Scottish Court of Session Decisions

By section 2 of the Married Women's Policies of Assurance (Scotland) Act 1880 (43 and 44 Vict. cap. 26) it is enacted—“A policy of assurance, if effected by any married man on his own life, and expressed upon the face of it to be for the benefit of his wife, or of his children, or of his wife and children, shall, together with all benefit thereof, be deemed a trust for the benefit of his wife for her separate use, or for the benefit of his children, or for the benefit of his wife and children, and such policy, immediately on its being so effected, shall vest in him and his legal representatives in trust for the purpose or purposes so expressed, or in any trustee nominated in the policy, or appointed by separate writing duly intimated to the assurance office, but in trust always as aforesaid, and shall not otherwise be subject to his control or form

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part of his estate, or be liable to the diligence of his creditors, or be revocable as a donation, or reducible on any ground of excess or insolvency.”

On 21st June 1889 Mrs Amy Day or Kennedy, wife of John Kennedy, manager of the Baintbari Tea Estate, Western Duars, District Jalpaiguri, India, died, survived by her husband and three children of the marriage—John Hogarth Kennedy, born 19th September 1879, Catherine Anne Kennedy, born 1st October 1881, and George Alexander Kennedy, born 21st November 1886.

On 10th October 1889 John Kennedy insured his life with the Scottish Imperial Insurance Company for the sum of £1000. The policy bore to be effected for the benefit of any child or children of the assured who might survive him, and by the terms of the policy the company undertook to pay the sum in question “to any duly appointed trustee or trustees, failing whom, to the executor or executors of the assured, all in trust for the benefit of any surviving child or children, failing whom, then to the assured, his heirs, executors, or assignees.”

On 14th January 1893 John Kennedy married again, his second wife being Mrs Catherine Easter Macdonald or Kennedy. No children were born of this marriage.

On 14th April 1893 John Kennedy died, leaving a last will and testament dated 13th April 1893, whereby he, inter alia, appointed William Goss of Ballabari, Dr William Brown of Rungamati, and his wife Mrs Catherine Easter Macdonald or Kennedy as joint trustees thereunder, and directed all his belongings to be equally divided between his wife and three children.

Mr Kennedy was survived by his second wife, and by the three children of his first wife. Mrs Catherine Easter Macdonald or Kennedy was subsequently married to James Jardine Sharpe, engineer, Edinburgh.

William Goss and William Brown proved the will of Mr Kennedy in India, and probate was issued in their favour as his executors, dated 19th November 1894.

The trustees and executors applied to the Insurance Company for payment of the amount due under the policy, and the sum due, amounting to £968, 2s., was, on 23rd August 1895, paid over to the executors, who gave a discharge therefor. Mr Kennedy left almost no other estate.

In these circumstances various questions arose as to the administration and disposal of the funds. Mr and Mrs Sharpe contended that as Mr Kennedy, at the date when he effected the policy of assurance, was unmarried, the policy was ineffectual to constitute a trust for behoof of the children in terms of the Married Women's Policies of Assurance (Scotland) Act 1880; that the sum secured under the said policy was accordingly part of the deceased's estate at his death, and that they were entitled to payment of one-third thereof in virtue of the widow's jus relictæ. The children of Mr Kennedy, on the other hand, maintained that the sum recovered under the said policy of assurance fell to them as sole beneficiaries under the trust which was constituted for their behoof by the policy, and accordingly that that sum did not form part of the estate of the deceased at his death, and did not fall under his will, and that Mrs Sharpe was not entitled to any part of it.

If a valid trust had been constituted under the policy of assurance, a further question arose as to the persons entitled to administer and distribute the fund. The trustees under the will contended that by their appointment as such they had been also appointed trustees under the policy of assurance. The executors, in whose favour probate had been issued, maintained that they were entitled to administer the fund, the testator having made no appointment of trustees appropriate to the policy.

For the decision of these questions a special case was presented to the Court by (1) the trustees, (2) the executors, (3) Mr and Mrs Sharpe, and (4) the children of Mr Kennedy by his first wife.

The questions at law were—“1. Did the policy of assurance in question constitute an effectual trust under the Married Women's Policies of Assurance (Scotland) Act 1880, of the sum thereby secured, for behoof of the fourth parties solely? or 2. Did the proceeds of the policy form part of the estate of the assured at the date of his death? 3. In the event of the first question being answered in the affirmative, do the proceeds of the policy fall to he administered and distributed by the first parties as trustees duly appointed in terms of the policy? or 4. Do they fall to be administered and distributed by the second parties as the executors of the assured?”