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Scottish Court of Session Decisions |
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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Russell's Trustees v. Russell and others [1886] ScotLR 23_719 (18 June 1886) URL: http://www.bailii.org/scot/cases/ScotCS/1886/23SLR0719.html Cite as: [1886] ScotLR 23_719, [1886] SLR 23_719 |
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Page: 719↓
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A testator bequeathed an annuity and the liferent of his town-house to his widow, and bequeathed the residue of his estate (after certain provisions had been satisfied) to his daughters in liferent and their children in fee, directing that the provisions for widow and children should be accepted in full of their legal rights. The widow having taken her jus relictœ, lield that the case was one of election not forfeiture, that the doctrine of equitable compensation therefore applied, and that both the daughters and their children as liferenters and fiars having suffered loss the testamentary provisions made for the widow should be applied so as to compensate them for their respective interests as liferenters and fiars.
Where a widow or child rejects the provisions given in lieu of legal rights, such case is not one of proper forfeiture, and therefore the provision is not to be treated as simply a lapsed interest.
William Russell of Ardpeaton died on 29th August 1884 leaving a trust-disposition and settlement, dated 29th August 1879, by which he left his whole estate, heritable and moveable, to trustees for the purposes therein mentioned. He was survived by his wife, by one son, John James Russell, and by three daughters—Mrs Gardiner, Mrs Murray, and Mrs Howat. He inter alia directed his trustees to pay his widow, in addition to her marriage-contract provisions, a free liferent annuity of £900 per annum, and to allow her the free alimentary use of his house in Kew Terrace, Glasgow, with a provision that if she married again the annuity was to be reduced to the sum of £400 per annum. He directed £14,000 to be paid to his son on his attaining twenty-one, while the residue, including the capital fund and estate set aside to secure the provision to his widow, was to be held by the trustees for behoof of his daughters, equally among them in liferent, for their liferent only and their children in fee, and these provisions were “to be accepted” by the widow and children in full of their legal rights. Mrs Russell decided to take her legal rights. The jus relictœ was about £27,000.
The present action of multiplepoinding was raised by Colin Campbell and others (Mr Russell's trustees) for the purpose of settling how the annuity of £900 per annum, left by Mr Russell to his wife, along with the liferent of the house in Kew Terrace, were to be disposed of in the altered state of circumstances. The trustees claimed that they were bound to uplift the amount of the £900 annuity, and the rent of the house, and apply them, Mrs Russell having rejected them, in the equitable compensation of the beneficiaries who had been injured by Mrs Russell's election—that is, in making payments to the three daughters as liferenters of the residue, and in making additions to the capital of the residue which was destined to the children, and that in proportion to the loss actually sustained by the fiars and liferenters respectively. They proposed to uplift these sums at each term, and apply them in making payments at each term in proportion to the loss actually sustained by the liferenters and fiars.
The daughters maintained that in consequence of their mother having taken her legal rights the effect on the fund in medio was the same as her death would have been, and the amount necessary to secure the annuity to her, and the value of the house in Kew Terrace, fell into residue, and to be divided immediately among them in liferent and their children in fee.
On 19th December 1885 the Lord Ordinary pronounced this interlocutor—“Finds that in consequence of the election of Mrs Russell to claim her jus relictœ in place of the testamentary provisions contained in the trust-settlement of the deceased William Russell, her husband, the annuity of £900 therein provided to her, and the liferent of the house at Kew Terrace, and moveable effects also therein provided, have vested in the trustees of Mr Russell's estate in trust for the purpose of being applied under such equitable scheme of distribution as may be approved of by the Court towards the compensation of the objects of the residuary destination for the loss which they will sustain through the exercise of Mrs Russell's right of election: Finds that under the said residuary destination the testator's daughters are respectively entitled to one-third of the income of residue during their respective lives, and that in the executing of the said resulting trust it is necessary that the amount of the prospective loss of income to each daughter should be separately ascertained according to the present value thereof; and finds that each annual instalment of £900, with the liferent of said house and moveable effects, should be apportioned between the testator's three daughters (as liferenters) and the trustees as custodiers for the contingent fiars in the proportion of the losses respectively sustained by such liferenters and fiars according to a scheme to be approved by the Court after such inquiry and report as may be hereafter directed; and appoints the case to be enrolled with a view to further procedure.”
Mrs Gardiner and Mrs Murray having obtained leave, reclaimed, and argued—This was really a case of forfeiture, and being so there was no room for the doctrine of equitable compensation; if the conventional provisions were not taken advantage of, then there was no room for the doctrine of equitable compensation.
Authorities— Nisbet v. Nisbet, Dec. 6, 1851, 14 D. 145; M'Farlane v. Oliver, July 20, 1882, 9 R. 1138; Annandale v. Macniven, June 9, 1847, 9 D. 1201; Davidson's Trustees v. Davidson, July 15, 1871. 9 Macph. 995.
Replied for the trustees—This was clearly a case for the application of the doctrine of equitable compensation. The widow had rejected her provisions, and these should be applied to compensate the liferenters and fiars of the residue in proportion to the loss which they had respectively sustained.
Authorities—Those cited for appellants, and Harvey v. Harvey's Trustees, Jan. 30, 1862, 1 Macph. 345.
At advising—
The truster was survived by his wife, his son, and three daughters. The daughters are all married, one (Mrs Murray) having issue.
The widow (Mrs Russell) has claimed her jus relictœ, which is estimated to amount to about the sum of £27,000. The annuity of £900 per annum and the liferent of the house in Kew Terrace, left to her by the settlement, are thus set free, and the question to be decided in this case is how these are disposed of by the truster.
The Lord Ordinary is of opinion that each annual instalment of £900, with the liferent of the said house, should be apportioned between the testator's three daughters (as liferenters) and the trustees as custodiers for the contingent fiars in proportion of the losses respectively sustained by such liferenters and fiars. In coming to this conclusion he has applied to this case the doctrine of equitable compensation, and in my opinion he is right. That doctrine is, I think, so clearly established as a part of our law that I do not think it necessary to refer to the cases by which it has been established. It is that when a legacy or provision is bequeathed to a beneficiary
Page: 720↓
In this case the widow was put to her election—she might either take the special provision left to her by the settlement, or she might take her jus relictœ. She elected to take the latter, and thereby set free the special provision bequeathed to her by the settlement. In Macfarlane v. Oliver, from its being a universal settlement, the condition was implied that if Mrs Oliver claimed her legal rights she must surrender the special provision bequeathed to her by the settlement. I cannot see that it makes any difference that in this case the condition is expressed. In this case the provision is declared to be in full of the widow's legal rights. But as regards the interests of those prejudicially affected, that can make no difference. It does not make the bequest in any proper sense a conditional bequest. It only amounts to a declaration that both legal and conventional provisions are not to be taken—and that if the conventional bequest is taken, it is to be taken in satisfaction of her legal claims. I think the case of Harvey v. Harvey's Trustees is a clear authority against the liferenter's claims. In that case Colonel and Mrs Harvey had by marriage-contract and bond of provision destined certain provisions to their younger children unconditionally. By a subsequent bond of provision
Page: 721↓
Three of the younger children declined to take under this deed, and elected to take the portions to which they were entitled by the marriage-contract. The Court held that in so doing they reprobated the bond of provision and forfeited the life interest provided to them in the sums therein contained, but that their forfeiture did not apply to their children. The result was, just as here, that the liferents provided to the younger children by the bond of provision were set free, while a portion of the capital sum provided to their children was carried away. The question was, how the forfeited liferents were to be applied. The Court pronounced this interlocutor:—“Find that according to the true meaning of the bond of provision of 1839 and the codicils, and according to the implied will of Colonel and Mrs Harvie, the granters thereof, the said liferent interests of the children forfeiting as aforesaid do not fall into the residue of the estate of Colonel and Mrs Harvie … but fall to the trustees under the said bond of 1839, to be administered by them for the purposes of the said bond of provision, and particularly for behoof of the parties whose interests were injuriously affected by the act of election and repudiation which occasioned the forfeiture, viz., the children existing or who may exist of the said younger children of Colonel and Mrs Harvie so forfeiting respectively, and for behoof of the parties substituted by the said bond of provision to the said younger children and their issue.”
This case appears to me to be directly in point, the only difference being that the provisions which the younger children elected to take were due to them ex contractu, while here the widow was entitled ex lege to her jus relictœ, but I do not think that makes any difference in principle. I think this case is a direct authority to the effect that the annuity surrendered or forfeited in the sense in which it was in this case does not fall into residue, but is to be administered for behoof of the parties whose interests are injuriously affected by the act of election.
If, then, the parties whose interests are injuriously affected are to be compensated, the question is, how is this to be most equitably done? I think in this matter regard must be had to the pecuniary losses sustained respectively by the liferenters and fiars.
Both liferenters and fiars have suffered loss, and I see no equity in applying the whole of the forfeited or surrendered provision in compensating the fiars only, as they propose.
I agree with the Lord Ordinary in thinking that it should be apportioned between the life-renters and the fiars in proportion to the losses sustained by them respectively, the widow having carried off her jus relictœ. That there may be some difficulty or nicety in estimating their respective losses is no reason why it should not be done as accurately as may be, and I approve of the Lord Ordinary's proposed inquiry for that purpose.
I concur in thinking that the sum set free by Mrs Russell claiming her jus relictœ should be devoted to compensating the interests of those prejudicially affected by the election Mrs Russell has made.
In M'Farlane v. Oliver, which was the case of a universal settlement, the condition was implied that if Mrs Oliver claimed her legal rights she would require to surrender the special provision bequeathed to her by the settlement.
In the present case there is no question of forfeiture but of election, and when as here a widow or children elect to take her or their legal rights, and thereby take away a bequest from some individual or class whom it was the intention of the testator to benefit, then the doctrine of equitable compensation ought no doubt to come in, and the fund set free by the renunciation ought to be distributed among those whose bequest has been carried off, in the proportion that each has thereby suffered.
The Court pronounced this interlocutor:—
“Vary the interlocutor of Lord M'Laren of 19th December 1885 by deleting from it the following words, viz.—‘And moveable effects also therein provided’ on the tenth line thereof; the word ‘Find’ on the eighteenth line, and all the words following the said word to the word ‘thereof’ on the twenty-seventh line; as also the words ‘and moveable effects’ on the twenty-ninth line thereof: Quoad ultra adhere to the said interlocutor, refuse the reclaiming-note, and decern.”
Counsel for Mrs Gardiner and Others— Gloag— Dickson. Agents— Boyd, Jameson, & Kelly, W.S.
Counsel for Trustees— D.-F. Mackintosh, Q.C.— Low. Agents— D. Mackenzie, W.S.— Webster, Will, & Ritchie, S.S.C.
