Macfarlane's Trustees v Macfarlane
| Jurisdiction | Scotland |
| Judgment Date | 21 January 1910 |
| Docket Number | No. 51. |
| Date | 21 January 1910 |
| Court | Court of Session |
Lord Dundas, Lord Ardwall, Lord Justice-Clerk.
Succession—Ademption—Special Legacy—Bequest of Shares—Sale by Curator Bonis—Change in Denomination of Shares.
A testator by his will bequeathed to each of certain beneficiaries ‘100 £5 shares of the Empire Guarantee and Insurance Corporation, Limited.’ Four months before his death, the testator became insane, and a curator bonis was appointed, who in the course of his administration sold the entire holding of the testator in the corporation, not as a necessary act of administration for the maintenance of his ward or otherwise, but only because he considered it prudent to do so. Between the date of the will and the date when the curator was appointed each of the £5 shares had been converted into five £1 shares.
In a special case, held that the legacies had not been adeemed, either by the change in the denomination of the shares or through the sale by the curator, and that the legatees were entitled to receive the value of the shares sold by the curator as a surrogatum for their specific bequests.
By his trust-disposition and settlement executed in 1902, Alexander Thomson Macfarlane, who died on 20th November 1908, made the following bequest:—
‘To each of my mother and my three sisters, at present unmarried, 100 £5 shares of the Empire Guarantee and Insurance Corporation, Limited,—my remaining shares in that corporation to be sold, and, after payment of any debts which I may owe, the proceeds to fall into residue.’
At the date when the testator's will was signed he held 1000 shares of £5 each fully paid of the Empire Guarantee and Insurance Corporation, Limited. From time to time his holding in that company was reduced by sales, and on 21st May 1904 had been reduced to 330 £5 shares. On 22d December 1905 his holding was increased by 120 shares then purchased, and on 7th June 1906 it was reduced by a sale of 330 shares to 120 shares. On 3d June 1907 his holding was 500 £5 shares, he having sold about that time 120 shares, and purchased 500 shares. By a resolution of the company passed on 13th, and confirmed on 28th September 1907, each of the fully paid £5 shares was divided into five shares of £1 each fully paid. The testator's holding was therefore converted into 2500 £1 shares fully paid, and for this holding he received a new certificate. The converted shares were in September 1908 designated A shares. By a resolution of the company passed on 13th September 1907, the capital of the company was increased by the creation of 400,000 new shares of £1 each. In or about November 1907 the testator applied for and obtained an allotment of 3870 of said new shares, 2s. 6d. per share being paid thereon. The new shares were in September 1908 designated B shares. The testator was a director of the company, and at the date of the passing of said resolutions was quite compos mentis. The testator had borrowed from one of his sisters a sum of £800, and to enable him to repay this loan he on or about 25th June 1908 sold 750 of the said £1 fully paid A shares, and applied the proceeds towards repayment of the loan. He was then left with a holding of 1750 £1 fully paid A shares, and 3870 £1 B shares (2s. 6d. paid up) in the company.
The testator became insane, and on 18th August 1908 a curator bonis was appointed. In the course of his administration of the estate the curator bonis, on or about 19th November 1908, realised, inter alia, the testator's entire holding in the Empire Guarantee and Insurance Corporation, Limited. These shares were realised, not that the money was required for payment of the debts or for the maintenance of his ward, but because the curator bonis considered it imprudent to hold these shares. The curator bonis was not aware of the terms of the trust-disposition and settlement.
The testator died on 20th November 1908, predeceased by his mother, but survived by the three sisters referred to in the bequest.
A question having arisen as to the validity of the bequest, a special case was presented which stated the facts above narrated.
The parties to the case were—(1) Mr Macfarlane's trustees, (2) the legatees designated in the bequest, and (3) the whole legatees under the will other than the second parties.
The second parties contended that on a just construction of the testator's settlement the bequest to them of shares of the said Company was not adeemed, and that in lieu of the said shares they were entitled to be credited in the trustees' accounts with the money value of the shares based on the price at which they were sold.
The third parties contended that the said bequest had been adeemed, and that the proceeds of the sale of the said shares formed part of the residue of the trust-estate.
The following question of law was submitted for the opinion and judgment of the Court:—‘Was the bequest by the testator to each of the second parties of 100 £5 shares of the Empire Guarantee and Insurance Corporation, Limited, contained in the third purpose of his said trust-disposition and settlement, in whole or in part adeemed?’
The case was heard on 7th and 8th January 1910.
Argued for the third parties;—The only question which it was competent to consider was whether or not the shares in question formed part of the testator's estate at his death.1 There could only be one answer to this question, for there was no doubt that when he died the testator possessed no £5 shares of the Empire Guarantee Corporation. It made no difference that the shares were sold, not by the testator but by his curator bonis.2 In fact, the legacy was adeemed at the date when the £5 shares were converted into £1 shares, for at this date the specific shares which formed the subject of the legacy ceased to exist.3
Argued for the second parties;—The sale of the shares by the curator could not affect the legacy in any way, since it was not an act which the testator would have been obliged to perform if he had remained sui jurisSCUNK.4 Accordingly the condition of the testator's estate must be
considered as at the date when the curator was appointed. At that date the testator held shares in the Empire Corporation which were substantially identical with those which he had bequeathed, the difference being one of name only.1In re LaneELR2 was considered and doubted in Dillon v. ArkinsUNK.3 The sale by the testator of the identical shares held by him at the date of the will did not affect the legacy.4 (Counsel for the third parties intimated that this was not now disputed.)
At advising on 21st January 1910,—
Lord Dundas.—The first parties to this special case are the trustees, original and assumed, acting under the trust-disposition and settlement executed in 1902 by the late Mr Macfarlane, who died on 20th November 1908. The question raised by the case is whether or not a legacy bequeathed by the settlement has been adeemed. The second parties are three sisters of the truster, who are designated as beneficiaries in the bequest—the terms of which I shall presently quote—and who...
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