Scottish Court of Session Decisions

Allan Stevenson and another, trustees of the late John Howat, Ayr, acting under his trust-disposition and settlement dated 11th September 1897, first parties; Mrs Rachel Bonpain or Howat, widow of the said John Howat, second party; and the Ayr Branch of the Society for the Prevention of Cruelty to Children for itself and as representing the branches of said Society formerly known as the Ayrshire Branch, the Executive Committee of said Ayr Branch, and the General Secretary of the said Society, third parties, presented a Special Case for the opinion and judgment of the Court as to the rights of the second and third parties in the residue of the truster's estate.

The trust-disposition and settlement provided—“ In the fourth place, should I be survived by my wife, the said Rachel Bonpain or Howat, I direct and appoint my trustees to pay to her an annuity of £150, terminable as after mentioned, for the maintenance in comfort of herself and my child Douglas Eusebe Howat, and any other children that may be born of our marriage … and which annuity shall be for her alimentary use allenarly, unaffectable by her debts or deeds, and unattachable by the diligence of her creditors.… In the fifth place, subject to payment of the foresaid annuity, I direct and appoint my trustees to hold the whole residue of my means and estate, heritable and moveable, for behoof of my child, the said Douglas Eusebe Howat, and any other children that may be born to me or the survivors equally among them or their issue per stirpes, and which residue, subject to such part of my estate being retained as may be necessary to meet the foresaid annuity, shall be payable to my children as they respectively attain majority, with power to my trustees to pay or apply the whole or part of the income of my estate towards the maintenance, education, and upbringing of my children in such way as to them shall seem most expedient, and also to make advances to any of them out of the capital of my estate for such purposes as my trustees may approve of; and in the event of my child the said Douglas Eusebe Howat and any other children that may be born to me all dying before receiving payment of their shares of my estate without leaving issue, I direct and appoint my trustees to hold the said residue and pay or convey the same, failing my giving any other directions by any codicil hereto or separate writing, to the Ayrshire Branch of the Society for the Prevention of Cruelty to Children, the receipt of whose secretary or treasurer shall be a sufficient discharge to my trustees, and failing such branch of said society, then to such charitable institution or institutions in the town or county of Ayr as my trustees in their sole discretion may select to receive the same.”

The testator, who died on 25th July 1898, was survived by his widow, the second party, and by his only child Douglas Eusebe Howat, who attained majority on 23rd June 1917 and died unmarried on 5th August 1918, leaving a general disposition and settlement in favour of his mother dated 1st June 1917.

The Case stated—“5.… On attaining majority the said Douglas Eusebe Howat, by codicil dated 8th July 1917, confirmed and homologated the said general disposition and settlement. As it was necessary that the residue should be held for the purpose of meeting the second party's annuity, it was not possible for the first parties to pay or make over the same to the said Douglas Eusebe Howat. 6. A question has arisen between the parties as to whether the residue of the truster's estate vested in the said Douglas Eusebe Howat upon his attaining majority, or whether, he having died without receiving payment of said residue, it falls to be paid to the third parties in terms of the destination-over. In the event of its being held that the said residue vested in the said Douglas Eusebe Howat, a further question arises as to whether the second party, the said Mrs Rachel Bonpain or Howat, is entitled to payment of the fee of said residue notwithstanding the alimentary declaration contained in the truster's settlement. 7. The second party maintains that on a sound construction of the trust-disposition and settlement of the truster the residue vested in the said Douglas Eusebe Howat upon his attaining majority, although he died before receiving payment of the same; that the fee of said residue is carried to the second party by the general disposition and settlement of the said Douglas Eusebe Howat in her favour; that the alimentary declaration in the truster's settlement does not affect or limit her right to the full enjoyment of the fee, and that she is accordingly entitled to immediate payment thereof. 8. The third parties maintain that the said Douglas Eusebe Howat did not acquire a vested interest in the residue of the truster's estate in respect that he died before receiving payment of the said residue, and that accordingly the same falls to be held for their behoof and to be paid or made over to them on the termination of the second party's annuity in terms of the direction contained in the fifth purpose of the truster's trust-disposition and settlement. 9. The first parties as trustees put forward no contention as to whether the said Douglas Eusebe Howat acquired a vested interest in the residue of the trust estate. In the event, however, of that question being decided in the affirmative, the first parties maintain that in view of the declaration in the truster's settlement that the annuity payable to the second party was for her alimentary use allenarly they are bound, until her death or second marriage, to retain in their hands the said residue or so much thereof as is necessary to secure payment of the said annuity.”

Page: 413↓

The questions of law were—“1. Did the residue of the truster's estate vest in the said Douglas Eusebe Howat on his attaining majority? or 2. Does the residue of the truster's estate fall to be held for behoof of the third parties and to be paid or conveyed to them on the termination of the second party's annuity in terms of the direction contained in the fifth purpose of the truster's trust-disposition and settlement? 3. In the event of the first question being answered in the affirmative and the second question in the negative, Is the second party entitled to immediate payment of the fee of the residue?”

Argued for the second parties—1. The residue vested in the testator's son on his attaining majority. It was then “payable” to him. “Before receiving payment” meant “before the shares became payable”— Chalmers' Trustees v. Chalmers, 1882, 9 R. 743, 19 S.L.R. 493; Yuill's Trustees v. Yuill, 1901, 8 S.L.T. 324. To suspend vesting until actual payment might result in vesting at several periods. The presumption was against this, particularly where the testator had treated the residue as a single corpus. There was no power given to the trustees to postpone payment, and the interposition of an annuity did not prevent vesting. In Howat's Trustees v. Howat, 1869, 8 Macph. 337, 7 S.L.R. 157, there was no express term of payment, and the vesting depended upon when the trustees could realise and divide. 2. If the fee of the residue had vested in the son it was carried by his general settlement to the second party, and the third parties could have no right to it. Further, the second party was entitled to immediate payment of the residue. An alimentary annuity was not a separate legal estate like an alimentary liferent, but was merely a burden on the estate of a series of annual payments which merged in it on the annuitant becoming fiar— Colquhoun's Trustees v. Colquhoun, 1912 S.C. 32, 59 S.L.R. 40; Kinmond's Trustees v. Kin-mond, 1873, 11 Macph. 381, per Lord President Inglis at p. 383, 10 S.L.R. 244; Knox's Trustees v. Knox, 1869, 7 Macph. 873, 6 S.L.R. 557; Duthie's Trustees v. Kinloch, 1878, 5 R. 858, 15 S.L.R. 586. When the purpose of the annuity was served the fiar was entitled to payment — Dunsmure's Trustees v. Duns-mure, 1920 S.C. 147, 57 S.L.R. 142; Martin v. Bannatyne, 1861, 23 D. 705. Here the purpose of the testator had been to provide maintenance for his wife and children secured from creditors. So far as the children were concerned the purpose had ceased, and there was no reason, the second party having become fiar, for continuing the annuity for her benefit. It was a question of the intention of the testator— Montgomery's Trustees v. Montgomery, 1888, 15 R. 369, per Lord President at p. 372, 25 S.L.R. 278; Main's Trustees v. Main, 1917 S.C. 660, 44 S.L.R. 532.

Argued for the third parties—The case was similar to Howat's Trustees v. Howat ( cit.). The testator had made vesting in the son dependent on two conditions—his attaining majority and his receiving payment, the latter of which had not been fulfilled. In Chalmers' Trustees the condition as to payment was not so clear as it was here, and in Yuill's Trustees not only was payment impossible owing to a cause extrinsic of the will, but there was also a direct gift of the legacy. Here payment was impossible owing to the testator's directions. Howat's Trustees had been approved in Mac-dougall v. M'Farlane's Trustees, 1890, 17 R. 761, 27 S.L.R. 638. There was therefore no vesting of the fee in the son, and the estate fell to be held for behoof of the third parties and conveyed to them on the termination of the annuity.

Argued for the first parties—The testator had created a trust for the protection of an alimentary annuity for his wife. She could not have defeated this in conjunction with the fiar, nor could she do so by herself becoming fiar. The fact that the deed created an alimentary annuity instead of a liferent made no difference— Elliot's Trustees v. Elliot, 1894, 21 R. 975, per Lord Ruther-furd Clark at p. 985, 986, 31 S.L.R. 851; Duthie's Trustees v. Kinloeh, cit.