Scottish Court of Session Decisions

By antenuptial contract of marriage, the late Kenneth Mackenzie of Dundonell bound himself and his heirs to make payment to the claimant, Mrs Mackenzie, his wife, of a free liferent of £500 per annum, in the event of his predecease and of there being no issue of the marriage, which events happened. This annuity was secured over the lands and estate of Dundonell, and Mrs Mackenzie was infeft on the disposition in security. Kenneth Mackenzie died in 1826, having granted a disposition of his whole property in favour of a trustee, who was empowered to bring the property to sale. His succession came to be regulated by a former disposition and settlement in favour of his brother, Thomas Mackenzie, an express condition of which was, that Thomas should pay the sum of £5000 to the claimant, Mrs Dr Ross, his sister, in liferent, and to her children in fee. The estate of Dundonell was thereafter sold by the trustee. The sum realized turning out to be inadequate to answer the demands upon it of those having interest, the trustee brought the funds into Court by a process of multiplepoinding. ^*

In this process Mrs Mackenzie claimed her provision by the marriage-contract, in regard to which, her preferable right under the infeftment in security not being disputed, she pleaded;—

1. The claimant is entitled to be preferred on the fund in medio, for the sum of £7500, as the converted value of the annuity secured to her by her marriage-contract over the lands of Dundonell, and interest thereon since Whitsunday 1834. ^†

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* The amount of the fund in medio was upwards of £8000, but was not exactly ascertained.

† The value of the annuity differed according as the calculations proceeded on the Northampton or Carlisle probabilities of life, and according as the rate of interest involved should be 4 per cent or 3; the lowest sum, according to the Northampton Tables, and 4 per cent, being £6419, and the highest, according to the Carlisle Tables, and 3 per cent, being £8320.

2. If this claim is not given effect to, the claimant is entitled to have secured, and set apart to her, such a capital sum as will provide her in the annuity of £500 per annum, secured by her marriage-contract.

3. In the event of the estate not yielding a capital sum which, invested at the ordinary rate of interest, will yield a yearly return equivalent to the claimant's annuity, she is entitled to demand that the balance of the funds, or so much as is necessary, should be employed to purchase an annuity for her from Government, or otherwise, so as to make good her primary right as creditor on the estate.

4. The claimant is further entitled to be preferred on the fund in medio, for the amount of her arrears of annuity, and other claims.

Mrs Ross and her children claimed to be preferred on the fund in medio to the provision of £5000, for their respective rights of liferent and fee, next after Mrs Mackenzie; pleading as to her preferable claim, that she was not entitled to be put in a better position in regard to the annuity, than if the estate had been still unsold.

After various procedure, to which it is unnecessary to advert, the Lord Ordinary pronounced the following interlocutor, with the subjoined note ^*:—“Having considered the closed record, and heard parties' pro-

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* “In regard to the last point in the interlocutor, the Lord Ordinary will only observe, that as the claimants indicate plainly that they are to object to Mr Girvan's charging against the estate his own expenses incurred in regard to this record, on the name ground on which they now claim expenses against him, it would be very inexpedient now to decide a principle which would necessarily affect a more important matter, not now before the Lord Ordinary; the more especially as Mrs Mackenzie intimates, that she has other claims of expenses still more serious against Mr Girvan. It is certainly remarkable that, without Mr Girvan's part of the record, the question on which the other parties have now been heard, would scarcely have been found in that of Mrs Ross and the children. But the Lord Ordinary means to express no opinion on the point raised.

“The first question disposed of by the interlocutor is somewhat curious, and not quite simple. But it must be kept in view, that Mrs Mackenzie had not merely the personal obligation of the deceased for her annuity, but also the security of the whole estate of Dundonell, by infeftment. As long, therefore, as any part of that estate, or what is the same thing, the price of it, remains, she is entitled not merely to have her annuities paid as they fall due, but to have her right to them in some manner made secure, by the substitution of some other security in place of that which is taken away. If there was a capital sufficient to secure it, she could ask no more. But if there is not such a capital, is she bound, after the whole fund is in the hands of the Court for division, to accept of successive annuities out of that limited capital, under the hazard that it may entirely fail long before the expiry of her lifetime? Or are the gratuitous donees of her husband entitled to say that she shall be put to that hazard in order to give them a chance of reversion if she should die before the fund is exhausted; or to state such an interest as an objection to any mode of application of the existing fund, by which full implement of the onerous debt may be given or secured? After full consideration, the Lord Ordinary is of opinion, that though metaphysical subtleties may be suggested on such a question, the plain sense of it is, that the onerous creditor must, if possible, be made entirely secure by means of that which is the surrogatum of her previous security, and that no gratuitous legatee can oppose her in that demand.

“It would, indeed, be most unreasonable to listen to such a plea, unless the other parties were to produce some other sufficient security that the annuity should not fail, and this would really come to the same thing. But if it were even supposable that the annuitant should be content with such a diminished annuity as the existing capital simply invested would secure, certainly when she died, her representatives would have a good claim for payment of all the sums of annuity unpaid, from the capital so preserved, before the legatees could draw any thing. The Lord Ordinary is, however, of opinion, that the legal right of the annuitant is according to the findings of the interlocutor.”

curators on the claim of Mrs Mackenzie, in regard to the annuity provided to her, as explained alternatively in the three first pleas in law for the said claimant, and on the claim for expenses incurred by the claimants in making up the record against Mr Girvan, the trustee and raiser of the multiplepoinding, and having made avizandum, Finds that the claimant Mrs Mackenzie is an onerous creditor on the whole fund in medio for her annuity of £500, originally secured by infeftment over the estate of Dundonell, the price of which, after being sold by Mr Girvan, the trustee, forms the fund in medio in this multiplepoinding: Finds that the only other claimants, Mrs Ross and her children, are merely gratuitous legatees, for their respective interests of liferent and fee, in the sum of £5000, payable out of any reversion of the funds which may remain after satisfying the proper debts of the deceased Kenneth Mackenzie: Finds that the precise right of the claimant Mrs Mackenzie is, in terms of her second plea in law, to have such a sum of capital from the price of the estate laid out and secured as may be sufficient, at the rate of interest which may be obtained by contract, to secure the payment of her said annuity during her life; and that till her death the other claimants, Mrs Ross and her children, could have no claim over that capital money: Finds, that if such a sufficient fund were found to exist, Mrs Mackenzie could not insist for more than that it should be so secured; and, in particular, would not be entitled to demand that an estimate of the present value of her annuity should be made by calculation; and the amount thereof in a capital sum should be paid over to her; But finds, that in the event that upon a full adjustment of the state of the funds, it shall appear that there is not a sufficient sum of capital to secure the said annuity by simple investment, the said Mrs Mackenzie must be entitled to insist either that her annuity shall be valued, and the value thereof paid to her, as the amount of her claim in the multiplepoinding, or otherwise that the full payment of her annuity, during all the days of her life, shall be effectually secured to her by some other form of investment of the whole or a part of the sum which may remain in medio; and finds that the other claimants, as the gratuitous donees of the deceased Kenneth Mackenzie, have no legal title or interest to resist such her claim to one or other of the said alternatives, as set forth in her first and third pleas in law, but in the option of the said other claimants under the control of the Court: But in respect that it does not appear that the precise amount of the fund in medio has yet been ascertained, supersedes further judgment in hoc statu in regard to the application of the principles thus laid down, but allows the cause to be enrolled by either party: Finds that Mrs Mackenzie has a just claim against the fund in medio for the arrears of the annuity already due, and also for the value of one-half of the household furniture of the deceased, according to the terms of her marriage-contract; and that in the event of its being found that there is not a sufficient fund both to pay the sums so due, and to secure the annuity de futuro, it will be in her option either to take payment thereof, or to allow the whole sum to be laid out for providing the annuity: Finds that it is not expedient to give any judgment on the claims for expenses in making up the record, and otherwise now made against Mr Girvan, until Mr Girvan's own accounts, and all objections which may be made against them, shall be before the Lord Ordinary. Therefore, in the mean-time, reserves all such questions, and reserves also all other questions of expenses.”

Mrs Ross's minor children reclaimed against the interlocutor, in so far as it found, that if it shall appear, upon a full adjustment of the state of the funds, that there is not a sufficient sum of capital to secure Mrs Mackenzie's annuity by simple investment, she “must be entitled to insist either that her annuity shall be valued,” &c.; and they prayed to have it found that Mrs Mackenzie was not entitled to be preferred in terms of either her first or third pleas in law; contending that, by the finding complained of, they, the younger children, would be excluded altogether from any share in the fund; that the annuitant might die tomorrow, and that they ought not to be put in a worse condition than if the estate were still unsold, in which case they could not be excluded from their chance of reversion.