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You are here: BAILII >> Databases >> United Kingdom House of Lords Decisions >> Mrs. Agnes Farmer or Galloway v. Robert Craig in M.P., at instance of Thomas Thomson, Raiser [1861] UKHL 1_Paterson_1047 (17 July 1861)
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Cite as: [1861] UKHL 1_Paterson_1047
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SCOTTISH_HoL
Page: 1047↓
(1861) 1 Paterson 1047
REPORTS OF SCOTCH APPEALS IN THE HOUSE OF LORDS.
No. 156
v.
Subject_Husband and Wife — Donatio inter virum et uxorem — Bankrupt — Policy of Insurance to Wife —
A. insured his life, and paid the premiums, the policy being taken in the name of his wife, her heirs, executors, or assigns. He afterwards became bankrupt. There was no antenuptial contract, and the wife had no separate estate.
Held (reversing judgment), That the life policy was in the nature of a provision for the wife, and being reasonable in amount, if it was made when A. was solvent, it belonged to the wife and not to the trustee for A.'s creditors. 1
_________________ Footnote _________________
1 See previous report 22 D. 1211; 33 Sc. Jur. 553. S. C. 4 Macq. Ap. 267: 33 Sc. Jur. 649.
Page: 1048↓
This action of multiplepoinding was raised by Thomas Thompson the manager for the Standard Life Assurance Company; the fund in medio being the sum due on a policy on the life of the deceased James Galloway. The claimants were Galloway's widow and the trustee on his sequestrated estate.
The policy, which was in favour of Galloway's wife, between whom and her husband there was no marriage contract, was in the following terms:— “Whereas Agnes Farmer or Galloway, wife of James Galloway, builder, No. 101, St. George's Road, Glasgow, being desirous to effect an insurance on the life of the said James Galloway for the remainder thereof, to the extent of £499 19 s. sterling, with the Standard Life Assurance Company, and having subscribed, or caused to be subscribed, and deposited at the office of the said company in Edinburgh, a declaration, bearing date the 26th day of February 1852, which is also signed by the directors subscribing as relative hereto, and which is hereby declared to be the basis of this assurance, and having paid to the directors the sum of £18 13 s. 9 d., as the premium for such assurance for one year from the 12th day of April 1852. Now be it known by these presents, That if the said James Galloway shall die at any time within the term of one year as above set forth, the capital stock and funds of the said company shall be subject and liable to pay, and are hereby charged with the payment, to the said Agnes Farmer or Galloway, or to her heirs, executors, or assignees, of the said sum of £499 19 s. sterling, at the end of six months after the death of the said James Galloway, the said sum of £499 19 s. sterling, to be paid at the office of the said company in Edinburgh, from which this policy has been issued, provided always, that the said sum shall not be payable until the expiration of at least three calendar months after the decease of the said James Galloway shall have been certified and proved to the directors of the said company: and it is hereby further agreed, that this policy may be continued in force from year to year, during the life of the said James Galloway, provided the said Agnes Farmer of Galloway, or her afore—saids, shall pay, or cause to be paid, to the directors at their said office, on or before the 12th day of April next ensuing, the sum of £18 13 s. 9 d., and the like sum annually, on or before the day aforesaid, which annual payments shall be accepted at every such period as a full consideration for such assurance.”
Galloway's estate was sequestrated on 10th June 1858, and he died on 4th July following, when the sum on the policy became payable.
The trustee on the sequestrated estate, who claimed the whole sum in the policy, averred that Galloway was insolvent when it was effected, or, at least, for several years before sequestration.
The widow, who also claimed the whole sum, averred that—“ Cond. 3. The policy was delivered to the claimant, and remained in her separate and individual possession, and under her control, and the premiums were regularly paid as they fell due by the claimant, or others acting for her; and the whole receipts (which are herewith produced) run in her name, and were all along in her separate and individual possession, and were put up by her in the inside of the policy.”
The widow admitted, that the premiums had been paid by James Galloway.
The Court of Session held, that the policy was in effect a donatio inter virum et uxorem, and being revocable it was actually revoked by the sequestration, and so, that the trustee was entitled to the proceeds.
Mrs. Galloway maintained, in an appeal to the House of Lords, that the interlocutors of the Second Division of the Court of Session ought to be reversed, for the following reasons:—1. The late Mr. Galloway was not only entitled, but bound by a natural obligation to make a suitable provision for the appellant, in case she should survive him. Having done so by means of the policy in question, and by payment of the annual premiums thereon, the policy became the appellant's absolute property. It was not revocable by Mr. Galloway as a donation inter virum et uxorem, and was not attachable by Mr. Galloway's creditors. Authorities:—Erskine's Institutes, i. 6, 30; iv. 1, 33; Stair, i. 4, 9, 15, 18; Bankton, i. 5, 98; Bell's Commentaries, ii. 15, 14; Dalgleish, M. 6124; Cossar, M. 5710; Macgill, M. 6109 and 5696; Chalmers, M. 6110; Short, M. 6124; Lady Lindores, M. 6126; Hepburn v. Brown, 2 Dow, 342; Sharp v. Christie, 1 D. 396; Mackenzie, M. 958. 2. The judgments appealed against, which award the sum in the policy to the creditors of the deceased James Galloway, should be altered and reversed, because the sum in question was never in bonis of the said James Galloway, and never formed part of the estate carried by his sequestration, and never vested in his trustee for behoof of his creditors. 3. The appellant ought to be preferred to the proceeds of the policy in question, because that policy, and all rights arising or accruing in virtue thereof, were from the first, remained throughout, and still continue, the exclusive property of the appellant alone.
Craig, the respondent, supported the judgments (in his printed case) on the following grounds:— 1. The grant of the policy was a donation, no consideration having been given for it, and the husband having been under no obligation to confer it. 2. The policy was not of the nature of a provision by Galloway to his wife, in the event of her survivance, in place of her legal provisions, and therefore there is no authority for holding it onerous or irrevocable in any view. 3. It was
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Anderson Q.C., and Neish, for the appellant.—This was not a donation but a provision. The rule is well settled, that if the gift is in the nature of a provision, it is irrevocable during the marriage—Ersk. i. 6, 30; iv. 1, 33; Stair, i. 4, 18; Bank. i. 5, 98; 2 Bell's Com. 2, 15, 14. Here the wife had no provision previously made for her. And it was the natural duty of the husband to give her a provision. When this policy was effected, everything tended to shew, that the husband's intention was to make it a provision. The only objection against so treating it is said to be, that the policy was made payable to her and her executors whether she survived or not. Does that circumstance make it the less a provision? It was substantially a provision nevertheless. There is no dispute as to its being suitable to the circumstances and position in life of the parties; and the only effect of its being in excess would be to cut down the excess to the proper standard— Short v. Murray, M. 6124; and nice scales will not be used in order to reduce it. Per Lord Eldon in Hepburn v. Brown, 2 Dow, 342. It is said, that this was not in the usual form of an alimentary provision, viz., by way of annuity, but it was a lump sum. But a lump sum was easily convertible into the other form, and there was no absolute necessity for such form, as the other might often be more convenient and valuable, and there were several instances of such provisions in M. 6126, et seq. It was said also, that the wife might have sold this policy during the marriage. It is true it did not form part of the husband's goods— Wight v. Brown, 11 D. 459; and he could not have alienated it without her consent. At all events it was not alienated, and there is no reason for allowing this circumstance to take this provision, otherwise good, out of the protection of the general rule.
Lord Advocate (Moncreiff), and Rolt Q.C., for the respondent.—The objections urged in the Court below were sufficient to shew, that this policy was in effect a revocable donation, and was revoked.
Cur. adv. vult.
Having carefully referred to the decisions and the authorities from institutional writers, quoted at the bar, I come to this conclusion, that, according to the law of Scotland, in determining whether a gift by a husband to the wife is to be considered a pure revocable donation or a provision for the wife after the death of the husband, which cannot be revoked by the act of the husband, or by his sequestration—if there was no antenuptial contract between the spouses, and the wife was entirely unprovided for at the time of the gift, and if the gift was intended between the parties when made to be such provision for her, and it may operate as such a provision, it shall be treated as such a provision, so that, the wife surviving the husband, it shall go to the wife, and not to the executors of the husband, and the husband being sequestrated, living the wife, it shall go to the wife, and not to the creditors of the husband.
The policy in question, a gift by the husband to the wife, seems to me, according to all these conditions, to be a provision for the wife, and to belong to her.
There had been no antenuptial contract between the spouses. At the time of the gift the wife was wholly unprovided for, and the important obligation on the husband to make a provision for the wife when she becomes a widow, wisely recognised by the law of Scotland, subsisted in full force to prevent this being considered a were voluntary gift without consideration. It is naturally to be expected, that it would operate, and most clearly it was intended to operate, as a provision for her when she should become a widow. There being two policies of insurance for £300 each effected by the husband in his own name, on his own life, and payable to his own executors for his own separate benefit while he was still solvent, this policy for £499 19 s. was effected by him in the name of his wife on his own life, payable three months after his death to his wife, “her heirs, executors, or assigns.” The premiums due on this policy were paid from the funds of the husband, but the receipts given for them were in the name of the wife.
She actually did survive him, and the sum insured on his life is unquestionably due from the
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Such a provision by a husband for his widow, we are told, is very common, and certainly is very natural.
The objection, that it is not in the shape of an annuity, is clearly unsustainable, for, although the provision must be for the wife not stante matrimonio, but post finem matrimonii, this provision may be by a lump sum, which may purchase an annual allowance, and there are various instances in the reports of such a gift being held a valid provision.
But, strange to say, chief reliance is placed upon the policy being payable to the wife, her heirs, executors, and assigns. Although this might be supposed to be indicative of an intention to make the money insured the separate and absolute property of the wife, it is converted into an objection, that the money would have been payable to her representatives if she had predeceased her husband, and that, in that case it could not have been a provision for her after his death. Further, the fact is relied upon, that the moment one premium had been paid, the policy was of some value, and that she might have sold it in her lifetime, and that so, on his death, she might have been wholly unprovided for.
But I think it is very certain, that the spouses did not consider the policy of any productive value till the death of the husband. The notion of selling it during their joint lives never entered their imagination, and, in truth, the one could not have sold or surrendered it without the consent of the other. To be sure, there was a possibility, that she might have predeceased; but, although this was not an anticipated possibility, if we are to regard subtleties, the gift of the policy as a provision for the wife may be considered to have been only on an implied condition, that she survived him. I allow, that the transaction must have its character impressed upon it at the time when the policy was effected. Here initium non finis operis nomen imposuit. But, from the beginning, it may be considered a provision for the wife if she survived her husband, but to be his property on her death if she predeceased him. I cannot doubt, that a valid deed might have been framed containing these express stipulations. It is admitted, that between husband and wife there may be a valid transaction, making an irrevocable provision for the wife when she becomes a widow, without any writing, and that, by way of provision, there may be a conditional as well as an absolute gift. On this hypothesis, the sequestration of the husband in the lifetime of the wife could not work a revocation, and, as she survived him, the policy became absolutely hers.
There being thus no legal objection to giving full effect to the just intention of the parties, I must confess, that I feel satisfaction in being able to advise your Lordships to reverse the interlocutor appealed against, which has driven the widow to prosecute this appeal in formâ pauperis.
As to one point referred to in the opinion of my late noble and learned friend, which I have read to your Lordships, in addition to what he has said, I may mention that, in a case of Short v. Burney, a gift to the wife of a security subject to a life interest which might not terminate, living the wife, was held to be a provision for her, and that she might dispose of it. Now, in this case, the wife might have disposed of the policy, and might have sold it for more than she would have done if it had actually contained the condition of her surviving her husband. Therefore, I entirely agree with my noble and learned friend, that the judgment appealed from should be reversed.
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If the policy had been for the payment of the sum insured on the death of the husband, provided the wife survived, there would have been, I think, no question but that the gift of it to the wife would have been deemed a provision for her after the husband's death, and therefore irrevocable if reasonable, and no question in the present state of the case arises as to the sum to be paid being disproportionate to the husband's means, and therefore unreasonable.
But the objection to this policy being considered as a provision is, that it is payable in the event of the husband's death whether the wife survive or not, and a sum payable to the wife or her executors or administrators on the death of the husband would be hers though she died in her husband's lifetime. And it may be said, that, if that event happened, such sum could not in point of law be considered as a provision for her, because she could never actually enjoy it on her husband's death. Then it would seem, if this be correct, that, as it was uncertain at the time of the insolvency—which happened before the death of the husband—whether this policy would turn out to be a provision, and therefore valid, or a donation, and therefore invalid, it was revocable by the husband, and therefore by the respondent, the trustee.
I certainly have felt very great doubt upon this point; but, after much consideration, I agree with my noble and learned friends, who are of opinion, that the appellant is entitled to the full benefit of this policy, because it may be considered, notwithstanding these objections, as a provision. There can be little doubt, that it was intended by the husband so to be, because the sum was made payable to his wife after his own death; and most likely, it was by mistake, that he omitted to introduce the contingency of the wife surviving, and therefore paid too large a premium. But I do not see why, in order to constitute a valid provision, the money must be payable after his death, or why the gift of a present sum of money's worth to a wife, at that time unprovided for, may not be considered in point of law, if so intended, to be a provision.
In the case of Short and Burney v. Murray ( M. 6176), a gift of the security for 10,000 marks, due from a third person to the husband, subject to his mother's liferent, was held to be a good provision for a wife (subject to a further inquiry, whether, in reference to his estate, it was excessive, and then it was to be reduced). Now, in that case, it was not certain, that the wife would survive the husband's mother, and, therefore, it might be, that she would never actually receive any part of it herself; but she might so dispose of it as to make a provision for herself.
The same observation may be made on this policy of assurance. She might dispose of it as soon as she obtained it, and for much more than if it had contained a condition, that she should survive her husband, and, with the money produced, might be able to secure a provision for herself.
Therefore, upon the whole, though after much doubt, I agree, that the judgment ought to be reversed.
By the law of Scotland a donation made by a husband to his wife stante matrimonio is revocable, and his bankruptcy operates as a revocation. On the other hand, a provision made for a wife by her husband is not revocable if it be reasonable; and if it be excessive, it may be cut down for the excess, and remain valid for the remainder.
These rules appear to be established by the text books and decided cases referred to in the argument, and they are not disputed at the bar.
The question is, What is it that distinguishes a donation from a provision?
A provision is held to be good because it is not the were voluntary act of the donor, but is the performance of a moral duty imposed upon a husband to provide for his wife in the event of her surviving him. And the first question, therefore, seems to be, Is she already otherwise provided for? If not, it should seem, that primâ facie an intention on the part of the husband would be presumed to make a provision, unless there be something in the nature of the transaction to exclude such intention.
Here the gift is of a sum of money which cannot fall into possession until the husband is dead, and until, therefore, the wife may require alimony. It is not alleged, that it is excessive in amount. It is but £500; and it appears, that the husband, at the same time that he effected this policy on his life in the name of his wife, effected two others, each for like sums of £500, in his own name.
That the sum so secured is a gross sum, and not an annuity, is an objection which seems to be excluded not more by the decided cases than by the reason of the thing.
If it had been an annuity, it might have been sold and converted into a gross sum, and being a gross sum, it may be invested in the purchase of an annuity.
It is said, that the policy, being made in favour of the wife, her heirs and executors, her
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Mr. Anderson.—This case must, I presume, be remitted for inquiry into the insolvency at the date of the policy; but I would submit to your Lordships, that the costs in the Court below subsequent to the date of the Lord Ordinary's interlocutor should be given to the appellant. Your Lordships are now pronouncing the order which the Court of Session ought to have made. If that Court had refused the reclaiming note, they would have done so with costs.
Lord Advocate.—Your Lordships will observe, that the interlocutor of the Court of Session finds no expenses due, and it is not usual to insert in your Lordships' judgment any finding as to costs in the Court below. The case will go back to the Court of Session, and the Court of Session will do what they think just, upon the reversal of the judgment.
Mr. Anderson.—Yes, my Lord.
Lord Advocate.—Although we were successful in the Court below, the Court below awarded no costs to us. If, upon your Lordships' judgment going back, they think the appellant is entitled to the costs since the date of the Lord Ordinary's interlocutor, they will give costs accordingly.
Lord Advocate.—At any rate, the only amount of costs that they claim will be, as my learned friend says, costs subsequent to the date of the Lord Ordinary's interlocutor. But what I submit is this, that the Court, in considering the case, although they considered the appellant wrong, gave no costs against the appellant, therefore I think it is a case in which the Court below should be left to consider the question of costs, and to hear the parties upon it.
Lord Advocate.—The question of costs is a matter very much in the discretion of the Court.
Lord Advocate.—This is a question between the trustee of an insolvent's estate and the widow. There may be considerations arising out of the position of the parties which may regulate the question of costs.
Lord Advocate.—Not upon the question of costs. I submit it is the exception rather than the rule in cases of reversal to deal with costs in the Court below. That is generally left to be dealt with by the Court below in the application of the judgment. It is sometimes done, but it is not the usual course in cases of reversal.
Mr. Anderson.—Almost universally your Lordships dispose of the question of costs. I ought to mention, that we did not appear in formâ pauperis in the Court below; we were pauperized by the decision there. We were ordinary litigants in the Court below.
Interlocutors reversed, and cause remitted with directions as to the costs below.
Solicitors: For Appellant, Dodds and Greig, Solicitors, London; Adam Morrison, S.S.C., Edinburgh.— For Respondent, Loch and Maclaurin, London; Robert Finlay, S.S.C., Edinburgh.