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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Macduff v. Spence's Trustees [1908] ScotLR 135 (21 November 1908) URL: http://www.bailii.org/scot/cases/ScotCS/1908/46SLR0135.html Cite as: [1908] SLR 135, [1908] ScotLR 135 |
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Page: 135↓
After bequeathing legacies and annuities a testatrix directed her trustees to hold the residue of her estate and “to apply the interest or annual proceeds thereof, or so much of said interest or annual proceeds thereof as they may deem expedient, towards such charitable purposes within the city or county of Aberdeen as my trustees shall think fit, full discretionary power being hereby conferred on my trustees as to the selection of the said charitable purposes above referred to.” The testatrix's sole heir sought to have this bequest declared void in respect that the subject of the bequest was left uncertain and optional in amount.
Held that the discretion as to the amount to be distributed conferred by the testatrix upon the trustees did not invalidate the bequest, and hat if in the future the trustees should fail to distribute the whole of the income any question regarding such possible surplus could only be determined when it emerged.
On the 23rd September 1907 Mrs Margaret Lucy Spence or Macduff, residing at 8 Greenhill Gardens, Edinburgh, brought an action against Lachlan Mackinnon, advocate in Aberdeen, aud others, the trustees acting under the trust-disposition and settlement of the late Miss Caroline Jane Spence of 32 Albyn Place, Aberdeen, dated 11th May and recorded 26th November 1906. In it the pursuer, inter alia, (1) sought declarator that the directions as to the residue of the trust estate contained in the thirteenth purpose of the trust-disposition and settlement were void, invalid, and ineffectual,
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and that the residue formed intestate succession of the testatrix and belonged to the pursuer as heir-at-law and sole heir in mobilibus. The thirteenth purpose of the trust-disposition and settlement was:—“As regards the residue of my estate, including therein the capital of the sums required to meet the annuities hereinbefore provided, as these shall respectively expire, I appoint my trustees, subject to such further bequests as I may hereafter make, to hold, settle, and secure the same in their own names, and to apply the interest or annual proceeds thereof, or so much of said interest or annual proceeds thereof as they may deem expedient, towards such charitable purposes within the city or county of Aberdeen as my trustees shall think fit, full discretionary power being hereby conferred on my trustees as to the selection of the said charitable purposes above referred to, and I appoint that the capital of the residue of my said estates shall be called ‘Miss Caroline Jane Spence's Fund.’”
[ See also narrative in opinion of Lord Dundas.]
The Lord Ordinary ( Johnston) on 18th December 1907 pronounced an interlocutor declaring, in terms of the first conclusion, that the bequest of residue was void for uncertainty.
Opinion.—“By her settlement, dated 11th May 1906, the late Miss Caroline Jane Spence, of 32 Albyn Place, Aberdeen, as regards the residue of her estate, appointed her trustees ‘to hold, settle, and secure the same in their own names, and to apply the interest or annual proceeds thereof, or so much of said interest or annual proceeds thereof as they may deem expedient, towards such charitable purposes within the city or county of Aberdeen as my trustees shall think fit, full discretionary power being hereby conferred on my trustees as to the selection of the said charitable purposes above referred to, and I appoint that the capital of the residue of my said estates shall be called “Miss Caroline Jane Spence's Fund.” ’
“It is admitted that but for the words which I have underlined, this would be a good bequest for behoof of such Aberdeen or Aberdeenshire charities as the trustees of the testatrix might select. But it is maintained that the introduction of these words vitiate the bequest by creating uncertainty, not in the objects, but in the subject of the bequest. It is with regret that I come to the conclusion that this contention must prevail.
The trustees, in answer to my question what did the words underlined import, gave three alleged possible explanations.
First. A direction to the trustees to apply the whole income in charity, but with a discretion to distribute among different charities.
Second. A direction to the trustees to apply the whole income in charity, but with a discretion as to distributing the whole income within the year of its accruing, anything left over being merely carried forward into the next year.
Third. A direction to apply the whole or such part of the income as they deem expedient in charity, their discretion to be exercised within the year, and such part as they do not so apply falling into intestacy.
The only one of these suggested constructions which I think it is really necessary to consider is the first, and I would gladly give effect to it if I thought the words used would bear it. But I cannot do so without substituting for the actual words used certain perfectly different words, having a meaning which the words used can by no natural construction bear. I am practically asked to read the words ‘or so much of said interest or annual proceeds thereof as they may deem expedient’ as equivalent to ‘in such proportions as they may deem expedient.’ In the first place, it is impossible in this manner to get rid of the disjunctive ‘or,’ which makes it clear that the testatrix had in mind two different and alternative subjects of the bequest, viz.,—the interest or annual proceeds of her residue, and so much of said interest or annual proceeds as the trustees might deem expedient. And in the second place, even if that initial difficulty could be got rid of, it would, I think, be impossible, in the collocation in which they occur, to paraphrase the words used in the manner suggested.
If, then, the words must bear their natural meaning in the collocation in which they are found, it follows that the testatrix has given a discretion to her trustees not merely, as she expressly states, ‘as to the selection of the said charitable purposes above referred to,’ but as to what part of her estate shall be given in charity, and what part shall fall into intestacy, or remain with the heir and executor, for the pursuer happens to fill both positions. Such discretion I do not think that the testatrix could legally and competently confer upon her trustees.
There can be no doubt of the law that in order to disinherit either heir or executor the testator must by his settlement substitute somebody else, whether a person or a class of persons, to take the beneficial interest in his estate— M'Caig v. University of Glasgow, 1907 SC 231. There is here no question as to the certainty of the class of persons or objects meant to be benefited, for it has been accepted since the case of Crichton v. Grierson, 1828, 3 W. & S. 329, that the term ‘charitable purposes’ was sufficiently descriptive of a particular class of objects. The real import of that judgment is that a description which is not in itself really ‘particular’ shall, out of favour to charity, be deemed to be ‘particular,’ and this has been the law of Scotland since its date. But then in the present case, what portion of the residue or income of residue is given to this particular purpose? That the testatrix has not defined, but has left to her trustees. They may give all, or some, or none. That is an invocation of the alienum arbitrium which the law does not
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countenance. It has gone no further in that direction than to say that where the truster defines particular objects he may leave it to the discretion of others to distribute his estate among those objects— Hill v. Burns, 1826, 2 W. & S. 80. It will not support such a bequest that the trustees may apply the whole income to charity. The question is not whether the trustees may so apply it, but whether they are bound so to apply it— Morice v. Bishop of Durham (1804), 9 Ves. 399, and other cases. Nor can it be maintained that, so far as they choose to apply the income in charity, the bequest is good, and only, so far as they fail so to apply it, the income falls into intestacy. If that argument were good, pari ratione the bequests in Blair v. Duncan, 4 Fr. (H.L.) 1; Grimond, 7 Fr. (H.L.) 90, and similar cases, must have been sustained, instead of being found invalid.
As I think that the testatrix has left it in the discretion of her trustees how far her heir and executrix was to be disinherited, and as I think that she could not competently leave such discretion to her trustees, I am brought to the conclusion that this bequest is void.
In these cases there is always an appeal to the principle of the benignant interpretation of charitable bequests. I had to consider the extent to which that principle has ever actually been carried in the recent case of Hay's Trustees v. Baillie, 45 S.L.R. 908. I find that it has led to fixing that charitable is a sufficiently particular definition of a purpose to receive effect— Crichton v. Grierson, supra—and to the acceptance as sufficient of a very sketchy description of the actual charitable purpose contemplated, leaving to the Court to fill in the detail—as in the Morgan Hospital case, 19 D. 918, 3 Macq. 134, for example. But I cannot find that it has been successfully appealed to to any other or wider extent or effect, and certainly not for the justification of the substitution for words actually used, of words having a totally different meaning, in order to give effect to the general indication of a charitable intention.
I shall therefore grant decree in terms of the first conclusion of the summons, and I think that the expenses of the case so far should come out of the estate. Quoad ultra I shall continue the case and grant leave to reclaim.”
The defenders reclaimed, and argued—The intention of the testatrix was to confer upon her trustees a distributive power to carry over income into the following year. Such words were only intended to confer wide latitude of time of paying out— Dick's Trustees v. Dick, 1907 S.C. 953, per the Lord President at p. 959, Lord Dundas at 958, 44 S.L.R. 680, 1908 S.C. (H.L.) 27, per Lord Chancellor at p. 28, [1908] AC 347, 45 S.L.R. 683. Even if the Lord Ordinary's construction of the deed were sound, there was here noquestion of uncertainty as to the objects of the bequest, for these were admittedly valid charitable purposes, and where there are ascertained beneficiaries, it was competent to give trustees discretion as to the amount of the bequest— Macfarlane's Trustees v. Macfarlane, December 10, 1903, 6 F. 201, 41 S.L.R. 164; MacTavish v. Reid's Trustees, November 2, 1904, 12 S.L.T. 404; Chambers' Trustees v. Smith, April 15, 1878, 5 R. (H.L.) 151, 15 S.L.R. 541; M'Laren on Wills, p. 1196. No authority could be cited for any other requisite of validity than that the beneficiary should be ascertained and be a legitimate object of bequest. The question in Grimond, March 6, 1905, 7 F (HL) 90, 42 S.L.R. 466, and Blair, December 17, 1901, 4 F. (H.L.) 1, 39 S.L.R. 212, cited by the Lord Ordinary, was whether the object to which the trustees must necessarily give the funds was charitable, and that did not arise here. In Morice, (1804) 9 Ves. 399, the legacy was not charitable and did not receive the favourable construction. Even if the clause in this will were invalid as a direction to the trustees, it was still valid as a power conferred upon them.
Argued for pursuer (respondent)—The Lord Ordinary's construction of the will was sound, and the natural meaning of the words in dispute was that power was conferred on the trustees to determine how far the residue should fall into intestacy. The discretion to allocate among various charities was clearly expressed by other words. The meaning for which the defenders argued gave no effect to the clause, for there was no rule of trust administration compelling expenditure of all income within the current year. Therefore the discretion related to the subject of the bequest, and left its amount uncertain. There could be no divestiture of heirs or next-of-kin except by means of beneficial rights validly constituted in favour of third parties— M'Caig v. University of Glasgow, 1907 SC 231, Lord Kyllachy at p. 242, 44 S.L.R. 198. In Dick's Trustees, cit. sup., the trustees could not divert any part of the bequest from charity. If this bequest were upheld the trustees would be free to allot illusory amounts to charity, and thus to enrich the next-of-kin. To make trust purposes effective and valid trustees must be bound to an enforceable duty which they were not free to neglect— Morice v. Bishop of Durham, cit. sup.; Kendall v. Granger (1842), 5 Beav. 300, Lord Langdale, M.R., at p. 302.
At advising—
Page: 138↓
The action is raised by the only sister of the testatrix, who is admittedly her heir-at-law and sole heir in mobilibus. The defenders are the trustees acting under the settlement. The summons concludes for declarator that the provisions and directions of the settlement in regard to residue are void, invalid, and ineffectual, and that the whole residue forms intestate estate of the truster, and belongs to the pursuer, as heir-at-law and sole heir in mobilibus, as aforesaid; and conclusions follow for accounting and payment upon that footing.
The crucial words in the residuary clause above quoted are “or so much of said interest or annual proceeds thereof as they (the trustees) may deem expedient.” It is admitted for the pursuer that if these words had been absent the bequest of the residue would have been good and valid. But it is maintained that their introduction makes the whole bequest void from uncertainty. The Lord Ordinary has come, with expressed regret, to the conclusion that the pursuer's contention must be sustained.
The case is an interesting and in some respects a novel one. I am prepared to agree with the Lord Ordinary that it would not be a legitimate construction of the language of the residuary clause to read it as amounting to a direction to the trustees to apply the whole annual proceeds of the residue among the class of charitable objects indicated, in such proportions as they may think fit. But this concession does not, in my judgment, lead necessarily to the conclusion that the residuary bequest must be here and now held void. The trustees are certainly empowered to apply the whole proceeds among the class of charities (which is admitted to be sufficiently defined); and we heard no suggestion that they would have any practical difficulty in so applying the whole income year by year. So long as the trustees did so, the whole proceeds of the residue would be applied in a perfectly legal manner. Nor is there any direction or authority given to them to apply any part of the income to a purpose which the law will not countenance, as was the case, e.g., in Blair, 4 F. (H.L.), and in Grimond, 7 F (HL) 90, referred to in the Lord Ordinary's opinion. It can only be said on behalf of the pursuer that the trustees may perhaps fail to apply the whole income to and among the charities. I do not think this contingency is sufficient to warrant us in setting aside the whole bequest ab ante as void from uncertainty. It is true that if during any year or series of years the trustees should not in fact apply the whole income among the objects of the bequest, with the result that a balance of material amount was found in their hands undisposed of at any time, questions might arise as to the heir's right to such moneys. These questions would require to be determined if and when they emerged, but they cannot, I think, now be anticipated. If the truster's directions to her trustees had applied to the distribution of the capital (instead of the income) of her estate, no real difficulty would, in my judgment, have arisen; and though the failure of the trustees to apply the income or any part of it might give rise hereafter to more doubtful questions, I do not see that there is any difference in principle. Indeed, even if what I have called the crucial words in the residuary clause had been omitted, very similar questions must, I apprehend, have arisen if the trustees had not in fact distributed the whole income as directed by the settlement. Yet it was conceded that if these words had been omitted the residuary bequest would have been unchallengeable upon the ground of uncertainty. It seems to me, therefore, that it would be quite premature to grant decree of declarator at present, as the pursuer desires and the Lord Ordinary has done.
This case is not, I think, governed by any previous decision of which I am aware. It appears to me to involve quite different considerations from those present in the cases upon which the Lord Ordinary seems to rely. His Lordship says in the course of his opinion—“It will not support such a bequest that the trustees may apply the whole income to charity. The question is not whether the trustees may so apply it, but whether they are bound so to apply it— Morice v. Bishop of Durham, 1804, 9 Ves. 399, and other cases. Nor can it be maintained that so far as they choose to apply the income in charity the bequest is good, and only in so far as they fail so to apply it the income falls into intestacy. If that argument were good, pari ratione the bequest in Blair v. Duncan, 4 Fr. (H.L.) 1, and Grimond, 7 Fr. (H.L.) 90, and similar cases, must have been sustained instead of being found invalid.” With great respect to the Lord Ordinary, I think he has somewhat misinterpreted or misapplied the import of the cases he refers to. In Blair and in Grimond the trustees were given an express option to apply the money in whole or in part to an object or purpose so vague as to be incapable of execution, and the whole bequest was upon that ground held to be void from uncertainty. Again in Morice, as I read the case, just as in Blair and in Grimond, the flaw in the bequest was that the executor might under the language of the settlement have applied the money to a purpose which the law does not countenance. The direction there given to the executor was to dispose of the ultimate residue “to such objects of benevolence and liberality as the Bishop of Durham” (who was the executor) “in his own discretion shall most approve of.” The sole question was whether this trust was one “for charitable purposes,” as the technical meaning of these words, derived chiefly from the well-known English statute of Elizabeth, is understood by the courts in England. The Master of the Rolls (Sir Win. Grant) answered this question in the
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The Court recalled the interlocutor of the Lord Ordinary and dismissed the action.
Counsel for Pursuer (Respondent)— Constable, K.C.—Hon. W. Watson. Agents— Traquair, Hickson, & MacLaren, W.S.
Counsel for Defenders (Reclaimers)— Hunter, K.C.— Grainger Stewart. Agents— Morton, Smart, Macdonald, & Prosser, W.S.