Scottish Court of Session Decisions

Allan Fullarton Baird, LL.D., writer, Glasgow, and Archibald Duncan Campbell, writer, Glasgow, the trustees under the trust-disposition and settlement of the late Walter Stewart of Balloch, First parties; James Lawrence, Manchester, and Hugh Mulleneux Lawrence, Blackburn, the surviving children of the late Mrs Elizabeth Stewart or Lawrence, a sister of the late Walter Stewart of Balloch, second parties; Mrs Stewart or Love and Miss Edith Stewart, Hillhead, Glasgow, sister of the late Walter Stewart of Balloch, and the executors of the late Miss Agnes Stewart, another sister of the late Walter Stewart of Balloch, third parties; the said Mrs Stewart or Love, fourth party; the said Miss Edith Stewart, fifth party; Mrs Mabel Ellen Taylor or Coulson, Teignmouth, Devonshire, sole trustee under the will of the late Mrs Ellen Stewart or Taylor, a sister of the late Walter Stewart of Balloch, sixth party; Frederick Stancliffe Stancliffe, solicitor, Manchester, trustee under the will of the late John Stewart, a brother of the late Walter Stewart of Balloch, seventh party; and a son and two daughters of the late John Stewart, and the trustees on the daughters' antenuptial settlements, eighth parties, brought a Special Case for the opinion and judgment of the Court upon questions which had arisen between the parties as to whether a legacy of £10,000 bequeathed by the late Walter Stewart of Balloch under a trust-disposition and settlement dated 12th January 1904 to his niece Esther Mary Lawrence, who predeceased him, fell to be distributed as intestate succession of the testator.

The late Walter Stewart of Balloch died without issue on 11th February 1909 leaving a trust-disposition and settlement dated 12th January 1904 (described in the Case as “said will”).

The Case stated—“2. By his said will the testator assigned, disponed, and conveyed to and in favour of the trustees therein named, and to such other persons or person as might be nominated by him or assumed to act in the trust thereby created, and the acceptors or acceptor, survivors and survivor of them, all and sundry the whole means and estate, heritable and moveable, real and personal, of every kind and description and wherever situated, which should be owing and belonging to him at the time of his death,… in trust always for the ends, uses, and purposes following, videlicet (the first four purposes related to the payment of the testator's debts and certain legacies): ( Fifth) For payment to his wife, the said Mrs Agnes Aitken Riddell or Stewart, during all the days and years of her life, of the whole free income of the residue and remainder of his means and estate.( Sixth) On the determination of the said liferent provided to his wife, or in the event of his wife predeceasing him, he directed and appointed his trustees to make payment of the residue of his means and estate to and among any child or children he might leave, and the survivors and survivor of them, and the issue of any of them who might have predeceased him leaving issue, equally among such children and issue per stirpes; and ‘ in the seventh place, in the event of my decease without children or remoter issue, I direct and appoint my trustees to make payment of the residue of my means and estate as follows:—( First) My trustees shall out of the residue make payment of a legacy of ten thousand pounds free of death duties

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to my niece Esther Mary Lawrence, only surviving daughter of my eldest sister, the deceased Mrs Elizabeth Stewart or Lawrence; declaring that the said legacy shall not vest in the said Esther Mary Lawrence until the determination of the liferent before provided to my wife, and that the said legacy shall be payable on its vesting; declaring further that in the event of the said Esther Mary Lawrence predeceasing me, or the term of vesting before mentioned leaving children or remoter issue, my trustees shall make payment of the said legacy to and among the children of the said Esther Mary Lawrence and the survivors and survivor of them, and the issue of any of them who may have predeceased the term of vesting after mentioned, leaving issue equally among such children and issue per stirpes, such issue succeeding always equally among themselves per stirpes only to the shares to which their parents would have been entitled had they been in life; declaring further that the respective shares of the children of the said Esther Mary Lawrence shall vest in such of them as may be sons on their respectively attaining majority, and in such of them as may be daughters on their respectfully attaining majority or being married, whichever of these events shall first happen, if the liferent hereinbefore provided to my wife shall have then determined or on the determination of the said liferent and shall be payable on their respectively vesting; and ( Second) my trustees shall make payment of the net residue to my brother the said John Stewart, declaring that the said net residue shall not vest in the said John Stewart until the determination of the liferent before provided to my wife and that the said net residue shall be payable on its vesting; declaring further that in the event of the said John Stewart predeceasing me or the term of vesting before mentioned leaving children or remoter issue my trustees shall make payment of the said net residue to and among the children of the said John Stewart and the survivors and survivor of them, and the issue of any of them who may have predeceased the term of vesting after mentioned, leaving issue equally among such children and issue per stirpes, such issue succeeding always equally among themselves per stirpes only to the shares to which their parents would have been entitled had they been in life; declaring further that the respective shares of the children of the said John Stewart shall vest in such of them as may be sons on their respectively attaining majority, and in such of them as may be daughters on their respectively attaining majority or being married, whichever of these events shall first happen, if the liferent hereinbefore provided to my wife shall have then determined or on the determination of the said liferent, and shall be payable on their respectively vesting.’… 3. The testator was sixty-four years of age at the date of his death and was survived by his widow, who died on 2nd December 1922. He left no issue. 4. The testator was predeceased by the said Esther Mary Lawrence, who died on 17th November 1907 unmarried.… 6. The testator was survived by the said John Stewart, his brother, who died on 20th July 1910 testate, and his surviving trustee is the party of the seventh part. The said John Stewart was survived by three children—Walter Mulleneux Stewart, Muriel Alice Stewart (now Mrs Bennion), and Edith Dorothy Stewart (now Mrs Turner), who have all attained majority and are domiciled in England. No child of Mr John Stewart predeceased him leaving issue. The said Mrs Bennion made a voluntary settlement on 6th August 1913, of which intimation was made to the testator's trustees on 5th November 1913. The said Mrs Turner also made a voluntary settlement dated 27th November 1914, of which intimation was made to the testator's trustees on 7th January 1915. The sole surviving trustee acting under both of these voluntary settlements is Mr Stancliffe, and he and the said three children of the late John Stewart are the parties of the eighth part. 7. Questions have arisen between the parties as to whether the £10,000 bequeathed by the testator to the said Esther Mary Lawrence, whom failing to her issue, is, in respect that the said Esther Mary Lawrence predeceased the testator unmarried, intestate estate or falls to be regarded as part of his residuary estate. 8. The first parties, who are the trustees of the testator, do not consider it necessary to offer any argument upon the questions which have arisen. 9. The second, third, fourth, fifth, sixth, and seventh parties maintain that the said £10,000 has fallen into intestacy. They further maintain that in that event they are entitled to the said £10,000 free of death duties, and that these duties fall to be paid out of the ‘net residue.’ 10. The eighth parties maintain that on a sound construction of the will of the testator the said £10,000 falls to be treated as part of the net residue of his estate and that it is covered by the residuary clause in his will dealing with the net residue. They further maintain that if the said £10,000 does not fall to be so treated the death duties exigible therefrom fall to be paid out of the said £10,000 and not out of the ‘net residue.’”

The questions of law were—“1. Does the said £10,000 fall to be distributed as intestate succession of the testator? or 2. Does it form part of the ‘net residue’ within the meaning of the purpose in the seventh place (second) of the said will and fall to be distributed as provided by the said purpose? 3. In the event of the first question being answered in the affirmative, do the death duties fall to be paid out of the said £10,000 or out of the ‘net residue’?”

Argued for the second, third, fourth, fifth, sixth, and seventh parties—The legacy of £10,000 fell into intestacy and these parties were entitled to it free of legacy duty under the direction as to death duties. The bequest to John Stewart was a gift of residue of residue. Such a bequest was not a bequest of the residue of the estate but of the residue of a particular fund, and did not carry with it a bequest of part of the residue of the estate which had failed—Hawkins on

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Wills (2nd ed.), p. 56; Scrymsher v. Northcote, 1 S.W. 566; Lloyd v. Lloyd, 4 B. 231; Green v. Pertwee, 5 Hare 249; In re Parker, [1901] 1 Oh. 408; Wingate v. Wingate's Trustees, 1921 S.C. 857. per Lord Mackenzie at p. 870, 58 S.L.R. 604; Brown v. W'Lae's Trustees, 1877, 5 R. 37, 15 S.L.R. 27. Scrymsher v. Northcote ( cit.) was directly in point. The provision that the £10,000 was to be paid free of death duties simply amounted to a bequest of a further sum out of residue which also fell into intestacy.

Argued for the eighth parties—The bequest of £10,000 fell to be included in the net residue bequeathed to John Stewart and his issue, it was intended to be treated as a legacy and was so described. It was therefore merely a contingent burden upon the residuary legatee to whom the whole estate was given— Storie's Trustees v. Gray, 1874, 1 R. 953, per the Lord President at p. 957, 11 S.L.R. 552. In the fifth and sixth purposes the testator had dealt with the residue, and the seventh purpose was merely a destination-over of the residue, subject to another legacy in addition to those with which it was already burdened. The use of the words “net residue” was only with reference to payment on survivance or otherwise of the legatee, and there was no ground in the will for distinguishing the residue in the fifth purpose from that in the seventh. This interpretation avoided intestacy and was more in accordance with the will than the contention of the other parties— Scrymsher ( cit.) and the cases following that decision were not now regarded as authoritative in England—Jarman, Wills (6th ed.), vol. ii, pp. 1051–59 and particularly p. 1054. In any event the parties claiming on intestacy were not entitled to be relieved of legacy duty. The provision as to death duties could not take effect unless the bequest itself took effect.