Crum Ewing's Trustees v Bayly's Trustees
| Jurisdiction | Scotland |
| Judgment Date | 28 January 1910 |
| Date | 28 January 1910 |
| Docket Number | No. 73. |
| Court | Court of Session |
Lord President, Lord Johnston, Lord Kinnear.
SuccessionElectionApprobate and ReprobateInvalid Appointment in settlement containing provisions to objects of powerEffect of challenging exerciseFaculties and PowersValidity of exercise of power.
A testator in his trust-disposition and settlement directed his trustees to hold a share of his estate for behoof of his daughter in liferent and her children in fee, in such proportions and subject to such restrictions, provisions, and limitations as she may direct, and failing such direction, then equally among them. The daughter exercised this power by a settlement by which she conveyed to trustees (1) this share of her father's estate; (2) a sum settled by her marriage-contract on her in liferent and her children in fee, subject to a power of apportionment by her; and (3) her own estate; with directions to the trustees to hold the residue of the estate conveyed to them for her children in liferent and their issue in fee; and under the declaration that this provision was in lieu and full satisfaction of every right or claim competent to the children against her estate and against her estate under the marriage-contract.
The daughter's children having challenged her exercise by this residuary bequest of the power conferred on her by her father's settlement:Held (1) that it was bad in respect that it restricted the interest of the objects of the power, the daughter's children, to a liferent, and conferred the fee on her grandchildren, who were not objects of the power; and (2) (by the Lord President and Lord Kinnear, diss. Lord Johnston), that her children were not put to their election, but might set aside the exercise of the power and at the same time take the shares of the daughter's own estate given them by her settlement, seeing that the settlement did not provide for the children electing, and that the provisions of the settlement as to the daughter's estate were separable from, and could receive effect apart from, the provisions therein as to the share of her father's estate.
Observations as to the circumstances in which a question of election arises.
Humphrey Ewing Crum Ewing, of Strathleven, died in 1887 leaving a trust-disposition and settlement whereby he conveyed his whole estate to trustees, and directed them to divide the residue thereof into three equal shares. As regards one of these shares the trustees were directed to hold the same for behoof of his daughter, Mrs Bayly, and her children, and those substituted to them, and to pay her the income thereof; and, subject to her life interest, to divide and pay the capital thereof to and among her children in such proportions, among such children, and the issue of any of them who may have predeceased leaving issue, and subject to such restrictions, provisions, and limitations as she may direct by any deed or writing, to take effect at her decease, and in the event of no such appointment, then equally to and among her children.
Mrs Bayly died on 14th August 1908 survived by four childrenPaget Lambart Bayly, Mrs Douglas, Mrs Denroche Smith, and Mrs Jane C. E. Bayly or Dorman. At the date of the case hereinafter mentioned the son had no issue, but all the daughters had issue.
Mrs Bayly left a trust-disposition and settlement by which she conveyed the whole estate belonging to her, or over which I may have power of disposal by will or otherwise, to trustees. By this settlement, on the narrative that by her antenuptial marriage-contract a sum of 2000 was held for payment to her of the yearly interest, the fee being payable to the children of the marriage in such shares as she should appoint, and that she was desirous of exercising this power, she directed the trustees to pay the said sum to her son, Paget Lambart Bayly; and she further directed the trustees to hold and divide the whole residue of my means and estate into eight equal shares; of which shares four-eighths were to be held for her son Paget, in liferent for his liferent alimentary use only, and his children in fee, one-eighth for Mrs Douglas, one-eighth for Mrs Denroche Smith, and one-eighth for Jane (who was then unmarried, but subsequently became Mrs Dorman), the daughters' shares being likewise for their liferent alimentary uses only, and for their children in fee. It was declared that as regards these seven shares my said son and daughters shall have power to apportion the capital of their respective shares among their children in such proportions and subject to such conditions and restrictions, specially including the restriction of the right of any child or all the children to a liferent merely of the whole or any part of such shares, or in the event of there being only one child, exclusive even of a liferent right to any part thereof, and the destination of the fee to my other surviving descendants, or any one or more of them, as they may respectively appoint by any deed or writing signed by them, whether inter vivos or mortis causa, but failing such appointment the said shares shall be divided equally among such children, and that the share of any of her children who died without leaving issue should, subject to a power of apportionment in the child, be held for her surviving children in liferent and their issue in fee. As regards the remaining one-eighth share, it was to be held for Jane in liferent while unmarried, and on her marriage, for behoof of all the daughters equally in liferent and their issue in fee, on the same terms and subject to the same power of apportionment by their parents as were applicable to the other shares. The testatrix also declared that the provisions hereinbefore conceived in favour of my children and their issue shall be in lieu and full satisfaction to my said children respectively of all legitim, and every other right or claim competent to them through my decease against my estate in any way, and also in full to them and their issue of all provisions, rights, and claims competent to them against me or my estate under the said antenuptial contract: And I declare that these presents are granted in the exercise of all powers of disposal, apportionment, or otherwise, competent to me under the said antenuptial contract and the said trust-disposition and settlement of my said deceased father.
The capital of the one-third share of Mr Crum Ewing's estate held subject to Mrs Bayly's liferent amounted approximately to 20,000; and Mrs Bayly's own separate estate amounted to 10,000.
A question having arisen as to the validity of the apportionment of her share of Mr Crum Ewing's estate made in Mrs Bayly's trust-disposition and settlement, a special case was brought to which Mr Crum Ewing's trustees were the first parties; Mrs Bayly's trustees the second parties; her son, Paget Lambart Bayly, the third party; her three daughters and their husbands the fourth parties; and the issue of the daughters the fifth parties.
The fourth parties maintained that Mrs Bayly's exercise of the power was wholly invalid, and that her share of Mr Crum Ewing's estate to the extent of three-fourths thereof fell to be paid to them in terms of the provision in Mr Crum Ewing's settlement for the case of non-exercise of the power; and, alternatively, that if the exercise of the power was valid to any extent it was valid only in so far as it apportioned the shares in which the residue was to be divided among her children, and invalid in so far as it purported to restrict their enjoyment of the shares to a liferent.
The second, third, and fifth parties maintained that Mrs Bayly's exercise of the power was valid. If this were not so, the second and fifth parties maintained that Mrs Bayly's children were bound, as a condition of participating in her other testamentary provisions, to accept and permit effect to be given to the directions in Mrs Bayly's trust-disposition and settlement as to the disposal of the residue of her estate as if the same constituted a valid exercise of the power. The third party maintained, alternatively, that he was entitled to immediate payment of four-eighths of the share of Mr Crum Ewing's estate over which Mrs Bayly had a power of disposal.
The questions of law were:(1) Are the provisions of Mrs Bayly's trust-disposition and settlement (a) valid in whole, or (b) valid in part, or (c) wholly invalid, as an exercise of the power of apportionment conferred upon her by her late father's trust-disposition and settlement over one-third of the residue of his estate? [Questions (2) and (3) depended on the apportionment by Mrs Bayly being held to be valid.] (4) In the event of the said apportionment by Mrs Bayly being held to be wholly invalid, are the children of Mrs Bayly entitled to immediate payment of the capital of the said one-third of residue equally among them share and share alike? (5) In the event of it being held that the children of Mrs Bayly are entitled to immediate payment of the fee of the said one-third share of residue (a) are the said children, as a condition of enjoying any further provisions under the trust-disposition and settlement of Mrs Bayly, bound to renounce the said rights of fee, and to accept in lieu thereof rights restricted to liferents in the proportions and subject to the conditions set forth in the said trust-disposition and settlement? (b) In the event of the children electing to renounce their rights of fee in the said one-third of residue, are the first parties bound to continue to hold and administer the same? Or are they entitled to be relieved from the administration of the same and upon payment thereof to the second parties to obtain their discharge from the said children?
The case was heard on 21st and 22d December 1909.
Argued for the second and fifth parties;It must be conceded that the exercise of the power by Mrs Bayly was ultra vires.1 If, however, the exercise were challenged by any of the beneficiaries...
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