Scottish Court of Session Decisions

Andrew MacEwan and another, trustees of the deceased Andrew MacEwan, accountant, Glasgow, first parties, and Janet MacEwan, daughter of the deceased Andrew MacEwan, second party, brought a Special Case for the opinion of the Court, raising questions as to the exercise by the deceased Andrew MacEwan in his trust-disposition and settlement of a power of appointment conferred upon him by his antenuptial marriage contract.

The marriage contract, dated 21st November 1842, provided, after certain provisions in favour of Mrs MacEwan, as follows:—“Farther I the said Andrew MacEwan dispone convey and make over to and in favour of the child or children of the said intended marriage in fee my whole means and estate heritable and moveable real and personal wherever situated presently belonging or that shall belong to me at the time of my death or to which I may succeed or acquire right in any manner of way during the subsistence of the said intended marriage but always with and under the burden of the foresaid annuity and liferent use of the furniture and others before specified and hereinbefore provided in favour of the said Agnes Kerr and also under such burdens and conditions and payable at such periods and in such shares or proportions amongst the said children respectively if more than one and their lawful issue in case of any of them predeceasing me the said Andrew MacEwan leaving lawful issue of their bodies as I shall appoint by any writing under my hand and failing such appointment then the said means and estate shall fall and belong to the said children if more than one equally share and share alike and shall be payable to them if sons upon their respectively attaining twenty one years of age and if daughters upon their respectively attaining majority or being married whichever of these events shall first happen and in case any of the children shall die without leaving lawful issue of their own bodies before their shares shall respectively become due then the share or shares of any of them so dying shall accrue to the survivors or survivor but in case of their leaving lawful issue such issue shall be entitled to the share or shares which would have belonged to their parents had they been in life equally amongst them also if more than one child share and share alike unless otherwise appointed by me the said Andrew MacEwan in virtue of the power above reserved by me the said Andrew MacEwan.”

The trust-disposition and settlement, dated 16th November 1855, and with two codicils registered 21st June 1866, after conveying the testator's whole estate to trustees for certain purposes, which included the payment of debts, legacies, &c., provided as follows:—“And in the fourth place I direct and appoint my trustees to hold and retain the whole residue and remainder of my said means and estate including the sums or subjects to be set apart to meet the foresaid annuity to my said wife when the same becomes available by her decease for behoof of my whole children who shall be alive at the period of my decease, if more than one equally among them share and share alike and to pay or apply the same as hereinafter mentioned, the shares of sons to the extent after mentioned becoming vested and payable as hereinafter mentioned, and the interest of daughters in their shares and also the interest of sons in their shares to the extent after mentioned being restricted and limited as hereinafter mentioned; And I direct and appoint my said trustees to pay to or expend for behoof of my children whether sons or daughters the annual proceeds of their shares respectively or as much of such annual proceeds as my trustees shall think necessary for their maintenance and education accumulating the remainder if any for their behoof respectively and adding the same to the capital of their shares until they shall attain the age of twenty four years complete if sons or attain that age or be married whichever of these events shall first happen if daughters. And as regards the shares or provisions of my sons I direct and appoint that the same (including any accumulations of income and all sums to which they may become entitled by the decease of other children as after provided for) to the extent of two third parts or portions of each share or provision shall be payable at the first term of Whitsunday or Martinmas which shall happen after they shall respectively attain the age of twenty four years complete and in the event of the whole of the said two thirds not being then available the remainder shall be paid over when it becomes available. And in regard to the remaining one third part of the shares or provisions of my sons respectively (including as aforesaid) I direct and appoint my trustees to retain the same in their hands, and when the same becomes available

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by the decease of my widow or otherwise to set aside and hold the said one third part of the shares of my sons (including as aforesaid) for behoof of my sons respectively in liferent for their liferent alimentary uses allenarly and for behoof of their issue respectively in fee and that in the same way and manner and subject to the same power of apportionment and failing issue subject to the same destination and to the like restrictions and conditions directions and others as are hereinafter written in regard to the shares of my daughters; Declaring always that such liferents in favour of such sons shall be purely alimentary to them and shall not be alienable or assignable by them or affectable by their debts and deeds or attachable or arrestable by the diligence of their creditors in any manner of way; But my trustees shall have full power to pay over to my sons on their attaining the said age of twenty four years complete the whole of the said two third portions of their shares or as much thereof as may be then available retaining under their control as much of the sums or funds of the trust set aside for providing the said annuity to my wife or otherwise as will in the estimation of my trustees secure the One third of the shares of my sons to be limited and restricted as aforesaid; And I declare that the shares of my sons including as aforesaid to the extent only of two thirds shall become vested in them on their attaining the said age of twenty four years respectively, and that the other one third shall not become vested in them. But notwithstanding the above declarations I empower my trustees at any time even before my sons attain majority to advance to them such portions of their shares as my trustees shall think proper for the education of my sons or for setting them up or fitting them out in a business or profession or otherwise advancing their prospects in life such advances to be imputed pro tanto of the two third parts of their shares to become payable and vested in them as aforesaid. And in regard to the shares of my daughters I direct and appoint my trustees on my daughters respectively attaining the said age of twenty-four years complete or being married whichever of these events shall first happen or as soon thereafter as possible to set aside and hold their shares (including therein all accumulations of income and all sums to which they may become entitled by the decease of other children as after provided for) or such part thereof as may be then available the remainder being set aside when it becomes available for behoof of my daughters respectively in liferent for their respective liferent uses allenarly and of their lawful issue respectively in fee in such proportions among such issue if more than one child and whether there be one or more children under such restrictions and conditions as my daughters may respectively appoint by any mortis causa deed or writing under their hands respectively and failing such apportionment equally among such issue if more than one child share and share alike; And failing such issue or in the event of such issue dying before attaining majority, for behoof of such person or persons as my daughters may respectively direct by any mortis causa deed or other writing under their hands: And failing my daughters without leaving any such deed or writing for behoof of my then surviving children and the issue of any of them who may have predeceased leaving issue such issue always receiving the shares or shares which would have fallen to their parents had they survived: And I do hereby specially provide and declare that the shares or provisions of my said estate and effects herein made and provided in favour of my daughters including as aforesaid both capital and annual proceeds shall be purely alimentary to them and shall not be alienable or assignable by them or affectable by their debts or deeds or attachable or arrestable by the diligence of their creditors and shall be exclusive of the jus mariti and right of administration of any husbands they may marry and not affectable by the debts or deeds of such husbands, or attachable or arrestable by the diligence of their creditors in any manner of way, all which are hereby expressly excluded and debarred.… But I specially empower my trustees if they shall find it practicable in order to carry out the foregoing directions and instructions at any time without the intervention of a trust to convey and make over to any of my sons or daughters and their issue their respective shares or parts of shares of my estate subject to the same destinations conditions and provisions as are hereinbefore provided in regard thereto. And my trustees shall be completely discharged of such shares or portions of shares on the same being handed over to such new trustees or conveyed direct to the parties interested as aforesaid. And I do hereby specially provide and declare that the provisions before written in favour of my children shall be in lieu and place of and in full satisfaction to them respectively of all legitim and bairns' part of gear portion natural executry and every other right or claim legal or conventional competent to them or any of them by and through my decease or through the decease of their mother or otherwise against my or her estate in any manner of way whatever and shall also be in full to them of all provisions conceived in their favour by the said contract of marriage between me and the said Mrs Agnes Kerr or MacEwan, my wife.”

The Case stated—“1. Andrew MacEwan, accountant, Glasgow (hereinafter referred to as the truster), died on 11th June 1866, survived by his wife Mrs Agnes Kerr or MacEwan, and all the children of the marriage, namely, Jane Kerr MacEwan, who was born on 1st July 1815; Janet MacEwan, who was born on 13th April 1848; Andrew MacEwan, who was born on 8th September 1853; and Agnes Kerr MacEwan or Kidston, who was born on 25th September 1856. The truster's widow, Mrs Agnes Kerr or MacEwan, died on 10th July 1880. His daughter, Miss Jane Kerr MacEwan, died on 22nd January 1911. Of the surviving children, Andrew MacEwan is married and has issue;

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Janet M'Ewan is unmarried; and Mrs Agnes Kerr MacEwan or Kidston is the widow of David Whitelaw Kidston, chartered accountant, Glasgow, who died without issue on 27th June 1909

6. On the death of the truster the surviving trustees nominated in his said trust-disposition and settlement accepted office and entered on the management of the trust estate. They made over to his said widow the furniture and effects bequeathed to her and the sums provided for mourning and interim aliment, and until her death on 10th July 1880 paid to her her said annuity of £500 and allowed her the liferent use of his dwelling-house.

7. The residue of the truster's estate at the date of his death amounted approximately to £40,542. Of the one-fourth share thereof bequeathed to the truster's son, Andrew MacEwan, two-thirds have been paid over to him, as directed in the said trust-disposition and settlement, and the remaining one-third portion is represented by heritage in Glasgow, the title to which has, in accordance with the said trust-disposition and settlement, been taken in the name of certain trustees for him in liferent for his liferent alimentary use allenarly and for behoof of his issue in fee, in such proportions among such issue as he may appoint by any mortis causa deed or writing under his hand, and failing such appointment, for behoof of such issue, equally share and share alike. As regards the remainder of the residue of the truster's estate, no allocation of the capital thereof was made when the daughters attained twenty-four, as they desired that it should be retained undivided by the trustees, and that the income should be divided equally among them. By letter of date 22nd March 1884, however, the said daughters requested the trustees to allocate and set aside the share of the residue falling to each of them. The trustees accordingly set aside and appropriated and thereafter retained and administered the said shares, and paid to each daughter the income accruing from her respective share. The truster's daughter Miss Jane Kerr MacEwan, on her death on 22nd January 1911, left a trust-disposition and settlement disposing of the share of the residue liferented by her, and the said share was made over by the trustees as directed by her in her said deed. The remaining two shares of the residue of the truster's estate are at present held and administered by the trustees in terms of the directions contained in his said trust-disposition and settlement.

8. The truster's children (other than the said Miss Janet MacEwan) have acquiesced in the dispositions made by the truster in his said trust-disposition and settlement in regard to the shares of the trust estate falling to them. The said Miss Janet MacEwan, however, has now intimated that she challenges the exercise of the power of appointment by the truster in his said trust-disposition and settlement quoad the one-fourth share of the residue bequeathed to her, in so far as it restricts her interest in the same, on the ground that the said restriction is not warranted by the terms of the power of appointment reserved in the said marriage-contract, and has called upon the trustees to convey and make over the said share to her as absolute fiar and free from the said restrictions. Accordingly, in order that the validity of the said appointment in regard to the said share and the rights of the said Miss Janet MacEwan therein may be determined, the present case is presented for the opinion and judgment of the Court.”

The contentions of the first parties were—“That the estate settled by the truster in his said marriage-contract being destined to the children of the marriage ‘under such burdens and conditions and payable at such periods and in such shares or proportions amongst the said children’ as the truster should appoint, the directions in his said trust-disposition and settlement as to the said one-fourth share constitute in all respects a valid exercise of the said power reserved in the said marriage-contract; or, otherwise, that the said trust-disposition and settlement, in so far as it directs the first parties to hold or make over the said share for or to the second party under the conditions, limitations, and declarations affecting her interest therein, as set forth in the said trust-disposition and settlement, and empowers the second party to direct as to the disposal of the said share in the event of failure of her issue, is a valid exercise of the said power of appointment. The first parties accordingly maintain that the said conditions, limitations, and declarations being valid and effectual, the second party is not entitled to require immediate payment or conveyance to her of the said share as her absolute and unqualified property.”

The contentions of the second party were—“The said trust-disposition and settlement is a valid exercise by the truster of the power of appointment reserved in his marriage-contract in so far as it apportions one-fourth share of the residue of his estate to the second party, but that it is an invalid exercise of the said reserved power in respect that it seeks to restrict the interest of the second party in said share to an alimentary liferent, and further in so far as it bequeaths the fee of said one-fourth share to persons who are strangers to the power. In these circumstances, the second party maintains that she is entitled to immediate payment of said one-fourth share as her absolute property.”

The questions for the opinion of the Court were—“(1) Is the appointment of the marriage-contract fund contained in the said trust-disposition and settlement, in so far as it relates to the said one-fourth share of the residue of the trust estate ( a) valid in toto, or ( b) only partially valid? (2) In the event of the second alternative of the preceding question being answered in the affirmative, ( a) is the second party entitled to immediate payment or conveyance of the said share as her absolute property, unburdened by the restrictions, conditions, and provisions imposed thereon in the said trust-disposition and settlement; or ( b) to

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what interest in the said share is the second party entitled, and what restrictions, conditions, or provisions attach to that interest?”

Argued for the first parties—The proper objects of the power of appointment in the marriage-contract were children, the issue of children predeceasing the testator, and the issue of children dying before their shares respectively became due. In so far as the testator in his trust-disposition and settlement conferred a benefit upon those proper objects, the power of appointment was validly exercised. But in so far as the testator attempted to confer a benefit on others who were not proper objects, the exercise of the power of appointment was invalid. In so far as the exercise of the power of appointment went beyond the proper objects, as it did here, it was null and void, and that invalid portion of it being separable from the rest fell to be treated pro non scripto— Carver v. Bowles, 1831, 2 R. & M. 301; MacDonald v. MacDonald's Trustees, 1875, 2 R. (H. L.) 125 ( per L.C. Cairns at p. 132), 12 S.L.R. 635, following Carver's case ( cit.)—but quoad ultra the power of appointment was validly exercised. The fact that a liferent was given to the second party did not invalidate the exercise of the power— Pringle's Trustees v. Basta, 1913 S.C. 172, 50 S.L.R. 74. The present case was a fortiori of Pringle's Trustees ( cit.), for here there was an express power to impose burdens and conditions in appointing, and was ruled by the decision in Wright's Trustees v. Wright, 1894, 21 R. 568, 31 S.L.R 450. The gift of the fee to the children was a gift to a class, and did not entitle a child to claim a share in fee. Alternatively, the second party's rights were not cut down to a liferent but were a fee clogged by certain conditions, and consequently there was no repugnancy between the gift of the fee to the children of the testator and the appointment by him, and on that view the case was ruled by Lennock's Trustees v. Lennock, 1880, 8 R. 14, 18 S.L.R. 36, followed in Wallace's Trustees v. Wallace, 1891, 18 R. 921, 28 S.L.R. 709. Ewing's Trustees v. Ewing, 1909 S.C. 409, 46 S.L.R. 316, showed that the testator could validly create a trust to give effect to the restrictions and burdens imposed by the deed of appointment. Warrand's Trustees v. Warrand, 1901, 3 F. 369, 38 S.L.R. 273, was no longer authoritative as a result of the decision in Pringle's case ( cit.), Farwell on Powers, p. 350; Sugden on Powers, p. 681; and Balderson v. Fulton, 1857, 19 D. 293, were also referred to.

Argued for the second party—It was conceded that the appointment was not valid in toto, but it was not even valid in part. Here the deed gave a gift of fee to the children, and it was incompetent to restrict that, by exercise of the power of appointment, to a liferent. Pringle's case ( cit.) was distinguished, for there there was no gift of fee to the children, but the fund was merely to be held for their behoof. The words “under such burdens and conditions” did not entitle the donee of the power to appoint to cut down the fee given to the children to a mere liferent— Crum Ewing's Trustees v. Bayley's Trustees, 1910 S.C. 484 ( per L.P. Dunedin at p. 488), 47 S.L.R. 423; Middleton's Trustees v. Middleton, 1906, 8 F. 1037, 43 S.L.R. 718. Lennock's case ( cit.) was very special, but in any event the donee of the powers was held to have given a gift of fee. Wallace's case ( cit.) was distinguished, because in it there was no gift-over to persons who were not proper objects of the power. Matthews Duncan's Trustees v. Matthews Duncan, 1901, 3 F. 533, 38 S.L.R. 401; Darling's Trustees v. Darling, 1909 S.C. 445, 46 S.L.R. 394; Mackenzie's Trustees v. Kilmarnock's Trustees, 1909 S.C. 472, 46 S.L.R. 217, were also referred to.