Ma Yait v. The Official Assignee (1930)
Quick Summary
This case confirms that a family settlement can be treated as property in India. The children took a vested right to income from the settled assets and a contingent right to the corpus that would open when the youngest child reached 20 (and for some items, on the youngest son’s death). A son could assign his interest for value. The Privy Council found the settlement plain and valid and dismissed the appeal with costs.
Issues
- Are the son’s rights under the settlement similar to an heir-apparent’s mere expectation, or are they present, transferable interests?
- Did the son have a right to sue or deal with his interest during the trust period?
Rules
- Settlement as property: A settlement is a recognized form of property in India and has long been transferable.
- Dealing with beneficial interests: A beneficiary may raise money against, assign, or otherwise deal with the beneficial interest, subject to the instrument and law.
Source context: The Privy Council recognized the settled form and its transferability, treating the interests given as meaningful property rights.
Facts (Timeline)
An ordinary settlement covered the defendant’s movable and immovable property for the benefit of his wife and children.
The defendant kept a life interest in income. After his life, the income would be divided among the widow and children in fixed shares.
Schedules 1–3: To be sold after the youngest child turned 20, with proceeds split equally among surviving children.
Schedule 4: To be sold on the death of the youngest son, proceeds divided among the living children.
After the defendant’s death, but before the sale events in any schedule, one son assigned his entire interest in the settled property to a third party for value.
Arguments
Appellant
- The son’s interest was only an expectation like that of an heir-apparent; nothing present to assign.
- Until the triggering events, the corpus was uncertain; assignment should not bind the trust.
- Any right to sue should be limited as long as trustees’ powers had not matured.
Respondent
- The settlement created a vested income right in the children—immediately valuable and assignable.
- The corpus right was contingent, but still a recognizable beneficial interest, capable of assignment subject to conditions.
- Settlements are a well-known transferable property form in India; assignment for value is valid.
Judgment
The Privy Council upheld the settlement and treated the rights granted as plain and standard.
- Income: Vested in all children during the relevant period.
- Corpus: Contingent in favour of all children until the youngest child reached 20 (for Schedules 1–3) and until the death trigger for Schedule 4.
- Outcome: Appeal dismissed with costs.
Ratio Decidendi
A trust settlement may grant a present, vested right to income and a future, contingent right to corpus. Both are legally cognizable interests. Such beneficial interests can be assigned for value, subject to the settlement’s terms and the law.
Why It Matters
- Clarifies that settlements are transferable property in India.
- Separates vested income rights from contingent corpus rights—a frequent exam theme.
- Supports the assignability of beneficial interests, guiding lenders and family arrangements.
Key Takeaways
- Settlement = property; recognized and transferable.
- Children: vested income now; corpus later on events.
- Assignment for value is effective for such interests.
- Settlement terms govern timing and distribution.
Mnemonic + 3-Step Hook
Mnemonic: “VIC Set” — Vested Income, Contingent corpus, Settlement is property.
- Spot the interest: income (present) vs corpus (future).
- Check the trigger: youngest 20 / youngest son’s death.
- Ask about assignment: allowed by law and terms?
IRAC Outline
Issue
Are the son’s interests present and assignable or only expectant?
Rule
Settlements are transferable property; beneficiaries may deal with vested and contingent interests as allowed by law and the instrument.
Application
Children had a vested share of income and a contingent share of corpus tied to specified triggers; the son’s assignment for value operated on those interests.
Conclusion
Interests valid and assignable; appeal dismissed with costs.
Glossary
- Vested Interest
- A present right that exists now, even if enjoyment may be delayed.
- Contingent Interest
- A future right that becomes effective only when a condition or event occurs.
- Corpus
- The principal property (not the income) held under a settlement.
- Assignment
- Transfer of a person’s beneficial interest to someone else.
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