Trs, and Others

9, 1894

during the not-payment; and I direct my trustees to retain the remaining one-third of the respective shares of the half of said residue of my said means and estate left to my said sons for their behoof until the winding-up of the trust-estate; and I direct and appoint my trustees to hold the other half of the residue of my said means and estate, heritable and moveable, real and personal, before conveyed, in trust for behoof of my several daughters, .. to

the extent of one share each in liferent for their respective liferent use only, and their respective children or descendants equally per stirpes and not per capita in fee, and the fee of the said several shares shall be payable to the respective children of my said daughters on their mother's death, when the same shall vest, and on their respectively attaining the age of twentythree years, the annual proceeds thereof being applied for their use and benefit until the last of said events shall take place, declaring that if any of my sons shall die either before or after me, leaving lawful issue, his or their shares of the residue of my said means and estate before conveyed shall fall and belong to such issue equally, and if any of my sons and daughters shall die either before or after me without leaving lawful issue, the respective shares of my said means and estate left to them in fee or in liferent as aforesaid shall belong to the survivors and the issue of any deceaser of my sons and daughters per stirpes equally, the portion or portions thereof falling to my daughters being left to them in liferent for their liferent use only, and their children or descendants equally per stirpes in fee: Declaring that whatever sum or sums of money I may advance to any of my sons for the purpose of enabling them to commence business or otherwise shall be imputed to account of their respective shares of the residue of my said means and estate, and that all advances which I have made or may hereafter make to my respective sons-in-law shall be deducted from the respective shares of the fee of the half of the said residue liferented by my said several daughters, their wives."

In 1876 the truster lent to the firm of Donald & Sellar, of which his son-in-law William Sellar was sole partner, a sum of £2500, and in 1880 a further sum of £1000. He also granted a guarantee to Messrs J. & W. Campbell & Co. on behalf of the said William Sellar.

On 3rd April 1883 the firm of Donald & Sellar, and the said William Sellar, as sole partner thereof, and as an individual, suspended payment, and their affairs were wound up under a trust-deed dated 3rd April 1883. The truster the said Alexander Smith acceded to the trust-deed and lodged a claim with the trustee thereunder amounting to £3162, 12s. 1d. This claim was duly admitted, and in respect thereof the truster received dividends from the trust-estate amounting to £1189, 5s. 5d., leaving a balance unpaid on the claim of £1973, 6s. 8d. The truster was also called upon, under his guarantee to Messrs J. &

W. Campbell & Co., to pay, and made payment to them of £1812, 15s. 8d. The difference between the amount paid by him on behalf of his son-in-law and the amount received by him was £3786, 2s. 4d.

The trust-deed by Donald & Sellar and William Sellar contained the following clause:-"Declaring further that it is a condition of this deed that the creditors who accede hereto, or who shall take payment of a dividend on their claims, shall be held to have discharged us of the whole debts due by us to them."

A special case was presented to the Court by the trustees of Alexander Smith of the 1st part, the children of William Sellar and his wife Margaret Muir Smith or Sellar, who predeceased her father, the truster, of the 2nd part, the truster's sons of the 3rd part, and the truster's surviving daughters of the 4th part, to have the following questions determined—“(1) Does the said sum of £3786, 2s. 4d., or any part thereof, fall to be deducted by the first parties from the share of residue belonging to the children of Margaret Muir Smith or Sellar? (2) Is interest chargeable upon the said sum of £3786, 2s. 4d., and if so, at what rate? (3) Are the third parties entitled to payment of their respective shares of residue immediately upon the total amount of the trust-estate being realised, and the respective shares thereof falling to the third parties being ascertained, postponed in the case of the youngest son until he shall attain twenty-five years of age? Or (4) Are the first parties bound to retain onethird of the respective shares of residue falling to the third parties until the death of the survivor of the truster's daughters, and until the youngest child of any daughter of the truster shall attain twentythree years of age?"

The second parties maintained and argued that the sum of £3786 did not fall to be deducted as an advance. By acceding to William Sellar's trust-deed and accepting a dividend the truster had recognised the advances made as debts, and these debts were by the terms of Sellar's trust-deed discharged. The trustees could not sue for repayment, and were therefore not entitled to regard them as subsisting advances in the sense of the trust-disposition. The sums were not "advanced" in the proper sense of that term, but lent and guaranteed. There was no presumption that an "advance" was meant; it was a question of intention-M'Laren on Wills, i. 458-461. The truster could not have intended deduction in the circumstances here. (2) Even if these sums were to be regarded as advances, no interest was payable upon them-Baird's Trustees v. Duncanson, July 19, 1892, 19 R. 1045.

The third parties maintained and argued -(1) "Advances" was to be interpreted in a general and not in a technical senseAstbury v. Beasley, Weekly Notes, May 1, 1869, Romilly, M.R. The truster evidently intended to divide his estate among his family per stirpes; therefore, whatever one family had already got was to be imputed pro tanto to their ultimate share.

His

accession to Sellar's trust-deed could not affect the provisions of his own trust-disposition. By claiming under the deed he did cease to be "out of pocket," and that was the test; not to have claimed would have been to rob the rest of his family in favour of the sellers-Berry v. Downie, Morse, &c., July 10, 1839, 1 D. 1216, and (H. of L. 1847), 19 Jur. 447, was on all fours with the present case. (2) Interest was due on these advances, and that at 5 per cent., the rate Sellar was paying to the truster before his bankruptcy. (3) The sons took a vested interest in the entire half of the estate destined to them a morte testatoris, although payment of two-thirds was postponed until they reached twenty-five, and of the remaining one-third to secure the widow's annuity. This was clear from the direct and unqualified gift to them, and further, from the express declaration that vesting should take place a morte. The sole difficulty was created by the survivorship clause in the event of sons dying "before or after" the testator. To that extent there was repugnancy, but the words of direct gift and of declaration of vesting must prevail. A plain direction was to be given effect to in spite of subsequent inconsistent directions, especially if these served no real object, e.g., purported to keep up a trust after a right of fee had been conferred--Miller's Trustees v. Miller, December 19, 1890, 18 R. 301; Simson's Trustees v. Brown, March 11, 1890, 17 R. 581; Finlay's Trustees v. Finlay, July 6, 1886, 13 R. 1052; Archibald's Trustees v. Archibald, June 15, 1882, 9 R. 942; Alexander's Trustees, January 15, 1870, 8 Macph. 414.

Argued for fourth parties-On the 1st and 2nd questions they adopted the argument of the third parties. As to vestingThere was a distinct direction to the trustees to retain one-third of the sons' shares "until the winding-up of the estate." That, looking to the subsequent survivorship clause in the event of sons or daughter dying "before or after" the testator, must mean that that one-third did not vest in the sons until the final winding-up, upon the children of the daughters attaining twenty-three years of age, predeceased by their respective mothers. There would be no repugnancy if the declaration as to vesting were to be taken as applicable to the other two-thirds-Croom's Trustees v. Adams, November 30, 1859, 22 D. 45; Vines v. Hillou, July 13, 1860, 22 D. 1436.

At advising

LORD M'LAREN--The first question has reference to a clause in the trust-settlement of the testator providing "that all advances which I have made or may hereafter make to my respective sons-in-law shall be deducted from the respective shares of the fee of the half of the said residue liferented by my said several daughters, their wives." The trust-deed is dated 28th April 1883, and prior to that date the truster had advanced to his son-in-law William Sellar the sums set out in the third article of the case. On 3rd April 1883 William Sellar, who carried on business under the firm of Donald &

Sellar, suspended payment, and of the same date granted a trust-deed under which the business of the firm was wound up. The testator acceded to the trustdeed, claiming to the amount of £3162, 12s. 1d.; his claim was admitted, and he received dividends from the trust-estate amounting to £1189, 5s. 5d., leaving an unsatisfied balance of £1973, 6s. Sd. By accepting a dividend the testator of course discharged his right to recover the unpaid balance. The testator also made a payment under a guarantee which he had undertaken on behalf of Mr Sellar, and the difference between the total amount which the testator paid on behalf of his son-in-law and the amount received in the form of dividends is stated to be £3786, 2s. 4d.

1. The first question in the case is, whether this difference ought to be deducted by the testamentary trustees from the share of residue which is given to Mrs Sellar's children?

But for the direction which I have quoted, it is evident that the proposed deduction could not be made. Mrs Sellar predeceased the testator; the liferent intended for her did not take effect, and the fee of the share of the residue appropriated to the Sellar family went to her children, who are not responsible for their father's debts. Moreover, the debts of William Sellar were discharged, and even if he had been the residuary legatee of the share in question, the testamentary trustees could not have treated a debt which had been discharged as a subsisting debt of which they were entitled to operate payment by retention.

But a direction to testamentary trustees to impute advances to account of succession may be, and generally is, intended to empower the trustees to apply to advances made in the testator's lifetime a principle of accounting which would not be applic able if the will were silent on the subject, i.e., to treat such advances, not as debts, but as payments to account of children's shares of succession. The object of such a direction is, of course, to secure equality in the distribution of the testator's estate amongst the members of his family, and it is perfectly understood and settled that in the construction of such directions the word "advances" is not to be confined to advances by way of loan for which the father might have sued or claimed in bankruptcy, that is, is to include money advanced of which a record is kept, but which the son or daughter was under no obligation to

pay.

Now, if the direction to impute advances to account of shares of succession would include, for example, money given to a daughter on her marriage, or to a son to purchase an interest in a business, for which no receipt or obligation was taken at the time, it is difficult to see why money lent to a child upon an obligation to repay should cease to be an advance because that obligation is discharged either by the voluntary act of the father or by the operation of the principles of the law of bankruptcy.

Another consideration to which our

March 9, 1894.

attention was directed by counsel for the Sellar family is, that while the advances were made to their father, payment is to be operated by deducting the sums advanced from the children's provisions. But this is the very thing which the testator has directed, and the fact that he has so directed shows that he was not thinking about getting payment to his estate of a debt, but only of dividing his succession equitably by a per stirpes division, in which advances made to a parent were to be imputed to the account of the children's succession. This conclusion, I think, is in accordance with the opinions expressed in the House of Lords in Hutchison v. Skelton, 2 Macq. 492, and Berry v. Downie, 19 Scot. Jur. 447.

2. It follows from what has been said that the advances in question only became imputable to account of succession at the testator's death, and that interest is not due for the antecedent period. In making up the residue account as at the testator's death the sum of £3786, 2s. 4d. will be added to residue, and then the account of the Sellar family will be debited with this sum as a sum already paid.

3. or 4. The third and fourth questions are alternative, and they raise the question whether the shares of succession given to sons vested at the testator's death, or whether to the extent of one-third these shares are affected by a contingent destination.

The material provisions of the will are these (1) There is an original gift to the sons in terms which plainly import a vested interest-"I leave one-half of the residue of my said whole means and estate before disponed to and among my sons, equally among them." (2) There is a formaĺ declaration of vesting a morte "Declaring that the said half of the said residue of my said means and estate left to my sons shall vest from and after my death, and bear interest,' &c. (3) There are provisions applicable to the death of the testator's sons and daughters, "either before or after" him, leaving issue or without leaving issue, the property being destined in the first event to issue, and in the second event to survivors and the issue of such as may die leaving children.

If we had only to consider the effect of this destination, I apprehend there could be no doubt that the provisions of conditional institution and survivorship would be referable to the period of payment-that is, the testator's death as regards the twothird parts of each son's share which is immediately payable, and probably the death of his widow as regards the onethird which was to be retained by the trustees, presumably as a fund to be invested and applied towards the payment of the lady's annuity. But then this construction is absolutely repugnant to the previous provisions-(1) and (2) the unqualified gift of half the residue to the sons, and the unqualified declaration that their interests shall vest at the testator's death. These provisions apply only to the shares of sons, because in the case of

daughters there is no direct gift, but a declaration that the trustees shall hold their half in trust, and again in the case of daughters there is no declaration of vesting.

I do not say that in all cases a direction or declaration as to vesting is to be preferred to the inferential statement which we find in a destination, because it might be that we could not give effect to the express declaration without defeating some important purpose of the will or trust. But in the present case, so far as I am able to see, no injury can result to anyone from the giving effect to the twice-repeated intention of the testator to make an immediate gift of one entire moiety of his estate to his sons. It is true that in doing so we can only give partial effect to the third provision on this subject, for this provision will then only be applicable (in the case of sons) in the event of the death of one of the original legatees before the testator's death. But some part of one of the clauses must be rejected, and I cannot help thinking that the provision of survivorship which creates the difficulty is the least important provision of the series. I think the case must be classed with those in which a testator, after giving an immediate and substantial fee to a beneficiary, has attempted to restrict the beneficiary's right by putting him under trust. In such cases the law is, as settled in Miller's Trustees, 18 R. 301, that the beneficiary takes the fee disencumbered of the trust.

LORD KINNEAR-I am of the same opinion. I cannot say I have any doubt that the payments made by the testator to Sellar, under an obligation to repay, are advances in the sense of the will. Sellar's discharge in bankruptcy they ceased to be debts enforceable by action, but they none the less remained advances made by the testator.

By

It was competent to the testator to direct that such advances made by him should be deducted from legacies, and the only question is, whether upon a sound construction of the will the testator meant that these advances should be deducted.

The will is to be read as speaking from the date of the testator's death, and so reading it the testator was at that date out of pocket in respect of these advances, and I think there is no room for doubt that he intended to include among the reductions from the legacies advances in the position of those now in question.

LORD PRESIDENT-I agree.

LORD ADAM was absent at the hearing.

The Court pronounced the following interlocutor:

"Find and declare, with reference to the first question, that the sum of £3786, 2s. 4d. is an advance which falls, in terms of Alexander Smith's trustdisposition and settlement, to be deducted from the share of the fee of the half of the residue of the estate thereby appointed to be liferented by

v. Steels

10

I so understand the interlocutor, but it is so expressed that I cannot be confident that my interpretation of it is correct.

"In Drummond v. Carse, January 27, 1881, 8 R. 449, and 18 S.L.R. 272, a party to certain actions was decerned as judicial factor to pay certain sums to his opponent, and he was found liable in expenses without that qualification being expressed. He paid the expenses out of the trust-estate, and thereby reduced it below the sum which had been decerned for. In a suspension of a charge for this sum, the Lord Ordinary (Curriehill) repelled the reasons of suspension, on the ground-as explained in his note that the judicial factor was personally liable for the expenses, as a trustee would have been. The interlocutor, however, was recalled, and the Lord Justice-Clerk expressed the opinion that the position of a judicial factor was to be distinguished from that of a trustee on a sequestrated estate, and that the decisions as to such trustees were inapplicable to questions with judicial factors. Lord Young's opinion, however, proceeds on the assumption that the judicial factor was liable for the expenses personally, although he reserves his opinion on the point. The report seems to bear that the judgment was pronounced by these two judges.

"In an early case, Chalmers v. Douglas, 19th February 1790, M. 6083, a pursuer who succeeded in an action of damages against a married woman for defamation, defended by her with consent of her husband, was found entitled to expenses against the husband personally; but on appeal that finding was reversed, and it was declared that the husband was responsible for the conduct of the cause 'in so far as the same is malicious, vexatious, and calumnious,' and the cause was remitted for inquiry how much of the expenses had been occasioned by his conduct in the cause-Baillie v. Chalmers, 6th April 1791, 3 Paton's Appeals, 213.

"In the recent case of Whitehead v. Blaik, 20th July 1893, 20 R. 1045, the question whether a husband should be found liable in the expenses of a process brought by his wife was raised, but the motion to that effect was not granted, because it was held that the husband had not appeared in the

cause.

"In Fraser v. Cameron, 8th March 1892, 19 R. 561, a judgment by the Sheriff in an action brought by a minor aged nineteen, with consent and concurrence of her father as her curator, finding the father personally liable in expenses, was approved of in the Second Division. Lord Young qualified his judgment by the remark that if a father consented to make an action formally competent there might be just grounds for not subjecting him to liability for expenses.'

"Lord Fraser has expressed the opinion that, in general, a tutor will not be found liable in expenses, and he quotes in a note, a passage from the Code (which he considers to be in accordance with the Scottish authorities), to the effect that tutors and curators might be found liable in expenses si nomine

pupillorum vel adultorum scientes calumniosas instituant actiones, which he regards as implying that in the general case tutors and curators would not be so liable-Fraser on Domestic Relations, ii. 135; also Parent and Child, 276.

"The pursuer referred to the twelfth section of the Guardianship of Infants Act, 49 and 50 Vict. c. 27, and the first section of the Pupils Protection Act, 12 and 13 Vict. c. 51, as putting a father in the position of a tutor-at-law or tutor-dative. But I do not see that these statutes affect the question.

"In that state of the authorities I have found very great difficulty in deciding this question. But I have come, although with much hesitation, to think that my judgment should be for the defenders.

"William White is the only pursuer of this action. His son is but a boy, only seven years old, and there can be no doubt that the action was raised in the knowledge that the son had no estate. It is the very case supposed by Lord Mackenzie in Forbes v. Morrison. The pursuer had the whole control of the case. He is responsible for the record, and it cannot be suggested that the boy interfered at all. Further, I think it clear that nothing which the boy did affected the result of the action. There was really no ground for charging the boy with contributory negligence. One question-and what appeared to me the chief question was whether the factor for the defenders had due notice of the dangerous state of the property. On that point the evidence of the pursuer, and that of the factor were in direct conflict. It was impossible to believe both. Each was supported by other witnesses. I do not say that the jury disbelieved the evidence of the pursuer, but they at least held that he had not proved his case. I am not prepared to censure the pursuer for bringing the case, nor to affirm that his record and evidence were consciously false. These were questions, I apprehend, for the jury. But neither is it a case for treating the pursuer with exceptional indulgence; and I think, on the whole, that it is in accordance with principle, and not against the balance of authority, to hold the pursuer liable. I am unable to hold that a party is entitled to bring an action into Court under the condition that he shall not be liable for the expenses. A tutor entering into any ordinary contract on behalf of his ward, is liable personally to see that it is fulfilled, and if it be permissible to represent an action as a contract of litiscontestation, or as analogous to a contract, there seems no good reason for relieving a tutor from the obligations which arise out of it. I am disposed to doubt whether Lord Fraser's statement of the law does not go slightly beyond the authorities which he quotes, and it occurs to me that the practice of the Court in reference to questions of expenses has been greatly modified since 1791, when the case of Chalmers v. Douglas was decided.

"If it be said that the result of holding a tutor or father liable in such cases might be to deprive a pupil of the benefit of a just action, I think the answer may be that in