Coats's Trustees v Lord Advocate
| Jurisdiction | Scotland |
| Judgment Date | 02 June 1964 |
| Date | 02 June 1964 |
| Docket Number | No. 24. |
| Court | Court of Session (Inner House - Second Division) |
2ND DIVISION.
Husband and WifeRights arising on dissolution of marriageDivorceEffect on provisions of marriage contractWhole fund provided by husbandLiferent of whole fund to husbandLiferent of whole fund to wife on husband's deathForfeiture by wife of liferent of one half of fund on remarriageNo provision for event of divorceWhether wife entitled to liferent of whole fund after divorce and remarriageWhether children or husband entitled to provision forfeited by wife on remarriageMarriage Contract.
A husband contributed the whole fund held by trustees under an antenuptial marriage contract. The contract provided that during his lifetime the whole income of the fund should be paid to him in liferent; that in the event of the dissolution of the marriage by his death the whole income should be paid to the wife in life-rent; further, that in the event of the dissolution of the marriage by his death, if there were issue of the marriage and if the wife were to remarry, her liferent should be reduced to the income of one half of the fund, and the income of the other half applied for the benefit of the issue; and that in the event of there being no issue or of all the issue predeceasing the date of vesting, the whole income of the fund should be paid to the wife. No provision was made for the event of the marriage being dissolved otherwise than by the death of the husband. The wife divorced the husband in 1931 and remarried in 1932. The husband died in 1958 and the wife in 1959, survived by the three children of the marriage. The husband's estate was assessed to estate duty upon the footing that he was entitled to the liferent of one half of the fund from the date of the wife's remarriage until his death, it being conceded by the Crown that, the divorce being equivalent to the husband's death, the wife was entitled to the whole income from the date of the divorce until her remarriage. In an appeal against the assessment the trustees contended that, the divorce being equivalent to the husband's death, and there having been issue and the wife having remarried, the income of half of the fund fell, from the date of her remarriage, to be applied for the benefit of the issue; and alternatively that the wife continued after her remarriage to be entitled to the liferent of the whole fund.
Held (diss. Lord Wheatley, who was of opinion that the wife continued after her remarriage to be entitled to the income of the whole fund) that in a question between the husband and wife the reference in the contract to the dissolution of the marriage by the death of the husband fell to be read as including dissolution by divorce and consequently that on her remarriage the wife's liferent was reduced to the income of one half of the fund; but that, divorce not being the equivalent of death in relation to the children's rights, the conditions necessary to their becoming entitled to the income of the other half of the fund were not satisfied, and that on the wife's remarriage the right to the income of that half reverted to the husband by virtue of his radical right in the fund, which had been contributed by him, and also (per the Lord Justice-Clerk) by virtue of his right to a liferent of the fund in so far as that right had not been forfeited; and the appealrefused.
Ian Pountney Coats And Another, the trustees acting under an antenuptial marriage contract entered into between Thomas Heywood Coats and Mrs Olivia Violet Pitman or Coats or Moxon, appealed to the Court of Session under section 10 of the Finance Act, 1894, against an assessment to estate duty made by the Commissioners of Inland Revenue.
The appeal set forth the circumstances, which were admitted by the respondent, as follows:"(1) The late Thomas Heywood Coats, sometime residing at Levernholme, Nitshill, Renfrewshire (hereinafter referred to as Thomas Coats), and the late Mrs Olivia Violet Pitman or Coats or Moxon (then Miss Olivia Violet Pitman and hereinafter referred to as Mrs Moxon) entered into an antenuptial contract of marriage dated 23rd and 24th April 1920 and registered in the Books of Council and Session on 7th July 1920, whereby Mr Coats assigned, conveyed and transferred to the trustees therein named his right, title and interest under certain trusts and also certain shares in J. & P. Coats Limited, to be held by the said trustees for the trust purposes therein stated. Mr Coats was designed in the said marriage contract as the first party and Mrs Moxon as the second party. (2) After provision for payment of the expenses of executing the trust and for a sum of pin money to Mrs Moxon the marriage contract provided as follows:(Third) For payment to the first party during his lifetime of the balance of the free annual income thereof for his alimentary liferent use allenarly and declaring that in the event of the bankruptcy or declared insolvency of the first party the whole of the said income shall be payable to the second party on her sole receipt and free from the debts and obligations of the first party; (Fourth) In the event of the dissolution of the marriage by the death of the first party the trustees shall thereafter account for and pay over the free annual income of the trust funds to the second party subject to the provisions (Fifth) underwritten for her alimentary liferent use allenarly during all the days of her life after such dissolution(Fifth) In the event of the dissolution of the marriage by the death of the first party and there being issue of the marriage and the second party at any time thereafter entering into a second marriage, the trustees shall from the date of such marriage pay to her the income of one half of the trust funds for her alimentary liferent use allenarly and shall apply the income of the remaining half of the trust funds for the maintenance, education and upbringing of the issue of the marriage in such manner and in such proportions and shall pay the same to such person or persons for behoof of such issue or shall accumulate the balance of income not required for these purposes as the trustees in their sole absolute discretion may see fit, and in the event of there being no issue of the marriage or of all such issue predeceasing the date of vesting aftermentioned then the trustees shall pay over to the second party the whole income of the trust funds; (Sixth) With regard to the capital of the trust funds the trustees shall hold the same for behoof of the child or children of the marriage and the issue of such of them as may die before acquiring a vested interest therein leaving issue and shall pay over the same to the children at such times and in such shares or proportions and under such restrictions, including restriction to a mere liferent, as the first party, or the second party should she survive the first party, may appoint by any writing under his or her hand and failing such appointment then among the children equally share and share alike, the issue of any children who shall have died before acquiring a vested interest taking the share their parent would have taken if in life; Declaring that provisions in favour of the said children or issue shall vest in them on their respectively attaining the age of twenty-one years; Providing always and declaring that in the event of the failure of any child or child's issue to take a vested right in the trust funds the share which would have fallen to such child or to his or her issue shall accresce to and be divided among the remaining children of the said intended marriage or their issue per stirpes; Declaring, however, that notwithstanding the said provisions in favour of the said children or their issue may not have vested, the trustees, in the event of the death of both of the spouses, shall have full power to apply the income of the trust funds for the maintenance, education and upbringing of such issue in such manner as they in their sole discretion may see fit and to accumulate the balance of income not required for this purpose; (Seventh) In the event of the dissolution of the marriage by the death of the first party and of there being no child or remoter issue of the marriage or of such child or children all dying before acquiring a vested interest, the capital of the trust funds shall, subject to the liferent in favour of the second party if in life, be payable to and be dealt with as the first party may direct by any testamentary writing and failing such then to his heirs in mobilibus according to the law of Scotland; (Eighth) In the event of the dissolution of the marriage by the death of the second party and of there being no child or remoter issue of the marriage or in the event of such dissolution and such child or children all dying before acquiring a vested interest the first party shall be entitled to have the capital of the trust funds made over to himself absolutely.(3) Mr Coats and Mrs Moxon (as she later became) were married on 27th April 1920, and there are three children of their marriage, namely, a daughter, who was born on 26th January 1921, a son, who was born on 25th July 1924, and a son, who was born on 13th February 1927. On 18th December 1931 Mrs Moxon obtained decree of divorce against Mr Coats on the ground of a matrimonial offence. Mr Coats died intestate on 20th December 1958, and Mrs Moxon died testate on 2nd November 1959, survived by her second husband. (4) After sundry correspondence the Deputy Registrar, Estate Duty Office, informed the appellants' solicitorsthat the Estate Duty Office claimed estate duty of 48,276, 17s. 6d., calculated with reference to a principal value of 62,118, 19s. with interest, upon the death of Thomas Heywood Coats in respect of the one-half share of the marriage contract funds, of which it was contended the income had reverted to him during his life"
The grounds of appeal were stated as follows:"(1) Thomas Coats, upon his divorce on 18th December 1931, forfeited his...
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Coats's Trustees v Lord Advocate
...marriage contract, then the result seems to me harsh and wrong and one that should be rectified. (In the Court of Session 2nd June 1964—1964 S. C. 249.) Ian Pountney Coats and Another, the trustees acting under an antenuptial marriage contract entered into between Thomas Heywood Coats and M......