& Ors

1888

COURT OF SESSION.

Tuesday, July 19, 1887. Friday, July 20, 1888.

SECOND DIVISION.

SPECIAL CASE-PATERSON AND OTHERS. Entail-Aberdeen Act, sec. 4-Bond of Provision -Entailed Estate-Money Invested for Purchase of Land to be Entailed.

The heir of entail in possession of an entailed estate obtained the authority of the Court, with the consent of the next heirs, to uplift and acquire in fee-simple certain sums of money which had been deposited in bank for the purpose of purchasing lands to be added to the entailed estate. The consents of the next heirs were given upon the conditions specified in an agreement by which the heir of entail in possession became bound to invest these sums and hold them for the purchase of lands to be entailed upon the series of heirs called to succeed to the entailed estate. The deed contained a declaration that the heir of entail in possession "shall have the same powers in regard to them that he would have had if they had been invested in the purchase of lands and entailed in terms of the entail statutes according to the present law, or any future Act that may be passed affecting entails." The sums were uplifted and invested in debenture stock of a railway company. heir of entail thereafter executed a bond of provision in terms of the Aberdeen Act in favour of his younger children.

The

Held that the railway stock was dealt with in the trust-deed as part of the entailed estate, and was to be included in calculating the amount due to the children under the bond of provision.

Entail-Church Patronage (Scotland) Act, 1874 (37 and 38 Vict. cap. 82), sec. 4-Compensation for Abolition of Patronage-Nature of Pay

ment.

Held that the sum of money payable as compensation in respect of the abolition of patronage under the Church Patronage (Scotland) Act, 1874, to the heir of entail in possession of an entailed estate, does not form part of the entailed estate so as to create a jus crediti in the substitute heirs, but is to be regarded as a personal payment to the heir, the unpaid instalments of which pass at his death to his executors. Entail-Aberdeen Act, sec. 4-Bond of Provision -Apportionment of Amount.

The 4th section of the Aberdeen Act provides in regard to bonds of provision granted by heirs of entail in favour of younger children, "that the amount of such provision shall in no case exceed the proportions following of the free yearly rent or free yearly value of the whole of the said entailed lands and estates. . . that is to say, for one child, one year's free rent or value; for two children, two years' free rent or value; and for

three or more children, three years' free rent or value in the whole."

The heir of entail in possession of an entailed estate executed a bond of provision in terms of the 4th section of the Aberdeen Act, by which, on the narrative that he was desirous of granting a suitable provision to his second son W, and that he had made what he considered suitable provision otherwise for his younger sons C and H, and also for his two daughters, he bound and obliged himself, and the heirs of entail succeeding to the entailed estate, to pay to his son W, £10,000, being the estimated amount of three years' rents, but in the event of its being found to be in excess of his powers to provide the whole to him, then to pay to and among W, C, and H the sum of £10,000 in the proportions following, viz., to W, £9000, to C, £600, and to H, £400; or otherwise, and in the event of its being found to be in excess of his powers either to provide the whole to W or to apportion it in manner before mentioned among his three sons, then to pay the sum of £10,000 among all his sons and daughters equally, provided that the sum payable should be restrictable if it should exceed three years' free rents.

In a question between W and the other other younger children, it was held by a majority of the whole Court (the Lord President, the Lord Justice-Clerk, Lords Mure, Shand, Adam, Rutherfurd Clark, Kinnear, and M'Laren), that the true meaning of the 4th section of the Aberdeen Act is that an heir of entail in possession may make provision for his younger children to an amount not exceeding three years' rent, if he have three such children or more, and that if he does not exceed that amount he may divide it amongst them or give the whole of it to one, as he thinks fit, the excluded children having in the latter case no title to complain and the succeeding heir no interest to object, so long as the provision does not exceed the statutory amount, and that therefore the provision of the whole £10,000 to W was valid.

Opinions per Lords Young and Lee, who gave effect to the last alternative in the bond, that the true construction of the statute is that the provision for one child shall not under any circumstances exceed one year's free rent, and that if the heir in possession in his discretion divides the provision among three children, the division must be subject to this.

Opinions per Lords Trayner and Fraser, who gave effect to the second alternative in the bond, that the provision for one child shall not, according to the true construction of the statute, exceed one year's free rent, but that the bond in question, as regards the second alternative, was in conformity with the statute, as being a bond in favour of three younger children, the amount of which did not exceed the statutory limit of three years'

rent.

By his settlement dated 22nd July 1829 Mr Paterson, attorney-at-law, of Kingston, in the Island of Jamaica, directed his trustees James Dunlop, Esq. of Aunanhill, and others, to realise part of his estate there, and invest the proceeds

in the purchase of lands in Scotland to be settled by deed of entail on the series of heirs therein specified. The trustees purchased the estate of Montgomerie in Ayrshire, and executed a deed of entail settling the succession in accordance with Mr Paterson's directions on William Paterson and the heirs male of his body. After the purchase of this estate there remained of the deceased Mr Paterson's Jamaica estate, which was directed by the settlement to be laid out in purchasing lands to be settled on the series of heirs called to the succession of the Montgomerie estate, a sum of £1080 deposited by his trustees in the Royal Bank of Scotland in Glasgow. A further sum of £3722, 5s. 6d. was paid by the Glasgow and SouthWestern Railway Company for ground taken from, and damage occasioned to, the entailed estate of Montgomerie by the formation of the railway from Mauchline to Ayr, and deposited in the said bank on 3rd March 1871. A further sum of £3026, being one-half of the free residue of the estate in the hands of his trustees, was set apart in terms of the will to be laid out in purchasing lands to be settled upon the series of heirs entitled to succeed to the Montgomerie estate, and deposited in the same bank in Ayr to the credit of Paterson's trustees for the Montgomerie estate, on 11th July 1877.

In June 1872 William Paterson, as heir of entail in possession of the estate of Montgomerie, having obtained the necessary consents of his three eldest sons, Robert Paterson Paterson, William Alexander Orr Paterson, and Charles Orr Paterson, presented a petition to the Court for authority to uplift and acquire in fee-simple the two sums of £1080 and £3722, 5s. 6d. The conditions for obtaining the consents were set forth in a deed of agreement with them dated in August 1872, by which he bound himself, on receiving payment of these sums, to deposit the same in name of himself and his sons and Neil Colquhoun Campbell, advocate, Sheriff of Ayrshire, as trustees in trust, "to purchase good railway debentures or debenture stock, or preference stock, or to lend on heritable security the whole or any part of the above sums, and hold the same until a favourable opportunity presents itself for purchasing land, and thereafter to execute an entail of the lands to be purchased therewith in favour of the heir of entail in possession of the estate of Montgomerie and the other heirs in succession, all in terms of the entail of the estate of Montgomerie; . . . declaring, however, that the trustees shall be entitled, if they think proper, to apply the said sums, or any portion thereof, in payment pro tanto of children's provisions charged upon the rents or fee of the estate of Montgomerie. Until the said sums shall be applied in the purchase of land to be entailed or in payment of children's provisions, the interest or dividends accruing thereon to be paid by the trustees to the heir in possession of the estate of Montgomerie; and declaring that the heir of entail in possession of the estate of Montgomerie shall have the same powers in regard to the above-mentioned sums that he would have had if they had been invested in the purchase of lands and entailed in terms of the Montgomerie entail according to the present law, or any future Act that may be passed affecting entails." He obtained decree in this petition in 1872. In 1878 he obtained decree in another similar petition to uplift and

acquire in fee-simple the third sum of £3026 The conditions of obtaining the consents of his three sons were embodied in an agreement dated in March 1878, in which as before he bound himself to deposit the money in bank or invest it to be held for the purchase of lands to be added to the Montgomerie estate and to be entailed in terms of the Montgomerie entail. These three sums were accordingly uplifted and invested in name of William Paterson and others, as trustees under the said deeds of agreement, as follows:(1) £4800 four per cent. funded debt of the Glasgow and South-Western Railway Company; (2) £2930 of the same stock.

On 4th February 1884 Mr William Paterson executed a bond of provision, as heir of entail infeft and in possession of the lands and estate of Montgomerie, in terms of the 4th section of the Statute 5 Geo. IV. cap. 87, on the narrative that he was desirous of granting a suitable provision to his second son William Alexander Orr Paterson not succeeding to the said entailed estate, and that he had made what he considered suitable provision otherwise for his younger sons Charles Orr Paterson and Henry Edmund Paterson, and also for his two daughters Mrs Ann Paterson or Sadlier and Mrs Mary Paterson or Campbell, by which he bound and obliged himself and the heirs of entail succeeding to the foresaid estate of Montgomerie, in the following terms, viz., "to content and pay to my said son, William Alexander Orr Paterson the sum of £10,000 sterling, payable one year after my death, with a fifth part more of penalty in case of failure, and the interest of the said sum at the rate of four per centum from the first term of Whitsunday or Martinmas after my death to the foresaid term of payment, and thereafter during the notpayment thereof: But in the event of its being found to be in excess of my powers, to provide the whole of said sum to my said son William Alexander Orr Paterson (but only in that event). I bind and oblige myself, and the heir of entail succeeding to the foresaid estate of Montgomerie. to content and pay to and among the said William Alexander Orr Paterson, Charles Orr Paterson, and Henry Edmund Paterson, the said sum of £10,000 sterling, payable one year after my death, with a fifth part more of penalty in case of failure, and the interest of the said sum at the rate of four per centum from the first term of Whitsunday or Martinmas after my death to the foresaid term of payment, and thereafter during the not-payment thereof, and that in the proportion following, videlicet to my son William Alexander Orr Paterson the sum of £9000 sterling, to my son Charles Orr Paterson the sum of £600 sterling, and to my son Henry Edmund Paterson the sum of £400 sterling. Or otherwise, and in the event of its being found to be in excess of my powers either to provide the whole of said sum to my son William Alexander Orr Paterson, or to apportion it among my said three sons in manner before mentioned (but in that event only), then to content and pay the said sum of £10,000 sterling among the said William Alexander Orr Paterson, Charles Orr Paterson, and Henry Edmund Paterson, and Mrs Ann Paterson or Sadlier and Mrs Mary Paterson or Campbell, in equal proportions, payable also at the term and with the interest and penalty before provided: Providing also that if the sum above settled on

-

my said son William Alexander Orr Paterson, or alternatively in either of the events above mentioned, on my said three sons, or on my said three sons and two daughters, shall be found to exceed three years' free rent or value of said entailed estate, as the amount of the said free rents and values shall be ascertained in the manner pointed out by the said statute, then the said sum or sums, as the case may be, shall be and are hereby proportionally restricted so as to be consistent with the powers conferred by said statute." As narrated in the said bond of provision, the granter had during his lifetime, and also by his trust-settlement, made provision for his two younger sons and his two daughters exceeding the proportions of the entail provision which would have fallen to them had it been equally divided.

Mr William Paterson died on 20th October 1885, and was succeeded by his eldest son Robert Paterson Paterson, who made up his title by decree of special service as heir of tailzie and provision to his father, duly recorded. After finding security to the satisfaction of the Court for the provisions contained in his father's bond of provision he obtained authority to record a deed of disentail of the lands and estate of Montgomerie. He thereafter re-entailed them by disposition and deed of entail in favour of himself and the heirs male of his body and the other heirs therein mentioned.

In the circumstances above mentioned a question arose as to the amount of the younger children's provisions provided by the bond of provision, and as to whom they were payable.

At the date of Mr William Paterson's death20th October 1885-the rental of the estate of Montgomerie was £3276 14 10

And the public burdens and others which fell to be deducted in esti

mating the free rental

435 10 1

£2841 4 9

£8523 14 3

927 12 0

£9451 6 3

This special case was presented for the opinion of the Court, to which Robert Paterson Paterson of Montgomerie was the party of the first part; Robert Paterson Paterson, William Alexander Orr Paterson, Charles Orr Paterson, and Henry Edmund Paterson, the trustees of the deceased William Paterson, were parties of the second part; William Alexander Orr Paterson was the party of the third part; Charles Orr Paterson and Henry Edmund Paterson were the parties of the fourth part; and Mrs Sadlier and Mrs Campbell, daughters of the deceased Mr William Paterson, were the parties of the fifth part.

With reference to the amount of the said provisions, the first party maintained that the amount of the younger children's provisions was limited to three years' rents of the entailed lands and estate of Montgomerie; that even if the late Mr Paterson had the power to leave his younger children three years' interest of the said two sums

of £4800 and £2930, he had not exercised that power, and that therefore the sum due under the said bond of provision was £8523, 14s. 3d. only. On the other hand, the parties of the third and fourth parts maintained that the provision of £10,000 was only to be restricted in case it should exceed the amount within the power of the heir of entail in possession of the estate of Montgomerie to provide, and that therefore the sum due under the said bond of provision was £9451, 6s. 3d.

With reference to the question as to whom the said provisions were payable, the party of the third part maintained that it was within the power of the said William Paterson, as heir of entail, either to apportion the provision or to settle it on him alone; and that in any view the provisions otherwise made by the granter in favour of his other children must be held to be surrogata for their proportions of the said provision, and that he was entitled to obtain payment accordingly of the whole sum. On the other hand, the parties of the fourth and fifth parts maintained that the said sum of £10,000 should be paid to and among the said William Alexander Orr Paterson, Charles Orr Paterson, Henry Edmund Paterson, Mrs Ann Paterson or Sadlier, and Mrs Mary Paterson or Campbell equally. Or alternatively, the parties of the fourth part maintained that the said sum should be paid to and among the said William Alexander Orr Paterson, Charles Orr Paterson, and Henry Edmund Paterson, in the following proportions, viz., to William Alexander Orr Paterson the sum of £9000, to Charles Orr Paterson the sum of £600, and to Henry Edmund Paterson the sum of £400, as provided by the said bond of provision, subject to proportionate reduction according as the ascertained amount of the free rental might be under £10,000.

The deed of entail of the estate of Montgomerie, under which the first party succeeded, contained, inter alia, the patronage of the parish church of Tarbolton. By the 4th section of the Church Patronage (Scotland) Act, 1874, it is enacted that "in all cases in which the patronage of a parish is held either solely or jointly by a private patron or any guardian or trustee on his behalf, it shall be lawful for him or for such guardian or trustee at any time within six months after the passing of the Act to present a petition to the sheriff of the county," praying him to determine the compensation to be paid to such patron in respect of the operation of the Act, "but it shall not be incumbent on any such patron, or upon any guardian or trustee for such patron, whether the patronage is held upon a fee-simple title or under a deed of entail, or other limited title, to present such petition; and if no such petition shall be presented within the said period, it shall be held and taken that the claim for such compensation has been renounced, and no claim therefor shall afterwards be competent in any manner of way." Within the period prescribed the deceased Mr William Paterson had presented a petition to the Sheriff of Ayrshire, and obtained a decree finding that he was entitled to the sum of £383, 14s. 5d. as compensation under the Act, and payable by four yearly instalments on the occurrence of a vacancy in the said parish. A

vacancy occurred in 1884. The deceased Mr William Paterson got payment of the first instalment, and the parties of the second part of the second instalment. A question arose between the first and second parties as to who was entitled to the price of said patronage.

The first party maintained that the price fell to be dealt with as a surrogatum for part of the entailed estate, and that his father's executors were bound to disburse the instalments paid to him and them that they might be dealt with as part of the entailed estate, and that they had no claim to the remainder. The parties of the second part maintained that on the occurrence of the vacancy Mr Paterson, the petitioner, was entitled to payment of the compensation, and that they, as his executors, were entitled to the instalments still remaining unpaid.

The questions for the Court were-"(1) Does the interest of the foresaid sums of £4800 and £2930 four per cent. funded debt of the Glasgow and South-Western Railway Company fall to be included in calculating the amount due under the bond of provision executed by the late William Paterson of Montgomerie? (2) Who is the party entitled to the sum due under the said bond of provision-(a) The said third party to the whole amount; (b) the said third party and his brothers Charles Orr Paterson and Henry Edmund Paterson, in the proportion stated; or (c) the whole younger children equally? (3) Who is entitled to the several instalments of the patronage compensation money?"

On the first question the following arguments were submitted:-For the heir of entailIn his bond of provision Mr Paterson had invoked the powers of the Aberdeen Act alone in settling the provisions to be made to his younger children. That Act, to which he had elected to restrict himself, and to which he must be held, applied to nothing but entailed lands proper. It did not apply to the two sums which had been invested in trust "for the purchase of land to be entailed, or in payment of children's provisions." If Mr Paterson had meant to include these sums in the bond of provision, he should have invoked the trust-deed which had reference to them-Callander v. Callander, May 21, 1869, 7 Macph. 777; Dickson, et al. v. Dickson, June 13, 1854, 1 Macq. 729, per Lord Brougham, 732; Macpherson v. Macpherson, May 24, 1839, 1 D. 794. It was of no consequence what powers were contained in the trust-deed, because Mr Paterson had failed to invoke them in his bond of provision. Thus, even if he had had the power to leave his younger children three years' interest of the two sums, he had not validly exercised it. There was

no evidence of intention to do so otherwise.

The younger children replied-Mr Paterson was anxious to give as much as he could to his children, and must be held to have known that the rental of the lands was not sufficient to satisfy the provisions on which he had fixed, there being a shortcoming in any view. With the interest of the sums in the trust-deed he considered that this shortcoming would be made up. Desirous, then, of making it up he referred to the trust-deed, and found that it gave him all the powers he would have had if the subjects had been land and not money On a sound construction of the words

"entailed estate," as used in the statute, they included the two sums in question. In the cases of Dickson and Callander it was only decided that where the plain provisions of the deed were inconsistent with the statute the Court could not give effect to the statutory powers. But the Court laid down that where it was plainly the intention of the testator to exercise these powers, he need not allude to the deed at all. It was certainly Mr Paterson's intention to include the interest on these sums.

On the second question the arguments submitted appear infra. The clauses of the Aberdeen Act bearing on it were as follows-4. And be it further enacted, that it shall and may be lawful to the heir of entail in possession of any such entailed estate as aforesaid to grant bonds of provision or obligations, binding the succeeding heirs of entail in payment out of the rents or proceeds of the same to the lawful child or lawful children of the person granting such bonds or obligations, who shall not succeed to such entailed estate, of such sum or sums of money, bearing interest from the granter's death, as to him or her shall seem fit: Provided always, that the amount of such provision shall in no case exceed the proportions following of the free yearly rents or free yearly value of the whole of the said entailed lands and estates after deducting the public burdens, liferent provisions, including those to wives or husbands authorised to be granted by this Act, the yearly interest of debts and provisions, and the yearly amount of other burdens of what nature soever, affecting or burdening the said lands and estates, or the yearly rents or proceeds thereof, and diminishing the clear yearly rent or clear yearly value thereof as aforesaid to the heir of entail in possession-that is to say, for one child, one year's free rent or value; for two children, two years' free rent or value; and for three or more children, three years' free rent or value in the whole Provided always, that such provision shall, except in the case of the settlement thereof by a marriage-contract, as hereinafter mentioned, be valid and effectual only to such child or children as shall be alive at the death of the grantor, or to the child or children of which the wife of the grantor shall be then pregnant; and upon any such child succeeding to the entailed estate, the provision granted to him or her, in so far as not previously paid, shall be extinguished for ever, and shall never be set up as a debt against any succeeding heir." "5. Provided always, and be it further enacted, that if any child to whom any such provision as aforesaid may be granted shall marry, that such provision or any part thereof shall, with the consent of the grantor of the same, be settled in the contract made in consideration of the marriage of such child, and such child so marrying shall die before the grantor of such provision, then, and in all such cases, the provision, or any part thereof so settled in consideration of such marriage, shall remain and be effectual as if such child had survived the grantor."

On the third question-For the first partyThe compensation awarded under the Church Patronage Act was just a windfall which he was entitled to get as a surrogatum for part of the entailed estate.

For the second parties-The Act gave the patron an option, whether he was an heir of entail or

& Ors

1888

Its

not, to claim or give up the compensation. whole language showed that it regarded the whole matter as a personal one, and not connected with the entailed estate. There was no provision for depositing and investing the money. On the occurrence, then, of the vacancy in 1884 the late Mr Paterson was entitled to the compensation, and his executors were entitled to the instalments still remaining unpaid.

At advising on July 19, 1887—

LORD JUSTICE-CLERK-This case has given us a good deal of anxiety with regard to one of the questions put to us-that, namely, which involves a consideration of the 4th clause of the Aberdeen Act. We have thought it advisable to have the opinion of the whole Court, looking to the important nature of that question. We therefore now appoint minutes of debate to be prepared and laid before the whole Court.

With regard to the first and third questions, however, we are prepared to give judgment.

The first relates to the interest of certain sums of £4800 and £2930 funded debt of the Glasgow and South-Western Railway Company. The question with regard to these two sums is, whether they fall to be taken into calculation in estimating the amount due under the bond of provision executed by the late William Paterson as heir of entail in possession of the estate of Montgomerie under the Aberdeen Act? I am of opinion that these sums, which were sums directed to be entailed, and which have been invested for the purpose of purchasing land to be added to the entailed estate, are truly in this question under the Aberdeen Act. By the trust-deed it is declared that the heir of entail "shall have the same powers in regard to the above-mentioned sums that he would have had if they had been invested in the purchase of lands, and entailed in terms of the Montgomerie entail, according to the present law, or any future Act that may be passed affecting entails." It seems clear therefore that it was in view to treat these sums as part of the entailed estate. The proceedings in regard to the matter are narrated in the special case, and I do not need to enter into them in detail, but it is quite clear what the conception was upon which the investments were made. The provision seems to me to be perfectly clear-that until the sum is invested in the purchase of land the heir of entail in possession of Montgomerie shall have the same control over the sums, and the interest upon the sums, as he would have had in lands subject to the entail. It is said that Mr Paterson, who executed the bond under the Aberdeen Act, did not intend-or at all events has not duly carried out his intention-to charge these invested funds as part of the estate of Montgomerie. I am of opinion that it was totally unnecessary that he should do so, because they are part of the estate of Montgomerie, inasmuch as they fall under the same destination as the entailed lands, and the same provisions in regard to fetters affect them as affected the entailed lands. They can, in short, only be considered in the same way as the estate of Montgomerie would have been before this addition-for it truly was an addition-was made to it.

That is the general view I take of the investments. It is consistent with practice and with principle. There are provisions in the Entail

VOL. XXV.

Acts-in the Rutherfurd Act and the subsequent Acts-in regard to money destined to be entailed. We know what these provisions are, and I think that no other result than what I have indicated would be consistent with the principles upon which such investments have hitherto been dealt with.

The third question is one of considerable interest-" Who is entitled to the several instalments of patronage compensation money?" I have formed a clear opinion upon this question, and that opinion is, that the instalments of the price of the patronage of Tarbolton, in respect of which certain payments of compensation had become due under the Patronage Act, do not form part of the entailed estate, and that there was no obligation on the heir of entail to invest the money or purchase with it land to be entailed, and that the subsequent heirs of entail had no interest whatever in these payments. I gather that not only from the nature of the fund itself and the source of it, but I gather it from the words also of the Church Patronage Act of 1874. It is enacted there that "in all cases in which the patronage of a parish is held either solely or jointly by a private patron, or guardian or trustee on his behalf, it shall be lawful for him, within six months after the passing of this Act, to present a petition to the sheriff of the county, praying him to determine the amount of compensation;" and then it says that "it shall not be incumbent on any such patron, or upon any guardian or trustee for such patron, whether the patronage is held upon a fee-simple title, or under a deed of entail, or other limited title, to present such petition; and if no such petition shall be presented within the said period, it shall be held and taken that the claim for such compensation has been renounced, and no claim therefor shall afterwards be made in any manner of way." I think it is impossible to contend that the Act creates any jus crediti whatever in the substitute heirs under the destination. The heir in possession could at his pleasure renounce the claim for compensation altogether, and the mere omission to present a petition within six months is equivalent to that. Mr Paterson was the patron, and he was entitled to decline to receive compensation both for himself and all that were to succeed to him.

That, generally, is the view that I take upon his matter. It is a kind of residuum this compensation for the abolition of patronage. It does not come in place of any part of the entailed estate, but is to be regarded as a payment made to the party entitled to the next presentation by way of succedaneum personally. I think it goes to the executors. Although the instalments are postponed I do not think that makes any difference on the right of the heir in possession at the passing of the Act. I think the instalments vested in him at that date, and that consequently his executors are entitled to the subsequent instalments.

LORD YOUNG concurred.

LORD CRAIGHILL-I think the first question ought to be answered in the affirmative. I have felt no difficulty in coming to this conclusion. By the trust-deed, a portion of which is quoted in the special case, it is declared that the heir

NO. XLIX.