Scottish Court of Session Decisions

Lachlan M'Lean, who died at Islay House, Argyllshire, upon 9th August 1880, left a trust-disposition and settlement dated 15th June 1880, appointing trustees, inter alia, (3) to hold forty thousand pounds for the liferent use of his wife, and to pay her the interest half-yearly in advance, “the first half-yearly payment to be made to her as at the date of my death”—the first half-year's payment to be made from his general estate at the rate of 4 per cent. upon the capital sum. “In the fourth place, as at the date of my death” the trustees were to pay to the widow two thousand pounds, to be disposed of by her as she thought proper. “In the fifth place, for payment to each of my children, sons and daughters, and their respective issue, of a legacy of ten thousand pounds sterling, free of legacy duty, which shall (unless my trustees shall otherwise resolve in their discretion as after mentioned) be payable as at my death, and on their respectively attaining twenty-one years of age, or in the case of females, on their respective marriages before attaining said age, and the same shall not (except in the discretion of my trustees as aforesaid) vest until the period of payment… . And it is hereby provided and declared with reference to the legacies hereby bequeathed to my sons and daughters respectively and their respective issue, and to the shares of residue hereby bequeathed to my sons and their issue, whom failing to my daughters and their issue, and notwithstanding anything hereinbefore contained concerning the terms of vesting and payment thereof, or concerning the conditions on which the income hereby provided to my said wife under the third purpose hereof is granted, that my trustees shall not only be entitled to apply the available income of the said legacies and shares of residue, or any part thereof, for the education and maintenance, or otherwise for the benefit of my sons and daughters respectively or their issue, before and until the terms of vesting and payment of the capital, but shall also, with consent of my said wife, if and while she survives me, and after her death at their own discretion, be entitled to anticipate the terms

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of vesting and payment of the said legacies and shares of residue hereby fixed by me, and to advance and pay at any time to my sons and daughters or their issue the whole or any part of the capital of their legacies and presumptive shares of residue for their settlement or advancement in life.”

The truster was survived by his widow and seven children, three sons and four daughters. The eldest was born on 2nd June 1866, and the youngest on 31st October 1877, and consequently all were in minority at the truster's death.

The truster left estate which consisted entirely of personalty of the nett value of £125,000. The trustees did not set apart any special investments to meet the legacies of £10,000 bequeathed by the truster to his children under the fifth purpose of his settlement. They made annual payments since his death to the children during their minorities either directly or to their mother for their behoof by way of allowances for their education and maintenance such sums as in their discretion they thought adequate. These allowances in each year were less than the proportion or average effeiring to these legacies of the amount of income earned upon the whole trust investments. When the truster's two eldest sons respectively attained twenty-one years of age the trustees paid to each of them his legacy of £10,000, but without any accumulations of interest. The eldest son, Alexander Colin Ml'Lean, attained the age of twenty-five upon 2nd June 1891, and the question arose whether the accumulated amount of interest, which amounted to £28,600, fell to be apportioned to each child's share, so as to be payable to him or her at the date of payment appointed by the truster, or whether the surplus amount of income not expended upon the education and maintenance of each child fell into residue.

This special case for the opinion and judgment of the Court was presented by (1) the trustees and executors; (2) the testator's daughters, with consent and concurrence of their curators; and (3) his sons, with the consent of the curators appointed to them.

The question for the consideration of the Court was in these terms as amended at the bar—“Whether each child of the testator on the arrival of the term of payment of his or her legacy of £10,000 will be entitled to payment of the accumulations of interest and profit effeiring thereto along with the capital?”

The second parties argued—The interest upon the respective legacies of £10,000, so far as it was beyond the amount expended for education and maintenance, should accrue to the capital and be payable along with it. No claim was made for present payment. It was admitted that no share vested until the term of payment arrived. Upon the terms of the deed it was plain that the truster meant the interest to accrue to the capital. This was a special legacy of a specific; sum it did not vest until payment, and that payment was to be to each of the daughters as she attained the age of twenty-five, or was married before that time. But the payment was to be made as at the time of the truster's death. If the daughters had received each her legacy at the actual date of the truster's death she would have been enjoying the whole income from the capital, and under that provision she was entitled to get the capital with the interest it had earned from the truster's death, subject to the amount expended upon her education and maintenance; that was the only meaning that could be given to the words “payable as at my death”— Glasgow's Trustees v. Glasgow, November 30, 1830, 9 S. 87; Inglis' Trustees v. Breen, February 6, 1891, 18 R. 487. The truster's statements as to what was to be done with the “available income” showed that he was thinking of the income arising from each special legacy and not of the income from his whole estate. Again, this was a family settlement made by a father in favour of his children, and that had always been held to infer a strong presumption that the income accresced to the special legacy and did not fall into residue—Roper on Legacies, ii. 1257; Williams on Executors, ii. 1435 (8th ed.) The case of Playfair's Trustees v. Hunter, July 18, 1890, 17 R. 1241, upon which the third parties might found, was easily distinguishable, as that was a legacy of a specific sum to be paid at a specific date, and did not become a debt against the estate until it was exigible, while here the legacy was to be paid as at the truster's death.

The third parties argued—The rule which obtained in England was very special and had never been adopted in Scotland, that the position of the truster as being in loco parentis to the legatee made it more likely that he intended the interest to accrue to the capital than if he was a stranger. It arose from a desire on the part of the English Courts to provide for the children of the testator if the legacy was not to be payable for some considerable time after his death— In re George, April 23, 1877, L.R., 5 C.D. 837; Hill v. Grant, March 9, 1885, L.R., 29 C.D. 331. But in Scotland the maintenance of the children was a debt on the father's estate, and it was provided for here by the express words of the deed. The words “payable as on my death” meant no more than “payable after my death,” and indeed were superfluous. All the cases in which the interest of a legacy had been granted before the capital sum became exigible were easily distinguishable from this one, as they were legacies given to a class and the survivors, and were not specific legacies— Campbell v. Reid, June 12, 1840, 2 D. 1084; Duncan's Trustees and Others, July 17, 1877, 4 R. 1093. This case fell under the rule laid down in Playfair's Trustees, cited supra.

At advising—