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PUBLISHED FOR THE PROPRIETORS AT THE OFFICE OF
JUDICIAL COMMITTEE OF
HER MAJESTY'S PRIVY COUNCIL
AND OF THE
HOUSE OF LORDS
IN SCOTCH AND IRISH APPEALS.
[IN THE HOUSE OF LORDS.] the marriage settlement trustees of Mr. 1899. ) GREVILLE-NUGENT AND ANOTHER and Mrs. Greville-Nugent, in respect of Nov, 20. 5 V. MACKENZIE AND OTHERS. stone quarries on the estate of Cove,
were to be treated as capital or income. Minerals-Life Rent-Rent and Royal
The facts were thus stated by Lord ties of Mines-_* Opened" Mines-Income Adam in the course of his judgment : or Capital.
The questions in this case arise upon the The rents and royalties of “opened"
construction of a deed of settlement on mines—which mines are the subject of a
the marriage of Mr. and Mrs. Grevillesettlement in the form of a trust for sale Nugent, dated June 3, 1882, and which and for division, after the death of the
we should call an ante-nuptial marriage
contract. At that date Mrs. Grevilletenant-for-life, according to the exercise of a power of appointment—are to be treated Nugent, then Miss Ogilvie, was proprieas income and not capital, and the term
trix of the estate of Cove, in Dumfries“opened mines" is not confined to mines
shire, and by the contract she bound worked for the first time by the settlor or
herself to convey that estate to the trustestator.
tees therein named, upon trust, at the Decision of the First Division of the
request of her husband and herself during COURT OF SEssion in Scotland (25 Rettie,
their joint lives, or of the survivor of 475) reversed.
them, and after the death of both, at the
discretion of the trustees, to sell the same, This was an appeal against the opinion
and all necessary powers of sale were given
them for that purpose. Power was also and judgment of the First Division of the
given to them in the meantime to lease Court of Session (the Lord President,
the unsold parts of the lands, and they Lord Adam, Lord McLaren, and Lord Kinnear), dated January 25, 1898, and
were directed to hold the proceeds of the
sale and the net rents and profits of the given on a Special Case which raised the
Cove estate until sale upon the trusts question whether certain rents and royal- therein declared. These were that they ties payable under a lease and received by
should hold certain investments, including * Coram, The Lord Chancellor (Earl of Hals
the net moneys to arise from the sale of bury), Lord Macnaghten, Lord Morris, Lord the estate, but not including the rents Shand, and Lord Brampton.
and profits of the estate until sold, in VOL. 69-P.C.
GREVILLE-NUGEST v. MACKENZIE, H.L. trust to pay the annual income thereof to . But that is not decisive. Here Mrs. Greville. Nugent for her sole and the intention is clear that they were to be separate use, and after her death to her treated as income. The First Division husband under certain conditions which was misled by the power of sale, which in need not be mentioned, and after their English conveyancing does not import death for the children of the intended that the property is to be immediately marriage. As regards the rents and sold, but is inserted for the purpose of profits of the estate until sold, or of so ultimate division. These quarries had inuch thereof as should not have been solu, been worked intermittently for a long the trustees were directed to pay and period before the settlement; and power apply them to the person or persons for to lease is given by the Trusts (Scotland) the purposes and in the inanver in which Act, 1867 (30 & 31 Vict. c. 97), s. 2, the annual income of the residue or net sub-s. 3. money to arise from such sales would be [He also cited Elias v. Snowdon Slate payable or applicable if the sale and in- Quarries Co. (1879] ? and Bagot v. Bagot vestment thereof were then actually made. (1863).) Mrs. Greville-Nugent is the person who Guthrie, Q.C. (with him J. Taylor would at present be entitled to the annual Cameron), both of the Scottish Bar, for income of the moneys arising from the the respondent, Miss Greville-Nugent.-sale of the estate. These being the pro- These are not "opened" quarries, having visions of the trust settlement, the facts for long been left unworked and not which raise the present questions are having been worked by the settlors. In that, the estate not having yet been sold, such circumstances, the fair inference is the trustees on June 11, 1895, let certain that in the case of mines formerly worked quarries in the estate to tenants who pay but not dealt with by the settlor, no retherefor a fixed yearly rent of 1001. and a servation is intended of the profits-Cleyg royalty of one-twelfth of all stone quarried. v. Rowland (1866) * is to this effect. These yielded in the year ending July 1, [See also Campbell v. Wardlaw (1882)," 1896, a rent or profit of 2251. 198. There in the Court of Session, Stair, pp. 2, 3, 74, is only one child of the marriage, Miss and Wardlaw v. Wardlaw (1875) Greville. Nugent, who is the party of the Methold, for the respondents, the trussecond part, and the question is whether tees, referred to Clavering v. Clavering Mrs. Greville-Nugent is entitled to receive (1726].? the rent and royalties received in respect of the quarries so let, or whether the rent THE LORD CHANCELLOR (Earl of Halsand royalties are to be regarded as capital, BURY).-With the greatest respect to the of which she is only entitled to the learned Judges who have decided this income.
case in the Court below, I have not been The Court of Session adopted the view able to follow the reasoning by which that the rent and royalties were capital, they have arrived at their conclusion. I of which the life-renter was only to receive rather conjecture that what the Lord the interest.
Advocate has suggested has been the Mrs. Greville Nugent appealed to this foundation of the judgment (indeed, it House.
was stated by the Lord President to have
been the foundation of his judgment)The Lord Advocate (Graham Murray, that he thought the main purpose of the Q.C.) (with himn A. S. D. Thomson, of the instrument was to create a power of sale, Scottish, iind E. J. Elyood, of the English as the form of English conveyancing had Bar), for the appellants.--The question somewhat misled the learned Judge as to whether the rents and royalties of mines
(1) 8 App. Cas. 641. or quarries are to be treated as income or
(2) 48 L. J. Ch. 811; 4 App. Cas. 454. capital is one of intention to he gathered (3) 33 L. J. Ch. 116; 32 Beav. 509. from the will or settlement. One element
(4) 335 L. J. Ch. 396; L. R. 2 Eq. 160. is whether they were opened or not at the
(6) 9 Rettie, 725.
(6) 2 Rettie, 368. inception ofthe trust-Campbell Wardlaw
(7) 2 P. Wms. 388.
GREVILLE-NUGENT v. MACKENZIE, H.L. what was the main purpose of the settle- now become so perfectly well ascertained ment. The machinery by which, in the by a long course of decisions that, wherever event of there being children, the property those general words are used and the should be equally divided between them question is
is whether the tenant for being provided for by a power of sale so life is entitled to what, in one sense, as to turn realty into personalty-because is called the usufruct, but I suppose in that is the substance of it--is a device more strict language would be called part familiar in the ordinary form to the of the soil itself-where you are dealing English conveyancer; and I think the with minerals, it has always been held, so learned Judge has been misled by that far as I know, without doubt or question, into assuming what he has more than for centuries, that the proceeds of opened once in the course of his judgment said- mines form part of that which may go to that the main purpose of the settlement the tenant for life, and that he is entitled was a sale, and all the other provisions to take them as part of the proceeds of were intended to be temporary.
That the soil. As I have said, I am not quite has now been explained, and I observe certain that if this matter were that Mr. Guthrie has not dealt with that integra, and if we sent back part of the argument at all, but has two hundred or three hundred years, allowed it to pass without observation. would be quite able absolutely Therefore I think we may dismiss that as to follow all the reasoning by which that being decisive of this case, one way or the result is arrived at; but it is immaterial other, and we must look to see what has to do so now, because that point has been been the intention of the parties to this ascertained and adjudicated upon over settlement apart from any such considera- and over again, and finally in this House. tions as arise from the power of sale.
That being the state of the law, now Now, as to that proposition, which is the for the first time, so far as I am aware, a one which your Lordships are called upon new limitation is sought to be placed on to decide, it appears to me that it is that principle, and the proposition comes covered by authority. There is given somewhat in this form. In dealing with what includes both the mineral estate a settlement or a will the Courts have and the other estate, whatever there inay said that you must put in the words be; and the question is, what those words “ opened mines " as being part of what is convey. Now, whatever might have been gettled or bequeathed; by construction the case originally, and I am not prepared you are to put in those words; whether to defend the logic of some of the reasons the words occur or not they are imported given in the earlier decisions, at all into it by the construction which the law events, for obvious reasons—and I think has placed on instruments of that kind. if the Courts had the power by law to do Now for the first time it is suggested that it they were most useful and cogent the words “opened mines” are not suffireasons—they have treated in this class cient to convey what the law assumes to of case the produce of the soil as including be the state of things, and you must add that which is in truth what Lord Cairns to them “mines opened by the settlor or has described as the substance of the soil testator.” The learned counsel for the itself. In speaking of coal, for instance, appellants has given us a case in Peere we talk constantly about the "rent" and Williams which goes a good deal further ; “ royalty” of coal. The phrases are but I was prepared without that case to figurative: you pay rent in one sense it say that the suggestion is absolutely a is true; but rent generally has been novelty. In all the cases the question has understood to be a return from the soil, always been, What is the thing bequeathed and not to be a consumption or taking or settled? And if there are opened away of the soil; whereas, of course, where mines the consequence follows. The dilithe soil consists of coal and other minerals gence and learning of Mr. Guthrie, which you are actually taking it away. But is certainly not likely to leave anything whatever may have been the original unsaid or unsearched for, has not been view of such questions, the matter has able to produce a single case in which any