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case it appears that there would be double super-tax on the same £71.


The English case of Burrell is interesting in itself, and it naturally forms the basis of suggestive considerations with reference to the adjustments between capital and income of settled funds, although again the case itself had no direct application to matters of that kind. There were no fewer than twenty-three single-ship companies, in all of which a firm of Burrell & Son had a controlling interest, and that interest was mainly beneficially vested in Mr and Mrs Burrell. The articles of association of each company prescribed that the company should be wound up when the ship was lost or sold, and that was regularly done. method of finance adopted was (1) to make a return of capital in each company while it was a going concern; (2) to accumulate profits undistributed to about an equal amount; and (3) to sell and wind up, and then the price and accumulated profits became distributable in liquidation. In those distributions Mr and Mrs Burrell very largely shared, and of the sums drawn by them there was arithmetically attributable to undistributed profits no less than £120,000. All this of course had borne income tax through the companies, but what the Crown said was that it was super-taxable income of the individual receivers, Mr and Mrs Burrell. Successive decisions have been given against the Crown by the Special Commissioners, Mr Justice Rowlatt, and the Court of Appeal. Mr Justice Rowlatt said that in a liquidation

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there is no longer any distinction between the capital and income of the company, and the surplus is simply assets. Using the word "dividend" in its ordinary administrative sense and not in its bankruptcy and liquidation sense, the Master of the Rolls said,

It is quite true that this decision was given, and those remarks were made, with reference to taxation liability, and that the case did not raise any question of accounting between liferenter and fiar, though it cannot be denied that it did raise the issue of capital and income, at least in a special relation. It is understood that in England, in view of certain decisions, apportionment is often, or even usually, not made on the sale or purchase of stocks, as by giving a life-tenant part of the price as representing accrued dividend when trustees sell, or by keeping from the life-tenant, and carrying to capital account, part of the first dividend received by the trustees as having been paid for out of capital, when trustees purchase. But these adjustments are regularly made with us in Scotland in trustees' accounts, and they are generally supposed to be required by Scots law, though indeed that is not quite certain (Baird, 1907, 15 S.L.T. 25). Assuming that in this recent case of Forrest the sellers had been trustees holding for a liferenter, the question arises whether they would, or would not, have been bound to treat the £50 as income and to pay it to the liferenter. We think we are correct in saying that according to practice that is how the £50 would have been treated in a Scottish trust, and that that would have been sanctioned, if not indeed required, by any professional auditor, and also, we fancy, even by the Accountant of Court notwith-sufficient to allow of any distribution beyond standing the case of Baird. It seems to arise for consideration whether the decision in Forrest's case does not throw doubt upon the propriety, or even the legality, of this method of administration and accounting. If the practice is correct, one curious result may be noted if the £50 had been paid by trusteesellers to a super-taxable liferenter as income, he would surely be bound to include it (or rather the £71) in his super-tax return, in which

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the sums were not distributed to the shareholders as dividends, as the liquidation had deprived the directors of the power of declaring a dividend. Further, after the liquidator had assumed his duties it is a misapprehension to continue the distinction between profits and capital."

This decision may require to be considered by trustees who are shareholders of companies which are wound up, when the funds are

creditors. If the sum received is less than the capital amount, it is understood that it is not customary in Scotland to recognise any right on the part of a liferenter to an apportionment, notwithstanding that there may have been default in income on the part of the company for some time prior to the date of liquidation. But even in such a case as that, a question may arise if it be assumed that the trustees' holding was debenture stock or preference shares

carrying fixed rates of income which are in arrear unpaid. Take, however, the exceptional case where the return to the trustees from the liquidation is more than the capital, as happened in this case of Burrell, and that the money comes largely from accumulated profits. What then is the position of the liferenter with reference to income on the investment for the interval between the date up to which income was last paid and the date of liquidation, and thereafter to the date of actual distribution? On this question Sargant L.J. was quite express in Burrell's case, though, no doubt, his dictum was obiter.

Had the shares in this case been settled, it is clear that the whole of their proportion of those undistributed profits would have been applicable, not as income, but as capital (In re Armitage, [1893] 3 Ch. 337).

Further, Burrell's case may be supposed to raise a difficulty even where the constitution of the company provides that preference issues shall in the liquidation rank for principal and unpaid income up to the date of liquidation or up to the date of distribution. Even then it is by no means clear that the liferenter is entitled to anything even in the most favourable case for him which can be figured, namely, that the claim for both principal and income is satisfied in full by the liquidator, and that the liquidation fund includes a sufficiency of undivided profits to meet the distribution in respect of income. Atkins L.J. recalled In re Bridgewater Navigation Co. ([1891] 2 Ch. 317) for the proposition


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CHANGE ACT, 1882 (45 & 46 VICT. CAP. 61), SECTIONS 20, 29, and 56.-M'Donald & Co. bought from the Government Disposal Board a number of cases of Australian tinned soup. On 18th May 1920 they sold 19,000 of these

cases to William Archer & Co. Ltd. Archer &

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Co. were unable to find the money required, and asked Nash & Co. for assistance, who agreed to find 75 per cent. of the money. ment was thereafter come to between the three If the articles give any particular body of share-parties concerned, that Nash & Co. should holders the right to profits whether distributed or not, that must be recognised in distribution by the liquidator.

But that case had nothing to do with the beneficial rights in settled shares, and In re

Armitage shews that all profit" received by trustees does not fall to be passed on to the liferenter. Lindley L.J. said:

This £1, 5s. 6d. per share is profit. But is it income to which the tenant for life is entitled? That is a totally different matter, and I say that it clearly is not.

indorse a series of eight bills to be drawn by M'Donald & Co. on Archer & Co. payable six months after date, to the order of M'Donald & Co. In consideration of the indorsement by Nash & Co., M'Donald & Co. agreed to hand over to them delivery orders for the balance of

the cases. M'Donald & Co., accordingly, drew the requisite number of bills expressed to be payable to their order on Archer & Co., who accepted them. Nash & Co., thereafter, indorsed the bills, and handed them to M'Donald & Co. Sufficient room had been left above the indorsement for the indorsement of the name of any person to whom M'Donald & Co. should direct Finally, if any money were passed to the payment. Delivery orders were handed over liferenter, it would appear a strange result that in exchange for the bills. On 18th August this decision of the English Court of Appeal-1920 Nash & Co. paid and discharged one bill. that no part of the distribution can be charged as super-taxable income-should be in effect upset by the apparently immaterial specialty that one of the beneficial receivers happened to be a limited owner.

The remaining bills were not discharged and fell due on 21st February 1921. Shortly before that date M'Donald & Co. indorsed their name on these bills as payees above the signature of Nash & Co. The bills were presented as they

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fell due to Archer & Co., who dishonoured them. M'Donald & Co. gave notice of dishonour and claimed payment from Nash & Co. as indorsers. Rowlatt J. decided that Nash & Co. were liable as indorsers, but that decision was reversed by the majority of the Court of Appeal (Bankes, and Atkin L.JJ., Scrutton L.J. dissenting). Held (1) that on the facts Nash & Co. must be taken to have intended to undertake liability on the bills; and (2) that by section 20 of the Bills of Exchange Act, 1882, M'Donald & Co. were entitled to insert their name as payees, and so make Nash & Co. liable as indorsers, as the bills when received by them were wanting in a material particular. Decision of the Court of Appeal reversed.-House of Lords (Viscount Haldane, L.C., Lords Dunedin, Atkinson, Sumner, and Buckmaster).-21st March 1924.

Compania Mercantil Argentina v. United
States Shipping Board.

INTERNATIONAL LAW-GOVERNMENT DEPARTMENT ENGAGED IN PRIVATE TRADING-WHETHER LIABLE TO PROCESS IN FOREIGN COURT.-This was an action brought against the United States Shipping Board to recover money said to have been overpaid in respect of the freight of a vessel chartered by the plaintiffs. The American Ambassador furnished a certificate to the effect that the United States Shipping Board was not a corporation or partnership, but solely a department of the State. The defendants had at one time agreed to go to arbitration, but had subsequently refused to go on with the arbitration proceedings. It was argued that the defendants, by agreeing to arbitration, had waived the immunity from action which they might otherwise have enjoyed. Held that the mere fact that a Sovereign body was engaged in some private trading business did not subject such Sovereign body to processes in the Courts of a foreign country, and that submission to arbitration was not in itself sufficient to amount to a waiver of immunity when a Sovereign body was sued in a Court of law in personam.-Court of Appeal (Bankes and Warrington L.JJ., and Eve J.).—25th March 1924.

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salary of £500 as accountant in the employ of
the New Zealand Shipping Co. Ltd. The
company had since 1912, though they had
made no agreement to that effect, paid the in-
come tax of their employees. The amount
paid on behalf of the appellant for the year in
question was £80, 5s. This amount, along with
the amounts paid on account of other em-
ployees, had been included in the company's
Income Tax,
accounts under the heading
Staff," and had been allowed as a trade expense
and deducted in order to arrive at the profits
for the year.
The assessment complained of
included this sum of £80, 5s. in addition to
the appellant's salary. Held that although the
payment of the employee's income tax by the
company was a voluntary act, it was a payment
in respect of the employment, and that the
sum so paid fell to be considered as an emolu-
ment given to the employee in his position as
an officer of the company, and, accordingly, was
subject to income tax.-K.B. Div. (Rowlatt J.).
-27th March 1924.


Local Government, 1923. Comprising Statutes,
Orders, Cases, and Departmental Decisions.
Edited by Alexander Macmorran, M.A., K.C.,
assisted by F. C. Allworth. Butterworth & Co.;
Shaw & Sons Ltd.
Price 45s. net.

French-English and English-French Dictionary of
Technical and General Terms, Phrases and
Abbreviations used in Finance, Banking, Stock
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etc. By J. O. Ketteridge, F.S.A.A., A.C.I.S.,
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Chartered Secretary. George Routledge & Sons
Price 10s. 6d.

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The Juridical Review. June 1924.
Part 2. W. Green & Son Ltd.
Price 5s.; Prepaid Annual Subscription 15s.,
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The General Editor will be pleased to consider Articles of Legal Interest, and if accepted for publication these will be paid for, but no responsibility is undertaken for the safe custody and return of MSS.


The purpose of this article is merely to introduce students to a most interesting subject, and one which has played a very important part in the history of land in Scotland.


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Entails are gradually receding into the realm of history, for since the passing of the Entail (Scotland) Act, 1914, it is not competent to grant an entail of a landed estate in Scotland. The word entail is derived from the French word tailler to cut, and, when lands are spoken of as being entailed, it simply means that the legal order of succession, or the course of succession to land or heritable property in Scotland, which is established by law, has been cut off, and an arbitrary line of succession has been established.


were null; and as every proprietor was entitled to grant such deeds, the absence of the irritant clause was of itself sufficient ground on which to protect onerous deeds from challenge though the prohibitions were contravened.

At length the ingenuity of the feudal lawyers of the seventeenth century devised those clauses called irritant and resolutive, whereby not only were the debts and deeds of the heir in possession rendered null and ineffectual, but his own right was declared to be extinguished or, in law language, resolved, by his contravening the provisions of the settlement. Credit for evolving those clauses is apparently due to Sir Thomas Hope, the Lord Advocate of King Charles the First, who is said to have advised the first strict entail. The effect of the clauses, however, was for a long time the subject of doubt and discussion, and in 1662 the point was brought Entails came into fashion because the landed before the Court of Session. By a narrow interest a great and powerful feudal majority it was decided that the clauses were aristocracy-desired to perpetuate estates effectual. estates effectual. The power of the landed aristocracy in the same families and to preserve the fortune, prevented a renewal of the discussion by the name, and antiquity of their ancestry, and procuring the passing of the Statute of 1685, to transmit their estates to a long line of which has proved, in its practical operation, successors, unencumbered with the debts and one of the most stringent ever enacted by the obligations of the individual heirs into whose Scottish Parliament. The statute was prepossession they should descend. As liferents pared by Sir George MacKenzie, and was conin perpetuity are unknown in the law of Scot-sidered by lawyers to be indispensable to give land, the end to be attained was an effectual efficacy to the strict entail. By the Act it mode of restraining the power of alienation or was made lawful to tailzie lands and estates, disposal which every owner of property possesses and burden substitute heirs with such conas an inherent right. In order to achieve the ditions as the entailers should think fit, and object in view, landed proprietors, with the to affect the tailzies with irritant and resolutive help of their legal advisers, tried various clauses so as to restrain the heirs of tailzie from methods before the Act of 1685, to be after-selling, alienating, or disposing of the lands, wards adverted to, was passed. The earliest or contracting debt, or doing any other deed method was to convey their estates to an by which they might be apprised, adjudged, arbitrary line of heirs, but without imposing or evicted from the substitutes in the tailzie, any restraints on those heirs. Such con- or the succession frustrated or interrupted. veyances were effectual so long as the order of heirs remained unchanged, but each heir in possession for the time was absolute proprietor or fiar of the estate, and there being no prohibitions or restraints in his title he was able to alter the order of succession and dispose of his estate either for a price or without any price being paid, and also borrow money on the security thereof.

All such deeds were declared null, and the next heir of tailzie might, upon contravention, take up the estate. The statute required that the irritant and resolutive clauses should be inserted in the procuratories of resignation, charters, precepts, and instruments of sasine relating to the tailzied lands; and a register was appointed to be kept, wherein should be recorded the substantial parts of the deed of tailzie. It was further declared that the omission to repeat the provisions and irritant clauses in the rights and conveyances of the lands should import a contravention against the person guilty of the omission and his heirs, but should not affect creditors, or other singular successors contracting in bona fide with the

The next method in point of history was to grant conveyances of estates containing certain prohibitions which prevented the heir in possession from doing any act of a gratuitous nature in contravention of the prohibitions in the title, but as he was an absolute proprietor he could, for a sufficient consideration, dispose of the lands and disregard the pro-person infeft in the lands. hibitions. Such deeds were thus effectual only inter hæredes. They contained no irritancy on a particular series of heirs made permanent clause declaring that all acts done or deeds by statutory clauses, and not existing indegranted in contravention of the prohibitions pendent of the statute. Entails have always

The strict entail is thus a settlement of lands

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been regarded by philosophical writers with English law in that respect. If I here make disfavour, and in the courts they have been a tenant for life by a settlement, he is tied up, subjected to rules of severe criticism in order eo ipso, and he can do nothing that shall endure to preserve the freedom of property. The beyond his own life estate, unless in so far as Statute of 1685 was the source of much litiga-I add powers to his estate. But in Scotland tion in our law, and produced some glaring it is the very reverse. The heir of entail is evils. It entitled proprietors, on certain con- the fiar-he is free. Here the tenant for life ditions, to legislate for succeeding generations. is fettered, except so far as he is freed by powers. It excluded land from commerce. Agriculture In Scotland, the heir of entail is free, except so deteriorated under the system, for long leases far as he is fettered by the provisions of the were prohibited and heirs of entail could not entail he is the fiar-he is in possession of borrow money to improve the property. The the fee-simple of the estate in every particular, minor and female branches of families were except in so far as he is tied up by the entail. impoverished and neglected. This is the governing principle, and it is upon this governing principle that all the decisions have gone.'

In order to relax the restraints imposed by the Statute of 1685, the legislature has from time to time made enactments founded on expediency and obvious utility conferring various powers on heirs of entail. These acts will be found epitomised in the conveyancing books and still require to be studied by those whose business it is to advise proprietors of estates held under the fetters of a strict entail. It would not be in place in an article of this nature to do more than advert to the fact that numerous relaxations were made, all tending to greater freedom of action.

It is interesting to note the view which the law takes of the nature of the right of the heir of entail in possession of the estate for the time. Subject to the modifications introduced by the Act of 1914 as regards obligations to take over sheep stock, the right to let the mansionhouse, and to contract for the sale of timber, the heir in possession is regarded as the fiar and so far as unfettered he is an absolute fiar, but only for the limited period of his own life. His power to affect the fee is determined by his death, and the new heir who becomes fiar in his turn is not bound by any contracts bearing to affect the lands which the previous heir may have executed except such leases as may be valid under statute or by the deed of entail. The right which he acquires is, so far as it is unfettered, a right of absolute property, and every act of his which is not in contravention of the entail is as valid and effectual as if he held the estate in fee-simple. In the case of Montgomerie v. Eglinton (18th August 1843, 2 Bell's App. at p. 185), Lord Brougham, who shed much light on the law of entail, defines the position of an heir of entail thus: An heir of entail, in Scotland, is never considered a trustee for the subsequent heirs of entail. He is considered as a fiar in all respects whatever, except in so far as he is tied up, bound down, and fettered; and I have often had occasion, both at the bar in your Lordships' presence, and since I have come upon the bench, to explain the great difference, I may rather say the contrast, between the Scotch law and the

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Having in view the abolition of casualties by the Feudal Casualties (Scotland) Act, 1914, this introduction to the law of entail may be concluded by referring to the fact that heirs of provision under a deed, whether a strict entail or not, containing a destination, are in a privileged condition as regards the payment of casualties. If an institute or substitute under the destination paid to the superior a casualty of composition and received a charter containing or confirming the destination, the destination was held to be recognised or enfranchised by the superior. Thereafter the heirs of provision under the destination, and not the vassal's heirs-at-law, are heirs in a; question with the superior, and entitled to be, entered on payment of an heir's casualty merely and not the casualty due on the entry of a singular successor. W. Y. i



LORD ADVOCATE v. MACALISTER. The decision of the House of Lords in this case, affirming the judgments of the Lord Ordinary and of the First Division against the Crown, was given on 10th April of this year, and is reported in 1924 S.L.T. 437, and 40 Times L.R. 564. There is no intention here to discuss it as a decision on death duties. It is merely desired to venture a note of interrogation on what may be regarded as a side issue, or rather as no issue at all in the case, for it was made matter of admission in favour of the Crown. The case proceeded on the footing that the gift by the testator of a liferent interest to his mother was admittedly ineffective as to this property as she already held it for her life." The facts were simple and were as follows: Under the marriage contract of Mrs Eliza Wallnutt she had a liferent of the lands of X, and subject to that liferent the fee was vested in her son,. Major Wallnutt. He predeceased his mother, leaving a holograph general, will, under which,

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