Scottish Court of Session Decisions

James Penny of Park, in the counties of Aberdeen and Kincardine, died on the 22nd day of January 1902 possessed of estate of the net value of about £20,000, of which about £19,500 was heritage, and leaving a general settlement dated 10th September 1901, and subsequently registered 27th January 1902.

The testator's settlement was:—“I, James Penny of Park, seeing that I intend to make a will for regulating the division after my death of my means and estate, do hereby, in order to settle the same meantime until I have fully and ripely considered the terms thereof, appoint my wife to be my sole trustee and executrix, with power to her as trustee and executrix foresaid to borrow money on the security of my estate either for the purpose of setting up any of

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my children in business or on their marriage, or for the purpose of paying estate duty, or for the proper upholding of the buildings on the estate of Park, all payments made to children being reckoned as part of their ultimate share when the same falls to be divided; and I leave my said wife the liferent of my whole means and estate of every kind, the same to be realised and divided equally on her death among my children, share and share alike, the issue of predeceasing children taking among them the share which would have fallen to their parents if in life: And I grant full powers of sale by public roup or private bargain: And I reserve my own liferent; with full power at any time to revoke these presents in whole or in part: And I consent to registration hereof.…”

The testator was survived by his wife Mrs Mary Penny and by eight children, viz,, James Penny of Lochwood, Mrs Mary Penny or Adams, Mrs Alice Penny or Henry, William Penny, Robert Penny, Charles Penny, Kate Penny, and Mrs Maria Penny or Hill. James Penny of Lochwood died on 1st November 1905 survived by his wife and three pupil children. Before his death he had received a payment from his father's trustees of £609, 17s. 9d. under the powers contained in the general settlement for the purpose of setting him up in business. He left a trust-disposition and settlement whereby he conveyed to trustees his whole estate, and by the third purpose thereof he directed his trustees, to whom he also gave power to advance the capital if necessary, to pay over to his wife during her lifetime the whole annual income and profits to be applied by her in her own maintenance and support, and in the education, maintenance, and support of any of his children who might be under twenty-one years of age and unable to maintain themselves, and by the fifth purpose he directed his trustees, on the death of his wife and on his youngest child attaining majority, to divide his whole means and estate among his children equally, share and share alike. His whole estate, exclusive of any right he might have to a share of his father's estate, was estimated not to exceed £1000, and in order that his widow might be advised whether or not she should claim her legal rights, a Special Case was presented to ascertain what her husband's rights in the succession of his father might be in the circumstances which had arisen, namely, the death of her husband during the survivance of his mother, the liferentrix under his father's settlement.

The parties to the special case were (1) the trustees, an additional trustee having been assumed, acting under the general settlement of James Penny of Park, first parties; (2) the whole surviving children of James Penny of Park (and the marriage-contract trustees of one of them), second parties; (3) the testamentary trustees of James Penny of Lochwood, third parties; (4) the widow of James Penny of Lochwood, fourth party; (5) the tutors and curators to the pupil children of James Penny of Lochwood nominated in his trust-disposition and settlement, fifth parties.

The second, third, and fourth parties maintained that, on a sound construction of the general settlement of James Penny of Park a share of the fee of his estate vested absolutely at his death in the children who survived him. The third and fourth parties maintained that the share which so vested in James Penny of Lochwood fell to be accounted for to the third parties as his testamentary trustees and executors, and to be administered as part of his estate. In any event they maintained that the payment which the said James Penny of Lochwood received from his father's trustees before his death as aforesaid vested in him, and became ipso facto his property. The fifth parties maintained that as James Penny of Lochwood predeceased the period of division of the estate of the said James Penny of Park, namely, the death of Mrs Mary Penny, who was still alive, no share of the fee of the said estate had vested in him, and the share of said estate destined to him was not carried to his trustees (the third parties) by the general conveyance in his trust-disposition and settlement. The fifth parties further maintained that the payment which James Penny of Lochwood received from his father's trustees before his death never vested in him, and was not carried by the general conveyance in the trust-disposition and settlement.

The following questions of law were submitted for the opinion and judgment of the Court:—“(1) Did the fee of the shares of the estate of the truster vest in his children a morte testatoris? or Did said estate vest in the children of the truster subject to defeasance in the event of their predeceasing their mother the liferentrix, leaving issue? or is the vesting of said estate postponed till the expiry of said liferent? (2) Did payments made during the existence of the liferent to children of the truster in terms of the powers contained in his general settlement vest absolutely? or did such payments fall to be replaced in, or accounted for to, the truster's estate, should such children predecease the liferentrix?” After the conclusion of the hearing the following question was, at the suggestion of the Court, substituted for the original second question, viz.—“In the event of the first branch of the first question being answered in the negative, does the amount of the payment made to James Penny of Lochwood during his mother's lifetime fall to be deducted from the share of the estate payable to his children?”

Argued for the fifth parties—Words of “predecease” were referable to the period of distribution— Bowman v. Bowman, July 25, 1899, 1 F. (H.L.) 66, 36 S.L.R. 959, per Lord Watson—in the same way that words of survivorship were referable to the period of distribution— Young v. Robertson, 1862, 4 Macq. 314. Consequently the testator's children took no indefeasible vested right a morte testatoris. The shares vested a morte testatoris, subject, however, to defeasance in the event of the children predeceasing

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the liferentrix leaving issue, the present case being indistinguishable from and ruled by Cairns' Trustees v. Cairns, 1907, S.C. 117, 44 S.L.R. 96. The only conceivable distinction from Cairns was that here there was an implied power to advance part of the shares to the children, but a power to advance did not accelerate the period of vesting and was equally consistent with postponement of vesting— Bowman v. Bowman, ( cit. sup.), Lord Watson at p. 73–75; Fyfe's Trustees v. Fyfe, February 8, 1890, 17 R. 450, per Lord Rutherfurd Clark at p. 453, 27 S.L.R. 329. The attempted distinction between cases where “predeceasing” was unambiguously referable (or “made expressly referable”) to the period of division, and cases where this was not so, had been unsuccessfully argued in Cairns' Trustees. Alternatively, they submitted that vesting was postponed till the death of the liferentrix— Parlane's Trustees v. Parlane, May 17, 1902, 4 F. 805, 39 S.L.R. 632; Forrest's Trustees v. Mitchell's Trustees, March 17, 1904, 6 F. 616, 41 S.L.R. 421. They conceded that the payment or advance made formed a burden on the share.

Argued for the second, third, and fourth parties—There were two classes of cases with destinations-over to heirs or issue,—(1) where the destination-over was unambiguously referable to the period of division, (2) where the destination-over was capable of being read either as referable to the period of distribution or to some other period, e.g., the testator's death. Excluding the case of Cairns' Trustees v. Cairns, cit. sup., every case falling within the second category had been decided in favour of vesting a morte. Thus indefeasible vesting a morte had been held to take place in Bowman v. Bowman, cit. sup.; Thompson's Trustees v. Jamieson, January 26, 1900, 2 F. 470, 37 S.L.R. 346; Taylor's Trustee v. Christal's Trustees, June 24, 1903, 5 F. 1010, 40 S.L.R. 738; Ogles Trustees v. Ogle, February 4, 1904, 6 F. 359, 41 S.L.R. 284; and even where the destination-over was unambiguously referable to the period of distribution— Matheson's Trustees v. Matheson's Trustees, February 2, 1900, 2 F. 556, 37 S.L.R. 409. The circumstances here were very similar to those in Taylor's Trustees v. Christal's Trustees, cit. sup., which should be followed. They admitted that “predeceasing” was primarily and in the absence of other indications to be read as referable to the period of division, but as in Bowman v. Bowman, cit. sup., so here there were contrary indications sufficient to displace the primary presumption. There was (1) a power of advance—a circumstance expressly founded on in Bowman by Lord Shand at p. 77, and treated as favourable to early vesting in Wilson's Trustees v. Quick, February 28, 1878, 5 R. 697, 15 S.L.R. 395, and in Matheson's Trustees v. Matheson's Trustees, cit. sup.; (2) the fact that the power of advance was limited to children and did not apply to grandchildren; (3) the fact that the estate was almost entirely heritage, which furnished a reason for postponement of division, i.e., that testator's widow might enjoy the liferent thereof; and (4) the absence of anything tending to show that payment and vesting were postponed in order to determine a class. In Parlane's Trustees v. Parlane, cit. sup., and in Forrest's Trustees v. Mitchell's Trustees, cit. sup., the destination-over was unequivocally referable to the period of division.

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