Davidson's Trustees v Arnott
| Jurisdiction | Scotland |
| Judgment Date | 03 November 1950 |
| Date | 03 November 1950 |
| Docket Number | No. 7. |
| Court | Court of Session (Inner House - Second Division) |
2ND DIVISION.
Lord Sorn.
CharityDirection to trustees to hold residue as a capital fund and apply income so far as desirable for benefit of a particular hospitalHospital taken over by StateFailure of trustNo general charitable intentionWhether bequest effective in whole or in partCy-prs scheme or intestacy.
A testator, who died in 1924, directed his trustees to hold the residue of his estate "as a capital fund and apply the income thereof so far as my trustees may think it desirable for the benefit of" a named hospital, with power to encroach on capital for the purpose of structural extension of the buildings. The hospital had been built and endowed by the testator. The trustees administered the residue in terms of this purpose until 1948, when the hospital and its original endowment fund were taken over under the National Health Service (Scotland) Act, 1947. As regarded the trust funds an action of multiplepoinding was brought in which the competition was between the trustees, who claimed the funds with the object of preparing a cy-prs scheme for the approval of the Court, and the testator's heirs ab intestato, who contended that the bequest evinced no general charitable intention and that, as the funds had not vested in the hospital or had so vested only quoad the sums actually paid over, the funds had fallen into intestacy. No claim was made on behalf of the Crown to the trust funds.
Held (1) that there was no general charitable intention; but (2) (diss. Lord Mackay) that, as the hospital was in existence at the date of the truster's death, and as the whole of the residue had vested in the trustees for the purposes of the hospital, the bequest to the hospital had taken effect, not merely as regarded the income actually paid over but also as regarded the funds remaining unexpended in the hands of the trustees, and that these fell to be administeredcy-prs.
Anderson's Trustees v. Scott, 1914 S. C. 942,explained and applied.
Thomas Davidson, who died in 1924, left a will whereby, after providing for certain legacies, he provided as follows:"(Third) Considering that I have founded and endowed during my lifetime the Davidson Cottage Hospital at Girvan at a cost considerably in excess of my original estimate owing to the abnormal conditions occasioned by the Great War I find it necessary to restrict the legacies and bequests which I had intended to make by testamentary provision to those aftermentioned. " The testator then made provision for pecuniary legacies to his nearest of kin, and continued, "(Lastly) as regards the residue of my means and estate I direct my trustees to hold the same as a capital fund and apply the income thereof so far as my trustees think it desirable for the benefit of the Davidson Cottage Hospital; Declaring that it shall be lawful to encroach if necessary on the capital in order to make structural extensions of the buildings; but my wish is that the annual income may be used primarily and principally in rendering the administration of said hospital more and more efficient, my trustees, however, being the judges of how much money should be expended annually for that purpose."
Questions having arisen with regard to the disposal of the residue of the testator's estate, an action of multiplepoinding was brought by his trustees. The following narrative of the circumstances is taken from the opinion of the Lord Ordinary:"Mr Davidson was a native of Girvan and he had himself built the Cottage Hospital to which he refers during his lifetime and had provided it with an endowment fund.1 The trustees appointed under the will administered the residue in terms of the trust purposes from 1924 until 5th July 1948, at which date the hospital and its endowment fund became vested respectively in the Secretary of State and the local board of management in terms of the National Health Service (Scotland) Act, 1947. Roughly one-half of the income had been from time to time applied for the hospital, and at the last-mentioned date the trustees had in their hands capital to the value of approximately 33,000 and accumulated income to the value of approximately 30,000. With the taking over of the hospital by the State the object of the bequest failed, and it became necessary for the trustees to consider what fell to be done with the fund. A petition for approval of a cy-prs scheme was presented by them to the Inner House, and this petition was opposed (1) by the next of kin, who contended that the fund should pass to them, and (2) by the Lord Advocate, who contended that the fund had passed to the local board of management under section 7 of the Act above mentioned. In view of this opposition, the petition was sisted to enable the present action to be raised as a means of settling the matters in dispute. I am informed that, since then, the Lord Advocate has withdrawn his answers to the petition and, in the present action, though called as representing both the Secretary of State and the board of management, he has lodged no claim. The issue thus lies solely between the trustees, who contend that there should be a cy-prs scheme, and the next of kin, who maintain that the fund has fallen into intestacy."
On 25th May 1950 the Lord Ordinary (Sorn), after hearing parties in the Procedure Roll, ranked and preferred the trustees in terms of their administrative claim.
At advising on 3rd November 1950,
LORD JUSTICE-CLERK (Thomson).The Lord Ordinary has so admirably summarised the circumstances of this case that I need not repeat them. It was argued to us that the testator's settlement evinced a general charitable intention. Of course, if that were established, the way would be clear to find another recipient for the fund. I can see nothing to support this argument. The testator's object was to benefit a particular institution which he himself had founded and endowed in a particular locality. The purpose of the residue clause was to provide a supplementary fund for that institution and for it alone.
As there was no general charitable intention, the question is whether the failure of the particular charity precludes the application of the funds to any other charitable purpose or whether the Court is entitled to apply the lapsed funds to some similar charity by way ofcy-prs scheme. Broadly speaking, there is applied to a bequest to a particular charity the analogy of the ordinary legatee, who, if he predeceases the testator, or the date fixed by the testator for vesting, takes nothing, whereas, if he survives the testator and the date of vesting fixed by the testator, the heirs ab intestatoor the residuary legatees as the case may be are ousted for ever. Accordingly, if the named charity either never comes into existence at all or ceases to exist before the succession opens to it, the legacy lapses. This institution undoubtedly survived the testator at the date of whose death the succession opened. Indeed, it was not disputed that, had the bequest been made direct to the Davidson Hospital, there being nothing to suspend vesting in the institution a morte testatoris, the reclaimers, in view of the decision inAnderson's Trustees,15 would have had no case. The reclaimers sought to distinguish Anderson's Trustees16 on two grounds.
It was argued, first, that, as there was no direct gift to the institution but merely a direction to the testamentary trustees to pay to the institution, the bequest to the institution had not "taken effect" in the sense in which that phrase is used inAnderson's Trustees,17 in respect that, although the institution had survived the testator, there was no vesting in the institution itself. I find this argument untenable. The validity of a bequest does not depend on the machinery selected to carry it out. A direction by a testator to his own testamentary
trustees to pay funds to a charity without qualification is surely a gift of those funds to the charity and one which takes effect at the date fixed by the testator for its enjoyment.
I pass to the more plausible part of the reclaimers' argument. It was said that the direction to the trustees was not unqualified and that the funds still in the hands of the trustees, being the unexpended part of the legacy, should go to the reclaimers on the ground that the testator had failed to dispose of them. It was argued that he had made vesting dependent on the action of the testamentary trustees and that, except in so far as they had in fact handed funds over to the hospital, the legacy had not taken effect in the hospital's favour. Such a reading is to my mind entirely inconsistent with the testator's intention, which was to provide that his residue was once and for all to form a supplementary fund for the hospital, although he left the time and circumstances of the application of the fund to the discretion of his trustees. In my view, as the hospital was nominated as the recipient and the exclusive recipient of the testator's residue and was in existence when the testator died, the conditions desiderated by the Court inAnderson's TrusteesSC18 have been fulfilled. In these circumstances, it is my opinion that the Lord Ordinary reached the right conclusion.
LORD MACKAY.The bare facts which here raise an issue of considerable money avail, and I fear of increasing legal importance, are statable in the shortest form.
A truster (Thomas Davidson) who died in 1924 had within four years of his death erected a special and individual hospital intended to benefit "Girvan and neighbourhood." As to this erection and what it meant, I shall have to say something later. He had during his lifetime endowed it, making an inter vivos trust for the purpose of managing this endowment. As he says in his testament dated 29th December 1922, only about two years after the building was erected and endowed, he began to fear that the administration required further money support for its proper administration and (perhaps) for...
To continue reading
Request your trial
-
RUSSELL'S EXECUTOR v Commissioners of Inland Revenue
...supplied by the Court if there is failure of the means or machinery which the testator himself intended". In Davidson's Trs. v. ArnottSC 1951 S.C., 42 at p. 61 Lord Patrick dealing with a submission like that of the respondents in relation to vesting said: "It was not clear to me in what se......
-
Guild v Commissioners of Inland Revenue
...by the Solicitor of Inland Revenue) for the Crown. The following cases were referred to in the opinions: Davidson's Trustees v Arnott SC1951 SC 42 Fogo's Judicial Factor v Fogo's Trustees ENR1929 SC 546 Fulton v Fulton & Ors (1864) 2M 893 Gibson's Trustees, Petitioners SC1933 SC 190 IR Comm......
-
Hay's Judicial Factor v Hay's Trustees
...Institute Fund, [1909] 2 Ch. 1, Vaughan Williams, L.J., at p. 7; Tudor on Charities, (5th ed.) p. 146; Davidson's Trustees v. ArnottSC, 1951 S. C. 42; Anderson's Trustees v. Scott, 1914 S. C. 942, Lord Skerrington at pp. 952ndash;953;In re Slevin, [1891] 2 Ch. 236; Mackenzie Stuart, Law of ......
-
Edinburgh Corporation v Cranston's Trustees
...v. Scott, 1914 S. C. 942, Lord Skerrington at p. 952. 2 Anderson's Trustees v. Scott, 1914 S. C. 942;Davidson's Trustees v. ArnottSC, 1951 S. C. 42. 3 Davidson's Trustees v. ArnottSC, 1951 S. C. 42;Cameron's Trustees v. Edinburgh Corporation, 1959 S. L. T. (Notes) 1 1958 S. C. 629. 2 Refere......