Reid's Trustees Vs. Dawson - Court Judgment

Earl Loreburn.

The question here turns upon the construction of a holograph letter addressed by the late Mr Robert Reid to his solicitor, which, it is admitted, is a testamentary writing. I will read the document—[His Lordship read the letter].

Now, this letter was a letter written by a layman, and I think in construing letters written by laymen those who are familiar with the law and its difficulties are sometimes apt—as I feel myself sometimes apt—to overthink the meaning of the particular expressions, and therefore to overstrain the language. I desire to avoid that danger, if I can. I read this will myself as having the following effect: It is a bequest of a monthly payment of £12, 10s. without any period to the duration of that payment being named in the document, but it is evidently meant to be terminable upon the payment of a capital sum of £3000, which at five per cent yields the same sum annually, namely, £150. It is evident to my mind, from the scheme of the document itself, that Mr Young was intended to pay the capital sum, and then to discontinue the payment of the monthly sum. I think that in substance he was directed to pay that capital sum. The document, I need hardly say, is not skilfully expressed, but the £3000 is spoken of in it as a bequest, and that seems to me to settle any doubt that might have existed as to whether there was a direction to pay that sum or not. The monthly payment and the capital payment do not appear to me to have been intended, or expressed, as being alternative payments at the option either of the trustee or of the lady herself, but the one is to follow the other as soon as convenient, and that is the only thing it seems to me that is left to the discretion of the trustees. The use of the word “prefer”indicates not an alternative for selection by the trustee, but that there has been an alternative in the mind of the testator, which he proceeds to resolve in the document before your Lordships. The trustee is bound to pay this money—he is bound and entitled to pay it at a time that he thinks convenient, but he is, of course, to do so in good faith, and in the same way as in the case of all other trust funds.

That being so, the only question remaining is whether or not this legacy, this bequest of £3000, which he said should be taken “from my life insurance fund,”is a demonstrative or a specific bequest. I do not deny that there may be a doubt upon the particular wording of this document, and it is a difficult question, but upon the whole I accede to the view which has prevailed with your Lordships, and I think that upon the whole it means, not that the money is to be paid only out of those funds if those funds suffice, but that the money is to be paid. In my opinion that is the result of this document.

Lord Kinnear.

I agree with my noble and learned friend on the woolsack upon both points.

Lord Dunedin.

In the view I take the initial fallacy which I think influenced the judgments of the Court below was to consider the first words as creating a bequest of an annuity of £150 per annum. If that was so, I could understand the view of alternatives depending on discretion. But the first words are not the bequest of an annuity; they are a direction to pay a monthly allowance, beginning one month after the testator's death. This monthly allowance is to continue until it is superseded by the payment of a capital sum as soon as that can conveniently be made forthcoming; a very natural arrangement, and one that is consonant with the method in which the bequest is conveyed, namely, a direction in a letter to the testator's solicitor. The constitution of an annuity would necessitate a continuing trust—an arrangement not contemplated by the testator's trust-disposition and settlement—and, therefore, if made, would be appropriately made by a direction to his body of trustees. The word “prefer”can, I think, without violence, be taken as a polite form of command.

Then comes the question, Out of what is the capital sum to be paid Prima facie, it is unlikely that it should represent less than the value of the monthly payment of £12, 10s. As a fact, £3000 almost exactly represents the capital value at 5 per cent of a perpetual payment of £12, 10s. a month. But, further, it is clear from the circumstances which are here admitted that, if the sum bequeathed is truly not £3000 but the proceeds of the policies under burdens of such sums as they were pledged for, then the legatee could never get anything like £3000 out of these proceeds. To my mind, this makes it clear that the enixa voluntas of the testator was that the legatee should get £3000, and that the indication of the fund was a mere direction as to the moneys from which primarily his trustees should take the same; the reason, I think, not being far to seek, to wit, that he thought they would be more or less immediately available, while the rest of his capital in his business could only be realised gradually.

Taking this view, it is unnecessary to consider the question which would arise, supposing this provision was to be made out of the proceeds of the policies alone, as to whether the general direction to pay the debts would bind the general estate to clear the policies, in other words, whether the law, which is undoubtedly the law as to heritage ever since the case of Frazer,which came to your Lordships' House shortly after 1804, is applicable to movables. Notwithstanding the authority of Lord Kyllachy in the case of Stewart,which was quoted, I think that is a very difficult question, and one on which I wish to reserve my opinion. I apprehend that the questions in the case will be answered in a way consonant with the judgment that is proposed by my noble and learned friend on the woolsack.

Lord Atkinson.—I concur. I agree with my noble and learned friend on the woolsack that the word “prefer”prima faciemeans a choice between two alternatives, but at the same time I think that in this particular will this clause providing for payment “as soon as you conveniently can”is absolutely inconsistent with any discretion being given to Mr Young as to whether he should pay or should never pay. I think they indicate clearly that he is to pay, and therefore I construe the words “I prefer”as if they were “I wish.”

With regard to the other portions of the letter, I think it is clear upon the face of it that the testator, if so he may be called, intended that the sum of £3000 should be given to this lady, not merely such a sum as the insurance would produce after all the incumbrances upon it had been paid. I think he intended that she should get £3000, and that the reference to the policy of insurance was merely meant to indicate that that was the first fund which he wished to apply in payment of it, but if this fund were insufficient, she was still to get £3000 out of his general estate. That was his dominant intention which was not to be defeated.

I abstain with prudence from venturing to express an opinion as to the fund which is the primary fund generally under the Scottish administration for the payment of debts.

Lord Parker of Waddington.—I have come to the same conclusion, and in coming to that conclusion I am influenced by two facts. The first is that the testator at the commencement of his letter explains what his object in view is, and that is to provide for the lady and her child towards whom he felt a moral obligation. It would be entirely insufficient as provision for the child merely to provide an annuity for the life of the lady, and it is, on the other hand, very common to provide for children by giving their parents a lump sum.

The second point to which I attach importance is the concluding words of the letter, which appear to me to show not only that the gift or bequest of £3000 was not to be in the discretion of the trustees, but also that it was contemplated by the testator as a sum which was to be payable in any event and not only if the specific fund alluded to proved sufficient for the purpose. The words are that the testator “had hoped to make this bequest from another source.”I consider that that is entirely inappropriate language to indicate a discretion given to the trustees to pay or not to pay at their will and option as a bequest to a person in whose favour the payment might or might not be made; and, on the other hand, I consider it an inapt way of alluding to a specific legacy to say that he had hoped to make that legacy out of another source. Had he really meant it as a specific and not as a demonstrative legacy I think he would have used other words. He might have said, “I had hoped to make other provision or a specific legacy of another nature,” but lie has referred to the £3000 as a sum which might or might not be payable out of one source or another source, and that is really the essence of a demonstrative legacy as opposed to a specific, or, as I understand the Scotch call it, a special legacy.

For these reasons I agree with the motion about to be made by the noble and learned Earl on the woolsack.

Lord Sumner.

I concur for the reasons stated.