Colquhoun's Trustees v Colquhoun
| Jurisdiction | Scotland |
| Judgment Date | 09 November 1921 |
| Date | 09 November 1921 |
| Docket Number | No. 9. |
| Court | Court of Session |
Lord President (Clyde), Lord Mackenzie, Lord Skerrington, Lord Cullen.
Succession—Testament—Annuity—Insufficiency of income—Encroachment on capital.
In the absence of expressions indicating a contrary intention, a bequest of an‘annuity’ is, primo loco, an annual charge upon income preferable to the interests of a liferenter of the residue, and, if the income should prove insufficient to meet the annuity, a charge upon capital as a special legacy preferable to residuary or reversionary interests in the capital.
Circumstances in which held that, in the absence of any clear indication of a testator's intention that ‘a free yearly annuity’ bequeathed by him should be met solely out of income, his trustees were bound to pay the annuity out of the capital of the trust-estate to the extent to which the income was insufficient.
Sir Alan John Colquhoun, Baronet, of Colquhoun and Luss, died on 14th March 1910 leaving a trust-disposition and settlement, dated 1st February 1910.
The conveyance to the trustees was in the following terms:—‘I, Sir Alan John Colquhoun K.C.B. of Colquhoun and Luss, Baronet, being desirous to arrange my affairs after my death and in that event to provide for the payment of the debts on my Estates which have been occasioned by the sums borrowed to meet Government Duties exigible on my succession thereto and family provisions secured thereon and in order to make such arrangements as will preserve the Estate from alienation and with a view to the ultimate advantage of my son Iain Colquhoun and the heirs who shall succeed to me and from the full trust and confidence I have in the persons named for executing the Trust hereby created have given granted and disponed as I do hereby give grant assign transfer convey and dispone to and in favor of’ certain trustees ‘All and Sundry lands heritages and heritable and moveable estate of every description which shall belong to me at the time of my death.’
The first five purposes of the trust were concerned with the payment of personal debts and legacies, and the implement of the testator's marriage-contract obligations.
The deed then proceeded:—‘(Sexto) For payment out of the free annual rent and revenue of my said means and estate of (First) the annuity or jointure of two thousand five hundred pounds sterling per annum granted by me to my wife Lady Anna Helena MacRae or Colquhoun in the event of her surviving me under and in virtue of the Bond of Annuity executed by me in her favor dated eighth and seventeenth August and recorded in the said Division of the General Register of Sasines applicable to the County of Dumbarton second October all in the year Nineteen hundred and seven: and (Second) the annuity or jointure of one thousand five hundred pounds sterling per annum granted by the Trustees of the late Sir James Colquhoun of Luss Baronet in favor of Ivie Muriel Ellen Urquhart or Harrington (formerly Lady Colquhoun) Widow of the late Sir James Colquhoun last of Luss Baronet under and in virtue of Bond of Provision by the said Trustees in her favor dated twelfth and seventeenth January Nineteen hundred and five: (Septimo) For payment out of the free annual rent and revenue of my said means and estate of the annual interest on the sums of money borrowed by me and secured over my various lands and estates until such times as the principal sums of these debts and sums of money shall be paid off as hereinafter provided: (Octavo) Considering that I have in contemplation the immediate disentail of the presently entailed portions of my estates of Colquhoun and Luss and others and that I anticipate that at my death the whole of the said Estates will be held by me in fee simple I direct my Trustees to ingather the whole rents and produce of my said estates both presently entailed and unentailed and after meeting the foresaid annuities and interests to pay to the said Iain Colquhoun a free yearly annuity of three thousand pounds sterling free of income tax and that at two terms in the year Whitsunday and Martinmas by equal portions, beginning the first payment at the first of these terms which shall happen after my death of the proportion applicable to the period from the date of my death to said term and the second term's payment of one thousand five hundred pounds sterling at the next term thereafter for the half-year preceding and so forth half yearly termly and proportionally thereafter during the lifetime of the said Iain Colquhoun with interest at the rate of five pounds per centum per annum on each term's payment during the non-payment thereof and one-fifth part more of each term's payment as penalty in case of failure, and also to allow him to retain the use and management free of rent of the Mansion House and policies of Rossdhu and also of the deer parks in the said policies and of the shootings on any part of my said Estates which had not been let but were retained for my own use, and that over and above the annuity above or after provided: Declaring that my said Trustees shall have power to allow the said Iain Colquhoun a further sum of one thousand pounds sterling per annum for the upkeep of Rossdhu House and policies provided same are maintained in a good state of order and repair, … And said allowance shall be paid at the same terms and in the same manner as before described in reference to said Annuity of three thousand pounds per annum: Declaring further that in the event of the said lands presently entailed not having been disentailed at the time of my death the said Annuity of three thousand pounds sterling per annum and additional allowance of one thousand pounds sterling shall only be paid to the said Iain Colquhoun if he shall allow my said Trustees to collect and receive the rents of the said entailed estates along with the rents of the unentailed properties, and in the event of his not agreeing to do so and of his entering himself into the possession and management of the said entailed lands and estates then and in that event he shall not receive the said Annuity of three thousand pounds sterling nor allowance of one thousand pounds sterling above mentioned or any part thereof: (Nono) Considering that I have effected a Policy of Assurance for the sum of twenty thousand pounds sterling with the Scottish Life Assurance Company Limited on the life of my son the said Iain Colquhoun in his own name, I hereby authorise and empower my said Trustees to pay out of the remainder of the free yearly revenue or proceeds of my said lands and estates the premiums requisite and necessary for keeping the said Policy of Assurance in force provided same is absolutely assigned to them; but my trustees shall not be bound to maintain the said Policy, and shall be entitled to sell surrender discharge or otherwise deal with the same as they see fit: (Decimo) In the event of the said Iain Colquhoun being married and being desirous in contemplation of or after his marriage to make provision for his wife or intended wife and children born or to be born of the marriage I hereby direct and appoint my Trustees if requested so to do by the said Iain Colquhoun to grant and deliver such deed or deeds as may be necessary or competent for securing over my lands and estates hereby conveyed or any part thereof to and in favor of the wife or intended wife of the said Iain Colquhoun in the event of her surviving him a free annuity or jointure of such sum as he may desire but not exceeding the sum of one thousand pounds sterling per annum and that during all the days of her lifetime after the death of the said Iain Colquhoun my son payable at two terms in the year Whitsunday and Martinmas by equal portions with interest and penalties as is usual in such cases but that only if one or both of the annuities referred to in the sixth purpose hereof shall have terminated before the death of the said Iain Colquhoun and if one or both of said annuities shall not have so terminated then and in that event the said Annuity to the widow of the said Iain Colquhoun shall be restricted to a sum not exceeding five hundred pounds sterling per annum until that event occurs when it shall be increased to the sum of one thousand pounds sterling: And I further direct my Trustees to grant such deed or deeds as may be necessary or competent for securing over the lands and estates hereby conveyed to and in favour of any lawful child or children of the said Iain Colquhoun who may be alive at his death other than the heir who shall succeed to the said lands and estates or to any person or persons for their behoof that may be named by the said Iain Colquhoun suitable provisions after his death the said provisions to be so secured over my said lands and estates not exceeding the sums aftermentioned, videlicet: … (Undecimo) I direct and appoint my said Trustees out of the rest and remainder of the yearly revenue or proceeds of my said lands and estates after paying the annual interest of the money borrowed and secured over my estates and the annuities and provisions before referred to and the public and parochial burdens and any sums that are required to pay the Factor … and any sums on account of drainage, repairs on farm buildings or fencing … to pay off from time to time as they shall find themselves in a position to do so the various heritable debts … secured over my said lands...
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