No. 4. the sum in the bond of annualrent, under the statute 23 and 24 Vict. c. 80, as part of the succession of the Baroness Keith, deceased. The clause under Oct. 15, 1872. which the claim is made is in these terms :-" All money secured on heritable Lord Advocate property in Scotland, and all money secured by Scottish bonds and other instruv. Marchioness of Lansdowne, ments excluding executors, and all money secured by Scottish bonds or other instruments the rights to which shall be taken excluding executors, constituting the succession or part of the succession of any person who shall have died after the 3d day of April in the year 1860, shall be liable to inventory-duty under the said recited Act." The 2d clause of the Act is that the said duty, with interest thereon at the rate of five per cent from the expiry of six months after the death of such deceased person, shall be a debt to Her Majesty, and shall be payable by any and every person who shall take any money secured as aforesaid, constituting the succession or part of the succession of any person deceased, and that whether he shall take the same as having a beneficial interest therein, or as trustee, or in any other capacity, and whether he shall have an absolute right or only a liferent or life interest or other limited right or interest therein, and whether he shall take the same by mortis causa conveyance or by special destination or by inheritance." The question is, whether the money which is said to have been secured, viz., the sum of £9715 contained in this bond of annualrent, is within the first clause,— in the first place, whether it secured a sum of money on heritable property, and in the second place, whether it constituted part of the succession of the Baroness Keith. The state in which the right and interest of Lady Keith stood at the date of her death was simply this, that she was the uncontrolled proprietrix of the whole of that estate on which it is alleged that this burden had been laid and this money secured. These bonds were executed for the purpose of making a burden on an entailed estate in respect of certain moneys expended on improvements, on the footing and supposition that the estate was limited by fetters, when in point of fact these fetters were entirely null. The way in which Lady Keith dealt with these bonds is this: she executed a new entail upon the footing that the former entail was defective in the solemnities required by the law. The new entail is substantially the same as the previously existing one, and keeps alive the feudal investiture which had been taken under the bond at the time when it was thought that that was necessary to make it a burden upon the fee of the estate, but with this provision that unless she shall leave the bond and the money secured by it to any one else, it is on her death to cease and determine absolutely, leaving the institute or heir of entail in full possession of the unburdened estate. Now, whatever effect might have been given to any conveyance or deed in favour of a third party under which Lady Keith might have tried to create a new burden, or to impose on the heir in possession the burden of these bonds, I have come to be very clearly of opinion that upon the facts as they actually occurred, and under these instruments, there was no rela Brown's Supplement, p. 533, where it was held that one having first acquired an infeftment of annualrent and then the right of property, he was entitled to use both as separate rights, the property was not entailed. "The defender, besides maintaining that the authorities and cases which have been now referred to, were favourable rather than adverse to her, cited and seemed to rely on the case of Burnett v. Burnett, 30th April 1766 (Paton's Appeals, vol. ii., p. 122). The principles of decision, however, in that case appear to be inapplicable to the circumstances of the present. The destination of both the rights there, although expressed in different terms, were held to result in the same thing; and it was on this ground, and having regard to what clearly appeared to be the intention of the party, that no separate estate was to be kept up, it was decided that confusio had taken effect. "For the reasons which have now been explained, the Lord Ordinary has, although not without difficulty, come to the conclusion that the question in the special case ought to be answered favourably for the Crown, and he has accordingly so answered it.” Lord Advocate tion of debit or credit at all between Lady Keith and the estate of which she No. 4. was the absolute proprietor, and that as there was no such relation there was no right in which she was a creditor secured upon this heritable property, and con- Oct. 15, 1872. sequently that there was no money so secured which did or could form any part v. Marchioness of her succession. Whether a person holding in fee-simple could create such a of Lansdowne. relation is a matter involving some subtlety, into which I think we need not enter, but the substance of the thing is beyond all doubt, viz., that the bond of annualrent in substance effected nothing. It effected nothing during Lady Keith's life, for she had the whole uncontrolled property of the estate, and it effected nothing after her death, for the moment Lady Keith died the whole thing came to an end. No one had any beneficial interest in it. No doubt if it had been a separate debt heritably secured over this estate, and there had been such declaration in a settlement by a party entitled to make the declaration that it should cease and determine in favour of the heir, that might have been the case put to us a legatum liberationis, but that is not at all the nature of this case. The fact is that these bonds were executed under a misapprehension in point of law and also in point of fact, and when Lady Keith died she was in possession of this estate on which the succession-duty is payable, but the money secured by the bonds was no part of her succession. Therefore, as the question is put in the form of a special case for the opinion of the Court, I am for finding in favour of Lady Lansdowne, in the question put to us, that she is not liable to pay inventory-duty on the sum in the bond of annualrent. LORD COWAN.-I concur with your Lordship in thinking that there were several points brought into the argument in this case which we do not require to solve in giving the judgment which must be pronounced. As regards the question of creating, in the terms here employed, a burden upon an estate which the party has in absolute property, I do not wish to express any opinion whatever. I am very far from thinking that it may not be within the power of a party so to deal with the succession to his estate as to enable him to give over a burden so created on the estate to a third party, and to leave it as a burden upon the heir to whom he gives the estate itself. We do not require to consider that question. Had there been an assignation of the bond of annualrent in favour of a third party the state of the rights of parties under the Revenue Acts would just have been this-that the value of the estate taken in absolute property would have suffered a deduction, to the extent of the burden so created upon the succession, in the question as to the succession-duty; and then the party who got the benefit of the assigned bond of annualrent would have been liable in the succession-duty for the sum that he took under the assigned bond of annualrent. But with that we have no concern whatever in this argument. That was not the state in which this lady left her estate to be taken by her heirs and representatives. On the contrary, it is impossible for me to read the clause in the deed of entail to which our attention was so frequently called without being convinced that the estate was left absolutely unaffected by any burden whatever in favour of her daughter, seeing it is there said that, unless there should be an assignation of the bond of annualrent (which there never was), the lands would be entirely free and relieved from the bond in all time coming. The Baroness Keith had power to make such a declaration. That is undisputed. And therefore the estate was really left unburdened and free of the bond of annualrent, to be taken by her eldest daughter as absolute and uncontrolled fiar. Now, in that condition of matters, how can it be said that there was here money, secured over the estate in terms of the statute, which fell to be included in the inventory given up of the lady's succession. That is the first point; and as to it I think Mr Shand's argument was good; but in the second place, under the same clause of the statute it required to be a part of the succession of the lady; and upon the same footing I hold that there was no succession to the bond of annualrent, and never could be, because it terminated the moment the lady died without having assigned that annualrent. Therefore, upon the whole matter, from an early part of this argument, I came to be quite satisfied that we had to deal here really in principle and in substance with No. 4. Lord Advocate nothing else than this,-a reserved power to burden the estate which was given by the deed, if the granter thought fit thereafter to burden the succession so Oct. 15, 1872. given to the party who is disponee; and undoubtedly a reserved power to burv. Marchioness den, if not exercised, ceases to have any existence at the death of the party who of Lansdowne has the power. Upon the same ground it seems to me that, in principle, we must deal with the question that is now before us, and that we have no ground for holding that there was here an estate created, which required to be destroyed by confusion. Upon that point I do not enter into the argument of the Lord Ordinary at all. I cannot understand that view of the case, because there was no proper debtor and creditor to give rise to the doctrine of confusion so as to. extinguish this bond of annual rent. That would have raised an entirely dif ferent question if it had existed here, but I go simply upon the grounds I have stated in holding that, in the state in which this lady left her succession, there was nothing to be given up in the inventory of her estate under the statute as being liable for inventory-duty. LORD BENHOLME.-The bond of annualrent about which we have heard so much in this case was executed with reference to the Montgomery Act; and the object of the Montgomery Act is to enable a proprietor who holds an estate. under fetters, when laying out money in a particular way, to secure to the proprietor's representatives, who may be supposed not to be his or her heirs of entail, the amount, or a certain portion of the amount, of moneys so laid out by executing a bond of this kind. It is held that if that expenditure gives benefits to a special class of disponees who are protected by the fetters of a good entail this is the statutory method of affecting their interests, by making them liable to pay the annuity under the bond. Now, in this case, there is no room for that view, and no room for the application of the law by which the doctrine of confusion is excluded, because there are no parties here entitled, under the protection of the fetters, to be considered as heirs of entail in the sense of the Montgomery Act. I look upon this bond as having been executed under a mere false impression of the Act, and to be no better than if the granter had been the fee-simple proprietor, without any entail at all, or any destination at all upon her estate. The mere circumstance that her estate is destined to heirs-male, for instance, does not make it a fettered estate; and it is against fetters, and with reference to fetters and the necessity of overcoming these fetters, that the whole operation of the Montgomery Act is directed. Now, having said so much on that point, I must say that I quite agree with your Lordship that this bond had no effect at all, either in favour of or against Lady Keith. It had no effect in her favour in conveying to her a right which she herself was debtor in. It was conveying to her an estate which she held simply, and she might have altered the destination at her pleasure. There was no use of fettering such a bond, which had no effect, and consequently I look upon it that it was no benefit to her on the one hand, and no burden upon her on the other, either upon her or upon her estate. The Act of Parliament, I think, clearly requires that the money secured in the way contemplated by the statute was a part of the succession of the lady, with reference to whom inventory-duty is to be paid. Inventory-duty suggests that it is an inventory of something that belonged to the deceased, and that is taken up by her representatives, it may be her trustees, or it may be her general representatives; but it is something that belonged to her, and that is the estate which forms part of her goods. Now, can it be said that this estate was of that kind? I think it neither belonged to her, nor was debtor to her in any way; and consequently I think it is perfectly plain that inventory-duty cannot be charged upon a thing she never had any interest in at all, and which could only come into operation as a debt, or as money secured upon her death, and in consequence of some peculiar provision that she contemplated. I think it is impossible to say that that formed part of her succession. On these grounds, I think there has been an entire mistake here, and that the question contained in the case should be answered as your Lordship suggests. No. 4. v. Marchioness LORD NEAVES.-I am of the same opinion. This case has been complicated by introducing into it questions as to confusion which forms an important part of our law, and in so far as regards the general principles applicable to that matter Oct. 15, 1872. I am inclined to hold with the Lord Ordinary that there is a strong equity in Lord Advocate applying those principles to all cases where there is a substantial interest to do of Lansdowne. so. But the principle is, that in certain events where rights have merged into one they should be capable of being kept separate. Where there is a substantial interest in the party I would extend that principle as far as possible, not only in cases of entail, but in other cases. There are various rights that ought to be kept separate, although they come into the person of the same individual,— as, for instance, in a ranking and sale; when a creditor gets a decree of sale he not only gets that decree but he gets a virtual or expressed assignation to all the adjudications, and all the heritable securities that exist over that estate in favour of his debtor's creditors, so that he may resort to them at any time to defend himself equitably against the claims of other parties. The same thing occurs in other cases. It is competent to preserve these rights separate, so as to be capable of separate assertion, and he may ascribe his title to any of them to obtain what is reasonable and equitable in his defence of it. These are cases by which debts that would otherwise run into one are prevented from being extinguished by confusio; but a thing cannot and need not be extinguished before it exists. Now, I know no case in which a party becomes his own debtor in a bond of this kind, heritable or moveable, or whatever it may be, even although he adds at the end of it, "I bind myself and my heirs-male to pay to myself and my heirs-female £1000," which virtually imports this: "I bind myself after I am dead to pay to myself that sum." That is a thing I never heard of. A man may, by conveyance or by other means, say, "I bind my heirs-male to pay to my heirs-general after my death" so and so; but that is another affair. That is not a regular bond, but it may become binding upon both parties, if it is made in connection with grounds or conditions that will compel the parties in justice to fulfil the wish so expressed. That is a different thing; but for any one to bind himself or herself after death to pay to himself or herself a certain sum of money, and to say that that obligation is in bonis of him or her, seems to be a great absurdity. In point of fact it is nonsense. Now, that is the general aspect of this matter according to the view that is taken of it, that of debtor and creditor; but when we come to the other question, it resolves itself into this-Is this a part of the succession which in any right sense was vested in Lady Keith, and after her death was to descend to her representatives of some kind? It cannot be a part of her succession, unless it is first in bonis of her, and I cannot see that it was ever in bonis of Lady Keith. She could have done nothing in any way to enforce it. It is a mere fiction, so far as that is concerned; and if not in bonis of her, it cannot become a part of her succession on which duty is to be paid. It may be a revelation or expression of will, valid or invalid, by which after her death certain rights in her property are to take effect, but the rights are not to take effect in her lifetime, and they are mere rights of property affecting an estate, and have no reference to money which is to come into her possession. Upon these grounds I think it plain that there is nothing here in bonis of Lady Lansdowne which can be the subject of a claim such as is here made. THE following interlocutor was pronounced :-" Recall the interlocutor complained of, and find that the Marchioness of Lansdowne is not liable to pay inventory-duty on the sum in the bond of annualrent dated 1st and 3d March 1851, under the statute 23 and 24 Vict. c. 80, as part of the succession of the Baroness Keith, deceased, and decern: Find the reclaimer entitled to expenses, and remit," &c. Angus Fletcher, Solicitor of Inland Revenue-LOCKHART THOMSON, S.S.C.—Agents. No. 5. Oct. 16, 1872. City of Edinburgh v. Montgomery. 2D DIVISION. THE CITY OF EDINBURGH, Objectors.-Watson-McLaren. Teinds-Locality-Res Judicata.-Held that a judgment in a question between two heritors given effect to by a final locality was res judicata in a subsequent locality in a question between the common agent and one of these heritors. Teinds-Locality-Old Stipend.-Opinion (per Lord Cowan) that when an augmentation of stipend is granted, the allocation of the old stipend remains fixed and falls to be taken as the first step in the new locality. Teinds-Locality.-In a process of locality a heritor whose teinds were not valued for stipend was localled upon an admitted rental of £409. In a subsequent locality he alleged that the rental was now less, and that the teinds were exhausted. The Court held that the heritor was entitled to a proof of his averment that the rental was diminished. IN the locality of the stipend of the parish of St Cuthberts, modified Lord Gifford. in 1821, approved of as final by interlocutor dated 4th February 1864, Teind Clerk. the Lord Provost and Magistrates of Edinburgh were localled on as follows: "For lands of Lochbank and others, For lands of Bruntsfield Links and the Meadows, BARLEY. B. F. P. L. 18 1 2 0 MEAL. 70 0 2 24" A new augmentation having been granted in 1862 the common agent proposed in the interim locality to local on the Magistrates for the above amounts as old stipend, and for 3 0 1 1 meal, and 3 0 1 1 barley, as augmentation for the lands of Bruntsfield Links and the Meadows, treating the teinds of "Lochbank and others" as exhausted. In so localling on Bruntsfield Links and the Meadows the common agent assumed the rental to be £409 in terms of a judicial admission made by the Magistrates in the previous process of locality. The Magistrates of Edinburgh now objected that as appeared from various documents produced, of the 18 1 2 0 of old stipend localled on "Lochbank and others," 8 bolls only were applicable to the lands of Lochbank, and that the remaining 10 1 2 0 was truly applicable to the lands of Bruntsfield Links and the Meadows, and that that amount added to the amount of 70 0 2 2, localled on these lands exhausted these teinds. The Magistrates, therefore, objected (objection 8) to the interim locality, and craved that the scheme of locality in the present process be rectified as follows:— The respondent, the common agent, stated,-" In the process of locality of the stipend modified in 1821 the city appeared and objected to Bruntsfield Links and the Meadows and the lands of Lochbank being localled on for stipend, on the ground that they were not teindable subjects, and never were so. A record was made up between the objectors and Mr Learmonth of Dean, a heritor in the parish. On 12th May 1858 the Lord Ordinary pronounced an interlocutor in which he, inter alia, |