Equitable Doctrines
Cases Conversion
Re Elliott
[1952] 1 Ch. 217;
HARMAN J.: … It was admitted before me, and I think rightly, that if this were a perpetual gift of a legacy for the purpose of preserving a grave uncon nected with the fabric of a church it was void as creating a perpetuity. If then the legacy be void, the £100 falls into residue. 1evertheless, the condition remains, but it is an illegal condition which the residuar;, legatee cannot lawfully carry into effect. The question is, therefore, whether the illegality of the condition avoids the gift or whether it can be disregarded. If this were a gift of real property it is clear that failure to perform the condition must avoid the gift. This is and always has been the English law, and is illustrated by Egerton
v. Earl Brownlow ( (1853) 4 H.L.C. 1). Compare the decision of Astbury J. in
In re Turton ([1926] Ch. 96), and see also the following statement in Roper and White on Legacies, 4th ed., vol. 1, p. 754: “It is a general rule of the common law, applicable to real estates, that where an interest is so devised as only to arise upon a preceding condition, it cannot vest until that condition be performed, or the event happen, upon which it is given. This rule has been acknowledged and acted upon ever since the time of Lord Coke. The principle is, that there is nodevise until the happening of the event, or performance of the terms upon which the disposition is made; a principle which applies to every case, so that although the condition require the performance of an impossible act, as for the devisee to go to Paris in half an hour, or it require the devisee to do an illegal act, as to kill B or to burn his house (conditions mala in se); or whether it require a woman to separate from her husband (a condition against the policy of law); or whether the devise be made on condition that the legatee have criminal con nexion with a particular person (a condition contra bonos mores); the before stated principle authorizes the conclusion, that, as all such conditions are void, the dispositions to arise only upon their performance are also void. But the rule of the civil law is different.”
This, however, is a gift of personalty, and different rules apply drawn from the ecclesiastical law which contains a great number of refinements on the subject, vide Swinburne on Wills, 7th ed., vol. 1, p. 387, and those which follow. This work, however, deals with the ecclesiastical law, and not all its niceties were adopted by the courts of equity when they took over the administration of estates from the ecclesiastical courts. A deal of learning on this subject is to be found in In re Moore ( (1888) 39 Ch.D. 116). See the judgment of Cotton L.J. (at p. 128), where is the following citation from Jarman on Wills, 4th ed., vol. II,
p. 12: ” The rule is thus stated by Mr. Jarman: ‘ But with respect to legacies out of personal estate, the civil law, which in this respect has been adopted by courts of equity, differs in some respects from the common law in its treatment of conditions precedent; the rule of the civil law being that where a condition precedent is originally impossible, or is made so by the act or default of the testator, or is illegal as involving malum prohibitum, the bequest is absolute, just as if the condition had been subsequent. But where the performance of the condition is the sole motive of the bequest, or its impossibility was unknown to the testator, or the condition which was possible in its creation has since become impossible by the act of God, or where it is illegal as involving malum in se, in these cases the civil agrees with the common law in holding both gift and condition void.’ According to English law, if a condition subsequent which is to defeat an estate, is against the policy of the law, the gift is absolute, but if the illegal condition is precedent there is no gift. In the civil law a distinction is taken between what is malum in se and what is only malum prohibitum ”
It was argued before me that the present case was governed by the decision of Bennett J. in In re Thomas’s Will Trusts ([1930] 2 Ch. 67). In that case the testator was desirous of pledging his legatee to pursue an action in which the testator had been engaged connected with an undivided share in real property. Before the date of the will, however, this undivided share was converted into personal property by the Law of Property Act, 1925, and therefore the pursuit of the action had become impossible. Bennett J. held that the condition was not binding, and relied on a passage in Swinburne quoted in the report, but with all deference to him, it seems doubtful whether that passage sufficed, because the judge did not notice an exception which apparently provides that where the impossibility was unknown to the testator the gift is avoided. However that may be, that case does not in my opinion govern the present. That was a case of impossibility, it being physically impossible to bring an action about some thing which did not exist. There is no such impossibility here; there is only illegality.
Precedent conditions which are illegal are dealt with in Roper, Joe. cit., at p. 757: “It is a rule of the civil law, that, if a precedent condition require the performance of an act malum in se, as to kill B, burn his house, etc.; not only the condition, but the disposition itself is void; a rule, which being in unison with the common law in devises of real estate, it is presumed that similar dis positions of personal property will receive the like construction in courts of equity. When, however, the illegality of the condition does not concern any thing malum in se, but is merely against a rule or the policy of law, the condition only is void, and the bequest single and good; for the condition not being lawful, it is held in the phrase of the civil law pro non adjecta.”
It appears from this passage that if the illegality involve malum in se the disposition is void, but if it be merely malum prohibitum then the condition is void and the bequest good. The present illegality is of the second kind, and, therefore, if this doctrine of the civil law has been imported into the English law, the condition can be disregarded. Mr. Roper is of the opinion that this rule was imported into equity, and for this there appears to be the authority of Lord Hardwicke L.C. in Reynish v. Martin ( (1746) 3 Atk. 330; 26 E.R. 991), quoted and accepted by Bowen L.J. in In re Moore. This view is also agreeable to the observations of Mr. Jarman already cited above, which only states that illegality avoids the gift where it involves malum in se. I conclude, therefore, that the condition is avoided. If this be so, the gift is what the older authorities call pure and may be accepted by the legatee. Treating it, therefore, as a gift unfettered by a condition, I conclude that the first defendant can take the residue and disregard the condition.
Re Lord Chesum
Chancery Court (1886) 31 Ch.D. 466
CHITTY J. : … The questions … are, first, whether Lord Chesham is put to his election; and secondly, if he is, whether if he elects (as he does) to take under the will he is bound to make compensation to his younger brothers out of the residue given to him to the extent of the value of his interest in such of the settled chattels as the will purports to bequeath.
I will deal with these questions in the first instance apart from the Settled Land Act.
It is clear that if he takes under the will he must confirm the will so far as he can, and must give up to the disappointed legatees any beneficial interest that he can dispose of in the chattels. But he has in effect no interest in the chattels which he can make over to them, or from which they can derive any benefit, apart from the mansion-house; and as to his life estate in the mansion-house he is free from all claim, direct or indirect, on the part of his brothers.
In effect it is the paramount title of the trustees, who are not affected by any question of election, rather than the restricted interest of Lord Chesham, which prevents effect being given to the bequest of the chattels. A Court of Equity never decrees an act to be done which is a breach of trust, or a mere idle act which could only lead to litigation. And inasmuch as no assignment by Lord Chesham of his interest could be framed which would not be a breach of trust, or which could confer any benefit on his younger brothers, it would not order him to execute any assignment of the chattels for the purpose of confirming the will.
It is admitted that no authority can be produced in support of the proposition that where the election is to take under the instrument compensation has been decreed. The question, then, requires some examination of the principles on which the Courts of Equity have proceeded in working out the doctrine of election and the authorities bearing on the subject.
Mere personal incapacity arising from infancy or coverture on the part of the person put to his or her election is not sufficient to exclude the application of the doctrine. In the familiar cases of incapacity arising from infancy or coverture, the Court (generally after a preliminary inquiry on the subject) itself makes the election for the benefit of the infant or married woman, but in all cases that I am aware of, the Court, where the election is thus made to take under the will, effectually binds the interest of the party entitled to set up a paramount title by an appropriate declaration in favour of persons taking under the instrument on which the question of election arises, with incidental directions, where necessary, for conveyance, assignment, release, or the like, adapted to the special circum stances of the case. But in the case before me Lord Chesham is under no personal incapacity. He cannot make an assignment because he has no assignable interest.
The principle on which the doctrine of election is based is that a man shall not be allowed to approbate and reprobate; that if he approbates he shall do all in his power to confirm the instrument which he approbates. The consequences of such a principle cannot be legitimately carried beyond the principle itself; if a man approbates, his obligation is confined to his adopting the instrument as a whole and abandoning every right inconsistent with it. In all the leading authorities the principle is stated substantially to the effect above given, and, so far as I am aware, where the election has been to take under the instrument there is no decision decreeing compensation. In Streatfield v. Streatfield ( (1735) Cas.t.Talb. 176) Lord Talbot, in stating the principle, said that the tacit condi tion was that the devisee should not disturb the disposition made by the will.
In Ker v. Wauchope ((1819) 1 Bli. 1) Lord Eldon confines the engrafted doctrine of compensation to the case of taking against the instrument, and describes it as arising from the conduct of the person electing so to take. He says (at p. 25): “In our Courts we have engrafted upon this primary doctrine of election, the equity as it may be termed of compensation. Suppose a testator gives his estate to A., and directs that the estate of A., or any part of it, should be given to B. If the devisee will not comply with the provision of the will, the Courts of Equity hold that another condition is to be implied, as arising out of the will, and the conduct of the devisee; that inasmuch as the testator meant that his heir-at-law should not take his estate which he gives A., in considera tion of his giving his estate to B.; if A. refuses to comply with the will, B. shall be compensated by taking the property, or the value of the property, which the testator meant for him, out of the estate devised, though he cannot have it out of the estate intended for him.”
In Wollaston v. King ( (1869) L.R. 8 Eq. 165) Lord Justice James, then Vice Chancellor, after stating that he had endeavoured to extract from the cases a principle, adopted the rule laid down by the Master of the Rolls in W hi · v. Webster ( (1796) 2 Yes. 367) in the following general terms, viz.: “That no man shall claim any benefit under a will without conforming, as far as he is able, and giving effect to everything contained in it whereby any disposition is made shewing an intention that such a thing shall take place.”
In Cooper v. Cooper ( (1875) L.R. 7 H.L. 53, 69) Lord Hatherley says: “The main principle was never disputed, that there is an obligation on him who takes a benefit under a will or other instrument to give full effect to that instrument under which he takes a benefit; and if it be found that that instrument purports to deal with something which it was beyond the power of the donor or settlor to dispose of, but to which effect can be given by the concurrence of him who receives a benefit under the same instrument, the law will impose on him who takes the benefit the obligation of carrying the instrument into full and complete force and effect.”
In Codrington v. Codrington ( (1875) L.R. 7 H.L. 854, 861) Lord Cairns states the law thus: ” By the well-settled doctrine which is termed in the Scotch law the doctrine of ‘ approbate ‘ and ‘ reprobate,’ and in our Courts more commonly the doctrine of ‘ election,’ where a deed or will professes to make a general disposition of property for the benefit of a person named in it, such person cannot accept a benefit under the instrument without at the same time conforming to all its provisions, and renouncing every right inconsistent with them.”
In none of these authorities can any trace be found of an attempt to apply the engrafted doctrine of compensation to the case of a person electing to take under the instrument which gives rise to the election. or is there any sugges tion to that effect in Mr. Swanston’s learned note to Gretton v. Haward ( (1819) 1 Swan. 409); on the contrary, the obligation of the person electing to take under the instrument appears to be confined to confirming the instrument so far as he is able….
Threesult is, that this attempt to engraft a new doctrine of compensation on the doctrine of election fails. I hold that Lord Chesham is not bound in any view of the case to make any compensation out of the residue to his younger brothers. But I go further. Inasmuch as Lord Chesham has no interest in the chattels which he can make over for the benefit of his younger brothers, it appears to me that no case of election really arises. Election means free choice. He cannot be compelled directly or indirectly to take under the settlement and against the will. But when he takes under the will there is nothing for him to give up, for there is nothing which he can give up. It seems to me to be absurd to say that he is put to his election merely for the purpose of making a deduction from his residuary legacy.
The point raised as to the Settled Land Act, and the order giving Lord Chesham liberty to sell some of the chattels, and the sale of some of the chattels comprised in the order, is readily disposed of on a broad principle. The equities of the parties must be determined according to the state of circumstances as they existed at the testator’s death, and the Settled Land Act had not then been passed: ..
Pickersgoll v Rodger
(1877) 5 Ch.D. 163
JESSEL M.R.: … Any disappointed legatee is entitled to say, “You shall not take the benefit given to your estate by the will unless I have made up to me an equivalent benefit to that which the testatrix intended me to take.” Sometimes this is called the doctrine of compensation, which is the meaning of the doctrine of election as it now stands. The disappointed legatee may say to the devisee, “You are not allowed by a Court of Equity to take away out of the testatrix’s estate that which you would otherwise be entitled to, until you have made good to me the benefit she intended for me.” That means that no one can take the property which is claimed under the will without making good the amount; or, in other words, as between the devisees and legatees claiming under the will, the disappointed legatees are entitled to sequester or to keep back from the other devisees or legatees the property so devised and bequeathed until compensation is made. Thence arises the doctrine of an equitable charge or right to realize out of that property the sum required to make the compensation.
If you follow out that doctrine, you will see that the person taking the property so devised or bequeathed takes it subject to an obligation to make good to the disappointed legatee the sum he is disappointed of. Once get the doctrine into that shape and you will then see that the eldest son cannot get the estate at all without making good the necessary amount to the disappointed legatees, and it follows, as a matter of plain principle, that he has nothing to complain of. The very instrument which gives him the benefit, gives him the benefit burdened with the obligation, and the old maxim, ” Qui sentit commodum, sentire debet et onus,” applies with the greatest force to such a case as this.
But it was argued, in substance, that the testatrix-who had no power in the world to take away a shilling from her son, or who could merely impose a condition on the object of her bounty by saying that he should not take the subject of the bounty without making good to other people what she intended for them-could deprive the residuary legatees of the son of that which was their exclusive property. That is contrary to the whole theory of the doctrine of election, and would have the effect of actually taking away that property from the son’s residuary legatees .ex post facto by an ambulatory instrument coming into existence after the death of the testatrix, without any compensation or satisfaction whatever.
It appears to me that, when you fairly state the argument, you see at once a plain fallacy in it. It would be extraordinary if any person could take property away from another without having a power of disposition over such property; that would be the result of the argument.
Now, one more remark and I have done. It is said, if the testatrix’s son, who was bound to elect, had done so, he would have elected for his own benefit to take the real estate and give up the appointed share. That is a mistake, because he can always take both provisions if he thinks fit. He is not bound to take one and give up the other. As I said before, he may take both, but the benefit that he takes under the will is subject to the obligation upon him to make good the consequent loss to the disappointed legatees. The obligation is only to the extent of the benefit he derives: it cannot go beyond that. If this estate had been less in value than the appointed share, the fallacy would have become obvious. You cannot take away anything from the eldest son beyond the value of what he has got, which is the Yorkshire estate given to him; and it is not true that any one can now elect when the profer person to elect is dead. There are two persons, the person entitled to the rea estate and the person entitled to the personal estate; which of them is to elect? Who can decide between them? No one can. There is no power of election in such a case, that is, of election in the ordinary sense.
You must treat the case as if each of those two persons took his property separately, and then, as I said before, you must discover upon whose property the obligation lies to make good what is required to satisfy the disappointed legatees. You will then see at once the effect is to charge the Yorkshire estate with the deficiency, and it appears to me, therefore, that the persons entitled to the residuary personal estate of the son take it free of any obligation.
Re Bradshaw
[1902] 1 Ch. 436; 71 L.J.Ch. 230; 86 LT. 253
W. B. by his will left his son A. B. a power of appointment in favour of
A. B.’s children. By his will A. B. made an appointment in part in favour of his son for life, with a remainder which was void for perpetuity. He also made a bequest of his own property to his son. The four children of the son sought to compel the son to elect between the property he took through the invalidity of the remainder and the other benefits received under A. B.’s will.
KEKEWICH J. [quoted the statement of Lord Cairns in Cooper v. Cooper (1875) L.R. 7 H.L. 53, 67] : . . . “The rule, as was said during the argument at the bar, does not proceed either upon an expressed intention, or upon a conjec ture of a presumed intention, but it proceeds on a rule of equity founded upon the highest principles of equity, and as to which the Court does not occupy itself in finding out whether the rule was present or was not present to the mind of the party making the will.” I am not going to suppose that this testator wished to fulfil this gift, which the law did not enable him to fulfil, by the doctrine of election or anything depending on it. If the doctrine of election applies, it is because of those high principles of equity of which Lord Cairns speaks. The testator Arthur Bradshaw had a power to appoint among children. He pur ported to exercise the power so as to give to persons to whom the law would not allow him to give, by reason of the rule against perpetuities, and therefore the appointment to those persons was bad. The result is that the property which he purported to dispose of goes to those who, under the original will of William Bradshaw, take in default of the exercise of the power of appointment; but to
those very persons Arthur Bradshaw has given what Kay J. refers to as ” free disposable property “-property which was his own and which he might give, in a legal manner, as he pleased; the result being that those persons who take in default of appointment are themselves beneficiaries under Arthur Bradshaw’s will. If the doctrine of election applies, it compels them to make good out of what they take the interests which are defeated by their insisting, as they do, upon the appointment being void for remoteness. I do not myself see what the difference in principle is between an appointment becoming void for that reason, and an appointment such as is mentioned by Kay J., referring to Whistler v.
Webster ( (1794) 2 Ves. 267), to persons who are not objects of the power. Whether the appointment fails because it offends against some rule of law, or whether it fails because it offends against the rule of construction of the will, which is that the donee may appoint to certain persons and no others, seems to me, with all deference to those who entertain a contrary opinion, not to matter one jot. In either case it fails, and on its failing the property goes to those who take in default of appointment. But it has seemed otherwise to other judges, and I have to determine whether I can properly follow those other judges. [His Lordship referred to Wollaston v. King (1869) L.R. 8 Eq. 165.] The only other case in which the point has been dealt with is In re Warren’s Trusts
( (1884) 26 Ch.D. 208). There Pearson J. really had not the point directly before
him in the general discussion of the case. When he came to the end, there was apparently a point raised by Mr. Everitt, who referred to Wollaston v. King,
and Pearson J. said this: “How can there be any question of election? I must
read the will as if the invalid appointment were not in it at all. The ordinary case of election is when a testator attempts to give by his will property which belongs to some one else. Such a gift is not ex facie void. In the present case it is the law which disappoints the appointee. The gift is void ex facie.” He says that election does not apply to this case because he has not got in the will that which raises it, and he says he has not got that because the gift being ex facie void he is bound to read the will as if it were not there. With great respect to the learned judge, I cannot help thinking there is a slip in his conclusion. You cannot say, as it seems to me, that the gift is not in the will. The gift is in the will, and is void, and because it is void the case of election arises; and if I am right in saying that there is no substantial distinction between an appointment to a person not an object of the power and an appointment to a person who cannot take because of the law against perpetuities, then the doctrine of election must be applied….
There must be a declaration that the persons who take in default of appoint ment must elect between what they so take and their interests in the property of the testator Arthur Bradshaw which passed by his will.
Wollaston v King
(1869) L.R. 8 Eq. 165; 38 L.J.Ch. 61, 392; 20 L.T. 1003; 17 W.R. 641
JAMES V.-C.: … I have endeavoured to extract from [the] cases a principle which I can apply to the decision of the case before me. The rule laid down by the Master of the Rolls in Whistler v. Webster ( (1794) 2 Ves. 367) is, in general terms, “that no man shall claim any benefit under a will without conforming, so far as he is able, and giving effect to everything contained in it whereby any disposition is made shewing an intention that such a thing shall take place.”
This rule, expressed in these terms, was certainly not applied in the case of Carver v. Bowles ( (1831) 2 Russ. & My. 301) and the cases which followed it. There it was clear that certain persons were intended to take benefits under the will, and other persons were allowed to take other benefits without conforming to, and giving effect to, the first dispositions, and, in fact, after defeating them. But why? The only intelligible principle which I can find is that jt was held that the failure of the first dispositions, so far as they failed, did, under the will itself, enure for the benefit of the legatees; that the legatees were allowed to retain both benefits because they took both as legatees under the will itself without calling in aid any other instrument or any adverse title. It results in this, that the rule as to election is to be applied as between a gift under a will and a claim dehors the will, and adverse to it, and is not to be applied as between one clause in a will and another clause in the same will.
It would seem a very strange thing that in construing the same instrument the Court, dealing with a clause in which a fund is expressed to be given partly to A. and partly to B., should hold that the gift to A. being void, the testator’s intention is that B. should take the whole; and then coming to another clause in which another fund is given to B., and no mention of A. at all, it should hold that there is an implied condition that B. should give back part of that which it was the testator’s intention that he should take. It is also material that the reason why the gift fails is that there was an attempt to create a power in violation of the rules of law. I apprehend that it is not for this Court to aid such an attempt, either by the application of the doctrine of election or otherwise.
The great difficulty, moreover, of applying the doctrine of election to such a case as this is strikingly exemplified in this particular instance by the conflicting claims which have arisen to the benefit which would arise from the application of that doctrine.
The appointees named in the son’s will say, “By the conjoint operation of the two wills the mother has expressed her wish to give us certain benefits which have been intercepted by the daughters. Let the daughters make it good out of the mother’s will.” But the creditors of the son say, “No, you never could have taken the benefits; nothing has ever been intercepted from you; it being a general power of appointment, and the son being largely indebted, any appointment made by him would, by the application of another rule of Equity, have gone to his creditors.” It seems to me that there is great force in this contention of the creditors in destroying any claims of the specific appointees, but that their own equity to compensation by reason of the doctrine of election is far too complicated and remote to entitle them to the interference of this Court. I, however, only rely on this conflict of claims as shewing the prudence of not extending rights under the implication of somewhat refined equities like the doctrine of election, beyond the simple cases which have been decided, and which are sufficient to provide for all cases ordinarily likely to occur, and for all cases for which there is any substantial object in providing.
Re MacCartney
Chancery Division [1918] 1 Ch. 300; 87 L.J.Ch. 143; 118 L.T. 174
NEVILLE J.: … That there is an equitable principle applicable to somewhat similar cases is well recognized. It is sometimes referred to as a principle of election, sometimes of compensation, sometimes-by those who prefer Scotch legal expressions to English-of approbation and reprobation. But it seems to me that, although these expressions are each of them applicable in the case of particular instances within the doctrine, the doctrine is wider. The simplest instance of it is where a testator purports to dispose of property to A., which in fact belongs not to the testator but to B., while B. himself takes benefits under the will. B. cannot accept the benefits given to him by the will unless he will surrender his right to his own property in favour of A. In this case the doctrine imposes the necessity of election. In the case of Pickersgi.ll v. Rodger ( (1876) 5 Ch.D. 163; supra, p. 294) it is treated as a doctrine of compensation; and see Rogers v. Jones ( (1876) 3 Ch.D. 688), where Sir G. Jessel gave compensation to an amount not exceeding the benefits under the will. But these cases are only instances of the application of an equity which may arise under a great variety of circumstances. In Pickersgill v. Rodger Sir G. Jessel thus states the principle: ” ‘ You are not allowed by a Court of Equity to take away out of the testatrix’s estate that which you would otherwise be entitled to, until you have made good to me the benefit she intended for me.’ That means that no one can take the property which is claimed under the will without making good the amount; or, in other words, as between the devisees and legatees claiming under the will, the disappointed legatees are entitled to sequester or to keep back from the other devisees or legatees the property so devised and bequeathed until compensation is made. Thence arises the doctrine of an equitable charge or right to realize out of that property the sum required to make the compensation.” What is the equity? If I may hazard a definition I should put it thus : ” A volunteer under a will cannot take the benefit and at the same time wilfully defeat the expressed intentions of the testator.” I say wilfully, because in the case of In re Lord Chesham ( (1886) 31 Ch.D. 466; supra, p. 292), before Chitty J., the case was held not within the rule because the volunteer was ready to do what he could to fulfil the intention of the testator. But it has been argued that the equity does not arise where the testator’s intention is defeated by a volunteer who has no property in the subject of the testator’s gift except such as he acquires under the will; that in the present case were the Malta Tramways, Limited, beneficiaries under the will they could not take without surrendering the 30001., but that the principle does not apply to the legatees of the shares in Macartney, McElroy & Co., Limited, because the interest they have in the stock is derived solely from the will. Now it is obvious that where two people claim the same property of a testator under his will, in the majority of cases the question must be to which of them the testator intended to give it, and a question of construction is raised to which the principle cannot apply. Here there is no doubt about the testator’s intention, nor is there any doubt that under the will the legatees of the shares in Macartney, McElroy & Co. will acquire almost the whole of the beneficial interest in the stock which the testator undoubtedly gave to Maggie Macartney. It appears to me, therefore, that the present case comes within the principle, and I must give effect to it unless I am bound by authority to adopt the contrary view. It is said that Wollaston v. King ((1869) L.R. 8 Eq. 165; supra, p. 298), before James V.-C., is such an authority, and I must therefore examine it. The case of W ollaston v. King is, as it appears to me, an authority only for the proposition that where an appointment by will under a power fails as creating a perpetuity and benefits are given by the will to the persons who benefit in respect of the appointed fund by failure of the appointment, no question of so-called election arises….
Sweetman v Sweetman
(1868) 2 I.R.Eq. 141
CHATTERTON V.-C.: Therequisites for holding a party bound by an election as concluded are, I think, these: -first, he must have a knowledge of his rights,that is to say, he must know that the property, which the testator attempted to give to another person, was not the testator’s property, and that it would, upon the testator’s decease, become, independently of the testator’s will, the property of the party called upon to elect. It must be known by him, as a matter of fact, that the testator had not the power to give the property which he purported to devise, and that it belongs, not by the will, but by an earlier title, to the person who is called upon to elect. Next, he must know the relative values of the properties between which he is called upon to elect; and further, he must know, as a matter of fact, and not as a presumption of law, that the rule of equity exists, that he cannot, under such circumstances, take both estates, but must make an election between the two. And, further, the Court must be satisfied that he made a deliberate choice with the intention of making it. That is per fectly ascertained law; and I need not go beyond the case of Spread v. Morgan ( (1865) 11 H.L.C. 588), as every one of these propositions was there laid down by the House of Lords.
But when I say that these propositions must be established to the satisfaction of the Court, I do not mean to say that there must be in every case actual, direct evidence of the existence of them. From a long course of dealing, from a series of acts, the Court is at liberty, as an inference of fact, to conclude that the party called upon to elect knew his rights, knew the value of both estates, and knew the rule of equity, that he was bound to elect, and had, with that full know• ledge, made his choice, with the intention of making it, and of electing between the two estates. To justify the Court, however, in arriving at that conclusion, there must be a series of acts or dealings, consistent only with the knowledge which I have already mentioned, and with the deliberate intention to elect; or, at least, a series of acts or dealings that preponderates so strongly in the mind of the Court, that no person could come reasonably to any other conclusion; and the onus of proof must rest always upon the party who alleges that the knowledge existed, and that the deliberate choice was made.
Dillon v Parker
(1818) 1 Swan. 359; 36 E.R. 422
Srn THOMAS PLUMER M.R. : … From the undisputed principle, that no one can frustrate an instrument under which he claims, Sir Henry might clearly have been put to his election; but the Plaintiff maintains that he has actually elected. Supposing that election implies intention, a voluntary relinquishment by Sir Henry of the settled estates, an acceptance of the benefits given by the son at the price of renouncing his own property, and, as the term election seems to denote, a preference of one estate as matter of choice; is the fact of election so clearly established that the Court will be authorised in acting on that assumption? It seems difficult to prove all the circumstances necessary to constitute an election; that Sir Henry was apprised of the necessity of electing; that, knowing that he could not hold both the property to which he was previously entitled, and that which was given to him by his son, he voluntarily abandoned the former and took the latter. That he proved the will of his son, and entered on the
devised to him, is not sufficient. Did he not exercise dominion over his own estates as if the son had not devised them? Taking both estates, enjoying that which was his own, and also that given to him by his son, how can it be said that he relinquishes one and elects to take the other? Has he not rather elected to take both? It is clear that he thought the power of disposition which his son had assumed over his estates was in the actual circumstances inoperative; either that it was to take effect only in the event of the son’s surviving, or that for some other reason he was not bound to submit to it; for in less than six weeks from the death of the son, in the next month after proving his will, on the 10th of November 1769, he makes his own, containing a full disposition of his estates, long and elaborate limitations, settling them on his daughters Margaret and Ann for their lives, with successive remainders to their issue and other branches of the family, not considering himself bound by the devise which his son had made to the same daughter in fee. That was not relinquishing the estates, but, as far as choice was concerned, asserting a right to dispose of them, and an actual disposition….
The point made by the plaintiff is, that acceptance binds, and operates for feiture without reference to intent. It is said that Sir Henry accepting his son’s gift, by that act renounced his own estate; that is not election, but forfeiture: if such is the effect of acceptance, even though in ignorance that it was not com petent to the party to retain both benefits, but that on taking one, the conse quence of law was that he renounced the other, then, by inadvertence without choice, an estate may be lost; but in all cases of election the Court is anxious, while it enforces the rule of equity, that the party shall not avail himself of both his claims, still to secure to him the option of either; not to hold him concluded by equivocal acts performed perhaps in ignorance of the value of the fund….
2. Under Sir Henry’s will the land subject to the settlement was devised to his daughters, John’s sisters, for life with remainder over to Sir William Parker. Both daughters of Sir Henry died without issue, but one (Ann) left a will. By this will a house in Salisbury Court was left to the plaintiff, Dillon, her heir-at law, to whom she also left residuary personalty. She left the Talton estate to a person who predeceased her (Sir William’s father). The house in Salisbury Court and the Talton estate were subject to the original settlement and so passed to Sir William. To Sir William Ann left a legacy of £500.
. . . Knowing then that [ the daughters] must elect, what election have they made? Have they claimed under the will of their father, or of their brother? On this subject every principle of argument used to induce the Court to pro nounce, as matter of fact, an election, in the first instance, by Sir Henry, concurs to prove that the daughters elected to abide by his will, and reject that of the son; for it is established, not upon mere presumption, but by direct proof, that they expressly and unequivocally renounced their character of devisees in fee, and adopted the character of devisees for life. Sir Henry never explicitly abandoned his own estate; that dereliction is alleged only as matter of inference from his acceptance of the alternative benefits; but the daughters, adult and competent, by a series of explicit deeds, assume the estates devised by their faather in the character of tenants for life constituted by that devise; a title totally inconsistent with their claim as tenants in fee of the same estates under the will of the son….
In1811, Ann Parker devised the Talton estate to the person who would have been entitled to it under the will of Sir Henry; the Plaintiff claiming, not by any intention of the testatrix in his favour, but as her heir, on failure of the devise. These acts, it may be said, show a disposition to abide by the will of the son; but when in so many other transactions with third persons, the daughters had recog nised their title as devisees for life, could they after so long an interval, assume another character? Can the Plaintiff, insisting that it was not competent to Sir Henry, to claim against his son’s will at the expiration of a month from his death, maintain that in 1811, after the lapse of forty years, Mrs. Ann Parker might, in defiance of these repeated deeds, assert her claim under the will of the son? The letters of Mrs. Ann Parker to Sir Harry Parker concur to prove that she elected to take under her father’s will.
On this evidence, I am of opinion, that the Plaintiff has not established the second proposition on which his title depends, namely, that the daughters never elected to take under their father’s will. I cannot pronounce the equitable right of the Plaintiff, which, if it exists at all, existed in those ladies forty years ago, so clearly proved, is to authorise me to make the declaration prayed against the legal estate of the Defendant. That legal estate has constantly remained with the title, which the Plaintiff seeks to impeach, by establishing a disposition, the validity of which requires the supposition of facts, of which I find no sufficient evidence. So much of the bills, therefore, must be dismissed. With respect to the supplemental bill, which calls on the Defendant to make his election of taking under or against the will of Mrs. Ann Parker, and, if he retains the house in Salisbury Court, to relinquish the legacy of £500, to that relief the Plaintiff is entitled.
Re Lord Grimthorpe
Court of Appeal [1908] 2 Ch. 675; 78 L.J.Ch. 20; 99 L.T. 679; 25 T.L.R. 15
COZENs-HARDY M.R.: . . . What was the result [of the settlement] ? The property could not be sold until after the settlor’s death. At the very moment that the trustees came into possession, and when alone any duty or power was vested in the trustees, there was no enforceable trust; for I think it is well settled that as between the executors and the heir, or, putting it more generally, between the real and personal representatives of a deceased person, there is no equity. Or, in other words, the executors could not have maintained an action, on the settlor’s death, against the heir-at-law requiring him to sell the property and to pay the proceeds over to the executors as part of the settlor’s residuary estate. This seems to me to be reasonably plain in principle, and I think there is ample authority for it, the real test being this: Aye or No, was there an enforceable trust for sale? If there was, then, no doubt, conversion would take place, and would take place with all its full consequences and effects; but if there was no enforceable trust for sale, then the property is, to use a phrase which is com monly found in some of the old authorities, “at home.” It was real estate de facto, and the Court will not, in favour of the personal representative and as against the real representative, convert it into money. The case of Davenport v. Coltman ( (1842) 12 Sim. 610), which I mentioned in the argument, seems to me to be, if necessary, a sufficient authority on that point.
We have been pressed with the case of Attorney-General v. Hubbuck ( (1884) 13 Q.B.D. 275) and with the case of Clarke v. Franklin ( (1858) 4 K. & J. 257) and other cases, but they are broadly distinguished from the present by that which is the vital difference; in all those cases there was an enforceable trust; there were people who could require the property to be converted, and the trustees had both a power and a duty to discharge; and then the doctrine of notional conversion applied, with all its full consequences. When once you get to this fact, that there was no human being who from the first moment when the trust came into operation till the present day could have enforced the trust for sale, it seems to me that the whole argument fails, and that this was, in the events which have happened, real estate of the settlor which passed under his will as such….
Re Kempthorne
Court of Appeal [1930] I Ch. 268
LORD HANWORTH M.R.: . . . We have to apply to the devise of “all my freehold and copyhold property ” in this will the law contained in the Law of Property Act, which subjects property held in undivided shares to a trust for sale, and thus converts it into personalty. Maugham J., in his judgment, with which I entirely concur (and, indeed, to which I should have added nothing, save for the careful argument that we have had presented to us) has decided in this sense, following the judgment of Clauson J. in In re Price ([1928] Ch. 579). He cited and followed this passage in the judgment of Clauson J.: “The result of this survey of the new Acts seems to show that on January 1, 1926, Thomas John Price ceased to have any estate in the fourteen acres or any part of it and became entitled to an equitable interest in the proceeds of sale of the fourteen acres.” I, like Maugham J., desire to adhere to what is said by Clauson J. in that passage.
There remain two other cases which have been cited to us. One is In re Wheeler ([1928] W.N. 225), and the other is In re Mellish ([1928] W.N. 226),
which is referred to in In re Wheeler. Neither of those cases to my mind covers the point that we have to decide. In In re Mellish Eve J. held that there was an
effective devise, which was not altered by the Law of Property Act. The terms of the devise there were, ” All his share and interest in an estate known as the Rushall estate in the county of Stafford to the defendant Buchanan in fee-simple.”
Eve J. held that those words were sufficient to constitute a definite devise of the
undivided shares of that estate which had belonged to the testator, and took
effect as a bequest of all the testator’s interest therein and the proceeds of sale thereof. In In re Wheeler Tomlin J. held that the words in the case before him were sufficiently similar to those in In re Mellish to justify his deciding in the same way as Eve J. The gift in that will was of the testator’s interest “in an
undivided moiety of the real estate in the County of York.” Tomlin J. held that
s. 16, sub-ss. 4 and 5, operated, and that Sir Delaval Cotter took the estate indicated and was bound to repay under sub-s. 5 of s. 16, the duty which had been paid in respect of it.
Those two cases are to my mind based upon the interpretation given to the gifts in the two wills which the two learned judges found to be specific bequests. We, however, have to deal with a devise in general terms of “All my freehold and copyhold property.” Those general words must be construed in accordance with the directions of the Legislature in the new statutes. Inasmuch as the land in which the testator owned undivided shares is subjected to a trust for sale, the general devise is not adequate to cover the proceeds of sale. The property has been turned into personalty, with the result that this devise fails.
Russell L.J.: . . . The next question which arises is what is the effect of the Act upon the disposition made by this testator in his will? That has been called the ademption point; but I am not sure that this is a strictly accurate description. The position is this. The testator has died leaving a will in which he makes a disposition in general terms of “all my freehold property,” and also makes a general disposition of all his personal estate. The question is which of those two dispositions carries this particular interest of the testat?r? When once the con clusion is reached that the effect of the Act 1s to turn his freehold property so far as it consisted of undivided shares into personal estate, there can be only one answer to the question-namely, that the property passes under the general gift of the testator’s personal estate….
Re Sturt
PETERSON J. : . . . It is contended that no person who takes under the will can deny that what the testator has treated as land ought to be treated as land and that they have no equity to insist that it is personalty. But this is not in my opinion a sound argument. If the property is in the eyes of the law personalty the testator could not by the provisions of his will dispose of it to uses and upon trusts which the law does not admit in the case of personalty; he cannot convert the personalty into land by declaring that it is to be deemed to be land or by declaring that it is to devolve as land. He can only effect his purpose by a trust for conversion: see In re Walker ([1908] 2 Ch. 705) and In te Aspinall’s Settled Estates ([1916] 1 Ch. 15). If in law the property is personalty the only interests which can be created in it, in the absence of a trust to convert into land, are those which are permissible in the case of personalty. Thus, if a testator settles personalty in strict settlement as if it were real estate, the first tenant in tail, subject to any preceding life interest, takes the absolute interest, although this manifestly defeats the intention of the testator that the property shall go to suc cessive tenants in tail. But a testator who is absolutely entitled under a settlement of land upon trust for sale may by his will elect to take the property in its uncon verted state. His election would operate as a reconversion of the personalty into realty….
Threeal question is whether that which has happened amounts to a recon version or, in other words, was Colonel Sturt able to elect to take the property comprised in the settlement of 1880, which has never been sold, as land, and, if he was, is his will sufficient evidence that he elected to do so? If he was com petent to elect I feel no doubt that the dispositions of his will show that he did elect. The limitations of “The Priory” are consistent only with the view that Colonel Sturt thought that the property he had to dispose of was land and that he intended to dispose of it as land: see In re Lord Grimthorpe ([1908] 2 Ch. 675) and Meek v. Devenish ( (1877) 6 Ch.D. 566). The difficulty which gave rise to the greater part of the discussion in this case was caused by the question whether Colonel Sturt ever was in a position to elect to take as land what was in the eyes of the law personal estate….
None of the cases to which I have been referred establish that a man, who at his death has only a contingent or defeasible interest, can by his will effect a reconversion which becomes operative if the contingent interest becomes an absolute interest at some time after his death. No case has gone further than Meek v. Devenish, and the decision in that case was that a man who is entitled absolutely in a contingent event, may, before the contingent event happens, effectually elect to reconvert if the event happens before his death.
In my opinion Colonel Sturt was not competent to effect a reconversion by his will, as at his death he was only contingently entitled to the proceeds of sale of the property comprised in the settlement. He died before the interest became absolute and never was in a position even with the concurrence of his wife to require the trustees of the settlement to convey the property to him. It is fallacious to say that Colonel Sturt became entitled to an absolute interest; he never had more than a contingent interest. It was his successors who became entitled to the absolute interest when the contingency happened….There is one other suggestion with which I ought to deal. It is said that a person contingently entitled to proceeds of sale of land settled upon trust for sale can by his will provide that if after his death the interest becomes absolute and the property has not then been sold it shall go as land to the uses created by his will. Whatever might be the effect of such a direction it is not the provision made by this will. The case supposed is that of a contingent devise of fee simple estate, while the devise in this case is an immediate gift of a contingent interest. But it may also be observed, that in the case supposed, until the contingency happened the testator’s interest would either pass under a gift of residue or devolve as personalty which had not been disposed of. In the case of a will which contained a residuary bequest such a disposition would give the testator’s interest in the proceeds of sale until the contingency happened to the persons entitled to his residuary personal estate, and provide that when the contingency happened the property should go away from the persons absolutely entitled to the personalty and pass to other persons as real estate. This is, I think, very far from what the testator has done in this case.
Re Thomas
Chancery Division (1886) 34 Ch.D. 166; 56 L.J.Ch. 9; 55 L.T. 629
The testator had entered into a contract to sell land but had not completed the sale. The sale was rescinded after the testator’s death for lack of title. By the will all the real estate was to be sold and £1,000 to be invested, the income of which was for the widow. The court was asked whether there was conversion.
KAY J.: . . . There can be no doubt that if it was a binding contract it would operate as a conversion, and what took place after the testator’s death would be immaterial. . . .
It is said that there is a rule in Equity that where a vendor has entered into a contract for the sale of property to a portion only of which he can make a title, he can be compelled to convey that portion, and to make compensation in respect of the rest. Whether such a rule would apply to this case, I do not consider. There may be such a rule in Equity where the purchaser comes for specific per formance, but this is rather by way of alteration than performance of the contract. The question in the present case is whether there was a binding con tract. The point arose before the late Master of the Rolls, in the case of Lysaght
v. Edwards ( (1876) 2 Ch.D. 499), though no doubt under different circum stances. The question there was whether by virtue of a contract for the sale of real estate the property became converted in Equity, so that the vendor who died before completion, was only a trustee of the property, and whether it therefore passed under a devise of trust estates in his will. That is obviously only a different mode of trying the same question. Here, if the contract was valid, and there had been a devise of trust estates, the property would have passed by the devise. The Master of the Rolls says this: –
” In other words, the position of the vendor is something between what has been called a naked or bare trustee, or a mere trustee (that is, a person without beneficial interest), and a mortgagee who is not, in equity (any more than a vendor), the owner of the estate, but is, in certain events, entitled to what the unpaid vendor is, viz., possession of the estate and a charge upon the estate for his purchase-money. Their positions are analogous in another way. The unpaid mortgagee has a right to foreclose, that is to say, he has a right to say to the mortgagor, ‘ Either pay me within a limited time, or you lose your estate,’ and in default of payment he becomes absolute owner of it. So, although there has been a valid contract of sale, the vendor has a similar right in a Court of Equity; he has a right to say to the purchaser, ‘ Either pay me the purchase money, or lose the estate.’ Such a decree has sometimes been called a decree for cancellation of the contract; time is given by a decree of the Court of Equity, or now by a judgment of the High Court of Justice; and if the time expires with out the money being paid, the contract is cancelled by the decree or judgment ot the Court, and the vendor becomes again the owner of the estate. But that, as it appears to me, is a totally different thing from the contract being cancelled because there was some equitable ground for setting it aside. If a valid contract is cancelled for non-payment of the purchase-money after the death of the vendor, the property will still in equity be treated as having been converted into per sonalty, because the contract was valid at his death; while in the other case there will not be conversion, because there never was in equity a valid contract. Now, what is the meaning of the term ‘ valid contract ‘? ‘ Valid contract ‘ means in every case a contract sufficient in form and in substance, so that there is no ground whatever for setting it aside as between the vendor and purchaser-a contract binding on both parties. As regards real estate, however, another element of validity is required. The vendor must be in a position to make a title according to the contract, and the contract will not be a valid contract unless he has either made out his title according to the contract or the purchaser has accepted the title, for however bad the title may be the purchaser has a right to accept it, and the moment he has accepted the title, the contract is fully binding upon the vendor. Consequently, if the title is accepted in the lifetime of the vendor, and there is no reason for setting aside the contract, then, although the purchase-money is unpaid, the contract is valid and binding; and being a valid contract, it has this remarkable effect, that it converts the estate, so to say, in equity; it makes the purchase-money a part of the personal estate of the vendor, and it makes the land a part of the real estate of the vendee; and therefore all those cases on the doctrine of constructive conversion are founded simply on this, that a valid contract actually changes the ownership of the estate in equity.”
And further on he says this : ” If, on the other hand, the title, being bad and not having been accepted, was in such a state at the time of his death that the purchaser was entitled to refuse the estate, then there was not a valid contract to sell; there was nothing which would have been binding upon the testator’s heir, under the doctrine of constructive conversion; and then the testator would have been entitled to the real estate, to the freehold estate free from any contract at all, because the contract he had entered into was not binding.”
If I may respectfully say so, that is a statement of the doctrine in which I entirely concur; and therefore, in this case, the title being bad at the time of the testator’s death, and not having been accepted by the purchaser in the testator’s lifetime nor since his death, and the contract itself having been rescinded because of its invalidity, I am of opinion that the contract did not effect any conversion of the estate in Equity.
Edwards v West
Chancery Division (1878) 7 Ch.D. 858
FRY J.: . . . Where there is a contract capable of being specifically enforced as from the date of that contract, and neither earlier nor later, the property comprised in the contract is deemed to belong to the purchaser, and the money to be paid is deemed to belong to the vendor, because those two things ought to be done; but here there is no obligation to do them at any earlier date than that of the contract constituted by the exercise of the option. The conversion cannot, according to the principle, relate back to an earlier date than the contract which gives rise to it. I refer to the cas: o Haynes _v. Haynes ( (18 1) 1 Dr. & Sm. 426) as an authority for that general pnnc1ple, and 1t appears to be important.Upon that general principle, then, I should hold that the argument is untenable. But, then, I am told that the case is covered by authority, and for that purpose my attention is very properly drawn to the cases which begin with Lawes v. Bennett ( (1785) 1 Cox 167), and which shew that where there is a contract giving an option to purchase real estate, and the option is not exercised till after the death of the person who created the option, nevertheless the produce of the sale goes as part of his personal estate, and not as part of his real estate. Now, whether Lawes v. Bennett is or is not consistent with the general principle upon which conversion has been held to exist, it is not for me to say. It is enough for me to say that the case has been followed in numerous other cases, though it has been observed upon by more than one Judge as somewhat difficult of explanation. I think that the language of Lord Eldon in Townley v. Bedwell ( (1808) 14 Ves. 590), and of Vice-Chancellor Kindersley in Collingwood v. Rew ( (1850) 3 Jur.(N.s.) 785), shews that they were not satisfied that that case was consistent with the general principles which were applicable to cases of conver sion; and therefore, although I should implicitly fo1low Lawes v. Bennett in a case between the real and personal representatives of the person who granted the option, I do not think that I am at liberty to extend it so as to imply that there is conversion from the date of the contract giving the option as between the vendor and the purchaser who claim under it. It is to be borne in mind that no authority can be produced which has extended the doctrine of Lawes v. Bennett in the slightest degree beyond what was decided in that case. The principle, whatever it be, has never been applied except as between the real and the personal representatives of the original creator of the option, and I for one shall not extend it, because I think that it is limited by the general principle to which I have adverted. Therefore, upon that ground, I hold that there is no conver sion of the estate from an earlier date than the 28th of September, when the notice was given. The fire having taken place, and the insurance money having been received at an earlier date, the intended purchaser has no right, upon the general principles of conversion, to assert a title to that money.
The principle in Lawes v. Bennett is only a prima facie guide to the testator’s intention. In Weeding v. Weeding (1859) 1 J. & H. 424 PAGE Wooo V.-C. said: Conceiving the principle to be settled by the authorities I have mentioned, the only question is whether the case falls within the exception recognized b)’ the cases of Drant v. Vause ( (1842) 1 Y. & C.C.C. 580) and Emuss v. Smith ( (1848)
2 De G. & Sm. 722). I understand the principle on which those cases were decided to be this : When you find that, in a will made after a contract giving an option of purchase, the testator, knowing of the existence of the contract, devises the specific property which is the subject of the contract without referring in any way to the contract he has entered into, there it is considered that there is sufficient indication of an intention to pass that property to give to the devisee all the interest, whatever it may be, that the testator had in it. This was the nature of both the authorities relied on, for, in one, the contract was before the will, and, in the other, the same effect was produced by the subsequent republication of the will.
But the case is very different when, after having given the property by will, the testator makes a sale of it. If it is a sale out and out, there is no question that the devisee’s interest is taken away. Here, the testator first gives the Kentish Town estate to certain devisees, and his personalty to other persons. After that a part of the estate ceases to be Kentish Town estate and becomes personalty. There is no republication of the will after the contract by which this change would, in a certain contingency, be brought about. The intention is that all the Kentish Town property is to go one way, all the personalty another. The testator must be taken to have known, when he had entered into the contract, that what would ultimately be Kentish Town estate would depend on the option of the lessee; and the inference is that he meant his property to go according to the state to which it would be reduced by the exercise of that option.
The case is, in principle, on all-fours with Lawes v. Bennett ( (1785) 1 Cox 167).
Smith v Claxton
(1820) 4 Madd. 484; 56 E.R. 784
THE VICE-CHANCELLOR [Sir John Leach]: The inaccuracy of some expres sions, which are to be found in the books, has created much of the difficulty which arises in cases of this kind. I have anxiously considered every authority which has been referred to; and my endeavour has been to extract from them certain general principles which may admit of clear application. Where a devisor directs his real estate to be sold, and the produce to be applied to particular purposes, and those purposes partially fail, the heir at law is entitled to that part of the produce which in the events is thus undisposed of. The heir at law is entitled to it, because the real estate was land at the devisor’s death; and this part of the produce is an interest in that land not effectually devised, and which therefore descends to the heir. It is for this reason that the produce of an estate, which the devisor directs to be sold, can never be strictly part of his general personal estate. If a devisor directs such produce to be paid to his executors, and applied as part of his personal estate, the executors take it as devisees. Every person, taking an interest in the produce of land directed to be sold, is in truth a devisee, and not a legatee. A devisor may give to his devisee either land, or the price of land, at his pleasure; and the devisee must receive it in the quality in which it is given, and cannot intercept the purpose of the devisor. If it be the purpose of the testator to give lan tothe ?evisee, e land will descend.to h!s heir; if it be the purpose of the dev1sor to gwe the pnce of land to the dev1see, it will, like other money, be part of his personal estate. Under every will, when the question is, whether the devisee or the heir_ fa ling, the devisee t kes an interest in land, as land or money, the true enqwry 1s; whether the dev1sor has expressed a purpose that, in the events which have happened, the land shall be converted into moneyi’ Where a devisor directs his land to be sold, and the produce divided between A. and B., the obvious purpose of the testator is that there shall be a sale for the convenience of division; and A. and B. take their several interests as money, and not land. So, if A. dies in the lifetime of the devisor, and the heir stands in his place, the purpose of the devisor, that there shall be a sale for the convenience of division, still applies to the case; and the heir will take the share of A. as A. would have taken it-as money, and not land. But in the case put, let it be supposed that A. and B. both die in the life time of the devisor, and the whole interest in the land descends to the heir; the question would then be, whether the devisor can be considered as having expressed any purpose of sale applicable to that event so as to give the interest of the heir the quality of money. The obvious purpose of the devisor being that there should be a sale for the convenience of division between his devisees, that purpose could have no application to a case in which the devisees wholly failed, and the heir would therefore take the whole interest as land.
To apply these principles, which I apprehend to be the true result of all the authorities, to the present case: Under the first devise, the estate is directed to be sold, and the produce applied in aid of the personal estate, in payment of debts and legacies; and the surplus is given to the wife. The debts and legacies are fully paid out of the personal estate; and the wife dies in the testator’s lifetime. The whole interest thus resulted to Thomas the heir; and the devisor’s purpose of sale being plainly for a distribution, according to the will, has no app1ication to the events which have happened, and Thomas took the estate as land, which descends in that character to his heir.
Under the second devise, there is an obvious purpose of sale for the con venience of division between the sons of Thomas, or failing them, between the devisor’s sons Joseph and Robert. The only son of Thomas, and the devisor’s son Robert, both die in the devisor’s lifetime, and Thomas the heir becomes entitled, by lapse, to the moiety of the produce intended for Robert. The pur pose of sale for convenience of division still applies to the events which have happened, and this moiety is not land, but personal estate of Thomas the heir.
Under the third devise, there is the same obvious purpose of sale; first, for a division between the children of Robert; and failing, then between Thomas the heir and Joseph. There were no children of Robert, but the purpose of sale remains; and this moiety also is not land, but personal estate of Thomas the heir. …
Re Richerson
Chancery Division (1892] I Ch. 379; 61 L.J.Ch. 202; 66 L.T. 174; 40 W.R. 233; 36 S.J. :’.00
CHITTY J.: . . . The contest is not between the testator’s next of kin and the heir, but between the heir of the heir on the one hand, and the legal personal representatives of the heir or the persons entitled to his personal estate on the other. For the persons entitled to the heir’s personal estate it is argued that, there being in this will an absolute trust for conversion, their title vested in interest on the death of the heir. For the heir of the heir it is contended that the title shifted from time to time and as sales were made, and that as each sale was made the title of the heir of the heir was divested and passed to the heir’s next of kin. Inasmuch, however, as some portion of the real estate remains unsold, it is argued for him-that is, the heir of the heir-that the right rule is that, there eing no equity between the real and personal representatives of the deceased heir to reconvert the property, it must be taken in the actual state in which it is. On the other hand, on behalf of the next of kin or the persons entitled to the personal estate of the heir, it is argued that the title was fixed at her death by reason of the trusts of the will. It is true, as I have said, that the heir of the heir does not claim as a person to whom a benefit is given directly in terms by the will, but it is quite clear that he takes by way of resulting trust, and the proposition which is stated by Jessel, M.R., in Curteis v. Wormald ( (1879) 10 Ch.D. 172), appears to me to be a correct way of putting the case. Having referred to Ackroyd v. Smithson ( (1780) 1 Bro.C.C. 503), he says: “The result is that in the case I put there is a trust for the next of kin.” He is there dealing with the converse case of personal estate directed by the will to be applied in purchasing real estate; and merely altering the language to make it suit this corresponding case, I adopt his expression, and say that there is a trust for the heir. But a trust for the heir of what? Clearly, a trust of the personal estate. It appears to me that the decisions have always gone upon the footing that the heir who takes under circumstances such as these takes the property in the state into which it is converted by the will. Where there is a partial undisposed interest of real estate directed to be sold, that interest results to the heir of the testator and it becomes personal estate in his hands; of course, so long as he is alive it is immaterial whether it is real or personal estate; but on his death it seems to me, that on principle as well as by virtue of the authorities which are summarized in Jarman on Wills, that the proposition I have just stated is correct, and I do not remember in my experience to have heard it questioned. There is the other proposition, namely, that, if the purposes of the direction for conver sion in the will wholly fail-that is, if all the legatees of the moneys to be pro duced by the sale die in the testator’s lifetime, so that there is a total failure of the objects for which the conversion was to be made-the property will devolve upon the heir as real estate. But I have to deal with the case of partial failure. If the argument for the heir of the heir is correct, it is difficult to understand why the numerous authorities which distinguish the cases of total and partial failure should have ever been brought into controversy. It would have been sufficient to say, “Never mind what the trusts of the will are; whether it is an absolute conversion or not, all you have to do to ascertain the rights of the real and personal representatives of the heir is merely to look to the actual state in which the property is, and there is an end to the question ”
Thcoensequences of partial failure of the objects of conversion differ according to whether the conversion is directed by will or by deed. The reason is explained by Wigram V.-C. in Griffith v. Ricketts (1849) 7 Hare 299, 311-312.
WrGRAM V.-C.: . . . But a deed differs from a will in this material respect. The will speaks from the death, the deed from delivery. If, then, the author of the deed impresses upon his real estate the character of personalty, that, as between his real and personal representatives, makes it personal and not real estate from the delivery of the deed, and consequently at the time of his death. The deed thus altering the actual character of the property is, so to speak, equivalent to a gift of the expectancy of the heir at law to the personal estate of the author of the deed. The principle is the same in the case of a deed as in the case of a will; but the application is different, by reason that the deed converts the property in the lifetime of the author of the deed, whereas, in the case of a will, the conversion does not take place until the death of the testator, and there is no principle on which the Court, as between the real and personal representa tives (between whom there is confessedly no equity), should not be governed by the simple effect of the deed in deciding to which of the two claimants the surplus belongs. It was in this view of the case that I observed during the argument that the status in which the property was found could not, as it appeared to me, affect the question to whom it belongs.
Amphlett v Parke
Court of Chancery in Appeal (1831) 2 R. & M. 221; 9 L.J.(o.s.)Ch. 161; 39 E.R. 379
LORD BROUGHAM : The general principle appears to be, that the heir must be effectually displaced, that he is not to be displaced by inference or implication, but that there must appear a clear, substantive, and undeniable intent on the part of the devisor or testator to exclude him….
A good deal was said of Ackroyd v. Smithson ( (1780) 1 Bro.C.C. 503), chiefly on account of Lord Eldon’s most able argument in that case; but the case has, in fact, no application; for the contest there lay, not as here, between the heir and residuary legatees, as might at first be supposed, but between the heir and the next-of-kin, each claiming as undisposed of, a lapsed share of residue, the produce of real estates directed to be sold. As to that there can be no doubt; for it is admitted on all hands, that unless the next-of-kin is made a specific donee he never can stand in competition with the heir at law.
It was held that the property reverted to the heir at law.
Cases Satisfaction
Taylor v Cartwright
(1872) L.R. 14 Eq. 167; 41 L.J.Ch. 529; 26 L.T. 571; 20 W.R. 603
WICKENS V.-C.: … There is no presumption of law that the pay ment of a sum of money to a child, even by a father, before the date of the will is to go against a legacy to that child. If there be a contract by the child that it shall do so, as in Upton v. Prince ( (1735) Cas.t.Talb. 71) that contract may be perfectly valid. If the child is informed by the testator that he is intended to take the legacy on the understanding that he shall make good a certain sum to the other residuary legatees, and acquiesces in it, that might possibly be binding on his conscience, as in the analogous case of secret trusts. But it would be difficult, I think, in any case to hold that a gift by the will of A’s father to A for life, with remainder to his children, was adeemed by anticipation, by a gift to A made long before the will; though the testator, when he made the.gift, verbally, intimated that his intention was that it should have that effect….
Monterfiore v Guedella
(1859) 1 De G.F. & J. 93; 125 R.R. 367
T
LORD CAMPBELL: • It has been said that neither can there be an ademption where a testamentary gift is of the residue of the testator’s personal property, nor can such testamentary gift operate as a satisfaction of a covenant to make a provision to a given amount for a child. This position rests on no principle, and, if strictly acted upon, would produce great injustice. The doctrine of ademption has been established for the purpose of carrying into effect the intention of fathers of families in providing for their children, and of preventing particular children from obtaining double portions, contrary to such intention. The only reason for the exception when the testamentary gift is of residue is, that a residue is uncertain, and may be worthless. A will may be made under such circumstances, and may be so worded as to shew that the testator considered the residue of insignificant value, and there it may be proper to hold that he did not intend that this should be in satisfaction of a covenant to make provision for a child, and that he did not intend any subsequent advance to a child to be an ademption of the bequest of the residue. But if a testator, after directing his executors to pay debts, funeral expenses and legacies, goes on to say, “and whereas, I wish all the residue of my personal property to be equally divided among my three children, I direct that each of them shall receive one-third of the said residue : ” and afterwards, between the making of his will and his death, he advances £5000 to a daughter on her marriage, or to a son to purchase a commission in the army, can there be any doubt that he meant this sum to be deducted from the one-third of the residue coming to the daughter or the son?
KNIGHT BRUCE L.J.: . . . I have considerable doubt as to the law of the case. As to the good sense of it, however, I have none.
Pym v Lockyer
(1841) 5 My. & Cr. 29; 10 L.J.Ch. 153; 5 Jur. 34; 12 Sim. 394; 48 R.R. 219
LORD CoTTENHAM: . . . The first question to be asked is, whether the sums given are to be considered as portions, or as mere gifts; and, upon this subject, certain rules have been laid down, all intended to ascertain and to work out the intention of the giver. In the case of a parent, a legacy to a child is presumed to be intended to be a portion; because providing for the child is a duty which the relative situation of the parties imposes upon the parent: but that duty, which is imposed upon a parent, may be assumed by another, who, for any reason, thinks proper to place himself, in that respect, in the place of a parent; and, when that is so, the same presumption arises against his intending a first gift to take effect as well as a second; because both, in such cases, are considered to be portions. Whether the donor had, for this purpose, assumed the office of a parent, so as to invest his gift with the character of a portion, may be proved by extrinsic evidence, such as the general conduct of the donor towards the children, or by intrinsic evidence from the nature and terms of the gift. If the former be alone relied upon, it may prevail, although it should appear that the donor did not assume all the duties of a parent, or effectually perform those which he had undertaken: the question being, merely, whether the facts proved fairly led to the conclusion that he intended to provide a portion for the child, and not merely to bestow a gift. Upon this point, Powys v. Mansfield ( (1836) 3 My. & Cr. 359), founded upon Carver v. Bowles (2 Russ. & Mylne, 301), and many other cases, is conclusive. Such evidence of general conduct towards the child is of far less importance than that which relates to the pecuniary provision for it, whether that be found in the instruments containing the gifts or in extrinsic circumstances; and, as part of such extrinsic circumstances, the general conduct of the donor towards the family, and particularly towards the other children of it, may, very properly, be included in the consideration of his object and intentions….
In all these arrangements, the sums given were settled, or agreed to be settled, as nearly as possible, in the same way as he had provided by his will,which, in Trimmer v. Bayne (7 Ves. 408, see 516), Lord Eldon seems to think would be of itself sufficient to establish the ademption. That the sums so settled or agreed to be settled were portions, in every sense of the word, cannot be doubted; and it is equally clear that the corresponding provisions by the will, though differing in amount, are of the same character. From the necessities of the family, or from his own free choice, or, probably, from both, he assumed the task of furnishing portions for the children, regarding, in the distribution of his property, the number of those who, standing in the same degree of relation ship, had similar claims upon him. This task, so undertaken, he, in the first instance, proposes to carry into effect by his will, but, upon the marriages of the several children, he comes forward, in some instances to perform, and in others to bind himself to perform, in part, what he had so assumed the office of doing. In what respect, for the purpose of trying the intention of the donor, does this differ from the case of a parent? The father, as well as the grandfather, were at liberty to make what distributions they thought proper of their property; but having once made the distribution, by attributing a certain sum to each child, where is the probability that, upon the marriage of that child, there should arise an intention of disturbing the whole scheme of such distribution, and of giving to such child the sum then settled, in addition to what had been before assigned as its portion, to the necessary prejudice of all the other children? It is to avoid such consequences, so little likely to be intended by the donor, that the presump tion against double portions arises, which, though it may, in some instances, defeat the intention of the donor, is, in my opinion, calculated, in general, to effect it….
When, upon the first argument of this case, I had come to the conclusion that the testator had placed himself in loco parentis, and that the effect of the portions upon the provisions by the will was, therefore, to be the same as if the testator had been the father of the children, I was startled at the consequences of such a decision, if the rule generally received in the profession, and laid down in all the text-books of authority, and, apparently founded upon the highest autho- rity, was to regulate the division of the property; the rule to which I refer being, that a portion ” advanced by a father to a child will be a complete ademption of a legacy, though less than the testamentary portion.” (1 Roper Leg. 318.) I
could not but feel that, in the case before me, and in every other, the effect of the rule would be to defeat the intention of the parent. A father, who makes his will, dividing his property amongst his children, must be supposed to have decided what, under the then existing circumstances, ought to be the portion of each child, not with reference to the wants of each, but attributable to each the share of the whole which, with reference to the wants of all, each ought to possess. If, subsequently, upon the marriage of any one of them, it becomes necessary or expedient to advance a portion for such child, what reason is there for assuming that the apportionment between all ought, therefore, to be dis- turbed? The advancement must naturally be supposed to be of the particular child’s portion; and so the rule assumes, as it precludes the child advanced from claiming the sum given by the will as well as the sum advanced.
So far the rule is founded on good sense, and adapted to the ordinary trans actions of mankind. The supplying the wants of one child for an advancement is not permitted to lessen or destroy the provisions made for the others, by giving both provisions to the child advanced; but the supposed rule that the larger legacy is to be adeemed by the smaller provision, appears to me not to be founded on good sense, and not to be adapted to the ordinary transactions of mankind, and to be subversive of the obvious intention of the parent. Can it be assumed,as a proposition so general as to be the foundation of a rule of property, in the absence of any expressed intention, that the marriage of one child and he advancing a portion to such child, furnishes ground for the father’s altering the mode of distributing his property amongst his children, by taking from the portion previously destined for that child, and, to the same extent, adding to t_he provision for the others? Is it not, on the contrary, the usual course and practice that the father, upon a child’s marriage, parts with the control over as little as possible, preferring to reserve to himself the power of disposing of the residue of the portion destined for such child, as its future circumstances and situation may require? In doing so, the father is not influenced only by the natural preference of bounty to obligation, but adopts a course which he may well be supposed to think most beneficial for his children. Where, then, is the ground of the presumption that he intended, by advancing part of what he had destined as the portion of that child, to deprive that child of the remainder?
The argument in favour of the proposition appears to me to be founded upon technical reasoning as to the term “portion,” without due consideration of the sense in which that term is used. The giving a portion to a child is said to be a moral debt, but of the amount of which the parent is the only judge; and although the parent has, by his will, adjudged the amount of that moral debt to be a certain sum, he is supposed, by the settlement, to have departed from that judgment, and to have substituted the amount settled; and this only because the one provision and the other are considered as a portion. This, however, assumes the portion settled to be intended·as a substitution of the portion given by the will; and such intention, if proved; would remove all doubt; but the question is, whether such intention is to be presumed, in the absence of all proof. Is it not more reasonable to suppose that the intention as to the amount of the portion remains the same, and that the sum settled is only an advance of part of what the will declares to have been the intended amount of the whole? There is no reason for supposing the sum advanced to be the whole portion intended for the child; and, if so, there can be no reason for assuming it to be substituted for the whole. The effect of a portion advanced by a parent upon a legacy before given is called an ademption; but if the principle of ademption be applied to this case, the consequence now under consideration will not follow. The gift or alienation of part of what constitutes a specific legacy will not destroy the legacy as to what remains. So, the admitted exceptions to this general rule do not seem very consistent with the existence of that part of it now under consideration. The rule is said not to apply when the testamentary portion and the subsequent advancement are not ejusdem generis. This may be very reason able, as indicative of intention, but it is not easy to discover why, if one thousand pounds advanced is to be an ademption of a ten thousand pounds legacy, a gift of stock-in-trade of the value of £1500 is not to be an ademption of a legacy of
£500, which, in Holmes v. Holmes (1 Bro. C. C. 555), it was held not to be., a testamentary gift of a residue, or part of a residue, is said not to be adeemed by a subsequent advancement, because the amount is uncertain; but, in that case, the child, if sole residuary legatee, takes, as advancement, part of what it would, if no such advancement had been made, have taken as residue. The gift under the will operates, though diminished by the amount of the advance ment. The Statute of Distributions, the customs of London and York, and the whole doctrine of hotchpot, proceed upon the principle that advancement by a parent does not operate as substitution for, but as part satisfaction of, what the child would otherwise be entitled to; the object being to produce equality, and not, according to the rule contended for, inequality, between the children. It appears to me, therefore, that all reasoning and all analogy are against the supposed rule. . . .
Lord Chichester v Coventry
House of Lords (1867) L.R. 2 H.L. 71
LORD ROMILLY: . . . It is to be remembered that this is a case of satisfaction, and not of ademption. I think that a full view of the cases, and a consideration of the doctrine on this subject, do not justify the observation that there exists no distinction between ademption and satisfaction, an observation which is not, so far as I have been able to examine the cases, to be found in any other case on the subject, and which, if adopted, would often entangle the Court in this difficulty, that it would be hard to discover how any question of election could ever arise; and accordingly the Vice-Chancellor in this case below expressed himself as unable to understand how election was or could be dealt with in the case of Lady Thynne v. The Earl of Glengall ( (1848) 2 H.L. 131). I venture to think that the distinction is marked, and that it is recognised in all the decided cases on the subject. It appears to me Oo be accurateJy expressed by the legal terms, ademption and satisfaction. The general question was, I think, well expressed by Lord Cranworth during the argument, when he said, that in cases where it arises the second instrument must be read as if the maker of that instru ment had expressed in it that he intended the benefit thereby given to be taken in substitution for the benefit given by the former instrument. In truth, in both cases, the second gift is given. in substitution for the former benefit.
The distinction between ademption and satisfaction lies in this: in ademption the former benefit is given by a will, which is a revocable instrument, and which the testator can alter as he pleases, and consequently when he gives benefits by a deed subsequently to the will, he may, either by express words, or by implication of law, substitute a second gift for the former, which he has the power of altering at his pleasure. Consequently, in this case the law uses the word ademption, because the bequest or devise contained in the will is thereby adeemed, that is, taken out of the will. But when a father, on the marriage of a child, enters into a covenant to settle either land or money, he is unable to adeem or alter that covenant, and if he give benefits by his will to the same objects, and states that this is to be in satisfaction of the covenant, he necessarily gives the objects of the covenants the right to elect whether they will take under the covenant, or whether they will take under the will. Therefore this distinc tion is manifest. In cases of satisfaction the persons intended to be benefited by the covenant, who, for shortness, may be called the objects of the covenant,and the persons intended to be benefited by the bequest or devise, in other words, the objects of the bequest, must be the same. In cases of ademption they may be, and frequently are, different.
The cases of Lord Durham v. Wharton ( (1836) 3 Cl. & F. 146), and of Lady Thynne v. Lord Glengall, afford striking and leading instances of each of these two cases. Lord Durham v. Wharton was a case of ademption. In that case William
Lambton bequeathed £5000 to his niece Susan, who was the daughter of General Lambton. General Lambton, by his will, gave his daughter Susan, in addition to the £5000 she took from her uncle, £10,000 to her for life, and after her death in trust for all her Children. The will was made in 1788. In 1790 the daughter Susan married Mr. Wharton. General Lambton advanced £15,000 on that marriage to Mr. Wharton, and declared that it should be in satisfaction of the legacy of £5000 from the uncle. And in consideration of the marriage, and in consideration of this sum paid to him, Mr. Wharton settled £500 per annum pin money on Mrs. Wharton, a jointure of £1,200 per annum if she survived him, and also £30,000 for the younger children of the marriage. This was held, in accordance, I must say, with the principles of all the previous cases, to be an ademption of the legacy of £10,000. I think that no question could well have been raised upon it if it had not been that the £15,000 are stated in the settle ment to be in satisfaction of the legacy of £5000 from the uncle. It was strongly urged, that upon the principle of expressio unius est exclusio alterius, this was an implied statement that the legacy of £10,000 was still to subsist. The answer, and, I think, the conclusive answer, was, that the presumption of law did that which, in the case of the uncle’s legacy, required an express statement to effect. In that case the children of the daughter were in both cases provided for, but the rule would have been the same if the first gift, viz., the legacy, had been to the daughter absolutely, because the law very properly, and in accordance with the ordinary usage of mankind, considers that on the marriage of a child the settlement for that child and the children of the marriage is a settlement for the benefit of the child of the settlor. The consequence is, that, in all cases of ademption, a bequest of a sum of money to a child absolutely, is adeemed by the settlement of that or a larger amount on the marriage of that child; if a smaller
amount it is an ademption pro tanto.
But in cases of satisfaction, where the testator has first entered into a covenant to settle a sum of money upon his child for life, with remainder to the issue of the marriage, that covenant is not satisfied by a bequest of a like sum of money to that child absolutely; it is only satisfied pro tanto, that is, so far as the child is concerned. So also if the bequest be to he children of the marriage, omitting the parent, that may be a satisfaction of so mU<;h of the covenant as relates to them, but it is no satisfaction of the covenant to the parent.
Accordingly in these cases if the bequest be to the parent the parent may elect, or if the bequest be to the children of the marriage alone the children may elect to take under the will instead of taking under the covenant; but this cannot affect the rights of the other covenantees who take no interest under the will. This appears to me to be shewn very clearly in the very important and valuable decision of Lady Thynne v. Earl of Glengall. There the father, on the marriage of Lady Glengall, gave £100,000 to her for life for her separate use, and after her death to the children of the marriage as she and her husband
should appoint. By his will the testator gave half the residue of his estate to Lady Glengall for life for her separate use, and after her decease for all her children, whether by the present or any future marriage, as she alone should appoint.
Here it is to be observed that the daughter, Lady Glengall, and the children of the first marriage, are objects of both gifts; they are both covenantees and legatees, the only difference between the objects is, that the children of a later marriage are let in. This, as the House of Lords, confirming the decision of the Master of the Rolls, held, is clearly a case for election. Lady Glengall and the children of the first marriage, if adult, would have elected separately to take either under the covenant or under the will; and if the children of the first marriage had elected to take under the settlement, their share of the residue after the determination of the life interest of Lady Glengall must have gone on the principle of compensation; which, and not forfeiture, has long been settled to be the principle of election to make good to the children of the subsequent marriage what had been taken from them. As there were no children of the first marriage, which marriage was still subsisting, the Court, as it usually does in such cases, elected for the children that might be born; and finding that the residue was much larger than the amount secured by the covenant, thought it most for their benefit, as it clearly was most for Lady Glengall’s benefit, to take under the will. This is correct and perfectly intelligible. But if the decree in that case had been made in conformity with the decree in the case before us, it would have given the residue to the residuary legatee upon condition that the covenant made on the settlement was paid out of her share of the residue, which is, I apprehend, at variance with principle and authority.
This will, in my opinion, be made distinct by pointing out how the two different modes of decree would have operated in the respective cases. Suppos ing there to have been children of a second marriage-£100,000 settled on Lady Glengall for life to her separate use, remainder to the children of first marriage
-a residue worth £200,000 by will given to Lady Glengall for life for her separate use, remainder to children of both first and second marriages. Sup posing one child by the first marriage, and two children by the second marriage, to be alive at the death of the testator, then, according to the decree of the Court below in this case, £100,000 are to be deducted out of this residue, which sum is to be paid to the trustees of the settlement in trust for Lady Glengall for life, remainder absolutely to the single child of the first marriage, and the remaining
£100,000 of the residue is to go to Lady Glengall for life, remainder equally between all her three children. But this is not what the testator has said, or what he intended. By the presumption of law he is supposed to have intended that the provision made by the will should be a substitution for, or, in other words, an extinguishment of, the covenant.
And that is worked out in this manner by election. The child of the first marriage is bound to elect. He is told that he must either let in the children of the second marriage to share with him in the covenant, or that he must give up his share in the residue after the decease of Lady Glengall, and that what he gives up will go to compensate the children of the second marriage for what they lose by his insisting on the due performance of the covenant. Accordingly, in the case I have suggested, if the principle of the decree before us be applied, the child of the first marriage gets on the death of his mother £133,333, and each child of the second marriage £33,333 only; whereas, on the principle of election, the child of the first marriage, if he elect to take under the settlement, gets £100,000 on the death of his mother, and the two children of the second marriage get £50,000 each, or, in other words, the child of the first marriage must give up his share of the residue to compensate the others for what he has taken away.
This appears to me to be the defect in the decree, which actually directs the
£10,000 to be paid to the trustees of the settlement, which arises from want of bearing distinctly in mind the correctness of this proposition,-that the distinction between ademption and satisfaction lies in this, that in cases of satisfaction a case of election must always arise, and in cases of ademption never.
In truth, the decree of the Court below does not substitute the gift of the residue for the covenant, but gives the residue to the legatee upon condition that he performs the covenant; it does not satisfy the covenant, but it performs the covenant.
I think that these two cases before this House, and the case of Hall v. Hill
( (1841) 1 D. & W. 94), before Lord Chancellor Sugden, who laid down that a legacy to the daughter was no satisfaction of a bond to the husband on the marriage of that daughter, which are all most valuable decisions, ·very clearly lay down the law on this subject.
I think that the principle to be borne constantly in mind is, that the provision by the will is to be a substitution for the provision by the settlement, and that the provision by the will can never be treated as a bequest upon an implied condition that the legatee performs the covenant. The covenant, if at all, must be performed by the testator, or by his legal personal representative out of his estate. The testator, by his will, gives something in lieu of the covenant; if that is accepted, the covenant is superseded, and is not to be performed at all.
I have looked through all the cases I can find, and I do not find one in which a provision by will to one person, or one set of persons, has ever been held to be a satisfaction of a covenant in favour of another person, or another set of persons. That result could only be got at by converting the provision given by the will into a legacy, coupled with a condition not expressed by the testator. The definition of satisfaction given, or rather adopted, by White and Tudor in their Leading Cases in Equity (3rd ed., Vol. 2, p. 349n.), seems to me to express this accurately, namely, “Satisfaction is the donation of a thing with the intention that it is to be taken either wholly or in part in extinguishment of some prior claim of the donee.”
I am of opinion that as a covenant may be satisfied pro tanto, as is laid down in Kirk v. Eddowes ( (1844) 3 Hare 509) and several other cases, so also the converse of that proposition is true, namely, that a provision by will may satisfy one part of the covenant without satisfying the other parts of it; for instance, that if a father, on the marriage of his daughter, should settle £10,000 on her for life, remainder to the children of the marriage, a bequest of £10,000 to that daughter would satisfy her life interest in the £10,000, but would not satisfy or touch the interests of her children.
Hitherto I have treated the case as one where the father has, in the second instrument, stated that he intended the provision thereby made to be in substitu tion for the former provision made by him. But in considering the present case a new question arises, which is, whether the difference between the two provisions is not sufficient to rebut the presumption of law against double portions.
By the settlement £10,000 is given to trustees in trust to pay £200 per annum as pin money to Lady John Chichester, the rest of the interest is to go to her husband, and if she survive him, to her for life, and after the death of the survivor to the children of the marriage, as she shall appoint. By the will, he gives her half of the residue for her separate use for life, with a general power of appointment after her decease, excluding her husband. I think that this is such a difference as, when coupled with the direction to pay his debts, rebuts the presumption respecting double portions. In the first place, the testator directs his debts to be paid; this would include the covenant. In Chancey’s Case ( (1717) 1 P.Wms. 409), which was satisfaction of a debt by a legacy, much stress was laid on the fact that the testator directed that all his debts and legacies should be paid. The decree as it now stands gives the half of the residue to Lady John, coupled with a condition that she shall pay this debt, or, rather, it directs
£10,000 to be paid out first to the trustees of the settlement; therefore, contrary to the direction of the testator, the residue is to be ascertained before this debt is paid. In the second place, it does not appear to me that a residue, however large, can be presumed to be intended to be given in satisfaction of pin money or of a reversionary life interest, whether they are taken jointly or separately. I cannot, however, say that the cases are very clear on that subject.
It has been decided in Bellasis v. Uthwatt ( (1737) 1 Atk. 426) and in Hanbury
v. Hanbury ( (1788) 2 B.C.C. 352) that a contingent legacy is no satisfaction of a vested portion, and also that the different nature of the property left will rebut this presumption of law. Thus, a devise of land is no satisfaction of a covenant to pay money, and vice versa (see Bellasis v. Uthwatt, and many other cases), unless the testator estimates the value of the land at a fixed sum, and desires it to be made up to a particular amount, as in Bengough v. Walker ( (1808) 15 Ves. 507), before Sir W. Grant. So in Holmes v. Holmes ((1783) 1 B.C.C. 555), a legacy of £500 to a son was not adeemed by the father giving the son his stock in trade, which was of much greater value.
My opinion is, that the gift of half the residue in this case cannot be taken as any satisfaction of the covenant in favour of the husband and the children of the marriage, and that, having regard to the very different nature of the two provisions, the bequest of the residue was not intended to affect Lady John’s interest under the covenant. To use the words of Sir John Leach in Weal! v. Rice ( (1831) 2 R. & M. 251), “It is not possible to define what are to be con sidered as slight differences between two provisions. Slight differences are such as, in the opinion of the Judge, leave the two provisions substantially of the same nature; and every Judge must decide that question for himself.”
In my opinion the provisions of the will and of the covenant are substantially different, and no case of satisfaction arises, and consequently the judgment of the Court below must be reversed.
Cases Advancement
Re Hayward
[1957] Ch. 528
JENKINS L.J.: . . . It will be seen that the present provision, the provision in section 47 (1) (iii) of the Administration of Estates Act, 1925, radically departs from the language of the Statute of Distribution containing as it does no reference at all to portions save in so far as a reference to portions is to be imported by implication from the use of the word ” advancement.” To my mind section 47 (1) (iii) of the Administration of Estates Act, 1925, is, if anything, narrower than the provisions of the Statute of Distribution, but decisions upon the old Act are, I think, generally speaking, applicable to the new….
Thneext case, which is the leading case on this topic and has been referred to over and over again where questions of this sort arise, is Taylor v. Taylor ( (1875) L.R. 20 Eq. 155). It was a case of intestacy. The headnote reads: “An ‘ advancement by portion’ within the meaning of section 5 of the Statute of Distribution is a sum given by a parent to establish a child in life or to make a provision for the child. Sums given for the following purposes: (1) payment of the admission fee to one of the Inns of Court in the case of a child intended for the Bar; (2) the price of a commission and outfit of a child entering the army;
(3) the price of plant and machinery and other payments for the purpose of starting a child in business: -Held, ‘ advancements by portion.’ Sums given for the following purposes: (1) payment of a fee to a special pleader in the case of a child intended for the Bar; (2) price of outfit and passage money of an officer in the army and his wife on going out to India with his regiment; (3) payment of debts incurred by an officer in the army; (4) assisting a clergyman in paying his housekeeping and other expenses: -Held, not ‘ advancements by portion.’ ”
In the first of two judgments delivered by him in the case Jessel M.R. said: “I have always understood that an advancement by way of portion is something given by the parent to establish the child in life, or to make what is called a provision for him-not a mere casual payment of this kind. You may make the provision by way of marriage portion on the marriage of the child. You may make it on putting him into a profession or business in a variety of ways: you may pay for a commission, you may buy him the goodwill of a business and give him stock-in-trade; all these things I understand to be portions or provisions. Again, if in the absence of evidence you find a father giving a large sum to a child in one payment, there is a presumption that that is intended to start him in life or make a provision for him; but if a small sum is so given you may require evidence to show the purpose. But I do not think that these words ‘by portion’ are to be disregarded, nor is the word ‘ advancement ‘ to be disregarded. It is not every payment made to a child which is to be regarded as an advancement, or advancement by way of portion. In every case to which I have been referred there has either been a settlement itself, or the purpose for which payment was made has been shewn to be that which everyone would recognize as being for establishing the child or making a provision for the child.”
In the second judgment the Master of the Rolls said: ” nothing could be more productive of misery in families than if he were to hold that every member of the family must account strictly for every sum received from a parent. According to his view, nothing was an advancement unless it were given on marriage, or to establish the child in life. Prima facie, an advancement must be made in early life; but any sum given by way of making a permanent provision for the child would come within the term establishing in life.” Then he said : “The entry money at the Middle Temple was clearly for the establishment of the child, and must be accounted for.” Then he referred to some of the other payments and he went on: ” Again, the sums paid for debts in India appeared to be in the nature of temporary assistance; thus, if a child were in business and required further capital, a sum given for that purpose would be an advance ment; but a sum given merely to assist him temporarily would not. The sum given to pay the debts in India therefore need not be accounted for.” On the other hand, he held that ” the payments in respect of the mining operations in Wales appeared to have been made for starting the plaintiff in business, and ought to be accounted for.”
That is a very well-known case, and those two short judgments of Sir George Jessel have always been regarded, I think, as the nearest approach to a definition of what is an advancement that our case law has achieved. There are one or two other points to which I should especially refer. The Master of the Rolls said : ” Again, if in the absence of evidence you find a father giving a large sum to a child in one payment, there is a presumption that that is intended to start him in life or make a provision for him.” I call attention to that because Miss Hall, for the appellant, relied on the relatively substantial amount of the value of the certificates and the bank balance here in question as compared with the total estate of the father.
Then the Master of the Rolls said : ” In every case to which I have been referred there has either been a settlement itself, or the purpose for which the payment was made has been shewn to be that which everyone would recognize as being for establishing the child or making a provision for the child.”
Now it seems that under the Statute of Distribution any provision made for a child by way of settlement was looked upon as an advancement by portion, and it seems to me that that is recognized by the language of the Master of the Rolls to which I have just referred. But we have to apply the terms of section 47 (1) (iii) of the Administration of Estates Act, 1925, and the language of that enactment seems to me to show that it is not every settlement the benefits taken under which must be brought into account, but the settlement must be either by way of advancement or on the marriage of the child concerned. So that in this case if one regards the nominations as equivalent to a settlement, that cannot conclude the matter; it is necessary still to see whether the disposition was in the nature of an advancement.
I would particularly refer again to this in the second judgment of the Master of the Rolls: ” According to his view, nothing was an advancement unless it were given on marriage, or to establish the child in life. Prima facie, an advancement must be made in early life; but any sum given by way of making a permanent provision for the child would come within the term establishing in life.” So “prima facie an advancement must be made early in life.” One must note in relation to this consideration that the elder son at the date of these nominations was 43 years old. Then there is the question whether the subject matter of the relevant dispositions in the present case was given by way of making a permanent provision for the elder son. That is a matter to which I will return. . . .
Returning to section 47 (1) (iii) of the Administration of Estates Act, 1925, the question is whether the certificates and the bank balance in this case were ” any money or property which, by way of advancement or on the marriage of a child of the intestate, has been paid to such child by the intestate or settled by the intestate for the benefit of such child.” It is, I think, clear, as I have already indicated, that the words ” has been [aid to such child by the intestate or settled by the intestate for the benefit o such child ” are governed by the words “by way of advancement or on the marriage of a child”; so that it is indis pensably necessary to the appellant’s success in the present case, a gift on the occasion of marriage not b<:>ing here in question, that the court should be able to say that these dispositions, whether one terms them payments or settlements, were made by way of advancement. Jessel M.R. indicated in Taylor v. Taylor the kinds of payment which should be regarded as advancements by portion for the purposes of this provision. The difficulty in the way of the appellant is the complete absence of evidence as to the circumstances in which these nominations were made. We have no information whatever except the age of the elder son,which was 43, and, therefore, “prima facie,” as Sir George Jessel said, against the view that there was an advancement. We have no evidence as regards the elder son’s means or needs at the time; we have nothing whatever to throw any light upon the matter. The only purpose in the way of advancement that can here be collected is the general purpose of making a permanent provision for the elder son so as to come within the words of Sir George Jessel “that any sum given by way of making a permanent provision for the child would come within the term of establishing in life.” Can one say, on the bare fact of these nominations having been made, that they were made by way of permanent pro vision for the elder son? There is nothing to aid us to that conclusion except the size of the fund. As I have already indicated, the fund in itself is not large as the value of money goes today, but it is no inconsiderable portion of the whole amount that the father had to dispose of. Is it then, regarding the matter relatively as well as absolutely, a large enough sum to make it possible for this court to say, prima facie, this was an advancement by way of permanent pro vision for the elder son and it must, therefore, be brought into account unless the presumption to that effect can be rebutted? There being no rebutting evidence, the matter could in that event be decided on the presumption the other way, that is to say, the presumption to the effect that the giving of this relatively large amount, if unexplained, must be taken to have been an advancement.
I have found this case a difficult one and I agree with Upjohn J.’s description of it as a borderline case, but giving the best consideration to the matter that I can, I cannot regard these Savings Certificates and this bank balance, given as they were on two separate occasions, albeit the dates were close together, as constituting a fund of such size or importance, even when considered in relation to the intestate’s other assets, as to be capable of being described as prima facie constituting an advancement. I appreciate the force of Miss Hall’s argument based on relative values, but it does not seem to me that this should be carried too far. I think, in order to raise a prima facie case for accounting, it must be shown that the fund in question was sufficiently substantial in itself to be in the nature of a permanent provision without pressing too far the question of pro portion. If that were not so, an intestate who only had £50 in the world, £25 in cash and £25 in National Savings Certificates, could properly be held to be making a permanent provision for one of his sons by giving him a nomination in respect of the certificates because they represented no less than half his estate, although the sum given would in itself be trifling.
For these reasons, which I am afraid I have expressed at undue length, I think that Upjohn J. came to a right conclusion in this case and I would dismiss this appeal.
SELLERS L.J.: . . . If even the elder son had been 20 years younger it might have been sufficient, but in the circumstances I think any inference to be made on the evidence was too uncertain to justify an affirmative finding that this was an advancement.
Re Hillas-Drake
[1944] 1 All E.R. 375
SIMONDS J.: There is nothing in the material facts to distinguish this estate from many others which are administered by the court or out of court, and it is strange that it should have been necessary, as undoubtedly it was necessary, for the executors to seek the guidance of the court on the questions that have been raised. These questions relate (a) to the date at which the distributable assets of the estate ought to be valued for the purpose of the hatch-pot clause, and (b) as to the manner in which the rights of the beneficiaries in the income of the estate up to the date of distribution ought to be ascertained. These two questions are logically inter-connected, for if the assets of the estate ought to be valued at the death of the testator for the purpose of hatch-pot so that the fractional share of each beneficiary in the ultimately distributable estate is once and for all deter mined on that basis, it would surely be logical that each beneficiary should have the same fractional share of the income since the death and it would be unneces sary to have recourse to the method of adjustment which has been commonly adopted, namely, that the advanced beneficiary should bring into hatch-pot on income account four per cent. per annum on the amount of his advances and be debited therewith against his share of such income. In my judgment, the fact that such a method has been for so long the common practice of administration in and out of court is of great importance in considering what is the proper date for valuation.
I should have entertained no doubt what is the proper date for such valuation but for In re Gunther’s Will Trusts ([1939] Ch. 985), in which Farwell J. delivered a considered judgment, and In re Oram ([1940] Ch. 1001) in which Bennett J. followed his decision. In the first place, since the object of a hotch pot provision is to ensure equality between beneficiaries, it is relevant to ask what date for valuation will serve that end. If I take the date of distribution as
the proper date, I have no difficulty in securing equality. If there are three beneficiaries of whom one has been advanced 10,000/., and there is available for distribution money or securities of the value of 50,000/., I add the 10,000/. to the 50,000/. and give each beneficiary 20,000/., debiting 10,000l. against the advanced beneficiary. If, on the other hand, I take the date of the testator’s death as the proper date, and value as at that date the assets which are available for distribu tion, I do not necessarily secure equality. It is, indeed, almost certain that I shall obtain inequality in greater or less degree.
Let me take a simple example. Again I have three beneficiaries, of whom one has been advanced 10,000/., and assets available for distribution of the value of 50,000/., but these assets at the date of the testator’s death were worth not 50,000l. but 40,000/., and on this assumption it is by reference to this value that the shares of the beneficiaries are to be finally ascertained. Accordingly, the advanced beneficiary will take 6666/40,000ths and each of the other beneficiaries 16,666/40,000ths of the distributable estate. The value of the estate being increased from 40,000/. to 50,000/., the share of the advanced beneficiary will be approximately 8,333/., and that of each unadvanced beneficiary 20,833/. So far from equality being produced by this method of botch-pot, the advanced bene ficiary loses in the distribution substantially more than he has gained by his advancement. Conversely, if the assets have depreciated between the death and the date of distribution, this method of applying the botch-pot provision will allow the advanced beneficiary to retain a substantial advantage. On principle there seems no reason for adopting such a method. Why should the court, aiming at equality, deliberately miss the mark? …
On the second question, namely, the adjustment of rights in respect of income, I need not repeat what I said at length in In re Wills ([ 1939] Ch. 705) and have already indicated in this judgment. There being no provision to the contrary in the will, the advanced beneficiaries will be debited against their share of residuary income with interest at four per cent. per annum less tax on the amount of capital brought into hotch-pot by them.
Re Tennant
High Court of Australia (1942) 65 C.L.R. 473
RICH J.: The intention of a testator in inserting a hotchpot clause in his will is to provide that there shall be a fair division among his children, and that they shall be equal inter se. Similarly, the intention of the Statute of Distribu tions is “grounded upon the most just rule of equity, equality” (Edwards v. Freeman (1727) 2 P.Wms. 435, 443). In the present will the testator’s intention is clearly expressed with regard to ” his residuary funds,” viz., that they are to be held in trust for all his children in equal shares. The problem is one which is apt to arise whenever a fund of capital is distributable amongst a group of persons some of whom have already received, or must be treated as having received, something on account of their shares. It is obvious that in such a case some adjustments must be made in respect of what has already been received, not only upon a distribution of capital but upon any distribution of the inter mediate income pending a final distribution. In general, that method of administration should be adopted which is most calculated to produce a fair result in the circumstances of the particular case, subject to two considerations, first that the provisions of the controlling instrument may, by accident or design, require the adoption of a particular method or preclude the adoption of another, and, second, that the use of a simple method which produces a reasonable approximation to fairness is to be preferred to attempts to achieve meticulous accuracy if they involve elaborate actuarial computations, valuations, or applica tions to the court. If it has been authoritatively stated that a particular rule may be applied in the absence of special circumstances, it is of great importance, in order that personal representatives may be able to administer their estates without incurring the expense of recourse to the court, that the applicability of the rule should not be put in doubt by unnecessary refinements. But this is a counsel of perfection. It is obvious that adjustments, for all relevant purposes identical with those required in the present case, may be necessitated by the equitable doctrine of ademption, or for purposes of hotchpot occasioned by express pro vision or arising under an intestacy, or by reason merely of the fact that a partial distribution of assets has been made by a personal representative on a basis not strictly proportionate to the shares of the beneficiaries: Cf. In re Tod ([1916] 1 Ch. 567, 576). Since in all these cases the problems are the same, it is perhaps a laudable ideal that the methods for resolving them should be the same. Indeed, it has been established that if it is necessary to determine the value of the property advanced, this must be done, in the absence of some provision to the contrary, as at the date when the advance was made. This is so whether the case is one of ademption (Watson v. Watson (1864) 33 Beav. 574), or of an express provision for hotchpot (In re Crocker; Crocker v. Crocker [1916] 1 Ch. 25), or of an appropriation in specie by a personal representative (In re Richard son; Morgan v. Richardson [1896] 1 Ch. 512). In the case of an appropriation in specie to a beneficiary by a personal representative in part satisfaction of his share, no valuation other than that of an appropriated asset (and of any other assets similarly appropriated) may be necessary. The authorities show that, in this type of case, if the rest of the assets are from time to time sold, and the proceeds distributed, or allocated to settled shares, there is no reason why the administration of the estate should be encumbered by a general valuation, or why capital distributions should not be made on the basis of the value of what is distributed at the time when it is distributed, notwithstanding that the estate may have depreciated in value since the testator’s death (In re Lepine; Dowsett v. Culver [1892] 1 Ch. 210–Cf. Herbert v. Badgery (1894) 15 L.R.(N.S.W.)Eq. 236), or that the value of the appropriated asset may have risen or fallen (In re Richardson; Morgan v. Richardson [1896] 1 Ch. 512). And the intermediate income may be adjusted by charging the advanced beneficiary with interest at the rate of four per cent. per annum on the value of the appropriated asset taken as at the date of appropriation (In re Richardson [1896] 1 Ch. 512, 516); In re Nickels; Nickels v. Nickels [1898] 1 Ch. 630).
If there is a relevant difference between the cases of an advance made by a testator in his lifetime which has to be brought into hotchpot and of an appro priation of an asset to a beneficiary at a valuation by a personal representative in part satisfaction of his share which should involve the application of any different methods adjusting distributions of corpus or income, it will depend on the provisions of the will. Prima facie the same type of adjustment is called for in each case. Otherwise it is conceived that the special complications which some of the authorities have introduced in the hotchpot type of case are in the main, if not entirely, unnecessary….
[The learned judge then referred to the provisions of the will.]
These provisions, together with that for the testator’s widow, are clear indica tions that the testator intended that the fractional proportions of the children should be ascertained after actual conversion, when the hotchpot clauses will be applicable.
This interpretation distinguishes the present case from that of In re Har greaves ( (1903) 88 L.T. 100). That case was, it has been said, “decided solely on the very exceptional language of the will, which pointed to an immediate ascertainment of the fractional shares of the advanced and unadvanced children respectively at one definite period, namely, the day of the death of the testator, and on the basis of the market prices current at the time” (In re Forster-Brown [1914] 2 Ch. 584). In Hargreaves’ Case calculation of interest was not involved, as the capital value of each advance was to be added to the net estate at the death of the testator, and the income derived therefrom from the date of the death was divisible among the children according to the fractional proportions thus ascertained. Having regard to the particular dispositions of the will I fail to understand why this method of calculation was not correct. And I consider that it should be followed in similar cases where the exact shares of the beneficiaries are directed to be ascertained at death. Indeed, it has been applied in Re Hart ( (1912) 107 L.T. 757) and in In re Mansel ([1930] 1 Ch. 352). Hargreaves’ Case does not, I think, establish any rule of administration or disturb any existing practice, and there is no conflict between the decision in Hargreaves’ Case and that in In re Poyser ([1908] 1 Ch. 828), as they are dealing with entirely different dispositions. No doubt Hargreaves’ Case was “argued on the part of the appel lants only, since the principle of construction suggested by Romer L.J. in the Court of Appeal was as favourable to the respondents as that applied by Joyce J. in the Court below, and was accordingly accepted by them without demur,” and it was about to be appealed to the House of Lords but was compromised (In re Forster-Brown). And the note of the case in the Weekly Notes ([1903] W.N. 24, 28) may explain the reason why it did not find its way into the Law Reports (In re Craven [1914] 1 Ch. 358, 364). But these matters do not affect the binding character of the decision in any similar case and, I have already stated, it has been followed in other cases. But where by the terms of the particular will the ascertainment of the exact proportions in which the bene ficiaries are entitled to corpus is postponed, then to overcome the difficulty which arises in the distribution of intermediate income, the court established the practice stated in Andrewes v. George ( (1830) 3 Sim. 393, 395), editor’s note, and restated in In re Rees ( (1881) 17 Ch.D. 701). The practice is that “advanced children must bring their advances into hotchpot with interest at four per cent. per annum from the time for distribution to the time of actual distribution ” (In re Tod [1916] 1 Ch. 567). So far as the rate of interest is concerned, if the general standard of income return should ever be proved to have found a stable level above or below four per cent. it is always competent to the court to change the rate without changing the method of calculation: Cf. Re Jones; Jones v. Baxter ( (1929) 30 S.R.(N.S.W.) 26, 40); Union Trustee Co. of Australia Ltd. v. Graham ( (1931) 31 S.R.(N.S.W.) 528, 531); Re Tindal; Perpetual Trustee Co.
Ltd. v. Tindal ( (1933) 34 S.R.(N.S.W.) 8, 15).
It is not necessary in the present case to express an opinion as to whether in cases such as In re Wills ([1939] Ch. 705; [1939] 2 All E.R. 775), In re Gunther’s Will Trusts ([1939] Ch. 985), in re Oram ([1940] Ch. 1001), the course of basing the administration of the estate upon estimates of value made at an arbitrary date rather than upon values actually realized or determined for the purposes of actual appropriations can be regarded as necessary or justifiable. It may be pointed out, however, that the view expressed by Farwell J. in In re Gunther’s Will Trusts, that a date for valuation should be chosen which is fixed, and not one which is in any way dependent upon the energies of the executors and administrators, is not borne out by such authorities as In re Lepine ([1892] 1 Ch. 210) and In re Richardson ([1896] 1 Ch. 512). It is desirable that estates should be administered and distributed, so far as possible, in accordance with their actual position and results, and that the rights of beneficiaries should not be regulated by estimates made at arbitrarily fixed periods unless the provisions of the controlling document or the necessities of the case so require.
DIXONJ.: It is evident that to ascertain in this way the proportionate shares of corpus which in any given case advanced and unadvanced children are to take, it is necessary to express in money both the value of the respective advances and of the testator’s residuary or other fund to which the hotchpot provision applies. Usually the advancements are expressed in money, and if the hotchpot clause covers gifts of property in specie then often the will supplies the value or a means of fixing it. In the absence of any other indication there must be a valuation as at the date of the gift.
But the necessity of reducing the residuary estate to monetary expression is a cause of difficulties that have not been so simply answered. The choice is presented between waiting for the actual realization in money of all the assets comprising the estate, or fixing the values by estimation as at some earlier point of time. If the former course is adopted the proportional or fractional shares in the residuary estate which, as a result of the operation of the provision for hotchpot upon the direction to divide equally, the children are to take will not be ascertained until actual conversion in money is completed, a thing often not required except for the purpose of final distribution. If the latter course is adopted, the fact that the value of property does not remain constant means that the proportional or fractional shares taken by the beneficiaries will vary according to the period chosen for fixing them by means of valuation. A very simple example will suffice to show this. Suppose a residue consists of land or securities which as at the testator’s death are valued at £25,000, as at the death of his widow at £27,000, and as at the time when his youngest child attains twenty-one years of age at £33,000; that the will disposes of it upon trust for the widow for life and after her death for such of his children as attain full age in equal shares with a provision that advances should be brought into hotchpot; that there are four children and they attain twenty-one; and that the eldest child has received
£3,000 in his father’s lifetime by way of advancement. If the value at the death of the testator is taken the fractional proportions would be obtained by adding first the advance of £3,000 to the value of £25,000 and dividing the total of
£28,000 by four. The quotient of £7,000 would then, if values remained constant, represent the prima-facie share of each child from which in the case of the eldest his advance of £3,000 must be deducted, leaving £4,000 for him. The proportions are thus 4 : 7 : 7 : 7, that is, fractions of 4/25ths for the eldest and 7/25ths for the others.
If, however, the death of the life tenant were chosen as the time for ascer taining the proportions an application of the same process to the value at that date would give the eldest child a 9/54th share and the others a 15/54th share each. If the date of vesting in interest were taken the fractions would be 2/llths and 3/llths.
It is therefore evident that if the fractional or proportional shares of the beneficiaries are to be ascertained before the final distribution of the estate it is a matter of much importance to determine as at what time or upon what event it is to be done. For the proportions fixed by reference to the values then ruling will govern the shares in which the corpus is to be enjoyed, whatever fluctuations in the value of the estate there may afterwards be and whatever it may finally realize.
Further, if it is right at any point of time before final distribution to ascertain definitively the proportional or fractional shares of the beneficiaries in corpus, and if in virtue of their interests in corpus they are entitled to the intermediate income, it would seem inevitably to follow that the same proportions will govern the distribution of the income.
It will thus be seen that under provisions requiring distribution in propor tional shares obtained by bringing advances into hotchpot the first question must be : Are the proportions not to be ascertained until final realization for distribution or on the other hand are they to be ascertained earlier and, if so, at what time or upon what event?
The question would appear to be one for which the answer should be sought in the provisions of the will. For the meaning and operation of the will should determine when the proportions in which the estate is to be distributed should be ascertained. If the matter is not one to which the testator expressly adverts and the plan upon which his dispositions are constructed does not imply an answer, then it may be necessary to invoke some fresumption or some general rule. But in principle the question is one rather o interpretation than of administration. For it goes to the nature of the dispositions intended.
If as a matter of interpretation the conclusion is reached that the propor tional shares are ascertainable only upon final realization or distribution, then a question may present itself with respect to intermediate income. For, quite con sistently with that conclusion, it may be found that nevertheless the beneficiaries entitled to corpus in the shares yet to be definitively ascertained are to enjoy the income. Indeed, that question may arise even when there is to be an earlier ascertainment of the proportions in which corpus is shared. For earlier still it may be necessary to divide intermediate income or surplus income among the beneficiaries entitled to corpus.
The necessity of distributing intermediate income among the persons entitled to corpus before the time arrives when their exact froportional interests in corpus can be ascertained does appear to call for a rule o administration. In fact there is a well-settled rule. The amount or value of the advancement is taken, and
interest at the rate adopted by the court is calculated thereon over the period to which the income is attributable. The interest is added to the income of the estate and the aggregate fund of interest is then divided by the number of beneficiaries. This gives a prima-facie share of each in the income, but from the shares of an advanced beneficiary is deducted the interest calculated on the amount or value of the advancement made to him by the testator.
Thus, in the example I have already given, suppose there was to be no ascer tainment of the precise shares of corpus either until actual distribution or at all events until the youngest child attained twenty-one and that in the meantime income was to be distributed among the four children. In other words, there would be an income-bearing fund to be distributed or proportioned at a subse quent time but by a calculation involving as one step the addition to the fund of the amount or value of the advancement of the e1dest son, viz., the sum of £3,000.
Suppose the income for a given year produced by the corpus is £1,500. To that would be added interest at four per cent. on £3,000, or £120. The total £1,620 would be divided by four. The prima-facie share of each in the year’s income would be £405, but from that there would be deducted in the case of the eldest son the interest, £120, calculated on the amount by which he had been advanced, leaving £285 as his share.
Until the proportional or fractional shares of corpus are definitively fixed, there is, I believe, no other way of arriving at the shares of income; though it is true that questions have been raised as to how the interest rate should be fixed. Once the fractional shares in corpus have been ascertained there is no longer any necessity to apply such a method of determining the shares of income. The proportions should apply equally to corpus or income.
It would seem therefore in point of reason that the two modes of calculating the shares of income are not alternatives; one applies until the other is made possible by the complete ascertainment of the fractional shares of corpus. They are, however, generally regarded as rival methods for doing the same thing, for solving the same difficulty. Each appears to have its supporters, who represent them as being in opposition; one is condemned on the mistaken ground that it is an innovation, the other as a departure from principle. To apply one or the other seems sometimes to be treated as an act of faith rather than of reason. Each has suffered the misfortune of being labelled by the name of a case.
No doubt it is often very difficult to say which method of distributing income should be applied under the provisions of trust instruments. But I cannot help thinking that the difficulty arises not from the rival claims of the two methods to perform the same office, but from the inadequacy, obscurity or complexity of the dispositions which, by introducing a hotchpot clause, necessarily raise the question whether the fractional shares are or are not to be defined and ascertained before realization for final distribution, and, if so, when. To my mind it is on the answer to this question that the choice of methods depends, and not on grounds of doctrine, of traditional practice or of preference for one chain of cases to another.
Coates v Coates
[1898] 1 IR 258; 32 ILTR 7 (Chancery Division)
By a separation deed S covenanted that he, his executors and administrators would pay his wife an annuity during the term of her natural life of the weekly sum of 15s. By his will S bequeathed to his wife a weekly sum of 12s and the life use of a house and furniture. An originating summons was taken out to determine whether the annuity under the separation deed had determined with the husband s death and, if not, whether the bequest under the will, including use of the house and furniture, operated as a satisfaction of the obligation to pay the annuity.
Chatterton V-C: The first question is whether the provision made for the plaintiff by the deed of separation of the 8th of September, 1884, terminated on the death of her husband? I am of opinion that on the true construction of the deed it did not. The deed states the occasion for its execution, namely, the separation of the husband and wife in consequence of unhappy variances existing between them, and, in consideration of the regular payment by the husband to the wife during the term of her natural life of the weekly sum of 15s, by way of separate allowance and maintenance, the wife bound herself not to cohabit thenceforth with her husband, or to annoy or molest him, and it was agreed that the weekly allowance should commence, accrue, and be payable to her from the 30th August 1884. And the husband thereby for himself, his executors, administrators, and assigns covenanted with the wife, her executors, administrators, and assigns that he, his executors, administrators, and assigns should punctually pay to the wife, her executors, administrators, and assigns the said weekly separate maintenance as thereby provided. The allowance is therefore expressly payable to the wife for her life, and is payable not only by the husband but by his executors and administrators. No doubt this latter clause might be construed as applying only to any arrears due at the husband s death, but it is certainly wide enough to cover payments accruing after his death. As a matter of construction, I hold that the provision was made for the wife for her life, even in case she should survive her husband.
But it was contended that this, being a deed of separation, is to be dealt with in a different way from deeds for other purposes, and must be held to be incapable of subsisting after the death of the husband. There is no authority that I am aware of for this contention, and assuming the construction of the deed to be such as I hold it, I cannot so deal with it. That a deed of separation may be good after the death of the husband I find decided by the Vice-Chancellor of England in Clough v Lambert 10 Sim 174. The question is whether it is to be construed as restricted to the joint lives of the husband and wife, and this must depend on the language of the instrument. An analogy was contended for between the case of the death of the husband and the return to cohabitation; but the latter case depends entirely on considerations which have no application to the former.
The second question then arises, whether the bequests to the wife in the will of the husband are to be deemed a satisfaction of the liability of the husband s assets to the payment of the allowance secured by his covenant. The rule of this Court as to the satisfaction of a debt by a legacy is simple in its terms, but it has been so restricted by fine distinctions that it is often hard to know what cases are or are not within it. The debt or obligation here is the personal covenant of the husband and nothing more; the amount is the weekly sum of 15s. The gifts by the will are, first, a weekly sum of 12s and the life use of a house and its furniture. The objection that a legacy cannot operate in satisfaction of a debt of greater amount, even pro tanto, is sought to be got over by the proof that the use of the house and furniture exceeded the deficiency of 3s a-week. But this introduces another objection, namely, that the nature of the gift must correspond with the nature of the obligation which was held in Bartlett v Gillard 3 Russ 149, following earlier cases, to be conclusive against satisfaction. If, then, recourse must be had to the house and furniture to get over the prior objection, it must be admitted that the whole of the obligation is not met by a gift of the same nature of the full amount; and, as satisfaction cannot operate pro tanto, this latter objection would seem to be equally conclusive. It was sought also to object on the ground that the allowance given by the will was not to arise till a week after the death of the testator. But even if such a trivial matter as the delay of one week were to be deemed sufficient evidence of an intention of the testator to take the case out of the general rule, it is conclusively met by the consideration that here there was no interval in the provision for the wife, as it ran from the death of the testator, although the first payment of it was not to be made till the end of a week from the death.
I am of opinion that on the other grounds I have mentioned I am precluded by the authorities referred to in argument from holding that the provision by the will was in satisfaction of the provision by the deed of separation, and I decide that the widow is entitled to both these provisions.
Quin v Armstrong
[1876] IR 11 Eq 161 (Rolls Court)
The facts are set out in the judgment.
Sullivan MR: The bill in this cause was filed for the purpose of raising out of the lands of Tinneranny two annuities of 40 and 60 a-year, charged, as the plaintiff alleges, on those lands by the joint operation of a deed of the 17th of July 1866, and the will of Joseph Jeffares. In order to explain how the matter stands, it is necessary to go back and ascertain how the testator was circumstanced as to his property when he made his will. He was owner in fee of the lands of Tinneranny in 1856; and on the marriage of his daughter in that year he charged the whole lands of Tinneranny with an annuity of 100, the trusts of which he declared by deed. I had a suit before me recently in which I had to declare the construction of that deed, and some others executed by Mr Jeffares. I held that that lady was entitled to the annuity for her life. That being so, it appears that on the 16th of July, 1866, by two deeds executed on that day he charged, not all the lands, but a portion of them, with an annuity of 50 by one deed, and by the other the same portion of the said lands with an additional annuity of 100 for the daughter to whom he had originally given the annuity of 100 above mentioned. The deed by which he charged this particular portion of the lands of Tinneranny with the 50 annuity contains a power to the grantor of revocation of the uses of the annuity. The deed granting the annuity of 50 contains a power to the grantor of revocation in the following terms:
Provided always, and it is hereby agreed and declared, that the said Joseph Jeffares may at any time or times, by deed to be registered at the Office for Registering Deeds in Ireland, within six months from the execution thereof, or by will or codicil, either alter or absolutely revoke all or any of the uses, trusts, and estates hereinbefore limited and declared; and by the same or any other deeds or by will or codicil, limit and declare new uses, trusts, and estates of and concerning all or any of the said premises hereinbefore expressed to be hereby granted and assigned respectively, as he shall think fit.
A question has been incidentally raised as to whether this power extends to a total revocation of the grant of the annuity, or merely to a revocation of the uses thereof. The strong inclination of my opinion is, that it is a power to revoke the annuity entirely. The deed of the 16th of July, 1866, which charged the additional 100 a-year for the daughters also contains provisions the details of which I need not go into. The effect of them was that as, in the interval between the deed of 1856 and the 16th of July, 1866, the grantor had parted with a certain portion of the lands of Tinneranny, he gives the additional 100 a-year as a sort of amends to his daughter and her second husband, Mr Wilson, and he purports to release the portion of the lands which he had parted with from the annuity of 100 which he had given in 1856, and the daughter and her husband are made parties to the deed of the 16th of July, 1866. They did not execute that deed probably on account of the power of revocation; but in the suit I referred to, I proceeded on the basis that they had taken with this second deed. Now, on the morning of the 17th of July, 1866, Joseph Jeffares was master of the Tinneranny estate – save to the extent of the portion of it which he had parted with – subject to those three annuities, two of them of 100 each, the other of 50, which were to commence from the day of his death. I do not think it of moment whether he had a legal fee or an equitable fee in the lands. On the 17th of July, 1866, he executed a voluntary deed of a very peculiar character by which he gives certain annuities to relatives and persons in his employment, and, subject to those annuities, he limits the estate, after a life interest to himself, substantially away from himself. He reserves a reversion after an estate tail, but of such a character that it is more than questionable whether he could ever enjoy the reversion. He recites the deeds which I have adverted to, and then proceeds: In consideration of the love and affection which the said Joseph Jeffares bears to his son Isaac Jeffares, he the said Joseph Jeffares doth by these presents grant, &c, the part of the lands of Tinneranny on which he had charged the annuity of 50, and the additional annuity of 100 by the deed of the 16th of July, 1866, to the following uses: To the use that Frances Jeffares, widow of Richard Jeffares deceased, son of the said Joseph Jeffares, and her assigns, shall during her natural life receive an annual sum of 40, to be charged upon the premises hereinbefore expressed to be hereby granted, &c, payable half yearly on the 25th of March and 29th of September, the first payment to be made on the gale day next succeeding the death of the said Joseph Jeffares; and to the further use that Mathias Quin of New Ross, his clerk, shall and may during his natural life receive an annual sum of 40, payable in the same manner on the same gale days as the former annuity, and to the further use and intent that three other persons – Darby Doyle, Michael Murphy, and James Jeffares – should receive annuities of 20, 10 and 10 respectively, payable in the same manner; and subject and charged as aforesaid to the use of the said Joseph Crawley and his heirs, upon the trusts, intents and purposes after declared and contained ; that is to say, upon trust that the said Joseph Crawley, his heirs and assigns, do and shall pay the said annual sum or yearly rent of 100 granted by said in part recited indenture of the 1st day of February, 1856, so as to exonerate the part of the lands granted by the said in part recited indenture of the 28th of March, 1864, and 4th day of September, 1865, from the payment of the same, and subject thereto, that the trustees do and shall pay and apply the rents, issues and profits which shall remain after payment of the said annual sums so charged thereon as aforesaid, including said annual sum of 100 granted by said in part recited deed of the 1st of February, 1856, unto or permit or suffer the same to be received by the said Isaac Jeffares during his life, or until he shall charge the same or any part thereof, or until any writ of execution shall issue against the said Isaac Jeffares, by virtue whereof his life interest in the rents, &c, shall be liable to be seized, &c, or that the said Isaac Jeffares shall be declared a bankrupt or insolvent debtors, or shall accept the benefit of any Act for the Relief of Insolvent Debtors, or become insolvent, or the interest of the said Isaac Jeffares shall otherwise become vested in any other person, &c – in either of which cases the said last-mentioned trust for the said Isaac Jeffares shall determine; and then upon trust during the remainder of the life of the said Isaac Jeffares to apply the rents of said lands for the maintenance of the present or any future wife of the said Isaac Jeffares, and for the maintenances support and education of the child and children of any deceased child, &c; and after the death of Isaac Jeffares to the use of his children or remoter issue, or to the use of any other person or persons in trust for any such child or children or remoter issue as Isaac Jeffares should by deed, &c, appoint; and in default of appointment to the use of the child or children as tenants in common in tail, and in default of such issue to the use of the said Joseph Jeffares, his heirs and assigns.
This deed of the 17th of July, 1866, contains a power to Joseph Jeffares by deed or will to alter or absolutely revoke all or any of the uses or trusts thereby declared, and by the same or any other deed or will to limit or declare new uses and trusts of and concerning all or any of the lands thereby granted. Mr Jeffares then came to make his will. He appears to have considerable property, but he had the great misfortune to have had it complicated by a set of badly drawn instruments, which it is difficult even to see one s way through. The will itself which he made, and which I am now going to mention, if it had not been preceded by those deeds, is plain and simple enough; but, having regard to the fact that he had executed those deeds, it was a task of no ordinary difficulty to make a will such as would steer clear of litigation – nay, it was impossible for any man, unless he had prior deeds before him, to draw a will which would not land the property into the very difficulties which have finally surrounded it. It has been proved, and it is a conceded fact, that the net rental of the lands, as conveyed and limited by the deed of 1866, is, and was when Mr Jeffares died, about 460 a-year. The total of the annuities which the deed of the 17th of July, 1866, granted is 120; adding that sum to the tot of the three former annuities ( 250) he makes 370. He made his will on the 16th of November, 1871, nearly five years and a half after the deed of the 17th of July, 1866. The will commences by devising various properties forming the bulk of the testator s estates, and then the testator devises all my estate and interest of and in the town and lands of Tinneranny, to the trustees of his will, upon the trusts hereinafter declared of and concerning the same, that is to say, that my daughter-in-law Mrs Frances Jeffares, widow of my late son Richard Jeffares, may receive and take thereout during her natural life the yearly sum of 40 sterling; that my clerk, Mathias Quin, of New Ross may receive and take thereout for the term of his natural life the yearly sum of 20 sterling; that Michael Murphy, of New Ross, at present in my service, may receive and take thereout for the term of his natural life the yearly sum of 10 sterling; and that James Jeffares, of new Ross, at present in my services may receive and take thereout for the term of his natural life the yearly sum of 10 sterling; the said several and respective annuities to be paid and payable at or upon the two following days, that is, on the 25th day of March and 29th September. The will then gives the annuitants a power of distress, and proceeds: And subject to the annuity already charged upon said town and lands, and to the several and respective annuities hereby charged on said town and lands, and to the remedy given for securing and recovering the same, to the use of my said daughter-in-law Isabella Jeffares, for and during the term of her natural life, to and for her own sole and separate use and benefits or to such person or persons as she, by any writings signed with her proper hands shall from time to time, notwithstanding her coverture, appoint, &c.; and from and immediately after the decease of my said daughter-in-law Isabella Jeffares, to the use of her children by my said son, Joseph Jeffares, with the power of appointment and limitation over as hereinafter mentioned, but as the annual rents and profits of said town and lands of Tinneranny may not be sufficient to pay the annual charges affecting the said lands and said several annuities hereinbefore devised, now in the event of there being a deficiency in any years after paying the charges affecting said lands of Tinneranny, to pay each and every of said annuities. I hereby will and direct that in each and every year there shall be any such deficiency, said deficiency shall be made up and paid to said annuity by my said daughter-in-law, Isabella Jeffares out of the rents and profits of the other estates and properties given, devised, and bequeathed to her for the term of her natural life. Then, after disposing of other property, the will proceeds: And, as to, for and concerning all the said several lands, tenements, and hereditaments before left and devised for the benefit of my said son William Jeffares, and of my daughter-in-law Isabella Jeffares, respectively, for their respective lives, my will is, that the same are hereby left upon trust for each, my said son William Jeffares, and my daughter-in-law Isabella Jeffares, to whom a life interest is given remain and be to the use and for the benefit of all and every such one or more, exclusively of the other or others of the children or remoter issue of my said son William Jeffares, and of my daughter-in-law Isabella Jeffares by my said son Isaac Jeffares, to whom any interest has been limited for life, at such ages, days or times, for such estate or estates as his said son and daughter-in-law should appoint, and in default of appointment equally, as tenants in common in tail.
The important question now arises, whether that will revoked the deed of the 17th of July, 1866; in other words, whether the plaintiff Mathias Quin is entitled to the annuity of 40 under the deed and to the annuity of 60 bequeathed to him by the will or only to the latter.
The principles of law affecting this case are clear, and no controversy has been raised on either side in respect of them. It is not necessary for a man who has executed a voluntary deed with a general power of revocation to make an express revocation of it. It is a sufficient revocation within the power if he makes a disposition of the estate inconsistent and which cannot stand with the voluntary deed. A revocation may be implied from the manner in which he has given the estate and the extent to which he has given it. There is also a rule of law which has been established by the many cases which were relied on at the Bar, that where a testator by his will gives a benefit to a person, and by a codicil to his will gives a benefit to the same person, the presumption of law is that he means to give twice; and it lies on the party who disputes it, to show why that construction of them should not be adopted. That is a very sensible and a very wise rule of law. I doubt very much whether that rule of law, which is so clearly applicable to a will, and codicil applies precisely to the case of a voluntary deed capable of being revoked by will, and to a will subsequently executed. However that may be in the abstract, in the case before me the question seems to me one of pure construction – namely, whether the disposition made by the will is of such a character as to compel the Court to hold that by it the voluntary deed is entirely revoked, or is left standing wholly or in part.
When the testator Joseph Jeffares came to devise these lands of Tinneranny, he had at the determination of his own life, when of course the will became operative, that shadowy reversion which I have described. It is plain that he was not merely dealing with that reversion; he plainly meant that his devise should have operation at the moment of his death. The Plaintiff s counsel are compelled to concede this. The testator was therefore to some extent exercising his power of revocation. No doubt this extent is not to be carried further than the dispositions in the will enforce it. If the new dispositions can to any extent fairly stand with the old ones, the rule is to preserve the old dispositions so far as the new dispositions do not interfere with them, and merely to hold the rest revoked.
Relying upon the rule of law as to cumulative gifts by will and codicil as applicable here, it was argued with great ability on the part of the Plaintiffs and rightly argued, that the Court ought not, from the similarity of the gifts being all annuities and from their being made to the same persons and apparently for the same reasons, to come to the conclusion that the testator meant to revoke the annuities given by the deed. So far I go entirely with the Plaintiff`s argument before me. But there is a rule of law which is, in my opinion, of equal weight and importance as those which I have already mentioned – and that is, that you are to construe the language of a testator s will according to its plain well understood meaning, and if he tells you that he is disposing of his whole estate you are not to take upon yourself to say that he is disposing of part only, Well, but the Plaintiff`s counsel say if you give the wide interpretation to the language of the devise, you must hold that the additional annuity of 100 granted by the deed of the 16th of July, 1866, to his daughter was revoked thereby. Now I may as well say that I think it clear he did not revoke that annuity, and that, without invading that annuity, the will may well operate to revoke all those granted by the deed of the 17th of July, Pomfret v Perring 18 Beav 618; 5 DM & Gor 775 goes a long way to support the view that the annuity given by the deed of the 16th of July, 1866, was not revoked. It has been argued strongly that if the will did not revoke that additional annuity which was granted by the deed of the 16th of July, 1866, it could not have revoked the annuities granted by the deed of the 17th of July, 1866. I have not been able to appreciate the force of that argument. The two matters are essentially distinct, and stand on entirely different grounds.
Indeed I think that no two matters could be more distinct than the effect in law of the will on the state of things as it existed anterior to the deed of the 17th of July, 1866, and its effect after that deeds when he had nothing to dispose of but a shadowy reversion. If the testator was not by this will disposing of the estate under his power of revocation what was the estate in Tinneranny which he was disposing of? The Plaintiff says that he was disposing of the estate subject to the annuities given by the deed of the 17th of July, 1866. In my opinion, the testator does not say anything of the sort; he tells me that he is disposing of all his estate and interest in the town and lands of Tinneranny. Now he had an estate and a present one under the deed of the 16th July, 1866; he had none such under the deed of the 17th of July, 1866; and in my opinion the true construction of the words of devise is that they include all that he could dispose of under the power of revocation in the deed of the 17th of July, 1866. If that construction is put on those words, the whole is at once intelligible. But if any other construction is put upon them, inextricable difficulties arise as to how much of the limitations of the deed of the 17th of July, 1866 is cut away, and how much is left unaffected by the will. The better construction, and the more reasonable and consistent one, is to give the words estate and interest their ordinary and full meaning. In coming to that conclusion, I do not bring in aid the limitations in the will itself, which would go a long way to sustain that meaning; for the whole estate and interest in the lands is given, and trusts are fastened on it which are commensurate with the entire estate, showing an intention to revoke the deed of the 17th of July, 1866, by giving estates inconsistent with its preservation.
The case of Beckett v Harden 4 M & Sel 1, relied on by Mr O Hagan, was a very clear case. But cases on the construction of the words of one will are seldom of use when applied to the construction of another will. In my opinion, Beckett v Harden is not an authority for the Plaintiff in this case. That was a case sent to the Court of law by the Court of Chancery, and was disposed of according to the then existing practice by the certificate of the Judges, and the reasons for the decision are not given. But from the arguments in the report I am satisfied in my own mind what the reasons were; they are very readily to be gathered from the statement of the case.
It was suggested that in the clause and subject to the annuity already charged upon said town and lands, and to the several and respective annuities newly charged, the word annuity should be read annuities. I must leave the word annuity as I find it. I cannot change it into annuities for the purpose of controlling a very clear devise. It seems to me there is a clause in the will which much strengthens the view I have taken, namely, the testator s declaration but as the annual rents and profits of said town and lands of Tinneranny may not be sufficient to pay the annual charges affecting the said lands and said several annuities hereinbefore devised, now in the event of there being a deficiency in any year after paying the charges affecting said lands of Tinneranny to pay each and every of said annuities, I hereby will and direct that in each and every year there shall be any such deficiency, said deficiency shall be made up and paid to said annuitants by my daughter-in-law Isabella Jeffares out of the rents and profits of the other estates and properties given and bequeathed to her for the term of her natural life. That clause has been relied on by both sides – by the Plaintiff as showing that no revocation was intended – by the Defendant as showing that it was not intended that the annuities should be cumulative. If the testator did not mean to revoke the deed of the 17th of July, 1866, the annuities charged on the property would amount to 510, and the rental which was to meet those annuities was only 460. If, on the other hand, the will operated as a revocation of the deed of the 17th of July, 1866, the charges amounted to 390 a-year, and they stood against a rental of 460. In my opinion, it appears to be a more reasonable construction to hold that the testator contemplated a charge of 390 against a rental of 460, than a charge of 510 against 460, which was 50 short of meeting it. The only answer which Mr O Hagan gave to that was that the testator may have contemplated the deaths of the annuitants, or of some of them. He does not say that; 390 is close of 460, and it might happen that in some years the rental of 460 might not be sufficient to meet it – and so the testator puts it. He treats the deficiency as an event which may happen, not as a thing which must happen, which it would be if there was a charge of 510 against a rental of 460.
Various other passages of the will have been relied upon, on the part of the Plaintiff, as inconsistent with the idea of revocation. I must say that, looking at the whole will – nay more, criticising its language as you may – I see nothing to take from the effect of the first devise of all his estate and interest in the lands of Tinneranny, but much to sustain it. The ground of my decision is that, by the devise of all his estate and interest in the lands of Tinneranny, the whole estate which he had powers by reason of the clause of revocation in the deed of the 17th of July, 1866, to devise, passed by the will, and that the annuities thereby given, and the limitations thereby made, entirely supersede those given and made by the deed of the 17th of July, 1866.
I shall therefore declare that the Plaintiff is entitled to the annuity of 60 given by the will, but that he is not entitled to the annuity of 40 given by the deed.
Hickey v O Dwyer & Ors
[2005] IEHC 365
Judgment of Miss Justice Laffoy delivered on 9th November, 2005.
Background
Two separate and distinct issues are raised on the special summons in these proceedings.
The facts common to both issues are that they arise in relation to the estate of John Hickey (the testator) who died on 30th January, 1999. The testator was the husband of the plaintiff and the father of the fourth defendant, who was born on 5th December, 1990. The third defendant is the mother and, in effect, the next friend of the fourth defendant. The testator and the third defendant were not married. The testator made his last will and testament on 26th May, 1998, wherein he appointed the plaintiff to be his sole executrix and residuary legatee and devisee. She having renounced her right to probate, Letters of Administration with the testator’s will annexed were granted to the first and second defendants on 15th July, 2003. The first and second defendants are party to these proceedings in their capacity as personal representatives of the testator.
The first issue
There were only two dispositive provisions in the will of the testator. The provision which gives rise to the first issue in these proceedings is Clause 4 wherein the testator devised and bequeathed the sum of IR£100,000 to the first, second and third defendants to be held by them in trust as thereinafter set out for his daughter, the fourth defendant, until she should reach the age of 25 years and then to his said daughter absolutely. The first, second and third defendants were appointed as trustees of that bequest and the trusts upon which they were to hold the sum of IR£100,000 were set out. The other dispositive provision was the devise and bequest of the residue to the plaintiff for her own use and benefit absolutely.
In 1993 the testator had taken out a policy of assurance on his life with Prudential Life of Ireland. On 21st June, 1993 he executed a document (the 1993 Trust) which, in effect, was a declaration of trust in a standard form, apparently, produced by the insurer. It was a special condition of the policy that it was issued pursuant to the 1993 Trust. In the 1993 Trust the testator declared that the trustee or trustees for the time being thereof should hold the policy and the full benefit thereof and all monies which might become payable thereunder (the trust fund) upon trust, if the benefit under the policy should become payable in consequence of the death of the testator, which happened, for the benefit of all or one or more of the class of persons named by relationship to the testator (which included the spouse and children of the testator) as the testator in his absolute discretion should “be (sic) deed or deeds revocable or irrevocable appoint”. It is quite clear that the word “be” is a misprint for “by”. It was expressly provided that no appointment should be made nor any power of revocation exercised after the death of the testator. It was provided that, in default of and subject to any such appointment, the trust fund should be held for the absolute benefit of the fourth defendant as to 100% of the trust fund.
The testator did not exercise the power of appointment over the trust fund conferred on him in the 1993 Trust during his lifetime by deed. Following his death, the proceeds of the policy, IR£223,350 (€283,595.99), were paid out by Prudential Life of Ireland to two trustees appointed by the court of the trust fund on behalf of the fourth defendant.
The first issue raised on the special summons concerns the entitlement to the fourth defendant to the proceeds of the policy and under the will of the testator and requires the court to answer the following questions:
(a)(i) Did the testator by the bequest in his will in favour of the fourth defendant, exercise the power of appointment in relation to the proceeds of the policy?
(a)(ii) What is the interest of the fourth defendant in the proceeds of the policy?
(a)(iii) What is the interest of the plaintiff in the proceeds of the policy?
(a)(iv) If the answer to question (i) is in the negative, was the bequest in the testator’s will to set up a trust in favour of the fourth defendant in the amount of IR£100,000 intended to be in whole or in part satisfaction of the monies held upon trust for her pursuant to the terms of the trust funds?
(a)(v) In the light of the answers to the above questions, in what manner are the proceeds of the policy to be distributed?
There is inherent in the first issue an acceptance by the plaintiff that the testator by his will gave a bequest of IR£100,000 in trust for the fourth defendant. No question as to the proper construction of the will arises. The case made is that by operation of the equitable doctrine of satisfaction the fourth defendant is not entitled to both the provision made in the 1993 Trust in relation to the trust fund and also the bequest.
In Williams on Wills, 8th Ed., 2002, the various situations in which the doctrine of satisfaction comes into play are identified as follows in para. 44.1.
“Satisfaction is the donation of a thing with the intention that it shall be taken either wholly or partly in extinguishment of some prior claim of the donee. It may occur (i) when a covenant to settle property is followed by a gift by will or settlement in favour of the person entitled beneficially under the covenant, (ii) when a testamentary disposition is followed during the testator’s lifetime by a legacy or settlement in favour of the devisee or legatee, and (iii) when a legacy is given to a creditor. In all these cases the question of satisfaction is one of the intention of the settlor or testator; and, if he expressly declares that the latter disposition is to be in satisfaction of the earlier obligation or disposition the matter will be governed by this expression of his intention and effect is given to the later disposition accordingly. In the absence of such expression, certain presumptions as to his intention are raised in equity, and evidence, intrinsic and, in certain cases, extrinsic, may be used to rebut or support such presumptions. … The three cases above are shortly described as (i) satisfaction of portions by legacies or subsequent portions; (ii) ademption of legacies by portions; and (iii) satisfaction of debts by legacies. In the first two cases the court leans in favour of satisfaction; in the third case it leans against it.”
Counsel for the plaintiff submitted that circumstances which have arisen in this case fall within the first classification of the doctrine – satisfaction of a portion by a legacy. He acknowledged that the sequence here was that there was a portion followed by a legacy and, accordingly, when the portion was created there was no legacy to adeem. The species of the doctrine of satisfaction on which the plaintiff relies is an aspect of the so called “rule against double portions”.
Counsel for the third and fourth defendants submitted that, as traditionally applied, the rule against double portions is discriminatory and is inconsistent with both the Constitution and the European Convention on Human Rights. The criticisms which may be made of the rule are outlined in Delaney on Equity and the Law of Trusts in Ireland, 3rd Ed., at p. 703, where it is pointed out that it has been expressly preserved by s. 63(9) of the Succession Act, 1965, which provides that nothing in s. 63 shall affect any rule of law as to the satisfaction of portion debts. Accordingly, there is express recognition of the rule in a post 1937 statute. Aside from that, neither the question whether the rule was carried over in 1937 on the coming into force of the Constitution nor whether it is compatible with the European Convention on Human Rights was raised in the pleadings, either generally or by reference to the facts of the case. In the circumstances I consider it inappropriate to express any view on those questions in these proceedings.
The presumption of satisfaction of a portion by a legacy has traditionally been applied in this jurisdiction where the settlor or testator is the father of, or in loco parentis, to the donee, the first gift is a portion and both gifts are substantially of the same nature and in favour of the same person. In this case, I am satisfied that the provision made in 1993 was a portion in the sense of being a gift of a substantial nature relative to the means of the testator and intended to set up the fourth defendant in life. Moreover, I am satisfied that the provision made in the 1993 Trust and the provision made by the testator in his will for the fourth defendant were substantially of the same nature. They were both, essentially, dispositions of money to which the fourth defendant was to be absolutely entitled, albeit in the case of the bequest in the will the trustees would have control until she attained 25 years of age. Although the provision in the will was substantially smaller than what the policy yielded, the doctrine of satisfaction admits of a lesser provision in a will being satisfaction pro tanto of an earlier portion.
There is a helpful commentary on the strength of the presumption of satisfaction in relation to the different classes of satisfaction in para. 44.9 of Williams. It is pointed out that the strength of the presumption against double portions, and what it takes to rebut the presumption, varies according to the nature of the instruments and the order in which they are executed. Presumption is strongest in the case where a testamentary provision for a child is followed by a settlement, which does not arise in this case. The rationale for that proposition is that both provisions are still under the testator’s control when he executes the later instrument. The presumption is less strong where a settlement, which creates an obligation remaining unperformed, is followed by a testamentary provision. I would surmise that the editors of Williams are referring there to an irrevocable settlement. The rationale of the weaker presumption in that situation is that the testator is not free from the obligation of the settlement when he makes the will, and it is not so readily presumed that he meant the latter to take the place of the former. The strength of the presumption is further reduced when the double provision is contained in consecutive settlements, since, in the case of a will, the testator is supposed to be disposing of the whole of his property and distributing it among the different objects of his bounty, but not so in the case of a settlement. Further, if the first settlement contains a power of revocation which is not exercised, this will be an indication that the provisions are intended to be cumulative.
In this case the testator did not expressly declare his intention. Accordingly, it is necessary to consider whether the presumption applies. In relation to the two instruments at issue in this case, and considering the evidence they afford intrinsically without the aid of extrinsic evidence other than evidence of what the personal circumstances of the testator, his age and marital status, were when they were executed, the following seem to be the relevant factors:
(1) When he was a single man aged 28, in the 1993 Trust, the testator put in place an arrangement to provide for the fourth defendant in default of him exercising the power of appointment in relation to the trust funds. The exercise of the power of appointment would have overridden the default provision, so that the trust fund was still under the testator’s control.
(2) In 1998, after he had married, and when he was aged 33, the testator made a will in which he disposed of his entire estate and made provision for the fourth defendant. A will is ambulatory, so that the testator’s estate was still under his control after he made his will.
(3) After he made his will the testator neither revoked the will nor did he exercise the power of appointment under the 1993 Trust. The fourth defendant was his only child.
(4) On his death the entitlement of the fourth defendant to the trust fund under the default provision in the 1993 Trust took effect. At the same time, the testator’s will took effect and the entitlement of the fourth defendant to the provision made for her in it took effect.
In my view, the foregoing circumstances give rise to a presumption that the testator did not intend the fourth defendant to take both provisions. The issue which remains is whether extrinsic evidence is admissible to either support or rebut that presumption and, if it is, what is the effect of the evidence.
Section 90 of the Succession Act, 1965 provides that extrinsic evidence shall be admissible to show the intention of the testator and to assist in the construction of, or to explain any contradiction in, a will. It is well settled that extrinsic evidence may only be adduced pursuant to s. 90 if it assists in the construction of a will or resolves a contradiction in the will and, in either case, the purpose of its admission is to show what the intention of the testator was in the particular context (O’Connell v. Bank of Ireland [1998] 2 IR 596). As I said at the outset, it is accepted by the plaintiff that the bequest in favour of the fourth defendant contained in the testator’s will is a valid bequest. No question arises as to the admission of extrinsic evidence to construe the will. In any event, the will is unquestionably clear and unambiguous.
What the plaintiff asserts is that extrinsic evidence is admissible in support of the presumption that the testator did not intend to make double provision for the fourth defendant. In this connection, counsel for the plaintiff relied on the following passage from Williams at 14.14:
“Parol Evidence cannot be admitted to add to or vary a written instrument; but where from two written instruments, taken in conjunction with the surrounding circumstances, the court raises a presumption of satisfaction, then parol evidence is admissible to rebut the presumption, and therefore also to support it. In the case of a will and a settlement the rule is the same whether the will precedes or follows the settlement.”
The evidence adduced by the plaintiff which it is contended supports a presumption of satisfaction is as follows:
(a) In her grounding affidavit, having earlier averred that prior to and after her marriage she discussed with the testator the provision he had made for the fourth defendant, the plaintiff averred that it was always her clear understanding from the testator that it was his understanding that he had settled his affairs in such a manner that IR£100,000 from the life assurance policy would be held for the benefit of the fourth defendant but that thereafter the balance of the estate would devolve to herself, the plaintiff. In relation to that averment, the factual position is that the proceeds of the policy were not part of the estate of the testator.
(b) Apropos of the averment at (a), the first defendant, in his affidavit filed in response to the summons, averred that he admitted that it was the deceased’s understanding that he had settled his affairs in such a manner that IR£100,000 from the policy would be held for the benefit of the fourth defendant and that thereafter the balance of the estate would devolve to the plaintiff. The first defendant did not identify his means of knowledge as to the testator’s understanding. In relation to the general approach adopted by the first and second defendants on this application, in the same affidavit the first defendant averred that he and the second defendant were willing to abide by any decision of the court in respect of the plaintiff’s application.
(c) The solicitor who acted for the testator in the drawing and execution of his will gave oral testimony to prove the notes of his attendance on the testator on 6th March, 1998 when he took instructions from the testator for the drawing of the will. The attendance notes record the following in relation to provision for the fourth defendant:
“100K to Nicole in trust.
This is available through life policy on J.H.’s life – approx. 280K.
Trust [?] 25 yrs.”
The third and fourth defendants did not seek to cross-examine the plaintiff or the first defendant on their respective affidavits.
In my view, neither the averment of the plaintiff nor the averment of the first defendant is of a probative quality to either support or rebut the presumption. In relation to the evidence of the solicitor, that goes no further than to prove the instructions recorded by the solicitor when he took instructions for the drafting of the testator’s will almost three months before it was executed.
The position adopted by the third defendant in her affidavit was that the attendance notes of the solicitor were not admissible. Further, she averred that she visited the testator in hospital on the Friday afternoon prior to his death, when he assured her that the fourth defendant would be well looked after. She further averred that at all material times she understood that the policy was in place and also that the fourth defendant had been provided for under the terms of the testator’s will. The source of her understanding is not identified. In my view, those averments are not of a probative quality to rebut the presumption.
The only other evidence which might be relevant to rebutting or supporting the presumption is the evidence of the testator’s assets when he made his will. There is no direct evidence of this, but, as he died just eight months after making his will, this can be inferred. The only asset of any substance which the testator had was his dwelling house, which was valued at €114,176.43 (IR£90,000) as of the date of his death on the Inland Revenue affidavit filed with the Revenue Commissioners. The dwelling house was mortgaged but there was a mortgage protection policy in place which would, if it was kept up, and in fact did, clear off the mortgage on the death of the testator. The testator was a member of his employer’s pension plan. Following his death the plaintiff, as the nominated beneficiary, received €69,537.19 on foot of the pension plan, but this did not form part of his estate.
The totality of the relevant evidence in relation to the testator’s age, marital status and personal circumstances and the state of his assets when he made his will, in my view, support the presumption that the testator did not intend that the fourth defendant should receive both the entirety of the proceeds of the policy and the bequest contained in his will. In other words, the presumption stands.
Before answering the questions raised on the special summons in relation to the first issue, it is necessary to explain the consequence of the conclusion that the doctrine of satisfaction applies. It is that an election must be made on behalf of the fourth defendant, who is still a minor, between the provision contained in the 1993 Trust and the provision under the will. On the facts of this case, it must be assumed that the election would be to take the provision under the 1993 Trust the trust fund represented by the proceeds of the policy.
Finally, by way of clarification, it is stated in Delaney at p. 703 that, if the father has actually advanced the portion to the child, a subsequent legacy will not be regarded as satisfaction, the reasoning being that, if the father has already given the child the gift in the nature of a portion, he would undoubtedly intend that child to benefit in addition from any provision made for him under a subsequent will. There is authority for that proposition in Smyth v. Gleeson [1911] 1 I.R. 113 at p. 119. On the facts of this case, the prior portion had not been actually transferred or paid to or on behalf of the fourth defendant when the will was made. The provision in the 1993 Trust was liable to be displaced by the exercise of the power of appointment.
Answers to questions in relation to the first issue
The answers in relation to the first issue are as follows:
(a)(i) The testator did not by his will execute the power of appointment in relation to the proceeds of the policy. By virtue of the terms of the 1993 Trust the power of appointment was exercisable by deed only.
(a)(ii) The fourth defendant is entitled to elect to take the proceeds of the policy or the bequest contained in the will.
(a)(iii) The interest of the plaintiff in the proceeds of the policy depends on the election made by the fourth defendant. On the assumption that she will elect to take the proceeds of the policy and, indeed, the proceeds have already been paid to trustees on her behalf, the plaintiff has no interest in the proceeds.
(a)(iv) The provision in the testator’s will in favour of the fourth defendant was intended to be in part satisfaction of the proceeds of the policy the subject of the 1993 trust.
(a)(v) The distribution of the proceeds of the policy depends on the election to be made on behalf of the fourth defendant. On the assumption that the election is to take the proceeds of the policy, the distribution of the proceeds to trustees on behalf of the fourth defendant will stand.
The second issue
At the date of his death the testator was the sole legal owner of the dwelling house, 9 The Dell, Huntsfield, Dooradoyle, Limerick, which has a current value of €265,000. The testator purchased the dwelling house, as a newly constructed house, around 1994. He financed the purchase price, which was in excess of IR£60,000, by a loan of IR£4,000 from his then employer to pay the deposit, the State grant of IR£3,000 and a mortgage for the balance. On completion of the purchase the testator and the plaintiff moved into the dwelling house and they resided there until the date of his death.
The questions raised on the special summons in relation to the dwelling house are as follows:
(b)(i) At the date of the death of the testator did the testator and the plaintiff own it in all the circumstances in equity as joint tenants?
(b)(ii) Is the plaintiff entitled to a beneficial interest in the dwelling house?
(b)(iii) If the answer to (ii) above is in the affirmative, what is the extent of the plaintiff’s beneficial entitlement?
The basis of the plaintiff’s claim to a beneficial interest is that she made financial contributions to the cost of the acquisition of the dwelling house. It is not in issue that the principles of law to be applied in determining whether the plaintiff’s claim is well-founded are those set out in the judgment of Finlay P., as he then was, in W v. W [1981] I.L.R.M. 202.
The factual basis of the plaintiff’s claim is as follows. The testator purchased the dwelling house “from the plans”. When it was completed the testator and the plaintiff decided to live together there. They considered that they were moving into their “home”. It was decided to leave the house in the testator’s name, the intention being that the plaintiff could buy a house as well. Some time after they moved in, the testator changed his employer, whereupon the loan he had obtained for the deposit became repayable. The plaintiff borrowed a sum of IR£4,000 on a term loan and gave that sum to the testator so that the testator could repay his employer. The testator and the plaintiff had a joint account before they were married. Their respective salaries were paid into the joint account and the mortgage and mortgage protection policy instalments were paid out of the joint account. The mortgage debt was discharged out of the proceeds of the mortgage protection policy.
The basis on which a court will decide that a wife is entitled to an equitable interest in a property in the sole name of her husband on the basis of a contribution of money to the purchase or on the basis of a contribution, either directly or indirectly, towards repayment of the mortgage instalments is subject to the overriding requirement that such a decision will be made only “in the absence of evidence of some inconsistent agreement or arrangement” per Finlay J. in W v. W at p. 204. In this case, the evidence is not consistent with an understanding by the testator and the plaintiff that the plaintiff would have a beneficial interest in the house. First, the assistance the plaintiff gave the testator in relation to repayment of the loan he had borrowed to pay the deposit cannot be construed as a contribution to the purchase price of the dwelling house. Secondly, on the plaintiff’s own evidence, the understanding between them was that each would own and have title to a house, the house in issue here being the testator’s. In fact, the plaintiff did acquire a house in her own name later, which she rented out.
Apart from that the court has been furnished with very little concrete evidence to support the plaintiff’s claim. Copies of the bank statements on the joint account of the testator and the plaintiff dating from 30th October, 1997 to 4th February, 1999 have been put in evidence. From the pagination of the statements I would surmise that the joint account was opened very shortly before 30th October, 1997. Over the period for which statements have been furnished there are gaps. Even if I was satisfied that the plaintiff’s claim for a beneficial interest based on the principles set out in W v. W. had been made out, I would find it impossible to calculate the contribution on the basis of the evidence before the court.
Answers to questions in relation to the second issue:
My answers in relation to the second issue are as follows:
(b)(i) The testator and the plaintiff did not own the dwelling house in equity as joint tenants at the date of the death of the testator.
(b)(ii) The plaintiff was not entitled to a beneficial interest in the dwelling house at the date of the testator’s death.
(b)(iii) This does not arise.