Scottish Court of Session Decisions

At advising on 12th July 1940,—

LORD JUSTICE-CLERK (Aitchison).—Sir George Burns, Baronet, died in 1890 leaving a will dated in 1859 and no less than 49 codicils, with two of which only, the second and the thirty-seventh, we are concerned in this case. James, the third Baron Inverclyde, who was a grandson of Sir George Burns, died in 1919, leaving a will dated in 1906. The main question which the case raises is whether James exercised by his will a power of appointment conferred upon him by Sir George by his second and thirty-seventh codicils, and relating to the fee of a share of the residue of Sir George's estate in which James was liferented, and, if so, whether the exercise of the power was valid, or falls to be held invalid in respect that James appointed the fee to persons who were not objects of the power. If the appointment is held to be valid, the fifth parties, who are great-great-grandchildren of Sir George, succeed; if invalid, then the question arises whether the restriction of the fourth parties, who are great-grandchildren, to a liferent of their shares is valid, and, if this is answered in the negative, the fourth parties succeed.

The history of the bequests is as follows:—By his will in 1859 Sir George gave to his son John (who was the first Baron Inverclyde) a liferent of one-third of the residue of his means and estate, and the fee to his children as John might appoint. By his second codicil in 1873 Sir George directed that, on the termination of John's liferent, the residue should be held for the liferent of John's children (that is the grandchildren) and the fee for their children (that is the great-grandchildren) as the grandchildren might appoint. By his thirty-seventh codicil Sir George directed as follows:—

"Therefore and without prejudice to the rights and powers hereinbefore partly recited conferred upon my grandchildren hereinbefore named under the said Trust-Disposition and Settlement and Codicils, I would specially recommend to each of my said grandchildren to exercise such powers so as to confer upon their children liferents only of any shares of my estate to which children may succeed or become entitled in virtue of my said Trust-Disposition and Settlement and Codicils, and any deeds executed by such grandchildren in virtue of the powers contained in the said Trust-Disposition and Settlement and Codicils, and in addition and without prejudice to the powers conferred upon my said grandchildren and each of them by my said Trust-Disposition and Settlement and various Codicils, I do hereby confer upon such grandchildren and each of them full and express power to limit the interests of their children or any of them to liferents of all shares or portions of my estate as they may succeed or become entitled to."

Now, before coming to the will of James it will be observed that this is a power given to the grandchildren, of whom James was one, to limit their children (that is the great-grandchildren) to a liferent, but that no power is conferred, in the event of this limitation being imposed, in turn to appoint the fee, or any other interest less than a fee, to their children (that is to the great-great-grandchildren). It is said by the fifth parties that this must be implied, and that such an intention can be gathered from the whole terms of Sir George's testamentary writings. I can well conceive that Sir George, who had been the architect of his own fortunes, may have had some idea in his mind that from generation to generation the residue should be enjoyed in liferent only, the fee remaining intact, each generation in turn being empowered to restrict to a liferent the succeeding generation. But, while some such conception may have been his intention, the fact remains that, in giving power to his grandchildren to restrict the great-grandchildren to a liferent, he did not confer upon them a power to give any interest, whether fee, liferent, or any other interest, to his great-great-grandchildren, and I cannot accept the view that such a power is given by necessary implication. We have no right to make good the deficiency. The intention, if it was such, cannot be carried into effect, because power to give effect to the intention has not been conferred.

Turning now to the will of James. James was a grandson of Sir George, and by his will dated in 1906 he conveyed to trustees his whole estate, including estate over which he had the power of disposal. In the eleventh purpose he directed his trustees to hold the residue for behoof of his children (that is the great-grandchildren) equally in liferent and for behoof of their lawful issue (that is the great-great-grandchildren) in fee in such proportions among such issue respectively and subject to such restrictions, limitations and conditions including limitation to a liferent as they (that is the great-grandchildren) might appoint, and failing such appointment the fee was to be divided equally among the great-great-grandchildren. Now, assuming that by this direction James was purporting to exercise the power of appointment conferred on him by Sir George, I think it is clear that it is ineffectual to confer any rights of fee either directly or indirectly, now or in the future, upon the great-great-grandchildren. As already pointed out, there is no power to give the fee or any less interest to the great-great-grandchildren, who are not objects of the power in any respect, and, on the assumption that an exercise of the power was intended, that is conclusive of the matter.

In any event, any power given to James to appoint the fee, whether under the second or the thirty-seventh codicil, was a power committed to his personal judgment and discretion. If he was purporting to exercise it, what he did amounted to an attempt to delegate the power which had been reposed in himself, and it was, therefore, an invalid exercise of the power. The rule is stated by Sugden in his chapter on the Transfer of Powers (cap. 6, see. 2) thus:—

"If the power repose a personal trust and confidence in the donee of it, to exercise his own judgment and discretion, he cannot refer the power to the execution of another, for delegates non potent delegare."

The rule is similarly stated in Farwell on Powers, (3rd ed. cap. 11, sec. 1). The application of the rule is illustrated by the case of Monies from which the present case is indistinguishable. In Angus's Trustees an appointment to a liferent coupled with a testamentary power of disposal was held to be a valid exercise of the power in that case, but it will be observed that the right conferred by the donee's exercise of the power was substantially a fee, although not a full fee, and, therefore, it was held that the rule which prohibits delegation had not been infringed, although in one sense there had been delegation.

If the exercise of the power is invalid, it is unnecessary to decide the question, which logically comes first, whether James was intending to exercise the power. Notwithstanding the difficulty of seeing why he should have specially declared, as he did, that he was making his dispositions in the exercise of all powers of disposal and appointment contained in his antenuptial contract of marriage and the will of his father, John, but making no specific mention of the power of appointment conferred on him by the will of Sir George, I am inclined to think that the presumption arising from the fact that his settlement was a universal settlement, which contained a conveyance of his whole estate to trustees, including that of which he had the power of disposal, has not been displaced, and accordingly, that he was purporting, although ineffectually, to exercise the power conferred on him by Sir George's will. It is, however, unnecessary to decide the point.

If James's will is ineffectual to appoint the fee to the great-great-grandchildren, it follows that the restriction of the great-grandchildren, that is the fourth parties, to a liferent of their shares was invalid. The restriction is not severable from the appointment of the fee, for it is quite impossible to say that, if James had appreciated that he could not give the fee, either directly or indirectly, to the great-great-grandchildren, he would have imposed the restriction. The probabilities are that he would not, but whether he would or not is in the region of conjecture, and it follows inevitably that the restriction to a liferent must be held to fail.

In any event, I would be disposed to think—although I do not decide the point—that the restriction is struck at by section 9 of the Trusts (Scotland) Act, 1921. It was maintained by the fifth parties that the fourth parties' right to a liferent was by virtue of James's will dated in 1906, whereby the appointment was made; and, therefore, it was said, the fourth parties being in life at that date, the restriction to a liferent was valid. Is this the true construction of the section? If the exercise of the power had been valid, the life interests would have flowed from the maker of the power. I think this is the correct view where the power is to appoint among a named class, and the donee has not an unfettered power of alienation. In such a case the beneficiary takes by virtue of the deed of the maker of the power, notwithstanding that his right is not in esse until the power is exercised and the appointment is made. The test therefore is, Could the maker of the power validly have constituted or reserved in his moveable estate liferents in favour of the fourth parties? To that question the answer must be "No," as the fourth parties were not in life at the date of Sir George's death. If the restriction of the fourth parties to a liferent fails, as, in my opinion, it does, the appointment is wholly invalid, and the fourth parties take equally among them under the gift-over failing appointment contained in the second codicil to Sir George's will.

Upon the whole matter, I am of opinion that the first question should be answered in the negative, and the second question, which is consequential, in the affirmative.

LORD WARK .—The dispute in the present case is with reference to the fee of the share liferented by James Cleland Burns, third Baron Inverclyde, of the estate of his grandfather, Sir George Burns, Baronet. It is claimed by the fourth parties, who are James's children. Their claim is opposed by the children of James's daughter Mrs Maclean of Ardgour who has five daughters who are the fifth parties to the case. Neither his other daughter, Mrs M'Kenna, nor his son, the present Lord Inverclyde, has any children. The question turns upon the terms of the provisions in the eleventh purpose of the trust-disposition and settlement of James Cleland Burns.

The fourth parties submitted three separate contentions, (first) that that purpose did not purport to be, and was not, an exercise of the power of appointment conferred upon the said James Cleland Burns by the second codicil of the testator Sir George Burns; (second) that, esto that it did so purport, it was an invalid exercise of the power; and (third) that, in any event, the fourth parties, not having been in life at the date of the testator's death, cannot be validly restricted to a liferent of the said funds, and, being of full age, they are entitled to payment of the capital thereof in virtue of the provisions of section 9 of the Trusts (Scotland) Act, 1921. The fifth parties, who are all in minority and to whom a curator ad litem has been appointed by the Court, contend that the fourth parties have been validly restricted to a liferent of the funds in question.

By his trust-disposition and settlement James Cleland Burns disponed to his trustees his own whole estate, heritable and moveable, "or of which I may have the power of disposal at the time of my decease, and not have otherwise specifically disposed of." Prima facie, that general conveyance is sufficiently wide to import an exercise of the power of appointment conferred upon him by his grandfather. The fourth parties, however, point to a special declaration in the following terms:—

"And I do hereby further specially provide and declare that these presents are granted in the exercise of all powers of disposal, apportionment or otherwise competent to me under the said antenuptial contract between me and my said wife and all deeds executed or to be executed in connexion therewith and under the trust-disposition and settlement of my father the Right Honourable John Baron Inverclyde now deceased, dated 16th September Eighteen hundred and ninety-nine and four relative codicils all registered for preservation in the books of Council and Session on the twenty-seventh day of February nineteen hundred and one to the effect that the funds and estate held or administered or to be held or administered under such deeds or any of them over which I have or may acquire rights of disposal apportionment or otherwise shall so far as possible ultimately devolve and descend in the same way as if the said funds and estate had formed part of the estate belonging to and vested in me individually and coming under these presents and in so far as I have power to do so I direct the trustees or others acting under such deeds or writings or any of them to hold and apply the funds and estate under their charge accordingly."

They maintain, upon the principle of expressio unius exclusio alterius, that the general conveyance must therefore be read as not purporting to exercise the power of appointment given by the will of Sir George Burns, which is not mentioned. They further say that there is good reason why James did not expressly refer to that power, namely, that he was aware that he could not, under that power, make a valid appointment in the terms he desired to do. To this it is replied on behalf of the fifth parties that the presumption that a power of appointment possessed by a testator is intended to be exercised by a general conveyance in a trust-disposition and settlement is overwhelming where, as here, that conveyance expressly includes all estate over which he has power of appointment. I find it unnecessary to decide this issue, for, assuming, as I am willing to do for the purposes of the case, that it was the intention of James to exercise the power, I am of opinion that he has not exercised it validly.

Two attacks have been made upon the provisions contained in the eleventh purpose of James's will. The first is that his grandchildren are not objects of the power; and that the restriction of his children to a liferent (which, by itself, would have been valid) is not separable from the remainder of the bequest. The second is that, even if the grandchildren are objects of the power, they have not been appointed to a fee. What has been done is to attempt to delegate the power to his children; and that is not permissible.

In my opinion, both these attacks succeed. In the narrative of his second codicil, Sir George Burns says, no doubt, that "I am desirous in my lifetime not only to limit the interest of my grandchildren, the children of my said two sons, to liferents of any portion of my estates falling to them, but also to apportion the shares of such residue and otherwise regulate the succession of my grandchildren and their issue to the residue of my estate as hereinafter mentioned." But, when he comes to the power, the direction to his trustees is to pay or make over the fee or principal of the portions of the said one-third share liferented by the said grandchildren respectively to and among the child or children they may respectively leave, such child or children taking the portion of the said one-third share liferented by their parents, in such proportions among the children of each family and subject to such conditions, limitations and provisions as "my grandchildren," the children of the said John Burns, may direct and appoint and, failing their leaving any such deed or writing, equally among such children share and share alike. In the thirty-seventh codicil the testator explains that he had, by his settlement, conferred upon his sons and grandchildren powers of distribution of the capital among their issue, and of limiting and restricting the interest of their children therein, and that he had recommended to his said sons and grandchildren to avail them selves of their powers and so to limit and restrict the provisions to their children that the same might be continued liferents for their benefit. He then narrates the provisions of the several codicils, and goes on, "And now, seeing that various of my grandchildren before mentioned have attained the age of majority, that two of them have already been married, and that another of them is shortly about to be married, and that I wish still further to impress upon my grandchildren the desirability of continuing to their children the liferents they themselves enjoy of portions of my estate; Therefore, and without prejudice to the rights and powers hereinbefore partly recited, conferred upon my grandchildren hereinbefore named under the said trust-disposition and settlement and codicils, I would specially recommend to each of my said grandchildren to exercise such powers so as to confer upon their children liferents only of any shares of my estate to which children may succeed or become entitled in virtue of my said trust-disposition and settlement and codicils, and any deeds executed by such grandchildren in virtue of the powers contained in the said trust-disposition and settlement and codicils, and in addition and without prejudice to the powers conferred upon my said grandchildren and each of them by my said trust-disposition and settlement and various codicils, I do hereby confer upon such grandchildren and each of them full and express power to limit the interests of their children, or any of them, to liferents of all shares or portions of my estate as they may succeed or become entitled to." But, while he thus emphasises his desire that his grandchildren should restrict their children's interests to liferents, he nowhere provides that in that event they may apportion the fee to their grandchildren, that is to say, his great-great-grandchildren. In my opinion, this omission cannot be supplied. Nor can I read the word children as including grandchildren. I do not think the language used will bear that interpretation. The result is that the appointment made by James Cleland Burns is of a liferent to objects of the power and a fee to persons who are not objects of the power. This, in my opinion, is an invalid appointment—Neill's Trustees v. Neill .Moreover, I do not think the provisions are separable so as to leave the liferent standing. Non constat that, if he had known that his appointment to the fee was bad and that failing the appointment his children world take the fee, he would have restricted his children to an alimentary liferent.

But further, what James Cleland Burns has done is to delegate to his children the power of appointment given to him by the testator's second codicil. This, in my opinion, is plainly not a competent exercise of the power. I am unable to distinguish this case from the case of Monies v. Monies, where the language of the power and the attempted exercise of it were in almost identical terms with the terms here. In that case, Lord Fleming, who gave the leading judgment, said (at p. 347):

"Nothing can, I think, be clearer than that, if a testator delegates to another power to make an appointment with regard to his estate, the appointment must be made by the donee of the power and cannot be delegated by him to a third party. There is delectus personœ in the choice of the donee of such a power, and the maxim delegates non potest delegareapplies."

The law of England is to the same effect—Joicey v. Elliot . I do not think that the authority of the decision in Monies is affected by the Seven Judges' decision in Angus's Trustees v. Monies, in which it was held that a power of appointment was validly exercised by conferring upon objects of the power a liferent together with a testamentary power of disposal of the share liferented. It was really not seriously maintained to us that the delegation of the power of appointment was a good exercise of the power; but it was maintained that the whole of that part of the eleventh purpose was severable from the appointment to a liferent of the fourth parties. For the reasons I have already stated, I am unable to hold that the clause is so severable.

This is enough for the decision of the case. But we have heard a further argument upon the third point raised, which is that the attempted exercise of the power is struck at by section 9 of the Trusts (Scotland) Act, 1921. That section provides as follows:—[His Lordship quoted the section, which is printed supra, p. 493.]

It was contended for the fourth parties that the estate here in question was held in liferent for them by virtue of the trust-disposition and settlement of the testator, Sir George Burns, and that, as none of them were in life at his death, the section applied. The fifth parties maintained that the deed to be looked at was the trust-disposition and settlement of James Cleland Burns, in which case the section did not apply. There is little authority on the construction of the section. It was founded on in the case of Stewart's Trustees v. Whitelaw, but the Court reserved opinion in view of the fact that the only party interested did not contest the matter. As the Lord President (Clyde) pointed out in that case, there is no common law in Scotland against perpetuities in the English sense. The matter therefore must be decided upon the language of the section alone. In England, the manner in which the rule against perpetuities is applied to the situation here arising is clearly established. A recent statement of it is to be found in the judgment of Buckley, L.J., in Fane v. Fane (at pp. 413, 414) It is that where the power is a limited power—as this power is—the provisions made by the donee of the power are to be held as read into the settlement of the donor of the power.

The English rule, however, appears to me to be based not upon any special or technical application of a doctrine peculiar to English law, but upon general grounds which are equally applicable in considering the interpretation of the language of the Scottish statute. The liferent here attempted to be given is a liferent not of any past of the estate of James Cleland Burns, but of part of the estate of Sir George Burns in execution of the power of appointment given by Sir George's will. As Lord Moncrieff observed in Marshall's Trustees v. Findlay (at p. 561) "In a case in which a person vested with a power of appointment exercises the power, such an exercise confers rights of succession which flow from the maker of the power and not from the party who exercises it." It is therefore truly by virtue of Sir George's will that that portion of his estate is held in liferent (assuming that James validly exercised the power of appointment) and it is so held by the trustees of Sir George. It humbly appears to me that, where a testator gives a power of appointment under which the donee of the power may appoint among a limited class to a liferent of part of the testator's estate, the validity of the appointment must be judged as if the exercise of the power were read into the will of the granter of the power. If this be the sound principle to be applied, the section strikes at the appointment here attempted to be made.

The result on the whole is that the appointment fails, and the fourth parties are entitled to the fee in terms of the destination in default of appointment. I agree, therefore, that the questions should be answered as your Lordship proposes.

LORD ROBERTSON .—Three questions were debated in this special case, (1) Whether the Right Honourable James Cleland third Baron Inverelyde, by his trust-disposition and settlement dated 19th October 1906, with two relative codicils, purported to exercise over certain funds a power of appointment conferred upon him by the testamentary writings of his grandfather, the late Sir George Burns, Baronet? (2) Whether any such exercise of the power of appointment was a valid exercise of the power at common law? and (3) Whether any such exercise of the power is struck at by the provisions of section 9 of the Trusts (Scotland) Act, 1921?

The first question appears to me to be attended with some difficulty. I am inclined to hold that it should be answered affirmatively, but, in view of the clear opinion I have formed as to the second question, I prefer to proceed on the assumption that the first question should be answered affirmatively rather than to state a definite decision upon it.

Assuming the first question to be answered affirmatively, the second question then arises. In my opinion, the second question should be answered in the negative. The appointment purporting to have been made by the third Baron Inverelyde is an appointment to his children in liferent and to their issue in fee in such proportions and subject to such restrictions (including limitation to a liferent) as they may appoint. The fee is thus appointed to the grandchildren of the third Baron, but subject to a power, delegated to the children of the third Baron, to apportion among the grandchildren, and to restrict them to a liferent. Now, the grandchildren of the third Baron are the great-great-grandchildren of the granter of the original power of appointment—Sir George Burns. His testamentary writings confer power on his grandchildren (of whom the third Baron was one) to limit the interests of their children to liferents, but, as I understand them, do not confer any power on his grandchildren to appoint the fee to their grandchildren. Their grandchildren (that is to say, the great-great-grandchildren of Sir George) are not objects of the power of appointment granted by Sir George—whatever his intention in the matter may have been. Accordingly, the appointment to them made by the third Baron is, in my judgment, invalid. And I think that the same result is reached if attention is turned to the delegated power of appointing and restricting which the third Baron purported to confer on his children. In this matter the case appears to me to be indistinguishable in principle from the case of Monies v. Monies . And, as in the case of Monies, I am unable to regard the limitation to liferents which the third Baron imposed on his children as separable from his appointments of the fees to their children. I think it is matter of conjecture, and it is not proper to conclude, that he would have imposed the liferent restrictions if he had been aware that the appointments to the fees were not valid. Accordingly, in my view, his exercise of the power of appointment and restriction conferred upon him is invalid in its entirety, and his children are entitled, under the testamentary writings of his grandfather, to immediate payment in fee equally among them of the fund subjected to the power of appointment.

In these circumstances the third question which was debated—as to the effect of section 9 of the Trusts (Scotland) Act of 1921—does not arise for decision, and I prefer to reserve my opinion upon it.

In my opinion, the first question of law set forth in the special case should be answered in the negative, and the second question in the affirmative.