Scottish Court of Session Decisions

George Garioch Dalgarno, solicitor, Arbroath, judicial factor on the estate of the late Rev. James Ewen Macdougall of Springfield, Arbroath— first party; Mrs Margaret Campbell Macdougall or Watson and others, the next-of-kin of the late Rev. J. E. Macdougall— second parties; and Miss Margaret Anderson, to whom the late Mr Macdougall had bequeathed the free income of his estate— third party, presented a Special Case dealing with the administration of the late Mr Macdougall's estate.

By his will the Rev. James Ewen Macdougall, who died at Springfield House, Arbroath, on 23rd December 1901, provided, inter alia, as follows—“It is my wish that should my housekeeper Margaret Anderson survive me, she shall be entitled to and enjoy the whole free income and revenue arising from the whole residue of my means and estate during her lifetime so long as she survives me.”… Quoad the fee of his estate, which consisted of both heritable and moveable property, Mr Macdougall died intestate.

The case stated—“6. The heritable property which belonged to the said Reverend James Ewen Macdougall at the time of his death, and now forming part of the estate under the management of the first party, consists of the lands of Springfield comprising the superiority or dominium directum of eight feus given off from the lands by former proprietors of the estate. The feu-duties and ground-annuals yielded by these feus amount to £64, 3s. 2d. per annum. In the case of two of the feus a duplication of the feu-duty is payable on the expiry of every twenty-fifth year from the date of entry under the charter. In the case of four of the feus a duplication of the feu-duty is payable ‘at and upon every transfer or conveyance’ of the feu. In another case a duplication of a ground-annual is payable on every transfer of the subjects. In the remaining case the entry of heirs and singular successors is untaxed 7. During his period of office as judicial factor the said George Miln—Mr Dalgarno's predecessor—invested £751 of the moveable estate of the said deceased Reverend James Ewen Macdougall in the purchase of the dominium directum of subjects at Rosebrae, in the burgh of Arbroath, and of certain ground-annuals payable furth of subjects there. This superiority and the ground-annuals continue to form part of the deceased's estate. The feu-duties yielded by this superiority and the said ground-annuals together amount to £25, 8s. 6d. per annum. For these feus a duplication is payable in one case on the expiry of every fifteenth year from the term of Whitsunday 1877, in another case on the expiry of every twentieth year from Whitsunday 1898, and in the third case on the expiry of every twentieth year from Martinmas 1899. As regards the ground-annuals, a duplication is in each case payable upon ‘every transfer or conveyance … whereby the same may come or belong to a new proprietor.’ 8. The first party, as judicial factor foresaid, invested £2767, 10s. of the moveable estate under his control in the purchase, at Whitsunday 1903, of the superiority of subjects in Dalhousie Terrace and Comiston Drive, Edinburgh, yielding fifteen feu-duties, amounting in all to £92, 5s. per annum. As regards fourteen of the holdings, a double of the feu-duty is in each case payable at the end of every nineteenth year from the term of Martinmas 1886. As regards the remaining holding, a double of the feu-duty is payable at Whitsunday 1921, and at the end of every twentieth year thereafter.”

The first and second parties maintained that the duplications and casualties, uplifted and to be uplifted, were to be considered as capital, and did not fall to be paid to the liferentrix.

The third party maintained that the said duplications and casualties were to be reckoned as income, and fell to be paid to her as liferentrix.

The questions of law were—“1. Do the duplications or casualties, … or any of them, or any part of them, fall to be considered as income or revenue of the estate, payable by the first party to the third party? 2. Do the duplications or casualties, … or any of them, or any part of them, fall to be considered as capital.”

Argued for first and second parties—In the absence of contrary intention, duplicands and casualties fell to be treated as capital— Ewing v. Ewing, March 20, 1872, 10 Macph. 678, 9 S.L.R. 416; Gibson v. Caddall's Trustees, July 11, 1895, 22 R. 889, 32 S.L.R. 668. The cases of Montgomerie-Fleming's Trustees v. Montgomerie-Fleming, February 28, 1901, 3 F. 591, 38 S.L.R. 417; Ross' Trustees v. Nicoll, November 22, 1902, 5 F. 146, 40 S.L.R. 112; and Dunlop's Trustees v. Dunlop, October 23, 1903, 6 F. 12, 41 S.L.R. 8, were inapplicable, for there the Court proceeded on evidence of the testator's intention. There was no such evidence here. The duplicands received by this testator were small and at rare intervals, and could not, therefore, have been in contemplation. Quoad the duplicands of feu-duties bought by the judicial factor, intention had no place, and the rule in Ewing v. Ewing ( cit.) applied. That rule was still law— Dunlop's Trustees ( cit.), per the Lord President, 6 F. at p. 14. Even if the duplicands were legally income, those falling due within a year or two of the purchase of the superiorities ought to be apportioned between the fiars and the liferentrix—Apportionment Act 1870 (33 and 34 Vict. cap. 35), sec. 2. The method of striking an average adopted in Lamont Campbell v.

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Carter Campbell, January 19, 1895, 22 R 260, 32 S.L.R. 203, was an instance of this principle. These duplicands represented part of the purchase price, and ought therefore to be treated as capital. Any other rule would enable trustees to favour life-renters at the expense of fiars. If the contention of the liferentrix were sound, it would be possible to depreciate the trust-estate by buying and selling superiorities before and after duplication payments.

Argued for third party—Casualties and duplicands were income, not capital— Montgomerie Fleming's Trustees v. Montgomerie-Fleming ( cit. sup.); Ross's Trustees v. Nicoll ( cit. sup.) The present bequest of liferent was in very full terms, nor could favour to heirs on intestacy as fiars be presumed— Blyth's Trustees v. Milne, June 23, 1905, 7 F. 799, 42 S.L.R. 676. It was immaterial whether the duplications were payable at regular or irregular intervals— Dunlop's Trustees v. Dunlop ( cit. sup.)—and whether they were owned by the testator or bought by the factor— Curle's Trustees, December 18, 1903, 46 S.L.R. 7. Since the Conveyancing Act 1874 the ratio of Ewing v. Ewing ( cit. sup.) no longer applied— Montgomerie Fleming's Trustees ( cit. sup.), per the Lord President, 3 F. 594. The case of Gibson v. Caddall's Trustees ( cit. sup.) was distinguishable.