Scottish Court of Session Decisions

Mr Alexander Paton, of Cowden Park, Alloa, died on 18th September 1860 leaving a trust-disposition and settlement, of which the sixth purpose was as follows:—“I hereby direct and appoint my said trustees, within one year after my death, if practicable, or as soon thereafter as may be, to make payment of the sum of £5500 sterling to the Minister and Session of the First United Presbyterian Congregation, Alloa, at the time, and their successors in office, in trust for the education of such children as may be connected with the foresaid works of Kilncraigs, whom failing, or in addition to whom, if in the opinion of the said minister and session and their fore-saids the funds shall admit of such addition, of poor children connected with the said congregation, whom failing, or in addition, to whom, if in the opinion of the said minister and session and their foresaids the funds shall admit of such addition, of poor children in the town of Alloa: Declaring that the said minister and session shall immediately, on receiving payment of the said sum, lend out the same on good heritable security in name of themselves and their foresaids in trust as aforesaid, and the said minister and session and their foresaids shall have full power to change or renew the loans from time to time as may be necessary, and they shall keep the said sum entire, and shall in nowise infringe or encroach upon the same, but shall apply only the free annual interest or profits of the same in payment, first of the cost of a school-house and teacher's dwelling-house to be erected on a suitable site in the vicinity of the foresaid works of Kilncraigs, and which cost shall amount to a sum between £700 and £800 sterling; secondly, of salaries to teachers, assistants, and others; and thirdly, of such relative incidental expenses as the said minister and session and their foresaids may find it necessary to incur; and further, declaring that the said minister and session and their foresaids shall have the sole right and power of making regulations as to the education to be imparted to the foresaid children, of admitting children to the benefits of such education, of electing teachers, assistants, and others, fixing the duration of their holding office, and assigning their several duties, and generally of exercising whatever management, superintendence, and control may bo necessary in reference to the arrangements connected with the purposes of this bequest.” This legacy, together

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with another of £450 which accrued owing to the failure of another trust purpose, was duly paid over to the minister and session, who in 1865 purchased a site, erected a school and teacher's house within the burgh of Alloa, and appointed a teacher. The school was carried on by them in accordance with the trust directions up to 1875. From that date up to 1890 the income of the trust was handed over to Messrs John Paton & Company, the proprietors of Kilncraigs factory, who virtually managed the school, the children attending it being connected with that factory. In 1890 Messrs Paton decided to terminate their management of the school and the contribution which they had been giving, and the trustees thereupon decided to reduce the teaching staff and teach only the higher standards. In 1892 they tried the experiment of opening the school to any children who chose to attend.

On May 18th 1898 a petition was presented to the Court by the trustees, in which, after narrating the circumstances set forth above, they stated that, owing to the free education supplied by the Alloa Burgh School Board, the school was no longer required, the number of scholars attending it at that time being only nine. The petitioners averred accordingly that the direct object of the truster's bequest had practically failed, and that it was necessary that some kindred object should be devised carrying out the spirit of the truster's intention, and requested the Court to settle a scheme with this view. The petitioners suggested “that the balance of free income, after providing for a retiring allowance to Mr Stevenson (the present teacher) should be devoted to providing £5 bursaries to enable the bursars to attend the secondary or technical school of the Alloa Academy, which provides instruction in various classes of a literary and scientific character, the bursaries to be awarded after competitive examination, and to be tenable for three years. Upon the retiring allowance to Mr Stevenson ceasing, the petitioners suggested that the income then set free should be applied in providing scholarships of £30 each, to be tenable for three years, for enabling the holders to attend one of the Scotch universities or science or art colleges, or technical schools, with discretionary powers to those administering the funds to alter the amount of the bursaries or scholarships as they might think fit, and as the funds would permit. With a view to benefiting the special classes favoured by the truster, the petitioners suggested that five-tenths of the bursaries and scholarships should be made available to children connected with Kilncraigs factory; three-tenths to poor children connected with the First United Presbyterian Congregation, Alloa; and two-tenths to poor children in the town of Alloa.” The petition then proceeded—“The petitioners, after full consideration, desire to be relieved of the trust, and they suggest that the Alloa Burgh School Board should be appointed in their room.” They stated that the School Board had intimated their willingness to act, and prayed the Court “to appoint the School Board of the burgh of Alloa to take over the management and application of the said bequests from the petitioners in the future, or alternatively to appoint a judicial factor upon the said bequests, and to authorise the petitioners to transfer to the appointees the whole funds and heritage thereof, and to declare the trust in the petitioners and their successors in office at an end.”

Answers were lodged by the School Board in which they approved of the petitioner's suggestions as to a future scheme, with certain modifications, and stated that “on such modifications and alterations being satisfactorily adjusted, they would be willing to take over the trust-estate and man agement thereof.” Answers were also lodged by certain workers at Kilncraigs Works who offered no objection to the proposed transference, but called the attention of the Court to their rights under the settlement, and claimed to be heard thereafter with reference to the settlement of a scheme.

The Court remitted to Mr J. Edward Graham, advocate, to report on the questions raised in the petition and answers.

Mr Graham's report contained the following observations with regard to the proposed transference:—“The question whether your Lordships will authorise the transference of a trust such as this from a body of trustees expressly nominated by the truster to another and entirely different set of trustees is an important one. There can, I think, be no doubt that in many cases the interests of education would be served by the transference of endowments such as the present from trustees having no necessary connection with such interests, to school boards to whom the charge of education in the district is entrusted by the State; and the trustees of many similar endowments would probably be glad to be in like manner relieved of their duties and responsibilities in connection therewith. But I find no authority or precedent for such a transference. In the case of Philp's Trust, June 28, 1893, 20 R. 900), a petition by a body of governors appointed under the Educational Endowments (Scotland) Act 1882, for authority to alter their scheme so as to transfer part of the trust property to the school board, who were to undertake to supply the special education given by the governors, was refused on the ground that what was proposed was alienation of part of the capital of the trust-estate in favour of a statutory board external to and independent of the trust, and that the trustees could have no control of the alienated property. The only distinction between that case and the present seems to be that in Philp's Trust only a part of the estate was proposed to be alienated, and the existing trustees would have had no control over the part so alienated, whereas in the present case it is proposed to transfer the whole trust-estate so that the new trustees would come in the place of and undertake the responsibilities of the old ones, and would be bound to administer the funds in

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accordance with any scheme approved by your Lordships. In the case of the Governors of Jonathan Anderson's Trust, March 12, 1896, 23 R. 592, the transference of the use of certain buildings and of the income of certain funds to a school board was sanctioned, but there was no question of alienation of capital.

“It seems clear that at common law a trustee has no power to devolve the trust upon other persons, and in the present case the trust is conferred not only on the minister and session of the said church at the time, but also on ‘their successors in office.’ Are the present holders of office entitled to deprive their successors of the duty or privilege of administering this trust, and is the said duty not one necessarily appertaining to the office of minister or member of session, and therefore one which such minister or member is not entitled to decline? …

The petitioners make the alternative suggestion of an appointment of a judicial factor, but if your Lordships should be of opinion that the petitioners ought to be relieved of their trust, it would, I think, be very much better that the trust should be transferred to the School Board, who are the natural guardians of education in the district. There is no prospect of a trust such as this coming to an end, and therefore new appointments of successive judicial factors would be required.”

Argued for petitioners—The holder of an office was not bound to accept a trust imposed upon him — ex officio — Shepherd v. Hutton's Trustees, February 24, 1855, 17 D. 516 at 520. Moreover, gratuitous trustees were entitled to resign— M'Connell's Trustees Petitioners, December 16, 1897, 25 R. 330. Their resignation, however, would involve anomalous consequences, and accordingly the Court should allow the proposed transference. Such transference had been made in Steedman v. Malcolm, June 23, 1842, 4 D. 1441; Managers of Prime Gilt Box of Kirkcaldy, May 27, 1859, 21 D. 871. In cases of charitable bequests, where the object had failed, the Court had transferred to ex officio trustees— Governors of Jonathan Anderson Trust, March 12, 1896, 23 R. 592; Harrison, June 16, 1893, 20 R. 827; M'Culloch v. Kirk-Session of Dalry, July 20, 1876, 3 R. 1182; Low November 17, 1865, 4 Macph. 35. The case of Philp's Trustees, June 27, 1893, 20 R. 900, was different, because there the petitioners proposed the alienation of part of the trust property, and there was no security that the assignees would devote the funds to the purposes intended, there being no separate trust created.

At advising—