Tarratt's Trustees v. Tarratt's Trustees

Factual and Procedural Background

By an indenture of settlement dated 1st May 1865, a power of appointment over certain trust funds was reserved to a wife under a marriage settlement. The wife died leaving a holograph will containing a general settlement of her property. The legal question arose whether this general settlement validly exercised the reserved power of appointment. The dispute involved the trustees under the marriage settlement, the trustees under a related will, the daughter and residuary legatee of the deceased wife, and the executor under her will. A special case was presented to the Court to determine whether the will operated as an exercise of the power of appointment over the trust funds.

Legal Issues Presented

1. Whether the holograph will of the deceased wife, which made a general disposition of all her property to her daughter, constituted a valid exercise of the power of appointment reserved to her under the marriage settlement.
2. If the power of appointment was not validly exercised, to whom the trust funds should be paid.

Arguments of the Parties

First and Second Parties' Arguments

• A general disposition of the whole property by a person who also has an estate besides the subject of the power of appointment does not necessarily amount to an exercise of that power.
• At most, such a disposition creates only a presumption that the power was exercised, which can be rebutted by circumstances.
• In this case, the presumption was rebutted because the daughter had already received substantial shares of her father's and grandmother's estates.
• Relied on precedents including Smith v. Milne, Dalgleish's Trustees v. Young, Hyslop v. Maxwell's Trustees, and Mackenzie v. Gillanders to support the contention.

Third and Fourth Parties' Arguments

• The general rule is that a general settlement or disposition of the whole estate is a valid exercise of a power of appointment.
• There was nothing in the facts to prevent application of this general rule to the present case.
• Relied on precedents including Mactavish's Trustees v. Ogston's Executors, Clark's Trustees v. Clark's Executors, and Cameron v. Mackie, particularly citing Lord Brougham’s dictum.

Table of Precedents Cited

Court's Reasoning and Analysis

The Court considered whether the general words in the holograph will left by the deceased wife amounted to a valid exercise of the power of appointment reserved in the marriage settlement. The Court acknowledged the difficulty but noted settled authority, including the dictum of Lord Brougham, that a general disposition of the whole estate by a person holding a power of appointment is sufficient to exercise that power. The burden was on those denying the exercise to show reasons why the words should not be given their widest meaning. The Court found no such reasons and rejected the argument that the presumption was rebutted by the daughter’s prior receipt of other estates. Consequently, the Court held that the will did validly exercise the power of appointment in favour of the daughter. The concurring opinions emphasized adherence to established precedent that general dispositions can validly exercise powers of appointment.

Holding and Implications

The Court held that the holograph will constituted a valid exercise of the power of appointment reserved to the wife under the marriage settlement, thereby passing the trust funds to her daughter, the residuary legatee.

The direct effect of this decision is that the entire trust fund falls to be paid to the daughter as appointed by the will. The Court did not establish new precedent but reaffirmed the existing legal principle that a general settlement or will can validly exercise a power of appointment unless clear evidence rebuts that presumption.