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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Turner's Trustees v. Fernie and Others [1908] ScotLR 708 (30 May 1908) URL: http://www.bailii.org/scot/cases/ScotCS/1908/45SLR0708.html Cite as: [1908] ScotLR 708, [1908] SLR 708 |
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Page: 708↓
A testator directed his executor to pay to his Scotch trustees certain sums to be invested by them in the purchase of annuities for certain parties named. He further provided—“And I declare that all annuities … shall be purchased … from the British Government or from the Scottish Widows' Insurance Company, Limited, of Edinburgh, … and any other first-class company or annuity office, as my said executor or Scotch trustees shall in this behalf… think fit,…” The annuities were not declared alimentary.
The beneficiaries having called on the trustees to pay over the principal sums instead of investing them in the purchase of annuities, held that the beneficiaries were entitled to payment.
Tod v. Tod's Trustees, March 18, 1871, 9 Macph. 728, 8 S.L.R. 445, followed. Hutchinson's Trustees v. Young, October 29, 1903, 6 F. 26, 41 S.L.R. 14, distinguished and commented on.
By his will the late Robert Blackburn Turner of Goosery, Bengal, India, who died, domiciled in Scotland, on 17th March 1906, directed his executor to pay to his Scotch trustees the sum of Rs. 10,000, to be invested by them in the purchase of an annuity for the benefit of Margaret Fernie, then residing in Glasgow, for her life. He also directed his executor to pay to the said trustees a sum sufficient for certain purposes therein mentioned, to be held upon the trusts therein declared, inter alia—“To set apart three several sums of Rs. 15,000 each, and to invest each of the said three sums of Rs. 15,000 in the purchase of three several annuities, that is, Rs. 15,000 to be expended in the purchase of each such annuity, one in the name and for the benefit of my sister Jane Wilson, wife of William Wilson, residing in Possil Park in Glasgow aforesaid, another for the benefit and in the name of my sister Jane Fleming, the widow of Joseph Fleming of Glasgow aforesaid, and the third for the benefit and in the name of my sister Martha Morgan, the wife of James Morgan, at present residing in Slottville, in the state of New York, in the United States of America.”
The testator further provided—“And I declare that all annuities which by this my will I direct to be purchased by my executor or my Scotch trustees shall be purchased by him or them from the British Government or from the Scottish Widows' Insurance Company, Limited, of Edinburgh, in Scotland, and any other first-class company or annuity office, as my said executor or Scotch trustees shall in this behalf think fit, and that such annuities shall be made payable to the persons in whose names and for whose benefit they have respectively been purchased, in equal half-yearly or quarterly portions, and shall be enjoyed by them respectively as their respective separate property, free from the control of any husband to whom any of them respectively may be married.”
The annuitants having called on the trustees to pay them the principal sums instead of investing the money in the purchase of annuities, a special case was presented for (1) the trustees, who were in doubt as to their power to make such payment, and (2) the annuitants.
The case, inter alia, stated—“(6) The purchase of Government annuities is mainly regulated by the Acts 16 and 17 Vict. cap. 45, and 45 and 46 Vict. cap. 51, section 2. Section 25 of the former Act provides that ‘the right, title, interest, and benefit in and to any annuity … purchased under the provisions of this Act shall not be assignable by the original proprietor thereof so as to enable the assignee to receive the same during the lifetime of the said proprietor, except in case of the insolvency or bankruptcy of an individual proprietor, when the same shall become the property of his or her assignee or assignees for the benefit of his or her creditors.’ The section further provides that in case of any such bankruptcy or insolvency the commissioners for the reduction of the national debt shall repurchase and cancel the annuity, the receipt of the assignee or assignees to the commissioners being constituted a sufficient discharge thereof. (7) The first parties have ascertained that according to the practice of the Department with regard to annuities issued by it, while the right to an annuity itself cannot, apart from insolvency or bankruptcy, be assigned, the half-yearly payments are made either to annuitants themselves or parties holding powers of attorney granted by annuitants; and further, that under their regulations the Department cannot, or at any rate will not, grant a bond of annuity containing a clause that the annuity shall be strictly alimentary and shall exclude a trustee in bankruptcy.
In these circumstances the first parties maintain that they are not bound to pay over said sums to the second parties, and that they are bound to purchase the annuities on behalf of the second parties; or otherwise, that they are entitled in their discretion to purchase annuities for the second parties, or such of them as they
Page: 709↓
may consider proper. The second parties respectively maintain that having intimated a demand for payment of the said capital sums… the first parties, as trustees foresaid, are bound to make payment.” The questions of law were—“(1) Are the first parties bound to purchase annuities for behoof of the second parties as directed by the will? (2) Are the first parties entitled in their discretion to purchase annuities for behoof of the second parties or such of them as they shall consider proper? Or (3) Are the first parties bound to make payment to the second parties respectively of the capital sums directed to be invested in the purchase of annuities on their behalf?”
Argued for the first parties—The first parties were willing to pay over the principal sums if they were in safety to do so. The direction to purchase annuities, however, indicated an intention on the part of the testator to protect his beneficiaries against loss, and in these circumstances the trustees were bound, looking to the recent case of Hutchinson's Trustees v. Young, October 29, 1903, 6 F. 26, 41 S.L.R. 14, to purchase annuities. The present case was distinguishable from those of Tod v. Tod's Trustees, March 18, 1871, 9 Macph. 728, 8 S.L.R. 445, and Murray v. Macfarlane's Trustees, July 17, 1895, 22 R. 927, 32 S.L.R. 715, where it was held that trustees were not bound to purchase annuities in face of a demand by the beneficiaries for payment of the principal sums—for the terms of this bequest clearly inferred a direction to the trustees to purchase such annuities as were alimentary and not assignable. As to the effect of declaring an annuity alimentary, reference was made to Cosens v. Stevenson, June 26, 1873, 11 Macph. 761, 10 S.L.R. 526.
The second parties were not called upon.
These ladies now come forward and they ask the trustees to pay over to them the capital sums mentioned in the will, because they say that they do not desire to receive them in the form of annuities, as provided for in the will, it being their intention, should they receive them in that form, to realise the annuities and possess themselves of the capital sums. In fact, the situation here is exactly like the situation that existed in the case of Tod's Trustees, 9 Macph. 728. The trustees, however, have felt bound to resist that proposal, professedly on the authority of the decision in the recent case of Hutchinson's Trustees, 6 F. 26.
I confess, if the matter had to be considered in the light of these two decisions, I would have found a difficulty in reconciling the case of Hutchinson with the case of Tod, and if the matter were to come up in a form requiring it I think it would be necessary that these decisions should be reconsidered. But here I think no such necessity arises, for the present case is easily distinguishable from that of Hutchinson. I think the decision in the case of Hutchinson went on the ground that the judges found there an expressed anxiety on the part of the testator to protect the legacies she was giving, i.e., not to give the legacies in the form of a capital sum to the beneficiaries. There that anxiety was extracted from two provisions in the will. First, no option was given to the trustees, they were to purchase government or savings bank annuities only. Secondly, the annuities were declared to be strictly alimentary. Here neither of these provisions is present. The direction in the will to purchase Government annuities is not specific as it was in Hutchinson; it is merely mentioned as one of several investments that the trustees may in their discretion make. In other words, the mention of Government annuities can in no way be attributed to a desire for cutting down the rights of the annuitants; it is obviously introduced for the sole purpose of ensuring the safety of the provisions. And there is no declaration that the annuities are to be alimentary only. That seems to take the present case out of the circumstances that had to be considered in the case of Hutchinson, and to bring it into line with Tod, and many other cases, in which a similar decision has been arrived at. That leads me to the conclusion that the beneficiaries here are entitled to what they ask.
I reserve my opinion as to the difficulty of reconciling the case of Hutchinson with that of Tod. But if this matter should come up again in a form requiring the reconsideration of the more recent decision, I think that greater attention should be given to the differences between the various classes of Government annuities than seems to have been done in the case of Hutchinson.
Page: 710↓
I see no evidence, however, that this testator in directing his trustees to buy annuities intended anything more than to bestow these annuities as a convenient form of investment. There is no indication that he thought these ladies were likely to run into debt or to require protection by way of restriction, and that, I think, is why the annuities he selected were such as might be realised by the annuitants.
In these circumstances, the principle of Tod v. Tod's Trustees, 9 Macph. 728, and other cases, such as White's Trustees v. Whyte, 4 R. 786, is, I think, clearly applicable, because the Court ought not to compel a beneficiary to accept a gift in a disadvantageous form when it is in his power by calling it up to obtain possession of the principal sum.
As to the power to select investments, it was given, I think, for the ordinary and natural purpose of securing safety; and accordingly the trustees are directed to purchase from the Government or from a first-class company or annuity office. The beneficiaries demand payment of the money which it is proposed to sink in the purchase of annuities; and since there is nothing in the will to prevent their turning the annuities into money if they please, it is for them to determine whether it is more for their advantage to take their legacies in the one form or in the other. I think the case of Tod v. Tod's Trustees, 9 Macph. 728, which follows a long series of decisions, is sufficient authority for declaring that the beneficiaries are entitled to what they demand.
The Court answered the third question in the case in the affirmative, found it unnecessary to answer the other questions, and decerned.
Counsel for First Parties— Chree. Agents— M. MacGregor & Company, W.S.
Counsel for Second Parties— Cullen, K.C.— Valentine. Agents— Alexander Morison & Company, W.S.