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Destinations in Bonds in 17th to Early 18th Century Scots Law: Between Continental Influences and National Developments

Document Cited in Related
Vincent
Pages342-362
Published date01 September 2020
DOI10.3366/elr.2020.0649
Date01 September 2020
DESTINATIONS IN BONDS AS WILL-SUBSTITUTES

Will-substitutes are devices that operate in a way which avoids ordinary mechanisms of succession. According to Daniel Carr, in modern Scots law will-substitutes are “underused”, in contrast to, e.g., the law of the USA.1 However, nothing could be further from truth when one speaks about Scots law of 1600–1800.

Scots law at the time applied an extremely restrictive regime to testamentary dispositions. In succession to land and other heritable property (heritable succession), the concept of “heir” reigned supreme: the rights of heir could be prejudiced neither by a last will, nor by any kind of disposition executed on “deathbed”.2 In succession to moveable goods (moveable succession), testamentary freedom was restricted by the legal rights of the children (“legitim”, or “Bairn's part”) and the relict (jus relictae), leaving only a half or a third of the estate free for disposition by the testator (“Dead's part”). Moreover, until 1701, the Commissary courts charged “quots”. Quots were tolls paid by the executor for the confirmation of the testament out of the testator's free goods. As early as 1420,3 they were set to the amount of twelve pence per pound (5%) of the testator's ’Dead's part’.4

In view of the above, it is not surprising that various types of will-substitutes were very popular in 17th century Scotland. Judges were generally lenient towards devices that, in effect, defeated the rights of the heir and of Commissaries. The law of fraud was not yet sufficiently developed to protect the legal rights of wives and children.5 Destinations in bonds were one of such devices, where an inter vivos obligation contained in a bond itself specified the recipient in case of death of the original creditor. Thus, a long-term investment, with a destination, could help one bypass the usual rules of succession.6

It is obvious that Scottish practice has changed significantly in the course of four centuries, with will-substitutes all but disappearing. What was the reason for that? One possibility might be the disappearance of long-term bonds among private individuals. Most long-term investments are nowadays performed by banks and other corporations. Private individuals hold bank accounts instead, and 19th century court practice has significantly restricted the possibility of creating a destination over a bank account.7 Other reasons could relate to the disappearance of some of the reasons behind the initial popularity of will-substitutes (such as the abolition of quots and the abolition of heirship), as well as a strengthening of protection of the legal rights of wives and children against potential encroachments by will-substitutes.8

The main purpose of this article is to show to the modern reader how much Scots law and the practice of succession has changed in the past four centuries. Will-substitutes, feudal institutions, Civilian concepts and the prohibition of usury – these paint a picture of a very strange legal world. Yet, these are the origins of the legal system that governs Scotland today. This article will, thus, debunk the stereotype of the law of succession as a “conservative” branch of the law, incapable of drastic changes except by legislation. It is also possible that the illustration of the origin, evolution and disappearance of legal concepts, which this article aims at, might expand the horizons of legal thought for the modern Scots jurist, and allow a deeper understanding of the inner logic of Scots law.

 “DESTINATION”, “TAILZIE” – A CLARIFICATION OF TERMS

This article will start by defining the key concepts which are important for the understanding of Scots legal doctrine in the 17th century. The most important one is the concept of “destination”. The term “destination” was used in the time of Thomas Craig (c. 1600), meaning “directing the use of some property for a third person”.9 This is the definition which would eventually prevail in Scots law, and which still remains the generally accepted definition in the modern law.10 The Scottish “destination” was, and still is, an institution of the law of succession, which allows the creation of an artificial line of succession, between two or even multiple generations, to particular property or even to someone's entire estate. However, the earliest cases from the printed collections use this term in a slightly different way, meaning “directing some property to be converted into a different kind of property”: for example, promising to invest money into heritable property. Either way, this Scots term seems to bear only a remote relation to the term “destinatio”, used in contemporary Continental Civilian (ius commune) literature.11

The term “tailzie” in Scots law originally designated a feudum talliatum. It was a fee in which the regular line of succession (especially the collateral one) was “cut off” and which descended to the heirs determined in advance by the terms of the “infeftment” (investiture).12 Such pre-determined heirs were called “heirs of tailzie” or “heirs of provision”. Both the etymology of the term “tailzie” and the essence of this institution are connected to the English “entail”. G. Mackenzie in his Treatise on Tailies (c. 1687) distinguishes the terms “tailzie” and “destination” by reference to the type of property involved: “tailzie” is correctly used for land and other heritable property, while directions to the use of a third party, contained in moveable obligations, are properly called “destinations”.13 Nevertheless, as already said above, “destination” could also be used as a general term, encompassing both heritable and moveable property.

In this article, the term “destination” will, in most cases, be used in the narrower meaning – excluding proper “tailzies”. The “tailzie”, in the early 17th century writings of Craig, was still a narrowly defined institution of feudal law, which concerned land only.14 A Scots lawyer in the time of Craig would not speak of a “tailzie of a sum of money”. For this reason, we will speak of a “destination of a sum of money”. As will be shown further, such destinations in the early 17th century were indeed governed by different rules from those which governed tailzies.

Since the 19th century, Scots legal doctrine has distinguished “destinations over” from “special destinations”.15 The former are made in a last will, whereas the latter are contained in inter vivos bonds and other contracts. This classification is of recent origin and cannot be found in the pre-1800 Scots sources. This article is concerned mostly with the latter type of “destinations”. This does not mean that destinations in last wills did not exist or were scarce in the 17th century. Indeed, they were very widespread in last wills of the era, which often disposed of leases and “kindly tenancies”16 of the testator to A for life and then to B.17 However, there was very little litigation in relation to last wills in the 17th century.18 In contrast, destinations in bonds and other contracts feature quite prominently in litigation of that time, and this allows us to trace their evolution.

Today's Scottish reader, nevertheless, should be careful not to equate 17th century destinations in bonds with modern “special destinations” in Scots law. The most common type of special destination in Scots law, nowadays, is the “survivorship destination”, where property is acquired by “A, B and the survivor of the two” (usually involving spouses).19 In the 17th century, such a disposition was sometimes seen as a destination, too; and at other times it was seen as creating a “conjunct fee” (or, “joint ownership”), where both parties were simultaneously “fiars” and “liferenters” and did not succeed to each other at all.20 Nowadays, the predominant doctrine is that joint ownership in Scots law may exist only in certain narrow circumstances.21 This is yet another reason to use different concepts when dealing with the different eras of the development of Scots law.

 BONDS AND DESTINATIONS IN THE CONTEXT OF HERITABLE AND MOVEABLE SUCCESSION

The development of the legal status of destinations in bonds largely revolved around a question: should they be considered as a form of heritable or moveable succession? In pre-1964 Scots law, the distinction between obligations which were heritable and those which were moveable was important. To put it simply, moveable obligations formed part of the deceased creditor's moveable estate upon his death and could be left by his last will. Heritable obligations descended to the creditor's heirs, either general heirs or “heirs of provision”, and could not be disponed by a last will.22 The same distinction usually held in respect of the debtor. The debtor's executor and heir could be sued for both moveable and heritable debts of the defunct; nevertheless, afterwards, they had recourse against each other.23 Heritable and moveable obligations also had different “diligences” (procedural forms) to enforce them.

Which obligations were heritable and which moveable? This was one of the most complicated questions in Scots law. In principle, a bond was considered heritable if it contained an obligation to infeft the creditor in land or rights in land. However, even if there was no obligation to infeft, a bond creating an annualrent on the principal sum or any other right of periodical character (tractum futuri temporis) was usually considered heritable.24 The “annualrent” (from Latin “annuus redditus”) spoken about here means any interest on borrowed money,25 in contrast to the narrower right of “annualrent by infeftment”, which was a real right due from the particular plot of land.26 Nevertheless, the inclusion of annualrent of either kind turned the bond into a heritable one. This was due to the medieval Canon law prohibition of usury: the obligation to pay annualrent, being, nominally, perpetual, irredeemable, “immoveable” and unconnected directly to the principal capital, was not seen as...

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