Scottish Court of Session Decisions

William Henry Goff, chartered accountant, Glasgow, and others, trustees of the late James Paterson, Southfield, Midlothian, acting under a trust-disposition and settlement dated 25th January 1905 and various codicils, pursuers and real raisers, brought an action of multiplepoinding and exoneration, the fund in medio being 200 one-thouandth parts of the residue of the testator's estate, which he had originally in a codicil bequeathed to the directors of the Western Infirmary of Glasgow, but subsequently left subject to a discretionary power given to two of his trustees. This power was exercised, but the deed was cancelled and was not exercised again by the two appointees. After the death of one, however, the other executed a deed, dated 2nd March 1917, purporting to exercise it.

The clause conferring the power is quoted from the codicil of 2nd September 1909, supra in rubric.

John Finlay, Southfield, Midlothian, claimant and defender, lodged a claim as nephew of the testator, averring that he was entitled to the succession to the testator's estate ab intestato, and that the deed of 2nd March 1917 above referred to was invalid. The Royal Edinburgh Hospital for Incurables, claimant and defender, also lodged a claim, maintaining that the deed of 2nd March 1917 was a valid exercise of the discretionary power conferred by the testator.

On 20th December 1917 the Lord Ordinary ( Hunter) pronounced the following interlocutor:—“Finds that the fund in medio has fallen into intestacy of the late James Paterson: Sustains the condescendence and claim for John Finlay, Southfield, Liberton, Midlothian: Ranks and prefers him to the fund in medio; and decerns.”

Opinion.—[ After dealing with questions which are not reported]—“The second alternative of the contentions for these claimants” ( i.e., The Royal Edinburgh Hospital for Incurables) “deserves more consideration. In Shedden's Trustee v. Dykes,

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1914 S.C. 106, 51 S.L.R. 115, a testator by her settlement appointed two persons to be her trustees and executors (the appointment of one of them being recalled by codicil) and conveyed to them her whole estates. The trustees were, inter alia, directed to divide the residue of the estate among such charitable institutions in Glasgow and in such proportions as her trustees in their absolute and uncontrolled discretion should decide. A new trustee was assumed and the Court held that the discretionary power given to the trustees as to the disposal of the residue might be exercised by him. This case affords a good example of the rule that where a power of disposal is conferred upon the holders of an office in virtue of their official position the power may be exercised by those who in fact hold the office whether they are survivors of the original holders or are assumed.

“It appears, however, to be settled both in England and Scotland that where a power is vested in two or more persons nominatim, without any reference to an office that enures to the survivor, as in the case of executors or trustees, the power cannot be exercised by the survivor. In the present case the testator has given the power of allocation not to his trustees but to two of that body. They hold the power not in virtue of their being trustees or as part of their duty as trustees but because they have been selected as individuals to make the allocation. I do not think, therefore, that Mr Mackechnie had any right after Miss Paterson's death to exercise the power of allocation given to him and her jointly.

The two English cases of Toovey v. Turner, [1907] 1 Ch 475, and Crawford v. Forshaw, [1891] 2 Ch 261, to which I was referred by the claimants, do not appear to me to be inconsistent with the view which I have indicated. In the former of these cases it was held that where a power of sale is given to trustees by name or under the description ‘my trustees,’ to whom the legal estate is devised, the power can be exercised by the surviving trustees or the sole surviving trustee. Mr Justice Swinfen Eady quoted with approval the following passage from Lewin on Trusts, 11th ed., p. 748. It seems to be now decided that even where the trust is reposed in the trustees by name, the survivor who takes the estate with a duty annexed to it can execute the trust, and the rule of survivorship applies not only to trusts or powers imperative which are construed as trusts but also to such discretionary powers as are annexed to the office of trustee and are meant to form an integral part of it.’ In Crawford's case it was held that a power attached by the will to the office of executors could be exercised by the executors for the time being. The principle given effect to in these cases, which appears to me to be in entire accordance with Scots law, would only favour the claimant's contention if I held as a matter of construction that the power of allocation was attached to the office of trustee.”

The claimants the Royal Edinburgh Hospital for Incurables reclaimed, and argued—The power to recal certain provisions of the will having been given to the testator's sister and Mr Mackechnie, as trustees, it could be exercised by the survivor. If weight was to be given to this power to recal its terms had to be given effect to strictly. Once the power of allocation had been carried out it was final and not revocable. The power was exercised in the most deliberate and conclusive manner possible, and once exercised could only be revoked without creating a breach of trust by substituting an equally good power. The effect of the charitable provision was to create a trust within a trust, two of the original trustees having been particularly chosen to see to the carrying out of that provision. The codicil containing their appointment distinctly described them as “two of my trustees.” Accordingly the power dealing with the charitable provision could be exercised by the survivor of the two, and if the prior allocation were effectually displaced the allocation by the survivor held good. The question to be considered was what was the testator's intention in the deed—Farwell on Powers, p. 511. The following cases were cited— In re Bacon, [1907] 1 Ch 475; Shed-den's Trustee v. Dykes, 1914 S.C. 106, 51 S.L.R. 115; Dick's Trustees v. Cameron, 1907 S.C. 1018, 44 S.L.R. 753; Pocock v. Attorney-General, (1876) 3 Ch D 342; Hill's Trustees v. Thomson, (1874) 2 R. 68, 12 S.L.R. 20.

Argued for the claimant John Finlay—There was delectus personæ in the present case. A bare power given to two persons by name could not be exercised by the survivor when, as was the case here, the words “to the survivor” had been omitted. Although the word “joint” had not been used it had been implied. Mr Mackechnie could not by himself make a valid allocation. The two persons appointed trustees were unable to assume other trustees to act with them in exercising the discretionary power. Counsel referred to Farwell on Powers, p. 514, and in re Somes, [1896] 1 Ch 250, per Chitty, J., at p. 255.

At advising—