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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Malcolm and Others v. Goldie and Others [1895] ScotLR 32_711 (19 July 1895) URL: http://www.bailii.org/scot/cases/ScotCS/1895/32SLR0711.html Cite as: [1895] ScotLR 32_711, [1895] SLR 32_711 |
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Page: 711↓
Trustees having a power of assumption assumed new trustees without consulting one of their number, who had gone to reside in Australia. Held that the assumption was valid.
A husband and wife executed a mutual trust-disposition and settlement. After the death of his wife, the husband executed a codicil whereby he appointed, “so far as I can competently do so,” two new trustees, “as trustees along with J. M. & J. G. … trustees already acting under the foresaid mutual trust-disposition and settlement.” It was admitted that he could not appoint new trustees on his wife's estate.
Held that the appointment was altogether invalid, as the truster plainly had only the mutual settlement in view, and did not intend, even assuming he had the power, to make new trustees on his own estate.
Ronald M'Dougall and his wife executed a mutual trust-disposition and settlement on 6th February 1857 for the disposal of their respective estates after their deaths, whereby they conveyed to the survivor of themselves and to Mr James Stitt and four other trustees, “the whole means and estate … at present belonging to us, or either of us, and all that shall be belonging to us, or either of us, at the time of our respective deaths.” The trust-deed conferred upon the trustees a power of assumption, and provided that a majority of the trustees, original or assumed, and of the surviving acceptors, should always be a quorum.
Mrs M'Dougall died in April 1863, survived by her husband and three daughters. The trustees all thereupon accepted office, but no meetings of trustees were held until 1st August 1876. On 31st May 1876 Mr Stitt had sailed with his family for Australia, where he afterwards remained. Another of the trustees had died prior to 1st August 1876.
On 1st August 1876 Mr Ronald M'Dougall and the other three trustees, on the narrative that Mr Stitt “is now resident in Australia, and has ceased to act, ” assumed John Malcolm and James Goldie, sons-in-law of Mr M'Dougall, as trustees under the said mutual settlement, and conveyed the estates under their control to themselves and the new trustees alone. No intimation was made to Mr Stitt of the proposal to assume Mr Malcolm and Mr Goldie.
Between 1876 and 1886 the remaining original trustees, other than Mr M'Dougall and Mr Stitt, had either died or resigned. Mr M'Dougall died in September 1886. A week before his death he executed a codicil, whereby he appointed, “so far as I can competently do so, my nephew, Ronald M'Donald, and my son-in-law, James Orr Macniven, as trustees and executors, along with John Malcolm and James Goldie, my sons-in-law, trustees already acting under the foresaid mutual trust-disposition and settlement.” These gentlemen accepted office, but Mr M'Donald resigned in 1888.
In 1895, difficulties having arisen as to the discharge of a trust bond, a special case was presented to the Court by Mr Malcolm and his family of the first part, by Mr Goldie and his family of the second part, and by Mr Macniven and his family of
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the third part, to have the following questions of law determined:— “(1) Were Mr Malcolm and Mr Goldie validly assumed as trustees on the estates of Mr and Mrs M'Dougall, or either of them, under the mutual settlement by the deed of assumption of 1st August 1876? (2) Was Mr Macniven validly appointed trustee on the estates of Mr and Mrs M'Dougall, or on the estate of Mr M'Dougall, by the codicil of 27th August 1886?” The first and second parties maintained that the deed of assumption validly appointed Mr Malcolm and Mr Goldie trustees on the estates of both Mr and Mrs M'Dougall, and the third parties maintained that it did not validly appoint Mr Malcolm and Mr Goldie trustees on the estates of either Mr or Mrs M'Dougall. The third parties maintained that the codicil validly appointed Mr Macniven trustee on Mr and Mrs M'Dougall's estates, or at least on Mr M'Dougall's testamentary estate; and the first parties maintained that it did not. The second parties were willing that both Mr Malcolm and Mr Macniven should be trustees (along with Mr Goldie), but they were especially anxious that their appointments either way should be put beyond doubt.
The Trusts (Scotland) Act 1867 (30 and 31 Vict. cap. 97), sec. 11, enacts—“When trustees have the power of assuming new trustees, such new trustees may be assumed by a deed of assumption executed by the trustee or trustees acting under such trust-deed, or by a quorum of such trustees, if more than two, in the form of the Schedule (B) to this Act annexed, … and in the event of any trustee acting under any trust-deed being insane, or incapable of acting by reason of physical or mental disability, or by continuous absence from the United Kingdom for a period of six calendar months or upwards, such deed of assumption may be executed by the remaining trustee or trustees acting under such trust-deed; provided that when the signatures of a quorum of trustees cannot be obtained, it shall be necessary to obtain the consent of the Court to such deed of assumption on application either by the acting trustee or trustees, or by any one or more of the beneficiaries under the trust-deed.”
The first parties argued—(1) The assumption of Malcolm and Goldie was within the powers of the trust-deed, and was valid. It was only challenged because Stitt had not been consulted. He was not consulted only because he had gone to Australia and could not attend trust meetings, not because the other trustees wished to ignore him and act behind his back. The case of Wyse, relied on by the third parties, was accordingly not in point. Waugh's case was not one of administration, but of feudal title. The petition there was refused because the request was a startling one, and there were other ways of making good the title. (2) Mr M'Dougall alone could not revoke the mutual settlement even to the extent of altering the trustees— Hogg v. Campbell, February 24, 1863, 1 Macph. 647; Craich's Trustees v. Mackie, June 24, 1870, 8 Macph. 898. In any case he could only appoint a new trustee on his own estate. He had attempted to appoint Macniven trustee under the mutual settlement. That appointment was invalid. There was nothing to indicate that he wished to have two different sets of trustees—one on his own estate, another on his wife's. It was plainly intended to have only one trust, and it would be highly inexpedient to separate the administration into two.
The second parties adopted the argument of the first parties.
The third parties argued—(1) The assumption of Malcolm and Goldie was invalid. There was no urgency about such a step, and it could only be taken after all the existing trustees had been consulted. That one of them was in Australia did not validate the procedure—he could have been written to. He might have had reasons against these gentlemen being assumed. The authorities were all against the validity of the assumption— Reid v. Maxwell, February 6, 1852, 14 D. 449; Smith v. Smith, March 20, 1862, 24 D. 838; Kelland v. Douglas, November 28, 1863, 2 Macph. 150; and especially Wyse v. Abbott, July 19, 1881, 32 SLR Vol 32 8 R. 983; and Waugh's Trustees, November 18, 1892, 20 R. 56. The other side got no assistance from the Act of 1867, because Stitt had not been six months absent. (2) They admitted that Macniven could not be appointed by Mr M'Dougall trustee upon his wife's estate, but his appointment as trustee on Mr M'Dougall's own estate was good. The deed was revocable by M'Dougall as to his own estate, and therefore he could appoint a new trustee upon it— Melville v. Melville's Trustees, July 15, 1879, 6 R. 1286; Main v. Lamb, March 10, 1880, 7 R. 688; Beattie's Trustees, May 23, 1884, 11 R. 846; and especially Welsh, October 24, 1871, 10 Macph. 16.
At advising—
The statement is that the late Mr Ronald M'Dougall and his wife, the late Elizabeth Gardiner or M'Dougall, executed a mutual—trust-disposition and settlement for the disposal of their respective estates after their deaths. By this settlement they conveyed to the survivor of themselves, and to Mr James Stitt and four other persons named, and the acceptor or survivor of those persons, the whole estate belonging to them in trust for certain purposes. The trust-deed expressly provides, in the first place, that the trustees named shall have a power of assumption; and in the second place, that the majority of the trustees, original or assumed, and of the surviving acceptors, shall be always a quorum. The
Page: 713↓
Now, the first question which is raised by the special case is whether this was a valid assumption, and the only ground upon which its validity is challenged is that Mr Stitt, the absent trustee who had gone to Australia, was not consulted as to the assumption of the new trustees. I am of opinion very clearly that that averment is altogether irrelevant to affect the validity of the assumption. The assumption is made by a majority of the trustees, and therefore is prima facie unchallengeable, because they, as a quorum under the express terms of the trust-deed, were entitled to act although Mr Stitt had not been able to give his concurrence. But the parties to the case who challenge the assumption appeal to a perfectly well-settled and very reasonable rule, by which it has been held that, although trustees are entitled to act by a majority or by a quorum which may be less than a majority, that does not enable them to exclude from their deliberation any one of their number merely on the ground that there is a majority without him. It is quite manifest that so to act would be directly contrary to the intentions of the truster, because when a truster appoints a certain number of persons to act together as his trustees, he means that they are to meet together and interchange their views upon any question as to which doubt or difficulty may arise, and deliberate and come to a conclusion after consultation together. And therefore for any one or more of them to act separately to the exclusion of one or more of the others is plainly contrary to the trust. But then it is quite consistent with that doctrine to say that when a majority of trustees have come together and consulted, they may proceed to act upon their deliberate opinion although one of their number has not been able to attend the meeting, because that is just the meaning of authorising a quorum or majority to act. It is said that, although they can do that, they must consult the absent trustee. I am not quite sure what is meant by that statement. If it means that trustees who are able to meet are bound by correspondence to take into consultation a co-trustee who is unable to attend their meeting, and therefore unable to interchange his views with them, then I dissent from the proposition, because these matters in the ordinary conduct of business are not to be too strictly regulated, and trustees are not to be tied down any more than other men of business to strict technical rules. The consultation of a trustee by his co-trustees does not in strictness mean that they are to obtain his separate opinion only, but it means that they are all, like other deliberative bodies, to meet together to deliberate; and therefore I am not prepared to assent to the proposition that where a trustee cannot attend, his co-trustees are bound to obtain his opinion before they can arrive at any conclusion, they being a quorum of the trustees without him. But then I do not at all doubt that they are bound to give him an opportunity of attending the meeting, and that, I think, is the full extent of the doctrine to which the parties impugning this deed of assumption refer. If he is accessible it would be quite wrong not to give him notice of a meeting; but then if the trustees are aware that he is resident in Australia, and that he does not intend to come back, to give notice of the meeting would be a mere futile formality. I do not see any reason whatever for holding that the business and administration of the trust is to be interrupted for the sake of any such unmeaning form. If the question depended only upon the settled doctrines of the common law, I should have no doubt that this deed of assumption is perfectly valid. If it were challenged by the absent trustee himself he would no doubt have a title to challenge anything that had been done in his absence without due notice to him, although the statement which he may be supposed to have made in support of that challenge would be absolutely irrelevant, because the hypothesis is that this trustee, coming home after nineteen years, would aver—“My co-trustees performed a certain act of extraordinary administration in my absence; they did not give me any notice to attend the meeting. I was in Australia at the time, and would not have come home for the purpose, and I have not in fact been at home since, but notwithstanding that the proceeding is bad because I had no notice of it.” It appears that the case so imagined would be perfectly extravagant, and what would be extravagant at the instance of the absent trustee is not more reasonable when it is brought forward by beneficiaries, or by an outside purchaser or lender dealing with the trust.
But it was said that, apart from the doctrines of common law, the proceeding complained of was invalid by reason of the provisions of the 11th section of the Trusts Act 1867. Now, I observe, in the first place, upon that statute that it is intended to give additional powers to trustees, and to
Page: 714↓
The second question is of a different kind, and perhaps of some greater delicacy. The question is whether the surviving husband had validly appointed a new trustee on the estates of his wife and himself or on his own estate alone by a codicil of 27th August 1886. Now, by that codicil he refers to the previous mutual trust-disposition and settlement, and on the narrative that he was desirous to make additions “to the mutual trust-disposition and settlement executed by me and my late wife,” so far as it is competent for him to do so, he goes on to appoint his nephew Ronald M'Donald, and his son-in-law James Orr Macniven, “as trustees and executors along with John Malcolm and James Goldie, my sons-in-law, trustees already acting under foresaid trust-disposition and settlement.” Now, the question which is raised by this codicil is very much simplified by the reasonable concession that was made by the party maintaining its validity, because it is not maintained that Mr M'Dougall had power to appoint a new trustee upon his wife's estate. On the contrary, a concession is made to the other side that he had no such power, and that as far as the wife's estate is concerned the appointment is invalid. The only question remaining therefore is, whether he has made any valid appointment of a trustee upon his own separate estate. Now, in considering that question, I think we must assume that it was competent for him to do so. I do not know that it is necessary to decide that point, but at all events I assume that there can be no doubt as to his power to appoint a new trustee upon his own separate estate. But then the question arises whether he has done so, or whether he intended to do so. I am unable to come to the conclusion that he had any such intention. I think when this introductory clause is read together with the contents, it is quite clear that what he intended to do was to appoint new trustees to act under the existing trust upon both estates. That I infer, in the first place, from the reference to the mutual trust-disposition, which constitutes one trust only, although there are two separate estates to be administered by it; and in the second place, from the language in which he says that the new trustees are to act along with those who are “already acting under the foresaid trust-disposition and
Page: 715↓
We were referred to the case of Welsh v. Welsh's Trustees as an authority against the view which I have just now expressed, but it does not appear to me to be an authority in point. In the first place, there was in that case a much clearer separation of the two trusts in the original trust-deed than I find in the present case, but what is more material is that the question whether the surviving spouse either could appoint or had, in point of fact, appointed trustees to act upon her separate estate was not raised before the Court, and was not considered. The only question raised was whether her deed recalling the nomination of trustees upon the husband's estate, and appointing new trustees in their place, was good or bad. What the Court held, as the Lord President said, was that under the powers conferred by that trust (because the decision proceeded entirely upon a consideration of the trust-deed) the lady was not entitled to innovate on the settlement of her husband's estate either as to administration or as to destination. And then his Lordship goes on to say that, that being so, the three questions put to the Court must necessarily be answered in the negative, but when one turns to those three questions, it appears that there is not one of the three that raises the point we are now considering, and therefore the case does not appear to me to be an authority. All the parties concerned appear to have been satisfied that Mrs Welsh's appointment was good so far as regards her own estate, but whether they were justified in that conclusion or not, I do not know, because the question was not brought before the Court in any form.
I am therefore of opinion that we ought to find, in answer to the first question, that Mr Malcolm and Mr Goldie were validly assumed as trustees on both Mr and Mrs M'Dougall's estates, and answer the second question in the negative.
The Lord President was absent.
The Court, in answer to the first question, held that Malcolm and Goldie were validly assumed as trustees on both Mr and Mrs M'Dougall's estates, and answered the second question in the negative.
Counsel for the First Parties— Dundas— Blair. Agent— A. C. D. Vert, S.S.C.
Counsel for the Second Parties— Leslie. Agent— W. C. B. Christie, W.S.
Counsel for the Third Parties— H. Johnston— Craigie. Agents— Constable & Johnstone, W.S.