Scottish Court of Session Decisions

On 30th November 1838 David Young, messenger-at-arms, and Margaret Lindsay entered into a contract of marriage, whereby David Young bound himself to invest £1000 in heritable estate, and to take the titles thereof to himself and Margaret Lindsay, and the survivor, in trust for behoof of Margaret Lindsay in liferent allenarly, and for the children of the marriage in fee. On her part Margaret Lindsay disponed to the said David Young and herself, and the survivor, as trustees for the purposes foresaid, the whole property which she then possessed or which should pertain to her during the subsistence of the marriage. The provisions in favour of the wife were declared to be exclusive of her intended husband's jus mariti and right of administration.

David Young and Margaret Lindsay were thereafter married, and the marriage subsisted until 1871, when Mr Young died. Mrs Young died in 1890, survived by several children, and leaving a trust-disposition and settlement disposing of her whole estate.

After Mrs Young's death her children were appointed trustees under their parents' marriage-contract, by decree of the Lords of Council and Session, and they thereafter raised an action against their mother's testamentary trustees, concluding, in the second place, for declarator that certain heritable properties acquired by Mrs Young during the subsistence of the marriage fell under the conveyance by her in the foresaid contract of marriage, and were held by her as trustee under that contract.

The defenders pleaded that they should be assoilzied, in respect that the whole of the properties in question had been acquired

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by Mrs Young out of the liferent which formed her separate estate.

Proof was allowed. The evidence was almost entirely documentary. It appeared from titles produced that during the subsistence of the marriage between Mr and Mrs Young three properties, viz., a house and ground in Arrochar, and houses in Union Street and Paisley Road, Glasgow, had been acquired by the spouses as trustees under the marriage-contract, and that three other properties, viz., houses in Monteith Row, Bothwell Place, and West Regent Street, Glasgow, had been acquired by Mrs Young, the titles being taken to herself, exclusive of the jus mariti and right of administration of her husband.

The method pursued by the spouses was to purchase a property under burden of bonds and gradually disburden it. Thus, to take first the properties acquired by the spouses in trust, it appeared from the titles that the Arrochar property was purchased in 1840 for £375, £100 being paid by Mr Young in cash, and the remainder of the price being secured by bond over the property granted by the spouses as trustees under the marriage-contract. This bond was paid off to the extent of £75 in 1851, and the balance in 1854, and in May 1861 the property was sold for £850, but £600 of the price was left on bond over the property until May 1866.

It was admitted that Mr Young had in 1841 built an additional house on this property at the cost of about £150. There was no direct evidence to show what was done with the price received for the property.

In regard to the Union Street property, the titles showed that it was bought in 1860 for £500, £385 being paid by David Young in cash, and a bond for £115 being granted by the spouses as trustees. The bond was paid off in November 1861, and the property was sold in May 1874 for £1500.

From the title of the Paisley Road property it appeared that it was purchased in 1867 for £1800, of which £400 was paid in cash, and the balance was secured by bond granted by the spouses as trustees.

With regard to the properties acquired by Mrs Young in her own name, the following facts appeared from the titles:— Monteith Row Property—Mrs Young lent sums of £300 and £70 over this property in 1856 and 1857. In 1860 she purchased it for £1530 under burden of a bond for £1000, in corroboration of which a personal bond was granted by herself and her husband. The bond was paid off in May 1866. Bothwell Place Property—In 1869 Mrs Young purchased this property for £1500 under burden of bonds to the amount of £3950. She paid the balance of £1150 in cash. Of the bonds £100 was paid off in 1871, and between November 1874 and May 1885 further sums of £2450 were paid off. In 1890 the property was sold for £8500, leaving a balance of £7100 after the remaining bond for £1400 was paid off. West Regent Street Property—The property was purchased by Mrs Young in 1870 for £800 under burden of a bond amounting to £550, which was paid off in 1875.

It also appeared that in 1869 Mrs Young borrowed a sum of £1000 over the Monteith Row property, and in 1870 a sum of £200 over the property in West Regent Street. On each occasion Mr Young bound himself personally to repay the sums borrowed, while Mrs Young, as heritable proprietor of the subjects, disponed them in security of the loan.

It was shown from entries in the books of a firm of writers, who acted as agents in regard to the properties from 1869 onwards, that the £1000 borrowed over the Monteith Row property in 1870 was applied in part payment of the price of the property in Bothwell Place.

A document was produced which had been found in Mrs Young's repositories after her death. It was headed “Statement showing the intromissions of Mrs Young as trustee under her marriage-contract,” and evidence was led showing that the existence and contents had been known to Mrs Young. It contained entries extending from May 1851 to the date of Mrs Young's death, and credited Mrs Young with all the payments made between these dates in purchasing or disburdening any of the properties held by the spouses, whether held on a trust title or in Mrs Young's individual name. On the other side were entered the price received for the Arrochar property, and sums borrowed on the security of the properties, and also sums of £300 and £100 received from Mr R. L. Young, a son of Mrs Young, in 1870 and 1871. At the foot of the account was written—“From this account it appears—1. That up to the 15th of May 1860 £645 had been invested, and the only apparent source from which it could come were the savings from the Arrochar rents and profits made by Mrs Young. 2. That from the 15th of May 1860 to the 15th of May 1866 £810 additional had been invested, after taking into account the price of the Arrochar property. And 3. That between 15th May 1866 and the year 1872 another sum of £600 had been invested.”

No evidence was led to show that Mrs Young had possessed any money at the date of her marriage, or had succeeded to any during its subsistence, and her bank account threw no light upon the source from which the payments made in purchasing or disburdening the properties held by her as an individual had been derived. Several witnesses deponed that she was a woman of excellent business capacity and thrifty habits.

As to Mr Young's means, it was admitted that his estates had been sequestrated in 1849, and again after his death. The latter sequestration was said to be due not to ill success in his business but to unfortunate speculation.

On 29th March 1892 the Lord Ordinary ( Stormonth Darling) assoilzied the defenders from the second conclusion of the summons.

“ Opinion.—[ After referring to the various properties acquired by Mr and Mrs Young] Now, apart from the rise in market value, the only source which can be suggested for

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all this gradual acquisition of property is the lady's thrift in saving from the income which formed her separate estate. Were these savings acquirenda in the sense of the marriage-contract? I think not. A legacy to which she succeeded would undoubtedly have fallen under that category. But this was money which by the terms of the contract itself was made exclusively her own. She was free to spend it as she chose, untrammelled either by her husband or the marriage-contract trustees, and it seems to me that any possible construction of a contract is to be preferred to one which says to the wife ‘You may spend your income, but if you save it, you shall have no right to dispose of it after your death.’ That was, I think, at the bottom of the judgment in Morris v. Anderson, 9 R. 952 (see especially the concluding portion of the late Lord President's opinion at p. 956), and it has been decided in two cases— Boyd's Trustees, 4 R. 1082, and Young's Trustees, 12 R. 968—that a clause of acquirenda does not cover the life interest to which a wife succeeds during the subsistence of the marriage, but extends only to principal sums. If this be so as to life interests coming to the wife from sources outside the marriage-contract, I think the rule applies still more forcibly to savings from the income of the marriage-contract funds. Had the case, then, been a pure one of property bought with savings alone, and the title taken in the wife's name, I confess I should not have had much doubt. My chief difficulty has arisen from the difficulty of tracing the proceeds of the Arrochar property, which was undoubtedly trust property, even although in that case also the wife's savings may have helped to pay off some of the bonds. If it can be shown that the price obtained for that property was invested to any extent in subjects the title to which was taken in the wife's name, undoubtedly the trust-estate would be entitled not merely to the sum so invested, but to any increment of value proportionate thereto. If there had been any case of breach of trust, perhaps the trust-estate would be entitled to the whole property. But no such case is alleged, and in the absence of any positive proof as to what came of the proceeds of Arrochar, I have come to think that the conduct of the spouses in taking certain titles in their own names as trustees, and certain other titles in the wife's individual name, affords the best guide to the destination of the money.

Assuredly their conduct excludes any notion that the wife dedicated her separate estate to trust-property. In 1860 and 1861 a sum of £500 was invested in the Union Street property on a trust title, and the defenders are willing to account for the nett price realised for that property in 1874, viz., £1490, 12s. 5d. Again, in 1867 a sum of £400 was put into the Paisley Road property also on trust title, and that property is still, I understand, in the pursuers' hands, so that whether these were the actual proceeds of Arrochar or not, a sum more than double the price obtained for Arrochar is now available to the trust-estate.

I am therefore of opinion that on making payment of the admitted proceeds of the Union Street property, the defenders are entitled to absolvitor, but inasmuch as the great part of the difficulty has been caused by the spouses not keeping the trust-estate sufficiently distinct, I think the pursuers were justified in trying the question, and I shall therefore not find them liable in expenses.”

The pursuers reclaimed, and argued—The properties having been acquired by Mrs Young stante matrimonio, were prima facie acquirenda, and fell under the conveyance in the marriage-contract. The fact that the titles were taken in Mrs Young's own name was not enough to displace the presumption arising from the fact of acquisition during marriage. It was for the defenders to prove that the monies with which they were purchased were derived from the separate estate of the wife, but they had failed to do so, as the evidence on the whole favoured the view that these monies were derived either from the sale of the Arrochar estate, or from further advances made by the husband in fulfilment of his obligation under the marriage-contract, or from gifts by the children.

The defenders argued—The Lord Ordinary's view was right, that the conduct of the spouses in taking the titles of the properties partly to themselves as trustees under the marriage-contract, and partly to the wife in her own name, formed the best guide as to the sources from which the monies for their acquisition had been derived. The fact that the husband was insolvent in 1849 and in 1871, and the evidence as to the wife's business capacity and thrifty habits, favoured the defenders' contention.

At advising—