Burns's Trustees v McKenna
| Jurisdiction | Scotland |
| Judgment Date | 12 July 1940 |
| Date | 12 July 1940 |
| Docket Number | No. 44. |
| Court | Court of Session (Inner House - Second Division) |
2ND DIVISION.
SuccessionFaculties and PowersPower of appointmentValidity of exerciseObjects of powerDelegation of powerBeneficiaries born after death of granter of powerTrusts (Scotland) Act, 1921 (11 and 12 Geo. V, cap. 58), sec. 9.
A testator by his trust-disposition and settlement gave one-third of the residue of his estate to his eldest son in liferent and the fee to that son's children as the son might appoint. By his second codicil he, directed that, on the termination of the son's liferent, the one-third share of the residue should be held for the son's children (his grandchildren) in liferent and the fee for their children (his great-grandchildren) in such proportions as the grandchildren might appoint, and failing appointment equally. By a later codicil the testator conferred upon his grandchildren a power, with a recommendation, to limit their children's rights to rights of liferent, but he conferred no power on them to make any appointment to the fee.
A grandson of the testator (a son of the eldest son), by his trust-disposition and settlement, disponed to trustees his whole estate, heritable and moveable, "presently belonging and resting owing to me or which may belong or be resting owing to me or of which I may have the power of disposal at the time of my decease and not have otherwise specifically disposed of." He directed his trustees to retain the whole residue of his estate for behoof of all his children (the testator's great-grandchildren) equally in liferent, and for behoof of their respective issue in fee "in such proportions subject to such restrictions, limitations and conditions (including the limitation of the interest of any child to one of liferent only) as my said children may respectively appoint," and failing appointment for division among his own grandchildren, the testator's great-great-grandchildren, equally. A question having arisen as to whether the grandson had validly restricted his own children, the testator's great-grandchildren, to a liferent interest in the fund,
Held, on the assumption that the grandson intended to exercise the power of appointment conferred by his grandfather, (1) that he had failed to appoint effectually the funds in question to the testator's great-great-grandchildren, in respect (a) that these parties were not objects of the power, and (b) that, even if they were objects of the power, his attempted delegation to his own children of the power of appointment was sufficient to invalidate the appointment; (2) that the restriction of his own children to a liferent of their shares was also invalid, being inseverable from the invalid appointment of the fee to his own grandchildren; and (3) that accordingly his children took the fee equally among them by virtue of the gift-over in the testator's second codicil.
Opinions per the Lord Justice-Clerk and Lord Wark that the restriction was also bad under section 9 of the Trusts (Scotland) Act, 1921, in respect that, where a power is given to appoint among a named class and the donee has not an unfettered power of alienation the appointee takes by virtue of the deed of the granter of the power, notwithstanding that his right is not in esse until the power is exercised and the appointment made by the donee of the power, and accordingly that the great-grandchildren, who had not been born at the date of the testator's death and were now of full age, were entitled, in terms of the section, to immediate payment of the funds in question.
Sir George Burns, Baronet (hereinafter referred to as the testator), died on 2nd June 1890 leaving a trust-disposition and settlement, dated in 1859, and 49 relative codicils.
By his trust-disposition and settlement the testator gave to his eldest son John (afterwards first Baron Inverclyde) a liferent of one-third of the residue of his means and estate, and the fee to John's children, as John might appoint or failing such appointment equally.
By his second codicil, dated 25th April 1873, the testator provided,inter alia, as follows:"And further, considering that the said John Burns has now five children, videlicet:George Arbuthnot Burns, Agnes Caroline Burns, James Cleland Burns, Jane Cleland Burns and Mary Hay Burns, and that the said James Cleland Burns [the testator's second son] has now five children and that I am desirous in my lifetime not only to limit the interest of my grandchildren, the children of my said two sons, to liferents of any portion of my estates falling to them, but also to apportion the shares of such residue, and otherwise regulate the succession of my grandchildren and their issue to the residue of my estate as hereinafter mentioned; therefore (first) as regards the said one-third share of the residue and remainder of my estate to be held for behoof of my son, the said John Burns, in liferent as hereinbefore mentioned, I direct and appoint the said Trustees after the termination of his liferent to hold the said one-third share for behoof of the said children of the said John Burns, and any other child or children whom he may leave, equally among the whole of such children in liferent for their respective alimentary liferent uses allenarly during all the days and years of their respective lifetimes, and upon their respective deceases the said Trustees shall pay or make over the fee or principal of the portions of the said one-third share liferented by the said grandchildren respectively to and among, the child or children they may respectively leave, such child or children taking the portion of the said one-third share liferented by their parents, in such proportions among the children of each family (if it consist of more than one child), and whether there be one or more children, subject to such conditions, limitations, and provisions as my grandchildren, the children of the said John Burns respectively, may direct and appoint by any deed or writing under their hands respectively, whether inter vivos or mortis causa, and, failing their leaving any such deed or writing, equally among such children (if more than one) share and share alike; and in the event of the decease of any one or more of the children of the said John Burns without leaving issue, then the said Trustees shall hold the share or shares liferented by such deceaser or deceasers (including all accumulations made thereto as after provided) for behoof of the survivors of them, equally between and among them in liferent for their respective liferent alimentary uses allenarly, and for behoof of the child or children of such survivors equally among them per stirpes, in such proportions among the children of each family (if more than one child), and subject in each case to the whole conditions, provisions, and others as are hereinbefore made and provided in regard to the shares of my said grandchildren (children of the said John Burns) and their issue."
The testator's thirty-seventh codicil, dated 22nd March 1886, contained the following provision:"And now, seeing that various of my grandchildren before mentioned have attained the age of majority, that two of them have already been married, and that another of them is shortly about to be married, and that I wish still further to impress upon my grandchildren the desirability of continuing to their children the liferents they themselves enjoy of portions of my estate; Therefore, and without prejudice to the rights and powers hereinbefore partly recited conferred upon my grandchildren hereinbefore named under the said Trust-Disposition and Settlement and Codicils, I would specially recommend to each of my said grandchildren to exercise such powers so as to confer upon their children liferents only of any shares of my estate to which children may succeed or become entitled in virtue of my said Trust-Disposition and Settlement and Codicils, and any deeds executed by such grandchildren in virtue of the powers contained in the said Trust-Disposition and Settlement and Codicils, and in addition and without prejudice to the powers conferred upon my said grandchildren, and each of them by my said Trust-Disposition and Settlement and various Codicils, I do hereby confer upon such grandchildren and each of them full and express power to limit the interests of their children, or any of them, to liferents of all shares or portions of my estate as they may succeed or become entitled to."
The testator's son John first Baron Inverclyde died in 1901, survived by his five children, and, on the death without issue of his elder son George Arbuthnot second Baron Inverclyde in 1905, John's younger son, James Cleland Burns became third Baron Inverclyde. The third baron died in 1919, leaving a trust-disposition and settlement dated 19th October 1906 and two relative codicils. He was survived by three children, the Honourable Mrs Emily Dunbar Burns or M'Kenna, the Honourable Mrs Muriel Annette Burns or Maclean of Ardgour, and the Right Honourable John Alan fourth Baron Inverclyde, who were born respectively in 1891, 1893 and 1897.
By his trust-disposition and settlement the third Baron conveyed to the trustees therein named "All and Sundry lands and heritages, goods, gear, debts, effects and sums of money, and in general the whole estate and effects heritable and moveable, real and personal of whatever kind or denomination and where-soever situated presently belonging and resting owing to me or which may belong or be resting owing to me or of which I may have the power of disposal at the time of my decease, and not have otherwise specifically disposed of." The eleventh purpose contained the following provision:"I direct my Trustees after fulfilling or providing for the fulfilment of the whole of the foregoing provisions of this Trust to hold and retain the whole residue and remainder of my means and estate for behoof of all my children sons and daughters equally among them in liferent for their respective liferent alimentary...
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