimentary "fetter" in connexion with an interest such as that conferred on the Duchess by the antenuptial contract of marriage. In Eliott's Trustee v. Eliott, Lord Kinnear, when dealing with an alimentary liferent under a marriage contract said, at p. 988:
"But the stipulation in question is not a mere restriction. It is a stipulation for the benefit of the wife that her liferent shall be protected from the diligence of her creditors."
The law, as I understand it, is this, that where a right conferred upon a party has been declared to be alimentary, and where it is protected by a trust, the liferenter or annuitant is given the privilege of security for the alimentary provision, not excessive in amount, so that it is not subject to the diligence of creditors, but the counterpart of this privilege is a conventional incapacity of the liferenter or annuitant to assign or discharge the right or to revoke the trust by which it is safeguarded. In the same case Lord Kinnear said, at p. 988:
"It is not the absence of her consent [to the abolition of the restriction], but her incapacity to consent, which excludes her creditors from attaching the liferent. It is perfectly well settled, and indeed it is elementary, that money or estate of any kind cannot be placed extra commercium and exempted from the diligence of Creditors so long as the person to whom it belongs has power to dispose of it at pleasure. This is the principle on which it was held in White's Trustees v. Whyte that the only way in which an alimentary right can be effectually created is that which was adopted in the marriage contract in question—that is, by the constitution of a trust under which the trustees are prohibited from giving any effect to the claim of assignees or arresting creditors, and which the liferenter or annuitant is effectually debarred from discharging … A trust which she has power to determine at pleasure is totally ineffectual for the purpose for which it was created."
Therefore, it is wrong in principle to say that the restriction upon alienation or discharge of an alimentary provision is dependent upon actual enjoyment of the benefit. The incapacity to assign or discharge the alimentary interest is the counterpart of the protection given by the nature of the right and the existence of the trust which safeguards it.
An important corollary follows from the relation between the protection afforded by the trust and the conventional incapacity of the spouses to revoke or alter the alimentary provisions of their contract. The alimentary interest is protected from the moment of the constitution of the trust, and the right of the survivor to receive an annuity on the death of the other is safeguarded during the marriage by the existence of the trust, although the right is at that time future and contingent. It follows that during the marriage there is a corresponding limitation of the power of the spouses to revoke or assign the alimentary provision and to discharge or determine the trust either in whole or in part. In Main's Trustees v. Main, it was held that it was not in the power of a wife, even with the consent of her husband, to revoke by her trust disposition and settlement the alimentary restrictions which had been placed upon his liferent, during his survivance of her, of funds conveyed by her to the marriage contract trustees. Lord Justice-Clerk Scott Dickson said, at p. 667:
"In my opinion, the wife had by the marriage contract effectually put it beyond her power to destroy the protection which that marriage contract was intended to give, and, in my opinion, effectually gave, to the husband's liferent."
For the same reason it is beyond the power of the spouses in the present case to destroy the protection which the marriage contract was intended to give to the prospective annuity of the Duchess.
When one is considering whether a future alimentary liferent or annuity can be disclaimed, I do not agree with the contention that it makes no difference whether the interest is conferred by a testament or is stipulated for in an antenuptial marriage contract. When a will provides that a beneficiary shall have an alimentary interest in a fund, the prospective beneficiary does not acquire a right to it from the date of the will, and can only have the right, at the earliest, on the death of the testator. But when the provision of an alimentary liferent or annuity during widowhood is contained in an antenuptial marriage contract, the spouse has a right, albeit a contingent right, under the contract from the time of the signature of the deed and the constitution of the trust, and her contingent right is protected by the trust from that time. The annuity during widowhood is part of the contract on the faith of which the marriage takes place. Further, when the alimentary interest is conferred by a will, the beneficiary is entitled to reject it before he has begun to enjoy it—Chrystal's Trustees v. Haldane, per Lord President Clyde;Ford v. Ford's Trustees . The general proposition that a person cannot be compelled to accept a gift is indisputable, and requires no authority. But the element of compulsion does not exist in relation to an alimentary interest under an antenuptial marriage contract voluntarily entered into by a prospective spouse. It is also inaccurate to refer to an alimentary interest, created by such a contract, as a gift, since it is settled law that the provisions of an antenuptial marriage contract are highly onerous. Therefore, the argument based upon the opinions of Lord Deas in Smith and Campbell and White's Trustees v. Whyte is not relevant to the present question In the former case Lord Deas said, at p. 646:
"The donor may attach to his gratuitous legacy any lawful condition he thinks proper … The legacy must be taken under the condition on which it is given, or rejected altogether."
These considerations do not apply to a stipulation for an alimentary provision in an antenuptial marriage contract. There is, however, a feature common to an alimentary provision under a will and one under a marriage contract. In Smith and Campbell Lord President Inglis said, at p. 645:
"The existence of the trust cannot be put an end to except by the carrying out of the purposes, and so long as the annuity remains payable the trust must subsist."
In my opinion, this is true both of a testamentary trust and of a trust created by an antenuptial marriage contract. Further, in view of the fact that the renunciation by the Duchess in this case is only partial, it is necessary to add that the principle of the rule stated by Lord President Inglis applies where it is not sought to put an end to the existence of the trust by a transfer by the trustees of the whole of the trust estate, but only to release from the administration and protection of the trust funds which have been held by the trustees for the provision of the alimentary interest. A partial renunciation is intended to effect a partial extinction of the trust.
In my opinion, the inability of either spouse, or both spouses, to destroy the protection of an alimentary interest created by an antenuptial marriage contract is due to the combined effect of three circumstances, first, that it is a stipulation in an antenuptial marriage contract under which the rights and obligations of the spouses relating to the trust funds during and after their marriage are regulated and their issue is provided for; second, that a trust has been created to safeguard the provisions of the contract and to administer the funds transferred to the trust; and, third, that the interest is declared to be alimentary. This is in accordance with the opinions in the House of Lords in Hughes v. Edwardes, where Lord Watson stated the rule that a trust duly constituted for payment of an alimentary annuity cannot be brought to an end by the joint action of the annuitant and the parties beneficially entitled to the fee, nor, indeed, of all parties interested. The contractual nature of a right conferred on a wife under an antenuptial marriage contract is not now of itself enough to prevent her renunciation of it, when the right is not alimentary. This has been settled by the case of Beith's Trustees v. Beith, where a wife was held entitled to renounce her liferent over funds contributed by herself which was not alimentary. If the contractual nature of the right does not prevent its disclaimer, then it follows that the test as to the existence of a power to renounce it is not acceptance of the marriage contract, and on this point I cannot entirely agree with the Lord Ordinary's reasoning. The true criterion is, I think, whether a trust has been constituted to protect the alimentary interest, although future and contingent, the reason being that the constitution of the trust has placed the funds beyond the control of the spouses. This principle, which is of long standing, has been recently reaffirmed. In Kennedy v. Kennedy's Trustees, Lord President Cooper stated, at p. 64, as the decisive circumstance preventing the spouses from compelling their antenuptial marriage contract trustees to denude in their favour:—
"These alimentary interests have been properly constituted by transfer of assets to an independent trust."
Later, in dealing with the alimentary interest of the wife in the husband's fund, the Lord President said:
"I do not see that it matters that this interest is deferred and contingent upon the wife's survivance of the husband."
In Beith's Trustees v. Beith Lord President Cooper said, at p. 71:
"Long before 1875 conveyancers knew how to create alimentary interests which would effectively protect the wife's future subsistence."
The method adopted for her protection is thus described by a distinguished conveyancer of the last generation, Mr John Burns, W.S., who wrote in the Encyclopædia of the Laws of Scotland, vol. ix, section 1124:—
"Wherever there is an alimentary clause, as in carefully prepared settlements there always is, that particular clause bars both the winding-up of the trust and the alienation of the provisions under the trust, without the necessity ofinvoking any general doctrine of the wife's inherent disability or protection."
In my opinion, Kennedy v. Kennedy's Trustees applied law which was well settled by the previous cases to which I have referred, and its ratio decidendi governs the present case and is binding on this Court. In Great Western Railway Co. v. Owners of S.S. Mostyn, Viscount Dunedin said, at p. 73, in a passage quoted by Lord President Cooper in Beith's Trustees:
"When any tribunal is bound by the judgment of another Court, either superior or co-ordinate, it is, of course, bound by the judgment itself. And if from the opinions delivered it is clear:—as is the case in most instances—what the ratio decidendi was which led to the judgment, then that ratio decidendi is also binding."
An attempt was made to distinguish Kennedy's Trustees from the present case, but, in my opinion, the question raised in both cases is the same, whether a wife can, stante matrimonio, renounce an alimentary provision for her widowhood contained in her antenuptial marriage contract and protected by a trust. The decision in Kennedy's Trustees is correctly stated in the rubric thus:—
"As the husband had duly constituted an alimentary liferent for his wife, and as the wife had duly constituted alimentary liferents for herself and her husband, these provisions were irrevocable stante matrimonio, and consequently the trustees were not entitled to denude in favour of the spouses."
The decision was simply an application to the circumstances of that case of the rule stated by Lord Watson in Hughes v. Edwardes . That rule is equally applicable to the facts of this case. In Kennedy's Trustees,the alimentary liferent interest of the wife in the funds contributed by the husband was future, and contingent upon survivance of him, but it was held that this interest was protected by the trust, which could not be revoked stante matrimonio. It was argued by the reclaimer's counsel that Kennedy's Trustees was distinguishable because the spouses had not, in that case, entered into a formal deed of renunciation or disclaimer, as had been done in the present one. This circumstance does not create a distinction, since the result of the constitution of a trust to protect an alimentary interest is to create an incapacity to renounce the benefit, whether by formal deed or by calling on the trustees to denude. Then it was said that in Kennedy's Trustees the spouses sought to have the trust funds transferred to themselves, whereas in the present case the Duchess did not seek to obtain any benefit for herself. But one object of the creation of an alimentary interest is to prevent the beneficiary from assigning it, and, as was pointed out by Lord President Inglis at p. 788 and by Lord Shand at p. 793 in White's Trustees v. Whyte, "a discharge is substantially an assignation of the right in favour of the person getting it." Indeed, the fact that a wife takes no benefit from a discharge of her interest under her antenuptial marriage contract has always been held to be a
strong reason for refusing effect to her deed, since one of the main objects of the creation of an alimentary interest in a wife under such a contract was to safeguard her against the importunity of a husband. Therefore, the attempt to distinguish this case from Kennedy's Trustees fails. I think that the Dean of Faculty was right in his submission for the trustees, that, unless Kennedy's Trustees is overruled by a higher Court, it is fatal to the argument for the reclaimer. Accordingly, in my opinion, the Lord Ordinary came to a sound conclusion when he held that he was bound by the decision in Kennedy to refuse the declarators relating to the alimentary annuity of the Duchess. I would refuse the reclaiming motion.
I would add that, in my opinion, the considerations as to the changes in the status of married women in society and in. the law of married women's property which brought about the decision in Beith do not affect the result of the present case, any more than that of Kennedy's Trustees where Lord President Cooper said, at p. 63:
"The legal effects in a question with creditors of a properly constituted alimentary liferent of not excessive amount depend on considerations unconnected with, and much wider than, the status and capacity of married women."
Indeed, the same considerations would apply if it were a husband and not a wife who was seeking to disclaim an alimentary provision in his favour contained in his antenuptial marriage contract out of funds contributed by the wife to the trust.
I also think that the Court cannot be influenced in its decision of the present case by the fact that fiscal and economic changes since 1937 may have made the provisions of this marriage contract, which no doubt were wisely conceived at the time, unexpectedly burdensome. The fact that such changes may have serious consequences to particular individuals does not entitle the Court to refuse to apply the law as hitherto settled. If such cases require a remedy, it must be provided by legislation. As I have said, one of the objects of the creation of an alimentary interest under an antenuptial marriage contract is to protect a wife against the importunity of a husband seeking to induce her to discharge the provisions in her favour in the contract, and there may, even now, be many cases in which that consideration is more important than fiscal and economic changes affecting the financial situation of the parties. This case raises a general question, and the answer to it ought not to be affected by having regard to the financial consequences of the existing law to particular parties,
There is a special and subsidiary reason in the terms of this particular marriage contract why the declarators should be refused. It provides that the Duchess's annuity is to be for her alimentary use allenarly and for the maintenance during pupillarity and minority of the children and issue, if any, of the said intended marriage, but without any obligation upon her to account for the manner in which she may expend the annuity. In my opinion, this provision imposes a fiduciary character upon the annuity, and is an additional reason for holding that she is not entitled to renounce it. The fact that there is obligation to account for the expenditure of the annuity does not alter this fiduciary character. The provisions are partly for the benefit of the minor children of the marriage, who would, therefore, be entitled to claim support out of the sum of £4000 per annum. It was part of the contract upon the faith of which the marriage took place that this sum should be used for the support of the children. There are minor children in existence, and the Duchess has no power to deprive them of the prospective benefit of the annuity. The funds are at the moment held in trust by the first defenders, not merely for the Duchess, but for the issue of the marriage. In these circumstances, I do not think that she can validly terminate the annuity in whole or in part, and that the trustees cannot be called upon to denude themselves of the funds so held by them.
Reference was made in the course of the argument to a provision in the antenuptial contract of marriage providing for the payment of the income of the trust funds to the wife as an alimentary allowance in the event of the insolvency or bankruptcy of the prospective husband, but I think that the issue raised by the reclaiming motion can be decided against the reclaimer without taking into consideration the terms of that clause.
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