Varlo v Faden
| Jurisdiction | England & Wales |
| Judgment Date | 17 December 1859 |
| Date | 17 December 1859 |
| Court | High Court of Chancery |
English Reports Citation: 45 E.R. 339
BEFORE THE LORD CHANCELLOR LORD CAMPBELL.
S. C. 27 Beav. 255; 29 L. J. Ch. 230; 1 L. T. 176; 6 Jur. (N. S.), 257. See Mathews v. Keble, 1868, L. R. 3 Ch. 697.
[211] varlo v. fades. Before the Lord Chancellor Lord Campbell. Dec. 5, 6, 17, 1859. [S. C. 27 Beav. 255 ; 29 L. J. Ch. 230 ; 1 L. T. 176 ; 6 Jur. (N. S.), 257. See Matheu-s v. KeUe, 1868, L. R. 3 Ch. 697.] A contingent liability under a covenant executed but not broken by a testator is a debt within the meaning of the provision for payment of debts, exceptecl from the operation of the Thellusson Act. A testator bequeathed shares in a newspaper to his wife, with a proviso that if they should be sold, the purchase-money should be placed in the funds, and that she should have the interest for her life ; but should she not sell the shares, then whatsoever sum might annually accrue from them above 200 was to be reserved as a kind of sinking fund for the protection of the shares. Held, that a large fund which had arisen from the income beyond 200 a year, and which was not required for the protection of the shares, formed capital, and that the widow was entitled only to a life interest therein. This was an appeal from the decision of the Master of the Kolls, as to the validity of a trust for accumulation contained in the will of a testator named James Fad$n (Quartermaster of the Royal Marines), dated the 12th of August 1828, the material portions of which were the following : - " I do hereby leave and bequeath my four shares in the Globe, and Traveller to my dearly-beloved wife Christiana Adelaide Faden, and also my two houses in Francis Street, Woolwich, together with the furniture in the one I dwell in, and together with the books, wine and plate which I may possess. The execution of the lease of the two houses has been deferred from my ill-health, but there will be no obstacle to her execution of it, and I recommend it to lie done without loss of time. This being done, my advice is to part with the house I reside in to Government, as a residence for the commandant, or otherwise to let it to an artillery officer of rank ; with that view, she should take with her into the adjoining house that part of the furniture which may be suitable, and Bell the remainder. In the event of the house being let, the rent is to go to her, and in the event of its being sold, the interest of the money arising is to go to her; the purchase-money to be placed in the funds. In the same manner, should the four shares be sold, the purchase-money is to be placed in the funds, and she is also [212] to have the interest thereof during her natural life ; but, should she not sell the shares, whatever sum may annually accrue from them, above 200, is to be reserved as a kind of sinking fund for the protection of those four shares in the Globe newspaper. At her decease the whole of the property arising from the shares or from their sale, as also that arising from both houses or from their sale, is to be divided unequally between Miss Marianne Varlo and Miss Louisa Varlo, Miss Marianne Varlo receiving one-third, and Miss Louisa Varlo two-thirds ; and upon their decease it is to be divided equally among the other surviving children of Captain Varlo." And the testator appointed Captain George Varlo and Mr. Anthony Gordon trustees for carrying his will into effect. The testator died without issue on the 9th September 1828, and his will was proved by both the executors. The testator, at his death, was owner of the four shares in the Globe and Traveller newspaper referred to in his will. The Globe and Traveller newspaper was, at that time, the property of several proprietors, and was divided into sixty -two shares. The rights and interests of the several proprietors were regulated by partnership articles dated the 25th March 1826, of which the material provisions were the following: - The 12th -article provided that the partners would, every of them, according to 340 VARIA) V. FADEN 1DE a. F. ts J. J13. their respective shares and interests for the time being in the partnership property, contribute, in due time their due shares or proportions of and to all payments, fines and costs, losses, damages, charges and expenses which might be incurred by the partnership or by any of the co-partners in the conduct or management of the said newspaper, or any article, matter, or thing therein contained, or by or in consequence of any bond or bonds given and to be given, for [213] the due and regular payments of the stamps required for the lawful sale of the newspaper, and for the duty on advertisements, or otherwise howsoever. The 15th provided, that, if, upon the settlement of the accounts at the first weekly meeting in every month, there should remain a balance of profit above 500 (which was to be retained as a capital), it should be divided among the partners according to their shares and interests therein ; and also, that if at any first weekly meeting in every month, or other meeting, the balance on such monthly or other account or settlement, should discover a loss to the concern arising from fine or otherwise ; then, as often aa it should so happen, such loss should be immediately answered and made good by the partners according to their several and respective shares, rights and interests therein ; and that, if, at any weekly, monthly or special meeting a call should be made on the partners for an advance to carry on the business, and if any of the partners should neglect to answer or make good his share and proportion of such loss, for the space of one calendar month next after the settlement of any account by which tha amount of such loss should be ascertained, the other partners were to be at liberty to sell the shares of the defaulters. The 16th article provided, that, upon the death of any of the co-partners, there should be no other right or benefit of survivorship than such right of pre-emption as next thereinafter mentioned, and that no other advantage on that event should be taken by the surviving partners or by any of them; but that the interest of the deceased partner should vest in and devolve upon his personal representatives or any other person or persons to whom he should bequeath such interest; provided that his executors or administrators or legatees should, within [214] one calendar mouth next after his decease, render themselves subject and liable to the performance of the agreements, covenants and liabilities to which the then surviving partners might be then subject in respect of the said joint concern; arid should, if thereto required, enter into and execute a deed or deeds at his or their expense, containing covenants with the other partner or partners for the time being, to observe, perform, fulfil and keep such clauses, agreements, covenants, matters and things, rules, orders and resolutions as should be then subsisting and in force with respect to the said partnership concerns. The 17th article provided, that, in case the representatives of a deceased partner should refuse or neglect to comply with the conditions last mentioned, or if any of the said partners for the time being should be desirous of selling and disposing of their shares, the other partners, or any one or more of them, should have the preference and right of pre-emption of the shares of the deceased or selling and retiring partner, at the price at which such share or shares should have been last valued at the then last first weekly meeting, or at the last valuation thereof. On the death of the testator, the executors were requested by the widow riot to sell the shares, and they accordingly retained them in manner provided by the partnership articles. The annual sum of 200 was duly paid to the testator's widow, out of the dividends arising from the shares, so long as they were sufficient for that purpose, and a considerable accumulation had been made from the surplus income which from time to time had, been converted and accumulated by the executors for the purpose of forming the sinking fund directed by the will. At the expiration of twenty-one years from the death [215] of the testator (viz., on the 9th September 1849), the accumulations amounted to 5059, 12s. 9d. 3 per cent, consolidated Bank annuities, and since that time the fund had been increased by a further sum of 1479, 3s. lOd. like annuities; so that in January 1858 the whole fund arising from the accumulations amounted to 6538, 16s. 7d. like annuities. The shares since the death of the testator, had become depreciated in value, and the dividends in June 1847 became insufficient to pay the annual sum of 200 a year 1DE&. F. &J. 218. VARLO V. FADEN 341 to the widow, and continued to be insufficient till June 1854. During the intermediate time the 200 a year was made up out of the income of the accumulated fund. In 1858, questions arose between the Plaintiff and Defendants as to the construction of the will, the Plaintiff insisting that the direction in the will for the accumulation of the surplus was within the provisions of 39 & 40 Geo. 3, c. 98 (the Thellusson Act), and that the accumulation, therefore, ceased to be lawful at the end of twenty-one years from the testator's death. She claimed to be entitled to all accumulations as well before as since the expiration of such twenty-one years, and to all the future dividends upon the four shares. The Defendants, the legatees in remainder, contended that the direction for accumulation was within the exception contained in the second section of the statute (1) as [216] to debts, and that the accumulation of the surplus dividends of the four shares, after payment of the '200 to the testator's widow, ought to be accumulated during the widow's life, and that on her death the shares and the accumulated fund, or the latter and the income arising from the four shares, or the income arising from the shares and from the accumulated fund, would belong to...
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Smyth's Trustees v Kinloch, Company
...L. R. 8 Chan. Div. 261. 2Barrington v. Liddell, Nov. 24, 1852, 2 De Gex, Macnaughton, and Gordon, 480; Varlo v. Faden, July 27, 1859, 27 Beav. 255, aff. Dec. 17, 1859, L. J. 29 Chan. 230; Hargreaves on Thellusson Act, pp. 77, 3Green v. Gascoigne, Jan. 12, 1865, L. J. 34 Chan. 268; Mackenzie......