M5*5 n«3 GJnnwll Hatu ^rljrml ICihrarjj Cornell University Library KDC 460.M55 1913 Law of Scotland affecting trustees / 3 1924 024 629 226 Cornell University Library The original of this book is in the Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924024629226 THE LAW OF SCOTLAND AFFECTING TRUSTEES PRINTED BY WILLIAM GREEN AND SONS EDINBURGH May 1913. THE LAW OF SCOTLAND AFFECTING TRUSTEES BY Arj. V 'P. 3 MENZIES ADVOCATE SECOND EDITION REVISED AND ENLARGED EDINBURGH WILLIAM GREEN & SONS LAW PUBLISHERS 1913 /%;L>+^y /$ PREFACE The increased size of this edition is due in part to its fuller treatment of the rights of the beneficiary in the distribution of the trust estate, in part to the natural development during the last fifteen years of the law more strictly affecting trustees.. In order to incorporate this new material with the old text, the work has been mostly written afresh. Cases are cited only as the result of an independent examination of the original series of Eeports. This method of investigation has made it possible to eliminate from the English case law, 1 as cited in the standard English text-books, cases that are not of service to a practitioner of the Scots law. As those who have used the former edition may have acquired a certain familiarity with its arrangement, the same sections have been retained, although the added matter has caused some disproportion in their length. For greater practical convenience this edition is published in one volume, and in order to avoid making it unwieldy, certain formal matter, such as reprints of statutes specially referred to in the text, has been omitted. A. J. P. M. Advocates' Library, Edinburgh, May 1913. 1 On the subject of the relation of Scots and English case law in a question of trust, the following cases may be referred to : — Fleeming v. Howden, 1868, 6 M. (H. L.) 113, per Lord Westbury, at p. 121 ; Muir v. City of Glasgow Bank, 1878, 6 K. 392, at pp. 405-408 ; Muir v. City of Glasgow Bank, 1879, 6 R. (H. L.) 2], per Lord O'Hagan, at p. 38 ; 4 App. Cas. 337, at p. 379 ; Lumsden v. Buchanan, 1865, 3 M. (H. L.) 89, vide arguments for respondents, at p. 91, and Lord Kingsdown, at p. 98 ; Playfair, 1898, 5 S. L. T. No. 461, per Lord Pearson (Ordinary). CONTENTS PREFACE PAGR V I. NATURE OF TRUSTEESHIP . II. NOMINATION OF THE TRUSTEE I. Original Trustees II. New Trustees (a) By the Truster (6) By the Trustees (c) By the Beneficiaries (d) By Third Party (e) By the Court . III. QUALIFICATIONS FOR, AND ENTRANCE UPON, OFFICE I. Who mat be Trustees (a) Original Trustees (b) New Trustees . II. Acceptance . (a) Nature of Act . (6) Express Acceptance (c) Implied Acceptance III. Disclaimer . IV. THE TRUSTEE'S TITLE . (a) Its Completion (6) The Trustee as Vassal . (c) Nature and Incidents of Title V. THE EXECUTION OF THE TRUST (A) The Executive Machinery I. Within the Trust . 1. The Quorum 2. Powers of a Quorum 3. Powers of Trustees, not being a Quorum 4. Powers of One of More Trustees II. Outwith the Trust . (a) Skilled Agents generally (1) When to be Employed . (2) How to be Employed (3) Effect of Employment . (4) Who may be Employed . 36 36 37 42 42 42 49' 49 49 54 61 61 65 67 74 74 79- 81 85 85 85 86 92 98 101 108 108 108 110 111 116 VU1 CONTENTS chap. v. — continued (b) Particular Skilled Agents (a) Permanent Agents — Law Agent and Factor (1) Their Appointment (a) Law Agent . (6) Factor (2) Position of Law Agent and Factor (a) Law Agent . (6) Factor (/J) Temporary Skilled Agents (a) Banker (6) Stockbroker (c) Valuator . (d) Counsel . (e) Accountant (/) Miscellaneous Agents (B) Executive Powers of the Trustees I.^Of Powers Generally (a) Powers Discretionary (1) Manner of Exercise (2) Differences in Discretion . (3) Breach of Trust . (4) Conditional Powers (5) Powers Unalterable by Trustees (6) Supervision by Court (b) Of Trusts .... (1) Their Nature and Incidents (2) Implied Trusts (c) Procedure for Ascertaining Powers II.).Of Particular Powers 1. Powers at Common Law . 2. Statutory Powers . (a) Powers Vested Directly . (5) Powers obtained from Court or by Deed of Consent (a) Statutory Procedure (fi) Particular Statutory Powers (a) Power to Sell (6) Power to Excamb . (c) Power to Feu (d) Power to Grant Long Leases (e) Power to Borrow (/) Power to Remove Heritable Debt (g) Incidental Statutory Powers (h) Power to Advance Capital . (y) Procedure by Petition under the Trusts Acts .... (8) Acts of Sederunt anent Trusts Acts (0) Executive Duties op the Trustees 1. The Trustee must Act as Trustee only . (a) Accretion through the Trust Title — " Construe tive Trust" .... PAGE 118 118 118 119 120 122 122 133 135 135 138 142 144 147 147 148 148 150 151 154 156 159 163 165 174 174 181 184 198 198 202 202 206 206 211 212 223 224 224 225 230 231 231 233 236 236 238 240 CONTENTS IX chap. v. — continued page (6) Dealings by Trustee with. Himself as Individual 248 (c) Dealings between the Trustee and the Beneficiary 262 (d) Dealings by Trustee with Trust Estate through Third Party . . . . .270 (e) Dealings between Future or Past Trustee and Beneficiary ..... 274 (/) Similar Relationships outwith Rule . . 277 2. The Trustee must Act Diligently . . 278 (a) The Indemnity Clause . . . .285 3. The Trustee must Act Prudently . . 294 4. The Trustee must Act Intelligently . . .295 5. The Trustee must Act Independently . . . 297 6. The Trustee must Act Openly . . . 300 VI. GETTING IN THE ESTATE 305 I. The Recital op the Estate in the Trust Deed . 305 II. The Conversion op the Estate .... 307 (a) Rule in Howe v. Lord Dartmouth . . .311 III. Trustee's Receipt Discharging Debtor op Truster . 316 IV. Proper Time por Conversion .... 317 V. Manner op Getting in Estate . . . 325 (a) Litigation and Diligence .... 325 (b) Compromise and Arbitration .... 332 VII. INVESTMENT OF THE ESTATE ... 339 I. Powers op Investment at Common Law . . 339 (A) Where no Express Powers . . . 339 (a) Temporary Investment .... 339 (6) Permanent Investment .... 340 (B) Where Express Powers Given by Truster . 344 II. Statutory Powers op Investment . . . 357 III. Choice op Authorised Investments . . . 381 (a) Diligence and Good Faith . . . .381 (&) Suitability of Objects of Trust . . . .386 IV. Manner op Making Investment . . 388 V. Varying Investments ..... 393 VIII. PAYING OVER THE ESTATE . . . .396 I. General Rules ...... 396 (a) Duties of Trustee in Distribution of Estate . . 396 (b) Order of Payment among Claimants . . .411 II. Particular Cases ...... 424 (a) What should be Paid Over . . . .425 (b) Time for Payment — Acceleration of Date . . 436 (1) Where no Trust Machinery Provided . . 436 (2) Where no Beneficial Interest to be Protected . 439 (a) Where all Interests in one Beneficiary . 440 (/?) Where all possible Beneficiaries Agree . 453 CONTENTS ciiap. vin. — cmivnucd pagk (3) Interests Exceptionally Protected . . 465 (1) Alimentary Liferent or Annuity . 465 (2) Wife's Marriage-contract Provisions . 472 (e) To whom Payment to be made . . . 484 (1) Heir or Executor of Deceased Beneficiary (Con- version) ...... 484 (2) Assignee of Beneficiary .... 492 (3) Parents of Beneficiary .... 503 (a) Income ... . 503 (6) Capital 505 (4) Children of Deceased Parent . . . 507 (5) Beneficiary who has Disappeared . 509 (6) Trustee as Trustee . . . .511 (7) Beneficiary Claiming Legal Rights . . 512 (8) Illegitimate Children . . . .514 (9) Conditional Beneficiaries .... 514 (10) Interpretation of Words . . . 518 (d) Payment under Entail Acts and under Thellusson Act 524 (1) Thellusson Act — What are Statutory Accumu- lations?. . . " . .525 (2) When Statute Intervenes . . .534 (3) To whom Illegal Accumulations Payable . 541 IX. DIVESTMENT OF OFFICE AND DISCHARGE I. Resignation ... (a) Extra-judicial Resignation (1) At Common Law . (2) Under the Trusts Acts (b) Judicial Resignation (1) At Common Law . (2) Under the Trusts Acts (c) Procedure in Resignation (d) Effect of Resignation upon Trust Title (e) Effect of Resignation upon Trustee's Liability (1) To Beneficiaries . (2) To Third Parties . II. Removal (a) Its Relation to Sequestration (b) Jurisdiction to Remove (c) Grounds of Removal at Common Law . (d) Grounds of Removal under Trusts Acts III. Discharge .... (a) Nature of Discharge (b) Who can Grant a Discharge . (1) The Beneficiaries . (2) Third Party Named by Truster (3) Co-Trustees (4) The Court — Judicial Discharge (a) By Statute . . " (/J) At Common Law . (c) Effect of Discharge 544 544 545 545 547 548 548 550 556 557 558 558 558 562 562 565 565 573 575 576 579 579 582 584 585 585 586 589 CONTENTS xi CHAP. PAGE X. CHARGES BETWEEN ALL PARTIES CONNECTED WITH THE TRUST 592 (A) Charges Arising Within the Trust . . . 592 (a) Accounting ...... 592 (1) Who are Bound to Account . . . 592 (2) Who can Call for an Accounting . . 596 (3) Extent of the Accounting . . . 599 (4) In what Court must the Trustee Account . 601 (5) What Law Governs the Accounting . . 609 (6) Charges between the Trustees and Particular Beneficiaries ..... 612 (a) Charges for which the Trustee is Liable quA Trustee only . . . . .612 (1) General Rules Affecting Claim of Beneficiary 613 (2) Special and Residuary Legatee . . 620 (3) Alimentary Beneficiary . . . 623 (4) Annuitant ..... 625 (5) Heir and Executor . . . .631 (6) Liferenter and Fiar . . . .635 (i) Where Estate is in Proper Form of Investment . . . 635 (a) Wasting Investment . . 637 (b) Reversions . . . 643 (#) Where Estate in Improper Investment 652 (S) Apportionment of Outlay . . 654 (7) Beneficiary under Resulting Trust . . 662 (1) Where Resulting Trust emerges . 662 {2) Who is Beneficiary under Resulting Trust . . . .674 (3) Radical Right or Title . . 679 (fi) Charges for which the Trustee is Liable as an Individual ..... 684 (1) Claims for Breach of Trust . . .684 (1) Breach of Trust in Getting in the Estate 689 (2) Breach of Trust in Investing the Estate 690 {S) Breach of Trust in Paying over the Estate 703 (2) Rate of Interest Chargeable . .708 (3) Defences to Claims by Beneficiary (1) Prescription (3) Homologation . (3) Special Defences (•y)JRemedies of Beneficiaries (c) Claims of Relief by the Trustee against the Trust Estate 734 (a) Claims by Beneficiaries against the Trustee qu& Trustee, as under Section (6) (a), supra 734 (j6) Claims by Third Parties against Trustee as an Individual for Administrative Charges 734 (1) General Rules as to the Expenses of the Trust Administration . . 734 (2) Outlays and Advances . . .738 (3) Payments for Agency . . .741 712 712 716 725 727 XII CONTENTS chap. x. — continued page (4) Expenses of Litigation . . • 754 (1) General Rules . . .754 / (2) Cases where Expenses Given . 765 (3) Cases where Expenses Refused . 768 (d) Trustee's Remedies ..... 773 (a) First Charge on General Estate . . 773 (/8) Charge on Interest of Particular Beneficiary 780 (y) Repetition of Money Paid in Error . . 788 (8) Claims of Indemnity against Co-Trustees . 791 (B) Charges Arising Odtwith the Trust . . 793 (a) Charges between Trustees and Third Parties . 793 (1) Truster's Creditors . . . .794 (2) Trustees' Creditors . . . .797 (a) Business Creditors . . . 797 (/3) Judicial Expenses . . 805 (b) Charges between Beneficiaries and Third Parties . 808 (1) Following Trust Estate — Constructive Trustee . . . . .808 (2) Doctrine of Subrogation . . . 819 (c) Claims by and against Trust Agents . . 826 (1) Claims against Trustees by Trust Agents . 826 (2) Claims against the Trust Estate by Trust Agents ..... 826 (3) Claims by Trustees against Trust Agents . 829 (4) Claims by Beneficiaries against Trust Agents 830 (5) Claims against Beneficiaries Personally by Contractors with the Trustees . . 831 (d) Remedies of Third Parties .... 832 APPENDIX 841 Note on Vesting ....... 841 Note on Offices of Executor and of Trustee . . . 849 INDEX OF CASES 857 INDEX OF STATUTES 933 GENERAL INDEX . . . 937 CHAPTER I NATURE OP TRUSTEESHIP 1. Many definitions of trust have been essayed . by judicial Definition authorities as well as by academic jurists. 1 None of these ° definitions seems to distinguish satisfactorily the specific rela- tion of trustee and beneficiary from the many other fiduciary relations governed by the same general rules. The following definition is suggested as an approach to the expression of this distinction as existing in the law of Scotland : — Wherever a proprietary title is burdened with an obligation attached to, or arising out of, the acquisition of such title, and limiting the beneficial use of the property by the holder of the title, he is, in so far as his beneficial use is thus limited, a trustee. 2 1 Of these the greater number are the creation of English Equity lawyers, in which legal system the delicate distinctions of the fiduciary relations have been most highly developed. For a list of such definitions, and a discussion of them, see Mr. Hart's Digest of the Law of Trusts, and 15 Law Quarterly, p. 294. For a further discussion of the definition by the Scots law, see ss. 21, 22. 2 Cf. definition given in Indian Trustfe Act, 1882, s. 3. Vide Act in Appendix to volume i. of first edition. Cf. s. 790 and s. 1061. An example of a situation raising the relation of trustee and beneficiary, and requiring such a definition to cover it, is to be found in Stevenson v. Wilson, 1907, S. C. 445 ; see second finding of Lord Ordinary, at p. 449. Cf. Hardoon v. Belilios, 1901, A. C. 118, at p. 123. 2. The definition of trust above attempted has the authority of the following dictum of Lord Westbury : — " An obligation to do an act with respect to property creates a trust; and if a fiar bound to fulfil an obligation acquires or retains, by means of his neglect of that duty, a greater estate than he would, otherwise have had, he is a trustee of such excess of interest for the benefit of the persons who would have been entitled to it if the obligation had been duly fulfilled." 1 The value of this statement does not seem, as has been suggested, 2 to be in any way affected by certain comments of Lord President Inglis 3 and of Lord Watson 3 upon the case from which it is quoted. These comments dealt solely with the particular question of the "nature of the interest which 1STATUEE OF TEUSTEESHIP [CHAP. I. Constitu- tion of trust. Direct trusts. Construc- tive trusts. Three con- ditions of constitution of direct trust. Definition of property transferred. a trustee in sequestration takes in the heritable estate of the bankrupt," and did not impinge upon the question of the nature of the relation of trustee and beneficiary. 1 Fleemingtf. Howden, 1868, 6 M. (H. L.) 113, at p. 121. Of. Lord Kinnear in Dunn v. Pratt, 1898, 25 R. 461, at p. 473. 2 Juridical Review, vol. v. p. 180. 3 Heritable Co. v. Millar, 1891, 18 R. 1166, at p. 1183 ; and 19 R. (H. L.) 43, at p. 49. 3. Questions as to the circumstances in which a trust is held to have been constituted do not fall within the purposed scope of this work. Therefore any attempt to treat so large a subject in an exhaustive manner is disclaimed. Some of the principles ruling such questions are, however, noticed as even such limited treatment may be of practical value. A trust may, on the one hand, be the creation of a truster transferring his property to another expressly or impliedly in trust, and not beneficially. It may, on the other hand, be created by a set of circumstances inferring a duty in the holder of the proprietary title to account to others for the intromissions had in virtue of that title. 1 To the creation of trusts in the former manner, viz. by the transfer of property by its owner to another, there are three conditions precedent. The classical definition of these conditions is to be found in the following often-quoted words of Pepper Arden, M.E., after- wards Lord Alvanley : — " Wherever any person gives property and points out the object, the property and the way in which it shall go, that does create a trust, unless he shows clearly that his desire expressed is to be controlled by the party, and that he shall have an option to defeat it. ... If a testator shows his desire that a thing shall be done, unless there are plain express words or necessary implication that he does not mean to take away the discretion (to defeat it), but intends to leave it to be defeated, the party shall be considered as acting under a trust." 2 1st. The property transferred must be indicated in such a manner as to be ascertainable with reasonable certainty. As a legal conception, trust refers only to the limitations upon the title to property, and there cannot be a trust where there is not property whose title is affected by it. Therefore, where the property professed to be transferred is not indicated so as to be eapable of identification and separation, a title to it cannot be made up in the transferee, and a limitation of that title by a trust is impossible. Pew examples of the failure of this condition are chap. I.] NATUEE OF TRUSTEESHIP 3 to be found in reported eases, but a typical one is afforded by a case where property left at death of a liferenter was described as " heirlooms." This was held to be too uncertain to maintain a trust in the liferenter. 3 2nd. The transferee of the property must be indicated in such Definition of a manner as to be ascertainable with reasonable certainty. 4 3rd. There must be a direction to the transferee to deal with Binding the property for the behoof of another than the transferee, which miction to direction must be of so imperative a nature as not to be capable of being defeated by the exercise of any discretion conferred upon the transferee. 5 The third condition is held to be fulfilled by a transference expressly in trust. 6 Where there is no such express trust declared, it becomes a question of construction as to whether a " precatory trust " has been created by the terms used by the precatory transferor. Such questions are often extremely difficult, and the considerations that arise in attempting to apply the condition to the circumstances of each case are too numerous to be dealt with exhaustively. All that can be attempted is to trace the lines on which the decisions have treated the expressions appearing more generally in such deeds. In considering the question whether the transfer constitutes a precatory trust or is a beneficial gift, it is necessary to point out that it is not relevant to consider whether the object of the transference fails from uncertainty, as such a reading of Lord Alvanley's words is possible. " In order to render a person precatory 11* p tit * rus * nofc a trustee, it is not necessary that the obiects of the trust should affected by J J failure of be defined ; it is sufficient to show that the property or power com- ot> J ect - mitted to him is so committed in a fiduciary capacity only." 7 The existence of a precatory trust must therefore be inferred from the words conditioning the transfer alone. In estimating these words certain general considerations must be kept in view. Thus the modern tendency is against the inference of a precatory trust. 8 " Where there are prior words giving legal or equitable rights, Modem and then come words of request, it requires the strongest possible a =£™^ r circumstances to say that these words of request are to cut down trusts - the prior words giving the legal and equitable rights, and to say that the words of request impose an obligation." 9 The relationship of the truster and the alleged trustee is a Eeiation- ... iiii sn 'p wi ^ n relevant consideration. 10 In a disposition between husband and truster. wife the law leans against a precatory trust. 11 Similarly, where NATUEE OF TEUSTEESHIP [chap. i. "In full confidence. "Abso- lutely." "Desire." "Request." " Mainten- ance.'* property is purchased and the title is taken, not in the name of the purchaser, but in that of another who is a stranger to the purchaser, there is a presumption that the holder of the title is a trustee for the purchaser. "Where, however, the title is taken by the purchaser in the name of his son, the son is pre- sumed to have received the property as an advancement from the father, and not to hold it as a trustee for him. 12 The following are illustrations of words conditioning the trans- fer of property which have been judicially commented upon : — The words " in full confidence " are not technical words in any sense. " They are words which may or may not create a trust, and whether they do so or not must be determined by the context of the particular will in which you find them." 13 The word " absolutely " only defines the amount of the estate which is given, and does not exclude an inference of limitation of its quality. 14 " Absolutely " may refer to extent of interest, but it may mean a great deal more, and its natural grammatical meaning is unfettered and unlimited, i.e. unlimited in point of estate, and unfettered in respect of any consideration or trust. 15 An expression of " desire " is not enough to create a trust. 16 Property given for life with "request" that it be left in a certain way at death is not a trust. 17 The words " upon trust " are not themselves sufficient to create a trust of all the property so conveyed. 18 A gift with the specifica- tion of a purpose is not by itself a trust for the purpose, but the purpose is a measure of the gift. A gift of "a sum of money sufficient to pay and discharge all the estate duty which may be payable " by the donee is not a trust binding the donee to use the money in paying the duty. 19 But a gift of an annuity by a husband to his widow to be applied by her to the maintenance of their daughter created a trust, and the annuity was held payable to the daughter even after the death of the widow. 20 The converse case of a gift of property to a widower " to be applied " to the maintenance of the children was held to create a trust, 21 but a gift to a son by his parents for maintenance of his children was held to be an absolute gift, which was forfeited, there- fore, on son electing to take legitime " Under burden of annuities " creates a trust for the annuitants. 23 A bequest to a brother " for behoof of his family " is equal to " in trust for his children," and the beneficial right is in the children only. 24 It is settled law in England that the executors are presumed chap. I.] NATUEE OF TKUSTEESHIP 5 to take beneficially as against the Crown. The presumption is Executors- rebutted where the testator favours all the executors equally in his legacies. 25 The expressed intention to make a gift during life is held to be completed by the appointment of the intended donee as an executor, either alone or with others, the intention not having lapsed. This applies to all personal estate, and not only to the discharge of a debt due by the donee. 26 But the intended gift must be a present one and not a mere promise to give in the future, and the gift must be of the nature of a specific legacy. 27 A precatory trust is to be distinguished from an absolute gift Absolute with a condition repugnant to the gift, such as the gift of a property condition under the condition that if it is sold a sum of money out of the proceeds is to be paid to a third party. 28 If a condition is attached to a testamentary gift, which con- dition limits the gift in favour of a third party, and the condition has been assented to by the original donee, this creates a trust in the donee, and the person taking an interest under the condition has an enforceable right against the original donee as a trustee for him. 29 1 Trusts created in the latter way are known as constructive trusts, and are dealt with in s. 439 and s. 1271. .. 2 Malim v. Keighly, 1794, 2 Ves. Jim. 333, at p. 335 ; 2 R. R. 229 ; Knight v. Boughton, 1844, 11 CI. & F. 513, per Lord Lyndhurst, C, at pp. 548, 549 ; Meredith v. Heneage, 1824, 1 Sim. 542. (This volume is backed 1826-27.) Cf. Greene, 1869, 3 I. R. Eq. 90, and cases quoted there ; Wilson v. Lindsay, 1878, 5 R. 539 ; Lambe v. Eames, 1871, 6 Ch. App. 597 ; Williams, 1851, 1 Sim. (N. S.) 358 ; Brooke, 1898, 1 Ch. 647, at p. 651. 3 Hill, 1897, 1 Q. B. 483, per Lopes, L.J., at p. 489. A bequest of a sum " not to exceed " a specified amount is a bequest of that amount. Speer v. Colbert, 1906, 200 U. S. 130, at p. 146. 4 In practice this condition affects inter vivos trusts only. In trusts mortis causd the Court will not allow the interest of the beneficiary to be defeated merely because a trustee has not been sufficiently described. If there is a legal administrator in the person of an executor he will be bound by the conditions of the mortis causd gift ; if there is none the Court will, on the application of a beneficiary, appoint a judicial factor to act as legal adminis- trator and execute the trust directions. As to the sufficient description of a trustee in. general, see s. 25. 5 The rule laid down by Lord Alvanley in Malim, supra, and the criticism of it by Lindley, L.J., in Hamilton, 1895, 2 Ch. 370, at p. 372, is discussed by Vaughan Williams, L.J., in Oldfield, infra, at pp. 553, 554. Both Lord Justices agree that the rule is good if the words " shall go " are to be read in an imperative sense, and that the later cases of Adams, 1884, 27 Ch. D. 394, and Diggles, 1888, 39 Ch. D. 253, do not conflict with it when so read. Cf. Conolly, 1909, W. N. 259. 6 Of. s. 26 et seq. 7 Eyre, 1883, 49 L. T. 259, per Kay, J., at p. 260, 2nd col., referring to Briggs v. Penny, 1851, 3 Mac. & G. 546 ; see p. 556, per Lord Truro, G, and Bernard v. Minshull, 1859, Johns. 276 ; see Wood, V.-C, at pp. 286, 287. 8 Williams, 1897, 2 Ch. 12, per Lindley, L.J., at pp. 18, 21. Cf. Adams, supra, per Cotton, L.J., at p. 410. 9 Hill, 1897, 1 Q. B. 483, per Lord Esher, M.R., at p. 487. 10 Morrison, infra. 6 NATUEE OF TEUSTEESHIP [chap. i. 11 Sullivan, 1903, 1 I. R. 193, at p. 199 ; Wilson, supra. 12 Commissioner of Stamp Duties v. Byrnes, 1911, A. C. 386 ; Gray, 16, /, 2 Sw. 594, per Lord Nottingham, C, at p. 597. 13 Comiskev v. Bowring-Hanbury, 1905, A. C. 84, per Lord Davey, at p. 89. 14 Gomiskey, supra, at pp. 89, 90. The difference of judicial opinion in this case is a striking example of the uncertainty of any professional advice in such p Tn*if"f"PT* 15 Williams, supra, at p. 21 ; Lindley, L.J., citing James, V.-C, in Irvine v. Sullivan, 1869, 8 Eq. 673, at p. 680. ^ 16 Oldfield, 1904, 1 Ch. 549; Miller, 1906, 13 S. L. T. No. 360; Wilson, supra. 17 Hill, 1897, 1 Q. B. 483 ; Morrison v. M'Ferran, 1901, 1 I. R. 360 ; but see as to a "direction," Johnston, 1880, 18 S. L. R. 60. 18 Morrison, supra. Cf. Rigg, infra; Henderson, 1894, 1 S. L. T. No. 554, and Allan, 1893, 1 S. L. T. No. 324. »» Mexborough v. Saville, 1903, 88 L. T. 131. 20 Yates, 1901, 49 W. R. 646 ; Urquhart v. Abbott, 1899, 1 F. 1149. 21 Delahuntry, 1907, 1 I. R. 507. 22 Chalmers, 1903, 5 F. 1154 23 Galletly v. Ross, 1881, 18 S. L. R. 718. 24 Michie, 1905, 7 P. 509. Cf. Risg, 1905, 13 S. L. T. No. 71 ; Mill, 1877, I. R. 11 Eq. 158 ; Bradshaw, 1908, 1 I. R. 288 ; Shields, 1910, 1 I. R. 116 (cases of property left to the widow with rights of disposal or selection amongst the children). * Glukman, 1908, 1 Ch. 552. Cf. Balfe v. Halpenny, 1904, 1 1. R. 486. For trust for next-of-kin where object too vague, Anderson v. Smoke, 1898, 25 R. 493. 26 Stewart, 1908, 2 Ch. 251, following and extending the principle of Strong v. Bird, 1874, 18 Eq. 315. 27 Innes, 1909, 101 L. T. 633. 28 Elliot, 1896, 2 Ch. 353. Cf. Denholm, 1908, S. C. 255, as to limitation on an absolute fee in a contractual mortis causd settlement between spouses. Cf. Lambe, supra. 29 Maddock, 1902, 2 Ch. 220, and Tee v. Ferris, 1856, 2 K. & J. 357. Trusteeship 4. The relation of trustee and beneficiary, and also the many Irom other relations which, though wanting in one or more of the essential positions, conditions of that relation, 1 are governed by the same general fiduciary rules, must be distinguished from the relation existing between the holder of a proprietary title and one with whom he has entered into a contractual relation which limits the pro- prietary title itself, and not merely the beneficial use of it. The illustrations of this relation are very numerous, but certain cases are typical and more commonly met with. Mortgagor Mortgagor and mortgagee do not stand in a fiduciary relation mortgagee, to one another ; there is no higher duty than the exercise of good faith towards each other, 2 unless where there is an express declara- tion of trusteeship. 3 vendor and The position of the vendor in possession towards the purchaser after the conclusion of the contract of sale is a similar relation. " The vendor is a trustee of the property for the purchaser " till transfer to him, but "subject to the paramount right of the vendor and trustee to protect his own interest as vendor of the property." 4 Heir of An heir of entail is not a trustee for the substitute heirs of chap, i.] NATUEE OF TEUSTEESHIP 7 entail, and he is under no implied obligation as regards such heirs. 5 On the other hand a fiduciary fiar under a heritable destination in fee and liferent is a proper trustee for the prospective fiars. 6 The donee of a power of appointment, since the Powers of Donee of power of Appointment Act, 1874 (Lord Selborne's Act), 7 does not appear to ^ p e p n ° t int " be bound by any fiduciary relation to the objects of the power. The relation of tutor and pupil includes that of trustee and Tutoranci . , curator. beneficiary, the relation of curator and minor does not, though it is. governed by the same fiduciary rules. The tutor holds the title to the property of the pupil — the minor, not his curator, holds the title to the minor's property. It is a general proposition that where property is transferred Transferee under contract the transferee cannot be held to be a trustee for contract. the transferor of any gratuitous increment attaching to the title after transfer, 8 unless where an undertaking, express or implied, on the part of the transferee to hold said increment as such trustee can be substantiated by the transferor. 9 A typical illustration is afforded by the case where property is transferred under burden of incumbrances, and these incumbrances turn out to be other than they were estimated to be by the transferor. " The notion that after the completion of the purchase the purchaser is in some way a trustee for the vendor of the amount by which the existence, or supposed existence, of incumbrances has led to a diminution of the price, and liable therefore to account to the vendor for anything that remains of that amount after the incumbrances are satisfied or disposed of, is without foundation. After the purchase is com- pleted the vendor has no claim to participate in any benefit which the purchaser may derive from his purchase." 10 1 See s. 5 et seq. Cf. Hallett, 1879, 13 Ch. D. 696, at p. 709. 2 Kennedy v. De TrafFord, 1897, A. C. 180 ; Field v. Debenture, 1896, 12 T. L. K. 469. This applies also to tenants in common of real estate in England. Cf. Brown v. Home, 1904, 12 S. L. T. No. 322. 3 London v. Goddard, 1897, 1 Ch. 642. Here the mortgagor of land by a deposit of the deeds declared himself trustee of the legal estate in the land for the mortgagee, and was held to be a trustee within the meaning of the Trustee Act, 1893, 56 & 57 Vict. c. 53. Vide Dobson v. Land, 1850, 8 Hare, 216, per Wigram, V.-C, at p. 220 ; but cf. Taylor v. Watson, 1846, 8 D. 400, per L. P. Boyle, at p. 405 ; Brooke, 1898, 1 Ch. 647, per Kekewich, J., at p. 651. 4 Shaw v. Foster, 1872, 5 Eng. & I. App. 321, per Lord Cairns, at p. 338 ; Lynders, 1910, 1 I. R. 231. Vide article in 36 Sol. J. 775 and 784 ; see also Dowson v. Solomon, 1859, 1 Dr. & Sm. 1, and Newman -o. Maxwell, 1899, 80 L. T. 681. See s. 1272 as to position of purchaser in England with reference to proper application of purchase-money by vendor. As to assignee suing as trustee for the assignor, Bankes v. Jarvis, 1903, 1 K. B. 549. 6 Gould, 1899, 2 F. 130, per Lord Moncreiff, at p. 139. Cf. Medows, 1898, 1 Ch. 300. 6 Cf. Pottie, 1902, 4 F. 876 ; and see Cumstie, 1876, 3 R. 921, for circum- stances creating such a position. 8 NATUEE OF TEUSTEESHIP [chap. i. 7 37 & 38 Vict. c. 37. 8 Landauer v. Asser, 1905, 2 K. B. 184. Here the assignee of a marine policy was held not to be a trustee of the policy moneys when realised, and therefore not accountable to the assignor for a profit on the transaction. 9 See circumstances in Ralli v. Universal Co., 1862, 31 L. J. Ch. 313. 10 Musammat v. Kimwar, 1909, 36 Ind. App. 203, at pp. 208, 209. Cf. posi- tion of company and director as to sale by latter to former, Burland v. Earle, 1902, A. C. 83. Trustee 5. The most distinctive characteristic of the office of trustee is always holds . . . ' . » proprietary ownership. A trust, m the legal sense, can only exist m rererence to property. 1 The trustee is always the holder of the proprietary title ; he acts always as principal, never as agent. " The property of the thing intrusted," says Lord Stair, " he it in land or mov- ables, is in the person of the intrusted, else it is not proper trust." 2 This characteristic of ownership, as the real criterion of proper trusteeship, is sharply illustrated by the procedure of the English law, where a trustee proper, being vested with the legal estate, cannot be sued by the beneficiary in an action at law, but only in a personal suit in equity. An agent, though liable in a fiduciary capacity in equity, can also, as he is not vested with the legal estate of the property in his possession, be sued in an action at law. 3 As the trustee is only the titular owner, however, and has none of the beneficial uses of the property of which he holds the proprietary title, he is not subject to the disabilities attached to beneficial ownership. He is not, for instance, precluded from sitting on the licensing bench by reason of his being a trustee on an estate, part of which consists of a public-house business.* Nor is he disqualified from acting as judge in a criminal prosecution connected with property of which he is a trustee, if he has no beneficial interest in it. 5 1 Forbes v. Eden, 1867, 5 M. (H. L.) 36. 2 Institutions, i. 13, 7. 3 See Kekewich, J., in North American Land and Timber Co. v. Watkins, 1904, 1 Ch. 242, at p. 250, discussing judgment of Stirling, J., in Friend v. Young, 1897, 2 Ch. 421. 4 3 Edw. vii. c. 25, s. 9. Lundie v. Falkirk, 1890, 18 R. 60. On the other hand, he is, by statute, precluded from voting for a member of Parliament, in respect of the property of which he is only the titular owner (2 & 3 Will iv. c. 65, s. 26). Under the Public Health Acts the trustee is liable to perform the statutory obligations as the " owner " (Lever, 1897, 1 Ch. 32 ; 60 & 61 Vict, c. 38, s. 3). 6 Wildridge v. Anderson, 1897, 25 R. (J. C.) 27. Trusteeship 6. The position most easily confused with that of trusteeship is stnrl 5urenftv_ . . agency. Possession by an agent involves his liability to account to his principal on the same general principles as govern an accounting by a trustee to his beneficiary ; but his possession being without a proprietary title 1 constitutes not trusteeship, but and agency. chap. I.] NATUEE OF TEUSTEESHIP 9 agency. 2 Where, for instance, money belonging to a trustee, as such, comes into the hands of his agent, the agent acts in a fiduciary character with regard to that money, and is liable to account for it as a trustee ; still he is not the trustee of the money, but a mere agent, holding money to the order of his principal, the trustee. 3 It has been decided in England that an agent becomes an express trustee of money transferred to him for a specific purpose. Many of the decisions, however, have special regard to the scope of the English Statutes of Limitation as a plea in bar, and do not necessarily infer that the agent is thus created a true trustee, having legal ownership of the money against all the world. 4 But money paid to a bankrupt for a special purpose constitutes him a true trustee thereof, and the beneficiary is entitled to it against the bankrupt's general creditors. 5 Where an agent in breach of his mandate takes the title to heritage in his own instead of in his mandant's name, no trust is thereby created. 6 In so far as the mandate authorises the pur- chase of property in the name of the mandatary, and is duly executed, a proper trust is created in the mandatary. 7 1 In Lord Advocate v. Clyde Navigation Trs., 1891, 19 R. 174, at p. 184, Lord Trayner uses the word " proprietary " in the sense of " beneficial," and as opposed to "trust" ; also Lord Young in Sutherland's Trs., 1893, 20 R. 925, at p. 927 ; but vide s. 5, supra. 2 Wall v. Stanwick, 1887, 34 Ch. D. 763, per Kekewich, J. Cf. 8 Law Quarterly, p. 220. 3 Vide curious case of Lake v. Bell, 1886, 34 Ch. D. 462. * See North American v. Watkins, 1904, 1 Ch. 242 ; affd. 1904, 2 Ch. 233 ; Friend v. Young, 1897, 2 Ch. 421; How v. Winterton, 1896, 2 Ch. 626 ; Lands Allotment, 1894, 1 Ch. 616 ; Soar v. Ashwell, 1893, 2 Q. B. 390, at p. 395, as to company directors. Cf. Burdick v. Garrick, 1870, 5 Ch. App. 233 ; Watson v. Woodman, 1875, 20 Eq. 721 ; Hindmarsh, 1860, 1 Dr. & Sm. 129, cases dealing with position of solicitor towards client ; Burgis v. Constantine, 1908, 2 K. B. 484, owner and registered holder of shipping shares ; Petty v. Taylor, 1897, 1 Ch. 465, owner and registered holder of copyright. Cf. s. 8. « Drucker, 1902, 2 K. B. 237. Cf. Watson, 1904, 91 L. T. 665 ; Middlemas ■a. Gibson, 1910, S. C. 577. 8 Home v Morrison, 1877, 4 R. 977. 7 Dunn v. Pratt, 1898, 25 R. 461, and cases there, specially discussion of Home, supra, by Lord Low (Ordinary). 7. The trustee acts always on his own initiative and on his own discretion, limited only by the conditions and term of his trust, and independently of both truster and beneficiary. 1 For instance, where there is a settled account between a stranger and the trustees, it cannot be reopened by the beneficiaries unless on some specific affirmative case against the settlement, such as fraud. 2 Again, it has been laid down that " what a trustee says or does in the exercise of his duty is evidence against his beneficiaries, but 10 NATUEE OF TEUSTEESHIP [chap. I. what he says or does in other respects is not evidence against his beneficiaries." 3 An agent, on the other hand, however like to those of a trustee his powers and actings may be, is always subject to the express instructions of his principal, whenever communicated to him, and the agency, where pure agency,* may be brought to an end at any time by the principal. Further, the trustee is bound personally in contract because he is a principal \ the beneficiary cannot be sued by the person contracting with the trustee as such ; 5 an agent is not personally bound, but binds his principal. 6 1 Cf. words " given at the time of its creation," in Indian Trusts Act, 1882, s. 11, in Appendix to vol. i. of 1st edition. 2 Fish, 1893, 2 Ch. 413, per Wright, J., at p. 417. 3 New v. Hunting, 1897, 1 Q. B. 607, per Vaughan Williams, J., at p. 611 ; aflfd. 1897, 2 Q. B. 19. 4 Motion v. Michaud, 1892, 8 Times L. R. 253 and 447. 6 King v. Stewart, 1892, 66 L. T. 339. 6 Plumpton v. Burkinshaw, 1908, 2 K. B. 572, per Farwell, L.J., at pp. 577, 578. Financial 8. This distinction between trusteeship and agency is well trustees, illustrated by an English case. Money was remitted by the Domain Commissioners of Egypt to Messrs. Eothschild & Sons, as agents in London for the Egyptian Government, to be applied to paying the interest, less a tax of 5 per cent., on the Domain mortgage bonds. This was duly advertised by the Messrs. Eoths- child. At a subsequent date, before the date of payment of the interest, the Domain Commissioners instructed the Messrs. Eothschild to pay the interest in full without deducting the tax, and remitted money to meet the difference. This was also duly advertised. On the date of payment of the interest, however, the Messrs. Eothschild again advertised to the effect that they were instructed anew to pay the interest, less the 5 per cent, tax, " notwithstanding that the amount required to pay the same in full has been duly remitted by the Commissioners." A bond- holder claimed payment in full from the Messrs. Eothschild, on the ground that they were trustees for the bondholders of money received by them, and specifically appropriated for that purpose. The Court found for the defendants, holding that they were mere agents. The decision rests on the principle that an order to pay addressed to one who is a mere agent can be revoked before pay- ment, but not so if the holder is a trustee for the creditor, for then the ownership of the property would have passed to the trustee, subject only to the terms of his trust, and out of the control of the truster, the debtor. 1 chap. I.] NATURE OF TRUSTEESHIP 11 1 Henderson v. Rothschild, 1886, 33 Ch. D. 459, following Garrard v. Lauderdale, 1831, 2 Russ. & My. 451. Gf. New v. Hunting 1897, 1 Q. B. 607, at p. 614, a conveyance on the eve of bankruptcy to repair breaches of trust held to create a good trust. 9. " No one will doubt that a man who gives an order to his agent to pay a creditor can afterwards revoke that order. There is another class of cases where there has been an accomplished fact — where money has been placed in the hands of a stakeholder or trustee for payment of an existing debt, and the stakeholder or trustee informs the creditor that he has the money in his hands for payment of that debt. 1 ... It is said that this is an action for money had and received ; but an action for money had and received is only maintainable when the money has been had and received to the use of the plaintiff. Nobody can say that anyone except the Egyptian Government had any right to the money in the hands of their agents." 2 The widely different result in the case of a proper trust is expressed in Lord Neaves' dictum: — " I consider that when once a trust is constituted, the person consti- tuting it has, in the absence of stipulation, no more control over the funds which he has conveyed to the trustees." s The position of Secretaries of State has been decided to be that of agents only, not of trustees, 4 even where they hold property nominally "in trust." "Where funds are raised by subscription, the depositaries of subscrip- tions as these funds are trustees limited by the objects of the subscription, trust fund. and not agents of the subscribers, subject to their instructions as to the application of the funds. 5 But the objects of the subscrip- tion must have been finally decided upon, and intimated to those interested, in order to make the trust an enforceable one in their favour. 6 1 See such a case in Hales, 1907, 2 K. B. 539. 2 Per Bacon, V.-C, in Henderson, supra, s. 8, at p. 469. 3 Grant v. Baillie, 1869, 8 M. 77, at p. 80. 4 Kinloch v. Secretary for India, 1880, 15 Ch. D. 1. Gf. Grenville-Murray v. Clarendon, 1869, 9 Eq. 11 ; Te Teira ■;;. Te Roera, 1902, A. C. 56, at p. 72. 6 Cross v. Lloyd Graeme, 1909, 54 S. J. 152 ; Parkes v. Royal Botanic, 1908, 24 Times L. R. 508. 8 O'Brien v. M'Meel, 1898, 1 I. R. 366. Lord M'Laren's remarks in Falkirk v. Ferguson, 1899, 1 F. 1175, at p. 1178, as to the difficulty of returning subscriptions to individual trusters, and the unwillingness of any public institution to take subscriptions on such a footing, seem to overlook the fact that in such cases as his Lordship predicates the subscriptions form a public trust and will not lapse though the immediate object fails. No question as to the return of the subscriptions will in such a case arise, and the difficulty suggested by his Lordship was avoided in the very case in question by the Court authorising application of the fund to other purposes. 10. The most striking illustration of the confusion between conveyance trust and agency is presented by the treatment by the Court of ^ m agency. 12 NATUEE OF TEUSTEESHIP [chap. i. a conveyance of his estate by a debtor in trust for the payment of his debts. Such a conveyance vests in the trustee a title to the debtor's estate against all the world. Such a trustee can, subject to the terms of his trust, himself give a good title to anyone deal- ing with him, and is not merely an agent binding his principal to give a title. Two irrelevant considerations continually occur and cloud the issue as to whether such a conveyance is a trust. These are — 1st, that such a conveyance is revocable by the truster while things are intact, that is, until no beneficiary has appeared — similarly a trust for unborn children, if voluntary, is revocable till a child is in existence — and 2nd, that in the case of an insolvent truster the purposes of the conveyance can be set aside by the action of a creditor who invokes the statutory procedure of sequestration in bankruptcy. In both cases there is ex hypothesi the revocation of a trust. The title has to be got from the trustee in one case by the truster as the beneficiary in a resulting trust, and in the other case by an individual vested in the truster's right by force of statute. In neither case is there any question of* the alteration by a principal of his instructions to his agent. "Where a creditor accedes to such a trust he obtains a jus crediti against the trustee to account to him as a beneficiary for the trust estate in the trustee's hands, he is not merely accepting an offer of an agent binding the principal in a personal obligation. The question has always arisen in practice in connection with the creditor's position under such a conveyance in trust, and not in connection with the legal relation of the truster and trustee. From the point of view of the creditor, while he has not acceded to the trust, the practical result is the same whether the legal position of the transferee from his debtor be that of trustee or of agent. Hence the following well-known statement of the law is applicable to either position, though it is treated here as a case of proper trust: — A conveyance to trustees for the payment during the lifetime of the truster of debts due by him, and to which the creditors of the truster are not parties, 1 is " an arrange- ment made by a debtor for his own personal convenience and accommodation — for the payment of his own debts in an order prescribed by himself — over which he retains power and control, 2 and with respect to which the creditors can have no right to com- plain, inasmuch as they are not injured by it, they waive no right of action, and are not executing parties to it." 3 The revoca- tion of a trust and the recall of an agent's instructions to pay chap, i.] NATURE OF TEUSTEESHIP 13 affect the creditor similarly, and he has no interest to object to the question being treated on the latter footing. This has led to the erroneous conclusion that in such a conveyance the truster has power to alter the instructions to the trustee. This is not so ; he may revoke the trust altogether up to a certain point of time, but he cannot alter the trust directions once it is constituted. Insolvency does not, of itself, constitute a man a trustee of his property for his creditors, and thereby give a creditor a right to call him to account for his intromissions with that property. 4 But a person, solvent or insolvent, may declare himself a trustee of his property for his creditors, and the accession of a creditor would entitle him to call the debtor to account for his intro- missions with the property till his beneficial rights under the trust were satisfied. In such a case there is no doubt about the character of the person holding the property ; he is a trustee who may retransfer the property to himself as an individual while no beneficiary has come into existence — he cannot be an agent holding the property for himself as principal. The correctness of the view that this conveyance is a trust is proved by an exception which has been made in the case where the debtor has died since executing his conveyance to pay debts. The exception has been authoritatively stated in these terms : — " In such a case it appears from the mere fact that it is a direc- tion to take effect when he is not able to recall the direction, that it is not intended that the trustees who have the estate should be mere agents; it is not intended that they should have no duty or trust for anyone else, because the trusts are to take effect when he is dead, and is no longer able to call on the trustees to reconvey the property to him." 5 A similar result obtains on the death of one of more joint trusters. 6 That the death of the truster should be represented as of itself changing his agent into a trustee for his creditors justifies the criticism offered above of the erroneous conception put forward in the cases of the nature of the convey- ance. It must either be agency or trust from the beginning. If agency, it falls with the death of the principal ; 7 as the relationship survives the death of the transferor, it must be trust. 8 1 Johns v. James, 1878, 8 Ch. D. 744 For case where creditors are parties, and consequent difference, vide Nicolson v. Johnstone, 1872, 11 M. 179, per Lord Deas, at p. 185. Cf. Fleming v. M'Hardy, 1892, 19 R. 542, as to effect on title to sue. 2 See New v. Hunting, 1897, 1 Q. B. 607 (reported in House of Lords, sub nom. Sharp v. Jackson), as to intention of maker of deed to execute irrevocable and, therefore, proper trust (Garrard, infra, discussed, and Smith v. Hurst, 1852, 10 Hare, 30, followed). 3 Garrard v. Lauderdale, 1831, 2 Russ. & My. 451, per Lord Brougham, 14 NATUEE OF TEUSTEESHIP [chap. i. C, at p. 455. Vide a. 144, infra. Cf. Edmond v. Dingwall, 1860, 23 D. 21, at p. 26, for recall of such a trust ; Mess v. Hay, 1898, 1 F. (H. L.) 22 ; 25 R. 398, per Lord Trayner, at pp. 405, 406; also Wallwyn «. Coutts, 1815, 3 Mer. 707 ; Byres v. Gemmell, 1895, 23 R. 332. 4 M'Lay v. M'Queen, 1899, 1 F. 804, per Lord Kincairney (Ordinary), at p. 809 ; Severn, 1896, 12 T. L. R. 262. 6 Fitzgerald, 1887, 37 Oh. D. 18, per Cotton, L.J., at p. 25 ; Synnot v. Simpson, 1854, 5 H. L. Gas. 121 ; Priestlev *. Ellis, 1897, 1 Ch. 489. 6 Montefiore v. Browne, 1858, 7 H. L. Cas. 241. 7 Yonge v. Toynbee, 1910, 1 K. B. 215. 8 Of. Nicholls v. Knapman, 1910, 26 T. L. R. 356, where a trustee for creditors was held to be personally liable to third parties as a principal. Are 11, The question, whether the holder of a certain fiduciary directors ... . . i i trustees? position is a trustee or not, has arisen on several occasions 1 as to the position of directors of a company. 2 " They certainly are not trustees," says Kay, J., " in the sense of those words as used with reference to an instrument of trust, such as a marriage settlement or a will. One obvious distinction is that the property of a company is not legally vested in them." 3 It is not the duty of a director to have the property of the company vested in him, and he is not a trustee of the property of the company unless it is vested in him. 4 His Lordship afterwards 5 quotes James, L.J., to this effect: — "The distinction between a director and a trustee is an essential . distinction, founded on the very nature of things. 6 A trustee is a man who is the owner of property, and deals with it as principal, as owner, and as master, subject only to an equitable obligation to account to some persons to whom he stands in the relation of trustee, and who are his cestuis que trust. The same individual may fill the office of director and also be a trustee having property, but that is a rare, exceptional, and casual circumstance. The office of a director is that of a paid servant of the company. A director never enters into a contract for himself, but he enters into contracts for his principal — that is, for the company of whom he is a director, and for whom he is acting. He cannot sue on such contracts, nor be sued on them, unless he exceeds his authority. That seems to me to be the broad distinction between trustees and directors." 7 Still, directors have a fiduciary position towards the company which involves duties on their part towards the company that they do not owe to third parties. They are therefore not protected, by the ruling in Derry v. Peek, 8 in their relations to the company. 9 1 Directors have been said to be " trustees of the company's property, with the liabilities of trustees in respect thereof" (Young v. Naval Society, 1905 1 K. B. 687, at pp. 693, 694) ; but the authorities relied upon only support the proposition that whether trustees proper or not, they are held to be trustees in any question of the application of the Statute of Limitations in chap. I.] NATURE OF TRUSTEESHIP 15 England (Lands Allotment, 1894, 1 Ch. 616 ; Severn, 1896, 12 T. L. R. 262 ; Soar v. Ashwell, 1893, 2 Q. B. 390, at p. 395). 2 Where the company itself is in a fiduciary relation, see s. 210 as to the position of the directors. 3 Faure, 1888, 40 Ch. D. 141, at p. 150. 4 Macfadyen, 1908, 2 K. B. 817, per Cozens Hardy, M.R., at p. 821. 6 At p. 151. 6 Cf. Overend v. Gibb, 1872, 5 Eng. & I. App. 480, per Lord Hatherley, C, at pp, 494, 495, as to difference in test of prudence applicable to trustees and to business directors respectively. 7 Smith v. Anderson, 1880, 15 Ch. D. 247, at p. 275. 8 1889, 14 App. Cas. 337. 9 Lagunas, 1899, 2 Ch. 392, per Lindley, M.R., at pp. 436, 437. 12. This opinion of Kay, J., 1 is referred to in a later case by Stirling, J., 2 as embodying what is "established law," who, in corroboration of the "broad difference" pointed out by Kay, J., says " that directors should not be held liable on the same principles as trustees, the object of the administration of the former being the acquisition of gain, while that of the latter is the preservation of the estate." The peculiarity of a director's position is emphasised by the language used in reference to it by Lindley, L.J. (who does not, however, make him a proper trustee): "A. director of a company is certainly not a mere agent. It is his duty, amongst other things, to protect the company and to enforce its rights even against himself ; " and again, "he is often more than an agent, and is a trustee, or has duties similar to those of a trustee." 3 It has been laid down 4 that directors "are no doubt trustees of assets which have come into their hands, or which are under their control," but in any case that is only an occasional and intermittent trusteeship, not affecting directors more specially than other agents of the company. 1 S. 11. 2 Sheffield v. Aizlewood, 1889, 44 Ch. D. 412, at p. 452. 3 Bennett, 1891, 8 Times L. B. 194, at p. 195, 2nd col. 4 Forest of Dean, 1878, 10 Ch. D. 450, per Jessel, M.R., at p. 453. Cf. Lands Allotment, 1894, 1 Ch. 616. 13. Promoters are not, as such, trustees. It is somewhat a«> promoters ■difficult to treat them as a class, in the absence of a definition trustees? •of the word "promoter." 1 They undoubtedly occupy a fiduciary position towards a company they promote, and are subject to the rules of fiduciary relationship in dealings affecting it. 2 The position of promoters, as distinguished from proper trustees, is thus put by Lord Kincairney : — " I think that the analogy between a trustee and a promoter is defective, and that all the principles and practice applicable to a trustee cannot be applied to a pro- moter. The promoters were not in a strict sense trustees when 16 NATUEE OF TKUSTEESHIP [chap. i. they were engaged in promoting the company. They could not be, because they had no constituent or beneficiary. They were creating the trust, and even the strictest law applicable to trusts does not bar an agent from making professional charges for framing the trust deed by which he is made a trustee." 3 Pro- moters, of course, perhaps even more frequently than directors,* may occupy incidentally the position of true trustees. "Where they take in their own name the title to property which, inter alia, the company has been formed by them for the purpose of acquiring, they are true trustees of this property for the company. 5 1 Promoters are recognised by the Directors' Liability Act, 1890, 53 & 54 Vict. c. 64, s. 3 (2), as "persons engaged in procuring the formation of a company," but they are not therein defined. 2 Edinburgh v. Mann, 1891, 18 K. 1140 ; Poole, 1878, 9 Ch. D. 322, at p. 328, as cited in Wood, 1890, 62 L. T. (N. S.) 760 ; Gluckstein v. Barnes, 1900, A. C. 240. 3 Edinburgh i>. Mann, 1896, 23 E. 1056, at p. 1060. 4 S. 12, supra. 6 Ladywell v. Brookes, 1887, 35 Ch. D. 400. is liquidator 14. The position of a liquidator of a companv has been a trustee? r ^ r J decided to be that of "an agent of the company who had by statute certain duties cast on him, including that of distributing the assets." 1 " In my judgment," says Eomer, J., " the liquidator is not a trustee in the strict sense. ... If a liquidator was a trustee for each shareholder, his duty would indeed be onerous, and one which few people would care to undertake." 2 It is different with a private assignee of debts for the purpose of collection and distribution, who is a real trustee. A number of creditors of one and the same debtor assigned absolutely to a debt - collector their respective claims, to be collected and distributed amongst them. Lord Esher, M.E., said it was "an assignment to the plaintiff (the debt-collector) with a trust, when the debts are collected, to pay them over to the assignees. It was intended to be an assignment of the legal property in these debts." s The statutory trustee in bankruptcy is a true trustee, as the estate is vested in him (19 & 20 Vict. c. 79, s. 102). 1 Under the Companies Act, 1908, s. 151 (2) (b), the liquidator only acts " in the name and on behalf of the company." 2 Knowles v. Scott, 1891, 1 Ch. 717. Vide discussion of cases referring to directors and liquidators as "trustees." In this connection note Lord Kinnear's- words—" The liquidator who holds the funds as trustee for equal distribution! among the creditors " (Henderson v. Stewart, 1894, 22 E. 154, at p 1661 3 Comfort v. Betts, 1891, 7 Times L. E. 475. ' chap, i.] KA.TUKE OF TEUSTEESHIP 17 15. When the trust is once constituted, it is irrelevant in any Beneficiary's question of a claim by a beneficiary 1 to consider from whom the against trustee trust estate came or what was the motive of the truster in con- ^dependent of circum- stituting the trust. It is sufficient to substantiate the claim of ^hkhtrust the beneficiary if he proves that the trustee holds the property oon9tituted - for his behoof ; he is not called upon to discuss the reason of the trust direction or to trace the origin of the trust property. 2 " A trustee with no liability for a breach of trust is an anomaly which I have not yet encountered." 3 Where the trust is not constituted, the questions from whom an estate is to come and the motive for constituting a trust thereof are relevant to the question of a claim to a beneficial right in that estate. If there is any contractual, statutory, or common-law obligation affecting the owner of that estate in favour of the beneficiary, the latter can enforce this obligation though there is no trust constituted. Where there is no such obligation in favour of the beneficiary, and his claim depends upon the bounty of the alleged truster — that is, if the trust is voluntary or gratuitous — the burden is on the bene- ficiary to prove the constitution of the trust in his favour. " I Trusts 1 T-i voluntary take the distinction to be, ' says Lord Eldon, " that if you want and owiga- the assistance of the Court to constitute you cestuy que trust; and the instrument is voluntary, 4 you shall not have that assist- ance for the purpose of constituting you cestuy que trust; as upon a covenant to transfer stock, &c, if it rests in covenant, and is purely voluntary, this Court will not execute that voluntary covenant ; but if the party has completely transferred stock, &c, though it is voluntary, yet the legal conveyance being effectually made, the equitable interest will be enforced by this Court. . . . If the actual transfer is made, that constitutes the relation between trustee and cestuy que trust, though voluntary, and without good or meritorious consideration." 5 A voluntary contract to create a trust gives no jus crediti to anyone not within the consideration of the contract. There must be a completed voluntary trust in favour of any other claimant to give him a title. 6 Where the trust is voluntary or gratuitous the considerations voluntary affecting the question whether a trust has been constituted are delicate. The principal of these considerations are noted in an opinion of Turner, L.J., which is regularly quoted as authoritative. " I take the law of this Court to be well settled that, in order to render a voluntary settlement valid and effectual, the settlor must have done everything which, according to the nature of 2 18 NATURE OF TRUSTEESHIP [chap. I. the property comprised in the settlement, was necessary to be done in order to transfer the property and render the settle- ment binding upon him. He may of course do this by actually transferring the property to the persons for whom he intends to provide, and the provision will then be effectual, and it will be equally effectual if he transfers the property to a trustee for the purposes of the settlement, or declares that he himself holds it in trust for these purposes ; and if the property is personal the trust may, as I apprehend, be declared either in writing or by parol ; but in order to render the settlement binding one or other of these modes must, as I understand the law of this Court, be resorted to, for there is no equity in this Court to perfect an imperfect gift. The cases, I think, go further to this extent, that if the settlement is intended to be effectuated by one of the modes to which I have referred, the Court will not give effect to it by applying another of these modes. If it is intended to take effect by transfer, the Court will not hold the intended transfer to operate as a declara- tion of trust, for then every imperfect instrument would be made effectual by being converted into a perfect trust." 7 After a reference to this statement Byrne, J., goes on to say : " What is required of the settlor is that he should part with his property 8 if he intends it to operate by way of a conveyance in trust. And, moreover, this is an established rule, that the Court cannot construe an incomplete gift as being a declaration of trust." 9 "Where property is transferable by deed, the existence of a covenant for further assurance in English deeds 10 and the absence of a reservation of a power of revocation u are indicia of a com- pleted gift. Delivery of "It is settled law that the delivery of a deed into neutral custody with the intention of putting the deed out of the granter's power and conferring an irrevocable right on the grantee is equivalent to the delivery of the deed to the grantee himself. Recording. The recording of a deed in a public register satisfies the required conditions." 12 That such a deed was recorded with the intention of operating delivery is presumed where the recording was done at the desire of the granter of the deed, 13 but there is no such presumption where the deed is a mere declarator of trust. 1 * But where there is a completed gift, the disclaimer of the trustee revests the property in the settlor under imposition of the trust created by himself, and he has no power to create a second voluntary trust of the property. 15 deed. chap. I.] NATUKE OP TKUSTEESHIP 19 1 It is of course necessary that there should be a beneficiary in existence at the time the question arises who can call the trustee to account where a completed gift is held to have been created ' (Middleton, 1909, S. C. 67 ; Bertram, 1909, S. C. 1238; Walker, infra; Laurence, infra). 2 Shropshire v. The Queen, 1875, 7 E. & I. App. 496, per Lord Cairns, C, at p. 507. 3 Howden v. Yorkshire, 1903, 1 K. B. 308, at p. 344, per Mathew, L.J., in rejecting the argument that no action could be brought against the trustees of a trade union for breach of trust in virtue of 34 & 35 Vict. c. 31, s. 4. 4 I.e. gratuitous. 5 Ellison, 1802, 6 Ves. 656, at pp. 661, 662 ; 6 R. R. 19, at p. 24. Vide also Column v. Sorrel, 1789, 1 Ves. Jim. 50 ; 1 R. R. 83, at p. 86, per Lord Thurlow, C. Cf. Robertson, 1892, 19 R. 49. 6 Fletcher, 1844, 4 Hare, 67 ; Plumptre, 1910, 1 Ch. 609 ; Spark, 1904, 1 Ch. 451. For an example of a deed partly declaring an intention to execute a trust and partly actually creating a trust, Ferrier, 1899, 1 F. 610. Of. Walker, infra, where there were two deeds executed contemporaneously. 7 Milroy v. Lord, 1862, 4 De G. F. & J. 264, at pp. 274, 275. 8 Cf. Walker v. Amey, 1906, 8 F. 376 ; Hutcheson v. Porter, 1901, 9 S. L. T. No. 170 ; Laurence, infra. He "parts with his property" by declaring him- self to hold it in trust. 9 Mallott v. Wilson, 1903, 2 Ch. 494, at p. 500. Cf. O'Flaherty v. Browne, 1907, 2 I. R. 416, and Irish illustrations discussed there. 10 Mallott, supra, real estate ; Jones, infra, execution of a power of appointment. 11 Mallott, supra; Walker, supra; Laurence v. Murray, 1901, 9 S. L. T. No. 137, and cases cited there. As to effect of power to revoke with consent ■of trustees who have absolute discretion to give or to refuse consent, Parry, 1904, 1 K B. 129. Vi Obers v. Paton, 1897, 24 R. 719, per Lord M'Laren, at p. 733. Of. Shedden, 1895, 23 R. 228. 13 Tennent, 1869, 7 M. 936, per L. P. Inglis, at p. 948. 14 Cameron, 1907, S. C. 407, per Lord Kinnear, at pp. 421, 422. 15 Mallott, supra, following Hall, V.-C, in Jones, 1874, W. N. 190. 16. Where two individuals declared themselves, from a friendly motive, to be trustees of a fund, they were held liable to the beneficiaries for a breach of trust, on the same principles as if the truster had been a third party. "When the relation of trustee and cestui que trust is once created, it is immaterial what may have been the consideration for it. There appears to have been no legal consideration in this case, for these two gentlemen acted merely from motives of kindness and liberality; but if a fund subject to a trust is afterwards dissipated, the trustees are as much responsible when the trust has been voluntarily x created by them, as when created for valuable consideration." 2 Where the truster is a beneficiary under a gratuitous conveyance in trust, he must discharge himself of any debt due to the estate by him before he can receive his beneficial interest. 3 1 I.e. gratuitously. 2 Drosier v. Brereton, 1851, 15 Beav. 221, per Romilly, M.R., at p. 225. Gf. Egmont v. Aman, Times, 8th July 1911 ; but see Barrell v. Joy, 1819, 16 Mass. Rep. 221, at p. 226. 3 Weston, 1900, 2 Ch. 164, at p. 172. 17. It makes no difference to his liability either to third parties Trusts mter vivos and •or to beneficiaries whether the trustee is appointed by an inter mortis causa. 20 NATUEE OF TEUSTEESHIP [chap. i. vivos or by a mortis causd deed. As to liability to third parties, Lord Deas says of trustees registered as shareholders: "I can- not distinguish between the liability of trustees registered in virtue of an inter vivos deed, such as a marriage contract, or the liability of trustees appointed or assumed under an ordinary mortis causd deed of settlement." 1 And Lord Justice-Clerk Hope, refer- ring to the trustees' liability to the beneficiaries, says : " The trust in this case is constituted by an antenuptial marriage contract; but I do not, on that account, think that the rights and interests of the parties are the less to be determined by the provisions and purposes for the fulfilment of which the trustees are directed to hold, than if such purposes had been established by a testa- mentary deed." 2 English authority is expressly to the same effect. A deed inter vivos is to be construed in the same manner as one mortis causd? 1 Smith v. Glasgow Bank, 1879, 6 R. 1017, at p. 1022. 2 Pretty v. Newbigging, 1854, 16 D. 667, at p. 673. 3 Friend, 1906, 1 Ch. 47, foUowing Cole v. Sewell, 1848, 2 H. L. Cas. 186. is the 18. It has been laid down 1 that a distinction exists in law liability of public between the liability of public trustees, as for instance trustees different? administering a charitable trust for behoof of the public interested, and that of a trustee in a private trust. But the liability of every trustee differs from that of all others in questions with his bene- ficiary — in each case his liability is measured by the rights vested in the beneficiary. The real distinction is that, not between classes of trustees, but between classes of beneficiaries, between the liability of the trustee to a beneficiary claiming in his private and personal character in an action for his private interest, and the liability of a trustee — possibly the same trustee — to a bene- ficiary claiming as the member of a public class and for a class, not a private, interest. In the case of the private beneficiary the trustee is liable for any breach of trust that injures the right vested by the truster in the particular beneficiary in the trust estate, a liability that varies in every case. In the case of the beneficiary in a public trust the trustee is liable only for adminis- tering the trust estate in the general interests of the public intended to be benefited, and is not liable to a member of that public whose contingent right to benefit under the trust is in- jured by such administration. Construed in this light, the dictum referred to above in no way derogates from the generality of the rule laid down as to the liability of the trustee. chap. I.] NATUEE OF TEUSTEESHIP 21 1 Andrews v. Ewart, 1886, 13 R. (H. L.) 69, per Lord Watson, at p. 73 ; and see Lord Young, in 12 R. 1001, at p. 1012. 19. It is to be noted that partnership x affords an example of partners true trusteeship outwith the ordinary scope of trust administration. The title to the heritable property of the partnership is vested in the partners jointly in trust for the firm, and each partner is a true trustee. 2 In like manner the heritors in a parish are trustees of the parish church and churchyard for the whole body of the parishioners, who are the beneficiaries. 3 1 As to joint adventurers holding the common property in trust, see Livingstone v. Allans, 1900, 3 P. 233. 2 53 & 54 Vict. c. 39, s. 20 (1) (2). 3 Steel v. St. Cuthbert, 1891, 18 R. 911, per L. P. Inglis, at p. 917, quoting Roxburghe, 1876, 3 R. 728, at p. 734. Of. Lord Young in Fraser v. Turner, 1893, 21 R. 278, at p. 281. 20. The legal conception of a trustee involves the existence of Trusts for someone vested with a right limiting the beneficial use by the objects. trustee of the property of which he holds the proprietary title. Where the primary beneficial object of the trust is not a legal persona, two questions have arisen that have not always been recognised to be independent. 1st. Is the trust a valid trust which the trustee can execute, where he is willing to do so, to the detriment of the interest of a residuary beneficiary, or, failing such a one, the beneficiary under a resulting trust ? 2nd. Where the trust is valid and the trustee declines to execute the trust, can he be compelled to do so ? To the first question the answer in Scotland has been in the negative. It has now been decided that directions to a trustee to expend the trust funds upon the execution of specified objects not subject to objection on the ground of uncertainty, but not a charitable bequest, do not carry the estate past the residuary or resulting beneficiary, unless there is created a beneficial interest in connection with the specified objects in some other individual sufficient to give him a title to enforce the direc- tions. 1 "In order to create a valid trust you must have not only a trustee but a cestui que trust. That cestui que trust may be either an individual or individuals, or the public or a class of the public." 2 In the latter cases the Crown has a legal right to intervene to enforce the execution of the trust. 3 In England the answer is less certain. Thus a trust for the benefit of animals, in whom no legal right could vest to enforce the obligation limiting the trustee, has been upheld by the Court, and 22 NATURE OF TRUSTEESHIP [chap. I. not on the ground of its being a charitable bequest. " It is said that there is no cestui que trust who can enforce the trust, and that the Court will not recognise a trust unless it is capable of being enforced by someone. I do not," says North, J., " assent to that view." And his Lordship then proceeds to give some examples of trusts of such a nature. " There is not the least doubt that a man may, if he pleases, give a legacy to trustees, upon trust to apply it in erecting a monument to himself, . . . and I am not aware that such a trust is in any way invalid, although it would be difficult to say who would be the cestui que trust of the monument. ... A trust to lay out a certain sum in building a monument, and the gift of another sum in trust to apply the same to keeping that monument in repair, say, for ten years, is, in my opinion, a perfectly good trust, although I do not see who could ask the Court to enforce it. If persons beneficially inter- ested in the estate could do so, then the present plaintiff (the residuary legatee) can do so; but if such persons could not enforce the trust, still it cannot be said that the trust must fail because there is no one who can actively enforce it." 4 On the other hand, it is decided that a bequest burdened with a direction to keep tombstones in repair does not create a trust binding the donee to expend anything on the tombstones, the obligation being merely honorary. What is not so spent follows any trust of the surplus. 5 The bequest of a museum and pleasure- grounds, and an annuity for their maintenance, on condition that the public were to be admitted to the museum and grounds, gives the public no rights, and does not create a public trust binding the donee. The annuity was held to become his absolute property, and the museum and grounds to be held in tail under the donor's will, to which the special bequest was a codicil. 6 To the second question there is no authoritative answer, and only the negative has been suggested. The residuary bene- ficiary, or, failing such a one, the beneficiary under a resulting trust, can call the trustees to account for the funds not expended upon material objects. That the interests of these beneficiaries are adverse to the enforcement of any right against the trustees in personam to execute the trusts for such objects is a suffi- cient explanation of there being no declaration of the existence of such a right. In a case cited above 7 Lord Kyllachy expressly reserves from the scope of the decision the " validity of a testa- mentary disposition directed to the providing, on a customary and rational scale, a burial-place for a testator or a suitable chap. I.] NATUEE OF TEUSTEESHIP 23 monument to his memory;" or "for the erection in suitable situations of memorials to historic personages or to commemorate historical events;" or "for beautifying or embellishing a town or neighbourhood." It is not explained by whom in these cases the trust is to be enforced, unless possibly, in so far as the trusts can be raised into public benefits, they can be enforced by the Crown. "Where the objects are not for the benefit of the public, it is very questionable if there is any civil law sanction to enforce the direction. The sanctions of social opinion and of the criminal law as to misappropriation of funds by the trustee where he is the residuary or resulting beneficiary, the trust being ex hy-pothesi valid, seem to prove sufficient in practice. 1 M'Caig v. Glasgow, 1907, S. C. 231, per Lord Stormonth-Darling, at pp. 245, 246. 2 Church Patronage, 1904, 2 Ch. 643, per Cozens-Hardy, L.J., at p. 654. 3 See M'Caig, supra, per Lord Kyllachy, at p. 244. 4 Dean, 1889, 41 Ch. D. 552, at pp. 556, 557, following Mitford v. Reynolds, 1848, 16 Sim. 105. Of. PettingalL, 1842, 11 L. J. Ch. 176 ; Howard, Times, 30th October 1908. 5 Dawson v. Small, 1874, 18 Eq. 114 ; Rogerson, 1901, 1 Ch. 715. 6 Pitt v. Rivers, 1902, 1 Ch. 403. 1 M'Caig, supra, at p. 244. 21. The nature of the relation between the truster, trustee, Legal relation of and beneficiary is a subject on which considerable difference of parties interested opinion has been expressed. The definition of the relation as a in a trust * combination of the nominate contracts of deposit and mandate, which is that suggested by Lord Stair, 1 has been repeated by Lord President Inglis. " A trust is a contract made up of the two nominate contracts of deposit and mandate. The trust funds are deposited for safe custody, and the trustees receive a mandate for their administration." 2 A fatal objection to this view of the nature of the trust relation is that it is physically impossible to deposit heritable property. Professor Bell 3 speaks of a "system of trusts in which the rights of all parties may be vested in the trustee, as in deposit," a statement that seems to be an attempt to cover a trust of heritage by a definition of trust as a combination of deposit and mandate previously set forth by him. 4 But it is just as impossible to deposit a right to heritage as to deposit the heri- tage itself : to deposit an incorporeal right is no easier than to deposit an immovable property. Lord Stair, too, speaks of the " right " being deposited. 5 Treating of trust as a mandate or commission, he says that it may also " be referred to depositation, seeing the right is in custody of the person intrusted." However, in another place, 6 he says that " the thing intrusted is in the custody of the person intrusted." 7 It is also to be observed that both the 24 NATUKE OF TKUSTEESHIP [chap. i. nominate contract of deposit and that of mandate are terminable at the will of the depositor and of the mandant respectively, and in the case of a mortis causd trust there cannot be a mandate — a mandate cannot survive the mandant. The combination of such contracts cannot create a relation of the irrevocable nature of that of truster and trustee. ...s, i. 12, 17, and i. 13, 7. 2 Croskery v. Gilmour, 1890, 17 R. 697, at p. 700. Of. L. P. Dunedin m Allen v. M'Combie, 1909, S. C. 710, at p. 716. 3 Com., 7th ed., vol. i. p. 32. 4 Page 30. 6 Institutions, i. 12, 17. 6 Institutions, i. 13, 7. 7 Vide also s. 5. 22. The relation of trustee and beneficiary has also been described as a " quasi-contract distinct from mandate, but closely allied to it." 1 The relation, however, is simply a nominate con- tract, 2 which always involves an obligation by the contractor to perform an act affecting property vested in him by the contract without having a beneficial interest in the property as such contractor. The contractual nature of the relation is proved by the fact that a person cannot be made a trustee against his will. The condition precedent to the existence of the relation is that affecting all contracts — an offer and an acceptance. That the Court will not allow a trust to fail for want of a trustee is an elementary maxim of the law, but it means nothing more than that the Court will provide someone ap- proved by them who will accept the offer of the trust where the truster has failed to find an acceptor. The Court has not a power to force anyone to accept a trust ; its function is limited to enforcing the execution of an accepted contract of trust by the contractor — the trustee. It is obvious that express trust only is referred to here, and the position is emphasised by comparing the case of express trust with that of constructive trust, in which there is no question of contract, a duty being in that case raised by implication against the holder of the proprietary title without any averment of contractual relation. This conception of the relation as a nominate contract has been traversed, but it is believed unsuccessfully. Lord Kincairney expressed the criticism thus : — " When a trustee undertakes a trust containing an explicit direction he does not enter into a contract that he will fulfil that direction, and he will not be liable for breach of contract if he fails to do so. His obligation is that of a trustee, not of a contractor, and in the obligation of a trustee there is an element of discretion chap, i.] NATUEE OF TEUSTEESHIP 25 which is not present in a contractual obligation. A trustee may justify non-compliance with such a direction on grounds of expedi- ency; he may excuse it on strong grounds of convenience." 3 The conception of the relation as a contract, even where accepted, has been unnecessarily complicated by the introduction of the idea of a "threefold relationship subsisting between the truster, the trustee, and the beneficiary." 4 There is only the twofold relation of contract, the contractee — who in this case is the truster — on the one side, and the contractor — the trustee — on the other. The beneficial interest created is an assignation of the truster's right against the trustee under the contract. 6 Thus we find that the truster may assign his power to the donee of a power of appointment, and the appointment made in conformity with that power is a mandate to the trustee as to the mode of dealing with the property subject to the power of appointment. 6 The introduction of the first assignee, the direct beneficiary, no more makes the trust relationship threefold than the introduction of a second assignee by the direct beneficiary makes it fourfold. 7 1 M'Laren, s. 1508. A later authoritative discussion of the problem results in the suggestion that it is not contract (L. P. Dunedin in Allen v. M'Combie, 1909, S. C. 710, at pp. 716, 717), but that the obligation of the trustee is really something different from a common-law obligation, and " that, unknown to Scots lawyers, the same ideas" as have made the obligation of the trustee only enforceable in the Chancery Court in England "have run through our juris- prudence." It is difficult, however, to reconcile this with concrete English authorities expressed in the following terms : — The sum of money received by • • i trustees as writing are presumed, in the absence of express prohibition, to be to new b I" U S uc 6S* the donees of a power of nomination of new 2 or additional trustees by the principle of co-optation, technically referred to as a power of assumption. At common law there is no presumed power of assumption, but the Trusts Act of 1861 enacts that " all trusts . . . shall be held to include the following provisions, unless the contrary be expressed; that is to say, power to any trustee so nominated if there be only one, or to the trustees so nominated, or a quorum of them, to assume new trustees," 3 and the Trusts Act of 1884 enacts that " Trust " shall mean and include any trust constituted by any deed or other writing, or by private or local Act of Parliament, or by resolution of any corporation or public or ecclesiastical body, and the appointment of any tutor, curator, or judicial factor, by deed, decree, or otherwise. 4 Trustees appointed under the Entail Acts do not fall within the definition 38 NOMINATION OF THE TRUSTEE [chap. n. of the Trusts Act, 1884, being appointed in virtue of a public general Act and not by a private or local Act of Parliament. 5 The truster may give power to a trustee to nominate another as his successor in the trusteeship on the death of the trustee. 6 Such a power to nominate a single successor in the trust by will must be strictly executed, and a nomination of two persons renders the nomination invalid. 7 Where executors were appointed by name, " their representatives, namely, the successors of each," were held to be the legal representatives of those predeceasing the testator, not of executors assumed in place of those who have survived the testator but not accepted office. 8 1 For exceptions, vide s. 44 et seq. For trustee under Entail Acts, vide a. 289. 2 This must be distinguished from the transfer of the trust estate to trustees under another trust, as to which see M'Grouther, 1911, S. C. 315 ; M'Lean, 1898, 1 F. 48. 3 24 & 25 Vict. c. 84, s. 1. 4 47 & 48 Vict. c. 63, s. 2. Of. as to retrospective effect of Act of 1884, see s. 49. 5 Queensberry, 1898, 5 S. L. T. No. 458. 6 Simpson v. Molson, 1895, A. C. 270, at p. 275, where truster's widow so empowered. 7 Bowman, 1910, 1 S. L. T. No. 139. 8 Michie, 1905, 7 F. 509. Limits to 44. It is to be noted that the statutory power of assumption f°sum°tion ( * oes nofc exten d to a U trusts. Its extent is limited first by the form of constitution of the trust, which must be by writing. Assumption 45. In the second place, the trustees who are vested with the by assumed trustees. statutory power of assumption must be trustees "nominated" under the trust writing. This limitation might appear to exclude assumed trustees. But the statute directs that the provision empowering assumption is to be read as if introduced into the trust writing; and trustees assumed under an express power in a trust writing are held at common law to be "nominated" by reference in the trust writing. The power of assumption must therefore be held to be extended to trustees assumed under the empowering provision introduced by force of statute into the trust writing. 1 The question does not arise in the construction of the corresponding English statute, as the defini- tion of the assuming trustee is not limited by any such words as " so nominated." 2 1 Forsyth, p. 102. Bell's Com., 7th ed., vol. i. p. 32, s 6 2 56 & 57 Vict. c. 53, s. 10. F ' Sutfby° f 46, Theextenfcof the statutory power of assumption may be truster. limited, thirdly, by the express direction of the truster—" unless chap, ii.] NOMINATION OF THE TEUSTEE 39 the contrary be expressed." This has been interpreted to mean that "it is v not sufficient that the contrary may be implied." 1 " Any hypothetical inference as to the intentions of the truster can never prevent the application of the statute." 2 The implica- tion of intention must be necessary and insuperable, or it does not exclude the statute. Where, for instance, a power to nominate new trustees is given to someone else than the trustees, or is expressly reserved by the truster, the implication of the truster's intention is held to be sufficiently strong to exclude the statute, the power given to another than the trustees or reserved by the truster to himself being contradictory of, as in practice incom- patible with, the statutory power of assumption in the trustees. 3 On the other hand, where a limited power of assumption is given by the truster, there is no incompatibility between it and the larger statutory power, and no necessary implication of the truster's intention to exclude the latter. 4 Some "very cogent sentences " of an " important and valuable opinion " 6 of Lord Gifford are worth noting in this connection. 6 1 Allan v. Hairstens, 1878, 5 R. 576. For effect of subsequent empowering Act on deed containing no express prohibition of such powers, cf. Sutherland v. Stafford, 1892, 19 R. 504, at p. 512. 2 Maxwell, 1874, 2 R. 71, per L. P. Inglis, at p. 74. 3 Munro v. Young, 1887, 14 R. 574. 4 Allan, supra. 6 Per L. J.-C. Moncreiff in Munro, supra, at p. 577. 6 Allan, supra, at p. 580. 47. Fourthly, there is the limit introduced by the subsequent Trustees appointed statute of 1867, which enacts as follows: — "Trustees appointed by court, by the Court shall not have the power of assuming new trustees, unless such power is expressly conferred upon them by the Court." 1 Such power may be conferred by the Court though there is no crave for it in the petition for new trustees, at least where the grant of the power is moved for by the beneficiaries. 2 This limitation upon trustees appointed by the Court seems to hold good of trustees so appointed at common law 3 or under Che Entail Act, 1882, 4 as that Act does not confer the power of assumption on the trustees appointed by the Court under it. 1 30 & 31 Vict. c. 97, s. 13. 2 Lennox, 1901, 9 S. L. T. No. 230. 3 Vide Aikman, 1881, 9 R. 213, where the power is expressly given by the Court. 4 45 & 46 Vict. c. 53, s. 23. 48. A special statutory provision limits the power of assump- sole trustee. tion by a sole trustee who wishes to resign. He can only do so after trustees. 40 NOMINATION OF THE TRUSTEE [chap. n. having assumed new trustees, and that assumption must be with the consent of the beneficiaries of full age and capable of acting at the time. If that consent cannot be got, he must apply to the Court to appoint new trustees or a judicial factor. 1 i 30 & 31 Vict. c. 97, s. 10. Of. s. 879. Tmsts Acts 49. The further limitation of the statutory power of assumption toVipaid 3 to gratuitous trustees by combined effect of the Trusts Acts of 1861 and 1867 was abolished by the Trusts Act of 1884. Previously to the Act of 1884 the clause of the Act of 1861 conferring the power of assumption had been interpreted as limited to gratuitous trusts. 1 Lord President Inglis, speaking of the Act of 1884, said :— " This is a case of a curator bonis, and therefore it appears to me that, within the meaning of that Act, the curator here is a trustee, and the estate under his management is a trust." 2 It is now decided that the Act of 1884, by its in- corporation of the previous Trusts Acts, 3 makes any non-gratuitous trustee, such as a curator bonis or judicial factor, a trustee for the purposes of all the Trusts Acts. 4 1 M'Kenzie, &c, 1872, 10 M. 749. 2 Accountant of Court v. Crumpton, 1886, 14 R. 55, at p. 57 ; Molleson v. Hope, 1888, 15 R. 665. 3 47 & 48 Vict. c. 63, s. 1. 4 Royal Bank, 1893, 20 R. 741 ; followed in Clark v. M'Rostie, 1908, S. C. 196 ; Scott v. Craig, 1897, 24 R. 462, per Lord Kincairney, at p. 467. 50. The extension to paid trustees of the powers granted by the Trusts Acts raises at first sight some difficulties, such as that an officer of Court should have a power of assumption. This may be looked upon as met by the provision that trustees appointed by the Court have no implied power of assumption. 1 i 30 & 31 Vict. c. 97, s. 13. 51. By the citation clauses of the later Trusts Acts 1 the whole of these Acts 2 are directed to be " read and construed together." The question referred to in the last section is but an example of the many difficulties arising when an attempt is made to put this direction into practice. This situation points to a codifica- tion of the Trusts Acts as the necessary remedy, 3 or at least their consolidation in a single statute, as in the cases of the English Trustee Act of 1893 and the Companies Act of 1908. It is almost impossible to "read and construe together," without straining one of them, Acts drafted on such different bases as those of 1861 and 1891. 4 chap. n. J NOMINATION OF THE TRUSTEE 41 1 E.g., 54 & 55 Vict. c. 44, s. 1. 2 The series of Acts is now formally quoted as the Trusts (Scotland) Acts, 1861-1898, the last date changing with the date of any fresh Act where it is provided that it may be cited along with this group of Acts (59 & 60 Vict, c. 14, s. 22)). 3 Vide note to Indian Trusts Act, 1882, in Appendix II. to vol. i. of 1st ed. Mr. Hart drafted a Bill for the codification of the English Trust Law which was presented to Parliament in 1907 by Mr. Athelstan Rendall. The writer attempted to induce the draughtsman and promoters of this Bill to include therein the Scots law of trusts on the lines adopted in the Partnership Act, 1890, and the Sale of Goods Act, 1894. The English lawyers concerned were of opinion that the Scots law could not be incorporated satisfactorily with the English law in a single code. The English Bill met with considerable opposition upon its being remitted to the English law societies, and though introduced in an amended form in a second session, the exigencies of political business ultimately killed the Bill in that Parliament, and it has not since been revived (see Mr. Hart's Digest of the Law of Trusts). 4 Cf Johnston,. 1900, 2 F. 467, per L. P. Dunedin, at p. 469 ; Scott v. Craig, 1897, 24 R. 462, per Lord Kincairney (Ordinary) at p. 467 ; and Lord M'Laren's discussion of the analogous position of the Entail Acts and .the necessary limits to the literal construction of such a series of Acts as one Act (Advocate v. Sprot, 1901, 3 F. 440, at p. 445). 52. Assumption is an act of trust administration, and is there- Assumption 1 is within discretion trustees. fore, in the absence of any definite trust direction, an act purely jj> ! within the discretion of the trustee. The Court will not inter- fere with the exercise of this discretion unless on the ground of personal exception against the trustee assumed, 1 or on that of corruption or impropriety in the assuming trustees. 2 Where the assumption was under a power given in the deed, Lord Balgray, in delivering the opinion of the Court, said : " The will of the testator is the rule and law to the Court in this case. . . . There is no personal exception against him (the assumed trustee) ; and the Court will not, de piano, take the trust estate out of the hands where the truster has placed it." 1 This opinion, though referring to an express power, applies equally to the exercise of the power given by the Trusts Act of 1861, 3 as the trust writing is, under that Act, " held to include " such a power. 1 Roughhead v. Hunter, 1833, 11 S. 516. 2 Neilson, 1885, 12 R. 670. 3 24 & 25 Vict. c. 84, s. 1. 53. The circumstances in which the power of assumption is when *■ assumption usually exercised arise where, from non-acceptance, death, resigna- called for. tion, or other cause, the personnel of the trust has fallen below the standard, either in number or in character, obviously intended by the truster, or where a deadlock has occurred in the administration of the trust, 1 other, of course, than a deadlock in the exercise of the power of assumption itself. 2 Where the deadlock arises through an equal division of the trustees, the assumption of a new trustee has at first sight the appearance of a delegation of their trust by 42 NOMINATION OF THE TKUSTEE [chap. n. the trustees, just as much as if they had referred the exercise of their discretion to an arbiter. The new trustee, however, is exercising his own discretion, not directing how that of the other trustees should be exercised, and there is no delegation of trust. 1 Neilson, s. 52, at p. 673. 2 Vide s. 61. (c) By the Beneficiaries Appoint- 54. Beneficiaries who are above age and not subject to any new trustee legal incapacity have a limited power of nomination of a new floiaries. trustee. Where the heir-at-law of a sole or last surviving trustee, who has died possessed of an estate in land, held in trust, has, there being no contrary provision in the deed of trust and no contrary order by the Court of Session, completed a title to the said land as trustee, such beneficiaries may consent to and approve of the heir-at-law administering the trust. 1 Beneficiaries may also be express donees of the power in the trust deed. In a voluntary trust deed for creditors, the power may be given to the creditors to elect a new trustee to fill a vacancy, 2 and a similar power is given by statute to the creditors on a sequestrated estate. 3 1 37 & 38 Vict. c. 94, s. 43. Vide s. 137. Of. Grange, 1881, 29 W. R. 502, where trusts severed and new trustees appointed to one part of the estate with consent of all the heneficiaries. 2 Lauderdale v. Fife, 1830, 8 S. 675. 3 19 & 20 Vict. c. 79, s. 74. Vide also Mitchell, 1860, 22 D. 632. (d) By Third Party 55. A power of appointing new trustees may be given by the truster to someone outside the trust. Instances are to be found in many public trusts where a power of appointing trustees to fill vacancies is given ; for instance, to some cor- porate body, such as a town council, a kirk-session, or some committee of management. 1 1 Cf. Patullo, 1908, 16 S. L. T. 267. (e) By the Court when court 56. New trustees may be appointed by the Court. This will appoint . , . _ _ new trustees power is inherent in the Court at common law as part of its at common * general jurisdiction over the administration of trusts. It is not the exercise by the Court of a power to appoint trustees which has been vested in someone else and not exercised by him. The Court cannot exercise such a lapsed power, and its power to appoint is not dependent upon the grant of such a power. 1 It is difficult to deduce from the practice of the Court what are chap.il] NOMINATION OF THE TKUSTEE 43 the principles upon which it exercises the discretionary power thus vested in it. In a case 2 where trustees with the power to assume existed but could not exercise it owing to an even division of their number, the power to appoint new trustees was exercised by the Court, but no opinions are given, and the cases 3 cited by the petitioners in that case, as authorities showing the practice of the Court, were cases of absolute lapse of the per- sonnel of the trust. It is to be noted also that in the two cited cases 3 the new trustees appointed by the Court were obliged to find caution "in terms of the Act of Sederunt anent factors," a provision entirely foreign to private trusteeship and suggestive of the appointment of an officer of Court, while no such pro- vision is made in the appointment in the later case. 2 It may be said generally that the power will be exercised by the Court "wherever a necessity exists for its making such an appoint- ment." 4 Such a necessity does not arise where a body of ex officio trustees find a difficulty in carrying out their trust, and desire the Court to relieve them of it by transferring the trust administration to another body of trustees. 5 1 A., 1904, 2 Ch. 328, per Romer, L. J., at pp. 333, 335. 2 Aikman, 1881, 9 R. 213. 3 M'Aslan, 1841, 3 D. 1263 ; Glasgow, 1844, 7 D. 178. 4 Melville v. Preston, 1838, 16 S. 457, per Lord Mackenzie, at p. 471 ; Lamonc, 1908, S. C. 1033, a sole trustee removed from office. Gf. Moir, 1826, 4 S. 801 and 808, and Miller v. Black, 1837, 2 S. & M'L. 866, at pp. 889-91, per Lord Brougham ; also Boyal Bank, 1893, 20 R. 741, per Lord M'Laren, at p. 743. 5 M'Lean, 1898, 1 F. 48. 57. The question of the appointment of new trustees to execute an existing trust must be clearly distinguished from the creation of a trust to carry out an intention to do so which has failed. The latter the Court has distinctly refused to do. 1 1 Allan, 1872, 11 M. 216 ; Murray v. Macfarlane, 1895, 22 R. 927, at p. 941 ; Beveridge, 1878, 5 R. 1116, at p. 1120. Cf. Jamieson v. Lesslie, 1889, 16 R. 807, also Clouston v. Bulloch, 1889, 16 R. 937, where cases discussed; Russell v. Lawder, 1904, 1 I. R. 328 ; see further s. 751. 58. The Court will, however, ex proprio motu, constitute a when * - 1 creation of trust, and appoint a trustee, for the purpose of carrying out trusts objects incidental to the proper execution of its decrees. Where damages were found in favour of a minor, the Court constituted a trust and appointed a trustee on behalf of the minor, to preserve the capital sum of damages during the minority of the beneficiary. 1 A similar course was taken with respect to compensation awarded to a pupil under the Workmen's Compensation Act, two trustees 44 NOMINATION" OF THE TBUSTEE [chap. n. being appointed in this case. 2 In the former case, in changed cir- cumstances—the beneficiary, a girl, having married, and, along with her children, been deserted by her husband— the Court ordained the trustee, on the beneficiary's petition, to pay over the capital to her before majority.-' i ' Sharp v. Pathhead Spinning Co. (Ltd.), 1885, 12 R. 574 Cf. Connolly v Bent Colliery, 1897, 24 R. 1172, and Lord Young's dictum there ; see also s. 49 as to position of factors and curators. * Cooper v. Fife, 1907, S. C. 564. In Sharp the trust was created in a stranger though the father was a party to the action ; this was followed by Lord Mackenzie in an unreported case (Hendry, 1909), where damages were recovered by a minor under a compromise of his action. 3 Case unreported. Appoint- 59. The unsettled and unsatisfactory state of the law, as to newtrastees the exercise of the power of appointment of new trustees by the by Court * . . , . statute Court at common law, 1 is probably due to the introduction oi a statutory power to a like effect by the 12th section of the Trusts Act of 1867. 2 Though the statutory power is not universal, as is that at common law, and is limited to meet certain specified cases, 3 these cases are a large majority of those arising in practice. This fact, and the certainty of the statutory procedure, have thrown that at common law almost into desuetude, and have made the older cases of little more than historical value. i S. 56. 2 30 & 31 Vict. c. 97. 3 Vide Aikman, s. 56. 60. The statutory power is as follows: — "When Trustees cannot be assumed under any Trust Deed, 1 or when' any Person, who is the Sole Trustee acting under any such Trust Deed has become insane, or incapable of acting by reason of physical or mental disability, the Court may, upon the application of any party having interest in the Trust Estate, after such Intimation and Inquiry as may be thought necessary, appoint a Trustee or Trustees under such Trust Deed, with all the powers incident to that office." 2 1 Patullo, 1908, 16 S. L. T. No. 267. 2 30 & 31 Vict. c. 97, s. 12 ; but cf. s. 13 of Act. Vide s. 47. when statu- 61. The deadlock in the machinery of the trust, for which the tory power emerges, statute supplies the key, must be absolute. Thus the expression " when trustees cannot be assumed " refers to the want of anyone having the power of assumption, not to mere inability to come to a decision as to the person to be assumed on the part of trustees vested with a power of assumption. This, at least, is the result chap. II.] NOMINATION OF THE TEUSTEE 45 of a case, 1 where two trustees with power to assume were unable to agree in the exercise of that power, and the petition to the Court was presented as a petition at common law, on the understanding that such a case was outwith the scope of the statute. 1 Aikman, s. 56. Of. Dick, 1899, 2 F. 316. 62. Where the impossibility of assumption of new trustees conditions arises through absence by death or otherwise of trustees capable of statutory r power. of exercising a power of assumption, the statute comes into practice. 1 " I think that the general words of the statute, ' when trustees cannot be assumed,' are intended to comprehend every case where $ie trust cannot be kept up by means of powers within the trust deed, and that in every such case the aid of this Court may be invoked." 2 It is here presumed that it was the purpose of the truster that the trust should be kept up in such circum- stances. The Trusts Acts provide machinery for carrying out the intentions of the truster ; they do not imply any intention on his part. The words of Lord Brougham, applied to the appoint- ment of trustees by the Court at common law, must therefore be kept in mind in applying this statutory power. " If a trustee dies or refuses the trust, where it is quite clear that the intention of the testator was that, in such an event, the heir should take the estate discharged from any trust, the Court would not be fulfilling the intention of the maker of the deed, but acting contrary to his intention, if it supplied a trustee, for that is the very event pro- vided for, the gift going over and the trust ceasing." 3 1 ZoUer, 1868, 6 M. 577, followed in Graham, 1868, 6 M. 958. Of. Black- wood, 1894, 1 S. L. T. No. 631. 2 L. P. Inglis in Graham, supra. 3 Miller v. Black, 1837, 2 S. & M'L. 866, at p. 890. 63. It is questionable if the Court will exercise any power at common law in connection with the appointment of new trustees other than that of interponing its authority to a nomination of new trustees " on the application or with the consent of all the parties beneficially interested," 1 where there are no existing trustees, either through all the trustees having refused to accept, 2 or having all died, 3 or, where there are surviving trustees, on the further condition that they offer no opposition. 4 The statute 6 has vested the Court with the power to nominate new trustees " upon the application of any party having interest in the trust estate," but that power is limited to certain specified cases of 46 NOMINATION OF THE TEUSTEE [chap. n. unworkable trusts. In all other cases 6 than those provided for by the statute, or where "all the parties beneficially interested" do not apply or consent, so as to make the procedure at common law competent, the limitation of the statutory power implies that the appointment of an officer of Court is the proper course to be followed. 7 1 But vide L. P. Hope in Melville «. Preston, 1838, 16 S. 457, at p. 472. 2 Melville, s. 56. 3 M'Aslan and Glasgow, s. 56. 4 Aikman, s. 56. 6 Vide s. 60. 6 But vide a. 64. 7 Hope, 1884, 12 R. 27. Of. Bell's Com., 7th ed., vol. i. p. 31, note 4. Stle 80 ' 6 64. There is power given by statute 1 to the Court to appoint resigns. new t ru8 j; eeS) U p 0n ^ e application of a sole trustee who wishes to resign, after intimation to the beneficiaries under the trust. From the terms of the statute, it is to be inferred that the Court may properly be applied to under this section, only where the benefi- ciaries from want of capacity, or unreasonable objection, have not given their assent to the assumption of new trustees by the retiring trustee, which assent is in such a case a condition precedent to the assumption. 1 30 & 31 Vict. c. 97, s. 10. Cf. s. 879. where 65. Where new trustees have been appointed in an English trust h^fordm k v the English Court, it is incompetent to apply to the Scots Court Statutory under the statute to have these trustees appointed by that Court as Fneom-™ 6 new trustees in the same trust. Lord President Inglis, after narrat- ing that before the petition was presented to the Court, the English Court of Chancery, on an application properly made to it, had appointed new trustees, proceeded to say: — "That is a distinct appointment of trustees by a Court of competent jurisdiction, and it does not appear to me that it can be supplemented or made more effectual by any action that can be taken by this Court so far as the office is concerned, and yet we are asked to appoint these same gentlemen to be trustees under this trust. The object of the application is said to be to give them a title to the heritage which is situated in Scotland, and that because the Court of Chancery have not given them such title. That is to say, what the trustees require is nothing but the means of making up a title to the Scotch estate. But to do this they do not require any further appointment as trustees. The trustees appointed by this English settlement were capable of acquiring or holding landed estate in chap. II. J NOMINATION OF THE TRUSTEE 47 Scotland, and the gentlemen appointed as trustees by the Court of Chancery are just as capable of holding landed estate in Scotland, and all that they require is to make up a title to the property. But that is obviously not a matter falling under the 12th section of the Trusts Act." 1 1 Hall, 1869, 7 M. 667. Cf. circumstances in Brockie, 1875, 2 R. 923. Cf. s. 982. 66. Even where the English Court has not been applied to, the Scots Court refuses, in the case of an English trust, to appoint new trustees under the statutory powers where the only ground for the application is that part of the trust estate is heritage situated in Scotland. " No doubt the trust included heritable estate in Scotland, but the administrators appointed are English administrators. The question is whether the Scotch Trust Act of 1867 is applicable. I am clearly of opinion that it is not. If we were to hold that it was applicable we should be conferring on English trustees powers which it is quite possible might be inconsistent with the law of England, under which they are bound to administer. The consequence would be either that the trustees appointed by us would be bound to administer accord- ing to the law of Scotland, and perhaps contrary to the provisions of the English law, or we should be appointing trustees who would not be bound to carry out the provisions of the Act under which they were appointed." 1 And Lord Young (Ordinary) said : — " In the case of a Scotch trust we should not hesitate to supply a failure of trustees in circumstances which seemed to us to require that this should be done, although part or all of the property affected by the trust happened to be in England, and I think it improbable that an English Court would interfere or hesitate about leaving the matter to our determination. By interfering in this case we might do great injustice, and an appointment by us might be dis- regarded by the Court in England which has jurisdiction in the trust, and is undoubtedly competent to make any appointment that may be required." 2 1 Brockie, s. 65, supra, per L. J.-C. Moncreiff, at p. 924. 2 Vide also Lord Deas' opinion in Corbet v. Waddell, 1879, 7 R. 200, at p. 207. 67. Under the Entail (Scotland) Act, 1882, a power to consti- powers under Entail tute a trust and appoint trustees J for a definite statutory purpose Acts. is vested in the Court, not, however, ex proprio motu, but on the motion of a party to the process before it. Power is also given to appoint new or additional trustees. 2 48 NOMINATION OF THE TEUSTEE [chap. n. 1 See, for example, Inglis v. Caledonian Ely. Co., 1899, 1 F. 747, and note declaration of trust taken by trustees at p. 748. 2 45 & 46 Vict. c. 53, s. 23 (4) and (5). Cf. s. 58. Of. powers to create scheme under sanction of Lord-Lieutenant of Ireland under Irish Land Acts, s. 379. Assumption 68. In view of the provisions of the 13th section of the Trusts by new x trustees. Act, 1867, 1 all petitions to the Court for the appointment of new trustees by the Court, whether at common law 2 or under the statute, should contain an express crave for a power of assump- tion in the new trustees, where such power is desired. 3 1 30 &31 Vict. c. 97, s. 13. 2 Vide a. 47. 3 Aikman, s. 56 ; Zoller, s. 62. See s. 47 for case where powers granted without crave — still the crave should be made express as a matter of pleading. CHAPTER III QUALIFICATIONS FOR, AND ENTRANCE UPON, OFFICE I. Who may be Teustees (a) Original Trustees 69. The power of the truster to nominate trustees is unlimited Truster has unlimited save where, and to the extent to which, his power to transfer his l^l°* property to them is limited. He is " free from every rule which operates on a Court of Justice. He can select any person he chooses of whatever character." 1 An exception to this definition of the truster's power of nomination has been suggested by Lord M'Laren. His Lordship has expressed the opinion that a marriage-contract trust is not effectual against creditors of the truster, and therefore not a valid conveyance in trust, unless at least one of the trustees is a neutral person, by which he appears to mean someone other than either of the spouses, where either or both of them are the truster or trusters. The reason given is that the trustees had in the case in question power to advance capital to the truster, the husband, on the joint request of the spouses. Even on the basis of the argument presented by his Lordship, a majority, not one or more, of neutral trustees would be required to make the trust valid. It is not obvious how even such an appointment would protect the interests of creditors, unless the so-called neutral trustees were appointed by the creditors ad hoc. 2 1 Tempest ■». Camoys, 1888, 58 L. T. N. S. 221, per Chitty, J., at p. 223. 2 M'CaUum v. M'Culloch, 1904, 7 F. 337, at p. 344. 70. The trustee can even give to his nominee a legal capacity Nomination ° o r j of person to deal with the trust estate that such person would not have^ h a m ^ ted in dealing with the estate if it were unconditionally conveyed to him. Where the limitation of capacity of the trustee nominate as a beneficial owner is only conventional, the truster can clothe him with a power to hold and deal with property as a trustee un- trammelled by these limitations. Such cases are the appointment of a bankrupt, 1 a married woman, 2 or a minor 3 as a trustee. 49 4 50 QUALIFICATIONS FOE OFFICE [chap. hi. Lunatic. Convicfc. Crown. Where the limitation of capacity as a beneficial owner is natural, not conventional, the limitation is annexed to the trust title also, and makes the appointment invalid. Such an appoint- ment would be that of a lunatic, a convict, or a company 4 not empowered to act as a trustee. Another illustration of the limitations of the truster's power of appointment of a trustee is of an intermediary nature — that is, the case of the Crown. The Crown may, if so advised, act as a trustee, and in practice generally gives effect to trusts of property vested in it, but it cannot be bound to give effect to a trust. 5 1 S. 77. 4 S. 71. 2 S. 73. 3 S. 7S 6 Taylor, 1904, 2 Ch. 737. Corpora- tions as trustees. 71. A legal person, such as a corporation or a joint-stock company, whose capacity is defined by its charter or by statute, cannot be a trustee, unless it has express power to act as such. A company cannot bind itself to perform any act outwith the objects declared in its constituent deed. 1 Hence it cannot enter into the obligation involved in the acceptance of a trusteeship unless expressly empowered to do so, in the manner in which companies formed for the object of accepting and administering trusts are empowered. 2 Corporations at common law are un- limited in their capacity, 3 and can therefore be trustees. In this connection it may be noticed that the Bank of England refuses, and cannot be compelled, to make itself a constructive trustee of stock by entering any notice of trust on its registers. 4 A com- pany may register its shares on its own register in the name of a nominee under a declaration of trust for a class of shareholders. 6 1 Caledonian Rly. v. Helensburgh, 1856, 2 Macq. 391. 2 By the Bodies Corporate Act, 1899 (62 & 63 Vict. c. 20), a body corporate is made capable of holding property on joint title as if it were an individual; and see Thompson, 1905, 1 Oh. 229. 3 Sutton, 1612, 10 Rep. la, 30b ; Riche v. Ashbury, 1874, 9 Ex. 224 ; Wenlock v. River Dee, 1883, 36 Ch. D. 675, note, 685, note ; British v. De Beers, 1910, 1 Ch. 354 ; Gray v. Trinity, 1910, 1 I. R. 370. As to a college being a trustee, vide affirmative opinion of Lord Langdale, M.R., in Attorney-General v. Caius College, 1837, 2 Keen, 150, at p. 165. 4 8 & 9 Vict. c. 97, s. 2. Of. 55 & 56 Vict. c. 39, s. 5 (3), and Accountant of Court v. Crumpton, 1886, 14 R. 55. Of. ss. 637 and 696. As to shares in a ship held in trust and entered on the shipping register, which takes no notice of trust, Burgis v. Constantine, 1908, 2 K. B. 484, at p. 498. 6 Gill v. Arizona, 1900, 2 P. 843, at p. 860. Pupils and 72. As in the law of England "it is not in the power of a as trustees, testator to give an estate to an infant and say that he may sell it when the law says that he cannot do so," 1 so in Scotland a truster cannot effectively nominate a pupil to be a trustee and say that chap. in. J QUALIFICATIONS FOE OFFICE 51 he shall have power to accept when the law says he has no such power. 2 The case of a minor is different. A minor may be a trustee, and differs only from one of full age in the right reserved to him by the common law, within four years after attaining his majority, to challenge on the ground of minority and lesion his act of acceptance of the trust under which he may have incurred an obligation to his hurt. 3 The position of a minor with curators is doubtful, but the treatment of the analogous case of the nomi- nation of a married woman 4 suggests that, where the curators have agreed to his accepting the trust, he would act afterwards in the trust on his own discretion solely as a minor without curators. The possibility, or even probability, of the minor trustee's liability for his acts being avoided on the ground of minority and lesion, and of an increased burden being thus thrown on his co- trustees, should be present to the mind of trustees nominate in considering the advisability of accepting a trust along with a minor as a co-trustee. 1 King v. Bellord, 1863, 1 H. & M. 343, per Page "Wood, V.-C, at p. 348. 2 But see case of Bell, 1859, in Currie on Confirmation, 3rd ed., p. 72. Gf. the ad hoc statutory pupillarity and minority under the Friendly Societies Act, 1896 (59 & 60 Vict. c. 25, s. 36 (2)), and the Post Office Savings Bank Acts, 1861 to 1893 (24 Vict. c. 14 to 56 & 57 Vict. c. 69). A bare power over personalty may he exercised by an infant, "because the authority to dispose proceeds from the donor of the power and not from the donee." His inability to be a, trustee and so exercise powers annexed to the trust estate is a consequence of his inability to do any act affecting his own right to property rales. broker, and subject to the rules of the exchange, these rules form a sufficient practical reason for the trustee paying money into the hands of the broker. " A broker who has bought for the account, and given in a ticket stating the name of the person to whom the transfer is to be made out, is personally liable to pay, in exchange for the executed transfer deed, to the member who has become the holder of the whole or part of his ticket, and that as the person who has become holder of the whole or part of the ticket has by the rules ten days to get the transfers drawn up and executed, the broker must be prepared to pay on the pay-day, but may not actually have to pay, and consequently cannot get the transfer till some time after." Thus " it is necessary that the money should be ready, to be paid in exchange for the transfers, from the elate of the settling day till the transfers are all delivered, in order to keep the buying broker out of cash advance," and " it is the usual course of business to do this by giving to the buying broker a cheque for the money, so that he may be in funds to take up the transfers when ready." 1 1 Vide Lord Blackburn in Speight, s. 253, 9 App. Cos., at pp. 21 and 25. See also as to difficulties connected with the transfer of inscribed stock, ss. 637, 643, and 696. what 257. "Where it was suggested that it was not really necessary HGCGS - rt -| sary." tor the trustee to pay money to the broker, though the ordinary course of business, the alternative proposed was that the trustee should " take the advice note to his banker, and desire the banker to arrange with the broker that he should present the securities, when ready, at a bank, the correspondent of the banker in the CHAP. v.J THE EXECUTION OF THE TRUST 141 town where the securities were to be taken up." The Court seems to have regarded this course as too " cumbersome '' to be a workable alternative, and therefore did not consider that its possibility disproved the practical necessity of the ordinary course of such business, which necessity is the trustee's justification for following that course. 1 1 Speight, s. 253, 9 App. Cas., at p. 26. 258. This course of dealing through a broker, and passing trust Business practice funds through his hands, is, it must be remembered, not a stereo- changes. typed rule for the action of the trustee, but depends on the ordinary usages of business, which may and do change. 1 " It may possibly," says Lord Blackburn, " become unusual, at least where the sum is large, to pay trust funds to a broker ; and, if the usage change, a trustee who should pay in this way, after it had ceased to be usual so to do, may be responsible." 2 There is no reason to believe that the practice has in any way changed, or that the present usage is in any material point different from that above detailed. 3 But it must be kept in mind that " in these days usage is established much more quickly than it was in days gone by ; more depends on the number of the transactions which help to create it than on the time over which the transactions are spread ; and it is probably no exaggeration to say that nowadays there are more business transactions in an hour than there were in a week a century ago." 4 1 Of. Lord Herschell, C, in Nordenf elt v. Maxim, [1894] A. C. 535, at p. 547. "Regard must be had to the changed conditions of commerce which have been developed in recent years. To disregard these would be to miss the substance of the rule in a blind adherence to its letter." 2 Speight, s. 253, 9 App. Cas., at p. 27. Of. Smart, 1892, 8 T. L. R. 748, at p. 750, 1st col., where effect is given to an analogous consideration. 3 Ss. 254 and 256. 4 Edelstein v. Schuler, 1902, 2 K. B. 144, per Bigham, J., at p. 154. 259. Where a trustee has bought securities on the Stock Delivery of m securities. Exchange through a broker, he must see that the securities he has purchased are actually got and transferred to him, within a reasonable time, according to their respective characters, as to which he should make inquiry of the broker. 1 The securities should on no account be left in the hands of the broker longer than necessary for the carrying through of the transaction. 2 1 Bullock, 1886, 56 L. J. Ch. 221. Of. inquiries held to be sufficient in Shepherd v. Harris, 1905, 2 Ch. 310. 2 Matthews v. Brise, 1843, 6 Beav. 239. 142 THE EXECUTION OE THE TKUST [chap. v. (c) Valuator. 260. Where the valuation of any part of the trust estate, or of other property as a security for a loan of trust funds, is in question, the trustee ought to take the opinion of a professional valuator, and where, from the nature of the security, individual valuators may differ greatly in their valuations, two x valuators should report. 2 Trustees have been excused in some cases for acting on a recent valuation instead of instructing a new one. 3 ' But this is a matter of circumstances and not a fixed rule. Grove v. Search, 1906, 22 T. L. E. 290. 2 Crabbe v. Whyte, 1891, 18 R. 1065, at p. 1069. Gf. remarks of L. P. Inglis in Cleland v. Brownlie, 1892, 20 R. 152, at pp. 162, 163. 3 Palmer v. Emerson, 1911, 1 Ch. 758, at p. 770. Liability for 261. The occasion which most frequently necessitates a valua- valuator. . . tion of property in the execution or the trust, is the loan of trust funds on heritable security. This matter is now dealt with by the Trusts Act of 1891, 1 which enacts that a trustee shall not be liable for any error in the amount lent by him on the security of any property, " provided that it shall appear to the Court that in making such loan the trustee was acting upon a report as to the value of the property made by a person whom the trustee reason- ably believed to be an able practical 2 valuator, instructed and employed s independently of any owner of the property, 4 whether such valuator carried on business in the locality where the property is situated or elsewhere." Before the question of whether the belief of the trustee was reasonable or not arises, it must be found that the valuator employed was not an able practical valuator, or that he was not independently instructed and employed. If this is not found there is no breach of trust to charge the trustee with. The onus of proof as to the position of the valuator must be on the person challenging the transaction. But when the valuator is proved not to be what the statute requires, the onus of proof as to the trustee's belief in his status shifts to the trustee. 5 Where the trustee is relying upon the benefit of the statute, he must in his defence give reasons for his alleged belief, such as his reliance upon the long-trusted solicitor of the truster, and his ignorance of any connection between the solicitor and the borrower. 6 The facts that the valuator has introduced the security, and that the payment of his fee for his valuation depends on whether the trans- action goes through or not, 7 have been held to he conditions that ought to arouse the trustee's suspicion of the independence of the valuator, and that deprive the trustee of the benefit of the Act. 8 chap, v.] THE EXECUTION OF THE TRUST 143 And where trustees left the instructions to the valuator to be given by law agents who were also acting as solicitors for the borrower, this in itself was sufficient to prevent the Court holding that the trustees reasonably believed that the valuator was instructed and employed independently of the borrower. 9 1 54 & 55 Vict. c. 44, s. 4 (1). 2 It does not appear to be necessary that he should have any qualification. Grove v. Search, 1906, 22 T. L. R. 290. 3 There is no duty upon the trustee to make inquiries as to any connection of the valuator with the borrower. The trustee's duty under the statute is to see that the valuator is instructed independently of the borrower, with the reasonable belief that he is also employed independently of the borrower. Solomon, 1912, 1 Ch. 261. Though the valuator's fee falls ultimately upon the borrower, it should in the first place be paid directly by the leading trustee, as the employer. Smith v. Stoneham, 1886, W. N. 178. 4 In the absence of fraud, a mortgagee cannot sue an action against a valuator employed solely by, and on behalf of, the mortgagor. Dennis v. Gould, 1892, 9 T. L. R. 19. 6 Stuart, 1897, 2 Ch. 583. « Stuart, supra. 7 For condemnation of this practice and warning to trustees, see Warrington, J., in Salisbury v. Keymer, 1909, 25 T. L. R. 278. 8 Dive, 1909, 1 Ch. 328, at p. 343. Shaw v. Gates, 1909, 1 Ch. 389, at p. 403. 262. At common law it has always been held that the trustee must have an independent report from an independent valuator, and on no account must he accept a valuation taken for the borrower. 1 On this point the statute is only declaratory. 2 A valuation made upon the instructions of a guarantee society Guarantee society's which is to guarantee a loan does not give the lender any action position. against the valuator employed by the society, though the loan is made in consideration of the valuation so procured, unless the lender is a party to the contract of employment with the valuator. 3 1 Ingle v. Partridge, 1865, 34 Beav. 411 ; Walcott v. Lyons, 1886, 54 L. T. 786 ; Forsyth, 1853, 15 D. 345 ; Crabbe v. Whyte, 1891, 18 R. 1065. As to intervention of the borrower's solicitor, see Lord M'Laren in Paterson, 1885, 13 R. 369, at pp. 375, 376. 2 Vide Walker, 1890, 62 L. T. 449, dealing with the same words in the English statute of 1888, 51 & 52 Vict. c. 59, s. 4. Stuart, 1897, 2 Ch. 583, at pp. 591, 592. 3 Love v. Mack, 1905, 93 L. T. 352. 263. With regard to the choice of a valuator the statute choice of abolishes the limitations of the common law. At common law, it has been laid down that a local valuator should be employed, as he is more likely to be acquainted with the local considerations. 1 Though the statute gives no such preference to a local valuator, the considerations which prompted the Court to lay down the common law rule should still have weight with trustees in considering the choice of " an able practical valuator," and the fact that such con- siderations had been weighed would undoubtedly tend to instruct 144 THE EXECUTION OF THE TKUST [chap. v. "reasonable" belief on the part of the trustee in the valuator's practical ability. 1 Fry v. Tapson, 1884, 54 L. J. Ch. 224, following Budge v. Gummow, 1872, 7 Ch. App. 719. instruc- 264. In instructing 1 the valuator, the trustee should inform him that it is trust funds that are to be lent, 2 and the valuator should be asked to report in detail on all the circumstances necessary for enabling the trustee to form an intelligent opinion on the value of the security proposed. 3 There is no duty upon the trustee to make investigation as to the details concerning the property further than these are contained in the valuator's report. There was at common law such a duty, but the statute 4 has relieved the trustee of this duty. 5 1 Cf. s. 653 for full treatment of this subject. 2 Olive, 1886, 34 Ch. D. 70, per Kay, J., at p. 73. 3 Cf. circumstances in Smethurst v. Hastings, 1885, 30 Ch. D. 490. Vide Kekewieh, J., in Somerset v. Poulett, 1894, 1 Ch. 231. 4 54 & 55 Vict. c. 44, s. 4. 6 Solomon, 1912, 1 Ch. 261, per Warrington, J., at p. 280, dealing with the similar section of the English Act, 56 & 57 Vict. c. 53, s. 81. Howvaina- 265. The trustee must form his own conclusion as to the value tion to be used. of the security, guided by the valuator s report. " The ordinary course of business," says Lord Watson, "does not justify the employment of a valuator for any other purpose than obtaining the data necessary in order to enable the trustees to judge of the sufficiency of the security offered. They are not in safety to rely upon his bare assurance that the security is sufficient, in the absence of detailed information which would enable them to form, and without forming, an opinion for themselves." 2 1 Learoyd v. Whiteley, 1887, 12 App. Cas. 727, at p. 734. Cf. Rae v. Meek, 1888, 15 R 1033, per Lord Shand, at p. 1055. (d) Counsel. Advice of 266. The position of the trustee in acting upon the advice of counsel is not well defined. Trustees are undoubtedly entitled to take, at the expense of the trust, the advice of counsel for their guidance where any serious question of liability arises in the execution of the trust, 1 but no reliable rule can be deduced from the opinions or the practice of the Court as to how far trustees are in safety in acting on such advice. 2 1 Dick, 1899, 2 F. 316, per Lord M'Laren, at p. 318. "An entirely proper position on the part of the trustees." Cf. Mills v. Brown, 1901, 3 F. 1012, per Lord Moncreiff, at p. 1015. 2 See remarks of Lord Moncreiff in Cameron v. Anderson, 1844 7 D. 92, at pp. 102, 103. counsel. chap, v.] THE EXECUTION OF THE TEUST 145 267. Where the distribution of the estate is involved, it is Distribu- the duty of the trustee to exercise the strictest diligence in estate. seeing that this is correctly carried out, 1 and, in any actual difficulty, he is entitled to, and should obtain, judicial exonera- tion. 2 Where this is not available, as in the case of the difficulty emerging after the act of distribution, 3 it is an open question as regards authority in Scotland whether the trustee is protected be- cause the actual distribution was made upon the advice of counsel. The manner in which the English Court has regarded the question is to be seen in the following opinion of Eomilly, M.E. : — " It is said that the trustee acted upon the advice of counsel ; I regret it, but that does not make any difference. In Doyle v. Blake 4 it was held that such advice could not exonerate the trustees from the consequence of their acts." 5 What was said by Lord Eedesdale, Lord Chancellor of Ireland, in Doyle * was this : — " I have no doubt they meant to act fairly and honestly; but they were misadvised, and the Court must proceed, not upon the improper advice under which an executor may have acted, but upon the acts he has done. If, under the best advice he could procure, he acts wrong, it is his misfortune ; but public policy requires that he should be the person to suffer." This view of the trustee's position was undoubtedly influenced by the absolute right of the trustee before 1883 to have the estate administered by the Court in England, 6 and the consequent breach of duty in relying upon extra-judicial advice. At a later date, in a case where the Court could not be applied to, the opinion of Stirling, J., 7 was that the trustee who takes the best opinion he can get, and acts bond fide upon it, avoids personal liability. This test of the best available advice works out differently in Scotland, where the opportunity of obtaining the advice of the Court is more limited. The liability of the trustee, as such, can arise only out of breach of some trust duty — in this case in not taking the best advice available. Where the opinion of the Court can be got, the trustee is not performing this duty in relying upon the opinion of counsel. Where the opinion of the Court cannot be got, the opinion of counsel is the best advice open to the trustee. Therefore, if this does not protect him, his liability must arise, in this case, not out of breach of duty, but on some other ground, such as warrandice. Such a result would introduce a distinction between action on the advice of a legal expert and that on the advice of any other expert, say, of a valuator, and it is difficult to understand how such a 10 146 THE EXECUTION OF THE TKUST [chap. v. distinction can be drawn. However erroneous the valuation obtained from the valuator, the trustee is entitled to act upon it, and in no way warrants its correctness. If he has properly instructed and properly used the valuation he has discharged his duty to the claimant upon the estate. It is reasonable to think that his duty in connection with legal advice is on the same plane. 1 Cf. s. 702. 2 Of. s. 935. 3 This situation is not met by the suggestion of Lord M'Laren m Macgillivray v. Dallas, 1905, 7 F. 733, at p. 738. 4 Doyle v. Blake, 1804, 2 Sch. and L. 231, at p. 243, quoted for approval and followed in National Trustees v. General Finance, 1905, A. C. 373, at p. 379, by Judicial Committee. The latter case deals in terms with the advice of a solicitor, but its locus is Australia, and the " best advice he could, procure " — which would, be a solicitor — is expressly approved. The position of the trustee here was special. Cf. Davis v. Hutchings, 1907, 1 Ch. 356, at p. 365. 5 Knight, 1859, 27 Beav. 45, at p. 49. 6 See Grindey, 1898, 2 Ch. 599 ; Perrins v. Bellamy, 1899, 1 Ch. 797, per Rigby, L.J., at p. 801. Cf. s. 305. 7 Partington, 1888, 57 L. T. 654, at pp. 660, 661. Expenses of 268. Where the question is one as to the trustee's relief against the estate for outlay incurred by him, such as legal expenses, the trustee is, in certain circumstances, protected by the advice of counsel. Lord Selborne, C, says : — " The advice of counsel is not an absolute indemnity to trustees bringing an action, though it may go a long way towards it ; " x but the manner and circumstances in which it affords an indemnity to the trustee, his Lordship, unfortunately, does not explain. The matter is now settled in Scotland. Where parties have no personal interests in the matter in issue, and are guided by the best advice of counsel they can get, they are entitled to charge the estate with the expenses of following the course advised by counsel. 2 1 Stott v. Milne, 1884, 25 Ch. D. 710, at p. 714. Cf. s. 228. 2 Buckle v. Kirk, 1908, 15 S. L. T. No. 379. The impression is given by the wording of the report that the "best advice of counsel " is limited to that of the Dean of Faculty. This arises from the Dean being the counsel therein referred to, and the trustee is not so limited in the choice of his adviser. Cf. Russell v. Dunn, 1903, 10 S. L. T. No. 294. 269. Of course, where the form of process known as a Special Case for the opinion of the Court is practicable, 1 it should be adopted, and, in the case of testamentary trustees, an order for superintendence by the Accountant of Court over the investment and distribution of the estate under the Judicial Factors Act should be applied for, 2 as being the best form of protection avail- able in the matters it deals with. 3 1 See s. 334. 2 52 & 53 Vict. c. 39, s. 18. Cf. s. 310. 3 As to procedure by declaratory action, see s. 334. chap, v.] THE EXECUTION OF THE TEUST 147 270. An opinion of counsel must be treated on the same how • i j_i n "opinion" principle as any other expert professional report, such as a valua- 1° t» used. tion. The opinion must be judged with reference to the memorial submitted. The trustee must, therefore, see that all the facts known to him are fully and accurately put before counsel. 1 The opinion must be independently considered by the trustees as to its effect on the general conduct of the trust for which they are responsible. 2 Trustees were found liable on the ground of their negligence in acting on the erroneous oral statement of their solicitor as to what counsel's opinion was. 3 A solicitor trustee, with power to make professional charges, who had made up, on the advice of counsel, a title which turned out to be inept, was not entitled to credit in his accounts for his charges for making up the title. 4 1 Steeden v. Walden, 1910, 2 Ch. 393, at p. 396. 2 Morrison v. Miller, 1827, 5 S. 322 ; see pleas. 3 Pollexfen v. Stewart, 1841, 3 D. 1215. Gf. Pepper Arden, M.R., in Vez v. Emery, 1799, 5 Ves. 140, at p. 144. 4 Dixon v. Rutherford, 1863, 2 M. 61. 271. Where trustees come into Court upon the advice of counsel, and are unsuccessful, the opinion was formerly held in England to protect them from having expenses found against them, but not to entitle them to expenses out of the estate. 1 The ten- dency of the later decisions suggests that they might be more favourably dealt with now. 2 1 Angier v. Stannard, 1834, 3 My. & K. 566, at p. 572. Gf. Field v. Lord Donoughmore, 1841, 1 D. and War. 227, at p. 234. Devey v. Thornton, 1851, 9 Hare, 222, per Turner, V.-C, at p. 232. " It does not appear upon what state- ments such advice was given." Ryan v. Nesbit, 1897, W. N., p. 100. 2 Cf. s. 268. (e) Accountant 272. Where the trust accounts are of an intricate nature or difficult to arrange, the trustees, and any of the regular trust agents, e.g., their factor, who may have to deal with these accounts, are entitled to the assistance of a professional accountant. 1 Such accountant as a servant of the trustee is bound to act, and is justi- fied in acting, on the information and instructions given by the trustee, unless he is privy to a breach of trust. 2 1 Peddie v. Beveridge, 1860, 22 D. 707. Henderson v. M'lver, 1818, 3 Madd. 275. De Clifford, 1900, 2 Ch. 707, per Farwell, J., at p. 715. 2 Rodbard v. Cooke, 1877, 25 W. R. 555. Cf. position of banker as to honouring cheques, s. 250. (f) Miscellaneous Agents 273. Where an auctioneer has to be employed, and deposits are paid to him, trustees must be careful not to leave them in his 148 THE EXECUTION OF THE TRUST [chap. v. hands longer than is absolutely necessary. 1 Examples of other agents that may be employed by the trustee are a rent-collector or bailiff, 2 a debt-collector, 3 a gamekeeper, 4 servants of an establish- ment, 5 as gardener, parkkeeper, etc., 6 a messenger, 7 and a sales- man. 8 In connection with the power of employing servants and paying them out of the trust funds, it does not appear ever to have been decided whether it is competent to a trustee to pay Tensions to a voluntary pension to a servant incapacitated by old age or infirmity. Such payments are doubtless made in practice, and are unchallenged by the beneficiaries, but they do not seem good charges against the estate. Trustees of Savings Banks are author- ised to pay compensation to servants after ten years' service and while the surplus funds justify it. 9 An association not for profit registered under the Companies Acts, whose memorandum gave power to pay in good faith remuneration to any servant for services actually rendered to the association, was held to have power to pay to a retired servant of the association a pension by way of annuity without being under any legal liability to do so, and to make the necessary allocation of the funds of the association for that purpose. 10 It does not seem doubtful that such a power would not extend in the case of trustees to the payment of gratuities to the dependants of a servant, as is allow- able in the case of companies trading for profit, 11 unless where the trustees were trading for profit under express powers. 12 1 Edmonds v. Peake, 1843, 7 Beav. 239. Gf. principles laid down in the case of a stockbroker, ss. 255 and 256. Vide also Oliver v. Court, 1820, 8 Price, 127, at p. 167. 2 Bonithon v. Hockmore, 1685, 1 Vern. 315, cited in Davis v. Dendy, &c, 1818, 3 Madd. 170 ; Wilkinson, 1825, 2 S. and S. 237 ; Cox v. Bennet, 1891, 39 W. R. 308. Gf. Weall, 1889, 42 Ch. D. 674, at p. 679, per Kekewich, J., as to solicitor acting in this capacity. 3 Brier, 1884, 26 Ch. D. 238, at p. 243, per Lord Selborne, C. 4 Webb v. Shaftesbury, 1802, 7 Ves. 480. 6 Llanover, 1903, 2 Ch. 16. 6 Fountaine v. Pellet, 1791, 1 Ves. Jun. 336. 7 Eaw v. Cutten, 1832, 9 Bing. 96. 8 Jobson v. Palmer, 1893, 1 Ch. 71. 9 4 Ed. vii. c. 8, s. 3. 10 Cyclists' Club v. Hopkinson, 1910, 1 Ch. 179. 11 Henderson v. Bank of Australasia, 1888, 40 Ch. D. 170. 12 Cf. Small, s. 298. (B) Executive Powers of the Trustees I. Of Powers generally powers and 274. A power is a right over property conferred expressly or by implication of law upon a person other than the one deriving right from the same author to the beneficial use of that property. Powers are broadly divided into bare powers and powers trusts. chap, v.] THE EXECUTION OF THE TRUST 149 annexed to an estate. Of the former class a power of appoint- ment in a person who has no title to the estate subject to the power is the typical example. Of the latter class, the power given to a trustee to deal with the estate, the proprietary title to which is vested in him as trustee, is the common instance. As there can be no trust without an estate vested in the trustee, only the latter class of powers is treated here in a work dealing specially with trustees. In dealing with the trust estate, the trustee is not vested with the powers of a beneficial proprietor. The trustee is vested only with such powers as may be granted to him by the truster or implied by law, and in the exercise of these he must act within the conditions imposed upon the actings of a trustee. 1 Where the powers granted to the trustee are to be exercised at, and according to, his discretion, they are technically known as powers. Where they are granted to the trustee for the purpose of carrying out an imperative direction of the truster, they are technically known as trusts. Circumstances arising in the execu- tion of the trust may change a power expressly discretionary into a power in the nature of a trust. 2 1 Vide 30 & 31 Vict. c. 97 s. 19. 2 Nickisson v. Cockill,' 1863,' 3 De G. J. and S. 622, at p. 634. 275. In the case of a power, the trustee is subject to no inter- ference, if he exercises his discretion; but in the case of a trust, the trustee is bound to use the power to effect the object for which it was granted. "It is clearly settled law," says Cotton, L.J., " that where trustees have a power as distinguished from a trust, although the Court will prevent them from exercising the power unreasonably, it will not oblige them to exercise it." 1 1 Courtier, 1886, 34 Ch. D. 136. Gf. Tempest v. Camoys, 1882, 21 Ch. D. 571, per Jessel, M.R., at p. 578. 276. The direction may be a combination of a power and a trust. The object in connection with which the power is granted may be imperative, but the time and manner of its attainment may be discretionary. Thus " a direction given to trustees to sell at their absolute discretion is not equivalent to a direction that trustees may sell or not at their absolute discretion." In the first case, the absolute discretion vested in the trustees is limited by the direction to sell. This direction must be fulfilled, though the time and mode of sale are matters for their discretion. 1 Dealing with such a case where the exercise of a power of sale by trustees was in question, Chitty, J., says : — " There is, undoubtedly, a duty 150 THE EXECUTION OF THE TRUST [chap. v. upon the trustees to sell the leaseholds sometime. I think their power of sale is coupled with a trust or duty which the Court will enforce, if the trustees neglect to act in a proper and timely- manner; but the Court will not interfere with the discretion which the trustees possess as to the particular time or manner, when and in which they will exercise their power, so long as their conduct is bond fide, and they act fairly between the beneficiaries." 1 Atkins, 1899, 81 L. T. 421, per North, J. 2 Burrage, 1890, 62 L. T. 752. (a) Powers Discretionary Limited and 277. If the trustee has a pure power conferred upon him, his unlimited discretion, discretion as to the proper exercise of it is not subject to interfer- ence, whether the question be the using or not using his power or only the manner in which he shall use it. 1 "Where the power given is not a pure but a conditional power it can be properly exercised only subject to the condition. 2 A discretion otherwise unlimited may be impliedly limited by the nature and object of the fiduciary appointment. Where the beneficiary is merely under disability to manage his own affairs, e.g. insane or in minority, the discretion of the trustee is limited by the covering general principle that the estate shall be preserved unchanged against the taking up by the beneficiary of its management. In particular it follows that nothing that is in its nature irretrievable, such as the felling of timber, shall be done except in case of practical necessity. 3 1 Thomson, 19th Dec. 1840, 1 6 F. Dec. (N. S.) 285 ; Koss r. Heriot's Hospital, 1843, 5 D. 589, per L. P. Boyle, at p. 601 ; Clelland v. Brodie, 1844, 7 D. 147. Costabadie, 1847, 6 Hare, 410, per Wigram, V.-C, at p. 414 ; Kekewich v. Marker, 1851, 3 M'N. & G. 311, per Lord Truro, C, at p. 326 ; Hanibleton, 1863, 2 M. 137 ; Davey v. Ward, 1878, 7 Ch. D. 754, per Malins, V.-C, at p. 762 ; Blake, 1885, 29 Ch. D. 913 ; Thomson v. Davidson, 1888, 15 R. 719 ; Bullock, 1891, 7 T. L. R. 402, per Kekewich, J., last sentence of opinion. 2 C/. 30 & 31 Vict. c. 97, s. 19. Vide difference between "discretion incident to his office " and a " special discretion " in Garner v. Moore, 1855, 3 Drewry, 277, at p. 284. 3 Macqueen v. Tod, 1899, 1 F. 1069, per L. P. Robertson. Trustee acts 278. " The Court will never take upon themselves the exercise as an arbiter. of a discretion which the testator particularly stipulates is to be exercised by the trustees." x Where trustees are vested with an unlimited discretion, the Court will not even examine the grounds on which the discretion has been exercised by the trustees unless there are some very definite and precise averments of mala fides or of abuse of the discretion. 2 A trustee's discretion is referred to by Lord Stair 3 as " arbitrium boni viri." This suggests that the truster should be regarded as having appointed the trustee as chap, v.] THE EXECUTION OF THE TKUST 151 arbiter to decide as to the use of his estate within the terms of the reference, and that the function of the Court is limited to deciding the legal question whether he has either exceeded his powers or used them corruptly. 1 Train v. Buchanan, 1907, S. C. 517, per L. P. Dunedin, at pp. 524, 525. Cf. Lord Cairns, C, in Gisborne, 1877, 2 App. Cas. 300, at p. 307 ; Schneider, 1906, 22 T. L. R. 223, per Warrington, J., at p. 226. 2 MacTavish v. Reid, 1904, 12 S. L. T. No. 211, per Lord Kyllachy (Ordinary) ; Brown v. Elder, 1906, 13 S. L. T. No. 391. 3 Institutions, i. 12, 9 and 15. 279. The Court has in one reported case interfered with the Example of interfer- discretion of trustees on the ground of convenience. "Where enoe - trustees had, within their discretionary powers, decided to pay for medical attendance and medicines for a beneficiary, the Court ordered the trustees to pay him a sum of £10 per annum instead, on the ground that " the system of accounting which would result from the trustees' plan was most unsatisfactory." 1 1 Ritchie v. Davidson, 1890, 17 R. 673. Cf. Train, s. 280, as to an order for payment. (1) Manner of Exercise of Powers 280. Generally, the Court will not interfere 1 with the exer- control of . . Court - cise of a power by trustees, " unless a gross case of dereliction or misconception of duty is presented," 2 and " the more delicate the power, the more personal it is to the trustees selected, the less are they to be controlled in its exercise." 3 "Where trustees have a discretion as to the amount they are to pay over, they " are not entitled simply to button their pockets and say that they will not exercise any discretion whatever — if they take up that impossible attitude I think the Court would find a remedy by managing to give an order for the money." 4 However large the discretionary powers given to trustees, "of course the administration of a trust is always subject to the control of the Court if there is maladministration." 5 1 Vide s. 304. 2 Douglas, 1872, 10 M. 943, per Lord Deas, at p. 946, referring to Baird, 1872, 10 M. 482. Vide Thomson v. Davidson, 1888, 15 R. 719, for an instance of interference on this ground. 3 Milne v. Cowie, 1853, 15 D. 321, per L. J.-C. Hope, at p. 331. 4 Train v. Buchanan, 1907, S. C. 517, per L. P. Dunedin, at p. 524 ; cf Dick, 1907, S. C. 953, at p. 961 ; and Romer, J., in Sutherland, 1893, 9 T. L. R. 530, at p. 533, 2nd col. ; Chivas v. Stewart, 1907, S. C. 701. 6 Dick v. Audsley, 1908, S. C. (H. L.) 27, per Lord Lorebum, C. ; 1908, A. C. 347. 281. It is a primary condition of the exercise by trustees of a power, however unlimited in terms, that it shall be exercised by 152 THE EXECUTION OF THE TEUST [chap, v them as trustees only and for trust purposes only. Of this the following case is an example. The trust deed contained this clause : — " But I declare that my trustees shall not be bound to render any account of the application or expenditure of the said sum, and any part thereof remaining unapplied shall be dealt with by them at their sole discretion." It was held that " they took it only as trustees, for the purpose of giving effect to the trust declared of it, and they did not themselves take any beneficial interest in it." x 1 Dean, 1889, 41 Ch. D. 552, per North, J., at p. 561. Discretion 282. " The discretionary power is of a fiduciary nature, and not caprice. x * must be exercised in good faith ; that is, legitimately for the pur- pose for which it is conferred. It must not be exercised corruptly, or fraudulently, or arbitrarily, or capriciously, or wantonly. 1 It may not be exercised for a collateral purpose." 2 " The discretion of trustees may be unlimited, but it must be exercised in a reason- able manner ; it is a discretion, not caprice." 3 And in a leading case in the House of Lords it is laid down that "it is to be not arbitrary, vague, and fanciful, but legal and regular." 4 An example of the exercise of an unlimited discretion for a collateral purpose is a case 5 where the trustee had power to make advances of shares for the " advancement " in life of the beneficiary, of which the trustee was to be the sole judge. It was objected that certain advances by the trustee were not made with the single view of the advancement of the beneficiary, but with the view of the money being used for the benefit of the trustee himself. The trustee was a large creditor of the benefi- ciary's husband, and was pressing him for payment, and it was said that, though the money was nominally advanced under the power in the will, it was in reality advanced with the well understood purpose that it should pass into the hands of the beneficiary's husband to be used by him in reduction of his debt to the trustee. The Court doubted that, however large the discretion of the trustee might be, an advance to pay the debts of the husband could be considered as an advance for the advancement in life of the wife ; 6 but in any case it had no doubt that the ulterior object in this case took the advance out of the power and made it improper. 7 The existence of an interest in one of the trustees rendering it more beneficial to him to exercise the discretion in one way rather than in another does not invalidate his decision, always supposing there is no mala fides with regard to the exercise of the discretion. 8 It is not a breach of trust for a trustee, having a discretion to chap, v.] THE EXECUTION OF THE TRUST 153 exercise, along with others, to modify his opinion in deference to the views of another trustee who has a personal interest in the matter. This is a good exercise of his discretion if there is no allegation of bad faith. 9 1 See Smith, 1896, 1 Ch. 71, as to investment. 2 Bell, 1891, 7 T. L. R. 689, per Chitty, J. Gf. Ceylon, 1891, 7 T. L. R. 692 ; De Manneville v. Crompton, 1813, 1 V. & B. 354, at p. 359, cited and followed Brittlebank, 1881, 30 W. R. 99 ; Byam, 1854, 19 Beav. 58 ; Eland v. Baker, 1861, 29 Beav. 137 ; Thacker v. Key, 1869, 8 Eq. 408, at pp. 412, 413 ; Feltham v. Turner, 1870, 23 L. T. 345. 3 Dunn v. Flood, 1885, 28 Ch. D. 586, per Bowen, J., at p. 592. Gf. Tabor 1). Brooks, 1878, 10 Ch. D. 273, per Malins, V.-C, at p. 277 ; Luther v. Bianconi, 1860, 10 Ir. Ch. Rep. 194, at p. 203. * Sharp v. Wakefield, 1891, A. C. 173, at p. 179, per Lord Halsbury, C. Cf. Carmichael v. Greenock, 1910, S. C. (H. L.) 32, per Loreburn, at p. 33 ; A. C. 274, at p. 281 ; Williams v. Giddy, 1911, A. C. 381. 6 Molyneux v. Fletcher, 1898, 1 Q. B. 648. 6 Talbot v. Marshfield, 1868, 3 Ch. App. 622. 7 Gf. Portland v. Topham, 1864, 11 H. L. Cas. 32 ; Humphrey v. Oliver, 1859, 28 L. J. Ch. 406. 8 Schneider, 1906, 22 T. L. R. 223, per Warrington, J., at p. 226, following Gisborne, 1877, 2 App. Cas. 300, per Lord O'Hagan, at p. 310. Schneider, ut supra ; cf. Robinson, s. 284. 283. There is nothing improper in the trustee taking into Truster's opinion. account in the exercise of his discretion any informal expression of the truster's opinions of which he has knowledge. 1 " There is no reason," says Wigram, V.-C, speaking of a trustee in a testa- mentary trust, " why he should not, in the honest exercise of the discretionary powers given under the will, have regard to the known wishes of the testatrix, whether those wishes were obli- gatory or not." 2 1 In Milne v. Cowie, 1853, 15 T>. 321, there were express directions to con- sult informal documents, even unsigned papers, for the purpose of collecting the truster's intention, hence the case raises "wholly a special question." L. J.-C. Hope, at p. 325. 2 Hitch v. Leworthy, 1842, 2 Hare, 200, at p. 207. Gf. Robertson v. Taylor, 1868, 6 M. 917 ; Brand v. Scott, 1892, 19 R. 768. 284. The trustee is entitled to consult with the beneficiaries opinions . ofbene- with a view to obtaining their opinions and feelings on any point notaries, of trust administration, provided he does not surrender his judg- ment to theirs. " It would be extremely dangerous to hold that trustees, having a discretion to exercise, might not freely discuss with the bene- ficiaries the reasons for and against a particular decision, without running the risk of being held to act against their own judgment, if they should disregard, in the end, objections to which they had thought it right, in the first instance, to direct attention." x 1 Robinson v. Fraser, 1881, 8 R. (H. L.) 127, per Lord Selborne, G, at p. 129 ; Fraser v. Murdoch, 6 A. C. 855. Cf. Schneider, s. 282. 154 THE EXECUTION OF THE TEUST [chap. v. Reasons 285. Trustees need not justify the manner in which they have stated. exercised their discretion by stating the reasons that have influenced them ; but if they do state these reasons, they subject both the reasons and the consequent action to the judgment of the Court. " Trustees," says Lord Truro, C, " who are appointed to exe- cute a trust according to discretion, are not bound to go into a detail of the grounds upon which they come to their conclusion, their duty being satisfied by showing that they have considered the circumstances of the case, and have come to their conclusion accordingly. ... If, however, as stated by Lord Ellenborough in The King v. The Archbishop of Canterbury, 1 trustees think fit to state a reason, and the reason is one which does not justify their conclusion, then the Court may say that they have acted by mistake and in error, and that it will correct their decision." 2 1 1812, 15 East, 117. 2 Beloved Wilkes's Charity, 1851, 3 M'N. & G. 440, at pp. 447, 448. Gf. Smith v. Cock, 1911, A. C. 317. (2) Differences in Discretion Are powers 286. A power is sometimes conferred only upon the trustee personally, sometimes it is attached to the office of trustee. In the former case there is said to be a delectus personal, and the Court will not permit any one other than the particular trustee expressly vested with the power to exercise it. In the latter case there is no delectus personce, there is no restriction of the power to the individual originally vested with it, and any holder of the office is entitled to exercise the power as well as the original trustee. 1 Thus a new trustee would not in the former, but would in the latter case, be entitled to exercise a power vested in the former trustee. 2 The presumption is against delectus personce. "Every power given to trustees which enables them to deal with or affect the trust property is primd facie given them ex officio as an incident of their office, and passes with the office to the holders or holder thereof for the time being. . . . The mere fact that the power is one requiring the exercise of a very wide personal discretion is not enough to exclude the primd facie presumption, and little regard is now paid to such minute differences as those between 'my trustees,' ' my trustees A. and B.,' and ' A. and B. my trustees ' ; the testator's reliance on the individuals to the exclusion of the holders of the office for the time being must be expressed in clear and apt language." 3 Even special powers of apportionment, and wide discretion as to time and amount of payments, have been chap, v.] THE EXECUTION OP THE TEUST 155 held to be attached to the office and therefore to be vested in assumed trustees, both those assumed under an express power of assumption 4 and those assumed under the statutory power 5 of assumption, 6 and also in trustees appointed by the Court. 7 Trustees appointed by the Court under the Trusts Acts are vested " with all the powers incident to that office." 8 In a case where the original trustees nominated by the truster were as such empowered to appoint one of their number as law agent to the trustees and to remunerate him, this power was held to be incident to the office and therefore to be vested in the new trustees appointed by the Court. 9 1 Byam v. Byam, 1854, 19 Beav. 58. 2 In England the position of new trustees in this respect is matter of statutory declaration, and differs from the position of the trustee in Scotland. Cf. s. 288. 3 Smith, 1904, 1 Ch. 139, per Farwell, J., at p. 144, following Bowen, L.J., in Crawford v. Forshaw, 1891, 2 Ch. 261, at p. 268, and dissenting from Grant, M.R., in Cole *. "Wade, 1807, 16 Ves. 27, at p. 44. Cf. Lord Loreburn, C, in Cohen v. Bayley-Worthington, 1908, A. C. 97, as to survivorship being excluded only where the intention to exclude is indicated with sufficient clearness. 4 Blair v. MacFarlane, 1896, 4 S. L. T. No. 25, per Lord Kincairney (Ordin- ary). (In this case there was not only an express power of assumption, but a declaration that the assumed trustees should have the same powers as the original trustees. Cf. Brown v. Young, 1898, 6 S. L. T. 43.) See Laurie v. Brown, 1911, 1 S. L. T. No. 84, as to power of new trustee to select from a class of beneficiaries. 5 24 & 25 Vict. c. 18, s. 1. 6 Blair v. MacFarlane, 1896, 4 S. L. T. No. 26. 7 MacFarlane, 1903, 6 F. 201, per Lord Kyllachy (Ordinary), at p. 204. 8 30 & 31 Vict. c. 97, s. 12. a Gray v. M'Dougall, 1899, 7 S. L. T. No. 39, per Lord Low (Ordinary). As to charitable trust, see Grieve v. Wilson, 1904, 12 S. L. T. No. 172. 287. A particular trustee, vested with a personal discretion to decide upon the proportions and time and manner of payment of a sum, ceased from mental incapacity to be able to exercise the discretion. New trustees were appointed, but were not allowed to exercise the said discretion, and had to pay over the trust estate at once, and in equal shares. 1 Where trustees are vested with a power in the nature of a trust, the power can always be exercised by the survivors. 2 1 Hill v. Thomson, 1874, 2 R. 68. Cf. Walker, 1874, 12 S. L. R. 100, as to trustees who are tutors — " It is ultra vires to let assumed trustees be assumed as tutors," per Lord Neaves ; but cf. 47 & 48 Vict. c. 63, s. 2. Vide s. 102. 2 Bacon, 1907, 1 Ch. 475, quoting Lane v. Debenham, 1853, 11 Hare, 188, per Page Wood, V.-C, at p. 192. 288. In reading English case law on this point, the following provision of the Trustee Act, 1893, must be kept in view, to arrive at a correct estimate of the value of these cases for purposes of 156 THE EXECUTION OF THE TEUST [chap. v. Scots law. " Every new trustee . . . shall have the same powers, authorities, and discretions, and may in all respects act, as if he had originally been appointed a trustee by the instrument, if any, creating the trust." x Thus a power of sale vested in the original trustees is well exercised in an English trust by new trustees, and it is unnecessary to get the concurrence of the beneficiaries in the sale to give a good title to the purchaser. 2 1 56 & 57 Vict. c. 53, s. 37. Vide also s. 33. 2 Perrott, 1904, 90 L. T. 156. statutory 289. Some trustees have their discretionary powers limited limitations. ... . ■. it ,i . . .^ , by statute. There is the limitation placed by the Agricultural Holdings Act, 1908, upon " trustees for ecclesiastical, educational, or charitable purposes," in the exercise by them of the powers conferred by that Act on a landlord. 1 The position of trustees appointed by the Court under the Entail Act, 1882, is also regulated by special statutory provisions. 2 And the trustee in a sequestration has his discretion fettered by its being subjected to that of the commissioners. 3 1 8 Edw. vn. c. 64, s. 28. 2 45 & 46 Vict. c. 53, s. 23 (4), (5) ; and 52 & 53 Vict. c. 39, s. 6 ; see Queensberry, 1898, 5 S. L. T. No. 458. 3 19 & 20 Vict. c. 79, s. 85. (3) Breach of Trust 290. Powers are presumed to be limitative, 1 and every trans- gression of the limits of a power is in law as much a breach of trust as a failure to perform a positive duty. 2 "A breach of trust may consist of embezzlement, or it may arise simply from failure to account, or it may consist of some act or default which amounts only to some irregularity or error of judgment for which, nevertheless, there may be personal liability." 3 Breach of trust may arise either ex contractu or ex delicto — it may be a breach of contract or a breach of duty. 4 If the breach of trust arises out of the relation of trustee and beneficiary at common law, the beneficiary's cause of action is delict, but if the trustee fails to do something, or to take some precaution due by him, which is not a common law obligation arising out of the relation of trustee and beneficiary alone, then the beneficiary's cause of action is on contract. 5 x Eccles, 1910, 2 Ch. 263, per Farwell, L.J., at p. 275. 2 City of Glasgow Bank v. Parkhurst, 1880, 7 R. 749, at p. 753. Cf. Andrews v. Ewart, 1886, 13 E. (H. L.) 69, at pp. 76, 77. Vide s. 341. 3 Town and County v. Walker, 1904, 12 S. L. T. No. 216, per Lord Kyllachy, Ordinary. chap, v.] THE EXECUTION OF THE TKUST 157 4 See s. 1142 as to influence of this distinction on the necessary parties to an action. 6 Turner v. Stallibrass, 1898, 1 Q. B. 56, per Collins, L.J., at p. 59, speak- ing of the relationship of bailor and bailee. 291. The consequences of a breach of trust at civil law may civil and ,»..,.. criminal vary from what is of trivial * import to the trustee to what is breach of J _ r trust. financially ruinous to him, but these civil consequences are no criterion of the criminal character of the breach of trust. The dis- tinction between civil and criminal breach of trust is succinctly expressed by Lord Justice-Clerk Moncreiff, in advising on the relevancy of the libel in the prosecution of the directors of the City of Glasgow Bank. "It is not every violation or excess of the rights of directors, or persons in that position of trust, which will ground a criminal prosecution. It may quite well be that directors violate the conditions on which they hold their office by doing acts which are not sanctioned by the terms of their appointment. Such cases occur every day in the civil Courts; and if directors in that position act beyond their powers, or in violation of their powers, they will be responsible in the civil consequences, and their acts will not have the validity of legal acts of the directors. But before this can be raised into a criminal offence, and be the subject of a criminal indictment, there must be superadded to the illegality of the act some ele- ment of bad faith, some corrupt motive, some guilty knowledge, some fraudulent intent, which shall raise that which, although illegal, was not a crime into the category of a crime. These are familiar and elementary principles, and in eases of that kind the corrupt motive, the bad faith, is essential to the crime itself, and without it there is no crime." 2 1 Croskery v. Gilmour's Trs., 1890, 17 R. 697, per L. P. Inglis, at p. 700. 2 H.M. Advocate v. City of Glasgow Bank Directors, 1879, 4 Couper's Just. Rep. 161, at p. 187. Cf. Aylesford v. Poulett, 1892, 2 Ch. 60, and Knowles, 1883, 52 L. J. Ch. 685, therein referred to. Vide specially opinion of Kay, J., in latter case ; also Smith, 1893, 2 Ch. 1. 292. The fact that the act committed by the trustee is bene- ah excess ficial to the trust estate makes it no less a breach of trust if it is a is breach of trust. transgression of the limits of the trustee's power. 1 In a case where a trustee had entered into an agreement outwith his powers, the Court held that " the agreement was a violation of the rules which have been laid down for the guidance of trustees in the exercise of their duty, and the mere fact that the agreement was a bene- ficial one would not justify the Court in upholding it." 2 Of course, if in the result no detriment to the interest of any 3 bene- 158 THE EXECUTION OF THE TEUST [chap. v. ficiary arises out of the breach of trust, there is practically nothing with which to charge the trustee. But where loss has arisen, though from some cause unconnected with the breach of trust by the trustee, it is none the less a loss for which he is respon- sible. A loss on a mortgage arose not from any defect in title or from the nature of the security taken, but solely from an unforeseen depreciation in value of the lands mortgaged, which depreciation would have equally affected the subject of an invest- ment within the power. Here the trustee was held liable for the loss, the security being of an unauthorised nature, on the ground that if he had acted as he should have done, and not invested on the security in question, the loss would not have occurred to the trust estate. 4 1 Cf. Lindley, L.J., in Perrins v. Bellamy, 1899, 1 Ch. 797, at p. 798. 2 Oceanic Steam Navigation Co. v. Sutherberry, 1880, 16 Ch. D. 236, per James, L.J., at p. 245. Of. a. 468 infra. 3 One beneficiary may be injured in his particular interest though the general trust estate is benefited. 4 Chapman v. Browne, 1902, 1 Ch. 785, at p. 806. Liability 293. A distinction exists in the manner in which the Court of public trustees. treats a breach of trust by the trustees in a private trust and that by the trustees of a charity. 1 The private trustee is strictly responsible to his individual beneficiary in a direct action for loss by breach of trust, while the charitable trustee has no individual beneficiary with the right to call him to account, and, where acting hond fide, receives lenient treatment from the Court for his administration of the trust funds. 2 " The rule as to the personal liabilities of charitable trustees for the public," says Lord Watson, "was thus expressed by Lord Eldon in Attorney-General v. Corporation of Exeter: 3 — 'With respect to the general principle on which the Court deals with the trustees of a charity, though it holds a strict hand on them when there is a wilful misapplication, it will not press severely upon them when it sees nothing but mistake. 4 If the administra- tion of the funds, though mistaken, has been honest and uncon- nected with any corrupt purpose, the Court, while it directs for the future, refuses to visit with punishment what has been done in the past.' " 6 In England charitable trustees cannot consent to part with their funds, such as by payment of judicial expenses by agreement, without the consent of the Attorney- General. 6 1 Edinburgh v. University, 1851, 13 D. 1187. Cf. Clephane v. Edinburgh, 1864, 2 M. (H. L.) 7 ; Dundee v. Dundee, 1861, 23 D. (H. L.) 14 ; Aberdeen, 1877, 4 R. (H. L.) 48, per Lord Cairns, C, at p. 52. 2 Cf. s. 18. chap, v.] THE EXECUTION OF THE TEUST 159 3 1826, 2 Russ. 45, at p. 54. 4 In a similar matter L. P. Robertson speaks of certain expenditure as not rising to the " dignity of an illegality " (Keeson v. Aberdeen, 1898, 1 P. 36, at T). 44). 5 Andrews v. Ewart, 1886, 13 (H. L.) 69, at p. 73. 6 Kitner v. Addenbroke, 1908, Times, 25th July, per Farwell, L.J. As to Lord Advocate's position in Scotland as representative of public interest, c/. s. 432. (4) Conditional Powers 294. Where the powers granted to trustees are to be exercised only on certain conditions, these conditions, where not useless formalities, must be strictly observed to avoid a breach of trust. 1 Thus, where a power was to be exercised with a consent in writing, consent i -1 required. and the power was exercised with the required consent but not in writing, 2 or upon an application in writing and attested, and it was exercised upon an application in writing but not attested, 3 or in accordance with directions in a deed to be executed in a certain manner, and the power was exercised without such a deed being executed, 4 in each case the trustee was found to be in breach of trust. Again, where a consent is required it must be given at the proper time. Thus the consent cannot be given prospectively. 5 Nor is subsequent homologation of an act done without consent by the party whose consent is required sufficient, 6 being only a personal exception barring his claim on the breach of trust. "Where the nature and object of the power, and the circumstances of the case, point to a previous consent, there such previous consent is necessary, although not required by the terms of the power." 7 Where the consent of a liferenter was required and he became bankrupt, the consent of his trustee in bankruptcy was also required. 8 1 Lane v. Debenham, 1853, 11 Hare, 188, at p. 192. Pell v. De Winton, 1857, 2 De G. and J. 13. Cf. Starkey v. Dyson, 1875, 24 W. R. 37. 2 Cocker v. Quayle, 1830, 1 R. & M. 535. 3 Hopkins v. Myall, 1830, 2 R. & M. 86. 4 Reid v. Thompson, 1851, 2 Ir. (Jh. Rep. 26. 6 Child, 1855, 20 Beav. 50. 6 Bateman v. Davis, 1818, 3 Mad. 98. 7 Greenham v. Gibbeson, 1834, 10 Bing. 363, per Tindal, C.J., at p. 374. 8 Bedingfield, 1893, 2 Ch. 332, and cases there. 295. Certain considerations affecting conditions of time must Time for ° exercising be noticed. Where trustees are vested with a power " during the P owpr - continuance of the trust," the power does not continue in them beyond the time at which their trust ought to have been com- pleted. " It does not appear to me," says Lord Langdale, M.E., "that trustees, by omitting to perform their trusts at the time 160 THE EXECUTION OF THE TRUST [chap. v. when they ought to perform them, can at their pleasure pro- long the time during which a power vested in them is to be exercised." x 1 Wood v. White, 1838, 2 Keen, 664, at p. 669 ; but cf. circumstances in Muir v. Pollock, 1851, 14 D. 152. Stein, 1826, 5 S. 101; Pearce.v. Gardner, 1852, 10 Hare, 287 (sale after specified time). " What might have been done is held to have been done" (Stainton, 1850, 12 D. 571, per L. J.-C. Hope, at p. 589). Cf. Bowen, L.J., in Hunter v. Dowling, 1893, 1 Ch. 391 ; England *. Slade, 1792, 4 T. R. 682 ; 2 R. R. 498. 296. Where there is no express limitation of time, a power granted to the trustees exists in them till the purposes of the trust are spent and then ceases. 1 But such a power ceases, and cannot be exercised, after the time at which the trust should properly have been executed, 2 unless the delay in executing the trust has not been unreasonable. 3 1 Wolley v. Jenkins, 1856, 23 Beav. 53, where Mortlock v. Buller, 1804, lOVes. 291, and Wheate v. Hall, 1809, 17 Ves. 80, discussed. Lantsberyu Collier, 1856, 2 K. & J. 709 ; Cowan v. Crawford, 1837, 15 S. 398 ; Weller v. Ker, s. 300. Cf. as to power in trustees after absolute vesting of estate in beneficiaries, Cotton, 1882, 19 C. D. 624. 2 Adam v. Forsyth, 1867, 6 M. 31. 3 Tweedie, 1884, 27 Ch. D. 315, per Pearson, J., at p. 318. Stein, s. 295, per Lord Craigie, at p. 104. Cf. Ogilvie v. Hamilton, 1833, 12 S. 189. Peters v. Lewes, 1881, 18 Ch. D. 429. As to exercising a power of distribution before the period of distribution, vide M'Cormack v. Barber, 1861, 23 D. 398. Actings 297. It must be remembered that it is absolutely in the dis- express cretion of the truster what powers he may see fit to give to his powers. ° trustees, and wherever express powers have been granted by the truster, actings in. conformity with, and within the scope of, these powers are good and valid, though they are breaches of the general rules of trust administration, and transgress the powers presumed to belong to trustees in the absence of express grant. 1 i Dryburgh v. Walker, 1873, 1 R. 31 ; Hurst, 1892, 8 T. L. R. 528. Of. s. 522. implied 298. There are implied at common law certain powers as common law * powers. vested in all trustees. 1 "The appointment of a trustee carries with it all the powers that are necessary for the fulfilment of a trust purpose." 2 "When you have got a main purpose expressed and ample authority given to effectuate that main purpose, things which are incidental to it, and which may reasonably and properly be done, and against which no express prohibition is found, may and ought, prima facie, to follow from the authority for effectuating the main purpose by proper and general means." 3 Such is the case where the truster in a testamentary trust deed has assumed the realisation of some purpose of his own which has not been attained. Here it is CHAP, v.] THE EXECUTION OF THE TRUST 161 presumed to be within the powers of the trustees to realise that purpose, at least where its realisation has been practically entered upon, though not completed, by the truster. Where a truster had constituted his trust on the assumption that a mansion-house he intended, and had actually begun, to build, would be finished, and had given directions to his trustees for its upkeep, it was held that there was an implied power in the trustees to expend capital in finishing the house. 4 Power to trustees to postpone the execution of a trust for sale, followed by a power to make outlays out of capital, implies a power to raise the money by mortgage of the real estate. In this case the outlay was the repairing of houses on the estate. 5 In executory trusts properly so called there is an implication of power sufficient to attain the general object of the Executory trusts. truster, and the presumption of limitation of power 6 to the special objects enumerated is rebutted. The essence of such an executory trust is that the truster should not himself have expressed fully and completely the formal manner in which his general intention is to be executed, but has left this to his trustees. 7 Where, there- fore, you have a trust in which the truster has fully expressed and denned the manner in which his general intention is to be carried out, the trustees are limited to the actual powers given them, even though these fall short of enabling them to attain what they suppose the truster had in view. 8 1 " To understand a deed or covenant to be no further effectual than as far as will is declared or expressed, is a lame and imperfect notion of these legal acts. Many deeds and many covenants have effects that are not expressly pro- vided for ; . . . for he that wills the end must be presumed to will the means proper to accomplish the end" (Karnes's Equity, 2nd ed., p. 130). Cf. ss. 333 and 340. 2 This is enunciated as a principle by Lord M'Laren in Gifford, 1903, 5 F. 723, at p. 731. 3 Small v. Smith, 1884, 10 App. Cas. 119, per Lord Selborne, C, at p. 129, applied by Swinfen Eady, J., in Cyclists' Club v. Hopkinson, 1910, 1 Ch. 179, at p. 186, as the test of powers under a company Memorandum of Association. 4 Brotchie v. Stewart, 1869, 7 M. 1031, reported in 6 S. L. R. 673, as "special case for Stewart." As to finishing buildings for business directed to be carried on, Fraser, 1894, 21 R. 790, per Lord M'Laren, at pp. 795, 796. Vide also Cooper v. Jarman, 1866, 3 Eq. 98 ; Hudson, 1885, 33 W. R. 819 ; Sichel v. O'Shanassy, 3 V. L. R, E. 208, vide Davis's Cases of the Supreme Court of Victoria, p. 696. Cf. Edmond v. Dingwall, 1860, 22 D. 21, noting that " this case is entirely special," Lord Cowan, at p. 26. 6 Bellinger, 1898, 2 Ch. 534. 6 Gf. s. 290. 7 Gf. s. 350. 8 Sandys v. Bain, 1897, 25 R. 261, per Lord Kinnear, at p. 266 et seq. (see also p. 271, foot), quoting Lord St. Leonards in Graham v. Stewart, 1855, 2 Macq. 295, at pp. 324, 325. It is to be noticed that Lord St. Leonards here speaks of the question as being one of " constructive " trust. Also Lord Cairns in Sackville-West v. Holmesdale, 1870, 4 Eng. & Ir. App. 543, at p. 571, for definitions of an " executory " trust proper. 11 162 THE EXECUTION OF THE TEUST [chap. v. implied 299. Of executory trusts proper, the most common example powers in tat ,tory * s *kat directing trustees to entail specified lands. "The mere use of the term ' entail ' is treated as sufficient authority to the trustees to insert such clauses as are necessary to satisfy the statute of 1685," 1 and that although the truster has also given instructions to insert clauses which would not in themselves be adequate to set up a valid entail. 2 But some expression of the intention of the truster, such as the use of the word " entail," is necessary to imply the power to entail. Where the truster has directed the trustees to carry out his intention by a definite method without any general reference to the setting up of an entail, 3 the trustees' powers are limited to the carrying out of the specific scheme modo et forma. 4. It is to be noticed, however, that where there is a general conveyance to trustees, with a direction to entail special lands, and no directions as to the rest of the property conveyed, there is no implication of a direction or power to entail the latter. 5 But where trustees were instructed to purchase an estate and entail it, and they bought an estate without a mansion-house, they were held to have an implied power to expend money on the building of a mansion-house on the estate. 6 Trustees who have no power to spend capital on building on vacant ground have been held to have an implied power to rebuild on ground rendered vacant by the necessity of pulling down old buildings. 7 1 Gifford, 1903, 5 F. 723, per Lord M'Laren, at p. 732. 2 With this contrast Stirling, 1838, 1 D. 130, and Seton, 1854, 16 D. 658, which, though " there could not be a better example of an executory trust as denned by the authorities " (Lord Kinnear in Sandys, infra, at p.' 271), are rather cases of general powers expressly added to certain particular ones, than cases of powers implied from a general direction. 3 Gordon, s. 324, is an example of specific directions which were not sufficient to create an entail in themselves, and there was no general intention to execute an entail indicated. The beneficiary, therefore, took the estate in fee simple. 4 Sandys v. Bain, 1897, 25 R. 261, referring to Sprot, 1828, 6 S. 833, and Forrest v. Martine, 1845, 8 D. 304, as "cases of executory trust in the strict sense," per Lord Kinnear in Sandys, supra, at p. 271. In both of these latter cases the exclusion of heirs-portioners was held to be implied as being a neces- sary clause in a valid entail. See also cases cited by his lordship at foot of page 272 of Sandys, supra. 6 Trotter v. Cuninghame, 1849, 11 D. 1066, following Allan v. Glasgow, 1835, 2 S. and M'L. 333. B ^ ' 6 Sprot, 1830, 8 S. 712. 7 Armstrong v. Wilson, 1904, 7 F. 353. The case is very special, and it is difficult to discover whether the Court thought the trustees were acting intra we* or whether they had been in technical breach of trust, but had acted honestly and reasonably and were entitled to be excused from the consequences, much on the lines of the "honest and reasonable " clause of the Judicial Trustees Act, 1896, in England. Gf. s. 234. The cases quoted by Lord Kincairney (Ordinary), at p. 358, of implied power to build— Sprot, 1830, supra; Drake v. Trefusis, 1875, 10 Ch. App. 364; and Conway v. Fenton, 1888, 40 Ch. D. 512 —are very special, and the last two were applications for authority to the English Courts. chap, v.] THE EXECUTION OF THE TEUST 163 (5) Powers Unalterable by Trustees 300. Trustees cannot alter or vary such powers as may have Powers J r J unaffected been granted to them by the truster, even to the effect of putting £y *?* of any limitation on such powers, either in themselves or in their successors in the trust. 1 " A trustee who has a power which is coupled with a duty, is bound, so long as he remains a trustee, to preserve that power, and to exercise his discretion as circum- stances arise from time to time, whether the power should be used or not, and he could no more, by his own voluntary act, destroy a power of that kind than he can voluntarily put an end to or destroy any other trust that may be committed to him." 2 This does not prevent trustees acquiring and holding property as part of the trust estate under a condition that they will not have over it some power which the truster has granted to them over trust estate of the same nature coming from him. This is not limiting themselves in the exercise of a power they actually have, but agreeing to take property without the power at all. Thus where trustees have a power to erect a certain class of buildings on the truster's land, this does not prevent them, where they have a general power to acquire land, from acquiring land under con- dition that they shall not erect such buildings on the acquired land. 3 This question must be distinguished from that of a power to acquire land coupled with a trust to do something in connection with it. It would not be a valid exercise of a power so limited to acquire land under a condition derogating from the power to execute the trust. Of such a nature are the powers of statutory statutory 1 " trustees. trustees which must be exercised modo et forma. Statutory trustees are vested with powers in the nature of a trust, and they cannot limit themselves in the exercise of their statutory power. 4 A trustee is entitled to waive his power to take a technical or unsubstantial objection to a notice served upon him. 6 1 Ayr v. Oswald, 1883, 10 R. (H. L.) 85 ; Blantyre v. Clyde, 1871, 9 M. (H. L.) 6, per Lord Hatherley, C, at pp. 7, 8 ; Weller v. Ker, 1866, 4 M. (H. L.) 8, 1 Se. and Div. App. 11, followed in Chambers v. Smith, 1878, 3 A. C. 795, at pp. 815, 816 ; and in Saul v. Pattinson, 1886, 54 L. T. 670. Of. Mann v. Edinburgh, 1892, 20 R. (H. L.) 7, as to homologation by a limited beneficiary. 2 Eyre, 1883, 49 L. T. 259, citing Weller, supra, as " an exact authority on this point." 3 Stourcliffe v. Bournemouth, 1910, 2 Ch. 12. 4 Such is the case of Ayr, supra, discussed in Stourcliffe, supra. 6 Brailey v. Rhodesia, 1910, 2 Ch. 95, at p. 101. 301. In a case where the question arose whether trustees had Exhaustion of powers. exercised a power finally, and so divested themselves of it for 164 THE EXECUTION OF THE TKUST [chap. v. the future, Lord Cranworth, O, said: — "Now, undoubtedly by the law of England, I should say that it was clear that they could not divest themselves of this power. I hope I shall not be understood as meaning to say that there is any difference between the law of England and the law of Scotland in this respect. I do not believe that there is. . . . But it seems a very strange proposition that if a testator gives power to trustees, evidently to be exercised only with reference to the interests of those for whom he was providing, the trustees should be able to say, we give up that power — a power which was given to them, not for their own benefit, but for the benefit of others." And Lord Chelmsford, who concurred, said : — " It appears to me that the trustees could not either abandon or fetter the exercise of a power entrusted to them." x A power may be specifically granted so as to be exercised either revocably or irrevocably ; if such a power is exercised and intimated without any reservation the trustees cannot go back on what they have done. 2 1 Weller, s. 300, 4 M. (H. L.), pp. 12, 13. 2 Maofarlane, 1903, 6 F. 201, at pp. 205, 206. 302. In accordance with the principle that trustees cannot limit the future exercise of their own powers or of those of their successors in the trust, it has been held that trustees with a power of sale cannot grant a lease of the property in question, with an option to the tenant to buy the property at a fixed price during the currency of the lease. " I take it to be too clear for argument," says Parker, V.-C, " that the trustee cannot enter into a contract of this kind, binding those who may succeed him in the trust, to sell at a future time, at a price now fixed, without exercising any judgment whether the thing is beneficial or not at the time." 1 1 Clay v. Kufford, 1852, 5 De G. and S. 768, at p. 780. Cf. Oceanic *. Sutherberry, 1880, 16 Ch. D. 236 ; Moore v. Clench, 1875, 1 Ch. D. 447, at p. 453 ; Salamon v. Sopwith, 1876, 35 L. T. 826 ; Roth, 1896, 74 L. T. 50. taSftees 303 ' 0n the same P rmci P le > official trustees cannot, by refus- ing or neglecting to take any part in the management of a trust, affect the rights of their successors in the matter. In a case where the ministers of Edinburgh as official trustees of a charity had not for a long time taken any part in its administration, and it was submitted that their successors were thereby debarred from doing so, Lord President Inglis said:— "The circumstance that the ministers- of Edinburgh have never claimed to be conjoined chap, v.] THE EXECUTION OF THE TKUST 165 in this administration is of no consequence. No persons of an official character can give away the rights of their successors in office under a trust of this kind." 2 1 Edinburgh v. M'Laren, &c, 1881, 8 R. (H. L.) 140, quoted at p. 150 by Lord Gordon. (6) Supervision by Court 304. In dealing with the proper exercise of discretion, refer- Administra- ence was made to the interference of the ' Court. 1 That court- referred to interference, at the instance of an interested party, with a particular act of the trustees on the ground of its not being a proper exercise of their discretion. Quite a different thing is the putting of the trust estate generally under the administration of the Court. The idea of this distinction underlies the saying of Lord President Inglis that, " when a truster gives discretion to his trustees, the management is vested in them independently of the ordinary control of the Court." 2 1 S. 280. 2 Ferguson v. Robertson, 1869, 6 S. L. R. 238, at p. 239. 305. The English and the Scots Courts agree in avoiding inter- scots and English ference with the discretion of the- trustee in the exercise of his practices compared. powers. But these Courts differ substantially in their practice as to relieving the trustee of his duty to exercise his discretion. " There is a difference between the course of the Courts in England and Scotland respectively as to the grounds which are held sufficient for a general judicial administration at the instance either of fiduci- aries or of beneficiaries. The Court of Session will not in either case interfere with the administration extra curiam except for some special cause shown. The English Court, on the other hand, regards the mere exoneration of fiduciaries from the risks and responsibilities of an administration as sufficient reasons (generally) for its intervention." 1 " The great principle in the administration of Scotch testamentary trusts," says Lord President Inglis, " is to leave the administration where the testator himself has placed it, unless from fault or accident the trust has become unworkable ; and even in that case the Court do not undertake the administra- tion, but appoint new trustees, or a judicial factor, who will occupy the same position, and possess the same powers of extra- judicial administration which the trustees named by the testator occupied or possessed. 2 After this explanation it may seem almost 166 THE EXECUTION OF THE TEUST [chap. v. superfluous to say that an ' administration suit ' of the kind used and sanctioned in the English Courts of Chancery is altogether unknown to Scotch practice." 3 1 Orr Ewing, 1885, 13 R. (H. L.) 1, per Lord Selborne, C, at p. 7. As to the later practice of the English Court as to administration suits, see New, 1901, 2 Ch. 534, per Romer, J., at p. 543 ; Tollemache, 1903, 1 Ch. 457, per Kekewich, J., at p. 465 ; Wells, 1903, 1 Ch. 848, per Farwell, J., at p. 854. 2 But cf. s. 286. 3 Orr Ewing, 1884, 11 R. 600, at pp. 627, 628. In Glen v. Miller, 1911, S. C. 1178, it is suggested by Lord Skerrington that "in every case of difficulty" trustees should be authorised to apply to the Court for directions, the expenses to be in the discretion of the Court — a procedure analogous to that by originating summons in England. Cf. ss. 267 and 937. 306. A reason for the difference in the practice of these Courts may be found in the fact that English trustees, in private trusts, must all act together as a joint body, and, unlike Scots trustees, have no implied majority quorum. 1 Thus dead- locks in the execution of the trust are of more frequent occur- rence in England than in Scotland, and general administration of the trust by the Court is more naturally resorted to in the former than in the latter country. 1 Luke v. South Kensington Hotel Co., 1879, 11 Ch. D. 121, per Jessel, M.R., at pp. 125, 126. Cf. s. 156 ; also ss. 164 and 177. 307. This practice of the English Court has resulted in a wealth of case law on the subject of trust administration under the supervision of that Court, but its radical difference from the practice of the Scots Court necessitates great care in accepting the rules laid down in the English case law as applicable to the administration of trusts by an officer of the Scots Court. statutory 308. Previous to 1889 the want of any decision of the Scots judicial , admimstra- Court on the point left the question still moot, whether it was tion in Scotland, competent to have a private trust put under the direct adminis- tration of the Court. The matter had been dealt with by the Bankruptcy Act of 1856, 1 which enacted as follows : — " If a party deceased has left a settlement, appointing trustees, or other parties having power to manage his estate as aforesaid, it shall neverthe- less be competent for the trustees under the settlement, with or without concurrence of the creditors of the deceased, and of the persons interested in his succession, to apply in like manner to the Court, and obtain from them an order on the Accountant to super- intend the administration of the estate, in which case he shall exercise the like powers and discharge the like duties, under the chap, v.] THE EXECUTION OF THE TEUST 167 control of the Lord Ordinary or the Court, which have been provided for in the preceding sections." 2 1 19 & 20 Viet. c. 79, s. 166. 2 I.e. of the Bankruptcy Act. 309. Shortly after the passing of the Bankruptcy Act the question was raised in Court, 1 and the opinions given showed that the Court was inclined to throw difficulties in the way of the administration being undertaken by it. When the question was brought before the Court again, Lord President Inglis said : — " I cannot help thinking that whoever framed the 166th section of the Bankruptcy Act, 1856, hardly foresaw, what nevertheless was the obvious result of it, that if it was to be carried into opera- tion anything like generally, the administration of private trusts would be all carried out at the public expense." It was concluded to send the case to the whole Court, but no further procedure took place, and the question remained undecided. 2 1 Tweedie, 1858, 20 D. 438. 2 Kaebnrn, 1888, 15 R. 740. 310. The Judicial Factors Act, 1889, repealed this provision superin- tendence by of the Bankruptcy Act, and in lieu thereof enacted that where accountant. a person deceased has left a settlement appointing trustees or other persons with power to manage his estate, it shall be competent for such trustees or other persons 1 to apply to the Court of Session for an order on the Accountant to superintend their administration of the estate, in so far as it relates to the investment of the estate and the distribution thereof among the creditors of the deceased and the beneficiaries under the settle- ment, and the Court may grant such order accordingly; and if such order be granted, the Accountant shall annually examine and audit the accounts of such trustees or other persons, and at any time, if he thinks fit, he may report to the Court upon any question that may arise in the administration of the estate, with regard to any of the foresaid matters, and obtain the directions of the Court thereupon. 2 The powers conferred by the statute are expressly extended to trustees appointed by the Court. 3 Though the machinery of the statute tends to be more fre- quently taken advantage of, 2 it is still regarded as, and is, in fact, an exceptional course for trustees to take, and there is little certainty as to the working of the provision. Lord Presi- dent Inglis says : — " The jurisdiction would seem to be similar to that exercised by the Court in superintending judicial factors." 4 Though the statute is in terms purely an enabling one for the 168 THE EXECUTION OF THE TKUST [chap. v. relief of trustees who desire its protection, 5 the Court, in appoint- ing new trustees, has made an order for superintendence ex propria motu for the protection, not of the trustees, but of the beneficiaries, treating this procedure as an alternative to appointing a judicial factor. Thus trustees appointed by the Court on petition of bene- ficiaries in liferent were placed under supervision to safeguard the interests of minor beneficiaries. 6 Where the estate is small, 7 this is cheaper than the alternative of appointing a judicial factor. Where there was a disagreement between the trustees, but nothing to justify removal of any of them, the Court placed the administration of the estate under superintendence. Here the consideration that the expense of the superintendence, which the Court regarded as a " luxury," would fall on the petitioner, seemed to be of wejght. 8 It is doubtful that the measure of protection obtained by the trustee from the mere superintendence of the Accountant is substantial. There is high authority to the effect that the approval of the Accountant of Court does not in any way or to any extent relieve a judicial factor from responsibility for the class and nature of the investments made by him. 9 As the factor and the trustee are alike under statutory "superinten- dence," there seems to be no reason why the trustee should be protected if the factor is not. Similarly it has been decided that the audit of the Accountant does not discharge the trustee of his intromissions. 10 He is protected only when the special procedure introduced by the statute for enabling the Accountant to obtain the directions of the Court is put in force, and judicial authority for the proposed action is received. 1 In Pattullo and Milroy, infra, there were no such persons, and the application was by beneficiaries. 2 52 & 53 Vict. c. 39, s. 18. In August 1912 there were under the super- intendence of the Accountant of Court 22 testamentary estates of a value of over £1,800,000. No trust has been added to this number since 31st December 1910. Of. s. 269. 3 52 & 53 Vict. c. 39, s. 6. 4 Stair's Trs., 1896, 23 R. 1070. See full opinion as to policy and scope of statute. 6 Vide Bonnar, 1893, 1 S. L. T. No. 68. See form of report by Accountant for directions. 6 Patullo, 1908, 16 S. L. T. No. 267, per Lord Salvesen. By the Public Trustee Bill 1912, s. 11, it is proposed to extend the statutory power of the Court on these lines. 7 Milroy v. Tawse, 1905, 12 S. L. T. No. 407, per Lord Low. 8 Turnbull, 1905, 13 S. L. T. No. 72, per Lord Johnston. 9 Hutton v. Annan, 1898, 25 R. (H. L.) 23, per Lord Shand, at p. 29 ; A. C. (1898) 289, at pp. 303, 304. 10 Bonnar, supra. sequestra- 311. Another method of getting a testamentary trust put under the administration of the Court was suggested by Lord estate chap, v.] THE EXECUTION" OE THE TRUST 169 President Inglis. "Where trustees had attempted unsuccessfully to execute an almost unworkable trust, which ended in seques- tration, his Lordship said : — " We can easily see now that the best course the trustees could have adopted would have been not to accept the trust at all, but to have allowed the estate to be wound up under the sequestration statute. This is a course which I am surprised not to see more frequently adopted. The proceeding is one to be recommended, because it saves gratuitous trustees from the risk of being rendered personally liable, while at the same time it secures that the management be of a statutory kind, and also that the trustee in the sequestration may be guided by the decision of the Court if difficulty arises in the management of the trust." 1 It is obvious that the procedure is applicable only to the winding up of an executry and not to a continuing trust. If the estate proves solvent, any balance will remain subject to the continuing trust, which cannot be executed by a trustee in seques- tration. The original trustees could then accept the continuing trust, or new trustees or a judicial factor might be required, accord- ing to the terms of appointment of the original trustees, and their actings thereunder. •Binnie, 1888, 15 R. 417, at p. 422. Of. Stewart v. Morrison, 1892, 19 R. 1009. 312. The Scots Court has always been hostile to undertaking court . declines the supervision of private trustees, and the reason for this attitude supervision x r atcommoD is thus put by Lord President Inglis : — " I don't think it is for the law - Court to direct the trustees what they should do, seeing that that would not be for the benefit of the beneficiaries, inasmuch as the trustees would then be relieved of their responsibility." x On this ground a multiplepoinding has been declared incompetent where it was raised really to take the advice of the Court as to the proper exercise by the trustees of their discretion. 2 1 Taylor v. Adam, 1876, 13 S. L. R. 268, at p. 270. 2 Gregorson v. M'Donald, 1842, 4 D. 678. Of. City of Glasgow v. Geddes, 1880, 7 R. 731, advice given to liquidators only on petition by them and trustees. 313. Of the length the Court will go, even in a charitable trust, 1 to prevent the trustee evading his direct liability to the beneficiary by obtaining the supervision of the Court, an interesting example is afforded by a case where the trust deed contained the following clause : — " In order that the accounts of the actings and intromissions of my said trustee or trustees may be regularly audited and examined and settled and discharged, I hereby declare that my said trustee or trustees may and shall 170 THE EXECUTION OF THE TKUST [chap. v. Effect of multiple- poinding upon administra- tion Audit. apply to the Court of Session, by petition or otherways, for the purpose of having his or their accounts annually remitted to, and audited by, an experienced accountant in Edinburgh, to whom the judges in either Division thereof shall please to remit the same, and I hereby declare that the report to be made by such accountant, when approved of by the Court of Session, shall be a sufficient discharge and exoneration to my said trustee or trustees, in so far as the same shall state the said actings and intromissions to be sufficiently vouched and instructed." On an application by the trustees to the Court under this clause, the Court refused to have their accounts audited, as required, to the effect of exonering and discharging the trustees for the intromissions instructed by these accounts. The Court held that no such case of necessity had been shown as would sanction the use of their nobile officium, and that if they used it to exoner the trustees they would thereby oust their ordinary contentious jurisdiction by barring any action on the part of the beneficiaries. 2 The case, however, is not a strong or very satis- factory one, 3 and a vigorous protest against the decision, at least as affecting charitable trusts, was expressed by Lord Deas, who asks in effect, if a truster says, " my beneficiaries shall be satisfied by an auditor's report, approved of by the Court," why are the trustees not entitled to ask for such a discharge ? 1 Of s. 293. 2 Dundaa, 1869, 7 M. 670. 3 The case was decided by a majority of five judges to two, but the opinions of the majority are not consistent with one another, and reveal no common principle. 314. Though an estate may be, by the raising of an action of multiplepoinding, put into Court 1 in the sense of beirjg consigned for the purpose of judicial distribution and the judicial exonera- tion and discharge of the trustee, yet the Court in no sense undertakes thereby the general administration of the estate and the trustee is not thereby relieved of his ordinary trust duties. 2 " That the funds are the subject of a multiplepoinding will not exonerate the trustees from discharging the duty," says Lord Justice-Clerk Moncreiff, instancing a particular case, "of having their accounts furnished to them, and examined and audited periodically. That is one of the first duties of trustees, and I think it would be a dangerous thing to say that because it was necessary to take the judgment of the Court with regard to competing claims, the beneficiaries under the trust are to lose entirely tne protection which the appointment of the trustees was intended to secure." 3 chap, v.] THE EXECUTION" OF THE TEUST 171 1 The conditions on which this may be done are fully treated in Orr Ewing, 1884, 11 R. 600, per L. P. Inglis, at p. 627. Cf. s. 935. 2 Cf. Miller, 1848, 10 D. 765. 3 Gordon, 1882, 19 S. L. R. 549, at p. 552. 315. Where an estate has been put into Court in a multiple- sanction for actings poinding by trustees for the purpose of obtaining their judicial ™ h £<> ei . tate exoneration, the sanction of the Court must be obtained for all acts of administration done while the estate is so in Court, if the trustees desire the decree of exoneration to cover such acts. 1 They then bring themselves under the protection of the general proposi- tion that " the law will never compel a person to pay a sum of money a second time which he had paid once under the sanction of a Court having competent jurisdiction." 2 Where money in the hands of the Court in England is paid to the wrong person on the order of the Court in the absence of the proper payee, there is even in that case no claim by the latter on the consolidated fund, except possibly where the order was obtained by fraud or forgery. The trustees who distribute the fund under the direction of the Court are exonerated from further liability. 3 1 Barnet, 1872, 10 M. 730, per L. J.-C. Moncreiff. Cf. Miller, 1848, 10 D. 765, per Lord Pullerton, at p. 789, also L. P. Boyle, at p. 775. In this case the multiplepoinding was said to be " nominal and fictitious," Lord Jeffrey, p. 792. 2 Wood v. Dunn, 1866, 2 Q. B. 73, per Channell, B., at p. 80, cited in Martin v. Nadel, 1906, 2 K. B. 26, per Vaughan Williams, L. J., at p. 29. 3 Williams, 1910, 2 Ch. 481. 316. Where the estate has been put into Court in an action ciaim on oi multiplepoinding, the proper procedure for taking it out of trustees Court is the lodging by the trustees of a claim in the action, claiming the fund in medio for the purpose of administering it in terms of their trust. Such a ease arises where the estate has been made the subject of an action of multiplepoinding in order to test the validity of the trust ; and though the trustees may be also beneficiaries, their claim should be as trustees in the manner above stated. 1 1 Hall v. Macdonald, 1892, 19 R. 567. See terms of interlocutor in Allan, 1908, 8. 0. 807, at p. 818. 317. The usual course in practice, where the Court relieves Administra- r tion through trustees of the general administration, is to do so indirectly J£ d £jj, al through the medium of a judicial factor appointed by the Court. 1 The Court will not exercise through a judicial factor any discre- tionary power that has not been given to the trustees by the truster. 2 The Court will not authorise by anticipation exercise 172 THE EXECUTION" OF THE TKUST [chap. v. by the factor of even such powers as the truster has expressly given to the trustees. " Any application for special powers must be considered upon its own merits at the time when it is made." 3 1 Cf. s. 347. 2 Smith, 1873, 11 M. 639, at p. 646. As to practice of English Court see Fitzpatrick v. Waring, 1882, 11 L. R. Ir. 35, at pp. 44, 45; Hazeldine, 1908, 1 Ch. 34, per Farwell, L. J., at p. 39. Lord M'Laren's remark that " when- ever a judicial factor is appointed the Court becomes the trustee" (M'Connell, 1897, 25 R. 330, at p. 333) must not he taken too technically, and means no more than that the trust discretion will in important questions be exercised by the Court. The judicial factor is the trustee under the Trusts Act (47 & 48 Vict. c. 63, s. 2), and the function of the Court is that of " control and superintendence " (Lord Kinnear in M'Connell, supra). 3 Lord Kinnear in M'Connell, supra. Extent of 318. " A judicial factor x does not obtain by the mere act of bis powers. J . appointment the discretionary powers which were vested in the trustees whom he has superseded. He gets only the usual powers of the judicial office, 2 and must apply to the Court by petition whenever he wants special powers." 3 A judicial factor need not, however, apply to the Court to interpone its authority to ordinary acts of administration expressly within his powers. 4 1 A judicial factor appointed under statute such as under section 57 of the Companies Clauses Act, 1845 (8 & 9 Vict. c. 17), section. 87 of the Commis- sioners Clauses Act, 1847 (10 & 11 Vict. c. 16), section 26 of the Companies Clauses Act, 1863 (26 & 27 Vict. c. 118), or under a similarly worded private Act, is not to be confused with " a common law judicial factor." The former is merely a receiver of revenues for a limited purpose and exercises no trust management or discretion (Greenock Harbour, 1908, S. C. 944, per L. P. Dunedin, at p. 956, and Lord M'Laren, at p. 958). 2 " The interlocutor gives the usual powers (of the judicial office) to this gentleman, as well as the powers under the trust disposition and settlement. That is peculiar " (Shedden, 1867, 5 M. 955, per L. P. Inglis, at p. 956). " The title of a judicial factor depends upon the terms of the extract of his appointment" (Gordon v. William, 1889, 16 R. 980, per L. P. Inglis, at p. 982 ; as to the completion of his title, vide s. 141). 3 Dryburgh v. Walker, 1873, 1 R. 31, per Lord Deas, at p. 34. Cf. his opinion in Smith, 1862, 24 D. 838, at p. 843. See s. 347. 4 Proctor v. Gordon, 1824, 2 S. 659 and 553. Of. Keith, 1893, 1 S. L. T. 13. Delectus 319. The Court will not in all cases itself exercise through the personal. _ judicial factor such discretionary powers as the trustees were vested with. Where there is a deledvj personce in the grant of the discretion to the original trustees, of such a kind that the Court would not have allowed new trustees to exercise the dis- cretionary power, 1 the Court will not itself exercise it through a judicial factor. 2 Where the judicial factor has been appointed upon the sequestration of a trust estate without removal of the trustees, the Court may authorise the trustees, on a Note by the judicial factor, to exercise some personal discretion vested in them, and the factor to pay in accordance with that exercise of discretion. The decision of the trustees should be chap, v.] THE EXECUTION OF THE TRUST 173 instructed by a Minute by them lodged in process. 3 In a charit- able trust there is no discretion in a judicial factor or in the Court to select objects, and the trust fails if selection is required and has not been made by the donees of the power. 4 1 Vide s. 286. It is competent to test the question of delectus personce in a Note by the jtidicial factor for authority to exercise a power granted to the original trustees if all parties interested are duly convened (Brown, 1910, 1 S. L. T. No. 8). 2 Simson, &c, 1883, 10 R. 540, at p. 544 ; vide also Allan, 1869, 8 M. 139, and Jamieson v. Allardice, 1872, 10 M. 755, both therein cited. Of. Nisbet v. Tod, 1848, 10 D. 361 ; Auld, 1856, 18 D. 487. 3 Orr Ewing, 1885, 13 R. (H. L.) 1. Notes 19th May and 18th December 1886 ; 15th March 1894 ; 25th May 1897 ; 21st June 1901 ; 1st November 1904 ; 4th November 1909. 4 Robbie v. Macrae, 1893, 20 R. 358, followed in Goudie v. Forbes, 1904, 12 S. L. T. No. 193, per Lord Kyllachy. Cf. Grieve, s. 286, as to case of new trustee. 320. "Where the truster has defined the object, to the attain- Defined ment of which the trustee's discretion, on a consideration of the facts of the case, is to be exercised, the Court will inquire into these facts and use its discretion to attain that object. Where the trustees were to divide an estate so as to give it where they saw most necessity, 1 or to cut down such timber as was fit, 2 the Court thought that it had " a rule laid down for the trust," that it was "a judgment to be made on facts existing, so that the Court could make the judgment as well as the trustees." 3 1 Gower v. Mainwaring, 1750, 2 Ves. Sen. 86 and 109. 2 Hewett, 1765, 2 Eden. 332. 3 Gower, supra. Cf. Robbie, &c, a 319, per Lord M'Laren, at p. 362. 321. Where, however, " trustees have power to distribute court i • ■ divides generally according to their discretion, without any object pointed equally, out or rule laid down," x the Court will not exercise any discretion, but will divide the estate equally. 2 In one case, 3 where the trustees were to give the estate to " those who were most deserv- ing, and in such manner as they thought fit," the Master of the Bolls said that he had " no rule of judging of the merits of the truster's relations," and could not " enter into spirits," and there- fore could not prefer one to the other, "the known rule that equality is equity 4 being the best measure to go by." " The ordin- ary rule is that when a property is to be divided amongst a definite number of objects, it is to be divided into as many equal shares, one share going to each object." 5 1 Gower, s. 320. 2 Doyley v. Att.-Gen., &c, 1735, 4 Viner's Abridgement, pp. 485, 486. Cf. Longmore v. Broom, 1802, 7 Ves. 124, at p. 128 ; Fordyce v. Bridges, 1848, 2 Ph. 497, at p. 512, and cases of Penny v. Turner, 1848, 2 Ph. 493, and Maddison v. Andrew, 1747, 1 Ves. Sen. 57, cited there. Cowper v. Mantel], 1856, 22 Beav. 231, at p. 236, citing and following Brown v. Higgs, 1803, 174 THE EXECUTION OF THE TKUST [chap. v. Estate already partly divided. 8 Ves. 561, and Burrough v. Philcox, 1840, 5 My. and Cr. 73 ; Prendergast, 1850, 3 H. L. Cas. 195, at p. 223 ; Salusbury v. Denton, 1857, 3 K. and J. 529, at p. 536, citing and following Doyley, Fordyce, and Longmore, supra ; Reid, 1862, 30 Beav. 388, at p. 394 ; Izod, 1863, 32 Beav. 242. 3 Doyley, supra. 4 The report has it, by mistake, " equity is equity." 6 Galloway, 1897, 25 R. 28, per Lord M'Laren, at p. 31. Of. Croskery v. Ritchie, 1901, 1 I. R. 437. 322. Cotton, L.J., states the law in the same sense. " Where the Court, not having the discretion which is given to the trustee, has to administer the trust, in the absence of anything special in the instrument, it administers the trust by dividing the fund equally amongst the named and definite objects." 1 In another case, where a trustee who, in the exercise of his discretionary power, had divided part of an estate unequally among the beneficiaries, became hopelessly insane, new trustees were ordered by the Court to divide the remaining funds " in such proportions as to produce ultimate equality." 2 1 Douglas, 1887, 35 Ch. D. 472, at p. 485. 2 Hill v. Thomson, 1874, 2 R. 68. Trusts imperative. Exception where direction ineffective. (b) Of Trusts (1) Their Nature and Incidents 323. Trusts, technically so-called, are in their nature imperative, and it is the trustee's absolute duty to see that the object of the truster's direction is realised. 1 An exception has, for practical reasons, been introduced. 2 Where the particular trust is intended to limit the power of the beneficiary over the beneficial interest conveyed to him, the trustee is relieved of his duty if the carrying out of the trust would be useless to effect the object of the truster. " The governing principle is," says Lord Karnes, " that no man is bound to fulfil his obligation when it fails to bring about the end that was intended by it." 3 1 Of. s. 274. Where there is no limitation of time, the duty arises at once. Fenwick v. Greenwell, 1847, 10 Beav. 412, per Langdale, M.R., at p. 420. 2 Vide also s. 344 for other exceptions. 3 Karnes's Equity, 2nd ed., p. 148. Of. s. 11 of Indian Trusts Act in Appendix to vol. i. of 1st ed. See s. 781. Of. s. 750. 324. Where the truster directed a particular investment to be made for behoof of a beneficiary, who would have unlimited control over it when made, the law was stated thus by Lord Gifford :— " The principle of the cases of Tod, 1 Kippen, 2 and Gordon, 3 and of other cases both here 4 and in England, 6 that wherever a beneficiary, totally unfettered by the truster, can at once undo what the trustees have done, or what the trustees are directed to do, the chap, v.] THE EXECUTION OF THE TEUST 175 Court will never insist upon the trustees carrying out the direction." 6 "The ground on which we proceed," says Lord Justice-Clerk Moncreiff in the same case, " is that recognised in England as well as here, that an act which, if done, can be at once undone by the person having interest, will not be directed by the Court to be done." 7 " The Court will not allow trustees to do against the wish of a beneficiary what the beneficiary can undo." 8 The English Court has put it on the ground that what could be done by the beneficiary indirectly by two processes, the Court will do directly by one. 9 Where a trust deed contained the following clause — " And I Purchase of annuity. declare that no one of the annuitants hereinbefore be . . . allowed to accept the value of the annuity to which he shall be entitled in lieu thereof," the trustees were allowed to pay over the value of the annuity, in spite of the express prohibition of the trust direc- tion, Eomilly, M.E., saying — " It would be an idle form to direct an annuity to be purchased which the annuitants might sell immediately afterwards." 10 Another example of the principle Trust to iii • iir« • • en tail. involved m this exception to the duty of executing a trust is afforded by the Entail Acts. By the Eutherfurd Act, 1848, 11 statutory right is given to the person who would be heir in possession under a trust to entail land, to apply to the Court for a warrant for the payment to him of the money put in trust for the purchase of the land or conveyance to him of the land, if his position is such that he could disentail the land if the entail were executed. 12 Where a third party is bound to convey land to trustees to be entailed by them in terms of a direction in the trust deed, if he executes an entail directly in such terms without going through the form of a conveyance to the trustees, that is equivalent to performance by the trustees of the trust to acquire the land, and so entail it. 13 1 Tod, 1871, 9 M. 728, discussed and approved in Turner v. Fernie, 1908, S. 0. 883. The case of Hutchinson v. Young, 1903, 6 F. 26, is of doubtful authority ; see remarks on Turner (all cases of an annuity) 2 Kippen, 1871, 10 M. 134. Cf. Kennedy v. Warren, 1901, 3 F. 1087 (cases of an annuity). 3 Gordon, 1866, 4 M. 501, case of an invalid trust direction to entail. 4 Cf. Spens v.. Monypenny, 1875, 3 R. 50. 6 Of. a. 325. 6 Dow v. Kilgour, 1877, 4 E. 403. 7 Dow, supra. 8 Elliot, 1894, 21 R. 975, per Lord Rutherfurd Clark at p. 986. 9 Tennant, 1889, 40 Ch. D. 594, following Mackenzie, 1883, 23 Ch. D. 750. 10 Stokes v. Cheek, 1860, 28 Beav. 620, followed in Mabbett, 1891, 1 Ch. 707. Cf. Messeena v. Carr, 1870, 9 Eq. 260, per Romilly, M.R. See Boss v. Godsall 1842, 1 Y. & C. Ch. 617, for converse case where refusal by trustee to advance to insolvent upheld. 11 11 & 12 Vict. c. 36, s. 27. 176 THE EXECUTION OF THE TRUST [chap. v. 12 See Dalgleish v. Rudd, 1897, 25 R. 225, at p. 234, and p. 236 for example— Rankine's Land-Ownership, 4th ed., pp. 1091, 1092. 13 Mansfield v. Scone, 1908, S. C. 459, per L. P. Dunedin, at p. 465. Election for 325. The right of the beneficiary to elect to take the estate in reconver- ° ^ sion - the form in which it was left by the truster instead of its being converted into another form in accordance with his directions is known technically as the doctrine of election for reconversion. The beneficiary elects to take the estate in its unconverted form instead of allowing the trustee to convert it in accordance with the trust directions, and then reconverting it himself into its original form in which he desires to hold it. The doctrine of election for reconversion enables the persons with the beneficial title to say Ijo the trustees — " We desire you not to sell, but to convey the estate to us " ; and the trustee can lawfully convey the estate to them in the shares in which they are entitled to the purchase money. 1 1 Appleby, 1903, 1 Ch. 565, per Collins, M.R., at p. 571, following Chitty, J., in Daveron, 1893, 3 Ch. 421, at p. 424. In Appleby the trust for sale hadfailed through being struck at as illegal, and there could therefore be no conversion in any case in the hands of the trustees. The argument was submitted that the donees of the converted estate even in these circumstances in order to take the property in any other than its appointed form required to exercise the right of election, and that as they were not all able then to exercise an elec- tion, the unconverted estate fell into intestacy. This argument was repelled on the ground that election was not required to give a beneficial title to unconverted estate, as the right to elect, in a case where election was available, was itself only an illustration of the fact of beneficial ownership of the uncon- verted estate, and not the foundation of that ownership. in doubtful 326. Where there is any doubt that the trust directions would case trust to be be ineffectual to limit the beneficiary as proposed, the trustee is bound to execute the trust. " If we are," says Lord Neaves, " to sanction the disregard of the testator's directions, on the ground that if carried out they would be ineffectual, then we must be satisfied that this is clearly and incontrovertibly the ease. If it admits of any doubt, the question must be tried in a proper action with the proper contradictors having interest to try it." 1 1 Kinnear, 1875, 2 R. 765, at p. 768. uiegai 327. Trustees may be prevented from carrying out a trust by a declarator of its illegality obtained by a contingent beneficiary 1 either in virtue of statutory interference, of which the Thellusson Aocumuia- Act 2 against accumulations is the best-known example 3 or under tions. * > the common law, as in the case of a trust which is in effect 4 Public against public policy 6 or contra bonos mores. policy. The rule of the common law affects all forms of trust. 6 " It is established law that a secret trust invalidates the gift when, if the chap, v.] THE EXECUTION OF THE TRUST 177 property had been given upon an express trust to the same effect, the gift would have failed," and that though only one of more joint disponees is bound by the secret trust. 7 But there must be a binding trust and not a mere expectation on the part of the donor or honourable understanding on the part of the disponee. 8 There is a well-known dictum to the effect that public policy public "is a very unruly horse, and when once you get astride it youtobf"' . pressed. never know where it will carry you." 9 Therefore, in doubtful cases, it is not to be used against the claimant under the deed, 10 and it must be remembered that at different times very different views have been entertained as to what is injurious to the public. 11 A condition is not illegal unless it requires some voluntary act on the part of the beneficiary to secure its fulfilment — the succession to a peerage, as it comes automatically and cannot be refused, is not such a condition as can be avoided on the ground of its being contrary to public policy. 12 "A direction that in a particular event a fund should go in the way in which the law would make it go in the absence of such a direction cannot be said to be contrary to the policy of the law." 13 Thus where there is a gift over to residue on the happening of an event which might possibly be held to be so remote as to be struck at by the English rule against perpetuities, it is unnecessary to consider whether the gift is void under the rule when the event has happened, as in either ease it falls into residue. " All the instances of conditions against law in a proper sense General ° r r limits of are reducible under one of these heads : (1st) either to do some- condition, thing that is [necessarily] M malum in se, or malum prohibitum ; (2nd) to [necessarily] 14 omit the doing of something that is a duty ; (3rd) to encourage such crimes and omissions." 15 " According to English law, if a condition subsequent which is to defeat an estate is against the policy of the law, the gift is absolute, but if the illegal condition is precedent there is no gift." 16 Where, however, a condition does not affect the receiving or not, or conditions the forfeiture or not, of the sift, as a unum quid, but is limitative or sub- ° sequent. of its quantum, then, if the condition is nullified as contra bonos mores, the gift fails, though the condition is subsequent, because in the absence of the condition you cannot compute the amount of the gift. Thus a weekly allowance to a married woman while she lived apart from her husband has been held to be invalid as contra bonos mores, and the gift fails on the ground that you cannot estimate its quantum without the condition. 17 That the truster's directions are "whimsical" or "absurd" "Absurd" conditions. 12 178 THE EXECUTION OF THE TRUST [chap. v. is not in itself sufficient ground for declaring them to be null if they can be carried out without offending the public policy of the law. 18 As to what degree of the "whimsical" or "absurd" would be required to reach the point of offending against public policy, there is the authority of Lord Kyllachy for saying that the following examples can be " hardly alleged " to be consistent with public policy. "Where trustees are directed to lay the truster's estate waste and to keep it so ; or to turn the income of the estate into money, and to throw the money partly into the sea ; or to expend the income in annual or monthly funeral services in the testator's memory; or to expend it in discharg- ing from prominent points upon the estate salvoes of artillery upon the birthdays of the testator and his brothers and sisters." 19 A provision may be contrary to the municipal law of the country without being disregarded by the Court of that country altogether as against public policy. Thus the provision of an alimentary allowance for an adult, though inconsistent in general with the law of England, is not immoral or contrary to public policy in England. 20 conditions " Provisions in instruments of whatever kind contemplating ma£ia n gi the interruption of conjugal relations are void as against the policy of the law." 21 But this rule does not affect a provision by a husband to his wife to take effect for life or for so long as she should continue his cohabiting wife or his widow. On a voluntary separation by mutual consent, the provision, there- fore, ceased to be payable. "It seems to be a provision rather in favour of morality than against it, rather to secure the con- tinuance of cohabitation than to encourage a severance." 22 In England the law is now settled that a condition subsequent in restraint of marriage, e.g. a condition forfeiting provisions on marriage without the consent of named persons, is good, though the restraint is not limited to minority but lasts throughout the life of the beneficiary, provided there is a gift over in the event of marriage and any of the named consenters is alive. 23 illegitimate Settlement of property by deed on future illegitimate children children. . g contrar y to p UD ii c policy and void, 24 at least where the settlor is the father. 25 Settlement by will is valid, however, in all cases upon the illegitimate children of the settlor, but not upon those of others to be begotten after his or her death. 26 Residence. -*■ condition that a beneficiary shall not reside with her parents, they being of good character, is contra bonos mores and null. 27 A direction that a provision shall be forfeited if the beneficiary chap, v.] THE EXECUTION OF THE TRUST 179 enters into the naval or military services of the country is void Public , ,. .. services. as against public policy. 28 There is a statutory exclusion of the power to direct for- feiture of provisions under a settlement by a tenant for life under the English Settled Land Acts 29 as a penalty for exercising any power under these Acts. 30 It is to be noted that the English " rule against perpetuities " 31 statutory interference. has no place in the common law of Scotland, 32 but by the Entail Acts the law of Scotland has been assimilated to the law of England on this point, the Rutherfurd Act, 1848, 33 dealing with heritable property, and the Entail Amendment Act, 1868, 34 with personal estate. 35 The rule against perpetuities in England and the statutory restriction in Scotland in effect prevent property being held in liferent for a longer period than that covered by a life in being at the date of the grant of the first liferent and twenty- one years after the death of that liferenter. The practical differ- ence is that a trust transgressing the rule against perpetuities is void in toto as an illegal trust — the prohibition is penal — while the statutory restriction in Scotland cuts down the trust only in so far as it exceeds the limits of the statute. There is an excep- tion to the rule against perpetuities in favour of charitable trusts in England. 36 As the statutory restriction in Scotland does not apply to the objects of a charitable trust, the common law right to create a perpetuity remains intact in case of such a trust and leaves the law practically the same as in England. The statute does not apply to cases where the interest is limited to a liferent by the fact of there being in existence complementary interests granted to other beneficiaries under the trust deed. The statute applies only where the conversion of the liferent into a fee in the person of the liferenter does not interfere with any presently 37 enforceable right arising under the trust deed in any one other than the liferenter. 38 1 The unsuccessful argument for the plaintiff in South-Eastern Kailway v. Portland Cement, 1910, 1 Ch. 12, is an illustrative example of the length to which this historic doctrine has been pushed in England. 2 39 & 40 Geo. III. c. 98, and 11 & 12 Vict. c. 36, s. 41. Of. sees. 835 el seq. 3 The Thellusson Act is now amended, as regards accumulations for the purchase of land only, by the Accumulations Act, 1892, 55 & 56 Vict. c. 58. 4 It is not the motive that actuates the maker of the deed, but the effect of his directions that is in question. A person can do an act which is not illegal or assert a legal right without question as to his motives (Fitzroy v. Cave, 1905, 2 K. B. 364, per Cozens-Hardy, J., at p. 374 ; Occleston v. Fullalove, 1874, 9 Ch. App. 147, per James, L.J., at p. 161). 5 Of. s. 611. 6 It must be noted that " a trust created by statute cannot be held invalid on any ground" (Christchurch, 1888, 38 Ch. D. 520, per Lindley, L.J., at p. 530). 7 Geddis v. Semple, 1902, 1 I. K. 73, per FitzGibbon, L.J., at p. 80. 180 THE EXECUTION OF THE TRUST [chap. v. 8 Geddis, supra, at p. 81. 9 Richardson, infra, p. 252. Cf. L. P. Dnnedin in Caithness, infra, at p. 84. 10 Richardson v. Mellish, 1824, 2 Bing. 229. 11 Nordenfelt v. Maxim, 1894, A. C. 535, per L. Macnaghten, at p. 564, cited in Beard, 1908, 1 Ch. 383. 12 Caithness v. Sinclair, 1912, S. C. 79, distinguishing Egerton v. Brownlow, 1853, 4 H. L. Cas. 1, as case of acquisition of title, which was voluntary act, from succession to title, which was involuntary. 13 Blunt, 1904, 2 Ch. 767, per Buckley, J., quoting North, J., in Randell, 1888, 38 Ch. D. 213, at p. 218. 14 Lord Macclesfield in Mitchell, infra, adds an inference "that where there may be a way found out to perform the condition without a breach of the law, it shall be good," hence the word "necessarily" in this case should be inserted. The case of Wilkinson, infra, was brought under the second head — the con- dition being that a married woman should cease to live where her husband carried on his business which made it necessary to live apart from him — though the necessity was only circumstantial and not absolute. 15 Mitchell v. Reynolds, 1711, 1 P. W. 181, per Macclesfield, L.C.J., at p. 189, quoted by Stuart, V.-C, in Wilkinson, 1871, 12 Eq. 604, as "describing very clearly what are conditions which shall be considered to be invalid." 16 Moore, 1888, 39 Ch. D. 116, per Cotton, L.J., at p. 129. 17 Moore, supra. It is difficult to distinguish such a limitation from a con- dition precedent, but see Kay, J., at p. 121. 18 Macnair, 1791, Mor. 16210. See also Mason v. Skinner, 1844, 16 S. J., at p. 424 (left col.) ; M'Caig, infra, at p. 237. 19 M'Caig ii. University of Glasgow, 1907, S. C. 231, at p. 242. Cf. direc- tions held to be "not unusual" and "not transgressing any rule of law or public policy" (Scarlett v. Abinger, 1907, S. C. 811, at p. 821). 20 Fitzgerald, 1904, 1 Ch. 573. 21 Hope Johnstone, 1904, 1 Ch. 470, per Kekewich, J., referring,in illustration of " many authorities, ancient and modern " to this effect, to H. & W., 1857, 3 K. & J. 382, per Wood, V.-C. ; Fraser v. Rose, 1849, 11 D. 1466, per Lord Fullerton, at p. 1470 ; Wright, 1907, 1 Ch. 231. 22 Kekewich, J., in Hope Johnstone, supra, at p. 478. Cf. Harrison, 1910, 1 K. B. 35. 23 Whiting, 1905, 1 Ch. 96, where the history of the law and its illustration in decision are fully discussed. Cf. Ommaney v. Bingham, 1796, 3 Pat. 448, per Lord Loughborough, C, at p. 460 ; Sturrock v. Rankin, 1875, 2 R. 850, per Lord Gifford, at p. 854, as to position of law in Scotland. 24 Blodwell v. Edwards, Cro. Eliz. 509 ; Occleston v. Fullalove, 1874, 9 Ch. App. 147 ; Hastie, 1887, 35 Ch. D. 728, at p. 734. 25 Frogley, 1905, P. 137. 26 Occleston ; Hastie ; Frogley, supra. See further on this question, s 832. 27 Grant, 1898, 25 R. 929 ; Fraser v. Rose, 1849, 11 D. 1466 ; Morgan, 1910, 26 T. L. R. 398. Cf. Upton v. Henderson, 1912, 28 T. L. R. 398, as to restraint on liberty of subject. 28 Beard, 1908, 1 Ch. 383. 29 45 & 46 Vict. c. 38, s. 51. 30 Dalrymple, 1901, 49 W. R. 627 ; Adair, 1909, 1 I. R. 311. This case is illustrative of what will be regarded as the satisfaction of a condition as to " residence " at a particular place — and particularly as to absence on military or naval duty. 31 For definition of rule see London v. Gomm, 1882, 20 Ch. D. 562, at p. 581, approved in Edwards, 1908, A. C, at p. 277. 32 Strathmore, 1831, 5 W. and S. 170, at p. 193 ; Suttie v. Tod, 1846, 18 Jur. 442 ; M'Nair, 1791, Mor. 16210 ; M'Leish, 1841, 3 D. 914. 33 11 & 12 Vict. c. 36, ss. 47-49. 34 31 & 32 Vict. c. 84, s. 17. 35 The effect of this section on the position of the trustee is further dealt with in s. 749 and in s. 835, with special regard to the Thellusson Act. 36 Thomson v. Shakespear, 1860, 1 De G. F. & J. 399, and other cases cited by Lindley, L.J., in Christchurch, at pp. 531, 532. 37 Davie, 1900, 8 S. L. T. No. 22. 38 M'Culloch, 1903, 6 F. 3 ; 1904, A. C. 55, per L. Halsbury, C, at p. 59, L. Davey, at p. 63, referring to argument of counsel, at p. 59. (This case is a pointed example of the shortcoming in the reporting of House of Lords cases chap, v.] THE EXECUTION OF THE TEUST 181 in. the Scots reports, where no attempt was made until 1910 to report the argument of counsel, even though directly referred to by the judges and practically incorporated with their opinions.) Shiell, 1906, 8 F. 848, at pp. 853, 854 ; Baxter, 1909, S. C. 1027. Cf. Downie, 1901, 38 S. L. R. 755. (2) Implied Trusts 328. Besides the trusts expressly laid upon the trustee, there Trust to are certain trusts implied in all trust deeds. The most important estate. implied trust laid upon the trustee is the protection of the estate, and for that purpose every trustee upon his appointment is required to examine into and acquaint himself with the con- dition of the estate and to immediately take such steps as may be necessary for its protection. 1 Thus, where registration of the Registration trust deed is essential to the security of the trustee's title, it is an implied trust that the deed shall be registered ; 2 and where it is not void on the face of it, there is an implied trust to support the trust deed and execute it till it is declared to be ^Pf 01 * of void. 3 As the trustee is entitled to the custody of the title- custody, deeds, and is presumed to have them, the trustee should also make inquiry for the deeds, get possession of them, and take measures to secure their safe custody. 4 Where heritable property Repairs, is included in the trust estate, the trustees are bound by an implied trust " to see that the property does not fall into decay from want of proper repair " ; 5 but such repairs must be neces- sary for the support of the property, 6 or such as affect the question of its letting or not. 7 There is also an implied trust to let it Letting. if possible. Thus a trustee fails to perform his duty if he allows farms, readily lettable, to remain unlet. A trustee who does that voluntarily and knowingly will expose himself to a serious liability to the beneficiary who loses his rent. 8 Where the estate Damages, is injured by fault, it is an implied trust to recover damages from the wrongdoer. It has been decided in this connection that public trustees, though precluded by their constituent trust deed from making any profit for the trust out of their administration, are still entitled to recover damages against a wrongdoer on the footing of injury to their business. 9 1 Townley v. Bond, 1843, 2 Conn, and Laws, 393, at p. 405 ; Taylar v. Millington, 1858, 4 Jur. N.S. 204 ; Geaves, 1856, 25 L. J. Bank. 53, at p. 58 ; Atty.-Gen. v. Brecon, 1878, 10 Ch. D. 204, at p. 216. Vide Lawson's American Law, s. 2022, note. 2 Macnamara v. Carey, 1866-67, 1 Ir. Bep. Eq. 9, at p. 23. 3 Beddoes v. Pugh, 1859, 26 Beav. 407, per Eomilly, M.R., at p. 417 ; Story, Eq. Jur., s. 1275. Cf. Drysdale v. Nairne, 1835, 13 S. 348, per Lord Jeffrey (Ordinary), at p. 351. As to title in one or more trustees to defend the deed, see Duncan, 1892, 20 K. 200. 4 Lloyd v. Jones, 1885, 29 Ch. D. 221, at p. 228 ; Wotherspoon v. Laidlaw (case in bankruptcy), 1843, 6 D. 88. Cf. s. 182. 182 THE EXECUTION OF THE TRUST [chap. v. 6 Hotchkys, 1886, 32 Ch. D. 408, at p. 417. Of. Cruickshank v. Ewing, 1864, 3 M. 302 ; Conway v. Fenton, 1888, 40 Ch. D. 512, per Kekewich, J., and with this question of implied trust to prevent decay, contrast Armstrong, s. 299, a case of implied power to rebuild dilapidated houses, and note the difference of the consideration involved. The liability of the trustee in the former class of case arises out of his omission to execute the trust — in the latter class out of his performance of something beyond his powers. 6 Sandon v. Hooper, 1843, 6 Beav. 246. Vide circumstance of case where repairs held to be unnecessary, Bridge v. Brown, 1843, 2 Y. and C. Ch. 181, at p. 190. 7 Calverley, 1904, 1 Ch. 150, at p. 155 ; Noble, 1912, 2 S. L. T. No. 61. 8 Egmont v. Smith, 1877, 6 Ch. D. 469, at pp. 475, 476, per Jessel, M.E. 9 Steam Sand o. Greta, 1897, A. C. 596. Duty to 329. The implied trust to protect the estate makes it the salve _ _ property, trustee's duty to find, if possible, and even to advance, 1 money required temporarily for the preservation of the estate. The most familiar ease is the payment of premiums on a policy to keep it from lapsing. " There can be no question," says Lord Eomilly, " that if the trustee has no funds properly applicable to keeping up the policy, he may do, and, in my opinion, it is his duty to do, what he can to protect the policy, and advance or obtain money for the purpose of paying the premium." 2 1 Only in very exceptional circumstances will the legal duty of the trustee approach this point. See Dowson v. Solomon, 1859, 1 Dr. & Sm. 1, per Kindersley, V.-C, at pp. 13, 14, as to duty of beneficiary to put trustee in funds. Gf. Dundas v. Strathmore, 1870, 7 S. L. R. 710, per Lord O'Hagan, at pp. 725 726. 2 Clack v. Holland, 1854, 19 Beav. 262, at p. 276 ; Fitzgerald, 1904, 90 L. T. 266, at p. 274 (2nd col.) citing Leslie, 1883, 23 Ch. D. 552 ; but see opinion of Eomilly, M.R., in Hobday v. Peters (No. 3), 1860, 28 Beav. 603. Gf. ss. 1215 and 1216, infra. Another example of this duty is where the advance of money would save the estate from foreclosure by a mortgagee. Cf. Patten v. Bond, 1889, 60 L. T. 583, at p. 585. Trust for 330. The implied trust to protect the estate involves the duty insurance. on the part of the trustee of insuring the estate against the accidents naturally attendant upon the form of trust estate vested in him, wherever such insurance is an act of judicious adminis- tration. To decide what is judicious administration in any particular case is a difficulty inherent in the execution of a trust. In this question of insurance the practical test is whether the premium for insurance against any particular form of accident is an inconsiderable charge to the estate in proportion to the loss to which the estate is susceptible from that form of accident. Fire. Among natural accidents the outstanding risk is that of fire, and the most common problem of insurance arises in connection with it. It is one of the most obvious lessons of experience that all forms of corporeal property, except the solum, are susceptible to destruction by accidental fire. 1 Insurance of the trust property against this accident, if the property is susceptible to it, therefore chap, v.] THE EXECUTION OF THE TEUST 183 ranks as a primary duty under the general trust for protection of the estate. 2 There is a presumption set up by the universal practice of reasonably prudent people in recent times — and the consequent inconsiderable burden of the premium for insurance — that it is judicious administration. Where the trust estate Marine. includes ships or cargo, similar considerations affect the trustee's duty towards insurance against marine risks. 8 There is a tendency to extend the principle of insurance to cover other and often novel risks, and a general practice has arisen amongst reasonably prudent people of effecting insurance against many of such risks. In such cases the risks come under the same Miscel- laneous. considerations as those influencing the trustee in judging of the risk of fire. Examples are Workmen's Compensation, Fidelity, and Theft insurance. Only in very exceptional cases Death. can there be a trust to insure against the risk of death, but such a trust would emerge where it was foreseen and obvious that death would cause substantial loss to the estate. The temporary insurance of a debtor's life might in certain circum- stances afford an example. 4 Where insurance is properly decided upon, its cost may be met in the first place out of the readiest funds available to the trustee. Its incidence in accounting with the various beneficiaries is a different question. 5 1 Cf. a. 682. 2 See Betty, 1899, 1 Ch. 821, per North, J., at p. 829 ; Kingham, 1897, 1 I. R. 170, at p. 174, per Chatterton, V.-C. Of. Lord St. Leonards in s. 682. In a decision apparently to the contrary — Bailey v. Gould, 1840, 4 Y. & C. Exch. 221 — the circumstances are special, and the view taken there was supported on the strength of cases involving the relations of mortgagor and mortgagee on this point, which differ from those of trustee and beneficiary. In another case cited against the proposition in the text (Fry, 1859, 27 Beav., at p. 146), the question was with the landlord in a lease and not with a beneficiary. In M'Eacharn, 1911, 103 L. T. 900, Bailey and Fry are followed, but that there is a duty to insure at the expense of the estate generally is suggested. Dobson v. Land, 1850, 8 Hare, 216, per Wigram, V.-C, at p. 220. Cf. position of an heir of entail, who is neither bound to insure against destruction by fire, nor bound to rebuild what is so destroyed. Blair Maxwell, 1893, 1 S. L. T. 337. 3 Cf. Grover v. Mathews, 1910, 2 K. B. 401. 4 Cf. Garner v. Moore, 1855, 3 Drewry, 277. 5 Chisholm, 1902, 1 Ch. 457, at p. 463. See s. 1036. 331. Though by statute " no insurance shall be made by any Trustee's insurable person or persons .... on any event or events whatsoever, interest. wherein the person or persons for whose use, benefit, or on whose account such policy or policies shall be made, shall have no interest," 1 yet " a trustee has a legal interest in the thing," says Lord Eldon, " and may therefore insure." 2 Following this opinion, the law has been thus laid down in the United States of America : 184 THE EXECUTION OF THE TEUST [chap. v. " that a trustee having no personal interest in the property may procure an insurance on it, is a doctrine too well settled to need a citation of authorities to confirm it." 3 It is stated on United States authority that " a trustee having the title to property, and the possession and management of it, may insure it in his own name without specifying his interest," 4 and that " one trustee — where there are more than one — may insure for the whole ; or if he insures without authority of the other trustees, the others may ratify the same, and the bringing of an action in their names is a sufficient ratification." 5 1 14 Geo. in. c. 48, s. 1. 2 Lucena v. Craufurd, 1806, 2 Bos. & P. 269, at p. 324, 6 R. R. 623, at p. 705. Gf. Craufurd v. Hunter, 1798, 8 T. R. 13, per Lord Kenyon, C.J., at p. 23. 3 Strong v. Manufacturers' Ins. Co., 1830, 20 Am. Dec. 507, note at p. 515. The note contains a valuable resume of the principal United States authorities and references on the point. 4 Vide Phillips on the Law of Insurance, s. 422. 6 Wood on Fire Insurance, s. 291. TruBt to 332. The implied trust to protect the estate imposes the duty on protect r r r j affects every eae h trustee, where there is more than one, to protect the estate trustee. ' ' r against a breach of trust on the part of his co-trustees or co-trustee, 1 and, if necessary, to take action against them or him for that purpose. 2 There are implied trusts to recover the trust estate and reduce it into possession as soon as possible, and also to invest it when recovered, but these are dealt with fully elsewhere. 3 1 Dix v. Burford, 1854, 19 Beav. 409, at p. 413. In England, where the trustee happens to be a mortgagee also, he is not allowed, as mortgagee, to foreclose, it being his duty, as trustee, to save the estate. Tennant v. Trenchard, 1869, 4 Ch. App. 537. The duty of the trustee in this matter is set forth in some detail by L. P. Robertson in Millar v. Poison, 1897, 24 R. 1038, at p. 1043. 2 Gough v. Smith, 1872, W. N., p. 18. See opinions in Brice v. Stokes, 1805, 11 Ves., 319, at p. 327 ; Atty.-Gen. v. HoUand, 1837, 7 L. J., N. S., Exch. Eq. 51, at p. 56 ; Booth, 1838, 1 Beav. 125, at p. 130 ; Jackson v. Munster, 1885, 15 L. R. Ir. 356, at p. 362. Cf. a. 177. 3 Ss. 557 and 605. (e) Procedure for Ascertaining Powers where 333. As the trustee is strictly limited, in his dealings with the doubt as J ' 6 to power, trust estate, to such powers over it as are either expressly or impliedly vested in him, it is of vital importance, both to himself and to those who deal with him, that in any particular case there should be certainty as to his possession of the power or powers necessary to the validity of his proposed action. Where there is any reasonable uncertainty on this point, the trustee, before acting chap, v.] THE EXECUTION OF THE TKUST 185 in the matter, should, for his own protection, in all cases, obtain the decree of the Court, declaring his possession of the necessary power, 1 or the authority of the Court to his exercise of it if he has not the power already. 2 In most cases he will be forced to take this course by the refusal of those dealing with him to proceed until a decision of the Court has been obtained. 3 1 Ss. 334 et seq. 2 Ss. 372 et seq. 3 Binnie, 1888, 15 R. 417. Gf. Lord Young's opinion in Cameron v. Hunt, 1881, 18 S. L. R. 585. 334. In order to ascertain the extent of his powers the trustee Action of declarator. has a common law procedure by declaratory action. 1 This pro- cedure was the common and ordinary form in regular use before the Trusts Act of 1867. 2 Where all parties are agreed upon the facts 3 an alternative procedure at common law is that by Special special case. Case 4 presented by all the parties interested for the purpose of having the powers of the trustee, as a question of law, determined. 5 In questions between the interests of one class of beneficiaries and those of another class, it is not necessary that the whole members of either class shall have been ascertained in order to test the respective rights of the classes by a Special Case. If the class is represented the case is competent, and the decision is res judicata for the class. 6 But this does not apply to a case where the person, who is a party to the case in a certain char- acter, may not fill the character when the practical question arises for decision at a later date. 7 " The purpose of a Special Case is not to enable parties to consult the Court, but to enable them to obtain a judgment or opinion on a question which might form the subject of a proper lis between them." 8 " If that can- not be done — if there is no room for a judgment inter partes — then the opinion of the Court is not binding upon the parties interested, and gives no protection to the trustees. What protects trustees is a judgment and decision of the Court, and they are not in the practice of deciding questions which are not disputed." 9 The question submitted must be one that has actually arisen in the execution of the trust. The Court will not decide a merely possible question. 10 A Special Case is only competent where the answer to the question could be competently made the conclusion of an action of declarator. 11 The practice of the Court has some- what relaxed as to what can competently be the subject of a declarator. Formerly the Court declined to grant a decree of declarator ab ante. It uniformly refused to consider a declaratory 186 THE EXECUTION" OF THE TRUST [chap. v. conclusion that if such and such a thing were done it would he valid and effectual. But latterly this has been departed from if the question, though future, is actual and not hypothetical. 12 When the question involves the exercise of the nobile offitium of the Court, an action of declarator is not a competent form of process to decide the question — there should be a petition in the Inner House. 13 In the case of a sale, where the sale has been carried through before the question of its validity is raised, the question as to the existence of a power of sale in the suspension, trustee may competently be settled in a suspension of a charge for payment of the price. 14 A question as to the power to grant a reduction of rent may be tried in a suspension of a charge for the full rent. 15 1 Lanark v. Wylie, 1852, 14 D. 876. 2 Johnston v. Canongate, 1804, Mor. 15, 112 ; Erskine v. Wemyss, 1829, 7 S. 594 ; Campbell, 1838, 1 D. 153 ; Hendersons. Somerville, 1841, 3 D. 1049 ; Aberdeen v. Cooper, 1860, 22 D. 1053 ; Petrie v. Ramsay, 1868, 7 M. 64. Cf. Binnie, 1888, 15 R. 417, per L. P. Inglis, at p. 422 ; Thomson, infra, per Lord Young. 3 The facts agreed upon must include all the relevant circumstances of the case and not merely selected facts. Glasgow v. Iron Co., 1910, S. C. (H. L.) 63 ; 1910, A. C. 293. 4 Conflicting interests must be represented by separate agents (Ellis, 1898, 1 F. 4); as to two litigations in one Special Case (Church of Scotland v. Watson, 1905, 7 F. 395); all parties prima facie interested must be parties to the Case (Gray v. Elgin, 1903, 5 F. 650). Cf. circumstances in Cuthbert, 1908, S. C. 967 — a Special Case between the trustee and a beneficiary as to the alimentary nature of his right cannot be decided in the absence of possible alimentary creditors. 6 Briggs, 1869, 8 M. 242 ; Boag v. Walkinshaw, 1872, 10 M. 872 ; Mackin- tosh v. "Wood, 1872, 10 M. 933. Cf. Orr Ewing, 1884, 11 R. 600, per L. P. Inglis, at p. 627. 8 Bailie v. Whiting, 1910, S. C. 887, explaining Provan, 1840, 2 D. 298— a case of children against grandchildren. 7 Bailie, supra, where question as to right of person filling character of heir-at-law on death of liferenter raised while liferenter alive — following Smiths. M'Coll, 14th December 1909, reported in 1910, S. C. 1121. 8 Thomson, 1897, 25 R. 19, per Lord Trayner, at p. 22. 9 Mackinnon v. M'Neill, 1897, 24 R. 981, per Lord Kinnear, at p. 988. Gf. Edinburgh Institute, 1893, 20 R. 894, per Lord Kinnear, at p. 896. The incompetency affects only the particular question put to the Court, not the whole Case. Scott v. Bruce, 1912, S. C. 105. 10 Pearson v. Malachi, 1892, 20 R. 167, per L. P. Inglis, at p. 171, but see Thomson, supra, where the question of competency was not raised at the bar, but opinions were given from the bench. See also Mitchell, 1912, S. C. 228, following Galloway v. Campbell, 1905, 7 F. 931, where questions in Special Cases were answered in absence of any contradictor, all the parties before the Court being desirous of an answer in the same sense. Cf. Watson, infra. 11 Cuthbert, supra, per Lord Kinnear, at p. 972 ; Scott, 1911, 2 S. L. T. No. 155 ; Bailie v. Whiting, 1910, S. C. 887, per L. P. Dunedin, at pp. 890, 891 ; Watson, 1910, S. C. 975, per Lord Kinnear, at p. 979. 12 Lord Kinnear, in Cuthbert, supra, at p. 973, referring to Galloway v. Garlies, 1838, 16 S. 1212 ; and Harvey, 1860, 22 D. 1310. Cf. Millar, 1896, 4 S. L. T. No. 190, per Lord Kincairney, Ordinary, citing Galloway ; but see Chaplain v. Hoile, 1890, 18 R. 27, per Lord Kyllachy (Ordinary), at p. 29, and Lord Young at p. 32, and Falconer Stewart v. Wi'lkie, 1892, 19 R. 631, per Lord Kinnear, at p. 642 ; here declarators of beneficial rights were held competent ab ante on the ground that the actual question that must arise later chap, v.] THE EXECUTION OF THE TKUST 187 could be foreseen and so dealt with. These were followed by Lord Dundas (Ordinary) in Davidson, 1906, 14 S. L. T. No. 158, as having "considerably relaxed the older practice" founded on Galloway and on Murray, 1833, US. 13 MacTavish v. Reid, 1904, 12 S. L. T. No. 211, per Lord Kyllachy (Ordinary), dealing with Ferguson v. Robertson, 1869, 6 S. L. R. 238. Of. a. 336. 14 Moore v. Wilson, 25th June 1814, 17 R Dec. 663. Cf. Macgregor v. Gordon, 1864, 3 M. 148 ; Howard v. Richmond, 1890, 17 R. 990 ; Thomson, supra, per Lord Young. 16 Gill v. Fife, 1823, 2 S. 460, vide Session papers. See Tod v. Clyde, 1843, 6 D. 108. J 335. The following provision of the National Debt (Conversion) order under Act, 1888, introduces a summary method of obtaining a decision version™" Act as to the powers of trustees in certain cases. "If by reason of the conversion or exchange of any stock in pursuance of this Act, any question arises as to the powers or duties of any trustee, executor, or administrator, or other person acting in a fiduciary character, or as to the application of the dividends or capital of any stock, and in particular as to the cases in which, and extent to which, capital may be applied towards meeting any deficiency in income, the High Court in England or Ireland, or the Court of Session in Scotland, on the application of the trustee, executor, or administrator, or other person as aforesaid, or of any person interested in the stock, may by order determine the question." 1 1 51 Vict. c. 2, s. 28 (1). 336. Formerly procedure by petition at common law at the nomu instance ot the trustees was supposed to be an alternative to an action of declarator for obtaining the decree of the Court, though opinions rather adverse to its competency had been expressed; 1 but it has now been decided to be incompetent. 2 Where, however, minor descendants of the truster 3 are the beneficial fiars, actual 4 or presumptive, 5 a petition at common law is still competent to Petitions for mainten- the person charged with their maintenance, either alone 6 or along »nee. with the said beneficiaries, 7 praying for an increased allowance for the said beneficiaries out of accumulated income. 8 The principles on which the Court will act in granting or refusing such a petition are not very clear. Where the trustees have no express powers to deal with the matter, the Court will authorise them to do what seems to the Court reasonable in the circumstances ; 9 and in two cases where the trustees had express directions to accumulate, the Court interponed its authority to an arrangement, agreed to by the trustees, by which advances were made out of the income so directed to be accumulated. 10 Where a certain capital sum is named by the truster as the object of the accumulations, to invest. 188 THE EXECUTION OF THE TRUST [chap. v. and this sum has been accumulated, the Court wiU authorise the trustees to pay to the curators of the beneficiaries for their benefit the income previously accumulated, though there is no case of "pressing necessity" for it. 11 The order of the Court is only temporary, and will be varied on the Court being satisfied of a change of circumstances. 12 Thus an action of declarator is not a competent method of obtaining authority for payment of an allow- ance because it woidd " stereotype the allowance for all time." 13 An application to the nobile officium has been granted where the Authority object was to authorise the trustees to invest in the purchase of a specified piece of heritage, such an investment not being within the powers granted by the trust deed. The benefit of the estate seems to have been the moving ratio of the grant of power, as the petition was remitted to the Lord Ordinary on the Bills, who had a report made upon this question. 14 Where foreign trustees hold Foreign heritage in Scotland, and desire to offer an unexceptionable heritage. title to those with whom they are treating about it, they should apply by petition to the nobile officium, of the Scots Court for power, and the power, if it is a power to deal with specified subjects, and not a general power, 16 will be granted provided that the Court of the domicile of the trust has decided that the power sought is competent and expedient in the interests of the trust. 16 A petition by English trustees to charge heritage in Scotland with estate and succession duties effeiring to it is an application to the nobile officium of the Scots Court, and should therefore be presented to the Inner House. 17 1 Kinloch, 1859, 22 D. 174. 2 Berwick, 1874, 2 R. 90 ; Edinburgh Institute, 1893, 20 R. 894, per Lord M'Laren, at p. 896 ; Atherstone, 1896, 24 R. 39, where the quality of the petitioner's difficulty could not be got over by the Court ; see L. P. Robertson. Noble, 1912, 2 S. L. T. No. 61. The case of trustees must be distinguished from that of tutors nominate, who appear to have the right to petition the Court at common law. Bellamy or Copland, 1854, 17 D. 115 ; Mackenzie, 1855, 17 D. 314 ; Morrison v. Haldane, 1857, 19 D. 493; Turner, 1862, 24 D. 694; Brown, 1867, 5 M. 1046. Cf. Dixon's Tutor, 1867, 5 M. 1052. It is doubtful if tutors would now be exceptionally dealt with, their position having been assimilated to that of trustees under the Trusts Acts. Vide 47 & 84 Vict. c. 63, s. 2, but see Logan, 1897, 25 R. 51. See exceptional procedure in petition for judicial factor, where order on beneficiaries for delivery of trust papers to trustee held competent (Hill, 1855, 17 D. 1104). It is incompetent to raise a multiplepoinding only for the object of ascertaining power (Gregorson v. M'Donald, 1842, 4 D. 678). 3 See cases of Bowlby, Churchill, and others, in s. 994, for common law favour for this class. 1 Cf. a. 424. 6 Douglas, 1872, 10 M. 943. 6 Douglas, supra ; Taylor 1851 4 13 D. 948 ; Baird, 1872, 10 M. 482 ; Christie, 1877,4 R. 620; Muir, 1887, 15 R. 170 (as to the form of the interlocutor here and its effect, see sequel in Muir, 1899, 37 S. L. R. 257) ; Sutherland, 1901, 3 F. 761. Cf. s. 824. 7 Thomson, 1883, 11 R. 401 ; Websters v. Miller, 1887, 14 R. 501 ; Seddon, 1893, 20 R. 675. chap, v.] THE EXECUTION OF THE TEUST 189 8 Where an advance out of capital is alternatively prayed for, such a prayer should now be founded on the Trusts Act, 1867, 30 & 31 Vict. c. 97, s. 7. Vide cases of Thomson and Websters, supra. Cf. s. 428. This matter is dealt with by statute in England; vide 44 & 45 Vict. c. 41, s. 43, and opinion of Kay, J., in Dickson, 1884, 28 Ch. D. 291. 9 Baird, supra. 10 Websters and Muir, supra; Robertson, 1909, S. C. 236. In Normand, 1900, 2 F. 726, there was no direction to accumulate, but the Court held the advances made to be proper. The procedure was a Special Case. Cf. Taylor and Christie, supra. In the case of Latta, 1880, 7 R. 881, the Court exercised its mobile officium to this effect on a petition by an officer of Court, all interested parties being agreed. 11 Colquhoun, 1894, 21 R. 671. Cf. Walker 1905, 13 S. L. T. No. 69. 12 Baird, supra. Cf. Latta, supra. 13 MacTavish v. Reid, 1904, 12 S. L. T. No. 211. 14 Stenhouse, 1902, 10 S. L. T. No. 229. 16 Pender, 1903, 5 F. 504. 10 Allan, 1897, 24 R. 718. 17 Harris, 1904, 6 F. 470. 337. "Where public or official trustees have any doubt as to the Public extent of their powers, they may petition the Court at common law to grant authority for any particular act. 1 Charitable trustees will not be granted special powers in advance by an article intro- duced into a scheme for administration, but must make special application to the Court for any such particular power requisite for administration of the trust when the circumstances emerge which render the application necessary. 2 1 Rosebery, 1892, 29 S. L. R. 865. Cf. Trinity Chapel, 1893, 1 S. L. T. No. 113. In Edinburgh Institute, 1893, 20 R. 894, the application was re- fused as incompetent. 2 Mailler v. Allan, 1904, 7 F. 326, at p. 336. 338. The procedure by petition under the Trusts Acts * is indirect primarily intended to give authority for the exercise of a power, by petition r J ° J E under Trusts neither expressly conferred upon the trustee nor implied by Acts. statute or common law. Incidentally it offers a simple method of settling the question of the existence of an implied power, in eases where the Court declines to authorise the exercise of the power upon the ground that the petition is unnecessary, the trustee being declared to already have the power by implication. 2 Since the introduction by the Trusts Acts of the statutory presumption of the existence of certain implied powers in all trust deeds, 3 and of the procedure by petition for authority to exercise a power if not possessed, the procedure by declaratory action at common law has fallen into desuetude. Where parties are not all agreed upon the facts i the procedure by declaratory action is still the only method of getting the decree of the Court for the existence of an implied power. Questions relating to the actings of trustees before the date of the Trusts Act, 1867, may still have to be tested by action of declarator. 5 190 THE EXECUTION OF THE TEUST [chap. v. 1 S. 372. 2 Charlton, 1901, 9 S. L. T. No. 111. 3 Cf. s. 361. 4 Cf. s. 334 6 Binnie, 1888, 15 R. 417, at p. 422. Declarator 339. Declarator of an implied power is always granted 1 where power. ' the state of affairs is such that " the primary purposes of the trust cannot be implemented according to the intention of the truster " without the power, 2 and that on the principle that "the trust must be held to involve in it every power necessary for carrying into effect its proper object." 3 1 Cf. s. 374. 2 Campbell, 1838, 1 D. 153, Lord Moncreiff (Ordinary), Interlocutor at p. 156 ; Erskine v. Wemyss, 1829, 7 S. 594 ; Boag v. Walkinshaw, 1872, 10 M. 872. Cf. Auld, 1856, 18 D. 487. 3 Aberdeen v. Cooper, 1860, 22 D. 1053, at p. 1057. Vide argument in Minute by pursuers lodged in order to satisfy Court of its power to grant authority ; authority granted thereon. General 340. Where only general powers, if any, are expressly given to trustees, it is held that there is also an implied grant of such par- ticular powers as are necessary to carry out the trust laid upon the trustees. 1 On the same principle the revocation of a trust direction implies the revocation of a power granted for the purpose of carrying out that direction. 2 1 Ball *. Harris, 1839, 4 My. & Cr. 264 ; Stroughill v. Anstey, 1852, 1 De G. M. & G. 635, at p. 647 ; Forshaw v. Higginson, 1857, 3 Jur. N. S. 476, per Turner, L.J. ; Campbell, 1838, 1 D. 153 ; Graham, 1850, 13 D. 420. Vide Lord Moncreiff, at p. 429 ; Vide 30 & 31 Vict. c. 97, s. 2 (6). 2 Grindlay, 1853, 16 D. 27. specific 341. Where trustees have specific powers expressly granted to limitative, them, they are held to be limited to these specific powers, on the ground 1 that where something is expressed, nothing else can be implied. 2 But where the power is implied, as in the case of a direction to sell, the power is held not to be limited to the portions of the estate subject to the direction, but to extend to the other portions if sale of them should be found expedient in course of administration. 3 1 But " the maxim ' eocprestio unius est exclusio altering ' is seldom satisfactory unless some good reason can be given for supposing that the speaker really intended it to exclude what he did not expressly mention." Leng 1895 1 Ch. 652, per Lindley, L.J., at p. 658. ' 2 Brewster v. Angell, 1820, 1 J. & W. 625, per Lord Eldon ; Allan v Glasgow, 1835, 2 S. & M'L. 333, per Lord Craigie, at p. 352 ; Clelland v Brodie, 1844, 7 D. 147, at p. 151 ; Birkmyre, 1881, 8 R. 477, cited and discussed in Galloway v. Campbell, 1905, 7 F. 931, at p. 933, as authority for the Court granting a power of sale of a specific subject in the circumstances in Galloway • Thomson v. Miller, 1883, 11 R. 401 ; Whyte, 1891, 18 R. 376 ; but vide Spears' etc., 1873, 11 M. 731, at p. 734. Cf. London Association v. London Docks 1892 8 T. L. R. 717, per Lindley, L.J., at p. 719, foot of first column. Vide s 290 ' 3 Gunn, 1892, 29 S. L. R. 903, distinguishing Whyte, supra. chap, v.] THE EXECUTION OF THE TRUST 191 342. In illustration of the rule as to specific powers, the case may be taken where a trustee was empowered to lay out the rents of certain heritable property in repairing a dwelling-house, and it was held that he had no power to borrow money on the heritable estate for repairs, but must apply only the rents in hand to that purpose. 1 Again, where a power to lease for twenty-one years was granted, it was held that the particular power granted excluded any implication of a power of granting building leases for a longer term. 2 1 Fazakerley v. Culshaw, 1871, 24 L. T. 773. Cf. Round v. Turner, 1889, 60 L. T. 379. See s. 413 et seq. 2 Pearse v. Baron, 1821, Jac. 158. 343. The rule, however, must be read in the light of the follow- ing case, although it is exceptional and against the trend of judicial authority. Trustees had a specific power to advance a maximum sum to the truster's widow, while she remained such, for the mainten- ance of his children, to be increased at discretion in the event of the widow's death or second marriage. The widow having become insane, the children had to be sent out to board. The Court held, on a special case presented by all the parties to the trust, that the trustees had an implied power, owing to the necessities of the case, to advance more than the maximum laid down by the truster for the children's maintenance. Lord Cowan, in delivering the opinion of the Court, said : " The event of the wife's incapacity to maintain the children in her own residence as their home, through her mental weakness, seems at least as great as that arising from her second marriage or from death. The truster may well be held impliedly to have directed that it should be so dealt with." * 1 Brigg, 1869, 8 M. 242. 344. There is an exception to this rule in the case of a power Power of . sale tor debt to sell. However limited the power of sale expressly given to the always trustee by the trust deed, there is an extraordinary implication of power in all trustees to sell for payment of the truster's debts where there is no other means of payment. 1 The sanction for this implication of power exists in the fact that " any creditor could at any time insist on the trustees selling, and against him they could not plead want of power." 2 This power to sell gives a good title to a purchaser, though the sale has converted more into cash for the purpose of paying debt than the amount of the debt. The sale must be conducted in the best manner possible for the estate, realising it as a prudent owner would, and not breaking it up unnecessarily for sale in detached parcels. 3 192 THE EXECUTION OF THE TEUST [chap. v. 1 Erskine v. Wemyss, 1829, 7 S. 594 ; Henderson v. Somerville, 1841, 3 D. 1049 ; M'Leish, 1841, 3 D. 914, per Lord Medwyn, at p. 922, and cf. Lord Mon- creiff, at p. 927 ; Gunn, 1892, 29 S. L. R. 903. Cf. Marshall, 1897, 24 R. 478. Of. s. 413. 3 Graham, 1850, 13 D. 420, per L. J.-C. Hope, at p. 425. In this case there is no express power of sale, but the ratio of the quotation covers the case of a limited express power. See Bowman v. Hill, 1907, 1 I. R. 45, for difference in position of religious or charitable trust. Of. s. 1211. 3 Power v. Banks, 1901, 2 Ch. 487, per Cozens-Hardy, J., at p. 596 ; Jenkins, 1903, 2 Ch. 362. unworkable 345, if neither the specifically granted powers nor the neces- sarily implied powers prove sufficient to carry out the direc- tions, the trust becomes unworkable. "With matters in this position, the trustee is relieved of his duty to perform his trust. " In all cases of this kind, where trustees are sought to be charged with a breach of trust by reason of their omission, the Court takes care to see, before the trustee is charged, that it was within his power to perform the act which it was intended he should do." * Trustees were directed to make a settlement upon the truster's unmarried daughter on her marriage in terms similar to the terms of the settlements of her two married sisters. These two settle- ments were dissimilar in their terms. It was held that this made the direction unworkable, and that it must be treated as pro non scripto and the funds paid over to the beneficiary instead of settled upon her. 2 1 Fenwick v. Greenwell, 1847, 10 Beav. 412, per Lord Langdale, M.R., at p. 421. 2 Murray v. Matheson, 1898, 6 S. L. T. No. 193, per Lord Kyllachy (Ordinary). 346. The want of power may arise from the want of means. In a marriage contract a spouse agreed to transfer to the trustees a sum of money, which she declared belonged to her, but no such sum actually belonged to her. In consequence the trustees could not perform the trust imposed upon them affecting the supposed fund, and were discharged of the duty. 1 1 Fenwiek v. Greenwell, 1847, 10 Beav. 412, per Langdale, M.R., at p. 421. judiew 347. Where the trustee finds his trust unworkable, he should traX kaWe as a mle ' have a J U(ilcial factor appointed on the estate. 1 As an officer of Court, he can come to the Court by petition, in form as effeirs, for instructions, 2 and the Court will, unless there is a prohibition, express or implied, 3 by the truster, authorise him to exercise the powers necessary for extricating the trust. 4 Sfon of'" Jt is convenient to point out, in this connection, that a clear offtcteto distinction must be drawn between the position of the trustee and Court. chap, v.] THE EXECUTION OF THE TRUST 193 that of a judicial factor in their relations to the Court. The trustee is vested by the trust deed with a discretion, larger or smaller, to manage the trust estate to the best advantage for the beneficiaries. If he is of opinion that the exercise of any of the powers under the Trusts Acts would tend to that end, he can apply by petition under these Acts for authority to exercise such a power. In the general management of the estate, however, he must rely on his own dis- cretion, and cannot come to the Court by petition at common law for instructions. 5 On the other hand, the judicial factor, as an officer of Court, is entitled to petition not only for authority to exercise powers under the Trusts Acts, but also at common law, asking the Court, in the exercise of its nobile officium, for instruc- tions in questions of management, which would fall to be dealt with under his discretionary powers were he a trustee appointed under the trust deed. 6 The beneficiary cannot petition the Court for an order on the factor to do any particular thing, unless he has applied to the factor and the factor has refused to apply to the Court for the necessary authority. 7 A judicial factor appointed vice trustees is to be distin- judicial guished from a factor loco tutoris or a curator bonis. The former is curator dis- tinguished. really a trustee, and acts under the trust deed, and is responsible as a trustee — the estate is vested in him and is not in manihus curiae unless where it has been sequestrated at common law. His position is better described by the English title of judicial trustee than by that of judicial factor. He is not the mere agent or hand of the Court as are the latter officers, who are entitled to the direction of the Court in all questions of discretion. The judicial factor is not entitled to the direction of the Court unless such a serious question of responsibility arises as might compel him, in the absence of directions, either to do, for his own safety, something against the real interest of the estate or to resign his office. 8 1 SeePaterson, 1890, 27 S. L. R. 823. Cf. Hill, 1855, 17 D. 1104, where the Court refused to appoint a factor. The Court will not put the estate under judicial management on the petition of the beneficiaries without cause shown (Hendersons, 1901, 9 S. L. T. No. 11). 2 As to the procedure for recovery of the estate by the factor where it is in the possession of a trustee who refused to deliver it, see Orr Ewing, 1884, 11 R. 682 ; M'Alley, 1900, 2 F. 1198. s Whyte, 1891, 18 R. 376. Cf. s. 317. 4 As to alternative of sequestration, vide s. 311. The Court will not, how- ever, vary the purposes of a private trust (cf. s. 350) for the purpose of extri- cating it from an unworkable position (Wood, 1896, 3 S. L. T. No. 427). s Berwick, 1874, 2 R. 90. 6 Kilpatrick, 1881, 8 R. 592 ; Dryburgh v. Walker, 1873, 1 R. 31, Lord Deas's opinion, and see s. 317 ; Latta, 1880, 7 R. 881 ; Waddell, 1851, 13 D. 739 ; Robbie v. Macrae, 1893, 20 R. 358, per Lord M'Laren, at p. 362 ; Edin- burgh Institute, 1893, 20 R. 894, per Lord M'Laren, at p. 896. The dis- 13 194 THE EXECUTION OF THE TRUST [chap. v. tinction between an officer of Court and a trustee in relation to advice by the Court is sharply drawn by L. P. Inglis in City of Glasgow v. Geddes, 1880, 7 R 731. Cf. 12 & 13 Vict. c. 51, a. 7. ^ Mackay u. Ew »'g> 18e7 > 5 M - 1004 ^' Nisbet *' Tod ' 1848 ' 8 Browning, 1905, 7 F. 1037. unworkable 348. The following are illustrations of unworkable trusts, in " which a judicial factor was appointed to carry out the trust. 1 A truster, who had directed his trustees to erect a mausoleum upon the place of his interment, was interred in ground belonging to a deceased relative, whose representatives refused to permit the erection of the mausoleum upon it. In these circumstances, the sole trustee applied for the appointment of a judicial factor, and thereupon resigned. The Court then granted the factor power to exhume and reinter the body, so that the trust to build the mausoleum might be carried out. 2 Again, where a deadlock had arisen in the execution of the trust, the trustees being equally divided as to their course of action, a judicial factor was, on the petition of a beneficiary, appointed to execute the trust. 3 In a later case, in similar circumstances, a new trustee was appointed by the Court to remove the deadlock by raising the number of trustees to an odd number. 4 Mere differences of opinion do not create such a deadlock, 6 and though a situation had arisen which was "inconvenient and unfortunate," the Court were of opinion that there had not been " a sufficient trial of the existing trust administration." 6 1 Cf. ss. 176, 897, and 900. 2 Kilpatrick, 1881, 8 R. 592. Of. s. 20. 3 Stewart v. Morrison, 1892, 19 R. 1009. 4 Dick, 1899, 2 F. 316. 6 Scott, 1905, 13 S. L. T. No. 281, following Hope, 1884, 12 R. 27, and Yuill v. Ross, 1900, 3 F. 96. 6 Yuill, supra. statutory 349. "Where the power required to extricate the trust is one remedy. the granting of which has been expressly prohibited by the truster, the " extraordinary remedy of a private Act of Parliament " will be required even in a private trust. 1 In a public trust, a private Act of Parliament is the ordinary and proper means of acquiring such exceptional or additional powers as may be required for the execution of the trust. 2 The procedure for acquiring powers by private Act is now regulated by the Private Legislation Procedure Act, 1899, 3 which provides for a new preliminary procedure by way of Provisional Order, A typical example of the application of this procedure to trust administration is to be found in a case 4 where the object was to reconstruct two existing trusts so as to separate chap. v.J THE EXECUTION OF THE TEUST 195 the charitable from the educational objects and set up different bodies of trustees to attend to these separate objects. Where a trust of a public nature has become unworkable owing to the trustees "being unable adequately to carry out all the trusts of the property" or "any special trusts annexed to a legacy," Parliament has found occasion to interfere by passing a public statute to provide for a reallocation of the trust funds. 6 1 Hay, 1873, 11 M. 694, per Lord Gifford (Ordinary), at p. 696. Vide Private Acts, passim, cited after Local and Personal Acts in annual issue of the Statutes. As to effect and scope of such an Act, see Wilton, 1907, 1 Ch. 50. 2 Vide Cowan v. Law, etc., 1872, 10 M. 578. 3 62 & 63 Vict. c. 47. 4 Robert Gordon's Trust, 1909, reported in vol. ix. of the Private Legislation (Scotland) Reports. 6 Churches (Scotland) Act, 1905, 5 Edw. vil. c. 12, Preamble, and s. 4 (3). See effect of this Act upon discretion vested in private trustees (Free Church v. M'Knight, 1912, 1 S. L. T. No. 30). 350. In a charitable trust, 1 where it is impossible to carry out Procedure ~ ... by scheme the declared intention of the truster modo et formd, the Court will, w-p™ in J charitable on the application of the trustees, settle and approve a scheme trusts - cy-pr&s, enabling the trustees " to depart from the declared inten- tion of the testator, so far as is necessary, for the purpose of carrying out his main object." 2 A charitable trust is to be distinguished from a benefit society. Benefit socistv The latter may be a charitable institution in a sense, " but it is one which has adopted as its fundamental principle that charity begins at home," its funds being appropriated exclusively for its own members. The Court has no jurisdiction to deal with the funds of such a body by a scheme cy-prbs, and the proper objector is the Lord Advocate in the public interest, 3 as the funds, on the society coming to an end, fall to the Crown as bond vacantia. 11 Dealing with this " principle of cy-prds " administration, which Ratio of has been termed " the principle of approximation," Lord M'Laren scheme, says : — " It is a general principle of charity law and administration that, where it is not possible to carry out the intentions of a testator in the precise manner directed by him, either from a failure in the objects of the charity or from an increase in the trust funds beyond the sum required for the prescribed purpose, it is within the power of the Court to direct that the funds shall be applied to other purposes as near as possible to those prescribed by the testator. There are traces of the application of this prin- ciple in some of the older cases, but in recent times it has been applied unequivocally in more than one important case." 5 As to 196 THE EXECUTION" OE THE TKUST [chap. v. the reason of the practice, Lord Deas says : — "The only thing that justifies us in making any variance on that which the truster has done is, that if we do not do that, we would not only not be carrying out his purpose, but we would probably be defeating his purpose." 6 Transfer to In applying the cy-pris doctrine in order to provide a kindred object to take the benefit in place of the object designated by the truster, which has ceased to be capable of taking the benefit, the estate must still continue to be administered, and the benefit granted, by the trustees acting under the original trust as created by the truster. The Court will not sanction the transfer of the property to another trust and the extinction of that created by the truster, unless (1) where there has arisen a situation rendering the con- tinued administration under the original trust impossible in practice, and (2) where the proposed new trust is constituted on similar lines to that proposed to be extinguished. These conditions are cumulative ; if this latter condition is not fulfilled, the appointment of a judicial factor is the normal course. 7 The Court will not sanction any scheme that amounts to a practical alienation of part of the trust funds. 8 scheme There can be no question of cy-pr&s until it is clearly estab- necessary. lished that the directions of the truster cannot be carried into effect by the trustees obeying his explicit instructions. 9 To invoke the doctrine of cy-prds there must be a complete failure of the objects of the charitable bequest, either where from lapse of time or change of circumstances the original purposes cannot be carried out in the exact way directed by the truster, 10 or where the fund is so large as to satisfy the Court n that it cannot all be applied to the purposes originally prescribed. In these cases the general charitable intent will prevail and the particular mode will be disregarded. 12 Residuary " Cy-pr&s means as near as possible to the object that has failed," and not the application of the funds to other charitable objects under the same deed. Thus though the residuary bequest is charitable, the doctrine of cy-pris will be applied to a special charitable object that has failed, and the specific charitable bequest will, on failure of its specific objects, only fall into residue if there is a direction, express or implied, that it should do so. 13 poured Though the Court will not apply the cy-pris doctrine so as to extended, admit a class of beneficiary different to that which the truster intended to benefit, while any of that olass exist, still it will extend that class by admitting to the benefits conferred on it persons who chap. v.J THE EXECUTION OF THE TRUST 197 are within the spirit of the truster's intention as that may be gathered from his actual description of the class. 14 If it is intended that the trustees should have power to apply objects the funds to objects outwith the jurisdiction of the Court which jurisdiction. approves the scheme, such power should be specially and expressly set forth in the scheme. It will not be implied, even where the trustees have " uncontrolled discretion " in their choice of objects. 15 It is of interest to note that the doctrine of cii-pHs has been cypres in private applied in England to the destination in certain private trusts trusts ' where the trust purposes in their specific form have failed by operation of law. This is to be distinguished from a true cy-pr&s scheme in respect that the purposes in the latter are effective and legal but the particular object has ceased to be capable of taking the benefit. This application of the doctrine is really a rule of construction for giving to particular beneficiaries a benefit as closely following the general intention of the truster as the law will allow. It is usually applied to a conversion into estates tail of a gift of successive life estates, which would be void for remote- ness under the rule against perpetuities — as if in Scots law an entail were created in a line to which the truster had given successive liferents which had been cut down under the Entail Acts. The application of the rule must not, however, introduce anyone as a beneficiary who was not included under the truster's expressed intention or exclude anyone not so excluded by the truster. 16 The nearest approach to this application of the doctrine in Scots law is the case of certain executory 17 trusts where, rather than that the trust purpose should be held void from uncer- tainty, 18 general directions to trustees are held to imply special purposes not expressed and the power to carry them out. Special purposes, if expressed, will not be varied, whatever the general intention may be. 19 1 As to what is a charitable trust, see discussion in s. 1046. Where the truster is alive, and the trust is a charitable one, he is entitled to grant new powers to the trustees, if the objects of the trust have failed to exhaust the income (petition, Aitchison, 12th iSTov. 1895, Second Division, opinion of Lord Trayner, Lord Justice-Clerk and Lord Adam not dissenting). 2 Andrews v. Ewart, 1886, 13 E. (H. L.) 69, per Lord Herschell, C, at pp. 76, 77. Of. M'Dougall, 1878, 5 R. 1014 ; Edinburgh v. M'Laren, 1881, 8 R. (H. L.) 140. Vide procedure in Glasgow Infirmary, 1887, 14 R. 680, where there was no competition, and compare with Glasgow Infirmary, 1888, 15 R. 264, where there was a competition. It is incompetent for trustees nominate, who have not accepted, to apply for a scheme (Watt, infra). Of. s. 432. The cases in which the purposes have been extended cy-pres to include women as well as men are collected in Duart, 1911, S. C. 9, by the Reporter at p. 11. 3 Of. s. 432. * Smith v. Lord Advocate, 1899, 1 F. 741. Of. Gibson, 1900, 2 F. 1195. Of. s. 1046. 6 Carnegie, 1892, 19 R. 605, at p. 608. 198 THE EXECUTION OF THE TEUST [chap. v. 6 Aberdeen v. Irvine, 1869, 7 M. 1087, at p. 1094. The doctrine of "resulting" trusts does not apply to a charitable trust. Cf. s. 827. 7 M'Lean, 1898, 1 F. 48. R Philp, 1893, 20 R. 900. Cf. s. 337. 9 "Weir, 1910, 2 Ch. 124, per Cozens-Hardy, M.R., at pp. 132, 133 ; Watt, 1895 23 R 33 10 ' Attorney-General v. Ironmongers, 1840, 2 Beav. 313; 1841, Cr. & Ph. 208 ; Campden, 1881, 18 Ch. D. 310. 11 Vide intervention of the Legislature in Churches (Scotland) Act, s. 349, supra. 12 "Weir, supra, per Cozens-Hardy, M.R., at pp. 131, 132. 13 Lyons v. Advocate-General, 1876, 1 App. Cas. 91 ; opinion of Judicial Committee, at p. 115, referring to Lord Cottenham's dictum in Ironmongers Co. v. Attorney-General, 1844, 10 CI. & P. 908, at p. 922 (known as the "Barbary slaves' case"). 14 Mitchell, 1902, 4 P. 582. 15 Mirrlees, 1910, 1 Ch. 163. The Court will not sanction a scheme pro- viding for a future alteration to be approved by a Government Department instead of by the Court (Burnett, 1911, S. C. 777). 16 Hampton v. Holman, 1877, 5 Ch.D. 183, per Jessel,M.R., at pp. 190, etc., re- viewing cases, especially Monypenny v. Dering, 1847, 16 M. & W. 418, and 1852, 2 De G. M. & G. 145, where older cases establishing the doctrine are discussed by Lord St. Leonards (Rising, 1904, 1 Ch. 533 ; Mortimer, 1905, 2 Ch. 502). (If there is one point \ipon which the law is uncertain it is with reference to the cy-pres doctrine exemplified by Monypenny v. Dering. Wilmer, 1910, 2 Ch. Ill, per Parker, J., at pp. 117, 118.) A succession of liferents commenc- ing with an unborn person is void as being in breach of the rule against perpetuities. If this order of succession, however, is such that the estate can be taken in tail by the first liferenter, the doctrine of cy-pres is applied, and the general intention of the truster is executed by interpreting the devise as an estate in tail in the first liferenter. This varies the particular intention of the truster in respect of the nature of the estates given, but retains his general intention as to benefits to certain individuals (see Monypenny, supra, per Rolfe, B., 16 M. & W., at pp. 428, 429). In short, the cy-pres doctrine will apply if there is no change in the beneficiaries involved but only a change in the nature of the interest. The estate goes to the class for whom the truster intended to provide, though it does not go modo et formd (Lord St. Leonards, C, in Monypenny, supra, 2 De G. M. & G., at p. 175). The doctrine is one of English conveyancing of real estate, and though having some resemblances to the implied powers spoken of above (s. 340), the analogy is a treacherous one. Its principle has been doubted in the English Courts, where it has been suggested that it would be better to have adopted the principle of declaring the purpose void for uncertainty, as in the Scots law (see Murray, s. 345), but has been held to be too long established to be now called in question (Rolfe, B., in Monypenny, 16 M. & "W, at pp. 428, 429). Its application is now rigor- ously confined to the limits stated above. A similar technical rule of con- struction in England affecting real estate only is known as the rule in Wild's case (Richardson v. Yardly, 1559, 3 Co. 288 ; 10 Ruling Cases, 773). It is to the effect that where there is a devise in trust to a person and his issue as joint- tenants, which it is not possible to execute owing to the children not being all in existence when the trust comes into operation, the trust is to be interpreted not as a joint devise to all in existence but as a devise to the parent in tail, with remainders in tail to all those who may come into existence (see Under- bill v. Roden, 1876, 2 Ch. D. 494 ; Jones, 1910, 1 Ch. 167). 17 Cf. s. 298. 18 S. 340. 19 As to limitation of doctrine of cy-pres to charitable trusts, see Hedder- wick, 1910, S. C. 333, per Lord Johnston, at p. 336. II. Of Particular Powers 1. Powers at Common Law 351. Of the powers vested in the trustee at common law there only remain to be treated here his powers in connection with chap, v.] THE EXECUTION OF THE TEUST 199 litigation. Other such powers are dealt with incidentally in treating the matters to which the powers relate. It is "a general rule of law that trustees always have a good title at common law to defend the subject of their trust." 1 1 Elgin v. Innes, 1886, 14 R. 48, per L. P. Inglis, at p. 51— a case of interdict by the trustees. 352. As the holder of the proprietary title to the trust estate, Trustee .i . ..,-, t . . litigates in the trustee is entitled to appear in his own name in all actions in ws own name. connection with the estate, 1 but he is liable to be affected by any personal exception that would affect the beneficiary, were the latter himself the party to the action. 2 It is not a relevant objection to the title of the trustee to sue an ex-trustee for negligence that the pursuer has been equally negligent, 3 or that he is a beneficiary as well as a trustee. 4 He may not, under his general powers of management, sue an action the object of which is to change the condition of the estate, such, for instance, as an action of division of commonty. 5 1 Of. 34 & 35 Vict. c. 31, s. 9, and Curie v. Lester, 1893, 9 T. L. R. 480. 2 Cleaver v. Mutual Life, 1891, 7 T. L. R. 677, at p. 678. As to res judicata, see Elder, 1895, 22 R. 505. Of. Lord Kinnear in Ashburton, s. 453, at pp. 198, 199. As to effect of personal exception against trie truster upon the trustee's title to sue, see Lord Selborne, C, in Ayerst v. Jenkins, 1873, 16 Eq. 275, at p. 281. 3 Adair v. Connell, 1894, 22 R. 116 ; Lees, infra. 4 Lees v. Dun, 1912, S. C. 50, per Lord Salvesen, at p. 67, explaining Raes v. Meek, 1889, 16 R. (H. L.) 31. 5 Graham v. Boswell, 1830, 9 S. 121. 353. As the trustees in a trust created by a private individual, and not by Parliament or royal charter, are not a corporation, and " the title of each trustee stands on the right made up in his own person," x the trustees in a private trust must be designated by their individual names ; and " the trustees of A. B." 2 or " O.'s trustees," 8 without any specification of individual names and designations, is not a nomen juris under which parties can sue or defend or use diligence. 4 1 Martin v. Wright, 1841, 3 D. 485, per Lord Fullerton, at p. 487, quoted by Lord Selborne in Muir v. City of Glasgow Bank, 1879, 6 R. (H. L.) 21, at p. 39. 2 Bell v. Trotter, 1841, 3 D. 380. 3 Milne, 1842, 5 D. 68. 4 Of. position of voluntary associations who sue in name of their leading officials (Stuart v. Colclough, 1900, 8 S. L. T. No. 192 ; Peake, 1884, 22 S. L. R. 3 ; Association of Episcopalians v. Lindsay, 1910, 1 S. L. T. No. 29 ; Renton v. M'Dowall, 1891, 18 R. 670 ; Pagan v. Haig, 1910, S. C. 341). 354. Where trustees are also tutors of the beneficiary, they Trustees as tutors. must sue and be sued as tutors as well as trustees where the pupil 200 THE EXECUTION OF THE TKUST [chap. v. is interested ; otherwise the pupil is not made a party, and inter- locutors pronounced may be, quoad his interest, reduced. 1 Where the trustee-tutor and the pupil may have adverse interests, however formal, as where the pupil is, as a beneficiary, respondent in a petition presented by the trustee for authority to exercise powers under the Trusts Acts, the Court will not, in practice, allow the trustee to appear as tutor, but appoints a tutor ad litem to attend to the pupil's interests. Where there are declaratory conclusions affecting the truster, he must be called along with the trustees. 2 ' Craven v. Elibank, 1854, 16 D. 811. 2 Bell v. Maxwell, 1828, 7 S. 198. Effect of 355. Where some of a body of trustees resign the trust during resignation during the course of an action which was raised by the whole trustees on action. •> behalf of the trust, the remaining trustees are entitled to proceed with the action, and, as being then the whole trustees, to use the original instance of the whole trustees. 1 1 Morrison v. Maclean, 1862, 24 D. 625, per L. P. Inglis, at p. 637. Trustee 356. It has been decided that a trustee is entitled, in protee- appearing for truster, tion of the estate, to defend an action brought against the truster personally which he declines to defend, but no opinions are given by the Court in reversing the interlocutor of the Lord Ordinary (Robertson), who held the trustee had no title to appear. 1 In a case where a marriage-contract trustee sued an action in the name of the truster, the husband, the latter was held not to be entitled to disclaim the action ; but it is to be noticed that the judgment was given "in respect of the terms of the marriage contract." 2 1 Carrick *. Hutchison, 1844, 6 D. 1148. 2 Pitcairn, 1834, 12 S. 769. Trustee also 357. A change in the beneficial interest does not affect the beneficiary. ^ trustee's title. Where a heritable bond was granted to two persons as trustees for themselves, and they assigned the bene- ficial interest under the bond, they were still held to have a good title, as trustees, to use inhibition in their own names against the debtor in the bond. 1 1 Clarke v. M'Nab, 1888, 15 R. 569. Caution for 358. An insolvent trustee is not deprived of his right to sue expenses. A ° in his own name, without finding security, if he satisfies the Court that he is the bond-fide trustee of the estate, litigating in per- chap, v.] THE EXECUTION" OF THE TEUST 201 formance of his duty as such trustee. Where a trustee in a seques- tration was himself an undischarged hankrupt, and there was no estate except the subject of the litigation, and the creditors declined to join in the action, the Court ordered caution even though the trustee was defender. 1 1 Richmond v. Railton, 1850, 12 D. 1017. 359. If the trustee is merely a trustee for the action — a " man of straw " to whom " a shadowy case " is assigned — he must find security for expenses, 1 but this does not apply to a bond-fide assignee for collection and distribution, such as an executor, or a trustee for creditors. " Insolvency alone is not a ground for compelling security. But an exception has been engrafted on that rule, where the plaintiff is merely lending his name for the benefit of another person, and is therefore not the real plaintiff in the action — as where he has assigned his interest in the debt to another. There is no authority, however, for extending that exception to the case of an executor or an assignee of a bankrupt. They are not within the same principle ; they do not lend their names for the benefit of third persons in this sense." 2 1 Cowell v. Taylor, 1885, 31 Ch. D. 34 ; Carta Para, 1881, 19 Ch. D. 457 White *. Butt, 1908, 1 K. B. 50. 2 Sykes, 1869, 4 C. P. 645, per Brett, J., at p. 650, quoted in Cowell, supra, at p. 40. 360. The question whether a trustee in a sequestration can Effect of admission make an admission in point of law, as he undoubtedly can in by trustee. point of fact, has been raised but not decided. 1 Even an admis- sion in fact by the trustee will not be accepted to the injury of the estate without consideration of " the type of man who makes it and the circumstances under which he makes it," especially " if it is a reckless, exaggerated admission made at a late period." In this case the admission was made by the trustee in a letter to the effect that a person with whom he as trustee had contracted was at the time known to him to be insane, the admission being founded upon as preventing the trustee from recovering the trust property from the insane person, on the transaction being reduced by his representative. 2 Such an admission is a good personal exception against the individual trustee but does not bar co-trustees or the beneficiaries from proving the fact to be contrary to the admission. 1 Nicholson v. Johnstone, 1872, 11 M. 179. The dicta of the judges differ, L. P. Inglis and Lord Mure seeing no reason to doubt the trustee's power, while Lord Ardmillan denied, and Lord Deas doubted it. 2 Aldritt v. Maconochy, 1906, 1 I. R. 416. 202 THE EXECUTION" OF THE TRUST [chap. v. 2. Statutory Powers (a) Powers Vested Directly statutory 36i # Certain powers are conditionally vested in trustees by ?owers - statute, such powers being thereby implied to exist in the con- stituent trust deed. 1 The condition required is that the acts empowered " are not at variance with the terms or purposes of the trust." 2 It may be noticed that the powers do not require to be excluded by express words ; their exclusion may with equal effect be implied from the tenor of the deed. Where the exer- cise of a certain power is the only way in which a part of the trust estate can be made of practical benefit to the beneficiaries, the power will be held to be vested in the trustees if it is ejusdem generis with the powers expressly conferred. A power to lease minerals has therefore been held to be vested in trustees who had power to sell, 3 a lease of minerals being practically a sale of minerals. 4 1 These powers are " to be interpreted as an addition to the powers at common law, and not a limitation of them" (Malcolm v. Goldie, 1895, 22 R. 968, at p. 972. 2 30 & 31 Vict. c. 97, s. 2. 3 Naismith, 1909, S. C. 1380. * Gowans v. Christie, 1873, 11 M. (H. L.) 1 ; Dick v. Robertson, 1901, 3 F. 1021. Power to 362. The most general of these powers is a power "to grant ;rant deeds. ° r all deeds necessary for carrying into effect the powers vested in the trustees." No additional administrative power is here given, but the clause prevents any technical objection in a matter of conveyancing from interfering with the practical operation of the trustee's powers. "Where, for instance, the trustee has to clear the title for sale, the clause enables him to overcome any technical objection to his power to execute the necessary deeds, his power of sale being good. 363. The other statutory implied powers affect the trustee's management of the heritable property of the trust. It may be convey- noted that where the exercise of such a power would not be anting . 1 expedient, justified as a substantial act of administration, it may be held to be valid where it is purely a conveyancer's expedient as the best known method of conveyancing for carrying out a purpose of the trust. 1 1 Judd and Poland, 1906, 1 Ch. 684, per Romer, L. J., at p. 690, speaking of an underlease in England, citing Webb, 1897, 1 Ch. 144, at p. 149, and over- ruling Walker and Oakshott, 1901, 2 Ch. 383. chap, v.] THE EXECUTION OE THE TRUST 203 364. First, the trustee has the power to grant ordinary leases, 1 Power to £ ° j > grant leases. that is, leases of not more than twenty-one years' duration for agricultural lands, 2 and not more than thirty-one years for minerals. 3 There is at common law an implied power to grant leases for an ordinary and reasonable term, 4 and the statute merely introduces definite limits to the term of letting in the case of agricultural and mineral leases. The power to grant urban leases still remains a question of discretionary administra- tion at common law. 6 Before the date of the statute, tutors of a pupil heir of entail in possession had been authorised to grant agricultural leases for nineteen, and mineral leases for thirty-one years. 6 Where trustees are creditors in possession they are, of course, subject to the statutory limitations on the power of grant- ing leases introduced by the Heritable Securities (Scotland) Act, 1894, 7 viz. seven years without judicial authority, and with judicial authority up to twenty-one years for heritage in general and thirty-one for minerals. 8 1 As to question of rent to be got, vide Sutherland, 1893, 3 Ch. 169, at p. 193. 2 In this connection it should be noticed that by the Military Lands Act power is given to all ecclesiastical or public trustees to let land for military purposes irrespective of the conditions of their trust. The section in question reads as follows : — " Any person, body of persons, or authority holding land for ecclesiastical or public purposes, may lease such land to a Secretary of State or to a volunteer corps for military purposes for any term not exceeding twenty-one years, subject to the following provision : — (6) Where the land is vested in any trustees, commissioners, or other body of persons, a majority of a meeting of such trustees, commissioners, or other body of persons, duly convened, may grant a lease under this section, and execute any instrument for that purpose " (55 & 56 Vict. c. 43, s. 25 (6)). For other special statutory powers as to leasing, see s. 411. 3 30 & 31 Vict. c. 97, s. 2 (3). 4 Cf. discussion of principle and authorities in Fitzpatrick v. Waring, 1882, 11 L. K. Ir. 35, especially opinion of Law, C, at pp. 44, 45. Cf. s. 328. 6 Noble, 1912, 2 S. L. T. No. 61, where lease for twenty-one years granted as act of administration. Cf. Carnochan, 1894, 2 S. L. T. No. 89. 6 Speir's Tutors, 1848, 10 D. 1474. 7 57 & 58 Vict. c. 44, ss. 6 and 7. 8 As to what are " minerals," see discussion and opinions in North British v. Budhill, 1910, A. C. 116 ; S. C. (H. L.) 1. 365. Where the trustees are directed to sell, it is primd facie at variance with that trust to grant a lease, though certain cir- cumstances might justify such a course. 1 The trustee who has power to grant a lease to " any person or persons " has power to grant a lease to a corporation or to a limited company. 2 In accordance with the general rule that a trustee cannot limit his power, 3 he cannot grant a lease with a clause of renewal in favour of the tenant, as it makes his power conditional on the action of the tenant at the time of the renewal. 4 Where he ninerals. 204 THE EXECUTION OF THE TEUST [chap. v. has power to grant a lease from year to year it is ultra vires to grant a lease that can only be terminated by notice given by the tenant. 5 In granting a lease the trustee should limit himself to warrandice from fact and deed. 6 1 Evans v. Jackson, 1836, 8 Sim. 217. Of. Keating, 1835, LI. & G. temp. Sugden, 133. 2 Jefl'ock, 1882, 51 L. J. Ch. 507 ; Willmot v. London, 1910, 2 Ch. 525. 3 Vide s. 302. 4 Bellringer v. Blagrave, 1847, 1 De G. & S. 63. Of. Salamon v. Sopwith, 1876, 35 L. T. 826. 5 Eliott, 1893, 31 S. L. R. 36. 6 Of. discussion of question of warrandice in s. 392. The forms of warrandice there discussed may be varied to suit the nature of the warrandice in a lease. Of. warranty by trustee in English leases in Page v. Broom, 1840, 3 Beav. 36 ; Worley v. Frampton, 1846, 5 Hare, 560, at p. 566 ; Stephens v. Hotham, 1855, 1 K. & J. 571. uew 366. A power to lease any portion of the estate in the absolute discretion of the trustees as they shall think proper and beneficial, without any express power of granting mining leases, implies such a power and includes unopened mines. 1 It is an open question on authority whether a specific power to grant mineral leases, such as the statutory power, implies a power to grant a lease permitting the opening of new minerals. Opinions have been given in the Court of Session affirming the power. 2 Lord Deas says : — " I think it right to say that my leaning would rather be in favour of the view that the granting of a power to open fresh minerals is not contrary to the terms of the Trusts Act." 3 And in the same case Lord Shand's words are : — " I do not entertain any doubt that a power to lease minerals never before worked is included." On appeal the House of Lords reserved its opinion on the question of power, but observed that it could not at any rate be used so as to affect the beneficial enjoyment of the estate as between liferenter and fiar. " I do think," says Lord Blackburn, " that the Trusts Act of 1867 never was intended to change the nature of the beneficial enjoyment of the property which is con- veyed by the trust deed." i It has been held that if new minerals may be leased, the proceeds go to the fiar and not to the life- renter, but where minerals which have been abandoned by the truster as unprofitable are leased, the proceeds go to the liferenter. 6 Therefore, in any case, minerals so abandoned fall under the power to lease minerals. 6 1 Barker, 1903, 88 L. T. 685. 2 These opinions were adversely criticised — and that on the ground of the false principle they applied to the interpretation of the Act of Parliament — by Lord Robertson in the House of Lords. See Home v. Belhaven, 1903, 5 F. (H. L.) 13, at p. 23. See article in 1911, 2 S. L. T. 166. Of. s. 368. 3 Campbell, 1882, 9 R. 725, at p. 729. chap, v.] THE EXECUTION OF THE TEUST 205 4 Campbell v. Wardlaw, etc., 1883, 10 E. (H. L.) 65. 6 Baillie, 1891, 19 R. 220. Gf. s. 1020. 6 Gf, however, as to weight to be given to action of truster, Pettigrew, 1890, 28 8. L. R. 14 ; Dick v. Robertson, 1901, 3 R 1021, where lease abandoned by lessee to truster, and new lease given by trustees approved by Court. 367. An opinion in a contrary sense to that of the Court of Session has been expressed by the English Court. " If it be a sound doctrine," says Kindersley, V.-C., 1 after quoting Lord Coke in proof of its soundness, " that a lease by an owner in fee of the land and the mines, there being an opened and an unopened mine, does not justify the lessee in opening the unopened mine, then it appears to me that a power to make a lease of the land and mines (even mentioning mines) ought to be construed only to authorise the granting of a lease, so as to entitle the lessee to work the open mines, and not to entitle him to work the unopened mines." 2 This argument seems hardly conclusive, the power of a lessee being, with no apparent warrant, made the measure of the power of the trustee. 1 " That most accurate and learned judge," per Lord Selborne, C, in Minet v. Morgan, 1873, 8 Ch. App. 361, at p. 368. 2 Clegg v. Rowland, 1866, 2 Eq. 160, at p. 165. " The received opinion among conveyancers and text- writers " is the same as the dictum — which is a deliberate opinion — of Kindersley, V.-C, in Clegg v. Rowland (Baskerville. 1910, 2 Ch. 329, per Joyce, J., at p. 332). 368. There is no reason why the trustee's power in this matter should be otherwise limited than by the general rule making the advantage of the estate the test of the trustee's management. Apart from all questions of fee and liferent, if the opening of fresh minerals is to be of advantage to the estate, it is undoubted that under the statutory power, leases to that effect may be granted. "Circumstances," says Lord Watson, " may emerge which in the interest of the fiar for the protection of his estate in the sense of protecting it from depreciation in value, may render it expedient in the highest degree at once to convert his coal or his ironstone into money." 1 1 Campbell v. Wardlaw, 1883, 10 R. (H. L.) 65, at p. 70. Of. Lord Black- burn, at p. 68. 369. Second, the trustee has power "to make abatement or Power to reduce reduction, 1 either temporary or permanent, of the rent, lordship, rent - royalty, or other consideration stipulated in any lease of lands, houses, tenements, minerals, metals, or other subjects." 2 This statutory provision is retrospective. No such abatement or reduction "heretofore made by trustees shall be liable to be 206 THE EXECUTION OF THE TRUST [chap. v. challenged, which would have been lawful if made after the passing hereof." 3 1 As to discharging arrears of rent, vide Edmond v. Dingwall, 1860, 23 D. 21. 2 60 Vict. c. 8, s. 2, repealing 50 & 51 Vict. c. 18, s. 2 ; also see 52 & 53 Vict. c. 39, s. 19. This appears to be declaratory of a common-law power (City of Glasgow v. Geddes, 1880, 7 E. 731, per L. P. Inglis, at p. 734). 3 60 Vict. c. 8, s. 3. Power to 370. Third, the trustee has power to remove tenants. 1 This remove. . . prevents any technical objection being taken to the title or the trustee to give the necessary notice, and to carry out, if required, the process of ejection, thus saving any question of tacit relocation. 2 1 30 & 31 Vict. c. 97, s. 2 (3). 2 Of. Rankine on Leases, p. 445. Power to 371. Fourth, the trustee has power to accept renunciations accept re- . nunciation. of leases of lands, houses, tenements, minerals, metals, or other subjects. 1 This statutory provision is expressly declared to be retrospective. 2 A petition at common law for authority to exercise such a power was dismissed as incompetent, the exercise of the power being held to be " a pure question of management." 3 1 60 Vict. c. 8, s. 2, repealing 50 & 51 Vict. c. 18, s. 2 ; also see 52 & 53 Vict. c. 39, s. 19. 2 60 Vict. c. 8, s. 3. 3 Berwick, 1874, 2 R. 90. (b) Powers obtained from Court or by Deed of Consent (a) Statutory Procedure Petition or 372. Before dealing with the particular powers indirectly consent. granted to the trustee by statute, the procedure for obtaining these will be examined. By the Trusts Act of 1867 alterna- tive forms of procedure were introduced — an extra-judicial form of procedure by deed of consent by the beneficiaries, and a summary form of judicial procedure by petition. 1 By either of these the trustee may obtain authority to exercise any of the powers with which that Act deals. 2 position of Persons who claimed to be " fiduciary fiars in trust for their fiduciary _ fiars. heirs under a conveyance to them in liferent allenarly and to their heirs and assignees in fee petitioned for powers under the Trusts Acts as well as at common law, on the footing that they were entitled to take advantage of the provisions of these Acts. The Court granted the powers without reference to the Trusts chap, v.] THE EXECUTION OF THE TEUST 207 Acts, and without deciding the question whether the petitioners were fiars or only fiduciary fiars. 3 1 It is not competent for trustees under an English trust to petition the Scots Court for powers under the Act with regard to heritable property held by them in Scotland (Carruthers's Trs., 1896, 24 R. 238). 3 30 & 31 Vict. c. 97, s. 3. 3 Pottie, 1902, 4 F. 876. 373. The procedure by deed of consent saves judicial expenses, Limitations but the limits of its application must be noted. First, the trustee consent. must be satisfied that the power sought is not inconsistent with consistent the intention of the trust. The deed of consent bars claims by the won. beneficiaries who sign it; yet it must be borne in mind by the trustee that the success of his defence under the statute against claims on the part of beneficiaries coming into existence after the date of the deed of consent will depend on the view taken, ex post facto, by the Court of the consistency of the powers sanctioned by the deed of consent with the intention of the truster. Where the Court is against the trustee on this point, he may still apply to it for the conditional indemnity granted by statute 1 against the interests in the trust estate of the. signatories to the deed of consent. The safe course in all doubtful cases is to apply to the Court under the judicial procedure. 2 Expediency, it is to be noticed, is held to be instructed by the deed of consent, and is not a statutory requirement here as in the judicial procedure. Second, all the beneficiaries in existence must be of full age aii existing bene- and capable of acting, and all must sign the deed of consent, ficiaries. Hence the minority, incapacity, 3 or dissent of any one beneficiary renders this procedure impossible. The statute does not define the word " beneficiaries," and in many cases uncertainty as to the limits of the class would be an obstacle in the way of pro- cedure by deed of consent. As the limited words " beneficiaries having a vested interest " 4 have been interpreted so as to include all beneficiaries having a primary interest, though contingent on survivance, 5 the words " existing beneficiaries " are, in the absence of judicial decision, only susceptible of speculative definition. How wide the definition may be is seen from the following dictum : — " An existing interest, whether it be vested or contingent, however future or remote, may, if it be a present interest, form the founda- tion of a right in the party representing it to interfere with a share of the estate being paid over by trustees." In the same dictum the limits of the definition are put at " an interest that has not arisen and that may never arise, but with regard to which there is a remote possibility that the event which has 208 THE EXECUTION OF THE TRUST [chap. v. not occurred, and upon which it is made to hang, may here- after occur. This is not an interest — it is not a right — it is nothing more than a bare expectation of a future right. The expectation of a future event that may give an interest is not a thing which would justify a Court of equity in entertaining a suit at the instance of a party having that and nothing more." 6 1 54 & 55 Vict. c. 44, s. 6. 2 Websters v. Miller, 1887, 14 R. 501. Vide trustees' answers to petition. 3 An alimentary liferenter can consent if his liferent interest in the estate is preserved and a petition for authority is "not necessary (Charlton,' 1901, 9 S. L. T. No. 111). In the case, however, of an insane beneficiary, power may be given to his curator bonis to grant consent on his behalf (Cowan, 1902, 5 F. 19). 4 30 & 31 Vict. c. 97, s. 7. 6 Pattison, 1870, 8 M. 575. Davis v. Angel, 1862, 4 De G. F. & J. 524, per Lord Westbury, C, at p. 529. Such a present right is created where a married woman, in the event of her dying without issue, takes an interest in the fee of estate in which she is liferented (Taylor, 1900, 81 L. T. 812, at p. 816, per Stirling, J. Part of the above opinion of Lord Westbury is quoted by Stirling, J., but it should be noted that the quotation is incorrect in \ising "expecting " for "representing "). Nature of 374. The powers to which the statute relates are such as are statutory powers. no t; either expressly or impliedly granted by the trust deed, 1 and which therefore could, apart from the statute, only be acquired by special Act of Parliament. 2 Ey the statute Parliament has delegated its enabling authority in this matter to the Court, within the limits laid down as to the preservation of the truster's intention and the expediency of granting the authority craved in the interests of the proper execution of that intention. 3 1 They cannot therefore be the subject of a judicial declarator of power, notwithstanding the dictum of L. P. Inglis that " the only novelty which the Trusts Act introduces is, that it enables trustees to come in a more summary way to the Court for power, without having recourse to the cumbrous form of a declaratory action" (Downie, 1879, fi R. 1013). 2 Hay, 1873, 11 M. 694, at p. 698. The distinction between powers neces- sarily implied, which are subject to declarator at common law, and those merely expedient and not inconsistent with the trust purposes which fall under the scope of the Trusts Acts, is illustrated by the analogous position in the Building Society cases dealing with necessary powers outwith the scope of the society rules and those falling to be tested by the scope of the rules. See Murray v. Scott, 1884, 9 App. Cas. 519, per Lord Selborne, C, at p. 537. Gf. Amalgamated Society v. Osborne, 1 910, A. C. 87, at p. 96. 3 Molleson v. Hope, 1888, 15 R. 665, per L. P. Inglis, at p. 668. Gf. as to power to borrow, Ker, 1855, 17 D. 565, per L. P. M'Neill, at p. 567 ; Lawson, 1864, 2 M. 1422, at p. 1426 ; Bomore, 1906, 1 Ch. 359, at p. 364. Limitations 375. In order to obtain the authority of the Court for the of judicial . procedure, exercise ot any of the powers dealt with in the statute, the trustee requires to satisfy it on two points regarding the power in question, Expediency viz. that it is, first, " expedient for the execution of the trust " and, not sum- ' ' dent. second, "not inconsistent with the intention of the trust." It ■chap. v.J THE EXECUTION OF THE TEUST 209 must be noted that the conditions are cumulative, not alternative. Expediency alone is not sufficient. However palpably expedient the authorisation of the exercise of a power may be, and however embarrassing the want of the power may be, the truster's intention must rule. 1 A pointed example of the requirement of the double •condition is seen in a case where the Court assumed that it would be expedient to grant a power of sale but refused to do so, as the truster had specially directed that the trustees should hold the estate till a certain date, as he considered the value of property would improve. 2 In interpreting the intentions of the truster, the relative im- considera- . nil- i tions as portance of the various considerations expressed by him must be viewed by trustor* •estimated by the truster's view of them, and not by the view of the Court. " I do not think we have any right to speculate as to what is or is not important. The question is, what the founders of the trust thought important . . . what are we constrained to infer would be their view of it if it were possible to consult them." 3 In practice the Court takes independent information as to the Remit by r r Court. facts for the purpose of judging of the expediency. This informa- tion is obtained by a judicial remit to a man of skill appointed by the Court ad hoc, with instructions to report on the facts set forth in the petition for powers. 4 Sometimes the Court is satisfied by the statement of the petitioner. 5 Where the power granted by the Court is limited by a condition that in the event renders it useless, as in the case of a power to sell at a price that cannot be realised, a second report may be ordered, and a larger power granted. 6 1 Vide Freen v. Beveridge, 1832, 10 S. 727, per Lord Gillies, at p. 733. Of. remarks of L. P. Inglis on " substantial justice " in "Wilson v. Scott, 1890, 18 R. 233, at p. 235, and those of Cotton, L.J., in Dewhurst, 1866, 33 Oh. D. 416, at p. 419. 2 Marshall, 1897, 24 R. 478. 3 Free Church v. Overtoun, 1904, A. C. 515, per Lord Halsbury, C, at pp. 613 and 617 ; 7 F. (H. L.) 1, at p. 5 and pp. 7, 8. Cf. Cozens-Hardy, M.R., in Weir, 1910, 2 Ch. 124, at p. 131 ; and Farwell, L.J., at p. 135, quoting Lord Romilly in Philpott v. St. George, 1859, 27 Beav. 107, at p. Ill; but see opinion of Judicial Committee as to how the interpretation by the Court of the truster's intention is affected by the inability of the beneficiaries to estimate the different views of his intention, in the curious case of Zack- lynski v. Polushie, 1908, A. C. 65, at p. 81. In this case the deed was one •of declarator of trust given by the trustees in the terms requested by the beneficiaries, but the beneficiaries' understanding of the intention of the trust deed was not allowed to influence the judgment of the Court as to the inten- tion expressed by the deed (pp. 78-80). Of. Lord Halsbury in Free Church, supra, at pp. 617, 618 of A. C, and p. 9 of 7 F. (H. L.). 4 Of. Soutter, s. 376. 5 Ross, 1901, 9 S. L. T. No. 106 ; and Grant, 1904, 12 S. L. T. No. 77, where no remit made. 6 Anderson, 1909, 1 S. L. T. No. 11. 14 210 THE EXECUTION" OF THE TEUST [chap. v. Fiar's 376. A question has been raised as to the interpretation of the is pre- word " expedient " where the interests of the fiar and the liferenter dominant. are opposed, and where what is expedient in the interests of the one is detrimental to those of the other. The " puzzle," as Lord President Inglis called it, to be solved was this : The immediate sale of certain lands would raise the income of the liferenter greatly, but there being a prospect of a better price being got if the sale were deferred, owing to the likelihood of an improve- ment in the market for land, this immediate sale would, in a corresponding degree, injure the interests of the fiar. What was, in these circumstances, " expedient for the execution of the trust " ? The Court, going on the ground that, as expressed by- Lord Adam, " the substantial and permanent interest is with the fiar, and that the interest of the liferenter is subsidiary," solved the " puzzle " in favour of the fiar, refusing the power of sale, holding that where a sale would lead to the detriment of the fiar's interest, it is not " expedient for the execution of the trust,"' however beneficial to the liferenter. 1 1 Molleson v. Hope, 1888, 15 R. 665, at p. 669. Of. Muir, 1887, 15 R. 170 y see sequel in Muir, 1899, 31 S. L. R. 257; Birkmyre, 1881, 8 R. 477. A curious question of expediency in an application for power to borrow arose in the case of Soutter, 1897, 4 S. L. T. 328. Of. also views of English Court of Appeal as to what is for the " benefit " of the applicant in Pallard, 1896, 2 Ch. 552, and also considerations discussed in Blundell, 1901, 2 Ch. 221, as. affecting the "benefit" of a contingent fiar, who was also liferentrix, under restraint from anticipation in England, where a larger income was expected from the change for which power was craved. inconsistent 377. In considering what is " not inconsistent with the inten- "with inten- . tion. tion of the trust, we find that the Court have paid regard on this point rather to the leading intention of the trust deed 1 than to its expression of special purposes. Lord President Inglis inter- preted the clause in these words : — " The true meaning is that the authority sought shall not be inconsistent with the main design and object of the trust." 2 And in a later case his Lordship said : — " Kb doubt a sale of this property is inconsistent with the pro- visions of the trust deed, but then the perpetual retention of th& trust subjects was not the main purpose of the truster." 3 Thus- where the power craved was inconsistent not only with the ex- pressed provisions of the deed, but also with the leading purpose- of the trust, authority was refused. 4 The Court will not alter the- terms of the trust deed merely because it thinks the alterations would, in its opinion, be beneficial to the persons favoured under the deed. It will, however, interpret the trust deed so as to bring to these persons such benefits as appear to have been the " para- chap, v.] THE EXECUTION OE THE TRUST 211 mount intention " of the truster, and accordingly will hold that the trustees have or should be granted the powers necessary to the execution of that paramount intention as not being inconsistent with the intention of the trust. 5 1 Thecanon of interpretation is the same in cases of this class whether the writing be a deed or a will (Bbbern v. Fowler, 1909, 1 Ch. 578, per Cozens- Hardy, M.R., at p. 585). 2 Weir, 1877, 4 R. 876, a case held to be " an authoritative judgment " in, and to rule, the case of Downie, 1879, 6 R. 1013 ; Hiddleston, 1906, 13 S. L. T. No. 322, where power to sell on ground of expected depreciation was refused, as depreciation was in the mind of the truster, and was provided for by him in the trust deed. See Richardson, 1898, 6 S. L. T. No. 313, where that consideration was absent and power granted ; Knox, 1899, 7 S. L. T. No. 97. 3 Downie, supra, cited by Lord Eraser (Ordinary) in Cameron v. Hunt, 1881, 18 S. L. R. 585, at p. 587. Cf. Johnston v. Canongate, 1804, Mor. 15112. 4 Hay, 1873, 11 M. 694. Cf. Birkmyre, 1881, 8 R. 477, where power held not to be inconsistent, and Anderson, 1876, 3 R. 639, where power held to be inconsistent ; Old Meldrum, 1908, 15 S. L. T. No. 346 — power granted con- trary to express directions in deed ; Marshall, 1897, 24 R. 478 — power refused as inconsistent with express directions ; but see Lord M'Laren, at p. 481, as to "main purpose" in Weir, supra ; Moubray, 1904, 11 S. L. T. No. 436 — power of sale granted, as in circumstances sale practically unavoidable — see also Reporter's review of the cases dealing with the question ; Piatt, 1897, 4 S. L. T. 348, and see case of Sutherland, 1892, 29 S. L. R. 903, therein referred to. 6 Walker, 1901, 1 Ch. 879, per Farwell, J., at p. 885. 378. That powers shall be consistent with the intention of consistency -,..[.,. t "with inten- the truster is the governing condition of their exercise under ti°n is ° ° governing the authority of the Trusts Acts. Insistence upon the con- condition. dition is necessitated by the fact that " the pretext has always been that if the testator had known that which had subse- quently come to pass, and which the Court had been made to know, he would presumably have made his will differently, and in the way in which it is proposed the Court should make it for him." 1 How stringently this condition is enforced by the Trusts Acts may be seen in the expression of the 19th section of the Trusts Act, 1867. 2 1 Thomson v. Miller, 1883, 11 R. 401, per Lord Craighill, at p. 405. Cf. position of Court at common law, Mundell, 1862, 24 D. 327, per Lord Cowan, at p. 329 ; see cases of Free Church and of Zacklynski in s. 375. 2 30 & 31 Vict. c. 97, s. 19. (/8) Particular Statutory Powers 379. The nature of Tthe particular powers dealt with by the Acts, and the manner in which it is the trustee's duty to exer- cise these, 1 whether derived from statute or the trust deed, now fall to be dealt with. 2 The powers authorised under the Acts are not general powers, to be exercised at any time or in connec- tion with any part of the trust estate. The authority granted is 212 THE EXECUTION OF THE TKUST [chap. v. Lapse of statutory powers. to exercise a particular power for a particular and specified pur- pose. The statutory powers are subject to the general rule that powers lapse when all the purposes for which they were granted cease to exist. Further, a power given by the truster to enable the trustees to execute some purpose of the trust must be exer- cised within a reasonable time of the purpose becoming attainable ; 3 thereafter the power lapses. 4 This applies to the particular authority granted under the Acts, which will cease if the power is not exercised within a reasonable time. The Court will not " approve, ratify, and confirm " an act that has been done by the trustees, even though it is such as would, in the opinion of the Court, have been " authorised," had application in advance been made. 5 1 Highly technical rales, affecting the exercise of beneficial powers of appointment, have been elaborated by a long series of decisions in England. As these rules deal with an analogous situation, they seem, at first sight, of use in illustration of the conditions of the exercise of the fiduciary powers over the trust estate attached to the office of trustee. The analogy, however, is a treacherous one, owing to the radical difference in the principles under- lying the rules applicable to either class of powers. This difference is pointedly brought home by a study of the rules affecting the exercise of beneficial powers summarised by the judges in the case of Evered, 1910, 2 Ch. 147, particularly by the rule that holds a beneficial donee of a power of appointment to have barred himself from exercising a power by an under- taking in advance not to exercise it, while he is not barred by a premature exercise of the power. Neither the negative undertaking nor the premature exercise of a power by a trustee would bind the trust estate. 2 Trustees who hold land in Ireland have their powers in certain matters regulated by the Irish Land Acts. In particular, where money is advanced to trustees for purchase under the Acts, the powers of the trustees are settled by a scheme under sanction of the Lord-Lieutenant (3 Edw. vn. c. 37, ss. 34 and 20). For powers under Agricultural Holdings Act, 1908, cf. s. 422. 3 Such as the exercise of a power of sale after the death of a liferenter. This may be done though the fee has vested absolutely, or is, in English law language, "at home" (Dyson and Fowke, 1896, 2 Ch. 720, following Sudeley and Baines, 1894, 1 Ch. 334 ; Cotton, 1882, 19 Ch. D. 624 ; and Peters, infra). 4 Peters v. Lewes, 1881, 18 Ch. D. 429 ; Kaye, 1909, 53 Sol. J. 520 ; Ear well on Powers (2nd ed.), p. 32. 6 Clyne, 1894, 21 R. 849 ; Ross, 1895, 3 S. L. T. No. 306. Relates to heritage only. Action of division. (a) Power to Sell 880. There is power to sell 1 the trust estate or any part of it. 2 The power relates to the heritable property only. Authority to sell is not required in reference to movable estate, its sale being a mere matter of trust management. 3 This distinction arises from the consideration that the sale of heritage involves its conversion into movable property, which might, in certain cir- cumstances, alter the succession to the estate, while no such result follows the sale of movable property. 4 A trustee who has no power of sale can sue an action of division and sale of a commonty in which the trust is interested, on the ground that it is an application to the discretion of the Court for chap, v.] THE EXECUTION OF THE TRUST 213 a judicial sale and division of the proceeds, and falls to be regarded as an act of ordinary administration. 5 1 Special powers of sale are given to trustees of Savings Banks (4 Edw. vn. c. 8, s. 4) ; and to Friendly Society trustees (59 & 60 Vict. c. 25, s. 47). 2 30 & 31 Vict. c. 97, s. 3 (1). See Pope, 1911, 2 Oh. 442. 3 Brownlie, 1879, 6 R. 1233, per Lord Shand, at p. 1241. The power to sell movables does not exist where there is a direction in the trust deed in- consistent with the exercise of that power in any particular case or in connection with any particular part of the estate (Galloway v. Campbell, 1905, 7 F. 931). In the case of marketable securities this power is technically known as a power to vary investments (Buchanan v. Glasgow, 1909, S. C. 47, per Lord Johnston (Ordinary), at p. 52). 4 Cf. s. 806. 6 Craig v. Fleming, 1863, 1 M. 612. 381. There is granted by statute to trustees, irrespective of the compulsory conditions of their trust, a general power of sale outside the Trusts Acts, authorising trustees to sell to the promoters of an under- taking sanctioned by Act of Parliament ; x but the sale, where it takes place solely in virtue of the powers under the Act, there being no power of sale in the trustees otherwise, is subject to certain conditions as to valuation. 2 1 8 Vict. c. 19, s. 7. Vide 27 & 28 Vict. c. 121, s. 3 (2), as to special con- dition in the case of a railway. 2 8 Vict. c. 19, s. 9. Cf. Provision of Irish Land Purchase Act, 1891, 54 & 55 Vict. c. 48, s. 14. 382. The trustee's power to sell is a vital question for the Position of L purchaser. purchaser. 1 He should certify himself that the trustee has express power to sell, that he has received a declarator of his implied power, or that he has the authority of the Court to sell. 2 As between seller and purchaser the latter is not bound to inquire why the trustees are selling the estate. It is sufficient for him to know that the trustees have a power of sale and have decided to exercise it. 3 "Where a trustee who has been removed is negli- gently allowed to retain documents of title that should only be in the hands of a trustee, a purchaser who had entered upon a con- tract with the said trustee before his removal from office makes a good and valid purchase in completing the contract by accepting in bond fide from the said trustee, after his removal, such documents. 4 A trustee in realising an unauthorised investment in land made by unauthor- ° # ised mvest- him, which the beneficiaries repudiate, can give a good title to the ment. land to a purchaser from him. 5 To prove repudiation the consent to the sale of one of more beneficiaries should be taken. This is sufficient, as if one objected to take his share in land and required it to be resold in order to replace his share of the trust fund, it must be sold. 6 For the same reason the trustee can give a good 214 THE EXECUTION OF THE TBUST [chap. V. title without any consent where any one of the beneficiaries is incapax and cannot elect to take the land. 7 1 Airdrie v. Smith, etc., 1850, 12 D. 1222 ; Mitchell v. Major, 1856, 19 D. 30. 2 For remedy after sale, vide s. 334. 3 Dyson, 1896, 2 Ch. 720, per Kekewich, J., at p. 726. The relationship of the trustee towards the beneficiary in exercising a power of sale is different from this (see s. 550). 4 Mitchell, supra. 5 Power v. Banks, 1901, 2 Ch. 487, at p. 496. 8 Patten, 1883, 52 L. J. Ch. 787. 7 Jenkins, 1903, 2 Ch. 362. Excepted 383. Where a truster granted to trustees a power of sale lands. . „ . over his heritable estate, with the exception of certain lands, it was held that this exception implied a prohibition 1 against sell- ing the excepted lands, and a petition for authority to sell them was refused. 2 In a later case, however, it was held that, where it was essential for the protection of minor beneficiaries, and " necessary for the explication of the trust estate " and its preservation against the diligence of creditors, 3 the power to sell such excepted lands should be granted. 4 1 The general rule for interpreting the meaning of an exception has been thus stated by Lord Esher, M.R. : — "Where the Court is asked to imply a condition, if it finds in the document that the same state of things is dealt with as to other matters, leaving out the one which it is desired to imply, it will presume that the intention is that it is left out purposely" (Mills v. Carson, 1892, 9 T. L. R. 80). 2 Whyte, 1891, 18 R. 376. 3 Cf. s. 344. 4 Gunn, 1892, 29 S. L. R. 903, distinguishing Whyte, supra. cnaritabie 384 In charitable trusts, where an estate is conveyed to trustees in perpetuity for charitable purposes, it is not incon- sistent with the intention of the trust to authorise an alienation by sale or feu, 1 for " it may happen that the purposes of the charity may be best sustained and promoted by alienating the specific property." 2 The express prohibition of the truster, as where land was conveyed to trustees "never to be sold, but to remain as mortified land forever," of course, renders a sale inconsistent with the intention of the trust. 3 1 Ballantine v. Merchant Company (sale authorised), 1870, 7 S. L. R. 352, per Lord Ormidale (Ordinary), at pp. 357, 358, citing Merchant Company v. Heriot's Hospital (feu authorised), 1765, Mor. 5750 ; vide argument, p. 5753. In Petrie v. Ramsay, etc., 1868, 7 M. 64, this case is referred to as a doubtful authority by L. J.-C. Patton, but it was afterwards cited in Elgin v. Morrison, 1882, 10 R. 342, as a leading authority. Moore v. Wilson (sale), 25th June 1814, 17 F. Dec. 663 ; Aberdeen v. Cooper (sale), 1860, 22 D. 1053. 2 Att.-Gen. v. South Sea, 1841, 4 Beav. 453, per Lord Langdale, M.R., at p. 458, cited in Ballantine, supra. Cf. implied power in Simpson v. Moffat, 1892, 19 R. 389. ' 3 Craigcrook v. Sawers, 19th June 1794, Bell's (folio) Gases, p. 49. Cf. s. 410. chap. v.J THE EXECUTION OE THE TEUST 215 385. Lord "Watson, with the concurrence of Lords Her3chell conduct and Fitzgerald, has thus summed up the duty of a trustee in exer- cising a power of sale : — " All that the law requires from a trustee who has power to sell or borrow is, that he shall follow the dictates of ordinary prudence in adopting the one course or the other, and the question whether he did or did not act prudently is one of fact, which must be solved according to the circumstances of each case." 1 "With greater particularity, Leach, V.-C, says : — " Every trust deed for sale is upon the implied condition that the trustees will use all reasonable diligence to obtain the best price; and that, in the execution of their trust, they will pay equal and fair attention to the interests of all persons concerned." They do not do so " if they contract under circumstances of haste and improvidence, if they make the sale with a view to advance the particular purposes of one party interested in the execution of the trust at the expense of another party." 2 1 Binnie, 1889, 16 R. (H. L.) 23, at p. 26. Cf. s. 414. 2 Ord v. Noel, 1820, 5 Madd. 438, at p. 440. Cf. Downes v. Grazebrook, 1817, 3 Mer. 200, per Lord Eldon, 0., at p. 208 ; Oliver v. Court, 1820, 8 Pr. 127, at p. 165 ; Ogilvie v. Hamilton, 1833, 12 S. 189. 386. Trustees should, in safety, have a valuation of the property valuation, made with a view to ascertaining its value for sale, and it should not be sold under the price thus fixed, 1 unless that is absolutely necessary. 2 This reserve figure should be made the upset price in Upset price. a sale by roup, and the importance of having this figure properly fixed arises from the fact that the bidder of such upset price will, in the absence of competition, be declared the purchaser, and be entitled to have the property conveyed to him. Where there is no offer at the auction, it is competent to sell by private bargain afterwards at the upset price. 3 "Where the property is, within the knowledge of the purchaser, sold at a grossly inadequate price, the sale is a breach of trust of which the purchaser has notice, and in saiem advance. England, at least, he " takes the estate subject to the trust for the persons beneficially interested." i A power of sale must be exer- cised in view of the conditions existing at the time of the sale, and the trustees cannot fix in advance a price at which they will sell at a later date, by which time the circumstances may have ■changed. 6 A trustee cannot bind the estate by an agreement to Arbitration, sell at a price to be fixed by arbitration, as this is an improper delegation of his discretion as to the price. 6 1 Peyton, 1861, 30 Beav. 252 ; Peters v. Lewes, 1881, 18 Ch. D. 429, per Jessel, M.K., at p. 437. 216 THE EXECUTION OF THE TRUST [chap. v. 2 Campbell v. Walker, 1800, 5 Ves. 677, per Arden, M.R., at p. 680 ; 5 R. R. 135, at p. 138. Cf. Noble v. Edwardes, 1877, 5 Ch. D. 378, at p. 389. 3 Bousfield v. Hodges, 1863, 33 Beav. 90. 4 Stevens v. Austen, 1861, 7 Jur. N. S. 873. Cf. s. 1274. 6 Vide cases of Clay, and of Oceanic, in s. 302. Of. Ecclesiastical Commis- sioners in s. 633 for converse case of purchase. Wilton, 1907, 1 Ch. 50, at p. 55 ; Peters, supra. Advertise- 387. The trustees should see that the sale is properly adver- tised, and takes place where and when there is likely to be a good attendance of bidders. 1 The statutory requirements for the exer- cise of a power of sale by a creditor in a bond and disposition in security may, considering the purpose of their enactment, fitly serve as a guide to the private trustee in this matter, though he is not bound to any such set regulations. These requirements are generally that the sale shall be by public roup at Edinburgh or Glasgow, or at the head burgh of the county within which the said lands are situated, on previous advertisement, stating the time and place of sale, and published once weekly for at least six weeks in any news- paper published in Edinburgh or in Glasgow, and in every case in a newspaper published in the county in which such lands are Notice to situated. 2 It is also advisable, if not technically necessary, to give beneficiaries. notice to the beneficiaries of the arrangements made for the sale that they may have an opportunity of taking any means they see fit to employ for securing an advantageous sale. 3 1 Vide generally, Ord v. Noel, 1820, 5 Madd. 438, and Edge v. Kavanagh, 1888, 24 L. R. Ir. 1. 2 32 & 33 Vict. c. 116, s. 7. 3 Anon, 1821, 6 Madd. 10. conditions 388. " The power of sale must be considered to include all such acts as are usual and requisite for accomplishing the purpose of Public or the power," * and " may be exercised either by public roup or private private. bargain, unless otherwise directed in the trust deed or in the authority given by the Court, or in the deed of consent to be granted by the beneficiaries ; and when the estate is heritable it Reserva- shall be lawful in such sales to sell, subject to or under reservation of a feu-duty or ground annual, at such rate and on such conditions as may be agreed upon ; and in all sales and feus it shall be lawful to reserve the mines and minerals if so wished." 2 Where the trustee is duly advised that it would be more beneficial to the Lots. estate to sell by lots than en bloc, he should so sell the property. 3 The conditions affecting the sale of any number of lots less than the whole should be so drawn as to be most convenient for the trust estate generally, and so as to involve it in as little responsibility as possible consistent with a favourable sale. 4 chap, v.] THE EXECUTION" OF THE TRUST 217 1 Peyton, 1861, 30 Beav. 252, per Eomilly, M.R., at p. 255. 2 30 & 31 Vict. c. 97, s. 4. 3 Ord v. Noel, 1820, 5 Madd. 438, at p. 441. Cf. English statutory power, 56 & 57 Vict. c. 53, s. 13. 4 Judd, 1906, 1 Ch. 684, per Romer, L.J., at p. 689. 389. The proper time for exercising a power of sale is wholly Time for dependent on the particular directions of the truster and the cir- ' cumstances of the estate. In a case where the trustees were vested with a power of sale, " at such time or times as they shall think most advantageous for the interest of the subjects," and directed to pay certain legacies, "as soon as may be convenient after my decease," but not till the power of sale had been exercised, it was held that three years from the first term after the death of the truster was " a reasonable period within which the lands should have been disposed of." 1 "Where an official trustee having a number of estates vested in him adopts a general rule as to the time and manner of their sale, the adoption of such a rule is not in itself an exercise of his discretion with regard to the time and manner of sale of a particular estate, but the fact that he knows that the rule is being carried out in regard to that particular estate and does not interfere with that course is an exercise of his discretion. 2 An arrangement binding the trustees in the use to be made by them of certain shares forming part of the trust estate while they are retained, but not affecting the right of the trustees to dispose of them at any time according to their discretion, is not ultra vires where the arrangement is for the benefit of the estate. 3 1 Ogilvie v. Hamilton, 1833, 12 S. 189. As to exercising power of sale after property absolutely vested in beneficiaries sui juris, vide Cotton, 1882, 19 Ch. D. 624. 2 Carr v. Anderson, 1903, 2 Ch. 279 — an unusual situation arising out of a claim of accounting by a discharged convict against the official administrator of his estate during his detention. See Forfeiture Act, 1870, 33 & 34 Vict. c. 23. 3 Greenwell v. Porter, 1902, 1 Ch. 530,'at p. 535. 390. In offering property for sale the trustees should be care- Deprecia- ful not to suggest any difficulty in the title that does not exist, tions. Speaking of a condition of sale of this nature, Bowen, L.J., says : — "It appears to me to be full of warnings and cautions, which although in some special cases it may be proper to insert them, yet amounted in the present instance to a suggestion of traps and pitfalls where none really existed," and as a test his Lordship asks — " Would a prudent vendor who wished to sell at a fair price insert such a condition in such a case as this ? " 1 "I have always," says 218 THE EXECUTION OF THE TKUST [chap. v. James, L.J., "understood it to be the law, consistently with authority and principle, that, however large may be the power of trustees under their trust deed to introduce conditions limiting the title, and other special conditions which have, or are calculated to have, a depreciatory effect on the sale, they are bound to exercise them in a reasonable and proper manner — that they must not rashly or improvidently introduce a depreciatory condition of which there is no necessity." 2 Thus where an objection might be taken to the progress of titles on the ground that one step consisted of a dis- position by a trustee to himself, 3 the objection is avoided by the production of a deed of ratification and discharge granted by the beneficiaries in the trust subsequent to the date of the disposition, 4 and in such a case no depreciatory condition should on that ground be introduced into the articles of roup. 1 Dunn v. Flood, 1885, 28 Ch. D. 586, at p. 593. The case of Dunn was decided after and expressly in view of the very large discretionary powers given to trustees by the Conveyancing Act of 1881 (44 & 45 Vict. c. 41, s. 35) for exercising powers of sale. The English Trustee Act, 1893 (56 & 57 Vict, c. 53, s. 14), has since limited the liability of the trustee to cases where it shall " appear that the consideration for the sale was rendered inadequate " by the unnecessarily depreciatory conditions of sale. 2 Dance v. Goldingham, 1873, 8 Ch. App. 902, at pp. 909, 910. 3 Of. s. 454. 4 Howard v. Richmond, 1890, 17 It. 990. Articles 391. The articles of roup in the case of a public sale of trust property should not contain a stipulation that the purchaser should satisfy himself previous to the roup as to the validity and sufficiency of the title offered, unless the trustee has himself reason to doubt the title. In any case the introduction of such a stipulation should be limited to the case where the trustee has no funds, other than the price of the estate sold, to undertake litigation regarding the title. 1 In acting otherwise the trustee would, by suggesting diffi- culty in the title, incur the responsibility of having unnecessarily introduced depreciatory conditions into the sale. 1 For such a clause and its effect, vide Young v. Grierson, 1849, 11 D. 1482. Warrandice. 392. The nature of the warrandice to be granted by trustees in a disposition of heritable property has long been settled. It has been found by the Court that the purchaser " is entitled to have a clause of warrandice inserted in the disposition, directly binding the truster, his heirs and successors, in absolute war- randice, without reference to former trusts, and the trustees in warrandice from fact and deed." x The clause by which such warrandice is expressed is this: — "And we, as trustees foresaid, chap, v.] THE EXECUTION OF THE TKUST 219 warrant these presents from our own facts and deeds only, and bind and oblige the trust estate under our charge, and the parties beneficially interested therein, in absolute warrandice." 2 1 Forbes v. M'Intosh, 1822, 1 S. 462, 497, and 535. Gf. s. 395 ; English practice, Onslow v. Londesborough, 1852, 10 Hare 67, per Turner, V.-C, at p. 74. 2 Jur. Styles, 5th ed., vol. i. p. 32. Cf. 6th ed., vol. i. p. 72. 393. A trustee granted warrandice expressly from fact and warrandice deed only, but the articles of roup bound him to exhibit to liability. the purchaser a valid and sufficient progress of writs to the extent of a prescriptive title. It was afterwards discovered that part of the property so sold belonged to another pro- prietor. The Court held that "the special clause which expressly deals with the matter of warrandice must prevail, and must rule," and that the trustee was not liable in damages. 1 1 Bald v. Scott, 1847, 10 D. 289, per L. J.-C. Hope, at p. 305. 394. Where a trustee infeft in certain subjects had con- Extent of fact and sented to certain bonds being granted over them by his author, deed. he was held liable, under a subsequent bond granted by him as trustee, apart from any question as to the extent of the warrandice, 1 for loss sustained by the last bondholder from the existence of the prior bonds, which were held to be the fact and deed of the trustee. 2 1 Gf. s. 395. 2 Horsburgh v. "Welch, 1886, 14 R. 67. 395. It is not sufficient for the trustee to limit the words of warrandice . .. "as trustee." absolute warrandice, " I grant warrandice, ' by inserting the quali- fication " as trustee." Lord President Inglis expressed strong doubts whether the trustee would escape personal liability under such a qualification, and Lord Shand said : — " If the clause of war- randice in the present case had been expressly qualified by the words, 'and I, as trustee foresaid, grant warrandice,' I am not satisfied that it would necessarily have followed that there was no absolute warrandice on the part of the trustee." x 1 Horsburgh's Trs., s. 394, at p. 70. A simple clause of warrandice — " I grant warrandice " — is held to imply absolute warrandice (31 & 32 Vict, c. 101, s. 8). As to effect of lease granted as trustee upon use by the trustee as individual of his own property, vide Hill v. Kinloeh, 1856, 18 D. 722, per Lord Benholme (Ordinary), and s. 1262. 396. Considerable practical importance attaches to the eon- Power to x x join with sideration whether trustees, where they have a power of sale, can o^ers in join with other proprietors in selling their properties and the 220 THE EXECUTION OF THE TEUST [chap. v. trust property together, such other proprietors being either the beneficial owners of their properties or trustees for sale. The matter is exhaustively dealt with in the following opinion of Jessel, M.K. 1 1 Cooper, etc., s. 404. 397. " First of all, on principle, what is the duty of trustees for sale ? It is their duty to sell the estate to the best advantage they can, that is, in the manner most beneficial to the cestuis que trust. If, therefore, the sale of the property can be effected at a higher price by joining with somebody else, so far from that being a breach of that principle, they are only carrying out their trusts and performing their duty in so obtaining that higher price. It is very astonishing to me to find any judge could otherwise decide." 1 1 Cooper, etc., s. 404, at p. 815. Apportion- 398. " Secondly, it is their duty to receive the purchase- piSchase- money. If, therefore, they do join with any other person, whether that other person be a trustee himself or be a beneficial owner, they must take care that their share of the purchase- money is paid to them. Therefore, when they do join with other people, the purchase-money must be so apportioned before the completion of the purchase, and must be paid by the purchaser, the apportioned part coming to the trustees being paid to them." 1 1 Cooper, etc., s. 404, at p. 815. 399. " Who is to decide upon the apportionment ? As a general rule, the trustees are the persons to decide, under proper advice, in a proper and reasonable manner, as to the share of the purchase-money which is to be paid to them. The purchaser, having no notice of their acting otherwise than in that fair and reasonable manner, cannot be prejudiced by the fact of somebody else being of opinion that they ought to have a larger share." x 1 Cooper, etc., s. 404, at p. 816. Titles of 400. " If we find that the titles to the properties are the same, properties, so that there can be no questions of conditions affecting one property not the subject of the trust being prejudicial to the property which is the subject of the trust, or if the prejudicial conditions affect the title to the property which is not the subject of the trust, and do not affect the title to the other property which is the subject of the chap, v.] THE EXECUTION OF THE TRUST 221 trust, so that the insertion of them does not damage the trust property, there can be no objection to the trustees joining with ■other persons." 1 1 Cooper, etc., s. 404, at p. 816. 401. " We might distinguish two cases. First of all, there are those cases in which evidence is required that there will be a higher price obtainable by a joint sale ; and, secondly, those cases where no evidence is required that there will be a higher price obtainable, but evidence might be adduced the other way to show that there would not be." x 1 Cooper, etc., s. 404, at p. 816. 402. " The first class of cases applies to those instances in where presumption which there are two properties sold together, as, for instance, against joint two sets of houses, or two sets of lands, or a house and land, where one house belongs to the trust and the other house does not, or where one piece of land belongs to the trust and the ■other piece of land does not. In those cases, as a general rule, it is the duty of trustees to sell their own property alone, and not mix it up with that of other people. You must have evidence that the joint sale is more beneficial. It is very easy to ascertain that. Suppose there were a house belonging to trustees, and a garden and forecourt belonging to somebody else ; it must be obvious that those two properties would fetch more if sold together than if sold separately. You might have a divided portion of a house belonging to trustees and another divided portion belonging to somebody else. It would be equally obvious, if those two portions were sold together, that a more beneficial result would thereby take place. Or you might have a piece •of land in the centre of a park or pleasure-ground, or a piece in the centre of a courtyard, which would be worth little or nothing if sold separately. But in those cases where it is not manifest on a mere inspection of the properties that it is more beneficial to sell them together, then you ought to have reason- able evidence to satisfy the purchaser that it is a prudent and - right thing to do, and that evidence, as we know by experience, is obtained from surveyors and other persons who are competent judges. If they have given proper advice to trustees before the sale, and the trustees have acted upon it, that will also satisfy the purchaser ; but in those cases, as a general rule, the purchaser should see that there is evidence that the combination of the 222 THE EXECUTION OF THE TEUST [chap. v. property in one lot, for the purpose of sale, is beneficial to the cestuis que trust." 1 1 Cooper, etc., s. 404, at p. 817. where 403. " In the second class of cases you require no such presumption in favour of evidence. The common experience of mankind tells you that. .loint sale. r J They are mostly cases where the trustees are the owners of an undivided share, and other persons, either trustees or not, are the owners of the other undivided share, so that the two sets of people together can sell the entirety. In those cases we do not want any special evidence, because everybody knows that the entirety of a freehold estate fetches more, as a general rule (of course there are exceptions to every rule), than the sum total of the price of the undivided shares. In that case, again, we want no apportionment, because the money apportions itself. Another case is where the trustees are the trustees of the reversion, and the owners of the lease, or the owners of the life interest, or some other limited interest, will join them in selling the fee-simple in possession. There, again, we want no special evidence. Everybody knows that the fee-simple in possession will fetch more than the value of the reversion, plus the value of the limited interest, and there- fore, as a general rule, it is a prudent and wise thing for the trustees to join in the sale." 1 1 Cooper, etc., s. 404, at p. 817. Depreeia- 404. " In all the cases you must see that there are not tory con- dition. conditions of sale applicable to other property not subject to the trusts, which damage the value of the trust property for the purpose of sale." 1 1 Cooper, 1876, 4 Ch. D. 802, at p. 818. In a subsequent part of the same opinion his Lordship reviews and discusses the following English authorities, to the effect that they all support the doctrine laid down on principle by him : Eede v. Oakes, 1864, 4 De G. J. & S. 505 ; vide remarks of Turner, L.J., at p. 513 ; Cavendish, 1875, 10 Ch. App. 319 ; Morris v. Debenham, 1876, 2 Ch. D. 540. Purchase. 405. The trustee should, in safety, see that the full purchase- money, money is paid before the purchaser obtains possession. 1 "It is not to be tolerated," says Lord St. Leonards, C, " that a trustee . . . shall endanger his trust by executing a conveyance, deliver- ing it to the purchaser, giving that purchaser possession of the property, and allowing him to retain it without paying a single shilling of the price." 2 chap, v.] THE EXECUTION OF THE TRUST 223 1 Oliver v. Court, 1820, 8 Price 127, at p. 166. Cf. Browell v. Reed, 1842, 1 Hare 434. 2 Thomson v. Christie, 1852, 1 Macq. 236, at p. 241. Of. Lees v. Dun, 1912, S. C. 50, per Lord Salvesen, at p. 63. 406. Where a property is sold under the usual condition that Ke-seiimg. if the buyer does not pay the price within a given time, it shall be lawful to re-sell the property, a trustee is not bound to re-sell if he takes " other proper steps to carry out the purchase." * 1 Thomson v. Christie, 1852, 1 Macq. 236, per Lord St. Leonards, C, at p. 240. 407. Heritable subjects had become unfit for carrying out the Purchase- money purpose of the truster, and authority to sell them was granted consigned. on a petition under the statute. Authority was craved, inter alia, to apply the price in the acquisition of property more suitable to the trust. The Court required that the price of the unfit subjects, when sold, should remain subject to the control of the Court till reinvested, and that the titles to the new subjects to be acquired should be framed at the sight of the Court. 1 1 Downie, 1879, 6 E. 1013, at p. 1015. (b) Power to Excamb 408. The power to excamb x is noticed here as being in its Limits of excam ^ on - nature similar to that of sale, and many of the considerations just dealt with as affecting the latter may also be applied to the former. It must be noted, however, that " while power to sell may be a wider power than power to excamb, sale • is not the same thing as excambion. Excambion is a peculiar transaction, and is attended with some consequences which do not accompany an out-and-out sale." Such are, for instance, the mutual rights of real warrandice attaching to excambed lands. 2 The power to excamb " would probably be construed so as to be restricted to the ordinary case of excambion, and so as not to extend to an unreasonably large part of the estate." 3 In an application to the Court by petition under the statute, authority to excamb a certain specified part of the estate should, of course, be craved. Special powers of excambion are given to trustees of Saving Banks. 4 1 30 & 31 Vict. c. 97, s. 3 (4). 2 Bruce v. Stewart, 1900, 2 F. 948, per Lord Moncreiff, at p. 953. Here two bodies of trustees, each having a power of sale and one having a power to purchase heritage, but neither having express power to excamb, entered into and carried through a contract of excambion. A purchaser from the body of trustees who had the power to purchase heritage, objected to the- 224 THE EXECUTION OF THE TEUST [chap. v. Power to feu of •charitable trustees. title on the technical ground that the sellers had no title to the part of the estate resulting from the excambion. The Court supported the objection. 3 Rankine on Land-Ownership (3rd ed.), p. 613, dealing with entails. 4 4 Edw. vn. c. 8, s. 4, and to Friendly Society trustees (59 & 60 Vict, c. 25, s. 47). (c) Power to Feu 409. There is power to feu, 1 and it is to be noticed that " in all feus it shall be lawful to reserve the mines and minerals, if so wished." 2 Where a truster prohibited his trustees from selling or disposing of the estate, or granting a lease of more than seven years, it was held to be inconsistent with the intention of the truster to feu the estate. 3 Where the trust estate had been partly feued by the truster, authority was granted to the trustees to continue feuing, such a course being for the interest of the trust. 4 Ground vacant and yielding no return is a typical situation where it would be expedient to grant a power to feu at stated rates. 5 1 30 & 31 Vict. c. 97, s. iii. (2). 2 30 & 31 Vict, c. 97, s. iv. 3 Anderson, 1876, 3 R. 639, per L. P. Inglis. 1 Pettigrew, 1890, 28 S. L. R. 14, per Lord Kincairney (Ordinary). 5 See Pottie, 1902, 4 F. 876, end of Report on remit, at p. 877. 410. Charitable trustees are held to have a power at common law to feu as an act of trust administration, and a petition under the Trusts Acts for authority to exercise the power was refused as unnecessary. 1 The power is held to be inherent even where there is a prohibition against selling or alienating. 2 1 Elgin v. Morrison, 1882, 10 R. 342, following Merchant Company v. Heriot, 1765, Mor. 5750. 2 Jamieson, 1884, 21 S. L. R. 541, per Lord Kinnear (Ordinary), following cases of Elgin and of Merchant Company, supra; but vide Craigcrook v. Sawers, 1794, Bell's Folio Cases, 49, where the contrary was decided. This last case, however, has been doubted by Lord M'Laren (2nd ed.), s. 2115, and is not noticed by Lord Kinnear. Gf. s. 384. Nature of long lease. (d) Power to grant Long Leases 411. There is power to grant long leases of the heritable estate or any part of it. 1 The question is undecided whether a long lease in the sense of the statute includes any lease of a duration of more than twenty-one years for agricultural lands, and more than thirty-one years for minerals, such terms being the temporal limits assigned by statute to the trustee's ordinary power of letting these subjects. 2 The only definition of a long lease is that given in the Eegistration of Leases Act, 1857, 3 and that is a lease of at least thirty-one years for lands and heritages chap, v.] THE EXECUTION OF THE TRUST 225 generally. It must be kept in view that the power is granted by a statutory provision immediately associated in context with the power to feu. This might support the view that what is covered by the statutory power is a lease of not less duration than that specified by the Eegistration of Leases Act. This position, how- ever, creates a hiatus in the statutory power to let, under the Trusts Acts, between the superior limits of ordinary leasing and the inferior limits of granting long leases. An application to the Court is required for authority to grant a long lease, and until such application is made for power to grant a lease of a duration less than that defined by the Eegistration of Leases Act, the scope of the statutory power will remain undefined. 4 If the power to grant such a lease were held to be expedient and not inconsistent with the intention of the truster, there seems no good reason why the Court should not grant it. Special powers of leasing are given to trustees of Saving Banks. 5 1 30 & 31 Vict. c. 97, s. 3 (2). 2 Vide s. 364. 3 20 & 21 Vict. c. 26, s. 1. 4 An urban lease for twenty-one years is not a " long lease," but mere trust administration (Noble, 1912, 2 S. L. T. No. 61). 5 4 Edw. vii. c. 8, s. 4, and to Friendly Society trustees (59 & 60 Vict, c. 25, s. 47). 412. Where there is a prohibition " to sell or dispose of," it Example of • tit -it i -oii i i long lease. is held to strike also at the granting of a long lease, where the subject is a building and not bare ground. 1 Where trustees were directed to hold the estate as a revenue-producing subject till the death of the longest liver of the truster's children, and there- upon to sell and dispose of the estate and divide it amongst the beneficiaries, it was held not to be contrary to the intention of the truster to grant a lease for 999 years before the date of sale. "It does not appear to me that this long lease will interfere in any way with the object of the testator ; it would enhance the present value of the subjects, and not interfere with the rights and interests of the liferenters or of the fiars. Everything would go on in the execution of the trust precisely as if the lease had not been granted, but with the additional benefit of a larger income." 2 1 Petrie v. Kamsay, etc., 1868, 7 M. 64, vide L. J.-O. Patton, at p. 66. 2 Birkmyre, 1881, 8 E. 477, per L. P. Inglis. (e) Power to Borrow 413. There is power to borrow * money on the security of the Nature of . . power to trust estate or any part of it. 2 The real nature of this power is borrow. 15 226 THE EXECUTION OF THE TRUST [chap. v. Replacing old loan. To pay debts. Result of want of power. more clearly realised when it is spoken of as a power to charge the trust estate with a loan to the trustees. Thus where the transaction of loan is merely to replace a former authorised loan which has been called up, this is a mere matter of ad- ministration and does not require any special authority, because no new charge on the trust estate is being created. 3 After the movable estate is exhausted there is always an implied power to charge the heritable estate with a loan for the purpose of executing a trust to pay debts of the trust estate. 4 "Where trustees have no power to borrow on the security of the trust estate — that is, no power to make the loan a charge upon the trust estate — if they borrow, they do so only as individuals, and are person- ally bound to repay the loan without any recourse against the trust estate, except to the extent to which they can substantiate that the estate was lucratus by the transaction. Therefore the trustee must, for his own protection, be certified of his power to borrow, and that in the case of movables as well as in that of heritage. This personal nature of the exercise of a power to borrow, though a trust act, is apt to be not fully appreciated. Hence the remark of Lord President Inglis, referring to trustees not having an express power to borrow : — " The conduct of trustees in borrowing money under any circumstances is highly imprudent. If it turns out to be a mistake, it subjects the trustees to personal liability." 5 1 Powers of Friendly Society trustees to mortgage their property are given by 59 & 60 Viet. c. 25, s. 47. By the Finance Act, 1910 (10 Edw. vn. c. 8, s. 39), power is given to charge the trust estate with duty payable under the Act. 2 30 & 31 Vict. c. 97, s. 3 (3). Petition by foreign trustees to charge heritage (Blundell, 1893, 1 S. L. T. No. 158). 3 Henderson, 1901, 8 S. L. T. No. 341. The authority is reported, how- ever, as having been granted in this case. 4 Binnie, infra, as referred to by Lord Johnston (Ordinary) in Buchanan v. Glasgow, 1909, S. C. 47, at p. 52. In Pathe, 1902, 4 F. 876, the power was granted in these circumstances as being a necessary one ; see also Ross, 1901, 9 S. L. T. No. 106. Cf. s. 344. 6 Binnie, 1888, 15 E. 417, at p. 422. Of, s. 342, supra. 414. This statement of Lord President Inglis 1 was the subject of criticism in the House of Lords 2 under an apparent misapprehension. " In the Court below," says Lord Watson, " the learned judges have expressed themselves with regard to the con- duct of these trustees, and of trustees generally, in terms to which I cannot assent. ... I do not know whether, by these words, the Lord President intended to lay down a principle of law or a proposition of fact ; the result in either aspect might prove very unfortunate so far as the interests of beneficiaries are concerned. CHAP, v.] THE EXECUTION OF THE TEUST 227 . , . But there is really no such rule in existence." To appreciate the position, it must be noted that the Court of Session held that the trustees had no implied power to borrow, and the Lord President's remark had express reference to "a deed of this kind" — that is, a deed where there was no express power to borrow, and where the trustees had, according to the opinion of his Court, mistaken their powers to borrow as trustees and to charge the trust estate, and had therefore borrowed solely as individuals. In the House of Lords it was held, on the contrary, that there was an implied power to borrow, and the trustees had, in that view, not made the mistake attributed to them in the Court below. This reversal of the findings in this particular case does not affect the value of the Lord President's opinion, which referred to a trustee not having an express power, and consequently borrowing under risk of mistake as to the implication of power. 1 S. 413. 2 Binnie, 1889, 16 R. (H. L.) 23, at p. 26, reported as Binnie v. Broom, 14 App. Cas. 576, at pp. 587, 588. 415. Where money is lent to a trustee nominally on the Position of lender where security of trust property which he has no power to charge no power with the loan, the lender cannot make good his nominal security over the trust estate. His remedy against the trust estate is limited to his lien over the interest of any beneficiary in the security subjects to the extent to which the loan has been profitably applied for behoof of that beneficiary, and that on the ground that " the party benefited by the expenditure must be a debtor for the amount to those whose funds were so expended." 1 " The general principle of equity is that those who pay legitimate demands, which they are bound in some way or other to meet, and have had the benefit of other people's money advanced to them for that purpose, shall not retain that benefit so as in substance to make those other people pay their debts." 2 Where money is borrowed on behalf of a principal by an agent, who has no power to borrow to the effect of binding his principal, and is bond fide lent for the behoof of the principal, then, to the extent to which the money borrowed has in fact been applied in paying legal debts and obligations of the principal, the lender is entitled to stand in the same position as if the money had originally been borrowed by the principal. 3 It must be noticed that a trustee who, as Borrowing as act of such, has no power to borrow, cannot charge the estate with manage- a loan as an act of management in the conduct of a business 228 THE EXECUTION OF THE TKUST [chap. v. Power for special object. Exclusion of personal liability. Purpose of loan. Trustee fflgninglbill. forming part of the trust estate, whatever powers he may have as manager from other trustees — he can only bind them indi- vidually as his principals. 4 Where the power to borrow is limited to an indicated object for whose benefit the power is granted, the money borrowed cannot be charged by the trustee against the trust estate for any other trust purpose. 6 An express power granted to trustees to borrow money from time to time for re- paying "mortgages" and to charge the loan on the property, is not inconsistent with the granting of a power by the Court to these trustees to borrow to repay "equitable mortgages" in England. 6 i M'Millan v. Armstrong, 1848, 11 D. 191, per L. J.-C. Hope, at p. 205. Of. Heriot v. Fyffe, 1836, 14 S. 670 ; Buchanan v. Glasgow, 1909, S. C. 47, per Lord Johnston (Ordinary), at p. 52. 2 Blackburn v. Cunliffe Brooks, 1882, 22 Ch. D. 61, per Lord Selborne, C, at p. 71, referring to and explaining Cork Railway, 1869, 4 Ch. App. 748. 3 Bannatyne v. M'lver, 1906, 1 K. B. 103, per Romer, L.J., at p. 109, relying on "Wrexham, 1899, 1 Ch. 440. 4 Ralston v. Macintyre, 1882, 10 R. 72, per Lord Craighill, at p. 76. ° Att.-Gen. v. West Ham, 1910, 2 Ch. 560. 6 Kerr, 1907, S. C. 678. 416. Where trustees borrow, they may do so in such a, manner as to evade personal liability by binding themselves qua trustees only, the security being expressly limited to the trust estate without the personal obligation of the trustee as an indi- vidual. 1 In such a case in especial the lender requires to satisfy himself of the trustee's power to bind the trust estate. Where trustees have express power to borrow, a lender may presume, in the absence of any statement of the purpose for which the money is to be used, that the borrowing has taken place in the ordinary administration of the duties imposed upon the trustees by the trust deed, unless there is something to suggest that they intend to apply the borrowed money otherwise than as empowered by the trust deed. 2 1 Gordon v. Campbell, 1842, 1 Bell's App. 428 ; Robinson, 1912, 1 Ch. 717. Cf. s. 1252 for form of limitation. 2 Buchanan v. Glasgow, 1909, S. C. 47. See Lord Johnston (Ordinary) at p. 53, as to lender's position where the power to borrow is implied only by reason of there being a trust to pay debts, and relying on the analogy of a power of sale in Corser v. Cartwright, 1875, 7 E. & I. App. 731 , per Lord Cairns, C, at pp. 736, 737, quoting and approving Lord Cranworth, C, in Colyer v. Finch, 1856, 5 H. L. Cas. 905, at p. 923. It must be noted, however, that Lord Cairns limits the observations made to the case of an executor who is also the devisee of real estate charged with payment of debts. 417. Where a trustee accepts a bill in favour of the creditor as a security for a loan granted by him to the trust estate, the trustee cannot avoid personal liability by any qualification of his signature to the bill, though he may, of course, expressly limit his chap, v.] THE EXECUTION OF THE TRUST 229 personal liability by special agreement with the lender in any way he will accept. 1 1 Thomson v. M'Lachlan, 1829, 7 S. 787 ; Gordon v. Campbell, 1842, 1 Bell's App. 428, per Lord Campbell, at p. 457 ; Lumsden v. Buchanan, 1864, 2 M. 695, per Lord Cowan, at p. 716 ; Horsburgh v. Welch, 1886, 14 R. 67, per Lord Shand, at p. 71. Of. case of overdraft, Commercial Bank v. Sprot, 1841, 3 D. 939. 418. Where unfinished houses, over which bonds had been Adopting truster's granted by the bankrupt, formed part of an estate in sequestra- bonii - tion, the trustee in bankruptcy came to an agreement with the bondholders that, on condition that they would not enforce their power of sale under the bonds, and would advance the amount still unpaid under the bond to finish the houses, he would hold the houses till a rise took place in the property market, and meantime pay interest and arrears out of rents. It was contended that the trustee had thereby made himself personally liable for the debt and interest, on the ground that he had adopted the subjects as owner. The Court, however, assoilzied the trustee, Lord President Inglis saying : — " No doubt language might be used in such an arrangement which would have the effect of binding the trustee personally, but it would require to be very explicit." 1 1 Edinburgh Heritable v. Miller, 1886, 23 S. L. R. 276. 419. "Where trustees are directed to sell, with a power to where power to postpone the sale, it is not inconsistent with the intention of borrow is *■ implied. the trust to borrow. Lord St. Leonards, C, in discussing this matter, says : — " My opinion is that, speaking generally, a power of sale, a power of sale out and out, for a purpose or with an object beyond the raising of a particular charge, does not authorise a mortgage ; x but that, where it is for raising a particular charge, and the estate itself is settled or devised subject to that charge, there it may be proper, under the circumstances, to raise the in place of money by mortgage, and the Court will support it as a conditional sale, as something within the power, and as a proper mode of raising the money." 2 Where a truster instructed the division of his heritable property amongst the beneficiaries, but the pro- perty appeared to the trustees to be incapable of division for the purposes of the trust, and the time was unfavourable for selling, the Court authorised the trustees to borrow money as being expedient for the execution of the trust. 3 There is no implied power to borrow for such a purpose as pulling down and rebuilding houses Eebuiiding. 230 THE EXECUTION OF THE TEUST [chap. v. Bond with power of sale. Implied power of trustee. on the trust property, unless they are falling down and it is a case of actual salvage. 4 1 Cf. Smith v. Dove, 4 A. J. R. 140 ; vide Davis's Cases in the Supreme Court of Victoria, p. 701. 2 Stroughill v. Anstey, 1852, 1 De G. M. & G. 635, at p. 645. Cf. Haldenby v. Spofforth, 1839, 1 Beav. 390; Page v. Cooper, 1853, 16 Beav. 396; Devaynes v. Robinson, 1857, 24 Beav. 86 ; Bellinger, 1898, 2 Ch. 534— power to borrow for repairs of house. 3 M'Neil, 1883, 21 S. L. R. 168, Lord Kinnear (Ordinary). 4 Montagu, 1897, 2 Ch. 8 ; Jackson, 1882, 21 Ch. D. 786, per Kay, J., at p. 789 ; Frith v. Cameron, 1871, 12 Eq. 169, where foundation of house had given way. See Lindley, L.J., in Montagu, supra. Cf. Bellinger, supra. 420. Where a trustee with power to borrow, but without express power to sell, grants a bond and disposition in security, with a power of sale to the creditor, can the trustee sell to pay the debt, instead of allowing the creditor to exercise his power of sale under the bond? The answer is supplied by the general rule discussed above, 1 that the trustee has power to sell to pay debt. Ex hypothesi the debt is validly constituted, and the creditor himself might step in and force a sale. The power to borrow also implies a power to purchase the heritable security where it is put up for sale by a prior bondholder under the Heritable Securities Act, 1894. 2 1 S. 344. 2 Paterson v. Caledonian Co., 1885, 13 R. 369, at p. 378. (f) Power to Remove Heritable Debt 421. There is the option to convert a power to purchase heritage into a power to remove heritable debt in the circum- stances described in the following statutory provision: — "The Court may, on petition by the trustees, and after such intimation and inquiry as may be thought necessary, authorise the trustees under any trust deed to apply the whole or any part of trust funds which they are empowered or directed by the trust deed to invest in the purchase of heritable property to the payment or redemption of any debt or burden affecting heritable property which may be destined to the same series of heirs and subject to the same conditions as are by the trust deed made applicable to the heritable property directed to be purchased; provided always, that such application shall not be inconsistent with the other provisions of the trust deeds." 1 The object and practical effect of the clause is simply to permit of a redemption of trust estate disponed in security, in place of a purchase of new estate, where the intention of the truster is equally fulfilled by the former transaction. 1 30 & 31 Vict. c. 97, s. 8. chap, v.] THE EXECUTION OE THE TEUST 231 (g) Incidental Statutory Powers 422. The powers of an absolute owner are given by the Agricultural Agricultural Holdings Act 1 to all limited owners for the an ° d Herft- able purposes of that Act without reference to the terms of any A ^" rities trust deed by which their limitations may be expressed. This clause includes trustees holding heritable property in trust, and it is to be observed that the powers thereby granted are absolute, and not, as those in the Trusts Acts, conditional on their con- sistency with the intention of the truster or the terms of the trust deed. 2 All trustees have by statute conferred upon them the same rights and powers as any other heritable creditor in the realisation of a heritable security upon which they have validly lent trust money. 3 1 8 Edw. vii. c. 64, s. 26. 2 Mr. Johnston's note to the section in the sixth edition of his work on the Act is to the effect that it is possible to read this provision as leaving a power in the truster to limit the power of his trustees. It is difficult to appreciate the object of the section if this be so. 3 Heritable Securities (Scotland) Act, 1894 (57 & 58 Vict. c. 44, s. 13). (h) Power to Advance Capital 423. There is power to advance capital under the following provision : — " The Court may from time to time, under such conditions as they see fit, authorise trustees to advance any part 1 of the capital 2 of a fund destined, either absolutely or contingently, to minor descendants of the truster, 3 being bene- ficiaries having a vested interest in such fund, if it shall appear that the income of the fund is insufficient or not applicable to, and that such advance is necessary 4 for, the maintenance or education of such beneficiaries, or any of them, and that it is not expressly prohibited by the trust deed, 6 and that the rights of parties other 6 than the heirs or representatives of such minor beneficiaries shall not be thereby prejudiced." 7 1 The amount should be stated, and, if an annual grant, the number of years may be fixed (Martin, s. 424). 2 Accumulated income is to be treated as capital for the purposes of the Act (Boss, s. 424 ; Hodgson, 1904, 12 S. L. T. No. 286). Of. Walker, infra. 3 As to the favour shown by the common law to such beneficiaries, cf. Bowlby and Churchill in s. 994. 4 An order under the Youthful Offenders Act, 1901, upon the trustees to pay, as persons "legally liable to maintain" the offender, a certain sum per week, would seem to be sufficient proof of necessity (1 Edw. vn. c. 20, s. 4 (5), and s. 6 (1) and (4)). 6 See s. 426. As to the exercise of a discretion under the trust deed to advance capital, Robertson, 1909, S. C. 236 — a petition for authority at common law to advance certain sums — and see position of judicial factor in exercising such discretion in M'Connell, 1897, 25 R. 330. Cf. "Walker, 1905, 13 S. L. T. No. 69. 232 THE EXECUTION" OF THE TEUST [chap. v. 6 See Baillie, 1896, 4 S. L. T. No. 40. 7 30 & 31 Vict. c. 97, s. 7. Vested 424. The condition of a " vested interest " 1 in the beneficiaries under the statute has been held to be satisfied if they have a primary interest, though contingent on survivance, 2 or, where they take as " children," if as a class they have a vested interest. 3 Thus trustees have been authorised to advance capital to children from a fund life- rented by their father, who was a consenting party to the petition, although this capital did not vest in the children till the death of their father and that of certain annuitants. At common .law the interest required to be actually vested, 4 and the extension of the powers of the Court "may naturally be regarded as one of the main reasons which led to the provision in the Trusts Act of 1867." 5 1 Of. s. 336. 2 Pattison, 1870, 8 M. 575 ; Martin, 1904, 6 F. 592. 3 Ross, 1894, 21 R. 995 ; Clark, 1895, 22 R. 706. 4 Vide Mundell, s. 428. 6 Pattison, supra, per Lord Oowan, at p. 577 ; Baillie, a. 423. what is 425. Where heritable property has been sold under a power capital. . ■ authorised by the Court under the Trusts Act, 1867, it forms the capital of a trust fund in the sense of the Act. " If an heritable subject/' says Lord President Inglis, "is converted into money through the operation of a trust coupled with this statute, the proceeds will answer the description of the capital of a trust fund." 1 1 Weir, 1877, 4 R. 876. This case is interesting as one in which the Act was held to apply in terminis ; vide Lord Ormidale, at p. 884. Of. opinions in Baird, 1872, 10 M. 482, as to considerations affecting the judgment of the Court. 426. Express prohibition by the truster, so as to exclude the powers of the Court, need not be a prohibition in words. " Express words of prohibition are not necessary. An express direction to do something else inconsistent is just the same as an express prohibition against doing the thing that is in question." 1 1 Thomson v. Miller, 1883, 11 R. 401, per Lord Young. The case may he referred to as one showing circumstances in which the Court would not authorise the power craved. Cf. Websters v. Miller, 1887, 14 R. 501, a sequel to this case, where power to pay over free income granted. This was, however, done under the alternative prayer at common law in the petition, and the case does not derogate, as might be inferred from Lord Craighill's remarks, from the value of the opinions in the former case of Thomson. Debt con- 427. A power is specially granted to the Court to authorise the application of capital towards meeting any deficiency in income prohibition. version. chap, v.] THE EXECUTION OF THE TRUST 233 caused by reason of the conversion or exchange of any stock, in pursuance of the National Debt (Conversion) Act, 1888. 1 1 51 Vict. c. 2, s. 28. Vide s. 335. 428. At common law, where trustees, along with the beneficial Advances . . at common fiars, petitioned the Court to make an advance out of capital x for law - behoof of these beneficiaries, they being the children of the truster, the Court granted the petition where the said beneficiaries had a vested interest in the capital, 2 but refused it where they had no vested interest, although the conditional institute taking on their failure was a petitioner, and also where the trust deed itself dealt with the matter of advances. 3 The Court, where circumstances are likely to vary, will only grant authority for one year, but a new petition is not necessary at each annual application, a motion in the original petition being sufficient. 4 1 An advance out of the capital must be distinguished from advancing income directed to be accumulated. Cf. s. 336. 2 Hamilton, 1860, 22 D. 1095 ; Normand, 1900, 2 F. 726. 3 Mundell, 1862, 24 D. 327. Cf. a. 424. 4 Hamilton, supra. (y) Procedure by Petition under the Trusts Acts 429. Where the application to the Court is by petition under the Trusts Acts, the procedure is determined thus by the Act of 1867 : x — " Applications to the Court under the authority of this Act shall be by petition addressed to the Court, and shall be brought in the first instance before one of the Lords Ordinary officiating in the Outer House, who may direct such intimation and service thereof and such investigation or inquiry as he may think fit, and the power of the Lord Ordinary before whom the petition is enrolled 2 may be exercised by the Lord Ordinary on the Bills during vacation, and all such petitions shall as respects procedure, disposal, and review be subject to the same rules and regulations as are enacted with respect to petitions coming before the Junior Lord Ordinary in virtue of the Act 20 & 21 Vict. c. 56." 3 1 30 & 31 Vict. c. 97, s. 16. 2 Vide s. 430. 3 Distribution of Business Act, 1857. 430. Where a petition under this provision was presented to Power of the Lord Ordinary officiating on the Bills during vacation, it was PJjf™ 1 "* suggested that such a petition could not proceed in vacation unless it had been first brought before a Lord Ordinary during session, and intimation and service had been ordered by him. 234 THE EXECUTION" OF THE TEUST [chap. v. Lord Shand, as the Lord Ordinary on the Bills, said: — "The words ' shall be brought in the first instance before one of the Lords Ordinary officiating in the Outer House ' are used to make it clear that the petition is not an Inner House proceeding ; and the whole enactment is in terms which show that the power of the Lord Ordinary, and of the Lord Ordinary on the Bills, is not derived from the Inner House as if on a remit, but is an original jurisdiction directly conferred by the statute. It is said the words 'is enrolled' imply that an enrolment before a Lord Ordinary in session is a condition precedent of the exercise of any power under the Act by the Lord Ordinary on the Bills. . . . In my opinion the true meaning of the words ' the power of the Lord Ordinary before whom the petition is enrolled,' is ' the power of the Lord Ordinary before whom the petition is or might be enrolled (though addressed to the Court) may be exercised by the Lord Ordinary on the Bills during vacation.' Under these powers I hold that the mere ordering of intimation and service is included." 1 1 Staveleys, 1883, 20 S. L. R. 565. Of. Niddrie, 1892, 19 R. 820. inner 431. Where the application to the Court is by petition alter- natively at common law and under the Trusts Acts, it is proper and competent to present it to the Inner House directly. 1 1 Websters v. Miller, 1887, 14 R. 501. Cf. Thomson v. Miller, 1883, 11 R. 401 ; Mitchell, 1864, 2 M. 1378. settling 432. An application to the nobile officium of the Court must scheme of .. . . endowment, be made by petition at common law to one of the Divisions of the Inner House of the Court of Session, 1 with the exception of the case of settling a scheme in certain trusts, which is thus dealt with by the Trust Acts, 1867: — "When in the exercise of the powers pertaining to the Court of appointing trustees and regu- lating trusts it shall be necessary to settle a scheme 2 for the administration of any charitable or other permanent endowment, the Lord Ordinary [before whom an application under the statute shall be brought in the first instance] shall after preparing such schemes report to one of the Divisions of the Court, by whom the same shall be finally adjusted and settled ; and in all cases where it shall be necessary to settle any such scheme, intima- tion shall be made to His Majesty's Advocate, 3 who shall be entitled to appear and intervene for the interests of the charity or any object of the trust or the public interest." 4 chap, v.] THE EXECUTION OF THE TRUST 235 In its common law jurisdiction over charitable trusts the Court Difference , ■ . from scheme exercises its powers in two cases only, and the procedure proper ™ B - action intra quadriennium utile, to whatever extent it may afford protection to the trustees against their claims, as bene- 270 THE EXECUTION OF THE TEUST [chap. v. ficiaries, beyond that limit. " I am of opinion that no judgment we could pronounce," says Lord Gifford, "could ever preclude the minors from challenging the arrangement when they attain majority. I think it wholly incompetent by making minors parties to a case even with the protection of a cwator ad litem to preclude them from subsequent challenge." x That this opinion is based solely on the position of the beneficiaries, not as such, but as minors, appears from the fact that Lord Gifford in the same case expressly agreed with Lord Neaves " as to the possibility of a binding agreement being come to with the minors on this matter when they attain majority." 2 1 Mackie, 1875, 2 R. 312, at p. 317 ; Mackenzie, 1908, S. C. 995. Cf. s. 929. 2 Mackie, supra, at p. 317. (d) Dealings by Trustee with Trust Estate through Third Party Rule covers 496. A trustee who may not buy directly may not buy indirect leaiingsof indirectly through the medium of a third party. 1 Indeed, trustee with JO r J Mmseit Lord Eldon seems to have thought an indirect purchase some- what worse than a direct one. 2 Speaking of such a case he says: — "These trustees did not go to the auction avowing that they went there with the purpose to bid, and thereby giving distinct evidence to all persons attending for the same purpose that the trustees, who ought to know the value, and must be supposed not to have brought the estate to sale before they had obtained that information, were at least so far convinced of the value as to be induced to bid. Instead of that they employed a person who did not then declare for whom he bid ; but afterwards declared himself a purchaser for another person sale by who declared himself a purchaser for one of the trustees." 3 An bondholder. officer of Court cannot purchase the property which he is appointed to administer, even though it is being sold, not by himself, but by a bondholder under his power of sale. The reason is that the officer of Court in informing the bondholder of the rental for the purpose of the sale might, if he desired to buy, undervalue the rents in his own interest and in breach of his duty to the Taking borrower. 4 Where the trust estate is converted into a limited shares in company liability company and the trustees have shares therein allotted to buying estate. them as individuals, the rule will not apply to this allotment where the company has been formed without further interven- tion by the trustees in its formation than their acting as sellers to the company. 5 chap, v,] THE EXECUTION OF THE TEUST 271 1 Whichcote v. Lawrence, 1798, 3 Ves. 739. An exception to this rule was regarded as established in England (Bevan is. Habgood, 1860, 1 J. & H. 222), to the effect that the donee of a power to lease could grant a lease to a trustee for himself. As it proceeded upon technicalities of English jurisprudence, it has no application in the law of Scotland, and its value in England has been discounted by the criticism of Earwell, J., in Boyce v. Edbrooke, 1903, 1 Ch. 836, at p. 843. 2 Cf. Gillies v. M'Lachlan, 1846, 8 D. 487, per Lord Medwyn, at p. 500. 3 Sanderson v. Walker, 1807, 13 Ves. 601, at p. 603, and 5 R. R., at p. 141 ; but cf. Lacey, 1802, 6 Ves. 625, at p. 628, and 6 R. R. 9, at p. 13 ; and Tennant v. Trenchard, 1869, 4 Ch. App. 537, at p. 547. As to trustee buying ostensibly for a third party, see Bennett, s. 458. 4 Nugent, 1908, 1 Ch. 546 ; Alven v. Bond, 1841, Fl. & K. 196 ; Boddington v. Langford, 1845, 15 Ir. Ch. Rep. 558, note. The United States Court, on the other hand, treats such a situation as an exception to the rule (Starkweather v. Jenner, 1900, 216 U. S. Rep. 524, at p. 528 ; Allen v. Gillette, 1887, 127 U. S. Rep. 589, at p. 596). 5 Taylor v. Hillhouse, 1901, 9 S. L. T. No. 19. 497. Where a trustee may buy directly on certain conditions, 1 conditions •/ «> ■> same as in these conditions must be equally fulfilled in the case of an indirect please purchase by him. Thus where a creditor sold his future dividends from a bankrupt estate to a person who was proved to have bought for the assignee in bankruptcy, the sale was set aside. " To say nothing of considerations of public policy," says Knight Bruce, L.J., " a purchase of this description can at least not be maintained by an assignee against a creditor without proof that before the sale the assignee had communicated to the creditor all the information in the possession or reach of the assignee concerning the state and amount of the assets, and the likelihood or chances of their realisa- tion both as to time and otherwise, the extent of the demands on them, and the prospect as to dividends." 2 1 Cf. a. 478. 2 Pooley v. Quilter, 1858, 2 De G. & J. 327, at p. 344. " Something was said in the course of the argument," says Turner, L.J., in this case (at p. 351), "upon the nature of the trust reposed in assignees, but Lord Eldon has said in many cases, and, as I humbly conceive, most truly said, that the rules of the Court which apply to ordinary trustees apply with still greater force to assignees." 498. The rule cannot be evaded by buying through a relative, Dealings J J ° ° with estate e.g. a son, 1 or in name of children, 2 or wife, for " whether a trustee through J ' ' ' relatives of buys in for himself or for his wife, the temptation to abuse is trustee - nearly the same." 3 It may be said generally that the Court looks with suspicion on any dealings between the trustee and his relative with regard to the trust estate. Thus where a trustee gives a lease to a relative, " that is a circumstance to create suspicion." * In a case where the trust estate included a farm which the trustee had let to his sister, Lord Cottenham, O, said : — " Trustees expose themselves to great peril in allowing their own relatives to inter- vene in any matter connected with the execution of the trust; for the suspicion which that circumstance is calculated to excite, 272 THE EXECUTION" OF THE TRUST [chap. v. where there is any other fact to confirm it, is one which it would Husband of require a very strong case to remove." 8 Similarly it has been decided that the husband of a trustee stands in a fiduciary position to the trust, and can deal with the trust estate only on the same conditions as the trustee. 6 Purchase by It has been decided in interpreting the Bankruptcy Eules, trustee. 1886, 7 in England, that the purchase of the estate by a person who was a partner of a member of the committee of inspection is not struck at by the rules if he purchases as an individual for his own behoof solely, and not as a partner. 8 But this decision is limited to the interpretation of the statutory rules only, and the general law as previously laid down in the older bankruptcy practice is spoken of as " a salutary rule." 9 This previous practice is thus stated : — " The universal and well-established rule remains that a trustee cannot sell to his partner or to anyone else in such a way that he may in any manner derive any benefit therefrom." 10 1 Brown v. Burt, 1848, 11 D. 338, vide L. J.-C. Hope, at p. 342. Cf. Whyte v. Burt, 1851, 13 D. 679, per L. J.-C. Hope, at p. 681. 2 Gregory, 1815, Geo. Cooper, 201, aftu 1821, Jac. 631. 3 Davoue v. Fanning, 1816, 2 Johns Ch. (N.Y.) 252, at p. 256 ; vide opinion in Appendix III. to vol. i. of 1st ed. 4 Skinner, 1817, 2 Mer. 453, per Lord Eldon, at p. 457. 5 Ferraby v. Hobson, 1847, 2 Ph. 255, at p. 261 ; vide also 2 W. & T. L. C, 7th ed., 756. 6 Pepperell v. Chamberlain, 1879, 27 W. R. 410. 7 Rule 316. 8 Gallard, 1897, 2 Q. B. 8. 9 Gallard, supra, per Vaughan Williams, J., at p. 13. 10 Moore, 1881, 51 L. J. Ch. 72, per Bacon, O.J. Here the sale was in every way regular after full advertisement, and by auction, but was set aside. Repurchase 499. The rule extends to dealings bv the trustee with the from pur- ° ^ person to whom the trustee has contracted to sell the trust estate, if that contract has not been completely executed. Thus where the trustee has contracted to sell trust property, he cannot repurchase it from the person who has contracted to purchase it, unless and until this contract has been executed and the sale completed by payment of the purchase price and conveyance of the property. 1 The sale itself must also have been bond fide, and without evidence of undervalue. 2 Thus "if a trustee sell to a stranger over whom he has some influence with a feeling of certainty that he would be allowed to repurchase if he wished, he can hold that against his cestui que trust, and the repurchase would not be vitiated. But where there is an understanding, not expressed, but which is binding between friends and gentlemen, the repurchase by the trustee on the strength of that understanding cannot be held chap, v.] THE EXECUTION OE THE TRUST 273 good, even though there be no corresponding right on the part of the first purchaser to be relieved by the trustee." 3 1 Delves v. Gray, 1902, 2 Ch. 606 ; Parker v. M'Kenna, 1874, 10 Ch. App. 96, per Mellish, L.J., at p. 125 ; Williams v. Scott, 1900, A. C. 499. Of. lor circumstances of bogus sale where no money passed, Gillies v. MacLachlan, 1846, 8 D. 487. 2 Baker v. Peck, 1861, 9 W. R. 472. 3 Postlethwaite v. Rickman, 1888, 36 W. R. 808, per Kekewich, J.; vide discussion of cases in opinion. This judgment was reversed, vide 60 L. T. 514, but not on any ground affecting the value of this dictum. 500. The following facts afford an illustration of the first case put by Kekewich, J. 1 : — Trustees sold trust property at an in- adequate price to a stranger, from whom one of them bought it shortly afterwards at a slightly increased price, and thereafter sold it at a large profit. Bowen, L.J., after pointing out that the sale to the trustee took place " substantially at the same price " as that by the trustees, says : — " It is idle not to see that such a coincidence raises the gravest surmises as to the transaction." His Lordship then draws attention to the correspondence between the parties, which he thinks is bond fide, and proceeds : — " Now what sort of principle ought we to apply to this kind of case — a case of natural suspicion, accompanied, however, by correspondence which is perfectly bond fide between parties whose honour, I think, there is no reason to question ? It seems to me that we ought to bring to the consideration of such a case this feeling, that if the correspondence and facts are capable of a reasonable explana- tion consistent with the validity of the transaction, one ought not to draw in the dark inferences which would really be guesses. So long as a reasonable explanation is possible, we ought not to draw inferences in favour of the invalidity of the transaction." 2 1 S. 499. 2 Postlethwaite v. Rickman, 1889, 60 L. T. 514, at p. 520. 501. The second case put by Kekewich, J., 1 is exemplified in the following United States case. There the assets of a partnership were, on the dissolution thereof, sold at public auction to a person who subsequently conveyed them to one of the partners, in pursu- ance of a secret arrangement made before the sale. It was held here that the purchasing partner held them for the benefit of the partnership and not for his personal benefit, even though the other partner was present at the sale and bid. 2 1 S. 499. 2 Jones v. Dexter, 1881, 39 Am. Rep. 459, per Soule, J. ; cf. note by reporter, at p. 461. 18 274 THE EXECUTION OF THE TEUST [chap. v. (e) Dealings between Future or Past Trustee and Beneficiary Dealings 502. Where a person may afterwards, but has not yet, become before " . . acceptance, a trustee, or where he has been a trustee but the position has been bond fide vacated, there is no absolute disability to his transacting about the trust estate, "though he might possibly use his power in such a way as to raise a case for setting aside the transaction." 1 Thus in the former case a trustee nominate may, if he has by his conduct disclaimed the office, deal with the beneficiaries freely. 2 And even where he has not disclaimed and may yet accept, as, for instance, an executor who has not confirmed, but has power to do so, he is not under dis- ability to purchase, and it must be shown that he used his position in such a way as to render it inequitable that the transaction And after should be upheld. 3 In the latter case, where a trustee has severed trust ended. his connection with the trust, if there is nothing to show that at that time there was any idea of a sale, his having been a trustee does not prevent him becoming a purchaser. " If he retires with a view to becoming a purchaser, so as to put himself in a position to do what would otherwise be a breach of trust, that will not do." 4 Questions may arise as to whether the trustee has severed his connection with the trust as the result of the trust purposes being Election not exhausted. Thus where there is a trust for sale, though all the exercised. .. . i i » i ■ beneficiaries are ascertained and are capable of electing to take the estate in specie, unless it is proved that there actually was an election to this effect by the beneficiaries, the trust for sale is still unexecuted and exists as a trust purpose con- necting the trustee with the estate. In these circumstances the trustee is affected by the rule and cannot purchase the trust estate. 5 1 Clark, ififra. 2 Stacey v. Elph, 1833, 1 My. & K. 195. Of. s. 126. 3 Clark, 1884, 9 App. Cas. 733. Of. Chambers v. Waters, 1829, 3 Sim. 42 ; Montgomerie v. Vernon, 1895, 22 R. 465. 4 Boles, 1902, 1 Ch. 244, per Buckley, J., at p. 246. 6 Douglas and Powell, 1902, 2 Ch. 296, per Byrne, J., at p. 313 ; Tweedie and Miles, 1884, 27 Ch. D. 315. Agreement 503. An instance of dealings between the trustee and the for re - muneration. beneficiary before the relationship has actually been entered upon is to be found where the trustee, before he accepts the trust, approaches the beneficiary as to an agreement between them that the former shall be allowed to remunerate himself for his services out of the trust estate. Lord Hardwicke, C, chap, v.] THE EXECUTION OF THE TRUST 275 says in an old case : — " "Whether upon general grounds a trustee may make an agreement with a cestui que- trust for an extra- ordinary allowance, over and above what he is allowed by the terms of the trust, I think there may be cases where this Court would establish such agreements, but at the same time would be extremely cautious and wary in doing of it. If a trustee comes in a fair and open manner and tells the cestui que trust that he will not act in such a troublesome and burdensome office unless the cestui que trust will give him a further compensation, over and above the terms of the trust, and it is contracted for between them, I will not say this Court will set it aside, though there is no instance where they have confirmed such a bargain." * 1 Ayliffe v. Murray, 1740, 2 Atk. 58, at pp. 59, 60. 504. It is imperative that the future trustee should Must be x fair and approach the beneficiary " in a fair and open manner." He °P en must not, from the position in which he may be placed towards the beneficiary, take any advantage of him. A man conveyed his whole estate, including his business, to a creditor in trust for the creditor's behoof, but continued to manage, on behalf of the trust, the business. During an illness of the truster the trustee managed the business. He was disallowed a bonus he charged for managing the business, although he pleaded that the truster had not objected to his taking a bonus, and that on the ground that the truster, who was residuary beneficiary, as the trustee's debtor, did not dare to take objection to the trustee's proposal. 1 On the same principle, a solicitor, in drawing a deed appointing him to be a solicitor trustee with power to charge the estate for professional services, must explain fully to the truster his rights and position, or the remuneration will be disallowed on the ground of the solicitor having taken advantage of his position. 2 1 Barrett a. Hartley, 1866, 2 Eq. 789 ; also 12 Jur. (N. S.) 426, at p. 428. 2 Moore v. Frowd, 1837, 3 My. & Or. 45, at p. 48. 505. In England, where a trustee refuses, unless he obtains a reasonable allowance out of the trust estate, as compensation for time and trouble, to accept the trust, because the trust affairs will occupy so much of his time and attention as to be greatly prejudicial to his other concerns and to his business generally, such allowance will be authorised by the Court where it is for the benefit of the trust estate that the said trustee should 276 THE EXECUTION OF THE TKUST [chap. v. accept the trust. 1 A special case for the granting of compensa- tion must be made to the Court before the acceptance of the trust, 2 and the allowance will be given in the shape of a com- mission on receipts. 3 The granting of such an allowance to a trustee by the Scots Court does not appear to have ever taken place, an officer of Court in the person of a judicial factor being always appointed where an allowance is to be made for the con- duct and management of the trust affairs. The difference of practice probably arises from the relations existing between the Court and the trustee in England differing from those existing between them in Scotland, the trustee in England always being more under the direct control of the Court than is the trustee in Scotland. 4 1 Marshall v. Holloway, 1818, 2 Swan. 432, at pp. 452, 453. Of. s. 460, note 4. 2 Brocksopp v. Barnes, 1820, 5 Madd. 90; Bedingfield v. D'Eye, 1887, 57 L. T. 332. 3 Freeman, 1887, 37 Oh. D. 148, at p. 152. 4 Vide s. 305. when 506. In the case where the relation of trustee and beneficiary relation of * Bnded' eship ^ as come ' an en( i» tne question is " whether a person, who had a confidential situation previously to the purchase, had at the time of the purchase shaken off that character by the consent of the cestui que trust, freely given, after full information ; and bargained for the right to purchase." 1 Thus, " if the trustee wanted to buy the property," says Lord Moncreiff, " he should have resigned his office." 2 It must be borne in mind, however, that in all cases such dealing "is a transaction of great delicacy, and which the Court will watch with the utmost diligence ; so much, that it is very hazardous for a trustee to engage in such a transaction." s The relation must be really put an end to so as to destroy any chance of advantage being possibly taken by the trustee of his former position ; it must not be a mere colourable removal from the trusteeship for the purpose of enabling a sale to be effected with a better appearance of fairness. 4 Thus a curator of a minor has been allowed to take the renewal of a lease to himself as an individual instead of as curator after the person under curatory had attained majority. 5 1 James, 1803, 8 Ves. 337, per Lord Eldon, C, at p. 352 ; 7 R. R. 56, at pp. 67, 68. 2 Brown v. Burt, 1848, 11 D. 338, at p. 342 ; but see Boles, s. 502. 3 Coles v. Trecothiek, 1804, 9 Ves. 234, at p. 244 ; 7 R. R. 167. 1 Spring v. Pride, 1864, 4 De G. J. & S. 395, per Knight Bruce, L J., at p. 403. Cf. case where purchase by a late trustee, Whyte v. Burt, 1851, 13 D. 679. 6 Parkhill v. Chalmers, 1773, 2 Pat. 291, at p. 296, in argument for the respondent. chap, v.] THE EXECUTION OF THE TKUST 277' 507. An executor cannot buy any part of the executry estate Position of i executor. till the executry is closed, as he cannot put himself at arm's-length from his beneficiaries till the accounts of the estate have been settled, though he may buy a specific bequest from a specific legatee, or even, where he is not a trustee, a specific article given to trustees on a specific trust. 1 1 Harvey v. Lambert, 1888, 58 L. T. 449. (f) Similar Relationships outwith Rule. 508. Where the contracting parties are trustee and beneficiary, the fact that advantage has been gained by the former from his position is sufficient to raise a presumption of fraud, but such a presumption would not arise in a contract between parties not in that position, "for if it were otherwise such a principle must extend to every case in which the buyer of an estate happened to have a clearer discernment of its real value than the seller." * It was this consideration that occasioned Lord Thurlow's difficulty in framing the rule as to the transactions between trustee and beneficiary, so as not to "undo all the common transactions of mankind." 2 1 Fox v. Mackreth ; vide s. 480. C/.2W.& T. L. C, 7th ed., 756. 2 Fox, supra. 509. A mortgagee and mortgagor do not stand to one another Bondholder ° b ° ° . not trustee. in the relation of trustee and beneficiary. 1 The mortgagee is not a trustee for sale for the mortgagor, and is only bound to show bona fides in his manner of realising his security. He is only a trustee of the balance after having done so. 2 Thus the holder of a postponed bond may purchase an assignation to a prior bond at a discount, 3 and retain his right against the mortgagor to the full sum in the bond. If he were a trustee for the mortgagor he could not do so. 4 Therefore, where an express trustee does so buy a prior incumbrance, he acts for behoof of his express beneficiary and not for the mortgagor. 1 Knight v. Marjoribanks, 1849, 2 M'N. & G. 10, where Lord Cottenham, C, insists strongly on the distinction between the position of a trustee and that of a mortgagee in this connection ; vide pp. 13, 14. In the earlier case of Taylor v. Watson, 1846, 8 D. 400, the question had been decided in the Court of Session in a contrary sense, but the Court there considered itself bound by authority ; vide Lord Fullerton, at p. 407. 2 Warner v. Jacob, 1882, 20 Ch. D. 220 ; vide also Doody, 1893, 1 Ch. 129 ; London Bank v. Goddard, 1897, 1 Ch. 642, at p. 650. See Brown v. Home, 1905, 12 S. L. T. No. 322, where the mortgagor is referred to by Lord Stormonth-Darling as in certain circumstances a beneficiary — for instance, where the mortgagee is in possession and holds the reversion for the mortgagor — but a beneficiary of a "highly artificial kind." 278 THE EXECUTION OF THE TKUST [chap. v. 3 Davis 11. Barrett, 1851, 14 Beav. 542. 4 Dobson v. Land, 1850, 8 Hare, 216, at p. 220 ; Anon., 1 Salk. 154. dferenter 510. It has been decided that a liferenter, even though his duciary. consent is necessary to a sale of the property, does not stand in any fiduciary position to the other beneficiaries. Hence he is quite entitled to buy the estate when put up for sale, and the trustees may sell to him as to a stranger. 1 The probable ratio decidendi is that the power of consent was vested in him for his own benefit, and the trustees must protect the fiars of the estate against him, a duty all the more delicate owing to the fact pointed out by Lord Eldon, 2 that the liferenter has a unique opportunity of becoming acquainted with the trust estate. 3 for heir " An heir of entail is not a trustee for the substitute heirs of f entail. entail; and he is under no implied obligation as regards such heirs. A deed of entail is strictissimi juris, and no obligation that is not to be found on the face of it is binding on the heir of entail in possession." He is more than a mere liferenter — he is a limited fiar. 4 1 Howard v. Ducane, 1823, 1 T. & R. 81 ; Diceonson v. Talbot, 1870, 6 Ch. App. 32 ; De Vesei, 1908, 1 I. R. 237. 2 Howard, supra, at p. 86. 3 Under the Settled Land Act, 1882, s. 53, the tenant for life in exercising any power under the Act is subject to the duties and liabilities of a trustee towards all interested in the settled estate (Chandler v. Bradley, 1897, 1 Ch. 315, per Stirling, J., at p. 320). 4 Gould, 1899, 2 F. 130, per Lord Moncreiff, at p. 139. 2. The Trustee must Act Diligently. Mature of 511. It is a commonplace of the law of trusteeship that the Uligence. *■ r trustee must execute his trust diligently. 1 The legal default libelled as negligence is always a breach of a duty to be diligent. Where there is no legal duty to be diligent there can be no legal negligence. Therefore where the trustee is vested with a discretionary power there can be no charge of negligence where the trustee decides not to exercise the power. A typical example is the case of a dis- cretionary power to invest. If it is not exercised, negligence cannot be charged against the trustee, and therefore the beneficiary has no claim for loss of a profit which would have accrued had the trustee exercised his discretion to the effect of making the invest- ment. If, however, the trustee has exercised his discretion to the effect of making the investment and loss has incurred through negligence in his manner of doing so he is liable to the bene- ficiary for that loss. 2 Quality of The quality of the diligence required of the trustee has been much chap, v.] THE EXECUTION OF THE TEUST 279 discussed, and with variety of opinion. The subject may be best considered by dealing separately with the three leading questions that have been the centres of debate. First, Is the trustee liable in simple diligence or in exact diligence ? Second, Is the test of simple diligence the diligence of an ordinarily diligent man, or the diligence actually practised by the individual himself ? And third, If the test is the diligence of an ordinary diligent man, is it the diligence of such a man in the conduct of his own affairs, or his diligence in the conduct of the affairs of another under his charge ? 1 Diligence must not be judged " by the wisdom of after events," but by putting oneself as best possible into the position of the parties at the time. Gillespie v. Gardner, 1909, S. C. 1053, per L. P. Dunedin, at p. 1061. 2 Of. M'Clelland v. Manchester, 1912, 1 K. B. 118, at p. 129, dealing with the liability for nonfeasance in England. 512. It has long been settled that the trustee is only liable in Gross negligent^ simple diligence, and simple negligence, or the want of exact dili- required. gence, is not sufficient — there must be gross negligence, or the want of simple diligence — to render him liable. 1 Lord Stair nega- tives the proposition that trustees "are obliged to the exactest diligence, and for the lightest fault." 2 The distinction between the degrees of diligence is best ap- preciated by a consideration of the "omissions" that form breaches of trust at common law but from the consequences of which the trustee is relieved by an express or an implied clause of immunity. Where there is a want of exact diligence — the omission to execute some trust modo et forma — such negligence will be covered by the immunity. Where there is a want of simple diligence — the omission even to attempt to execute some trust — such negligence is gross ; it is culpa lata, and the immunity does not apply. " Systematic disregard " of an injunction of the truster for the protection of the estate is culpa lata. 3 The most diligent of trustees may be imposed upon ; it is not because he is imposed upon, but because he has not been diligent, and has thereby suffered himself to be imposed upon, that he is in breach of trust. Such is the case of a trustee " who accepts a trusteeship and does nothing, swallows wholesale what is said by his co-trustee, never asks for explana- tions, and accepts flimsy explanations." 4 Where the trustee was " thoroughly imposed upon — no one suggests that any reasonable precaution could have prevented him being so imposed upon " — he is not to be found liable as for a breach of trust. 5 1 Want of diligence is usually expressed by the negative term " negli- gence," and as there are degrees of negligence, that instructing breach of trust 280 THE EXECUTION OF THE TRUST [chap. v. is known as "gross negligence.'' The addition of the word "gross" has been protested against from the English Bench. Lord Cranworth says : — " I can see no difference between negligence and gross negligence — it is the same thing with the addition of a vituperative epithet" (Wilson v. Brett, 1843, 11 M. & W. 113, Lord Cranworth sitting as Baron Wolfe. Cf. Grill v. General Co., 1866, 1 C. P. 600, at p. 612). In delivering the judgment of the Privy Council in a later case, Lord Chelmsford refers to this protest, and enters on an elaborate discussion of the degrees of diligence due by different persons, justifying the use of the word "gross" in the case of those who are not liable for "ordinary negligence," as, for instance, " want of foresight or mistake of judgment," but only for "culpable fault." As to the difficulty of drawing a distinction between the two classes of negligence, his Lordship quotes the words of Pollock, L.C.B. : — " There is a certain degree of negligence to which everyone attaches great blame. It is a mistake to suppose that things are not different because a strict line of demarcation cannot be drawn between them" (Beal v. South Devon, 1864, 3 H. & C. 337, as quoted there, at p. 341, by Compton, J., in delivering judgment of Court) ; and proceeds : " In truth, this difficulty is inherent in the nature of the subject, and though degrees of care are not definable, they are with some approach to certainty distinguishable " (Giblin v. M'Mullen, 1869, 2 P. C. 317, at pp. 336, 337). 2 Stair's Institutions, i. 12, 10. 3 Carruthers, 1896, 23 B. (H. L.) 55, per Lord Watson, at p. 59 ; A. C, at p. 667. 4 Second East Dulwich, 1899, 79 L. T. 726, per Kekewich, J. 6 Smith, 1902, 71 L. J. Ch. 411, at p. 414, per Kekewich, J. me 513. There is no difference between the gratuitous and the non- ligence & atStouf gratuitous trustee in respect of the diligence required of him. The atuftou's f ac k that a trustee has accepted office on the condition of being remunerated for his services does not heighten the degree of dili- gence in which he is liable as trustee. 1 Any distinction on this point between the two classes of trustees has been latterly discarded by the legislature. 2 Again, strict diligence can only be required where there is an implied guarantee thereof, and the implication of such a guarantee extends only to agents who act in a merely ministerial capacity and for profit. 3 This distinction is best seen where a non- gratuitous trustee performs, and is permitted to remunerate himself for performing, professional work for the trust. In performing that work he will be liable in strict diligence, but only in his character of agent in the trust, not as trustee. As a trustee — a non- gratuitous one— he is remunerated only for trouble and loss of time and no guarantee of special qualities is implied, the remuneration being really an indemnity; as agent he is remuner- ated for his personal profit, and a guarantee of special qualities is implied in return. A watchmaker and jeweller conveyed his whole estate to a trustee for behoof of his creditors, the trustee being remunerated for his services out of the estate as if he were a trustee in bankruptcy. He continued to manage the truster's business for the purposes of the trust, and in course of that management a theft was committed by a servant in his employment. In delivering judgment in this case, Komer, J., ustee. chap, v.] THE EXECUTION" OF THE TEUST 281 sayg: — "The question which arises is whether the trustee is liable (to his beneficiaries) for the criminal acts of his servant. On his behalf it is said that the principle laid down in Speight v. Gaunt 4 applies, and that he is not liable. But the present case diners from that in the fact that the trustee was paid for his services. In other respects the cases are similar. I find no negligence in the selection of the servant for the work. Under these circumstances, does the fact that the trustee was paid by the truster for his services prevent the application of the principles of Speight v. Gaunt, 4, and make the defendant liable for the criminal" acts of his servant? I think not. ... I see no sufficient reason for confining the principle laid down in Speight v. Gaunt-* to cases where the trustee is unpaid, though, no doubt, some of the judges who decided Speight v. Gaunt 4 did in their judg- ments refer to the fact that there the trustee was not paid for his services. 5 I think the principle ought to be applied in a proper case, even where the trustee is remunerated." 6 The improper receipt by the trustee of a commission from a hroker, which the trustee has afterwards returned, does not impose upon him any duty greater than his ordinary duty as a trustee. 7 1 But cf. National Trustees v. General Finance, 1905, A. C. 373, App. 381, ■where the fact that the trustee was paid for his services was held to be a " very material circumstance " in considering whether he was to be relieved from the consequences of a breach of trust ; but it must be noted that the trustee was remunerated for skill as well as for trouble. 2 Cf. s. 49. 3 Raw, infra, per Tindal, C.J., at p. 101. There is a difference between the duty of an "ordinary trustee" and that of an "agent employed to do business for a remuneration" (Silver Valley, 1882, 21 Ch. D. 381, per Cotton L.J., at p. 392) ; but there must be a question of guarantee of skill in return for the remuneration (Shiells v. Blackburne, 1789, 2 R. R. 750). The liability arises from the remuneration for, not from the mere possession of, skill (Somerset v. Poulett, 1894, 1 Ch. 231, per Kekewich, J.) 4 1882, 22 Ch. D. 727 ; affirmed, 1883, 9 App. Cas. 1. Cf. s. 191. 6 E.g. Lord Blackburn, 9 App. Cas., at p. 17. 6 Jobson v. Palmer, 1893, 1 Ch. 71, at p. 76, following Raw v. Cutten, 1832, 9 Bing. 96, as clearly decided on general principle. 7 Shepherd v. Harris, 1905, 2 Ch. 310, per Farwell, J., at p. 318, following Jobson, supra. 514. The diligence required of a trustee is the diligence of the Diligence is average man, 1 not the actual diligence practised by the individual 2 average in question. 3 1 The distinction between the care exercised by an ordinarily careful man and the care actually exercised by a man in his own affairs is neatly illustrated by a case where a depositary of money put it along with his own and the whole was stolen. Lord Denman, C.J., said there : — " It did not follow from the defendant's having lost his own money at the same time as the depositor's, that he had taken such care of the depositor's money as a reasonable man would ordinarily take of his own " (Doorman v. Jenkins, 1834, 2 A. & E. 282 THE EXECUTION OF THE TEUST [chap. v. 256, at p. 258). Cf. Brogden, 1888, 38 Ch. D. 546, per Fry, L.J., at p. 571. " The fact that he has acted with equal foolishness in hoth cases will not justify him " (De Clifford, 1900, 2 Ch. 707, per Farwell, J., at p. 716). But his action is a point in his favour, as it instructs his good faith (Barker, 1898, 77 L. T. 712). 2 See Grindey, 1898, 2'Ch. 593, per Chitty, J., at p. 601, as to position of farmer with special knowledge. 3 These two criteria of diligence are authoritatively dealt with by Lord Watson in Knox v. Mackinnon, 1888, 15 R. (H. L.) 83, at p. 87. An opinion contrary to that of Lord "Watson was expressed by L. P. Inglis (Rae v. Meek, 1888, 15 R. 1033, at pp. 1045, 1046). Cf. Kennedy, 1884, 12 R. 275, per L. J.-C. Moncreiff, at p. 287). 515. This is now settled in both England and Scotland as the standard of diligence required of a trustee. 1 1 Raes v. Meek, 1889, 16 R. (H. L.) 31, per Lord Herschell, at p. 33, citing Whiteley v. Learoyd, 1887, 12 App. Cas. 727, and relying upon Lord Watson's opinion in Knox v. Mackinnon, 1888, 15 R. (H. L.) 83. 516. This standard of diligence, though now settled, has not been unanimously arrived at by judicial opinion. Lord President Inglis refers to the position of the law on this point in the follow- ing emphatic terms : — " Your Lordships are well aware how little sympathy I have with the rule now established by judgment of the House of Lords, that the law requires of a gratuitous trustee the same degree of diligence that a man of ordinary prudence would exercise in the management of his own affairs. As a definition of duty I think the rule is vague and inadequate ; and in its applica- tion it has been found to be often severe and unjust. For this evil I hope some legislative remedy will be found." x Lord Eldon, too, seems to have been of this opinion; indeed, the qualifica- tions introduced by his Lordship emphasise the similarity, in his view, of the position of the trustee acting in his own affairs, and of the trustee acting as trustee. His Lordship says: — "The Court does not expect them to take more care of the property entrusted to them than they would do of their own. . . . But I cannot persuade myself that the principle is satisfied, unless the result is as beneficial to the beneficiaries as it would be to the trustee. ... If you desire to deal for me as you would for yourself, it must be so that the dealing for me, if unfortunate, shall not be more so to me than it would have been to you, if it had been for yourself." 2 In the older cases this opinion is frequently met with. Indeed, in a very old case Lord Northington is reported as expressing an opinion that reduced the degree of diligence required of a trustee to a still lower quality. "No man can require," says his Lordship, "or with reason expect, a trustee to manage his property with the chap, v.] THE EXECUTION OF THE TEUST 283 same care and discretion that he would his own." 3 Thus, Lord Nottingham says, " He was to keep it but as his own " ; 4 and Lord Hardwieke says, " They are to keep them as their own and take the same care " ; 5 and again, " If a trustee acts as prudently for the trust as for himself and according to the usage of business," he has performed his duty. 6 In a much later case, too, Bacon, V.-C, speaks of a trustee keeping the trust estate " as carefully as if it were his own." 7 1 Carruthers v. Cairns, 1890, 17 K. 769, at p. 780. Cf. Rae v. Meek, 1888, 15 R. 1033, at pp. 1045, 1046. 2 Massey v. Banner, 1820, 1 J. & W. 241, at pp. 247, 248, per Lord Eldon, C. Cf. same judge in Attorney-General v. Dixie, 1807, 13 Ves. 519, at p. 534 (case of charitable trustees). 3 Harden v. Parsons, 1758, 1 Eden, 145, at p. 148. 4 Morley, 15th February 1678, 2 Cases in Chancery, at p. 2. 6 Jones v. Lewis, 1751, 2 Ves. Sen. 240, quoted in Job, 1877, 6 Ch. D. 562. 6 Belchier v. Parsons, 1754, Amb. 218, at p. 219. 7 Budge v. Gummow, 1872, 7 Ch. App. 719, at p. 720. 517. The diligence of the average man as the settled Acting as ° ° trustee, not standard of the diligence required of the trustee is not his ^°^/" diligence in his own affairs, but his diligence as a trustee. In most of the judicial opinions the words "in his own affairs" appear, but the opinions do not justify the rule thus suggested. Lord Watson, in stating the rule, makes excep- tions from the condition " in his own affairs " that virtually destroy the value of the condition altogether as regards the point in question. "As a general rule," says his Lordship, "the law requires of a trustee no higher degree of diligence in the execution of his office than a man of ordinary prudence would exercise in the management of his own private affairs. Yet he is not allowed the same discretion in investing the moneys of the trust as if he were a person sui juris dealing with his own estate. Business men of ordinary prudence may, and frequently do, select investments which are more or less of a speculative character, but it is the duty of a trustee to confine himself to the class of investments which are permitted by the trust, and likewise to avoid all investments of that class which are attended with hazard. So, so long as he acts in the honest observance of these limitations, the general rule already stated will apply." 1 1 Whiteley, s. 515, at p. 733, quoted by Lord Shand in Maclean v. Soady, 1888, 15 R. 966, at p. 985, and by Cotton, L.J., in Salmon, 1888, 42 Ch. D. 351, at p. 367. 284 THE EXECUTION OF THE TEUST [chap. v. 518. The supposed authority for reading into the standard of diligence the words " in his own affairs," seems to be a passage in Stair. 1 Lord "Watson, however, laid down 2 that this passage did not apply to the case of a trustee and that the passages truly applicable 3 simply refer to the trust being performed " secundum arlitrium boni viri." There does not appear in this statement of Lord Stair to be any warrant for the insertion of the words " in his own affairs " ; the presumption would appear to be against the introduction of such a condition. The trustee has to test his conduct by asking himself what would the "arli- trium boni viri " be — how would the just man decide to act had he to deal with this matter of trust management, as trustee, in my stead; not, how would he deal with a similar matter arising in his own affairs. 1 Institutions, i. 12, 10. Cf. Carruthers, 1895, 22 R. 775, per Lord Trayner, at p. 783. 2 Knox, s. 514. 3 Institutions, i. 12, 9 ; also 15. 519. All interesting example of the impracticability of the rule that would make the standard of diligence that of an average man acting " in his own affairs " is to be found in a case where the trustee was charged with want of care in making an investment of the trust money. The Court found the condition " in his own affairs" to be inapplicable, the trustee being a professional man of high standing, exercising in his own affairs at least ordinary diligence, and the transaction being one he would admittedly have entered on for himself. "It is not a case," says Lord Justice- Clerk Moncreiff, " for saying that a man should exercise the same prudence that he ought to exercise in his own affairs. Knowing the trustee as I do, I could not doubt that if the case had been his own he would have acted in the same way." Notwithstanding this, the difficulty in the application of the rule does not seem to have forced itself on the attention of the Court. Lord Shand, for instance, says : — " The rule to be applied in this case is that the trustee was bound to exhibit the reasonable amount of care in arriving at a judgment which a man of ordinary prudence would do in his own affairs," and then proceeds to quote Lord Watson's opinion to that effect. 1 But in the sentence immedi- ately preceding, Lord Shand says : — " He showed a want of that care in looking to the material points in reference to the security which any prudent man would have shown in investing the money of another," 2 which is a different standard of carefulness. chap, v.] THE EXECUTION OF THE TKUST 285 1 Vide s. 517. 2 Maclean v. Soady, 1888, 15 R. 966, at p. 985. Lord Cockburn's remark, " If they gave all the head they had they gave all that the trust could require " (Clyne, 1848, 10 D. 1325, at p. 1355), suggests that the origin of the misstatement of the rale was a confusion between the degree of intelligence and the degree of diligence required of a trustee. The intelligence and skill of a trustee are not subject to his volition, and the standard required in that respect is that which he possesses for dealing with his own affairs ; but the standard of his diligence and care, which he can regulate, are therefore those required of an average man dealing with the affairs of another. 520. In a later case, where a similar difficulty in applying the rule as conditioned by the words "in his own affairs" is observed, Lord M'Laren says : — " A trustee will, in my view, only be personally liable when it appears . . . that the security is not in fact such as a trustee ought to accept." x Bowen, L.J., referring to this question, says : — " The true test is whether a reasonable man of business would do it," and it will be seen from the circumstances of the case that his Lordship has not in his mind the conduct of such a man in his own affairs, but his conduct in the execution of a trust, for he proceeds: — "I think that ninety-nine trustees out of every hundred would have done it." 2 1 Crabbe v. Whyte, 1891, 18 B, 1065, at p. 1068. 2 Speight v. Gaunt, 1882, 22 Ch. D. 727, at p. 768. 521. The true rule, it is submitted, should read thus : — The dili- True rule of diligence. gence or prudence required of a trustee is that which a reasonably diligent or prudent man would use in the execution. of a trust — in short, the diligence or prudence of a reasonably diligent or prudent trustee. ' The duty of a trustee is not to take such care only as a prudent man would take if he had only himself to consider; the duty is rather to take such care as an ordinary prudent man would take if he were minded to make an investment for the benefit of other people for whom he felt morally bound to provide. That is the kind of business the ordinary prudent man is supposed to be engaged in ; and unless this is borne in mind the standard of a trustee's duty will be fixed too low — lower than it has ever yet been fixed, and lower certainly than the House of Lords or this Court endeavoured to fix it in Speight v. Gaunt." 1 1 Whiteley v. Learoyd, 1886, 33 Ch. D. 347, per Lindley, L.J., at p. 355. Cf. Partington v. Allen, 1887, 57 L. T. 654, per Stirling, J., at p. 657 ; Speight v. Gaunt, 1883, 9 App. Cas. 1, per Lord Blackburn, at p. 19 ; Brogden, 1888, 38 Ch. D. 546, per North, J., at p. 554. (a) The Indemnity Clause 522. The rights and duties of the trustee and the beneficiary ■ are defined, first, by the express conditions, in so far as these 286 THE EXECUTION OE THE TEUST [chap. v. are, within the limits of the law, 1 laid down by the truster himself; and, second, by the common and statute law affecting trustees where the truster's express conditions do not meet the case. "A truster may limit the degree of responsibility attaching to his trustees as far as he sees fit, and it is under every such limitation that the trustees accept their office." 2 And Lord Westbury, C, says : — " It was perfectly competent to a truster to define what should be the incidents to the duty of a trustee as long as he kept within the bounds of law." 3 1 See s. 327. 2 Ainslie v. Henderson, 1835, 13 S. 417, per L. P. Hope. 3 Wilkins v. Hogg, 1861, 8 Jur. (N. S.) 25. Of. Goodsir v. Carruthers, 1858, 20 D. 1141, per Lord Ardmillan. Forms of 523. Where the truster's express conditions vary the rules of indemnity. x the common or statute law, the provision of his trust deed effect- ing the variation, in so far as it limits the trustee's duties, is known as an indemnity clause. 1 The value of such a clause has been largely discussed, and the question is one of serious interest for trustees. Such a clause is generally inserted in a regularly drawn trust deed, and forms of such clauses are to be found in all the style books. It would almost seem, however, as if the Court considered that an indemnity clause in these forms was a mere matter of style, not to be literally interpreted as an expression of the truster's intention. "From the technical frequency of it," says Lord Moncreiff, " we are too apt to read it as mere words of course." 2 Therefore there should be inserted some simply- worded statement differing from the ordinary form, and emphatic on the particular limitations desired to be declared. This obviates the danger of the clause being treated by the Court as mere words of style. 3 Neither truster nor trustee should ever, in practice, rely on the implied indemnity in the Trusts Acts. Every trust deed includes by statutory implication "a provision that each trustee shall only be liable for his own acts and intromissions, and shall not be liable for the acts and intromissions of co- trustees, and shall not be liable for omissions," 4 but the Court has so enlarged the denotation of the terms intromission and omission 5 that the trustee who is in breach of the ordinary law has little chance of escaping liability under the protection of this provision. Relief The clause is strictly interpreted against the trustee. The nterpreted. liability, despite a clause of indemnity, of the trustee where trust funds have been allowed to remain in the control of the law agent, chap, v.] THE EXECUTION OF THE TEUST 287 has been put on this ground : — " There was no authority in the trustees to treat their agent and factor as a banker into whose account they might pay the money. If while acting strictly within the character of factor and agent there was something which he might have lawfully done but which he did fraudulently, it may well be that the liability of trustees is cut down and qualified by the immunity clause. But in this case it was not as factor or agent in any sense that could be supposed to be covered by that character, but as guardian of the money without any control or check, that the trustees thought proper to allow the defaulting agent to remain in possession of the money." 7 Signing a discharge of the debtor is not an intromission with the act of investment upon loan to him, and does not infer responsibility for it. 8 1 Of. s. 201. 2 Seton v. Dawson, 1841, 4 D. 310, at p. 328. 3 Of. Lord Westbury in s. 530. 4 24 & 25 Vict. c. 84, s. 1. Indemnity for acts of a "factor" does not cover those of law agent, nor does indemnity for "omissions" cover a devolu- tion of the trust (Mayne v. M'Keand, 1835, 13 S. 870, hut see Lord Medwyn, at p. 873). Of. Ross v. Allan, 1850, 13 D. 44. 5 Of. Lees v. Dun, 1912, S. C. 50, per Lord Salvesen, at p. 63. 6 Wyman v. Paterson, 1900, 2 F. (H. L.) 37, per Lord Halshury, C, at p. 40. 7 Ouchterlony v. Lyndoch, 1830, 4 W. & S. 148, per Lord Lyndhurst, C, at p. 153. Of. Urquhart v. Brown, 1843, 5 D. 1142. 524. A condition precedent is implied in the express limitation of conditions t i •!• p on which the liability of the trustee to the beneficiary contained in the indem- indemnity nity clause. That condition is that the clause of indemnity shall only be available to the trustee where he has discharged two common- law duties inherent in the legal conception of trusteeship. These duties are, first, to act in the matter in which he claims the indemnity with diligence in the attempted execution of his trust ; J and, second, to act in good faith. 2 These duties are cumulative, not alternative ; the discharge of either without the discharge of the other is not sufficient to entitle the trustee to claim the indemnity. The enforcement of these duties by the Court has deprived the indemnity clause of much of its apparent efficacy to protect the trustee against claims by the beneficiary. The quality of the diligence required of the trustee by the Diligence, common law has been discussed. 3 Legal good faith — bona fides — is of two qualities : actual bona Good faith. Jides — the mere want of evil intent or of knowledge of wrong in the act done 4 — and uberrima fides — the presence of good intent and •of reasoned belief 5 in the absence of wrong in the act done 6 — the ■conscientia illcesa that protects against errors in the judgment of 288 THE EXECUTION" OF THE TEUST [chap. v. expediency. 7 This latter quality of good faith is that required of the trustee. 8 As good faith is a psychological fact, it can only be inferred from material manifestations. Therefore the test of the good faith of the trustee is in practice the satisfaction of the Court that the circumstances at the time of the act were examined as a diligent and prudent trustee could, and would, examine them. 9 i Dix v. Buvford, 1854, 19 Beav. 409, at p. 413 ; Melville v. Noble, 1896, 24 R. 243, per Lord Moncreiff, at p. 253. Cf. Smith, 1896, 1 Ch. 71 ; Cardiff, 1892, 8 T. L. R. 383, as to effect of indemnity clause in Trustee Savings Bank Act, 1863 (26 & 27 Vict. c. 87, s. 11). 2 Wilkins v. Hogg, 1861, 8 Jur. (N. S.) 25, per Lord Westbury, C. Cf. a. 202. 3 S. 511 et seq. 4 Actual good faith is all that is required in the acquisition of title to goods under the Sale of Goods Act (56 & 57 Vict. c 71, s. 62 (2)), in negotia- tion of bills of exchange (45 & 46 Vict. c. 61, s. 90), in a settlement in Court (Ward v. Wallis, 1900, 1 Q. B. 675), or in the issue of a prospectus. For distinction between relations of directors to public and to company as affecting rule in Derry v. Peek, see s. 11. 5 Cf. wording of Companies Act, 1908, s. 84(1 (a)), as modifying rule in Derry v. Peek, infra. 6 The contract of insurance requires this quality of good faith (6 Edw. vn. c. 41, s. 17). 7 Of. Stair, i. 1, 20 ; see s. 282. 8 Of. s. 527 as to honesty and want of improper motive being no defence. 9 Of. Public Trustee Act, 1906 (6 Edw. vn. c. 55, s. 4 (2) h), and Irish Land Act, 1903 (3 Edw. vn. c. 37, s: 52 (7)). 525. Lord Herschell, in discussing the value of an indemnity clause of the ordinary kind, quotes and adopts the opinion of Lord "Watson 1 to this effect : — " It is settled in the law of Scotland that such a clause is ineffectual to protect a trustee against the con- sequences of culpa lata or gross negligence 2 on his part, or of any conduct which is inconsistent with bona fides. I think it is equally clear that the clause will afford no protection to trustees who from motives, however laudable in themselves, act in plain violation of the duty which they owe to the individuals beneficially interested in the funds which they administer. I agree with the opinions expressed by Lords Ivory, Gillies, and Murray in Seton v. Dawson,* to the effect that clauses of this kind 4 do not protect against posi- tive breaches of duty " ; 6 or against " a plain breach of duty." 6 1 Knox v. Mackinnon, 1888, 15 R. (H. L.) 83, at p. 86. 2 Even gross negligence, if without dishonesty, has been held to be covered by an immunity clause in the articles of association of a company relating to the liability of the directors (Brazilian Rubber, 1911, 1 Ch. 425). 3 1841, 4 D. 310. 4 The clause under discussion reads as follows : — " That the said trustees shall not be answerable for errors, omissions, or neglect of diligence, nor for the insufficiency of securities, insolvency of debtors, or depreciation in the value of purchases, nor singuli in solidum, or for the intromissions of each other or of their factor, but each for his or her actual intromissions only." " Such a provision," says Lord Herschell, " in terms identical or not distinguishable in their effect, chap, v.] THE EXECUTION OF THE TKUST 289 is a common one, and is to be found in many trust deeds " (Raes, infra, at p. 35). 6 Raes v. Meek,' 1889, 16 R. (H. L.) 31, at p. 35. 6 Wyman v. Paterson, 1900, 2 F. (H. L.) 37, per Lord Halsbury, C, at p. 40 ; A. C, at p. 278. 526. The joint opinion referred to x by Lord "Watson was this : — " Their not holding a single meeting of trustees for nine years after their acceptance, and then placing the whole funds of the estate into the factor's hands (for their concurrence in the deeds, which alone enabled him to get the money, amounts to no less) without ever from that moment taking a single step to compel him to account, or at all to ascertain what he was doing with the estate, was enough to bring the case up to that full measure of crassa negligentia which undoes all legal or equitable claim on their part to protection, even under such a clause in their favour as is founded on. Clauses of this kind do not protect against positive breach of duty. And when one accepts of the office of trustee and thereby undertakes, as he surely does undertake to some extent, to administer or superintend the administration of the estate which the trust places under his charge, what is it short of a breach of duty when he stands wholly aloof and does absolutely nothing, 2 leaving the estate in the meanwhile to run to ruin, not less effectually than if he had never taken upon himself the office of trustee at all ? " 1 Vide s. 525. 2 Where the trustees kept no books they were held to be guilty of gross negligence (Wilson v. Guthrie Smith, 1894, 2 S. L. T. No. 347). 527. These requirements of diligence and good faith, as inter- comments on condi- preted by the Court, have resulted frequently in considerable ttons at r J i j indemnity. hardship to trustees. Lord Herschell, while supporting the doctrine, seems conscious of the hardship involved. " I feel some regret," says his Lordship, " at being compelled to arrive at the conclusion that the trustee is liable, for I should be most unwilling to press the case hardly against any trustee who has acted honestly and without any improper motive. But it is the bounden duty of the Courts to enforce against trustees the obligations they have undertaken, and to protect the trust funds committed to their charge." * 1 Raes, s. 525, at p. 35. Cf. Fenwick v. Greenwell, 1847, 10 Beav. 412, per Lord Langdale, M.R., at p. 422. 528. An example of protests from the Bench against the manner in which the indemnity clause has been treated by the Court is the opinion of the minority in the leading case on this point. It is thus 19 290 THE EXECUTION OF THE TEUST [chap. v. put by Lord Moncreiff: — "The special clause of protection must mean something more than if it were not there. . . . The question, therefore, is not on the ordinary liability of one of several conjoined parties for the acts of another. It is on the responsibility precisely denned by that clause. That is the contract on which alone the trustees agreed to act at all — clearly entitled to the most favourable construction, as long as their honesty and bona fides is admitted." 1 The same view is emphasised by Lord President Inglis in these words : — " It is declared that the trustees shall not be answerable for ' errors, omissions, or neglect of diligence, nor for the insufficiency of securities, insolvency of debtors, or depreciation in the value of purchases.' Now, what can be charged against the trustee here ? You may charge against him certainly that he committed an error — an error of judgment, and a very serious error of judgment. You may charge against him also that he was guilty of neglect of diligence ; and we are certainly entitled to charge against him that he has taken an insufficient security. But these are three things for which the trust deed says that he is not to be answerable. They are just the very things from which he is protected." 2 Dealing with an analogous case, Lord Bramwell says : — " This seems to me to be a case [too common] in which there is a tendency to depart from the natural primary meaning of the words and to add to or take away from them — to hold that, constructively, words mean something different from what they say. It introduces uncer- tainty. No case is desperate when plain words may be disregarded. I deprecate this in all cases. In this particular one I believe it will be attended with at least this injustice, that the parties did not contemplate the case that has occurred." 8 1 Seton v. Dawson, 1841, 4 D. 310, at p. 328. 2 Rae v. Meek, 1888, 15 R. 1033, at pp. 1046, 1047. Of. remarks of Stuart V.-C, in Wilkins, s. 530. 3 M'Cowan v. Baine, 1891, 18 R. (H. L.) 57, at p. 62. rteffectto 529- That ifc is P ossible to protect trustees by an indemnity £dS°4 clause, if it is made distinct and emphatic enough, is established by the decision in a leading English case on the point. There a trustee had paid money over to another trustee to be applied by the latter for the purposes of the trust. Instead of doing so, he dishonestly misapplied it, and the first trustee was charged with breach of trust in allowing the money to be paid over to, and thus giving occasion for the dishonest act of, the second trustee. He was, however, held to be protected by the indemnity clause in the trust deed, which was in these terms : — " I declare that such trustee chap, v.] THE EXECUTION OF THE TEUST 291 shall be answerable only for losses arising from his own defaults, and not for involuntary acts or for the acts or defaults of his co-trustees or trustee ; and particularly, that any trustee who shall pay over to his co-trustees or co-trustee, or shall do or concur in any act enabling his co- trustees or co-trustee to receive any moneys for the general purposes of my will, or for any definite purpose authorised by my will, shall not be obliged to see to the due appli- cation thereof; nor shall such trustee be subsequently rendered liable by any express notice or intimation of the actual misappli- cation of the same moneys." l 1 Wilkins v. Hogg, 1861, 3 Giff. 116, clause taken from Haye's and Jarman's Forms of Wills, p. 345, 9th ed. ; vide observations in note there (p. 377, 13th ■ed.) as to ineffectiveness of ordinary indemnity clauses. 530. " It has been argued that, notwithstanding the extra autho- rity which this clause gives to the co-trustees to pay their money into the hands of any one of them for the several purposes of the will, without being in any degree responsible for its misapplication, this case is to be dealt with in precisely the same way as if there were no more than the usual indemnity clause. The argument has proceeded on the assumption that the usual indemnity clause amounts to nothing ; that it never receives a literal interpretation ; but that the Court will look generally at the conduct of the trustees, and, for any carelessness, or any act that a prudent man ought not to have committed, will visit the trustee who has been guilty of «uch acts, whatever may have been the language of the will, That is not the law of this Court. . . . There can hardly be language more clear or more explicit. The act for which it is sought to make the defendants liable is the concurrence by them, being two ■of the trustees, in paying the money to the third trustee, by whom it was misapplied. This is precisely the case in which the testatrix •declares that her trustees shall not be responsible for the misappli- cation of the fund. . . . But it is said that, in order to be within this extraordinary indemnity, the payment must be for the general purposes of the will. What does that mean ? Was this money allowed by them to be received by the third trustee for any other purpose than the purposes of the will, if they allowed it to be received by the third trustee, in order that it might be properly invested upon the trusts of the will ? . . . They believed that he would act honestly. He was guilty of immediate dishonesty ; he never applied the money to the purposes of the will ; he misapplied it for his own purposes. The words of the will make it impossible to hold these two co-trustees answerable for the misapplication by 292 THE EXECUTION OF THE TKUST [chap. v. the third trustee, without wholly disregarding the express words of the testatrix. It has been said that the Court will never allow any clause of indemnity to shelter a gross and abominable breach of trust. But no such case has been made out against these defendants. They have certainly been guilty of no gross breach of trust, even if their conduct was strictly a breach of trust at all. It is not a true view of the case to say that they committed a breach of trust in allowing the trust fund to be paid to the third trustee. The testatrix had said that they might safely do what they have done." x An appeal against this decision was dismissed. " There was no difficulty in holding," says Lord Westbury, C, " that the trustees were liable, unless they were protected by the clause. The frame of the clause was a remarkable departure from the ordinary form. . . . This decision would be based on the strict operation of the clause, having regard only to the intention of the will, as expressed in that clause. . . . There was an obvious intent to exclude the ordinary rules of the Court." 2 1 Wilkins v. Hogg, 1861, 3 Giff. 116, per Stuart, V.-O. 2 Wilkins v. Hogg, 1861, 8 Jur. (N. S.) 25, followed in Pass v. Dundas, 1880, 29 W. K. 332. 531. Another example of this kind is to be found in an older- Scots case, where the Court held that the trustees were protected by the special wording of the indemnity clause, even though their conduct was marked by negligence. The claim was made on them on account of the insolvency of a factor whom they had not pro- perly supervised. The indemnity clause declared, inter alia, that the trustees " shall not be liable for any omissions or neglects in their management, nor for the intromissions or solvency of the- factors, or others whom they employ, or the debtors whom they intrust, but shall only be bound to act honourably, and shall only be liable for their actual intromissions, and each of them for him- self and his own actual intromission respectively, and no farther."' Eeferring to this clause, Lord President Hope says : — " I never saw a clause in any trust deed which expressed, with so much anxiety,, the will of the truster to exempt the trustees from personal liability." 1 The effect of the special wording in this clause is- emphasised by the decisions in two Scots cases in which the trustees had allowed money to get into the hands of one of their number, and it could not be recovered from him. In these cases,, the relevant part of the indemnity clause declared that the trustees should not be held " liable for omissions, neglect of diligence of any kind, but each only for his own actual intromissions." 2 In chap, v.] THE EXECUTION OF THE TEUST 293 both cases the trustees were held not to be protected by that clause. 3 1 Ainslie v. Henderson, 1835, 13 S. 417. Of. a. 202. 2 Blain v. Paterson, 1836, 14 S. 361 ; Seton v. Dawson, 1841, 4 D. 310. 3 Cf. Urquhart v. Brown, 1843, 5 D. 1142, as an exception. There the trustee intromitted by signing the discharge of a bond, and the money was lost in his co-trustee's hands. He was held to be protected by the indemnity clause. Of. a. 523. 532. Negligence of such a quality as to take the trustee out of Absence as negligence. the protection of the ordinary indemnity that limits his liability to his own intromissions, is instructed by such continued absence of the trustee from the country where the trust is being executed as prevents him performing his trust, and that even where the absence is in performance of a duty, as, for instance, in the case of a military man going abroad with his regiment. 1 Such conduct seems to have been regarded by the Court as amounting to delegation of trust, and to fall under the rule enunciated by Sir Eichard Eichards, L.C.B. : — " Where several trustees leave the entire performance of the duties of the trust to one, all are equally responsible for the faithful and diligent dis- charge of their joint and several duty by that one to whom they have delegated it." 2 Thus Fry, J., says: — "The object of having two trustees is to double the control over the trust property, and when one trustee thinks it fit to give the other the sole power of dealing with the trust property he defeats that object, and he therefore becomes himself responsible." 3 1 Byrne v. Noreott, 1851, 13 Beav. 336, at pp. 344, 345. Of. a. 156. 2 Oliver v. Court, 1820, 8 Price 127, at p. 167. Of. Seton v. Dawson, 1841, 4 D. 310. Vide also for discussion as to state of law in England and in Scot- land respectively on this point, Home v. Pringle, 1841, 2 Bob. 384, at p. 432. 3 Rodbard v. Cooke, 1877, 25 W. R. 555, at pp. 556, 557. 533. Where a trustee intends to go abroad 1 for such a length of time as will entail his practical severance from the trust affairs, he should resign his trust, unless he obtains some satisfactory form of indemnity from the beneficiaries for what may take place in his absence, and even this he should accept only at the instigation of the beneficiaries, where they are anxious that he should not sever his connection with the trust. The Court has allowed a military man, who, it was assumed, had no power to resign under the Trusts Acts, to resign at common law, his plea being that his military duties prevented him from attending the meetings of the trust. 2 In judging what length of absence will unfit a trustee for attending 294 THE EXECUTION OF THE TEUST [chap. v. to the trust affairs, it is to be noted that "continuous absence from the United Kingdom for a period of six calendar months or upwards" is the test applied by the Trusts Act, 1891, to settle the question whether an absent trustee has become " incapable of acting," and subject on that ground to an application to the Court for his removal from office under the Act. 3 1 For case where English trustee had taken up residence in France, Stam- ford, 1896, 1 Ch. 288. 2 Alison, 1886, 23 S. L. E. 362. Gf. question as to absence on ground of ill- health, Blain v. Paterson, 1836, 14 S. 361. 3 54 & 55 Vict. c. 44, s. 8. Gf. 30 & 31 Vict. c. 97, s. 11. 534. The implication of negligence in the trustee's going abroad and thus leaving the trust affairs in the hands of co- trustees does not arise in the case when a trustee is resident out of the locality where the trust falls to be executed, and so is not able to attend to trust matters personally. A trustee in that position, as, for instance, a trustee on a Scots trust who resides in London, appears to be quite entitled to place a reasonable amount of confidence in the action of the trustee who is on the spot. In connection with the case instanced, Lord Young speaks of " the ordinary reliance which one trustee who is absent places on another who is on the spot, and who is in a position to take an actual part in the management of such trust affairs, as the lending of money on a local security." x 1 Kennedy, 1884, 12 R. 275, at p. 291. 3. The Trustee must Act Prudently Quality of 535. The quality of the prudence required of the trustee is prudence. x ± analogous to that of the diligence 1 required of him. Therefore the prudence required of the trustee is the prudence that would be exer- cised by a reasonably prudent man acting as a trustee. 2 It must be kept in mind that the duty of acting prudently does not entitle the trustee to substitute his judgment for that of the truster. How- ever prudent and judicious 3 the action of the trustee may be in fact, this will not prevent it being a breach of trust if it is not within his powers. 1 Vide s. 511 dseq. 2 Vide a. 521. s Perrins v. Bellamy, 1899, 1 Ch. 797. ("My old master, the late Lord Justice Selwyn, used to say :— ' The main duty of a trustee is to commit judicious breaches of trust,' " per Lindley, M.R., at p. 798.) Prudence m 536. In a leading case in the English Court of Appeal it was usual course *- r of business, said that a trustee may do what is in the "usual course of busi- chap, v.] THE EXECUTION OF THE TRUST 295 ness." x However, in a later case where these words were cited in support of the doctrine that the actual usage of business, whatever it may be, is the test of the trustee's action, they were thus inter- preted by Kekewich, J. : — " I think it is to be found in Speight v. Gaunt, 1 as a matter of principle, that the trustee may do that which, if usual, is also prudent in matters of business." 2 1 Speight v. Gaunt, 1883, 22 Ch. D. 727, per Jessel, M.R. 2 Bullock, 1886, 56 L. J. Ch. 221, at p. 224. 537. Diligence and prudence 1 differ widely in their nature. It Prudence . and dili- is difficult to imagine a trustee as being over-diligent, but it has been gence con- laid down that a trustee may be over-prudent. Thus a trustee raised proceedings "without ascertaining whether his cestui que trusts, who were all much over their majority, were satisfied with the provision made for them ; and when by their answer they declared themselves satisfied, the suit was still carried on, when its object had been fulfilled, 'and no further performance of the agreement could be required." Here Malins, V.-C, said he considered the trustee had brought himself within the observations made by Knight Bruce, L. J., 2 in being " cautious overmuch " 3 in his conduct, and he accordingly dismissed the proceedings, with costs against the trustee. 4 The trustee is not guilty of over-prudence if there is any risk, however small. In an appeal 2 from a decision of Stuart, V.-C, Turner, L. J., held that the trustee was not guilty of over-prudence, because the case did not deal with " a transaction in which there would be a total absence of risk. It may be," says his Lordship, " that the risk would be small ; but trustees are entitled to the protection of this Court against any risk." 5 1 See Turner, 1897, 1 Ch. 536. 2 King, 1857, 1 De G. & J. 663, at p. 674. Gf. Jessel, M.R., in Cull, 1875, 20 Eq. 561, at p. 564. 3 Trustee " unduly cautious " in question of investment, Melville v. Noble, 1896, 24 R. 243, vide Lord Moncreiff, at p. 253. Gf. s. 612, and Manners there, at pp. 834, 835, per Lord Pearson (Ordinary). As to circumstances in which trustees would be held to be unreasonable in demanding an accounting for moneys paid to their solicitors for disbursement before allowing them further payments, De Clifford, 1900, 2 Ch. 707, at p. 715. 4 Bradby v. Whitchurch, 1868, W. N., at p. 81. Gf. Hetling, 1893, 3 Ch. 269, per Lindley, L.J., at p. 280; Smith v. Telford, 1838, 16 S. 1223 ; Flower, 1884, 27 Ch. D. 592, at p. 598. 6 King, supra, at p. 673. 4. The Trustee must Act Intelligently trustee is bound to execute his trust He may be held liable for breach of trust by not having a reason- of trust. 538. The trustee is bound to execute his trust intelligently. Reasonable knowledge 296 THE EXECUTION OF THE TEUST [chap. v. able knowledge of the affairs of the trust. 1 "A trustee may involve himself in serious difficulty, by want of the information which it was his duty to obtain." 2 In considering what is reasonable knowledge, it is to be noted that he is not bound to have knowledge of a state of facts the existence of which he has no ground to suspect ; e.g. that funds belong to the trust estate beyond those he believes to be the whole trust estate. 3 Knowledge It is a presumption of law that the trustee knows the duties presumed, of his office. It is not a relevant defence to a charge of breach of trust that he did not know his duty. " People who undertake a duty are bound to know what their duty requires." 4 1 Youde v. Cloud, 1874, 18 Eq. 634 2 Walker v. Symonds, 1818, 3 Sw. 1, per Lord Eldon, at p. 58. 3 Geaves, 1856, 8 De G. M. & G. 291, at p. 309. * Wyman v. Paterson, 1900, 2 F. (H. L.) 37, per Lord Halsbury, C, at p. 40. 539. The trustee is bound to know the state of the titles of the property, and should at once, after accepting the trust, make inquiry as to where they are, and examine them, or have them examined, to find out their condition. 1 Thus where trustees had never examined the settlement under which they were act- ing, Lord Langdale, M.E., says : — " It does not appear that these trustees ever looked into the settlement ; but having contracted obligations by the execution of the deed, 2 they attempt to excuse themselves by saying that they were ignorant of the trust. This cannot avail them." 3 1 Lloyd v. Jones, 1885, 29 Ch. D. 221, per Pearson, J. 2 I.e. acceptance of the trust. 3 Fenwick v. Greenwell, 1847, 10 Beav. 412, at p. 422. inquiry by 540. In view of this duty of the trustee to act intelligently, new trustee. •> o J' a new trustee should, whenever he comes into the trust, immedi- ately set himself to get information as to its circumstances. " I think," says Kekewich, J., " that when persons are asked to become new trustees, they are bound to inquire of what the property consists that is proposed to be handed over to them, and what are the trusts. They ought also to look into the trust documents and papers to ascertain what notices appear among them of incumbrances and other matters affecting the trust." 1 The trustee should also examine the state of the accounts to see that they have been properly audited up to date, and that the auditor's reports are satisfactory. 2 chap, v.] THE EXECUTION OF THE TEUST 297 1 Hallows v. Lloyd, 1888, 39 Ch. D. 686, at p. 691. But see Buchanan v. Eaton, 1911, S. C. (H. L.) 40, at p. 45 ; A. C. at p. 260, for weight to be given to a statement of the truster. 2 Sommerville v. Wemess, 1854, 17 D. 151 ; Pearson v. Houston, 1868, 6 M. 286. Cf. s. 969. 541. The trustee must act according to his actual knowledge Actual ° knowledge. where that is in excess of his implied knowledge of the affairs of the trust. " I have always," says Wigram, V.-C., 1 " understood the principle of law to be that what a man knows for one purpose he knows for all ; and you do not inquire whether he learnt it in one character or in another." 2 "Where a trustee has acquired infor- mation casually, he is bound, unless it has escaped his memory, to act according to that information, subject to his opinion of its value. 3 1 " The very learned and accurate judge," per Lord Selborne, C, in Minet • v. Morgan, 1873, 8 Ch. App. 361, at p. 368. 2 Meux v. Bell, 1841, 1 Hare, 73, at p. 88. 3 Meux, supra. 542. It is not reasonable that trustees should be expected to Foreign law. know the law of a foreign jurisdiction. Thus where executors paid over money to foreigners, who, according to the foreign law, were not entitled to it, though they would be according to the native law, it was held that the executors would be liable only if they had actual knowledge of the state of the foreign law. 1 1 Leslie v. Baillie, 1843, 2 Y. & C. Ch. 91. 543. Where a third party, dealing with a beneficiary, makes Duty to inquirer. inquiries of the trustee as to the state of the trust affairs, the latter is not responsible to the former for more than actual knowledge. "I am not aware of any principle or authority," says Lindley, L.J., "which imposes upon him any obligation to to do more than give an honest answer to the inquiry — that is to say, to do more than answer to the best of his actual knowledge and belief." And, "There is no equitable as distinguished from legal obligation to answer such inquiries; and if a trustee gives an honest answer he discharges the only obligation which he is under." 1 1 Low v. Bouverie, 1891, 3 Ch. 82, at p. 100. Cf. Burrowes v. Lock, 1805, 8 E. K. 33 ; Oliver v. Bank of England, 1902, 1 Ch. 610, at p. 618. 5. The Trustee must Act Independently 544. It is the trustee's duty to act on his own independent judgment, irrespective of any pressure or influence brought to bear on him by co-trustees, 1 by beneficiaries, 2 or by guardians. 3 298 THE EXECUTION OF THE TRUST [chap. v. co-trustees. The danger of acting otherwise than independently of co-trustees has already been pointed out. 4 A trustee, provided he acts in good faith, does not act otherwise than indepen- dently because he modifies his opinion as the result of discussion with a co-trustee, even where the co-trustee has a personal interest in the decision. 5 A lady who succeeded her deceased husband as a trustee defended her trust actings on the ground that she had followed the practice of her husband to the time of his death, and believed what he had done was right. This was not held to excuse her from performing her duty to act reasonably and properly "according to the law of the Court." 6 Guardians. Where the beneficiary has other guardians than the trustees on his estate, the trustees must act solely for the bene- ficiary's interest and without reference to the interest of the guardian. Thus where a deceased mother left property to trustees for behoof of her daughter, her father being her guardian, it was ruled that "the trustees in exercising their discretion must consider what is most for the benefit of the infant. . . . They must not be deterred from doing what is for her benefit because it is also a benefit to the father, though, on the other hand, they must not act with a view to his benefit apart from hers." 7 1 Of. Second East Dulwich, s. 511 ; Alexander v. Johnstone, 1899, 1 F. 639, at p. 649. 2 Chalmer v. Bradley, 1819, 1 J. & "W. 51, at p. 67. Of. Hotchkin, 1887, 35 Ch. D. 41. 3 Stewart, 1871, 8 S. L. E. 367. 4 S. 532. 6 Schneider, 1906, 22 T. L. R. 223, per Warrington, J., at p. 226. 6 Smith, 1902, 71 L. J. Ch. 411, at p. 413. 7 Lofthonse, 1885, 29 Ch. D. 921, per Cotton, L.J., at p. 932. No duty on 545. There is no duty incumbent on the beneficiary to super- benenciary •* ./a t™tee rTi9e v * se *^ e trustee's execution of the trust. The beneficiary 1 is entitled to assume that the trustee will do his duty. 2 "The trustee cannot, as I apprehend," says Turner, L.J., "where the trust is clear, throw upon the cestui que trust the obligation of telling him what his duty is, and of cautioning him to observe it, thus involving the cestui que trust in the burthen and expense of those duties which he has undertaken himself to perform." 3 Of course, where the beneficiary's intervention amounts to homologation of the trustee's breach of trust, the latter will be thereby protected against claims on that account by the former, but the trustee's action is none the less a chap, v.] THE EXECUTION OE THE TEUST 299 breach of trust. Thus the statutory provision declaring the personal exceptions against the beneficiary who has interfered in an act of trust administration, refers expressly to such an act, where ultra vires, as a " breach of trust." i It is not homologation by acquiescence on the part of a beneficiary to treat a state- ment as to his rights made by the trustee as a correct statement of them, where it is not so in fact. 5 1 An absolute equitable owner has no greater duty than a limited one in the matter of watching his trustee (Shropshire Union, 1875, 7 Eng. & I. App. 496, per Lord Cairns, 0., at pp. 507, 508 ; Rimmer v. Webster, 1902, 2 Ch. 163, at p. 170). 2 Walker v. Linom, 1907, 2 Ch. 104, at p. 119. Of. Stewart v. Bruce, 1898, 25 R. 965, as to duty in dealing with beneficiary as to his interest ; Willis v. Barron, 1902, A. C. 271, at pp. 276 and 284 (not only meaning of deed, but advice as to his rights) ; Turnbull v. Duval, 1902, A. C. 429, at p. 434. As to consulting the beneficiary or his solicitor, Grove v. Search, 1906, 22 T L R 290 3 Life Association v. Siddall, 1861, 3 De G. F. & J. 58, at p. 73. Of. Thompson v. Finch, 1856, 22 Beav. 316, per Romilly, M.R., at p. 325 ; but as to consulting the beneficiaries, vide s. 284. 4 54 & 55 "Vict. c. 44, s. 6 (1). 6 National Trustees v. General Finance, 1905, A. C. 373. 546. Trustees must show their independence by acting impar- Duty to act impartially. tially between the beneficiaries ; and therefore they " should not put themselves in a position where they cannot exercise their judgment freely and independently." 1 Thus where trustees had entered into an agreement binding themselves to use their powers as trustees to further the claims of one of the claimants to the estate, the Court, on a petition by certain of the beneficiaries, removed the trustees from office. 2 1 Hotchkin, s. 547. 2 Birnie v. Christie, 1891, 19 R. 334. 547. The most familiar situation calling for a display of inde- impartiality s r J between pendence and impartiality on the part of the trustee is where the fj^"j! interests of a liferenter and those of a beneficiary in fee come into contact. In a case where the counsel for the trustees attempted to address the Court in support of a motion by the liferenter in his own interest, North, J., said : — " I decline to hear the trustees' counsel in support of the motion of the tenant for life. 1 In my opinion, trustees are appointed in order that they may act as a check upon the tenant for life in the interests of other persons who are entitled under the settlement, and they ought not to attempt to support the tenant for life, especially when his interest is opposed to that of the remainderman." 2 It is irregular for counsel for the trustee to appear for a liferenter in a question between him and the fiar. " It is the duty of the trustee's counsel 300 THE EXECUTION OF THE TKUST [chap. v. to assist the Court, and he ought not to argue on behalf of a beneficiary." 3 1 Under the Settled Land Act, 1882, the position of a " tenant for life " is largely that of an heir of entail in Scotland, and all questions of fee and life- rent arising in connection with the administration or the Act must he read in that light. As to whether a liferenter under a trust may claim to he " tenant for life" under the Act, see Llanover, 1903, 2 Oh. 16. As to duty of trustees to act independently where consent is required under the Act, see Norfolk, 1900, 1 Ch. 461, at pp. 467, 468 ; Keck, 1904, 2 Oh. 22, at p. 27. 2 Hotchkin, 1887, 35 Ch. D. 41, at p. 44. 3 Burton, 1901, W. N. 202. where 548. The truster's directions must be carried out, in what- invoiving ever partiality or favouritism, in the opinion of the trustees, partiality. this may result; the impartiality required of the trustee is impartiality in the execution of his trust. A trust direction must be carried out though it benefits the liferenter or fiar at the expense of the other — this is not a matter for the exercise of discretion by the trustee. 1 An illustrative case is thus stated by James, L.J. : — " By his will, the testator shows a clear intention that his nephew should be continued as tenant if the landlord would accept him. On investigating the state of the assets it was found that there was not enough to pay the legacies and annuities. The trustees thereupon came to the con- clusion that the will was made by the testator in ignorance of the amount of his assets. It was their duty to carry the trusts into effect impartially ; they had no right to use the power given to them by their position as trustees as a means of making a new will for the testator. They thought it morally right to extort a concession from the nephew. They consulted counsel, who gave them a cautious opinion, saying that they might properly represent the case to the nephew to induce him to make some concession, but emphatically warning them against exerting any pressure. Notwithstanding this they went to the landlord for the purpose of obtaining the power of holding out a threat to the nephew. It was a breach of duty on the part of the trustees to endeavour to induce the landlord to refuse his consent on any grounds to what the testator showed by his will that he wished and intended." 2 1 Atkins, 1899, 81 L. T. 421. 2 Ellis ii. Barker, 1871, 7 Ch. App. 104, at pp. 107, 108. 6. The Trustee must Act Openly 549. It is the duty of trustees to execute their trust openly and frankly towards those interested, whether beneficiaries or chap, v.] THE EXECUTION OE THE TRUST 301 co-trustees, 1 and on all occasions to avoid any suspicion of underhand action. "He who, undertaking to give information," says Lord Eldon, "gives hut half information, in the doctrine of this Court conceals," 2 and a trustee has been mulcted, by expenses being given against him personally, for " evasive " answers in an action against him by the beneficiary. 3 In dealings by the trustee with the beneficiary, the standard of the ordinary course of business with third parties is not a sufficiently high test of the duty of the trustee. Thus he has a duty to see that the beneficiary in any dealing with the trustee about his interest in the estate is either independently advised or deliberately prefers to act upon his own judgment, and that in the latter case any information as to his interest volunteered by the trustee is complete and exact. 4 A trustee who had in his possession a valuation of a part of the estate was held to have acted in breach of duty towards a bene- ficiary in purchasing this part of the estate from him without disclosing the valuation to him. 6 1 As to the duty of the individual trustee to act openly toward his co-trustees, vide s. 173. 2 "Walker v. Symonds, 1818, 3 Sw. 1, at p. 73. 3 Keech v. Kennegal, 1748, 1 Ves. Sen. 123. * Stewart v. Bruce, 1898, 25 R. 965. 5 Doiigan v. M'Pherson, 1902, 4 F. (H. L.), 7 A. C. 197. 550. " One of the duties of a trustee to his cestui que trust is Limits of duty to give to afford him all reasonable and proper information x in reference information. to the matters of the trust," 2 e.g. " what is the value of the estate, the amount of the moneys raised by sales and from the rents, and of the debts and incumbrances paid and of those remaining unpaid " ; 3 and on the occasion of a sale of the trust estate, or any part of it, notice of the date and place of the sale to enable him to attend and make arrangements to ensure a good sale. 4 A bene- ficiary, though one of many, 5 has a right to inspect all title- deeds and other documents relating to the trust estate which are in possession of the trustees, " subject to this, that there might be circumstances which would justify the trustees in withholding them from him." 6 Such circumstances are suggested in the follow- ing opinion of Lindley, L.J. : — " The duty of a trustee is properly to preserve the trust fund, to pay the income and the corpus to those who are entitled to them respectively, and to give all their cestui que trustent on demand information with respect to the mode in which the trust fund has been dealt with, and where it is. But it is no part of the duty of a trustee to tell his cestui que trust 302 THE EXECUTION OF THE TEUST [chap. v. incum- what incumbrances he (the cestui que trust) has created, nor which brances. x -*■ ' of his (the cestui que trust's) incumbrancers have given notice of their respective charges. It is no part of the duty of a trustee to assist his cestui que trust in selling or mortgaging his beneficial interest and in squandering or anticipating his fortune." 7 An Accounts, assignee of the beneficiary's interest who obtains information as to that interest by using improper pressure upon the trustee is barred by this action from making any claim upon the trustee for loss arising through the information so obtained being erroneous. 8 The information must also be so limited as not to disclose to one beneficiary the private dealings of another beneficiary. 9 "Where trust accounts are mixed with the trustee's own accounts, a bene- ficiary is entitled to inspect the original books, even where these are partnership books, if the other partner has permitted insertion Reasons for of the trust accounts in these books. 10 On a challenge by a bene- action. ficiary of any proposed exercise of discretion by the trustees it is their duty to inform the beneficiary of the reasons for their decision to so exercise their discretionary power. 11 1 Cf. s. 961. 2 Springett v. Dashwood, 1860, 2 Giff. 521, per Stuart, V.-C, at p. 526, following Lord Eldon in Clarke, infra. Exhibition of the trust deed is an elementary duty in this connection (Nicol v. Cameron, 1829, 7 S. 777). 3 Clarke v. Ormonde, 1821, Jac. 108, at p. 120. Cf. Walker, s. 549, at p. 58 ; Newton v. Askew, 1848, 11 Beav. 145, at p. 152. 4 Anon, 1821, 6 Madd. 10. 6 A beneficiary whose interest in the trust fund was only one-twelfth share was held entitled to an order by the trustee on the Bank of England, where the stock forming the trust estate was registered, to discover all charging orders or other burdens on it, though these might affect the interests of other beneficiaries (Tillott, 1892, 1 Ch. 86). 6 Cowin v. Gravett, 1886, 33 Ch. D. 178, per North, J., following and discussing Gough v. Ofney, 1852, 5 De G. & Sm. 653 ; Bugden v. Tylee, 1856, 21 Beav. 545, and Simpson v. Bathurst, 1869, 5 Ch. App. 193, per Lord Hatherley, C, at p. 202. Cf. as to director, Henderson v. Huntington, 1877, 5 R. (H. L.) 1, per Lord O'Hagan, at p. 8. 7 Low v. Bouverie, 1891, 3 Ch. 82, at p. 99 ; 7 T. L. R. 582. 8 Porter v. Moore, 1904, 52 W. R. 619. See 59 & 60 Vict. c. 25, s. 40, dealing with the inspection of a Friendly Society's books by a member. 10 Freeman v. Fairlie, 1817, 3 Mer. 29, per Lord Eldon, at pp. 43, 44. 11 Dyson v. Fowke, 1896, 2 Ch. 720, per Kekewich, J., at p. 726. Documents 551. A difficulty sometimes arises in regard to the beneficiary's Telating 1 . J to legal right to inspect documents relating to litigation ; e.g. opinions of counsel taken by the trustee. Dealing with this question, Lord Eomilly, M.E., says : — " There can be no question that the rule is, that where the relation of trustee and cestui que trust is established, all cases submitted and opinions taken by the trustee to guide himself in the administration of his trust, and not for the purposes of his own defence in any litigation against chap, v.] THE EXECUTION OF THE TRUST 303 himself, must be produced to the cestui que trust." 1 And if taken before the questions in the litigation were, to the knowledge of the trustee, raised, they are held to be taken by the trustee as trustee, and not for the purpose of his own defence. 2 "Com- munications by and to the trustees and their solicitors in relation to the trust estate, made before the action was brought," follow the same rule. 3 1 Wynne v. Humbertson, 1858, 27 Beav. 421. 2 Devaynes v. Robinson, 1855, 20 Beav. 42. 3 Mason v. Cattley, 1883, 22 Ch. D. 609. Cf. Postlethwaite v. Riekman, 1887, 35 Ch. D. 722. 552. In a case where two opinions of counsel were in question, one taken by the trustees in the administration of the trust, and another by the trustees for the purposes of their own defence in an action against them by the beneficiaries, Kindersley, V.-O, speaking of the former, says : — " The opinion was taken before pro- ceedings were commenced or threatened, and in relation to the trust. Under these circumstances, it appears to me that all the cestuis que trust have a right to see that case and opinion." His Lordship then continues thus : — " The other case and opinion, however, stands on a totally different footing. This was not to guide the trustees in the execution of their trust ; but after pro- ceedings had been commenced against them, they took advice to know in what position they stood, and how they should defend themselves in the suit. It appears to me that the cestuis que trust have no right to see this case and opinion, unless they can make out that the trustees can charge the expense thereof on the trust funds. As to this there is no proof ; the trustees may them- selves have to bear the expense of this case and opinion, as having been stated and taken by them as litigant parties with the cestui que trust." 1 1 Talbot v. Marshfield, 1865, 2 Dr. & Sm. 549. Cf. Bacon, 1876, W. N., p. 96, 34 L. T. 349, where a correspondence between trustees and their solicitors, and instructions to, and opinions of, counsel, in a previous litigation against the trustees, were held to be privileged against the beneficiaries. Vide also Brown v. Oakshott, 1849, 12 Beav. 252, circumstances where opinion of counsel was held to be privileged against beneficiaries. Vide question as to beneficiary getting draft of trust deed instead of copy, Holdsworth, 1838, 4 Bing. N. 0. 386. 553. There is no absolute duty on the trustee to volunteer where duty . , to volunteer information, 1 though such a duty may be implied by the circum- information, stances of the case. There is no such implication of duty, merely because the trustee has a beneficial interest that may depend upon Trustee also , . beneficiary. his not volunteering information. A house was left to the trustee 304 THE EXECUTION OF THE TEUST [chap. v. in the event of another person not returning from abroad and claiming it. The trustee had no duty towards the absent person to give him notice of the terms of the legacy. 2 In any case the duty of the trustee is discharged by his saying, — There is the trust deed under which you take an interest, and what that interest is your lawyer will explain to you. It is not be the duty of the trustee to explain the law to the beneficiary. 3 where Where the beneficiary has an election, there is a duty upon election. , the trustee to see that information of that position reaches the beneficiary before the trustee distributes the estate upon the widow. footing that an election has been made. 4 A widow who is re- quired to make election between her legal and her conventional rights must have the fullest information put before her by the trustees to enable her to judge of the alternatives. 5 Minors. Where any of the beneficiaries are under age, it is the duty of the trustee to see that they are informed, on attaining majority, what their position is and what are their rights, quite irrespective of how it may affect the trustee himself. The following case is an example of such a situation. Two trustees allowed a third trustee to have complete control of the trust funds, and the beneficiaries had in consequence been led to think that they had no claim against any one but the third trustee. The other two trustees were held to be bound to inform each beneficiary, on his attaining majority, of his rights under the trust, including his claim against them, even although the financial position of the third trustee was such that it would fall on them to make up any deficiency in the trust funds. 6 poucy. of A trustee without any active duty other than that of transferring the trust estate to the beneficiary is not bound to volunteer information to him as to the lapsing of a policy over the trust estate. 7 1 But see Lord Ardwall in Rodger, infra, at p. 1023. 2 Lewis, 1904, 2 Ch. 656, discussing Lord Hardwicke's judgment in Chauncy v. Graydon, 1743, 2 Atk. 616. Of. Mackay, 1906, 1 Ch. 25, per Kekewich, J., at pp. 32, 33, discussing Lewis, supra, and Brittlebank v. Goodwin, 1868, 5 Eq. 545, per Giffard, V.-G, at p. 550, which was not noticed in Lewis. Giffard, V.-G, affirms the duty to give information, and Kekewich, J., thinks the question requires to be examined more closely. 3 Mackay, supra, per Kekewich, J., at p. 33. 4 Rodger v. Allfrey, 1910, S. G 1015. Such intimation should be made to each interested beneficiary personally and not, e.g., to a father for himself and his children. 6 Stewart v. Bruce, 1898, 25 R. 965. 6 Burrows v. Walls, 1855, 5 De G. M. & G. 233, vide Lord Cranworth, C, at p. 253. 7 Dowson v. Solomon, 1859, 1 Dr. & Sm. 1, per Kindersley, V.-G, at pp. 13, 14. CHAPTER VI GETTING IN THE ESTATE I. The Recital of the Estate in the Trust Deed 554. When the trustee has accepted the trust, he must at Effect of i • • i i » recital. once proceed to investigate the nature and extent of the trust estate. The whole estate must then be reduced into possession, and a proper title thereto completed. In tracing the estate the trustee must be guided by any recital or narrative of its items in the deed of trust, and though he is not bound to make forth- coming the estate as there recited, unless it exists, and is recover- able, 1 yet the fact of this recital imposes on him the burden of showing that there is reasonable cause to believe that the estate as recited does not exist, 2 or is not recoverable. 3 He is entitled to rely upon a statement made to him by the truster and his law agent that bonds have been paid off — the trustee has no duty to inspect the law agent's books to test these statements. 4 Where the trustee, in dependence upon an erroneous recital, Accretion r r of title. purports to transfer estate to which he has no title, a subsequent title to that estate acquired by him as trustee completes the title of the transferee, even though the defect of title in the original transfer is apparent on its face. 5 1 As to the effect of the brocard " Actio personalis moritur cwm persona " upon a claim of damages by the truster, see discussion in Riley v. Ellis, 1910, Sfc. 934. ^ J . . 2 Cf. Macnamara v. Carey, 1867, I. R, 1 Eq. 9, where five parcels in recital of deed, but held only three fell under the trust. 3 As to the right to make a banker exhibit his books, in this connection, on the allegation that the deceased truster did business with the bank, vide Clark v. Mitchell, 1825, 4 S. 102. Generally, as to the duties of a trustee to ascertain the nature and amount of the liabilities affecting the trust estate, where the truster was engaged in trade up to the moment of his death, vide Thomson v. Campbell, 1838, 16 S. 560. * Buchanan v. Eaton, 1911, S. C. (H. L.) 40, at p. 45 ; A. C. 253, at p. 260. 6 Bridgwater, 1910, 2 Ch. 342 ; Noel v. Bewley, 1829, 3 Sim. 103, at p. 116 ; Hoffe, 1900, 82 L. T. 556. Cf. Swans v. Western Bank, 1866, 4 M. 663 ; Smith v. "Wallace, 1869, 8 M. 204. 555. Where it was argued that the trustees of a marriage Bedtai not contract were bound, by the mere recital of certain estate in the biDdins ' contract, to make that estate forthcoming, the claim was repelled by Lord Langdale, M.K., in these words :— " I am not aware that it has ever been held that trustees are bound by the representa- 305 20 306 GETTING IN THE ESTATE [chap. vi. tions of parties about to be married, of the state of their property. I do not therefore accede to the argument that the recital alone binds 1 the trustees." 2 The law has been declared by Lord Cottenham, C, in a similar sense in the case of a mortis causd trust : — " A statement by a testator/' says his Lordship, " as to the value of his property cannot form any ground for charging his executors with such value." 3 1 As to the effect of paying certain legatees on the strength of the recitals, cf. s. 1098, Schneider, etc. 2 Fenwick v. Greenwell, 1847, 10 Beav. 412, at pp. 418, 419. Some English cases have been cited (Lewin, ch. xi. II. 3, p. 224, 12tn ed., note(&)) as authority for the proposition that the trustee in a marriage contract, who executes the trust deed, will be bound by the recital in the deed. Undoubtedly the trustees in the cases cited were found liable for what was recited in the deed, but not simply on the strength of the recital. In all these cases the trustee was found liable because he had been negligent, and had not taken active steps, as in duty bound, to see that the sums recited in the deed as having been conveyed to him were actually so conveyed. This is fully in keeping with the opinion and judgment of Lord Langdale, M.R., referred to in the text, for though his Lordship there refuses to hold the trustee liable for the recital, he in that case actually did find the trustee liable because he had not taken measures to recover the sums recited as having been conveyed, and which it was proved could have been recovered if the proper steps had been taken. Vide also Gore u. Bowser, 1855, 3 Sm. & G. 1, per Stuart, V.-C, at p. 10, where sug- gestion that this is a case of estoppel or personal bar by acknowledgment. Of. discussion in opinion of Cusack Smith, M.R., in Chaigneau v. Bryan, 1858, 8 Ir. Ch. Rep. 251, at p. 260 ; Story v. Gape, 1856, 2 Jur. (N. S. ) 706 (Consols not transferred) ; Stone, 1869, 5 Ch. App. 74 (stock not transferred). The fact that the trustee is a signatory of the English indenture does not seem to affect the value in Scotland of the English judgments on this point, the reasoning in which seems equally to apply to the case of the accepting trustee under the Scots deed. 3 Rowley v. Adams, 1849, 2 H. L. Cas. 735, at p. 770. Recital 556. Trustees are put on their guard bv the recital of the must be r ° J tested. estate in the trust deed, and where they fail to make it forth- coming they can only excuse themselves by showing that they have taken active and independent measures to discover and to recover it. "Trustees who find that certain property has been bequeathed to them by a will have no right to be contented with the mere intimation that the property has been mortgaged, or given away in the testator's lifetime, or that it is lost, or to accept any excuse about it which is given to them ; they are bound to say, ' By the will we are entrusted with such and such property ; we must see where this property is, and must be satisfied that that which, primd facie, belongs to us, in reality belongs to some one else, or we shall be guilty of neglect of duty.' " l Aoquirenda A marriage contract obligation for specific performance, such as mptcy. to pay acquirenda, is not discharged by a discharge in bankruptcy. 2 Advances. Where a truster recites, though erroneously, that a particular sum has been advanced to a legatee, and directs him to pay to the trust estate that amount or "the sum hereinbefore recited chap, vi.] GETTING. IN THE ESTATE 307 to have been advanced," the legatee can only take his provision upon the footing of bringing into account the sum said to have been advanced, and he receives from the trust estate only the balance payable to him after an accounting upon that footing. 3 If, however, the truster recites a debt as due by the legatee and directs payment of " so much thereof as shall remain unpaid," only the amount actually owing is to be brought into account. If, therefore, the recital is erroneous and nothing is due by the legatee, he takes the legacy in full. 4 It should be noted that where a general power of appointment Appointed is given by an English deed, the testamentary exercise of that power vests the appointed fund in the executor of the appointor for payment of his debts before transference to the appointee, Where a general power of appointment is given by a Scots deed, its testamentary exercise carries the appointed fund directly to the appointee. 6 As this result follows though the power given by the Scots deed is exercised by an English will, it would seem that where the power is given by an English deed the exercise of it by a Scots will carries the appointed fund to the executor of the appointor in Scotland as assets of the appointor charged with his debts. 1 Tudball v. Medlicott, 1888, 59 L. T. 370, per Kekewich, J., at p. 374, 1st col. 2 Reis, 1904, 2 K. B. 769, at pp. 780, 781, 786, 787. As to the circum- .stances in which an interest acquired in funds of his first marriage contract by a husband who becomes bankrupt can be settled by him upon his second marriage and are so recoverable by the trustees of the second marriage contract, see Behrend, 1911, 1 Ch. 687. 3 Wood, 1886, 32 Ch. D. 517. 4 Kelsey, 1905, 2 Ch. 465, following Taylor, 1881, 22 Ch. D. 495, as over- ruling Aird, 1879, 12 Ch. D. 291, but see Wood, supra. 6 Bald, 1897, 76 L. T. 462 ; Bryce, 1911, 2 Ch. 286. II. The Conversion of the Estate 557. When the trustee x has informed himself of the condition of the estate he must proceed to convert it, in so far as necessary, from the condition in which it has reached him, into that in which it may legally be held by him as trustee. Lord Cottenham, 0., says it is one of the principal duties of a trustee "to call in and collect such parts of the estate as are not in a proper state of investment." 2 1 It is necessary before dealing with this subject that the position of the trustee in this connection should be clearly defined. His position under an inter vivos trust is usually clear, and raises no difficulty. He is almost always the ■express disponee of specified heritage and the express assignee of specified mov- ables, and as such has an active title to get in the estate so conveyed to him. A trustee in a mortis causd trust is in a different position. The transfer to him is of property generally not specified. The truster conveys the whole of his estate as at the date of his death, As the general disponee of the deceased 308 GETTING IN THE ESTATE [CHAP. VI, truster, he can make up a title to the heritable property of the deceased, but he has no active title to recover the movables. For that purpose an executor must be appointed. To this office the trustee may be himself appointed, and generally is, but the office and title are quite distinct from his office and title of trustee (cf. Orr Ewing, 1885, 13 R. (H. L.) 1, per Lord Watson, at pp. 25, 26). In discussing the question in the text, it is impossible to draw any hard and fast line between the offices where held by the same person — part of the estate will be held as executor and part as trustee (cf. Solomon v. Attenborough, 1911, 2 Ch. 159), but the transfer- ence from the one state to the other is a matter of fact rather than one of form (vide s. 27). The principal test is whether the property in question has been transferred out of the deceased's estate into the estate of the trustee. The exact moment of passage from the character of executor to that of trustee is difficult to define (Mackay, 1906, 1 Ch. 25, at p. 31) ; it is extremely difficult to draw the line even where the facts are fully ascertained (Timmis, 1902, 1 Ch. 176, at p. 182 ; cf. Forster v. Elvet, 1908, 1 K. B. 629, at p. 636). This has been increased by the operation of the Executors Act, 1900, by which the powers of executors-nominate have been assimilated to those of trustees in all respects (63 & 64 Vict. c. 55, s. 2). In what follows, it is always presumed that the estate has passed to the trustee, and the conversion of the estate referred to is that from an improper to a proper form for holding it as trustee, and not that of realisation into cash for paying debts and winding up the deceased's affairs. Vide Appendix for further discussion of offices of trustee 2 Styles v. Guy, 1849, 1 M'N. & G. 422, at p. 431. Claim on another trust. 558. There is no distinction between the case where the estate to be got in is the beneficial interest in another trust, and the case of an ordinary debt. " The position is not altered," says Page "Wood, V.-C, "by the fact that this money was trust money." 1 1 Taylar v. Millington, 1858, 4 Jur. (N. S.) 204. Of. Ellenborough, 1903, 1 Ch. 697. Directions by truster. 559. If the truster has left any definite instructions as to the condition in which the estate is to be held by the trustee, it must be converted, if necessary, into that condition, and where the truster has left no such instructions the ordinary rules of trust administration will take effect. Thus in a deed in which the clause referring to this matter ran, "The foresaid subjects to be held and administered by the said trustees for the following purposes," Lord Shand said : — " The direction in this deed is not to hold the estate in formd specified as received by the executors, but in the form in which it shall be placed in a due and proper course of administration." 1 1 Brownlie, 1879, 6 R. 1233, at p. 1241. Power to retain. 560. Where the truster has given express power to retain the estate in the form in which he has left it, there is no necessity for conversion. " A general power to retain stocks in which the truster has already invested 1 does not differ in its scope 2 from. chap, vi.] GETTING IN THE ESTATE 309 a general power to invest in these stocks. What the trustees can do in the one case by making a new, they can effect in the other case by retaining an old investment." 3 Conversion is here a matter for the discretion of the trustees, like any other question in connection with an authorised investment. " Where a discre- tion is given to trustees upon the question whether the funds should be got in or not, it is the duty of the trustees not to call them in, if in the exercise of their discretion they are of opinion that it is inexpedient to adopt that course." 4 Before deciding to hold the estate in the same condition as left by the truster, the trustees should investigate the security, if any, on which the trust fund is lent, and satisfy themselves that it still is of sufficient value at the date at which they undertake to continue the investment in its old form. 5 1 For examples of such a power vide Brown, 1890, 18 R. 185, and Scott, 1895, 3 S. L. T. No. 205 — the latter a case of deposit-receipts for a term of years ; and cf. Perpetual Executors v. Swan, 1898, A. C. 763. 2 But the power to retain does not imply power to invest ; s. 629. 3 Robinson v. Fraser, 1881, 8 R. (H. L.) 127, per Lord Watson, at p. 138. 4 Paddon v. Richardson, 1855, 7 De G. M. & G. 563, per Turner, L.J., at pp. 582, 583. 6 Ames v. Parkinson, 1844, 7 Beav. 379, per Lord Langdale, M.R., at p. 384. 561. The example of the truster does not iustifv the trustee Example r ■> J oftruster. in retaining any part of the estate in a form unauthorised by the ordinary rules of trust administration. The presumption is for conversion, not for retention. "What the truster may have done during his life is no rule for the conduct of trustees appointed by him for the management of his estate after his death." x 1 Cochrane v. Black, 1855, 17 D. 321, at p. 332 ; referring to, and founding on, Watson, 1814, 2 V. & B. 414, 13 R. R. 128 ; Wedderburn, 1838, 4 My. & Cr. 41 ; and Kirkman v. Booth, 1848, 11 Beav. 273, at p. 280. Of. Robinson v. Fraser, 1881, 8 R. (H. L.) 127, at p. 131. 562. Where the truster had lent money to one of the trustees Loan to nominate on a personal bond, that fact was held not to empower the trustees to continue the loan. "If the trustees were not entitled to lend the sum to one of themselves on his own responsi- bility, they were not entitled to authorise him to retain it upon his own responsibility, fcr the one is exactly equivalent to the other." 1 Such a state of things is a breach of the general rule of trust administration, which forbids a trustee to put himself in a position where his duty and his interest may conflict, 2 for though, " while the truster was alive, the rights and interests of creditor and debtor were vested in separate persons," on " the trust taking 310 GETTING; IN' THE ESTATE [chap. vi. effect, and the debtor becoming the factor, 8 the only person to look after the debtor was the debtor himself."* 1 Moffat v. Robertson, 1834, 12 S. 369, at p. 376, per Lord Corehouse (Ordinary), and affirmed on appeal. 2 Vide s. 437. 3 The trustee in tliis case was also factor to the trust. * Moffat, supra, at.pp. 376, 377. continuing 563. "Where there are no special powers in regard to in trade in ments c truster. ments™™ 8 " vestment, "trustees are no more at liberty to continue any hazardous business in which the truster was engaged, or to hold shares in a trading concern which he held, than themselves to make a trade investment. It is their duty to put the trust funds in a position of safety, although the truster may have left them in a position of danger." 1 " To authorise executors to carry on a trade, or to permit it to be carried on with the property of a testator held by them in trust, there ought to be the most distinct and positive authority and direction given by the will itself for that purpose." 2 It is not necessary that " the authority must be affirmatively expressed in positive terms — it is sufficient if the authority is implied." 3 There is always implied the exception that " an executor may carry on a business for a reasonable time with a view to a more profitable realisation of the property." 4 1 Brownlie, 1879, 6 R. 1233, per Lord Shand, at p. 1241. Gf. Craven v. Craddock, W. N. 1868, p. 229, and Powell v. Evans, 1801, 5 Ves. 838. 2 Kirkman v. Booth, 1848, 11 Beav. 273, per Lord Langdale, M.R., at p. 280. 3 Stainer v. Hodgkinson, 1903, 73 L. J. Ch. 179, per Buckley, J., at p. 182. Cf. s. 627. 4 Stainer, ut supra. Probably the most harassing difficulty to be en- countered by a trustee in the exercise of his discretion in realising the truster's estate arises in connection with shares carrying a liability for uncalled capital. The considerations which should guide him in these circumstances are authoritatively set forth in the opinions of the Court in giving direc- tions to its own officer — a judicial factor acting as judicial trustee — as to his exercise of his discretion in such a case (see Browning, 1905, 7 P. 1037, and cf. s. 347). The difficulty for the trustee here discussed must be distinguished from the difficulty of his position in respect of his personal liability to the creditors of a company as the registered owner of shares with a liability for calls. It is assumed here that the trustee has sufficient trust estate to meet the uncalled liability on the shares, and that the only question is one of power to hold such shares and of proper administration within the power. In order to recoup himself for any disbursements made by him in discharge of his personal liability to the creditors of the company he would have recourse, in a question with the beneficiary, to the trust estate only if this power was judiciously exercised. 564. The position is summarised in the following opinion of Lord President Inglis : — " It is contended that as the stock belonged to the truster himself, and as he left it as part of his trust estate, the trustees were thereby authorised to retain it or some portion of it if they thought fit. Now, I am not able to give effect to that contention. The limits of the trustees' powers chap, vi.] GETTING IN THE ESTATE 311 and liabilities as to investment must depend of course primarily on the provisions of the deed, if there be any deed, and otherwise on the rules of common or statute law, and not on the character and conduct of the truster in the management of his affairs during his lifetime, or on an inquiry how far he was a prudent and safe investor or a rash and imprudent speculator. Accordingly, I think that it is well settled that to retain an unsafe and improper investment after it could be converted and realised is equivalent, as regards the duty and liability of trustees, to making the same investment by the trustees themselves. They are just as little entitled to continue the truster's imprudence as to commit it themselves." 1 1 Brownlie, 1879, 6 R. 1233, at p. 1236. In this case Lord Mure, at p. 1239, refers to the case of Laird, 1855, 17 D. 984, as an authority, but in that case there was a positive direction to realise within twelve months. The question was there limited to an accounting for the profits, for no question as to replacing capital arose, the business having been successful. 565. Lord Deas was of opinion that the rule of conversion was not so imperative as that just stated. " I cannot have any doubt," says his Lordship, " that it is a very different question, and turns on very different grounds, whether the tutor is liable for allowing such investments made by the deceased to remain unchanged, and whether he would be liable had he made them himself. In the latter case the presumption would be against him. In the former it is rather in his favour. He has a duty as to income, as well as a duty as to security. There is some hazard attending all invest- ments, even deposits in banks. There is no rule requiring the tutor to sacrifice the estate by immediate realisation. . . . The course followed was not speculation, but prudent winding up. That the estate was in its nature speculative was the deceased's act, and not the tutor's. I should be slow to sanction the doctrine that either tutors or trustees can, under no circumstances, retain, even permanently, investments made by the deceased which they would not have been themselves justified in making." 1 1 Accountant of Court v. Baird, 1858, 20 D. 1176, at p. 1184. Gf. note to Lowson v. Copeland, 1787, 2 B. C. 0. 156. (a) Rule in Howe v. Lord Dartmouth 566. In certain circumstances a long-established rule, known wasting as the rule in Howe v. Lord Dartmouth, 1 prohibits the trustee from ™nts. holding investments of a certain nature though they fall within an authorised class. The rule affects investments whose proceeds fall to 312 GETTING IN THE ESTATE [chap. vi. be distributed between beneficiaries interested as liferenters and others interested as fiars. It sets up a presumption of fact that the truster intended neither of these classes of beneficiaries to benefit at the expense of the other class merely owing to the nature of any investment in which they are both interested. The example of such an investment most commonly met with in practice is that known as a "wasting" investment — where the substance of the fee is wasted in producing the revenue. The ratio of the rule is that the testator is presumed to have intended that this should not take place. Therefore estate in such a form of investment must be converted into a form where the revenue will not tend to exhaust the capital. 2 Into the discussion of the rule some confusion has been intro- duced by the erroneous treatment of wasting investments and authorised investments as being two mutually exclusive classes of investment. A wasting investment may be of an authorised or of an unauthorised class. It is only when it is of an authorised class that any question as to its individual character as a wasting investment can arise. The rule excepts any individual investment that is of a wasting nature from the class of authorised invest- ments under which it falls. 3 In the case of Howe v. Lord Dartmouth itself this confusion appears. Long annuities which were a typically wasting investment, and Bank of England stock, which was then an unauthorised, but not a wasting, investment, were treated as if both fell under the rule. The object of the rule is to effect, not the security of an investment but equity of distribu- tion of its proceeds. 4 The rule applies only to testamentary disposi- tions, and not to a contractual trust disposition inter vivos, such as a marriage contract. 6 There is high judicial opinion to the effect that it does not apply to a specific bequest but only to a residuary one ; and further, that it applies only to personal estate given as one fund in fee and liferent. 6 1 1802, 7 Ves. 137, 6 R. E. 96. See further discussion of this rule at s. 1014 2 See Thursby, 1875, 19 Eq. 395, at p. 406. 3 See Wilson, 1907, 1 Oh. 394, and Nicholson, 1909, 2 Ch. 111. 4 Bates, 1907, 1 Ch. 22. 6 Hope, 1855, 1 Jur. (N. S.) 770 ; Straubenzee, 1901, 1 Ch. 779 ; Slade v. Chaine, 1908, 1 Ch. 522, per Cozens-Hardy, M.B., at p. 533. 6 Straubenzee, supra, per Cozens-Hardy, J. Reversion- 567. Not only investments of a wasting, but also those of mentsT a reversionary nature fall to be converted under the rule. On this point the original statement of the rule by Lord Eldon, C, • is clear and emphatic. Speaking of the will in question in the case, his Lordship says : — " The personal estate might consist of chap, vi.] GETTING IN THE ESTATE 313 a vast number of particulars : for instance, a personal annuity, not to commence in enjoyment till the expiration of twenty years from the death of the testator, payable upon a contingency perhaps. If in this case it is equitable that Long or Short annuities should be sold, to give everyone an equal chance, the Court acts equally in the other case ; for those future interests are for the sake of the tenant for life to be converted into a present interest ; being sold immediately, in order to yield an immediate interest to the tenant for life. As in the one case that, in which the tenant for life has too great an interest, is melted for the benefit of the rest, in the other that, of which, if it remained in specie, he might never receive anything, is brought in; and he has immediately the interest of its present worth." 1 The rule also applies to non- productive estate — estate yielding no income. 2 It does not in general apply to property given in fee, subject in a certain event to limitation of that fee to a liferent with a gift over of the fee. Till the occurrence of the event, the property will be enjoyed in specie? 1 Howe v. Earl of Dartmouth, 1802, 7 Ves. 137, at pp. 147, 148 ; 6 R. R. 96, at p. 102. Of. a. 1022 for accounting between beneficiaries when reversion falls in. 2 Mackie, 1845, 5 Hare, 70, at p. 76 ; Rowlls, 1900, 2 Ch. 107. 3 Bland, 1899, 2 Ch. 336. 568. Baggallay, L.J., speaks of the rule as demanding " con- summary of position. version into permanent investments of a recognised character of all such parts of the estate as are of a wasting or reversionary character." 1 This sentence contains an excellent summary of the position of the trustee in the circumstances where the rule applies. He must, first of all, see that the estate lies in " investments of a recognised character." Though the securities may be quite satisfactory as to their permanency, the trustee must see that they are at the same time within his powers of investment. 2 If not, then it is his dtity to convert them into such a state of investment. But, secondly, the estate, though in a proper state of investment as regards the trustee's general powers, may be in wasting or reversionary securities. Then it is his duty to convert it into permanent securities. 3 Where the rule applies, it thus in practice adds a limitation to the trustee's powers of investment. 1 MacDonald v. Irvine, 1878, 8 Ch. D. 101, at p. 112. 2 Crowe v. Crisford, 1853, 17 Beav. 507, per Romilly, M.R., at p. 510. This is not affected by Wareham, 1912, 2 Ch. 312, which overrules Crowe. 3 Except where it is laid out so as to produce a large income, and is not capable of immediate conversion without loss or damage to the estate. Cf. s. 1018 for treatment of such a case. 314 GETTING IN THE ESTATE [chap. vi. Conversion 569, The rule only operates where there is no evidence in only a " r tfon Ump " th e truster's deed of his intention as to holding or converting, and where his main expressed intention can only be carried out by applying the rule. " The rule proceeds upon this, that the testator has intended the enjoyment of perishable property by different persons in succession, and this the Court can only accomplish by means of a sale." * Hence, when only by an application of the rule could the truster's main object be attained, express directions for sale of part of the estate were held to be of little weight as an indicium of his intention that the rest of the estate should not be converted. 2 1 Cafe v. Bent, 1845, 5 Hare, 24, per Wigram, V.-C, at p. 35. Cf MacDonald v. Irvine, 1878, 8 Ch. D. 101, per Thesiger, L.J., at p. 124. 2 Cafe, supra. 570. "Where there is any tangible indication of the truster's intention, 1 there is no place for the application of the rule. " If the will manifests an intention that the general residue of the estate shall be enjoyed by different persons in succession, and there is nothing to qualify that simple intention, the Court, in order to effectuate it, converts so much of the testator's estate as is of a perishable nature into investments of a permanent kind. But if the intention of the testator appears to be, that the first taker shall enjoy the property in that state in which it exists at his death, the Court is bound to give effect to that intention." 2 Again, Lord Cottenham, C, says : — " It is quite as well settled as Howe v. Lord Dartmouth itself is, that when you find an indication of intention that the property is to be enjoyed in its existing indicia state, it shall be so enjoyed." 3 Such an indication of intention is of intention. . instructed by a discretionary power of sale given to the trustees, which, as it involves a discretionary power to hold in specie, prevents the operation of the rule in Howe. 4 The Court has indeed gone further, and held that even in a case " where there is a direction for conversion of personal estate," but that direction is "followed by a power of retention of existing securities in the absolute discretion of the trustees," they are entitled to retain even wasting securities. " The testator directs his trustees to convert everything — a direction as absolute as it is possible to conceive ; and then he gives an equally absolute discretion to his trustees to retain securities," and the power was held to override the direction. 5 A general power to retain investments for an indefinite time is an indication of intention sufficient to exclude the opera- tion of the rule. " The obligation to convert (under the rule) and the chap, vi.] GETTING IN THE ESTATE 315 power to retain at their discretion are inconsistent the one with the other." 6 The gift of " rents * to the liferenter 7 is not in itself an indication of an intention to give an enjoyment in specie of English leasehold property (which is a wasting subject), neither is a contingent power of distress in order to secure payment of their annuities given to annuitants over lands of which the rent- producing subjects formed part an indication of intention. 8 1 For form of will excluding rule in Howe, see Hubbuck, 1896, 1 Ch. 754, at p. 755, and see Lindley, M.R., at p. 758. 2 Pickup v. Aitkinson, 1846, 4 Hare, 624, per Wigram, V.-C, at p. 628. 3 Pickering, 1839, 4 My. & Or. 289, at p. 304. " The value of this case is that it contains an exposition of the principle which ought to guide Courts of Equity in dealing with such questions" (Thursby, 1875, 19 Eq. 395, per Bacon, V.-C, at p. 411). 4 Simpson v. Lester, 1858, 4 Jur. (N. S.) 1269, per Kindersley, V.-C. ; Gray v. Siggers, 1880, 15 Ch. D. 74, per Malins, V.-C. ; Leonard, 1880, 43 L. T. 664, per Bacon, V.-C. ; Pitcairn, 1896, 2 Ch. 199 ; Bentham, infra. 6 Thomas, 1891, 3 Ch. 482, at p. 487, following Lord Cairns in Brown v. Gellatly, 1867, 2 Ch. App. 751, at p. 758 ; Hay, 1903, 11 S. L. T. No. 174. 6 Bates, 1907, 1 Ch. 22, per Kekewich, J., at p. 27, followed in Wilson, 1907, 1 Ch. 394 ; Nicholson, 1909, 2 Ch. Ill, following Gray v. Siggers, 1880, 15 Ch. D. 74, and differing from Porter v. Baddeley, 1877, 5 Ch. D. 542, which laid down that to exclude the rule, the power to retain must be not general, but applied to specified investments. 7 Bentham, 1906, 94 L. T. 307. 8 Game, 1897, 1 Ch. 881 ; "Wareham, 1912, 2 Ch. 312. 571. Where there is any dubiety as to the applicability of the induMo rule, there is a presumption in favour of its being applied. It applies, rests with the objector to show, in the trust deed, the intention that will elide the application of the rule. " In my opinion," says Komilly, M.E., "the rule of law is, that unless there can be gathered from the will some expression of intention that the property is to be enjoyed in specie, the rule in Howe v. Earl of Dartmouth is to prevail. It is, therefore, incumbent on the persons contesting the application of that rule, and on the Court which forbids that application, to point out the words in the will which exclude it; and if this cannot be done, the rule must apply." x "Certainly it lies upon those who assert that any portion of the property is not to be converted to show that." 2 1 Morgan, 1851, 14 Beav. 72, at p. 82, adopted by Thesiger, L.J., in Mac- donald v. Irvine, 1878, 8 Ch. D. 101, at p. 121 ; Lyons v. Harris, 1907, 1 1. R. 32, per Lord Chancellor Walker, at p. 35. Cf. Lord Cranworth, G, in Bate v. Hooper, 1855, 5 De G. M. & G. 338, at p. 342 ; also Eaton, 1894, 10 T. L. R. 594. 2 Blann v. Bell, 1852, 2 De G. M. & G. 775, per Knight Bruce, L. J., at p. 779. The following opinion of Wigram, V.-C, cannot, in view of the current of later opinions, be regarded otherwise than as exceptional : — " The rule is settled with sufficient clearness ; the difficulty arises only in its application to partiailar cases, where the intention of the testator is expressed with more or less distinctness. It certainly has always appeared to me that, in the more modern cases, the Court, in applying the rule, has leant against conversion as strongly as is consistent with the supposition that the rule itself is well founded" (Hinves, 1844, 3 Hare, 609, at pp. 611, 612). 316 GETTING IN" THE ESTATE [chap. vi. Limits of 572. Where trustees have power to continue the estate in the power to continue, condition in which it was held by the truster, this power has been very strictly construed. 1 For example, where a truster left his estate to trustees " upon trust to permit and suffer the same or any part thereof to remain in its present state of investment," 2 and part of the estate consisted of bank shares, the nature of the liability on which was changed after the truster's death, it was held that the trustee must convert the new shares into a form of investment within his powers, the estate not being in the new shares in the same state of investment in which it had been left by the truster. 3 Though the conversion in this case is brought about by the limits of the trustee's powers of investment, and not by operation of the rule in Howe, the rule affects the con- verted investment, as the indication of intention that there should be enjoyment in specie does not apply to it. 1 See s. 626 for further treatment of this matter. 2 The corresponding clause in the 5th edition of the Juridical Styles, vol. ii. p. 583, reads, " to leave the whole sums of money, funds and others of which my trust estate may consist at the time of my death, in the securities in which the same are or may be then invested." The 6th edition (vol. i. p. 602) has introduced the words " or investments " after the word " securities," obviously with the object of giving the trustee full discretion as to the continuing of all or any part of the estate in the condition in which the truster has left it, without raising the question whether the truster intends to limit the discre- tion of the trustee to what is properly investment on security, or to extend the power to the continuing of mere unsecured obligations such as bonds of a personal nature, or bills, etc., or shares in a trading adventure (c/. s. 619). The expression " power to retain the assets in their existing state " is simpler and seems to be sufficient. Vide Hall, V.-C, in Edwards v. Edmunds, 1876, 34 L. T. 522. 3 Morris, 1885, 54 L. J. Ch. 388, per Pearson, J. III. Trustee's Beceipt Discharging Debtor of Truster 573. The claim of a trustee for conveyance, payment, or delivery to him may be met by a challenge of his title to grant to the debtor such a discharge as will protect him against claims by any succeed- ing administrator of the estate or by a beneficiary. Such a defence to the trustee's claim is pleadable in two separate situations. These are — (1) where the claim of the trustee is against the debtor of the truster in the process of transferring his estate into the possession of the trustee ; and (2) where the claim of the trustee is against a debtor of his own, as trustee — as where a purchaser of the trust estate is debtor to the trustee for the purchase-money, or a borrower of trust funds from the trustee is debtor to him for their repayment. Only the former of these situations falls to be dealt with here. The latter raises the question of constructive trust in the debtor, and is dealt with under that subject. 1 The trustee's title to chap, vi.] GETTING IN THE ESTATE 317 discharge the debtor of the truster depends either upon his con- connrma- firmation to the debt as executor of the truster, or upon an assigna- tion of the debt in his favour by the truster. In the former case the confirmation is sufficient warrant for the debtor to pay to the person confirmed. In the latter case, if the assignation is specific, Assignation that is sufficient warrant for the debtor to pay to the assignee if the debtor has no notice of a competing assignation. If the assignation is general only, there is implied by statute, where statutory there is no express power to discharge debtors given by the assigning deed, a power " to uplift, discharge, or assign debts due to the trust estate," "where such acts are not at variance with the terms or purposes of the trust." 2 Apart from the question of the power to discharge him, the debtor must satisfy himself that the individuals signing the dis- charge are the persons empowered to do so. Thus where all the trustees do not sign, he must see that those signing are a quorum of the trustees. This includes an examination on his part into the title to act as trustees of such of them as are not nominees of the truster. 1 S. 1271. 2 30 & 31 Vict. c. 97, s. 2 (4). Such a power is really declaratory of the common law in Scotland. The case of Gordon v. Andersons, 1748, Mor. 6583, suggested in M'Laren, s. 1814, as a possible exception to the common-law rule, was decided on the ground that in the peculiar circumstances of the case the trustee had no power to grant a discharge. Vide argument in the report of the case. 574. In all cases the discharge must be given and received in considera- good faith. Thus a discharge granted without consideration does good faith. not bind the trust estate. 1 Where a trust deed for creditors is followed by a sequestration of the truster's estate, a receipt by the trustee in the trust deed for a debt of the truster's paid to the trustee under the trust deed does not protect the payer from a claim by the trustee in the sequestration except in so far as the payer can prove that the money paid by him to the trustee in the trust deed reached the hands of the trustee in the sequestration. 2 There is no difficulty in the case of a specific piece of property, and, though money is more difficult to follow, it can be ear-marked and traced. 3 1 Lees v. Dun, 1912, S. 0/ 50, per Lord Salvesen, at p. 66, relying on Smith v. Patrick, 1901, 3 P. (H. L.) 14, at p. 25 ; A. C, at p. 292. 2 Davis v. Petrie, 1906, 2 K. B. 786. 3 Hallet, 1880, 13 Ch. D. 696. IV. Proper Time for Conversion 575. Where the estate comes into the hands of the trustee in conversion , t • 1 • within such a condition that it is his duty to convert it, the question y ear - 318 GETTING IN THE ESTATE [chap. vi. arises, How long may he hold it for the purpose of conversion? Both in Scotland and in England what Lord Hobhouse calls the " arbitrary but convenient rule " x has been established, that the trustee should have converted all unauthorised investments within one year from the truster's death. Thus where the direction was to convert " immediately, or so soon as they shall think fit," it was said that " although a discretion was vested in the trustees, they were bound to exercise that discretion within a reasonable time, and that that time, as a rule of convenience, should have been within one year." 2 1 Hiddingb v. Dennyssen, 1887, 12 App. Cas. 624, at p. 631. 2 Sculthorpe v. Tipper, 1871, 13 Eq. 232, per Malins, V.-C, at p. 239, relying (p. 240) on Grayburn, s. 576, infra ; Barker, 1898, 77 L. T. 712. 576. The rule is not absolute ; it only offers a definite point of time at which the trustee must undertake the onus of proving the reasonableness of keeping the estate in its old form. "The result of the authorities seems to be that there is no fixed rule that conversion must take place by the end of the year, but that that is the primd facie rule, and that executors who do not convert by that time must show some reason why they did not do so." 1 1 Grayburn *. Clarkson, 1868, 3 Cb. App. 605, per Page Wood, at p. 606. Nature of 577. The question is one of circumstances, and in cases where estate affects rule, there is a necessity for conversion before the expiry of the year, the trustee will require to convert when the necessity arises. Thus Eomilly, M.E., says : — " I consider that the executor may properly exercise a reasonable discretion, and I cannot fix any particular period. I think, in my own view, that two months would have been reasonable time, but he might fairly have considered twelve months. ... I have considered whether I could lay down any general rule, but find it impossible. The question depends on the particular nature of the property, and the evidence affecting it." His Lordship then proceeds to instance a particular kind of property, viz. horses. "You cannot fix one period for selling every species of property. Thus, suppose the testator possessed Horses. a large quantity of horses, it would be culpable to keep them, at a great expense, incurring necessarily a great outlay for their maintenance, instead of selling them at once. But with respect to other property, there must be a reasonable time allowed for selling it." x 1 Hugbes v. Empson, 1856, 22 Beav. 181, at pp. 183, 184. chap, vi.] GETTING IN THE ESTATE 319 578. Dealing with another kind of property, shares in a joint- shares. stock company, Lord Shand says : — " It may probably be reasonable to hold here, as in England, that unless there be something special to justify retaining money in a hazardous investment, a period of a year should be the limit. But I do not think that any absolute rule can be laid down. In the present case we are saved from considering any question of that kind, for it is impossible to justify the retaining of the funds in this stock for so long a period as thirteen years." 1 Where the estate included shares with a liability Not Miy paid up. for uncalled capital, Lord M'Laren says : — ■" A prudent man of business would hold the investment for a year or two years rather than give a sum of money to a transferee to take it over." 2 1 Brownlie, 1879, 6 R. 1233, at p. 1242 ; Barker, 1898, 77 L. T. 712 (fourteen years). Of. Currey v. Watson, 1895, 11 T. L. R. 371, for case of unsaleable 2 Browning, 1905, 7 F. 1037, at p. 1045. 579. Even where there is a peremptory direction to convert, Discretion where direc- there is implied a discretion on the part of the trustees to postpone «™ ^ the conversion so as to admit of its being carried through in ordinary business fashion, and without unnecessary injury to the estate. " A direction to convert with all convenient speed is no more than the ordinary duty implied in the office of an executor, and there must necessarily be some discretion." 1 "Where the trust is in such words — to sell ' with all convenient speed,' or to sell 'immediately' — there is no doubt that, after the lapse of twelve months from the testator's death, the trustees, unless they have converted the estate, have on them the onus of proving that the assets were properly retained in their existing state. But even in such cases trustees are justified in using a reasonable dis- cretion in the matter." 2 Another instance of the same kind of property is afforded in a case where the trustees were directed to convert " as soon after my death as convenient." Lord President Inglis there says: — "I understand that they were to sell these stocks and convert them into money as soon as possible, consist- ently with a judicious and discreet management of the estate. They were not of course to sell instantly, to the effect of sacri- ficing any of the stocks at too low a price, but just as little were they to hold on for any considerable time in the prospect of making these stocks more available for family purposes." 8 In this case four years was held to be too long a time to have held the stocks without converting. 4 1 Buxton, 1835, 1 My. & Or. 80, per Pepys, M.R. (Lord Cottenham), at p. 93. The stock in question here was Mexican bonds. 320 GETTING IN THE ESTATE [chap, vl 2 Edwards v. Edmunds, 1876, 34 L. T. 522, per Hall, V.-C, at p. 524, follow- ing Buxton, supra. 3 Gordon v. City of Glasgow Bank, 1879, 7 R. 55, at p. 57. Of. Hardie v. Fulton, 1895, 2 S. L. T. 520. 4 Gordon, supra, per Lord Shand, at p. 68. Gf. Fry, 1869, 27 Beav. 144. simple con- 580. Money outstanding on so-called personal security — that is, a simple contract debt 1 — is an asset that must be most summarily realised. "I desire to be understood," says Pepper Arden, M.E., "that debts due upon personal security are what executors without great reason ought not to permit to remain longer than is absolutely necessary." 2 If such a debt is allowed to lie out, the trustee should insist on having real security given for it, and where a time notice of the calling in of the principal has to be given, such notice should be given at once. 3 Thus where the trustee was directed to convert " with all convenient speed " and invest in Consols, and he left out a debt on the personal security of his co-trustees for two and a half years, it was held that the burden of proof was on him to show that it could not have been recovered, if sued for sooner. 4 A power to retain invest- ments does not authorise trustees to leave a simple contract debt outstanding beyond the time necessary to properly ingather it, but where they so retained such investments, though erroneously, in reliance upon the power in the trust deed, this has been held to protect them from liability for a loss on realisation. 5 1 It is to be noted that personal security so called is generally no security at all, and differs in no way from an ordinary contract debt. Gf. s. 631. It is in this sense that it is spoken of here. Actual personal security in the shape, e.g., of guarantors of the debt, is quite a different situation. 2 Powell v. Evans, 1801, 5 Ves. 838, at p. 844. Gf. Carruthers v. Cairns, 1890, 17 K. 769. 3 Bullock v. Wheatley, 1844, 1 Coll. 130, per Knight Bruce, V.-C, at p. 136. 4 Grove v. Price, 1858, 26 Beav. 103. In the case of Caney v. Bond, 1843, 6 Beav. 486, a trustee left out a debt on a promissory note, and was found liable to make it good. There, however, whatever his liability otherwise, the trustee may be said to have guaranteed the debtor's soundness, for on being asked by his co-trustee, and one beneficially interested, to get in the money, he declared it to be quite needless, as the money was " as safe as if it were in the Bank of England." 6 Grindey, 1898, 2 Ch. 593. change in 581. Where money has been directed to be left out on the partnership. personal security of a partnership, a question arises as to whether it should be called in on the occurrence of any change in the partnership. The matter has been looked upon by the Court as a question of intention on the part of the truster, and not as one to be regulated by technical legal distinctions where these would seem to thwart the truster's intention. Thus, where the truster's object has been to assist a business in which he is interested, it is held not to affect the trustee's power to continue the loan that there .chap, vi.] GETTING IN THE ESTATE 321 has been a change of partners, and that, consequently, the business is not conducted by the same partnership or firm, techni- cally speaking, as that with which the truster directed his trustee to leave his funds. Accordingly, where a truster desired his widow to enter into partnership with his surviving partner, and directed his trustee, in reference to a certain sum, " to continue the said sum in the said business," the trustee was held to be justified in leaving that sum with the other partner, after the partnership with the widow had expired by effluxion of time. In dealing with this ease, Eomer, J., puts his judgment on the ground that "the power was not restricted to lending it to any particular partners in the business." 1 1 Earl, 1890, 39 W. R. 107. Of. s. 627. The difference of status between an English and a Scots partnership does not seem to affect this opinion. Of. a. 582. 582. In a case involving the same issue, Lord Young, in delivering the opinion of the Court, developed this view at some length. Here the truster directed his trustees to allow the funds "to be lent or invested in the business of the firm of J. L. & Son, either as a partner thereof, or on loan, or in any other manner of way, to remain and continue invested in the hands of and on loan to the said firm, on their personal security, for the period of twenty years from and after my death." On the death of a partner, the question of change of firm arose and was thus treated by Lord Young : — " The firm is the same firm and the business the same business so far as it is possible to identify a business like this, and the question is whether the amount of the truster's money which was invested in the firm at his death, by the death of one of the partners of the firm has become immediately payable. ... It is necessary for us to find out the intention of the testator as we can judicially collect it from the deeds in question. . . . Now, the intention of the testator, as I gather it from what he said in his will, was that his business, which he had inherited from his father, which he had himself fostered, and in which he had invested these large sums of money, should be aided and fostered after his death by his funds being allowed to remain in it, and that they should not be called up for twenty years. No doubt he contemplated that the calling up of this sum immediately might be injurious to the business and to the interest of his sons, whom he desired to aid, and therefore he gave these instructions to his trustees. I think it would not be aiding his intention, and that we should be doing violence to the terms in which he expressed his intentions, 21 322 GETTING IN THE ESTATE [chap. vi. if we were to hold that when one of the partners died, or if another son should be introduced into the business, the benefaction should cease, with perhaps serious consequences to the parties he intended to benefit." His Lordship suggests, per curiam, that a change of circumstances might occur "at any time within the twenty years, or before its expiry, to make it the duty of the trustees to uplift this money, a duty which might be enforced by any of the beneficiaries whose real interests were imperilled by allowing it to remain." 1 Thus, an important 2 change in the individuals constituting the firm makes it improper to continue to the new firm a loan authorised by the truster to be given to the old firm. 3 1 Alexander v. Lowson, 1890, 17 R. 571, at pp. 578-80. The fact that the trustees were the partners actually carrying on the business made it possible that the beneficiaries might require to interfere on their own account to check any remissness on the part of these trustees. 2 Smith, infra, 3 F., per Lord Shand, at p. 24 ; A. C, at p. 292. Cf. s. 627. 3 Smith v. Patrick, 1901, 3 F. (H. L.) 14 ; A. C. 282. The considerations before the Court in this case were very special, and the rubrics of both reports of it on this question of loan seem to be wider than the opinions warrant. "Where the plain intention of the truster is that his assets, or part of them, shall continue to be used as capital in his family business, the death of one of the family who was a partner in the business, or the substitution of one member of the family to take the place of another who is retiring from the business, would not be a reason for calling up the trust funds, possibly to the great detriment of the business, unless the circumstances of the change in themselves obviously affected the safety of the funds. 583. In a case before Lord St. Leonards when Lord Chan- cellor of Ireland, the change of circumstances pointed at by Lord Young x eventuated, and was made the ground of a decision finding the trustees liable for not having called up the funds. Here the funds assigned to the trustees were lent by the truster to a firm of which the trustees individually were partners. They were directed to get in the funds " with all convenient speed, and from time to time, as opportunity should offer and occasion re- quire, should they think fit." A change took place in the partner- ship through the retirement of a partner. This, in his Lordship's opinion, threw a duty on the trustees, at least, to see that the fund was safely secured 2 if it was not called in. He grounded his judgment, however, on the action of the trustees, as members of the new firm, which showed that they knew the trust funds invested with that firm were in jeopardy. This made it their duty, irrespective of their interests as partners in the firm, to have called up the trust funds. They had committed "a plain breach of trust, not in permitting the money to remain in the old firm while they thought it safe, but in placing it in the chap, vi.] GETTING IN THE ESTATE 323 new firm, when the circumstances showed that it ought not to remain there one moment." 3 1 S. 582. 2 Security was offered and taken in the Scots case, Alexander, s. 582 Vide interlocutor of Inner House, at p. 581. 3 Cummins, 1845, 3 J. & Lat. 64, at p. 85. 584. Although it is the duty x of trustees to realise the Truster's truster's business, unless he has directed them to carry it on, or to have it carried on, it may, however, be kept on as long as is reasonably necessary for the purpose of winding it up, or dispos- ing of it as a going concern. Lord Eomilly says : — " An executor cannot carry on the trade of the testator, except for the mere purpose of winding it up." 2 Here three years was held to be too long. 1 Vide s. 563. 2 Collinson v. Lister, 1855, 20 Beav. 356, at p. 365. Of. Chancellor, 1884, 26 Ch. D. 42, per Cotton, L.J., at p. 46. Vide also Dowes v. Gorton, 1891, A. C. 190, per Lord Hersehell, C, at p. 199 ; Laird, 1855, 17 D. 984, where trustees were directed to realise within a twelvemonth and continued business partnership for several years, and were held liable, but only for profits, there being no capital lost. In Garrett v. Noble, 1834, 6 Sim. 504, trustees were held not to be liable for continuing a business for several years, where they were directed to realise "with all convenient speed," but Shadwell, V.-C, put his judgment on the ground of the acquiescence of the beneficiaries, who knew the business was being carried on. Assuming undue delay in realisation, the objector must prove as a condition of recovering damages from the trustees, that a more favourable realisation at an earlier stage was possible ((Murray, 1905, 13 S. L. T. No. 135 — realisation of a licensed business). 585. There appears to be no objection to an anticipation of Anticipa- the date at which the trustees are directed to get in the estate, date of ° conversi if this may be equally well done at the earlier date. Thus a party to a marriage contract undertook to pay to the trustees during his life, or to direct his executors to pay at his death, the sum of £5000, and also to direct his executors to pay to the trustees another sum of £5000 five years after his death, both sums being secured on an estate belonging to him. He sold the estate, and the purchaser questioned his power to clear the estate of the second sum of £5000 by paying it ■over then to the trustees. The Court held that the party to the contract was discharged of the obligation by his present payment, and that the estate was also thereby validly discharged •of the burden. 1 Similarly, a direction to convert " with all con- venient speed, after request," on the part of a person named, does not prevent the trustee converting before the request is given, if he should see proper to do so. Speaking of this clause, Grant, M.R., says : — " The object of that is only to insure that the act conversion. 324 GETTING IN" THE ESTATE [chap, vi, shall be done when the request is made : not to prevent it until request." And again, " That was intended for no other purpose than that the trustees shall not be held guilty of laches, unless a request is made : not to debar them from laying out the money, if a request was not made to them." 2 1 Maskelyne v. Eussell, "W. N., 1869, p. 184, per Malins, V.-C. 2 Thornton v. Hawley, 1804, 10 Ves. 129, at p. 137. where full 586. Where the truster has given his trustee an uncontrolled discretion ° conversion discretion 1 as to the time of conversion, the duty of the trustee must be distinguished from that where the truster has directed that the conversion should be carried out as soon as reasonably possible. Thus where the trustees had power "to postpone for such a period as they in their free discretion should think fit " 2 the conversion of the estate, they were held not to be liable for retain- ing Egyptian bonds, on a falling market, for six years, with great loss to the estate. 3 On the other hand, where the clause dealing with the conversion read, " immediately, or as soon after as they see fit," it was laid down that this pointed to conversion at the ordinary time, 4 and was to be distinguished from the former clause. 6 Again, where a trustee, who had " uncontrolled discre- tion " to sell as he should think fit, continued to hold partly paid-up shares of a commercial company, with heavy loss to the estate in the result, he was held not to be liable, as he had " apparently exercised his discretion in the matter for the best, though in the result what he had done had turned out unfortunately for the estate." 6 "If the testator," says Thesiger, L.J., "had wished to limit the discretion of the trustees, he should have used lan- guage to that effect^ but he has used language giving them a discretion in terms absolutely unfettered ; and it would be wrong for the Court to impose an artificial rule that, notwithstanding this discretion, the trustees were not to hold any investment which might bring any liability on the estate." 7 This opinion is confirmed by that of Hall, V.-C, who says : — " It seems to me that it would be very undesirable, when the testator has given his trustees an uncontrolled discretion, for this Court to treat the case as if there had been no such discretion." 8 Trustees had power to hold the truster's investments "for such time as they may think fit." These included shares having a liability for uncalled capital. Their right was held to be, not to hold these " indefinitely at their pleasure," but " so long as they are satisfied of the safety of the said shares as a trust investment." 9 chap, vi.] GETTING IN THE ESTATE 325 1 The position of the official administrator of a convict's estate in the matter of converting that estate by sale is dealt with in Oarr v. Anderson, 1903, 2 Oh. 279. 2 The word " indefinitely '' appears to mean the same in substance as the words " for such time or times as they may think fit " (Dick v. Audsley, 1908, S. C. (H. L.) 27 ; A. C. 347). 3 Norrington, 1879, 13 Ch. D. 654. * Sculthorpe v. Tipper, 1871, 13 Eq. 232. 5 Norrintgon, supra, per Baggallay, L. J., at p. 665. 6 Johnson, 1886, W. N. 72. 7 Norrington, supra, at p. 665. 8 Edwards v. Edmunds, 1876, 34 L. T. 522. Of. Schneider, 1906, 22 T. L. R. 223. 8 Boyd, 1908, S. C, 1147, per Lord Low, at p. 1151. V. Manner of Getting in Estate (a) Litigation and Diligence 587. "While the broad rule of duty, that binds the trustee to get in the estate, is clear enough, the practical questions that arise in carrying out that duty often present difficulties that demand the careful weighing of many delicate considerations. There are, however, certain general rules that serve as useful guides to the trustee in executing his trust in this matter. 588. Litigation is always open to the trustee where estate Litigation, has to be recovered; and probably the fact that the trustee had taken action to recover the estate, and that had failed, would exonerate him in all cases in which a better course was not obviously open to him. Still the trustee is bound to exercise his judgment as to what is best for the trust estate, where his discre- tion is not ousted by specific directions of the truster, and should take into consideration whether other means than that of taking legal action might not be better for the interests of the trust. 1 Speaking of the position of trustees in this matter, Jessel, M.E., says : — " There are circumstances under which they ought to take proceedings, and in which reasonable men would take it, and there are other circumstances where reasonable men would well pause before rushing into litigation ; they must take into consideration the position of the debtor, the amount of the debt, and the proba- bility of the success of the proceedings." 2 1 Of. s. 601. 2 Owens, 1882, 47 L. T. 61. 589. The trustee must consider that the raising of litigation Position of ° . debtor. may put the debtor in a position that will prevent him making as good a settlement with the trust estate as he might have made but for the litigation. Thus, Lord Eldon in one place throws 326 GETTING IN THE ESTATE [chap. vi. out the suggestion that the publicity connected with litigation might destroy the means of giving security, and it is therefore instalments, not always to be resorted to. 1 Take, for example, the case where a debtor is due the trust estate a large sum by instalments, and also a smaller sum in one payment. The trustee is not bound to enforce performance of the smaller obligation, which is immedi- ately prestable by the debtor, should he be of opinion that by enforcing it he might injure the debtor's credit, to the extent of endangering the payment of the outlying instalments of the larger debt, with the result of greater loss to the estate. 2 A distinction must be drawn here between two radically different situations: the one is that in which the trustees, finding their debtor un- able to meet his obligations strictly, think best to accept security, such security as they can get at the time for the performance of the obligation: the other is that in which they have to come to a final settlement with the debtor on behalf of the trust estate. In the former case the trustees may well be lenient with the debtor in circumstances favourable to such a course; in the latter the utmost pressure by legal process must be applied with the object of exhausting the debtor's resources for meeting his obligation modo et forma? 1 Walker v. Synionds, 1818, 3 Sw. 1, at pp. 71, 72. 2 Vide Thomson v. Campbell, 1838, 16 S. 560. s Henderson, 1900, 3 F. 17, per Lord M'Laren, at p. 23. promissory 590. In one case, however, the trustee was found liable for not doing diligence, despite his opinion that it was best for the estate not to go to that length. There part of the trust estate consisted of a promissory note, payable one day after date, taken by the deceased truster more than two years before his death. The trustee immediately claimed payment of the note, and actually recovered part of the money, but refrained from doing diligence on the note, as he was of opinion that it was best for the estate to wait and not to force the matter. His good faith 1 on this point was beyond dispute, as he was himself interested 2 beneficially to the extent of one-fourth in the estate ; yet he was held liable for not having done diligence. 3 1 Qf. s. 593. 2 Of. s. 234, note 7. 3 Forman v. Burns, 1853, 15 D. 362. The decision is highly unsatis- factory, Lord Ivory going the length of delivering two mutually contradictory opinions, having changed his mind in the interval. In the opinions of all the judges, arguments are adduced directly traversing the decision, which, however, was unanimous, and all expressed their sense of its extreme hard- ship. This case is to be distinguished from Grindey in s. 580, as there the note. chap, vi.] GETTING IN THE ESTATE 327 trustees regarded the promissory note as an investment they could validly retain, and the question of negligence did not arise, only that of power to hold. Of. Henderson, s. 589. 591. How much the trustee must be guided in the exercise £ oa . n in ° business. of his discretion by the circumstances of the particular case is illustrated by a case which came before the House of Lords involving the following peculiar circumstances. A. assigned mortis ccmsd to trustees, in trust for his son B.'s children, a sum of money, which was left by the truster during his life with his son as part of his business capital. A. wrote to B. stating that A. hoped the trustees would forbear in the execu- tion of their duty, but at the same time reminded B. that on A.'s death the money would be a debt — that it must then be realised and placed in a situation and state of security. After the truster's death, the trustees found that to call up the money would, in the state of B.'s business, have resulted in ruining him, and con- sequently his family, who were the beneficiaries. The trustees were, in these circumstances, found not to be liable for having failed to get in the money. 1 1 Ward, 1843, 2 H. L. Cas. 777, at p. 786, per Lord Lyndhurst, C. 592. The trustee is justified in not getting in the estate at once in the case of a going concern, where calling up the money would bring about a winding-up of the busi- ness and the possibility of recovering nothing, while some- thing is likely to be got by not calling it up. 1 With this is to be compared, and contrasted, a case where the party to a marriage contract assigned to trustees a bond in which he was himself the debtor, with directions that it was to be called in " when the trustees should think fit and expedient so to do." Here it was held to have been the trustee's duty to call up the bond, as being the only chance of getting pay- ment. The trustee was in knowledge of the debtor's condition, and the real reason for not calling up the bond was that the trustee was personally a large creditor of the truster's, and tried to keep up his credit for that reason, and at the expense of the beneficiaries. Here there was no question of supporting a going concern with the object of benefiting the beneficiaries, and there was a want of bona fides on the part of the trustee. 2 1 Hurst, 1890, 63 L. T. 665, per Chitty, J., at p. 668, following Clark, s. 597 ; Speight v. Gaunt, 1883, 9 App. Cas. 1 ; and Brogden, s. 596 ; affd. 67 L. T. 96, and 8 T. L. R. 528. 2 Luther v. Bianconi, 1860, 10 Ir. Ch. Eep. 194, at p. 204. 328 GETTING IN THE ESTATE [chap. vi. Good faith 593. All through these cases it is to be noticed that any essentia), ° " suspicion of bad faith on the part of the trustee, as where he places his personal interest in competition with the interest of his trust, will render him liable for a failure to get in the estate. Thus where a trustee held bonds assigned to him in trust, and failed to realise them except to the extent of meeting a debt due to himself, he was found liable for the loss to the trust estate when the debtors in the bonds afterwards failed to pay. 1 1 Marslialls v. Milne, 1677, 1 Br. Sup. 780. Vide suggestion made, but repelled by Court (Lord Lyndhurst, C), against a trustee in Ward, 1843, 2 H. L. Cas. 777, at p. 786. Cf. also Cummins, 1845, 3 J. & Lat. 64, where the trustee was held liable through trying to save himself at expense of the trust. Private 594. Where the estate to be got in consists of debts due on bonds. bonds, a radical distinction must be drawn between private bonds and marketable securities. The former must be pressed for im- mediate payment, as no advantage is to be gained by delay in seeking payment, unless in very exceptional circumstances affecting the debtor's financial resources. In the ease of the latter, where the Marketable market value of the securities varies from day to day, it is a matter securities. for the discretion of the trustees whether, when the market is depressed, it is likely to improve, and, if so, they would be entitled speculative to hold for the chance of a better sale. 1 For example, in a case where Second Mortgage bonds of the Atlantic and Great Western Eailway Company of America — very fluctuating securities — came into the hands of trustees on a falling market, and were retained by them, but without success, in the hope of an improvement, 2 the trustees were not, in the circumstances, held liable for having held the bonds. "It would be very hard upon executors who have been saddled with property of this speculative kind, and have endeavoured to do their duty honestly, if they were to be fixed with a loss arising from their not having done what, as it is proved by the result, 3 would have been the best course." i 1 Buxton, 1835, 1 My. & Cr. 80, per Pepys, M.K. (Lord Cottenham), at pp. 94, 95 [a case of Mexican bonds], referring to Lowson v. Copeland, 1787, 2 B. C. C. 156. v 2 In this case there was no express discretion to postpone conversion as there was in Norrington, s. 586. 3 Cf. L. P. Dunedin in s. 511. 4 Marsden v. Kent, 1877, 5 Ch. D. 598, per James, L.J., expressly following Buxton, supra. instalment 595. A distinction has been pointed out between payments by instalments and payment in a slump sum, to the effect that, chap, vi.] GETTING IE" THE ESTATE 329 in the case of payment by instalments, great latitude ought not to be given. " The eases of payment by instalments and at once are quite different," says Grant, M.K. " In the latter, the debtor may be able to pay that sum to-morrow, or next year ; but the chance of receiving money by instalments depends upon its being regularly received." * Where, however, a composition on a bank- rupt estate was payable by instalments from a going business, and " the result of putting on pressure would have been the stoppage of the business and non-payment of the instalments remaining due," the trustee was held not liable for not having pressed the matter. 2 It may be noticed in this connection that where the trust estate is creditor on a bankrupt estate, the question arises as to how the oath of verity to the claim on the bankrupt estate is oath to claim in to be taken where there are more trustees than one. It appears sequestra. that one trustee, provided he has a mandate from a quorum of the trustees, can take the oath so as to bind the trust estate, 3 and he can also vote on the same conditions. 4 1 Caffrey v. Darby, 1801, 6 Ves. 488, at p. 494. 2 Earl, 1890, 39 W. R. 107, per Romer, J. 3 Watson v. Morrison. 1848, 10 D. 1414. 4 Dods, 1847, 9 D. 1419. Cf. Bell's Com., vol. ii. p. 304. If the beneficiary is in a position that enables him to possibly deal with the debt, his oath may also be required. Vide Cotton, L.J., on the.position of a " bare legal owner " and an "absolute beneficial owner," in Culley, 1878, 9 Ch. D. 307, at p. 311, and cases quoted there. 596. Lopes, L.J., thus states "the law which applies to a Getting in # . at specified trustee . . . whose duty it was to obtain payment of trust time, moneys at a specified time. Such a trustee is bound, at the expiration of a specified time, to demand payment of the trust moneys, and if that demand is not complied with within a reason- able time, 1 to take active measures to enforce its payment and, if necessary, to institute legal proceedings. I know of nothing which would excuse the neglect of such action on the part of a trustee, unless it be a well-founded belief that such action on his part would result in failure and be fruitless, the burden of proving the grounds of such well-founded belief lying on the trustee setting it up in his own exoneration. No consideration of delicacy, and no regard for the feelings of relatives or friends, will exonerate him from taking the course I have indicated." 2 Where the debt is due by a trustee through his having illegally retained funds be- longing to the trust, the duty of his co-trustee is clear. He ought without delay to instruct a lawyer to recover the missing money, and he ought to see to it himself or through the lawyer that 330 GETTING IN THE ESTATE [chap. VI. the rest of the trust estate is safe, and does not get into the hands of his fellow-trustee. 3 1 An interpretation of the words " reasonable time," used by Lopes, L. J., is supplied by the opinion of Cotton, L. J., in the same case. " The five years (the specified time) expired in the beginning of December 1874. I do not suggest that during the remainder of that month of December he should have taken any legal proceedings. That would hardly be expected, but what in my opinion he ought to have done, if not in December 1874, early in the year 1875, was to have demanded payment, and if payment was not made, then he ought to have taken effectual proceedings in order to recover payment " (Brogden, infra, at p. 565). 2 Brogden, 1888, 38 Ch. D. 546, at p. 574. 3 Millar v. Poison, 1897, 24 R. 1038, per L.P. Robertson, at p. 1043. The whole opinion is valuable as a guide to the duty of the trustee where its execution will probably result in ill-feeling between the trustees. Of. s. 332. Where legal proceedings appear in- effectual. Nature of onus on trustee. 597. As pointed out by Lopes, L.J., 1 the trustee must consider the probability of the success of legal proceedings. Dealing with this, Komilly, M.R., says: — "Where it is the duty of a trustee or executor to obtain payment of a sum of money, the trustee or executor is exonerated and never required to make good the loss, if he has done all he can to obtain payment but his efforts have not proved successful. Nay, more ; if he has taken no steps at all to obtain payment, but it appears that if he had done so they would have been, or there is reasonable ground for believing that they would have been, ineffectual, then he is exonerated from all liability." 2 To a like effect is the opinion of an Irish Master of the Eolls (Cusack Smith), who says : — " It is a mistake to suppose that there is any rule of equity so repugnant to the principles of natural justice, that executors and trustees are responsible for a debt or demand which they have not taken pro- ceedings to recover if it appear that the proceedings would have been ineffectual." 3 And this opinion is corroborated by the remark of Lord Ivory, that " if it can be proved that the trustee would not have advanced matters by doing diligence, I think that to enforce his liability is the severest thing I ever heard of in practice." 4 The burden of proof 5 is on the trustee. 6 It is not sufficient for him to prove that the debtor's own means are exhausted. " Some men after their own means are exhausted have other resources — they can appeal to their friends." But there must be some "legitimate inference" from the facts proved by the trustee's adversary that friends would have intervened — not mere surmise or remote conjecture; the onus on the trustee does not require him to prove a negative of such surmise or conjecture. 7 1 S. 596. 2 Clack v. Holland, 1854, 19 Beav. Peters, 1860, 28 Beav. 603. at pp. 271, 272. Of. Hobday v. chap, vi.] GETTING IN THE ESTATE 331 3 Alexander, 1861, 12 Ir. Ch. Rep. 1, at p. 20. Cf. Carruthers v. Cairns, 1890, 17 R. 769, per Lord Kincairney (Ordinary), at p. 777, where this defence repelled on the facts. Mustard v. Robertson, 1899, 7 S. L. T. No. 103. 4 Forman v. Burns, 1853, 15 D. 362, at p. 365. 6 Of. s. 1071. 6 Millar, s. 596, at p. 1043. 7 Millar, supra, at p. 1044. In this case the trustee was held liable for a part of the estate only, having discharged himself of the onus with respect to the rest. 598. The best example of the circumstances in which the o°°4 x defence trustee should not proceed to litigation is where he knows of a £ r "°^ s t0 good answer to the claim. Thus trustees did not during the running of the sexennial prescription raise an action of relief against the truster's co-acceptors on a bill of exchange, the trustees know- ing that the bill was accepted by the co-acceptors for the accommodation of the truster. At the instigation of an account- ant acting under a remit from the Court in another process, the trustees raised an action against the co-acceptors, after the expiry of the prescriptive period, and the co-acceptors, on a reference to oath, deponed that the bill was signed for the truster's accom- modation only. The trustees in these circumstances were held not to be liable for failure to raise legal proceedings. 1 Another example of circumstances justifying the trustee's action in not taking proceedings is found in a case where a trustee retained a promissory note, and took no proceedings to recover the capital or interest under it for seven years. Here he was held not to be liable, as the beneficiary to whom he then handed it did not recover anything on it during the next ten years, and no change had taken place in the debtor's position in the interval. 2 1 More v. Malcolm, 1835, 13 S. 313. 2 East, 1846, 5 Hare 343. Cf. Grindey, 1898, 2 Ch. 593, at pp. 602, 603— trustees justified in declining to put estate to expense of application to Court in a " small matter." 599; Where the trustee has no funds in hand he is not bound where no funds to to enter upon litigation for the purpose of recovering the trust litigate. estate, unless he receives from those beneficially interested in the estate an indemnity sufficient to keep him free from personal loss in the matter. "I know of no rule of the Court," says Kekewich, J., "and I am satisfied that there is no case which establishes any such rule, or even hints at it, that a trustee is bound to bring an action at his own expense to recover the trust property," unless he is in default in not having recovered it at the proper time. 1 An exception exists where he is a party to a settle- ment binding him to act without an indemnity. 2 Where he gets 332 GETTING IN" THE ESTATE [chap, vt beneiioiary an indemnity he is bound to lend his authority and name to the beneficiary, in order that he may prosecute the action in the trustee's name. 3 1 Tudball v. Medlicott, 1888, 59 L. T. 370, at p. 374. In this case it was argued that the alternatives before the trustee were to bring an action to recover the trust estate, or to be held chargeable with the estate as recited in the trust deed. It was held that he was not tied up to these alternatives. See Maxwell v. British Co., 1904, 2 K. B. 342 ; Bonner, 1902, 4 F. 429, at p. 430 ; Edgar v. Kennedy, 1905, 7 F. 452, at p. 456 ; Lees v. Dun, 1912, S. C. 50, per Lord Salvesen, at p. 64. 2 Kirby v. Mash, 1838, 3 Y. & C. Exch. 295, at p. 299. 3 Blair v. Stirling, 1894, 1 S. L. T. 625, per Lord Kyllachy (Ordinary). Cf. s. 1307. (b) Compromise and Arbitration Alternatives 600. Though the trust estate is not got iii after pressing to litigation. ° o jt o formal demands upon the debtor, 1 the trustee is not bound to institute legal proceedings for its recovery. The Trusts Acts empower him to " compromise or to submit and refer all claims connected with the trust estate." 2 It is important to note that these powers are alternatives to the raising of legal proceedings — not merely alternatives to a decision by a court of law after legal citation of the debtor. 3 Litigation introduces considerations irrelevant to the merits of a disputed claim, and compromise of a litigated claim is apt to differ widely from compromise of the same claim before litigation. The Courts have always strenuously upheld transactions entered into for the purpose of averting threatened iitigation with reference to rights which are in dispute. 4 The avoidance by the trustee of litigation, 5 with its delay and expense, may in itself be a sufficient consideration to establish a valid compromise without any material concession by his debtor. 6 It is a " benefit " to the trust, by being relieved of a difficulty. 7 But only Compromise and arbitration are not unconditional alternatives on cause shown. t i e g a i process ; there must be a valid reason for preferring them. Thus where there is refusal to pay, and no substantial reason 8 assigned, litigation must be resorted to in order to force payment. There is here nothing to refer, and to abandon or abate a claim voluntarily is not a compromise — there must be a transaction bind- ing on both parties, and so barring the trustee from enforcing his original claim by action. 9 If, after legal citation, there is no defence on the merits, the litigation must proceed till decree is obtained, so that diligence thereon may be done. If there is a defence on the merits before or after litigation, then there is reason to justify a compromise or a reference. A refusal to pay for a reason assigned, which is not obviously advanced maid fide, is a valid basis for a chap, vi.] GETTING IN THE ESTATE 333. compromise, but the compromise must recite the doubt as to the And recorded. rights of parties which has been raised by the debtor's reason for refusing payment, and which is the reason of the trustee for departing from his full claim. Where there has been litigation on the merits this is sufficient expression of the doubt as to the rights of parties, and it need not be further stated in the compromise. 10 To the person dealing with the trustee it is of vital in- Effect of - . . want of terest to he certiorated of his power to compromise or to power. submit and refer a disputed claim. The trustee is always entitled to compromise or submit and refer as an individual, but he binds no one who has not consented to become a party to the proceedings. 11 In such a case, the other party may find himself bound by the result where it is favourable to the trustee, but without recourse against the trust estate where the result is against the trustee. The other party must therefore see that the trustee has power as trustee so that the result will effec- tively bind the trust estate and all who may be interested bene- ficially therein. 12 To the trustee also it is a matter of serious personal interest, where he resorts to compromise or arbitration, to see that he is empowered to do so. If he is not, he may find himself involved in a claim against him personally under the compromise or arbitration without any recourse against the trust estate. However informal in certain circumstances it may seem fit to make the compromise or reference, care must also be taken to make it clear that the trustees are acting qua trustees. The power to compromise inherent in a trustee at common scope of power to law and confirmed by statute is not the unlimited power to com- compromise. promise inherent in an individual. The individual and the trustee alike are influenced by a number of personal considerations; the individual is free to give weight to them, the trustee is not. An individual may be influenced by his sense of justice, his pity, his benevolence, or his financial or social position, and gratuitously abate or even abandon a legal claim against his debtor. The trustee can only abate his legal claim with a single eye to the financial interests of the trust estate. To such considerations as affect him personally, or even his beneficiary personally, weight can only be given by consent of the beneficiary. A compromise does not bind anyone who is not a party to the compromise agreement to compromise, even though it is a settlement of an aistm- action the decision in which would have been binding upon him, as where he is a party who could, but who has not seen fit to, appear in the action. " Persons who are willing to stand by while a contest 334 GETTING IN THE ESTATE [chap. VI. Scope of power to refer. is going on are bound by the decision of the Court, but they are not compelled to abide by a compromise when no decision is in fact Form of come to by the Court." 13 The compromise may be instructed by ompromise. a joint minute in process, 1 * or by a proposed agreement to com- promise and acceptance thereof. 15 Letters by the agents for the parties, if duly authorised, are sufficient, though neither holo- graph nor tested. 16 Where there is admittedly an agreement to compromise an action, any litigation as to the terms of the agreement must take place in a fresh action. 17 A reference to one of the parties to the reference is not in itself invalid on the ground of public interest ; it is only invali- dated by a concealed or unknown interest in the arbiter. 18 A reference of such an extraordinary nature could not be held to bar objections by the beneficiaries in an accounting by the trustees, except in cases where it was recognised as the ordinary course of business — for instance, the reference to an architect in a building contract, where his fees are dependent upon the award to the contractor. 19 By the Arbitration (Scotland) Act, 1894, 20 a reference to an unnamed or two unnamed arbiters is made valid in Scotland, the Court having power, on the application of either party, to name an arbiter. If the agreement to refer is silent as to the number of arbiters, the Court has no jurisdiction. 21 An arbitration need not be formal, if the contract of submission and reference is of the same nature as a proper arbitration — that is, if there is consent, according to the " well-known rule " that the authority for the arbiter's award is to be found in the consent of the parties submitting. 22 It is a question of fact whether the parties have consented to be bound by the arbiter's award where he is not aware that he is so binding them. An instance of a reference implying such consent is the taking of a joint opinion of counsel on a question of law. 23 An arbitration under the provision of the Trusts Acts includes a reference to a valuator to fix a price, although there is no dispute referred to him requiring the hearing of evidence thereon. 24 It seems a reasonable inference that the power to refer authorises a trustee to prorogate the jurisdiction of a Court to which he is not amenable otherwise. Form of reference. Opinion of counsel. Prorogating jurisdiction. 1 Lowson v. Copeland, 1787, 2 B. C. 0. 156. 2 30 & 31 Vict. c. 97, s. 2 (5). This applies only to trusts constituted by writing. The corresponding section of the English Trustee Act, 1893 (56 & 57 Vict. c. 53, s. 21 (2)), though much more comprehensive in its terms, seems to he only exegetieal of the curter phraseology of the Scots Act. An executor in an English executry can compromise a claim by his co-executor against the chap, vi.] GETTING IN THE ESTATE 335 estate. This is expressly founded upon the powers of an individual executor in England (Houghton, supra, per Kekewich, J., at p. 626). In Scotland, arbitration has been suggested as a remedy, short of litigation, in a similar situation (Dunn v. Chambers, 1897, 24 R. 247, per Lord M'Laren, at p. 251). A majority of executors can at common law compromise an action and dis- charge the other party (Scott v. Craig, 1897, 24 R. 462, at p. 470). For statutory powers, see Executors Act, 1900, 63 & 64 Vict. c. 55. 3 Of. ss. 588 and 604. * Lord Advocate, infra, 1900, A. C, at p. 64, per Lord Herschell, 2 F. (H. L.), at p. 7 ; Lord Advocate, infra, at p. 72, per Lord Watson ; Stair, i. 17, 1 and 2. 6 Stair, i. 7, 9. 6 Houghton, 1904, 1 Ch. 622, per Kekewich, J., at p. 625. 7 Trenchard, 1902, 1 Ch. 378, per Buckley, J., at p. 385. Of. Hadden, s. 602, at p. 718, and s. 603 ; but see Stair, i. 17, 2, only if trustee in doubt as to issue of litigation. 8 Insolvency of the debtor is a good reason to justify a compromise. 9 Buttercase v. Geddie, 1897, 24 R. 1128, per Lord Kinnear, at pp. 1133, 1134. 10 Stair, i. 17, 2. 11 Barkley & Sons v. Simpson, 1897, 24 R. 346, per Lord Trayner, at pp. 351, 352. 12 Lord Advocate v. Wemyss, 1900, A. C. 48, per Lord Watson, at p. 74 ; 2F. (H. L.)16. 13 Ritchie v. Malcolm, 1902, 2 I. R. 403, per Andrews, J., at p. 410. But see Mecredy v. Brown, 1906, 2 I. R. 437, by same judge, at p. 444. 14 Edgar, s. 599, at p. 456, per Lord M'Laren. i 6 Christie v. Fife Coal Co., 1899, 2 F. 192, at p. 199. 16 Anderson v. Dick, 1901, 4 F. 68. 17 Christie, supra, at p. 199. 18 Buchan v. Melville, 1902, 4 F. 620, per Lord Kinross, at p. 623. 19 Buchan, supra ; see Lord M'Laren, at p. 625. 20 57 & 58 Vict c. 13. 21 M'Millan & Son, Ltd. v. Rowan & Co., 1903, 5 F. 317, In questions between landlord and tenant of agricultural land in Scotland, a statutory reference is imperative for settling disputes as to compensation for im- provement, damage by game, compensation for disturbance, and value of fixtures — Agricultural Holdings (Scotland) Act, 1908 (8 Edw. vu. c. 64, ss. 6, 9, 10, and 20). 22 Teacher v. Calder, 1899, 1 F. (H. L.) 39, per Lord Watson, at p. 45, referring to Erskine's Inst., bk. iv. tit. 3, s. 32. 23 Teacher, supra, at p. 49, per Lord Davey. 24 Stewart v. Williamson, 1910, S. C. (H. L.) 47; A C. 455. Of. Hordern, 1910, A. C. 465. 601. Though classed together in the statute, the power to compromise andarbitra- compromise and the power to submit and refer are fundamentally won dis- * A tinguished. distinct. This is best brought out by observing their respective positions at common law. Trustees had, before the statute, a power at common law to compromise, 1 but not to submit or refer. 2 The distinction drawn by the common law between the two powers was that, in the case of the power to compromise, there was no delegation by the trustees of their own discretion and judgment ; while, in the case of the power to submit and refer, the trustees were delegating their discretion and judgment to a third party, and thus acting in breach of trust, where such delegation was not expressly sanctioned. Thus Lord Justice-Clerk Patton says: — " There is all the difference in the world between a reliance on the judgment of the one selected by one's self, and a reliance on the 336 GETTING IN THE ESTATE [chap. vi. possible views of one chosen by another." 3 As a substitute for litigation, it is obvious that arbitration ranks after compromise. Compromise infers agreement between the parties as to the merits of the claim — it is only where this fails that arbitration, which infers agreement only as to the person who is to settle the differences as to the claim, can be invoked. 1 Clelland v. Brodie, 1844, 7 D. 147 ; City of Glasgow v. Geddes, 1880, 7 E. 731, per L. P. Inglis, at p. 734. 2 Thomson v. Muir, 1867, 6 M. 145 ; but cf. More v. Malcolm, 1835, 13 S. 313. Tutors appear to have had such a power. 3 Thomson, supra, at p. 149, claims 602. No judicial interpretation of the statutory words "all statute claims connected with the trust estate " x is to be found, but there applies. is a decision of the English Court dealing with a similar clause in the statute known as Lord Cranworth's Act. 2 There the deceased bequeathed the residue of his estate to a certain class of Beneficiary's relatives. Two persons claimed as such relatives, but on finding that they would have some difficulty in proving their relationship, they offered to compromise their claim. This offer was accepted by the trustees, and on the compromise being afterwards chal- lenged by these persons as being ultra vires of the trustees, the Court held that the statutory power included such a compromise as the one in question, as well as that of a mere money claim by or upon the estate. 3 Trustee's Where the validity of the deed by which the trustee is nominated is challenged, he cannot buy off the opposition to his title and charge against the trust estate the consideration paid by him to the challengers on the footing that it was a compromise for the benefit of the estate, at least without the consent, which may be implied, of the beneficiaries under the deed protected by the compromise. 4 Such a transaction is against public policy, and " would offer a premium to the executor named in a bad will, or even to a trustee claiming under a forged deed, to claim under the docu- ment and then to accept part of the property as the price of giving up his attempt to get the whole." Let the converse case be taken : " A compromise must be mutual, and its validity cannot depend on its form ; if the terms of the compromise had been that the will should be declared invalid, in consideration of the payment of a sum of money to the named executors, to be held by them upon the terms of the condemned will, it is only necessary to state the proposition in that form to see that such a compromise could not be within the statute." a What is attempted to be compromised is the question of the executor's title to compromise. 6 chap, vi.] GETTING IN THE ESTATE 337 " It is not in accordance with principle or authority- to con- interpreta- strue deeds of compromise of ascertained specific questions so as compromise, to deprive any party thereto of any right not then in dispute, and not in contemplation by any of the parties to such deed." 7 The inability of a debtor to pay cannot be referred to arbitra- Ability . . , , to pay. tion ; it is a legal status, and can only be tested by diligence. 1 Vide s. 600. 2 The power in the English statute was to "compromise ... all debts, accounts, claims, or things whatsoever relating to the estate of the deceased " (23 & 24 Vict. c. 145, s. 30). This is now superseded by the Trustee Act, 1893 (56 & 57 Vict. c. 53, s. 21 (2)). See arrangement as to payment of premiums by trustees on life policy held to be proper compromise — Hadden v. Bryden, 1899, 1 F. 710. 3 Warren, 1884, 51 L. T. 561. 4 Eussell v. Dunn, 1902, 10 S. L. T. No. 294. Here an action of reduction of the deed instituted by certain of the next of kin was compromised by the trustee nominate with the consent of the beneficiaries under the deed. A second action of reduction by other next of kin was also compromised by the trustee without the express consent of, but without objection by, the beneficiaries. The trustee was held entitled to charge the estate with the outlays of the com- promise on the ground that the beneficiaries were barred by their actings from objecting. 6 Graham v. M'Cashin, 1901, 1 I. R. 404, per Fitzgibbon, L.J., at pp. 411, 412, referring to English Trustee Act, 1893, s. 21. See also Bagot's Estate, 1900, 1 I. R. 496. 6 Abdallah v. Riekards, 1888, 4 T. L. R. 622, per Chitty, J. 7 Cloutte v. Storey, 1911, 1 Ch. 18, per Farwell, L.J., at p. 34 ; Bennett v. Merriman, 1843, 6 Beav. 360 ; Lawton v. Campion, 1854, 18 Beav. 87, a com- promise based upon a fraudulent appointment set aside when the fraud was revealed. 603. An excellent example of the advantages of compromise compromise is afforded by the circumstances of a case that came before Lord tenant. Talbot, O. There a tenant had become insolvent, and the trustee discharged him of arrears of rent, and gave him twenty pounds in cash, upon condition that he should forthwith quit possession, which he did on these terms. " The trustee," says Lord Talbot, 0., " seems to have done nothing but what was prudent. A vexatious tenant may put his landlord to great trouble and delay by a wrong- ful detainer of the possession, and by damaging the estate in the meantime; and may force the landlord to ejectments, writs of error, and bills in equity, by means of which he may lose not only his accruing rent, but his costs of suit ; so that this release seems to be for the benefit of the testator's estate." 1 1 Blue v. Marshall, 1735, 3 P. W., 6th ed., 381 ; followed in Forshaw v. Higginson, 1857, 8 De G. M. & G., at p. 834. Of. Buchanan, s. 604. 604. The trustee is not liable for having refused the terms of Liability for ° refusing a compromise, though a subsequent action results in recovering compromise, nothing. " There was no negligence on the part of the trustee," says James, L.J., " because an action was brought and resulted in 22 338 GETTING IN THE ESTATE [chap, vi, nothing. It is impossible to say that the trustee was liable on the ground that he did not accept terms of compromise." 1 The situation is to be judged as it appeared at the time of the proposed compromise, and not as it appears at a later date when new facts have emerged. 2 1 Ogle, 1873, 8 Ch. App. 711, at pp. 714, 715. Of. Russell v. Dunn, 1902, 10 S. L. T. No. 294. 2 Buchanan v. Eaton, 1911, S. C. (H. L.) 40, at p, 49 ; A. C. 253, at p. 267. CHAPTER VII INVESTMENT OF THE ESTATE I. Powers of Investment at Common Law (A) Where no Express Powers 605. It is the duty of the trustee to make fruitful by invest- ment such part of the trust estate as is conveyed to him in the form of money, or has been by him converted into that form. 1 The common law, which imposes this duty on the trustee, arms him with corresponding powers for the execution of the duty. These common-law powers of investment may be indefinitely extended by the grant of express powers by the truster, and, even in the absence of such powers, have been largely extended by statute. First, however, the powers granted by the common law, in the absence of any express powers from the truster, fall to be examined. 1 Of. 2 Ruling Cases, 172. (a) Temporary Investment 606. For the temporary x investment 2 and safe custody of the Bank deposit- trust funds, it has been seen 3 that they should be deposited in a receipt bank on deposit-receipt. It is " a proper place in which temporarily to deposit any moneys belonging to the trust, whilst looking out for investments," * being " the ordinary place of temporary deposit." 5 This common-law rule has been expressly recognised by the legisla- ture; e.g., by the Entail (Scotland) Act, 1882, trustees of entailed funds are directed to place the funds, pending investment, " in bank on consignation receipt." 6 The interest should be lifted annually at least, and redeposited, so as to produce compound interest. 7 1 Five years in the circumstances in Melville v. Noble, 1896, 24 R. 243. 2 But see Price, 1905, 2 Ch. 55, at p. 59, per Farwell, J. 3 S. 247. 4 Speight v. Gaunt, 1883, 9 App. Cas. 1, per Lord Blackburn, at p. 18 (Bradford Banking Co.). 6 Johnson v. Newton, 1853, 11 Hare, 160, per Page Wood, V.-C., at p. 169. Of. Sutton v. Wilders, 1871, 12 Eq. 373, per Romilly, M.R., at p. 377. 6 45 & 46 Vict. c. 53, s. 23 (5). 7 Of. statutory obligation imposed on banks by Judicial Factors Act, 1849, in case of tutors, etc., falling under its provisions — 12 & 13 Vict. c. 51, s. 37. 340 INVESTMENT OF THE ESTATE [chap. vn. Deposit 607. It was the opinion of Lord Eraser that the deposit-receipt ■with com- ply other f a Heritable Security Company in good credit, even though a limited liability company, was quite as good an investment of the trust funds as the deposit-receipt of a bank ; and that the trustee who had power to lend out the trust funds on the latter, could also lend them on the former. 1 1 Lamb v. Cochran, 1883, 20 S. L. E. 575, at p. 578, 1st col. Exchequer 608. Exchequer bills, from their nature, are only available for bills. ■*• temporary investment, and for this purpose their use was sanc- tioned by the common law. Eomilly, M.E., says that money may be lent on Exchequer bills pending permanent investment. 1 It has, however, to be taken into account, that while they may at times, according to their purchase price, produce a somewhat better return in the shape of interest than the current bank deposit rate, they are susceptible to the variations of the money market in their capital value, unless retained to maturity. The facilities that have always been offered by the banks in Scotland have pre- vented Exchequer bills from coming into general use there ; and in England the practice of so investing trust funds temporarily, came into existence prior to the advent there of the joint-stock banks, which introduced the system of deposits carrying interest, no interest on deposits being given by the Bank of England. 2 1 Matthews v. Brise, 1843, 6 Beav. 239. 2 Cf. Matthews, supra, at p. 244. (b) Permanent Investment investment 609. In Scotland two, and only two, forms of investment for at common ■* law. trust funds are sanctioned by the common law. 1 These are the purchase of British Government Consolidated Stock, and loan on the security 2 of a disposition of heritable property in Scotland. 3 There is a dictum of Lord President Inglis * to the effect that the powers, of investment conferred by the Trusts Act, 1867, 6 were the same powers as those belonging to the trustee at common law. These statutory powers include, in addition to the common-law powers just mentioned, power to invest in the purchase of Bank of Eng- land stock. His Lordship must have overlooked the grant of this power, for it cannot be suggested that it ever was a power of investment belonging to the trustee at common law. "Bank stock," says Lord Eldon, " is as safe, I trust and believe, as any Government security; but it is not Government security; and therefore this Court does not lay out, or leave, the property in chap, vii.] INVESTMENT OF THE ESTATE 341 Bank stock." 8 Such being an authoritative statement of the law of England, it is a fortiori that Bank stock would not be held to be a proper common-law investment in Scotland. 1 The latitude in the scope of investments permitted to an officer of court under the sanction of the Court (see opinions in Grainger, 1876, 3 R. 479) must be distinguished from the "hard-and-fast rule which governs ordinary trustees " in the matter of investment at common law. See Hutton v. Annan, 1898, A. C, at p. 294, in argument for appellant. 2 Purchase of heritable property is not a common-law investment. See Stenhouse, 1902, 10 S. L. T. No. 229. The procedure in this case is remarked upon in Noble, 1912, 2 S. L. T. No. 61. 3 Cf. s. 650. Haldane v. Lindsay, 1848, 11 D. 286 ; Perpetual Executors v. Swan, 1898, A. 0. 763, per Lord Macnaghten, at p. 764. In England, only the Government stock, spoken of usually as the "Funds," was recognised as a proper trust investment at common law (Raby v. Ridehalgh, 1855, 7 De G. M. & G. 104 ; cf. Nyee, s. 610 ; see note at pp. 510, 511), possible because real property did not in all cases offer the same class of security in England as in Scotland, owing to the difference in the system of titles and land tenure. Vide Prender- gast, 1850, 3 H. L. Cas. 195, at p. 223. 4 Brownlie, 1879, 6 R. 1233, at pp. 1235, 1236. 6 30 & 31 Vict. c. 97, s. 5. 6 Howe v. Dartmouth, 1802, 7 Ves. 137, at p. 149 ; 6 R. R. 96, at p. 103. Cf. s. 617. 610. Lord Cranworth puts thus the reason why Government consols *s . « a trust stock is chosen as a proper form of trust investment at common investment law. " This obligation 1 [to invest in the Funds] is not the result of any positive law, but has been imposed on trustees by the Court as a convenient rule, affording security to the cestuis que trustent, and presenting no possible difficulty to the trustees." 2 An American writer, however, finds the true inwardness of the rule in the desire to support the national credit, and speaks of the Court as, in this matter, " manifesting their patriotism with .other people's money." 3 The truth of this criticism is illustrated by the change in the position of Consols since the date of the previous edition of the present work, where the possibility of such a change was the subject of the following comments : — " This remark 3 suggests several considerations as to the desirable- ness of the Funds as an investment, from the beneficiary's point of view. The action of the Courts, and of the legislature, in marking out the Funds as the proper security for the investment of all moneys lying in the hands of persons in a fiduciary capacity, has, in addition to the natural causes at present 4 in action, raised the market price of this security to such a height that the return to the beneficiary, in the shape of income, is very unsatisfactory. 6 Then as regards the capital no appreciation of any practical value can be hoped for from a redeemable stock carrying a very low, and a falling, rate of interest. On the other hand, great deprecia- tion of the capital value is always possible. ■ This drawback it 342 INVESTMENT OF THE ESTATE [chap. vn. shares with all funded public debts, as a necessary result of their constitution. There being no preference among the stockholders, and no pledge .of specific property, anything leading, or that may lead, to a serious enlargement of the stock, by introducing new creditors whose claims rank along with those of the old, depreciates the capital value of the stock of prior holders, as it lowers the credit of their debtor. War expenses and war risks have hitherto been the most important factors in fluctuations of the capital value of the Funds, and though for many years the absence of serious foreign complications has left the Funds at a fairly steady capital value, still the possibility of the recurrence of international trouble is a serious consideration. It is worthy of notice that when Mr Forsyth wrote his work 6 the country was not so far from troublous times as to have altogether forgotten their effect on the public securities of the country, and his words are still worth remem- bering. 'Government stock has generally been held to form a security to which trustees may lawfully have recourse, especially the three per cent, consolidated bank annuities. But when the extraordinary fluctuations which occurred during the French revolutionary war are remembered, many will be disposed to regard it with some jealousy. At that period money that had been invested at £90 for each £100 was occasionally sold for £50 or £60 per hundred, 7 and this, of necessity, either resulting from the terms of the trust deed or the circumstances of a family which forced on a sale at a particular date. In these times various trusts, originally rich in funds, terminated in much loss, and even ruin, to individuals who had relied upon them. Still, however, the investi- ture of money in three per cent, stock is legally safe, so far as the trustee personally is concerned ; although, in justice to the estate, he will be disposed to prefer landed security in Scotland when it can be obtained.' " 8 1 His Lordship is speaking of an English trust, where there is no alter- native. 2 Robinson, 1851, 1 De G. M. & G. 247, at pp. 255, 256. 3 Nyce, 1843, 40 Am. Dec. 498. Note by A. C. Freeman, at p. 509. An interesting commentary on this remark is to be found in a case referred to on the same page. There it was held that State bonds were good public securities for trust investment, "even although the State debt should ultimately be repudiated " (Brown v. Wright, 39 Ga. 96). Cf. protest against investments authorised by English Public Trustee in foreign securities instead of Consols (Times, 30th March 1911, p. 7 ; House of Commons Questions, Times, 31st March 1911). 4 1896. 6 " Permit me to add that I hope, when the Finance Committee decide on changing any of the securities in which my contributions are at present in- vested, they will not be tempted to re-invest in what are called 'Trustee Securities.'" (Letter, Lord Mount Stephen to Prince of Wales, with 5000 chap, vii.] ISTVESTMENT OF THE ESTATE 343 shares Great Northern Railway Company of the United States to King's Hos- pital Fund (Times, 27th May 1908)). 8 1844. 7 Consols in which trust money was invested in 1897 at £114 as purchase price are selling in July 1912 for £74 — a similar depreciation. 8 Forsyth, pp. 228, 229. 611. So absolute is the common-law power to invest in the can consols be excluded? public funds of the country that it has even been doubted, on grounds of public policy, 1 that the truster can prevent his trustees from so investing. The question arose in a case where an Irish truster gave his trustees the following unique powers of invest- ment : — " My trustees being at liberty to sell all my ships, houses, and other property of mine, and invest same as they think most desirable, but not in British Funds." On this clause Porter, M.E. (Ireland), comments in these words: — "The trustees were pre- cluded from investing the money in the British Funds, so far as the testator could do so. I guard myself from being understood to say he could do so." 2 1 Of, s. 327. 2 Blount v. O'Connor, 1886, 17 L. R. Ir. 620, at p. 627. 612. To leave the trust funds on deposit-receipt in a bank is Deposit not permanent not a good form of permanent * investment, as the fund does not investment, fructify as it should. 2 " To have this large sum," says Lord Presi- dent Inglis in reference to such a case, " lying in bank on deposit- receipt at small interest is not a prudent course, but it is quite a secure one." 3 In England it has been laid down that if the trustees cannot find a suitable investment within six months after the money has been deposited in bank, their duty is to lift it and put it in Consols. 4 There, however, the ratio decidendi was the want of security in a private bank. 5 "Wood, V.-O, points out that while trustees in a continuing trust must not leave the trust funds in bank beyond a reasonable time for considering the question of investment, executors, on the other hand, whose whole duty is to Executor's duty. realise and distribute, should not invest, but should leave the funds in bank. If they did invest, they formerly became liable for any loss to the trust funds through depreciation in the capital value of the investment. 6 Though the powers of executors in Scotland are now 7 changed, the reason of the distinction remains good. 1 If deposit-receipt is held for any considerable time, this can only be justified where trustees have diligently applied their minds to the peculiar circumstances of their trust, and honestly decided that such a course was best in the interests of the whole beneficiaries (Melville, infra; vide Lord Mon- creiff, at p. 253 ; Manners v. Strong, 1902, 4 F. 829). 2 In Melville v. Noble, 1896, 24 R. 243, the trustees were found liable in the difference between the interest earned on deposit-receipt and that at the rate of 3 per cent. 344 INVESTMENT OF THE ESTATE [chap. vii. 3 Taylor v. Adam, 1876, 13 S. L. R. 268, at p. 270. 4 Cann, 1884, 51 L. T. 770, per Kay, J. Gf. Rehden v. Wesley, 1861, 29 Beav. 213. 6 Gf. s. 247. 6 Johnson v. Newton, 1853, 11 Hare, 160, at p. 168 ; distinguishing, at p. 169, Challen v. Shippam, 1845, 4 Hare, 555, q.v. 7 See statutory powers of executors nominate (63 & 64 Vict. c. 55, s. 2). Personal obligation. 613. It has long been established that there is no implied power at common law to invest trust funds on a personal obligation alone. 1 " It was never heard of," says Lord Kenyon in an old case, " that a trustee could lend an infant's 2 money on private security. 3 This is a rule that should be rung in the ears of every person who acts in the character of trustee, for such an act may very probably be done with the best and honestest intention, yet no rule in a Court of Equity is so well established as this." 4 In a still older case, 5 Lord Northington had laid it down that unless there was gross negligence such a loan was not in breach of trust. Lord Eldoii, however, took occasion afterwards 6 to refer to this judgment of Lord Northington as " a curious document in the history of trusts," and as containing "doctrines different from those on which we have been accustomed to proceed." Where there is no power to lend on personal bond, the number of obligants is an irrelevant consideration. 7 1 The phrase "personal security" is ambiguous. Vide s. 631. 2 If the beneficiary were sui juris, he could grant his trustee an indemnity for doing so. 3 E.g., as in this case, on a personal bond in which a surety joined. 4 Holmes v. Dring, 1788, 2 Cox, 1. 6 Harden v. Parsons, 1758, 1 Eden, 145, at pp. 149, 150. 6 Walker v. Symonds, 1818, 3 Sw. 1, at pp. 62, 63. 7 Holmes, supra. Truster's intention. (B) Where Express Powers given by Truster 614. It is the usual — almost universal — course for the truster to give express powers of investment to the trustee. As it is competent to the truster to give the trustee 1 powers of invest- ment of endless variety, it is impossible to discuss them exhaus- tively. All that can be done is to refer to some cases which have come before the Courts for decision, as examples of the lines on which the Courts treat the interpretation of such powers. The truster's intention must be gathered from a perusal of his deed of trust. Evidence of his intention other than the language of the deed itself, where that is unambiguous, is inadmissible. But if interpretation is required of the meaning of the words used by the truster 2 to define the powers of investment given to the trustee, chap, vii.] INVESTMENT OF THE ESTATE 345 the circumstances, the nature, occasion, and the date on which the words are used, are relevant considerations — " it is the duty of the judge to inform his mind, not only by reference to dictionaries of good reputation, but also by evidence of the meaning ordinarily given to such a word amongst those who deal with such pro- perty." 3 "The sense and meaning of the language may be investigated and ascertained by evidence dehors the instrument itself, where there is any doubt as to the meaning of the language, or any difficulty as to its application." 4 An important distinction exists between the principle of con- Bequest and power of struction applicable to the interpretation of testamentary bequests ^^ t e , nt and that applicable to the interpretation of powers of investment. oonstru «i- " The largest effect reasonably practicable " is given to a bequest of specified investments of the truster, while powers of investment are to be strictly interpreted, 6 so that the onus is on the trustee to show that he has any particular power of investment. 6 This onus is discharged if he might reasonably have interpreted the words of the deed as granting the power, though a different view is taken by the Court. 7 While cases dealing with the interpreta- tion of bequests can therefore not be applied to interpret in a similar sense similar words used in an investment clause, 8 these cases may, subject to this condition, be illustrative of the meaning attached by the Court to these words in various circumstances. 9 In any case where these cases rule out a bequest, a power of investment in similar terms is a fortiori excluded. 1 A donee of a power of appointment, except in so far as he has exercised the power of appointment, cannot alter the powers of investment given to the trustee by the truster (Falconer, 1908, 1 Ch. 410). As to statutory implica- tions of power, vide s. 634. 2 Morrall v. Sutton, 1841, L. J. 14 Ch. 266, per Parke, B., at p. 269. 3 Rayner, 1904, 1 Ch. 176, per Vaughan Williams, L. J., at p. 188. 4 Shore v. Wilson, 1842, 9 CI. & F. 355, at p. 566, per Tindal, L.C.J., and see opinions generally and authorities cited there. Richardson v. Watson, 1 833, 4 B. & Ad. 787. 6 Henderson, 1900, 2 F. 1295, per L. P. Dunedin, at p. 1307 ; M'Millan, 1908, 16 S. L. T. No. 115 ; Maryon- Wilson, 1912, 1 Ch. 55. * Falconer, supra, at p. 413 ; Henderson, supra. 7 Warren, 1903, 5 F. 890. 8 Henderson, supra. 9 See Lord Pearson (Ordinary) in Henderson, p. 1298. Of. Rayner, supra. 615. In reading the English case law on powers of investment, Reading of B B . . English it should be borne in mind that the English Court in an admmis- oases. tration suit 1 will not sanction an investment that it thinks im- proper, though the trustees have express power to make it. 2 For example, where a trustee had power to invest at discretion, and proposed, while the estate was in Court, to invest in American 346 INVESTMENT OF THE ESTATE [chap. Yn. " Securi- ties." Shares not ully paid. Canal shares. funds and railway stocks, Jessel, M.E., declined to say whether he thought it a proper exercise of the trustee's discretion; but refused to sanction the investment on the ground that the trustee's discretion was superseded by that of the judge while the estate was in Court. 3 1 Cf. 305. 2 Vide Brown, 1885, 29 Ch. D. 889, argument for plaintiffs, at p. 891. 3 Bethell v. Abraham, 1873, 17 Eq. 24. Cf. Brown, supra, where the " uncontrolled discretion " of the trustees was controlled by the discretion of the Court. As an instance of confusion of the practice of the English Court in an administration suit with the powers of the trustees as to invest- ment, this case, where the estate was being administered by the Court, is cited as an authority in an Irish case, dealing solely with the liability of the trustee to the beneficiaries for an investment. Murphy v. Doyle, 1892, 29 L. E. Ir. 333, at p. 335. 616. The manner in which the Court treats a power to invest in " securities " is illustrated by an Irish case where the trustees had invested in shares of the Munster Bank, which were not fully paid up. The words of the will read, "To be invested by my executors in such securities as they may think proper." "In this case we have to consider the construction of the particular clause in this will, which counsel for the defendants contended was so wide and elastic that the trustees could do what they liked, and he said that the words conferred a discretion so far-reaching as to include the present investment. On the other side it was contended that this was not so, and that when the testatrix said that the executors might invest in such securities as they might think proper, she must have meant something by ' securi- ties.' ... I do not consider such an investment an investment on securities. It was an investment in a partnership concern, and it was an investment of a speculative nature. It might involve other property by way of pledge outside the property invested, because if the bank failed it might require more than what was invested to answer the calls that would be made." 1 1 Murphy v. Doyle, 1892, 29 L. R. Ir. 333, per Lord Ashbourne, C; at pp. 334, 335. See Rayner, 1904, 1 Ch. 176, where "securities'" held to include stocks and shares in respect of context, but questioned whether at present day this would not also be so in the absence of such context. The meaning of the word " securities " has changed from its " narrow archaic meaning," per Vaughan Williams, L.J., at p. 189. Tapp and London Docks, 1905, 74 L. J. Ch. 523, "ground rents" as "securities." 617. A gift of " property that is or may be vested in . . . bonds or securities of any description " does not include canal shares. " A share," say Lord Langdale, " in a canal company is property which may be bought and sold without reference to any sum given for or secured by it. It is not a security for money, but the chap, vii.] INVESTMENT OF THE ESTATE 347 property itself that is bought or sold." * Under a bequest of " all my money and securities for money of every description," bank stock and canal shares do not pass. James, V.-C, says: — "It appears to me to be utterly impossible to hold that bank stock, Bank stock. which is, after all, nothing but a share in the capital stock of a com- pany incorporated by Act of Parliament, for the purpose of carrying on a banking business, is any more a security for money than a share in any other partnership. It is merely a share in an incorporated partnership which has certain statutory privileges, and does the banking business of the State. That cannot alter the character of it. It is really as much a share in a company as any partner's share in a brewery is. Clearly, therefore, the bank stock does not pass as a security for money. It is also clear that the three shares in the Barnsley Canal Company do not pass." 2 " Securities for money " do not include shares in a public company. 3 1 Hudleston v. Gouldsbury, 1847, 10 Beav. 547. 2 Ogle v. Knipe, 1869, 8 Eq. 434, commented upon in Rayner, 1904, 2 Ch. 176, at pp. 189, 190; and see Murphy v. Doyle, 1892, 29 L. R. Ir. 333, per Palles, C.B., at pp. 337, 338. Cf. s. 739. These cases, dealing with construction of a bequest, are cited subject to the criticism in s. 614. 3 M'DonneU v. Morrow, 1889, 23 L. R. Ir. 591. 618. Where the trustees of a marriage settlement had power Eaiiway preference to invest the trust funds upon the security of the funds of any shares. company incorporated by Act of Parliament, it was held that that did not warrant an investment in preference shares of the Great Northern Eaiiway. 1 Eomilly, M.E., said there : — " It is not an investment upon the security of the funds of the railway company, as debentures would be, but it is in fact embarking the trust funds in the speculation of the railway. It may be thought, by some persons, that no great amount of risk is incurred thereby ; but it is clear that, under the terms of this settlement, it was an improper sort of investment, the interest being only secured on the profits of the concern." 2 The cases all go to show the difference which has been laid down between shares and securities. 3 1 Harris, 1861, 29 Beav. 107. Cf. Murphy, s. 617, per Lord Ashbourne, 0., at p. 336. 2 Harris, ut supra, at pp. 108, 109. 3 Murphy, ut supra ; but see Rayner, s. 616, and Johnson, 1903, 89 L. T. 84, where " securities " held to include mortgage bonds, India stock, perpetual de- benture stocks, perpetual preference stocks, and shares in a limited company. This was, however, a case of construction of a bequest. For distinction, see s. 614. As to difference between " stocks " and " snares," see L. P. Dunedin in Henderson, 1900, 2 P., at p. 1307. In Willis, 1911, 2 Ch. 563, Eve, J., referred to and adopted distinction pointed out by Lord Pearson (Ordinary) in Henderson, supra, at p. 1298, between "stocks" and "shares." Lord Pearson took as the criterion in the question of investment the comparative 348 INVESTMENT OF THE ESTATE [chap. vir. Stock of trading company. "Employ" distin- guished from "invest." "Trading company " includes "unlimited' shares. safety of the funds in the respective investments, and held that there was no difference in this respect between fully paid shares and stock. Eve, J., in Willis, supra, reached a different conclusion, and decided that the power to invest in " stock" did not include " shares." Cf. s. 641. 619. In a case where trustees were empowered " to invest the trust funds in any of the Government securities, or upon heritable security in Scotland, or in such other way or on such other securities as my trustees shall think proper," in delivering the opinion of the Court Lord Craighill says : — " Truly the question is whether the purchase of the stock of a trading company is in the sense of law and in the sense of the trust deed an investment. I think it was a partnership in a company, and that the trustees became partners. But there can be no investment of money properly so called where the trustees become partners. In investing money, the trustees remain outside of the company. Here the trustees joined the company, and so far as mouey was concerned, all they did was to pay what was their stipulated share of the capital." x 1 Ritchie, 1888, 15 B. 1086, at p. 1093. 620. Lord Langdale, M.R., was of opinion that the word " employ " had a meaning distinct from that of the word "invest " when used in a direction to trustees, and that the former word might be interpreted as authorising trustees to put trust funds into a trading speculation, though the latter could not be so interpreted. 1 1 Dickonson v. Player, 1838, C. P. Cooper (1837-38), 178. 621. If the trustees are empowered to invest in a trading company, they are not limited to companies whose share capital is fully paid up. Where trustees have power to invest in the "shares or stocks of any company," they have been held to have power to invest in such shares, though not fully paid up, if the investment be made bond fide and not negligently. 1 Express prohibition of investment in unlimited companies does not imply power to invest in limited companies. 2 An investment in a company registered in Great Britain with limited liability does not subject the shareholder to unlimited liability if the company trades in another country whose law makes all members of a company that trades there personally liable for the company's debts. 3 1 Johnson, 1886, W. N., at p. 72, Court of Appeal. Of. Brown, 1885, 29 Ch. D. 889. As to the words, " stock, share, or obligation," vide Imperial Corporation, 1892, 9 T. L. B. 69 and 129. chap, vii.] INVESTMENT OF THE ESTATE 349 2 Hardie v. Fulton, 1895, 2 S. L. T. No. 520. 3 Risdon Works v. Furness, 1906, 1 K. B. 49, company trading in State of California. 622. "Where power was given to invest " upon the debentures "Public" ... » , ,. .... companies. or securities or any . . . public company carrying on business in any part of the United Kingdom," 1 Cotton, L.J., refused to attempt to give an exclusive definition of the words public company, but referred to the companies under notice in these terms : — " They are all companies which owe their existence to the Companies Act, 1862, and the public know what are the rules which regulate such companies. Their memorandums and articles of association are necessarily public documents, and their shares are transferable to the public, subject to the provisions of the articles of association. When companies have all these characteristics, it is impossible for us to say that they are not to be considered public companies." 2 " Public company " has been read as confined to companies in the United Kingdom. 3 The fact that companies registered in England or Ireland cannot take notice of any trust on their registers 4 does not prevent trustees investing in their shares where empowered to do so by the trust deed. 5 A power to invest in the securities of a " company incorporated " ^°^„ by Act of Parliament " does not authorise investment in the com P an y- securities of a company registered under the Companies Acts, 8 but does authorise investment in a company incorporated by Eoyal Charter in pursuance of power granted the Crown by Act of Parliament. 7 1 A limited company registered in England and having its head office in England is a " company in the United Kingdom," though its property and operations are abroad (Hilton, 1909, 2 Ch. 548). 2 Sharp, 1890, 45 Ch. D. 286, at pp. 288, 289. Bowen and Fry, L.JX, expressed the opinion that it might not be necessary that a company should possess all those qualifications in order to be considered a public company. Cf. Macintyreu Connell, 1851, 1 Sim. (N. &), 225; Lysaght, 1898, 1 Ch. 115, at p. 122. The word " company " has no strictly technical meaning (Stanley, 1906, 1 Ch. 131, per Buckley, J., at p. 134). 3 Castlehow, 1903, 1 Ch. 352. 4 8 Edw. vii. c. 69, s. 27. 6 Cf. a. 637. 6 Smith, 1896, 2 Ch. 590. 7 Elve v. Boyton, 1891, 1 Ch. 501. Cf. s. 640. A "body corporate" does not include a body of public trustees who are not incorporated (Wood v. Middleton, 1898, 79 L. T. 155). 623. The expression "chartered banks" has been defined by "Char- Lord President Inglis to mean " those banks which are estab- b™ks. lished either by Act of Parliament or by royal charter, and are 350 INVESTMENT OF THE ESTATE [chap. vn. so distinguished from ordinary trading adventures." 1 The stocks of these chartered hanks were greatly favoured by trusters for the investment of trust funds, owing to the traditional good manage- ment and high financial character of these institutions ; and also because, before the statutory power to limit liability on the shares of the company banks, only members of the chartered banks had a limit to their liability for the bank's debts. 1 Sanders, 1879, 7 R. 157, at p. 163, In Scotland, these are the following : — Bank of Scotland [Act of Parliament], Royal Bank of Scotland [Royal Charter], British Linen Company [Royal Charter], National Bank of Scotland [Royal Charter]. Of. Methven v. Edinburgh, 1851, 13 D. 1262, and 58 & 59 Vict. c. 19, s. 5. Foreign 624, In one case the words " foreign funds " in an investment funds. ° clause were defined as " any foreign security for which the faith of the Government of that country was pledged, which was secured, in fact, by the Government, and for which the Governnment of that country had made itself liable." x Where the question arose whether the securities of the State Governments of the United States fell under such a definition, Jessel, M.E., said : — " It seems to me that you must give a fair workable interpretation to the words the testator has used, and that there is no reason why the words ' or any other foreign government ' should not be extended to the governments of the States of America separately." 2 In view states of of this opinion, the securities of the individual States of anv a Union. r J federation of independent States would be covered by such an investment clause. The value of such securities varies widely, but this is a matter of discretion and not one of power. Where the investments authorised included " bonds, debentures, or other securities, or the stocks or funds of any colony or foreign country," it was held that bonds of a French rail- way company, of which both the capital and the interest were Guaranteed guaranteed by the Government, did not fall within the powers railway r bonds. given by such a clause. 3 Neither does a bequest 4 of "foreign bonds" carry colonial bonds. Where a testator made a bequest of "foreign bonds, amounting to about £8000," and he was possessed of £7000 in foreign bonds and £500 in bonds of New South Wales, it was held that the latter did not fall within the bequest. 5 1 Ellis v. Eden, 1857, 23 Beav. 543, per Romilly, M.R., at p. 548. While his Lordship did not lay down any general rule, but expressly confined, his opinion to the circumstances of the particular will that he was interpreting, yet the definition appears to afford a useful general criterion. The investments held to fall under the definition in this case were Virginia stock, Maryland bonds, Massachusetts stock, United States stock, Russian stock, French rentes, Austrian bonds, and Sardinian rentes. chap. vii. J INVESTMENT OF THE ESTATE 351 2 Cadett v. Earle, 1877, 5 Ch. D. 710, per Jessel, M.R., at p. 712. Here the securities in question were Ohio bonds and Georgia bonds. Cf. a. 643 as to Colonial Governments. 3 Langdale, 1870, 10 Eq. 39. * But see s. 614. 6 Hull v. Hill, 1876, 4 Ch. D. 97. Cf. s. 739. 625. Examples of what have been held good investments under cases under general very general powers are found in the following cases. Under a powers, power to invest "in Government or other securities, in bonds or shares of whatever nature or kind," Victorian, Eussian and Brazilian bonds, and English railway stocks have been held to be authorised investments. 1 A power to invest in "any funds or securities whatever" has been held to authorise investment in Eussian railway bonds and Egyptian bonds. 2 It has been stated as a general proposition that "a trustee ought not to invest on foreign securities." 3 The only authority cited, however, that in Foreign SGCiiritif s any way touches the question i had reference to the conduct of a judicial factor as an officer of Court, and it was held that he was guilty of misconduct in removing the estate out of the jurisdiction of the Court of which he was the officer. 5 The private trustee is not subject to such supervision, and the ease does not in any way affect his position. 6 A distinction has been drawn between "Corpora- tion " dis- powers to invest in "any corporation" and in "any corporation or Anguished company." " Corporation " may be taken to mean a corporation " com P an y-" which is such according to the law of the truster's domicile. But " company " has no strictly technical meaning. It involves two ideas : first, an association larger than that described as a " firm " ; and second, the consent of all the members is not required to the transfer of a member's interest. It may include an incorporated as well as an unincorporated company. 7 The widest powers must, of course, be honestly exercised. 8 Nor does a trustee adequately discharge his duty by placing trust funds in an investment fall- ing within the class or classes of investments specified in an investment clause ; it is also his duty "to avoid all investments of that class which are attended with hazard." 9 1 Arnould v. Grinstead, 1872, 21 W. R. 155, per Bacon, V.-C. 2 Lewis v. Nobbs, 1878, 8 Ch. D. 591. 3 M'Laren, s. 2246, 3rd ed. 4 Accountant of Court v. Geddes, 1858, 20 D. 1174. 6 Accountant of Court v. Baird, 1858, 20 D. 1176, per L. P. M'Neill, at p. 1181. See position of English Public Trustee as to foreign investments, Times, 30th March 1911 ; also question, House of Commons, 31st March 1911. 6 But cf. Roy, 1895, 3 S. L. T. No. 330, as to "joint stock company." For position under directions to invest in foreign securities, see Brower v. Ramsay, 1912, 2 S. L. T. No. 62. 7 Stanley, 1906, 1 Ch. 131, per Buckley, J., at p. 134, 8 Smith, 1896, 1 Ch. 71. Of. s. 282. 352 INVESTMENT OF THE ESTATE [chap, vil 9 Henderson, 1900, 2 F. 1295, per L. P. Dunedin, at p. 1307. A latent hazard to be guarded against is illustrated in Kisdon Iron Works v. Furness, 1906, 1 K. B. 49, where an English limited company traded in California, the law of which State does not recognise the limitation of liability, and even extends the liability to the beneficiary as equitable owner. See 1905, 1 K. B., at p. 307. continuing 626. "Where the truster authorises his trustees to continue his truster's investment, estate " in the same state of investment," the power must be strictly interpreted. 1 The test is whether the property, if specifically be- queathed, would go to the beneficial fiars in the same state as that in which it was left by the truster. Where, for instance, fully paid up shares, which were directed to be retained, were changed into shares having a liability for calls, it was held that the new shares were an unauthorised investment, and that they must be converted as soon Beoon- as reasonably possible. 2 Again, where a company, in which the structed company, truster held shares, was, after his death, reconstructed, the Court held that the trustees, though authorised to continue the truster's investments, had no power to hold shares in the new company. " The truster having perfect confidence in the investments which he himself has made, recommends his trustees not to change any of them unless they see fit, but that is a totally different thing from authorising them to become members of a new company, with new capital, and under new conditions." 3 Here an unlimited company had been formed into a limited company, and the old members, including the trustees, were offered an option between shares in the new company and cash. Where a limited company in which the truster had invested was reconstructed under the Companies Acts by voluntary winding-up of the old company and the formation of a new company with the same name, the same assets, and the same business, but its share capital was divided into preference and ordinary, allocated to the members of the old company, both classes of shares were held to be within the words " in its present form of investment." " The new shares came to the trustees because the testator held the old shares, and for no other reason. The shares in the new company resulted from the shares in the old company without any act on the part of the trustees, simply because they held the testator's shares. To get anything else, they would have had actively to do some- thing, namely, dissent within s. 161 [of the Companies Act, 1862]. The trustees, therefore, have not made the investment in the new shares." 4 » Of. s. 572. 2 Morris, 1885, 54 L. J. Ch. 388, per Pearson, J. 3 Thomson, 1889, 16 R. 517, per L. J.-C. Macdonald. chap, vn.] INVESTMENT OF THE. ESTATE 353 * Smith, 1902, 2 Ch. 667, per Buckley, J., at p. 672. In the later case of Anson, 1907, 2 Ch. 424, this decision is adversely criticised by Kekewich, J. (see pp. 433, 434). But his Lordship agrees that reconstruction is a proper test to this extent, that where there is no reconstruction of an old company, in- vestment in a new company is not the same investment and cannot be retained, his doubt being limited to whether even a reconstructed company, " built up on the ashes " of the old one, can properly be said to be the same as the old one. Of. Price, 1905, 2 Ch. 55, at pp. 58, 59. 627. Where trustees are empowered to continue a business continuing in which the truster was a partner of one of the trustees, business. the position is dealt with in the following opinion of Lord M'Laren : — " It appears to me to be quite consistent with sound principles of trust administration, that with a power to continue the business, the trustees should enter into a renewal of the partnership arrangement which had subsisted, taking care to give no increase of interest to the partner who was one of their own number. I know of no case where it has been held objection- able to continue the partnership arrangement where there was power given to the trustees to invest money in trade, and no greater interest given to the deceased's partners than they had before." 1 Trustees were authorised by the truster to " retain and conduct " his business. They were held to be entitled to transfer the business to a private limited company with the same capital, and controlled by themselves. 2 1 Lawrie, 1892, 19 R. 675, at p. 683. Of. s. 581. 2 M'Kechnie, 1912, 2 S. L. T. No. 12. 628. Where a deceased truster directs his trustees to carry on Trustees his share of a partnership, the trustees collectively take his place partner. in the partnership. Each trustee is not by himself a partner. Even where one of the trustees is the manager of the partnership business, this gives him no power to act individually as a partner. 1 1 Beveridge, 1872, 10 M. (H. L.) 1, vide Lord Chelmsford, at p. 9. 629. The power to invest must be distinguished from the Power ';t» power to hold. The power to hold property in a certain form as tinguisned •"■ j. i «r f rom p 0W er left by the truster, does not imply power in the trustee to invest " t0 u>™st." in such property. 1 An excellent example of this distinction is afforded by a case where a trustee had power to convert " at sole discretion." Part of the estate was bank shares, which he held for eighteen months. In the interval, the bank issued new shares to the holders of the old shares. The trustee had no power to invest in these shares, but he took them up. The bank failed, and the trustee was held liable for the loss on the new shares taken by 23 354 INVESTMENT OF THE ESTATE [chap, m Issue of new shares to holders. himself, but not for that on the original shares held by the trustee as part of the truster's estate. 2 "It is one thing to say that a trustee may, in the proper exercise of his discretion, keep shares in the state in which he finds them, and another to say that he may, in the exercise of the same discretion, invest in new shares." 3 His Lordship suggests that the trustee might be entitled to take up the new shares for the sole purpose of realising them, as they were selling at a large premium. This course was adopted in a case where a bonus on the shares that had been held by the truster was given in the shape of new shares. Stirling, J., there held that the trustees should accept the new shares, as they could be realised immediately with great advantage to the trust estate, but they were to be accepted for that purpose only, though his Lordship held it proved that to continue to hold them would be still more to the advantage of the trust estate. 4 1 Cf. a. 561. 2 Edwards v. Edmunds, 1876, 34 L. T. 522. 3 Edwards, supra, per Hall, V.-C, at p. 524, 1st col. 4 Pugh, 1887, W. N. 143. Circum- stances altering direction to invest. 630. A change of circumstances may even make it improper to execute an express direction to invest. Where trustees are directed to make a certain investment, and, at the time for execution of the direction, it would be "most imprudent and most improper " to make such an investment, the trustees should not execute the direction. 1 On the same principle, the Court refused to allow a trustee to carry out a direction to invest in United States securities, interpreting these as Federal securi- ties, during the civil war in the States, but on its cessation the investment was sanctioned. 2 A similar question has arisen in the United States as to investments made by trustees in Con- federate Bonds. Such an investment has been held to be good if the trustee received the estate in the shape of Confederate Notes, and was unable to distribute them; but where he received the estate in gold, or ante-war currency, he was held to be liable for the loss on such an investment. 3 1 Maberly, 1886, 33 Ch. D. 455, per Bacon, V.-C, at p. 458. This referred to an investment in Irish freehold lands in 1886. See, however, memorandum by truster on p. 456 : — "I beg my executors to be in no hurry in making any investment in land, till they can thoroughly appreciate the effect of Mr. Gladstone's confiscatory measures," referring to the Land Law (Ireland) Act, 1881. « Knowles, 1868, 37 L. J. Ch. 840. 3 The cases are summarised and discussed in Mr. Freeman's note to Nyce's Estate, 1843, 40 Am. Dec. 498, at p. 510. chap.yii.] INVESTMENT OF THE ESTATE 355 631. Where there is a power to invest on personal security, Personal BBCmifcv the meaning of the words "personal security" has been much canvassed. 1 Does it mean the security of movable property, or merely the personal obligation of the borrower ? Where there is no guide to the truster's intention but the expressed power to invest upon " personal security," it is difficult to see how a mere personal obligation can be security in any sense of the word. " A promissory note," says Lord Hardwicke, C, " is evidence of a debt ; but it cannot be considered as a security for money ; for it should have been on some such security as binds land or something to be answerable for it." 2 1 A curious discussion arose in this connection over a remark made by Lord Moncreiff, in Seton v. Dawson, 1841, and variously reported in 4 D., at p. 328, and in 14 S. J., at p. 121, 1st col. In M'Laren, s. 2179, 3rd ed., this remark is used for the purpose of crediting Lord Moncreiff with the opinion that a trustee may lend on personal bond, if authorised to invest on personal security. The words actually used by Lord Moncreiff according to the report in 4 D., the only report referred to in M'Laren, are these : — " If, having power to do so, they lend money on personal bond to a person fully believed to be of good credit," etc. It is obvious that here his Lordship does not express any opinion on the point, but makes an assumption for the purpose of his argument. Lord Fraser was of opinion that trustees authorised to lend on personal security could lend on personal bond, and relied on Lord Moncreiffs remark as an authority. His Lordship suggested that the report in 4 D. was wrong, and argued from the report in 14 S. J. (vide Lamb, s. 632, at p. 577, 2nd col.). As the question with which Lord Moncreiff was dealing had reference, not to powers of investment, but to negligence in making an investment, it is probable that the report in 4 D. is correct, and that Lord Moncreiff did not intend to express any opinion on the validity of a loan on personal bond as an exercise of a power to lend on personal security. His Lordship's assumption is that a loss on even this most hazardous of all investments (and his Lordship classes it with a bank whose failure was at the time notorious) would not be chargeable against the trustee, were the investment within his powers and not negligently executed. 2 Ryder v. Bickerston, 1743 ; reported in a note to Walker v. Symonds, 3 Sw. 1, at p. 80. 632. A personal obligation without the security of a real right over movable property is now held as a good form of investment under a power to lend " on heritable or personal security." The opinion of Lord Eraser in a case where the power was to lend upon "real and personal" security was that "the word 'security' has obtained a meaning, when allied with the word 'personal,' different from its common acceptation, and a clause therefore authorising a loan upon real or personal security may mean upon the security of real estate or upon the security of personal obligation." 1 This opinion seems to have been accepted by a later decision of the Inner House. In that case Lord Kyllachy, delivering the opinion of the Court, says: — "It is clear that the point in question is settled in England, and that it is also settled in Scotland, if not quite expressly, 356 INVESTMENT OE THE. ESTATE [chap, vil at least by necessary implication. I refer in particular to the Scots cases cited by the Lord Ordinary, and as regards the English rule to Lewin on Trusts, p. 317, 8th ed., and to the cases there cited, which seem fairly conclusive." 2 In the first of the cases cited above 1 it is to be noted the words used are "real and per- sonal," the English equivalents for " heritable and movable," while in the second case 2 the words of the power are " heritable or per- sonal." Had the security of movable property been intended in the latter case, the proper alternative to "heritable" would be the word " movable." 3 Where there is a power to lend on personal obligation with the consent of a beneficiary, there is no objection in principle to a loan being made to that beneficiary. The considerations as to the position of the borrower, his prospect of repayment, and whether the loan would improve his position, are the same as in the case of any other borrower. 4 1 Lamb v. Cochran, 1883, 20 S. L. E. 575, at pp. 577, 578. Of. Lord Watson's opinion in Knox, s. 684. 2 Sim v. Muir, 1906, 8 F. 1091, at pp. 1097, 1098. 3 Of. Millar, 1886, 14 R. 22 ; Morrison v. Allan, 1886, 23 S. L. R. 846, at p. 853, 1st col. 4 Laing, 1899, 1 Ch. 593, per Kekewich, J., at p. 598, differing from Keays v. Lane, 1869, I. R. 3 Eq. 1, and Lewin on Trusts, 10th ed., p. 335 ; cf. 12th ed., p. 347. Cf. Elynn v. Dalgleish, 1900, 1 I. R. 255, at p. 258. conditions 633. Where trustees had express directions to invest the trust of power to purchase estate in the purchase of land, Lord Deas expressed the opinion that they might purchase at a larger price than the amount of the trust funds, rather than leave a part of the funds uninvested as the result of buying lands of less value, it being almost impossible to buy so as to exhaust the trust funds and no more. 1 It is not a good exercise of a power to invest in land to purchase land at a time when there are no available trust funds to finance the purchase — as where they have been advanced on the security of life policies, and will not be available till the policy moneys fall in. This is purely a speculation on the rise or fall of the value of the land by the time the purchase-money comes to be paid. 2 A trust to purchase land does not imply a power to improve land et e contra. It does imply a power to build a new house, this being regarded as acquiring land. 3 1 Barns, 1857, 19 D. 626, at p. 652. 2 Ecclesiastical Commissioners v. Pinney, 1900, 2 Ch. 736 ; see Rigby, L.J., at pp. 742, 743. Of. s. 386 ; also s. 1294. s Vine v. Raleigh, 1891, 2 Ch. 13. chap, vii.] INVESTMENT OF THE ESTATE 357 II. Statutory Powers of Investment 634. In addition x to the common-law powers of investment, how the legislature has granted to all trustees acting under any trust constituted by writing, certain ^powers 2 of investment, " unless specially prohibited by the constitution or terms of the trust." 8 It is to be noted that this proviso is differently worded from the similar proviso in the Trusts Act, 1867, 4, which it supplants. From the use of the word " specially " it might be inferred that the prohibition to be effectual must strike at a particular form of investment sanctioned by the Act, and not at the statutory powers of investment generally. This view derives corroboration from the introduction into the prohibitory proviso of the word " constitution," for the constitution of ' the trust might render some particular statutory investment ineligible for that particular trust without excluding the other statutory investments. It is noticeable that the prohibition, unlike the earlier one, need not be express. 6 One statutory power cannot be added to another. Where a only , , , extends trustee who has power to invest in debenture stock is authorised express L powers. by the statute to invest in nominal debentures, the power referred to is an express power granted by the trust deed, not one implied by statute. 6 1 " The powers of investment conferred by this Act shall not be held or construed as restricting or controlling any powers of investment of trust funds expressly contained in any trust deed" (30 & 31 Vict. c. 97, s. 6). 2 In discussing in detail these powers, under the different sections of the statute granting them, it has not been thought advisable to attempt to give lists of the particular investments in marketable securities so authorised. In many cases such lists would be more misleading than serviceable. They are to be found in many of the annual publications, and are of use in aiding a selection of investments, but, of course, the trustee must not depend on them. The conditions of such investments are continually changing, and the trustee should always take expert advice, such as that of a member of the Stock Exchange, regarding the eligibility of any particular investment. Vide Cole- ridge, 1895, 11 T. L. B. 596, per Chitty, J., end of opinion. 3 47 & 48 Vict. c. 63, s. 3. The expression " and no other securities " follow- ing an investment clause excludes the statutory powers (Ovey, 1900, 2 Oh. 524, per Cozens-Hardy, J., declining to follow Malins, V.-C., in Wedderburn, 1878, 9 Oh. D. 112). MacMillan, 1908, 16 S. L. T. No. 115, where the statutory powers were granted in terms, but this grant was held to be modified by a subsequent clause that empowered certain investments "only." A specific direction to invest in a particular way does not in itself prohibit other investments (Burke, 1908, 2 Ch. 248, following Maire, 1905, 49 Sol. J. 383). 4 30 & 31 Vict. c. 97, s. 5. 6 Gf. discussion of the provision "express provision to the contrary" in Fitzhardinge, 1899, 80 L. T. 376. ' 6 Tattersall, 1906, 2 Ch. 399. Cf. power to sell in lots in s. 388. 635. Certain statutory provisions must be noticed that overrule Exceptional J r statutory any other powers of investments of the trustees. Where Govern- p° wers - 358 INVESTMENT OF THE ESTATE [chap. vn. Debt conversion powers. Irish Land Acts. ment stock in the hands of trustees was converted by operation of the National Debt (Conversion Act), 1888, that Act empowered the trustees to sell the converted stock and to invest the proceeds "in any of the securities in which trustees may without the approval of the Court of Session invest under the Trusts (Scot- land) Amendment Act, 1884," "notwithstanding 1 anything to the contrary contained in the instrument creating the trust." 2 This power must be noticed by trustees who have, since the date of the Conversion Act, accepted office in a trust in which the power has been exercised, as this explains what seems to be a breach of trust by the former trustees. The English Court in interpreting this power has held that trustees who had no power otherwise to change an investment in Consols could exercise the power of investment given by the statute. 3 Trustees who are trustees of a settlement of Irish land which is purchased from them by means of an advance under the Irish Land Act, 1903, have special statutory powers of investment of the purchase-money, " notwithstanding anything contained in the settlement." 4 1 This proviso is implied where a statute is silent on the point, and merely empowers without reference to the deed (Wedderburn, 1878, 9 Ch. D. 112, per Malins, V.-C). 2 51 Vict. c. 2, s. 27, as amended by 51 & 52 Vict. c. 15, s. 8. 3 Tuckett, 1888, 36 W. R. 542. * 3 Edw. VII. c. 37, s. 51. purchase- 636. The statutory powers of investment given by the Trusts under Lands Acts have been held to apply to the investment of purchase- Clauses Act. rr J r money received for compulsory sale under the Lands Clauses Act, 1845. Lands held by trustees under a declaration that they should have no power to sell them were taken by a railway company under compulsory powers, and the price consigned in bank. On a petition by the trustees, the Court authorised the bank to pay over the money to the trustees, to be invested by them according to their powers under the trust deed. The Lord Ordinary (Wellwood) was of opinion that the provisions of the Trusts Acts, 1884, as to investment of trust money "should be held to apply to the interim investment of consigned money under the Lands Clauses Act." 1 His Lordship was of opinion, however, that the said provisions of the Trusts Act did not apply to the permanent investment of the consigned money, 2 but the interlocutor of the Inner House seems to decide that they do so Entaii apply. 3 Trustees appointed under the Entail (Scotland) Act, trustees. chap, vil] INVESTMENT OF THE ESTATE 359 1882/ are confined to the special powers of investment granted to them by that Act and cannot exercise the statutory powers of investment under the Trusts Acts, as they are appointed under a public Act and not by a private or local Act of Parliament. 6 1 8 & 9 Vict. c. 19, s. 68. 2 8 & 9 Vict. c. 19, s. 67. 3 Dickson, 1889, 16 R. 519 ; Chapman, 1901, 9 S. L. T. No. 63. 4 45 & 46 Vict. c. 53, s. 23 (4). 6 Queensberry, 1898, 5 S. L. T. No. 458. 637. First, trustees may invest in the purchase, or in loan on Government stocks, the security, of any of the Government stocks, public 1 funds, or public securities of the United Kingdom. 2 securities. The public funds are managed for the Government by the Bank of England, which cannot be compelled, and refuses, to take any notice of a trust on its books. 3 Hence the public funds, and all other stock registered in the books of the Bank, can only be registered as the joint property of the trustees as individuals, not as trustees. In considering a report by the Accountant of Court in connection with this question, Lord President Inglis said : — Effect of registration " The Accountant has suggested a number of difficulties which all b ? B 3an , k nd arise from one source, viz. that the Bank of England will not receive a trustee as holder of stock, but will only recognise individuals, and will not add any condition or qualification of the right of the parties whose names stand in their books as holders of stocks. If we were to give effect to this objection the result would be that in trusts under the Act of 1884 the Court would not be able to authorise investments in Bank of England stock, or in any public funds of the United Kingdom. In short, Consols would be forbidden as an investment. That is a result quite contrary to the provisions of the Act of 1884." 4 " In order," says Lord Cottenham, " to come within the descrip- "Govern- ment " tion ' Government or Parliamentary stocks or funds,' a fund ought stock. to be either managed by Parliament, or paid out of the revenues of the British Government, or, at least, guaranteed 5 by that Government." 6 In the interpretation of another statute, in which the words " Government security or securities " occurred, it was decided that there these words did not include Exchequer bills, 7 but it is not likely that a similar decision would be given in the case of the section of the Trusts Acts under consideration, as Exchequer bills are at least a good temporary investment at common law. 8 360 INVESTMENT OF THE ESTATE [chap. vii. 1 See Kirk, 1904, 12 S. L. T. No. 281. 2 47 & 48 Vict. c. 63, s. 3 (1) and (9). This clause is declaratory of a common-law power of investment. Vide s. 609. 3 Of. ss. 71, 696, as to practice in transferring inscribed stocks, etc. The English Court has power under the Judgments Act, 1838 (1 & 2 Vict. c. 110), s. 14, to give a charge to a judgment creditor of the beneficiary over his interest in any Government stock, though this does not interfere with the trustee's power to vary the investment, and thereby defeat the charge (Bolland v. Young, 1904, 2 K. B. 824). 4 Accountant of Court v. Crumpton, 1886, 14 K. 55, at p. 58. Gf. Burgis v. Constantine, 1908, 2 K. B. 484, at p. 498. 6 The definition is here probably too wide, as applied to this section, for it in- cludes a power expressly given by another section of the statute. Vide s. 639. 8 Brown, 1858, 4 K. & J. 704, per Wood, V.-C, at p. 706. 7 Chaplin, 1839, 3 Y. & C. 397. 8 S. 608. Bank stock. 638. Second, trustees may invest in the purchase, or in loan on the security, of stock of the Bank of England. 1 Stock of the Bank of Ireland is added in the corresponding English statute, 2 but is not included in the Scots statute. A large proportion of the capital of each of these banks is lent to the Government, in respect of which the bank is empowered to issue notes to an amount corresponding to the amount of the loan. The payment by the Government of the interest On this debt, and the intimate con- nection generally of these banks with the finances of the Govern- ment, have sometimes given rise to the erroneous impression that Bank stock is to be classed with Government securities. 3 i 47 & 48 "Vict. c. 63, s. 3 (2) and (9). 2 56 & 57 Vict. c. 53, s. 1 (c). 3 Gf. s. 609. Securities guaranteed lay Parlia- ment. 639. Third, trustees may invest in the purchase, or in loan on the security, of any securities the interest of which is or shall be guaranteed by Parliament. 1 It is to be noticed that it is sufficient if the interest is guaranteed, though the capital is not. The statute does not say that the guarantee shall be permanent, 2 and a temporary guarantee would make the investment good, it resting with the trustees to see to it that the investment in such a terminable annuity was in their particular case proper. The guarantee must be such as binds the revenue of the Imperial Government, thus excluding, e.g., Indian guaranteed railway stock, the guarantee there only binding the revenue of the Government of India. " Interest which is charged by an Act of Parliament primarily on a particular fund is not ' guaranteed by authority of Parliament.' " 3 A decision that " Government securities " did not include guaranteed Greek bonds was expressly limited to the circumstances of the case, and expressly declared not to form a precedent.* chap, vii.] INVESTMENT OF THE ESTATE 361 i 47 & 48 Vict. c. 63, s. 3 (3) and (9). 2 Of. s. 676 for express condition as to permanency of guarantee. 3 National Society, 1890, W. N. 117, per North, J. 4 Burnie v. Getting, 1845, 2 Coll. 324. 640. Fourth, trustees may invest in the purchase, or in loan on Railway the security, of debenture stock of railway companies in Great stock. Britain incorporated by Act of Parliament. 1 It must be noted that the power is limited to railways in Great Britain, thus excluding those of Ireland and the Isle of Man. Debenture stock differs as a security from debenture bonds. Debenture stock is perpetual quoad the holder, and the borrower is only bound to pay the interest. The capital can only be realised by sale of the stockholder's rights, which are subject to the fluctua- tions of market price. In the case of debenture bonds, on the other hand, the loan is only for a certain fixed period, and the borrower is bound to pay the interest in the meantime, and the capital when due. 2 Where a company is incorporated by Eoyal Charter, but the charter is such as can only be granted in the exercise of powers conferred on the Crown by Act of Parliament, such a company is held to be a company incorporated by Act of Parliament. 8 1 47 & 48 Vict. c. 63, s. 3 (4) and (9). Of. Public Trustee v. Blacker- Douglas, 1905, 1 I. R. 532. This power corresponds with that given by the Rules of the High Court in England, whereas the English Trustee Act, 1893, s. 1 (g), requires that the railway company must have paid a minimum dividend of 3 per cent, on its ordinary stock for ten vears. 2 Of. s. 672. 3 Elve v. Boyton, 1891, 1 Ch. 501. Of. Smith, s. 622. 641. Fifth, trustees may invest in the purchase, or in loan on Railway SLOC&* the security, of Preference, 1 Guaranteed, Lien, Annuity or Eent- charge stock, the dividend on which is not contingent on the profits of the year, of such railway companies in Great Britain as have paid a dividend on their ordinary 2 stock for ten years im- mediately preceding the date of investment. 3 The geographical limitation to Great Britain must be noticed. It is also noticeable that the statute does not state any minimum dividend on the ordin- ary stock. The mere distribution of a dividend is enough. On the other hand, stock in order to be authorised for investment must have a cumulative preference for dividend, and not only a prefer- ence in each year's distribution. 4 The scheme of the clause suggests that only stocks of companies that have been in existence during the previous ten years are authorised, the ratio of the statutory grant of power being that during these ten years there were sufficient 362 INVESTMENT OF THE ESTATE [chap. vii. Municipal stocks. Bast India stocks. Colonial stocks. profits made to meet the preferred charges and leave something free for dividend on ordinary stock. The statute does not exclude stocks created within the ten years, but the consideration just noticed makes it impossible to advise trustees that the stocks of railways not in existence for over ten years are authorised by virtue of this provision. 1 Preference stock does not include preference snares (Willis, 1911, 2 CL 563), but cf. s. 618. 3 In cases where ordinary stock has been " split," the statutory require- ments should not be held to be complied with unless there has been a dividend upon the deferred section of the "split" ordinary stock. A dividend upon the preferred section only may reasonably be considered sufficient, as it snows a dividend for the former ordinary stock, but in the absence of judicial decision to this effect the investment should in safety be avoided by trustees. 3 47 & 48 Vict. c. 63, s. 3 (5) and (9). 4 In the corresponding section of the English statute the preference stock authorised may be contingent on the profits of the year as to dividend, but the company must have paid a minimum dividend of 3 per cent, on its ordinary stock for the last ten years (56 & 57 Vict. c. 53, s. 1 (° use P r °- . perty. of any kind, such as might naturally and properly influence an individual purchaser of the property, must be taken into account in arriving at the value of the property. Its realisable value on a forced sale by the security holder for the purpose of indemnify- 24 370 INVESTMENT OF THE ESTATE [chap, m ing himself is the true test of the value of a security for trust funds. 1 1 Learoyd v. Whlteley, 1887, 12 App. Cas. 727, per Lord Watson, at p. 736. Cf. Shaw, s. 652, at p. 406. unfinished 656. Unfinished buildings are not a proper security for a trust investment, their value being purely speculative. " To give an advance on a building in course of erection is to lend upon no security at all, because the subject on which the advance is made is not in existence. It is to be brought into existence by means of the loan." 1 1 Guild v. Glasgow, 1887, 14 R. 944, per L. P. Inglis, at p. 946. See example in position of new wet dock of Greenock Harbour Trust in Alexander v. Johnstone, 1899, 1 F. 639, at p. 650 ; and Hutton v. Annan, 1898, 25 R. (H. L.) 23. 657. To the rule against lending on unfinished buildings an exception was suggested by Lord Herschell in the case where the buildings in course of erection are of the same character as others previously on the same site, if these had been constantly let, and due security is taken for the completion of the new buildings. 1 1 Raes v. Meek, 1889, 16 R. (H. L.) 31, at p. 34 ; Shaw v. Gates, 1909, 1 Oh. 389, per Parker, J., at p. 396. New neigh- 658. Property in a new neighbourhood is not a desirable bonrhood. security for an investment of trust funds on account of its speculative value. This is quite uncertain, and dependent on a number of contingencies of taste and fashion, such as the security for a trust fund should not be subject to. 1 1 Blyth v. Pladgate, 1891, 1 Ch. 337, per Stirling, J., at p. 354. 659. Lord Kyllachy comments upon the position in these words : — " The present case presents an unfortunate combination of unfavourable features. ... I am unable to hold that a loan can be supported as a proper trust investment which is made on the security of unlet or unfinished buildings in a new and unestab- lished street, and which proceeds upon a valuation obtained by the borrower, and based upon an estimated rental calculated from plans and untested by experience." x And Lord M'Laren adds : — " The security was not such as a trustee ought to have accepted, because it was a security of a speculative character consisting of unlet and unfinished buildings, in a new and unestablished street ; chap, vil] INVESTMENT OF THE ESTATE 371 the rental being calculated from plans and measurements, and not based in any fair sense on actual transactions." 2 i Crabbe v. Whyte, 1891, 18 R. 1065, per Lord Kyllaohy (Ordinary). Of. Smethurst v, Hastings, 1885, 30 Oh. D. 490, per Bacon, V.-C, at pp, 498, 499. 2 Crabbe, supra, at p. 1069. 660. The additional value that buildings may derive from Trade • values, circumstances not of a permanent nature must be discounted in estimating the value of such buildings as a trust security, A mill had been valued on the consideration that there was only one competing mill. Afterwards three competing mills were put up, and the value of the mortgaged mill fell so considerably as to occasion loss to the trust funds invested on its security. " You cannot say that that is a proper investment," says Pepys, M.E. (Lord Cotten- ham), " which derives its value from the accidental absence of com- petition in trade." 1 Similarly, in the case of licensed premises, 2 the value of the licence should not be taken as part of the security. " The value of a hotel is necessarily of a very speculative character, and may, like the property in the case of Stickney v, Sewell, 1 arise from accident." 3 1 Stickney v. Sewell, 1835, 1 My. & Or. 8, at p. 15. 2 Where licensed premises are security for debentures issued by a brewery company, compensation moneys awarded under the Licensing Act, 1904, in England in respect of such premises are "purchase-moneys" or "capital moneys" under the deed of trust securing the debentures, and may be in- vested in purchase or on mortgage of licensed premises, including any belonging to the brewery company issuing the debentures (Bentley, 1909, 2 Ch. 609, following Dawson, 1907, 2 Ch. 359). 3 Budge v. Gummow, 1872, 7 Ch. App. 719, per James, L.J., at p. 722 Vide also Partington, 1888, 57 L. T. 654, at p. 658, 2nd col. 661. Amenity of situation is a speculative consideration, as Amenity " the chance of obtaining repayment depends on the fancy of a purchaser. In the case of a first mortgage, I do not say that it may not legitimately enter as an element of the margin." x This speculative element is conspicuous in the case of villa property, vma. which trustees should be extremely wary in accepting as a security, •owing to the difficulty of having any satisfactory valuation made. Thus Lord Justice-Clerk Hope speaks of " a villa with no land let, but only what was for the amenity or comfort of the place/' as " a description of property always liable to great depreciation, or at least fluctuation." 2 Here, especially, trustees should be on their guard against depending upon a cost-price valuation, which cost price. in almost all cases gives an exaggerated idea of what is realisable by a security holder. 3 372 INVESTMENT OF THE ESTATE [chap. vn. 1 Maclean v. Soady, 1888, 15 R. 966, per Lord M'Laren (Ordinary), at p. 979. 2 Forsyth, 1853, 15 D. 345, at p. 348. 3 Forsyth, supra, per Lord Wood, at p. 351. workmen's 662. Another fluctuating security, to which accidental value houses. may be attached at the date of the investment, is " small houses let at weekly rents, the value of which depends on labourers' houses being wanted in that part." 1 Such property is a good investment in itself ; but a margin of depreciation corresponding to the nature of the security must be allowed in fixing the amount of the loan. 2 1 Salmon, 1889, 42 Ch. D. 351, at p. 368. Gf. Fry, L.J., at p. 370. 2 Solomon, 1912, 1 Ch. 261. Added 663. Trustees can only be advised to shun altogether, in as far personal ' security. a s possible, such fluctuating security. 1 Where they find such security suitable, if they have a power to lend on personal security, in addition to the power to lend on heritable security, they should always take along with the heritable security the personal guarantee of a person in good circumstances, as " the fact of colla- teral security being given would be an element of more or less importance." 2 1 Vide s. 660, etc. 2 Millar, 1886, 14 E. 22, per Lord M'Laren (Ordinary), at p. 30. Kentai. 664. The nature and condition of the security as a revenue- producing subject should be carefully attended to. " The amount of income which a property is producing is material in considering what amount can properly be advanced thereon." x A security in. the hands of the proprietor is naturally of much more speculative value than one which is fully and regularly let to tenants, for, in the latter case, the actual rental gives the market value realisable. "It is in all cases desirable that the rental should exceed the annual incumbrance. I do not say that this is essential ; because an estate may be entirely in the proprietor's hands, as is the case with many Highland properties, and may yet be a safe security for a first bond. In a case like the present, looking to the amount of the previous incumbrances and other circumstances, I conceive that the trustee was not justified in lending on ' annual value,' or the prospects of a good price being eventually obtained under a sale, but ought to have seen that the current return in the shape of rents was sufficient to meet the interest on heritable debt." 2 1 Shaw v. Cates, 1909, 1 Ch. 389, per Parker, J., at p. 403. 2 Maclean v. Soady, 1888, 15 R. 966, per Lord M'Laren (Ordinary), at p. 978. chap, vii.] INVESTMENT OF THE ESTATE 373 665. A postponed bond, if properly secured, is a good trust Postponed investment both by the law of England and by that of Scotland. 1 "In England numerous authorities show that there is no fixed rule that a trustee must never invest on the security of a second mortgage ; but the burden of the proof that it was a proper invest- ment must fall upon the trustee." 2 In Scotland, in like manner, the only question is the sufficiency of the security. 8 The trustee should take care that the security is of such a superior character as to compensate him for the disadvantage of being handicapped by the discretion of another security holder as to the time and manner of realising the security subjects. " The law of Scotland does not, as at present interpreted, prohibit trustees from lending on the security of a second bond. If a second bond may lawfully be taken, I see no reason why a fifteenth bond (which is the present case) may not also be accepted by trustees, always assuming that there is an ample margin. . . . The question whether a post- poned security should be accepted as a trust investment is a question of circumstances, and here I think that the aggregate of all the circumstances — insufficiency of cash rental, speculative value, large prior incumbrances, and a proprietor difficult to deal with and verging on embarrassment — ought to have stamped the transaction, in the judgment of a professional man, 4 as one lying outside the limits of safe investments of trust moneys." 5 A postponed security must not be confused with an assignation Assignatso of a bond or a sub-mortgage, which is an excellent investment if the original bond or mortgage is sufficiently secured,^ as there are two personal obligations for repayment. 7 The objection to a postponed mortgage arises only where the lender does not hold the prior mortgage, as in that case another and prior mortgagee may exercise his legal rights for the realisation of his security to the detriment of the interests of the postponed mortgagee. In England an additional objection to a postponed mortgage 8 arises, unless the title is registered, out of the fact that such a mortgagee only gets an equitable charge, the legal estate being conveyed to the first mortgagee, who may be induced to advance further money on the mortgaged estate. If he does so in good faith and without knowledge of the equit- able mortgage, he, as the holder of the legal estate, " tacks " his later advance on to his former, and this later advance takes in priority of the antecedent loan secured by the equitable mortgage. 9 1 The Trusts Act, 1891 (54 & 55 Vict. c. 44, s. 4), speaks of a loan " ranking prior" to the loan of the trustee, and implies statutory power to invest on a postponed security. 374 INVESTMENT OF THE ESTATE [chap. vn. 2 Want v. Campain, 1893, 9 T. L. R. 254, per Wright, J., referring to Swaffield v. Nelson, W. N., 1876, p. 255, and Sheffield v. Aizlewood, 1889, 44. Ch. D. 412, at p. 459. 3 Of. Johnstone v. Thorburn, 1901, 3 F. 497, at p. 513. 4 Here the trustee was a professional man and trusted to his own judgment (vide Maclean, infra, per L. J.-C. Moncreiff, at p. 982), hence the wording of the opinion. In the ordinary case, the trustee takes the advice of a professional man, and the responsibility is shifted to the professional adviser. Where the trustee does not take such advice, he takes on himself the responsibility. "Trustee" would be properly substituted in the text for "professional man" where the valuator's report had put the trustee in possession of such conditions as those referred to in the opinion. But see Chapman, infra, at pp. 796 and 800. 6 Maclean v. Soady, 1888, 15 R. 966, per Lord M'Laren (Ordinary), at p. 979. See also Alexander v. Johnstone, 1899, 1 F. 639, at pp. 650, 651. 6 Smethurst v. Hastings, 1885, 30 Ch. D. 490, at p. 496. 7 See Webb, Valuation of Real Property, 1909, pp. 48, 50. 8 Norris v. Wright, 1851, 14 Beav. 291, per Romilly, M.R., at p. 308. 9 See opinion of Romer, L.J., delivering judgment of Court of Appeal in Chapman v. Browne, 1902, 1 Ch. 785, at pp. 800, 801, and 804. It must be noted that in this case the registration laws affecting incumbrances in Ireland are referred to as making postponed real securities there "less dangerous or undesirable" than a similar security in England. As registration exists in Scotland, this consideration applies also in the comparison of Scots and English postponed charges as securities. See also Smithwick, 1861, 12 Ir. Ch. Rep. 181, and Crampton v. Walker, 1893, 31 L. R. Ir. 437. Margin. 666. The proportion of the reported value of the security subjects that the trustee may, with safety to himself, lend on them is now fixed by statute. There was formerly a rule of the Courts of Equity in England that "trustees ought not to lend more than two-thirds upon freehold agricultural property; and in the case of house property they ought not to lend so much position as two- thirds." x The Trusts Act, 1891, 2 has, however, fixed the of valuator. > > > > two-thirds limit for all kinds of property, making it the duty of the valuator to take into consideration in his report the nature of the property and all the circumstances of the case. Such con- siderations are whether the " property is liable to deteriorate or is specially liable to fluctuations in value, or depends for its value on circumstances the continual existence of which is precarious." s The duty of the trustee is to see that the valuator has performed the duty allotted to him — not to attempt to perform that duty for him; " The inexpert person should leave it to the expert to determine what circumstances ought to be taken into account, and to satisfy himself that he obtains the necessary information with regard to those circumstances." 4 Duty of " It i s t ne duty of valuers, in advising trustees, to advise them not only as to what they consider the actual value, but what pro- portion of that value the trustees may safely advance upon the security quite independently of any supposed rule " relating to the And of two-thirds. It is the duty of the trustees to limit the advance trustees chap, vn.] INVESTMENT OF THE ESTATE 375 to the two-thirds if they wish to come under the protection of the Act. 5 Where several properties are being valued, the amount of the slumping properties. loan advised over each should be separately stated. "To advise an advance of two-thirds of the value of four properties is not the same thing as advising an advance of two-thirds of the value of any one or more of the properties apart from the others or other. That is more especially the case where one of the properties is not at the date of the report an income-bearing property." 6 At common law the two-thirds limit is not hard and fast. Common law margin. To quote Kekewich, J. : — " Lord Watson says 7 that these limits must be understood as indicating the lowest margins which, under ordinary circumstances, a careful investor of trust funds ought to accept; and if, on the other hand, that implies that under special circumstances those margins need not be observed, it equally implies that it may not be safe to be content with them." 8 The effect of the statute appears to be to enable Effector statute. the trustee on all occasions, in the conditions specified in the statute, to lend up to the limit there laid down, and it does not appear to change the common-law rule which allows the trustee to exceed the limit in special cases. 9 The trustee is not necessarily in breach of trust because he has exceeded the limit. He then becomes chargeable with breach of trust — but only to the extent to which he has trespassed on the statutory margin — and must undertake the burden of justifying the amount of the loan. The trustee should, in practice, rarely exceed the statutory limit, and where he comes fully up to it, he should be extremely careful about the valuation of the security subjects. 10 1 Olive, 1886, 34 Ch. D. 70, per Kay, J., at p. 72, citing Stickney v. Sewell, 1835, 1 My. & Cr. 8. Vide also Stretton v. Ashmall, 1854, 3 Dr. 9, per Kindersley, V.-C, at p. 12 ; Fry v. Tapson, 1884, 54 L. J. Ch. 224 ; Learoyd v. Whiteley, 1887, 12 App. Cas. 727, per Lord Watson, at pp. 733, 734. 2 54 & 55 Vict. c. 44, s. 4 (1). 3 Shaw, infra, per Parker, J., at pp. 398, 399. See observations on margin to he allowed where value of premises alone is difficult to dissociate from value of premises with business carried on in them (Palmer v. Emerson, 1911, 1 Ch. 758). 4 Solomon, 1912, 1 Ch. 261, per Warrington, J., at p. 275, agreeing with Parker, J., in Shaw, infra, at p. 398. 6 Solomon, supra, at p. 283. 6 Shaw, supra, per Parker, J., at pp. 402, 403 ; and cf. valuator's report in Solomon, supra. 7 Learoya, ut supra. 8 Somerset, 1894, 1 Ch. 231. 9 " The method of valuation adopted by the expert who had advised_ as to value might also be very material in considering the limit of protection which a prudent man ought to require, especially in the case of house pro- perty or buildings used for trade purposes. If, for example, the nature and character of the property had already been taken into account by the 376 INVESTMENT OF THE ESTATE [chap. vn. expert in arriving at the value, there would be less need to take them into account in determining the limit of protection to be required" (Shaw v. Cates, 1909, 1 Oh. 389, per Parker, J., at p. 397. 10 Cf. Shaw, supra, at p. 398. Depre- 667. Where a security, originally irreproachable, has depreci- security. ated, 1 it is not the duty of the trustees " to proceed at once to call in the mortgage debt, and to reduce it to a sum representing only two-thirds of the then value of the property. One of the reasons why a margin of one-third is required in the case of a mortgage of freehold estate is to provide for fluctuations in the value of the property. I do not think, therefore, that the fact that such a diminution had taken place in the value of the property as made the mortgage debt a little more than two-thirds of the value was a reason why the mortgages should be at once called in." 2 1 Cf. s. 701. 2 Medland, 1889, 41 Ch. D. 476, per North, J., at pp. 481, 482. See Ml dis- cussion of position in opinion. Cf. Rawsthorne v. Rowley, 1907, reported under Shaw v. Cates, 1909, 1 Ch., at p. 411. S h CU idb ®^" ^ e P ower t° invest in loan on heritable security should simple bond. ^ e exerc i se d by taking a simple bond and disposition in security with power of sale, in the ordinary form. Complicated transactions with unusual remedies, though based on the security of heritable property, should be treated as not being proper investments on heritable security. Trustees who were empowered to lend out and invest upon good security, real or personal, instead of taking ordinary heritable security, entered into a transaction of loan to the proprietor of an heritable estate secured on redeemable annuity over the estate, with an insurance upon his life. In this way the loan could not be recovered until his death, when the insurance company were liable; and the trustees being obliged to call up the money before his death, found they could only obtain, on an assignation to the whole debt, a much smaller sum. They were held liable personally to make good the loss. 1 ' Bon- Accord Insurance Co. v. Souter, 1850, 13 D. 295, at p. 296, per Lord Robertson (Ordinary), reporting to the Inner House. stock 669. A mortgage on real estate to secure the transfer of a certain amount of stock instead of payment of a sum of money, and to secure payment of the dividends on the stock instead of a fixed rate of interest on the loan — known in England as a stock mortgage * — is not a good trust mortgage. A trust mortgage should secure a certain fixed capital. 2 " I should be disposed to hold," says Lord Cranworth, C, " that such a loan, being a transaction by which a less perfect security was substituted mortgage. chae. vn.] INVESTMENT OF THE ESTATE 377 for a more perfect one, without any pecuniary benefit to the cestuis que trust, would be a breach of trust." 8 1 Of. 51 Vict. c. 2, s. 21. i Whitney v. Smith, 1869, 4 Ch. App. 513, per Giffard, L.J., at p. 521. 3 Pell v. De Winton, 1857, 2 De G. & J. 13, at p. 19. 670. " On the question how far, if at all, trustees may properly Financial rely on the position of the borrower, there is, so far as I am aware, borrower. no authority. Men of ordinary care and prudence managing their own affairs would, no doubt, take this into consideration ; and in the mercantile world it is frequently treated as equally important with the value of the security. It is impossible, I think, to exclude it from the consideration of trustees, who are bound to have regard to all the circumstances connected with any proposed advance on security ; and it would not be difficult to put cases x in which the solvency or insolvency of the borrower would properly influence them in making an advance somewhat in excess of the limits generally allowed or declining the transaction altogether; but where the object is to make a permanent investment of trust money on mortgage of real estate, it seems to me wrong to advance a sum largely 2 in excess of what is otherwise right, because it is believed that the borrower is now, and it is anticipated he will remain, capable of paying the principal and interest or such part thereof as cannot be realised from the security." 3 1 Of. Maclean, s. 665. 2 In Scotland " at all " would require to be substituted for "largely " unless the trustee had power to lend on personal security. Cf. s. 663. 3 Somerset, 1894, 1 Ch. 231, per Kekewich, .T., at pp. 247, 248. This is not affected by anything that passed in the case in appeal. 671. Where the trustees of a marriage contract hold a fund £°™ a ^ from which the jus mariti of the husband is excluded, they may e ^f^ give the husband a loan of the fund, if he can offer proper security. mantl ' The husband's possession of the money as a fund subject to his marital power, and his possession of it as a debtor accountable to trustees upon a bond, are not at all the same thing. 1 1 Ross v. Allan, 1850, 23 S. J. 1, at p. 3 ; 13 D. 44, at p. 49. The balance of opinion on the Bench was against the view that the trustees had power to lend to the husband on his personal security, though they had express power to invest on personal security. 672. Tenth, trustees may invest in loan on debentures or mort- Railway 1 ■> debentures. gages of railway companies in Great Britain incorporated by Act of Parliament. 1 The geographical limitation to Great Britain must be noticed. A difficulty as to the meaning of this section of the statute is treated below. 2 Debenture is not a word of 378 INVESTMENT OF THE ESTATE [chap. vn. Debenture stock. style. A security deed is not necessarily a debenture, though so called, and it may, on the other hand, be a debenture though not so called. 3 "A debenture means a document which either creates a debt or acknowledges it, and any document which fulfils either of these conditions is a 'debenture.'"* 1 47 & 48 Vict. c. 63, s. 3 (11). Gf. a. 622 and s. 640. As to power to invest in mortgage debentures generally, vide 28 & 29 Vict. c. 78, s. 40, which does not seem to be confined to England ; cf. a. 50 of Act. 2 Vide a. 677. 3 Edmonds v. Blaina Co., 1887, 36 Ch. D. 215, per Chitty, J., at p. 220 ; Levy v. Abercorris, 1887, 37 Ch. D. 260, per Chitty, J., at pp. 265, 266. 4 Levy, supra, per Chitty, J., at p. 264. 673. The Debenture Stock Act, 1871, 1 extends the power to lend on railway debentures to a power to invest in railway debenture stock, but that power is also expressly given by the Trusts Acts. 2 It must, however, be noticed that the Debenture Stock Act is not limited to railway debentures, with which alone the Trusts Acts deal, but extends to "any other descrip- tion of company," the object of the statute being to place debenture stock of companies in the same category of investments as their bonds or mortgages. 3 1 34 & 35 Vict. c. 27. 2 Vide s. 640. The power of investment dealt with in s. 642, it should be noted, is not one given by the Debenture Stock Act as an extension of the power dealt with in s. 675, for the Debenture Stock Act applies only to companies. 3 Gf. s. 640 for difference between the two classes of security. Local authority loans. 674. The following statutory provision extended the powers of certain trustees to investment in Local Loans stock: — " (1) Trustees or other persons for the time being authorised 1 to invest money in the mortgages, debentures, or debenture stock of any railway or other company shall, unless the contrary is provided by the instrument authorising the investment, have the same power of investing money in stock issued under the provisions of this Act (other than stock for the time being represented by a stock certificate to bearer) as they have of investing it in the mortgages, debentures, or debenture stock aforesaid. (2) Provided that when two or more persons are successively interested in money left subject to a trust, no investment thereof shall be made in stock at a price exceeding the redemption value 2 of the stock unless the instrument creating the trust shall otherwise expressly provide." 3 By the Trusts (Scotland) Act, 1898, 4 the scope of these powers has been enlarged, and they have been granted as so enlarged to all trustees. The powers of investment conferred by the third section chap, vii.] INVESTMENT OF THE ESTATE 379 of the Trusts (Scotland) Amendment Act, 1884, are extended so as to authorise trustees under any trust, unless specially prohibited by its constitution or terms, to invest the trust fund (a) in the purchase of redeemable stock 5 issued under the Local Autho- rities (Scotland) Acts, by any local authority 6 in Scotland, and (6) in loans on bonds, debentures, or mortgages 6 secured on any rate 7 or tax levied under the authority of any Act of Parliament by any local authority 6 in Scotland authorised to borrow money on such security. 1 I.e. expressly authorised by the deed of trust, not by the provisions of the Trusts Acts only (Tattersall, 1906, 2 Ch. 399). 2 The investment is not any the less invalid because the cost to the trust has not exceeded the redemption value ; e.g. where the liferenter has repaid the excess to the trust (Beveridge, 1908, S. C. 791). Cf. a. 688. 3 54 & 55 Vict. c. 34, s. 44 (1) and (2). Local Authorities Loans (Scotland) Act, 1891. This power of investment is complementary to that dealt with in s. 642, which is limited to municipal corporations. 4 61 & 62 Vict. c. 42. 6 Cf. Public Trustee, s. 675. 6 As to the finality of the census returns in any question of population, see Druitt, s. 675. 7 See Cowan, s. 675, at pp. 599, 600. 675. Eleventh, trustees may invest in loan on bonds, debentures, 1 Municipal or mortgages 2 secured on rates 3 or taxes levied under the authority of any Act of Parliament by municipal 4 corporations 5 in Great Britain authorised to borrow money on such security. 6 The condi- tions of this section must be carefully attended to. (1) There is a geographical limitation to Great Britain. (2) There is a limitation of the security to rates or taxes of a certain description. Thus, for instance, a bond over the common good of the corporation would not be a proper trust investment under this section, although, as the common good is heritable, the investment would be valid at common law. (3) Trustees may not lend to any municipal cor- poration having power to levy rates or taxes, but only to such as are authorised to borrow thereon. Such authority is often given by local Acts, which enable public bodies to borrow, and contain clauses empowering trustees to invest under their provisions. They are too numerous to cite, and are usually of a local interest. A question as to the proper interpretation of this section is noticed below. 7 1 Debentures of a municipal corporation are not " public funds " (Kirk, 1904, 12 S. L. T. No. 281). 2 Public Trustee v. Blacker-Douglas, 1905, 1 I. R. 532, at pp. 541, 552, and 557, as to " municipal stock." 3 Rates are payments for which the municipality are entitled to assess the community, and do not include payments made by individuals in return for services rendered to them by the municipality (Cowan, infra, at pp. 599, 600' 380 INVESTMENT OF THE ESTATE [char til 4 " Municipal corporation " means a town council or county council or some similar body, and a compound body consisting of a municipal corporation along with others who are not members of that corporation, is not a municipal corporation in the sense of the Act (Cowan v. Ferrie, 1897, 24 R. 590, at p. 599). 6 As to the finality of the census returns in any question of population, see Druitt, 1903, 1 Ch. 446. 6 47 & 48 Vict. c. 63, s. 3 (12). Of. s. 674 as to other local authorities. 7 Vide a. 677. Indian 676. Twelfth, trustees may invest in loan on Indian 1 railway railway * securities, stock, debentures, bonds, or mortgages on which the interest is permanently 2 guaranteed by the Indian Government and payable in sterling money in Great Britain. 3 The guarantee required is that of the Indian Government alone, 4 and only the interest need be guaranteed, while, on the other hand, the guarantee must be permanent, and the interest guaranteed must be payable in sterling money in Great Britain. All the Indian railways have been financed on one system. Some form of guarantee has been given by the Indian Government, with an option of purchase by the Government on stated conditions. The terms of the con- tracts between the Indian Government and the railway companies have varied considerably. Only two classes of these railways satisfy the requirements of this section. One class are those railways which have been taken over by the Indian Government, and for which that Government have issued perpetual stock. The other class are those railways which have not been so taken over, but on whose stocks that Government have permanently guaranteed a minimum rate of interest. In both cases the interest must be payable in sterling in Great Britain. 6 1 India is defined by s. 18 of the Interpretation Act, 1889. 2 The importance of this statutory condition is emphasised by a decision at common law holding that stock bearing a Government guarantee for ninety- nine years, with an option of purchase by the Government, is a proper invest- ment imder a power to invest in " guaranteed stock of any railway company in India " (Mansel, 1881, 45 L. T. 741). 3 47 & 48 Vict. c. 63, s. 3 (13). * Of. Brown, 1858, 4 K. & J. 704, at p. 706. 6 It is doubtful if, on a strict reading of the section, some of the stocks given, in certain publications, as proper investments under the clause, are to be so regarded. Loan on, 677. The manner in which the investment clause of the Trusts of securities. Act of 1884 has been drafted raises a doubt as to the proper interpretation of its last three subsections. 1 The clause starts by empowering the trustee to invest " in the purchase of " certain marketable securities, etc., and proceeds in its second subdivision to give the trustee the alternative power of investing "in loan on the security of " any of the same securities. It then introduces a third class of power, viz. to invest, " in loan on," as distinguished chap, vil] INVESTMENT OF THE ESTATE 381 from it " in loan on the security of," certain other specified forms of property. As these include Indian railway guaranteed stock, it is not clear whether the loan is to be made to a holder of such Indian railway stock on the security of a transfer or pledge of his holding, or whether the loan may be made to the Indian railway company against the issue by it of railway stock. 2 Subsection 13, which deals with the stock, does not give express power to invest in purchase of the stock itself, but this is believed to be its correct interpretation. 3 All the subjects of loan mentioned in this later part of the clause are, with the exception of the Indian rail- way stock, known as documents of debt rather than as marketable securities, and, in the case of municipal corporations, 4 it is to be observed that subsection 12 reads " bonds, etc., secured on rates, etc.," the rates, not the document of debt, being obviously the security on which the loan is to be made. This indicates that where the statute empowers a " loan on the security of " specified property, it refers to a transfer or pledge of any document of debt so specified, while, where it empowers a "loan on" specified property it refers to a loan to the borrower on his own document of debt, including, as such a document of debt, Indian guaranteed railway stock. Any other reading of the statute involves this absurdity, that in the case of a municipal corporation the trustee is not empowered to lend to the corporation itself, on the security of its document of debt, viz. its bond secured on the rates, but on the security of that document pledged with him, he can lend to anyone else. 1 47 & 48 Vict. c. 63, s. 3, subs. (11), (12), (13). Of. ss. 672, 675, and 676. 2 Cf. s. 639. 3 See Mordan, 1905, 1 Ch. 515, at p. 518. 4 Cf. a. 675. III. Choice of Authorised Investments (a) Diligence and Good Faith 678. Though the trustee must first of all see that the invest- ment he is making is within his powers, 1 his duty does not end there. That an investment is within his powers does not free the trustee from responsibility for loss thereon, if the investment has been made negligently or in bad faith. 2 The trustee must exercise his discretion in the choice of investments diligently, and for the sole purpose of getting for the beneficiaries the best invest- ment within the powers granted him. 1 Shaw v. Gates, 1909, 1 Ch. 389, at p. 395. 2 An investment may be improper although authorised (Hotham, 1902, 2Ch. 575, at p. 578). 382 INVESTMENT OF THE ESTATE [chap, til Choice of authorised invest- ments. 679. However wide the powers of investment may be, as for instance, " in the shares of any company," " some discretion must be exercised by the trustees. ... It does not follow that because the terms of the investing clause are general the trustees can invest in any company without any consideration, and without regard to its constitution, or its rights as against shareholders." 1 Thus in the same sense Cotton, L. J., says : — " The mere fact that they are companies within the power will not justify the trustees in investing in any of them without full inquiry." 2 And again, Eomilly, M.K., tells the trustees before him that " before they invest any money in any company authorised by the power, they must make every necessary inquiry and satisfy themselves that it is really a solvent company." 3 Even where a truster gives to his trustees " power to continue the investments in any public companies in which I may have my capital invested at the time of my death," such a power " in no way affects their duty to look closely after these investments, and to make sure for themselves that they are reasonably safe. All that the' deed will do for them is to relieve them of responsibility for holding investments of that class." 4 * New Bank v. Brooklebank, 1882, 21 Ch. D. 302, per Lindley, L.J., at p. 307. 2 Sharp, 1890, 45 Ch. D. 286, at p. 289 ; Henderson, 1900, 2 F. 1295, at pp. 1307, 1308, per L. P. Dunedin. 3 Consterdine, 1862, 31 Beav. 330, at p. 333. Cf. Cathcart, 1907, 14 S. L. T. No. 414. 4 Thomson v. Henderson, 1890, 18 R. 24, per L. J.-C. Macdonald. Considera- tions in- fluencing choice of invest- ment. 680. The principal considerations to which the attention of the trustee should be turned in choosing an investment where his choice is practically unlimited have been well and succinctly stated by a United States judge. The words relating to the position of the trustee in the United States in this matter with which he prefaces his opinion, show the point of view from which the opinion was delivered, and the width of its application : — " The trustee has not, in this country, the advantage of a precise standing rule, which has been long since adopted by the English Courts, indicating particular securities as safe ones, in the choice of which the trustee will be protected against all losses. . . . The question as to what are good and proper securities is left somewhat at large." He then proceeds thus : — " Some general rules on the subject may be propounded that cannot well be controverted, as just and reasonable. . . . Safety is the primary object to be secured in an investment of this kind, and the trustee is not chargeable with an income that cannot be realised without hazard chap, vii.] INVESTMENT OF THE ESTATE 383 to the fund. And we think, therefore, that an investment is not to be deemed safe without evidence that it is so, and that the trustee ought to be able to point out some ruling feature to distinguish it from a mere adventure. If he invests in property, it ought to be property which yields an actual income, and which has a valuation, in the general sense of the community, founded on that income, and not upon remote eventualities and a succession of contingencies. If his discretion under the trust extends to the buying of stocks at all, his purchases should be limited to such as have a value in market based upon a regular income, or, at least, upon an income that, upon an average for a considerable period, may fairly be deemed equivalent. If he lends the money, he ought to be prepared to show that the borrower was, at the time, possessed of property and in good credit, and that he has taken security in the names of persons of like standing, or, what is less open to question, in property of value according to the usual tests of value." 1 1 Kimball v. Reding, 1855, 64 Am. Dec. 333, per "Wood, C.J., New Hampshire, at p. 337. 681. "Where trustees have taken any form of security other Justification than the best, they must show either that there was something to securities, be gained by so doing, or that no better security could be obtained. Thus trustees who had a power of investing on " heritable or per- sonal " security, lent the trust funds on a security comprising the combined margins of several burdened properties and a personal guarantee. " If," says Lord Justice-Clerk Moncreiff, " the trans- action had been shown to be necessary for the trust estate, if the trustees had had to take second-class securities because there were no others available, or if it had been shown to be for the advantage of the trust estate otherwise to make this investment, I should have been glad to have given effect to every possible presumption, so as to free these gratuitious trustees." 1 1 Millar, 1886, 14 R. 22, at p. 33. Cf. Bon- Accord Insurance Co., s. 668. 682. House property has for so long a time, at least in Scotland, House property. been recognised as a security of the very highest class, that the sufficiency of the security in the circumstances of any particular loan is the only consideration before the trustee in lending on this class of security. The following opinion of Lord St. Leonards, C, though, in its deprecation of house property as a security, rather strongly worded to be taken as a proper statement of the present state of the law on the subject, is still useful in reminding trustees of a standing danger affecting this class of security, and the 384 INVESTMENT OF THE ESTATE [chap, til necessity of diligently guarding against it 1 : — " I may observe, too, that house property is never very satisfactory; for it is liable to casualties which do not attach in general to land. Take, for example, the accident of fire, whereby the most valuable buildings may be reduced to dust and ashes in the course of a few hours. In such a case, unless the trustees are constantly alive to the necessity of keeping an insurance afloat (and it is very easy to miss the day), there may be nothing left to secure the trust fund." 2 1 Of. s. 330. 2 Thomson v. Christie, 1852, 1 M'Q. 236, at p. 238 ; as to the fluctuations of value in house property, see Lord Deas in Gordon v. City of Glasgow Bank, 1879, 7 E. 55, p. 63. The word " property " has been held to mean land, and not to include house property (Train v. Bell, 1824, 3 S. 68). f h bTt with ®^' Shares not fully paid up are a class of investment not to be chosen unless there is some particular advantage to be gained. " I do not say that under a wide clause of investment, an invest- Bankshares. ment by a trustee in bank shares might not be supported, but I cannot conceive a more risky thing, either for himself or his cestui que trust, than to invest trust money on shares not fully paid up. I am quite aware that the Bank of England and Bank of Ireland 1 are excepted by Act of Parliament. There are other banks besides, quite as solvent, whose capital is not fully paid up ; but even these are a class of investment I should not approve of, either for an executor or a trustee." 2 1 The latter in English and Irish trusts only. 2 Murphv v. Doyle, 1892, 29 L. R. Ir. 333, per Lord Ashbourne, C, at p. 337. Of. s. 616. Personal 684. A loan on the personal credit of the borrower x is a class security of investment with such obvious disadvantages in the matter of security, that it can only be justified in circumstances showing some compensating advantage. "It must be kept in view that in requiring some kind of security to be taken it was the plain object of the truster to preserve intact the capital of the trust estate for the benefit of the persons ultimately entitled to it. It appears to me that the authority to invest, which he gives for that obvious purpose and no other, cannot be construed as a licence to his trustees to take a worse instead of a better security — that is to say, to accept a bare personal obligation so long as it is possible for them to obtain a pledge of heritable or movable property." 2 1 Of. s. 631. 2 Knox v. Mackinnon, 1888, 15 E. (H. L.) 83, per Lord "Watson, at p. 86. Of. terms of deed — " invested in the hands of, and on loan to, the said firm, on their personal security " — in Alexander v. Lowson, 1890, 17 E. 571, at p. 572. Sim v. Muir, 1906, 8 F. 1091. chap, vii.] INVESTMENT OF THE ESTATE 385 685. The trustee must not only exercise his discretion in the Good faith, choice of investments, but he must exercise it in good faith. It must be noticed that " the question of bona fides arises only when the trustees have invested in authorised securities." 1 Where the investment is outwith the trustee's powers, it is bad on that account alone, and no question of good faith arises. Thus, the fact that the trustees may have been within their powers " does not, in my judg- ment, alter the complexion of the present case. Because, in accepting the borrower's offer, the trustees were not, as I conceive, trying to get the best security for a sum to be invested, but were simply lend- ing the trust money to accommodate the borrower, taking such security as he could offer." 2 Again, in another case, the trustees had power to lend on real or personal security, and they lent the trust funds on personal security. As the investment, however, was made to accommodate the borrower, it was held not to be made bond fide, and that notwithstanding the fact that the trustees lent along with the trust funds, amounting to £500, a sum of £600 belonging to themselves. 3 1 Elve v. Boy ton, 1891, 1 Ch. 501, per Lindlev, L.J., at p. 507. 2 Millar, 1886, 14 R. 22, per Lord M'Laren (Ordinary), at p. 30. 3 Langston v. Ollivant, 1807, G. Cooper, 33. Gf. De Clifford, s. 234. 686. Where the trustee holds for persons in succession, the Fiar and liferenter. investment is bad if made for the purpose of increasing the interest of one of these persons at the cost of the interest of another. Thus where fiar and liferenter are interested in the trust fund, the trustee must get the best return he can for the liferenter without injuring the security of the capital fund. "It would not be a proper exercise of his discretion to change an investment merely for the sake of increasing the income of the tenant for life, if in doing so he diminishes the security of the capital fund." 1 " The Court will not allow the investment to be fraudulently or col- lusively arranged so as to diminish the capital of the remainderman on the death of the tenant for life, but on the other hand it is not competent for the remainderman to require that the investment shall be made at the lowest rate of interest in order to increase his capital. There is no rule which will interfere with the large discretion given to the trustees," 2 "and prevent a bond fide invest- ment of the fund on ample security, if they can find a person who will give them more than the usual rate of interest." 3 1 Dick, 1891, 1 Ch. 423, per Kay, L.J., at p. 431. 2 Vickery v. Evans, 1863, 3 N. R. 286, per Romilly, M.R. 3 Vickery, supra, as reported in 33 Beav., at p. 383. 25 386 INVESTMENT OF THE ESTATE [chap. vn. 687. An example of an investment authorised, but not made in good faith, is suggested by the remark, made from the Bench in a case where the liferenter objected to the action of the trustees, that there was " nothing to prevent the trustees from investing the trust estate in the Funds and giving the liferenter only the interest of it." 1 Such a course would be undoubtedly wrong. The trustees perform their duty only when they exert themselves to get the best return possible for the liferenter ; and though he may be impor- tunate, that does not entitle them to lessen his income capriciously. The Funds are regarded by the Court as the high water-mark of investment, 2 but even an investment in the Funds must be made in good faith, and because no more suitable investment in the circumstances of the particular trust is open to the trustees. 3 1 Smith v. Bennie, 1890, 18 R. 44, per Lord Young, at p. 48. 2 Vide s. 610. 3 For example of discretion required in this connection, see Ellissen on Trust Investment, pp. 48, 49 (j), where list of stocks given which may legally be bought, but discretion must be exercised in their selection, according to object of investment. (b) Suitability to Objects of Trust Redeemable 688. Powers of investment, however wide, must be exercised with regard to the nature and objects of each particular trust. For in- stance, " the doctrine of the Court is, that any appropriation of funds Pee ana the interest of which is given to a person for life and the capital to remaindermen, must be in securities of a permanent character. . . . The trustees have power to invest as they think fit, but that does not enable them to invest upon securities which, at the time, are commanding a higher rate of interest in consequence of their being determinable." 1 Thus Eomilly, M.E., says : — " The rule of this Court does not permit the trustees in exercising then* dis- cretion in the selection of investments to select such as are of a perishable nature." 2 This rule prevent trustees, in such circum- stances, investing in redeemable 3 stocks, whose price is above their redemption value. The Scots Trusts Acts do not contain any pro- visions declaratory of this rule such as are to be found in the English Trustee Act, 4 but the rule is followed by the Court in Scotland. Most of the " redeemable " stocks available for trust investment are Colonial Government stocks, Home municipal stocks, and Local Authority statutory loans. Power to invest in these securities at a premium is generally excluded by the terms of the statute authorising the creation of the security. Where investment in chap, vii.] INVESTMENT OF THE ESTATE 387 " redeemable " stocks is empowered only on condition that they Premium paid by are bought at or under par value, an investment at a premium uferenter. on the par value is ultra vires, and is not made valid by an arrangement with the liferenter that he shall contribute to the trust the amount of the premium. 5 1 Stewart i>. Sanderson, 1870, 10 Eq. 26, per Malins, V.-C, at p. 28. Cf. s. 568. 2 Wilday v. Sandys, 1869, 7 Eq. 455, at p. 457. 3 " Redeemable " is not equivalent to " must be redeemed " (see British Linen v. Edinburgh, 1912, 2 S. L. T. No. 104). * 56 & 57 Vict. c. 53, s. 2. 6 Beveridge, 1908, S. 0. 791 ; vide argument for trustees at p. 794. Cf. s. 674. 689. " Where the primary purpose of the trust is to secure an Annuity. alimentary annuity, the trustee is bound to be specially careful about the security being sufficient for the interest of the loan." 1 " On considering an investment of that kind, the thing to be kept in view is, in the first place, that the security shall be ample ; secondly, that the rate of interest shall be sufficient to satisfy the annuity; thirdly, that such rate of interest shall endure to the termination of the annuities." 2 1 Maclean v. Soady, 1888, 15 R. 966, per L. P. Inglis, at p. 988. 2 Forsyth v. Kilgour, 1854, 17 D. 207, per L. P. M'Neill, at p. 213. 690. Other things being equal, an investment should be Time when dividend selected whose dividends are payable at the times most suitable, payable. Thus where the truster directed the trustees to pay the beneficiary half-yearly, in January and July, Leach, V.-C, directed the trustees to invest the estate in Eeduced Three per cent. Annuities instead of in Consols, as the dividends on the former were payable at times to suit the distribution directed under the trust. 1 1 Caldecott, 1819, 4 Madd. 189. 691. Trust funds should not be locked up when there is a Time of distribution. possibility of their being required for distribution. Where pay- ments may have to be made at an early date, all the trust funds should not be invested so as to be recoverable only on a possibly distant date — say the death of an annuitant — though a better income is thereby obtained. In such a case the trustees would run the risk of involving themselves in liability for any loss occa- sioned to the trust estate by a realisation of the investment forced upon them by the conditions of the trust before the date contracted for. 1 Trustees should avoid binding themselves not to call up a bond for a series of years, if there is a possibility of the term of payment to the beneficiary arriving during the currency of the series. Where the term so fell, the Court held that the security 388 INVESTMENT OF THE ESTATE [chap. vn. should be sold and the deficiency, if any, made good to the bene- ficiary by the trustees. 2 Where, however, there is a probability of the money not being required to be called up for a considerable time, e.g. during the lifetime of a liferenter, the trustee should take advantage of that fact in choosing an investment, for such a condition would make it " a most desirable loan to obtain, and the very best securities might easily be obtained." 3 1 Bon-Accord Co. v. Souter, 1850, 13 D. 295. Cf. ss. 668 and 743. 2 Vickery v. Evans, 1863, 3 N. E. 286, 33 Beav. 376, at p. 383. 3 Forsyth, 1853, 15 D. 345, per L. J.-C. Hope, at p. 348. use of 692. Where trustees are directed to settle a share of the trust heritable . . -it - . n register. estate on persons in succession, the most suitable securities for such an investment are heritable securities, because the conditions of the settlement appear on the record. 1 1 Massy v. Scott, 1872, 11 M. 173, per L. P. Inglis, at p. 176. Cf. s. 769. IV. Manner of Making Investment Decision 693. The duty of the trustee to see that the trust fund is must not be delegated, properly invested must not be delegated to another. 1 The trustee is entitled to take skilled advice in coming to a decision as to the propriety of an investment, but the decision must be that of the trustee and not that of the adviser. 2 A trustee has discharged his duty if he is not negligent in the exercise of his discretion as to an investment, and his dili- gence is a good defence where he is charged with a loss of trust Diligence as funds by unsuccessful investment in authorised security. It is a defence. ^ necessary, however, to notice a case 3 where the investment was admittedly one authorised by the trust deed, and the degree of care that the trustees had used in making the investment was set aside as irrelevant in considering their liability for a loss to the estate thereon. There it was said : " it is not material that we should know what inquiries were made by the trustees." It is sufficient if it " be in fact an improper investment." 4 If it is to be taken as the law of Scotland that the diligence of the trustee in making an authorised investment is not a relevant defence to a charge of breach of a trust for investment, no trustee is safe from liability for loss on an investment should the Court afterwards differ in opinion from him as to its propriety. Against such a technical breach of trust the law of England pro- vides a statutory relief for the trustee who has acted honestly and reasonably, 6 but no such relief is at present available to him in Scotland. It is believed that this is so because the liability does chap, vil.] INVESTMENT OF THE ESTATE 389 not exist in Scotland, where the trustee has not the recourse to the Court for advice that the trustee has in England, but must depend upon his own discretion. 6 1 Thompson v. Finch, 1856, 22 Beav. 316, per Romilly, M.R., at pp. 326, 327 ; affd. 8 De G. M. & G. 560. Cf. Alexander v. Johnstone, 1899, 1 P. 639, at p. 646 (investment trusted to co-trustee) ; Lowe v. Shields, 1901, 1 I. R. 320, at p. 327 (money placed in hands of co-execntor, who was a private banker or money-lender ; defence that it was lodged in bank repelled) ; Wyman v. Pater- son, 1900, 2 P. (H. L.) 37, at p. 39 ; A. C. 271, at pp. 276, 277 (investment trusted to agent). Cf. s. 310 as to supervision of Accountant of Court. 2 Alexander, supra, at p. 646. 3 Alexander, supra. 4 Lord Adam in Alexander, supra, at p. 649, concurred in by Court. 6 59 & 60 Vict. c. 35, s. 3. 8 Of. s. 702. 694 The security must be taken in the names of all 1 or at least Form of security a quorum of the trustees, 2 and in the names of the trustees alone, deed. " If trustees invested in the names of themselves and a stranger, that is, a person who was not authorised to hold the security, who was not authorised to receive money, who was not authorised to exer- cise powers on behalf of the trusts of the settlement — that, to my mind, would be a direct breach of trust." 3 It is a justifiable ground of complaint against a co-trustee that he declines to assist in having the title properly completed in the names of the trustees.* Where the statute authorising a public body to borrow provides a form which the obligation of that body to the lender should follow, the trustee should see that he obtains it and not a mere receipt. 5 Trustees who are bound to invest according to the directions of an interested third party must satisfy themselves as to the valua- tion, the title to the security, the form of the security deed, 6 and the agents who advise them and carry through the transaction. 7 J Cf s. 90, note 1. 2 Thompson v. Finch, 1856, 8 De G. M. & G. 560, per Knight Bruce, L.J., at p. 564. Where there are two or more trustees they cannot hold stock, which by the articles of the company can only be registered in the name of one person, unless it has been specifically bequeathed by the truster (Consterdine, 1862, 31 Beav. 330). 3 Webb v. Jonas, 1888, 39 Ch. D. 660, per Kekewich, J., at p. 667. 4 Dick, 1899, 2 F. 316, per Lord M'Laren, at p. 318. 5 Greenock Harbour Trustees, 1888, 15 R. 344, at p. 355. " Hotham, 1902, 2 Ch. 575, order of Court, at p. 578. 7 Cleveland, 1902, 2 Ch. 350. 695. "To my mind," says Kekewich, J., "trustees not having contribu- tory mort- any power expressly given them are bound to invest on a mortgage gage. where they have the entire control in their own hands, and where they can exercise their own discretion for the benefit of their cestuis que trust, and fiot where they are bound to consult others, or where, if they do not consult others, they are bound to act for the benefit 390 INVESTMENT OF THE ESTATE [chap. vn. of others as well as for themselves. It robs them of that control which is an essential part of the propriety of the security." 1 As a breach of this rule is " a necessary result and a necessary incident of a contributory mortgage, that, to my mind, is one of the strongest reasons for saying that trustees cannot invest on a contributory mortgage." 2 A similar objection is stateable against a mortgage pro indiviso upon part of an estate held pro indiviso? interest. 1 Webb v. Jonas, 1888, 39 Ch. D. 660, at p. 668. 2 "Webb, ut supra. Here the two trustees had taken a contributory mort- gage along with two trustees of another settlement. Stokes v. Prance, 1898, 1 Ch. 212, at pp. 223, 224, citing Massingberd, 1890, 63 L. T. 296; Dine, 1909, 1 Ch. 328, at p. 342, citing both Massingberd and Webb as determining that there is no dispute in law on this point. 3 Turner, 1897, 1 Ch. 536, at p. 543. Specific interests. Bearer securities. 696. Funds appropriated to meet specific legacies, or other specific interests, must be earmarked in some way. This may be done either by, first, appropriation in the trust books of certain parts of general investments, or, second, a particular investment to cover the amount of the specific beneficial interest. In the books of the Bank of England, where trusts are not noticed, 1 different investments are thus appropriated by changing the order in which the names of the trustees are registered. 2 1 The Banks of England and of Ireland, at which the registers of the Government stocks are kept, are not bound to notice any trust on the register (33 & 34 Vict. c. 71, s. 30), and the same is true of the Bank of England as to the register of Colonial Government stocks (40 & 41 Vict. c. 59, s. 15) ; vide as to the register of the Local Loans, which is in the same position (38 & 39 Vict. c. 83, s. 9), and see limited notice of trusts in contracts for annuities or insur- ances in the Savings Bank (45 & 46 Vict. c. 51, s. 8 (1)). Of. ss. 71 and 637. No notice of trust is to be entered on the register of Trade Marks (5 Edw. vn. c. 15, s. 5) or of Patents (7 Edw. vn. c. 29, s. 66). In England and Ireland no notice of trust is to be entered on the register of a limited company (8 Edw. vn. c. 69, s. 27). The notice of trust on the register of a Scottish com- pany seems to involve notice to the beneficiaries under s. 9 (3) (a), relating to alteration of the objects of the company. For detailed account of practice in transferring transcribed stocks in the books of the Bank of England, and in banks (e.g. London and Westminster) which keep registers of colonial stocks as affecting relations of trustees to their agents, as also the difficulties attend- ing iipon this practice in respect of the liability attaching to trustees for safe custody of the trust estate, see Shepherd v. Harris, 1905, 2 Ch. 310, at p. 315, and Bank of England v. Cutler, 1908, 2 K. B. 208. 2 Walker, 1890, 62 L. T. 449, per Kekewich, J., at p. 451, 1st col. Cf. Brodie v. London and North- Western, 1912, 2 S. L. T. No. 154, as to practice of endorsing certificate in case of sole trustee. 697. Securities payable to bearer are not proper trust securities at common law on account of the great danger of misappropria- tion connected with their custody. 1 By statute, the holding of certain securities, issued in the form of stock certificates to bearer, is made a breach of trust. Such are the stock certificates issued, as certificates of holdings in the funds, with coupons for the divi- dends attached, payable to bearer. " A trustee of stock shall not chap, vil] INVESTMENT OF THE ESTATE 391 apply for, or hold, a stock certificate unless authorised to do so ; and any contravention of this section by a trustee shall be deemed a breach of trust." 2 A similar provision exists as to colonial stock; 8 and stock to bearer, issued under the Local Authorities Loans (Scotland) Act, 1891, may not be held by trustees, unless expressly authorised by the terms of the trust. 4 Debenture bonds, payable to the bearer, are authorised to be issued by Indian rail- way companies, but " trustees (unless expressly authorised by the terms of their trust to hold securities payable to bearer) may not hold debenture bonds payable to bearer issued under this section." 6 1 Of. s. 699. 2 33 & 34 Vict. o. 71, s. 29 (cf. s. 26). 3 40 & 41 Vict. c. 59, s. 12. 4 54 & 55 Vict. c. 34, s. 41 (3). 48 & 49 Vict. c. 25, s. 23. 698. "Where trustees may invest in bearer securities, a question custody of J ' *■ Dearer arises as to their custody. In a case which raised this question, seeuriti6S - Kekewich, J., said : — " "With regard to bonds and certificates pay- able to bearer, I have not the slightest doubt that they ought not to be under the control of a solicitor or any other agent. The trustees are responsible for them, and they must keep them, not necessarily in their own custody, but in some place where they cannot be got at, without the consent of the whole body." 1 The trustees must be careful that such securities are not left so that they can be dealt with by less than a quorum of the trustees. Thus where two trustees agreed that each should keep one- half of the bearer securities belonging to the trust, and one of them dealt improperly with those in his custody, the other trustee was found liable for the loss. 2 The proper form of custody for bearer securities is to deposit them with the bankers of the trust, with instructions to collect the dividends and credit them to the trust account, and, if it should become necessary to realise the securities, they can be sold through the bank and credited to the trust account. 3 In the case of bearer securities with coupons attached, which have to be cut off at regular periods, the trustees are justified in following the custom of prudent men of business — that is, to deposit the securities with the bankers holding the current trust account, who will discharge the duty of cutting off the coupons when due, collecting them, and placing the amount to the credit of the trust account. This is part of the duty of a banker which he undertakes for his customer, but it is no part of a solicitor's duty, and such securities should not be left in his hands. 392 INVESTMENT OF THE ESTATE [chap. vn. The banker is not entitled to part with the securities themselves except on the order of the trustees. 4 Bearer bonds issued in the United States can as a rule be registered with the trustee for the bondholders, and the capital sum is then payable only to the last registered holder. 5 "Where trustees are entitled to hold such bonds, the precaution of having them so registered should be taken. United States bonds are properly left in the custody of an approved financial agent there, such as a trust company of good repute, instead of being kept in Scotland by the trustees. This avoids the danger and inconvenience of the bonds being remitted to the United States every time any requirement of the holding has to be complied with in the United States. 6 1 Field, 1894, 1 Ch. 425, at p. 430. In Scotland the consent of a quorum is sufficient if properly obtained. Of. s. 173. 3 Lewis v. Nobbs, 1878, 8 Ch. D. 591. 3 The remarks of Lord Langdale, M.R., to the effect that securities to bearer should not be left in a banker's hands, has reference only to private bankers, not to such bodies as the Scots banking corporations or companies (Matthews v. Brise, 1843, 6 Beav. 239, at p. 244). Cf. s. 247. 4 De Porthonier, 1900, 2 Ch. 529, per Cozens-Hardy, J., at pp. 532, 533, dealing with Mendes v. Guedalla, 1862, 2 J. & H. 259, and Field, supra, Mendes was not cited to Kekewich, J., in Field, supra. 6 See Financial Review of Reviews, April 1910, article by C. D. Smith, Wisconsin, at p. 71. 6 Brower v. Ramsay, 1912, 2 S. L. T. No. 62. 699. The emphasis with which the law has forbidden the trustee, unless specially empowered, to hold bearer securities, and with which it has forbidden him, where so empowered, to leave them in improper custody, is justified by consideration of the following authoritative statement of the law as to the transference of such property : — " The general rule of law is that where a person has obtained the property of another from one who is dealing with it, without the authority of the true owner, no title is acquired as against that owner, even though full value be given and the property be taken in the belief that an unquestionable title thereto is being obtained, unless the person taking it can show that the true owner has so acted as to mislead him into the belief that the person dealing with the property had authority to do so. If this can be shown, a good title is acquired by personal estoppel against the true owner. There is an exception to the general rule, how- ever, in the case of negotiable instruments. Any person in posses- sion of these may convey a good title to them even when he is acting in fraud of the true owner, and although such owner has done nothing tending to mislead the person taking them. . . . It is the established rule of law that a person taking a negotiable chap, vil.] INVESTMENT OF THE ESTATE 393 instrument in good faith and for value obtains a title valid against all the world." * 1 London Bank v. Simmons, 1892, A. C. 201, per Lord Herschell, at pp. 215 and 221. V. Varying Investments 700. "It must not be allowed to escape attention that the duty of a trustee in the administration of a trust, and in particular in reference to its investments, is not a duty that arises at a single moment of time alone. It is the duty of a trustee to look vigilantly after the investment when it is made, to get the earliest notice of threatened insolvency or deficiency of credit in the party with whom the investment is deposited, and to take the earliest steps of diligence to make the trust estate secure." 1 Thus where the Court had affirmed the propriety of certain investments, Lord Justice-Clerk Macdonald, in delivering the opinion of the Court, says : — " Our judgment will not relieve the trustees of the exercise of their discretion from time to time in assuring themselves of the soundness of those investments." 2 The change of investment, on the other hand, must not be "wanton," and without "good and sufficient reason." 3 1 Perston, 1863, 1 M. 245, per Lord Neaves, at pp. 250, 251. 2 Thomson v. Henderson, 1890, 18 E. 24. 3 "Walker, 1890, 62 L. T. 449, per Kekewich, J., at p. 452, 1st col. 701. The exercise of the discretion vested in the trustee as to Depreda- , ■ . . . . tion of continuing or varying a depreciating investment is an extremely security, anxious and difficult part of his office. Common law and statute have laid down his powers of investment with sufficient defmite- ness, but neither of them offers any definite rules for testing the continued soundness of the investment. The Trusts Acts give Revaiua- . , . . tion. elaborate instructions as to the valuation of heritable property for a loan, and as to the amount to be advanced thereon; but there is no hint of how often, if ever, the valuation is to be repeated, for the purpose of testing whether the security has depreciated. It cannot be supposed that the trustee may leave the investment unquestioned during the whole currency of a long- continued trust, but there is not anything to guide the trustee as to whether the revaluation should be made every year, every five years, or every twenty. 1 Where it is discovered that there is depreciation there are no instructions as to when the deprecia- tion should be held to have proceeded far enough to make it the trustee's duty to call up the loan. 2 " The duty of trustees 394 INVESTMENT OF THE ESTATE [chap. vn. with respect to periodic inspection of mortgaged properties has never been the subject of judicial decision. The cases of Chapman 3 and Eawsthorne v. Kowley 4 would seem to suggest that there is no such duty." 5 Cozens-Hardy, M.K., says : — " When you are dealing with an authorised investment, whether it be an investment authorised in the sense that the trustees may them- selves make the investment, or whether you are dealing with a specific investment transferred to the trustees and thereby becom- ing authorised, although not an investment which they themselves might have made, in either case, I do not believe that there is any obligation or duty on the part of trustees to make periodical or further investigations as to either the title of the security or the solvency or sufficiency of the mortgagor. I must not be taken in saying that for a moment to question that if there are circum- stances which suggest to a reasonable man that the security is in jeopardy, the duty may not arise ; but the liability of a trustee in dealing with an authorised security must really proceed on the footing of wilful default and not upon not making inquiries when ^valuation he ought to do so." 6 In any case, revaluation is not properly date - decided upon by a resolution that it shall be made upon a certain fixed date, the circumstances of which are necessarily unknown at the date of the resolution. 7 An instance of the difficulty as to revaluation is to be found in the case of Colonial Government stock. For an investment in this class of security, the approval of the Court of Session had to he obtained formerly, and has still to be obtained in certain cases. "When that approval is obtained and the investment is made, is the trustee's duty at an end ? These stocks are subject to con- siderable changes in their quality as investments, 8 yet the statute does not hint at any subsequent application for approval, as a condition of continuing the investment. It may be doubted that approval for continuation of the investment would be given by the Court in the case of a stock which in a later application for a fresh investment fails to get the approval of the Court. The trustee has now a list of investments of this class presented to him with statutory authority, 9 but the list is a changing one. In the absence of any authoritative rule to guide the trustee in this matter, it can only be said that he is safer to err on the side of officiousness in changing investments, than on the side of negligence. The interference of the Legislature will be required before the trustee can hope for much light being thrown on this part of his duty. 10 chap, vil] INVESTMENT OF THE ESTATE 395 1 Vide Lord Cottenham in Stickney v. Sewell, 1835, 1 My. & Or. 8, at p. 15. 2 Cf. Manners v. Strong, 1902, 4 F. 829, at p. 837. s 1896, 2 Oh. 763. * 1907, 24 T. L. R. 51 ; 1909, 1 Ch., at p. 409. 6 Shaw v. Gates, 1909, 1 Ch. 389, per Parker, J., at p. 409. Five years was suggested in argument as the period for revaluation ; see p. 408. There is a statutory obligation on Friendly Societies to revalue their assets every five years (59 & 60 Vict. c. 25, s. 28 ; and see 2 Edw. vil. c. 21, Schedule X, as to " shop clubs " being required to revalue " at least every five years." 13 Rawsthorne, 1909, 1 Ch., at pp. 409, 410. See also Chapman, supra, per Lindley, L.J., at pp. 773, 774, and Rigby, L.J., at pp. 781, 782, as quoted by Farwell, L.J., in Rawsthorne, 1909, 1 Ch., at p. 412. 7 Cf. s. 302 as to the exercise of the discretion to revalue. 8 Vide s. 646. 9 Cf. s. 643. 10 The Trustee Act, 1893, Amendment Act, 1894 (57 Vict. c. 10), s. 4, deals partly with this difficulty, but appears to be limited to the case of an investment falling out of an authorised class, and not to touch the question of depreciation in an investment still remaining authorised. The expression of this section is quite general, in which it differs from the other sections of the Act, and this suggests that it may apply to Scotland. for distribu- tion, CHAPTER VIII PAYING OVER THE ESTATE I. General Rules (a) Duties of Trustee in Distribution of Estate Natme of 702. The distribution of the trust estate amongst its proper trustee's ior b distribu- re °ipi en ts is a duty requiring the utmost attention of the trustee, 1 for, in all but the simplest trusts, delicate questions arise regarding the claims to the trust fund. The proper solution of these questions is a matter of serious import for the trustee, as the law holds him liable in the strictest diligence to secure the payment of the trust funds to the persons entitled to receive them. Indeed the proposition has been advanced that the trustee in distributing the estate in his hands is personally liable to the beneficiary for his interest in the estate. This is nowhere baldly stated by any authority, but in many cases there are opinions which imply such a pro- position. In considering this proposition, it must be noted that the estate transferred to the trustee may fail to reach the beneficiary in other ways than by mistaken distribution. It may be lost during custody or during investment. It has not been suggested that the trustee in these spheres of his duty personally warrants the existence of the interest of the beneficiary. 2 The proposition under discussion therefore makes the case of the distribution 3 of the estate an exception to the general rule of the trustee's liability. No reasoned support is forthcoming for the exception. Such statements as appear to sup- port it are found upon examination to imply, as the true ground of the trustee's liability, that he has neglected to take advantage of means open to him for the better protection of the beneficiary's interest. The following judicial opinion is cited in illustration of the truth of this comment: — " I consider it to be a settled principle of our law," says Lord Kinloch, " that trustees, in distributing bhe trust estate, are bound to pay it away to the party in right to receive it, and are liable to that party if they pay it away to any other. There is no hardship to trustees in so holding, for if the matter is one of difficulty, they can always have recourse to chap, viil] PAYING OVER THE ESTATE 397 judicial authority, and refrain from paying without the warrant of a Court. The case of distribution herein differs essentially from that of realisation. I do not hold it of any moment what the precise blunder is. The payment may be to the wrong beneficiary, or may be to the beneficiary and not to the creditors, or it may be, as here, to the secondary creditors, and not the primary. In all such cases it is the rule of law that the wrong paying trustee is responsible. Cases may undoubtedly occur in which the facts necessary to be known, in order to point out the true person entitled, may be beyond the knowledge and fairly possible discovery of the trustees; 4 and in such cases responsibility may be modified." 5 In a claim for his interest in the estate made by a bene- Trustee ficiary against the trustee as an individual, it is not relevant to for breach J S of duty. aver simply that the claimant is in law the person entitled to payment of the fund that the trustee has paid away to some- one else. The beneficiary must further aver that the payment was made in breach of a specified duty owing by the trustee to the claimant. A relevant averment would be that the payment was made without legal advice which it was the trustee's duty to take, or in opposition to legal advice which it was the trustee's duty to follow, or in accordance with legal advice where the opinion of the Court was available, and there- fore should have been taken. 6 In many such cases it is difficult to advise the trustee as to his duty, owing to the variety of circumstances affecting the decisions of the Court on the question of the liability of trustees in this matter, 7 and in practical effect these decisions have often made very slight distinction between breach of duty and warranty. The Judicial Factors Act, 1889, 8 enables trustees to obtain superin- tendence by the superintendence of the Accountant of Court in the distribu- ^£°™{f nt tion of the estate. This statutory provision affords an apparent solution of the trustees' difficulties in connection with paying over the estate, but the protective quality of the provision has, in practice, been so reduced by the interpretation given to it by the Court, that trustees cannot be advised to look to the statutory procedure for relief. 9 It has been laid down that this statutory jurisdiction of the Court is " similar to that exercised by the Court in superintending judicial factors," 10 and that " so long as distribu- tion is more or less plain sailing or consequential the Court will sanction it"; 11 but it will not "either assist a trustee in the exercise of a discretion or decide contentious matters." 12 398 PAYING OVEE THE ESTATE [chap. vm. Liability qua trustee for wrong payment. Executory trusts. Trust to entail. A different question is whether the trustee qua trustee is liable to make good to the beneficiary the interest in the estate that should have come to him, but has been paid to another. In the marshalling of the trust estate for final distribution, the loss to any beneficiary by the payment of his interest to another by the trustee can only be treated, where the trustee is not in breach of trust, in the same manner as the loss on an authorised investment properly made and not appropriated. As such it would fall upon the general estate. The duty of the trustee in the completion of an executory trust is similar to that as to payment under an executed one. In executing a trust to entail, the trustees are not bound to adopt the ipsissima verba of the deed of trust, but they must not frame the destination of the deed of entail so as to "disturb any right conferred by the language of the trust deed or to create any beneficial interest which would not have arisen had its language been strictly followed." 13 They must, however, execute a strict entail, and not merely a deed regulating the succession and prohibiting alteration. 14 1 Gf. Miles, s. 227, for position of solicitor. 2 The trustee is not liable for the insufficiency of an investment unless he is in breach of trust (Solomon, 1912, 1 Ch. 261, at p. 280). 3 Gf. s. 267. 4 Gf. s. 727. 6 Lamond v. Groom, 1871, 9 M. 662, at p. 671. Gf. Lord Kinnear in Buttercase v. Geddie, 1897, 24 R. 1128, that trustee had deliberately taken final decision upon himself instead of getting a decree of the Court, and must, therefore, stand or fall by that decision. But see Ogle, 1873, 8 Ch. App. 711. 6 See Jessel, M.R., in Cull, 1875, 20 Eq. 561, as to liability for legal advice. Gf. s. 227. 7 Gf. s. 706 and cases there. 8 52 & 53 Vict. c. 39, s. 18. *> Gf. s. 310, note 10. 10 Stair, 1896, 23 R. 1070, per L. P. Inglis, at p. 1073. 11 Stair, ut supra. 12 Stair, supra, per Lord M'Laren, at p. 1074. Here the question was whether the trustees ought to sell or to keep a certain mineral estate belong- ing to the trust. The Court held this to be a pure question of discretion, to be decided by the trustees upon their own responsibility. In an earlier application by the Accountant for directions in the same trust, Lord Low (Ordinary), on 14th January 1896, decided a question as to the application of the Thellusson Act to certain provisions of the trust deed. His Lordship's interlocutor, however, is limited to deciding that accumulation must stop at a certain date, and expresses a merely academic opinion upon the contentious question as to the destination of the arrested accumulation. In a later case the question reported to the Court by the Accountant for directions dealt with the right of a widow to claim one-third of the investments of the moveable estate at the date of the claim instead of one-third of the corpus of that estate at the date of death. Lord Ormidale (Ordinary) decided the question under the statutory procedure, .but on a reclaiming note the Court held that this was incompetent, and that such a question could only be decided in foro contentioso (Ward, 23rd May 1911 (Extra Division), relying on Stair, supra). 13 Inglis v. Gillanders, 1895, A. C. 507, per Lord Watson, at p. 513 ; 22 R. (H. L.) 51, at pp. 53, 54. chap, viil] PAYING OVEK THE ESTATE 399 14 Gifford, 1903, 5 F. 723, per Lord M'Laren, at p. 732. Of. Johnston, 1903, 5 F. 1039, for terms of deed held ineffectual to limit the institute. 703. The trustee should approach this duty of distribution with deliberation and caution. Excess of caution in this matter can at worst involve the trustee in liability for interest and expenses, while incautious action may involve him, at least in the case of large trust estates, in disastrous liabilities for capital sums, as well as for interest and expenses. Many cases which at first sight appear transparently simple, and are therefore treated as such, give rise to serious questions, when the unforeseen complica- tions of the case afterwards develop. The trustee should never pay away any part of the capital of the estate without most serious consideration of all the possibilities involved in the situation. 704. A breach of the duty of the trustee to exercise the Good faith not suffi- strictest diligence in distributing the estate is not excused by cient - the bona fides of the trustee who makes the erroneous pay- ment. "The good faith with which he committed the wrong cannot exempt him from redressing it. It would be destructive of legal rights if a trustee who had paid away the trust funds to the wrong party was to escape from responsibility by merely saying that he bond fide thought there would be enough for everybody." 1 1 Lamond v. Groom, 1871, 9 M. 662, at pp. 671, 672. 705. Discussion of the duty of the trustee in distributing Title of ° claimant. the estate involves consideration of the trustee's responsibility for the validity of the title of the person to whom he pays. The trustee is bound to pay to the holder of an ex facie good title. Where the title is challenged by another claimant of the beneficial interest, the only effective remedy of the chal- lenger is to reduce the title. While it stands the trustee must recognise it. "The question before me," says Eomilly, M.E., in dealing with such a case, "is whether the deed is ipso facto, upon the face of it and with the surrounding circum- stances, void; because if it be not, so long as it stands, the cestuis que trust under it are entitled to call on this Court to carry its provisions into effect for their benefit." 1 The trustee may, however, call on the claimant to give full information with regard to his title. The claimant must state openly the grounds on which he bases his claim. If he either fails or refuses to do so, he cannot complain if the estate is paid to a competing claimant. 400 PAYING OVER THE ESTATE [chap. vm. Thus in a case where the truster gave a liferent of his estate to his son, with a gift over if he charged or incumbered his interest, a claim was made by certain persons who alleged that they were the mortgagees of a lease granted by the tenant for life. The beneficiaries under the gift over alleged that the mortgage was a direct incumbrance by the tenant for life over his interest, and they called upon the other claimants to tell the date of the lease they claimed under. This they refused to do, and the trustees were held to be right in refusing to pay to them. " The trustee has a right to know the title of those who pretend to be his cestuis que trust. ... If they do claim an interest, they must tell the trustee how they acquired that interest." 2 contingent Where the title of the claimant is contingent upon an event title. remotely probable but not impossible, such as the birth of a child to a woman apparently past child-bearing, the Court have, in some cases, held trustees entitled to pay to such claimant upon caution to restore so much of the estate paid them as will satisfy the other claimants if the contingency happens. 3 1 Beddoes v. Pugh, 1859, 26 Beav. 407, at pp. 416, 417. 2 Hurst, 1874, 9 Ch. App. 762, per James, L.J., at p. 766. His Lordship speaks of it as " a case resting on first principles." 3 M'Pherson v. Hill, 1902, 4 F. 921, following Scheniman, 1828, 6 S. 1019, and Shaw v. Shaw (no date), 6 S. 1149. On this point of caution, cf. Blackwood v. Dykes, 1833, 11 S. 443 ; M'Gibhon v. Hope, 1896, 4 S. L. T. No. 184, reduction of trust deed subject to appeal : "Wentworth, 1900, A. C. 163. Evidence of 706. The trustee must act reasonably in the matter. In an identity. English decision illustrative of this point, the share of a beneficiary whose name should be Elizabeth Tudor was claimed by a person who was commonly called, and answered to the name of, Elizabeth Phillips. She gave what the Court thought a perfectly satisfactory account of how the change of name had taken place. The trustee, after professing to be fairly well satisfied with the explanation, without further notice or inquiry, put the money into Court. The Court held the trustee to have acted unreasonably in the matter, and found him liable in costs. " She was called on for her title," says Knight Bruce, L.J., " and she furnished proof which, in my opinion, was satisfactory, and ought to have satisfied any reason- able mind. If it was not deemed satisfactory by the trustee, some specific statement of what further evidence he wished should have been given." 1 Another illustration of what the Court will hold to be sufficient evidence to satisfy a reasonable trustee is afforded by a case as to the identity of a person who claimed to be a bene- ficiary that had been absent for thirteen years. The beneficiary chap, vin.] PAYING OVEE THE ESTATE 401 was twenty-six years of age when he left, and the Court on that account did not think the question of identity attended with much difficulty. The person who made the claim was recognised as the proper beneficiary by his brother, by a sister, who, though having a hostile interest to that of the claimant, insisted strongly on the identity, and by an uncle who was a trustee. In these circumstances the trustees paid the fund into Court, stating that they had no satisfactory proof of the identity of the claimant with the beneficiary. The Court held that the proof offered was most satisfactory, and should have satisfied any reasonable person, and therefore ordered the trustees to pay costs. 2 1 Woodburn, 1857, 1 De G. & J. 333, at p. 340. 2 Elliot, 1873, 15 Eq. 194. 707. As the trustee is bound to pay to the holder of an ex Latent defect of facie good title, such payment protects the trustee, though it turns title. out afterwards that the holder of the title produced was not the proper claimant on the estate. Thus payment to a person holding English letters of administration, which were improperly taken out, instead of payment to the Scots executor, was held to protect the trustee; 1 as also payment to a person producing a regular service as heir. 2 Again, where the proper payee was the executor of the deceased, and payment was made to a person who was confirmed as nearest of kin of the deceased, the payment was held to protect the trustee, though the deceased was a bastard and could have no next of kin. 3 Of course, the bona fides of the trustee is absolutely necessary, and where its existence is directly traversed by an allegation of collusion, the fact that the payee had produced to the trustee an ex facie legal title does not, of itself, protect the trustee. 4 1 Stuart v. Orkney, 1713, Mor. 1796. 2 Thomson v. Moubray, 1676, Mor. 1791. 3 Paterson, 1626, Mor. 1786. Cf. Taylor v. Forbes, 1830, 4 W. & S. 444, and 3 S. J. 206. 4 Howes v. Goodlet-Campbell, 1758, Mor. 1799. 708. Care must be taken that the claimant produces not only Patent r J defect of an ex facie legal title, but that it is also technically regular and tine. complete. For instance, in a case where a trustee made a payment to the curator bonis of a minor, the curator having neither extracted ^ tor his appointment nor found caution, and the curator soon after- wards left the country insolvent, the trustee had to pay again to the minor. 1 The trustee must be careful to attend to the detailed terms of the title produced, which may put him on his 26 402 PAYING OVEE THE ESTATE [chap. Tin. guard as to paying the money to the person who has produced Bond. it. An example of this class is to be found in a case of wrong payment by a debtor in a bond, where the judgment was put on the ground that " the bonds, instead of being so expressed as to mislead, are, on the contrary, so expressed as to put the debtor and his representatives on their guard." 2 In distributing their trust fund, trustees had to pay over a share to an assignee of the Assignee, original beneficiary. " That necessarily set them on inquiry how he came to be such assignee, and they were bound to satisfy them- selves that the alleged assignee had a good title to the share in question. If in the course of that inquiry they reasonably would have come across notice of anything defeating that assignee's title, then they are affected with notice of that, notwithstanding that by the negligence of an agent, or for any other reason, they really never knew anything about it. That is the doctrine laid down in Jones v. Smith, 3 and followed by the Courts ever since." 4 1 Donaldson v. Kennedy, 1833, 11 S. 740. 2 Gray v. Walker, 1859, 21 D. 709, per Lord Curriehill, at p. 717. Of. Cowan v. Kerr, 1830, 9 8. 188, for example of deed putting trustee on his guard. 3 1841, 1 Hare, 43. 4 Davis -o. Hutchings, 1907, 1 Ch. 356, per Kekewich, J., at p. 362. Cf. s. 225. 709. Payment to the holder of a forged title is differently treated, and does not protect the trustee against a claim by the proper beneficiary, unless that beneficiary has so acted in connection with the presentation of the forged title as to raise a personal exception against his claim. For example, a trustee paid away the trust funds to certain persons, as the legitimate children of their father on the strength of a marriage certificate produced to him, which certificate turned out to have been forged. Here Eomilly, M.E., by a rigid application of the doctrine that " the trustee is bound to pay the trust funds to the right person," J found the trustee liable to repay the money to the proper bene- ficiary. Negligence was not alleged on the part of the trustee in making the payment, nor any improper action on the part of the beneficiary, and his Lordship expressed the opinion that it was " a very hard case on the trustee." The exception depends upon the anomalous but settled rule that a forged discharge is no discharge, although taken in good faith and without negligence. 2 The trustee has in such case a claim of relief against the person to whom the money has been wrongly paid, and also against the forger or issuer of the forged document for any balance chap, viil] PAYING OVEE THE ESTATE 403 not recoverable from the person wrongly paid. 3 The duty of the trustee in this matter is held to be analogous to that of the banker who undertakes to pay away the customer's money to the person indicated by the customer. 4 Payment by a banker to the holder of a forged title does not relieve him of liability to pay again to the customer, 5 unless the customer has acted so as to mislead the banker into paying to the holder of the forged title. 6 There seems no good reason why a loss to the estate by forgery, without fault on the part of the trustees, 7 should not be treated in pari casu with the loss of an authorised investment properly made, 8 and the anomalous position here stated on authority might well be reconsidered by the Court or provided for by legislation. > Cf. s. 701. 2 But see Smith, 1902, 71 L. J. Ch. 411, per Kekewich, J., at p. 415. 3 Eaves v. Hickson, 1861, 30 Beav. 136. Of. Bank of England v. Cutler, 1908, 2 K. B. 208 ; Sheffield Corporation v. Barclay, 1905, A. C. 392. 4 Bank of England v. Vagliano, 1891, A. C. 107, per Lord Watson, at p. 131. 6 Roberts v. Tucker, 1851, 16 Q. B. 560. 6 Bank of England v. Vagliano, supra, per Lord Selborne, at p. 125. The opinions in this case discuss exhaustively and authoritatively the situation here dealt with ; but vide also Scholfield v. Londesborough, 1896, 12 T. L. R. 604. Of. 3 Ruling Cases, 681. 7 Gf. Smith, ut supra. 8 See s. 991, and cf. s. 702, as to liability of trustee qua trustee in such a case. 710. A question of a different kind arises where there is no validity doubt as to the claimant but a doubt that his claim is a proper claim on the estate at all. In the cases dealt with above there was no doubt as to the existence of the claim ; the difficulty was in fixing on the proper claimant. Where there is any question as to the validity of the claim, the trustee can protect himself by requiring the creditor to constitute his debt by judicial pro- cess. At common law the trustee is responsible for debts of the Decree of constitu- truster paid without their being constituted should they prove not ''on- to be true debts of the estate. 1 Vide opinion of Court in Gardner v. Pearsons, 28th November 1810, 16 F. Dec. 59, but cf. s. 711. An erroneous payment made by the trustee under compulsion, though short of decree, bars his claim for repetition from the payee, but may found a good claim for relief out of the trust estate. Of. Hardicke v. Friern, 1904, 2 K. B. 807, at p. 815 ; and cf. s. 1320. 711. By statute the trustee is relieved from responsibility statutory conditions. for a mere error of judgment in paying an improper claim of debt against the estate. By the Trusts Act, 1867, 1 power is given to trustees " to pay debts due by the truster or by the trust estate without requiring the creditors to constitute such debts, where the trustees are satisfied that the debts are proper debts of the trust." 2 The trustee must exercise due diligence in satisfying 404 PAYING OVEE THE ESTATE [chap. vm. Procedure in con- stituting debt. " Proper " debt. himself as to the character of the claim, and where there is any reasonable doubt should require constitution, for the existence of such a doubt would in itself instruct breach of the condition of being " satisfied," and so remove the protection of the statute. "Though a decree of constitution is not always necessary, yet where the executry estate is small, and the amount of claims uncertain, and the existence or amount of the alleged debt at all doubtful, the executor is entitled to protect himself and the estate by requiring formal constitution." 3 x 30 & 31 Vict. c. 97, s. 2 (7). 2 As to difference between this power and that of compromise, see L. P. Eobertson in Lawrie, 1892, 19 R. 675, at p. 683. 3 M'Gaan, 1883, 11 R. 249, per L. P. Inglis. 712. Where , trustees are sued in an action of constitution they should limit their defence to opposing the granting of a personal decree against them. If they enter defences upon the merits and are unsuccessful, they will be found liable in expenses. 1 The proper form of decree of constitution is decree against the executor qua executor where an executor has been confirmed, or against the trustee qua trustee, and not a decree cognitionis causa tantvm? The official qualification of the personal decree is sufficient protection to the defender in either case. 3 It has been decided that it is competent to sue an action of constitu- tion against a trustee who is denuded of the estate and has been discharged by the beneficiaries. 4 1 Jackson v. Black, 1832, 10 S. 597. 2 This last form is appropriate to constitute a debt contra hereditatemjacentem. In the case of movables, the creditor's remedy is then, if there is no other executor, to confirm to his debt. 3 Crawfurd v. Cook, 1833, US. 406. * Assets Co. v. Falla, 1894, 22 R. 178. 713. Here the question presents itself, whether a trustee is bound to plead a technical defence against a claim which he knows to be good on its merits. The interpretation of the words, " proper debt of the trust," does not appear to have been the subject of decision, and it is accordingly uncertain whether they should be taken to mean legally enforceable debts or such debts as, though not legally enforceable, are in the opinion of the trustees equit- ably due by the trust. It is worth noticing that the practice of the English Court is to enforce a strictly technical inter- pretation of such a power, with one possible exception. The corresponding section of the English statute law reads thus : — "An executor or administrator may pay or allow any debt or claim on any evidence that he thinks sufficient." 1 Prima facie, this clause would seem to be much more susceptible than the chap, viii.] PAYING OVEK THE ESTATE 405 clause in the Scots Acts to an interpretation making it the duty of the trustee to pay equitable debts. The English Act, however, has been interpreted as binding the executor to pay only legally enforce- able debts. " It is the duty of an executor," says Eomer, J., " to plead to a claim, where applicable, the Statute of Frauds and all proper defences, with the single exception of the Statute of Limita- tions." 2 In the same case in appeal, Lindley, L.J., says : — " The general principle is that it is the executor's duty to protect the estate against demands which by law cannot be enforced against it." His Lordship then proceeds to point out that the exception in the case of the Statute of Limitations is an anomalous one, and not to be in any way extended at the expense of " a general and wholesome principle." 3 If "debt or claim" is properly so inter- preted, " proper debt " in the case of the Scots Acts is a fortiori only capable of the same interpretation. 1 The Trustee Act, 1893 (56 & 57 Vict. c. 53, s. 21 (1)), re-enacting the Conveyancing and Law of Property Act, 1881 (44 & 45 Vict. c. 41, s. 37 (1)). 2 Midgley, 1893, 3 Ch. 282, at p. 289. 3 Midgley, supra, at p. 299. 714. "Where a sole 1 executor, whether also express trustee or Discharge . confusions not, is either creditor or debtor or both of the deceased truster, where sole executor. the doctrine of confusio applies. All claims of debt hinc inde between the sole executor and the estate of the deceased become, upon acceptance of the office of executor, vested in the same person. From the date at which any such claim becomes prestable 2 the doctrine of confusio discharges it. An executor is not a trustee of the deceased's estate for his creditors, and is not bound, as such a trustee would be, to hold it for rateable distribution amongst them ; being eadem persona cum defuncto, 3 he is bound, and therefore entitled, in the same manner as the deceased would be, to pay his debt to the first creditor demand- ing payment while the estate is apparently solvent. 4 A sole executor is therefore entitled to pay a debt due 5 to himself 6 or to discharge a debt due by himself to the deceased's estate immediately either becomes prestable, and he is presumed to have then done so. The law, however, provides for a suspensive moratorium of six months in the case of debts due by the estate of a deceased debtor, and only upon the expiry of this period does the duty of the executor to pay debts primo venienti arise. Hence the doctrine of confusio operates (1) to discharge 7 the sole executor of his debt to the estate from the date of his acceptance of office, at which date debts then due to the estate are prestable; and (2) to discharge the deceased's 406 PAYING OVEE THE ESTATE [chap. viii. estate of a debt due to the sole executor immediately it becomes prestable — that is, on the expiry of six months from the death of the deceased. The case is different where the executor 8 claims, not as a creditor of the deceased, but only as a beneficiary. There is in this case no confusio till all the debts of the deceased are paid. 9 Though confusio operates automatically to extinguish all claims of debt between the two estates vested in the one person, it does not affect any claim between either estate and a third party. Thus it does not relieve the executor of his liability to account to a beneficiary or to a trustee in the bankruptcy of the executry estate for the debt presumed by the operation of the doctrine of confusio to be paid by the executor to the executry estate. On the other hand, an executor is entitled to take credit in an accounting with dilatory creditors or the beneficiaries of the executry estate for so much of the estate as is required to satisfy the debt that was due to him, as an individual, and has been extinguished confusione. Gift to Where a donor has attempted to make a gift of certain definite executor. *- ° property, but the gift fails on some technical legal ground, that gift is subsequently perfected by the appointment of the donee, and by his acting, as executor of the donor. There must be, how- ever, an actual present gift failing only on technical considerations, and not a mere announcement of an intention to give in the future. 10 1 Possibly in England one of more executors, but not so in Scotland. Cf. s. 715. 2 Future instalments of a debt are not included (Abrahams, 1908, 2 Ch. 69). 3 The doctrine of the executor being eadem persona cum defuncto, on which the confusio is based, was slighted in Gray, s. 715, but has since been fully re- established (Mitchell, s. 715). 4 Globe 'Insurance, s. 715. 5 Weir v. Hutchison, 1904, 12 S. L. T. No. 294. Where his claim is chal- lenged, it must be constituted; but see Ambler, 1905, 1 Ch. 697, as to claim of retention for loan by a married 'woman as executrix of her husband. As to decree against the executor barring him from retaining his debt, cf. Marvin, 1905, 2 Ch. 490. 6 Elder v. Watson, 1859, 21 D. 1122, at p. 1128. Cf. Erskine's Institutes, III. IX. 45, 46 ; M'Leod v. Wilson, 1837, 15 S. 1043 ; also article in 1 S. L. T. p. 679, and English cases there. Later cases are Belham, 1901, 2 Ch. 52, appeal from 84 L. J. 300, approving Davies v. Parry, 1899, 1 Ch. 602. " The trustee is unable to sue himself and is therefore entitled to use the assets that come to his hands to meet his debt" (Belham, supra, at p. 58), but the debt must be personal, not due to him as a representative or agent, e.g. a bank manager for his bank (Richards, 1901, 2 Ch. 399 ; cf. Rownson, 1885, 29 Ch. D. 358). The executor's cautioner in Scotland undertakes to make the estate to which the executor has confirmed "free and forthcoming" (Currie, Executors, p. 385, Bond of Caution). For effect of the executor preferring his own debt, see Davis v. Parry, 1899, 1 Ch. 602, and 16 T. L. R. 122 ; Belham, supra. " The right of retainer is a relic of old law, not founded on justice, and working the greatest possible injustice " (Crowder v. Stewart, 1880, 16 Ch. D. 368, per Malins, V.-C). There is no doubt about the truth of that (Williams, 1904, 1 Ch. 52, per Joyce, J., at p. 55). Therefore "the right of retainer, as it produces inequality, is never assisted" (Jones, 1885, 31 chap, viil] PAYING OVEE THE ESTATE 407 Ch. D., at p. 447, per Kay, J. ; Ridley, 1904, 2 Oh., at p. 776). The English Court has thus refused to extend the right to retainer of real assets vesting in the executor under the Land Transfer Act, 1897, s. 1 ("Williams, supra. As to legal and equitable estates, Selous, 1901, 1 Ch. 921). As to a debt due to a trust estate where the trustee becomes executor of the debtor, Ridley, supra, approved in Benett, 1906, 1 Ch. 216. For prescribed debts, see Bruce, 1908, 2 Ch. 682, explaining Courtenay v. Williams, 1844, 3 Hare, 539 ; in appeal, 1846, 15 L. J. Ch. 204 ; see Rownson, infra. The executor is not bound to plead any limitative prescription against himself, but in this case he must have the full beneficial interest in himself, as anyone jointly interested can sue and be met with the plea (Dunning, 1885, 54 L. J. Ch. 900 ; Hay- wood, 1901, 1 Ch. 221). This affects the claim of the trustee of a bankrupt executor (Wilson, 1911, 1 K. B. 327 ; cf. Elder, infra, at p. 1128). The executor may take the estate in specie without converting (Gilbert, 1898, 1 Q. B. 282). His claim is good till he parts with the assets (Rhoades, 1899, 2 Q. B. 34). He does not do so by paying into Court (Jones, 1897, 2 Ch. 190, at p. 203). Conversely the assets he claims must have come into his possession or that of his agent (Taafe, 1902, 1 I. R. 148, at p. 154). 7 Of. s. 728, note 8. 8 See rights of executor creditor expressly preserved under Executors Act, 1900 (63 & 64 Vict. c. 55, s. 7). Cf. Ambler, supra, however, as to priority. See s. 1074 as to trustee who is a beneficiary being barred from taking pay- ment where he is in breach of trust in getting in the estate. The case of Heritable Association o. Miller, 1893, 20 R. 675, has affirmed the doctrine that all known debts must be paid before any claim for beneficial interests arises, and so supports the judgment of the Lord Ordinary in Elder, supra. 10 limes, 1910, 1 Ch. 188 ; Strong v. Bird, 1874, 18 Eq. 315, which was applied in Pink, 1912, 28 T. L. R. 528 ; Stewart, 1908, 2 Ch. 251. Cf. s. 3. 715. If there is more than one executor the doctrine of confusio one of more executors. is not applicable, 1 for in this case where an executor is the debtor he requires the concurrence of his co-trustees to discharge his debt, and where he is the creditor he is only one of several debtors, others of whom may resist his claim. 2 Here if a debtor of the trust estate 3 is also the creditor in an obligation by the trust estate of the same quality, the doctrine of compensation i applies, and the one debt discharges pro tanto the other, leaving only a balance due to one of the parties. It must be remembered, though, that there is no com- pensation between debts due by or to the trustee qua trustee, and those due to or by the trustee personally. There is, in such cases, compensa- J r * tion between no coneursus debiti et crediti upon which to rest the doctrine of com- ^i^ r s and pensation. 6 Thus where the truster was indebted to a bank, and executor, his trustees, who were also his executors, deposited part of the trust estate with the same bank in the ordinary administration of the trust, the bank, on the insolvency of the estate, refused to pay this deposit to the trustees, on the ground that the bank was entitled to retain the money towards satisfaction of the truster's debt to the bank. It was there held that there was no compensation, and the bank were ordained to pay to the trustees on the ground that the funds deposited belonged to the trustees, not in the character of debtors of the deceased's creditors, but in that of trustees of his estate for them. 6 This doctrine has been formally overruled. 408 PAYING OVEE THE ESTATE [chap. vm. Trustees who are also executors have been declared not to hold the deceased's estate as trustees for his creditors, but to be eadem persona cum defuncto and the debtors of his creditors. The claim of the trustees, therefore, was held to be subject to be set off by a claim against the deceased truster. 7 Compensation does not arise where an individual legatee is a partner of an English firm which is a debtor to the estate. 8 compensa- In the winding up of an estate 9 such as the residue of a trust, tionin ° r winding up a ll claims of the estate 10 against debtors to it must be accounted of estate. ° for before anything is paid out of the estate to a debtor who is a claimant upon it. The rules of compensation between indi- viduals as to the quality of debts do not apply to such a situation. Therefore, before anything is paid by the estate an illiquid claim or a prescribed claim by the estate must be satisfied on the principle that the claimant has in his own hands a sum due to the estate, and he must pay himself out of that. " The person who is bound to increase the general mass of an estate by a contribution of his own cannot claim an aliquot share given to him out of that mass without first making the contribution which completes it." u The rule is limited to claimants upon the particular estate falling to be made up by their debts to it. Thus in the distribution of a residue, a specific legatee under the same trust must be paid his legacy irrespective of his accounting to the residue fund. 12 1 Compensation does not operate ipso jure like confusio — it must be pleaded. 2 Of. Dunning, s. 714, note 6. 3 Of. s. 714 for case of sole trustee or executor. 4 Of. s. 1191. 6 Hay v. Brown, 1825, 4 S. 344 and 348, vide L. J.-C. Boyle, at pp. 346 and 350. Of. Jones, 1897, 2 Ch. 190, at pp. 202, 203. For treatment of doctrines of confusio and compensation generally, vide Bell's Prin., s. 572, etc., and s. 580, etc. ; Erskine's Prin., iii., iv. 6. As to partnership debt, cf. Jennes, 1909, 53 Sol. J. 376. 6 Gray v. Royal Bank, 1895, 23 R. 199. 7 Mitchell v. Mackersy, 1905, 8 P. 198 ; Globe Insurance v. Mackenzie, 1850, 7 Bell's App. 296 ; Stewart, 1896, 23 R. 739. 8 Turner, 1911, 1 Ch. 716. 9 Of ss. 990 and 1191. 10 See Abrahams, s. 714, as to debt due in instalments. 11 Akerman, 1891, 3 Ch. 212, per Kekewich, J., at p. 219, referring to Cherry v. Boultbee, 1839, 4 My. & Cr. 442, at p. 447 ; Rhodesia, 1910, 1 Ch. 239. Cf. Willes v. Greenhill, 1860, 29 Beav. 376 ; Watson, 1896, 1 Ch. 925. 12 Akerman, supra. Trustee has 716. The duty of the trustee ends with his paying over the benefldary trust estate to the proper person at the proper time. He has no proper pay- concern with the use made of it by the beneficiary. 1 For instance, where the beneficiary, being young and under the influence of older people, is likely to give away or squander the estate, the ment. chap. Tin.] PAYING OVER THE ESTATE 409 trustee has no parental authority to attach conditions to the pay- ment of the estate with the object of preventing what he thinks a misuse of the property. Thus where the beneficiary was a young lady just come of age, residing with her step-father, who was alleged to have considerable influence over her, the trustees refused, at the instance of a brother of the beneficiary, to pay her the funds except on the condition that an interview with the beneficiary would first be granted them, for the purpose of explaining to her her position and preventing her making away with the estate under her step-father's influence. The Court held that the trustees were bound to pay over the funds unconditionally, it being no part of their trust to inquire what use the beneficiary would make of them, or to require the reasons of that use. 2 Similarly, where a beneficiary died, the trustees were held bound to pay his share over to his legal representatives, without reference, to any questions that might arise as to the ultimate ownership of the funds when in the hands of these legal representatives. Such questions Eomilly, M.E., said were " quite foreign to their trusteeship." 3 1 Of. Hazeldine, s. 734. 2 De Burgh v. M'Clintock, 1883, 11 L. K. Ir. 220. 3 Smith v. Bolden, 1863, 33 Beav. 262. Cf. Buchanan v. Dunnett, 1895, 22 R. 602. 717. A case of practical interest arises where an estate falls to Repayment to sub- be repaid to a number of subscribers. Where a number of people scnbers. subscribe money, and constitute a trust thereof for some particular object, and through the failure of that object a resulting trust emerges 1 in their favour as the trusters, how is this resulting trust to be carried out — how are the funds properly to be distri- buted ? This is a question that has not been definitely answered. The competency of an action of multiplepoinding for the purpose has been laid down in very emphatic terms by Lord Deas : — " Where Muitipie- ... , poinding parties join in a subscription to effect a particular object, and place where the money subscribed in the hands of certain persons to carry out that object, I think the quasi trust thereby created is for the alternative purpose of either carrying out the object of the sub- scription, or, if that cannot be done, of paying back the money. ... I think the appropriate action in such a case is a multiple- poinding." 2 Here the subscribers would appear to be all known. A more difficult question arises where they are not known. Thus Muitipie- x ^ poinding in a case where subscriptions had been taken by a church door ^?^| nt collection, the difficulty of returning the subscriptions to the proper ^known. parties was pointed out by Lord Brougham to Lord Campbell in 410 PAYING OVER THE ESTATE [chap. viii. a remark during the delivery of the latter's opinion. Lord Campbell proceeds : — " That would come to a question of multiplepoinding as to the various claimants; and a very difficult question would arise." 3 In the same case, Lord Cottenham, C, points out that the remedy in England had to be found in an Act of Parliament. 4 " It has been found that the existing establishments of this country were totally inadequate to perform that duty ; and Acts of Parlia- ment have passed for the purpose of establishing a machinery peculiar to itself, and with a view to do that which the regular proceedings in our Courts were found totally inefficient to accom- plish. Whether better means exist in the Court of Session it is not necessary now to inquire." 5 Though the difficulty is theoreti- cally met by an action of multiplepoinding, which, in form at least, brings all parties into the field, it is questionable how far it would succeed in surmounting the practical difficulties of the actual re- distribution of the fund. Another form of procedure is that of resignation by the trustees with a petition to the Court for the appointment of a judicial factor, 6 leaving it to him, under direction from the Court, to work out the solution of the difficulty. 7 In many cases it is certain that a final re-distribution of the funds could not be worked out without statutory interference. 8 Benefit Where the members of a contributory benefit association were at the time of the passing of a resolution for its dissolution the only persons who could establish a claim to the funds of the association, three principles of division were suggested in the settlement of a scheme in chambers in England — (1) Equally amongst those members ; (2) in proportion to payments made ; or (3) in proportion to the contingent benefits to which they were entitled. " The true principle is to be found in this — that there is a resulting trust in favour of those who have contributed to these funds, and the proper and legitimate way of dividing, there- fore, will be in accordance with the amounts contributed by the existing members at the time of the passing of the resolution." On the grounds of expense, loss, and delay, small amounts for incidental payments to the association, such as fines, need not be taken into account in ascertaining the proportions in which the fund is to be distributed. 9 1 As to when this takes place, see s. 1044. 2 Connell v. Ferguson, 1857, 19 D. 482, at p. 487. Gf. Simpson v. Moffat Institute, 1892, 19 R. 389, per Lord Wellwood (Ordinary), at p. 393. 3 Bain v. Black, 1849, 6 Bell's App. 317, at p. 335. * Gf. Stewart v. Colclough, 1900, 8 S. L. T. No. 192. 6 Bain, supra, at p. 329. See Aboyne Bazaar (Petition, Nash), Scotsman, 27th Oct. 1910, for authority granted to administer cy-prte where subscribers society. chap, viii.] PAYING OVEE THE ESTATE 411 not all known, and contrast London University, 1909, 25 T. L. R. 358, where all known. 6 Gf. Lead, etc., Society, infra. ■> Gf. Maxwell, 1874, 2 R. 71. 8 Vide Cunnack v. Edwards, 1896, 2 Ch. 679. 3 Printers', etc., Society, 1899, 2 Ch. 184, per Byrne, J., at pp. 189, 190 ; Lead, etc., Society, 1904, 2 Oh. 196, at p. 207, per Warrington, J., where Printers, supra, followed, and in addition to requirements there, advertise- ment in Gazette and local newspapers ordered. (b) Order of Payment among Claimants 718. As the trustee is liable in the strictest diligence in distributing the trust funds, he must attend |to the order in which the several classes of claimants on the estate should be paid, 1 and also the circumstances in which that order may safely be departed from. The order in which the payments should be made may be thus summed up : — First, expenses of trust adminis- tration; second, privileged debts; third, preferential debts ; fourth, ordinary debts ; fifth, special, demonstrative, and general legacies ; 2 and lastly, the claims of residuary legatees. 1 Where the trustee's title has been reduced acts done in a due course of administration of the trust estate remain valid, but not other dispositions of the assets (Ellis, 1905, 1 Ch. 613 ; and see Abram v. Cunningham, 1677, 2 Lev. 182, and Graysbrook v. Fox, 1564, 1 Plowd. 275, there examined and applied). 2 See further as to legacies, s. 1101. 719. First, there fall to be made certain payments out of the Expense of realisation. gross estate as it becomes realised in the hands of the trustees. The necessary outlay incurred in getting the estate ready for distribution is the primary charge, as it must be deducted before the realised value of the estate can be struck. In the case of a mortis causd trust there comes next what are known as the privi- Privileged leged debts. " They are preferred before all others," says Erskine, "because they are not only onerous, but strongly founded in humanity." 1 These are, first — the expenses connected with the last illness of the deceased, such as medicines, doctor's fees, etc. : second, the expenses of a funeral and burial suitable to the ap- parent 2 condition of the deceased; third, suitable mournings for the family of the deceased ; fourth, the current rent of the house of which the deceased was tenant and occupier at the time of his death ; fifth, the wages of farm and domestic servants for the term current at the date of death. 3 In addition to these rules of the statutory preferences. common law there are certain debts placed by particular statutes 4 in a privileged position. Aliment of the family of the deceased Aliment of ,■-.-, 1 family. till the next term after his death seems at one time to have been a privileged debt, but it has for long been settled that this is not so. 6 of debts. 412 PAYING OVEE THE ESTATE [chap. vm. Though outlays and debts are payable out of the gross estate as it becomes available, the assets of a solvent estate must be ultimately properly marshalled according to the character of its items for the purpose of an accounting with the beneficiaries Order of interested. " The order in which assets are administered for the assets in w«»t purpose of paying debts is well known. The general personal estate comes first, and then the undisposed-of realty, as the fund out of which the debts are to be paid, and specifically bequeathed personalty or the devised realty is not resorted to until these previous funds are exhausted." " So far as I can see in the text-books, there is no express statement as to what is the order in reference to the payment of funeral and testamentary expenses, but funeral and testamentary expenses are paid in order before debts, and therefore I can see no distinction, and I think that the order of administration for the payment of both funeral and testamentary expenses as well as of debts is that which I have mentioned." 6 1 Erskine, iii. 9, 43. 2 Vide 2 Ruling Cases, 147. 3 Erskine, ut supra; Bell's Prin., s. 1402, etc., and more especially More's Notes to Stair, pp. ccclxi, ccclxii, and Bell's Com., vol. ii. pp. 147, etc. The practice as to these debts is so well known, and they are so fully dealt with in every work on the general law, that it has been thought unnecessary to go at further detail into the matter here. Of. Goudy on Bankruptcy, 3rd ed., p. 559. * Such as poor rates by the Poor Law Act, 1845 (8 & 9 Vict. c. 83, s. 88). The executor is made accountable by statute to the Crown for estate duty upon the movable estate (Finance Act, 1894, 57 & 58 Vict. c. 30, s. 6). 6 More's Notes, ut supra. Cf. s. 725 as to position of such payment. e Pullen, 1910, 1 Ch. 564, per Warrington, J., at pp. 570, 571. Cf. s. 1033. creditors 720. In the distribution of the realised estate 1 there is a funda- and bene- ficiaries dis- tinguished. nji/1 "hfiriG" nciaries dis- mental distinction between the creditors of the truster 2 and his beneficiaries — between onerous claimants and gratuitous claimants. This distinction is vital, and the rule that the former 3 must be satisfied before the latter have any active claim, is " peremptory." 4 solicitor- A trustee who is a professional man, e.g. a solicitor, and is trustee. authorised by the truster to make professional charges against the estate, is a beneficiary in a competition for those charges with the truster's creditors. 5 Husband. The claim of a husband under an ante-nuptial contract of marriage against the estate of his deceased wife is the claim of illegitimate a creditor, and not that of a beneficiary. 6 The deceased father's gross estate is bound to support his illegitimate child so long as it is not able to support itself. 7 The debt is not privileged, but ranks with ordinary creditors in a sequestration. However inequitable it may appear to be that the claim of an illegitimate chap. Tin.] PAYING OVEE THE ESTATE 413 child is preferable to that of a legitimate child, the law would appear to be clear on the subject. 8 The trustees are bound to retain a sufficient capital sum to meet this claim before distributing residue. 9 The claim of a lunatic child is not a debt that comes into competition with the debts of ordinary creditors, but is a burden on the free estate which passes on to those lucrati thereby. 1 " The duty of the trustee is, not to hold for the lunatic, but to pay Lunatic the estate to the beneficiaries, taking in the receipts granted by them a binding obligation to support the lunatic, but without their being required to give security therefor. 11 1 This includes funds over which the truster had a power of appointment (Fearnsides, 1903, 1 Oh. 250, at p. 256). 2 The erroneous recital by the truster of a debt as due, even when accom- panied by a direction to the trustees to pay it, does not in itself imply a gift of the amount of the supposed debt (Rowe, 1898, 1 Ch. 153). 3 The rule does not cover contingent creditors such as a guarantor (Taylor v. Glass, 1912, S. C. 165). 4 Heritable Association v. Miller, 1893, 20 R. 675, per L. P. Robertson, at p. 694. As to payment made on order of Court, see Williams, s. 315. 6 White, 1898, 1 Ch. 217. 6 Bell, 1897, 25 R. 310, following Fisher, 1844, 7 D. 129. 7 A. B. v. C. D., 1900, 2 F. 610. The trustees may have a claim of relief against a third party who has contracted to support it. 8 Oncken v. Reimers, 1892, 19 R. 519, per Lord Adam, at p. 523 ; Gardner v. Munro, 1848, 10 D. 650 ; Clarkson v. Fleming, 1858, 20 D. 1224 ; Downs v. Gourlay, 1886, 13 R. 1101. Reid v. Moir, 1866, 4 M. 1060, does not affect decision in Clarkson. 9 Oncken, supra, at p. 520, and see there as to the amount to be retained. 10 Davidson, 1907, S. C. 16. 11 Cf. ss. 751, 752. 721. The only duty of the creditor of a deceased debtor creditor's J duty to towards testamentary trustees in possession of the debtor's estate sh ° w him - is to show himself; the trustees, or whoever are in possession, being made aware of his claim, must keep the estate safe till the validity of his claim is decided, and, if valid, it is paid. The trustees may be called to account for the whole estate by any unpaid creditor, and if any part cannot be well accounted for, the trustees are personally liable to make it good. This right is founded, not on the terms of the trust, but on the duty of the holders of a deceased person's estate to his creditor in a personal obligation for payment. 1 1 Heritable Association, s. 720, per L. P. Robertson, at p. 691. Where the time for distribution has arrived, the trustees are not entitled to retain as against the beneficiaries funds to meet possible claims arising out of the contractual relations of the truster for which his estate only, and not that of any trustee, is liable. If the trustees are personally liable under the contracts, they are entitled to retain funds as a protection for themselves (Nixon, 1904, 1 Ch. 638). Cf. Heritable Association, supra, where a known and valid claim existed though not immediately payable. In Nixon only claims which might, but need not, arise in future are referred to. Cf. Tomlin- son, 1898, 1 Ch. 232, at p. 234. 414 PAYING OVER THE ESTATE [chap. vin. Appropria- tion of security for creditor. 722. In this case 1 the question arose in this manner. The truster obtained a loan on the security of a disposition of heritage, accompanied by a personal obligation. The trustees in adminis- tering the trust paid away, while the loan was still due, part of the estate to the beneficiaries, in the belief that the heritable security was ample and the debt thus fully provided for. This security ultimately proved insufficient to meet the debt, and the trustees had not then sufficient trust funds available to implement the personal obligation. The lender then raised an action against the trustees personally for payment of the balance of their debt to the extent 2 of the trust funds paid by them to beneficiaries while the debt was unsatisfied, and got decree for this amount. 3 1 Heritable Association, s. 720. Cf. Nixon, s. 721. 2 It must be noticed that the liability of the trustees here is only a representative liability, and is limited to the trust estate that is or should be in their hands. It is different from the liability of the trustee in the case of debt incurred in the administration of the trust. There the trustee is a personal debtor to the extent of the debt. Where there is a cautioner for the trustee's administration of the estate, the responsibility of the cautioner to a creditor of the trustee is limited to the amount of the estate for which the trustee has failed to account to the creditor (British Power Co., 1910, 2 Ch. 470, applying Johnson, 1880, 15 Ch. D. 548). Cf. a. 1249. 3 See case where beneficiaries were allowed to carry on a business of the deceased truster's for their own behoof, and the estate turned out to be insolvent (Murray, 1905, 13 S. L. T. No. 135). 723. The opinion of Lord President Inglis, that " no trustees are entitled to pay away one shilling of the estate to beneficiaries until all the truster's debts are paid, and if they do so before ascertaining with certainty that the estate is solvent they do so at their own risk," 1 and an opinion of Lord Cottenham to the same effect, 2 must be read subject to the qualification that the creditor must have shown himself. The test suggested by Lord Cowan was whether " actions by legatees could not have been successfully defended." 3 There could be no defence to an action for a legacy due and payable if the trustee could not aver even a contingent preferential claim on the trust fund. 1 Lamond v. Croom, 1871, 9 M. 662, at p. 668. 2 Cruikshank, 1845, 4 Bell's App. 179, at pp. 192, 193. 3 Stewart v. Evans, 1871, 9 M. 810, at p. 817. 724. It may be well to notice in this connection a view that has found expression on the Bench derogatory of the proposition that the rule is " peremptory " where the creditor is known. It is expressed, rather as a suggestion for debate than as a settled conclusion, by Lord Adam. " It may be," says his Lordship, " that if trustees specially set aside a part of the estate and invest it in chap, vill.] PAYING OVEE THE ESTATE 415 securities which trustees may lawfully invest in, in order to meet a debt not presently payable, it may be that they may not be liable for any unforeseen loss or depreciation of these securities " -, 1 and Lord M'Laren, in the same case, 2 put forward the more general proposition that all that is required of the trustee is that he shall make " ample provision " for meeting debts not immediately payable. The serious difficulty in the way of adopting this view is the absence of any satisfactory definition of what constitutes an " ample provision." 3 The suggestion of Lord Adam, that the trustee may invest in trust securities the sum set aside to pay the creditor — for this must be his Lordship's meaning — is certainly the most practical, but even it is open to grave objections. For instance, where the security has appreciated, is the creditor, when he turns up, to be merely paid his debt out of the proceeds of the realised security, or is he to get his debt and something more ? Above all, no warrant can be found in the common law for imposing on the creditor the risk of loss upon a special investment made for him by the debtor, and so freeing the residue of the debtor's estate from that risk, on which residue it properly should fall. This is an objection that nothing but legislation can set aside. 4 1 Heritable Association, s. 720, at p. 700. 2 P. 702. Of. the Lord Ordinary (Wellwood), at p. 687. 3 In this connection the circumstances in the case of Young v. Johnston, 1841, 3 D. 1020 — " a very special case " — may be referred to. 4 Cf. s. 735, note 6, as to beneficiaries' position, and s. 732 as to difference from that of creditor. 725. The position of the trustee in relation to the support of Right of truster's the deceased truster's family 1 is not clear. Aliment of his family, &miiyto J J ' aliment. as such, till the next term after his death has been sometimes treated as a privileged debt analogous to rent and wages. In other cases it is looked upon, not as a debt of the truster, due only till the next term after his death, but as an advance to certain beneficiaries under his trust deed out of their apparent interests in the trust estate from the time of death till payment. The former view is now obsolete. The question is thus whether the trustee has a duty, where the estate is apparently solvent, to make advances for aliment, till they receive payment of their interests, to such bene- ficiaries as the truster was bound to aliment at the time of his death. Lord M'Laren supported 2 the position that there was such a duty, and that a belief in the solvency of the estate, held in good faith, protected the trustee, and left to the creditor the risk of the insol- vency of the estate. 8 That there is such an exception to the rule giving absolute preference to the creditor duly showing himself was denied by Lord President Eobertson, who laid it down authoritatively 416 PAYING OVEE THE ESTATE [chap. viii. that the risk of insolvency of the estate, where such payments are made, remains with the trustee and cannot be shifted to the creditor. 4 1 Cf. s. 720 for oases of illegitimate and of lunatic child. 2 The statement in M'Laren, s. 2163, 3rd ed., to a similar effect is not borne out by the cases therein cited, which deal mostly with questions of advances out of capital — the case of Ormiston v. Wood, 1838, 11 S. J. 232, which comes nearest, being a case of an exercise of ndbile officium. The opinions of English counsel returned in the case of Hardman v. Guthrie, 1828, 6 S. 920, show that in England the aliment is not paid as a debt, but purely as an advance. Cf. Professor More's note on case of Lindsay, 23rd Feb- ruary 1714, in More's edition of Stair's Inst, Notes, p. ccclxii. Vide s. 1001. 3 Heritable Association, s. 720, at pp. 7*02, 703. 4 Heritable Association, s. 720, at pp. 694, 695. Cf. Lord Ordinary (Well- wood), at p. 687. See Kay, 1897, 2 Ch. 518, at p. 523, for circumstances where payments immediately after death to widow, and before creditor known, were held to be made reasonably, under " honest and reasonable " clause of Judicial Trustees Act, 1896 (59 & 60 Vict. c. 35, s. 3). 726. It is difficult to formulate the exception put forward by Lord M'Laren 1 as to the advances for aliment that may be made to bene- ficiaries while there are creditors of the truster known to be unpaid. If the exception be put in the terms suggested — that income may be paid over — the objection may be taken that the income may not be sufficient for aliment, or, on the other hand, may be ridiculously extravagant as an alimentary allowance. If it be put as allowing the payment of aliment, this may involve the accumulation of income on the one hand, or the advance of capital on the other. It also raises the delicate question for the trustee as to what is aliment in each particular case. In his Lordship's last pronouncement on the point, this vagueness is rather intensified than dispelled by a reference to the permissible disbursements as " the customary interim pay- ments for maintenance." 2 If the trustee makes such payments in the exercise of his private discretion in any particular case, he should distinctly understand that, in the present state of the law, he does so at the risk of personal liability in the event of the insol- vency of the estate. Lord President Inglis says:— "It appears hard to make the trustees personally liable for their payment to the beneficiaries, but it was well remarked by counsel that if any charity was to be exercised towards them it should be, not by the creditors, but by the representatives of the truster." 3 1 In his opinion in Heritable Association, s. 720, at pp. 701 et seq. 3 M'Laren, 3rd ed., s. 2164. 3 Lamond v. Croom, 1871, 9 M. 662, at p. 668. personal 727. The claimant is personally barred from suing the trustee, exception against claimant. against as an individual, for reparation for a breach of the rule of prefer- ence either where the claimant has failed to show himself and give , notice of his claim debito tempore, or where he has so acted as to lead chap, vm.] PAYING OVEK THE ESTATE 417 the trustee to believe that the claim has been discharged or aban- if revision ° clear. doned. These are " equitable limitations of, or exceptions to," the rule. 1 The claim of the creditor against individual trustees to make good to him estate that has been distributed by them is purely an equitable one, dependent upon his own action, by which he may be barred, and upon the action of these trustees, who are only liable in so far as negligence in their administration of the estate was the cause of the error in distribution. 2 The right of the creditor against the undistributed estate, however, is not an equitable right merely, but ex debito justitice, and cannot be defeated short of prescription. 3 1 Murray, infra, per Lord Dundas. 2 Harrison v. Kirk, 1904, A. C. 1, per Lord Davey, at pp. 7, 8 ; Stewart v. Evans, 1871, 9 M. 810, per L. J.-C. Moncreiff, at p. 813 ; Murray, 1905, 13 S. L. T. No. 135 ; Harkness v. Graham, 1836, 14 S. 1015 ; Muire v. Fleming, 1634, 1 Br. Supp. 86. 3 Baker, 1881, 20 Ch. D. 230. 728. It is the duty of a claimant upon the trust estate to claimant barred by show himself and intimate his claim. 1 The trustee " is not bound silence, to know who the creditors are 'till they appear." 2 If the creditor does not do so, then, in the absence of any notice of his claim in the trust deed, the trustee is not personally liable for payment made in derogation of his claim. 3 An executor can be made to pay by legal process, and is not a trustee for creditors, who is only bound to distribute the estate rateably, and is entitled to retain it for that purpose. 4 By the law of Scotland, claims against the estate of a deceased truster become payable upon the expiry of six months after his death. 6 Therefore, on the expiry of the six months, the executor is bound to pay away the estate, if not obviously insol- vent, 6 primo venienW — to the first creditor of the truster putting in a valid claim. 8 Where all known creditors' claims have been paid, or provided for to the satisfaction of the creditor, the trustee may at once proceed to pay beneficiaries, and is not for such pay- Payment to , beneficiaries ment liable to a creditor claiming thereafter. The older authority after six & ^ months. and practice undoubtedly required a year to elapse before bene- ficiaries could be paid, but there seems no good reason why they may not be paid when the time has arrived for payment of claimants in their order of priority — the beneficiary being himself a creditor on the estate, though a postponed one. 9 " Since the ease of Harman v. Harman 10 it has been considered settled law that an executor who pays creditors without notice of the existence of a creditor of higher degree is not liable to account for the sums so paid at the instance of that creditor." 11 The 27 418 PAYING OVEE THE ESTATE [chap, viii- position, then, may be put thus — after the expiry, of six months from the death of the truster, the trustee is not liable to the holder of a prior right for any payment made to the holder of a postponed right, unless the trustee at the time of payment has, or should have, knowledge of the prior right. In all cases the bona fides of the paying trustee is of course assumed in this discussion of his personal liability. 1 Lord Cowan's dictum that " it is the duty of an executor to endeavour to find out the parties who have claims upon the executry " must be read in con- nection with, and as conditioned by, his other statement in the same opinion, that the executor is not entitled "by concealment" to lead the creditor into taciturnity and then set up a plea of taciturnity in bar of the creditor's claim (Allan, 1851, 13 D. 1220, at p. 1222 ; but see Lord Ardwall in Rodger v. Allfrey, 1910, S. C. 1015, at p. 1023). It has been held in England to be a prudent and reasonable course for an executor to advertise for creditors as soon as possible after his testator's death, and when he has notice of any claim it is his duty to try and ascertain the limits and extent, of this claim (Kay, 1897, 2 Ch. 518, per Eomer, J., at pp. 522, 523). Where a trustee who has so acted has paid a beneficiary while a creditor is unpaid (Kay, supra), he is entitled to the relief allowable by statute to a trustee who has acted honestly and reasonably (Judicial Trustees Act, 1896, s. 3). It must be noted that in England by Lord St. Leonard's Act (22 & 23 Vict. c. 35, s. 29 ; Law of Property Amendment Act, 1859) where an executor publishes a notice by advertisement similar to that ordered by the Court of Chancery in an adminis- trative suit, he may pay on expiry of the time mentioned in the notice. He should advertise as soon as possible after death (Kay, supra, at p. 522). , In Scotland there is no such statutory provision, but it is the almost uni- versal practice to advertise for claims against the trust estate. In England a stricter rule existed as to the liability of the trustee for an error in paying over the estate (cf. s. 702), and the statute was remedial. In neither country is an advertisement for claims a condition precedent to paying primo venienti; it is a factor in instructing diligence on the part of the trustee in the execution of his trust. 2 Gardner v. Pearsons, 1810, 16 F. Dec. 59. 3 Heritable Association, s. 720, per L. P. Robertson, at p. 695. 4 Taylor v. Class, 1912, S. C. 165, at p. 169, referring to Gray, s. 715, and Globe Insurance, infra. 6 Act of Sederunt, 28th February 1662 ; vide Alexander's Abridgment, p. 13. 6 Only in case of obvious insolvency is he justified in protecting himself by declining to pay except upon a decree, a course probably involving the sequestration of the estate in order to determine preferences (Samson, 1906, 2 Ch. 584). 7 Primo venienti means those who come forward and claim, not those who are sought out by the trustee (Taylor, supra, p. 170, referring to Laird, 1911, 1 S. L. T. No. 12). 8 Beith v. Mackenzie, 1875, 3 R. 185, per Lord Gifford, at p. 187. Cf. Globe Insurance v. Scott, 1849, 11 D. 618 ; affd. 7 Bell's App. 296. This includes the right of retainer by the executor of his own claim against the estate (Fludyer, infra). " It would be very unfair against the executor that he should be held always liable to refund if an enforceable debt of higher degree, of which he had no notice, should afterwards appear to be due. The simple answer is that the debt in question is not in the hands of the executor as executor. He has been paid it just as the other creditors have been paid their debts. Retainer is payment at law " (Fludyer, infra, per Romer, J., at p. 565). Cf. s. 714. 9 Cf. opinion of L. J.-C. Moncreiff in Stewart v. Evans, 1871, 9 M. 810, at p. 813, 10 1685, 2 Show. 492. 11 Fludyer, 1898, 2 Ch. 562, per Romer, J., at p. 565. claimant 729. A claimant upon the estate is barred where he has led action i-l the trustee to believe that the claim has been properly discharged. ffiirinji discharge. This has been well exemplified by a case in which the trustees chap.viil] PAYING OVEE THE ESTATE 419 obtained from the secretary of a company, in which the truster held shares only partly paid up, a discharge of the liability for calls on these shares. Trust funds were then paid over to bene- ficiaries. Afterwards the discharge was found to be invalid, and a claim was made by the company on the trustees in respect of the payments to beneficiaries. This was repelled on the ground " that the trustees proceeded to pay to beneficiaries in the belief that there was no creditor unpaid, this belief having been induced by a discharge of the debt granted by the secretary of the creditor company." x 1 Stewart v. Evans, 1871, 9 M. 810. Cf. Heritable Association, s. 720, per L. P. Robertson, at p. 695. 730. Another case of personal exception against the claimant claimant barred by is where he has led the trustee to reasonably believe that he has ?°tion •* inferring abandoned his claim. " For example/' says Lord President Eobert- Jj^° n " son, " if he holds a heritable security he may think good to give up his claim under the personal obligation to the general estate of the deceased, or he may consent to part of the general estate being paid away to beneficiaries. Such consent may be established by conduct." 1 An example of consent established by conduct is afforded by an English decision. There the creditors were mortgagees of a farm belonging to the truster. On his death they were informed that the truster's daughters intended to keep on the farm and occupy and work it, and they wrote in reply saying that they hoped that the daughters would succeed in the farm, and, generally, expressing satisfaction with the proposal. It was held that the mortgagees must have been aware that this proposal would necessarily involve the division and distribution of the personal estate, as the daughters could not carry on the farm without being paid their shares of the estate. It was, therefore, held that there was such assent on the part of the mortgagees to the division of the estate as amounted to abandon- ment of their claims against the personal estate so distributed, and consequently barred their claims against the trustees who had distributed it. 2 1 Heritable Association, s. 720, at pp. 691, 692. 2 Blake v. Gale, 1886, 32 Ch. D. 571. 731. Even in the case of onerous claimants, the trustee must Preference be careful that these are paid in their proper order. He is creditors. personally liable to a preferable creditor for paying away funds 420 PAYING OVEE THE ESTATE [chap. vm. to a postponed creditor while the preferable creditor's debt is unpaid. 1 1 Lamond v. Croom, 1871, 9 M. 662, at pp. 668, 669. This situation arises in the payment of debts affected by the English preference given to a " specialty creditor." Gf. Lord Brougham, C, in Globe Insurance, s. 728, at p. 320. See also s. 719. Creditor not 732. One point in the relation of the trustees to the truster's affected by r trust? ° f creditors cannot be too strongly emphasised. The trustees quoad the creditors, represent the truster, not qua truster, but qua debtor, and the creditor is in no way affected by the terms or conditions of the trust, but only by the terms and conditions of his contract with the truster. Hence the trustee cannot shelter himself behind the terms of the trust deed against the demand of the truster's creditor. " It is said that the trustees are to pay the legacies out of the residue, after having paid so and so, and ' after having paid all my obligations.' I do not care whether that is in the will or not, because the law would have inserted that. Suppose a testator says, I give to A. B. a legacy of £10,000, without saying, ' to be paid out of my residue,' it is clear that his debts must be paid in the first instance. "Whether he says, ' I give it to be paid after my lawful debts and all obligations which I owe' or not, the executor is bound not to pay the legacy until he has paid the honest creditor." 1 1 Cruikshank, s. 734, per Lord Brougham ; 4 Bell's App., at pp. 194, 195. 733. Thus, for instance, the creditor is in no way bound by the terms of a clause of indemnity in the trust deed, and it affords no protection to the trustee against the claims of the creditor. "The trustees argued," says Lord President Inglis, dealing with such a case, "that they were in a position of advantage, because they acted under a trust deed which secured to them immunity from all liability except for their own intromissions, but I am afraid that in the question we are here concerned with, that plea is of no avail." 1 1 Lamond v. Groom, 1871, 9 M. 662, at pp. 669, 670. In Young v. Johnston, 1841, 3 D. 1020 ; 13 S. J. 458, there are remarks as to the value of a clause of relief in such a case, but they only show that this question did not there receive due consideration. Beneficiaries 734. When creditors have all been paid, the trustee is still terms ot liable in the strictest diligence 1 to secure the payment of the trust. trust funds to the proper beneficiary. 2 The creditor, we have seen, 3 is in no way bound by the terms of the trust. In dealing with the beneficiaries and their rights inter se it is otherwise, as chap, viii.] PAYING OVER THE ESTATE 421 the beneficiary is bound by the truster's directions. Thus, for instance, where special legacies are directed to be paid, and also legacies out of residue, the trustee, in the absence of any special directions, is responsible to the special legatees if he has paid away funds to the residuary legatees while claims of the special legatees are unsatisfied; for "the payment of legacies out of residue assumes that all other legacies have been paid in priority of administration of the estate." 4 Where, however, the truster Appropria- has given directions that a special investment is to be made to investment to legacy. satisfy the special legatee's claim, and, before the legacy is payable, there is loss on the investment, the special legatee has no claim against the trustee, though the latter has paid away the estate to a residuary beneficiary meantime; for the trustee is not in breach of trust, and the special legatee is bound by the trust directions. 5 The trustee in distributing the estate amongst the bene- creditors of ficiaries owes no duty to their creditors unless they have put a nexus upon the beneficiaries' interest in the hands of the trustees. "The trustees have nothing to do with the debts of their cestui que trust, not being charges on his interest in the trust estate, and cannot set up against their cestui que trust any jus tertii." 6 Trustees are not bound to pay to a beneficiary his interest challenge r J J ofdeed under the trust deed, or even to exercise their discretion as to its suspends payment. payment where the payment is discretionary, while the deed itself remains under that beneficiary's challenge of its validity. 7 1 Where the trustee has a beneficial interest in the estate contingent on the failure of another beneficiary to perform some act, such as returning from abroad, it is not the trustee's duty to inform that beneficiary of the condition of the bequest, and his not having done so does not bar his own claim where the condition has not been fulfilled (Lewis, 1904, 2 Ch. 656). There may be an imperfect obligation to disclose or give notice to a legatee, but a perfect obligation, i.e. an obligation to which a sanction is attached, seems to me to be very difficult to hold (Maekay, 1906, 1 Ch. 25, per Kekewich, J., at p. 33). L//. S. 00 o. 2 Before distributing the estate amongst beneficiaries, the trustees should be careful to see that the legal claims of legitim and jus relictce have been dis- charged or properly provided for. The presumption of fact is against their discbarge (Ross v. Masson, 1843, 5 D. 483, per L. J.-C. Hope, at p. 488). Gf. Dawson, 1896, 23 R. 1006. Circumstances in which a beneficiary was held to have accepted conventional provisions and relieved the estate of any claim for legiti-rrtr- Bell, 1907, S. C. 872. 3 S. 732. i Cruikshank, 1845, 17 S. J. 326, per Lord Brougham, at p. 327 ; 4 Bell's App. 179, at p. 194. Of. Dalrymple, 1901, 49 W. R. 627 ; and as to what are specific legacies in such a case, Curry, 1908, 53 Sol. J. 117, following Mac- donald v. Irvine, 1877, 8 Ch. D. 101, and Gray, 1887, 36 Ch. D. 205 ; see Olivieri, 1912, 56 Sol. J. 613, as to effect of a direction to pay certain bene- ficiaries " after making provision " for others. 5 Gf. opinion of Lindley, L.J., in Hurst, s. 735. 422 PAYING OVEE THE ESTATE [chap. vm. 6 Hazeldine, 1908, 1 Oh. 34, per Farwell, L.J., at p. 40. 7 Train v. Buchanan, 1907, S. C. 517, per L. P. Dunedin, at p. 526. freedb 6 ^^5- Where the payment of beneficiaries is subjected to Bemrity S for conditions, the beneficiaries are bound by these conditions Sgacy™ 6 and the trustee is protected by their observance, whatever loss they may entail on certain beneficiaries. In an English case 1 where one legatee, whose legacy was immediately payable, was paid in full, but the security held for the payment of legatees whose claims were not then payable failed on realisation to meet the legacies thereby secured, the following statement of the law applicable in such a case was made by Lindley, L.J. : — " It was decided in Fenwick v. Clarke 2 and in Frere v. Winslow, 3 that if trustees have assets sufficient to pay all legacies, and they pay some in full and retain sufficient to pay the rest, and the assets so retained are afterwards lost or depreciated in value without any neglect or default of the trustees, they are not responsible to the unpaid legatees either for the loss of the assets or for having paid too much to the legatees who received their legacies in full. This principle is, in my opinion, applicable to this part of the case, though not to the payments to the residuary legatees." 4 The trustees are not entitled at their own hand to invest a legacy and so make a special trust of it for the legatee. Where the legacy is certainly, though not presently, payable, they are bound to do so at the legatee's request, but not in the case of a legacy only contingently payable. In that case the only duty of the trustee is to take reasonable care, by investing a certain amount in trust securities, to provide for the legacy before distributing the estate. Where he has done so he is not personally liable for the Appropm- legacy on the happening.of the contingency. 5 Though such an invest- gmshed me nt frees the trustee from personal liability for distribution of the ^security, residue, it does not free the residuary estate from a claim by the legatee for the difference between the cash value of the investment at the date of payment and the amount of his legacy. Only where the trustee has power to appropriate investments in discharge of legacies, or has in good faith made an agreement as to an invest- ment with a beneficiary competent to discharge him, does his appropriation of investments to legacies fix the residue as well as free himself. 6 implied A direction to trustees " previous to their dividing the residue of power to P appropriate, the estate " to set apart and invest " specific sums " for behoof of A. and B., infers 'prima facie an appropriation 7 of these investments to these beneficiaries as specific legacies, but this inference may be chap. Tin.] PAYING OVER THE ESTATE 423 rebutted where the intention of the truster that such investments should be treated as residue is to be gathered from the other pro- visions of the trust deed. 8 A power to appropriate investments for legacies is implied where there is a direction to pay one part of the estate and hold another part. 9 Where there is merely a general direction to hold for the beneficiaries, there is no implied power to appropriate investments. 10 Where two legatees take pa.ri passu, the trustees are not bound Legatees to pay the one at the risk of the other. " It seems impossible to hold that the trustees are bound to make the payment asked for. It may be that they are entitled, in the exercise of their discretion, to make it." 11 In England the question whether annuities or legacies have Test of ,. ,. . . . „ appropria- been validly appropriated as a charge upon certain parts of the tion. trust estate may be tested, where real estate forms part of the residue, in an objection by a purchaser of that estate to the title offered. Such residuary real estate is subject to the charge for these bequests 12 if the residue is not released by the bequests being validly appropriated as a charge on particular items of the estate, and the objection to the title raises the question sharply. 13 Such a question may arise in Scotland wherever the terms of a trust dis- position carrying residuary heritage have entered the record ; even notice of the trust on the record may be sufficient. 14 I Hurst, 1892, 67 L. T. 96, at pp. 99, 100 ; 8 T. L. R. 528, at p. 530. 2 1862, 4 De G. F. & J. 240. 3 1890, 45 Ch. D. 249. 4 The reason was that the security they held for the payment of the special legacies — a security of the truster's — was not of such a nature as to justify their paying over assets to the residuary legatees while any special legatees were unpaid. 5 Hall, 1903, 2 Ch. 226. Where a stated rate of interest is due under the deed upon such legacy, provision must also be made for this, as the interest on the investment is not a substitute (Salamon, infra). 6 Salamon, 1907, 2 Ch. 46, per Kekewich, J., at p. 50, dealing with Hall, supra ; Lynch v. Griffin, 1900, 2 F. 653. Of. s. 744. 7 Cf. Smith, 1900, 2 F. 713, as to minute of trustees required for proper appropriation where empowered. 8 Whitehead, 1897, 24 R. 1032, per Lord Kinnear, at p. 1037. 9 Robinson v. Fraser, 1881, 8 R. (H. L.) 127 ; Fraser v. Murdoch, 9 App. Cas. 855; Waters, 1889, W. N. 39; Vans Dunlop v. Pollok, 1912, S. 0. 10. 10 Scott, 1895, 23 R. 52 ; Teacher, 1890, 17 R. 303. II Haldane, 1895, 23 R. 276, per L. P. Robertson, at p. 278 ; M'Culloch, 1903, 6 F. (H. L.) 3, per Lord Davey, at p. 6 ; 1904, A. C, at p. 62. Of. note 5. 12 Under the rule in Greville v. Brown, 1859, 7 H. L. Cas. 689. Of. s. 1010. 13 Evans v. Bettell, 1910, 2 Ch. 438. In England, by procedure under the 5th section of the Conveyancing Act, 1881, the vendor may have the property declared free of the charge. M Kidd v. Paton, 1912, 2 S. L. T. No. 126 (under appeal January 1913), Lord Hunter (Ordinary). Here notice of a trust appeared on the record, and the lending trustees were held to be in breach of trust in not calling for the progress of titles, which would have disclosed an absence of power and a concealed fraud. 424 PAYING OVEK THE ESTATE [chap. vm. payment 736. In a case where the trustees on entering upon the trust realisation, had the estate carefully valued, it appeared there would be a large reversion. Subsequently, however, on the estate being sold, it did not bring, after payment of debts and preferable provisions, suffi- cient to pay the gratuitous provisions in full. The trustees had in the meantime paid interest on all the provisions, gratuitous as well as onerous, and had also made payments of capital to certain of the beneficiaries within their provisions, and to the party entitled to the reversion. It was held, in a question with gratuitous beneficiaries who had not been paid, that the trustees having acted bond fide in making the payments before the sale of the estate, all such payments were good and the trustees should get the benefit of them in their accounts. " If payments are made bond fide," says Lord Fullerton, " in circumstances which at the time imply no preference but were then reasonable acts of administration, such payments ought to be sustained, though, from supervening circumstances, it may turn out that they have given the party receiving them a preference de facto over another party who was not in a situation at the time to take a similar payment." * 1 Miller, 1848, 10 D. 765, at p. 789. 737. The position is stated broadly in these words by Lord Jeffrey : — " It is plain that the mere ultimate shortcoming of the fund for payment of the postponed provisions, and the inter- mediate and unforeseen dilapidation of the estate, would not render trustees personally liable." 1 1 Miller, 1848, 10 D. 765, at p. 792. II. Particular Cases 738. The ways in which a trust estate fall to be distributed are as many as there are trusters, and it is not possible to deal exhaustively with the questions that may arise in this connection. In order to show the trend of judicial opinion upon this important subject, it is proposed to examine here some of the cases, and especially the later cases, that have actually come before the Court for decision in connection with the paying over of trust funds. 1 interpreta- There are but two rules of universal application in conducting truster's the distribution of any particular estate. The one is that the intention of the maker of the trust is to be arrived at from the language he has used to express that intention, interpreted by chap, viii.] PAYING OVEK THE ESTATE 425 the circumstances in which it was used, and not by substituting for it different language which the Court may think the truster intended to use. 2 The other is that a truster can leave only one expression of his last will. " Whether a man leaves one testa- mentary writing, or several testamentary writings, it is the aggregate or the nett result that constitutes his will, or, in other words, the expression of his testamentary wishes. The law, on a man's death, finds out what are the instruments which express his last will. If some extant writing be revoked, or is incon- sistent with a later testamentary writing, it is discarded. But all that survive this scrutiny form parts of the ultimate will or effective expression of his wishes about his estate — he does leave, and can leave, but one will." 3 1 A large number of cases which might have been treated under this head have been taken under the later chapter dealing with the accounting between the various persons interested in the trust funds. Vide Chapter X., infra. 3C/.S.614. 3 Douglas-Menzies v. Umphelby, 1908, A. C. 224, per Lord Robertson, at p. 233. Of. Lord Dundas in Cordiner v. Duffus, 1910, 1 S. L. T. No. 12. (a) What should be Paid Over 739. Where there is no doubt as to the beneficiary the question may still arise as to how much of the trust funds is to be paid over to him. A revocation of a bequest is operative though made under Revocation, error of fact, unless the revocation is to be construed as con- ditional upon the statement of fact being correct. 1 There is a presumption that a second legacy given by a Double -,.«- ,, portions. wntmg different from that giving the first 2 is an augmentation of the first legacy, although the two sums are the same in amount. 3 There is no presumption that a legacy is a revocation of a mortis causa donation of an equal amount. 4 But where the legacy is the fulfilment of a moral obligation, either natural or assumed, towards the legatee, a gift of the same nature, and on the same conditions, in favour of that legatee made during the testator's lifetime or undertaken by contract to be made, is presumed to be in substitution of the legacy. This is known in England as the rule against double portions. 6 Following the brocard " Debitor non presumitur donare " the onus is on the legatee to show an inten- tion to give a double portion where the first portion is con- tractual. 6 The rule is that a legacy to a creditor of an amount equal to or greater than the debt is primd facie to be considered a satisfaction of the debt. 7 " Equity leans against double portions, 426 PAYING OVER THE ESTATE [chap. vm. and the general rule is that wherever a legacy given by a parent or a person standing in loco parentis is as great as or greater than a portion previously secured to the legatee upon marriage or otherwise, a presumption arises that the legacy was intended as a satisfaction of the portion. If the legacy is less than the portion, a presumption arises that it was intended as a satisfac- tion pro tanto. And a share of residue is on the same footing as a pecuniary legacy as regards the rule against double portions. 8 It is also true that where there is a covenant with trustees to pay a sum to them to be held in trust for persons in succession, a legacy given " by the debtor in the covenant to one or more of these persons " may operate as a satisfaction of the covenant " so far as they are concerned, though not satisfying the covenant so far as the others are concerned. 9 But though the rule holds that the liferenter's interest is satisfied by a gift to him of the same sum in fee as he was to enjoy in liferent, the interest of the fiar under the covenant remains unaffected by that gift to the liferenter. 10 Thus " the mere fact that in a settlement a person takes for life, and under a will the same person takes absolutely, will not prevent the application of the rule so far only as regards the life interest taken by that person under the settlement." The beneficiary under the settlement is put to his election between the provisions of the settlement and those of the will only where he is the primary and direct beneficiary under the will and not where he is merely a beneficiary under the will deriva- tively by reason of some disposition in his favour made by the primary and direct donee under the will. 11 specific The right of a specific legatee is limited to claiming the legacy. specific legacy as his property if it exists as the same specific thing at the date of the death of the truster. If it is not in existence at that date, the claim of the specific legatee against the trust estate fails entirely. It is not relevant to inquire into Ademption, the manner of the disappearance of the specific legacy, as the animus adimendi is a presumption of law from the fact of dis- appearance of the subject. 12 The subject is not held to have dis- appeared if it still exists " as substantially the same thing " and has changed " in name or form only." 13 " A change in the accidents will not operate as an ademption if the substance and essence of the subject remain the same." 14 In this con- " Money." nection 15 "money" has been held to differ from personal estate, and to include only cash due to the trust estate and stocks, shares, and securities that can be immediately turned into cash, chap, viii.] PAYING OVEE THE ESTATE 427 but not to include capital sums lent on mortgage. 16 A deposit receipt has been held to fall under the description " ready money in the hank " if the deposit can n be withdrawn without notice, but not if notice is required. 18 It is not a "pecuniary" investment. 19 The criterion of ademption differs from that of conversion, which is a presumption of fact that may be rebutted by evidence of intention. 20 But the rule that a curator bonis cannot by any avoidable act alter the succession to the ward's estate applies to ademption as well as to conversion. 21 A general mortis causd disposition of heritage is presumed not General and to evacuate a special destination in another deed unless the positions of same deeds are by different persons. 22 Where the deeds are by the subject. same person, they are presumed to be read together, whether the special destination be subsequent or not to the general disposi- tion, as the expression of the mind and will of the same person. 23 The assignee of the beneficiary is not entitled to payment on his where assignee own receipt of the whole of the beneficiary's share, if the trustees accountable. have information that it may not all be due to the assignee, even though he has the power to grant a receipt for the whole. " It is one thing to say they may take that receipt, and another thing to say that they must take it." Where they decline to pay in these circumstances until an account showing the state of the debt of the beneficiary is produced to them, they do not act so unreason- ably as to make them liable in expenses of proceedings by the assignee. 24 Where a gift is by direction to trustees to pay or convey in certain Executory , gift same terms, the construction of the bequest is the same as in the case of effect as x direct. a direct gift in these terms. 25 Therefore a direction simply to pay or to convey to A. in liferent and to his children nascituri in fee, whether the subject be land or money, is in law a direction to pay or convey the fee to A. m But where the direction is to hold or to stand possessed of a fund for the benefit of A. in liferent and his children in fee, A. is only a liferenter, and the trustees must preserve the fee for the children. 27 And where there is no expres- sion of a direction in either sense, either to pay or convey, on the one hand, or to hold on the other, the normal canon of construction, namely, the truster's intention, as it can be gathered from the whole deed, is to be applied in deciding whether there is an implied direction to pay or to hold. 28 Where a liferent is converted into a fee by force of the Payment of Entail Act, 1868, s. 17, the amount to be paid to the liferenter Entail Acts 428 PAYING OVEE THE ESTATE [chap. vm. is to be ascertained by the valuation of the capital of the trust at the date of the payment and not at the date of the truster's death. 29 Limited Where trustees are directed to pay a beneficiary certain trust by object. . funds for a particular object, the question arises whether the beneficiary is to be limited to the amount which the trustees have seen fit to pay over to him for the specified object, or whether anything more is due to him or his representatives. The following rule in the matter has been laid down in an English case : — Where an entire fund is given, and a special purpose assigned for that gift, which is to regulate the amount to be paid over by the trustees, the gift is regarded as absolute, and the purpose merely as the motive of the gift. The beneficiary in this case takes a vested interest in the whole fund absolutely, whatever may have been actually paid over to him by the trustees. On the other hand, where only a portion of a fund is given, for instance, a gift of " whole or any part " of a fund, and a purpose assigned, the gift is only of the part actually paid over by the trustees to fulfil the purpose. 30 In a case where the beneficiary was a lunatic, the trustees were directed to pay the income of the trust estate for the maintenance of the lunatic " in such way, at such time, and in such manner as they should think fit," and any surplus was to be accumulated as capital. There Cotton, L.J., says : — " The dis- cretion of the trustees under the will is only as to the time and manner of the application of the income. The trust is to apply the whole income of the lunatic's share in her maintenance." 31 1 Goddard v. Overend (No. 2), 1911, 1 I. R. 469. 2 Hooley v. Hatton, 1 B. C. C. 389 (note) ; White and Tudor, L. C, vol. i. p. 910, 8th ed. 3 Praser v. Forbes, 1899, 1 F. 513 ; Edinburgh v. Muir, 1881, 9 R. 352. 4 Hudson v. Spencer, 1910, 2 Ch. 285, dealing with Jones v. Selby, 1710, Prec. Ch. 300 ; 24 the English Reports, 143 ; Shields, 1912, 1 Ch. 591. 6 Pollock, 1885, 28 Ch. D. 552 ; Peel, 1911, 2 Ch. 165. As to a legacy sub- stituted for a benefit intended to be defeated by an appointment that fails, see Beale, s. 995, note 12. 6 Campbell v. Adamson, 1911, S. C. 1111. 7 Rattenberry, 1906, 1 Ch. 667, per Swinfen Eady, J., at p. 670 ; Horlock, 1895, 1 Ch. 516, per Stirling, J., at p. 518, and cases establishing rule cited and examined. 8 Of. Thynne v. Earl of Glengall, 1848, 2 H. L. C. 131. 9 Blundell, 1906, 2 Ch. 222, per Swinfen Eady, J., at pp. 226, 227. 10 Chichester v. Coventry, 1867, 2 Eng. & Ir. App. 71 ; Kirk v. Eddowes, 1844, 3 Hare 509, explained in Shields, 1912, 1 Ch. 591. 11 Blundell, supra, at p. 229 ; Chichester, supra, at p. 92. 12 Macfarlane, 1910, S. C. 325. In this respect the law of both Scotland and England differs from the Roman law which gave effect to indicia of intention. See also Anderson v. Thomson, 1877, 4 R. 1101 ; Ashburner v. MacQuire, 1786, 2 B. C. C. 107 ; Stanley v. Potter, 1789, 2 Cox, 180. Where there is a bequest of shares by name, none of which was held at date of will, there is no place for evidence of intention and the gift fails (Atlay, 1912, 56 Sol. J. 444). 13 Macfarlane, supra ; Oakes, 1852, 9 Hare 666, per Turner, V.-C, quoted chap, vin.] PAYING OVEE THE ESTATE 429 in Slater, 1907, 1 Ch. 665, per Cozens-Hardy, M.R., at p. 672, on account of the "accuracy of the language used " and followed in Clifford, 1912, 1 Ch. 29. 14 Longfield v. Bantry, 1885, 15 L. R. Ir. 101, per Ohatterton, V.-C, at p. 128, cited in Goddard v. Overend, 1911, 1 I. R. 165, per Meredith, M.R., at p. 175. Carron Co. v. Hunter, 1868, 6 M. (H. L.) 106, 1 Sc. & D. App. 362. Where a company splits its shares upon a reconstruction but is otherwise the same the gift is good (Leeming, 1912, 1 Ch. 828). A gift of a " carriage " has been held not to cover a motor car (Hall, 1912, 28 T. L. R. 480). 16 See also s. 617. « O'Connor, 1911, 1 I. R. 263. 17 In practice, though not technically — Cosgrove, Times, 3rd April 1909. 18 Mayne, 1897, 1 I. R. 324 ; Wheeler, 1904, 2 Ch. 66, at p. 71 ; Price, 1905, 2 Ch. 55 ; Boorer, 1908, W. N. 189, " cash" ; but see Derbyshire, 1906, 1 Ch. 135. 19 Price, supra, at p. 59, quoting Perpetual Executors v. Swan, 1898, A. C. 763, as to the construction of the word " money " generally ; Mann, 1912, 1 Ch. 388, distinguishing Adkins, infra; Bramley, 1902, P. 106; Cadogan, 1883, 25 Ch. D. 154; Prichard, 1870, 11 Eq. 232. A "deposit" in the Savings Bank has been held to cover an investment in Consols made through the Savings Bank— Adkins, 1908, 98 L. T. 667 ; but see Hunter, 1908, 25 T. L. R. 19. * Pollock v. Anderson, 1902, 4 F. 455. 21 Macfarlane, supra. 22 Currie v. M'Lennan, 1899, 1 F. 684. 23 Campbell, 1880, 7 R. (H. L.) 100, per Lord Selborne, C, at pp. 100, 101 ; 5 A. C. at pp. 796, 797. Glendonwyn v. Gordon, 1873, 11 M. (H. L.) 33, cases of presumption operating ; Turnbull v. Robertson, 1911, S. C. 1288 ; see Lord Kinnear, at p. 1293, as to Glendonwyn, supra; Henderson, 1911, S. C. 525, cases of presumption rebutted. Gf. Ferguson, 1906, 13 S. L. T. No. 336, for discussion of cases (case of a stock certificate with special destination). 24 Hockey v. Western, 1898, 1 Ch. 350, per Rigby, L. J., at p. 357, following Bell, 1896, 1 Ch. 1. 25 Gifford, 1903, 5 F. 723, per Lord M'Laren, at p. 731, following Hutton, 1847, 9 D. 639, and Ferguson v. Hamilton, 1860, 22 D. 1442, reported as Ralston v. Hamilton, in appeal, 1862, 4 Macq. 397. 26 Gifford, supra; Frog's Creditors, 1735, Mor. 4262. 27 Gifford, supra, p. 731. 28 Gifford, supra. 29 Baxter, 1909, S. C. 1027, dealing with 31 & 32 Vict. c. 84, s. 17. 30 Sanderson, 1857, 3 K. & J. 497, where the cases are cited and discussed — here the gift was for maintenance. Cf. Moncrieff v. Usher, 1861, 24 D. 49. 31 Weaver, 1882, 21 Ch. D. 615, at p. 618 ; contrast with Moncrieff, supra. 740. Where trustees have power x to apply all or any part Advances « , . to minors, or the income 2 for the maintenance or a minor beneficiary, 3 the principles which should guide the trustees in the exercise of their power were laid down by Cotton, L.J., in a case where the child lived with its father, who was a widower. "I think I am expressing the opinion of the rest of the Court as well as my own," says his Lordship, " in saying that the trustees in exercising their discretion must consider what is most for the benefit of the infant. In considering that, they should take into account that criterion ,. „ > of amount. the rather is not of sufficient ability properly to maintain his child, and that it is for her benefit not merely to allow him enough to pay her actual expenses, but to enable him to give her a better education and better home." 4 Each case depends upon its circumstances, and the only 430 PAYING OVEE THE ESTATE [chap, tiii Good faith of trustee. rule that can be laid down is this — " whatever it was proper under the circumstances for a prudent guardian to spend is proper to be allowed, and whatever is beyond that line ought to dis- allowed." 5 Where the minor is an only child, who will possess ample means upon his attaining his majority, and his widowed mother is his tutor, the test of what should be spent is what sums would have been allowed to the mother by the Court, or by an independent curator. The dispositions and tendencies of the minor must be considered, and neither lavish expenditure at his own will nor such false economy as would lead him to take an erroneous view of his responsibilities when he attains majority are permissible. He should be so supplied with money as to keep him from borrowing secretly, and so forming associa- tions injurious to him in after life. 6 However wide the powers of the trustees in this matter may be, they must act in good faith and with a single view to the real purpose and object of the power. Thus where trustees had power to apply a sum to the " advancement in life " of the minor, of which they were to be sole judges, an advance made to the minor in the knowledge that it was to be used to pay a debt due by her husband to one of the trustees was a breach of trust. 7 1 There is an implied power to advance income to or for behoof of minors who are vested in the capital, where the period of payment is postponed and there is no direction to accumulate income meantime (Normand, 1900, 1 F. 726). But see s. 726 as to position where creditors are unpaid. 2 Where power to pay annuity of £50 or something more if funds per- mitted, an additional annuity of £300 was sanctioned in Allan, 1869, 8 M. 139 ; see opinions for limit of exercise of discretion. The beneficiary is entitled to have a fixed termly sum allotted to him, and not merely money to meet his requirements as these occur (Mackie, 1872, 10 S. L. R. 49). 3 Gf. a. 824. « Lofthouse, 1885, 29 Oh. D. 921, at p. 932. s Ross, infra, 23 R. (H. L.), per Lord Halsbury, C, at p. 74 ; 1896, A. C, at p. 637. 6 Ross, 1896, 23 R. (H. L.) 67, reported as Barnes v. Ross in 1896, A. 0. 625. See Lord Halsbury's opinion for general view of the House, as to details of expenditure. Gf. Walker, 1901, 1 Oh. 879. 7 Molyneux v. Fletcher, 1898, 1 Q. B. D. 648 ; Talbot v. Marshfield, 1868, 3 Ch. App. 622. "Setting up in business" does not include paying husband's debts, but covers advance to wife where husband renounces his right over it — Portland v. Topham, 1864, 11 H. L. Cas. 32 ; Humphrey v. Oliver, 1859, 28 L. J. Ch. 406. Abatement ■where deficiency of estate. Exception where natural obligation, 741. Where there is a deficiency of funds to pay all the special legacies 1 in full, the presumed intention of the truster is that they should suffer a proportionate diminution, although some of the legacies may be payable before others. " Where there is a natural or legal obligation — as, for instance, in the case of a wife or child otherwise unprovided for, or a legal right in the place of which the chap.viil] PAYING OVEE THE ESTATE 431 bequest is to come, a preference may be given to it as proceeding on an onerous obligation ; 2 but where nothing of that kind occurs, although the testator may have expressed various degrees of predilection, and directed his legacies, some to be paid immedi- ately at his death, others after years, the general principle is that a testator intends that all his voluntary legacies should suffer a proportional abatement in the event of a shortcoming." 3 A legacy does not abate where it is a consideration for some- or where . . onerosity. thing given up by the legatee, and the Court will not inquire what the value of that something is. This applies to a widow's legal Legainghts. rights, but not to a daughter's rights under settlement by her father, at least where the legacy exceeds the benefit under the settlement. This latter case falls under the principle or rule conven- tional that where there is an ascertained debt and the legacy exceeds provision. the debt, the legatee takes by way of bounty and not by way of purchase, and there is abatement. 4 There is " a presumption that where land is specifically devised, special gift if there be nothing more, the testator intends the devisee to take that land without any derogation, and that a mere charge of some legacies on all his lands is not sufficient to rebut that presumption." 6 1 As to heritage, see Bank of Ireland, infra. 2 Wedmore, etc., infra. 3 Clyne, 1848, 10 D. 1325, per Lord Murray (Ordinary) at p. 1331, citing and following Lord Hardwicke's decisions in Lewin, 1752, 2 Ves. Sen. 414, and Blower v. Morrit, 1752, 2 Ves. Sen. 419. Of. s. 1007. 4 Wedmore, 1907, 2 Ch. 277 ; Davenhill v. Fletcher, 1754, Ambler, 244 ; Greenwood, 1892, 2 Ch. 295 ; Davies v. Bush, 1831, Younge, 341. 6 Bank of Ireland v. M'Carthy, 1898, A. C. 181, per Lord Herschell, at p. 185, citing Lord Cranworth in Conron, 1858, 7 H. L. Cas. 168, at p. 190. 742. Where beneficiaries have a joint interest in the trust Joint gift to " be divided estate, and it has become impossible to enjoy the estate as a joint e i uall y- estate, the trustees should divide it equally amongst the bene- ficiaries. A truster directed his trustees to hold the revenue of the trust funds for the joint behoof of a husband and wife, and to pay it to them on their joint receipt. The spouses, however, separated, and the fund could no longer " be used and enjoyed as a joint estate.'' The Court held that the trustees were bound to pay the income to the husband and wife in equal shares. Other- wise, " we must accept the self -contradictory proposition, that neither spouse can claim any benefit from a fund which belongs to them jointly." J 1 Bruce, 1894, 21 E. 593, per Lord M'Laren, at p. 599. 432 PAYING OVEE THE ESTATE [char vm. Pro indiviso interest in trust security. 743. "Where trustees have taken, as a trust investment, a security which is not realisable at the time when payment to some of the beneficiaries falls to be made, the beneficiaries cannot claim to the extent of their pro indiviso share an assignation to the security. Such a course would destroy the independent management of the trustees. 1 "The trust management," says Lord Rutherfurd Clark, in referring to such a case, " would cease and be superseded by the management of the joint owners. . . . The creation of the joint estate is so entirely subversive of the trust management which the truster has set up that I cannot hold it to be within the power of the trustees. No doubt there are cases in which the trustees may convey to all the beneficiaries pro indiviso. But in doing so they are denuded of the trust and their management ceases." 2 1 Hunter v. Burnley, 1868, 6 S. L. R. 148. 2 Playfair, 1894, 21 R. 836, at p. 839. Payment by invest- ment. Stock legacy. Appropria- tion of invest- . ments. Foreign money. 744. Where trustees are directed to invest the trust funds in name of the beneficiaries, the execution of this direction is equivalent to paying over to them, and entitles the trustees to claim their discharge from the beneficiaries. The trustees have no interest in any subsequent proceedings between the bene- ficiaries and, e.g., persons to whom the trust money has been lent as an investment. Thus a discharge granted by the beneficiaries to such borrowers of their intromissions with the funds lent them by the trustees does not require the intervention of the trustees. 1 Such a trust must be actually carried out before a proper discharge can be got. Thus where a truster directed his trustees to invest £800 in liferent for Mr. and Mrs. H. and in fee for Mrs. H.'s children, Mr. and Mrs. H. gave the trustee a discharge for the sum, on the footing of its having been paid to them during the lifetime of the truster. This was held not to protect the trustee against the claim of the children to have the sum invested in terms of the trust direction. 2 A legacy of a certain sum to be invested in Government stock is a legacy of the amount of stock that could be bought to answer the direction according to its price at the date of the truster's death, and not at the date of purchase. 3 It is a question of interpretation in every case whether the truster intended a fixed sum 4 or the proceeds of its investment 6 to be paid over to the beneficiary. 8 "Where an amount is to be paid in English money as the result of transactions in a foreign currency, the foreign currency is to be chap, viii.] PAYING OVEK THE ESTATE 433 turned into English money only when the total balance of the transactions is ascertained in the foreign currency — not each item to be exchanged before the account is taken. 7 A bequest expressed in a foreign coinage, e.g. Indian rupees, is a gift of their face value in sterling and not of their sterling value of exchange. 8 i Moncrieff v. Bethune, 1844, 6 D. 1100. 2 Hume v. Stewart, 1834, 13 S. 90. 3 Horsbrugh, 1848, 10 D. 824, at p. 831. 4 Montgomery, 1888, 15 R. 369. « Gordon, 1868, 41 S. J. 43. 6 As to power of trustees, virtute officii and without express power, to appro- priate, before the period of division, specific investments in discharge of shares of residue settled in fee and liferent, see Nickels, 1898, 1 Ch. 630. The rubric in this case states the decision to be in favour of a general power of this nature, but the case cannot safely be followed for so wide a proposition. It would be safer to state the result of the case thus : "Where it is not incon- sistent with the truster's directions the trustees may, with the assent of the beneficiary of any particular share settled on her and her children in liferent and fee, appropriate, before the period of division, specific investments to them in discharge of their share of the residue, the good faith of all parties and the absolute fairness of the transaction at the time being assumed. See also Lepine, 1892, 1 Ch. 210 ; Richardson, 1896, 1 Ch. 512. Of. s. 735. 7 Manners v. Pearson, 1898, 1 Ch. 581. 8 Cockerell v. Barber, 1810, 16 Ves. 461. 745. Where trustees have invested for behoof of a certain Appropria- tion dis- beneficiary, but in the names of the trustees, the effect is languished v from pay- different from investing in the name of the beneficiary himself, jjj^jjjbmmt. In the latter case there is irrevocable payment over by the execution of the investment ; in the former there is not, and the fund is still in the control of the trustees, though appropriated 1 to a certain beneficiary. In this case, where any difficulty arises through the right of the beneficiary being challenged, the trustees can, and should, have the matter settled by bringing an action of multiplepoinding with the sum so invested as the fund in medio? 1 As to where appropriation may be made and its effects on trustees' position, see ss. 735 and 744, and on position of legatee and residuary, s. 1319. 2 Buik v. Patullo, 1854, 17 D. 44. 746. There is a distinction between a liferent and an annuity Annuity dis- .... tinguished which is apt to be overlooked. " A liferent is attached to a from r liferent. particular estate or capital fund, whereas an annuity is not, but is a sum of money to the payment of which the annuitant is entitled year by year, without reference to any fund from which it may come, whether it be paid out of interest or of capital. Of course it is proper that if the annuity can be paid out of the interest of the trust estate the trustees should not encroach on the capital, but if the interest is insufficient then the capital must be drawn upon." * The value of a liferent depends wholly on the income derived from the fund to which the liferent is attached, 28 434 PAYING OVEE THE ESTATE [chap. vm. Annuity out of residue. Liferent annuity. Annuity presumed for life. Perpetual annuity. Alimentary annuity. and, instead of being a definite fixed sum, varies with every fluctuation of return obtained for the capital fund. Where trustees are directed to pay an annuity out of the income of a general residue, it is now settled that the annuity is presumed to be a charge on the corpus of the residue as well as on the income. Thus though the trustees are directed to pay the annuity out of the income, and there is a gift over " subject thereto," this means subject to the annuities and not merely subject to the trust to pay out of income. 2 The seemingly inconsistent expression "a liferent annuity" has been held to mean an annuity payable during the lifetime of the annuitant, in distinction from an annuity for any specified or definite number of years. 3 A "gift of an annuity to a person is a gift of an annuity for the life of that person and nothing more. Again, a gift of an annuity to a person for life, with remainder to another simpliciter, means that the second taker is to have it for his life, and no longer. To make the annuity perpetual in either of such cases, the testator must indicate an intention to that effect. He may do so by declaring or describing the annuity as perpetual, or he may do so by directing the property out of which it comes to be dealt with in a certain way for the purpose of keeping up the annuity. In case he segregates or appropriates a particular or definite portion of property for the purpose of the annuity, we ought to infer that the gift of the income of the portion so segregated is the gift of the corpus, and in that case the annuity is perpetual. On the other hand, if he merely creates a charge on property, we ought to infer that there is no gift of the corpus, and in that case the annuity is not perpetual. In the former case it is the duty of the trustees actually to appropriate — that is, to set aside— sufficient property to meet the annuity and nothing else. In the latter case they have no such duty." 4 1 Kinmond, 1873, 45 S. J. 255, per L. P. Inglis, 11 M. 381. Cf. s. 1002 2 Watkins, 1911, 1 Ch. 1, following Howorth, 1909, 2 Ch. 19, and Birch v Sheratt, 1867, 2 Ch. App. 644. In Watkins, supra, the case of Bigee 1907 1 Oh. 714 (which relies on Stelfax v. Sugden, 1859, Joh. 234, per Wood V -C • Wormald v. Muzeen, 1881, 50 L. J. Ch. 776, per Jessel, M.R. ; and 'Boden 1907, 1 Ch. 132, per Vaughan Williams, L.J., at p. 138), is declared to be overruled by Howorth, supra. 3 Scholefied v. Redfern, 1863, 2 Dr. and Sm. 173. 4 Smith Estate, 1905, 1 I. R. 453, per Ross, J., at p. 458 ; see cases cited there and referred to as " all read," and from which the above is the r>n'nrn-.lp to be gathered. Of. Ward, 1903, 1 I. R. 211, per Chatterton, V.-C. 747. An annuity which has vested in the annuitant must be wholly paid over to or expended for behoof of the beneficiary chap, viii.] PAYING OVEE THE ESTATE 435 within the year, even though it be an alimentary annuity. 1 " The case is in marked distinction to the class of cases 2 where a testator gives power to his trustees to apply such sum as they think proper within a certain limit for behoof of friends or relations. There is no vested right in such cases ; the power of exercising the benevolence is itself committed to the trustees." 3 1 Questions as to the excess of the annuity over what is a proper alimentary provision arise only with the annuitant's creditors. 2 Of. s. 815. 3 Webster, 1882, 10 R. 169, per Lord Young, at p. 172. 748. The interest paid by the British Government on its Government annuities. consolidated debt being spoken of as perpetual annuities, 1 the income of a certain amount of the stock is usually spoken of as an annuity and not as a liferent. Hence on the occasion of the reduction of the interest paid on the debt, the following provisions were thought to be necessary to enable liferenters to provide against a reduction of income, and also to declare the duties of trustees whose trust income was affected by the change : — " Where Debt conversion. under any trust or arrangement other than a charitable trust any stock has been appropriated to provide an annuity, and is under this Act liable to be converted into or exchanged for new stock, the person in whose name the stock is standing may, at the request of the annuitant, or, in the case of several annuitants, the majority of them, and at the expense of the annuitant or annuitants, sell the stock and invest the proceeds either in any manner authorised by the trust or arrangement, or in any manner in which cash under the control of the High Court, or the Court of Session, may for the time being be invested, and shall not be liable for any loss arising from any, such sale or investment." 2 "Where in execution of any trust, or in performance of any duty, and whether in pursuance of the order of any Court, or otherwise, any stock has been appropriated to provide an annuity, and is under this Act converted into or exchanged for new stock, the trust or duty shall, so far as relates to the payment of the annuity, be deemed to be executed or performed by the payment of the dividends on the new stock ; but nothing in this section shall affect any power of any Court or other authority to make any order as to the application of capital in such cases." 3 1 "The interest in stock is properly nothing but a right to receive a perpetual annuity, subject to redemption" (Wildman, 1803, 9 Ves. 174, per Grant, M.R., at p. 177 ; 7 R R. 153, at p. 155). Cf. s. 1003. 2 National Debt (Conversion) Act, 1888, 51 Vict. c. 2, s. 20 (1). 3 51 Vict. c. 2, s. 20 (3). 436 PAYING OVER THE ESTATE [chap. vm. (b) Time for Payment — Acceleration of Bate 749. The circumstances in which the beneficiary may call upon the trustee to denude of the trust estate before the date contemplated by the truster in the trust deed is a question frequently before the Court. Still the necessary conditions of this acceleration of the date of payment have not been categorically formulated in any authoritative opinion. It is, therefore, difficult to set down any definite rules, but the attempt is here made to expiscate some of the principles on which the Court has based its decisions, and such as might reasonably be supposed to form the basis of judgment on the fresh points continually arising in connection with this question. Protection only through trust. (1) Where no Trust Machinery Provided 750. The truster must have provided both the proper trust * machinery for carrying out his instructions, 2 and an interest for whose protection it is necessary to keep the machinery in existence. " If a testator desires to leave property 3 under conditions, he may effectually do so in general by means of a trust," i but he must take care that he does provide the proper trust machinery. 5 " There have been several cases of authority 6 in which the Court has enunciated the principle that when an absolute right of property is given to anyone under a condition, the condition is ineffectual unless a trust has been created or the means given of creating a trust." 7 Where neither of these has been done, " the testator has attempted to do two inconsistent things. 8 He has ordered his trustees to pay over, while he has endeavoured to limit the full right of property in the payees, and that without a trust, and without creating a separate or resulting right in anyone else." 9 It must be noted, however, that by no form of trust machinery promotion, is it legally possible " to protect the life interest of a person to whom a fee is also given against creditors or against his own voluntary acts." 10 And by the same principle, " no one can settle property in such a way as to give himself the full beneficial enjoy- ment of it, and at the same time to protect it against his creditors " by any form of trust. 11 Though a will provides no trust machinery to protect the interests of the substitutes, this does not prevent an effectual substitution, even in a gift of movable property. " Substitution in movables is recognised in the law of Scotland. It is not a favourite and it is not readily presumed, 12 and the substitution Limits of trust Substitu- tion in movables without trust. chap. vin. J PAYING OVER THE ESTATE 437 if effectually created, will be evacuated either by any clearly expressed intention of the institute to evacuate it, as by assign- ing 13 or spending the money, or by its becoming immixed with his own funds, 14 or by his disposing of it by will. But if not evacuated, a substitution must receive effect." 15 1 A legacy to a married woman " without power of anticipation " does not impose a duty on executors to hold in trust for her where no trustees are appointed (Russell v. Lawder, 1904, 1 I. R. 328). 2 Gf s. 324. 3 " Property cannot he given for life any more than absolutely without the power of alienation being incident to the gift" (Rochford v. Hackinan, 1852, 9 Hare, 475 ; Walsh, 1905, 1 I. R. 261, at p. 267). 4 Douglas v. Kay, 1879, 7 R. 295, per Lord Shand, at p. 314. 6 Examples of conditions failing through the want of such machinery are cases where there was a condition that if the property given was sold, part of the price was to go to others (Elliot, 1896, 2 Ch. 353) ; where there was gift over if the beneficiary did not make a disposition of the property by will (Hanbury, 1904, 1 Ch. 415; Dixon, 1903, 2 Cn. 458); and where a beneficiary was not to be at liberty to sell except to one of his brothers, at a price to be fixed by arbitration (Crofts v. Beamish, 1905, 2 I. R. 349). 6 Allan, 1872, 11 M. 216; White, 1877, 4 R. 786; Gibson v. Ross, 1877, 4 R. 1038 ; Turner v. Fernie, 1908, S. C. 883 (discussing White). 7 Douglas, supra, per Lord Shand, at p. 317. 8 Gf. Murray v. Matheson, 1898, 6 S. L. T. No. 193, where a form of settlement was referred to by description in the trust deed as that to be followed by the trustees, but two inconsistent forms answered the description. The beneficiary was entitled, therefore, to unconditional pay- ment of her interest. The doctrine of repugnancy on which this position is based (cf. s. 757) has been the subject of an interesting decision in England. It has been there formally decided that the doctrine affects only a provision that takes effect, and not provisions that fail. Where there was a disposition to several persons successively, each of whom took exclusively of all the others, and each claim was therefore repugnant to all the others, it was held that the disposition to the first disponee in the deed did not avoid all the dispositions to the subsequent disponees, but the disposition to the first disponee who took an interest in possession did. The competition was between the representatives of the first disponee named and the disponee who first took an interest in possession (Lowman, 1895, 2 Ch. 348, per Lindley, L.J., at pp. 357, 358). 9 Clouston v. Bulloch, 1889, 16 R. 937, per L. P. Inglis, at p. 942, quoting L. J.-C. Moncreiff in Allan, 1872, 11 M. 216, at p. 217. In Clouston there is an exhaustive review of the whole law on this pomt. Lord Adam's dissent as to the interpretation of the deed in this case is still worthy of consideration in a case not identical with that decided. 10 Kinmond v. Mess, 1898, 25 R. 819, per Lord M'Laren, at p. 823, relying upon Gibson, supra, at p. 1046. Cf. Bisset v. Rainie, 1899, 6 S. L. T. No. 452, for trust machinery effectually excluding creditors, and so differing from Clouston, supra. Cf. s. 755. 11 M'Callum v. M'Culloch, 1904, 7 P. 337, per Lord Kinnear, at p. 344, relying on White, supra ; Cozens v. Stevenson, 1873, 11 M. 761, referred to by Lord Stormonth-Darling (Ordinary) in M'Callum, at p. 340, as a case where there was no trust to protect an annuity. His lordship is incorrect, as the parties to the case were the trustees. l2 ~ Cf. Buchanan v. Dalziel, 1868, 6 M. 536, per Lord Deas, at p. 540. 13 M'Clymont v. Osborne, 1895, 22 R. 411, at p. 413 ; Howe, 1903, 5 P. 1099. " Cf. Buchanan, supra, per L. P. Inglis, at p. 539, and Lord Deas, at p. 540. « Bell v. Borthwick, 1897, 24 R. 1120, per Lord Moncreiff, at p. 1127, dissenting, but only on application of rule. Stair, iii. 5, 51. Pursell v. Elder, 1865, 3 M. (H. L.) 59 is rubriced as a case of substitution, but appears rather to have been the gift of a power of appointment only— a faculty and not an estate or right of property— see Lord Westbury, pp. 68, 69. Cf. Newall v. Inglis, 1898, 25 R. 1176, per Lord Moncreiff, at p. 1183. 438 PAYING OVEE THE ESTATE [chap. vm. court win 751. Where there is "no provision in the deed for the con- machin^ 6 tinuance of the trust," the Court will not create a trust to carry out the intentions of the truster. 1 Thus where the truster directed his trustees, " so soon as they shall find it convenient they shall deliver and pay " the trust funds to the beneficiaries, the Court held that the trustees were not entitled to continue the trust and hold the funds for contingent liars, but were bound to pay over to the existing beneficiaries. The trustees were, however, directed to take a " receipt or discharge bearing that the payment has been made and received subject to the conditions and provisions of the settlement." 2 1 Of. s. 57. Q Beveridges, 1878, 5 E. 1116, approving Hutton, 1847, 9 D. 639, and Gibson v. Boss, 1877, 4 R. 1038 ; see Newall, s. 752, for review of cases. Of. Murray v. MacFarlane, 1895, 22 R. 927, per Lord M'Laren, at p. 941 ; see s. 720 as to support of lunatic. As to taking receipt from conditional bene- ficiary as to condition being satisfied, Long, 1901, W. N. 166. conditions 752. Where the truster directs his trustees to pay over the of payment machine trust ^ mi ^> an( * * nen a dds a declaration imposing conditions upon the use of the fund by the beneficiary, the Court has ordered the trustees to pay over as they were directed, the truster having failed to provide the machinery 1 necessary for carrying out his Receipt intentions and protecting his conditions. The trustees were mtions. instructed to take a receipt from the beneficiaries, embodying the conditions of the trust deed, though the Court declined to say Direction whether such a proceeding would have any effect. 2 Such a case to settle. r ° J must be distinguished from that where the trustees are directed to settle the estate in a certain manner. There they must do more than take a receipt with the truster's conditions embodied. conditions In this case they must carry out the direction by taking the inheritable . . security, securities for the beneficial interest in such terms as to give effect to the settlement of the truster. 3 " In making such an investment the most suitable securities are heritable securities, 4 because thereby the conditions attaching to this provision would at once appear on record." 5 Government Where a truster directed the purchase of Government annuities for the beneficiary and declared the same to be alimentary, but provided no trust machinery for protecting the alimentary interest, the trustees were held bound to carry out the direction to pur- chase the Government annuities as the means, however imperfect, adopted by the truster to attain his object. 8 1 For case of a trust for sale where machinery failed, see Appleby, 1903, ICh. 565. chap, viii.] PAYING OVEE THE ESTATE 439 2 Allan, 1872, 11 M. 216, followed in M'Niah v. Donald, 1879, 7 R. 96, and in Jamieson v. Lesslie, 1889, 16 R. 807. Gf. Houston v. Mitchell, 1877, 5 R. 154; Clouston v. Bulloch, 1889, 16 R. 937, at pp. 941, 942. 3 Massy v. Scott, 1872, 11 M. 173. 4 See Burnett, 1909, S. 0. 223, for example of effective conditions in herit- able destination of fee. 5 Massy, supra, \)er L. P. Inglis, at p. 176 ; but cf. Jamieson, supra, where an express direction to invest the fund so as to limit and protect the interest of the beneficiary was declared impracticable. Vide also Cunningham v. Duke, 1873, 11 M. 543 ; Newall v. Inglis, 1898, 25 R. 1176, per Lord Moncreiff, reviewing cases at p. 1183, and distinguishing Houston, supra, from Massy, supra. Massy extended the construction of destinations as protective from the case of rights depending on contract to those originating in gratui- tous mortis causd dispositions, but this extension is limited to the circumstances of that case. Hutchinson v. Young, 1903, 6 F. 26 ; but see comments on this case in Turner v. Fernie, 1908, S. C. 883. 753. Where the truster's directions, if carried out, would ineffective directions. plainly and palpably fail to effect his intention, the trustee is entitled to pay over without taking any notice of the conditions imposed by the truster. 1 Thus where a truster directed that his daughter's share of his estate should, in the event of her marriage, be settled on her by the trustees, if they should see fit, so as to exclude the jus mariti, the Court held that this did not prevent JusmarUi •> ' * excluded. the daughter, while she was unmarried, discharging her interest for the purpose of receiving payment of her share of the estate. " No doubt," says Lord Justice-Clerk Macdonald, " the trustees are empowered to settle the daughter's share upon her, excluding the right of her husband. Whether or not that direction might have created some difficulty under the former law as to married women's property, I do not say, but I think it is of no importance now." 2 1 Vide s. 323, etc., and cf. Murray v. Macfarlane, 1895, 22 R. 927, a case of an alimentary annuity. 2 Brown, 1890, 17- R. 517, at p. 519. Gf. Balderston v. Fulton, 1856, 28 S. J. 664 ; Young, 1853, 18 Beav. 199. (2) Where no Beneficial Interest to be Protected 754. Not only must the proper trust machinery be provided, but there must also exist some beneficial interest requiring the continuance of such machinery for its protection. Here appears the second condition upon which acceleration of payment may take place, viz. where the machinery of the trust ceases to be pro- tective of any beneficial interest, and becomes merely dilatory. 1 Beneficiaries who have power to discharge their interests in the trust estate, 2 and who, at an earlier date than the date of pay- ment appointed by the truster, 3 represent the whole beneficial interests that might possibly 4 exist at the appointed date, 440 PAYING OVEK THE ESTATE [chap. viii. may call on the trustee to pay over at the earlier date the estate in which they are interested in such manner as they may see fit. 5 The trust exists, however, till it is put an end to by the beneficiaries — it does not determine automatically 6 upon these conditions arising. 7 Thus the trust continues though the beneficiary is absolutely entitled to the property, if he is unable through mental incapacity to call for a conveyance of the estate to himself, 8 or if something requires to be done by him, such as the exercise of a right of disposal in certain cases. 9 Any one of the beneficiaries of the same fund or estate is entitled to insist on the trust administration being continued. 10 1 The trustee in such a trust is sometimes called in England a " bare " trustee (Tendring v. Jones, 1903, 2 Oh. 615, per Farwell, J., at p. 622), but this term is also used for a trustee having no beneficial interest in the trust estates (Att.-Gen. v. Meyrick, 1893, A. C. 1, at p. 6, per Lord Herschell, C). Such a trust is in the United States of America expressively called a " dry trust," and will not be continued against the wish of the beneficiaries (Kay v. Scates, 1860, 78 Am. Dec. 399). 2 In s. 780, etc., the question is discussed as to what beneficiaries are regarded as conventionally incapable of granting such a discharge. 3 Watt v. "Watson, 1897, 24 B. 330, per Lord M'Laren, at p. 339. 4 See ss. 775, 776, as to contingent interests. 6 The question of vesting, which is intimately connected with this question, is separately dealt with in the Appendix. 8 Cotton, 1882, 19 Ch. D. 624 ; Sudeley, 1894, 1 Ch. 334. 7 Of. also Entail Act, 1868, s. 17. 8 Jump, 1903, 1 Ch. 129. 9 Howe, 1903, 5 P. 1099. Cf. a. 763, note 5. 10 Anderson, 1904, 7 F. 224, per Lord M'Laren, at p. 230, relying on M'Culloch, 1903, 6 F. (H. L.) 3 ; 1904, A. C. 55, as limiting scope of principle in Miller, s. 755, and Yuill, s. 755. (a) Where all Interests in one Beneficiary Rule 755. "Where there is only one beneficiary interested in any stated and J J J discussed, particular fund or estate, the following opinion of Lord President Inglis is generally referred to as a statement of the law appli- cable to his rights: — "There is, in my opinion, a general rule, the result of a comparison of a long series of decisions of this Court, that where, by the operation of a testamentary instrument, the fee of an estate or parts of an estate, whether heritable or movable, has vested in a beneficiary, the Court will always, if possible, relieve him of any trust management that is cumbrous, unnecessary, or expensive. 1 Where there are any trust purposes to be served which cannot be secured without the retention of the vested estate or interest of the beneficiary in the hands of the trustees, the rule cannot be applied, and the right of the beneficiary must be subordinated to the will of the testator. But I am not aware of any case in which the mere maintenance of a trust management without any ulterior object or purpose has chap, viii.] PAYING OVEE THE ESTATE 441 been held to be a trust purpose in the sense in which I have used that term." 2 Assuming that the words " fee of an estate " in this opinion mean " sole beneficial interest in an estate," the only " ulterior object or purpose " conceivable is the protection of the interest of the beneficiary where he is under a conventional dis- ability to deal with it. 3 The result is that where there is no such disability a beneficial interest can be limited only by the existence of another, and that a hostile, beneficial interest, and not by any merely fiduciary interest in the trustee.* Therefore where a limited or conditional interest is given to a beneficiary not under conventional disability, without the creation of any complementary and hostile beneficial interest requiring, for its protection, that the limitation or condition be enforced by the trustees, the beneficiary subject to the limitation or condition may require the trustees to disregard it. The leading proposition, that a trust purpose must have a beneficial object to support in order to justify the continuance of the trust, is almost universally accepted, but a difference of opinion has arisen over the application of the conditions laid down in the opinion of Lord President Inglis, 5 as those in which such object disappears, and the remaining beneficiary can ter- minate the trust by claiming an accelerated payment of his interest. Lord Young stood alone in later years in his advocacy of the doctrine that the fiduciary fee in the trustee is the pre- dominant fee, and that the beneficial fee, however full, is only a burden upon the fiduciary fee till the purpose of the assignation in fee to the trustee is fulfilled. 6 If Lord Young's doctrine is set aside, as it must now be held to be, there remains nothing but a question of vesting. 7 Most, if not all, of the difficulties that have arisen for discussion in connection with this question of acceleration of payment have their origin in the loose manner in which the word " vesting " has been used. The attention of the Court has been so fixed upon the problem whether some right has vested or not at a particular date, that the nature of that right has been overlooked. In the words of Lord Macnaghten, they "have dwelt too much upon the effect of the vesting, and have paid too little attention to the thing which is vested." 8 It is commonly assumed that, where vesting is held to have taken place, what has vested is a real right similar to that of a fiar in a heritable destination. 9 But no such right can vest in a beneficiary under a trust ; the highest right that can vest in him is a right to demand an instant conveyance 442 PAYING OVER THE ESTATE [chap. vm. of property or payment of money by the trustees. The word "vesting" does "not necessarily import the transfer of owner- ship." 10 Consequently, even where there is a "vested estate or interest" in the beneficiary, the quality of the "estate or interest" that has vested is the critical consideration. Such an estate or interest may be "a right of a somewhat com- plex and quite innominate character," u varying with the terms of the trust deed. Thus the right in Miller 12 that vested in the beneficiary upon his marriage was not the right to immediate payment, but the right to demand payment at a later date, viz. when he attained twenty-five years of age. He could assign that right. It would pass to his trustee in bankruptcy; the right itself was indefeasible; the enjoyment of the property affected by the right was defeasible, but only by his decease before the appointed date. In order to reach this conclusion con- sistently with the opinion of Lord President Inglis, it is true that a gift over must be implied, but it is reasonable to infer that the truster meant that the enjoyment of his property should go to his heir-at-law, if the conditions of the gift were not fulfilled. 13 A man is not obliged, by the law of Scotland, and is not presumed, to exhaust his power of disposal in making a mortis causd disposition. 14 Indeed, the heir-at-law cannot be dis- inherited, except to the extent to which the inheritance is validly put past him by will. 15 Where, of course, the donee under the trust is, or becomes, the heir-at-law, the condition of all possible interests being vested in one beneficiary comes, in its widest sense, into force. This interpretation of the right given by the truster in Miller 12 is consistent with the doctrine of Chambers, 16 but it makes the decision of the Court in Miller, 12 as was emphatically pointed out by Lord Moncreiff, 17 not so. To make it so, it is necessary to read the right in Miller 12 as equivalent to "vested right to demand immediate payment of his interest." Once this has been done, of course any right in the trustee to resist the demand is unstateable. The difference of judicial opinion upon the soundness of the decision in Miller 12 has arisen exactly on the question whether the latter reading of the right in Miller 12 is the correct one. Fund must To permit of the principle in Miller being applied, the estate sentiy or fund in question must be presently and definitely ascertain- ascertain- , " •> able. able in amount. 18 Where a definite sum is taken out of residue and specially invested by direction of the truster to answer certain liferent interests of the residuary legatees, the shares of the life- chap, viil] PAYING OVER THE ESTATE 443 renters in the fee of this sum being ascertainable, can be paid over on the renunciation of the liferents. 19 Neither is the principle applicable where the vesting is subject vesting to defeasance by the operation of a resolutive condition. Where STdefeas- provisions have vested in daughters of the truster, such a con-' dition is created by a direction to the trustees to settle the provision of any daughter in the event of her marriage. This does not prevent immediate vesting, but the trustees must retain the estate during life in order to protect the direction to settle should marriage eventuate. 20 If the trust imposes no effective restriction upon the right of the beneficiary, an agreement by him to accept the benefit under the trust deed upon its terms and conditions cannot operate as an agreement to submit to more stringent or more effective conditions than are contained in the deed itself, and can put him in no worse position than if he had accepted the benefit without any agreement- whatever. 21 1 Thompson, 19th December 1840, 16 F. Dec, N. S., 285, 13 S. J. 143, is a case where the management of the estate was attended with heavy expenses, hut the Court refused to ordain the trustees to convey to the beneficiaries, who were capable and willing to discharge them, because, and only because, an express direction to sell and divide had not been carried out. 2 Miller, 1890, 18 R. 301, at p. 305. This case is followed as authority in Hargrave v. Schofield, 1900, 3 F. 14 (Lords Young, Trayner, and Moncreiff expressing dissent from the decision in Miller) ; in Boss, 1902, 4 F. 840 ; in Stewart, 1897, 25 R. 302 ; and is approved by Lord Davey in M'Culloch. 1903, 6 F. (H. L.) 3, at p. 6 ; 1904, A. C, at p. 62, as " decided upon a sound principle." Of. s. 759 for statement of rule in England. 3 See s. 780 et seq. 4 Of. Wallace, 1893, 1 S. L. T. No. 159. 5 In Yuill v. Thomson, 1902, 4 F. 815, at p. 821, Lord Kincairney speaks of the rule in Miller, supra, as being not " of much importance," as there are " so many and such vague qualifications.'' 6 Stewart, 1897, 25 E. 302. Of Edmond, 1898, 1 F. 154. 7 See Lord Moncreiff in Russell v. Bell, 1897, 24 R. 666, at p. 672. In illustration of this, reference may be made to an English case where a gift was payable by the trustees upon the beneficiary attaining the age of twenty- six, and there was no destination over in the event of his death before that date. The trustees were directed to pay to the beneficiary, out of the income of the estate destined to him, £3000 a year till the said date. He died at the age of twenty-three without having claimed payment of the capital gift. The beneficiary's representative successfully claimed the capital on the ground that an unconditional right to payment had vested in the deceased (Nunburnholme, 1911, 2 Ch. 510). 8 Heritable Association v. Miller, 1892, 19 R. (H. L.) 43, at p. 53. 9 The reductio ad absurdum put forward by Lord Rutherfurd Clark in Miller, supra, at p. 310, is dependent for its conclusion upon this assumption. 10 Samardi Wakara v. De Saram, 1911, A. C. 753, at p. 763, referring to M'Laren, s. 1472, and Croom, cited there. 11 Shiell, 1906, 8 F. 848, per Lord Kyllachy, at p. 854. Of. Lord Low in M'Laren v. M'Alpine, 1907, S. C. 1192, at pp. 1199, 1200 ; and Lord M'Laren in Macfarlane, 1903, 6 F. 201, at pp. 209, 210. 12 Miller, supra. See s. 756 for circumstances of case. 13 See Lord Kyllachy in M'Donald, 1907, S. C. 65, at p. 68. Of. s. 759, note 4, for implication of condition as to intestacy in rule as stated in England ; also see s. 771, and s. 1053. 444 PAYING OVEE THE ESTATE [chap. vm. 14 Mackenzie, 1907, S. 0. 139, at p. 145. 15 M'Caig, 1907, S. C. 242 ; Cowan, 1887, 14 K. 670, at p. 675. 18 Chambers, s. 756. 17 Miller Richard, 1903, 5 F. 909, at p. 913. 18 M'Culloch v. Anderson, 1904, 6 F. (H. L.) 3, per Lord Davey, at p. 6 ; A. 0. 55, at p. 62 ; Graham, 1899, 2 F. 232— an annuity of 4 per cent, had to be paid, and this entrenched upon capital, so that the amount of estate was not ascertainable ; Ayr v. Shaw, 1904, 12 S. L. T. No. 65— liferenter had right to one-half the income of the estate ; fiar held not entitled to payment of one- half of capital, as liferenter's right was to be measured by income of whole estate, parts of which estate might change in value before his death. ^ Whitehead 1897 24 R 1032 ■ 20 Mackay, 1897, 24 R. 904 ; Lindsay, 1880, 8 R. 281 ; Dalglish, 1889, 16 R. 559 ; Stewart, 1896, 23 R. 416. 21 Johnston, 1903, 5 F. 1039, per Lord Kinnear, at pp. 1047, 1048. In this case the ageeement took the shape of a docquet on the trust deed to this effect :— " We, A., JR., and 0., hereby accept of the office of trustees hereby conferred on us, and we individually concur in, and agree to, the terms and conditions of said deed." After the property was conveyed to A., who was the first-named beneficiary in the deed, it was held that his right to the fee was not otherwise affected by this docquet than by the conditions of the deed apart from the docquet. Examples 756. In the leading case 1 the truster directed his trustees applied. to hold and manage, " as absolute proprietors," certain heritable property for behoof of his second son until the latter attained the age of twenty-five, when they were to denude in his favour. The " property " was to " vest " in him on his attaining that age, or on his marriage with the consent of the trustees after attaining majority. He married with the consent of the trustees after the age of twenty- one but before that of twenty-five. In these circumstances the Court held that the trustees were bound to convey over to the son the said property, on the ground that he alone was beneficially interested in it. 2 In a similar case, the share of an "estate" " vested " by express direction in a beneficiary at the age of twenty- five, but the trustees were empowered, notwithstanding the vesting having taken effect, to retain the share, and pay only the income to the beneficiary, should they see fit. In the event of his dying before payment, the share was to be paid to "his nearest heirs and representatives whomsoever." On the bankruptcy of the beneficiary after attaining the age of twenty-five, the Court held that the entire rights in the share of the estate were in the bene- ficiary, and accordingly passed to the trustee in bankruptcy. 8 A truster left his son a one-fourth share of his estate and directed his executors to invest it for him in house property to be used by him or for his benefit. This direction was held repugnant to the original gift, and the property to vest absolutely in the son. 4 It is proper to notice here that in two cases it was held that the fee of an estate might be "vested" in the beneficiary, and yet the estate retained by the trustees for behoof of the chap, viii.] PAYING OVEE THE ESTATE 445 beneficiary. 5 In view, however, of the judicial opinions that have been expressed in reference to these decisions, they cannot now be considered as of any weight, or as affecting the prin- ciple under discussion. 6 "The apparent conflict between the two classes of decisions is due to the different views which may be taken on the terms of any particular settlement as to whether right to the fee of a provision has, or has not, fully and unconditionally vested in a beneficiary. " But I do not understand it to be disputed," says Lord Moncreiff, "that if upon a sound construction of a settlement an absolute right has not vested, and the funds still remain in the hands of the trustees, such restrictions imposed by the trustees (truster ?) must receive effect." 7 1 Miller, s. 755. 2 Here his interest was expressly " vested " in the beneficiary. "Where there is no express vesting of the interest the preliminary question is whether vesting has taken place or not, as to which vide Appendix on Vesting. But when that question has been decided in favour of the vesting of the interest, the result is the same as in the case of express vesting. 3 Mackinnon v. Official Receiver, 1892, 19 R. 1051. Of. Duthie v. Forlong, 1889, 16 R. 1002. The circumstances of these cases afford illustrations of the reductio ad absurdum used by Lord Rutherfurd Olark in Miller, s. 755, at p. 310. It is worth noticing that the distinction between the case of Mackinnon and the leading case of Chambers v. Smiths, 1878, 5 R. (H. L.) 151, which at first sight it appears to resemble, is that in the latter case there is no express vesting, and the destination over to " issue " prevents its implication. The destination in the former case is in accordance with the expression of vesting, being to "heirs and representatives." Of. also White, 1896, 23 R. 836.' i Dowling, 1902, 1 I. R. 79. 6 Campbell, 1889, 16 R. 1007, following Christie v. Murray, 1889, 16 R. 913. 6 Vide L. J.-C. Macdonald in Brown, 1890, 17 R. 517, and Lord Rutherfurd Clark in Miller, supra, at p. 310. In Miller also, Lord Young bases his opinion, which was overruled, on Christie's case. 7 Russell v. Bell, 1897, 24 R. 666, at p. 672. The sole beneficial interest was held to be fully vested in the cases of Miller, supra, Greenlees, and Wilkie, s. 771. Chambers and White (1896), supra, are examples of it not so vesting. Of. Ballantyne v. Kid, 1898, 25 R. 621, per Lord Moncreiff, at p. 634, discussing the above cases ; Kinmond v. Mess, 1898, 25 R. 819, per Lord M'Laren, at p. 823, discussing ratio of Chambers ; Macfarlane, 1903, 6 F. 201, distin- guishing Chambers. It must be noted that there was no destination over of the fee in Russell ; see Lord Moncreiff, at p. 672. 757. An English case. illustrates a somewhat nice application of the rule governing the acceleration of payment to the bene- ficiary. There the truster left the residue of his estate and the accumulations thereof to certain charities. Payment was deferred till the death of the last of certain annuitants whose annuities were charged on the income of the estate, but only on the income of each year, without any charge on accumulations of income in the event of its failure in any year to meet the annuities. After the period of accumulation limited by the 446 PAYING OVER THE ESTATE [chap. vm. Thellusson Act, the subsequent accumulations were claimed by the next of kin of the truster, while the charities claimed the whole accumulations. The Court held that the Thellusson Act had never applied, as the accumulations were altogether repug- nant to the right given to the charities under the trust deed. "Applying this doctrine [of repugnancy] to the present case," says Lindley, L.J., "the charities are not entitled to the capital of the trust estate before the annuities cease, because the annuitants are interested in the income of that capital, and that income is not the sole and exclusive property of the charities. Nor would the charities be entitled to the annual surpluses, which there might be before all the annuities ceased, if in any event the annuitants could have recourse to them. 1 But inasmuch as the terms of the will pre- clude any such recourse, and the accumulations are directed to be made for the benefit of the charities, and for their benefit only, it follows that each year's surplus, as it arises, is their absolute property, and that the direction to accumulate is invalid, and may be properly disregarded, not only after but during the period of twenty-one years from the death of the testator." 2 1 Gf. Haldane, 1895, 23 R. 276. 2 Harbin v. Masterman, 1894, 2 Ch. 184, at pp. 197, 198. 758. The same point is illustrated by another English decision where the facts afford an example of the converse case. Here the truster divided his whole estate into certain shares, giving the liferent of a share to each of several beneficiaries. The capital he gave to a special legatee on the death of the last liferenter. He directed his trustees to accumulate the interest of the capital sums set free by the death of each of the several liferenters till the death of the last. The special legatee to whom the capital was given had an interest of one-fifth in the residue. On the death of the first liferenter, the special legatee claimed payment of the capital sum thus set free. The Court held that he had not the only interest in the sum, as the last liferenter might survive the truster by more than twenty-one years and so bring into play the Thellusson Act, in which case the income would thereafter go to residue, in which he had not the sole interest. As he had an interest of one-fifth in the residue, however, he was held to be entitled to immediate payment of one-fifth of the sum set free. 1 1 Parry, 1889, 60 L. T. 489, per North, J. Gf. Weatherall v. Thorn - burgh, 1877, 8 Ch. D. 261. chap. viii. J PAYING OVER THE ESTATE 447 759. In the House of Lords 1 the Lord Chancellor (Herschell) Rule in England. took occasion to quote a passage from an opinion of Wood, V.C., 2 in which he expounds the English doctrine on this point — a doctrine which " has been so long settled and so often recognised that it would not be proper now to question it." The passage quoted is in these terms : — " The principle of this Court has always been to recognise the right of all persons who attain the age of twenty-one to enter upon the absolute use and enjoyment of the property given to them by a will, notwithstanding any directions by the testator to the effect that they are not to enjoy it until a later age, unless during the interval the property is given for the benefit of another. 3 If the property is once theirs, it is useless for the testator to attempt to impose any fetter upon their enjoyment of it in full so soon as they attain twenty-one ; and upon that principle, unless there is in the will, or in some codicil to it, a clear indication of an intention on the part of the testator that any of his devisees are not to have the enjoyment of the property he has devised to them until they attain twenty-five, but that some other person is to have that enjoyment, or unless the property is so clearly taken away from the devisees up till the time of their attaining twenty-five as to induce the Court to hold that as to the previous rents and profits there has been an intestacy,* the Court does not hesitate to strike out of the will any direction that the devisees shall not enjoy it in full until they attain the age of twenty-five years." 5 It may be taken that sub- stantially 6 the same doctrine has been declared to be the law of Scotland by the later decisions of its Court. 7 1 Wharton v. Masterton, 1895, A. C. 186, at p. 192 — the same case in appeal as Harbin, s. 757. 2 Gosling, 1859, Johnston's Reports, 265, at p. 272. Treated as " well settled " law in Trevanion, 1910, 2 Ch. 538, per Joyce, J., at p. 546. s Cf. Williams, 1907, 1 Ch. 180. 4 Cf. b. 755, note 13. " Cf. Eocke, 1845, 9 Beav. 66, and Saunders v. Vautier, 1841, Cr. & Ph. 240, as commented on by Lord Langdale, M.R., in Curtis v. Lukin, 1842 5 Beav. 147, at pp. 155, 156. 6 Differences in the law as to protected interests (cf. s. 780 et seq.) require certain modifications of the rule in the text when it is applied in Scotland. 7 Cf. Lord M'Laren's opinion in Miller, s. 755, note 3, at p. 311, and cases cited in note. 760 Where a truster directed his trustees to pay over, on the Effect of ' ■*• " direction to death of his wife, the sum of £10,000 for the founding of a pro- accumulate. fessoriate, and the residue of his estate at the same time to a religious body, it was held that the trustees were bound to hold the £10,000 till the death of the widow, in accordance with the 448 - PAYING OVER THE ESTATE [chap. vm. express direction of the truster. 1 In an almost contemporaneous case, however, where the truster directed the trustees to accumu- late income "during the lifetime of my wife," who was an an- nuitant on the estate, it was held, on the wife repudiating the settlement, that the trustees could pay over to the residuary, which was a charitable trust known as " The Lucas Trust," with- out accumulating as directed. 2 This latter case has been the subject of some criticism. " It was the plainly expressed inten- tion of the testator," says Lord "Watson, " that the residue, increased by accumulations until his widow's decease, and no lesser amount, should be employed in launching his charitable scheme, and I entertain a doubt whether the Court was justified in giving the estate to the administrators of the Lucas Trust without imposing upon them the duty of accumulation as directed by the truster." 3 In the same sense Lord Herschell says : — " No reasons were assigned by the learned judges who decided that case, and I have some difficulty in understanding how they arrived at the con- clusion to which they gave effect. I should have thought that the testator intended that the endowment to be handed over to the charity should be increased by the accumulation which he directed." 4 After such criticism the case cannot be regarded as of great weight, but "in understanding how they arrived at the conclusion," some help is afforded by the view expressed, very tentatively indeed, by Lord Bramwell, that the reason for allowing the fund to be paid over was that no one could complain. 6 Un- doubtedly the distinction exists between the two cases we are deal- ing with, that in the former the acceleration of the term of payment was an injury to the residuary, who thereby lost the accumulations of income that meantime would have fallen into residue, 6 while in the later case, as there was no competing beneficiary for the accumulations, no one was injured by, or had a right to complain of, the accelerated term of payment. It is worth noting, in support of this view, that Lord Langdale, M.E., was of opinion that "where a legacy is directed to accumulate for a certain period, or where the payment is postponed, the legatee, if he has an absolute indefeasible interest in the legacy, is not bound to wait until the expiration of that period, but may require payment the moment he is competent to give a valid discharge." 7 The opinion of Lindley, L.J., quoted above, 8 also appears to support the decision of the Court of Session on this point. 1 Elder v. Free Church, 1881, 8 R. 593. 2 Lucas, 1881, 8 E. 502. chap, Vlii.] PAYING OVER THE ESTATE 449 3 Muirhead, 1890, 17 R. (H. L.) 45, at p. 49. 4 Muirhead, supra, at p. 52. 6 Muirhead, supra, at p. 52. This was an actual ground of judgment in the case. Afterwards the accumulation was stopped by the operation of the Thellusson Act, and the income thus set free went to the testator's heirs in mobilibus (Elder v. Free Church, 1892, 20 R. 2). The objection to the acceleration of the term of payment would of course still continue on the part of the person to be injured by it, though the interest to object had passed to another than the beneficiary under the deed. 7 Saunders v. Vautier, 1841, 4 Beav. 115, at p. 116. Gf. Archibald, 1882, 9 R. 942. 8 S. 757. 761. It has been seen that where a person not under con- Fee and ventional disability is the sole beneficiary, the trustee will be in same person. ordered to denude m his favour. 1 This situation arises where the holder of a limited beneficial interest becomes vested with the beneficial interest complementary of his own, for the sole beneficial interest as a consequence emerges in him. Thus, " If a person has an unqualified life-interest under a trust, and has also an unqualified reversionary right expectant on the termination of his own life interest, these two rights together constitute a fee, and entitle him to be put into possession of the estate." 2 But " in Power of order that a right of liferent and a power of disposal, taken together, may amount to a fee, both must be given in unqualified terms." 3 " The Court will not declare a fee unless there is both an unlimited liferent and an absolute power of disposal, as opposed to a mere testamentary power of disposal." 4 In a question with a purchaser as to title, a disposition of the reversion by the liferenter by irre- vocable mortis causd deed, though binding on him, 5 might not be held to be a proper exercise of a purely testamentary power. 6 A power to "devise" the reversion is different from, and less than, Power to "devise." a power to " alienate " or " dispone," and is probably limited to mortis causd disposal. As it is not an unqualified power of disposal of the reversion, it does not create a fee in the liferenter, at least where there is a destination over to others than the " heirs " of the liferenter. 7 But a power of "the sole control and disposal of the estate " subject to a destination over if not " sold or bur- dened," does not derogate from the "unambiguous and absolute gift." 8 "A protected life interest in a married woman can never Protected D r interests. be expanded into a fee, even where a plenary power of disposal is given along with it." 9 Nor can an alimentary liferent interest and absolute power of ultimate disposal create a right of fee. 10 The principal test of a gift of a fee is whether the gift of Testof either the liferent or the reversion is qualified in its inception. e in - If so, it is a limited gift of the liferent or of the reversion, and the 29 450 PAYING OVEE THE ESTATE [chap. vm. double gift does not amount to a gift of a fee. Such a condition attached to the gift of a liferent interest in its inception as that it is " for maintenance and support," renders it only a qualified gift. 11 It is a question of circumstances whether a gift unqualified in its inception is limited by subsequent qualifications. 12 The general rule is that where a testator has given an unqualified right, it is not in his power to impose restrictions limiting the enjoyment of the right. 13 It is always necessary to the implication of a fee in the liferenter that there must be first of all a direct provision of a gift or interest in the reversion. Such a gift or interest is contained in the direction to the trustee " to pay " to a beneficiary. 14 Direction A gift of a liferent with the direction to the trustees to pay the capital liferented to the liferenter's heirs and assignees creates a fee in the liferenter, as it gives the grantee the power to deal with the subject as he pleases. 15 But where a gift of the fee to the liferenter is burdened with a liferent to his issue, the donee is not entitled to payment. 16 Liferent by An absolute fee in a liferenter is more readily implied in a reservation. ^ x reservation of the power of disposal of the fee by the absolute owner, who settles the property on himself in liferent and on others in fee, or by the purchaser who takes a disposition with such a destination, than in the gift of a power of disposal to a liferenter. 17 1 This occurs by force of statute where the liferenter of heritage (Entail Act, 1848, 11 & 12 Vict. c. 36, s. 48) or of movable property (Entail Act, 1868, 31 & 32 Vict. c. 84, s. 17), who has been born after the date of the trust deed, becomes of full age ; and see Baxter, 1909, S. C. 1027. Of. a. 327. 2 His Lordship adds : — " I will even go further, and say that I think that the possibility of issue being born to the party ought not to be an obstacle in the vesting of the dominium plenum in the case of a woman who is admittedly past the age of child-bearing" (Barron v. Dewar, 1887, 24 S. L. R. 735, per Lord M'Laren (Ordinary)). Of. Hocking, 1898, 2 Ch. 567, and Lowman, 1895, 2 Ch. 348. The doctrine that " a liferent with an unqualified power of dis- posal (of the reversion), and no ulterior destination, may amount to a fee," has received no practical illustration in the decided cases, probably on account of the ease with, which a truster who means to give an unqualified right can say so, and because his object in creating a trust at all was to qualify the right (Anderson, 1904, 7 F. 224, per Lord M'Laren, at p. 230. His Lordship pre- sumably means that there is no illustration of the doctrine in the identical terms used by him— otherwise Eattray, 1899, 1 P. 510, is said by Lord M'Laren himself, at p. 512, to be such a case. 3 Douglas, 1902, 5 E. 69, per Lord M'Laren, at p. 74, relying on the " very clear expression of opinion" of L. J.-O. Inglis in Alves, 1861, 23 D. 712, at p. 717. " It is not an unfair inference that that person is the full proprietor of the estate, because it is difficult to see what other right a proprietor can have than the full right of enjoyment and the full right of disposal." But in certain cases the exercise of the right of disposal has been held to be necessary to create a right of fee in the liferenter (Howe, 1903, 5 F. 1099, and M'Laren s. 2020, therein adopted by Lord Trayner). 4 Mackenzie v. Kilmarnock, per Lord Dunedin, 1909, S. 0. 472, at p. 477 stating the law "as it stands at present upon authority." Of. Reid,'l899 1 f' 969 — "at her own option as to destination in the event of her death" confers only a right of disposal mortis causd. chap. viii. J PAYING OVER THE ESTATE 451 5 Paterson, 1893, 20 E. 484 8 Mackenzie, supra, per Lord M'Laren, at p. 476. ' Tait v. Neffl, 1903, 6 F. 138. Of. Rattray, 1899, 1 F. 510, at p. 512, "a destination over to fiars named or designed." It should be noted that the case of Weddell, 1848, Exchequer Cases, cited by Lord M'Laren in Rattray, is expressly decided on statutory and not on equitable considerations, and that the conditional destination is in force ; see L. J.-O. Inglis in White, 1860, 22 D. 1335, at p. 1340. 8 Davis, 1898, 6 S. L. T. No. 33. Gf. Jones, infra, and Pounder, 1886, 56 L. J. Ch. 113. 9 Mackenzie, supra, per Lord M'Laren, at p. 476, relying on Pursell v. Elder, 1865, 3 M. (H. L.) 59. 10 Ewing, 1909, S. C. 409, at p. 418, referring to Mackenzie, supra. 11 Douglas, supra, at p. 74 ; but see Gillies v. Hodge, 1900, 3 F. 238, ad- vances of capital, if the liferenters "stand in need thereof" infer a fee. Cf. Mackinlay, 1898, 5 S. L. T. No. 325, a power to encroach, " as if she were sole fiar," upon the capital, " even to the whole extent thereof," if for the limited purpose " of her better maintenance or support," does not infer a fee ; but see Jones, 1898, 1 Ch. 438, and Williams, 1907, 1 Ch. 180. 12 Douglas, supra, at p. 74. Gf. s. 771, note 5. 13 Douglas, supra, per Lord M'Laren, at p. 73, relying on Yuill v. Thomson, 1902, 4 F. 815. 14 Macgregor, 1909, S. C. 362. Gf. Tweedale, 1905, 8 F. 264, with which Fulton, 1880, 7 R. 566 (as explained by L. P. Dunedin in Tweedale, at p. 274, from perusal of Session Papers), and Stewart, 1896, 23 R. 416, reconciled. 16 Rattray, supra. 16 Brown, 1911, 2 S. L. T. No. 196. 17 Thomson v. Blair, 1900, 8 S. L. T. No. 190, where Lord Kyllachy dis- tinguishes Miller v. Findlay, 1896, 24 R. 114, from Baillie v. Clark, F. C.,"23rd February 1809, upon this ground. 762. A truster so disposed of his estate that, in the event, his Beneficiary also heir- trustees came to " hold and apply " certain property " for the sole at-iaw. use and behoof of " a certain person, " and that in such sums, at such times, and in such manner as my trustees shall think best, and of which they shall be the sole judges." Of this property, the same person was the heir ab intestato. The Court declined to decide the point whether the beneficiary was entitled to the reversion under the trust deed ; but, as either under the deed or ab intestato, he was vested with the reversion, the whole beneficial interest in the property belonged to him only, and the trustees were ordered to denude in his favour. 1 A truster left heritage to his son in liferent and to certain persons in trust as to the reversion, but no trust purposes were declared except in a sealed envelope which the truster directed to be opened only after the liferenters death. The son claimed the fee, as he either took the reversion as heir-at- law or the trustees held it for him only, and it was held that the claim was good if the direction as to the envelope was to be regarded, there being no destination of the reversion to anyone else. 2 1 Ritchie, 1894, 21 R. 679. Cf. Urquhart, 1886, 14 R. 112, and vide also the circumstances and opinions in Balderston v. Fulton, 1856, 28 S. J. 664, and s. 753, as to protection against jus mwriti, which principally distinguishes the latter from the former case. 452 PAYING OVER THE ESTATE [chap. Tin. 2 Edmond, 1898, 1 F. 154. The Court ordered the envelope to be opened as "the course doing less violence to the testator's wishes," and the trust directions were disclosed. Liferenteras 763. An example of the application of this rule is a case where of fee. a liferentrix, whose liferent was for her separate use, but was not declared to be alimentary, had power of appointment of the fee. She sold her liferent interest, then executed an irrevocable appoint- ment J of the reversion in favour of the purchaser of the liferent, and to him the trustee was asked to convey the fee. The trustee was held to be bound to accede. 2 The right of the liferenter to alienate the reversion must be unqualified, and a power to " devise " it is a qualified right limited to mortis causd disposal, and does not create a fee in the liferenter, 3 at least where there is a destination over to others than " heirs " of the liferenter in default of exercise where of the power. 4 It is a troublesome question not yet satisfactorily destination over if no settled, to what extent, if any, and in what circumstances, the gift appoint- J ° ment. f ^he r ight f disposal of the reversion is qualified by a destination over in the event of its not being exercised. 5 1 See Paterson, 1893, 20 R. 484, as to validity of a contract to execute an irrevocable testamentary deed. 2 Steward v. Vanner, 1894, 1 S. L. T. No. 556, per Lord Kyllachy (Ordin- ary). Gf. Lord Dunedin in Mackenzie v. Kilmarnock, 1909, S. C. 472, at p. 477, as to the effect of an irrevocable testamentary settlement in such circumstances. 3 The jus habendi and the jus disponendi do not together form an unqualified right of lee (Mackenzie, supra, per Lord M'Laren). This result was com- mented upon by L. P. Dunedin, who concurred in it, as being inconsistent- with the decision in Miller, s. 755, and as leaving the law in a state that was not satisfactory. 4 Tait v. Neill, 1903, 6 F. 138. Gf. s. 783. 6 See Forrest v. Eeid, 1904, 7 F. 142, at p. 145, and Morris v. Tennant, 1855, 27 S. J. 546, per Lord St. Leonards, C, at p. 548 ; Pursell v. Elder, 1865, 3 M. (H. L.) 59, per Lord Westbury, C, at p. 68 ; Gillies v. Hodge, 1900, 3 F. 238, at p. 242. Gf. s. 754, note 9. Discharge 764. The typical example of acceleration of payment is the equal to his case where the liferenter and fiar agree to discharge the trustees and take payment of the fund. Where the right of the fiar to payment on the death of the liferenter is vested, the termination of the liferent right in any way is sufficient warrant for the trustees to -pay over the estate to the fiar. Thus a truster directed his trustees to pay the residue of his estate to his niece subject to a life- rent of it to her husband. The husband discharged his liferent, and the trustees were held bound to pay the estate to the niece on obtaining the liferenter's discharge. 1 Where the truster gave his wife the liferent of the estate, and directed his trustees to pay the estate, after her " death," to certain persons named by him, the wife renounced the trust provisions and claimed her legal rights, chap. vin. J PAYING OVER THE ESTATE 453 and the trustees were held to be bound to pay over the estate to the persons named without waiting for the wife's death. 2 Divorce, Divorce, however, is not equivalent to death except as affecting the rights of the injured party in relation to the guilty party. Where a liferenter ceases through divorce to enjoy his liferent interest in funds provided by the other spouse, this does not accelerate the payment of the fee to third parties. 3 1 Rainsford v. Maxwell, 1852, 14 D. 450, referred to in Muirhead, infra, per Lord Watson, at p. 48. 2 Annandale v. MacNiven, 1847, 9 D. 1201 ; vide discussion of this case by Lord Watson in Muirhead, 1890, 17 R. (H. L.) 45, at pp. 49, 50 ; Coats, 1903, 5 F. 401 — widow's annuity provided for and surplus paid to fiars. Of. s. 766. 3 Dawson v. Smart, 1903, A. C. 457, 5 F. (H. L.) 24. The rubric in the Law Reports is misleading as to the question of vesting — the fiar was assumed to have a vested interest for the purposes of the argument ; see last sentence of Lord Robertson's opjinion. 765. " The liferent is out of the way as effectually by the unless renunciation as it would be by the liferenter's death. ... I "death" intended. agree with the doctrine of Lord Balgray in the case of Grieve, 1 that if it be plainly spoken out that payment shall not be made till after the death of some one, then the payment shall not be made. 2 But if it be merely said that you shall pay over at the death of a liferenter, it is not necessary that the natural life of that liferenter shall, in all cases, terminate." 3 Where, however, Alimentary liferent. the trust is alimentary, it must be kept up, " as the trustees are bound to protect the annuitant," i.e. against himself as well as against other beneficiaries. 4 1 Grieve v. Bethune, 1830, 8 S. 896. 2 This can only be where the direction is interpreted as a postponement of vesting as well as of payment. 3 Robertson v. Davidson, 1846, 9 D. 152, per Lord Jeffrey, at pp. 162, 163. Of. Brown, 1890, 17 R. 517. 4 Robertson, supra, per Lord Fullerton, at p. 159 ; cf. same judge in L'Amy v. Nicolson, 1850 13 D. 240, at p. 245. Of. Pretty v. Newbigging, 1854, 16 D. 667, per Lord Cowan, at p. 693, and per Lord Rutherfurd, at p. 696. Of. s. 780. (/3) Where all possible Beneficiaries Agree 766. Where the representatives of all possible beneficial interests, however numerous or diverse, agree to discharge the trustee, he is bound on receiving a valid discharge to pay over the trust estate in the manner directed by such beneficiaries. 1 Bene- ficiaries who have the " entire and only right, title, and interest in the estate," and who are " suis juris to exercise and deal with the same," " are fully in titulo, by their joint act, to discharge the trust in the persons of the trustees, and to require them to denude of the trust, and convey the estate and fund in favour of the bene- 454 PAYING OVER THE ESTATE [chap. vin. ficiaries, in such competent form and manner as the beneficiaries may point out." 2 "When, in a private trust," says Lord Gifford, "every possible beneficiary desires and consents to a particular course being adopted— all the beneficiaries being of full age and sui juris, and none of them being placed under any restraint or disability by the trust deed itself — then no one has any right or interest to object, and the Court will not interfere to prevent the sole and unlimited proprietors doing what they like with their own." 3 And in a similar sense, Lord Jeffrey says : — " A discharge might no doubt be granted, notwithstanding the course of manage- ment prescribed by the truster, were all the parties interested of full age and consenters, on the principle volentibus nonfit injuria." i " It is hard to see how the trustees can qualify an interest to main- tain a construction of the deed which all the parties interested concur in repudiating." 5 Where there is doubt, upon the inter- pretation of the trust deed, whether the claimants are "all the parties interested," the presumption is in favour of payment, and statutory against holding the estate for accumulation. 6 Under the Ruther- " '"' furd Act, 1848, 7 a beneficiary is entitled to demand from the trustees either payment of money directed to be converted by them into land, for the purpose of entailing it upon him as institute, or a conveyance in fee-simple of land that is directed to be entailed upon him as institute, unless other interests affect- ing the money or the land are set up under the trust. Even in the latter ease the beneficiary can, with the consent of all these other interests, demand payment or conveyance under the Act. 8 where Where it cannot be discovered before a certain date who are the if "an whole members of a class of beneficiaries, all the existing bene- possible " ascertain- ficiaries cannot by agreement between them demand payment before that date. Thus, as the " heirs of the body " of a married woman cannot be ascertained till her death, her children in existence at any time before her death cannot, on the cessation of the only interest limiting the claim of the class, demand payment from the trustees. 9 But in certain circumstances the Court have "authorised" 10 trustees to pay to the liferenter and the fiars in existence, where the liferenter was the mother of the fiars and was presumably past ehildbearing. It must be noted, however, that security was given to the trustees for the restoration of so much of the money paid as would meet the claim of any future child or children that might be born and reach majority, which was the period of vesting. 11 It must be kept in view that what is being dealt with here chap, viii.] PAYING OVEK THE ESTATE 455 is acceleration of the date for payment appointed by the Acceleration truster. Cases where payment is directed by the truster to movable date of be made to those able at a certain date to take the benefit, P a y ment - have no bearing on this question. Such a direction automati- cally closes the class of beneficiaries as at that date, and there is no question of acceleration. In such cases the date of payment is appointed by the truster, though it may vary according to the status or action of the beneficiaries. "The general rule (in this class of cases) is based on no stronger foundation than this — that you cannot carry out the direction to distribute at the particular time specified without giving the benefit solely to those who are in existence at that time." 12 This rule applies to each of several periods of distribution, as where annuitants die at various dates, and the capital that is the source of the annuity is set free. 13 There is in England an arbitrary English rule not rule, founded on convenience, that where there is a provision adopted in ' ^ Scotland. for members of a class contingently, simply on their attaining twenty-one, the first member of that class to attain twenty-one is entitled then to have his share handed over to him, and the class from that time cannot be increased, .after-born children being excluded. This rule has not been adopted into the legal system of Scotland. 14 1 As, for instance, by discharging, at the direction of the beneficiaries, a debt due to the trustees by another trust in which the beneficiaries were also inter- ested. In this case, this addition to the funds of the debtor trust is subject to its trusts, and not to those of the creditor trust (Neish, 1897, 24 R. 306). 2 Craigie v. Gordon, 1837, 15 S. 1157 ; vide interlocutor of Lord Mon- creiff (Ordinary) at pp. 1611, 1162, which was affirmed. This was a case where the beneficiaries were a widow (deaf and dumb) and her only son, who was in majority. Cf. Rutherfords v. Turnbull, 1821, 1 S. 35 and 37, where the liferentrix was the mother of the fiar, and they agreed to discharge the trustees, who were ordered to pay over. Cf. a. 764. 3 Gray, 1877, 4 R. 378, at p. 383. i Ferrie, 1849, 11 D. 704, at p. 709. 5 Livingstone v. Waddell, 1899, 1 F. 831, per Lord M'Laren, at pp. 845, 846 ; see Lord Kinnear, at p. 853. 6 Gollan, infra, per Lord Kinnear, at p. 1040. 7 11 & 12 Vict. c. 36, s. 27. 8 Clark, 1888, 26 S. L. R. 172. 9 Gollan v. Booth, 1901, 3 F. 1035, but see Lord Kinnear's doubts at p. 1040. Of. Gifford, 1903, 5 F. 723, " issue " ; Hope-Johnstone v. Sinclair, 1904, 7 F. 25. It is a question whether cases like Gollan, supra, turn on the consideration that where there are children you cannot tell which will survive their parent and so be his heirs, or whether the decision of these cases also involves the consideration that the class may be added to by subsequent births 10 See amendment to second question at end of report, M'Pherson, infra, p. 925. , . 11 M'Pherson v. Hill, 1902, 4 F. 921, and cf. s. 770. It may be doubted that the protection of the trustees rests on the "authority" of the Court rather than on the sufficiency of the security in the event of a claim being made by a future member of the class. Cf. Lord M'Laren in Hope-Johnstone v. Sinclair, 1904, 7 F. 25, at p. 30, where a suggestion that a payment to account should be authorised. " That is a matter for the trustees' consideration. We 456 PAYING OVER THE ESTATE [chap. viii. provision. have here only to consider the question of right " ; and Lord Adam, at p. 29 : " If the trustees were to pay now, what could they say to post nati ? " 12 Boss v. Dunlop, 1878, 5 R. 833, per L.-P. Inglis, at p. 836. Wood, 1861. 23 D. 338, considered and approved. Cf. Buchanan, 1877, 4 R. 754. All three cases followed in Scott, 1909, S. C. 773. 13 Ross, supra. 14 Ross, supra, per Lord M'Laren, at p. 30. The case laying down the rule (Andrews v. Partington, 1791, 3 B. C. C. 401), and such cases as Knapp, 1895, 1 Ch. 91 ; Watson v. Young, 1885, 28 Ch. D. 436 ; Emmett, 1880, 13 Ch. D. 484 (and cases cited there) ; Gimblett v. Purton, 1871, 12 Eq. 427, following Andrews, and illustrating the rule, must he avoided in considering the question dealt with in this section of the text. Cf. Curzon, 1912, 56 Sol. J. 362, where contingency was bankruptcy. where 767. Where beneficiaries are partially under restraint or dis- beneficiary . "te ability, they may have the trust funds dealt with in any way that does not interfere with the continuance of the restraint Alimentary or involve the disability. Thus, for instance, where certain of the beneficiaries had only an alimentary J interest in the trust funds, although all the beneficiaries were agreed that the funds should be handed over to them, the Court would not sanction such an act on the part of the trustees, but allowed the trustees to pay over the funds directly to new trustees appointed under a deed of agreement proposed by the beneficiaries in order to suit the ends they had in view, and that with the single condition that the alimentary restriction should be similar in the new trust deed to that in the old. 2 Again, in a ease where the trustee was alimentary liferentrix of the estate and the fee was vested in her children, the Court seem to have been of opinion that the life- rentrix could, with the consent of all the children, distribute the estate in so far as it was in excess of a proper alimentary provision. 8 But in a later case the Court declined to sanction tbe N distribution of any part of the fund that was the source of the alimentary provision, on the ground that the remainder left for his enjoyment might in future years suffer depreciation, and might even disappear altogether. "I need hardly say," remarks Lord M'Laren, " that an alimentary income of nil is not enough for anyone to live upon." * 1 Cf. s. 780. 2 Gray, 1877, 4 R. 378. 3 Patersons, 1849, 11 D. 441. The Court decided against paying away the estate because one of the children refused to concur. As to a proper alimentary provision, vide s. 999. 4 Cuthbert, 1908, S. C. 967, at p. 971. 768. The conditions under which such acceleration of payment Eirst, nothing less than the consent of the persons representing at the acelerated date Conditions of SfCCplGrfi" tion of may be demanded, and made, must be noticed payment. First condition Consents. CHAf. vin.] PAYING OVEE THE ESTATE 457 of payment the whole beneficial interests that may possibly exist at the appointed date of payment, will satisfy the requirements of the rule. 1 " A trust is a very sacred thing," says Lord Medwyn, " and parties are not entitled to cut and carve upon a trust. . . . Accord- ing to my view, a trust is too sacred a thing for parties to modify and alter without the consent of all parties concerned." 2 " The failure of one party is quite enough," 3 and his interest may be very remote. Thus where a fixed capital sum is to be paid over at a certain date, the period of payment of the residue cannot be accelerated unless with the consent of all the beneficiaries, includ- ing the fiar of that fixed sum. It is not sufficient to retain the fixed sum ; the residue must also be retained as a marginal security for payment of the fixed sum, unless the fiar of that sum consents to the residue being paid. 4 An annuitant is not obliged to allow Redemption of annuity. his annuity to be redeemed, and can demand that the trust be kept up to satisfy and secure his interest in it. 5 Thus where a truster directed his trustees to set aside £1000 to meet an annuity for life granted to his widow, the fiars proposed to get heritable security for the annuity with part of the £1000, and that the residue should be paid over to them. This was opposed by the widow and the trustees, and the Court held that the whole fund must remain under the trust to secure the annuity. 6 Directions to pay an annuity, but without power to purchase an annuity, do not authorise the trustees to expend capital on the purchase of an annuity without the consent of all interested in the fee of the capital. It puts the capital to the hazard of the annuitant's life, his claim being first of all against income. 7 Where the annuity is validly brought to an end, consideration capitalising •* ^ ° , annuity. must be given, in capitalising it, not only to the merely arith- metical calculation of the value of the annuity, but also to the nature of the fund on which it is a burden— e.g. where it is to be paid out of the proceeds of a loan, or of an unpaid considera- tion for the sale of a goodwill, to a partnership, it is subject payable out of to postponement of ranking. 8 To meet an annuity of £o00 partnership. trustees retained, in 1894, £20,000 and a rental of £45 from heritage. Though the amount was " very full," it was not so extravagant as to be inconsistent with a reasonable exercise of dis- cretion. 9 To meet an annuity of £120 trustees set aside £4000 in 1899, and were held to have acted "with perfect propriety." 10 Where one-third of income was held to mean income of one-third of capital, the remaining two-thirds of the capital were allowed to be paid over. 11 458 PAYING OVER THE ESTATE [chap. viii. 1 Horsnaill, 1909, 1 Ch. 631, relying on Trover v. Knightley, 1821, 6 Madd. 134 ; Lautsberg v. Collier, 1856, 2 K. & J. 709 ; Taite v. Swinstead, 1859, 26 Beav. 525 ; Tweedie, 1884, 27 Ch. D. 315. 2 M'Caskill v. Cameron, 1840, 2 D. 537, at p. 543 ; Anderson, s. 754. 3 Patersons, 1849, 11 D. 441, per Lord Fullerton. 4 Montgomery, 1888, 15 R. 369. Cf. Haldane, 1895, 23 R. 276 ; Souter Robertson, 1900, 8 S. L. T. No. 41. See s. 735 as to appropriation of investments. 5 Schenimann v. Willison, 1832, 10 S. 759. e Wilson v. Beveridge, 1833, 11 S. 343. Contrast Coats, 1903, 5 F. 401— it does not appear from the report whether the annuitant in this case objected or not to the arrangement. Cf. Scarlett v. Abinger, 1907, S. C. 811. 7 Graham, 1898, 1 F. 357 ; Parlane, 1902, 4 F. 805. Cf. s. 1002. 8 Gieve, 1899, 80 L. T. 359, and 53 & 54 Vict. c. 39, s. 3. 9 Chivas v. Stewart, 1907, S. C. 701. 10 Munro, 1899, 1 F. 980. Cf. Curror, 1874, 11 S. L. R. 507. See Smith, 1900, 2 F 713, as to minute of trustees required for proper appropriation of such sums. 11 Robertson v. Black, 1910, S. C. 1132. Heritable or 769. Where the trustees were directed to pay over the Government security for estate to the residuary legatees after the death of an annui- annuity. •> ° tant, the residuary legatees raised an action against the trustees to have them ordained to hand over the estate before that date. The residuary legatees offered to grant a bond of caution for the annuity and to invest the money on heritable security, "to be taken to the annuitant in liferent to the extent of her annuity, and to the residuary legatees in fee." The annuitant declared herself satisfied with the proposal, on condition that the security taken would be so expressed as to provide out of capital any deficiency of income to meet the annuity. 1 The Court ordained the trustees to make over the estate to the residuary legatees on their adding to the conditions offered by them the said condition required by the annuitant. 2 Where all con- cerned were competent to agree, and did agree, the Court held that an obligation in a marriage contract to pay an annuity was implemented by the purchase of a Government annuity payable to the marriage-contract trustees. 3 1 It is difficult from the papers in the case — the report is silent on the point— to discover what is the position of the annuitant. She was herself a trustee, and appears as such, but she does not seem to appear personally in the case. 2 Watt v. Greenfield, 1825, 3 S. 376 and 544. Cf. Coats, s. 768. 3 Graham, s. 768. Future 770. In considering whether all beneficial interests are renre- children. -r sented, a question arises, where children of parents still alive are interested, regarding the possibility of the birth of more children of the marriage. The Court " have never yet decided that there is any limit of age after which the possibility of the birth of children may be left out of account." l " No legal pro- chap, viii.] PAYING OVER THE ESTATE 459 position can be founded on the impossibility of issue." 2 "The Court will not make the presumption [that the woman is past childbearing] for the purpose of depriving a living person of a possible interest," 3 but it will make the presumption to accelerate payment to living persons, and the presumption applies alike to widows who have had children, and to spinsters. 4 The Court, how- ever, draws its own conclusion as to the presumption of fact from the history of the case before it, and does not accept expert medical testimony as proof. 6 Thus in some cases the Court have authorised trustees to accelerate payment — where in one case the wife was sixty years of age, 6 and where in another she was sixty-one. 7 Authority has also been granted where security is offered for repayment to the extent of any claim that may be subsequently made. 8 1 Menzies v. Murray, 1875, 2 R. 507, per Lord Neaves, at p. 517. In this case the question did not come before the Court, though it appeared on the face of the facts before it, for the Court assumed, for the purpose of raising the principal question in the case "in a pure form," that the difficulty could be got over. Gf. Anderson v. Ainslie, 1890, 17 R. 337, followed in Beattie v. Meffan, 1898, 25 R. 765, disapproving cases of Louson and Urquhart, infra; Gollan, 1901, 3 F. 1035, per Lord Adam, at p. 1039. 2 Hocking, 1898, 2 Ch. 567, at p. 572, per Chitty, L. J., quoting and inter- preting Coke, ut infra. Gf. Dawson, 1888, 39 Ch. D. 155, at p. 164, and Coke upon Littleton, note to s. 53, folio 40 (a) (406 in L. R. is incorrect;. 3 White, 1901, 1 Ch. 570, per Buckley, J., at p. 572, stating the principle laid down in Hocking, supra. 4 "White, supra; Haynes, 1866, 35 L. J. Ch. 303; Widdows, 1871, 11 Eq. 408 ; Millner, 1872, 14 Eq. 245 ; Davidson v. Kempton, 1881, 18 Ch. D. 213 ; Lyddon v. Ellison, 1854, 19 Beav. 565. In Croxton v. May, 1878, 9 Ch. D. 388, the facts did not warrant the presumption, for the spouses, though married for seventeen years, had been separated for the first fourteen. No question of security appears to be mooted in the English cases. 6 Hocking, supra, at p. 570, per Chitty, L.J., referring to Jee v. Audley, 1787, 1 Cox, 324. 6 Louson v. Dicksons, 1886, 13 R. 1003. Here there were children who were all in majority. 7 Urquhart, 1886, 14 R. 112. Here the marriage had lasted for thirty-nine years without issue. Vide also cases cited there. Gf. Lowman, 1895, 2 Ch. 348, per Lindley, L.J., at p. 366, and Hocking, supra, at p. 570. 8 M'Pherson v. Hill, 1902, 4 E. 921 ; Turnbull, 1907, 44 S. L. R. 843. Gf. s. 766, note 11, as to question of caution. 771. Where the only interest given by the deed is expressly a interestout- limited interest, it is a question of interpretation 1 whether the jjmittag testator had in view the existence of another beneficial interest under deed - outwith the deed. Where he had such an interest in view, its recognition gives vitality to the limitation expressed in the deed, and necessitates the upholding of the trust for its protection. For instance, a truster's family consisted of three daughters, one of whom predeceased him leaving one child. The truster directed his trustees to hold all his estate for the liferent use of his two 460 PAYING OVEE THE ESTATE [chap. viii. surviving daughters, share and share alike, but he gave no direc- tions as to the destination of the fee. The Court there held that the surviving daughters took a liferent only, and that the fee fell into intestacy, and went at the termination of the liferent to the truster's heirs in intestacy, thus including the grandchild who did not share in the liferent provisions. 2 On the other hand, where in such a case no interest outwith the deed is held to exist, the limita- tion disappears, being held pro non scripto. Thus a testatrix was survived by three sons and two daughters. She left certain property to trustees "for the benefit and alimentary use of the daughters, equally between them, share and share alike, and to pay, apply, and lay out the same for their behoof respectively," and generally with full discretionary powers as to its management and distribution. She left no further directions as to this pro- perty. The Court held that the daughters were absolute fiars, and repelled the plea that the fee fell into intestacy. " There is neither a declaration," says Lord Rutherfurd Clark, " that their right should be limited to a liferent, nor is there a destination to any other person. 3 I am of opinion, therefore, that the shares of the daughters vested in them in fee . . . and I do not think that the rights of a fiar can be restricted by the limitations contained in this deed. These limitations do not reduce the right of the legatees to anything less than a fee. They are mere attempts to restrain the rights of the fiar in the use of her own property." 4 '' An original gift or partition of a residue amongst the members of a family will not be cut down to a liferent by the effect of a subsequent direction to pay the income to one or more of the objects of the gift for life," unless the primary gift is in its incep- tion qualified in expression and the subsequent direction does but detail the nature and scope of that qualification. 5 1 Cf. Wood, V.-C, in s. 759. 2 Spink v. Simpson, 1894, 21 K. 551. Lord Trayner, though not dissent- ing, said that "the leaning of his mind was rather to hold that the two surviving daughters took a right of fee." It is noticeable that the case of Wilkie, infra, was not referred to in the discussion of this case. Of. Robb 1896, 4 S. L. T. No. 134. Vide also Sanderson v. Kerr, 1860, 23 D. 227. 3 "The importance of a direction (to pay to another) consists in its afford- ing a complete indication of the truster's intention that vesting shall not take place until payment," but it is not a necessary condition of the postponement of vesting if the intention of the truster is otherwise sufficiently expressed in that sense (Russell v. Bell, 1897, 24 R. 666, per Lord Moncreiff, at p 672) * Wilkie v. Wight, 1893, 21 R. 199, at p. 203. Cf. Greenlees, 1894 22 R 136 ; Lawson, 1890, 17 R. 1167 ; Gibson v. Watt, 1896, 4 S. L T No 11 ■ White, 1896, 23 R. 836; Forrest v. Reid, 1904, 7 F. 142 (differing 'from Greenlees in there being no direction "to pay"). 5 Mackay, 1897, 24 R. 904, per Lord M'Laren, at p. 907, referring to Lindsay, 1880, 8 R. 381 ; Dalglish, 1889, 16 R. 559 ; Stewart, 1896, 23 R. 416 ; and Greenlees, supra. Cf. s. 760, note 12. chap, viii.] PAYING OVEE THE ESTATE 461 772. The second condition x is that all the persons representing second the beneficial interests must be free from incapacity, whether legal acceleration. or conventional. 2 "It is essential," says Lord Gifford, " before Capaoifcy - terminating and extinguishing a trust . . . that every possible beneficiary not only concurs in its extinction, but is in such circumstances and in such a position as to be capable of so concurring." 3 1 S. 768. 2 For conventional incapacity, vide s. 780. 3 Menzies v. Murray, 1875, 2 R. 507, at p. 518. 773. Incapacity of the claimant to validly discharge the trustees is of itself sufficient to entitle them to refuse payment. Where the trust estate becomes available for distribution by the trustees at an earlier date than that looked for by the truster, this event does not of itself accelerate the date of payment to the bene- eiaries of their interests, if they are unable to discharge them. In this case the trust estate consisted of an obligation by the truster to pay a sum of money to the trustees, secured by a bond over his own estate. The truster became bankrupt, and the present value of the bond, which had a postponed date of payment, was ascer- tained and paid over to the trustees and the bond discharged. The beneficiaries, one of whom was under age, pleaded that the sum paid to the trustees was the present value of their beneficial interests and should then be paid over to them. The Court held, however, that the sum paid was merely surrogatum of the bond, and the trustees were bound to hold the fund at least till all the beneficiaries were of age. 1 1 Maxwell Heron, 1892, 19 R. 922. The possibility of all the beneficiaries not being in existence, as more children of the marriage might possibly be born, was also a consideration in this case. 774. The third condition x is that the beneficiaries who claim tiim condition of an accelerated payment must at that date have vested in them acceleration, an indefeasible right to demand payment of the trust estate right, at the appointed date of payment. They need not have this right individually, but they must have it as a class. 2 1 S. 768. 2 Muirhead, 1890, 17 R. (H. L.) 45, per Lord Watson, at p. 48, referring to the following cases : — Roberton v. Davidson, 1846, 9D. 152 ; Rainsford v. Maxwell, 1852, 14 D. 450 ; Pretty v. Newbigging, 1854, 16 D. 667. Vide also Hughes v. Edwardes, 1892, 19 R. (H. L.) 33, at p. 34, where his Lordship refers to and expressly reaffirms his opinion. Of. M'Murdo, 1897, 24 R. 458, at p. 461, and Cairns, 1901, 3 F. 545, at p. 551, per Lord Low. 775. Where the payment of an interest in the fee is postponed Right vest- . ing when till the exhaustion of a burden upon it, and the interest in the interest 462 PAYING OVER THE ESTATE [chap. vm. fee vests on its becoming payable, the institute in existence at the date of the exhaustion of the burden by renunciation 1 is entitled to demand immediate payment, and is not bound to await, in the interests of a conditional institute, 2 the date of the natural exhaustion of the burden. 3 Thus the primary creditor in a marriage contract is vested with such an interest in the subject of the obligation that the debtor can propel the property to him to the exclusion of those who might have outlived him, and that even where he predeceases the debtor. 4 In this case, 5 the trust estate Position of was to be given to the conditional institute — the grandchild — conditional • i_ j institute. n]y in the event of the institute — the son — predeceasing the date on which it became payable. The mother had an annuity, which she renounced, and as the Court held that the payment was only postponed to secure the annuity, the estate was held to be payable on the renunciation of the annuity, and payable to the institute, who was alive at the date of payment. "If the rights of all parties in existence prior to the son are terminated or withdrawn, the trustees are quite in safety to pay upon the discharge of the son, and are not entitled to hold against him in respect of ulterior, emergent, and only possible interests." 6 1 For cases where acceleration is result of trust being cut down by offend- ing against public policy, see Appleby, 1903, 1 Ch. 565, and Deveron, 1893, 3 Ch. 421. And see effect of Entail Act, 1868, s. 17, in stopping liferent, Baxter, 1909, S. C. 1027. 2 See difference between right of beneficiary taking interest under express provision of deed and of one taking under operation of conditio si sine liberis, Foucart, 1897, 4 S. L. T. No. 304 (end of opinion). 3 Macdonald v. Hall, 1893, 20 R. (H. L.) 88, per Lord Shand, at p. 102. 4 Pretty v. Newbigging, 1854, 16 D. 667, per Lord Curriehill, at p. 709, citing Traill, 1737, Elchies, voce Mutual Con., No. 5, also Mor. 12985 ; Fothering- ham, 1797, Mor. 12991 ; Routledge v. Carruthers, 1812, 16 F. Dec. 572 (also in Buchanan, 121) ; again in House of Lords in 1816, 4 Dow, 392 ; and again in 1820, as Majendie v. Carruthers (H. L.), 2 Bligh, 692. 5 Pretty, supra. Pretty, supra, per Lord Butherfurd (Ordinary), at p. 672. This case of Pretty is unsatisfactory, owing to the facts that the judges are almost equally divided as to the proper decision to be arrived at, and that the grounds of their opinions are so various as to baffle any attempt to classify them. Of. summing up of opinions by L. J.-C. Hope, at p. 713. Lord Shand refers to the "numerous dicta by different judges of a very con- flicting nature" (Macdonald, supra, at p. 102). "In Pretty v. Newbigging," says Lord Herschell, C, " the question which arose was this : the person who made the settlement having died, leaving a widow entitled to a liferent, and an only child, the question was whether if the widow renounced her liferent the child could call for an immediate conveyance from the trustees. The point decided was, that inasmuch as the terms of the contract did not show any intention that this should not take place for the purpose of securing and continuing the liferent to the widow, by the widow renouncing the liferent the child was in a position to call upon the trustees for a conveyance " (Macdonald, supra, at p. 91). Pretty was followed without comment in Grant, 1876, 3 R. 280. Cf. opinions in Allan v. Kerr, 1869, 8 M. 34 ; Ross, 1902, 4 F. 840. The liferenter of movables, on attaining majority, takes the fee by force of statute to the exclusion of all taking under destinations over, where he has been born after the date of the deed of trust (Baxter, 1909, S. C. 1027, and chap, vni.] PAYING OVER THE ESTATE 463 31 & 32 Vict. c. 84, s. 17). The date of the deed is the date of death in the case of a will, and the date of the dissolution of marriage in the case of a marriage contract. Gf. s. 327, note 35. 776. Where trustees are directed to pay over on the fulfilment Payment on /> i i» i • • fulfilment or the purposes ol the trust, contingent beneficiaries have no title of trust ° purposes. to require the trustees to keep up the trust till its natural termi- nation, and the trustees are entitled to take the trust purposes as fulfilled when all the beneficiaries have validly discharged their shares. Thus where the trustees were directed to pay certain legacies and annuities, and on the fulfilment of the trust purposes to pay the residue to certain residuary legatees, whom failing to certain conditional institutes, it was held that the trustees, having paid the legacies, and having received a discharge of her annuity from the last surviving annuitant, were entitled to regard the trust purposes as fulfilled, and to pay over the residue to the insti- tutes. The conditional institutes, whose contingent rights might have matured had the trust been kept up till its natural conclu- sion on the death of the last surviving annuitant, had no title to prevent the residue being paid over to the institutes. 1 But if the Fulfilment only after trust directions contemplate a definite period of time as being definite certain to pass before these directions can be carried out, the fulfilment of the object of the directions at an earlier date in another manner than that directed will not oust the rights of the conditional institutes, and the trust must be kept up to protect them. 2 1 L'Amy v. Nicolson, 1850, 13 D. 240 ; "Watt v. Watson, 1897, 24 R. 330, per Lord M'Laren, at p. 339. 2 Scarlett •». Abinger, 1907, S. C. 811 ; Muirhead, 1890, 17 R. (H. L.) 45. 777. It must be noticed here that though there may be Payment may be acceleration of the date of payment, 1 there is no such thing as j^J^* ed the acceleration of the date of vesting. 2 The date of payment vestin s- fixed by the truster may be altered by the beneficiaries, but the date of vesting cannot — this may be determined by their action where the truster has so directed; but where it has been otherwise determined by the truster, it cannot be accelerated. The peculiarity of the class of cases 3 now dealt with is that the condition attached to the vesting becomes purified, in accordance with the truster's directions, when the estate becomes payable. Here the date of vesting may be determined by the action of the beneficiaries. Where, on the other hand, a date of vesting is indi- cated which is dependent on some contingency other than, and not affected by, the date of payment, there can be no question of 464 PAYING OVER THE ESTATE [chap. viii. Presump- tion against alteration of vesting. Actual fulfilment required. calling on the trustees to denude before the resolution of the con- tingency, as until then there is no person or class in a position to grant a discharge. 4 " If a gift," says Lord Brougham, " be to a class, or to an individual, by a description which cannot be ascer- tained till some future time or future event, those who may answer the description at an earlier period cannot, by any arrangement among themselves, exclude those who may become entitled at such future time or upon such future event happen- ing." 5 In such a case the renunciation of a liferent, for instance, would not affect the vesting of the interest in the fee. 6 The position, in the words of Lord Watson, is this : — " It is impos- sible to hold as matter of principle that the act of any person outside of and hostile to the trust can per se effect an alteration of the truster's dispositions with regard to the vesting of interests in his estate. Such an act may be of material importance if the testator has either expressly or by implication signified his inten- tion that upon its occurrence the period of vesting shall shift." r " There is a strong presumption against the idea that the testator intended vesting to depend on the discretion of his trustees," but "where unequivocal language is used it is not safe to refuse to construe that language according to its ordinary meaning, simply because there are strong reasons for believing the intention of the testator to have been otherwise." 8 1 Cf. a. 853 as to effect of Thelluson Act on acceleration. 2 The phrase "acceleration of vesting" is made use of in M'Laren, chap, xlvi., hut it is highly misleading, if not absolutely erroneous. 3 Ss. 775, 776. 4 The only exception to this is exemplified in the case of Ritchie, s. 762. Cf. Lord Trayner in Forbes v. M'Condach, 1890, 18 R. 230, at p. 233. 6 Scott, 1850, 22 S. J. 606, 7 Bell's App. 143. Cf. Pretty v. Newbigging, 1854, 16 D. 667, per Lord Wood, at p. 685 ; also Ferrie, 1849, 11 D. 704. Vide Lord Oovvan in Foulis, 1857, 19 D. 362, at p. 365, referring to Pretty, s. 775. Cf. Hughes v. Edwardes, 1892, 19 R. (H. L.) 33. * Muirhead, 1890, 17 R. (H. L.) 45, at p. 50. Cf Lord M'Laren in Scarlett v. Abinger, 1907, S. C. 811, at p. 822. 8 Bleakley v. Johnston, 1907, S. C. 593, per Lord Low, at p. 598. Cases where a truster has been held to have conferred upon trustees the power to postpone vesting are— Chambers, 1878, 5 R. (H. L.) 151 ; Russell, 1897, 24 R. 666 ; White, 1896, 23 R. 836. See Lord Dundas in Hendry v. Patrick, 1905, 13 S. L. T. No. 238 (end of opinion), and see specially MacFarlane, 1903, 6 F. 201, for vesting by minute of trustees. In Maclean, 1897, 24 R. 988, the power was held not to be conferred. 778. Fourth, the renunciation of a limited interest, such as a liferent or an annuity, must be actually made before the Court will decide its effect on the rights of the residuary to have the estate paid to him. The Court refuses to give any " hypothetical and prospective declarator on the matter." 1 i Cattanach v. Thorn, 1858, 20 D. 1206, per Lord Deas, at p. 1213. chap, viii.] PAYING OVEE THE ESTATE ,465 779. Fifth, the demand for payment must not be made at such Personal a time or in such a manner as would embarrass the trustees in trustees preserved. the administration of the trust. Thus although a trust " may be brought to an end when all the beneficiaries concur in requiring that it shall be so," still this must be done " at a time and in a manner fair and equitable towards the denuding trustee or trus- tees, keeping always in view the nature and objects of the trust." l For example, where an estate has been in large part but not wholly realised, the Court have ordered payment of the estate in so far as realised to beneficiaries having vested interests, under deduction of so much as the trustees should think necessary for the carrying on of the trust administration and the winding up of the trust. 2 1 Henderson v. Nome, 1866, 4 M. 691, per Lord Deas, at p. 701. 2 Archibald, 1882, 9 R. 942. (3) Interests Exceptionally Protected 780. It has been seen x that persons who are not legally in- Exceptional .... . protection. capacitated cannot, as a rule, be conventionally incapacitated from granting a discharge of their beneficial interest — that any restric- tion on their powers in this respect is held to be inconsistent with their position as holders of the full beneficial right. There are, however, two exceptions. These exceptional cases, which are entirely artificial and arbitrary, 2 are, first, that of the beneficiary, Aliment. whose interest in the income of the estate is declared to be alimentary, or unassignable and unattachable ; 3 and, second, that of a married woman, whose interests in the marriage-contract Marriage _ contract. trust estate are guarded, stante matrimonio, by protective- pro- visions in the contract. 4 1 Vide s. 754. 2 " It is by no means easy to reconcile these questions of aliment to the ordinary principles of law" (Patersons, 1849, 11 D. 441, per Lord Fullerton, at p. 445). An alimentary provision for an adult is not recognised by the law of England. 8 Mackay, 1878, 16 S. L. R. 197, per L. J.-C. Moncreiff. 4 Vide article in Scottish Law Review, vol. viii. p. 218. (1) Alimentary Liferent or Annuity 781. The first exceptional form of protection is that which Form of alimentary restricts the beneficiary, who must be other than the truster, 1 protection. from prospectively 2 assigning, either gratuitously or onerously, his interest in a termly payment 8 by the trustees, and also excludes the diligence of his creditors from that interest. 4 This protection is generally 5 attained through qualifying the gift by 30 466 PAYING OVEE THE ESTATE [chap. viii. use of the word " alimentary," " which according to high authority- word has a very comprehensive effect." 6 There is, however, no special "alimen- x . . sufficient y i rtue i n tne wor( i "alimentary." 6 To create an effectively necessary", protected provision for aliment there are no voces signatm neces- sary, any terms indicating the definite intention of the truster to make the provision alimentary being sufficient. For this purpose it is sufficient to exclude the liferenter's acts and deeds and the diligence of his creditors from affecting his interest. 7 Where the truster in a continuing 4 trust has clearly indicated his in- tention to make a gift of income to be administered by trustees, " Mainten- the direction that this income is to be applied for the maintenance anee and .. . support." and support of the beneficiary makes his interest an alimentary liferent; 8 but a direction to pay to the beneficiary the income "for his own use and the maintenance and education" of his children is not one from which an alimentary intention can be inferred. 9 In England a protection similar to that attained in Scotland by the use of the word " alimentary" can only be attained by irritant and resolutive clauses, with a destination over. 10 " A strictly alimentary provision for an adult male u is unknown to, English law. and inconsistent with, the provisions of English law," but there is nothing immoral or contrary to public policy according to that law in such a provision. Therefore where such a provision is valid according to a foreign law, which foreign law governs the right of parties in the fund, the provision will be treated by an English Court as valid in settling the rights of beneficiaries under its jurisdiction. 12 Alimentary Where arrestments have been used in the hands of the nature tested in trustees to attach the interest of a beneficiary, and the arrester recall of J arrestment. h as n0 ^ followed up the arrestment with an action of furth- coming, it is competent to have the question of the arrestable quality of the beneficiary's interest determined in a petition by him for recall of the arrestments. 13 1 See s. 790. 2 It is only the prospective interest that the restriction affects. " An alimentary annuity cannot be validly assigned, but each term's annuity, when reduced into possession, is of course at the absolute disposal of the owner " (Hewats v. Roberton, 1881, 9 R. 175, per L. J.-C. Moncreiff, at p. 181). Gf. Corbet v. "Waddell, 1879, 7 R. 200. 3 In the United States of America such alimentary trusts are known by the appropriate name of " Spendthrift trusts." Such trusts are not recognised as valid there, any more than in England, with the exception of the State of Pennsylvania, whose law on the point seems to be similar to that of Scotland. Vide Ghormley v. Smith, 1891, 23 Am. State Rep. 215. « See Turner v. Fernie, 1908, S. C. 883, per Lord M'Laren, at pp. 886, 887, as to position of alimentary beneficiary where no continuing trust. 6 " No authority has established that the word ' alimentary ' must be used " (Chambers v. Smiths, 1878, 5 E. (H. L.) 151, per Lord Hatherley, at chap, viir.] PAYING OVER THE ESTATE 467 p. 156) ; and, "There is no rule requiring that any special terms of art, such in SnS, fs.t T. Na'iT M ^^ * P " ^ ^ 6XP ~ • Reliance Society v. Haiket't, 1891, 18 R. 615, per Lord M'Laren, at 'Martin v. Bannatyne, 1861, 23 D. 705 ; Dewar, 1910, S. C. 730, explain- ing decision and criticising dicta in Rogerson, 1885, 13 R 154 8 ?°IW la ^' 19 3 5 F - 69 > P er Lord M'Laren, at p. 74. A direct convey- ance to the beneficiary requires clauses excluding assignment and the diligence of creditors ; see Kennedy v. Warren, 1901, 3 F. 1087, per Lord M'Laren, at p. 1090. ' 9 M'Murdo, 1897, 24 R. 458. 10 For certain exceptional cases, see Fitzgerald, infra, at p. 589. Cf. s 793 and s. 814. l J 11 Cf. s. 793. 12 Fitzgerald, 1904, 1 Ch. 573, per Cozens-Hardy, L.J., at p. 589, reversing Joyce, J., 1903, 1 Ch. 933. 8 13 Ruthven v. Drummond, 1908, S. C. 1154 ; Brand v. Kent, 1892, 20 R 29 ; and Barclay, Curie & Co. v. Laing, 1908, S. C. 82, discussed. 782. " A trust duly constituted for payment of an alimentary Alimentary annuity cannot be brought to an end by the joint action of the cannofbe annuitant and the parties having beneficial right to the fee." The rule has "long been settled" that "the combined action of all parties interested cannot defeat the settler's intention to make the annuitant's right alimentary, a result which cannot be attained except by continuing the trust." 1 1 Hughes v. Edwards, 1892, 19 R. (H. L.) 33, per Lord Watson, at p. 35; and vide explanation there of position of judges in Court of Session. Cf. Cosens v. Stevenson, 1873, 11 M. 761 ; Sanders, 1879, 7 R. 157 ; Reid, 1899, 1 F. 969, per Lord Moncreiff, at p. 974 ; Kennedy v. Warren, 1901, 3 F. 1087, per Lord M'Laren, at p. 1090. 783. Even where an indefeasible right to the fee vests in the where alimentary liferenter, the trustees cannot be called on to denude alimentary liferenter. in his favour, and his interest is of the nature of a power of appointment of the fee, with a gift over to his heir-at-law in default of appointment. 1 '' If the question is looked at theoretic- ally," say Lord M'Laren, " there are two rights, the one qualified and the other unqualified ; and it is impossible to add the one to the other so as to make one homogeneous unqualified right of fee." 2 Where the truster in his settlement left an alimentary annuity to his sister, and by a subsequent codicil left " the whole residue of his property " to the same sister, the only question that occasioned any difficulty was whether the codicil had revoked the provision of the settlement. It was held that it had not. " There is nothing inconsistent in an alimentary provision being given first, and then a gift being made of all residue." s 1 Cf. s. 763. 2 Barron v. Dewar, 1887, 24 S. L. R. 735 ; Ewing, 1909, S. C. 409, per Lord Low, at p. 418. 468 PAYING OVEK THE ESTATE [chap, vin. 3 Duthie v. Kinloch, 1878, 5 R. 858, per Lord Gifl'ord, at p. 862 ; vide Hughes v. Edwards, 1892, 19 R. (H. L.) 33, per Lord Watson, at p. 35. Cf. Lord Rutherfurd Clark in Eliott, 1894, 21 R. 975, at pp. 985, 986. 784. Attention may be called to the point of difference between these cases 1 and that exemplifying the power of discharge in a non-alimentary beneficiary, where all rights merge in him. 2 In the latter situation a liferent, which was not restricted, and a power of appointment of the fee, existed in the same person. He was therefore held to be entitled not only to make an irrevocable appointment of the fee, but to discharge his liferent, and so come into the full enjoyment of the present value of the unburdened fee. In the former situation the right of the bene- ficiary is different only in so far as affecting the disposal of the liferent. He also has a power of appointment of the fee, and "may dispose of it as he pleases, even by using his right to it to improve his position financially during his life, by conveying it away for a money consideration," 3 but he cannot enter into the full enjoyment of the present value of the unburdened fee, as he cannot realise his liferent interest, not having power to discharge the burden of the liferent. 1 S. 783. 2 Vide a. 763. 3 Eliott, 1894, 21 R. 975, per L. J.-C. Macdonald, at p. 979. Cf. Lord Rutherfurd Clark, at p. 984. Protection 785. The only case in which an alimentary beneficiary is held to without . . . trust. be entitled to discharge his interest is where some arrangement can be, and is, come to whereby the alimentary condition is as effec- tively protected as by the continuation of the trust. 1 " Wherever there is left only one special interest to be provided for, for which alone it is necessary that the trust should be kept up, and that interest is of a partial kind, and may be provided for just as effectually in some other way, and thus the estate be liberated from the trust and set free, so as to be conveyed directly to the residuary legatee or heir-at-law, this may competently be done." 2 1 It must always be kept in mind that the continuation of the trust is insisted on by the Court for the protection of the alimentary condition, and not for the financial security of the provision. 2 White v. Whyte, 1877, 4 R. 786, per L. P. Inglis, at p. 789. Alternative 786. A case in which this rule 1 is cited and expressly applied to trust J rr approved, affords an example of the circumstances to which it is applicable. Here the estate was under a judicial factor, and the only interest, other than that of the fiar, was that of an alimentary annuitant. The factor conveyed the lands to the fiar, who was an institute of chap, vni.] PAYING OVEE THE ESTATE 469 entail, " subject to a real burden in favour of the judicial factor of the provisions conceived in favour of the annuitant contained in the trust disposition." The factor then craved the Court to recall his appointment so far as regards the lands conveyed, " except the real burden of the foresaid provisions therein, and to discharge him of his whole actings and intromissions as judicial factor in regard to the lands except as aforesaid." By the con- veyance, those provisions were " to be payable to and prestable by " the judicial factor, " by and against the heir in possession of the said lands and others, and that for behoof of the parties beneficially interested therein out of the rents and yearly profits of the said lands," and the provisions were constituted real burdens. Commenting on this arrangement, Lord President Inglis says : — " It appears to me that the judicial factor and the beneficiary (the fiar) have succeeded in devising with considerable ingenuity just as good a provision for the annuitant as she had under the original deed." 2 1 S. 785. 2 Munro v. Maoartliur, 1878, 16 S. L. R. 126. Cf. arrangement authorised in Stillie, s. 789, and see also s. 794, note 3. 787. The retention in the hands of a trustee of the interest Alternative to trust of the alimentary beneficiary is the distinguishing feature of the disapproved, arrangement, and that which obtained for it the sanction of the Court. 1 Thus where, in similar circumstances, the heir-at-law proposed to give, on the estate being conveyed to him, a bond in favour of the alimentary beneficiary, which bond was accepted by the latter, the Court refused to sanction the arrangement. 2 Again, where the residuary legatee offered, on the estate being conveyed to him, to grant a personal bond in favour of the alimen- tary beneficiary, the Court refused to allow the judicial factor on the estate to hand it over to the residuary legatee. In both cases the Court held that there was not the same protection afforded to the alimentary beneficiary by the new arrangement as by the continuance of the trust. 3 > Cf. Graham, 1898, 1 F. 357 ; and Stillie, s. 789. 2 White, s. 785 ; followed in Park, 1890, 27 S. L. R. 528. Cf. Ker, 1895, 23 R. 317. 3 Smith, 1873, 10 S. L. R. 433. 788. The question has been raised whether a beneficiary mrert^ can discharge his alimentary interest with the consent of the truster, truster. Lord M'Laren states it to be his opinion that the affirmative answer is self-evident. "If a father in his life- 470 PAYING OVER THE ESTATE [chap. vm. time," says his Lordship, putting an instance, "puts a sum of money into the hands of trustees to provide an alimentary life interest to his son, it is, I think, self-evident that the father and Gratuitous son can by their joint act put an end to the trust. They alone are interested in its fulfilment, and the father's consent is of course sufficient to release the son from his obligation not to assign the life interest or to allow it to be carried away by creditors. The reason why alimentary trusts are indissoluble when constituted by will is that the testator being dead, his consent to the revocation of the alimentary trust cannot be obtained." 1 The correct- ness of this opinion may be seriously doubted. In a question relating to a protective restriction, it must be noticed that it is not the consent of the beneficiary that is in issue, but his capacity to discharge the trustees of his interest prospectively. Ex hypothesi, in this case the son cannot so discharge the trustees. Therefore, if the alimentary interest can be discharged, the full capacity to discharge it must reside in the truster. If this be so, no proper trust would have been created. This result, however, involves an erroneous conception of the position of an alimentary beneficiary. The conveyance of funds to third parties for his beneficial use creates a trust and makes his claim against the trustees as obligatory upon them as that of a non-alimentary beneficiary, whose right differs from that of an alimentary bene- ficiary only in so far as it is dischargeable by anticipation. It appears, therefore, that an alimentary beneficial interest cannot be assigned or renounced prospectively with the consent of the truster. 2 1 Eliott, 1894, 21 R. 975, at pp. 986, 987. 2 Cf. Lord Kinnear's opinion in Eliott, supra, at p. 988. onerous 789. The further question has been raised whether in an trust. onerous trust, such as a marriage contract, the consent of the truster, expressed by will after the dissolution of the marriage by his death, is sufficient to enable a beneficiary under the trust to discharge an alimentary interest. In a case before seven judges, three of them based their opinions expressly on an affirmative answer, while other three, whose view of the facts did not require them to give an express answer, rather inclined to answer, where that should be necessary, in the negative. In addition to this difference in the opinions, they seem on this point to be affected by the special circumstances of the case to an extent that makes it unsafe to rely on them for chap, viil] PAYING OVER THE ESTATE 471 any general proposition. 1 If the conclusion arrived at above 2 be correct, the argument by which it was supported applies a fortiori to the case of an onerous trust. 3 But where the marriage- Testamen- ' , ° taryfor contract provisions are supplanted by testamentary provisions by m ^ r 'aft the husband equally stringent and protected by the testamentary P rovlsion - trustees, the marriage-contract provisions, though alimentary, may be discharged by the parties — the truster and the alimentary bene- ficiary — in favour of the provisions under the will/ i 1 Eliott, s. 788. 2 S. 788. 3 Of. Reid, 1899, 1 F. 969, where alimentary provision by husband in favour of wife in marriage contract held not to be terminable by both, though no other interest, and s. 798. 4 Stillie, 1901, 3 F. 1054 ; and see Lord Moncreiff, at p. 1058, distinguish- ing facts from those in Eliott, supra. Of. s. 786. 790. Throughout this discussion it is assumed that the truster Truster, ° cannot pro- and the beneficiary are not the same person. 1 Though a truster tect himself. can protect a gift to another by declaring it to be alimentary, and that without any gift over being required to make the protection effective, he cannot so protect his own property by a provision in his own favour. " However far courts of law may have gone," says Lord Justice-Clerk Moncreiff, "in preventing persons in a position requiring protection from renouncing rights conceived in their favour, I know of no authority or precedent either here or in England for holding that a man of full age and sui juris can put his property out of his power, and beyond the reach of his creditors, without constituting at the same time some right, direct or contingent, in regard to that property, in another." 2 "No one can settle property in such a way as to give himself the full beneficial en- joyment of it, and at the same time to protect it against his creditors." 3 There is an exception to this general rule in the case of Exception^ a marriage contract under which a woman 4 can validly put in ^ a ^ n trust her own property, and make the interest thereof during''" marriage a protected alimentary provision for herself. 5 But an alimentary provision in a marriage contract in favour of the wife is invalid if the trustees have power under the deed to advance such portion of the estate as they see fit to the husband on the joint request of the spouses. The power given to the wife to consent to an alienation of the fund burdened with the supposed alimentary interest is inconsistent with the object of a proper alimentary provision— the protection of the beneficiary against herself. 6 , contract. 472 PAYING OVEK THE ESTATE . [chap, vin. And of provision out of fund not truster's. Conditions of protec- tion of married woman. Intention to protect. The test of the validity of an alimentary provision by the truster in his own favour is not the form of the trust deed, but the proprietorship of the fund out of which such an interest is provided by the deed. Where a debtor with the consent of his creditor puts in trust for his own alimentary use funds truly belonging to the creditor if he were to enforce his debt, the alimentary provision is valid. He is not putting his own funds out of the reach of his creditors. 7 1 Of. ss. 10 and 1061. 2 Hamilton, 1879, 6 R. 1216, at p. 1221 ; Ruthven v. Drummond, 1908, S. C. 1154 ; Bertram, 1909, S. 0. 1238 ; Brewer, 1896, 2 Ch. 503 (case of a resolutive condition in England). Cf. position of alimentary provision in favour of truster under a marriage contract, s. 805 ; also vide Shedden, 1895, 23 R. 228. 3 M'Callum, infra, per Lord Kinnear, at p. 344, as "settled by the case of "White v. Whyte," 1877, 4 R. 786. See article in 22 Law Quarterly Review (1906), at p. 401, for suggested trust machinery to achieve such protection. 4 See Gillon, 1903, 5 F. 533, at p. 536, per Lord Stormonth-Darling {Ordinary), as to there being no such exception in favour of the husband. 5 M'Callum, infra, per Lord Stormonth-Darling (Ordinary), at p. 340 ; Christie v. Hardie, 1899, 1 F. 703, per Lord M'Laren, at p. 709. 6 M'Callum v. M'Culloch, 1904, 7 F. 337, following Reliance Society v. Halkett, 1891, 18 R. 615. Weight was laid by Lord M'Laren (M'Callum, p. 344) upon the consideration that the spouses were themselves the sole or, at least, a majority of the trustees. It is difficult to appreciate how the pro- tective quality of the trust provisions, which depends upon the limited power of the beneficiary, could be affected by the number or personal character of the trustees. This could only affect the practical and not the legal situation, and resolves itself into a greater or less probability of, or facility for, misuse of the trust funds. 7 Ruthven, supra, where the fund was the creation of a disentail and the alimentary provision in favour of the disentailer was truly derived from part of the fund belonging to the next heir. (2) Wife's Marriage-contract Provisions 791. The second exceptional 1 form of protection is that which restricts a married woman, during marriage, from discharging provisions in her marriage contract inserted for her protection. 2 Two conditions are necessary in order to afford this protection. First, the provision must be intended to be a protective one, and second, it must be found in the woman's marriage contract. 3 1 " It may be fairly conceded that, as a general rule, all parties interested may do what they like with their own, and that this principle of protection to the wife by ante-nuptial contract is exceptional" (Menzies, s. 792, per Lord Deas, at p. 513). The exceptional rights conferred on possible issue under a marriage-contract trust create limitations of the powers of existing bene- ficiaries (cf. Entail Act, 1848, s. 8), but these limitations are not protective of the interests of the existing beneficiaries. Cf. s. 1064. 2 As to the difference between a destination in a direct disposition of heritage under the older practice and the later practice of introducing the machinery of a trust with a trust destination, Mackie v. Gloag 1884 11 R (H. L.) 10, at p. 16 ; 9 A. C. 303, at p. 339. 3 Watt v. Watson, 1897, 24 R. 330. 792. The protective intention of the provision is a question of interpretation in the case of each trust deed. "The first chap. Tin.] PAYING OVEE THE ESTATE 473 question," says Lord Justice-Clerk Moncreiff, in dealing with such a case, "is whether under this marriage contract the limita- tion of the wife's right to a liferent was simply a restriction for the benefit of the heirs of the marriage, or whether the interposed trust was intended to preserve the fee of the property from which the liferent was drawn against any inducements that might arise during the marriage to part with it. This is a question to be solved on the construction of the marriage settlement itself, and on the intention of the parties to it as expressed in that instrument. The mere fact of the provisions being contained in an ante-nuptial contract is not necessarily conclusive of this matter." 1 The pre- sumption is against the protective limitation upon the power of the beneficiary. " The Courts lean against a restraint upon aliena- tion for the reason that a gift of property to a person involves the gift of the power to alienate it, and an instrument which, while giving property, takes away the incidental power of alienation, must also receive a strict contraction." 2 1 Menzies v. Murray, 1875, 2 R. 507, at p. 510. Of. Wilken, 1904, 6 F. 657, where deed not in form of marriage contract, but held to be protective. 2 Russell v. Lawder, 1904, 1 I. R. 328, per Barton, J., at p. 333, referring to Fry, L. J., in Stogdon v. Lee, 1891, 1 Q. B. 661, at p. 670. 793. Lord Moncreiff deals with the effect of such a protective Effect of protection. provision 1 in these words : — " Assuming that it was intended by this contract to protect the wife's contingent 2 interest, there being no interests involved but her own, 3 ... I am of opinion that, stante matrimonio, she has no power to alienate or diminish the rights secured to her by such a trust under an ante-nuptial contract of marriage, unless such power is conferred by the contract itself. . . . The general principle is, that rights intended to be secured to a wife by her ante-nuptial marriage contract, and vested in trust for that purpose, cannot be abandoned 4 or renounced by her while the marriage subsists." 5 As to the manner in which " the same objects have been worked out, though not precisely in the same way," in the law of England, it is sufficient to refer to an opinion of Lord Cottenham, where the law of the two countries on this point is discussed. 6 The " restraint on anticipation " of the English law is a special device for the protection of a married woman, 7 and though resembling in many respects the alimentary restriction of the Scots law as applied to the case of a married woman, it differs from it too materially to be safely used in illustration of the Scots doctrine. 8 The doctrine of separate estate, however, more nearly resembles the exclusion of the jus mariti? 474 PAYING OVEE THE ESTATE [chap, viil 1 Cf. s. 790 for question as to whether a protective trust can be con- stituted without other trustees than the spouses. See s. 803 for forms of protection possible. 2 Where the continuance of the restraint is dependent on a contingency, the beneficiary is not barred from claiming the protection of the restraint by her admission that the contingency has happened, even though the admis- sion was fraudulent, if the admission is contrary to the fact. " A married woman cannot by any device, even by her own fraud, deprive herself of the protection which the restraint throws around her " '^Bateman v. Faber, 1898, 1 Ch. 144, per Lindley, M.R., at p. 149 ; and see pp. 151. 152, for discussion by Vaughan Williams, L.J., of Stanley, 1878, 7 Ch. D. 589). 3 Of. s. 794. 4 As to the power of the wife to bar herself from objecting to the absence of a formality, such as notice to the trustee, as affecting her protected interest, see curious case of MacNaghten v. Paterson, 1907, A. C. 483. 6 Menzies, s. 792, at p. 511. 6 Rennie v. Ritchie, 1845, 17 S. J. 332, at p. 336 ; 4 Bell's App. 221, at p. 244 ; Watt v. Watson, 1897, 24 R. 330, per Lord M'Laren, at p. 335. Cf. L. P. Hope in Torry Anderson v. Buchanan, 1837, 15 S. 1073, at p. 1085 ; vide also historical summary of English law and cases in Tullet v. Armstrong, 1838, 1 Beav. 1, per Lord Langdale, M.R., at pp. 32, 33, and in appeal, 1840, 4 My. & Cr. 390, per Lord Cottenham, C, at p. 405, discussed in 3 Ruling Cases, 214 ; Hood Barrs v. Heriot, 1896, A. C. 174 ; Bolitho v. Gidley, 1905, A. C. 98 ; Lumley, 1896, 2 Ch. 690. 7 Introduced first by Lord Thurlow into a settlement of which he was trustee. Vide Parkes v. White, 1805, 11 Ves. 209, at p. 221 ; and Hood Barrs, supra, per Kav, L.J., 2 Q. B., at p. 568. 8 See Crum Ewing v. Bayly, 1911, S. C. (H. L.) 18, at pp. 24, 25. The effect of the English restriction is largely dependent upon statute (Wheeler, 1899, 2 Ch. 717). Cf. article in 21 Law Quarterly Review (1905), at p. 233. 9 Cf. historical note by L. J.-C. Patton in Pringle v. Anderson, 1868, 6 M. 982, at p. 988, with Lord Cottenham in Tullet, supra. Porter, M.R., in Wright, 1904, i I. R. 360, points out that there is an increase of dominion on the part of the woman by settlement on marriage, while it is always a restriction upon the man. 794. Iii the leading case x on this points — " a very authoritative case, decided by the unanimous judgment of seven judges " 2 — the circumstances were these : — A lady conveyed, by ante-nuptial con- tract, all her property to trustees with directions to pay the income to the spouses and the longest liver of them in liferent, and the fee to the children of the marriage. After all the children of the marriage had attained majority, the wife, with the consent of the children and of her husband, who all renounced their rights, called upon the trustees to denude of the trust property in her favour. The Court there held that the wife was not entitled to discharge Question of her interests in the trust. 3 It must be noted that the protective protection r only where quality of the marriage-contract trust only comes into question beneficiary. wnere the wife is in a position, apart from the protective provision, to discharge the trustee and demand a conveyance to herself of her interest in the trust property. 4 "Where third parties who do not consent to the demand for reconveyance have acquired a jus qucesitum in the same estate, the protective nature of the pro- Eenuncia- vision is an irrelevant consideration. 5 Marriage-contract provisions tion by will. or may, however, where there are no children, be competently re- chap. vm. J PAYING OVEE THE ESTATE 475 nounced by a mutual disposition and settlement by the spouses as it comes into effect only after the dissolution of the marriage, and therefore does not interfere with the protection of the marriage contract during marriage. 6 1 Menzies v. Murray, 1875, 2 R. 507. Vide, at p. 515, the interesting dis- cussion by Lord Deas of the older cases in which the doctrine was developed, viz. Anderson v. Buchanan, 1837, 15 S. 1073 ; Pringle v. Anderson, 1868, 6 M. 982 ; Hope, 1870, 8 M. 699. Gf. Ker, 1895, 23 R. 317. 2 Laidlaws v. Newlands, 1884, 11 R. 481, per Lord Deas, at p. 485. 3 It is noteworthy that L. J.-C. Moncreiff suggests that the wife's interests might be discharged if otherwise provided for (Menzies, supra, at p. 510). Where the wife was seventy years or age, and the marriage had lasted twenty- five years without any children being born, an alimentary provision, under trust for the spouses, was replaced by the purchase, in the names of the trustees, of annuities for the joint lives of the spouses and that of the survivor, to be held by the trustees for the alimentary use of the spouses. By this means the income of the spouses was about doubled (De la Chaumette, 1902, 4 F. 745). Gf. s. 785 as to providing otherwise for an alimentary provision. 4 Gf. ss. 755, 766. 5 Middleton, 1909, S. C. 67, following Lyon, 1901, 3 F. 653, and distin- guishing Wattu Watson, 1897, 24 R. 330, where no such interest existed ; and see Russell v. Lawson, 1897, 5 S. L. T. No. 276, where, though there was a contingent interest conferred, no jits qucesitum had vested in anyone. Gf. s. 1064. 6 Grant, 1873, 10 S. L. R. 245, per L. P. Inglis. Gf. Croll v. Alexander, 1895, 22 R. 677 ; Montgomery, 1895, 22 R. 824 ; Montgomerie v. Alexander, 1911, S. C. 856, where children by a former marriage held not within the protection of the contact. Gf. s. 804. 795. Where the purpose of a trust, though created by marriage No intention r x . to protect. contract, is merely administrative, such as to protect the capital of the estate for future beneficiaries, the trust can be put an end to, in the ordinary way, by the consent of all possible beneficiaries. Thus in the case that forms the leading example of an administra- tive trust in a marriage contract the position was this. The wife conveyed by ante-nuptial marriage contract all her property to trustees. Of this a certain sum was to be held by the trustees for herself and her husband in liferent and the children of the marriage in fee. The remainder of the property was to be held for behoof of the wife herself, her heirs, executors, and assignees whomsoever, exclusive of the jus mariti, but in the event of the husband's survivance he was to get a liferent of the half of this part of the estate. The husband renounced this right of liferent, and the wife called upon the trustees to convey this part of the estate to her, and the Court supported that claim. "I do not look," says Lord President Inglis, " upon the trust settlement of the residue of the lady's property in this case as part of the marriage-contract provisions at all. If a sum had been settled on her by her husband as consideration of the marriage, or in consideration of the provisions made by her on the other hand, I would not say she could renounce that. That would be a viola- 476 PAYING OVER THE ESTATE [chap. vm. Part of estate may be protected. tion of the marriage contract. But this is merely carrying out the true intention of parties in creating this trust. I think nothing else was intended than that, in the situation in which they now stand, this residue should he at her disposal, both during the sub- sistence of the marriage and after its dissolution." 1 There was not, in regard to the sum here in question, what has been described as "a proper matrimonial purpose — that is to say, any purpose connected with the protection of the wife against herself or against her husband." 2 Such merely administrative directions may be contained in a marriage contract including proper and binding contractual stipulations, and the property affected solely by the administrative purposes may be released from the trust by consent of the beneficiaries or the fulfilment of the purposes, and the truster's interest therein is not protected from the claims of her creditors. 3 1 Ramsay, 1871, 10 M. 120, at pp. 125, 126. This case has been followed in the case of Newlands v. Miller, 1882, 9 R. 1104 ; Laidlaw, 1882, 10 R. 374 ; Laidlaws o. Newlands, 1884, 11 R. 481 ; vide Lord Mure there, at p. 484. The case of Ramsay is also referred to and discussed in Menzies, s. 792, at pp. 515, 516, per Lord Deas, and at p. 519, per Lord Gifford ; in Simons v. Neilson, 1890, 18 R. 135, at p. 137, per L. P. Inglis ; in Watt v. Watson, 1897, 24 R. 330, per Lord M'Laren, at p. 336 ; and in Reid, 1899, 1 F. 969, per Lord Moncreiff, at p. 973. Vide also cases of Higginbotham, 1886, 13 R. 1016 ; Reliance Society, s. 781 ; and Lord Advocate v. Stewart, 1906, 8 F. 579, per Lord Pearson (Ordinary), at p. 589. 2 Williamson v. Boothby, 1890, 17 R. 927, per Lord Kyllachy (Ordinary), at p. 930. 3 Murray, 1901, 3 F. 820, at p. 827, approving Ramsay and Simons, supra. Cf. Scott, 1902, 10 S. L. T. No. 78 ; Knox, 1887, 24 S. L. R. 282 ; Crawford, 1873, 11 S. L. R 2. Effect of declaring trust irre- vocable. 796. In deciding whether a trust was protective or merely administrative, stress was laid in some of the earlier cases 1 on the point that the trust was, in gremio of the trust deed, expressly declared to be irrevocable. 2 The later cases have held this declara- tion to be of value only in so far as it is a clear indication of the intention of the parties that provisions in a marriage contract, which are outwith the consideration of marriage, should not be treated as testamentary, but as conferring an immediate gift. 3 Such a provision, however, cannot be made protective of herself by the wife, though it may be irrevocable by her alone as truster. " A clause of irrevoca- bility," says Lord Deas, " could not prevent the parties from altering or evacuating the provision or the stipulated security for the pro- vision, unless the law itself interposed for the protection of the wife. The only formidable plea in favour of the power to alter or evacuate is that, where you have all parties interested con- curring, they may do what they like with the fund. But if that chap, viil] PAYING ~ OVER THE ESTATE 477 were a good plea, it would be equally applicable where there was a clause of irrevocability as where there was not. An express clause of irrevocability could no more stand in the way than a clearly implied irrevocability. The triumphant observation in either case would be, Who can hinder them?"* And Lord Gifford adds: — "It is plain that if no interests forbid, a clause of irrevocability may be itself revoked by the parties who made it. A deed in its nature revocable can never cease to be so by a clause of irrevocability if there is no interest to secure thereby." 5 It is therefore the " quality of revocability " 6 or of " irrevoc- Test of ,.,.„„....,, . „ revocability ability ' exhibited by the purposes 01 a trust constituted by con- is natare J of trust. tract of marriage, and not the declaration of either quality by the truster or trusters, that is the ruling consideration. 8 It is to be noted that what is dealt with here is only the question of revocability by the beneficiary of the protective limitation created by the truster. 9 The necessity for emphasising the distinction arises from the use of the word " revocation " in the decided cases, when what is really meant is renunciation. What the beneficiary may be able to do is to renounce her interest under the trust for the purpose of bringing it to an end — she cannot in any proper sense recall it. Thus Lord Justice-Clerk Moncreiff says : — " No question of revocation arises here in any proper sense of that term. The proposal to the trustees is founded on the assumption that all the interests created by the marriage settlement have, by this agree- ment, been secured and provided for, either by actual fulfilment, or by valid and competent renunciation." 10 In point of mere revocability, a marriage contract trust differs from any other trust only in so far as it confers a jus qucesitum upon unborn bene- ficiaries, at least in funds coming from the spouses, and thereby limits the powers of all the existing parties interested in the trust to deal with it stante matrimonio. It is to this extent an excep- tion to the rule that only a named or designed living person can take a jus qucesitum and so make the trust irrevocable by the truster. Unless the jus qucesitum is actually acquired by the direct institute in a marriage-contract trust, through his coming into existence, no jus qucesitum is conferred by the trust on a conditional institute, and the trust is revocable. 11 1 Anderson v. Buchanan, 1837, 15 S. 1073 ; Pringle v. Anderson, 1868, 6 M. 982. Of. Lord Deaa in Menzies, s. 792, at p. 515 ; Walker v. Amery, 1906, 8 F. 376, per Lord Low, at p. 380 ; Fowler, 1898, 25 K. 1034 ; Lawrence v. Murray, 1901, 9 S. L. T. No. 137. 2 An express reservation of power to revoke is valid (Simpson v. Taylor, 1912, S. C. 280, following Fowler, 1898, 25 R. 1034). 3 Byres v. Gemmell, 1895, 23 R. 332, per Lord M'Laren, at p. 337. 478 PAYING OVEE THE ESTATE [chap. Tin. 4 Menzies, s. 792, at p. 512. 6 Menzies, s. 792, at p. 519. 6 As in Watt, s. 795. 7 As in Menzies, s. 792. 8 Sawrey-Cookson, 1905, 8 F. 157, per L. P. Dunedin, at p. 167. Of. Lyon, 1901, 3 P. 653, per Lord M'Laren, at p. 660, followed in Middleton, 1909, S. C. 67 ; Stevenson o. Currie, 1905, 13 S. L. T. No. 215, per Lord Salvesen (Ordinary) ; M'Gregor v. Sohn, 1905, 15 S. L. T. No. 351. 9 A large class of the cases dealing with the revocability of marriage-contract trusts, of which Mackie v. Gloag, 1884, 11 K. (H. L.) 10, is the leading one, and Byres v. Gemmell, 1895, 23 R. 332, and Barclay v. Watson, 1903, 5 P. 926, are examples, raises questions between beneficiaries as to their rights after the dissolution of the marriage by the death of the wife, and has no bearing on the protection of the provisions in her favour stante matrimonii]. 10 Menzies, s. 792, at p. 509. The case of Mackenzie, s. 799, is an example of a proper recall of a trust ; there no interests but those of the truster had come into existence and the purpose was not properly matrimonial. Gf. s. 800. 11 This is the turning-point in Mackie, supra, where it was argued (see 9 A. C. pp. 330, 331, for arguments) that the children of the first marriage were conditional institutes, taking only in the event of there being children of the second marriage. Though there were no children of the second marriage, the children of the first marriage were held to be intended to take a jus qucBsitum as direct and living institutes, as the words of the deed did not limit the gift to them by any condition as to the existence of children of the second marriage, see Lord Selborne, C, at p. 335. Cf. per Lord Kinnear in Barclay v. Watson, 1903, 5 P. 926, at p. 931, and general statement by Lord M'Laren in Byres, supra, at p. 337. Protection is indepen- dent of who is truster. Protection only in proper marriage contract. 797. The principle of protection for the wife stante matri- monii) laid down in the leading case 1 applies whatever he the source from which the trust estate has come. In some of the reported cases the donors of the trust fund were respec- tively the husband and his father, 2 the wife herself, 3 the husband and the wife, 4 and the husband alone, 5 yet the application of the principle was not affected by this difference of circumstance. "I do not think," says Lord Gifford, "any sound distinction can be taken between the cases where the wife's provisions, secured by ante-nuptial contract, flow from her parents or from strangers, and those in which her provisions come from the husband or from the wife herself." 6 And Lord Deas, in the same case, says: — "I do not think it is material from whose means or estate the income flows, provided only it is clearly a marriage-contract provision." 7 1 Menzies, s. 792. 2 Hope, 1870, 8 M. 699. 3 Anderson v. Buchanan, 1837, 15 S. 1073 ; Pringle v. Anderson, 1868 6 M. 982 ; Williamson v. Boothby, 1890, 17 R. 927. 4 Menzies, s. 792. « Low, 1877, 5 R. 185. 6 Menzies, s. 792, at p. 519. 7 Menzies, s. 792, at p. 512. 798. The provision, in order to be protective, must be a proper marriage-contract : provision, at least where it is derived from the hap. viii.] PAYING OVER THE ESTATE 479 wife herself. 2 A provision by the husband, though not in a marriage-contract trust, would appear to be as protective of the interest of the wife under it as a similar provision in a trust created by a stranger to the marriage. 8 The peculiarity of the protection afforded by a proper marriage-contract trust to the interest of the wife under it is the power given her by the law to make, under such a trust, a provision in her own favour which would otherwise be invalid. Thus in a case 4 where the alimen- tary provision for the wife was provided by the husband in a marriage-contract trust, the protection of the alimentary limita- tion would be in itself sufficient 6 without that of the marriage contract. 6 The limitation of the principle of protection to proper marriage-contract provisions is emphasised by a case where it was held that no protective quality is implied in a provision for the wife under a testamentary trust, though one of the judges confessed that he could not clearly discover the distinc- tion 7 drawn between testamentary deeds and marriage contracts in their effect in this respect. 8 In that case the truster was the father of the wife, and he directed his trustees to invest the trust estate for behoof of his daughter in liferent and her children in fee, but on the express condition that the said income should be payable to her exclusive of the jus mariti and right of administration of her husband. When the wife was sixty years of age, and all the children of the marriage had attained majority, these parties, along with the husband, being all the parties in- terested in the trust estate beneficially, were found to be entitled to payment of it, the wife's interest not being expressly protected against herself by the father's testamentary trust. 9 1 The form need not be that of a proper marriage contract if the substance of the deed is equivalent to one (Wilken, 1904, 6 F. 655). The substantive provisions of the deed are the test of its character, not its form or its narrative. Thus though the deed is followed by the marriage "and in contemplation thereof," this does not make it a proper marriage contract if the marriage does not in fact follow on the faith of the deed, and if its substantive provi- sions are not truly matrimonial and contracted for between the spouses in consideration of the marriage (Watt v. Watson, 1897, 24 R. 330, per Lord Trayner, at pp. 339, 340 ; and see M'Gregor v. Sohn, 1908, 15 S. L. T. No. 351, per Lord Mackenzie (Ordinary). Cf. Russell v. Lawson, 1897, 5 S. L. T. No. 276 ; Stevenson v. Currie, 1905, 13 S. L. T. No. 215, unilateral deed to which husband declined to be a party). Another characteristic of a proper marriage contract is the specific or definite nature of the provision as distinguished from an interest in a residue (Gillon, 1903, 5 F. 533). 2 Christie v. Hardie, 1899, 1 F. 703, per Lord M'Laren, at p. 708. 3 Cf. MacNaghten v. Paterson, 1907, A. C. 483, at p. 492. * Such as Reid, 1899, 1 F. 969. 6 Gf. Reid, supra, per Lord Trayner, at p. 973. ° Of. a. 788. 7 The distinction is very clearly brought out by L. P. Dunedin in Sawrey Cookson, 1905, 8 F. 157, at p. 167, in putting a question to the English Court ; 480 PAYING OVEE THE ESTATE [chap. vin. Could a woman who has executed a deed when unmarried, which is expressly declared to be revocable, exercise the power of revocation after marriage ? (The answer returned was in the affirmative.) In Scotland, following Watt, supra, she could do so, as it was not a matrimonial provision in a marriage contract. 8 Louson v. Dicksons, 1886, 13 R. 1003 ; vide Lord Craighill. Of. Chambers, 1901, 9 S. L. T. No. 220, per Lord Kyllachy. 9 The circumstances here are strikingly similar to thoje in Menzies, s. 792, and serve well to bring out sharply the distinction between a marriage- contract provision and a provision in a testamentary deed, in respect of protective quality. 799. Where an unmarried woman conveyed her property to trustees in trust for herself in liferent and for her children in fee, should she marry and have children, and failing children, as she should appoint, the Court held that, as the deed was not executed in view of marriage, the trustees were bound to reconvey the estate to her, though she was married and had a child at the date of the raising of the action for reconveyance. 1 In an English case where the circumstances were similar in so far as the deed was voluntary and the object of the deed was the same, viz. to protect the truster from his own extravagance, beneficiaries other than the truster did not consent to the revocation, and the Court held that the settlement " could not be set aside by the settlor." 2 1 Mackenzie, 1878, 5 R. 1027 ; but vide Lord Gifford's opinion in dissent. 2 Phillips v. Mullings, 1871, 7 Ch. App. 244. 800. The exceptional nature of the protection afforded by a marriage-contract provision is exemplified by the following case : — An unmarried lady granted a trust disposition and bond of inter- diction whereby she, for her own protection, conveyed her property to certain trustees for the purpose, inter alia, of payment to her of such portions of the capital as they might think proper, and also for payment to her of the income for her alimentary use. The trustees were directed to hold the remainder for such pur- poses as she might appoint by any writing to take effect after her death. This deed was clearly revocable, no beneficial interest other than that of the truster herself being created by the pur- poses of the trust. Shortly afterwards, however, the lady entered into an ante-nuptial contract of marriage, by which she and her future husband ratified and approved of the trust disposition and bond of interdiction as a condition of the marriage. After the marriage the lady brought an action to have the trust disposition and bond of interdiction declared to be revocable. The Court held that she could not, stante matrimonio, rid herself of the chap, viil] PAYING OVEE THE ESTATE 481 protection which she had created hy the terms of her marriage contract. 1 1 Williamson v. Boothby, 1890, 17 R. 927. 801. There is a series of cases in the Second Division of the is post- Court which lays down the rule that there is no difference between contact protective? an ante-nuptial and a post-nuptial *• contract trust in their protec- tive effect. " I have very little difficulty," says Lord Gifford, " in applying the same rules to a reasonable and onerous provision in a post-nuptial deed as have already been applied to the pro- visions in an ante-nuptial one." 2 In this case the husband created a post-nuptial trust in favour of his wife and children. Four years after the marriage, there being no issue thereof, the spouses called upon the trustees to reconvey the trust funds to the husband, but the Court held that the spouses had no power to put an end to the trust. It must be noted, however, that the Court relied greatly on the special circumstance that the wife was only twenty-eight years of age, and therefore the possibility of issue could not be overlooked, and their interests had to be protected. 3 In a later case, expressly following this, Lord Eutherfurd Clark says: — "Marriage contracts, whether ante- nuptial or post-nuptial, are entered into for the same purposes and ends, and should have the same legal effect, when the interest of third parties is not involved. The contract with which we are dealing was entered into on the part of the wife for the purpose of securing her own estate to herself and her children. . . . She cannot revoke a marriage contract into which she entered for her own protection." 4 But the post-nuptial trust must, in any case, be a proper marriage contract and not merely an administrative arrangement. 5 A distinction has been taken, however, in a later case in the First Division of the Court, between the position of the wife in a post-nuptial and that in an ante-nuptial contract. In a post-nuptial contract the status of the wife is the same at the time she accepts as at the time she discharges her provisions ; she is not in an independent position towards the other party. In an ante-nuptial contract she is independent in contracting, and while independent, agrees to put herself in a protected position during the time she is not independent. 6 1 As to whether deed is post-nuptial or ante-nuptial if signed after marriage ceremony, see Cooper, 1888, 15 R. (H. L.) 21. 2 Low, 1877, 5 R. 185, per Lord Gifford, at p. 188. s Low, supra. o L 482 PAYING OVEE THE ESTATE [chap. vm. 4 Peddie, 1891, 18 R. 491, at p. 495 ; Barras v. Scottish Widows, 1900, 2 F. 1094. 6 Of. s. 795, and Lockhart v. Martin, 1904, 12 S. L. T. No. 75. 6 Gillon, 1903, 5 F. 533, per Lord M'Laren, at pp. 538, 539, reserving opinion on the question whether the wife's disability to revoke or surrender an ante-nuptial marriage provision can be extended to the case of a proper post-nuptial provision. This reservation is concurred in by L. P. Dunedin and Lords Adam and Kinnear. It is to be noted that the cases of Low, Peddie, and Barvas, supra, were all cited and followed by Lord Stormonth-Darling (Ordinary) in Gillon, whose interlocutor was recalled by the Inner House. Extent of 802. The question arises, What is the degree of protection protection. x afforded by a marriage-contract provision ? This is really a matter of the truster's intention, to be instructed from the terms and circumstances of each contract. As it is a question of construction in each individual case whether a provision is a proper marriage- contract provision, and therefore protective, so it is a question of construction in the case where it is protective, as to what is the extent of that protection. " A wife is, certainly, not deprived of all power of dealing, either gratuitously or onerously, with her separate means and estate, in favour of her husband, as well as in favour of other parties, by the mere fact of her means and estate being placed under trust by an ante-nuptial contract. 1 ... It is just from the fact that the wife's disqualification to deal with her separate rights and estate is not universal that the delicacy of such questions as the present arises. Hence also the inexpediency of any attempts to define the limits of this protection, or to specify the particular circumstances in which it will or will not be applicable." 2 1 Of. Lord M'Laren in Kinmond v. Mess, 1898, 25 R. 819, at p. 823, dealing with cases of Lennock, 1880, 8 R. 14, and Wallace, 1891, 18 R. 921. 2 Menzies, s. 792, per Lord Deas, at p. 513. 803. During the subsistence of the marriage the degree of protection afforded by the provisions of the contract will vary with the expressed intention of the parties to the contract. It is impossible here to state more than the general rule regulating the interpretation of all such contracts in this respect. The matter is put thus by Lord M'Laren : — " There are many ways and many degrees of protection. If it is only desired to protect the wife's estate against the husband's creditors or against his voluntary acts, there is no need for a trust in our law, because that is done by excluding the jus mariti. But where it is desired to protect the wife herself against her own improvident acts, then that is accomplished by means of a trust, 1 and the protection given by the law is just that which the parties have sought to give to themselves. ... If a wife chooses to say in her contract that the income of her estate chap, viii.] PAYING OVEE THE ESTATE 483 shall not be assignable, the law will give effect to that provision ; nevertheless, the estate would be open to the diligence of her creditors. But, as we know, the more usual mode is to exclude both voluntary assignments and diligence." 2 Thus where the trustees were empowered to advance such portion of the trust estate to the husband as they might think right, this was held to be destructive of a limitation of the wife's interest to a liferent allenaiiy, although that interest was declared not to be affect- able by her own or her husband's debts or deeds, or the diligence of their creditors. 3 1 As to this, vide Standard Co. v. Cowe, 1877, 4 R. 695, per Lord Curriehill (Ordinary), at p. 700. 2 Reliance Society v. Halkett, 1891, 18 R. 615, at p. 622, 3 M'Callum o. M'Culloch, 1904, 7 F. 337 ; see L. P. Dunedin, at p. 342, following Reliance, supra. 804. The protective quality, whatever it may be, of a marriage- protection CGSjSCS Oil contract provision ceases with the dissolution of the marriage, dissolution x ° of marriage. '' Being of the nature of a protection against marital influence on the one hand and self-sacrifice on the other, it extends no further and lasts no longer than is necessary for the accomplishment of its purpose. Accordingly, the subsistence of the marriage does not incapacitate the wife from disposing of the fee, if it belongs to her, of the liferented fund by mortis causd deed, 1 nor does the origin and nature of the provision prevent her, after the marriage has been dissolved by the predecease of the husband, from dealing, either onerously or gratuitously, with the income at her pleasure." 2 1 Of. s. 794. 2 Menzies, s. 792, per Lord Deas, at p. 512. Cf. Ounninghame v. Macleod, 1846, 5 BeU's App. 210, 18 S. J. 614. 805. Even where the provisions are declared to be alimentary, when *• t alimentary the restriction ceases to be operative at the dissolution of the provision marriage, unless the contrary is expressed in the trust deed. 1 In dealing with the interpretation of the deed in such a case, Lord Cowan says: — "Assuming the whole marriage relation to be at an end, the purposes of the contract were necessarily brought to a termination. There is not a word in the deed, even the word alimentary, when read along with the context, and in the collocution where it occurs, that indicates any other end or pur- pose being in the view of the lady in this marriage settlement." 2 And Lord Benholme adds: — "The restrictions imposed by the contract are not to be carried beyond the purposes for which the contract was entered into. That is the general principle conversion. 484 PAYING OVER THE ESTATE [chap. viii. of construction." 3 This question of the interpretation of the intended duration of an alimentary provision only arises, it must be noticed, where the truster is other than the beneficiary, and where, therefore, the alimentary protection may be expressly attached to the gift beyond the period of the marriage. Where the beneficiary is herself the truster, the alimentary protection can only exist during the marriage, for it exists in such a case in virtue of the exception in favour of interests protected by marriage contract, and not in virtue of the exception in favour of alimentary interests. 4 1 Of. Eliott, 1894, 21 R. 975. 2 Martin v. Bannatyne, 1861, 23 D. 705, at p. 711. 3 Martin, supra, at p. 711. 4 Of. s. 790. (c) To whom Payment to be Made (1) Heir or Executor of Deceased Beneficiary {Conversion) Principle of 806. Questions of importance may arise as to whether the trust estate is to be considered, for purposes of succession, as heritable or movable, whatever be the actual form in which the property is held by the trustees, or, in technical language, whether conversion has taken place. "There is no doubt as to what is the principle of the law of conversion. 1 The question arises as to a man's will. It is whether the testator directed his money to be turned into land by buying land, or it may be his land turned into money by selling land. The estate is to be considered as of that character, land or money, to which he intended it to be converted. That is the whole law and principle of the matter." 2 1 Where the trust estate has not been actually converted, " reconversion (by the will of the beneficiary— cf. s. 1056 as to resulting trust) is a question of intention, and must be dealt with as such " (Meredith v. Vick, 1857, 23 Beav. 559, per Romilly, M.R., at p. 565). 2 Brown, 1890, 18 R. 185, per Lord Young, at p. 188. Of. Anderson, s. 809, at p. 259, citing Leach in Smith v. Claxton, 1820, 4 Mad. 484, at pp. 492, 493. 807. The circumstances in which the question of conversion arises in practice are thus put by Lord Young: — "The interest in a question of converting the property from the condition in which the truster left it 1 is occasioned by our law of succession — chiefly by the law of primogeniture. It never is of any interest if those who take immediately under the will are all alive to take at the testator's death. They may take it in any form that they agree upon. It is when some of .them die before the period of CHAP, viii.] PAYING OVER THE ESTATE 485 distribution and the question arises between the heir in heritage and the heirs in mooilibus of the deceased that the question ever conies to be of the slightest interest. But there the interest of the deceased beneficiary is held to be an interest in the estate as the deceased testator has left it, if he has indicated nothing to the contrary, and will pass to the beneficiary's heirs in heritage or in mooilibus according to the nature of the estate." 2 "The ruling principle in all such cases is, that the trustee has no (implied) authority to alter the succession of the person whose estate he holds in trust. . . . The principle (of conversion by mortis causd trust direction s ) is an exception to the otherwise universal rule that rights of succession depend on the quality of the estate at the ancestor's death." 4 " Conversion under a power of sale has no retrospective effect, and does not divest the interest of the person entitled beneficially to the land at the time of conversion, but merely changes his interest from an interest in real estate to an interest in personal estate, so that his personal and not his real representatives would upon his death become entitled." 8 But the law to be applied in deciding the fact of conversion is that regulating the heritable or movable quality of property at the date of the testator's death, not the law at the date of conversion. Thus a direction to invest in heritable securities effects conversion if the truster died before 1868, 6 though the estate was not converted till after that date, when such securities were declared to be movable for purposes of succession to the lender. 7 1 The English law refers to property as being " at home " when it retains the quality it possessed at the truster's death. Of. Grimthorpe, 1908, 2 Ch. 675, at p. 679. 2 Sheppard, 1885, 12 K. 1193,atp. 1202. Cf. M'Adam v. Souters, 1904,7F. 179, per Lord Kinnear, at p. 182 : "The rule is that the succession must be regulated by the condition of the property at the death of the deceased." 3 Succession cannot be affected by any act of ordinary administration (M'Adam, supra, at p. 181, per Lord M'Laren). * M'Farlane v. Greig, 1895, 22 B. 405, per Lord M'Laren, at pp. 409, 410 ; Howden, 1910, 2 S. L. T. No. 101. 6 Dyson, 1910, 1 Ch. 750, at pp. 752, 753, per Neville, J. R Brown v. Smith, 1900, 2 F. 817, at p. 822. 7 31 & 32 Vict. c. 101, s. 117. 808. There can be no difficulty in the application of the conversion principle where the truster has expressly directed conversion. |£^ It is "a principle which is quite settled law, that if a testator devises real estate to trustees upon an absolute, not a discre- tionary, trust for sale, and to divide the proceeds between A., B., and C, it makes no matter that at the death of A. the property 486 PAYING OVEE THE ESTATE [chap. viil And where mere power, Conversion at request of bene- ficiaries. has not been sold. . . . The person equitably interested, on his death, would not be his heir-at-law but his personal representa- tive." J A mere declaration that personalty shall pass to persons successively as realty is only effective as an indicium of intention that the deed should be construed as creating au imperative trust for conversion; the declaration does not itself effect conversion without the imperative trust. 2 Where the truster has given power to the trustees to convert and that power is exercised, it is presumed that the conversion so attained is in conformity with the intention of the truster in giving the power. 3 Everything must be presumed in favour of honest administration, and the onus is on the party disputing that conversion has been effected by the exercise of the power. 4 In this connection must be noticed a judgment in the Outer House, where a distinction was drawn between a case where the sale of heritage took place at the request of beneficiaries and that where the sale was determined on by the trustees in the exercise of their discretion in the administration of the trust. In this case the truster conveyed his estate to trustees for his wife in liferent and for his children in fee. The trustees had a power of sale. They held the heritage till after the death of the liferentrix and then sold it at the request of certain beneficiaries. The Lord Ordinary (Wellwood) held that conversion had not taken place. "It was true," says his Lord- ship, " that the subjects were sold after the death of the liferenter, but this was done, not in the exercise of the trustees' discretion, or as necessary for purposes of division, but at the request of certain of the beneficiaries ; and it was not stated that there would have been any difficulty in conveying the subjects pro indiviso, or even in dividing them among the beneficiaries. 5 Where there is a direction to convert " at request " of a bene- ficiary, the request is not a condition precedent of conversion, and conversion takes place though no request is made. The provision is for the purpose of insuring conversion on request, not of preventing it till request. 6 1 Fauntleroy v. Beebe, 1911, 2 Ch. 257, per Cozens-Hardy, M.R., at pp. 262, 263. It may be noted that his Lordship goes on to give as the ratio of the principle — as does Buckley, L.J., also, at pp. 264, 265 — that the only right of the beneficiary A. against the trustees was to insist on the execution of the trust. This is not so. A. had a right to elect to reconvert the estate that was notionally converted by the trust for sale, and take or will (Meredith, s. 806) the gift in specie as land. But this election of reconversion is personal to the direct beneficiary A., and is not available to his heir-at-law or personal repre- sentative, whose right is limited to enforcing the execution of the trust, and so making the notional conversion a reality. 2 Walker, 1908, 2 Ch. 705, per Parker, J. chap. vni. J PAYING OVER THE ESTATE 487 3 The statutory power of sale (s. 380) and the statutory power to invest in superiorities (s. 649) are limited by the intention of the truster. 4 M'Adam v. Souters, 1904, 7 F. 179, per Lord M'Laren, at pp. 181, 182. 6 Adamson v. Abernethy, 1895, 2 S. L. T. No. 508. 6 Thornton v. Hawley, 1804, 10 Ves. 129, per Grant, M.R., at p. 137. As to difference where words are "with consent of," see English Forms and Precedents, vol. xiii. p. 202, line 10 from foot. 809. The practical difficulty arises where the truster has given where a power of conversion but it has not been exercised. A technical exercised. rule has, however, been evolved from a long series of cases as a canon of interpretation of the truster's intention in such a case. It will be noticed that the rule applies only to the conversion of heritable into movable estate, as the conversion of movable estate into heritable can never be indispensable to the adminis- tration of the estate except where there is an express direction to convert movables into heritage. The rule is thus stated by Lord Eutherfurd Clark in delivering the opinion of the Court : — " The rule is that a direction to sell operates conversion; but that a power to sell does not, 1 unless it is exercised 2 or unless the exercise of it is ' indispensably necessary to the due execution of the trust.' In the latter case the power is equivalent to a direc- tion to sell." 3 This rule is emphasised by an earlier decision by seven judges, that where the exercise of a discretionary power of sale is not indispensable to the execution of the trust, and has not been exercised, there has been no conversion. 4 A trust for conversion does not in itself operate as notional where trust fails, conversion ; there must be some person who, after the trust has position ' c ' of Crown. come into operation and the trustees are vested with power to convert, can enforce the trust for conversion by calling upon the trustees to do their duty to him — and neither the truster's per- sonal representatives 5 nor the Crown can enforce this trust And of x trusters where the purposes of the trust have failed and the estate £? P e r s esenta ' results to the truster. 6 "With the failure of the objects and purposes of the trust for conversion, where that failure is not partial but complete, 7 the Court holds the intention to convert to have failed, and regards the truster as not having directed conversion. 8 1 "It is so well settled that there is no conversion of land into money or of money into land, if the trust for conversion is not imperative, that it is quite unnecessary to cite authorities on the point. ... I do not understand that there is any difference between the law of Scotland and the law of England on this subject" (Advocate v. Stewart, 1902, 4 F. (H. L.) 11, per Lord Lindley, at p. 19 ; A. C, 1902, at p. 359). 2 A power of temporary investment in heritable security exercised in the ordinary administration of the trust which falls short of purchase of heritage does not operate conversion (Campbell, 1900, 8 S. L. T. No. 188, per Lord 488 PAYING OVEK THE ESTATE [chap. vm. Kyllachy, following White, 1860, 22 D. 1335, as not overuled by Buchanan, infra). 3 Playfair, 1894, 21 E. 836, at p. 838, citing Buchanan v. Angus, 1862, 4 Macq. 374, 34 S. J. 502, by which case " the general law is settled." Of. Lord Trayner in Anderson, 1895, 22 R. 254, at p. 259, followed in Kerr, 1895, 3 S. L. T. No. 283; Lord M'Laren in Watson, s. 811, at p. 803; Steel v. Steedman, 1902, 5 ~F. 239, following Playfair and Watson, supra. 4 Sheppard, 1885, 12 R. 1193, following Advocate-General v. Blackburn, 1847, 10 D. 166, which was approved in Buchanan v. Angus, 1862, 4 Macq. 374, at pp. 379, 380, and later in Auld v. Anderson, 1876, 4 R. 211, and Aitken v. Munro, 1883, 10 R. 1097, at p. 1105. 6 Davenport v. Coltman, 1842, 12 Sim, 610. 6 Of. s. 812. 7 Ripley v. Waterworth, 1802, 7 Ves. 425, per Lord Eldon, C, at pp. 434, 435 ; Hewitt v. Wright, 1780, 1 B. C. C. 86 ; Wheddale v. Partridge, 1803, 8 Ves. 227. 8 Grimthorpe, 1908, 2 Oh. 675, distinguishing Att.-Gen. v. Hubbuck, 1884, 13 Q. B. D. 275, and Clarke v. Franklin, 1858, 4 K. & J. 257 ; Griffith v. Ricketts, 1849, 7 Hare 299, in which cases there was a trust for conversion and people who could enforce it. Rule purely 810. Lord President Inglis shows the purely technical nature technical. ° * J of the rule 1 : — " If the true construction of the deed and the history of the trust are such as not to make conversion indispensable, the law as now established affirms that there shall be no conversion, and the heritage shall be conveyed to the beneficiaries in specie. Such conveyance, except in very special circumstances, can only be effected by a conveyance to the whole beneficiaries as joint- proprietors pro indiviso. 2 If the question thus stated were open, I should think it worthy of very serious consideration. But accord- ing to the state of the authorities, I feel myself bound to pronounce against conversion. The doctrine established by the House of Lords in Buchanan v. Angus s is that where there is no positive direction to sell, but only a discretionary power of sale given to the trustees, the question is whether the exercise of that power is ' indispensable to the execution of the trust.' This is the language of Lord Pullerton in the case of Blackburn's Trustees, 3 adopted by the Lord Chancellor (Westbury) in Buchanan v. Angus, 3 as being, in his opinion, most appropriate to express the rule applicable to such cases. It is in vain to represent Buchanan v. Angus 3 as a case depending on specialties, for both the Lord Chancellor and those noble and learned Lords who agreed with him intended to establish, and did establish, a rule of general application." i An excellent example of the application of the rule, and an illus- tration of its extreme technicality, is afforded by a case where the truster directed the shares of his estate to be paid to his children on their respectively attaining majority. Had the truster died while any of the children were in minority there would have been several different dates at which the estate would have been pay- chap, viii.] PAYING OVEE THE ESTATE 489 able, and conversion would be indispensable to meet these claims. The truster, however, did not die until the children were all of age, and the claims falling to be all met at the same time the estate did not require to be converted, but could be conveyed pro iivdiviso to the beneficiaries. 6 In this case it would be extravagant to sug- gest that the truster ever had the intention that the rule imputes to him — the intention that his surviving the majority of his youngest child should alter the character of the estate to which the children should succeed, and the distribution of it amongst their representatives in intestacy. 1 Of. s. 813. 2 Of. "Watson, s. 811, at p. 804. 3 S. 809. 1 Sheppard, s. 809, at pp. 1197, 1198. Of. Sim, 1895, 22 E. 921. 6 Anderson, 1895, 22 R. 254. 811. " However clear the law may be, the cases show that the just application of it is not an easy matter." l " It is unfortunate that no definite and easily applicable criterion can be found for determining whether or not a trust estate is constructively converted as regards the succession of the beneficiaries." 2 The considerations in each case vary with its peculiar circumstances, and from the whole of these the intention of the truster, as inter- preted by the rule given above, 3 must be inferred. 4 One point, however, mav be taken as settled. Where the truster directs the Direction ' » "to pay. trustees " to pay " instead of " to convey," or " to pay and convey," that direction is not of itself sufficient to instruct a direction to convert. 5 " Of course," says Lord Eutherfurd Clark, " I do nob attach importance to the fact that the trustees are directed to pay and not to convey. The phrase in itself is not material, as the case of Buchanan 6 shows." 7 An arrangement for the conveyance of the trust estate in conveyance specie to the beneficiaries may be possible, yet so impracticable and j£& raotic ' inconvenient, that the truster's intention that it should be carried out will not be presumed, and must be established by the clearest evidence. 8 But the mere number of the beneficiaries does not in itself make a conveyance to them pro indiviso an impracticable arrangement in this sense. 9 1 Lord Rutherfurd Clark in Playfair, s. 809, at p. 838. 2 "Watson, 1902, 4 F. 798, per Lord M'Laren, at p. 803. 3 S. 809. 4 M'Call v. Murray, 1901, 3 F. 380. 5 "Pay," "convey," "transfer," have been regarded as practically synony- mous (M'Call, supra, per Lord Trayner, at p. 386). . , 6 In this case Lord Westbury, C, said:— "The words 'pay over, it is admitted on all sides, are regarded as equivalent 'only to a direction to No con version in of truster. 490 PAYING OVEK THE ESTATE [chap. vm. transfer or convey" (Buchanan, s. 809, 4 Macq., at p. 381, and note, 34 S. J., at p. 504). 7 Playfair, s. 809, at p. 838 ; but cf. L. J.-C. Macdonald in Brown, 1890, 18 B. 185, at p. 188, and Lord M'Laren in Watson, supra, at p. 804. 8 Henderson, 1907, S. C. 43, per Lord M'Laren, at p. 47. Cf. M'Call, supra, at p. 386, per Lords Trayner and Moncreiff. 9 Henderson, supra, per Lord M'Laren, at p. 47. 812. It is important to note, in this connection, that where the trast. ms residue of an estate is claimed hy the truster's representatives ah intestato under a resulting trust, the question of conversion does not arise so as to affect the claims of the heir and the executor of the truster. 1 The estate, in whatever form it may exist at the date of dis- tribution, must be divided between the truster's heir-at-law and his executor in proportion as the heritage stood to the movable estate at £j^£ the date of the truster's death. 2 A distinction must he drawn, in executor this question of division, between the case where the trust deed fails only as to residue — where the testator dies intestate only as to residue — legacies and annuities having been paid, and the case where the deed fails altogether and the testator dies intestate as to all his estate. In the latter case the estate falls to be divided simply in proportion to the respective values of the heritable and the movable estates at the date of the truster's death. " The right of the heir and that of the executor if the estate had been altogether undisposed of would have corresponded to the respective values of the two estates." 3 In the former case the division of the residue would depend upon whether the truster had directed his annuities and legacies to be paid out of his general estate or not. If these charges were to be made out of his general estate, " the result is that we must ascertain to what extent the whole fund has been contributed by the heritable estate and to what extent by the movable, and then there will be division (of the residue) according to the proportions in which the two funds contributed to the whole." 4 Where there have been no such directions given as to the payment of these charges, the whole estate would have to be divided in proportion to the respective values of the heritable and movable estates at the truster's death, deducting from the value of the heritable estate the annuities payable in so far as they are a charge on heritage, and from the value of the movable estate the legacies, which are a charge on that estate. 5 1 Cf. Grimthorpe, s. 809. 2 Cowan, 1887, 14 R. 670 ; cf. Wilson, 1894, 22 B. 62. Cf. also by contrast, Meiklam, 1852, 15 D. 159. 3 Cowan, supra, per L. P. Inglis, at p. 676. 4 Cowan, supra, per Lord Adam, at p. 677. 6 Cowan, supra, per Lord Mure, and case of Wallace v. Ritchie, 1846, 8 D. 1038, referred to by his Lordship. Cf. ss. 1056 and 1011. chap, vni.] PAYING OVEE THE ESTATE 491 813. In most of the cases in which the question has arisen Testof in- .. . . dispensable whether conversion was to be implied as indispensable to the conversion. execution of the trust, the test adopted has been the feasibility of executing the trust by a conveyance of the heritage to the bene- ficiaries. The result of the cases may be taken to be that where the whole estate can, in accordance with a proper execution of the trust, be conveyed to the beneficiaries pro indiviso, so as to denude Pro mamso , i . t -i -i /-^ conveyance. the trustee, conversion does not take place. On the other hand, where the direction as framed can, in the circumstances that have arisen, only be carried out by sale of the heritage and a pay- ment out of the price, there is indispensable conversion. Such is the case where interests vest successively in children on attain- ing a certain age and payment becomes due on vesting. There the heritage cannot be conveyed pro indiviso to those with vested rights along with those only contingently interested, 1 nor can it be conveyed to the person whose interest has vested jointly with the trustees, as this would not be payment of the share as directed. 2 Where trustees were given a special power to allocate separate heritable subjects to the separate beneficiaries as an alternative to converting the estate for division, and allocation became impracticable as there was in the event only one heritable subject, the exercise of the power of conversion was held to be imperative and the estate to be converted. 3 There is conversion, even in the hands of a curator for a Lunatic. lunatic, where sale was " inevitable " or " necessary " as the only practicable method of providing for the maintenance of the bene- ficiary. 4 The confirmation by the committee of a lunatic, under direction of the Court, of a voidable contract by the lunatic to purchase real estate effects conversion. 5 An obvious case of necessity for sale is where a trust estate Extent of ^ conversion. is sold under order of the Court — as, for instance, to pay costs. 6 After much difference of judicial opinion it is now decided by sale by " Court. the Court of Appeal in England that where a trust estate is sold by order of the Court the sale operates conversion as at the date of the order 7 of the whole estate sold, and not only of so much of it as is necessary to satisfy the order. 8 This appears to be only an example of a quite general proposition both in England and in Scotland, that where the trust estate has been properly converted into money the residue of the product of the conversion, after meeting the purpose of the conversion, descends to the heir in mobilibus and not to the heir-at-law. Thus where a mortgagee sells under a power and pays himself, he holds the residue for 492 PAYING OVER THE ESTATE [chap. viii. the heir in mohilibus of the mortgagor unless there is a trust for reconversion or a special destination ; 9 and the residue of a sale effected for maintenance was, after the death of the beneficiary, held to be movable for succession. 10 1 Watson, s. 811 ; Macharg, 1894, 2 S. L. T. No. 224, and Anderson, 1895, 22 R. 254. 2 Steel v. Steedman, 1902, 5 F. 239, at p. 244, following Lord Rutherfurd Clark in Playfair, 1894, 21 R. 836, and Watson, supra. See Lord M'Laren in Henderson, infra, at p. 47. 3 Henderson, 1907, S. C. 43. 4 M'Adam v. Souters, 1904, 7 F. 179, followed in M'Farlane, 1910, S. C. 325, at p. 329 ; and contrast Kennedy, 1843, 6 D. 40, and Monerieff, 1856, 18 D. 1286, where sale not necessary and no conversion, 6 Baldwin v. Smith, 1900, 1 Ch. 588. 6 Burgess v. Booth, 1908, 2 Ch. 648. 7 Conversion takes place at the time of an absolute order of the Court for sale though the beneficiary dies before the actual sale (Arnold v. Dixon, infra; Hyett v. Mekin, infra; Fauntleroy v. Beebe, 1911, 2 Ch. 257). 8 Burgess, supra, approving Steed v. Preece, 1874, 18 Eq. 192 (see also Stinson, 1910, 1 I. R. 13 ; Hyett v. Mekin, 1884, 25 Ch. D. 735 ; Arnold v. Dixon, 1874, 19 Eq. 113 ; Oxenden v. Compton, 1793, 2 Ves. 69 ; Flanagan, reported in Fletcher v. Ashburner, 1779, 1 B. C. C. 500, and Cooke v. Dealey, 1855, 22 Beav. 196, following Ackroyd v. Smithson, 1780, 1 B. C. C. 503), and disapproving Scott, 1882, 9 L. R. Ir. 648, and cases followed there, viz. : Richardson v. Nixon, 1845, 2 Jo. & La. T. 250 ; Jermy v. Preston, 1842, 13 Sim, 356. 9 Grange, 1907, 2 Ch. 20. 10 M'Adam, supra. (2) Assignee of Beneficiary 814. "Where the truster has attempted to prevent the bene- ficiary alienating his interest in the trust estate, questions arise as to the duty of a trustee in paying over the estate to an assignee *■ of the beneficiary who claims as in his right. 2 Such questions arise where the right of the beneficiary is limited by a destination over, and the trustees have a discretion — either general or arising on a specified event — to limit the interest of the beneficiary in favour of the reversionary interest, i.e. where they have a general or limited power of apportionment. 3 This situation must be distin- guished from the case where the beneficiary is vested in the unconditional right to the fee of the estate, and any limiting condi- tions are void ; * or where a liferent interest is declared alimentary, in which case the trustees have not only no discretion to limit the benefit, but a duty to pay only to the alimentary beneficiary. The class of cases here dealt with has most frequently arisen in Eng- land, because the result attained in Scotland by a simple declaration that a liferent interest is alimentary cannot be attained in Eng- land, and a generally similar object can only be worked out by a resolutive clause and a destination over. 5 1 " It is well settled that the word ' assignees ' does not mean nominees — it means the persons to whom a right has been assigned, and a right cannot be chap, viii.] PAYING OVEE THE ESTATE 493 assigned unless the assignor had that right vested in him" (Burnett, 1909, S. C. 223, per Lord Low, at p. 226 ; Bell v. Clieape, 1845, 7 D. 614). It has been suggested that the law of England is different (M'Laren, s. 1393), hut this does not affect the value of the English cases in this connection, as in any event the right here dealt with is vested, though the right itself is defeasible. 2 As to duty of trustees to creditors of beneficiary, see Hazeldine, s. 734. 3 Of. s. 816. *Of. s. 754. See Coleman, 1888, 39 Ch. D. 443, per Cotton, L.J., at p. 452. 6 Vide Younghusband v. Gisborne, 1844, 1 Coll. 400, and cf. Scots case of Chaplin v. Hoile, 1891, 19 R. 237. But see s. 781. 815. Of a general discretion vested in the trustees, a leading General Scots case may be taken as an example. Here no right vested apportion. in the beneficiary until the trustees had paid over, or had declared the exercise of their discretion in favour of paying over. 1 Certain parts of the estate had been paid over to the beneficiary, and before they had declared the exercise of their discretion as to future pay- ments the interest of the beneficiary was arrested in their hands. They thereafter limited the interest of the beneficiary to an alimentary liferent by deed of declaration of a trust in themselves, inter alia, in favour of the beneficiary to this effect. It was argued for the arrester that the trustees were too late in exer- cising their discretion ; but it was held that the trustees had power to choose the time at, as well as the manner in which, they should exercise it. " It appears to me," says Lord Hatherley, " that under the ample terms of the discretion conferred they are at liberty to withhold from the beneficiary, and from any claiming under him, the payment of either principal or interest as they may think occasion requires; and that by the operation of the deeds they only limited this their power, which was general as to the times and manner of its exercise, as they themselves, being sole judges, conceived to be expedient." 2 The discretion of the trustees is equally binding upon the beneficiary where it is limitative of a liferent interest only. Where trustees are vested with a discretion to pay " the whole Power to x ■* apportion' or only a portion of the annual revenue, and that subject to such income. conditions and restrictions, all as the trustees in their sole and absolute discretion think fit," with a destination over of any accrued revenue, the Court will not interfere with the discretion of the trustees if they have not taken up an unreasonable attitude to the beneficiary. There is no duty on the trustees year by year, as revenue accrues, to exercise their discretion in the way of limiting the annual revenue to be paid or the conditions under which they should pay it. They retain control over the accrued income, as being within their sole and absolute discretion. 3 A fiduciary power such as this must be exercised, however, solely with a 494 PAYING OVEE THE ESTATE [chap. vm. view to the benefit of the object, and the pretended exercise of the power must not be of an illusory nature. 4 Where the same person is beneficiary under two separate trusts, and in each the amount of the provision is subject to the discretion of the trustees, no equitable contribution between the two estates is to be applied. It is the duty of each set of trustees to exercise an independent discretion with a view solely to the proper administration of their particular trust. 5 1 The marked contrast between the wide discretionary powers here granted to the trustees to determine the nature and extent of the beneficial interest and cases of protected destinations, with contingent powers of the trustees to settle the estate, is discussed by Lord Moncreiff in Newall v. Inglis, 1898, 25 R. 1176, at p. 1183. Of. Lord M'Laren in Kinmond v. Mess, 1898, 25 R. 819, at p. 823. 2 Chambers v. Smiths, 1878, 5 R. (H. L.) 151,'at p. 156. Of. Moran, 1910, 1 I. R. 346, where one contingent beneficiary received nothing out of the trust estate. Of. Russell v. Bell, 1897, 24 R. 666, where part of capital paid to beneficiary under power to pay or not, and held nothing attached by arrest- ment in hands of trustees, although there was here no destination over of the fee (see Lord Moncreiff, at p. 672). 3 Train v. Buchanan, 1907, S. C. 517. 4 A., 1904, 2 Ch. 328, at p. 335. 6 Smith v. Cock, 1911, A.C. 317. 816. This discretion is really a power of apportionment in the trustees, and the beneficiaries under the destination over are only entitled to the residue as determined by such payments as the trustees see fit to make to, or apply for, the original donee. 1 It is thus that Lord Shand treats it : — " The case is practically the same as that of a creditor attaching and seeking to vindicate a claim to an equal share of a fund which, though destined to children, is subject to a power of apportionment. The creditor in such a case who brings a furthcoming could surely never succeed in maintaining that because he had used his diligence the person vested with the power of apportionment could no longer exercise it. So here I cannot understand why the use of arrestment and furthcoming should have the effect of converting a conditional right into an absolute right, or, in other words, have the effect of depriving the trustees of the power which the deed declares they shall be entitled to exercise at any time before pay- ment, and as to which it is according to their duty that they shall exercise their discretion only when they are called on to make romtwes th e payment." 2 "Where an apportionment is made ultra vires, it is still valid to the extent to which it is made lawfully and within the power. 3 i Bullock, 1891, 7 T. L. R. 402, 64 L. T. 736, per Kekewich, J. 2 Smiths v. Chambers, 1877, 5 R. 97, at p. 123. His Lordship dissented from the decision of the Court of Session, and his dissent was sustained in ment. chap. viii. J PAYING OVEE THE ESTATE 495 appeal. Gf. M'Farlane, 1903, 6 F. 201, where the trustees had apportioned capital in exercise of a power, and fee held to have then vested. 3 Stirling, 1898, 1 F. 215, per Lord Trayner, at p. 222, relying on Wright, 1894, 21 R. 568, and M'Donald, 1875, 2 R. (H. L.) 125. Appointments, etc., Act, 1874 (37 & 38 Vict. c. 37) applies to Scotland— Lord Fraser (Ordinary) in Mackie, 1883, 10 R. 746. 817. By treating the discretion of the trustees as a power of Contingent t rv> i • • <* interest and apportionment, the difference between the position of a beneficiary alimentary vested in an alimentary interest, and one vested in an interest sub- Anguished, ject to apportionment, or even defeat, 1 at the discretion of the trustees, becomes obvious. In both cases the beneficiary is pro- tected against himself and against his creditors, but in the former he has an indefeasible beneficial interest, while in the latter his interest is purely contingent. The former can only be made use of as a protective, but not as a penal, provision; the latter is both protective and penal, and it is surprising that it is not oftener met with in Scots practice. In England it is the only form of protection known, but even in Scotland it seems to offer a form of protection supplementary to, and more drastic than, that afforded by the use of the word " alimentary." It is not unlikely that the more drastic and penal form of protection is that which is often intended by the truster, and that the draftsman believes he is expressing that intention by the familiar and comprehensive word " alimentary." 1 A wife holding an alimentary decree is entitled thereunder to attach a contingent beneficial interest of her husband as well as a proper alimentary interest (Baird, 1910, 1 S. L. T. No. 30, referring to Buchan v. His Creditors, 1835, 13 S. 1112). 818 A conditional discretion only comes into play on the conditional power to happening of the specified contingency, and not before. " There apportion. is no law to prevent a testator providing that a legacy is to be divested in a certain event," x but " such limitations are regarded with great jealousy, and are construed with great strictness." 2 The contingency 3 usually specified is in the case of a man the Bankruptcy. bankruptcy of the beneficiary, or the assignation of his interest, and in the case of a woman her marriage without the consent of Marriage. a named person. The happening of this event brings into play the power of apportionment in the trustees. The right of the intervening assignee differs according as the Difference & ' in right of discretion to apportion is general or conditional. In the case assignee. where the discretion of the trustees is general, the assignee attaches nothing but what has been paid, or is determined to be paid, by the trustees. In the ease of conditional discretion the 496 PAYING OVEK THE ESTATE [chap. vin. assignee attaches everything due before the act bringing the discretion into play. 4 Forfeiture In illustrating the contingencies that may bring the conditional and partial, discretion of the trustees into action, use is here made of cases where the happening of the contingency involves absolute for- feiture of the truster's bounty. The quality of the result following upon the contingency being realised does not affect the conditions in which it does realise. The bringing into action of the discretion of the trustees to apportion a benefit is forfeiture of right differing only in quality from absolute forfeiture. 5 Past Where a breach of a condition entails forfeiture of an interest forfeitures. in the estate, past breaches of the condition recited by the truster do not operate forfeiture, otherwise the gift could never take effect, a result which the truster could not have intended. 6 "Legal " Legal disability " on the part of a beneficiary to take and enjoy a gift for his " personal and exclusive benefit " does not arise only because there is a judgment against him 7 or a mortgage of his interest. Bankruptcy, a conviction for felony, attainder for treason, lunacy, or some such disability imposed upon him by law in invitum, is required. 8 An adjudication in bank- Bankruptcy, ruptcy on the application of the debtor, made on the day of the opening of the succession, but before it actually opened, and which was recalled in a few days as improper, is not a bankruptcy of the nature required, being a mere device of the beneficiary to escape his creditor. 9 A bankruptcy of the beneficiary existing at the truster's death, but annulled before the right to have anything paid over has accrued to the trustee in bankruptcy, does not create a forfeiture. 10 income Income does not become "payable to some other person" "payable r toother because the limited liferenter obtains possession of the capital person. *■ c on loan and dissipates it. If, however, the limitation operates when the income " ceased to be payable " to the beneficiary, it appears that a forfeiture would take place. 11 In the case of a gift of income until bankruptcy, forfeiture takes place on the date when the first payment of income would accrue to the trustee in bankruptcy. 12 condition A condition that a benefit shall be payable until the bene- rapt a C y k ' ficiary becomes bankrupt, 13 or even " shall at any time hereafter marriage become bankrupt, 14 or until he assigns his interest, 16 is purified by the beneficiary having been bankrupt or having assigned his interest before the date at which the succession opens, at least where the truster was ignorant of the fact. 16 But where the distin- chap. viii. J PAYING OVER THE ESTATE 497 condition of forfeiture is a marriage forbidden by the truster, 17 this rule as to forfeiture on bankruptcy before the truster's death is not applicable, and the forfeiture only takes place on the contracting of a forbidden marriage after the truster's death. 18 The bankruptcy must be in the court of the beneficiary's Foreign bankruptcy. domicil in order to create a forfeiture, as the foreign bankruptcy does not vest the interest of the beneficiary in the foreign trustee in bankruptcy without intervention of the court of domicil. 19 A disposition of his interest by the beneficiary to trustees to Disposition . , intrust. hold for him is not an " attempt to dispose of his interest, and the right given to the trustees appointed by him to retain their expenses of management does not make it so, and there is no forfeiture. 20 A power of attorney granted by the beneficiary to receive income and apply it for his benefit, if made in good faith, is not a forfeiture under a prohibition against anything " vesting the right to receive the income in any other person whomsoever." 21 A disposition which fails by reason of its having no legal effect as void dis- * position. a disposition is an " attempt to dispose " and creates forfeiture. 22 Where the trustee is in ordinary course of administration Position of creditors. paying over the beneficiary's interest to him, the trustee has no duty to inquire into the relations between the beneficiary and his creditors, unless the trustee has been interpelled by them from paying to the beneficiary. 23 On the other hand, where the beneficiary has a conditional interest imposed for his protection, the trustee has a duty, not to the beneficiary's creditors but to the beneficiary himself, to see that he has not attempted to transfer his interest. But " unless the trustees Form of r receipt. have notice or reasonable cause to suspect that a forfeiture has been incurred they may safely from time to time pay the income to the beneficiary on a form of receipt stating that no forfeiture had been incurred by the beneficiary giving the same." 24 The difference must be noted between the grant of a liferent conditional XiI6l611u- without power to alienate it, which is held to be an absolute grant, 25 and that of a liferent until an attempt is made to alienate it, with a destination over in that event, either absolutely or at the discretion of the trustees. This is a grant of a determinable liferent. 26 A forfeiture clause of a life interest reserved by the truster Truster's for himself is good against him, though the trust itself, in so far liferent. as necessary to pay his debts, is set aside by his trustee in bankruptcy as a fraud on creditors. Therefore where the 32 498 PAYING OVEE THE ESTATE [chap. vm. creditors were all paid out of the trust estate, the forfeiture of the life interest by a prior bankruptcy prevents the trustee in a sub- sequent bankruptcy attaching the life interest which had passed into the control and discretion of the trustees under the deed. 27 condom ^e contingency on which a limitation is to take effect must be something definite and certain, 28 and must be so expressed as not to leave it in any degree doubtful or uncertain what the contingency is which is intended to defeat the prior estate. 29 " From the earliest times one of the cardinal rules on the subject has been this: that where a vested estate is to be defeated by a condition or a contingency that is to happen afterwards, that condition must be such that the Court can see from the beginning, precisely and distinctly, upon the happening of what event it was that the preceding vested estate was to determine. 30 " To work a forfeiture there must be shown a breach of a defined line of conduct which the parties concerned must reasonably have onus. known would work a forfeiture," 81 and the onus is on the person setting up the breach to show clearly that it has taken place. There must not only be " certainty of expression in the creation of the limitation, but also certainty in its operation. It must be such a limitation that at any given moment of time it is ascertainable whether the limitation has or has not taken effect." 32 A gift over of a share of residue, should the beneficiary disentitle himself to discharge it at any time prior to "actual payment," is a definitely certain proviso, and bankruptcy before actual payment creates a forfeiture. 38 condition " Upon the authorities cited to us Si it seems to me to be clear subsequent. i law that, in a devise of real estate with a condition, where the intention of the testator, as evidenced by the words he has used, is more consistent with the inference that he intended the condi- tion to be a condition subsequent rather than a condition precedent, then if the words are capable of admitting both constructions, the Court ought to hold the condition to be a condition subsequent." 35 Therefore where such a condition is attached to the gift to the beneficiary, it falls to be fulfilled only upon the benefit opening to him, and his legal representatives take the gift free from the condition if he dies before the benefit opens to him, and thus impossible before the condition falls to be fulfilled. 36 A condition subsequent which is impossible of fulfilment is not a condition creating a for- feiture. Such is a condition that the beneficiary should " lawfully assume " certain arms of which it appeared it was impossible for him to obtain a grant from the proper authority. 37 chap, viii.] PAYING OVER THE ESTATE 499 1 Goulder, 1905, 2 Oh. 100, per Swinfen-Eady, at p. 103. 2 That rule is one of very old standing (Claveringu. Ellison, 1856, 3 Drewry, 451, per Kindersley, V.-C, at p. 470, giving history of rule ; affirmed in. 7 H. L. Cas. 707). 3 As to the value of an admission by the beneficiary of the happening of a contingency which has in fact not happened, see Bateman, s. 793. 4 Vide generally Bullock, s. 816, following Chambers, s. 815. An arrest- ment of the interest before a resolutive decision by the trustees is valid to found jurisdiction (Baird, s. 817). 6 " Forfeitures are not regarded with favour " (Farwell, J., in Greenwood, infra, at p. 891). 6 West v. Williams, 1899, 1 Ch. 132, at p. 148. Gf. Wynne, infra. 7 But the appointment of a receiver of the income on the strength of the judgment would be a forfeiture (Detmold, 1889, 40 Ch. D. 585; Spearman, 1900, 82 L. T. 302). 8 Carew, 1896, 2 Ch. 311. 9 Carew, supra. Gf. Sheward, 1893, 3 Ch. 502. 10 Metcalfe, 1891, 3 Ch. 1, per Bowen, L.J., at p. 6, summing up effect of White v. Chitty, 1866, 1 Eq. 372 ; Lloyd, 1866, 2 Eq. 722 ; Ancona-y. Waddell, 1878, 10 Ch. D. 157 ; but see Baker, 1904, 1 Ch. 157, decided in another sense on the ground that the release of the charge on the interest before anything became due to the beneficiary was an immaterial fact, Buckley, J., and the contrary view taken by Neville, J., in Williamson v. French, 1909, 2 Ch. 280 ; see also Loftus-Otway, 1895, 2 Ch. 235, where the words, however, were " liable to be deprived." 11 Brewer, 1896, 2 Ch. 503. . 12 Robertson v. Richardson, 1885, 30 Ch. D. 623. In Scotland, this date is not the date of the award of sequestration, but that of the first deliverance in the petition for sequestration (Bankruptcy Act, 1856, s. 42). In England the relation back from the date of adjudication is to the first act of bank- ruptcy, not earlier than three months before the adjudication (English Bankruptcy Act, 1883, s. 43 ; Montefiore v. Guedalla, 1901, 1 Ch. 435). 13 Manning v. Chambers, 1847, 1 De G. & S. 282. 14 Seymour v. Lucas, 1860, 1 Dr. & Sm. 177, following Manning, supra, and Wynne, infra. 15 West v. Williams, 1898, 1 Ch. 488. w Wynne, 1837, 1 Keen, 778, per Lord Langdale, M.R, at p. 795 ; West, supra, per Kekewich, J., at p. 497. The doctrine was carried so far in Trappes v. Meredith, 1871, 7 Ch. App. 248, as to apply to the case where the bankruptcy existed at the date of the will and was known to the testator, but this, though held to be binding, has been adversely criticised in Metcalfe, 1891, 3 Ch. 1. 17 Gf. s. 327 for discussion of the validity of such a condition. 18 Chapman v. Perkins, 1905, A. C. 106. The decision in the House of Lords rested solely upon the terms of the particular deed before it. In this connection the dissent of Cozens-Hardy, L.J., in the Court of Appeal, 1904, 1 Ch., at p. 441, cannot be overlooked in appreciatingjthe value of the decision as affecting the general question. 19 Hayward, 1897, 1 Ch. 905, following Blithman, 1866, 2 Eq. 23. If the bankruptcy were in the domicil of the trust though not that of the bene- ficiary, the vesting in the trustee in bankruptcy would appear to be effective and to create a forfeiture. As to the effect of an English garnishee order made absolute, Roffey v. Bent, 1867, 3 Eq. 759, relied on in Sutton, infra ; Greenwood, 1901, 1 Ch. 887, following Sutton v. Goodrich, 1899, 80 L. T. 765 ; Stultz, 1853, 4 De G. M. & G. 404. Bates, 1884, W. N. 129, is dissented from in both Greenwood and Sutton. In so far as an arrestment in execution may be taken as equivalent to a garnishee order made absolute, their effect, where there is a general prohibition of alienation or of divestment of power to receive and discharge the benefit under the deed, is to operate as a forfeiture where they fail to attach in the hands of the trustees sufficient to satisfy the diligence. If there is sufficient accrued benefit due and payable by the trustees to the beneficiary, it is to be regarded as a payment by the beneficiary himself, and the alienation ■of this is not a forfeiture ; if the diligence operates as an attempt to attach a benefit which has not accrued, there is a forfeiture. For case of a petition in bankruptcy by beneficiary under the 1883 Bank- 500 PAYING OVEK THE ESTATE [chap. vm. ruptoy Act and consequent adjudication as an "alienation" (Cotgrave, 1903, 2 Ch. 705), and question there as to effect of presentation of petition. 20 Tancred, 1903, 1 Ch. 715. The clause of forfeiture should be drafted "attempt to dispose of" and not "dispose of or attempt to dispose of," because a person cannot "dispose of" an interest which comes to an end, ipso j "ado, by the act of attempted disposition (Buckley, J., at pp. 724, 725). 21 Swannell, 1909, 101 L. T. 76. Of. Durran, 1905, 91 L. T. 819. Letter to officer of court to pay out of funds — sufficient funds in officer's hands, and no forfeiture. 22 Porter, 1892, 3 Oh. 481, but see Sheward, 1893, 3 Ch. 502. 23 Of. Hazeldine, s. 734. 24 Long, 1901, W. N., p. 166, per Byrne, J. 26 Of s. 750. 26 See cases of "Walsh and of Eoehford, s. 750. 27 Johnson, 1904, 1 K. B. 134. 28 Goulder, 1905, 2 Ch. 100, relying on Johnson v. Crook, 1879, 12 Ch. D. 639, where Jessel, M.R., examined all the earlier cases. Johnson was approved by Fry,. J., in Chaston, 1881, 18 Ch. D. 218, and Wilkins, 1881, 18 Ch. D. 634. 29 Clavering v. Ellison, 1856, 3 Drew. 451, per Kindersley, V.-C, at p. 470. 30 Clavering v. Ellison, 1859, 7 H. L. Cas. 707, per Lord Cranworth, at p. 725, referring to Lord Eldon, C, in Fillingham v. Bromley, 1823, Turner & Russ. 530. 31 Clavering, supra, 7 H. L. Cas., per Lord Campbell, C, at p. 721 ; Egerton v. Brownlow, 1853, 4 H. L. Cas. 1, per Lord St. Leonards, at p. 208 ; and see Farwell, J., in Jeffreys, 1901, 84 L. T. 417, dealing at length with Clavering and citing Exmouth v. Praed, 1883, 23 Ch. D. 158, as an example of a condition declared void for uncertainty irrespective of the facts of the case. 32 Exmouth, supra, per Fry, J., at p. 164. The following are examples of limitations that fail in this respect : — " In any way associate, correspond, or visit with" certain persons, "or entertain or exercise hospitality to them or in any way contribute to the maintenance of any house in which they or any of them reside, or are or shall be at any time entertained as visitors or guests " (Jeffreys, supra). "Expiration of twenty-one years after the decease of all such persons as should be in existence at the time of the testator's decease." (" You can never ascertain when the twenty-one years will commence to run," Exmouth, supra, per Fry, J., at p. 161.) "Live and reside on a certain estate " (Fillingham, supra). "Educated in England and in the Protestant religion " with gift over if " educated abroad, or not in the Protestant religion " (Clavering, supra, 3 Drew. 451, per Kindersley, V.-C, but see case in House of Lords, 7 H. L. Cas., at p. 721, where facts of case fully discussed). 33 Goulder, supra. 34 Woodhouse v. Herrick, 1855, 1 K. & J. 352 ; Egerton v. Brownlow, 1853, 4 H. L. Cas. 1 ; Langdale v. Briggs, 1856, 8 De G. M. & G. 391. 35 Greenwood, 1903, 1 Ch. 749, per Collins, M.R., at p. 755. 36 Greenwood, supra. 37 Croxon, 1904, 1 Ch. 252. See also s. 833, note 1. Contin- 819. Where trustees are directed to pay over income to fSifptcy. a beneficiary until he becomes bankrupt, and thereafter to apply the income or any part thereof in the discretion of the trustees to his maintenance and for his benefit, it was formerly held that the trust to apply was only valid where it was for the benefit of wife and children as well as the bankrupt him- self, and that because it was impossible to determine what the trustees intended to apply for the benefit of the bankrupt as distinguished from the other objects of the power. 1 It is now held, however, that the income can be directly applied for the benefit of the bankrupt himself, though he is the sole object of the power. 2 chap, viii.] PAYING OVEE THE ESTATE 501 1 Godden v. Crowhurst, 1842, 10 Sim. 642. It is to be noted, however, that Shadwell, V.-C, in this case, says that it is " a case quite sui generis," and which " must be decided upon the view of the will itself," p. 652. Cf. Kearsley v. Woodcock, 1843, 3 Hare 185. 2 Bullock, 1891, 7 T. L. R. 402. 820. The manner in which the income may be applied for Form of " '■'■ mainten- behoof of the bankrupt is illustrated by the opinion of aEOe< Shadwell, V.-C, in a case already referred to. 1 "It does not follow," says his Lordship, " that anything was of necessity to be paid ; but the property was to be applied ; and there might have been a maintenance of the son, and of the wife, and of the children, without their receiving any money at all. For instance, the trustees might have taken a house for their lodging, and they might give directions to tradesmen to supply the son and the wife and the children with all that was necessary for maintenance." And in a later case Kekewich, J., on being asked by trustees to define the limits within which they might apply income for the bankrupt's benefit, says : — " I can say no more at present than that they certainly may, in my opinion, spend the whole or any part of the income in maintenance, using that word in its most general and widest sense ; and I doubt whether I was right in saying in the course of the argument that they could not properly pay the bankrupt's debt." 2 1 Godden, s. 819, at p. 656. 2 Bullock, s. 819. 821. Though trustees may so apply income to the maintenance f f ^ m ^* k . or for the benefit of the beneficiary, they cannot, after his bank- ruptoy - ruptcy, pay it directly to him. Where trustees are directed to pay over income to a beneficiary until he becomes bankrupt, and there- after to pay to him or apply for his benefit so much of the income as the trustees shall in their discretion think fit, it is not in the trustees' power to pay over income to him after his bankruptcy. 1 To pay income to the beneficiary in these circumstances " would be to make a payment in derogation of the overriding title of the trustee in bankruptcy, and therefore a wrongful payment, which would be no discharge to the trustees of the will, and would render them accountable to the trustee in bankruptcy." 2 i Coleman, 1888, 39 Ch. D. 443 ; Neil, 1890, 62 L. T. 649, cited and followed in Bullock, 1891, 7 T. L. R. 402. 2 Bullock, supra, per Kekewich, J. See for position in second bankruptcy, Betts, 1896, 13 T. L. R. 23. 822. A question arises in this connection as to whether trustees £«»£«<>» have irrevocably exercised their discretion when they have passed 502 PAYING- OVER THE ESTATE [chap. viii. a resolution to pay but have not yet carried it out by handing over the money. It appears that where trustees have formally expressed their intention to pay, they are held to have exercised their power and to have given the beneficiary a right to demand the interest in the estate thus apportioned to him. "The principle estab- lished by the cases," says Lord Weaves, " leads to this rule, that the interests of beneficiaries are not to be affected by accident or by delay, which may often conceivably be interposed by interested parties. A resolution once taken is to be held in law as already carried out ; and the parties' rights shall be judged of as at the date of the resolution, without reference to a supervening accident." 1 And again, in a later case, his Lordship says : — " It is a principle in trust law that what should be done and is only accidentally delayed shall be held as done." 2 In a similar sense, in an English case, Kekewich, J., says: — "I think it must be assumed that money paid by the trustees to him or to any person in his behalf was his in their irrevocable determination immediately before payment." 8 1 Leighton, 1867, 5 M. 561, at p. 572, per Lord Neaves. This is referred to by his Lordship in the later case of Adam v. Forsyth, 1867, 6 M. 31, at p. 35. It must be noted that in the case of Leighton the resolution had refer- ence to a payment already provisionally made, and the result in Lord Neaves's words was, "that what was before a provisional payment became now an absolute payment, without any new act of payment taking place." Cf. M'Farlane, 1903, 6 F. 201. 2 Adam, supra, at p. 35. 3 Neil, 1890, 62 L. T. 649. Cf. Hood Barrs v. Heriot, 1896, A. C. 174, and s. 793, supra. Bight ceases 823. Where trustees are directed to pay to a beneficiary until from date r J J ofassigna- he shall cease to be entitled to receive such income or any part thereof for his own personal use or benefit, and the beneficiary assigns his interest, it must be noticed that the assignation as between the assignor * and his assignee 2 operates from its date, and not from the date of notice of the assignation to the trustees. The assignor therefore ceases to be entitled to the income from the date of the assignation, and the assignee cannot claim the income as in right of the assignor between that date and that of the notice of assignation. 3 1 The doctrine of Dearie v. Hall (1828, 3 Buss. 1) as explained by Jessel, M.B., in Freshfield (1879, 11 Ch. D. 198), that an assignation of a beneficial interest made by the legal representative of the deceased beneficiary and intimated to the trustees takes priority of any unintimated assignation by the beneficiary himself, has been affirmed by the Court of Appeal in England (Montefiore v. Guedalla, 1903, 2 Ch. 26). 2 "As between assignor and assignee an assignment of an equitable interest is perfect without notice to the trustee holding the trust pro- perty." It is in order to obtain priority as between assignees that such notice is necessary. For "so long as the first assignee in point of data chap, viii.] PAYING OVEE THE ESTATE 503 omits to give notice it is competent to the assignor to make a title to a more diligent stranger " (West v. Williams, 1898, 1 Ch. 488, per Kekewich, J., at p. 496, and see s. 185). 3 Bullock, 1891, 7 T. L. R. 402 ; 64 L. T. 736. (3) Parents of Beneficiary (a) Income 824. Where minor beneficiaries have a vested x interest in Mamten- sums payable at their majority, the trustees of these sums are minor vested in bound to pay to the legal guardian of the minors, during their income. respective minorities, the income of the said sums, or such part thereof as may be necessary 2 for their maintenance and education, 3 where the income is not otherwise disposed of by the truster.* " A child who possesses an income of his own is not entitled to have it accumulated while his maintenance and education is borne as a burden by his father. The income falls, in the first instance, to be devoted to this purpose. The surplus, if any, is to be accumulated, there being no other fair way of dealing with it for the child's benefit." 5 "Where the interest has not vested individually, but has vested class of minors in children as a class, there the trustees are bound to pay over the vested in x ^ income. income, or at least a reasonable proportion thereof, for the main- tenance and education of the children, where the truster stood in loco parentis towards them. " It seems to be quite settled by the authorities that where a parent himself provides to his children shares of residue or even simple legacies, the payment or vesting of which is postponed till majority or marriage or other contingent event, the children will nevertheless be entitled to the intermediate accruing interest for the purposes of maintenance. But this prin- ciple has been extended beyond the case of children to cases where the testator held or assumed the position of being in loco parentis to the children to whom he destined the fee of the provision." 6 The part of the income to which the legal guardian is entitled Ammmt is limited to what is sufficient to relieve him of the maintenance temmee. and education of the child, 7 and he is entitled to repayment of expenditure already made by him for this purpose unless he is barred by conduct on his part amounting to proof of donation of such expenditure to the child. 8 Where large estates are being administered, somewhat nice Named sum questions arise as to the amount which should be paid out of income for the benefit of the beneficiary who is under age. The only test is the preparing of the beneficiary for the position to 504 PAYING OVEE THE ESTATE [chap. viii. which he is born, and where there is no express limitation in the trust deed to a sum named by the truster for maintenance and education, the Court will permit that sum to be exceeded and accumulated income to be trenched upon for this purpose. 9 Foreign Where the father is domiciled in England, but is not the legal guardian. a > «= guardian there, the Court have refused his petition to ordain the trustees to pay income to him for maintenance of his children. He must first be appointed legal guardian, 10 or have applied for the appointment and been refused the grant unless the Petitioners, trust estate was paid into the English Court. 11 The Court declines to give the trustees such authority on their own peti- tion, on the ground that they either have the power them- selves, in which case they require no authority from the Court, or they have not the power, in which case the Court cannot give it to them. 12 Amount It has been held that where there is an express trust to apply settled by r rr J trustees not p r0 p er ty "f r the maintenance, education, advancement, or other- by guardian, r r J wise for the benefit of the children, it is not until the trustees have exercised a discretion upon that point, and determined what it is that is to be so applied, that they may, as a mode of applying it, hand it over to a parent or guardian," 13 and the same rule should guide trustees in the exercise of their implied duty to minors having vested interests. 14 i Gf. s. 336. * Discretionary payments for maintenance are each held to be a legacy for Revenue purposes (Att.-Gen. v. Wade, 1910, 1 K. B. 703). 3 Mackintosh v. Wood, 1872, 10 M. 933 ; see Mackie, 1872, 10 S. L. B. 49, as to a fixed allowance beiDg granted. 4 Normand, 1900, 2 F. 726, at p. 731. 6 Stewart, 1871, 8 S. L. B. 367, per L. P. Inglis. As to position of widowed mother, see Fairgrieves, infra, and see Lord Moncreiff in Hutcheson, infra, at p. 603, reviewing authorities, including Gait v. Boyd, 1830, 8 S. 332, and Fairgrieves. 6 Duncan, 1877, 4 B. 1093, per Lord Gilford, at p. 1100 ; and see cases cited at p. 1101. 7 Stewart, supra ; Scott, 1870, 8 S. L. B. 260, extra advance refused ; Sutherland, 1901, 3 F. 761, a fixed allowance rising with the child's age ; Fairgrieves v. Hendersons, 1885, 13 R. 98, whole interest of small capital given to widowed mother, but capital refused. 8 Hutcheson v. Hoggan, 1904, 6 F. 594 ; there was here an express trust to "apply" the interest in maintenance and education. Fairgrieves, supra, widowed mother reimbursed. Hodgson, 1904, 12 S. L. T. No. 286, payment of whole income (£28) authorised to a factor loco tutoris for maintenance and education of minor. » Walker, 1901, 1 Ch. 879, per Farwell, J. Gf. s. 740. i° Seddon, 1891, 19 E. 101, and 1893, 20 B. 675. 11 Webb v. Cleland, 1904, 6 F. 274. Here the order was limited to a period of five years, and the petition continued. Gf. Edmiston, s. 825, for exceptional grant of petition, where no evidence of father's guardianship. 12 Atherstone, 1896, 24 R. 39. 13 Gainsborough v. Watcombe, 1885, 54 L. J. Ch. 991, per North, J., at p. 996. 14 L. P. Inglis in Stewart, supra. chap, viii.] PAYING OVEE THE ESTATE 505 (b) Capital 825. The circumstances in which trustees are entitled to pay Payment of capital the shares of pupil beneficiaries * to the father of these beneficiaries to father. as their administrator-at-law are so fully discussed in an opinion of Lord Campbell, C, that the matter may best be dealt with by quoting his Lordship's words. " It is allowed," says his Lordship, " that by the general law of Scotland the father is the administrator for the pupil; and when we look at this settlement we see that there clearly was nothing in the settlement that was at all to abridge the power of the father as the administrator for the son. Then, that being so, we have to consider whether the mere poverty of the Poverty. father would be a sufficient ground for refusing the payment to him of what was due to the son. I am clearly of opinion that poverty of itself would not be a sufficient ground. Men, whether in Scotland or in England, may be poor, but although they are poor they are honest; and it is unreasonable to say that a cottager whose son has had a small legacy left to him must waste his money in applying to the Court of Session for security that it shall be duly administered. If there has been on his part mala fides, or, Maiafictes. as it may be called, insolvency in one sense of the word, I should think the trustees would be guilty of a breach of trust if they were to pay over the money to the father. Looking at the admission that there was something more than pure poverty ; that there was embarrassment of circumstances that might have rendered some- Embanks- ment. thing more necessary to be done than barely paying over the money to the father and allowing him to dispose of it as he pleased — I think, upon the authority of Govan v. Eichardson, 2 and the other cases which have been referred to, that there would have been strong ground for contending that it would have been unjusti- fiable, in this case, for the trustees, under the circumstances which the trustees acknowledge to have existed, to have simply paid the money over to the father. But instead of that they do what, if there had been an application to the Court, the Court would have directed. They obtained caution from cautioners who were sub- Caution, stantial at that time, and their solvency was inquired into and established to be perfectly sufficient for this purpose. And it was under these circumstances that the payment was made." 3 These considerations appear to apply with equal force to the ^yj™"* question of payment to any tutor, 4 at least to any sole tutor who has not had to find caution, as in the case of the mother under the Guardianship of Infants Act, 1886. 5 The Court has ordained the 506 PAYING OVER THE ESTATE [chap. viii. Foreign guardian. trustees to make payment of the child's share to the mother residing in New Zealand and appointed as guardian in the father's will. 6 The English Court will not pay a fund in Court, to which a child is absolutely entitled, to a foreign subject domiciled out of its jurisdiction, although he is the legal guardian of the beneficiary, and can grant a legal discharge, unless upon evidence that the fund will be applied for the benefit of the child. 7 Care must be taken not to confound this question with that of tutors, or minors and their curators, exonering trustees for their trust administration. 8 That is not in question here at all. All that is in question here is the propriety of the payment to the administrator-at-law on his receipt, and the protection of the trustee against a claim for negligence in making that payment. In regard to that, the trustees in making such payments take the risk that in each particular case the measures adopted to protect the interests of the beneficiaries are sufficient, or, where none is taken, that, in the circumstances, none is required. 1 The penal restrictions of a foreign law which limit his powers to deal with his property but do not change his status, are not recognised by the English Courts as interfering with the right of an adult beneficiary to claim payment in England of a trust fund there (Selot, 1902, 1 Ch. 488, following Worms v. De Valdor, 1880, 49 L. J. Ch. 261). Both were cases of the appoint- ment of a " conseil judiciare " to an adult Frenchman who had been declared a "prodigue." a 1633, Mor. 16263. 3 Dumbreck v. Stevenson, 1861, 33 S. J. 269, at p. 270, 2nd col. ; 4 Macq. 86. Gf. Wardrop v. Gossling, 1869, 7 M. 532, where trustees found liable to pay to father without demanding caution, poverty alone being alleged against him. Vide also Murray v. Bloxsom, 1887, 15 R. 233, where interest to be paid to father, without caution, on authority of Stevenson, supra ; vide Lord Ruther- furd Clark, at p. 237 ; and c/. Edmiston v. Miller, 1871, 9 M. 987 ; Allan, 1895, 3 S. L. T. No. 131; and Long, 1901, W. N. 166, per Byrne, J., follow- ing M'Creight, 1849, 13 Ir. Eq. 314, where the English law on this point is discussed. * Gf. Abercromby, 1897, 4 S. L. T. No. 441. 5 49 & 50 Vict. c. 27. 6 Elder, 1903, 5 F. 307, see reference to Scots Act in Mr. Dalzell's Report, at p. 308. 7 Chatard, 1899, 1 Ch. 712. In this case, where the parties were French, in the absence of satisfactory evidence as to the application of the fund and the situation of the child financially, the fund was retained in Court and the income ordered to be accumulated, costs being given out of the fund. In the case of a Prussian the order for payment was made by "Wood, V.-C. (Brown, 1865, 12 L. T. 488), and refused by Lord Romilly in a case from Hamburg (Hellman, 1866, 2 Eq. 363), but these cases have been regarded as exceptional (Chatard, at p. 717). Payments have been authorised to Scots curators for minors, relying apparently on the capacity, though limited, of a Scots minor as distinguished from the want of capacity of a pupil, and also on the security found for administration by the curators (Crichton, 1855, 24 L. T. (O. S.) 267 ; Ferguson, 1874, 22 W. R. 762). 8 Gf. s. 929. Payment to curator bonis. 826. As an alternative to asking the father to find caution, the Court may be asked to appoint a factor loco tutoris} or a curator chap, vni.] PAYING OVEE THE ESTATE 507 bonis to the beneficiaries. Thus where the father of a minor beneficiary was bankrupt and the trustees refused to make any payment either to the father, because he was bankrupt, or to the beneficiary himself, because he was a minor, the Court appointed a curator bonis to the beneficiary, " with power to uplift and dis- charge, and administer and apply for the minor's behoof whatever sums of money may be paid or may be directed to be paid to the minor, or to the said curator for the minor's behoof." 2 1 Mann, 1851, 14 D. 12. 2 Robertson, 1865, 3 M. 1077. Cf. Anderson v. Muirhead, 1884, 1 1 R. 870. Vide also MaoDonald, 1896, 4 S. L. T. No. 4. (4) Children of Deceased Parent 827. In certain conditions the child of a deceased parent Two classes ...... of conditio takes by implication in preference to a named beneficiary. This «? <*«? right is founded upon the conditio si sine liberis decesserit, which is implied in two cases. One case is that where the institute under the trust deed has died and his children are preferred to the named conditional institute ; the other case is that where the testator dies leaving children not provided for by his trust deed — here they are preferred to a stranger named as a beneficiary in the deed. (1) The conditio si institutus sine liberis decesserit is this : — Where Child of . . institute. a general settlement 1 is made either by a parent in favour of children or other descendants, or by a person who stands in loco parentis to the beneficiaries therein designated, the maxim or rule si sine liberis decesserit introduces into the provisions of the settle- ment, by implication of law, a conditional institution of the issue of a nominatim legatee who may die before the period of vesting. It is an implied gift over, on the failure of the parent to take, and defeats an ulterior though express gift. 2 Uncles and aunts stand in loco parentis towards nephews and who are in loco nieces where the bequest is made on account of the relationship parentis? and not through' personal favour for the legatee. 3 Personal dis- favour shown by the exclusion of some of the nephews or nieces does not support an inference that personal favour is the cause of the bequest to the others. 4 The making of the bequest to such relatives in itself creates the quasi-paternal relation required to bring the condition into effect, and there need not be any ante- cedent indications of the assumption of a parental attitude towards the relatives benefited by the will. 5 508 PAYING OVEE THE ESTATE [chap. Tin. «on™ p " " ^ e conditio proceeds entirely on the presumption that the ™S Hastie, 1887, 35 Ch. D. 728. 11 Ebbern v. Fowler, 1909, 1 Ch. 578, overruling Shaw, 1894, 2 Ch. 573 ■ Loveland, 1906, 1 Ch. 542. (9) Conditional Beneficiaries interpret*- 833. Where the beneficiary is described as the person fulfilling renditions, certain requirements which have since the truster's death become chap., vin.] PAYING OVEE THE ESTATE 515 impossible of fulfilment, then unless their fulfilment is a condition precedent to the gift, as where there is a gift over in event of their non-fulfilment, the person intended to be benefited, if still clearly conditions indicated, takes the bequest. Thus where the beneficiary is described as " the heir for the time being entitled to succeed under a deed of entail," the person who would be the heir takes the gift, though the estate has been disentailed. 1 Similarly, " refusal " or " neglect " to perform an act cannot be attributed to an infant in England, as it requires such an exercise of discretion or will in regard to a legal matter as the law makes impossible for an infant. 2 Where a gift is given subject to the happening of an event, condition the event must happen before the gift becomes operative, whereas if the possibility of an event happening is stated merely as the reason for making the gift, the gift becomes operative whether the event happen or not. 3 A gift conditioned upon there being a child " other than an eldest or only son " is satisfied by the existence of a daughter or daughters, but where the words are " besides an eldest or only son," there must be a son in existence. 4 " Residence " such as to comply with a condition in a will must Residence. be personal and real, but need not be permanent or continuous. 6 The construction of " survivor " as " other " is only to be Conditions affecting resorted to where it is required by a clear indication of a scheme life - of settlement found in the trust deed. 6 " It is a well-known rule of law that, if a testator does not A *4 a * e .,. ' of distribu- indicate the event to which the survivorship clause refers, it is tion - presumed to refer to the period of distribution." 7 The words " shall die " in a will are not necessarily to be read "Shall die.' as applying merely to an event subsequent to the will ; they may be read as " shall be dead " or " shall have died," if the intention to be gathered from the context points to this meaning. 8 Where a bequest is destined to a person named, "and his "Heirs, u x executors, heirs, executors, and assignees," this is presumed to import a j conditional institution of the heirs, executors, and assignees in the event of the predecease of the institute. 9 But that presump- tion is rebutted where the donor has shown that his intention was that the whole gift should be contingent upon his predeceasing the institute. 10 In such a case the words " heirs and assignees " are mere surplusage and matter of style, used for the purpose of expressing somewhat emphatically that the conveyance is absolute. 11 i and ' assignees.' 516 PAYING OVER THE ESTATE [chap. vm. Conditions affecting marriage. Consent. Single. Widow. Widow living in adultery. Consent given to a marriage by a person in loco parentis can be retracted upon circumstances coming to his knowledge which might, if known to him at the time he gave his consent, have " fairly and properly " operated to induce him not to give his consent, such as any moral failing on the part of the intended spouse. 12 Where a truster in his will specifies a person and requires his consent to the marriage of a beneficiary to whom the truster stands in loco parentis as a condition of a gift to that beneficiary, the condition is held to be fulfilled (1) where the marriage has taken place in the lifetime of the truster with his consent; 13 (2) though his consent is refused at the time of the marriage, if there is a subsequent reconciliation; 14 and (3) in either of these cases, though the will expressly refers to consent to a marriage after the decease of the truster. 15 An interest determinable upon a woman ceasing to be single and unmarried is of a different quality from a gift during widow- hood. In the former case there is an absolute gift of the capital fund if no marriage ever takes place, and a gift of the remainder is taken by the representatives of the woman on her death without marriage. In the latter case the gift is for life or viduity, as the state of widowhood must determine with the woman's life. 16 The absolute gift is inferred only where there is a simple trust to pay income to a woman so long as she remains unmarried. Where there is a destination over upon marriage, the gift is a gift only for life or until marriage. 17 A gift " during the widowhood of my wife " does not imply " on condition that she is my widow " where the donor dies in the belief, though contrary to the fact, that his marriage is valid. It merely fixes the period during which the gift is to be enjoyed. 18 Where the truster left his widow the liferent of a house, with a sum of money to be paid at the discretion of the trustees for main- tenance while she remained his widow, and the fee to his children, the Court refused to interfere to the effect of ordering the trustees to pay any money to the widow when she was living in adultery and had deserted her children. The Court went on the ground that the intention of the truster was to benefit the widow and the children jointly, and her desertion of the children had put an end to her claim. The Court, however, also indicated that it would not interfere to obtain for a woman living in open adultery that which she would have no title to were she to marry her paramour. 19 A widow, in implement of a trust to maintain and educate the unmarried children of her deceased husband, lived in adultery chap, viii.] PAYING OVEK THE ESTATE 517 with a married man in the house she provided for them. No objection was taken to the character of the maintenance and education. The trustees applied to the Court for liberty to retain out of the income, arid apply, such sum as the Court should allow for maintenance and education of the children. The Court interfered as requested, on the ground that "a woman thus living in adultery cannot be treated as properly bringing up her children, however much she may do in the way of making them a comfortable home and giving them a proper education." 20 A woman who has obtained a divorce does not take under a pro- Divorce, vision to her " during her widowhood." 21 But a widow who has Deceased wife's contracted a marriage which is valid only in virtue of the Deceased sl8ter - Wife's Sister's Marriage Act, 1907, continues to enjoy any provision as a widow vested in her previous to the passing of the Act, as it declares that the union, legalised by the Act, shall not interfere with any rights of property existing at the passing of the Act. 22 The words in a marriage settlement " survive her now intended coverture " are not the same as " survive her now intended hus- band," and divorce brings the condition into operation. 23 A pro- vision in a marriage contract by a husband of a liferent to his wife determines upon her divorce. 24 Divorce is not equivalent to death in a question of the vesting of provisions under a marriage contract. 25 " There is to be gathered from the general line of authority conditions 00 J affecting one clear principle — that if a gift is absolute in the first instance, absolute and the provisions that follow are a mere settlement of that gift, then the settlement, if it is effectual, will have operation, reducing what appears to be an absolute gift to a life estate only. If, however, the settlement for any reason fails, then, in so far as it fails, there is no intestacy, but an interest in the nature of a reversion to the person who is the object of the previous absolute gift." 26 A gift is held to be absolute although there is added to the gift a direction as to the mode in which it is to be dealt with for the donee's benefit and to be enjoyed by him, such as a direction as to the manner in which it was to be invested and applied for the benefit of the donee. 27 But where the directions attached to the gift limit it to a certain purpose there is no absolute gift, and if the purpose fails there is intestacy. 28 1 Mackenzie, 1907, S. C. 139. A penal condition must be reasonably con- strued. Thus a condition that any beneficiary who raised an action against the trustees should be charged with the expenses of it applies only if there was no probabilis causa litigandi (Williams, 1912, 1 Ch. 399). Of. forfeiture clauses in Hay, 1913, 1 S. L. T. No. 13, where a declarator of right, and Collins, 1913, 1 S. L. T. No. 53, where a Special Case held not to contravene. Where there is a condition that the donee shall become a naturalised British 518 PAYING OVEK THE ESTATE [chap. vm. subject, the donee takes the gift if naturalisation is in his case impossible (Knox, 912, 1 I. R. 288). Cf. also s. 818. 2 Edwards, 1910, 1 Ch. 541. 3 Vines, 1910, P. 147, per Bigham, P., as result of authorities which had been " carefully reviewed " by Jeune, J., in Spratt, 18,97, P. 28. A gift on con- dition of the performance by the trustees of an act erroneously supposed by the truster to be a necessary act lapses though the act is performed voluntarily by the trustees (Currie, 1911, S. C. 999 ; see also s. 818, note 27). 4 Flemyng, 1885,15 L. R. Ir. 363 ; L'Estrange v. Winniet, 1911, 1 I. R. 62. 6 "Walcot v. Botfield, 1854, Kay, 534 ; Moir, 1884, 25 Ch. D. 605 ; Wright, 1907, 1 Ch. 231. 6 King v. Frost, 1890, 15 A. C. 548, at p. 553 ; Olphert, 1903, 1 I. R. 326, at p. 331. Examples in recent cases are collected in Scots Digest, 1873-1904, under " Succession," No. 349. " Remaining " children means " the others," and is not limited to " surviving children " (Speak, 1912, 56 Sol. J. 273). 7 Steel v. Steedman, 1902, 5 F. 239, per Lord M'Laren, at p. 243. Cf. Poultney, 1912, 2 Ch. 541. But see s. 834 (note 40). 8 Loring v. Thomas, 1861, 1 Dr. & Sm. 497 ; Lambert, 1908, 2 Ch. 117 ; Metcalfe, 1909, 1 Ch. 424. 9 Halliburton, 1884, 11 R. 979. 10 Findlay v. Mackenzie, 1875, 2 R. 909 ; Baillie, 1899, 1 F. 974. 11 Findlay, supra, per L. P. Inglis. Cf. Ferguson, 1906, 13 S. L. T. No. 336. 12 Brown, 1904, 1 Ch. 120. 13 Clarke v. Berkeley, 1716, 2 Vern, 719 ; Parnell v. Lyon, 1813, 1 V. & B. 479 ; Park, 1910, 2 Ch. 322. • « Wheeler v. Warner, 1823, 1 S. & S. 304. 15 Wheeler, supra. Cf. Park, supra, at p. 326. 16 Rishton v.' Cobb, 1839, 5 My. & Or. 145 ; Boddington, 1884, 25 Ch. D. 685 ; Kettlewell, 1908, 98 L. T. 23 ; Howard, 1901, 1 Ch. 412. Cf. Anderson v. Berkley, 1902, 1 Ch. 936. 17 Mason, 1910, 1 Ch. 695. ? 8 Hammond, 1911, 2 Ch. 342, distinguishing Boddington, supra. Cf. Laing, 1912, 2 Ch. 386. 19 Mellor, 1871, 20 W. R. 51, per Romilly, M.R. Cf. s. 327. 20 G., 1899, 1 Ch. 719, per Kekewich, J., at p. 723. 21 Kettlewell, 1908, 98 L. T. 23, following Boddington, 1884, 25 Ch. D. 685. 22 Whitfield, 1911, 1 Ch. 310. 7 Edw. vn. c. 47, s. 2. 23 Crawford, 1905, 1 Ch. 11. 24 Hedderwick v. Morison, 1901, 4 F. 163. Cf Gavin v. Johnston, 1901, 4 F. 278, where husband divorced ; Harvey v. Spittal, 1893, 20 R. 1016. 26 Harvey, supra; Tavlor v. Barnett, 1893, 20 R. 1032 ; Gavin, supra. . 20 Hancock, 1901, 1 Ch. 482, per Rigby, L.J., at p. 498. The test proposed by his Lordship was this : — Could the donee during life have succeeded in an action against the trustees to pay to her on the ground that they held in trust for her only, the other trusts having disappeared as invalid ? Cf. s. 759. 27 Gompertz, 1846, 2 Ph. 107. Cf. s. 755. 28 Lassence v. Tierney, 1849, 1 M'N. & G. 551 ; Hancock, supra, per Vaughan-Williams, L.J., at p. 498 ; Olphert, 1903, 1 I. R. 326. (10) Interpretation of Words Giffc by 834. " It is a rule that where the description is made up of more than one part, and one part is true but the other false, then if the part which is true describes the subject or object of the gift with sufficient certainty, the untrue part will be rejected and will not vitiate the gift." 1 Where the description and the name in a gift apply to different persons, there is now no presumption in favour of the name over the description. 2 " Where there is such a description on the face of the will as amounts to a designatio personce, it enables you to give to a person not filling the character description, — *m chap, viii.] PAYING- OVEE THE ESTATE 519 in which he would be entitled to take it by law, the property which the testator has bequeathed to him." 3 Such words as " now " or " present " in a will are presumed to ■■ present. refer to the date of the execution of the will and not to the date " JNow ' of death, and a subsequent codicil does not imply republication of the will as of the date of the codicil to the effect of altering the interpretation of such words in the will. 4 The general rule is that "the heir means the heir of the' Heir, testator at the time of his death." 5 The gift of personal property " Eight to the truster's " right heirs " excludes his personal representatives and carries the property to his heir in heritage as a persona designata.® .. Suc . A gift to the "heirs, executors, and successors whomsoever" of a ce person, at least where they are conditional institutes taking upon failure of the said person, is presumed to operate in favour of legal heirs, and not in favour of heredes facti. 7 " Heirs of my body " are Heirs of J J J the body. technical words in the language of the law, and mean the heirs of the particular person at his death, and they cannot be ascertained at an earlier date. 8 "Next of kin" are the next of kin according to the law of the Next.ofkm. truster's domicil, though the donee be a foreigner, but the status of any individual beneficiary by which he is brought within, or excluded from, the class as defined by the law of the truster's domicil, is to be decided by the law of the domicil of the donee. Such a question as legitimacy would fall to be determined by the foreign law. 9 In a destination " next of kin " is presumed to be used in its technical sense as "nearest in blood," and is not equivalent to "heirs in mdbilibus." 10 The words " nearest relatives entitled to succeed to movable estate " have been construed to mean heirs in mdbilibus, and not next of kin at common law, 11 and the same construction has been put upon the words " next of kin according to the law of movable succession in Scotland." 12 " Nearest of kin according to law " is according to common law, and not according to the Moveable Succession Act. 13 In England also "it is well settled that under a gift to next of kin without reference to the statute, the property passes to the nearest kindred in blood, and not the statutory next of kin." u But where there is an express reference to the statutory order and measure of distribution, such as " according to the statutes for the distribution of the estates of intestates," 15 or " as the law directs," 16 this is held to mean an equal stirpital dis- tribution, unless where it is qualified by such words as " equally " or "share and share alike," in which case the distribution is equally per capita amongst the class determined by the statute. 17 520 PAYING OVEE THE ESTATE [chap. vm. Relatives. Issue. Family. Without children. Next eldest. Cousins. Unborn child. Per stirpes or per Class gift. Where the destination is to the beneficiaries as tenants in common, or pro indiviso, this does not necessarily infer equality of interest, and the division is per stirpes. 1 * " Eelatives " of the truster are held to be his statutory next of kin at the date of the opening of the bequest to them. 19 " Nearest of kin " carries no presumption that it refers to those who are such at date of death. 20 Here there is no question of succession — the expression is not " heirs in mobilibus." But "my next of kin," according to the Statute of Distributions, refers to the date of death as the only date at which such people would be discovered. 21 There is no presumption of fact as to the existence or not of issue at date of death. 22 " Issue " includes, primd faciei direct descendants of every degree. 24 Both in England and in Scotland the word " family " in a will is presumed to mean " children," and to exclude grandchildren. 25 " Without leaving children " is to be construed as " without having any children who attained a vested interest." 26 A gift over upon the death of a son to "his next eldest" brother is a gift to the brother of the deceased son coming next after him in order of birth. 27 A bequest to "cousins" is presumed to mean "first cousins" only. 28 "It is now laid down as a fixed principle that wherever it would be for his benefit, a child em, ventre sa mere shall be considered as absolutely born." 29 Thus in the case of payment to children to be made to those alive at a certain time, the unborn child would take his share. 30 " A child en ventre sa mere at the period of distri- bution," says Malins, V.-C, " would be treated as being in existence for the purpose of sharing in the fund." 31 The limitation of the rule of construction to the cases where the application would be for the benefit of the child has now been authoritatively settled. 32 The interests of an unborn beneficiary are properly represented in Court by the trustees. 33 A gift by will to after-born children is presumed to be confined to children born between the date of the execution of the will and the testator's death. 34 There is no doctrine of a preference in a family settlement for a division per stirpes instead of per capita. 25 A direction to divide a fund " among " indicated persons is presumed to mean a division per capita. m It is a general rule of construction that where there is a gift to the children of several persons described as standing in a certain relation to the testator, the objects of the gift take per capita and not per stirpes. 37 It is a pure question of intention whether a gift is a class gift chap, vin.] PAYING OVER THE ESTATE 521 or not. 38 It is sufficient to make the gift a class gift if the persons described do in fact form a class, though not referred to as such. Persons described by their relationship to the truster or to some one named by the truster primd facie form a class. It is con- sistent with the idea of a class gift that some of the beneficiaries should be named and others described by reference, or that the beneficiaries forming the class should themselves be drawn from classes separately described. 39 A gift to a class is a gift to the persons happening to form the class at the time the gift takes effect. 40 There is no room for lapse in the case of a class gift where any member of the class exists at that time. 41 The English doctrine that a gift to a class, part of which is void, is void altogether, is not to be extended to other systems of law. 42 " The word ' unmarried,' as applied to a man, primarily means unmarried. ' without ever having been married,' i.e. a bachelor, but although this is the primary meaning of the word, apart from its context, there is a secondary meaning which the words may bear, namely, ' not having a wife,' i.e. being either a bachelor or a widower." 43 The words " without having been married " u must be primd facie construed according to their natural meaning, even in a marriage settlement. There is no presumption that the parties intend to benefit the issue of the marriage and that the words are intended only to exclude the husband from taking as legal personal representative of predeceasing children. 45 Where the primary meaning can be attached to the words of the deed, so as to give effect to every word, 46 merely redundant and unnecessary words of conveyancing excepted, and that without changing any of the words, such as "and," for "or," 47 then the primary meaning is to be taken. If the primary meaning cannot be so attached to the words, and the secondary meaning can be so attached, then the secondary meaning must be taken. 48 There is a presumption that allusions by a married man to his wife, wife or by another to a given man's wife, 49 refer to his wife at that time and that he does not contemplate one whom he may marry after her death, unless the instrument points to the time of his death, as where it is intended to make provision for a wife after that event. In this case the presumption is reversed. A policy in favour of a wife under the Married Women's Policies of Assur- ance Act, 1880, 50 is affected by the former presumption. 61 " Primd facie where the wife of a person is spoken of by a testator, and that person is married at the date of the execution of the will, the wife existing at that date is the person intended to take." 62 522 PAYING OVEE THE ESTATE [chap. vin. Liferent presumed joint. Servants. A bequest to servants of " a year's wages " does not include servants employed at weekly or monthly wages, though these are paid at longer intervals, 53 but a gift of " the amount of one year's wages," as it involves the idea of the sum being arrived at by addi- tion of smaller sums, covers servants employed at weekly wages. 54 A gift to servants " living with me at the time of my decease " does not exclude servants living in a different house from that in which the truster lived. 55 A gift to domestic servants or " house- hold servants " does not include a gardener, 56 or a coachman or a groom, 57 or a laundress, 58 any of whom lives in a house of his or her own. A gift to " clerks " in the employment of a shipping firm does not include pursers on ships. 59 The persons included in a gift to those in the employment of a named person are those who can sue that person for wages or make a claim against him under the Workmen's Compensation Act. 60 A bequest of a liferent interest of a fund held by trustees is presumed to be a joint gift, and the survivor takes the whole interest. The presumption is rebutted not only by express words of severance of interest, such as by any reference to " shares," but also where the bequest is capable of being interpreted as a gift to the issue of each liferenter of the share liferented by the parent. 61 In a charitable gift, where the words "found," "establish," " endow," or other similar or analogous expressions are used, the fund must be used for the purpose of investment, and the income thereof, and not the capital, applied to the purpose of the gift. 62 income. " income " is " as large a word as can be used " to denote a person's receipts. 63 It is not limited to the interest receivable upon investments, but includes the profits of a business, though they are partly the result of the skill and attention of the trustees. 64 Bents. A bequest of "rents" is presumed to be a gift of the gross rents. 65 1 Anderson v. Berkley, 1902, 1 Ch. 936, per Joyce, J., at p. 940, referring to Cowen v. Truefltt, 1899, 2 Ch. 309, per Lindley, M.R., at pp. 311, 312. Of. Wagstaff, 1908, 1 Ch. 162. See Garney v. Hibbert, 1812, 19 Ves. 124, and Sharp, 1908, 2 Ch. 190, for mistake as to member of a class intended to be benefited. 2 Garland v. Beverley, 1878, 9 Ch. D. 213, per Fry, J., discussing the history of the law on this point. See Halston, 1912, 1 Ch. 435. 3 De Beauvoir, 1852, 3 H. L. Cas. 524, per Lord St. Leonards, C, at p. 554. * Stilwell v. Mellersh, 1851, 20 L. J. Ch. 356 ; Park, 1910, 2 Ch. 322, but see Champion, 1893, 1 Ch. 101, and Willis, 1911, 2 Ch. 563, for a different construction in the case of a named property. 6 Frith, 1901, 85 L. T. 455, per Joyce, J. ; M'Donald, 1907, S. 0. 65 ; Leach, 1912, 2 Ch. 422. 6 De Beauvoir, supra ; Skinner v. Gumbleton, 1903, 1 I. R. 36. Cf. Jerdon v. Forrest, 1897, 24 R. 395—" F. is to be my heir ; " Galloway, 1897, 25 R. 28— "heirs" held to be heirs in mobilibus. ' Kinnaird v. Ogilvy, 1911, S. C. 1136. "Found." "Establish. "Endow." chap. Tin.] PAYING OVER THE ESTATE 523 8 Gollan v. Booth, 1901, 3 F. 1035. 9 Fergusson, 1902, 1 Ch. 483. 10 Honeyman v. Donaldson, 1900, 2 F. 539. 11 Thomson, 1903, 11 S. L. T. No. 30. 12 Rutherford v. Dickie, 1907, S. C. 1280. 13 Young v. Janes, 1880, 8 R. 242 ; Gregorys Alison, 1889, 16 R. (H. L.) 10. 14 Richards, 1910, 2 Ch. 74, per Swinfen-Eady, J., at p. 76. 16 Richards, supra; Holloway v. Radcliffe, 1857, 23 Beav. 163. 16 Fielden v. Ashwortb, 1875, 20 Eq. 410. 17 Mattison v. Tantield, 1840, 3 Beav. 131 ; Richards, supra. 18 Mattison, supra. 10 Reid v. Swan, 1911, 1 I. R. 405 ; Brown v. Higgs, 1803, 8 Ves. 561, and Phene, 1868, 5 Eq. 346, distinguished ; Joddrell, 1890, 44 Ch. D. 590, followed ; Birch v. Wade, 1814, 3 V. & B. 198, nearest case. 20 Johnston v. Dewar, 1911, S. C. 722, at p. 728. 21 Mortimore, 1879, 4 App. Cas. 448 ; Hannay, 1913, 1 S. L. T. No. 31. 22 Jackson, 1907, 2 Ch. 354. 23 See Cattanach, 1901, 4 F. 205 ; Bannerman, 1906, 13 S. L. T. No. 351, for examples of limited interpretation. 24 Turner, 1897, 24 R. 619, relying onMacdonald v. Hall, 1893, 20 R. (H. L.) 88, per Lord Herschell, C, at p. 91 ; Macdonald v. Scott, 1893, A. C, at p. 651 ; Dalziel, 1905, 7 F. 545, at p. 554 ; Taylor, 1912, 1 I. R. 1. 25 Pigg*>. Clarke, 1876, 3 Ch. D. 672 ; Low v. Whitworth, 1892, 19 R. 431 ; Phillips v. Davies, 1910, 2 S. L. T. No. 57, where Irvine, 1873, 11 M. 892, is discussed. 2a Cobbold, 1903, 2 Ch. 299 ; Leach, 1912, 2 Ch. 422. 27 Crofts v. Beamish, 1905, 2 I. R. 349. "Eldest son" is not equal to " first born " son, but eldest son alive when estate vests in possession (Wise, 1913, 1 Ch. 41). 28 Copland v. Milne, 1908, S. C. 426, following Stoddart v. Nelson, 1855, 6 De G. M. & G. 68, and rejecting an argument that the application of the word was wider in Scotland than in England. 29 Doe v. Clarke, 1795, 2 H. Bl. 399 ; 3 R. R. 430, per Buller, J., at p. 432, quoting Watkins' Law of Descents, 142, "a sensible treatise," where the whole matter " is well summed up " in this quotation. 30 In such a case it is difficult to see that there could be any question as to the benefit accruing to the child, though in some situations there may be a difficulty in interpreting the word " benefit." See Lord Loreburn, G, in Villar, infra, at p. 146. 31 Corlass, 1875, 1 Ch. D. 460, at p. 463, following Doe, supra. Cf. MacDonald, C.B., in Thellusson v. Woodford, 1805, 11 Ves. 112, at pp. 139, 140 ; 8 R. R. 104, at pp. Ill, 112 ; Grant v. Fyffe, 22nd May 1810, 15 F. Dec. 654 ; Ebbern v. Fowler, 1909, 1 Ch. 578, per Cozens-Hardy, M.B. 32 Villar v. Gilbey, 1907, A. C. 139, approving LordWestbury, C, in Blossom, 1864, 33 L. J. Ch. 403 ; 2 D. J. & S. 665 ; and Leach, V.-G, in Trower v. Butts, 1823, 1 S. & S. 181 (see Salaman, 1908, 1 Ch. 4 ; cf. Pearce v. Carrington, 1873, 8 Ch. 969, as explained by Lord Atkinson in Villar, supra, at pp. 151, 152), and overruling Buckley, J., in Wilmer, 1903, 1 Ch. 874, at p. 888 ; affd. 1903, 2 Ch. 411; and Chitty, J., in Burrows, 1895, 2 Ch. 497, who there inter- preted the case law authorities in a contrary sense. 33 Whiting, 1905, 1 Ch. 96, per Byrne, J., at p. 101. 34 Bhagabati v. Kali, 1911, Ind. App. 54, at p. 62, a gift to sons of two sisters of the testator, " who may be born hereafter," referring to Mann v. Thompson, 1854, Kay, 638, per Wood, V.-C, at p. 641, as to effect of gift of an "inter- vening interest" — e.g. a liferent— in postponing date of distribution when class to be ascertained. See also Dias i>. De Livera, 1879, 5 App. Cas. 123. 36 Binnie v. Prendergast, 191 1, S. C. (H. L.) 6, per Lord Shand, at p. 9. 30 Hay-Cunningham v. Blackwell, 1909, S. C. 219, but cf. Searcy v. Allbuary, 1907, S. C. 823. 37 M'lntire, 1904, 192 U. S. 116, at p. 121. 38 Galloway, 1897, 25 R. 28. 39 Bogie v. Christie, 1882, 9 R. 453. 40 Cf. Lord M'Laren in Argo v. Elmslie, 1905, 8 F. 67, at p. 70 ; Poultney, 1912 2 Ch. 541. «' Kingsbury v. Walter, 1901, A. C. 187 ; Kekewich v. Barker, 1903, 88 L. T. 130. 524 PAYING OVEK THE ESTATE [chap. vni. 42 Bhagabati v. Kali, 1911, Ind. App. 54, at pp. 64, 65. The doctrine is developed in Leake v. Robinson, 1817, 2 Mer. 363. 43 Chant, 1900, 2 Ch. 345, per Cozens-Hardy, J., referring to Clarke v. Calls, 1861, 9 H. L. Cas. 601, a case of a woman dying "unmarried" ; Collyer, 1907, 24 T. L. R. 117 ; Woodhouse, 1903, 1 I. R. 126. 44 Deane, 1900, 1 I. R. 332. 46 Brydone, 1903, 2 Ch. 84, approving Emmins v. Bradford, 1880, 13 Ch. D. 493 ; Smith, 1903, 1 Ch. 373, and disapproving Upton v. Brown, 1879, 12 Ch. D. 872 ; Stoddart v. Saville, 1894, 1 Ch. 480 ; Mare, 1902, 2 Ch. 112. 46 Roberts v. Kilmore, 1902, 1 I. R. 333, " unmarried and without issue." 47 Of. Lord Selborne, C, in Boddington, 1884, 25 Ch. D., at p. 688 ; see Crutchley, 1912, 2 Ch. 335. 48 Chant, supra ; Clarke, supra. 49 Coley, 1903, 2 Ch. 102. 60 43 & 44 Vict. c. 26. 61 Browne, 1903, 1 Ch. 188, per Kekewich, J. ; Griffiths, 1903, 1 Ch. 739. 62 Drew, 1899, 1 Ch. 336, per Stirling, J., at p. 339, relying upon Radford v. Willis, 1871, 7 Ch. App. 7 — a gift to the " husband " of an unmarried woman is taken by the person who first answers the description, and Firth v. Fielden, 1874, 22 W. R. 622— a second wife not entitled to benefit. Of. Boreham v. Bignall, 1850, 8 Hare 131 — here the first wife survived the testator, but not the date of the opening of the benefit, and a second wife who survived the opening of the benefit Was held, though reluctantly, to be excluded. 63 Ravensworth, 1905, 2 Ch. 1 ; Blackwell v. Pennant, 1852, 9 Hare, 551. 64 Sheffield, 1911, 2 Ch. 267. 68 Blackweil, supra. 56 Ogle v. Morgan, 1852, 1 De G. M. & G. 359 ; Vaughan v. Booth, 1852, 16 Jur. 808. 67 Drax, 1887, 57 L. T. 475. 68 Ogilby, 1903, 1 I. R. 525. 69 Jones, 1912, TinCes, 8th May. 60 Jones, supra. 61 Napier, 1908, S. C. 1160. 62 Att.-Gen. v. Belgrave, 1910, 1 Ch. 73. 63 Huggins, 1882, 51 L. J. Ch. 935, per Jessel, M.R., at p. 938. 64 Crowther, 1895, 2 Ch. 56 ; Elford, 1910, 1 Ch. 814. 65 Ford, 1911, 1 Ch. 455 ; Cleveland, 1894, 1 Ch. 164. (d) Payment under Entail Acts and under Thellusson Act 835. In certain cases the execution of a trust is interrupted by statute. Of such interruptions examples are those which occur (1) under the Entail Acts which have been treated in an earlier section, 1 and (2) under what is known as the Thellusson Act * against accumulation. In dealing with the latter example a distinction must be noticed between perpetuities which limit the beneficial interest to a series of liferents and withhold the fee in perpetuity and accumulations which withhold both income and capital, but for a limited period only. By the common law of Scotland an accumulation to be legal must have a definite beneficial object, coming into operation within a reasonable time, 3 but there is no interference with the scope of a perpetuity. 4 The law as to accumulations is now, however, ruled by the Thellusson Act and its amending statutes. 6 " That Act expressly alters what it takes to have been the former law upon the subject ; admitting the right to direct chap, viii.] PAYING OVER THE ESTATE 525 accumulation, 6 and reducing that right 7 in given cases to the period of twenty-one years." 8 1 S. 327. 2 The decision on the will of Mr. Peter Thellusson, which was the occasion for the passing of the Act, and the origin of the name by which it is known, is reported as Thelluson v. Woodford, 1805, 11 Ves. 112 ; 8 R. R. 104. 3 Mason v. Skinner, 1844, 16 S. J. 422. 4 Cf. L. P. Boyle in Suttie v. Tod, 1846, 18 S. J. 442, at p. 445 ; and vide s. 327 as to statutory interference. The modern " Rule against Perpetuities " in England is more correctly called the " Rule against Remoteness " (see distinction drawn in article in 15 Law Quarterly Review (1899), at p. 71). 6 39 & 40 Geo. in. c. 98 ; 11 & 12 Vict. c. 36, s. 41 ; and 55 & 56 Vict. c. 58. Vide Appendix, vol. i. of 1st edition. 6 " A direction to accumulate beyond one of the permitted periods is not void in toto " (Cattell, s. 850, at p. 573, citing Longdon, s. 850) 7 There is no acceleration of a beneficial interest by the intervention of the Act. Cf. s. 853. 8 Thellusson, supra, per Lord Eldon, C, at 11 Ves. p. 148 ; 8 R. R. 118. Thellusson Act (1) What are Statutory Accumulations 836. The original statute has been a perennial source of litiga- tion, owing to the number of interests affected by its interruption of the execution of the trust purposes, and by the obseure drafting of the provisions dealing with the re-settlement of these interests. Lord Brougham, for instance, says it is " an Act which has hardly ever been discussed in courts either of law or equity without the judge having occasion to observe upon the inartificial and, in several respects, ill-defined language in which its provisions are expressed," 1 and Lord Cranworth C, calls it " one of the most ill-drawn Acts to be found in our Statute Book." 2 Lord Eldon in the Thellusson case itself refers to the statute as an Act " which has been sometimes, though without foundation, attributed to me ; and which in some respects I would have corrected, if it had not come upon me rather by surprise. . . . The amount of accumula- tion, even through the provisions of that Act, though only to endure for twenty-one years, might in many instances, by giving the son a scanty allowance, be enormous. I do not think it was intended." 3 The correction his Lordship refers to would evidently affect the amount of accumulation allowed, which, as well as the period of accumulation, his Lordship would have limited. 1 Shaw v. Rhodes, 1835, 1 My. & Cr. 135, at p. 141. 2 Tench v. Cheese, 1855, 6 De G. M. & G. 453, at p. 460. Of. Lord West- bury, G, in Green v. Gascoyne, 1865, 34 L. J. Ch. 268, at p. 271. 3 Thellusson, s. 835, at 11 Ves. p. 148 ; 8 R. R. 118. 837 The original Thellusson Act did not extend to trusts of Effect on ' ° heritage. heritage in Scotland — these were expressly excepted — but this 526 PAYING OVEE THE ESTATE [chap. viii. exception was repealed by the Entails (Eutherfurd) Act, 1848, s. 41. 1 The question then arose whether the repeal drew back its effect to the date of the principal Act, and so affected accumu- lations made under such trusts in the interval between the dates of the repealing and of the original Act. As the repealing pro- vision has been decided not to be retrospective, the original Act only affects such accumulations where made after the passing of the repealing Act. 2 1 11 & 12 Vict. c. 36. Vide Appendix to vol. L, 1st edition. 2 Keith, 1857, 19 D. 1040, per L. P. M'Neill, at p. 1059. Vide also Lord Ivory, at p. 1062, and Lord Deas, at pp. 1069, 1070. Cf. M'Larty v. M'Laverty, 1864, 2 M. 489. 838. The Thellusson Act applies to all heritable property in Scotland, though held by trustees under a trust outwith the scope of the Act, e.g. an Irish trust, 1 on the principle that the territory and soil of Scotland are governed by all statutes in force in Scotland. 2 Conversely, of course, in the case of Scots trustees holding land in Ireland in trust, the statute would not apply to that part of the trust estate. Though the statute does not touch the accumulations of the income of such land, it will affect the income of the accumulations themselves, unless these are invested, as they accrue, in real estate situated outwith the scope of the statute. 3 1 The Act does not apply to Ireland, as it was passed before the Legislative Union. Vide Ellis v. Maxwell, 1849, 12 Beav. 104. 2 Freke v. Oarbery, 1873, 16 Eq. 461, per Lord Selborne, C. Cf. principle in Curtis v. Hutton, 1808, 14 Ves. 537. 3 Ellis, supra, per Langdale, M.R., at p. 111. Direction to 839. It must be noted that the Act does not strike at volun- accumulate necessary. t arv savings out of income which are not the result of directions Direction . maybe i n the trust deed. 1 An implied direction to accumulate is struck implied. *■ at by the statute as well as an express one. Whatever be the form of the direction if its effect is accumulation, it is struck at. "The enactment is in substance that no -person shall settle or dispose of his property so and in such manner that the rents, issues, produce, or profits thereof shall be wholly or partially accumulated beyond a certain time. The thing to be prevented is the accumulating the profits and produce ; and the statute forbids any manner of settlement whereby that result shall be attained. That is the leading purpose of the statute and what it prohibits." Therefore, although the statute speaks of income " directed to be accumulated," that includes direction by implication as well as express direction. 2 In a similar sense, Lord Cranworth, chap, viil] PAYING OVEE THE ESTATE 527 C, says : — " If a testator directs that to be done which, as a conse- quence, leads to an indefinite accumulation, he must, within the meaning of the statute, be taken to have directed accumulation." s Again, it has been laid down that " if the provision in question cannot be carried into execution without postponing the beneficial enjoyment of the rents and profits, in order that those rents and profits may be laid up from year to year and applied at a future time to a particular object, it appears that such a provision is within the statute. If the disposition be such that accumula- tion is thereby required, it is within the statute." i Thus where there was put upon the rents of an estate a charge of such a sum as would in a certain number of years amount to a certain specified sum, it was argued that that did not fall within the statute as it was a simple charge on the estate. It was, however, held to be within the statute, and, as an implied direction to accumulate, to be void after twenty-one years from the testator's death, " the real question being not as to the form of the direction, but as to its substance and effect." 6 " It is enough that the deed under which the question arises is so conceived that there must necessarily be an accumulation beyond twenty-one years." 6 A trust to accumulate is not to be presumed unless the trustees But not t it- • presumed. have a " very clearly implied power and direction to retain the estate and can do nothing with the income in the meantime but accumulate it for the benefit of the persons who may ultimately be entitled to it. 7 i Lindsay, 1911, S. C. 584. 2 Lord v. Colvin, 1860, 23 D. Ill, per L. P. M'Neill, at p. 124. Of. Lord Deas, at pp. 136, 137. 3 Tench v. Cheese, 1855, 6 De G. M. & G. 453, at p. 461. The judgment in appeal in this case overruled the decisions of Shad well, V.-C, in Elborne v. Goode, 1844, 14 Sim. 165, and Corporation of Bridgenorth v. Collins, 1847, 15 Sim. 538, who there held that the statute struck only at express direction to accumulate, and not at "chance accumulation" ; as also the judgments of Romilly, M.R., in Tench, 1854, 19 Beav. 3, and in the earlier case of Bryan v. Collins, 1852, 16 Beav. 14. * Shawu. Rhodes, 1836, 1 My. & Cr. 135, per Bosanquet, J., at pp. 154, 155. 6 Shaw, supra, per Lord Cottenham, G, at p. 160. " Maxwell, 1877, 5 R. 248, per Lord Ormidale, at pp. 251, 252, expressly following Lord, supra. 7 Gollan v. Booth, 1901, 3 F. 1035, per Lord Kinnear, at p. 1040. Of. Gollan v. Dallas, 1906, 13 S. L. T. No. 332, where accumulation held implied. 840. The mere fact that the amount of the accumulation is Discretion as to variable and subject to be changed from time to time in the amount. discretion of the trustees does not prevent such accumulation falling under the prohibition of the statute. 1 Where, however, improve- & L . ments. trustees, after providing for an annuity, had a discretionary trust 528 PAYING OVEE THE ESTATE [chap. vra. to apply surplus income to the improvement of the estate during the life of the annuitant, such sums as the trustees applied in the execution of this trust, in so far as of the nature of current expendi- ture, such as would be properly chargeable against income and not capital, were held, in that particular case, not to be accumulations struck at by the statute. 2 It was admitted, though, that " some ingenious conveyancer might try to work through the medium of the trust for improvement so as, in fact, to make it an accumulation." 3 Mineral Where coal is let by trustees on lordships or at a fixed rent, according to whether the coal is worked or not, and both of these are decided to be capital and not income quoad the beneficiaries, the accumulation of these is not struck at by the statute. 4 1 Matthews v. Keble, 1868, 3 Ch. App. 691, per Selwyn, L. J., at p. 698. 2 Vine v. Raleigh, 1891, 2 Ch. 13, per Chitty, J. Of. Lindsay, s. 839. 3 Vine, supra, at p. 21. 4 Ranken, 1908, S. C. 3. interest on 841. Interest on accumulations is also an accumulation, and accumula- tions. j s therefore struck at by the statute. "A trust to accumulate affects the interest of the principal sums invested, and then again the interest on that interest." x Thus both simple and compound interest on accumulations are struck at, and the question arises how such interest is to be disposed of. special Where accumulations are directed to be made out of the destination. income of a fund that is specially destined, if the accumulated income has been retained from a person who, but for the direction to accumulate, would have taken it, in so far as the interest on the accumulations is struck at, it falls to be paid to him, other- wise it falls to be paid to the fiar 2 of the residue 3 if there is one, or to the heirs ab intestato if there is no residuary bene- ficiary. Where there is a residuary beneficiary, but he is not ascertainable at the date on which the Act stops accumulation, the future income must be invested by the trustee and held for the person who may prove to be the fiar. In the meantime, between the date at which the Act stops accumulation, and the date at which the person with a vested right to the fee of the residue emerges, the interest on the accumulation in the hands of the trustee is to be paid to the liferenter of the residue if there is one. The argument that after the Act had stopped accumula- tion the future income of the trust estate, and not merely the interest on that income, fell to be paid to the liferenter of the residue as it' accrued, has been rejected. 4 chap, vin.] PAYING OVEE THE ESTATE 529 Where the accumulations are made out of the income of Residue. residue, and not out of that of a fund with a special destination, 6 in so far as the interest on the accumulations is struck at, it falls to be paid to the liferenter of the residue . who has been ousted by the direction to accumulate. 6 If there is no such life- renter, and the residuary is not yet ascertainable, this interest is undisposed of, and goes to the heirs ah intestato of the truster. 7 1 Green v. Gascoyne, 1864, 4 De G. J. & S. 565, per Lord Westbury, C, at p. 572. 2 Crawley, 1835, 7 Sim. 427. 3 Cf. 859. A distinction must be drawn all through the treatment of this question between a general residuary beneficiary and a special residu- ary ; cf. s. 1048. The true residuary legatee is the former ; he takes all the trust estate that is not otherwise disposed of, and therefore the only limit to the amount he may take is the amount of the whole trust estate. The special residuary takes all of a particular fund that is left undisposed of, and he can in no circumstances take more than the whole of that fund. He therefore does not oust the heir ab intestato except to the extent of the particular fund — the true residuary does oust the heir ab intestato. Nothing can fall into intestacy where everything falls into the residuary destination. See L. P. Dunedin in Smith w Glasgow Infirmary, 1909, S. C. 1236. 198, and following Crawley, supra, and O'Neil v. Lucas, 1838, 2 Keen, 313. 4 Pope, 1901, 1 Ch. 64, per Farwell, J., disapproving Phillip, 1880, 49 L. J. Ch. 6 A fund is not specially destined if it is set apart only for purposes of accumulation, and falls ultimately into residue as in Phillip, supra. 6 As in Phillip, supra. The discrepancy between the decisions in Phillip and in Pope seems to be due to a misunderstanding as to the destination of the accummulating fund in the former — it is treated as specially destined, as the fund in Pope is, while in fact, though subject to the payment of a specific legacy, it is residue. The illegal accumulations in Phillip therefore fall into the category of accumulations of a residue liferented and not into the category of accumulations of a specially destined fund without a liferenter to take on the cessation of the accumulations. Phillip differs from Green in that there is no hiatus, in Phillip there being a liferenter of the residue, while in Green, as in Crawley, no interest under the will emerges till the date when the accumulations would naturally cease. Cf. s. 85% 7 Macdonald v. Bryce, 1838, 2 Keen, 276, per Lord Langdale, M.R., at p. 285. 842. All capital debts incurred for the estate during the period g^ 9 e ° f of legal accumulation must be paid out of the accumulations made during that period. To pay them out of subsequent income would be an accumulation struck at by the statute and only an evasion of it. Thus where during the period of legal accumulation debts are incurred by the trustees to pay off new purchases of land, they cannot be paid out of income accruing after the lapse of twenty-one years from the truster's death. 1 1 Smyth v. Kinloch, 1880, 7 R. 1176. 843. Are premiums paid to an insurance company accumula- ^™^| tions within the scope of the Act ? The matter is thus discussed by Turner, V.-C, in a case dealing with life insurance : — " The dry question I propose to determine is, whether a direction given by a will, to pay out of the income of the testator's property the 34 530 PAYING OVER THE ESTATE [chap. vm. premiums upon a policy of insurance, effected by the testator upon the life of another person, is valid for the whole of the life insured, or only for the term of twenty-one years after the death of the testator, ... It was said in argument that the payment of the income to the insurance company in the present case was of itself an accumulation ; that the company are recipients of the income for the purpose of accumulation ; that what was done was the same thing as if the rents were paid to an individual, to accumulate in his hands, and to be paid over at the death of the life insured ; but I do not see how the payment of the premiums to the insurance company out of the income is an accumulation of the income. The premiums when paid to the insurance company become part of their general funds, subject to all their expenses ; and although it is true that the funds in the hands of the com- panies do generally produce accumulations, it is impossible to say what accumulations arise from any particular premium. It was said that it was an accumulation as to the estate, because the estate receives back a certain sum upon the death of the party whose life was insured ; but what the estate receives back is not the accumulation of the income, but a sum payable by the office by contract with the testator." * This decision has been attacked 2 on the ground that, while the statute forbids accumulation in any manner whatsoever, the decision sanctions accumulation if made in a certain manner. That manner is the payment of the income to be accumulated to a person who contracts to pay a certain sum at a certain date or on a certain event. This criticism seems to overlook the condition that when the income has been paid over to the other party it has passed out of the power of direction on the part of the testator altogether, and the fact that the other party may or may not see fit to accumulate what is paid to him has no relevance to any question of the administration of the testator's estate by his trustees under his directions. The repayment in no way depends upon the amount accumulated by anyone, or the manner of accumulation, if there be accumulation ; the repayment is wholly dependent on the personal solvency of the debtor in the obligation at the date of its solution. That the decision appears to open up a wide field for the ingenuity of conveyancers in practically defeating the statute is another matter. In any case, the adverse criticism of the decision has been expressly put aside and the decision followed in a later case, which was held to be undistinguishable from the older one. 3 chap, viii.] PAYING OVEK THE ESTATE 531 The principle seems to be that maintenance and repair of the Limited to estate may be provided out of income, either directly or by means and repair! of insurance, without contravening the statute. 4 But anything beyond maintenance, as, for instance, building houses on the estate out of income, would be struck at by the Act. 6 Examples of insurance not in contravention of the Act are fire insurance of buildings, 6 the keeping in force of a policy taken out by the truster on the life of a third person, 7 and the payment of premiums on a policy to secure the loss of capital to the estate on the expiry of leaseholds. 8 1 Bassil v. Lister, 1851, 9 Hare, 177, at pp. 180-183. 2 Jarman on Wills, vol. i., 4th ed., p. 316, repeated in 6th ed., p. 393, with Teference to Vaughan, infra. 3 Vaughan, 1883, W. N. 89, per Chitty, J., followed expressly in Cathcart ■v. Heneage, 1883, 10 R. 1205 ; vide specially opinion of L. J.-C. Moncreiff. 4 Vine v. Raleigh, 1891, 2 Ch. 13 ; Mason, 1891, 3 Ch. 467. 6 Vine, supra, per Lindley, L.J., at p. 26. 6 Mason, supra. 7 Bassil, supra ; the actual decision does not seem to go beyond this, though the opinion ut supra is general. 8 Gardiner, 1901, 1 Ch. 697, where Buckley, J., considers and discusses Bassil, Vine, and Mason, supra. 844. The statute expressly excepts x accumulations directed for Exception the " payment of debts of any grantor, settler, or devisor, or other other than trustees'. person or persons." 2 This exception has been interpreted in a broad sense, so as to include future and contingent debts, such as possible calls on partly paid shares, or obligations falling on an ■estate at the end of a lease. The extension to the debts of other people is also to be interpreted quite generally, Lord St. Leonards saying that it extended to " the debts of such other persons as the grantor should think fit, it being perfectly certain that the power "was one which it would not be very dangerous to entrust to any- body." 3 The direction must in all cases, however, be bond fide given for the purpse of paying debts, and must not be merely "colourable for the purpose of evading the Act." 4 To instruct bona fides, it would appear that there must be some reasonable prospect of obligations arising such as would justify accumula- tion, and not merely an "accidental result, which may or may not happen, of the payment of debt out of the accumulations." 5 But where part of the estate has been sold either by order of the •Court 6 or under the powers of the trust deed, 7 and debt paid off with the proceeds, a trust to accumulate income to replace the •capital so expended is struck at by the Act as not being an accumulation for the payment of debts in the sense of this 532 PAYING OVEE THE ESTATE [chap, viil exception. Neither is the unpaid balance of purchase money a debt falling under the exception. 8 1 39 & 40 Geo. in. c. 98, s. 2. 2 Vide example in Bateman v. Hotchkin, 1847, 10 Beav. 426. 3 Barrington v. Liddell, 1852, 2 De G. M. & G. 480, at p. 498. 4 Varlo v. Faden, 1859, 27 Beav. 255, per Romilly, M.R., at p. 265 ; affd.. 1 De G. F. & J. 211 ; Hurlbatt, 1910, 2 Ch. 553. 5 Matthews, s. 840, per Page Wood, L.J., stt p. 697, relying on Romilly,, M.R., in Varlo, supra. 6 Tewart v. Lawson, 1874, 18 Eq. 490. 7 Heathcote, 1904, 1 Ch. 826. 8 Tewart, supra, at p. 496, per Hall, V.-C. And of portions. Portion must be definite in amount. 845. The statute also expressly excepts accumulation "for raising portions x for any child or children 2 of any grantor, settler, or devisor, or any child or children of any person taking any interest 3 under any such conveyance, settlement, or devise." 4 Portions proper, in the sense of the Act, are created "where there is a direction, out of rents and profits, or out of the income- of the estate, or by felling timber on the estate, or by any of the ordinary modes, to raise a certain sum for the benefit of younger children or children generally, or to raise a sum 5 of money for each child." 6 Thus an accumulation directed for the purpose of raising a fund to be paid to a widow in liferent and her children in fee, is not an accumulation for raising portions within the ex- ception of the statute. 7 A provision for raising portions must be distinguished from a provision for making additions to a capital sum, with the purpose of making one gift of the aggregate fund. 8 " There is abundant authority on the point that, where the bulk of a fund is given, together with accumulations of the income of that fund, to the children of a person who takes an interest under the will, such a gift is not a raising of portions within the mean- ing of the exception in the Thellusson Act," 9 and though along with such gift there may be given accumulations of income from another capital fund, which fund is not itself given, these accumu- lations cannot be separated from the rest of the gift, so as to bring them within the exception of the Act. 10 " When a testator directs, the income of his personal estate to be accumulated for a certain period, and, at the expiration of that period, gives the accumulated fund amongst children, the shares which the children are to take- are not portions within the meaning of that term as used in the second section of the Act, and, consequently, the direction for accumulation is not a provision for raising portions within the- meaning of that section." n And again, " a direction to accumu- late residue for the benefit of an infant is not a provision for chap. Tin.] PAYING OVER THE ESTATE 533 raising portions for the child within the meaning of the section in question." 12 But a specific annual sum that is reserved out of the income of the residue in order to be accumulated for a child is a good portion. 13 1 " Portions " includes portions already charged as well as those charged by the will itself (Barrington v. Liddelh 1852, 2 De G. M. & G. 480, at p. 498, following Shadwell, V.-C, in Halford v. Stains, 1849, 16 Sim. 488, and referred to and followed in Middleton v. Losh, 1852, 1 Sm. & Gif. 61, per Stuart, V.-C, at p. 71). 2 Of course legitimate children (Shaw v. Ehodes, 1836, 1 My. & Or. 135i at p. 159). 3 Cf a. 846. 4 39 & 40 Geo. in. c. 98, s. 2. 5 The grant of the interest of a fund is not a portion (Mackay, infra, per L. P. Dunedin, at p. 143). 6 Bourne, infra, at p. 97. 7 Watt v. Wood, 1862, 2 Dr. & Sm. 56, per Kindersley, V.-G, discussing cases. 8 Bourne, infra. Cf. Jones v. Maggs, 1852, 9 Hare, 605, per Turner, V.-C, at p. 607. 9 Walker, 1886, 54 L. T. 792, per Kay, J., at p. 794. 10 Walker, supra. 11 Bourne, infra, per Kindersley, V.-G, at p. 97. Cf Drewett v. Pollard, 1859, 27 Beav. 196, and Mathews v. Keble, 1868, 3 Ch. App. 691, at p. 697. 12 Edwards v. Tuck, 1853, 3 De G. M. & G. 40, per Lord Cranworth, C, at p. 59, referring to and relying on Bourne v. Buckton, 1851, 2 Sim. (N. S.) 91. Cf. Wildes v. Davies, 1853, 1 Sm. & Gif. 475 ; Moon, 1899, 2 F. 201, per Lord Trayner, at pp. 207, 208 ; Mackay, 1909, S. C 139, per L. P. Dunedin, at p. 143 ; Muir v. Jameson, 1903, 10 S. L. T. No. 448, per Lord Kincairney, following Moon. 13 Colquhoun, 1907, S. C. 346 ; Stephens, 1904, 1 Ch. 322. (In reading the reasoning of the Court in deciding this case, which largely turned upon the question whether the rule in Andrews v. Partington was applicable or not, it must be noted that that rule is not adopted in the law of Scotland. Of. s. 766.) Beech v. Lord St. Vincent, 1850, 3 De G. & Sm. 678. In Colquhoun Lord Stormonth-Darling reviews the earlier cases and discusses their varying tendencies. 846. As to the interest which the parent must take under the parent's interest. conveyance so as to bring the portion of the child within the exception, it appears to be still a moot point whether that interest must be " a special interest in the subject-matter of the property- devised for accumulation," or whether it may be an interest in other property falling under the conveyance. 1 It has been decided on the one hand that an interest under the particular gift for accumulation must be taken, 2 and on the other hand, by high authority, that the interest need not be under that particular gift, but under any provision of the deed. 3 As to the quantity of the interest it has been laid down that "any interest, however minute," is sufficient. 4 1 See this question and cases discussed by Turner, V.-C, in Burt v. Sturt, 1853, 10 Hare, 415, at p. 420. 2 Bourne v. Buckton, 1851, 2 Sim. (N. S.) 91, per Kindersley, V.-C, at p. 101. 3 Barrington v. Liddell, 1852, 2 De G. M. & G. 480, per Lord St. Leonards, C, at pp. 500, 501 ; referred to by Turner, V.-C, in Burt, supra, at pp. 420, 534 PAYING OVEE THE ESTATE [chap. vni. 421, and also by Kindersley, V.-C,, in Watt v. Wood, 1862, 2 Dr. & Sm. 56, at p. 61. 4 Evans v. Hellier, 1837, 5 CI. & E. 114, per Lord Lyndhurst, at pp. 126, 127 ; approved by Lord Cranworth, C, in Edwards v. Tuck, 1853, 3 De G. M. & G. 40, at p. 63 — a contrary opinion as to "small annuities" in Shaw v. Rhodes, 1836, 1 My. & Cr. 135, at p. 159, is referred to " the circumstances of that case being so peculiar " ; Bourne, supra, at p. 99. be™eflSte St ^^ ' ^ e ^cumulation for raising the portion must be bond fide directed for that purpose ; there must be " a bond fide inten- tion on the part of the grantor to benefit the children of the particular parent whom he had benefited." 1 Thus there is held to be no such bond fide intention where there is " a mere chance limitation to the surviving grandchild, whoever he may be, after the death of a number of persons, with regard to many of whom, as his uncles and aunts, that child cannot be said to be in the direct position of a person intended to be benefited by way of portion after the limitation to the parent." 2 1 Burt, s. 846, per Turner, V.-C, at p. 427. 2 Burt, ut supra. (2) When Statute Intervenes 848. Under the statute, accumulation is declared not to be permissible "for any longer term than the life or lives of the grantor or grantors, settler or settlers, or the term of twenty-one years from the death of any such grantor, settler, devisor, or testator, or during the minority or respective minorities of any person or persons who shall be living or en ventre sa mere at the time of the death of such grantor, devisor, or testator, or during the minority or respective 1 minorities only of any person or persons 2 who, under the uses or trusts of the deed, surrender will or other assurances directing such accumulations, would for the time being, 3 if of full age, be entitled unto the rents, issues, and profits, or the interest, dividends, or annual produce so directed Four differ- to be accumulated." 4 There is thus a choice of four periods of ent periods *■ foraocumu- accumulation allowed: — First, during the life of the grantor. Second, for a period of twenty-one years after his death. Third, during the minority of anyone in existence, though unborn at the date of the death of the grantor. Fourth, during the minority of the beneficiary himself. 1 Cattell, infra. Vide ^ argument at p. 571 that this does not mean "suc- cessive," but that the minorities referred to are those of different persons respectively entitled to different funds, the income of each of which funds can be accumulated only during the minority of its beneficiary. 2 Including those born after the truster's death— Cattell, 1907, 1 Ch. 567, per Neville, J., who discusses and declines to follow dicta in a contrary sense in Haley, s. 850, per Leach, V.-C. ; Ellis, s. 850, per Lord Langdale, M.R. ■ chap, viii.] PAYING OVER THE ESTATE 535 Bryan v. Collins, 1852, 16 Beav. 14, per Eomilly, M.R., at p. 16 ; and Jagger, s. 850, per Kay, J., at p. 734. 3 I.e. accumulation is legal, though the title of the beneficiary is not indefeasible (Cattell, infra, at p. 574, per Neville, J.). 1 39 & 40 Geo. in. c. 98, a. 1. 849. Under the provisions of the Accumulations Act. 1892, 1 Only one x penod for where the accumulations are for the purchase of land only, this f a ^ hase of choice 2 is not available, and only the last period, viz. that during the minority of the beneficiary himself, is permissible for accumu- lation. This statute has received illustration in a case where the truster directed the trustees to accumulate during twenty-one years after his death, 3 and invest the accumulations in land or Government securities. Chitty, J., held that " there was no trust imposed by this will as to these accumulations which could be described as a trust for the purchase of land only. The money could be applied in various other ways within the meaning of the will." The later Act did, therefore, not apply to this case, and the accumulations were legal as directed, and were not struck at on the majority of the beneficiary. 4 But a direction to purchase " real estate " is held to be struck at. To interpret " land " recourse must be had to the Interpretation Act, 1889, 5 and it is impossible to figure " real estate " not covered by the statutory definition of " land." 6 1 55 & 56 Vict. c. 58. The Act applies to a will made before and coming into operation after the Act (Llanover, 1903, 2 Ch. 330). 2 S. 848. 3 Cf. Clutterbuck, infra, at p. 289. * Danson, 1895, 11 T. L. E. 455 ; 13 The Reports, 633. 5 52 & 53 Vict. c. 63, s. 3. 6 Clutterbuck, 1901, 2 Ch. 285. Here the question is raised whether the Interpretation Act confines " land " to " corporeal hereditaments " or not ; Byrne, J., in Clutterbuck deciding in the negative against dictum of Chitty, J., in Danson, supra, in the affirmative. 850. It will be noticed that the periods of accumulation men- Periods *■ are not tioned in the Thellusson Act are exclusive, not cumulative. The cumulative, statute allows accumulation for only one of the periods mentioned therein. 1 Thus where a truster gave directions to accumulate income for twenty-one years after his death, and at the expiration of that term to continue the accumulation during the minorities of the beneficiaries, it was held that only the former direction was good, and that the accumulation must stop at the expiry of twenty- one years from the truster's death. 2 "Where accumulation is directed from a testator's death it cannot be continued during the minority of a person not then born." 3 i Jagger, 1883, 25 Ch. D. 729 ; Cattell, 1907, 1 Ch. 567, per Neville, J., at pp. 572, 573. 536 PAYING OVER THE ESTATE [chap. vm. 2 Wilson, 1851, 1 Sim. (N. S.) 288. 3 Cattell, supra, per Neville, J., at p. 573, relying on Longdon v. Simson, 1806, 12 Ves. 295 ; Haley v. Bannister, 1819, 4 Madd. 275 ; Ellis v. Maxwell, 1841, 3 Beav. 587. Accnmuia- 851. Where a truster directs, by inter vivos deed, accumulation tion during . life of to be made during any period commencing before his own death, he thereby brings into play the clause permitting accumulation during the lifetime of the grantor, and, the periods of permitted accumulation being exclusive, excludes all other periods of accumu- lation permitted by the statute, and the accumulation ceases at his death. Thus B. transferred stock by inter vivos deed to trustees, and directed them to accumulate the income during the joint lives of M. and N. It was held that the direction was only good for the period during which all three, B., M., and N., were alive — that is, the accumulation ceased under the direction by the death of either M. or N., and it ceased by statutory intervention on the death of B. 1 It is to be noted that in the case of accumulation during the grantor's lifetime the accumulation may go on for much over twenty-one years, for the grantor could accumulate income himself without handing it to trustees for the purpose. It is only after his death, when he cannot accumulate but by direction to trustees, that the statute intervenes to name a maximum period of accumulation. 1 Rosslyn, 1848, 16 Sim. 391, followed in Jagger, s. 850. implied 852. A direction to accumulate, which in fact entails accumu- excess of 1 . . accumuia- lation beyond the permitted period, is struck at, though that period is not expressly exceeded in the direction. If the necessary result of the execution of a direction to accumulate is to cause accumulation to be made beyond the permitted period, the statute intervenes, and the accumulation must cease when the permitted period expires. Thus where the truster directs accumulation to be made till a certain contingency occurs, the statute stops that accumulation at twenty-one years from the death of the truster, if the contingency is still unsolved. 1 Similarly, where a truster directs accumulation till a fund reaches a certain amount, the statute steps in and stops the accumulation at twenty-one years from the death of the truster, if the amount has not then been reached. " I think," says Lord Chelmsford, C, " that if a person directs the accumulation of his personal property till it reaches a certain sum, it is virtually a direction for accumu- lation for the number of years requisite to produce that sum, and chap, vm.] PAYING OVER THE ESTATE 537 that when the period prescribed by the statute arrives, it steps in and stops the further progress of the accumulation." 2 1 Beetive v. Hodgson, 1864, 10 H. L. Cas. 656, at p. 664. 2 Oddie«. Brown, 1859, 4 De G. & J. 179, at p. 188. 853. The effect of the statute is strictly limited to the preven- statute tion of accumulation beyond the period permitted by the statute, apcumuia- and in no other way affects the purposes of the trust deed. "Although the trust for accumulation is cut down and reduced to a limited period, the whole of the rest of the will remains, in point of disposition, in point of the meaning, effect, and true inter- pretation of its language, precisely as if there had been no such operation performed by the statute." 1 "The statute was not intended," says Lord Langdale, M.E., " to operate, and does not operate, to alter any disposition made by the testator, except his direction to accumulate. Striking that out, everything else is left as before, and all the other directions of the will, as to the time of payment, substitution, or any contingencies, are to take effect according to the true construction of the will, unaltered by the effect of the statute." 2 Thus the cessation of accumulation brought about by the intervention of the Act cannot be used to accelerate the enjoyment of any provision or gift under the deed, 3 unless where the sole object of the postponement of the right to demand payment is to permit of the direction to accumulate being carried out. Lord Kinnear puts the distinction in these words : — " If a testator postpones the period of payment or con- veyance of his estate so as to suspend or exclude vesting, and in the meantime directs that the rents and proceeds of his estate shall be accumulated, the interruption of the accumulation by the operation of the Thellusson Act will not accelerate the period of vesting." But if payment is postponed only to permit of accumulation, the cessation of accumulation accelerates the date of payment. 4 1 Green v. Gascoyne, 1865, 34 L. J. Ch. 268, per Lord Westbury, G, at p. 271. 2 Eyre v. Marsden, 1838, 2 Keen, 564, at p. 574. 3 Green v. Gascoyne, 1865, 4 De G. J. & S. 565, at pp. 569, 570. 4 Colquhoun, 1892, 19 B. 946, at p. 953. 854. The statute only affects accumulation after the permitted ^™Jy period, e.g. twenty-one years; it does not cut down the whole p«™» ted accumulation and make it payable at twenty-one years. The accumulation during the twenty-one years remains untouched, as if the statute did not exist; it only fixes a limit of 538 PAYING- OVER THE ESTATE [chap. vm. time within which the accumulation is allowable. 1 Thus where the testator died on the 18th June 1831 the statute does not touch any accumulation made on or before the 18th June 1852. It is only from that date that the statute declares all accumulation How to be void. 2 In calculating the period of twenty-one years from years the truster's death, the day of the death is to be excluded. Thus measured. d where a truster died on the 5th of January 1820, income falling in on the 5th of January 1841 can be accumulated. 3 1 Griffiths v. Vere, 1803, 9 Ves. 127 ; Keith, 1857, 19 D. 1040. 2 Lord v. Colvin, 1860, 23 D. Ill, per L. P. M'Neill, at p. 124. 3 Gorst v. Lowndes, 1841, 11 Sim. 434. There is no general rule as to computation of time. " The rational mode of computation is to have regard in each case to the purpose for which the computation is to be made " (Lord Esher, M.R., in North, 1895, 2 Q. B. 264, at 269). Vide note to s. 46 of Bell's Prin. ; also Sir William Grant's opinion in Lester v. Garland, 1808, 15 Ves. 248 ; 10 R. R. 68. , Twenty-one 855. It is to be noted that the Act does not necessarily permit years runs from death of accumulation for twenty-one years ; it comes into operation, not onl y- after twenty-one years' accumulation, but twenty-one years after the date of the truster's death, however shortly the accumulation may have been in progress, or though his direction to accumulate may not have come into effect at all. Thus where the truster died on the 10th July 1812 the Act came into operation to prevent further accumulation on the 11th July 1833, although the accumulation had only commenced on the death of a beneficiary in 1831. 1 Again, where the direction was to accumulate rents after the death of the truster's widow, who enjoyed a liferent of them, she survived the truster for thirty-two years. " The statute, according to its sound construction," says Lord Kincairney (Ordinary), " renders illegal a direction to accumulate, siich as . bo postpone the beneficial enjoy- ment beyond twenty-one years from the truster's death ; 2 and in this case, as the liferentrix has survived the truster for much more than twenty-one years, there can be no legal accumulations after her death." 3 Lord Eutherfurd Clark, in delivering the opinion of the majority in the Inner House, says : — " The answer of the Lord Ordinary is right. We have no decisions in Scotland. But those of the English Courts are directly in point, and I think that we ought to follow them. I do not say that the question is free from difficulty, but in view of a series of judgments of the highest authority I cannot look upon it as being any longer open." 4 1 Shaw v. Rhodes, 1836, 1 My. & Cr. 135 ; vide Bosanquet, J., at p. 157 ; affirmed as Evans v. Hellier, 1837, 5 CI. & F. 114. Of. Att.-Gen. v. Poulden, 1844, 3 Hare, 555 ; also ef. argument in Webb, 1840, 2 Beav. 493. chap, viii.] PAYING OVER THE ESTATE 539 2 The cases of Webb, supra, and Att.-Gen. v. Poulden, supra, followed in Campbell, infra, at p. 998, were cases where, as in Campbell itself, no minorities were in question, and the opinion in the text must be read in that light. Where there are minorities it is now decided that the accumulation during a minority may begin with a person born after the death of the truster, and so continue for over twenty-one years from his death — see Cattell, s. 848. 3 Campbell, 1891, 18 R. 992, at p. 998. 4 Campbell, supra, at p. 1007. The appellate judges were unanimous on this part of the case. Gollan v. Dallas, 1906, 13 S. L. T. No. 332. 856. There may, on the other hand, be de facto accumulation Aconmuia- for longer than twenty-one years, which does not come within the but not directed, scope of the statute. " For instance, suppose the testator had an ££ e °t™ ne infant son, a year old, and a brother, and that he expressly years ' directed accumulation for twenty-one years; and, subject to that, gave the estate to his eldest son ; and after the decease of his eldest son, to the eldest son of his brother : suppose the will contained a direction that the property so accumulated, under a direction admitted to be legal, should go to the person who under these limitations was to take the estate ; and it is clear, though the direction to accumulate is only for twenty-one years, yet under the combined effect of the direction and the law there might be an accumulation for forty years ; for if the son lived till just about the end of the first twenty years and then died, and the brother had a son a week old, and by his will he had provided a mainten- ance for his own son, under the direction of the law that accumu- lation must during the minority of that son accumulate in this Court. It is clear, then, he would take the accumulation of forty years, though the legislature did not mean that." 1 Such a direction is not, however, an implied direction by the truster to accumulate, such as is struck at by the statute. " In the instance of property coming to an infant, accumulation is only just that which, if it was not the case of an infant, the owner might do for himself; if he chooses to accumulate the rents instead of spending them, he may do so ; and when the property comes to an infant, as the infant has no will to say whether it shall be spent or accumu- lated, the Court expresses its will for the infant, and says that the most advantageous way of applying the rents is to accumulate them for him — that is, for the benefit of the person who is in possession : this is a totally different thing from accumulating a fund so that it goes as a suspense fund after an indefinite lapse of time to somebody for whose benefit it was not accumulated, and who was not in the enjoyment during the time of accumulation." 2 This latter case occurs where the deed gives the minor beneficiary no vested interest, and directs accumulation during his minority. 540 PAYING OVER THE ESTATE [chap. vin. The interest not being vested, the accumulation is not necessarily for his benefit, and thus differs from the accumulation at law during the minority of the holder of a vested interest. 3 " The Thellusson Act," says Lord Ivory, " does not deal with accumulation in the interests of a party to whom the estate itself, belongs, and who is in the beneficial enjoyment as well as in the vested right to the whole estate. The case there is the case of funds of the successor being placed in such a situation that it is necessary to throw the protection of the law over them. The trustees, or the receivers of Court, or whoever else is placed in charge, must deal with the estate so that all the beneficial results from that estate shall fall to the party whose the estate is. But that is not at all the kind of case which the Thellusson Act points at." 4 ' Griffiths v. Vere, 1803, 9 Ves. 127, per Lord Eldon, C, at p. 136. Vide Lord Cranworth, V.-C, in Wilson, 1851, 1 Sim. (N. S.) 288, at pp. 299, 300. 2 Tench v. Cheese, 1855, 6 De G. M. & G. 453, per Lord Cranworth, C, at p. 463. Cf. Lord Cranworth, V.-C, in Wilson, supra, at p. 297. 3 The case of the minor without a vested interest is illustrated by Wilson, supra. Cf. s. 850. 4 Lord v. Colvin, 1860, 23 D. Ill, at p. 127. Voluntary accumula- tions not struck at. 857. The statute does not prevent the beneficiary carrying out the object of the truster by accumulating the income when paid to him. Being the unfettered owner of it, he can do with it as he pleases, and may accumulate it, if he so wills. 1 Thus a testator directed his trustees to make over to the Kirk-Session of Dundee the residue of his estate, on the condition that it was to be invested in the Funds, and a fund to be accumulated for the building of an hospital by investing the dividends along with the capital for one hundred years. At the expiry of twenty-one years from the testator's death the Act came into operation, not, however, to the effect of absolutely putting a stop to all further accumulation by the Kirk-Session, but to the effect of " relieving them from the obligation to accumulate after the time there prescribed." 2 " The only result of holding the statute to apply," says Lord Fullerton, " will be to carry the bequest to the Kirk- Session free from any obligation to accumulate 3 after the number of years fixed by the statute shall expire." 4 i Cf. s. 851. 2 Ogilvie «. Dundee, 1846, 8 D. 1229. Cf. Lindsay, s. 839. 3 Vide Lord Watson's opinion in Muirhead, 1890, 17 R. (H. L.) 45, at p. 49, as to the donee's duty to accumulate. 4 Ogilvie, supra, at p. 1243. chap, viii.] PAYING OVER THE ESTATE 541 (3) To whom Illegal Accumulations Payable 858. "Where the statute intervenes to stop accumulation, it directs that the accumulation so set free shall go to " such person or persons as would have been entitled thereto if such accumu- lation had not been directed." 1 This extremely vague direction has been interpreted to mean that where the statute intervenes the accumulation set free by it is to be dealt with " as if there had been no direction, and as if the testator had not disposed of it." 2 It must be borne in mind that where accumulation is directed in which no one but the person having a vested right to payment of the fee has any interest, that person can put a stop to the accumulation and demand payment at any time, if he is capable of discharging the trustee. 3 In this case the accumulations are interrupted independently of the statute. 1 39 & 40 Geo. in. c. 98, s. 1. 2 Lord v. Colvin, 1860, 23 D. Ill, per L. P. M'Neill, at p. 125. 8 Cf. s. 757. 859. The destination of the accumulation struck at by the Destination of illegal statute depends first of all on whether the estate which is the accumuia- x tions. source of the accumulations has vested or not. " On this question there have been two distinct classes of decisions — in the one class, where it has been held that there was a good gift of the estate, the revenue derived from which was directed to be accumulated, the direction to accumulate has been held to be a burden on the gift vested. of the estate, and the person to whom the estate was destined has been held entitled to it, unaffected by the direction to accumulate so far as in excess of the period allowed; 1 and in the other, 2 where there has been no prior gift of the estate, the revenue Not vested. directed to be accumulated has, so far as affected by the Act, been regarded as undisposed of, and as falling to the testator's heir s in heritage or in movables," 4 if there is either no residuary bene- ficiary, or, where he is not presently ascertainable, till he can be ascertained. 5 "Where there is a hiatus between the period when the accumulation ceases by law and the period when the accumula- tion is directed to cease by the will, and there is nothing in the will to catch the rents which arise during that hiatus, those rents belong to the heir-at-law." 6 Where there is a general residuary legatee he will take the illegal accumulations. 7 1 To this class of cases belong Ogilvie v. Dundee, 1846, 8 D. 1229 ; Mac- kenzie, 1877, 4 R. 962 ; Maxwell, 1877, 5 R. 248. 2 To this class belong the cases of Keith, 1857, 19 D. 1040 ; Lord v. Colvin, 1860, 23 D. Ill ; Cathcart v. Heneage, 1883, 10 R. 1205 ; Mackay, 1909, 542 PAYING OVEE THE ESTATE [chap. vm. Legacy charged with accumula- tions. S. C. 139 ; Smith v. Glasgow Infirmary, 1909, S. C. 1231 ; Gillies v. Bain, 1893) 30 S. L. R. 651. 3 Of. s. 1054. 4 Campbell, 1891, 18 R. 992, per Lord Kincairney (Ordinary), at pp. 998, 999. 6 Moon, 1899, 2 R 201. 6 Green v. Gascoyne, 1864, 4 De G. J. & S. 565, per Lord Westbury, C, at p. 572. 7 But cf. s. 1048 as to general and special residuary, and Smith, supra, at pp. 1236, 1237, per L. P. Dunedin ; see also s. 841 for discussion of destination of interest on legal accumulations. 860. A beneficiary who has vested in him a right to demand payment of the fund which is the source of the accumulation at a date postponed solely for the sake of the accumulation, can claim payment of the fund when the accumulation is brought to an end by the statute. Here no question arises of payment of accumulations struck at by the statute. Such a question only arises either where the vested interest is not payable on the cessation of the legal accumulation, or illegal accumulation has de facto been made before the question of payment is raised. In these cases the accumu- lation struck at goes to the person vested in the right to demand payment at the later date. In other words, where the accumu- lation is a charge on an interest in the estate, the accumulation set free by the statute goes to the person vested in the interest which is charged with raising the accumulation. 1 Page Wood, V.-C, thus states the rule : — " "Where there is a charge by will upon property, and a devise of that property subject to such charge, if the charge fails, it sinks into the devised property for the benefit of the devisee." 2 Thus where a legacy was charged with the raising of accumulations for a period in excess of the statutory period, Eomilly, M.R., said that the accumulation was directed to be " carved out of the legacy," but only so much could be carved out as the law would allow ; and when the law stopped the process of carving out by stopping the accumulation, the principal of the legacy was what was left, including therein any illegal accumulations, if the question arose after these had been made. 3 1 Evans v. Hellier, 1837, 5 CI. & F. 114, at p. 127— successful argument for respondent ; expressly approved of in Clulow, 1859, 1 J. & H. 639, at p. 649, per Page Wood, V.-C. 2 Tucker v. Kayess, 1858, 4 K. & J. 339, at p. 341, relying on Cooper, 1853, 4 De G. M. & G. 757. 3 Combe v. Hughes, 1865, 34 L. J. Ch. 344. 861. A distinction has been drawn between accumulation by a charge on a beneficial interest and that by exception out of such an interest : in the former case, on the intervention of the statute, chap, viii.] PAYING OVEK THE ESTATE 543 the charge disappears and the interest in the estate goes to the fiar of it unburdened; in the latter case the limitation of the gift continues, but the accumulations struck at go to the residuary, or into intestacy. 1 The position must be carefully noted in the peculiar case where the trust estate itself is a charge upon another estate. In such a case the charge, which is the trust estate, must not be confounded with the charge on the interest vested in the beneficiary under the trust. Where the estate of the truster consists of a charge on real estate, which he gives to trustees by will as personal estate for accumulation, the accumulations struck at by the statute go to the residuary or next- of-kin of the truster, and do not sink into the real property on which the charge rests. 2 1 Vide Page Wood, V.-C, in Cooper, s. 860 ; opinion given at length as note to 23 L. J. Ch. 27, at p. 28, 2nd col. 2 Simmons v. Pitt, 1873, 8 Ch. App. 978. 862. Where the interest in the fund that is the source of the Rights of residuaiy. accumulations is not vested, but the interest in the residue of the estate is vested, the accumulation struck at is payable to the residuary. 1 In such a case the accumulation struck at is undis- posed of in the manner in which the truster desired to dispose of it, and as there is no one in immediate right of the property which is the source of the accumulation, the accumulation falls to the person who by the will takes all that is not otherwise disposed of, viz, the residuary. It must be noticed that it is impossible for the trustees to say we will, at the end of the statutory period, stop the accumulation for the purpose directed by the truster and accumulate in future for the person who may be ulti- mately found to be the beneficiary vested in the property out of which the accumulation is growing. The statute strikes at all accumulation after the statutory period, and what was to be accumulated must be paid over to some one as it accrues. 2 Where neither the interest in the fund that is the source of the accumu- lation nor the interest in the residue has vested in any one under the terms of the trust deed, the accumulation struck at goes to the beneficiary taking under a resulting trust. 3 1 Vide case of Att.-Gen. v. Poulden, 1844, 3 Hare, 555. 2 Of. s. 841. 3 Vide s. 1054 et seq. for treatment of resulting trust. CHAPTEE IX DIVESTMENT OF OFFICE AND DISCHAEGE 863. The trustee is divested of his office, during the adminis- tration of the trust, in two ways — the one voluntary, and the other involuntary. His voluntary divestment of office is known as resignation ; his involuntary divestment, as removal. Death, of course, thins the personnel of the trust, but it is incorrect to describe it as a divestment of office — it is an extinction of the persona to which the office was attached. In an analogous manner, upon the trustee's being completely divested of the trust estate by his conveyance thereof in favour of the beneficiaries, he is not divested of his office, but the matdriel of the trust, and, conse- quently, the office of trustee, ceases to exist, for there can no longer be an office of trustee when there is no trust estate. 1 1 Gf. s. 104 as to extinction of a trust by lapse of time alone. I. Resignation Resignation 864. It must be noticed that there is a vital distinction be- cxoneration tween resignation and exoneration. Eesignation is the act of guished. the trustee whereby he severs his connection with the trust for the future — its object is to prevent any future liabilities being incurred. Exoneration is the act of others than the trustee, whereby he is relieved from his existing liabilities, but which does not in itself affect the question of future liabilities. Hence, though in certain circumstances the Court may see fit to allow a trustee to resign, it requires a different case and different procedure before granting him exoneration. 1 i Gf. Gordon, 1854, 16 D. 884. See s. 934. Resignation 865. It is now decided that a trustee cannot cancel his resig- recaiied nation though he recalls it before its acceptance. A trustee before .... acceptance resigning by minute, intimated to the co-trustees and registered, 1 has completed his resignation, and no question of recall can arise. 2 In an earlier case where one trustee had intimated his resignation by letter to his co-trustees, and thereafter, on certain litigation chap, ix.] DIVESTMENT OF OFFICE 545 arising, recalled the resignation and continued to act as trustee, Lord Kinloch (Ordinary) was of opinion that the resignation was revocable before anything had passed upon it. 3 His Lordship would appear, from the context, to have had in view some form of acceptance by the co-trustees of the resignation as a necessary step of procedure. The subsequent Act of 1867 i seems, however, to have settled the question in the same sense as the later case above referred to. 2 In the Act certain ways of resigning are specified, and in none of them is there any mention of acceptance by the co-trustees. In fact, intimation by edictal service is referred to as a competent method of resignation, in which case no question of acceptance of the resignation can arise. Eesignation validly executed is from the moment of such execution irrevocable ; any- thing short of a validly executed resignation is of no effect what- ever, and its recall is not in question. 1 Of. s. 883. 2 Fullarton v. James, 1895, 23 R. 105. 3 Blair, 1863, 2 M. 284, at p. 286. 4 30 & 31 Vict. c. 97, s. 10. (a) Extra-judicial Resignation (1) At Common Law 866. At common law there is no implied power of extra-judicial resignation. Before the passing of the Trusts Act, 1861, 1 it was not competent for a trustee to resign extrajudicially, unless ex- pressly empowered to do so. " The Lord Ordinary (Lord Wood) has not been able to find any authority for holding that even where a sufficient number of trustees would be left to keep up the trust, a party who has accepted can, at his pleasure, resign his office, and that an intimation of his resignation by letter to his co-trustees is enough either to constitute a complete resignation, or that at least his co-trustees are bound to accept a resignation so made, and that if they do not, and go on using his name as trustee, he must, in respect of his resignation, be held as relieved of all responsibility as in a question with his co-trustees. The authori- ties, so far as they go, appear all to point the other way, and to show that where a party has once accepted and acted as trustee he cannot, by any such simple method, either denude himself of the office, or place himself in the position, that he shall be held released from all further obligation to look after the trust affairs, and from all subsequent risk or responsibility in any question with his co-trustees alone, he being entitled to hold them bound 35 546 DIVESTMENT OF OFFICE [chap. ix. to relieve him from every burden of the kind, and to bear it wholly themselves. He does not think such a resignation can operate as a divestiture of the office of trustee." 2 And in an older case, the second Lord President Dundas says : — " Trustees must not imagine that whenever they are tired of their office they can slip their necks out of the collar, and leave the trust to be extricated by the Court." 8 1 24 & 25 Vict. c. 84, s. 1. 2 Logan v. Meiklejohn, 1843, 5 D. 1066, at p. 1072. 3 Carstairs, 1776, Hailes, 678. Resignation 867. A question of considerable importance in this connection sent of is whether a trustee, who has no power to resign extra-judicially, bene- . floiaries. can validly so resign, with consent of the beneficiaries. The state- ment has been made that " where all the beneficiaries are sui juris and consent to the resignation of a trustee, he may retire without involving either himself or his colleagues in new responsibilities." 1 If the word "responsibilities" is to be read as "responsibilities to the beneficiaries for his future acts,'' the statement is a correct application of the maxim volenti non fit injuria. If it be meant to read as it naturally would read, "responsibilities to anyone," then the statement must be dissented from. First, the case 2 relied on for the statement is with great insistence declared by the judges to be quite special. The two trustees, for instance, whose resignations are in question in the case, had never intromitted to any extent with the trust estate, 3 and at that date the law was not so prone to hold a trust accepted by merely formal intromission as it became at a later date. 4 Second, to allow beneficiaries to empower trustees to resign is to allow them to interfere with the title of a going trust, and may affect the interests of third parties who have dealt with the trustees. Thus where third parties are dealing with the trust, they may well take into consideration the character of the par- ticular trustees, and the certainty on the face of the trust deed, on the faith of which the third party has contracted with the trust, of these trustees remaining in office to administer the trust affairs, or resigning only on certain known conditions. 6 This question of resignation is quite different from that of the beneficiary's power to put a stop to the trust administration. There the time and manner must be convenient to the trust administration, and there is implied a satisfaction of any third party's claim. 6 Eesignation by consent of the beneficiaries must, in any case, be clearly distin- guished from resignation by intimation to the beneficiaries.? The chap, ix.] DIVESTMENT OF OFFICE 547 former relates to the conferring of a new power — the latter to the procedure for exercising one already possessed. 8 1 M'Laren, s. 2114. The case of Wilkinson v. Parry, 1828, 4 Russ. 272, referred to here and in Underhill, 7th ed., p. 373, deals only with the question of consent by the beneficiaries to a breach of trust. The trustee there had express power to retire. 2 Hill v. Mitchell, 1846, 9 D. 239. 3 Vide argument for chargers in Hill, supra. * Cf. s. 123. 6 Cf. Maclean, 1895, 22 R. 872, where a trustee resigned at common law with consent of beneficiaries, but Court refused to confirm resignation. 6 Cf. s. 779. 7 Cf. s. 885. 8 The case of Hill, supra, cannot be put any higher than this — that the beneficiaries are entitled to authorise the trustees to exercise a conditional power of resignation where the circumstances confer such a limited power. It does not suggest that the beneficiaries could confer the power of resignation on the trustees in circumstances in which the Court would find they were not entitled to resign. The opinions expressed in the case of Maclean, supra, must, how- ever, be taken into consideration. (2) Under the Trusts Acts 868. Since the passing of the Trusts Act of 1861 1 the presump- statutory i implication tion of the common Jaw has been reversed, and it is declared that of power, any trustee to whom the Trusts Acts apply 2 shall have the power of extra-judicial resignation, "unless the contrary is expressed." It is to be noted that extra-judicial resignation is presumed to include resignation of the office of executor as well as that of trustee, where the office of executor is conferred by the same deed as the office of trustee. 3 i 24 & 25 Vict. c. 84, s. 1. 2 Gf. s. 43 et seq. as to trustees to whom Trusts Acts apply. These do not include trustees appointed under the Entail Act, 1882 (45 & 46 Vict. c. 53, s. 23 (5)) (see Queensberry, s. 636). As to power of assumed trustee to resign under the statute, this is expressly provided for in Schedule A to the Trusts Act, 1867. Cf. discussion in s. 45 as to his power of assumption, which is granted in similar terms. There should also be noted, what was inadvertently omitted in s. 45, that the Schedule B of the Trusts Act of 1867 expressly provides for assumption by the " remaining " trustees as distinguished from the " accepting and surviving" trustees. Cf. use of word "remaining" in s. 932, where it obviously includes all existing trustees, however created. 3 30 & 31 Vict. i;. 97, s. 18. Resignation of the office of executor nominate (see Executors Act, 1900 (63 & 64 Vict. c. 55, s. 2), for presumed power) is not presumed to include resignation of the office of trustee. 869. It has been pointed out above 1 that the exclusion of the ExciusioD ■*■ of power statutory power must be express, not implied. Thus in the case must be of a deed executed prior to 1861, "the fact that a limited power of resignation was conferred by the trust deed could not possibly prevent the application of the subsequent enactment which con- ferred an unlimited power of resignation." 2 This argument may not be so effective in a deed executed since the passing of the Act. 548 DIVESTMENT OF OFFICE [chap. ix. The express limitation of the power in such a case may well be read as an express exclusion of the existing statutory power. 1 Vide s. 46. 2 Maxwell, 1874, 2 R. 71, per Lord Deas, at p. 74. (b) Judicial Resignation (1) At Common Lano 870. The circumstances in which a trustee may resign judici- ally x at common law are nowhere laid down with any degree of certainty. The law has been stated by Lord Cunninghame, in the Outer House, in these words : — " The Lord Ordinary is clear upon the authorities that were brought together in the late case of seasons for Bannerman, 2 that when a trustee has urgent occasion to resign resignation. from the state of his affairs, or it may be from the state of his health, 8 or avocations abroad, 4 and, in fact, when this is not done capriciously 6 to embarrass the trust management, he has a right to do so at the sight and by the authority of the Supreme Court. That appears to he the law and practice of England; and it is thought that a contrary decision in Scotland would be most prejudicial to families and individuals in this part of the empire, who must often have important interests which cannot be rightly administered and protected without trusts. No rational man would ever accept of a trust if he could not resign it when it was absolutely necessary for him to do so, and when he could prove the necessity of that step to the satisfaction of the Supreme Court." 6 That the personal and the fiduciary interests of the trustee are in conflict is also a good ground for resignation. 7 Trustees, however, " cannot resign on views which they anticipate court grants will be satisfactory to a Court of law." The resignation must be authority, ° j°t?° ] nnr - authorised, not merely confirmed, by the Court. 8 1 Of. note to s. 123. 2 Bannerman, 1842, 5 D. 229 ; vide his Lordship's opinion at p. 234. 3 Dick v. Pridie, 1855, 17 D. 835, where a trustee was allowed to resign on a doctor's certificate that the business of the trust was aggravating a serious disease from which he suffered, and was " preying on his health." 4 Alison, 1886, 23 S. L. R. 362, where a military man was allowed to resign in consequence of his military duties preventing him attending the meetings of the trust. Of. Gordon, 1854, 16 D. 884. In Simpson, 1907, S. C. 87, the Court on the petition of the trustees of a marriage contract granted them authority to resign and appointed new trustees resident abroad, the petition being pre- sented at the request of the spouses, who had gone abroad ; but see Stewart, 1st Div., 7th February 1913. 5 Chetwynd, 1902, 1 Ch. 692, at p. 694, per Farwell, J., in an administra- tion suit, where there was no jurisdiction under the Trustee Act, 1893. 6 Watson v. Crawcour, 1844, 6 D. 687, at p. 688. As to necessity for inti- mation of petition to beneficiaries, see Gordon, supra. Of. resignation of curator at common law, Mackenzie, 1854, 26 S. J. 467. mation. chap, ix.] DIVESTMENT OF OFFICE 549 7 Guthrie, 1895, 22 R. 879. Cf. case of Maclean, infra, per Lord M'Laren, at pp. 875, 876. 8 Hill v. Mitchell, 1846, 9 D. 239, per Lord Jeffrey, at p. 243. This was a ease of extra-judicial resignation, subsequently approved or by tbe Court, but expressly limited to the special circumstances of the case. Cf. case of Maclean, 1895, 22 R. 872, where confirmation of a previous extra-judicial resignation was held to be incompetent. 871. The circumstances in which a trustee may obtain judicial claims of private authority to resign at common law have been further illustrated business, by a decision in which the Court refused a petition craving such authority. Here the trustee was, as such, entitled to a legacy under the trust deed, and therefore fell under the exception of the Trusts Acts affecting such a trustee, and excluding him from the power of extra-judicial resignation given by the Acts. 1 He alleged that he could not devote sufficient time to the trust affairs without interfering with the attention which his own business, a very large one, demanded of him. He did not allege that he was unable to do full justice to the trust affairs for any other reason. " He does not state," says Lord Justice-Clerk Macdonald, "that the trust will suffer from causes over which he has no control, if he is forced to continue in office. He only states that he now finds the duties of the trust will take more time than he is willing to devote to them. . . . The testator thought the petitioner a suitable person to administer the trust. We have no reason to doubt that he can fulfil the duties. The only ground on which he wishes to resign is that he thinks the duties too heavy. Such a ground is not sufficient to entitle us to interpone authority to his resignation." 2 The petitioner, it is to be noted, stated that he was willing to renounce his legacy provided he was relieved of office, but the undertaking seems to have been treated as irrelevant. 3 A trustee holding a judicial post has been authorised to resign official on the ground that his time was wholly taken up by public official duty. Here repayment of the legacy received by him was made a condition of the grant of authority. 4 1 Cf. a. 874. 2 Scott v. Muir, 1894, 22 R. 78. 3 In the case of Maclean, 1895, 22 R. 872, the legacy had not been accepted although the trust was for long in existence, yet the non-acceptance was held to be irrelevant. 4 Orphoot, 1897, 24 R. 871. 872. The curator bonis of an insane ward found after entering Eesignation by curator on the office that the ward was a trustee. The curator applied ^^fj 16 to the Court, by petition at common law, praying the Court either to remove the ward from the trust, or to grant authority to the 550 DIVESTMENT OF OFFICE [chap. ix. curator to resign the trust on behalf of the ward. The Court granted the latter alternative of the prayer. 1 1 Laidlaw, 1882, 10 E. 130. (2) Under the Trusts Acts 873. It is not strictly proper to speak of judicial resignation under the Trusts Acts, as these statutes make no reference to such a method of resignation. It is, however, a convenient classification under which to examine the different exceptions from the statutory power of extra-judicial resignation, in which eases the trustee must fall back on the common-law power of judicial resignation. 1 1 In Bunten v. Muir, 1894, 21 R. 370, the trustees prayed the Court " to grant power and authority to the petitioners to resign the office of trustees," on the ground that they were excluded from the general power of resignation granted by the Trusts Acts. In deciding that the petition was unnecessary, the judges speak of their being thereby relieved from exercising " the juris- diction given us by the Trusts Act" (Lord President Robertson) ; "the special statutory provisions with reference to the resignation of trustees" (Lord M'Laren); and "the power which is prayed for under the statute" (Lord Kinnear). As the petition is at common law, and as there are no special statutory provisions authorising judicial resignation, excepting possibly that affecting a sole trustee (vide s. 879), it is difficult to resist the idea that some misconception as to the scope of the Trusts Acts on this question prevailed on the Bench (cf. s. 876). The words used by the Lord President might be taken as referring to the same idea as that expressed in the text, but the words of the other judges do not permit of such an interpretation. Trustee 874. In addition to the general exception where the operation receiving o ± jr bequest. f fa e statute is expressly excluded by the truster, a special exception from the presumption of the power of extra-judicial resignation is expressly provided by the Trusts Acts in the case of any "trustee to whom any legacy or bequest or annuity is expressly given on condition of the recipient thereof accepting the office 1 of trustee under the trust." 2 The words "expressly given " as used here have not yet been the subject of decision. It is not disputed that they include the case of a bequest where the condition, though not express, is necessarily implied. 3 They probably are intended to meet the case of a person to whom a bequest is given under the designation of trustee but without any condition that the office must be accepted to complete his claim to the bequest. 4 In such a case, should that person accept the office of trustee, the grant of the bequest would not prevent his resignation extra-judicially under the statute. 1 Where an annuity is attached solely to the office and is taken solely by reason of the holding of the office, succession duty is not chargeable upon the death of a trustee against a new trustee entering upon office and thereby becoming entitled to the annuity (Att.-Gen. ■». Eyres, 1909, 1 K. B 723). Cf. "Wilson, 1909, 1 S. L. T. No. 46— a legacy to a trustee "who shall accept office and act " does not include an assumed trustee. chap, ix.] DIVESTMENT OF OFFICE 551 2 30 & 31 Vict. c. 97, s. 1. 3 Cf. s. 46. 4 But cf. s. 833, in the light of which the exception must have a very- limited application. 875. Trustees affected by this exception 1 have been permitted to resign judicially on petition to the Court at common law for that purpose, one on the ground of old age, 2 and another on the ground that his military duties prevented his discharging his duty as a trustee. 3 i S. 874. 2 Cf. Tod v. Marshall, 1895, 23 R. 36, for alternative of removal. 8 Alison, 1886, 23 S. L. R. 362. Cf. s. 870 for other examples of judicial resignation at common law. 876. A misconception of the position of such trustees * seems Position ofnon- sometimes to exist, viz.. that such a trustee is a non-gratuitous gratuitous ° trustee. trustee in the sense of the Trusts Acts. 2 Now, a trustee who receives "a legacy or annuity or bequest under the trust" is expressly declared to be a gratuitous trustee in the sense of the Trusts Acts. 3 It is just because he is such a trustee that his express exclusion from the powers granted to gratuitous trustees by the Act of 1867 is required. There is no reason for the express exclusion of a particular class of non-gratuitous trustees from the exercise of the powers which the statute grants to gratuitous trustees only. A further misconception appears to exist as to the present scope of the Trusts Acts. By the later Trusts Acts the powers granted in the earlier Acts to gratuitous trustees only have been extended to non-gratuitous trustees, 4 and it is incorrect to say that " the Trusts Acts do not provide for the resignation of a non-gratuitous trustee." 5 The situation is this : — Any trustee who is not expressly pro- hibited by the terms of his trust may resign extra-judicially under the implied power given by the Trusts Acts, with the sole 6 exception of a trustee " to whom any legacy, bequest, or annuity is expressly given, on condition of the recipient thereof accepting the office of trustee under the trust," and a trustee so situated cannot resign extra-judicially without express power of resignation. 1 Cf. s. 874. 2 E.g., vide the case of Scott v. Muir, 1894, 22 R. 78, where the Lord Justice-Clerk so speaks of him, and where the case is so rubricked ; vide also same case in 2 S. L. T. No. 293, and later case of Maclean, 1895, 22 R. 872. 3 30 & 31 Vict. c. 97, s. 1. * Royal Bank, 1893, 20 R. 741 ; and cf. s. 49. 6 Scott, supra, per L. J.-C. Macdonald, as reported in 2 S. L. T. No. 293. In the report in Rettie, ut supra, his Lordship says : — " The Act expressly de- 552 DIVESTMENT OF OFFICE [CHAP. IX. "Express " power to resign may be inferred. clares that a non-gratuitous trustee cannot resign by virtue of it." There is no such expression in the Act, and it is the reverse of the statutory implication. 6 But ef. s. 882 as to position of trustee tinder the contract of a trading company. 877. In the case of the trustee falling under this exception, 1 the power of extra-judicial resignation must be " expressly declared in the trust deed." 2 A broad interpretation has been given to the word " expressly." Two trustees, to each of whom a legacy had been left by the truster as a condition of his accepting the trustee- ship, petitioned the Court at common law 3 for authority to resign the trust. The trust deed contained a clause declaring that upon any of the trustees resigning office and accounting for their intro- missions, the remaining trustees should be bound to discharge them. The Court held that this was equivalent to an express power of resignation, and that therefore the trustees required no authority from the Court. " The testator," says Lord Kinnear, " has given the trustees an absolute and unqualified power to demand a discharge in respect of their having resigned office. It is difficult to imagine a clearer expression of power to resign than that." 4 This exception x may also be elided by the truster's expressly reserving to his trustees the statutory powers of trustees generally. A trustee who, as such, had accepted a legacy was held to be entitled to resign extra-judicially in virtue of the following proviso attached to the gift — " but without prejudice to their powers as gratuitous trustees." 5 » S. 874. 2 30 & 31 Vict. c. 97, s. 1. 3 The petitioners' condescendence states that " there is no express power to resign conferred upon the trustees." Vide Session Papers. * Bunten v. Muir, 1894, 21 K. 370. The detailed circumstances of this case are an example of the danger of omitting an express power of resignation, in reliance upon the general statutory power. Express power of resignation should be inserted in all trust deeds where it is intended to give the power in all circumstances. Cf. article in 1 S. L. T., at p. 504. 6 Assets Co. v. Shiress, 1896, 4 S. L. T. No. 185. 878. The effect of the later Trusts Acts in extending to a wider class of trustees the powers granted by the earlier Acts is dealt with in an earlier part of this work. 1 1 Ss. 48-51. In addition to the cases there, see Queensberry, 1898, 5 S. L. T. No. 458, as to position of heir of entail, and Pattison, 1890, 17 R. 303, as to curator bonis. 879. A partial exception to the general power of extra-judicial At - i " i H the case of a sole trustee. Conditions o t c. xl jjaiuicui oavjojjiuliu \j\j unc tionbysoie resignation under the statute is trustee. ° chap. ix. J DIVESTMENT OF OFFICE 553 Such a trustee cart only resign under certain conditions. The statute reads thus : — " If any x trustee entitled to resign his office is at the time sole trustee, he shall not be entitled to resign until, with the consent of the beneficiaries under the trust of full age and capable of acting at the time, he shall have assumed new trustees, who shall have declared their acceptance of office, or he may apply to the Court stating his wish to resign, and praying for the appointment of new trustees or of a judicial factor 2 to administer the trust; and the Court, after intimation to the beneficiaries under the trust, or such of them as the Court may direct, shall thereafter either appoint a judicial factor, or, on the application of the beneficiaries or any of them, may appoint trustees in the same manner as is provided 'under the twelfth section of this Act ; and after such appointment, either of judicial factor 3 or of trustees, the petitioning trustee will be entitled to resign." 4 Where the petition was presented by one trustee within petition a month of the intimation of resignation of the other trustee, but resignation effective. the month expired before the petition was dealt with and the resignation had thereby become effective, 5 it was held to be com- petently presented. 6 The judicial procedure should be regarded as an alternative only upon failure of the procedure by assumption with consent of the beneficiaries. An application to the Court before the extra-judicial procedure had been tried and had failed would entail the risk of the expenses of the application being refused by the Court as a trust charge and their falling upon the applicant personally. 7 1 It must be noticed that the clause, which is prohibitive, ex facie applies to all trustees, however empowered, and not only to trustees resigning under the statutory power; but s. 19 of same statute declares that the statutory pro- visions shall not restrict any express power given under any trust deed, and the limitations of the statute referred to in the text may therefore be expressly excluded. 2 The appointment of a judicial factor does not affect the remedies of a creditor of the trust (Ker v. Brown, 1902, 10 S. L. T. No. 165). 3 Vide Wyse v. Abbott, 1881, 8 R. 983, for illustration of resignation of sole trustee and appointment of a factor. i 30 & 31 Vict. c. 97, s. 10. 6 Of. s. 884. 6 M'Math, 1896, 4 S. L. T. No. 20. Of. s. 884. 7 Cf ss. 48 and 64, and see s. 880 (note 2). 880. The condition 1 attached to his assumption of new trustees before the resigning sole trustee can be relieved of his office is declared in somewhat obscure terms. At first sight it would appear to require that the trustee, who, as sole trustee, assumes 2 new trustees, should have the consent of the beneficiaries of full age and capacity at the time to that assumption. But the words " at the time sole 554 DIVESTMENT OF OFFICE [chap. ix. trustee " can only mean " sole trustee at the time of his resigna- tion." If he assumed trustees before his resignation, he could not be a "sole trustee at the time of his resignation." There must, then, be resignation by the sole trustee before any question of assumption under this section arises. "Where a sole trustee resigns in any competent manner, the statute describes the manner in which such a trustee may thereafter assume new trustees, not to act along with him, but to take his place. Until such assumption is made, the resignation of the sole trustee is in suspense, but the acceptance of office by the new trustees brings the resignation into effect. 1 Vide a. 879. 2 The power of assumption is given expressly to a sole trustee without any conditions by the Act of 1861 (24 & 25 Vict. c. 84, s. 1), and the only exception introduced by later statutes is that affecting a trustee who has been appointed by the Court without a grant of such power (Trusts Act, 1867, 30 & 31 Vict, c. 97, s. 13). Such a sole trustee is limited to an application to the Court. See s. 879. Resignation 881. There is nothing in the conditions attached by the Trusts by all trustees. Act of 1867 1 to resignation by a sole trustee to prevent the whole body of trustees resigning at once. The Trusts Act of 1861 z gives power to " any trustee " to resign, and " power to any trustee means power to every trustee, and consequently to the whole. ... It must be kept in view that the statutory right of resigning was created by the Act of 1861, not by that of 1867. The latter only intro- duces alterations or conditions which are imposed on parties situ- ated in a particular way, and it is not to be read as applicable to others." 3 In practice, however, the common-law duty of a trustee prevents a body of trustees taking advantage of the power to resign en bloc unconditionally. The common law requires them to take certain precautions before resigning, similar to those involved in the conditions affecting the resignation of a sole trustee under the statute. For in the same case Lord President Inglis continues :— " In what form ought a body of trustees, who all want to resign, to proceed ? It would be extremely improper and inconsistent with their duty if they were de piano to execute a deed of resignation and hand it to the beneficiaries, leaving the trust without administration. If the beneficiaries are able to act, and are reasonable, there can be no difficulty in nominating new trustees. But supposing they are not, there must be some mode of proceeding, and one consistent with leaving some person to administer the trust. "What better course could be followed than to present a petition for the appointment of a judicial factor or of chap. ix. J DIVESTMENT OF OFFICE 555 new trustees as a preliminary step ? " 4 The right of the trustee to resign in the manner appointed by the statute is absolute, and is not affected by the consideration that the discretionary powers of the trustee may, or even, will lapse through his resignation introducing the administration of a judicial factor who cannot exercise them. 5 1 30 & 31 Vict. c. 97, s. 10. Cf. a. 879. 2 24 & 25 Vict. c. 84, s. 1. 3 Maxwell, 1874, 2 E. 71, per L. P. Inglis, at p. 74. 4 Maxwell, ut supra. 5 M'Connell, 1897, 25 R. 330. 882. A question as to the statutory power of resignation of Position ^ J r ° of trustee a " trustee appointed under the contract of any trading company " 1 Ej£? r f° n " arises out of the manner in which the various Trusts Acts have been company. drawn. By the Trusts Act, 1884, 2 it is enacted that these statutes shall all be read together as one chapter of statute law. In the earliest of these Acts such a trustee is expressly excluded from the scope of the statute. 3 None of the later Trusts Acts repeals this express exception, and as the statutes are to be read as one, the express exception must be read into the provisions of all the Acts. The exception looks meaningless in view of the wide definition of "trustee" in the Trusts Act, 1884, 4 but it is an express exception, and cannot be held to have been overruled by such general definition, however wide, while there is no incon- sistency between them. Therefore it would appear that such a trustee is excepted from the power of extra-judicial resignation under the Trusts Acts. A further difficulty in connection with the position of such a trustee has been created by the terms of the Statute Law Eevision Act, 1893. 5 The section of the Trusts Act, 1861, dealing with this matter is included in the schedule of enactments nominally repealed by the Act of 1893. The preamble and the first proviso of section 1 of that Act make it plain, how- ever, that the proviso of the Trusts Act, 1861, in question, which limits the operation of that statute, is not to be held to be affected in substantialibus by this nominal repeal under the Act of 1893. This repeal is intended to affect only the definition of " gratuitous trustee " in the section scheduled, which definition had been super- seded by the later definition in section 1 of the Trusts Act, 1867, without being expressly repealed thereby. The question is of practical importance in connection with the position of trustees for debenture-holders. 6 In view of the question as to the effect of the proviso of the Act of 1861, the powers 7 of such trustees should always be fully expressed in the trust deed. 556 DIVESTMENT OF OFFICE [CHAP. IX. Minute in sederunt book. Separate minute. 1 For an early statutory reference to a " trading company," see Act 1696, c. 25, dealing with bearer bonds, etc. Cf. s. 29. 2 54 & 55 Vict. c. 44, s. 1. s 24 & 25 Vict. c. 84, s. 3. 4 47 & 48 Vict. c. 63, s. 2. 5 56 Vict. c. 14, Schedule. 6 The Rules issued under authority of the Public Trustee Act, 1906 (6 Edw. vii. c. 55), forbid the Public Trustee in England to accept a trust under " any instrument made solely by way of security for money" (see Rule 7). 7 The statutory exception affects, at least, all the powers dealt with by the Act of 1861 — probably all the powers dealt with by any of the Trusts Acts — though the matter is noticed here in connection only with the power of resignation. (c) Procedure in Resignation 883. Procedure for carrying into effect a power of resignation is described by the tenth section of the Trusts Act of 1867. 1 The first method is by minute of the trust 2 entered into the sederunt book, signed by the resigning trustee, and by the other trustee or trustees acting 3 at the time. The second method is by a separate minute * of resignation signed by the resigning trustee, which may be registered in the Books of Council and Session for preservation, and must be intimated to the co-trustee or co-trustees. 6 1 30 & 31 Vict. c. 97. 2 The form in Schedule A can be easily adapted to the narrative construc- tion of the sederunt book. The resignation is truly oral at a meeting of trustees, and recorded as part of the business of the meeting. 3 I.e. acting at the meeting at which the resignation is made, and being a quorum. To require the signatures of all the other trustees might indefinitely suspend the resignation, which is a result inconsistent with the right of immediate resignation given by the statute. This view is corroborated by the marked difference in the terms of the statute in dealing with the other form of resignation. There intimation has to be given "to his co-trustees," and provision is made for the case of some of them not being found. 4 See form in Schedule A to same statute. 6 The statute does not require any intimation to the beneficiaries. Cf. s. 885. Statutory methods of resignation compared. 884. Certain differences between these two methods of resigna- tion must be noticed. The first method requires no intimation at all to be given, while the second makes intimation to the co-trustees an essential. Eesignation by the first method becomes complete and takes effect from the moment of the signing, by the proper persons, of the minute in the sederunt book. By the second method, resignation only takes effect x at various periods from the date of intimation to the co-trustees. This period varies from one month to six months, according to the residence of the co-trustee at the time to whom intimation is being made. 2 As to both methods, it is to be observed that the wording of the resignation is optional, but in the former the obtaining of the signatures of the acting co-trustees to the minute in the sederunt book, and in the latter the giving of the intimations to the other trustees, chap, ix.] DIVESTMENT OF OFFICE 557 is a condition precedent to the resignation taking effect. It must be noticed, further, that the provision applies to all trustees having power to resign — to " any trustee entitled to resign his office " — and not only to trustees exercising the statutory power of resignation. 3 1 Of. M'Math, s. 879. 2 After intimation, the resignation is irrevocable, though it does not take effect immediately (Fullarton v. James, 1895, 23 R. 105). 3 As to special conditions affecting a sole trustee, see s. 879. 885. There is a question in this connection as to whether the statutory methods statutory provision limits the trustee to the methods of resignation optional. indicated therein, or whether these methods are only optional. The statute makes use of the words " may do so," and thus expresses an option. This option might be read as limited to the choice of methods given by the statute, and not as referring to a choice between the statutory methods and any other form. The Trusts Act of 1891, 1 however, refers to trustees who "have resigned in either of the modes provided by the Trusts (Scotland) Act, 1867, or otherwise," so that the methods provided by the Act cannot be held to be exclu- sive. It would be rash to depart from the methods provided by the statute, which are undoubtedly valid, and to adopt another method, with the burden of proving its validity if it is impeached. Thus, Resignation • i-ii(». ... , .. ~ . at common though resignation by deed or resignation intimated to the benenci- law. aries is valid at common law, and is the only available form in the case of a sole trustee, or where all the trustees resign at once, 2 it offers no advantage over the statutory form where the latter is available. 1 54 & 55 Vict. c. 44, s. 7. 2 Maxwell, 1874, 2 K. 71 ; vide L. P. Inglis, at p. 74 (d) Effect of Resignation wpon Trust Title 886. The effect of the resignation of a trustee upon the trust title has been declared by statute. Where a trustee has validly resigned, his resignation divests him " of the whole property and estate of the trust which shall accrue to or devolve upon the continuing trustees or trustee, without the necessity of any con- veyance or other transfer by the resigning trustee." The continu- ing trustees may, however, require the resigning trustee to execute and deliver a conveyance or transfer, at the expense of the trust estate, should they think such expedient. 1 Such conveyance may be expedient for rectifying the formal title to such part of the estate as consists of heritage or other property held on a special registered title. In cases in which the title is regis- 558 DIVESTMENT OF OFFICE [chap. ix. tered in the name of the resigning trustee alone, such a conveyance is necessary in order to save recourse to cumbersome judicial processes for completing the trust title. 1 54 & 55 Vict. c. 44, s. 7. Of. s. 140. (e) Effect of Resignation upon Trustee's Liability (1) To Beneficiaries 887. The resignation of the trustee protects him from incur- ring any liability to beneficiaries for actings of the trustees 1 after the date on which his resignation takes effect, 2 but any liability incurred up to that date 3 remains with the trustee or his repre- sentatives until it is discharged. 4 The resignation does not prevent rights against the estate accruing to him before his final discharge. 5 As the trustee is only liable to the beneficiary as trustee, the resignation of the office of itself relieves the trustee of subsequent liability to the beneficiary without any further action on the part of the trustee. To third parties his position is different. 1 He is responsible, in respect of trust property still vested in him, for his own actings. Cf. Erentz, infra. 2 Gf. s. 884. The status of the trustee between the date of signing the minute of resignation and the date of its taking effect is not defined, but no suggestion is made that it is altered till the resignation takes effect. * Among such liabilities is that for the good faith of the act of resignation itself. Vide s. 78. 4 For discharge, s. 923. 6 Erentz, 1897, 25 R. 53. (2) To Third Parties Necessity 888. Towards third parties the trustee is liable, except in ofintima- . ... .,..,...., tion. certain very special cases, as an individual, and he may continue to incur such liability towards third parties after his resignation, unless he takes action to put an end to any relationship involving such liability. Eesignation is a private act of which third parties are not bound to have knowledge before notice thereof is given to them. 1 Hence, as regards third parties, the important date for the resigning trustee is that of intimation to them and not that of resignation. As liability towards third parties determines from the date to them of intimation, the trustee should see to it that after he has divested himself of office no time is lost before taking steps to divest himself of the continuing liability as an individual to third parties. 1 This should be notice of the completed and effective resignation, not of the initial act of resigning, in the case where time must elapse before the resignation becomes effective. See s. 884. chap. ix. J DIVESTMENT OF OFFICE 559 889. Where the resigning trustee was, as a trustee, partner Resignation in a bank, Lord Cairns, C, said : — " His resignation of his trustee- trustee is _ a partner. ship alone would not terminate his liability to the bank. He ceased to be a trustee ; but it remained for him to terminate his liability in respect of the bank by a transfer, 1 or something equi- valent to a transfer, 2 of his shares." 3 He must take the same steps as are necessary in the case of any other individual partner to put an end to his continuing liability to the public contracting with the partnership. Thus Lord President Inglis says : — " I cannot imagine that the resignation of one of a body of trustees who are joint owners of shares in a company of this kind can have the slightest effect upon the liability of the party resigning until it is intimated to the bank and given effect to by them, or at least intimated to the bank in such a way that the bank are bound to give effect to it." i For instance, intimation of resigna- tion must be made timeously. Thus where intimation of resigna- tion was made by trustees to a public company after the company had become insolvent, the directors were held to have no power to change the register of proprietors. 5 1 Cf. s. 893. 2 Of. s. 890. 5 Mitchell (Alexander) v. City of Glasgow Bank, 1879, 6 R. (H. L.) 60, at p. 61. Cf. Ker v. City of Glasgow Bank, 1879, 6 R. (H. L.) 52, per Lord Cairns, C, and Lord O'Hagan, at p. 54. 4 Sinclair v. City of Glasgow Bank, 1879, 6 R. 571, at p. 574. fi Mitchell, supra. Cf. Shaw v. City of Glasgow Bank, 1878 6 R. 332, case of a sole trustee. 890. As the resigning trustee, where he is not a sole trustee, 1 Transfer not neees- requires no transfer to denude him of the trust title, so mtima- sary at ^ common tion to the company of his resignation, and of his consequent loss law - of title, should be equivalent, even at common law, 2 to a transfer, and sufficient to take his name off the register of partners liable to the public dealing with the company. "If there had been in this case distinct evidence of intimation to the bank of the trustee's resignation, I am," says Lord Deas, " by no means pre- pared to say that this would not have been sufficient without a transfer. We have never yet decided that a transfer, in such cases, is necessary, and there is a good deal which goes the other way." 3 And in the same case Lord Shand goes further in saying : — " I assume that if notice of the resignation of the office of trustee had been given by or on behalf of the trustee to the bank, with a view to his name being removed from the register, or with a view to a marking being put on the register of the fact of his resignation, that would have been effectual to relieve him of 560 DIVESTMENT OF OFFICE [chap. ix. future responsibility with reference to the shares, and that no deed or transfer of any kind was required." 4 1 Of, s. 893. 2 As to statutory declaration, see s. 886 3 Toehetti v. City of Glasgow Bank, 1879, 6 R. 789, at p. 793. 4 Toehetti, supra, at p. 794. 891. This view Lord Shand reaffirms in a later case with greater emphasis in the following reasoned opinion dealing with the general question : — " The question in this case is, What is the effect of a resignation by a trustee duly intimated to the company on whose register his name stands as trustee ? and I am of opinion that, as his title on the register is that of one of several joint owners in trust, a deed of transfer by him and his co-trustees, or by him alone, to the remaining trustees, is not necessary to divest him. His resignation, admittedly competent and effectual, cer- tainly divests him of all right of property in the trust estate as effectually as his death would do. I see no good reason to doubt that the title accrues to the remaining trustees in the same way as in the case of death, and that on due intimation of the resigna- tion to the company his liability as a shareholder must cease." 1 In this connection it is proper to notice that Lord Penzance, in the House of Lords, in an earlier case, expressed the following opinion in regard to this question : — " The only way in which a partner could, under the provisions of the deed of co-partnery, divest himself of his share in the bank, would be by a deed of transfer, the form of which is to be regulated by the directors. . . . The mere act of resigning his office of trustee cannot, even though communicated to the directors, properly be held to be equivalent to a transfer, or, per se, to entitle the trustee to have his name removed from the register." 2 This is, however, only apparently in disagreement with the opinions quoted above. His Lordship has failed to notice that the directors had been in the habit of treating an intimation of resignation by a trustee as a proper form of transfer, entitling the trustee to have his name taken off the register. 3 1 Dalgleish v. Land Co., 1885, 13 R. 223, at p. 230. 2 Mitchell (Alexander) v. City of Glasgow Bank, 1879, 6 R. (H. L.) 60, at p. 63. 3 Vide 6 R., at p. 440. Equivalents 892. There may be equivalents for intimation. Direct and tion. formal intimation, though it should never be omitted wilfully, is not actually necessary where knowledge, at least if that know- chap, ix.] DIVESTMENT OF OFFICE 561 ledge has been acted upon, of the resignation is brought home to the company. " I am not," remarks Lord Deas, " to say that equivalents can never be accepted for direct intimation." 1 For instance, one of two trustees had resigned, but no formal intima- tion of his resignation had ever been given to a bank in which he along with his co-trustee was registered as a proprietor of shares. After the date of his resignation, the bank, as appeared from their own books, paid the dividends to the receipt of the sole remaining trustee. Lord Shand was of opinion that parole evidence, " even though it had not been very much," showing how the bank came to make the change in their books and in their practice, might be sufficient to instruct an equivalent for intima- tion of the resignation. 2 1 Toohetti v. City of Glasgow Bank, 1879, 6 E. 789, at p. 793. 2 Tochetti, supra, at p. 794. 893. Though intimation of his resignation is sufficient tosoieregis- divest the trustee of the shares and of the responsibility attached trustee must trims i fir. to them where he leaves other trustees on the register, the case is different where either a sole trustee resigns, or a whole body of trustees resign. Here it would seem that the trustee cannot divest himself without investing someone else with a title to the shares by an executed transfer. 1 Though a sole trustee is spoken of, the same question would arise where there were more trustees than one but the only one of them who was on the register was the resigning trustee. The important question in the whole matter is not how many trustees are resigning, but is there at least one left on the register after the resignation — if there is, then intimation of resignation is sufficient for rectifying the register without a transfer; if not, then a transfer is necessary from the old members to the new ones in order to complete their formal title by placing them on the register. 1 Shaw v. City of Glasgow Bank, 1878, 6 R. 332, where the question is mooted. Vide argument for defenders at p. 336. 894. "Where an action has been raised against a trustee only intimation in his character as one of a body of trustees and he resigns before defences are lodged, the proper form of intimation to the parties to the action is to lodge defences stating the fact of his resigna- tion, and on his doing so he is entitled to be assoilzied. 1 1 Gilmour, 1852, 14 D. 454, an action for reduction of the trust deed. 36 562 DIVESTMENT OF OFFICE [chap. ix. Death 895. Besignation must not be confused with death 1 in its different ° ?Mignat°o™. e ff" ect on the continuing responsibility of the trustee. The former is a private act, and therefore requires notice to give it public effect, but the latter does not. " I do not think," says Lord Shand, " it makes any difference whether the death has been intimated to the bank or not. I take it that, having on the face of the register a title of this kind, in which the parties are entered as joint owners in trust, if one of the body of trustees dies, that is a public fact of which the bank is bound to have knowledge ; just as I think, in the ordinary case of partnership, creditors and partners are bound to have knowledge of the death of a partner who is liable under the contract." 2 1 Where a limited liability company is a trustee, its dissolution by liquida- tion is equivalent to the death of a personal trustee (Bomore, 1906, 1 Ch. 359). * Oswald v. City of Glasgow Bank, 1879, 6 R. 461, at p. 469. II. Removal (a) Its Relation to Sequestration 896. The removal of a trustee is sometimes accompanied by (1) the appointment of a judicial factor, and (2) the sequestration of the estate ; but there is no necessary connection between removal and either of the other processes. The position may be put thus : — Where some only of the trustees are removed, leaving trustees still in office, these remaining trustees carry on the trust title and the trust administration, 1 and there is no necessity for any further procedure. Where, however, all the trustees are removed, some method of carrying on the trust title and the trust administration has to be found. The method usually adopted is the sequestration of the trust estate to continue the title, without the necessity of a conveyance of the estate from the trustees who have been removed, combined with the appoint- ment of a judicial factor upon the sequestrated estate to carry on the trust administration. 1 Here sequestration is inappropriate. Vide L. J.-C. Inglis in Neilson 1865, 3 M. 559, at p. 561. sequestra- 897. The estate may nevertheless be sequestrated and put tion without . . _ „ . . r removal. under the administration of a judicial factor x without the removal of the trustees, for it must always be borne in mind that it is removal and not sequestration that divests the trustee of his office. In this case the trustee still remains vested with his office • chap, ix.] DIVESTMENT OF OFFICE 563 it is bnly his title and consequent powers of management that are suspended, and they revive at once when the sequestration comes in any way to an end. Thus where a trust estate was sequestrated and the trustee, during the currency of the seques- tration, executed a deed of assumption, this deed was held to take effect and come into operation when the trust was revived by the recall of the sequestration and factory. 2 1 Of. ss. 176, 348, and 900. 2 Shedden, 1867, 5 M. 955. 898. Sequestration of the estate and the appointment of a sequestra- judicial factor without removing the trustees is the appropriate precaution, preliminary procedure for protecting the estate while the conduct of the trustees is being looked into. Where there is no evidence or admission of facts amounting to such misconduct as would cause the Court to remove the trustees, but their proceedings are suspicious and unexplained, 1 the Court will sequestrate the estate and appoint a judicial factor ad interim, reserving the question of the removal of the trustees till investigation has been made. " If the trustee can satisfy the judicial factor, or the Court, that his proceedings are all right, the sequestration may be recalled ; and hence the propriety of not removing him in the meantime." 2 Thus, where there were primd facie great irregularities in the adminis- tration of a trust, the Court sequestrated the estate and, without removing the trustees, appointed ad interim a judicial factor to " investigate into the history of the trust funds, bring them all together, and, if necessary, call for an accounting of the adminis- tration of the estate as regards the income." 3 Should the circum- stances require it, such an appointment of a factor will be made by the Court 4 de piano at the first calling, before intimation has been ordered. 5 1 Where they are primd facie regular, the Court will not appoint a factor (Roughhead v. Hunter, 1833, 11 S. 516). 2 Morris v. Bain, 1858, 20 D. 716, per Lord Deas, at p. 718. Cf. Taylor, 1857, 19 D. 1097. 3 Carmont v. Mitchell, 1883, 10 R. 829. Of. Walker, 1837, 9 S. J. 480 ; Henderson, 1901, 9 S. L. T. No. 11. 4 The appointment of a judicial factor vice trustees is competent only in the Court of Session irrespective of the size of the trust estate. 6 Goold, 1856, 18 D. 1318. Cf. opinion of Lord Cunninghame in Dean, 1852, 15 D. 17. 899. In a case where a deadlock has arisen in the adminis- sequestra- tration of the trust, but not through any fault of the trustees, extricate QcaQlOCiC, the Court will sequestrate the estate and appoint a judicial factor to extricate the affairs of the trust under the direction of the 564 DIVESTMENT OF OFFICE [chap. ix. Court without removing the trustees. Thus in a well-known case where the trust estate was partly in England, the trustees were ordered by the English Court of Chancery to pay into that Court all the trust funds, wherever situate, and on the other hand they were interdicted by the Scots Court from taking the funds or any part of them out of Scotland. The Scots Court, to meet the difficulty, sequestrated the estate, and appointed a judicial factor, without removing the trustees. " The effect of this," says Lord President Inglis, " will be to relieve the trustees for the present of all charge of the estate, and to suspend all action on their part as trustees and executors. . . . This course is in accordance with the practice of the Court when testamentary trustees become, from any accidental cause, temporarily disqualified to administer the trust." 1 1 Orr Ewing, 1884, 11 R. 600, at p. 637 ; affd. Orr Ewing, 1885, 13 R. (H. L.) 1. Of. Whyte, 1885, 22 S. L. R. 890 ; Wilson, 1895, 2 S. L. T. No. 457. Factor 900. A case must be noticed where there was a difficulty as appointed to make t the title of a trustee to sue an action against a co-trustee title. ° where the other co-trustee declined to appear as a pursuer. Here a judicial factor was appointed 1 ad hoc, without seques- tration of the estate or removal of the trustees, and was sisted, not in place of the pursuer, but as a party concurring with the pursuer. " It appeared to us desirable," says Lord President Inglis in this case, " that a judicial factor should be appointed to represent the trust estate. What was done was not to extinguish the trust, nor even to supersede the trustees. The appointment of the judicial factor was merely to meet the emergency which had occurred. The trust may come into active operation as soon as the difficulty is removed which rendered the appointment of the judicial factor necessary. The trust itself undoubtedly subsists, but the judicial factor, after his appointment, is the proper person to uplift debts due to the trust estate, and to grant discharges." 2 And Lord Deas, in the same case, says : — " The judicial factor represents the trust estate which was previously represented by the trustees. These trustees have not been removed, and the estate has not been sequestrated. The factor has simply been appointed to meet the present diffi- culty, and when that is removed there is nothing to prevent the factory from being recalled and the trustees reinstated in the management." 3 This case is, however, quite special in its circum- stances, and the Court itself expressed doubt as to the efficacy of the remedy. CHAP, ix.] DIVESTMENT OF OFFICE 565 1 Cf. sa. 176, 348, and 897. 2 Morison v. Gowans, 1873, 1 E. 116, at p. 117. 3 Morison, supra, at p. 118. (b) Jurisdiction to Remove 901. Until the passing of the Trusts Act of 1891 the power to remove a trustee 1 could be exercised only by the Court of Session. Since then, in the case of an application for the removal of a trustee on the statutory grounds of insanity, incapacity, or continuous absence, " such application, in the case of a mortis causd trust, may be made either to the Court of Session 2 or to the Sheriff Court from which the original confirmation of the trustees 3 sheriff Court. as executors issued ; and in the case of a marriage contract may be made either to the Court of Session or to the Sheriff Court of the district in which the spouses are, or the survivor of them is, domiciled." i The Court of Session, being a " court of competent jurisdiction in which a question relative to the . . . removal of a trustee comes to be tried," 5 is entitled and bound, 6 on an appli- cation to it at common law, to exercise the statutory power of removal under the 8th' section of the Trusts Act, 1891. 7 An application for removal of a trustee at common law is made to the Inner House, being an appeal to the nooile officium of the Court, but a remit has been made by the Inner House to the Junior Lord Ordinary to dispose of such a petition. 8 1 It was Lord M'Laren's judicial opinion {e.g. Henderson, 1893, 20 B. 536, at p. 539) that the truster while alive had power to revoke an appointment of trustees made by him, and in their stead to appoint others more congenial to him, at least in a marriage-contract trust. The proposition seems to be stated higher than the cases warrant. Cf. s. 42. 2 I.e. to a Lord Ordinary (Campbell, 1895, 3 S. L. T. No. 54). 3 The phrase " original confirmation of the trustees " must be taken to mean " confirmation of the original trustees," otherwise it is meaningless. So read, the provision extends to the case of assumed trustees, and would bring them quoad hoc under the jurisdiction of the Sheriff Court where the trust was held to be domiciled, irrespective of their individual domicile. 4 54 & 55 Vict. c. 44, s. 8. 5 54 & 55 Vict. c. 44, s. 2. « Cf. s. 918. 7 Tod v. Marshall, 1895, 23 E. 36. The trustee to be removed was one of the petitioners. 8 Wishart, 1910, 2 S. L. T. No. 89. (c) Grounds of Removal at Common Law 902. The leading principle in considering this question of the removal of trustees has been thus stated by Lord Blackburn : — " The Court must be mainly guided by the welfare of the bene- ficiaries, and ' if satisfied that the continuance of the trustee would prevent the trusts being properly executed, the trustee may be 566 DIVESTMENT OF OFFICE [chap. ix. removed. It must always be borne in mind that trustees exist for the benefit of those to whom the creator of the trust has given the trust estate.' " 1 1 Orr Ewing, 1885, 13 R. (H. L.) 1, at p. 23, quoting judgment of Privy Council delivered by his Lordship in Letterstedt v. Broers, 1884, 9 App. Cas. 371, at p. 386. Of. Wrightson, 1908, 1 Ch. 789. Maiversa- 903. The kind of circumstances that would prevent the trusts office being properly executed, and call for the removal of the trustee, necessary. ° x x d . are thus put by Lord President Inglis : — " In order to justify us in adopting so extreme a measure as the removal of a trustee, there must be something more than mere irregularity or illegality. We are not in the habit of removing trustees unless there has been a decided malversation of office, and there is nothing of that kind here. There is no suggestion that the trustees did not act in perfectly good faith." x In a later case, where the charge against the trustee was " that the claim on the trust estate which the trustee paid was not sufficiently vouched, and that a part of the trust estate was lost owing to his not taking care to see that it was,'' the Court held that such a charge did not entitle it to remove the trustee. 2 1 Gilchrist v. Dick, 1883, UK 22, at p. 24. Of. Bannerman, 1895, 3 S. L. T. No. 328. 2 Harris v. Howie, 1893, 21 R. 16, per L. P. Robertson, at p. 19, expressly following Gilchrist, supra. Cf. circumstances in Taylor v. Adam, 1876, 13 S. L. R. 268. Good faith. 904. Mere good faith on the part of the trustee will not prevent his removal, where he shows "gross misconception of duty," and persists in acting in accordance therewith. Where all the beneficiaries 1 for the second time petitioned the Court for the removal of the trustee on the ground of his improper interference with the liferenter, and of his expressed deter- mination to continue that interference, the Court removed him. Lord Lee, delivering the judgment of the Court in this case, says : — " Although the allegations of the beneficiaries may not involve any moral delinquency on the part of the trustee or malversation in office to the effect of making personal profit, it has been held, 2 and is, I think, settled, that such moral delin- linquency or malversation is unnecessary, and that a breach of trust even from error in judgment may be sufficient." 3 1 Williamson, 1900, 8 S. L. T. No. 162, where petition refused, as the title of the petitioner as a beneficiary was challenged and the question could not be decided in that process. 2 Fleming v. Craig, 1863, 1 M. 850. 3 M'Whirter v. Latta, 1889, 17 R. 68, at p. 71. chap, ix.] DIVESTMENT OF OFFICE 567 905. Thus where there is " utter failure of the trustee to wiifui maladminis- rollow out the directions of the truster, this is a grave offence on Nation. the part of the trustee, quite sufficient to justify his removal." 1 " The allegation of the beneficiaries is that he has so conducted himself as to show that his only object in retaining the manage- ment is to exercise the powers of a sole trustee in a manner hostile to the beneficiaries. He has plainly carried to such a length his extravagant views of his independence of the rights and interests of the liferentrix as to bring the trust to a deadlock. 2 This is nothing short of a wilful failure to administer the trust." 3 "Where, Difference on the other hand, " the grounds of complaint against the trustees amount truly to a difference of opinion between them and the beneficiaries as to their powers and mode of management/' the remedy is the enforcement by action on the part of the beneficiaries of what they think the sound construction of the trust deed — not the removal of the trustees.* 1 Whyte, s. 907, per L. P. Inglis. 2 See Stewart v. Chalmers, 1904, 7 F. 163, at pp. 166, 167. Cf. s. 348. 3 M'Whirter v. Latta, 1889, 17 R. 68, at pp. 70-72. 4 Taylor, 1857, 19 D. 1097, per Lord Deas, at p. 1098. A factor was after- wards appointed on the petition of the trustees, the beneficiaries concurring. Gf. Wrightson, 1908, 1 Ch. 789 ; Forster v. Davies, 1861, 4 De G. F. & J. 133. Breach of trust 906. Where the breach of trust is not persisted in, but is • immediately made good on its being challenged by the bene- remed,ed - ficiaries, the trustees will not be removed. Two trustees advanced trust funds to a client of their own on his promissory note, with a separate letter of guarantee by themselves and a third party. When the transaction was challenged by the beneficiaries, the trustees at once replaced the money, and appointed an agent to arrange the future investment of the funds in concert with the beneficiaries. In these circumstances Lord Mackenzie (Ordinary) held that there were not sufficient grounds for removing the trustees. 1 1 Hay v. Binny, 1861, 23 D. 594. 907. In a case where the whole parties interested petitioned ^"Sion for the removal of the trustee, Lord President Inglis said : — " That aJu?S" I consider a sufficient reason for removing him, without imputing blame on his part. When all the parties interested combine x in asking to get rid of a trustee, we have a strong case for his removal. I do not say that in all circumstances that would hold as a good ground for such a petition being granted. There might be cases where a family compact might be formed in order 568 DIVESTMENT OF OFFICE [chap. ix. to compel a trustee to resign, and if there were any suggestion of such a combination I should refuse the petition. But here a grave offence is alleged — the utter failure of the respondent as trustee to follow out the directions of the truster — and all the parties interested combine to petition for the trustee's removal, and I see no reason why we should not sequestrate the estate, remove the trustee, and appoint a judicial factor." 2 1 Cf. M'Whirter, s. 904. 2 Whyte, 1891, 28 S. L. R. 901. Trustee 908. Where a trustee has come into a position where he hate, as ■with r Interest an ^dividual, 1 or even as a trustee, 2 interests necessarily antagonistic to those of the trust estate, this is a good ground for his removal from the trust. 3 Where a trustee committed " a clear and direct breach of trust " to serve his own private ends he was removed. " The trustee," says Lord Weaves, " is now in a position in which it is plain that he is not the person to carry on the trust. His interests are adverse to those of the trust. His first duty, as a trustee, would be to consider whether he should not take proceed- ings against himself. He is not a fit party to perform that duty, and therefore I think he should no longer be trustee." 4 1 Of. s. 451. z Of. s. 909. 3 In a case in which the action of executors-dative was under discussion, opinions were expressed showing that in their case the rule is not so strict as in the case of trustees. " It is not a ground for displacing executors," says Lord M'Laren in that case, " that they have personal interests conflicting with their duty as executors. The law supposes that they are able to reconcile their interest and their duty until the contrary is proved. But it is a different case where they have bound themselves to use their powers as executors for the benefit of one party, and against the estate which they represent. In such a case, I think, the Court has no alternative but to remove them from office and appoint a factor " (Birnie v. Christie, 1891, 19 R. 334, at p. 338). 4 Fleming v. Craig, 1 863, 1 M. 850, at p. 854. Gf. Brown v. Burt, 1848, 11 D. 338 (vide interlocutor at p. 342), where a trustee was held to be removable for having purchased the estate, a position obviously involving him in antagonistic interests ; Young, 1901, 9 S. L. T. No. 13. Adverse 909. It makes no difference that the position involving con- mterests. flicting interests has been quite innocently acquired; the same reasoning applies. Thus where the principal part of one trust estate consisted of claims on another trust estate, and the trustees on the one estate were a majority of the trustees on the other estate, the Court removed the trustees from the claiming trust and appointed a judicial factor. It was held that the fact that there were two trusts did not, for this purpose, make any difference — that the trustees were still proceeding against themselves, though in another capacity, and that the antagonism of trust interests in the chap, ix.] DIVESTMENT OF OFFICE 569 same individual could no more be permitted than the antagonism of a personal and of a trust interest. 1 Where the trustee of lands became tenant of the same, even although under a power in the will, the English Court have removed him from the trust. 2 There must be noticed in this connection, however, a dictum of Lord Neaves to the effect that " an adverse interest to the trust is Position known to not a ground for removal when the interest was known by the truster. truster." 3 On the other hand, it was suggested by Lord Justice- Clerk Inglis and Lord Cowan, in the same ease, that the trustee to whose circumstances this dictum was applied might be removed, which affects the value of the dictum. The statement, it is sub- mitted, cannot be put higher than this — that an adverse interest is not of itself sufficient ground for the removal of a trustee where the truster nominated the trustee in the knowledge that he must necessarily, on his acceptance of the trust, be affected by the particular adverse interest in question. 4 1 Thomson v. Dairy mple, 1865, 3 M. 336. 2 Vide s. 476. 3 Neilson, 1865, 3 M. 559, at p. 561. See Henderson, 1893, 20 R. 536, where circumstances supervened raising an antagonism of interests of a different nature to that in the view of the truster, and the estate was sequestrated under a judicial factor. 4 Of. Lord M'Laren's remarks on the effect of knowledge of this nature on the question of judicial resignation (Maclean, 1895, 22 R. 872, at pp. 875, 876). 910. Where two trustees had been assumed under circum- Assumed trustee. stances which gave them an interest adverse to that of the trust estate, the Court sequestrated the estate and appointed a judicial factor but did not remove the trustees, evidently on the ground that there was nothing to be said against them but for the position in which they found themselves. Lord President Kobertson, how- ever, after stating that the cause would be continued, took occasion to add significantly : — " It will be for the two gentlemen to consider whether they should not further simplify the situation by forth- with resigning office." x In a later case, an original trustee who by the resignation of his co- trustees was left sole trustee on the sole trustee, estate, had a personal interest in businesses in which he had, as trustee, a trust interest, and these interests were adverse to one another. Here the Court, without removing the trustee, seques- trated the estate and appointed a judicial factor. It was held that, though there was no reflection on the trustee, he was in a position where it was impossible for him to properly perform the duties of a trustee. 2 1 Foggo, 1893, 20 R. 273. Cf. case of Scott, 1867, 3 S. L. R. 325, where, after an order for service of a petition of removal, a deed of resignation was 570 DIVESTMENT OF OFFICE [chap. ix. put into process and the petition dropped. See also Cherry v. Patrick, 1910, S. C. 32. 2 A. and Others, 1894, 1 S. L. T. No. 617 ; vide also note to No. 639. Removal 911. Trustees will not be removed on the mere allegation of of estate tadsdiction an interested party that they intend to remove the trust estate from Scotland to his prejudice. Thus the next-of-kin of the truster petitioned the Court for the sequestration of the estate, the removal of the trustees, and the appointment of a judicial factor, on the ground that the trustees contemplated removing the estate to England and winding it up in the English Courts. This, they alleged, would seriously interfere with their interests in the estate, as they intended to bring an action of reduction of the trust deed. The trustees lodged answers, in which they denied that they had any intention of removing the trust estate out of Scotland, and the Court refused the petition. " There are no doubt some cases," says Lord M'Laren, " in which this Court has appointed a judicial factor for the purpose of preventing the estate from being removed to foreign parts. It appears to me, however, that it is a sufficient answer here that the trustees have come forward and disclaimed all intention of acting prejudicially to the petitioner's claim; and in any case until proceedings have been taken in the foreign Court and we know something of them, we could not entertain an application founded on such grounds. The proceedings, for anything we know, may turn out to be perfectly legal and unobjectionable." x 1 Bowman v. Russell, 1891, 19 R. 205. Dissension 912. It is not a good ground for removing trustees that they among trustees. do not act harmoniously. "It is not sufficient for trustees to come to the Court and say, We cannot get on together, so we want to be removed and the estate put under a factor. . . . If it had been shown that a trustee had obstructed the adminis- tration of the trust and had acted against the express wish of the truster, the question would have been very different." 1 1 Hope, 1884, 12 R. 27, per L. P. Inglis. Of. L. P. Dunedin in Dick, 1899, 2 F. 316 ; and Stewart v. Chalmers, 1904, 7 F. 163, at pp. 166, 167. insolvency 913. Bankruptcy or insolvency is not of itself a sufficient of trustee. r J J ground for the removal of a trustee. " In such a case, though it might be necessary for the Court to take the funds out of the hands of the bankrupt trustee, it does not follow that he might not still be in full capacity to attend to the interest of children, chap, ix.] DIVESTMENT OF OFFICE 571 in the ultimate investment of the money as authorised by the deed." 1 1 Cowan v. Crawford, 1837, 15 S. 398, per Lord Moncreiff (Ordinary) at p. 405 ; Morland v. Cowan, 1837, 9 S. J. 214, at p. 217. In Towart, 1823, 2 S. 268 and 305, the prayer of the petition asking for the removal of the trustee on account of his insolvency was granted expressly " in respect of no answer " (c/. Walker, 1837, 9 S. J. 480, and Sawersu. Penney, 1881, 19 S. L. R. 258— case of petition for recall of the factory) ; and again in Smith, 1 832, 10 S. 531, and in Eraser, 1854, 16 D. 867, /similar applications were granted, when no appear- ance was made for the trustee — a most important condition in estimating the value of the decisions, notwithstanding Lord Mackenzie's opinion to the contrary in M'Pherson v. A. B., 1840, 3 D. 315. In this case the trustee was removed for insolvency hy a decree in foro contentioso, hut the exceptional position assigned to the trustee in question, in the opinions of the judges, is alone sufficient to divest the case of any weight as a precedent. Again, in Soutar v. Brown, 1852, 15 D. 89, not only did the beneficiaries plead the insol- vency of the trustee, but they also " attacked the constitution of the trust on the ground of mala fides" (L. P. M'Neill, at p. 93)— a circumstance that also appears in the earlier case of Barry v. Thorburn, 1847, 9 D. 917, and destroys the value of both cases as decisions on the point under consideration. The expedient suggested in Barry, that the trustee in such a case should find caution for his intromissions with the trust estate, is repugnant to later views of the nature of the office of trustee. Vide also Whittle v. Carruthers, 1896, 23 R. 775. 914. In exercising its statutory 1 powers for the removal of English ° practice. bankrupt trustees, the English Court has proceeded on the footing that, though bankruptcy is a ground for the removal of the trustee where it endangers in the smallest degree the trust property, the intention of the legislature was that when a trustee had become bankrupt, the beneficiary should at once apply to the Court for the removal of the trustee, if the beneficiary were of opinion that such danger to the trust estate existed. Accordingly, where all the parties interested had for some time after the bankruptcy dealt with the bankrupt trustee on the footing of his being a proper person to be trustee, the Court refused to remove the trustee on the ground of bankruptcy, when at a later date a dispute arose between the beneficiaries and the trustee. 2 The character and circumstances of the bankruptcy must also be taken into consideration. Thus where the bankrupt would have paid twenty shillings in the pound but for an unfortunate accident in the winding up of his affairs, and the bankruptcy is an old one, the Court will not be so inclined to remove the trustee 3 as where the bankruptcy is recent, the assets much less than the liabilities, and the bankrupt entirely impecunious. 4 In a case of the latter class, the trustee was removed on the petition of his co- trustee, who was a beneficiary, although the petition was opposed by other beneficiaries with larger interests. 5 Where sequestration is expressly declared ipso facto to deter- ^ eo u a ^ t <£ mine the holding of the office, a recall of the sequestration restores tion - 572 DIVESTMENT OF OFFICE [chap. ix. the trustee to his original position subject to any new rights that may have come into existence in the interval. 6 1 12 & 13 Vict. c. 106, a 130 ; and 46 & 47 Vict. c. 52, s. 147. 2 Bridgman, 1860, 1 Dr. & Sm. 164, per Kindersley, V.-C. " Vide Bridgman, supra. 4 Foster, 1886, 55 L. T. 479, per Kay, J. 5 Foster, supra. 6 Newman, 1899, 2 Q. B. 587. General 915. The following is an authoritative expression of the general rule that guides the Court on this question of danger to the trust through the continuance in office of an insolvent trustee. " In my view," says Jessel, M.R., " it is the duty of the Court to remove a bankrupt trustee who has trust money to receive or deal with so that he can misappropriate it. There may be exceptions, under special circumstances, to that general rule ; and it may also be that where a trustee has no money to receive he ought not to be removed merely because he has become bank- rupt ; but I consider the general rule to be as I have stated. The reason is obvious. A necessitous man is more likely to be tempted to misappropriate trust funds than one who is wealthy ; and, besides, a man who has not shown prudence in managing his own affairs is not likely to be successful in managing those of other people." 1 Thus where part of the trust estate consisted of bonds with coupons for interest attached, which could very easily be made away with, the trustee was removed on account of his bankruptcy. 2 1 Barker, 1875, 1 Ch. D. 43. ' Barker, supra. Absence 916. Absence from the country may of itself become a good from jurisdiction, ground for removal at common law, even where short of that required by statute. 1 In a case 2 where one of two trustees left the country and could not be communicated with, the Court refused to authorise the remaining trustee to grant conveyances of the trust estate, because after the lapse of six months he could of himself assume new trustees, and so grant a title. 3 What does not seem to have been noticed in the case is that the absent trustee could, after the six months had elapsed, be removed by the Court on the statutory ground of his con- tinued absence merely. 4 The trust estate, however, had been sold and the conveyance fell to be executed before the lapse of the six months. In these circumstances Lord M'Laren suggested that the difficulty might be got over either by. removing chap, ix.] DIVESTMENT OF OFFICE 573 the absent trustee summarily on petition at common law, not on the ground of his absence as such, but on the ground of his neglect of duty, 5 or by a declaratory adjudication on a title granted by beneficiaries, who were the only persons interested in the estate. 6 1 Of. a. 921. 2 Waugh, 1892, 20 R. 57. 8 30 & 31 Vict. c. 97, s. 11. . 1 54 & 55 Vict. c. 44, s. 8. Of. s. 921. 6 Of. Smith, 1862, 24 D. 838. 6 Waugh, supra. 917. In another case, of a similar nature, two out of four trustees left the country and made no answer to communications addressed to them regarding the trust affairs. On a petition at the instance of the remaining trustees, with the concurrence of the beneficiaries, the Court, after ordering intimation on the absent trustees at their last known address and upon their agents, removed the absent trustees from office, on the ground that their continued absence and silence rendered the beneficial management of the estate impossible. 1 1 Walker, 1868, 6 M. 973. (d) Grounds of Removal under Trusts Ads 918. By a provision of the Trusts Act, 1891, 1 three grounds Three J r ° statutory for removal of a trustee are declared. These are: (1) insanity; grounds of x ' •* 3 removal. (2) incapacity of acting by reason of physical or mental dis- ability ; and (3) continuous absence from the United Kingdom for a period of six calendar months or upwards. A distinction must be noted between the first two grounds and the third. The first two are peremptory reasons for removal, and on proof of the condition specified the trustee must be removed. In the case of the third ground, the removal is only empowered, not directed, and the Court has a discretion to exercise on the facts proved before it. Such facts as the immediate return of the trustee, and the likelihood of his not again leaving the country during the continuance of the trust, would be relevant considerations in the exercise of the discretion of the Court. 2 The presence of the trustee in this country at the time of the applica- tion for his removal does not render the application incompetent, * if the statutory disqualification by absence has been incurred. 3 1 54 & 55 Vict. c. 44, s. 8. The petition under this section may be presented to a Lord Ordinary (Johnston, 1900, 2 F. 467). See Tod v. Marshall, 1895, 23 R. 36, for exercise of the statutory power upon a petition at common law. 2 The ratio of removal is not mere absence, but incapacity to act through fli DS6 n C 6 3 Rex v. Rowlands, 1906, 2 K. B. 292. It would appear to be otherwise in the cases of restored sanity and capacity. 574 DIVESTMENT OF OFFICE [chap. IX. insanity. 919. Of the grounds for removal introduced by the Trusts Act, 1891, ' the first is that of insanity, and the question has arisen as to the nature of the evidence that will satisfy the Court of the mental condition of a trustee so as to entitle the Court to remove him from office in accordance with the provisions of the Act. Lord Stormonth-Darling (Ordinary), after consultation with the other judges, decided that the evidence necessary in petitions for the appointment of curators in cases of insanity would satisfy the Court, and that, accordingly, medical certificates were by themselves sufficient. 2 sole trustee. In the case of the insanity of a sole trustee, the proper course is to apply to the Court to appoint a new trustee, or new trustees, and the appointment of such new trustees in such a case involves ipso facto the removal of the insane sole trustee. The application to the Court may be made by " any party having interest in the trust estate." s 1 54 & 55 Vict. c. 44, s. 8. 2 Lees, 1893, 1 S. L. T. No. 51 ; Reid, 1897, 5 S. L. T. No. 158— a case of "mental disability." See Petition, 14th July 1897; A., 1898, 6 S. L. T. No. 192. 3 30 & 31 Vict. c. 97, s. 12. Physical 920. Another ground for removal under the statute is in- or mental disability, capacity of acting by reason of physical or mental disability. It is obvious that the mental disability here referred to must be some- thing short of insanity, which has already been dealt with by the statute. 1 In the only Scots case yet reported, the trustee removed under this section of the statute was seventy-five years of age, and unable from debility to attend to the affairs of the trusts An illustration of the kind of case to which this provision would be applicable is to be found in an English case. 3 There it was held that a person who is paralytic and deprived of the power of speech and unable to read or write, but who is not suffering from any mental disease, may be incapacitated from acting, but not on account of infirmity of mind, and therefore is not of unsound mind within the Trustee Act, 1850. 4 sole trustee. In the case of a sole trustee becoming incapable of acting by reason of physical or mental disability, the proper course is to apply to the Court to appoint a new trustee or new trustees, and the appointment of such new trustees ipso facto involves the removal of the incapacitated sole trustee. The application to the Court may be made by " any party having interest in the trust estate." 6 chap, ix.] DIVESTMENT OF OFFICE 575 1 A distinction should be noted between the procedure where insanity is averred {cf. s. 919) and that where only mental disability is averred. Insanity is a technical term {cf. 31 & 32 Vict. c. 100, s. 101), and is so used in the Trusts Acts. In this case the medical certificates should simply bear that the trustee is insane. This is a purely medical question, and the Court will accept this certification, if the certificates are in order and unchallenged. The condition of mental disability requires the Court to apply itself to the consideration of the certificates. The Court has to find that the trustee is " incapable of acting " as an inference from the state of " physical or mental disability " of the trustee. In this case the certificates should inform the Court of the actual state of the trustee from which the inference may be drawn as to his capacity or incapacity. In practice this statutory distinction appears to be generally overlooked. The averment in the petition should state the particular statutory condition upon which removal is craved, and this should correspond with the class of certificate produced. 2 Tod v. Marshall, 1895, 23 R. 36. The petition here was presented at common law. Of. Reid, s. 919, on question of petition before Lord Ordinary. 3 Barber, 1888, 39 Ch. D. 187. 4 13 & 14 Vict. c. 60, s. 2. 6 30 & 31 Vict. c. 97, s. 12. 921. The third statutory reason for removal is " continuous x Absence from absence 2 from the United Kingdom for a period of six calendar country. months or upwards." 3 A trustee disappeared with a missing sailing vessel, and a factor loco absentis was appointed on his estate. In a petition presented by his co-trustees, with the consent of the beneficiaries and the factor, for the removal of the absent trustee, the Lord Ordinary required as evidence of the continuous absence of the trustee, in addition to the extract appointment of the factor, affidavits by the absent trustee's brother and by a co-trustee. 4 By statute 5 a trustee of a Trustee Savings Absence •> J ° from Bank who has not attended any meetings of the trustees for a meetings. certain given time, and has not performed any of the duties imposed on him by statute, is ipso facto removed from office. In the case of a private trustee, such neglect of duty is not a ground under the Trusts Acts for removal, if the trustee has not been out of the United Kingdom. 6 1 The absence is not continuous if the trustee has returned, for however short a time (Walker, 1901, 1 Ch. 259). 2 A dissolved company is not a trustee absent from the United Kingdom (Taylor, 1904, 2 Ch. 737) ; but see General Corporation, 1904, 1 Ch. 147. 3 54 & 55 Vict. c. 44, s. 8. For computation of time in such cases, see Peggie v. Wemyss, 1910, S. C. 93. 4 Dickson, 1894, 2 S. L. T. No. 59. It is in the discretion of the Court to say what evidence of the continuous absence is sufficient. 6 54 & 55 Vict. c. 21, s. 7. 8 But cf. s. 916 as to removal at common law for neglect of duty. III. DiscJiarge 922. Though the trustee may at any time during the currency of his period of office obtain from the beneficiaries, or other person empowered to discharge him, a discharge of his actings and intro- 576 DIVESTMENT OF OFFICE [CHAP. IX. Discharge distin- guished from receipt. Termly payments. Discharge of some of trustees. missions with the estate, in whole or in part, the usual time for a general discharge is when the trust comes to an end or he has divested himself of the office, and wishes finally to sever his con- nection with the trust. At such a time, while divesting himself of his powers, he usually takes occasion to free himself from all his responsibilities in connection with his office, by being validly dis- charged and exonered of all his actings and intromissions in that office. 1 1 It is not uncommon to hear trustees referred to as being discharged of their office ; e.g. rubric in Bunten v. Muir, 1894, 21 B. 370. This is an incorrect expression. Trustees vacate their office — they are discharged of their actings and intromissions had with the trust estate in virtue of their office. See Lord M'Laren's opinion in Bunten, and cf. 30 & 31 Vict. c. 97, s. 9. It must be noted that in England the word " discharge " is used in the sense of " relieve" of his office or trust (see, e.g., Trustee Act, 1893, ss. 10 and 11, and Chetwynd, 1902, 1 Ch. 692), and the word "release" is technically used for discharge of liability. (a) Nature of Discharge 923. A discharge must be distinguished from a mere receipt. 1 Where the beneficiary is entitled only to a specific sum of money or to a specific piece of property, a simple receipt acknowledging payment or delivery of the same is sufficient. Such a beneficiary has no concern with the trust administration if his claim to the specific sum or thing has been satisfied. Where, however, a bene- ficiary has a claim whose extent depends upon the administration of the trust affairs by the trustees, they must get a discharge. For the beneficiary in this case must not only acknowledge that he has received a certain sum, but that that sum is all that he could properly claim, and that, therefore, he is satisfied with the actings of the trustees. Such a discharge 2 falls to be given by the residu- ary legatee in ordinary course, 3 and also by the specific legatees where there is a deficiency in the trust estate to meet the specific legacies in full, as this assimilates their position to that of residuaries. 4 A trustee is not, however, entitled to a discharge of his intro- missions up to date as a condition of paying over to a beneficiary termly payments. He is only entitled to a simple receipt for sums thus paid. 5 The so-called discharge to be granted to any number of the trustees less than the whole is really only an exoneration of them for their intromissions and an undertaking not to call them further to account. It should not be made a discharge of the debt due to the beneficiaries by these trustees, as such, for a discharge of some of the joint-debtors would discharge the whole body of trustees. 6 chap, ix.] DIVESTMENT OF OFFICE 577 1 In the cases the expression "receipt and discharge'' is sometimes used (e.g. Murray v. Bloxsom, 1887, 15 R. 233), passim, instead of merely "receipt." What is meant by such an expression is that the receipt discharges the payer of liability to pay the sum paid. Similarly in the expression " exoneration and discharge " the word " discharge " means that the liability to pay the sum then paid is discharged, while the exoneration applies to the approval of the actings and intromissions of the trustees which have resulted in the sum dis- charged being the available residue for payment. The word " discharge " where used alone in the text is always taken to imply the word exoneration. 2 A discharge in general terms is to be construed with regard to the circumstances of the particular case (Burns, 1911, 2 S. L. T. No. 141). "The general words in a release are limited always to that thing or those things which were specially in the contemplation of the parties at the time when the release was given. But a dispute that had not emerged or a question which had not at all arisen cannot be considered as bound and concluded by the anticipatory words of a general release " (London and South-Western v. Black- more, 1870, 4 Eng. & I. App. 610, per Lord Westbury, at pp. 623-4 ; M'Adam v. Scott, 1913, 1 S. L. T. No. 3). 3 The trustee is entitled to be relieved of any " possible liability " incurred by him in the interests of the trust estate (Mackenzie v. Fowler, 1897, 24 R. 1080, per L. P. Robertson). 4 Fleming *. Brown, 1861, 23 D. 443. Cf. Davidson v. Simmons, 1896, 23 R. 1117. 6 Bonnar, 1893, 1 S. L. T. No. 68. Cf. Johnstone v. Smith Clark, 1896, 4 S. L. T. No. 269. 6 E. W. A., 1901, 2 K. B. 642. Cf. the special provision of the English Bankruptcy Act, 1883, s. 30 (4), that a discharge in bankruptcy does not release a co-trustee. 924. In considering the effect of a " discharge " by a beneficiary Mature of to his trustee the nature of their relation must be kept in view. To the beneficiary the trustee owes both a duty as an individual and a debt as a trustee. He is individually responsible to the beneficiary for the administration of the trust estate, and has corresponding rights as an individual against the beneficiary; he is also responsible, but only as trustee, for the conveyance to the beneficiary of his interest in the estate. When the trustee receives his " discharge " it includes " exoneration," which is not Exoneration ° and dis- only an acknowledgment by the beneficiary that any claim against jj££5? 8 {j£; the trustee in connection with his duty as an individual has been satisfied, but a settlement to which the trustee is a party as an individual having rights against the beneficiary. That part of his " discharge " is a transaction between individuals, and is subject to the same grounds of reduction as any discharge between individuals, and no other. In the case, however, of reduction upon the ground of "error induced," the onus upon the beneficiary is modified, and in certain cases may shift on to the trustee, owing to the fact that part of the duty 1 of which the trustee is being discharged is to see that the beneficiary is as fully instructed as the trustee himself should Error be as to the situation of the trust when the "discharge" is granted. But where the trustee has paid over to the 8 37 578 DIVESTMENT OF OFFICE [chap. ix. beneficiary what appears to be due to him by the trustees jointly out of their trust estate, the trustee, in addition 2 to receiving " exoneration," is in terms " discharged " of the debt due by him as trustee to the beneficiary. This part of the " discharge," if it is not granted as a compromise 3 with the trustee, either as an individual or where co-beneficiaries have been convened for their interest, is subject to a ground of reduction not open to the parties to any discharge. It is not a transaction between individuals, but a gratuitous acknow- ledgment by the beneficiary of the performance by the trustee, as such, of an obligation, binding him only as trustee, and in the discharge of which he has no interest as an indi- Brror aione. vidual. Here mere error, either in fact or in law, though on the part of the beneficiary alone, is sufficient to reduce the discharge to the extent of removing it as a bar to the right of the beneficiary to claim against the trustee, as such, for whatever of the beneficiary's interest in the estate has not been paid to him and has therefore been discharged sine causd. 6 In the case of grounds of reduction relating to the form of the discharge, the beneficiary is bound by the general rule of law that sustains a deed signed by a person who is neither illiterate nor blind though it turns out to contain something which he would not have signed if he had read it. 6 The position in which the beneficiary obtains relief is where he signs knowing and approving what he signs, but in error either as to its being necessary for him to sign it or as to its effect on his position when signed. Taxation A discharge of the trustees by the beneficiary, though unim- peachable, does not bar him from having the account of the law agent of the trust taxed and the trustee's accounts adjusted in accordance with the result of the taxation. 7 In such a case the law agent is not only entitled to remodel his account against the taxation, but is entitled, upon the motion for approval of the auditor's report, to be credited with any finding of the auditor in the law agent's favour. 8 1 Garnett, 1885, 31 Ch. D. 1, per Fry, L.J., at p. 17. Of. Williams v. Scott, 1900, A. C. 499, at pp. 503, 504. 2 0/. Lord Dundas in Johnstone v. Mackenzie, 1911, S. C. 321, at p. 328. This part of the case was not dealt with in the House of Lords (1912, S. C. 106, A. C. 743), and is not affected by the reversal of the decision of the Court of Session. 3 Of. s. 600. 4 Inglis, 1887, 14 R. 740, per Lord Shand, at p. 759. 6 Of. Dickson v. Hallert, 1854, 16 D. 586. 8 Howatson v. Webb, 1908, 1 Ch. 1 ; Selkirk v. Ferguson, 1908, S. C. 26. 7 MacFarlane, 1897, 24 R. 574. * King, 1906, 14 S. L. T. No. 153 chap, ix.] DIVESTMENT OF OFFICE 579 925. Facts and circumstances may raise a presumption that implied discharge. a discharge has been granted to the trustees. Thus in a case where the original parties to the trust — near relatives and in a humble line of life — were illiterate and kept no books, an assignee of the beneficiary came forward, after a period of fourteen years, with a claim acquired "in an awkward manner and under sus- picious circumstances," the original beneficiaries never, during their lifetime, having suggested that there was any shortcoming on the part of the trustees. It was here held that the trustees were to be presumed to have obtained a discharge from the original beneficiaries. 1 Again, where a trust has been created by absolute disposition and back-bond, the fact that the back- bond is found in the possession of the trustee is held to be an implied discharge of his intromissions. 2 1 Stuart v. Maconochie, 1836, 14 S. 412. 3 Charteris, 1712, Mor. 11413. 926. Where a beneficiary was present at a meeting of Presence at meeting. trustees, and the minute, which was signed by all the trustees but not by the beneficiary, bore that the beneficiary agreed to a certain course of action, this was found not to discharge the trustees. " If the beneficiary was to be bound by the statement in the minute," says Lord Justice-Clerk Macdonald, " there would have been no difficulty in writing a couple of lines at the foot of it, and getting her, if willing to do so, to sign that. But I think the minute as it stands is a mere narrative of what the trustees and the agent understood to be in the mind of the beneficiary at the time, and I do not think that she is bound by it, or that it can be regarded as a discharge by her to the trustees." 1 1 Cameron v. Panton, 1891, 18 B. 728, at p. 733. Of. Johnstone v. Mackenzie, 1911, S. C. 321 — this decision was reversed in the House of Lords (1912, S. C. (H. L.) 106 ; A. C. 743), and the question of discharge did not fall to be dealt with by the House. (b) Who can Grant a Discharge (1) The Beneficiaries 927. In all cases, beneficiaries who are of full capacity 1 can discharge the trustees either in a joint discharge by them all or in a separate discharge by each to the extent of his beneficial interest. Whatever other form 2 of discharge the truster may have directed, a discharge from such beneficiaries will protect the trustee, for the holders of the beneficial interests have the only title to make a claim against the trustees, and the discharge is a 580 DIVESTMENT OF OFFICE [chap. ix. good personal exception against any such claim. The capacity is to be decided by the law of the domicile of the person granting the discharge. 3 Where there is a charitable bequest to the funds of a public statutory body, the trustees of the donor have no duty to see to the administration of the estate themselves, and are discharged by paying over the trust estate so bequeathed to the said body on their receipt. 4 ' 1 That a beneficiary is deaf and dumb is not, per se, a valid objection to his capacity to discharge the trustees (Craigie v. Gordon, 1837, 15 S. 1157). Incapacity of this kind only arises where the person is unable to be communicated with (Kirkpatrick, 1853, 15 D. 734). For conventional in- capacity, vide s. 780, etc. As to conventional minority, cf. Adam, 1861, 23 D. 859. As to the position of a married woman, see Sillars, s. 929. Cf. Freeman, infra. 2 Of. s. 931. 3 Freeman v. Bruce, 1905, 13 S. L. T. No. 48. Of. Sawrey-Cookson, 1905, 8 F. 157, at pp. 166, 167. 1 Milne v. Aberdeen, 1905, 7 F. 642. Cf. Free Church v. M'Knight, 1912, 2 S. L. T. No. 108, for instance of statutory interference. Discharge 928. In a case where a truster conveyed his estate to trustees, by repre- / sentatives of and directed them to make over the residue of the estate to a beneficiary. certain heir as the institute of an entail, the following clauses occurred in the trust deed : — " Declaring, nevertheless, that in the event of the heir entitled to possess the land and others so to be entailed by my said trustees, being under age at the time appointed for denuding of this trust, then this trust right and disposition shall subsist and continue until he or she shall be of age, and thereafter until the said trustees are validly exonered and dis- charged." "When the heir referred to, S., came of age, the trustees proceeded to hand over the said residuary estate, in accordance with the terms of the trust. Before, however, the whole of the deeds relative to the conveyance and the entail were settled and a dis- charge granted to the trustees, S. died, leaving a pupil as his heir. The question then arose whether the terms of their trust bound the trustees to hold the property and continue the trust during the minority of this child. It was contended — and a minority of the Court supported the argument — that the trustees were bound to continue their trust until they got their discharge from a major heir. The majority of the Court, however, held that the estate must be taken to have been actually handed over to S., and that the fact that the conveyance to S. was formally incomplete did not stand in the way of their getting their discharge from S.'s representative on completing the conveyance to her. 1 i Stainton, 1850, 12 D. 571. Cf. s. 829. chap, ix.] DIVESTMENT OF OFFICE 581 929. A conclusive 1 discharge cannot be granted by a minor or Discharge i . by bene- by a tutor tor his pupil, as by the common law it is the absolute floiar y '■'■'•' underage. right of every person to reduce, within four years after attaining majority, all deeds granted during minority, to his " enorm lesion." 2 A minor without curators can give a valid discharge for such sums as will be required to be immediately expended on his maintenance Mainten- j j ance. and education, on the ground that the expenditure of his money profitably for his behoof is binding upon him. 3 The object of getting the Court to fix the amount to be paid by the trustees for maintenance to the minor's guardians is to give the trustees a good discharge for the payment such as they could not get from the minor or the guardian. 4 After the death of the father the mother of a pupil 6 can give a valid discharge of such a pay- Mother ment. 6 A factor loco tutoris is the proper person to grant a Factor. discharge of a debt on behalf of a pupil whose parents are dead. 7 In a case where a pupil beneficiary and her factor loco tutoris Effect of r r J Court's raised an action against the trustees to have it declared that authority, the pupil beneficiary was entitled to immediate payment by the trustees, the Court ordered the accounts to be produced to the factor. There being no objections to the accounts, the Court ordered the pupil and her factor to grant to the trustees a full discharge of all their intromissions. To this the Court interponed its authority, and exonered and discharged the trustees accordingly. 8 By such an interposition of the authority of the Court the discharge by a minor of his general claims against the trustees can be made less vulnerable, but trustees cannot thus avoid the risk of having their intromissions afterwards challenged by the beneficiary. Though the transaction by the person under age has been authorised by the Court, that does not render his action of reduc- tion intra quadriennium utile incompetent. 9 Thus where the Court interponed authority to such a transaction, and its inter- locutor declared the transaction "unchallengeable by the pupil on the head of minority or lesion or any other ground arising from the state of minority," the transaction was reduced at the instance of the pupil after majority. 10 A discharge by a married woman must be granted with the Married . woman. express consent of her husband, unless where he has an interest adverse to that of the wife. In such a case she should present a petition to the nobile officium of the Court craving for power to dispense with his consent. The Court will then appoint a curator 582 DIVESTMENT OF OFFICE [CHAP. IX. Receipt by guardian. ad litem to advise her, and if he consents, and the Court agrees with his decision, the prayer of the petition will be granted. 11 1 As to judicial proceedings being set aside ex capita lesionis, see Cunningham v. Smith, 1880, 7 R. 424, per L. P. Inglis, at p. 425. 2 Cf. Advocate v. Wemyss, 1899, 2 F. (H. L.) 1, at pp. 17, 18 ; 1900, A. C, at pp. 75, 76. 3 Jack, infra, dealing with Kirkman v. Pym, 1782, Mor. 8977. " Bowlby, 1904, 2 Ch. 685, per Vaughan Williams, L.J., at p. 699. Cf. Mackie, 1872, 10 S. L. R. 49. 6 In virtue of the Guardianship of Infants Act, 1886 (49 & 50 Vict. c. 27, s 2) 6 Jack v. North British Rly. Co., 1886, 24 S. L. R. 211. 7 Connolly v. Bent Colliery, 1897, 24 R. 1172. 8 Stainton, s. 928. Vide interlocutor, at pp. 599-600, and opinion of Lord Moncreiff, last sentence, at p. 598, but see Atherstone, 1896, 24 R. 39, where the Court refused to grant the prayer of a petition at common law for authority to trustees to pay to beneficiaries who could not grant the trustees an extra-judicial discharge. See also Vere, infra, which was not referred to in Stainton. Cf. s. 336 as to difference between petition and action of declarator. 9 White, 1855, 17 D. 599, per Lord Deas, at p. 602, referring to Vere, infra. 10 Vere v. Dale, 1804, Mor. 16389. In Stainton the Court found the dis- charge to be " as good and effectual for the full protection and discharge of the trustees as if the same had been granted " by the deceased beneficiary. " Sillars, 1911, S. C. 1207. The discharge must be granted by an "advised" and not by an "unadvised" wife, per L. P. Dunedin. 930. Where no exoneration and discharge but only a receipt for payment of a beneficial interest is required, the receipt of the tutor or of the minor and his curators, if any, is conclusive, and discharges finally the liability for payment of the sum. In the case of a pupil where payment is properly made to his tutor, 1 the pupil must proceed against his tutor if he has maladministered what was paid to him. Eeferring to such a case Lord Curriehill says: — "The discharge was not signed by the youngest son, who at the date of it was a boy of seven years of age. But the tutor of a pupil is by law empowered to grant a dis- charge for his ward, and the discharge was rightly granted by the party entitled in law to grant it. . . . He was their legal guardian. If the money was properly paid to him, their adminis- trator, who was in law entitled to receive it, and was misappro- priated by him, that is a matter for which the children must call their father to account ; but it is a matter with which the trustees, who made the payment properly, have no concern." 2 1 Vide s. 825 for conditions of such payment. Cf. Atherstone, 1896, 24 R. 39, as to payment to father of infant in England. 2 Stevenson v. Dumbreck, 1857, 19 D. 462, at p. 472, followed in Murray v. Bloxsom, 1887, 15 R. 233. Vide Lord Rutherfurd Clark, at p. 237. (2) Third Party Named hy Truster Discharge 931. Though a discharge by beneficiaries of full capacity 1 is in all circumstances sufficient to protect the trustees, such a discharge chap. ix. J DIVESTMENT OF OFFICE 583 is not always necessary. The truster may have empowered some one else than the beneficiaries to discharge the trustees, and such discharge will exoner the trustees without the concurrence of the beneficiaries. Thus a truster directed that the accounts of the trustees should " be annually produced to, and examined by, an accountant of character and experience, to be chosen by the said trustees or trustee, and after being examined and passed by him, shall be fitted and docqueted by the said trustees or trustee, and which shall operate as a complete exoneration to them or him accordingly." " I apprehend," says Lord Justice-Clerk Hope, " the whole subject of the examination of the trust accounts, and of the exoneration of the trustees, is a matter peculiarly within the will, power, and discretion of the truster. There is no ground for interfering with his deed upon this point. He may have reasons perfectly conclusive to his own mind for an arrangement such as that established by this deed. , . . No party benefited by that deed is entitled to complain or ask for any other mode of investi- gation. Had any other mode of examination been proposed, the truster might not have left such party any benefit whatever." 2 Such a provision, however, " may be construed to import entire independence and integrity, and the absence of unreasonable precipitancy " on the part of the person nominated. 3 Again, in the case of a charitable trust, the truster directed his trustees — the minister and kirk-session of a parish — to lay an account of their intromissions, at least once annually, before the presbytery, and empowered the presbytery to discharge the trustees then of their past intromissions. 4 This form of discharge by audit is, of course, not uncommon in public or charitable trusts, where a discharge from the beneficiaries is not available, as it is in a private trust. 5 The duty of an auditor is not confined to seeing that payments are properly vouched; he must, by fair and reasonable examination of the vouchers, see that the pay- ments are themselves such as the trustees might legally and properly make. 6 The auditor should have knowledge of all the circumstances of his appointment and the effect of his report. 7 1 Of. s. 927. 2 Tod, 1842, 4 D. 1275, at p. 1282, reported as Forster v. Tod, in 14 S. J. 406, at p. 409, 2nd col. Of. s. 942. 3 L. J.-C. Hope in Tod, vi mpra, 4 D., at p. 1278, and 14 S. J., at p. 408, 1st col. * Shepherd v. Hutton, 1855, 17 D. 516. 6 See Mailler v. Allan, 1904, 7 F. 326, at p. 336. 6 Thomas v. Devonport, 1900, 1 Q. B. 16. 7 Teacher v. Calder, 1899, 1 F. (H. L.) 39. 584 DIVESTMENT OF OFFICE [chap. ix. (3) Co-Trustees diseh^l ^32. Under the Trusts Acts the remaining trustees are trashes. empowered to discharge trustees who have resigned, or the representatives of deceased trustees. 1 Doubt has been thrown on the quality of this discharge, and the suggestion made that it only protects the trustee against action by the co-trustees who have granted it. 2 There does not seem to be any warrant for reading into the word discharge in this part of the section a meaning and effect differing in any way from that of the same word used in another part of the section in connection with the discharge of debtors of the trust estate, and the discharge by the co-trustees cannot, therefore, be considered as of any lower quality than that by the beneficiaries. 3 The expression of the statute is clear, 4 and it is impossible to go behind it. The power is declared to be as effective as if it were contained in the trust deed. Now, though beneficiaries are presumed to be able to open up a settlement of accounts made between trustees, not only where there has been a waiver by the discharging trustees of a proper statement of account, 6 but where there has been an examination of the accounts and a bond fide settlement, special authority in the trust deed enables the trustees to make such a settlement conclusive against the beneficiaries. 6 Further, the preamble of the Act speaks of " greater facilities " being " given for the administration of trust estates," and the words of the Act should therefore receive an enabling interpretation of as full a nature as possible. 7 Of course there is implied here, as in all questions of protection to trustees, absolute good faith 8 on their part. This right to discharge is implied in, as it is complementary to, the right to call to account. The title to call a resigned trustee to account is confined to the existing trustees, and if they have wrongly discharged him they will be liable for this breach of trust to those who have lost thereby. 9 1 30 & 31 Vict. c. 97, s. 2 (2). 2 Vide Article in 3 S. L. T. p. 139. s Of. M'Gregor, s. 933. 4 See Lord Robertson in Home v. Belhaven, 1903, 5 F. (H. L.) 13, at p. 23, as to duty to follow directions of statute if clear. 6 Upperton, 1891, 91 L. T. Jo., at p. 431. 6 Fish, 1893, 2 Ch. 413, per Lindley, L.J., at p. 421, where there were only two trustees. 7 Fletcher v. Birkenhead, 1907, 1 K. B. 205, at p. 218. 8 Of. a. 524 for discussion of good faith. 9 Town and County v. Walker, 1904, 12 S. L. T. No. 216 ; affirmed simpliciter, 13 S. L. T. No. 139. chap. ix. J DIVESTMENT OF OFFICE 585 (4) The Court — Judicial Discharge (a) By Statute 933. By the Trusts Acts, 1867, 1 it is enacted that resigning trustees may apply to the Court for a discharge when they cannot ohtain a discharge " from the remaining trustees, and when the beneficiaries of the trust refuse or are unable to grant a dis- charge." It appears to have been considered possible that these conditions were cumulative, for resigning trustees have applied to the Court for a judicial discharge on the ground that they could not get a discharge both from the remaining trustees and from the beneficiaries. The application was refused as unneces- sary, because the remaining trustees offered to discharge the resigning trustees, and Lord Low (Ordinary) held that the remaining trustees were empowered to do so without any inter- vention by the beneficiaries. Judicial discharge can only be applied for where neither of the other forms of discharge is available, not where both are not available. 2 It seems obvious that the statute intended to place a discharge by the remaining trustees as an intermediary resource between a discharge from the beneficiaries and a judicial discharge. To require a discharge both from the remaining trustees and from the beneficiaries, when a discharge from the latter alone would be a complete discharge at common law, would be plainly supererogatory. A discharge in sequestration is a statutory discharge of any Effect of discharge claim by the beneficiary against the trustee personally for breach insequestra- of trust existing before the date of the sequestration. 3 "Where the breach of trust is fraudulent the English statute excludes the liability therefor from the scope of the discharge. 4 The Scots statute seems to leave this question of fraud to be dealt with by the Court applied to for the discharge. 1 30 & 31 Vict. c. 97, s. 9. 2 M'Gregor, 1894, 2 S. L. T. No. 131. 3 Bankruptcy Act, 1856, s. 147. See s. 1077 as to damages for failure of trustee to claim as such in the sequestration of his individual estates. * Bankruptcy Act, 1883, s. 30 (1). 934. Where a trustee who is excluded from the statutory Discharge not granted power of extra-judicial resignation 1 is allowed to resign onaj r p e e s -j£° n petition at common law, the Court will not grant him a dis- charge in the petition. 2 In the event of his not being able to get an extra-judicial discharge, he will get his discharge from the Court in the same manner as any other trustee who has 586 DIVESTMENT OF OFFICE [chap. ix. validly resigned — that is, under the 9th section of the Trusts Act of 1867. 3 1 Of. s. 874. 2 Alison, 1886, 23 S. L. R. 362. 3 30 & 31 Vict. c. 97, s. 9 ; vide ss. 932, 933. (/3) Judicial Discharge at Common Law potadta" 935. Though the trustees may be exonered and discharged incidentally by the Court in any proceedings before it to which they are parties, there is one well-known form of process available to trustees when discharge is the only judicial declarator required, viz. an action of multiplepoinding. 1 In this process the trustees put the estate, for their intromissions with which they desire to be exonered, into Court, and having called all parties who may have an interest, to present their claims to the Court, the trustees take their discharge from the Court. Even where the trustees have been appointed to different trusts under two separate deeds, it is proper to bring the whole estate under the two trusts into Court for dis- charge and exoneration in one multiplepoinding if the two deeds Declarator, form part of one general settlement. 2 Discharge may be obtained judicially by an action of declarator raised against the beneficiaries concluding for a declarator that the trustees have accounted to the Division beneficiaries and are entitled to be discharged by them. 3 An action and sale. _ ° J of division and sale is not a competent procedure for trustees to adopt with the object of denuding themselves of the trust property and dividing it amongst the beneficiaries. 4 1 " The established mode of getting a discharge " (Dunbar v. Sinclair, 1850, 13 D. 54, per Lord Cunninghame, at p. 61). 2 dimming v. Hay, 1834, 12 S. 508. 3 Davidson v. Simmons, 1896, 23 R. 1117. 4 Kennedy v. Incorporation of Maltmen, 1885, 12 R. 1026. Double 936. From the point of view of the trustee, the competency of distress. an action of multiplepoinding for the purpose of exoneration is to be tested by his ability to get otherwise a valid and absolute dis- charge. First, then, the action is competent where there is actual double distress — where there are two or more claimants for the same fund. In such circumstances the action is competent to any holder of a fund, whether a trustee or not. Double 937. Trustees may raise an action of multiplepoinding l when distress not . . necessary, there is something short ot double distress. 2 The process of multiplepoinding is the common mode by which trustees seek to obtain judicial exoneration. They do not require to allege actual chap. ix. J DIVESTMENT OF OFFICE 587 double distress to entitle them to bring that process. 3 The trustee Doubt as to is entitled to be relieved of any possibility of a liability. 4 Indeed, sufficient Lord Fullerton goes the length of saying : — " I think the trustee is entitled to the benefit of a judgment making himself safe. It is no answer to say that he is safe without it. He is entitled to judge of that." 5 But it is very doubtful if the trustee's judgment on the point would be accepted by the Court as conclusive. 6 It is not necessary, however, that there should be more than one actual claimant; where there is any serious doubt that the discharge of the sole claimant is valid to protect the trustees against all the world, 7 the trustees are entitled to get their discharge judicially in a multiplepoinding. For trustees are not bound to denude of the estate until they are " validly and effectually freed from challenge." 8 "It is not necessary," says Lord Fullerton, " that there should be actual competition ; it is enough that there is a possibility of competition." 9 Thus in a ease where a person was found, under the Presumption of Life Limitation Act, 1891, to have died on a presumed date, his sister, who was the petitioner under the statute, claimed to be his representative. His father's testamentary trustees declined to recognise her as such, there being no evidence as to whether her brother had ever married or not. In these circumstances they were held entitled to raise an action of multiplepoinding for their exoneration. 10 1 See course proposed by Lord M'Laren, where no claims made but doubt as to whom payment should be made (Macgillivray v. Dallas, 1905, 7 F. 733, at pp. 738. 739). 2 See discussion in Glen v. Miller, 1911, S. C. 1178, especially per Lord Johnston. 3 Taylor v. Noble, 1836, 14 S. 817, per L. P. Hope, at pp. 819, 820. 1 Mackenzie v. Fowler, 1897, 24 R. 1080, per L. P. Robertson. 6 Dunbar v. Sinclair, 1850, 13 D. 54, at p. 60. 6 Cf. s. 537. 7 The mere apprehension of " some trouble in administering the estate in future " is not sufficient (Mackenzie, s. 938). 8 Edinond v. Dingwall, 1860, 23 D. 21, per L. J.-C. Inglis, at p. 25 ; Blair, 1863, 2 M. 284; Kyd v. Waterson, 1880, 7 R. 884, at p. 886, per Lord Ormidale. 9 Dunbar v. Sinclair, 1850, 13 D. 54, at p. 60 ; but cf. Fraser v. Wallace, 1893, 20 R. 374. The competition must affect the trustee's discharge — if the competitors agree to discharge the trustee he has no concern in a possible dis- pute between them afterwards (Commercial Rank v. Muir, 1897, 25 R. 219, per L. P. Robertson, at p. 224). 10 Davidson v. Ewen, 1895, 3 S. L. T. No. 249. Cf. Livingstone v. Waddell, 1899, 1 F. 831, per Lord Kinnear, at p. 854. 938. Where trustees seek " exoneration in circumstances either construc- tion of deed. of conflicting claims by beneficiaries, or where difficulties have arisen as to vesting, or on such points, the Court will always be willing to assist." * For instance, " any difficulty of the construe- 588 DIVESTMENT OF OFFICE [ohap.ee. tion of the trust deed under which the trustees are acting is always recognised as a ground on which trustees, acting after due reflec- tion, and in order to benefit the trust, may institute an action of multiplepoinding." 2 Where the action is only brought for safety's sake, without raising any question between the trustee and the beneficiary as to his discharge, the trustee should be allowed to Decree in take a decree of exoneration and discharge in absence to save absence. expense. 3 1 Robb, 1880, 7 R. 1049, per Lord Gifford, at p. 1052. 2 Mackenzie v. Sutherland, 1895, 22 R. 233, per Lord M'Laren, at p. 236. This has been criticised as being "wider and more general than can be justified by authorities and the practice of our Court " (Glen, s. 937, per Lord Sker- rington, at p. 1188). But see Livingstone, s. 937. Of. Cundell v. Peacock, 1822, 2 S. 80. 3 Dunbar v. Sinclair, 1850, 13 D. 54, per Lord Cunninghame, at p. 61. Though this case was " of a very special nature " (Dunbar, supra, per L. P. Boyle, at p. 58), the principles on which the opinions of the judges were rested are quite general. where 939. Second, the action is competent where the trustee is unable, no other ' . discharge when the time for denuding of the trust estate has arrived, to set available. & ' 6 a discharge from the beneficiaries, whether through their refusal or their inability to grant it. 1 "If an extra-judicial exonera- tion is refused," says Lord Fullerton, "he is entitled to raise an action to obtain judicial exoneration. I do not see how that could be obtained without a multiplepoinding." 2 Thus in a case, where the action was found to be incompetent Lord Adam says : — " If the trustee had been able to say that the beneficiaries had refused to grant them an extra-judicial discharge, the case would have been different." 3 1 For case of beneficiaries legally incapable of granting a discharge, vide s. 929. 2 Dunbar v. Sinclair, 1850, 13 D. 54, at p. 60. 3 Mackenzie v. Sutherland, 1895, 22 R. 233, at pp. 235, 236 ; followed in Gordon v. Watson, 1895, 2 S. L. T. No. 540. where only 940. Third, the action is competent where the discharge offered conditional . 1 . . it, m discharge, to the trustees is a conditional discharge. Trustees are not bound to pay over until they get a full and unconditional discharge. They are not bound to rely upon security for any contingent demands on them after the acceptance of the partial discharge offered. 1 1 Elliot, 1828, 6 S. 1058. Of. Taylor v. Noble, 1836, 14 S. 817, where an "absolute discharge" was refused. As to insurance as a form of caution, see s. 1233. Delay in 941. Fourth, the action is competent where the beneficiaries, discharge, though they have not refused to grant a discharge, have delayed unreasonably in producing it or completing it. Where the conduct chap, ix.] DIVESTMENT OF OFFICE 589 of the beneficiary as to granting a discharge has been " vacillating and inconstant," the trustee is entitled to raise a multiplepoinding for his judicial exoneration. 1 1 Fothringham v. Salton, 1852, 14 D. 427, per Lord Dundrennan (Ordinary), at p. 431. 942. The Court has refused to discharge trustees on an ex ex parte °. . audit. parte application to have their accounts audited, and a discharge granted in accordance with the result of the audit, and that even where the truster had himself declared that such a discharge should be binding on the beneficiaries. 1 1 Dundas, 1869, 7 M. 670. Vide fuller statement of case in s. 313. Cf. s. 931. It must be noticed that the case of Tod there differs from Dundas, as the Court were in the latter case to " approve the report " and give the trustees judicial discharge. In Tod the Court was not asked to intervene ex parte, which is what they refused to do in Dundas. 943. Where a body of official public trustees had occasion to Public * x trustees petition the Court at common law for authority to transfer the petition. whole trust property to another body, they prayed also for ex- oneration and discharge from all their actings and intromissions in the trust. The Court there granted the prayer, on the ground that all interests contemplated by the trust were represented by the petitioners. 1 1 Rosebery, 1892, 29 S. L. R. 865. Cf. s. 337. (c) Effect of Discharge 944. A discharge 1 granted before the trust has been completely Jxecuti executed presumes its complete execution before the discharge im P Iied takes effect, and such a discharge will not protect trustees where the trust has not been so executed. "Where trustees were bound to invest the estate on heritable security, they got a discharge from the beneficiaries after they had paid over the money in exchange for a heritable bond, but before sasine had been taken. In the interval another bond was granted over the same property, and infeftment taken. The discharge was held not to relieve the trustees, who had not taken heritable security for the money, as was presumed in the discharge, but had only taken what was a mere personal bond. 2 Again, where a trustee gets a judicial discharge and ex- £ots toin oneration in a multiplepoinding, it only covers his actings up to poking. the date of the raising of the action. For subsequent intromis- sions with the estate judicial sanction must be applied for in the process. 3 1 Cf. s. 923. 2 Mayne v. M'Keand, 1835, 13 S. 870. 3 Barnet, 1872, 10 M. 730 ; and cf. s. 315. ion of trust 590 DIVESTMENT OF OFFICE [chap. ix. Not dis- 945. Where beneficiaries grant a ioint discharge to trustees for charge of ° J ° flciaSel *^ e P ur P 0Se °f their exoneration, such discharge is not to be pre- sumed to be a discharge by the individual beneficiaries of their claims inter se to their respective beneficial interests. Thus children who were beneficiaries having a contingent interest in the fee joined with their mother, the liferentrix, in discharging and exonering the trustees of their respective interests of fee and liferent, and " of all claims and demands competent to us, or either of us, against the said trustees, or the said trust estate, in reference thereto, in terms of the said trust deed and settlement, or in any manner of way." In that case Lord Fullerton said: — "It is the ordinary case which we have every day, that both parties concur in the discharge and let the money go into the hands of the liferentrix. But that does not operate a discharge of her children's rights in her favour. There is a very good discharge of the trustees, but there is no evidence that it was meant to serve the purpose of a discharge as between the mother and children." 1 A fortiori, a simple discharge of the trustees by a beneficiary does not bar him from suing another beneficiary who has been paid in error for repetition to the trustees of the money so paid to him. 2 1 Halbert v. Dickson, 1851, 13 D. 667, at p. 673. 2 Armour v. Glasgow, 1909, S. C. 916. warrandice. 946. Where, in a discharge by several beneficiaries, warrandice of the discharge is given, each beneficiary is only held to warrant the discharge granted by himself, and not that granted by the other beneficiaries, 1 at least "where all parties are present, and each uplifts his own separate share, and no more." 2 1 MTarlane v. Donaldson, 1835, 13 S. 725. 2 M'Farlane, supra, per Lord Mackenzie, at p. 734. Reduction 947. A discharge by beneficiaries must be challenged in a necessary. formal reduction, and the question of its validity cannot be competently raised in an action of count and reckoning against the trustees. 1 Again, a discharge by beneficiaries can only be challenged on specific grounds and within a reasonable time. 2 Grounds of Unless the grounds of challenge are specific and facts are averred which were not in the knowledge of the beneficiary at the time of the discharge, the challenge will fail. 3 Where a discharge proceeds upon a state of affairs of the trust, the discharge may be reduced if that state is found to be not " true, accurate, and complete " in tact. 4 chap. ix. J DIVESTMENT OF OFFICE 591 1 MaePhers.on, 1841, 3 D. 1242, per L. J.-C. Boyle, at p. 1260. Of. Donald (2nd Div.), 29th November 1912, as to objection ope exceptionis in Sheriff Court. Sheriff Courts Act, 1907, 7 Edw. vn. c. 51, rule 50. 2 Robertson v. Scott, 1834, 12 S. 875 — case of judicial discharge of a trustee in a sequestration ; challenge brought after fourteen years, and repelled. Bain v. Assets Co., 1905, 7 P. (H. L.), 104 ; 1905, A. C. 317— lapse of twenty years. 3 Campbell v. Montgomery, 30th May 1822, 1 S. 413 and 484. 4 Assets Co. v. Bain, 1904, 6 F. 692. See Bain, supra, for case in appeal. Of. Stewart v. Bruce, 1898, 25 R. 965. 948. Where trustees are directed to purchase land and entail challenge by substi- lt, a discharge granted to them by the institute under the trust tuto - deed and entail, if merely voidable, cannot be challenged by a sub- stitute except " on the ground of corruption." Where it is not only voidable but void, the substitute may challenge it on any " lawful ground of nullity." 1 1 MacPherson, 1841, 3 D. 1242, per Lord Medwyn, at p. 1251. Such a case must be distinguished from the class of case illustrated in Hume v. Stewart, 1834, 13 S. 90, where the discharge under challenge was granted by the liferenters with regard to a claim by the fiars, who were not held to be barred by such discharge. 949. Where a solicitor-trustee has made professional charges, charges of . solicitor- contrary to the rule of law in such a case, and the beneficiary has trustee. discharged the trust accounts, the discharge will be held not to cover the professional charges, unless the beneficiary has had independent professional advice in granting the discharge. 1 Where the beneficiary has had such advice, the discharge will be sustained. 2 1 Todd v. Wilson, 1846, 9 Beav. 486. 2 Stanes v. Parker, 1846, 9 Beav. 385. Of. Wyche, 1848, 11 Beav. 209. CHAPTER X CHARGES BETWEEN ALL PARTIES CONNECTED WITH THE TRUST 950. In this chapter an attempt is made to deal, in as methodical a manner as the subject permits, with the nature and amount of the charges competent to all parties interested in the management and distribution of the trust funds, and the circumstances in which claims for these charges will be sustained or. repelled. An exhaustive statement of such a subject is impos- sible, but the leading principles have been treated with some illustrative detail. (A) Charges Arising Within the Trust 951. The charges within the trust arise between the parties — truster, trustee, and beneficiary — whose actions are governed by the conditions, express or implied, of the trust deed creating their relationship. The solution of questions as to these charges is dependent upon the correct accounting by the trustee for the property entrusted to him. It therefore is necessary to turn attention in the first place to the question of accounting. (a) Accounting (1) Who are Bound to Account Regular 952. The trustees must be able to account for all incomings and outgoings of trust funds. It is their duty "to keep clear and distinct accounts of the property," 1 and "faithfully, diligently, and accurately to account, at least when called upon ; and not to suppress, conceal, or overcharge." 2 " Their duty is to keep proper accounts, and to have them always ready when called upon to where pre- render them." 3 "The presumption must in alubio be against a Igatast™ trustee who has failed to keep regular accounts," 4 and any considerable departure from " the accurate business-keeping of accounts" will deprive trustees of their expenses in litigation arising therefrom. 5 Agents. Trustees are not bound to keep the trust accounts them- 592 chap, x.] CHAEGES BETWEEN ALL PAETIES 593 selves; they may employ a proper professional agent for the purpose. The trustees, however, remain responsible to the bene- ficiaries for the correctness of the accounts. 6 It is competent to bring an action against the trustees jointly Joint i. ij- .ii-.,,, accounting to account ior sums that should have been in their hands, as well as for sums that actually have been. It is not necessary to sue them individually for damages for breach of trust. 7 1 Freeman v. Fairlie, 1817, 3 Mer. 29, per Lord Eldon, C, at p. 43. 2 Hardwicke v. Vernon, 1808, 14 Ves. 504, at p. 510 : 9 R. R. 329, per Lord Eldon, C, at p. 334. l 3 Kemp v. Burn, 1863, 4 Giff. 348, per Stuart, V.-G, at p. 349. Gf. Pearse v. Green, 1819, U. & W. 135, per Plumer, M.R, at p. 140 ; "Wilson v. Guthrie Smith, 1894, 2 S. L T. No. 347. 4 Ross, 1896, 23 R. (H. L.) 67, per Lord Watson, at p. 78 ; Barnes v. Ross, 1896, A. C, at p. 644. 5 Ross, supra, at p. 78 ; Barnes, supra, at p. 643. 6 Turner v. Corney, 1841, 5 Beav. 515. For circumstances where plea of confidentiality sustained on part of agent employed by trustee in litigation, vide Cuming, 1896, 4 S. L. T. No. 188. 7 Melville v. Noble, 1896, 24 R. 243 ; vide Lord Trayner, at p. 252, and unsuccessful argument for defenders, at p. 246. 953. "Mere lapse of time, mere delay on the part of the bene- Effect of ficiary in demanding an accounting, will not relieve the trustee taking . . . account. from responsibility, or discharge his obligation to give reasonable account and explanation of his conduct and of his intromissions with the estate. 1 " But, on the other hand, I am not prepared," says Lord Ardmillan, " to leave out of view, in disposing of this case, the important fact that the trustee acted in good faith, and that accounting might have been demanded, and ought to have been demanded, many years ago. This delay, which is not the fault of the trustee, on whom no call for accounting had been made, has placed him in a position of disadvantage, and care must be taken that he does not suffer wrong from a delay for which he is little, if at all, to blame." 2 Where the liability to account is limited to a period subsequent onus on objector. to a given date, the onus of showing that the balance in hand at that date should be other than the trustee's account states it to be, lies upon the objector to the account. 3 1 Gf. Paterson, 1897, 24 R. 499, at pp. 505, 506, 510 ; Gourlay v. Wright, 1864, 2 M. 1284. 2 Taylor v. Mather, 1873, 10 S. L. R. 461, per Lord Ardmillan, delivering opinion of Court, at p. 463, 2nd col. In this case the Court fixed a sum as the sum due on an accounting, which was "as close an approximation to the truth and justice of the case as we have the means of making." Gf. Gourlay, supra the delay affects " the extent and strictness of the onus " upon the trustee — Lord Ormidale (Ordinary), at p. 1287. 3 How v. Winterton (No. 2), 1897, 79 L. T. 344. 954 Constructive trustees, as well as express trustees, are construc- tive trustee. liable to account. Where, for instance, a company or firm are 38 594 CHAEGES BETWEEN ALL PAETIES [chap. x. aware of, and take benefit from, a breach of trust by one of the partners, the company or firm is bound to account for the trust Borrower, funds in their hands. 1 But a bond fide borrower of trust funds is only bound to return them with interest; he is not bound to account. 2 A constructive trustee is not liable for failure to execute the trusts affecting the express trustee; the former is liable to account for the trust funds in his possession, with realised profits thereon (if any), and with commercial interest (probably at 4 per cent, if trust funds not employed by him for his own purposes, or 5 per cent, if so employed). 3 A constructive trustee must be dis- tataomittar languished from a vitious intromitter. The former passively receives the estate ; the latter actively enters into posses- sion of it. He thereby incurs individual liability to the claimants on the estate for satisfaction of their claims instead of merely fiduciary liability as in the case of the constructive trustee. 4 1 Scottish Co. v. Falkner, 1888, 15 R. 290, extending (vide Lord Mure, at p. 304) the decision in Gray, 1856, 19 D. 1, which was a case of a firm of law agents, to the case of a mercantile firm, and following (vide Lord Adam, at p. 306) the case of Imperial Association v. Coleman, 1873, 6 Eng. & Ir. App. 189. a Chillingworth, 1896, 1 Ch. 685, at pp. 695, 696. Vide Lord M'Laren in Macarthur v. MacLean, 1896, 3 S. L. T. No. 435. Of. s. 1272. 3 Cf. s. 1111. 4 Smart v. Stewart, 1910, S. C. 18 ; Crawford v. Black, 1829, 8 S. 158. Accounts 955. Where the accounts are made up by one of the trustees, adopted by trustee, the other trustees are equally responsible with him for these accounts if they have acted so as to induce a belief that they have adopted them. Thus where one of two trustees drew up the accounts in the name of both, and the other trustee acted at a meeting with the beneficiaries in such a manner as to encourage the belief that he adopted and sanctioned them, the latter was found to be equally responsible with the former for the accounts produced. " In almost all cases," says Bomilly, M.E., in this case, " one person alone makes up the accounts, but if the trustee adopts the accounts as his own, then they become his accounts, and it is not open to him afterwards to deny that which he has sanctioned Accounts of and allowed or encouraged his cestuis que trust to believe." 1 But solicitors, the accounts of a firm of solicitors employed by the trustees are not the accounts of the trustees, and are not evidence against them unless such accounts were kept on behalf of the trustees by their instructions. 2 1 Horton v. Brocklehurst, 1858, 29 Beav. 504, at p. 509. 2 Fountaine, 1909, 2 Ch. 382. chap, x.] CHAEGES BETWEEN ALL PAETIES 595 956. Trustees who refuse to produce accounts to a beneficiary Expenses where will have to pay the costs of an action to compel them to do accounts r J r refused. so. " If they fail in so important a matter as rendering an account to the person who is entitled to it, and if that make it necessary for the beneficiaries to file a bill," the trustees ought to be made to pay the expenses. 1 Thus where the solicitor of a residuary legatee applied to the trustees for accounts, it was said that "there must be some strong reason to justify any executor and trustee in refusing to allow the solicitor of a residuary legatee to interfere in the matter of the accounts " ; and as the trustees Delay with misconduct. had so refused, they were ordered to pay the costs occasioned by their action. 2 "Where there is mere neglect or delay to furnish accounts, the expenses of an action of accounting will be given against the trustee where such neglect or delay is combined with misconduct in dealing with the trust fund. 3 1 Kemp v. Burn, 1863, 4 Giff. 348, at p. 351 ; Linsley, 1904, 2 Ch. 785. 3 Kemp, supra, at p. 350. 5 Heugh v. Scard, 1875, 33 L. T. 659, per Jessel, M.R. ; Skinner, 1904, 1 Ch. 289. 957. Where trustees refuse to render accounts, and allege that nothing is due to the beneficiaries, but that, on the other hand, something is due to the trustees from the trust estate, the trustees have been ordered to pay all the expenses of an action in which the question was tried, on its being found that there was a balance due from the trustees. 1 1 Eglin v. Sanderson, 1862, 3 Giff. 434. Gf. Boynton v. Richardson, 1862, 31 Beav. 340. 958 Eefusal to produce accounts is to be implied in some implied A refusal. cases. " It is clear," says Eomilly, M.E., " that the distinction is verbal between a constant avoiding to produce accounts without denial and an open denial at once. The latter is more manly and straightforward, and produces in the end less costs, as it avoids all the preliminary correspondence between solicitors." 1 1 Gresham v. Price, 1865, 35 Beav. 47. 959. When an accounting party destroys the accounts before Accounts r. -n t i i t destroyed the accounting has been finally adjusted, and, still more, pending by trustee. a litigation thereanent, the Court will presume everything that is most unfavourable to him, consistent with the established facts. " I believe in this case, as in most cases of this description," says Eomilly, M.E., " the want of evidence operates much more preju- 596 CHARGES BETWEEN ALL PARTIES [chap. x. dicially to the person who causes its removal than if the evidence had been before the Court." 1 1 Gray v. Haig, 1855, 20 Beav. 219, at p. 238. Expense of 960. Trustees are entitled to demand from persons who are not inspecting r copies' of primd facie beneficiaries the expenses connected with the inspec- accounts. ^ Qn Q ^ ^ trugt accoun t s> i They are not entitled to ask the same of beneficiaries. 2 They must produce the accounts to a beneficiary free of expense ; and if they refuse, and demand expenses, they will be found liable in the expense of any action necessary to obtain accounts. Thus where a beneficiary had been induced to execute deeds of release and indemnity of the trustees, and afterwards brought an action to get them set aside, she was held to be even then entitled to demand accounts, she not having been present when the accounts were gone over by other persons in- terested, and no copy having been sent to her. On requesting the production of accounts, she had been informed by the solicitor in charge of the trust affairs that she must first pay the expenses ; and there was undoubtedly a suggestion of mala fides on the part of the solicitor, who had induced her to sign the deeds, which suggestion may have somewhat influenced the decision. 3 1 Vide Bosworth, s. 963. 2 But see Oddy, s. 968, as to Chancery practice in regard to limits of time and reasonableness of demand. Gf. Utley, 1912, 56 S. J. 518. 3 Underwood v. Trower, W. N. 1867, p. 83. (2) Who can Gall for an Accounting 961. It is the right of everyone beneficially interested 1 in the trust estate to demand information regarding the state of the trust affairs. 2 Distinctions must be drawn, however, between the conditions affecting the exercise of the right on the part of different Legatee. beneficiaries. Thus " a legatee has a clear right to have a satis- factory explanation of the state of the testator's assets and an inspection of the accounts, but he has no right to require a copy of the accounts at the expense of the estate," 3 unless he is the Residuary, residuary legatee, to whom or his solicitor the trustees are bound to furnish accounts when required. 4 In the latter case, of course, the legatee is actually being charged with the expense of the accounts. A legatee who applied ineffectually to the trustee for payment of his legacy, or for information to enable him to judge if his interest was duly attended to, raised an action against the trustee, and used arrestments on the dependence. The trustee chap, x.] CHAKGES BETWEEN ALL PAETIES 597 then offered to pay the legacy, but refused to pay the expenses of process and of the arrestment, but the Court held the trustee liable in the expenses. 6 A contingent beneficiary who is held to have contingent ° " beneficiary. no immediate right to any share of the trust property cannot call for accounts, unless misconduct of the trustees is proved, as where they have misused a power to apportion shares. 6 1 For example of accoxinting called for by judicial factor, cf. s. 898, and by creditors of truster, s. 1245. Cf. s. 373 for definition of " beneficiaries " ; and see Salaman v. Tod, 1911, S. C. 1214, per Lord Mackenzie, at p. 1223, for dis- tinction between an expectation to benefit under the will of a person still alive and a right tinder the will of a dead person subject to a contingency. No action lies against trustees at the instance of a person who is not a beneficiary, though the action of the trustees may affect his interests under another trust. Smith v. Cock, 1911, A. 0. 317 — discretionary payments under one trust affecting discretionary payments under another trust. 2 Cf. s. 550. 3 Ottley v. Gilby, 1845, 8 Beav. 602, per Lord Langdale, at p. 604. 4 Kemp v. Burn, 1863, 4 Giff. 348. 5 Murray v. Johnston, 1831, 9 S. 631. 6 Moran, 1910, 1 I. R. 346. 962. A truster who had divested himself of his property in insolvent, favour of a trustee for creditors has been held entitled to sue an action of accounting against the trustee without finding caution for expenses. 1 But a bankrupt has no title to challenge his trustee's action unless he can show that there would be a rever- sion to himself if the challenge were held good. 2 A trustee under a voluntary trust for creditors must account to the trustee in a subsequent sequestration of the same estate. 3 1 Ritchie v. M'Intosh, 1881, 8 R. 747. 2 Whyte v. Forbes, 1890, 17 R. 895. 3 Craig v. Pollard, 1896, 3 S. L. T. No. 412. 963. Where persons who claim to be beneficiaries, but are not claimants primd facie so, call upon trustees to furnish accounts and formal expenses. information regarding the trust estate, the trustees are entitled to require them to guarantee the expenses connected with the satisfying of their demand for accounts. 1 But the Court will not readily allow trustees to avoid their liability to account to a beneficiary who is resident abroad by requiring him to sist a Beneficiary mandatory. 2 The fact that in a particular case the solicitor to be solicitor- trustee employed in making out the accounts for the claimant is one of the trustees, does not in any way affect the right of the trustees to demand a guarantee for expenses: "to the solicitor his time is money and the means of earning his income, and I think he ought to be paid for information which he has to give." 3 i Bosworth, 1889, 58 L. J. Ch. 432. In Salamon, s. 967, the pursuer offered to pay the expenses of the trustees. 2 Graham, 1901, 4 F. 1 ; but cf. Lawson, 1902, 4 F. 692. 3 Bosworth, supra, per Kekewich, J. 598 CHAEGES BETWEEN ALL PAETIES [chap. x. Beneficiary 964. The person who would be beneficiary in a resulting trust in resulting x * trust. has no title to interfere in the trust administration, or challenge the acting of the trustee, unless he can show that there is a fund existing to which a resulting trust can apply, 1 or that the success of the action would result in the existence of such a fund. 2 1 M'Leish, 1841, 3 D. 914, per Lord Medwyn, at pp. 921, 922. Cf. Lord Moncreiff, at p. 923. 2 Whyte v. Forbes, 1890, 17 R. 895. charitable 965. The heir-at-law or next-of-kin of the truster can call the trusts. trustees to account in a charitable or public trust : " although they could not come and claim the fund for themselves, they might call the trustees to account, if they neglected their duty or abused their trust." 1 Also any person possessing a beneficial interest, either existing or contingent, in the right administration of a charity, has a good title to pursue all actions before the Court of Session necessary for ascertaining and declaring the powers and • duties of the administrators, and enforcing their proper execution. 2 1 Hill v. Burns, 1826, 2 "VV. & S. 80, per Lord Gifford, at p. 91 ; and vide also Maclean v. Mackintosh, 1852, 14 D. 928. Though no objection was in this case taken to the title of the heir [vide interlocutor of the Inner House], still L. J.-C. Hope thought the point was clear, and that "no sound objection to his title could be taken." Cf. M'Leish, 1841, 3 D. 914. See also s. 20. 2 Ross v. Heriot's Hospital, 1843, 5 D. 589. This point was not affected by the reversal of the decision in the House of Lords, 1846, 5 Bell, 37. Cf. Mackie v. Presbytery of Edinburgh, 1896, 23 R. 668. Trustee 966. A beneficiary who is ako a trustee is not barred by beneficiary. _ " •> his actings as trustee in connection with the accounts from calling, qua beneficiary, for an accounting by the trustees. 1 Neither does the fact that a beneficiary's interest is small, bar him from calling for an accounting of the whole estate. The trust directions must be followed, unless the beneficiaries are Beneficiary unanimous in empowering the trustees to depart from them. One with small n . • -i i n interest. benenciary, with however small an interest, can insist on the truster's directions being followed out 2 in so far as they may possibly affect his interest. His objection can, however, be got over by payment to him of his interest in the estate, after which he has no further claim on the trustees, and cannot interfere with their administration. 3 » Sawer, 1873, 10 S. L. R. 249. 2 Deeth v. Hale, 1809, 2 Moll. 317, per Lord Manners, C. ; Walcott v. Lyons, 1886, 54 L. T. 786, per Bacon, V.-G, at p. 789, 2nd col. 3 Bain v. Black, 1849, 11 D. 1286, per Lord Fullerton, at p. 1310. Assignee of 967. An assignee from the beneficiary has a good title to sue beneficial . interest. the trustee m an accounting, where the interest of the beneficiary chap, x.] CHAEGES BETWEEN ALL PARTIES 599 was properly assignable, e.g. an assignee to whom an annui- tant has assigned his annuity in consideration of the payment to him of a lump sum. 1 But the measure of the trustee's duty to the assignee is the duty owed by the trustee to the beneficiary — he cannot by the assignation alter the duty undertaken by the trustee. 2 A contingent right is property, and so assignable, while a mere spes successionis is not property until realised, and so is not assignable. 3 Hence an action against the trustee for breach of trust is not assignable, being a mere spes. Where beneficiaries who declined to institute proceedings against the trustees for breach of trust assigned the claim for a consideration of five shillings, it was held that such an interest was not assignable. 4 1 Salamon v. Morrison, 1912, 2 S. L. T. No. 173, Lord Skerrington (Ordinary) distinguishing situation from that of " circumstances " affecting beneficiary's right to information referred to in cases of Co win and of Low in s. 550. 2 Brower v. Ramsay, 1912, 2 S. L. T. No. 62. 3 Reid v. Morison, 1893, 20 R. 510 ; Kirkland, 1886, 13 R. 798, as com- mented upon by Prof. Goudy in the Juridical Review, vol. v. p. 212. 4 Hill v. Boyle, 1867, 4 Eq. 260. This case was cited in the later case of Park Co., 1881, 17 Ch. D. 234, where a different decision was arrived at, but without expressly overruling or distinguishing the case of Hill. The view that a right of action for damages, where not for personal injury, is assignable, is supported in an article in the Law Quarterly Review, vol. x. p. 143. (3) Extent of the Accounting 968. The surviving and acting trustees are bound "judicially Acting to give in accounts extending over the whole period of the trust management." x "I bold it a principle in our law of trust," says Lord Neaves, " that a beneficiary is entitled at any time to demand from a surviving trustee or trustees, or from the representatives of the last survivor, a full production of accounts. When these are examined, questions of liability may arise which will make it necessary to call the other trustees or their representatives." 2 This liability to produce accounts is, it must be noted, a different Duty to J x account question from that of liability for the condition of the estate ^[? t tr £™ disclosed by the accounts when produced. 3 To enable the pre- ^™ mis " sently acting trustees to so account, they are entitled to, arid should, call upon the former trustees for an account of their intromissions. Thus where trustees have resigned, the proper parties to call them to account are the acting trustees and not the beneficiaries. 4 1 Pearson v. Houston, 1868, 6 M. 286, per Lord Cowan, at p. 291. As to Chancery practice see Oddy, 1911, 1 Ch. 532, at p. 536 and p. 539. 2 Pearson, supra, at p. 292. 3 Pearson, supra, per L. J.-C. Patton, at p. 292. * Town and County v. Walker, 1904, 12 S. L. T. No. 216 ; affd. 1905, 13 S. L. T. No. 139. 600 CHAKGES BETWEEN ALL PAKTIES [chap. x. Accounting 969, Assumed trustees are bound to give an account, not only by assumed ° trustees. f flj e j r own intromissions, but also of the intromissions of their predecessors, from the date of the last audit, in so far as there are materials within their power to enable them to state the trust accounts. 1 "I say nothing about liability," says Lord Cowan. " They must come forward with these accounts to let us see how the matter stands." 2 The liability of assumed trustees for breaches of trust committed before they were assumed is limited to the case where there were circumstances which should have led them to suspect such a breach of trust. They are then liable for any loss occasioned by their failure to discover the breach and insist on its reparation. 3 Thus Kekewich, J., has laid it down that new trustees are not liable for conditions affecting the estate which do not appear on the face of the trust documents, and the existence of which, though known to the retiring trustees, is not disclosed to the new trustees. 4 They are " entitled to assume that every- thing before their coming in has been duly performed." 5 1 Pearson, s. 967, per Lord Cowan, at pp. 290, 291, stating principle given effect to in Sommerville v. Wemess, 1854, 17 D. 151. Of. Lees v. Dun, 1912, S. C. 50, per Lord Salvesen, at p. 66. Affd. in House of Lords, sub nom. Schulze v. Tod, 1913, 1 S. L. T. No. 76. 2 Sommerville, supra, as reported in 27 S. J. 49. Vide also interlocutor of. Court. 3 Scott v. Gray, 1862, 1 M. 57. Vide Lord Neaves, at p. 65. 4 Hallows v. Lloyd, 1888, 39 Ch. D. 686. The cases of Boswell v. Ogilvy, 1848, 11 D. 185, and Ogilvie v. Boswell, 1850, 12 D. 940, may be referred to here, though their circumstances are so special as to make them of little general value. 6 Geaves, 1856, 25 L. J. Bank. 53, per Turner, L.J., at p. 60. Temporal 970. Where the beneficiaries had always had access to the limit of accounting, books, the Court refused to order the trustee to produce accounts for a period of thirty years back, and ordered the accounts to be taken from a certain date at which some of the beneficiaries had last inspected the books. " It would be a very hard case if the trustee was required to verify every payment for the last thirty years. It is clear that the accounts have been badly kept ; but, on the other hand, the cestuis que trustent always had access to them, and might have examined them whenever they chose." 1 But where trustees had distributed the estate and kept no vouchers thereof, and after a similar lapse of time were called to account for the estate, though they succeeded by general evidence in satisfying the Court of the distribution of the estate, they were refused their costs, as the matter was brought into Court owing to their negligence. 2 1 Banks v. Cartwright, 1867, 15 W. R. 417, per Romilly, M.R. 2 Payne v. Evens, 1874, 18 Eq. 356. chap, x.] CHARGES BETWEEN ALL PARTIES 601 (4) In what Court must the Trustee Account ? 9*71. Difficult questions arise in considering what is the proper Court in which to try questions between the trustee and the bene- ficiaries, or questions affecting the administration of the estate. The Court of every country has jurisdiction over all persons and things within the territory. 1 This consideration at once opens up a large choice of Courts. The Court having jurisdiction over any trustee, the Court having jurisdiction over any beneficiary, and the Court within whose jurisdiction any part of the trust estate lies 2 — each of these may be a forum competens according to the question Fanm •'J * ■= *■ competens. at issue. An example is afforded by a case where a domiciled Scotsman was ordained by the Scots Court to convey Irish land and refused to do so. Thereafter the Irish Court granted a vest- ing order 3 giving effect to the decision of the Scots Court, and transferring the title to the Irish land without the intervention of the Scotsman. 4 To avoid, in as far as possible, conflicts of jurisdiction, the various Courts thus having primary jurisdiction have taken into consideration, in addition to the question of forum competens, that of forum conveniens. Each Court has, ex comitate gentium, agreed Fonm •' u conveniens. to forego its jurisdiction as a forum competens in favour of another forum competens, if satisfied that that other Court is that in which the question may be tried with the greatest convenience to all concerned. "The question is not in what place under extra- ordinary circumstances an action might be brought, but what place under existing circumstances was the natural and proper one in which the beneficiary should enforce his rights." 5 Here, however, comes the real difficulty of the question. This rule of private international law falls to be applied by each Court that is a forum competens, and that may be a forum conveniens. 6 Where any two Courts differ as to its application, a conflict of jurisdic- tions arises, and each of these Courts falls back upon its primary right as a forum competens. Such is the ratio of the practice oh™<*ry of the English Chancery Court, which exercises its jurisdiction by decreeing specific performance by persons subject to it of acts affecting real estate outwith its jurisdiction. 7 Conversely that Court refuses to give effect to a decree in personam against a domiciled Englishman obtained in a foreign Court within whose jurisdiction he was not resident at the date of the action, though he was possessed of real estate there. 8 By the common law 9 a trustee has no power to prorogate the >*«£«£ 602 CHAEGES BETWEEN ALL PAETIES [chap. x. jurisdiction of a Court which has not legal jurisdiction over him as trustee to the effect of binding the trust estate, though he may be personally liable to implement the decree of such a Court. 10 At common law, only the Court of Session has jurisdiction over foreigners, and that privative jurisdiction cannot be taken sheriff away by implication. The Sheriff Court has now, by statute, jurisdiction over foreigners where the action would be competent if raised against a person subject to its jurisdiction, provided that arrestment within the jurisdiction has been used against the foreigner. If the foreigner is the owner of heritage within the jurisdiction of the Sheriff, he can be sued in the Sheriff Court without arrestment, but only in an action relating to that heritage. An action against a foreigner not preceded by such arrestment, or not in relation to such heritage, is not competent in the Sheriff Court, and is therefore not excluded from the jurisdic- tion of the Court of Session by reason of its small pecuniary conclusions. 11 A foreigner suing an action in the Scots Court in a fiduciary capacity is not subject to the jurisdiction as an individual ex reconventione. 12 1 This power is correlative to the duty to protect all persons and things within the territory (Carrick v. Hancock, 1895, 12 T. L. JR. 59). 2 But see s. 980 for statutory exception. 3 Under Trustee Act, 1893, 56 & 57 Vict. c. 53, s. 26. * Ruthven, 1906, 1 I. R. 236 ; and see 13 S. L. T. No. 28. 6 Smyth, 1898, 1 Ch. 89, per Romer, J., at p. 94. c As to heritage, see Mackay, 1897, 4 S. L. T. No. 466. 7 Penn v. Baltimore, 1750, 1 Ves. Sen. 443, is the classic example. » Emanuel v. Symon, 1908, 1 K. B. 302. 9 But cf. end of s. 600 for position of trustee to whom the Trusts Acts apply. 10 See cases of Simpson and of Stewart, s. 977. 11 Sheriff Courts Act, 1907, 7 Edw vn. c. 51, ss. 6, 7 ; Pagan v. Haig, 1910, S. C. 341. 12 Ponton, 1913, 1 S. L. T. No. 52. Effect of 972. The fact that the Courts of England and of Scotland have position or House a common Court of Appeal in the House of Lords modifies the of Lords. \ *■ conflict of jurisdiction in their case, though it does not entirely avoid it. 1 The same judges sit as the Court of Appeal in an English as in a Scots case, but in either case they only declare the law that is to be administered by the Supreme Court of the country from which the appeal is taken. They do not issue an executive decree, and do not of themselves exercise any territorial jurisdiction. Effect of " A decision of this House [House of Lords] in an English case," decision, says Lord Selborne, C, " ought to be held conclusive in Scotland as well as England as to the questions of English law and English chap, x.] CHAEGES BETWEEN ALL PAETIES 603 jurisdiction which it determines. It cannot, of course, conclude any question of Scottish law, or as to the jurisdiction of any Scottish Court in Scotland. So far as it may proceed on principles of general jurisprudence, it ought to have weight in Scotland, as a similar judgment of this House on a Scottish appeal ought to And of have weight in England. If, however, it can be shown that by any positive law of Scotland, or according to authorities having the force of law in that country, a different view of the proper inter- pretation, extent, or application of those principles prevails there, the opinions on those subjects, expressed by noble and learned Lords when giving judgment on an English appeal, ought not to be held conclusive in Scotland. When a Scottish decision in apparent conflict with them is brought to the bar of this House, the first duty of your Lordships must, I conceive, be to ascertain whether there is any settled rule of Scottish law requiring or justifying that decision. If not, it may still be open to the House to consider the points raised in any new light which may be presented by the view of them taken in the Scottish Court." 2 A judge of first instance in England is bound by a decision of the Court of Session in Scotland on a statute applying to both countries. 3 1 But cf. a. 980. 2 Orr Ewing, s. 971, at pp. 3, 4. Of. notes in 2 Ruling Cases, pp. 88, 89, and reference there to old Chancery rules, since superseded. 3 Hartland, 1911, 1 Ch. 459, at p. 466. 973. The independent jurisdiction of the Scots Court as a scots court forum competens is laid down thus by Lord Selborne, C. : — " It omnpetens. cannot be maintained that the Court of Session was bound to abstain from the exercise of its own independent and unquestion- able jurisdiction over the persons of the trustees and the trust property, both being in Scotland, on the mere ground that a decree for administration had previously been made against the same trustees, and as to the same property, by an English Court." 1 Where the Scots Court is a forum competens, the question of forum conveniens is to be decided as a matter of Scots law. " It may be said," says Lord Watson, " that the determina- Authorities tion of what shall constitute a forum conveniens or non con- ^ S ^' veniens is more or less a matter of discretion, but the principles ' upon which it has hitherto been held, in eases of this kind, 2 that the Court of Session was forum inconveniens, are, in my opinion, as binding upon its judges as any rules of positive law." 3 , conveniens. 604 CHAEGES BETWEEN ALL PARTIES [chap. x. 1 Orr Ewing, 1885, 13 R. (H. L.) 1, at pp. 13, 14. 2 Ferguson v. Douglas, 1796, 3 Pat. App. 503 ; 19th November 1793, 11 F. Deo. 157 ; Mor. 4602 ; Morison v. Kerr (wrongly cited in Orr Ewing, supra, as Peters v. Martin, q.v. infra), 25th February ] 790, Mor. 4601 ; 10 F. Dec. 233 ; Peters v. Martin, 1825, 4 S. 108 ; MacMaster v. Stewart, 1834, 12 S. 731 ; Clements v, Macaulay, 1866, 4 M. 583, at p. 592. 3 Orr Ewing, supra, at p. 31. Conflictof 974 The distinctive feature of the local administration by the jurisdiction ■ not neoes- Scots Court of the doctrine of forum conveniens is that it applies the doctrine though no competition of jurisdictions has actually arisen. In referring to certain " differences affecting, not the jurisdiction, but the lex fori by which the Courts are to be governed in exercising or declining to exercise it," Lord Selborne, C, says : — " It appears that the doctrine of forum conveniens, which in England seldom comes into consideration, when jurisdiction exists, apart from service of process abroad, unless there is an actual competition of suits, 1 is in Scotland carried further, and may prevent the exer- cise of jurisdiction when the Court is satisfied that the suit might have been brought and effectively prosecuted in a more convenient forum, although this may not actually have been done." 2 And Lord Watson, in the same case, says : — " The Courts of Scotland, in declining jurisdiction over foreign trustees, do not rely upon the circumstance of there being no pending litigation in the proper forum. Although there be no lis alibi pendens, it is sufficient to oust their jurisdiction, on the plea of forum non conveniens, either that the pursuer can obtain his remedy by a suit in the proper forum, or that the trustee, called as a defender, expresses his willingness to institute, and accordingly does institute, proceedings in that forum, by means of which the pursuer can have the redress which he claims." 3 1 Lord Selborne, C, points out, in Orr Ewing, s. 973, at p. 16, that in the appeal in the English Chancery suit arising out of the same matter it was expressly said that " if there had been any proceedings pending in a Scottish Court, equally beneficial to the infant plaintiff, in which his rights and interests coxild have been adequately protected, it would have been competent, and probably right, for the High Court in England to stay the further prosecu- tion of that suit, either before or after decree." 2 Orr Ewing, s. 973, at pp. 7, 8. 3 Orr Ewing, s. 973, at p. 29. Auxiliary 975. The Scots Court, though not itself the forum conveniens, jurisdiction. ...... * exercises its jurisdiction as a forum competens to aid in carrying out the orders of the forum conveniens. " Where it is doubtful," says Lord Watson, " whether the Courts of the forum conveniens may have it within their power to give the pursuer a full remedy, or to enforce their orders against the persons of the trustees and the trust estate, the Court of Session will not dismiss the suit, but chap, x.] CHARGES BETWEEN ALL PAKTIES 605 will sist procedure, not with the view of superseding, but of aiding, the action and supplementing the powers of the foreign Court, in order that full justice may be done." 1 Thus where foreign trustees own heritage in Scotland the Scots Court will exercise an auxiliary jurisdiction in order to give a good title to a purchaser, or to a vassal or tenant, as " no Court other than a Scots Court could grant a power of sale of heritable estate in Scotland," 2 or " has the power of transferring or ordering the transfer " of such estate. 3 The pro- ceeding must be a purely administrative one, and the Court of the domicile of the trust must first have decided in favour of the transaction.* 1 Orr Ewing, 3. 973, at p. 27. ■' Carruthers, 1896, 24 R. 238, per Lord M'Laren, at p. 242. s Love, 1907, S. C. 728. 1 Allan, 1897, 24 R. 718 (sale) ; Pender, 1903, 5 F. 504 (feu and lease) ; Forbes, s. 1215 (power to borrow). 976. In judging of the forum conveniens, the interest of the Criteria of conveniens. individual beneficiary must be subordinated to that of the trust estate and to the economy of its administration. Lord Watson expresses the test of the forum conveniens in these words : — " In my opinion, the true principle upon which jurisdiction in such cases should depend is, that every person beneficially interested ought to seek his remedy in that Court in which it is most for the benefit of the trust and of all concerned that the litigation should be carried on." 1 The language in which the deed is expressed Language 00 of deed and and the law bv which it is governed are both relevant considera- law govern- J ° ing it. tions in determining the question of forum conveniens in favour of -the Court using that language or administering that law. Where a deed was written in English and admitted to be governed by English law, the English Court restrained by injunction a person subject to their jurisdiction from suing upon it in the Spanish Court a person over whom the Spanish Court had juris- diction, on the ground that the Spanish Court was a forum non conveniens in the circumstances. 2 1 Orr Ewing, s. 973, at p. 31. 2 Pena Copper v. Rio Tinto, 1911, 105 L. T. 846. 977. " Where trustees are liable jointly to account for their Jomt^ ^ intromissions," says Lord President Inglis, "the proper forum to account, try the question is the forum of the country where the trust is said to subsist and where it comes to be executed." 1 His Lordship then proceeds to quote and adopt the following opinion of Lord M'Laren, as a fuller statement of the law on the point :— " Where a trust is constituted in Scotland, and is to be executed in 606 CHARGES BETWEEN ALL PARTIES [chap. x. Scotland, the Supreme Court of this division of the United Kingdom has jurisdiction 2 over the whole subject-matter of the trust, including in that expression not only the interpretation of the trust, but the duty of making due provision for its con- tinuance, and the power, in cases of negligent administration, of calling the trustees or trustee to account. It is a matter of frequent occurrence that a body of marriage trustees, having originally the domicile of the spouses, become in some degree scattered before the necessity for administering the trust arises; and it would be mischievous in the extreme if it were necessary to take separate action against the different members of the trust in the various parts of Her Majesty's dominions or elsewhere in which they might be resident for the time. The obligation of trustees to account for their administration is one and indivisible, and is in general to be enforced by an appeal to the Courts of the country in which that obligation is to be fulfilled and where the trust is to be executed." 3 The ground of jurisdiction is a contract implied in the acceptance of office in a Scots trust, and renders the personal representatives of foreigners who were trustees in a Scots trust subject to the jurisdiction of the Scots Court. 4 But the Court of the domicile of the testator has not jurisdiction over foreign trustees holding his trust estate situated outwith the domicile. 5 1 Robertson v. Nicholson, 1888, 15 R. 914, at p. 920. 2 What is meant is — " has the right to exercise its jurisdiction as a forum conveniens." 3 Kennedy, 1884, 12 R. 275, at p. 282 ; approved also by Lord Shand in Robertson, supra, at p. 921, and by Lord Kinnear, delivering the opinion of the Court, in Ashburton v. Bscombe, 1892, 20 R. 187, at p. 196. Cf. for English practice, Cigala, 1878, 7 Ch. D. 351 ; Att.-Gen. v. Sudeley, 1896, 1 Q. B. 354 ; Smyth, 1898, 1 Ch. 89 ; Att.-Gen. v. Johnson, 1907, 2 K. B. 885. 4 Rintoul v. Garroway, 1898, 5 S. L. T. No. 382. See Simpson, 1907, S. C. 87, for special contract by minute in process to prorogate jurisdiction, and remarks of L. P. Dunedin (in Stewart, 1913, 1 S. L. T. No. 70) as to how- useless in practice such a proceeding is. 6 Douglas, 1906, 13 S. L. T. No. 348 ; cf. Morrison v. Vallance, 1906, 14 S. L. T. No. 173. 978. The Scots Court was held to be forum, conveniens in a case where the circumstances were very exceptional, for there all the trustees, and also all the beneficiaries, were at the time of the action resident furth of Scotland. " It is certain," says Lord Kyllachy, in dealing with this case, " that the truster was domiciled in Scotland, that the trust was constituted in Scotland, and that the trustees obtained a title to Scots movables and Scots heritage for the purpose of executing the trust. Moreover, the trust fell to be executed in Scotland, at least in this sense, chap. x.J CHAEGES BETWEEN ALL PAETIES 607 that the duty of realisation fell to be performed in Scotland, as did also the duty of distribution, unless the trustees took the unusual course of carrying away the funds and personally dis- tributing them amongst the beneficiaries. In these circumstances, ... if the defenders cannot be sued here, they cannot be sued together, so far as I can see, anywhere. One is in Ireland, another in Nebraska, and yet their liability to account is a joint and in- divisible liability, and to sue them separately would be therefore impossible." * 1 M'Gennis v. Rooney, 1891, 18 K. 817. The opinion, from which the relevant parts are here extracted, is a curious example of confusion of the question of jurisdiction with that of forum conveniens, which necessarily assumes the existence of jurisdiction. In this case the persons sued in the action appeared and thereby submitted themselves to the judgment of the Court. It was therefore competent to decide both the question of jurisdic- tion and that of forum conveniens. The question of jurisdiction is, however, decided in favour of the pursuer upon the ground of the "hardship and inconvenience " to him of deciding otherwise — a relevant ground in a question of forum conveniens, which would have been merely a pious opinion on the question of jurisdiction if the foreigners who were sued/ had not appeared to defend the action, there being no property imder the jurisdiction of the Court upon which their decree could operate. 979. The application of the doctrine of forum conveniens is Forum limited to an action by a beneficiary, and does not extend to an eSranSt" action by a creditor of the truster for payment of his debt. In creditor, this case the trustee is qud executor an ordinary debtor, and the creditor is entitled to sue him in any forum competens. Thus a domiciled Englishman died leaving, besides property in England, both heritable and movable property in Scotland. His trustees, who were Englishmen, took out confirmation as executors in Scot- land. After having raised an administration suit in the English Courts, and having got a decree for taking accounts therein, they were sued in the Scots Court by a Scots creditor of the truster. They pleaded that, although the jurisdiction of the Scots Court was undoubted, the proceedings should be stayed in order that the question might be tried in the Court of Chancery, as the proper and most convenient forum. The plea was repelled. " This is not an action," says the Lord Ordinary (Mackenzie), whose opinion was concurred in simpliciter by the Court, " calling upon the trustees for a general accounting for their intromissions as executors. Neither is it brought by a party claiming as a bene- ficiary under the will. It is an action by a Scotsman to recover payment of a particular debt alleged to be due him by the repre- sentatives of the deceased." . . . " Another important specialty in the present case is, that it is not pretended by the defenders that 608 CHARGES BETWEEN ALL PARTIES [chap. x. there is any competition among the creditors of the truster, so as to render any administration suit in Chancery necessary so far as they are concerned. . . . The administration suit in Chancery appears to have been instituted, not for the protection of creditors, but for the benefit of parties claiming under the testator's will, and the interests of such parties ought not to be allowed to interfere with the rights of creditors." * 1 Carron Co. -o. Stainton, 1857, 19 D. 318. statutory 980. Though the English, the Irish, and the Scots Courts are securities ° ° or ?re?ana d independent judicatories, they administer the laws of the same legislature, and this legislature has intervened to modify the primitive right of the English or the Irish Court as a forum convpetens in certain questions affecting trustees. Thus the Trusts Act, 1884, after authorising trustees to invest in certain securities, including such securities as would bring the trust funds under the control of the English or the Irish Court, proceeds : — " Provided that the trustees shall not be held to be subject as defendants or respondents to the jurisdiction of any of Her Majesty's Courts of Law or Equity in England or Ireland, either as trustees or per- sonally, in any suit for administration 1 of the trust, by reason of their having invested or lent trust funds as aforesaid." 2 There does not appear to be any analogous exclusion of the jurisdiction of the Scots Court in the English Trustee Act, 1893, 3 but the difference in the practice of the Scots from that of the English or the Irish Court, both in the matter of administration suits 4 and in that of the exercise of its jurisdiction over trustees, 5 may account for its absence. 1 It must be noticed that the exclusion of the jurisdiction of the English or Irish Court is limited to its peculiar Equity procedure for the general administration of a trust by the Court, and that the jurisdiction of these Courts in contested questions is not touched. This position is emphasised bv comparison of this section of the Act of 1884 with that of the earlier statute of 1867 (30 & 31 Vict. c. 97, s. 5), which it repealed, in respect that the repealed section excludes the jurisdiction of these Courts in toto. 2 47 & 48 Vict. c. 63, s. 3. This expressly covers investments in Colonial stocks "approved by the Court of Session," and impliedly investments by Scots trustees in Colonial stocks registered in England under the Colonial Stock Act, 1877 (40 & 41 Vict. c. 59), as the Colonial Stock Act, 1900 (63 & 64 Vict. c. 62), provides that the powers under the Colonial Stock Acts are to be treated as powers under the Trusts Acts. Cf. s. 643 It may be noticed that the registrar of Colonial Stock cannot exclude the jurisdiction of the Courts of the United Kingdom by pleading his agency of a Colonial Government. » 56 & 57 Vict. c. 53. * Cf. a. 305. 6 Cf. a. 974. jurisdiction 981. Questions of jurisdiction may arise within the same courts" country between its inferior Courts. Thus in a mortis causd trust chap. x.J CHAEGES BETWEEN" ALL PAETIES 609 the trustees are not at common law l subject to the jurisdiction of the Sheriff Court in which they have been confirmed as executors. " The question," says Lord Shand, " whether the taking out of con- Effect of firmation implies that thereby jurisdiction arises entitling creditors tion. or beneficiaries to call the executors to account in the Sheriff Court in which the confirmation was granted, must be answered in the negative." 2 " If," continues his Lordship, " the pursuer had resorted to the domicile of the executor who had taken the leading part in connection with the administration of the executry estate, and had sued both executors there, I should have had no doubt of the juris- diction." 3 And Lord Eraser says : — " If one of a body of trustees or executors is within the jurisdiction of the Sheriff Court and has possession of the funds, the others may be made subject to the jurisdiction" by proper citation. 4 The jurisdiction of the Sheriff extends also over any trustee, as such, where there is heritable property belonging to the trust or leased by the trust within the sheriffdom, or where the trustee carries on business within the sheriffdom. 5 1 A jurisdiction limited to applications for removal under the Trusts Acts is introduced by the Trusts Act, 1884. Cf. s. 901. 2 Halliday, 1886, 14 R. 251, at p. 254. 3 Cf. Thomson v. Wilson, 1895, 22 R. 866. 4 Watt v. Richmond, 1875, Guthrie's Sheriff Court Cases, vol. i. p. 241, at p. 243 ; approved by L. P. Inglis in Halliday, supra. 6 Sheriff Courts Act, 1907, 7 Edw. vn. c. 51, s. 6 (d). In Aston, 1913, 1 S. L. T. No. 56, it was decided in the Sheriff Court of Lanarkshire that the jurisdiction exists over the trustee though he carries on business in the sheriffdom only as an individual. This decision is inconsistent with that of the Court of Session in Ponton, 1913, 1 S. L. T. No. 52. (5) What Law Governs the Accounting 982. Where the jurisdiction of the Scots Courts is sustained, the question arises, What law is to be applied to the question at issue ? In the case of heritable property x all questions of title fall to be decided according to the law of the country in which the property lies — the lex rei sites. 2 There is a difference of opinion ux m sity 4 is " ' tributed. the undistributed shares rateably. 1 This case must be distin- guished in its effects from that where the funds have not been distributed, but only advances thereout have been made; 2 and also from that where there is an appropriation of investments to the shares of beneficiaries, in which case the loss upon an invest- ment falls upon the share to which it is appropriated. 3 1 Bacon, 1889, 61 L. T. 458, per Chitty, J. 2 See s. 991. 3 See s. 735. 993. Where a fund destined to a particular beneficiary is Profit by use of employed by the trustees in keeping up a policy which is part of beneficiary's interest. the trust estate, there is no change in the destination of the policy moneys. The beneficiary has no claim on the policy, in virtue of this use of the fund set apart for him, beyond the repayment of what is so used, though he may indirectly benefit in his character of beneficiary from the proceeds of the policy. 1 On the same principle, where the parties to a marriage contract, from whom the marriage-contract trust funds came, claimed the profit that had been made from an improper invest- ment of the trust fund, it was held that the profit must be added to the capital of the trust fund, the whole beneficiaries being entitled to participate in the benefit according to their several interests. "When a trust fund is irregularly invested and loss arises, the trustees must make that loss good ; and when, on the other hand, benefit arises, that benefit enures to all the bene- ficiaries 2 in proportion to their respective interests ; and it is out 618 CHAKGES BETWEEN ALL PAETIES [chap. x. of the question for one of the beneficiaries, though the party from whom the money improperly dealt with was derived, to demand that the whole benefit or produce shall come to himself." 3 1 Dundas v. Strathmore, 1870, 7 S. L. R. 710 ; vide Lord Hatherley, C, at p. 722, and Lord O'Hagan, at pp. 725, 726. 2 Where a widow has not discharged her jus relictos, she is entitled to a proportionate share of the profits made by trading with her husband's estate (Ross v. Masson, 1843, 5 D. 483). 3 Grant v. Baillie, 1869, 8 M. 77, per Lord Neaves, at p. 80. Interest presumed to follow capital. Postponed sale. Legacies. Legacy of movable residue. Mixed fund, Contingent legacy. Fund set apart. Mainten- ance of minors. 994. Interest follows capital as an accessory x where it has not been otherwise disposed of. 2 Where there is a valid trust for sale and there is no gift of intermediate rents, the persons who take the proceeds of sale, being the equitable owners of the estate, unquestionably take the rent for the period during which the sale is postponed. 3 "It is a general rule that legacies do not of their own nature carry interest till default is made in payment — if of an indefinite legacy from a year after the death of the testator ; if made payable at a future day, then to carry interest from such time of payment." * Where the future day is the occurrence of an uncertain event — that is, the purifying of a proper or uncertain condition — no interest is due until the condition is purified. " This rule is necessarily subject to an exception when the legacy consists of a general residue, or of a share thereof, for in such a case the intermediate interest must necessarily go along with, and accrue to, the legacy itself. Accruing interest on residue is really just a part of that residue when it is not otherwise disposed of." 6 This rule as to intermediate income of a gift of residuary personal property on a future contingency applies also to a mixed fund. 6 "A contingent legacy does not carry interest while it is in suspense." 7 This rule is subject to three exceptions. First, in the case of a fund or personal property directed to be set apart from the rest of the estate and held by the trustees on special trusts. The intermediate interest will follow the principal when the contingency is resolved. 8 Second, in the case of " a legacy by a parent or one standing in loco parentis to the legatee," the intermediate interest is to be applied to the maintenance and education of the legatee if the testator has not provided 9 another fund for that purpose. 10 The second exception is based upon the presumed intention of the truster that the child should not either starve or become chargeable for maintenance upon the residue of his estate while the contingency is in suspense; 11 and as this situation of the child would only arise in ordinary course of chap, x.] CHAEGES BETWEEN ALL PAETIES 619 nature during its minority, or in the case of females during minority or until marriage, the presumption is limited to the case where the contingency is to be resolved by majority or marriage, and the exception does not extend to such legacies if subject to other contingencies. 12 That the legacy, though vested, is subject to defeasance on the exercise of a power of appointment, does not interfere with the right of the children to the income, pending the exercise of the power. 13 There is a distinction between such a legacy to the minor to whom the truster stands in loco parentis and a legacy to another than him burdened with the maintenance of the minor. In the latter case, interest is not payable on the legacy till the legacy itself is payable. 14 The third exception exists where the truster, though not in loco parentis, has shown an intention that the legatee should be main- tained as part of the testator's bounty — here the legacy will bear interest from the testator's death until the legacy becomes payable. 15 The right of the child is to the interest, and not only to maintenance out of the interest. The fixing of the amount of maintenance by the Court 16 is necessary only owing to the inability of the child or its guardian to give to the trustees a valid discharge for the interest itself. 17 The surplus income, therefore, belongs to the child's representatives if it dies before the resolution of the contingency. It is not correct to say that the surplus income in the ease of such a gift follows the principal, 18 for this only happens where the contingency is resolved and the child takes the principal. 19 The surplus income follows the fate of the principal only where there is an express provision of interest or maintenance, and not where the interest is given only in accordance with the rule of construction in Green v. Belchier. 20 1 Bective v. Hodgson, 1864, 10 H. L. Cas. 656. 2 Weatherall v. Thomtmrgh, 1878, 8 Ch. D. 261, per James, L.J., at pp. 269, 270. 3 Daveron, 1893, 3 Ch. 421, per Chitty, J., at pp. 424, 425. 4 Pettu. Fellows, 1733, 1 Swans. 561 (note), per Lord Talbot, C. 6 Duncan, 1877, 4 E. 1093, per Lord Gifford, at p. 1100. 6 Bective, supra. This is referred to as " settled law " by Cozens-Hardy, J., in Taylor, 1901, 2 Ch. 134. Cf. Allhusen, s. 995. 7 Of. Allhusen, s. 995, as to its destination. 8 Woodin, 1895, 2 Ch. 309, at pp. 315, 316, and 317 ; Kiersey v. Flahavan, 1905, 1 I. B. 45, at p. 49. 9 Such a provision must be within the intention ot the truster, and not merely the result of the operation of statute law (Moody, 1895, 1 Ch. 101 ; Abrahams, 1911, 1 Ch. 108, at p. 114). "> George, 1877, 5 Ch. D. 837, per James, L.J., at p. 843 ; Greeny Belchier, 1737 1 Atk. 505, per Lord Hardwicke, C, at p. 507 (p. 506 in 3rd ed.); Bowlby, 1904 2 Ch. 685, per Vaughan Williams, L.J., at pp. 697-699. Cf. Bevel v. Watkinson, 1748, 1 Ves. sen. 93, per Lord Hardwicke, C. ; Collins, 1886, 620 CHAEGES BETWEEN ALL PAETIES [chap. x. 32 Ch. D. 229 ; Havelock, 1881, 17 Ch. D. 807, for principle inferred in general dispositions. Lord Gifford in Dnncan, supra, at p. 1101, quotes the English oases as authorities. See also opinion of Lord Ormidale, where cases in the "Equity Court in England" quoted as authorities. In Pursell v. Elder, 1865, 3 M. (H. L.) 59, at p. 64, Lord Westbury, C, lays it down that the English and the Scots law on this subject are the same. In Normand, 1900, 2 P. 726, the legacies had vested in the children, but were not payable, and accruing interest was held to be properly applied for their behoof by the trustees, as there were no directions to accumulate. 11 Bowlby, supra, at p. 698. 12 Abrahams, supra, at pp. 114, 115. 13 Master, 1911, 1 Ch. 321. 14 Crane, 1908, 1 Ch. 379. 16 Churchill, 1909, 2 Ch. 431, at p. 433. 16 Cf. s. 824. 17 Bowlby, supra, at p. 699. 18 Hanson v. Graham, 1801, 6 Ves. 238, at p. 249. 19 Bowlby, supra, at p. 699. 20 See Green, note 10, supra ; Bowlby, supra, at p. 700. Loss of capital. Expenses of manage- ment. Special gift out of residue. Value of shares. Equitable compensa- tion. (2) Special and Residuary Legatee 995. Against residue 1 there falls to be charged both loss of capital, 2 as in the case of depreciation of the value of trust investments, 3 and the expenses of management,* where the funds are all invested together, and not allocated. 5 In the same state of the funds, loss of revenue falls rateably against all those entitled to share in the annual proceeds. 6 Where there is a particular gift first and then a gift of residue, if the special legacy lapses it falls to the representatives of the truster ah intestato under a resulting trust ; 7 but where there is a gift of residue followed by an exception out of the residue in the nature of a specific gift to another, if this specific gift lapses it falls back into residue again. 8 Where an estate charged with a pecuniary legacy fails to realise the amount of the legacy, the deficiency does not fall to be made up out of residue. 9 The value of a special legacy, e.g. shares in a company, is to be taken as at the date on which the legatee is entitled to enter on the beneficial enjoyment of it. Where it is paid to a trustee to hold for him during minority, he is not entitled to its value as at the date it falls to be paid to the trustee. 10 Where the doctrine of equitable compensation is applied, the residuary does not take special provisions that are forfeited under an election of legal rights, until compensation has fully operated in favour of special legatees. 11 Where an appointment is made purporting to take property away from the contingent legatee of it but the appointment fails, and the appointor also makes a special provision in his will for the contingent legatee in view of the appointment, the contingent legatee takes both under the will and by default of appointment, chap.x.] CHAEGES BETWEEN ALL PAETIES 621 and is not forced to elect between them whatever be the cause of the failure of the appointment. 12 1 " Residue means all of which no effectual disposition is made by the will, other than the residuary clause" (Skrynisher v. Northcote, 1818, 1 Swans. 566, at p. 570, per Plumer, M.R.). Residue is the unappropriated part of the estate at the date when the residue is directed to be paid over. Subsequent current outlays, including an annuity to the trustees, are chargeable against the income of any estate left in the trustees' hands (Kirkvood, 1912, S. C. 613). Vide also Millar v. Morrison, 1894, 21 R. 921. The liferenter of residue is entitled to the income of a fund set apart to meet a contingent legacy, until the fund is wanted. "I apprehend the principle may be rested upon this, that the fund is residue till it is wanted" (Allhusen v. Whittell, 1867, 4 ~Eq. 295, per Page "Wood, V.-C, at p. 304) ; Crawley, 1835, 7 Sim. 427. But see s. 994 for exceptions. 2 Gray, 1835, 13 S. 866. As to calls on shares, vide Day, I860, 1 Dr. & Sm. 261. As to purchase of an annuity out of capital, see Graham, s. 1002. 3 Hunter v. Burnley, 1868, 6 S. L. R. 148. Loss on special legacies by the exchange from a foreign coinage falls on residue (Cockerell, s. 744). 4 Cf. s. 1036. A different rule prevails in the case of appointed funds. There all costs of administering the funds fall upon all the appointees rateably, and not upon the appointee who takes the residue of the fund (Chisholm, 1902, 1 Ch. 457). 6 Gray, supra. Government duties are not a charge on residue (Dundas, 1912, S. C. 375) unless they are made so by the truster, as by declaring the special gift to be "without deductions" (Maryon- Wilson, 1900, 1 Ch. 565). 6 Gray, supra. 7 Llovd, 1841, 4 Beav. 231. 8 Thompson v. Whitelock, 1859, 4 De G. & J. 490 ; Jupp, 1903, 87 L. T. 739. Adam v. Wilson, 1899, 1 F. 1042. 10 Broadwood, 1911, 1 Ch. 277. This would apply only to the case of a bare trustee. If the trustee had a duty to administer the legacy and a power of sale in connection therewith a different question would arise. 11 Douglas-Menzies v. Umphelby, 1908, A. C. 224. Cf. s. 831, which was printed off before the decision in Jacks, 1st Div., 18th March 1913, to which reference must be made for discussion of cases of M'Farlane and of Gray in that section. 13 Beale, 1905, 1 Ch. 556, discussing conflicting authorities. 996. In a case where certain special legacies were directed to loss where L ° no proper be " set apart," and the residue to be divided in four equal parts, jJgQ 0pria " and then to be " set apart " for particular beneficiaries, it was held that where the funds were not separately invested, all loss must fall on the residuary legatees. It was not sufficient to avoid this result that the shares had been set apart for the purpose of allocating the interest to be paid on them, without their being separately invested. 1 Even though separately invested, the loss falls on residue where the appropriation of the separate invest- ments to certain interests is ultra vires. 2 "Where legacies are charged on a specifically appropriated portion of the trust estate, and a fund has been set apart by the trustees out of that portion to meet the legacies and the remainder is distributed, the legatee is entitled to follow the remainder into the hands of the residuary beneficiary for the satisfaction of his legacy if the fund set apart fails. 3 622 CHAEGES BETWEEN ALL PAKTIES [chap. x. policy. Judicial expenses. Expenses of getting in estate. Where a policy has lapsed through circumstances over which the trustees have no control and cannot be renewed, the beneficiary under the policy is entitled for the future to be paid the premiums that would have been payable under the policy, in addition to any benefit receivable from the lapsed policy. 4 1 Gray, 1835, 13 S. 866. 2 Scott, 1895, 23 R. 52, distinguishing Robinson v. Fraser, 1881, 8 R. (H. L.) 127. Of. Lynch, s. 991, and see s. 735. 8 Evans and Bettell, 1910, 2 Oh. 438. Of. s. 1273. 4 Fitzgerald, 1904, 90 L. T. 266, at p. 274. This point is not reported in the Imw Reports. Here the policy was surrendered under an order of Court which was reversed upon appeal. 997. Against special legatees there falls to be charged " special expenses arising from the discussion or adjustment of the rights of any particular persons, or classes of persons," who may be such legatees. 1 Otherwise, " unless an action be one which goes to reduce a trust, special legatees cannot be made liable for expenses. ... It must be shown that special legatees have an interest. The special and residuary legatees should not be placed on the same footing with regard to an action, the defeat of which could only benefit the residuary." 2 The expenses of getting in the estate, whether specifically bequeathed or not, and reducing it into possession, are part of the expenses of administration, and fall upon the residue, 3 but outlays on the upkeep or preservation of a specific bequest after it is got into possession and until it is delivered to the legatee must be met by the specific legatee. 4 1 Gray, s. 996. 2 Cameron v. Anderson, 1844, 7 D. 92, per L. J.-C. Hope, at p. 99. 3 Perry v. Meddowcroft, 1841, 4 Beav. 197, at p. 204. " Pearce, 1909, 1 Ch. 819 — gift of horses, carriages, and yacht. Of. Adam v. Wilson, 1899, 1 F. 1042, at p. 1046, as to expenses of exposure and sale being chargeable against specific legatee, while expenses oi application to Court for power to sell are expenses of administration and are chargeable to residue. See Chisholm, 1902, 1 Ch. 457, at p. 464. 998. An annuitant brought an action against the trustee, who SeT™ 1 ultimately compromised it, and agreed to pay the pursuer's expenses. The trustee charged the estate with the expenses paid to the annuitant, and his own expenses in the action. The Court found that the trustee was not entitled to charge any part of said expenses against the annuitant, but he was entitled " to state these expenses in the trust accounts in a question with both the other special legatees and the residuary legatees, it being understood that, if there are funds to pay the special legatees in full, and also a residue to the residuary legatees, these expenses must fall to be paid out of the residuary funds." 1 The trustee's of litigation chap, x.] CHAEGES BETWEEN ALL PAETIES 623 right to charge the expenses of the litigation " even against the other special legatees " is put by Lord Medwyn on the elementary ground that " the trustee's administration was fit and right in the circumstances." On the other hand, the special exception of the interest of the annuitant from the charge is thus put by Lord Moncreiff : — "After having agreed to pay the annuitant's expenses of process, I do not think the trustee could state the expenses, so settled, in his trust accounts in any question with the annuitant herself, because that would be in effect, pro tanto, to take back what he had by judicial settlement paid to her." 2 It follows from this position 3 that where a special legatee is the litigant and, being unsuccessful, is liable to the trustee in expenses, the extra-judicial expenses caused by the action of the special legatee should be charged against his legacy, otherwise the residuary is being charged with these expenses. 4 "Where the And with 1/00 * residuary. successful litigant with the trustee is the residuary and he gets his expenses against the trustee, the application of the principle leads to the result that the trustee has to pay the expenses out of his own pocket, at least where his attitude has given rise to the litigation. 5 1 Cameron v. Anderson, 1844, 7 D. 92 ; Anderson v. Cameron, 17 S. J. 42 ; vide interlocutor of Inner House. Cf. Cleghorn v. Gordon, 1827, 5 S. 203, and Carswell v. Munn, 1832, 10 S. 677. 2 Cameron, supra, 7 D., at p. 101 ; Easson v. Mailer, 1901, 3 F. 778 ; Anderson, 1901, 4 F. 96. 3 Graham v. Marshall, 1860, 23 D. 41. 4 Cf. Peat, 1901, 38 S. L. R. 269 ; Fletcher, s. 1189. This situation must be distinguished from that of expenses incurred in getting in the special legacy, in which matter the legatee does not intervene, and the expenses are general outlays of administration and a charge against the gross residue. Of. Perry, s. 997. 6 Buckle v. Kirk, 1908, 15 S. L. T. No. 45, at p. 102, and No. 379. (3) Alimentary Beneficiary 999. Though it is possible to protect a beneficiary against Amount of his ordinary creditors by declaring his interest to be alimentary, 1 provision. the declaration will only protect what is a reasonable amount for the purposes of aliment in the circumstances of the case. It is impossible to protect extravagant sums in this manner. "A party cannot leave to another £20,000 a year, and render it in- alienable by calling it alimentary." 2 Even where the trust funds only produced between £700 and £800 a year, it was held that that was far more than in any possible view could be held to be a proper and protected alimentary provision to a person in the circumstances and position of a baker in a country town. 3 The principle recognised by the Court is that " where a person 624 CHARGES BETWEEN ALL PARTIES [chap. x. is in the enjoyment of an annual income under the form of an alimentary liferent, that sum may he made available to his credi- tors year by year in so far as it is in excess of the amount which is required for an alimentary provision." But the question of what is available for ordinary creditors cannot be settled in advance, as the future surplus income must remain unburdened as a security for the future payment of the alimentary provision.* ' Of. a. 781. 2 Paterson v. Baxter, 1849, 21 S. J. 125, at p. 127. 3 Hamilton, 1879, 6 R. 1216, at p. 1226. Of. Livingstone, 1886, 14 R. 43 ; Haydon v. Forrest, 1895, 3 S. L. T. No. 286 ; Clareinont, 1896, 4 S. L. T. No. 220 ; Cuthbert, infra (where £1000 annuity was in question). 4 Cuthbert, 1908, S. C. 967, per Lord M'Laren, at p. 971. Order of 1000. In case of the bankruptcy of an alimentary beneficiary, provision ry his interest, to the extent of a proper alimentary provision, does not fall into the hands of the trustee in bankruptcy. Only the alimentary creditors of the bankrupt have a claim on the ali- mentary provision. The trustee in bankruptcy may buy up their claims and vindicate them, but the trustee does not otherwise represent the alimentary creditors. 1 In so far, however, as the provision is in excess of a proper alimentary allowance, this excess as it accrues from year to year falls under the bankruptcy, 2 as also any arrears of it remaining in the hands of the trustees of the provision. 3 The liferent right itself, however, is not adjudgeable, and does not fall under the statutory title of the trustee in bankruptcy. 4 The current year's income of the alimentary fund is subject to diligence by creditors in the following order : — First, by alimentary creditors for contemporaneous debts ; second, by these creditors for arrears ; and thirdly, by ordinary creditors ; provided that before the second class of debt operates, the alimentary beneficiary shall have a right to a sum for current alimentary expenses over and above the sum required to satisfy the first class of debt, this sum being in inverse ratio to the amount of the debts of the first class. 6 Interest on an alimentary debt is not itself an alimentary debt. 6 If two beneficiaries have a joint right in the income of the alimentary fund, the whole income is liable for the alimentary debts of either. 7 Bene- One of the proper objects of an alimentary provision is the cSidLn. alimenting of the beneficiary's children, who are alimentary creditors entitled to attach his alimentary income if he fails to maintain them. 8 chap. x.J CHABGES BETWEEN ALL PAETIES 625 1 Corbet y. Waddell, 1879, 7 R. 200, per Lord Shand, at p. 211. 2 Vide Livingstone, s. 999. As to trie position of legitim as an alimentary- fund, vide Wishart v. Morison, 1895, 3 S. L. T. No. 42. 3 Kidston v. MacFarlane, 1905, 12 S. L. T. No. 372. 4 Cuthbert, s. 999, at p. 971. 6 Ruthven v. Pulford, 1909, S. 0. 951. Of. Kennedy v. Warren, 1901, 3 F. 1087, at p. 1090. 6 Ruthven, supra, at p. 955. 7 Ruthven, supra. 8 Opinion of Lord Dunedin, when Lord Advocate, in affidavit in English Court. Fitzgerald, 1903, 1 Oh. 933, at pp. 935, and 1904, 1 Ch. 573, at p. 577. Cf. Lord M'Laren's remark as to " current expenses of the family " in Ruthven, supra, at p. 954. 1001. It has been stated 1 as a general proposition that the Trusters trustees, as the representatives of the truster, are bound to aliment the truster's family out of his estate in their hands. 2 The claim against the trustees is, however, limited to the case where the truster stood in loco parentis to a minor beneficiary in fee, to whom no present interest, or at least an interest insufficient for aliment, has been given. 3 1 M'Laren, s. 2163. Cf. s. 2191. 2 Cf. s. 725. 3 In an early case the Court is reported as "looking upon this entirely as an omission on the part of the father " (Riddells, 1802, Mor., Aliment, App. 4). Advances of capital are now dealt with by 30 & 31 Vict. c. 97, s. 7. Vide s. 423. Baillie, 1896, 4 S. L. T. No. 40, end of opinion of Lord Pearson (Ordinary). Cf. s. 994 as to payment of interest on a gift as a provision for maintenance. (4) Annuitant 1002. An annuity is a charge of a fixed x amount payable termly. Gratuitous Where the annuity is gratuitous and not contractual, it is presumed to be a charge first on the income of each term, 2 but if that income fails, then on capital. 3 The fiar has no charge against the income of a subsequent term for repayment of this capital. 4 The annuity is a charge against the whole trust capital, 5 unless where the charge is limited by a certain capital sum being apportioned by the truster to meet the annuity. But the limitation must be definite and express. Where the annuity is charged on a specified part of the trust estate, and the trustees set apart a portion of that part to meet the annuity and distribute the remainder, the annui- tant is entitled to follow this remainder into the hands of its recipient for satisfaction of his annuity where the portion set apart fails. 6 A gift of an annuity out of the income of an estate and "subject thereto," a gift over of the estate, makes the annuity a charge upon the capital and not upon the income only. 7 Where there is a mere bequest of an annuity, the trustees Purchase of annuity. have no implied power as a matter of trust administration to 40 626 CHAEGES BETWEEN ALL PAETIES [chap. x. expend capital in buying off the annuitant's claim by purchasing an annuity. In so far as the annuitant is concerned, they have no power to part with any of the capital securing the annuity, though in practice they are protected by the purchase of a Government annuity. The residuary legatee, on the other hand, is entitled to the chance of the annuitant's death before the normal period, just as he is bound to take his chance of the exhaustion of the capital by the prolongation of the life beyond that period. 8 contractual Where an annuity is contractual it is a debt of the truster, annuity. and is thus presumed to be a charge upon capital. It is not, how- ever, properly divided between fiar and liferenter by paying each instalment out of capital as it becomes due, the liferenter suffer- ing the corresponding loss of interest after each payment. The proper calculation is to ascertain what sum would, if invested at 3| per cent, simple interest, at the truster's death amount to each instalment of the annuity at the date on which it falls to be paid. This sum is the proper charge against capital for that instal- ment of the annuity, and the balance between this sum and the amount of the instalment is the proper charge against income for that instalment. This rule governs arrears as well as current and future instalments. 9 1 Gf. s. 746. 2 Peat, infra, per Lord Trayner, at p. 272 ; Graham, 1898, 1 F. 357, per Lord Monereiff, at p. 366. But see Glover, 1912, 2 S. L. T. No. 122, for gift of a stated sum " a year " out of the income of a business. 3 Gf. Phillips v. Gutteridge, 1862, 32 L. J. Ch. 1, and notes thereto in 3 Ruling Cases, 197. Annuities are payable out of capital where income is insufficient, on the principle that the annuity is a legacy payable by annual instalments instead of a sum down (Ewing v. Mathieson, 1902, 9 S. L. T. No. 308, per Lord Stormonth-Darling). Gf. Kennedy v. Stark, 1897, 5 S. L. T. No. 94 ; and see also s. 746, note 2, as to charge on capital of residue. 4 Tewart *. Lawson, 1874, 18 Eq. 490. 6 Peat, infra. 6 Evans and Bettell, 1910, 2 Ch. 438. See for case where appropriation expressly freed residue, Higginbotham, 1897, 4 S. L. T. No. 397. Gf. Cole- brooke (Wemyss' Tr.) First Div., 18th March 1913. 7 Watkins, 1911, 1 Ch. 1, following Howarth, 1909, 2 Ch. 19, which over- ruled Bigge, 1907, 1 Ch. 714. In Young, 1912, 2 Ch, 479, Howorth is followed, in preference to, and held to overrule, Taylor, 1874, 17 Eq. 324. Gf. Wilkinson, 1849, 3 De G. & Sm. 633, and Phillips v. Gutteridge, 1862, 3 De G. J. & S. 332 (both " rents and profits " charged, but annuity also a charge on corpus), and contrast Boden, 1907, 1 Ch. 132 (where income only charged). 8 Graham, supra. For direction to purchase annuity, see s. 1003. 9 Poyser, 1910, 2 Ch. 444 ; Thompson, 1908, W. N. 195, both following Perkins, 1907, 2 Ch. 596, and differing from Bacon, 1893, 62 L. J. Ch. 445, and Henry, 1907, 1 Ch. 30. Gf. Dawson, 1906, 2 Ch. 211 ; Yates, 1860, 28 Beav. 637. Allhusen, s. 995, is the principle applicable to such a case. stock 1003. In an English case a truster directed his trustees to pay certain "annuities," amounting to £400 a year, and also directed his trustees to invest £10,000 in 4 per cent, stock to meet the chap, x.] CHAEGES BETWEEN ALL PARTIES 627 " annuities." The stock was reduced to 3 \ per cent., and it was held that the " annuities '' were to be correspondingly reduced. 1 The common use of the word "annuities" in reference to the interest on Government stock is, however, sufficient to account for the interpretation of the direction reached by the Court in this case. 2 Thus where there is a direction to invest a sum, or set apart investments, to produce an annuity of a certain sum, e.g. £1200 a year, the "true effect of that portion of the will is precisely, and to all intents and purposes, the same as if the testator had said, disengaged from anything as to investment, I bequeath an annuity of £1200 a year." 3 If the trustees are directed to purchase an annuity and the Direction to purchase annuitant dies before the purchase is completed, his representatives annuity. are entitled to the capital sum that would be required to purchase the annuity. The decision is based on the principle that the direction must be held to have been carried out, and in that case the annuitant could have sold the annuity next day.* Such a direction is therefore treated as a legacy of the capital sum vesting in the annuitant on the truster's death, 5 and that whether the direction is to invest a specific sum in an annuity or a direction to purchase an annuity of a definite amount. 8 1 Att-Gen. v. Poulden, 1844, 3 Hare, 555. 2 Cf. s. 748. 3 Carmichael v. Gee, 1880, 5 App. Cas. 588, per Lord Selborne, C, at p. 594. 4 Robbins, 1907, 2 Ch. 8 ; Brunning, 1909, 1 Ch. 276. Cf. Ross, 1900, 1 Ch. 162. Where no part of the annuity has been paid, the capital value is to be estimated as at the date of the truster's death (Robbins, supra) ; but where instalments of the annuity have been paid pending the execution of the direction to purchase, the date of the payment of the last instalment is to be taken, with 4 per cent, interest from that date on the capital sum so brought out (Brunning, supra). 5 Robbins, supra, at p. 11. 6 Robbins, supra, at p. 12, citing Lord Brougham, C, in Dawson v. Hearn, 1831, 1 Russ. & My. 606, at p. 614. Cf. also Lord Brougham's remarks at p. 612 on Yates v. Compton, 1725, 2 P. W. 308, "which is the earliest case upon the point." 1004. Being. a termly payment of a fixed sum to a person Not appor- surviving at the term of payment, " an annuity is not appor- tionable, and nothing is due until the day of payment," 1 differing ' in this from a liferent, which is apportionable, running de die in diem. 2 1 Bennet v. Going, 1828, 1 MolL 529, per Lord Chancellor Hart (Ireland). 2 Wood v. Menzies, 1871, 9 M. 775 commented on by L. P. Inglis in Ferguson, 1877, 4 R. 532, at pp. 536, 537. 1005. Deductions from an annuity must be made from the Deductions, current term's annuity. A deduction omitted to be made from one 628 CHARGES BETWEEN ALL PARTIES [chap. x. term's annuity cannot be made from a subsequent term's annuity. Thus where trustees had omitted to deduct income tax from the annuity for some terms, Kekewich, J., said : — " There can be no reasonable doubt that a trustee cannot, because he has made a mistake in payment of an annuity, deduct what might have been deducted before. There is no liability on the part of the annuitant income tax. to pay the trustees what they ought to have deducted." 1 An annuity "payable without any deduction whatever" is not free from income tax. To effect this there must be an express bequest of the tax additional to the bequest of the annuity. 2 1 Warren, 1895, 11 T. L. R. 355 ; Sharp, 1906, 1 Ch. 793 ; Currie v. Goold, 1817, 2 Mad. 163. Cf. Hunter, 1894, 21 R. 949 ; and see s. 1235. 2 Abadam, 1864, 33 Beav. 475. Annuityas 1006. There is a presumption that all incumbrances on the charge on x r liferent. estate must be kept down by the liferenter of the residuary estate, and these include a gift of an annuity. 1 Even an onerous annuity, in so far as it is directed to be payable out of income, is chargeable against the liferenter of the general estate. 2 "Where the liferent opens at a later date than the annuity, any arrears of annuity at the date of the opening of the liferent are a charge against capital ; but while unpaid, any interest on them is a charge on income. 3 1 Honywood, 1902, 1 Ch. 347. 2 Currie v. Threshie, 1846, 8 D. 1021. 3 Nixon v. Borthwick, 1806, Mor., Liferenter, App. 2. It has been said that in England arrears of an annuity do not as a rule carry interest, at least according to Chancery practice, which is against what seems "per- fectly plain on principle" — that interest should be payable on arrears of an annuity equally with arrears of a legacy, per Kekewich, J., in Hiscoe, 1902, 71 L. J. Ch. 347, at p. 349 ; but see Salvin, 1912, 1 Ch. 332, where the limits of the older authorities are defined. An overdue payment of a slump sum payable in lieu of an annuity carries interest if the sum is to purchase an annuity, from one year after the truster's death, as in the case of a legacy (Friend, 1898, 78 L. T. 222), if the sum is taken in place of an annuity from the date of death or stoppage of the annuity (Brunning, 1909, 1 Ch. 276). Abatement 1007. "Where a testator's estate is insufficient for payment of of annuities. r ^ legacies and annuities, the practice of the Court is to value * the annuities and direct that legacies and annuities 2 abate proportion- ately." 3 But this does not apply in a question between the annuitant and the residuary legatee. Here the annuitant has no claim to have his annuity valued and to take the value out of the estate, 4 but he can exhaust the estate in satisfaction of his annuity. 6 The residuary is entitled to the chance of the annui- tant's death before the estate is exhausted. But in the case of an onerous annuity, the creditor in the annuity is entitled, upon the chap, x.] CHAEGES BETWEEN" ALL PAETIES 629 insolvency of the estate, to rank for the value of the annuity as a dividend instead of continuing to receive an abated annuity out of the estate. There is in this case no proper residuary. 8 If the estate is insufficient to meet the specific legacies and provide a residue sufficient to meet the annuity out of income, but the residue is sufficient to pay the annuitant the value of his annuity 7 on the Government 8 scale, the specific legacies must be paid in full, and the value of the annuity paid to the annuitant. 9 Even where the annuity is held subject to forfeiture in a certain event, once it has been valued under this rule owing to' the insolvency of the estate, the value must be paid in full to the annuitant. 10 Where an estate turns out to be insolvent at some period after contingent annuity. the death of the truster, sums paid in ordinary course of adminis- tering the trust before that date are not to be treated as advances from the estate, and do not require to be brought into account in the final distribution of the estate. Thus payments made to an annuitant whose annuity is due do not require to be brought into account in settling the respective shares of this annuitant and of an annuitant whose annuity is postponed or reversionary. 11 1 As at the truster's death (Bobbins, 1907, 2 Ch. 8, at p. 13). As to actuarial scale, see Cottrell, infra, at p. 408. 2 Even if the annuitv is reversionary or postponed — see Metcalf, 1903, 2 Ch. 424. 3 Rule in 3 Ruling Cases, 185, following Long v. Hughes, 1831, 1 De G. & Sm. 364 ; Wroughton v. Colctuhoun, 1847, 1 De G. & Sm. 357. Of. s. 741. * Cottrell, 1910, 1 Ch. 402 ; "Wright v. Callender, 1852, 2 De G. M. & G. 652. 5 De Quetteville, 1905, 93 L. T. 579. Of. a. 1002 as to purchase of annuity. 6 Sinclair, infra ; see also Cottrell, supra, at p. 409. 7 If the annuitant dies before the annuity is actually purchased, the capital value belongs to the deceased annuitant's estate (Ross, 1900, 1 Ch. 162). 8 Where there is power to purchase an annuity the trustees are in safety in purchasing a Government annuity (Graham, 1898, 1 F. 357). 9 Cottrell, supra, at p. 408. The alternative argued for the residuary, who was an infant, of' allowing the annuitant his resource in ordinary form against the capital of the residue after payment of the legacies, and thus conserving the residuary's chance of the annuitant's death, does not seem to have been given full weight to in the decision. 10 Sinclair, 1897, 1 Ch. 921, per Kekewich, J., discussing Carr v. Ingleby, 1837, 1 De G. & Sm. 362, and declining to follow it. In Sinclair the contin- gency was disregarded by the valuator (see p. 923). » Metcalf, 1903, 2 Ch. 424. 1008. "An annuity given by will begins to run from the death ^™ tof of the testator; 1 and, ordinarily, the first yearly payment is due at the end of the year from the death. But if the annuity is directed to be paid monthly, the first monthly payment is to be made at the expiration of a month after the testator's death." 2 630 CHAKGHES BETWEEN ALL PAETIES [chap. x. Where gift of capital. Annuity presumed to be for life only. Annuity during life of another. Annuity to more than one not joint. Effect of survivorship clause. There is a general principle that where there is the gift of the produce of a fund without limit as to time, that amounts to a gift of the fund itself; though if expressions are to he found showing an intention that the gift should be limited as to time, such limit will he the measure of the gift. 3 But "there is a marked distinction between the gift of the produce of a fund without limit as to time and a simple gift of an annuity. An annuity may be perpetual, or for life, or for any period of years ; but in the ordinary acceptation of the term used, if it should be said that a testator has left another an annuity of £100 per annum, no doubt would occur of the gift being an annuity for the life of the donee. It is the gift of an annual sum of £100 ; that is, of as many sums of £100 as the donee shall live years." 3 Thus the gift of an annuity to A. during the life of B. does not cease on A.'s predecease, but continues to the executors of A. during the life of B. by virtue of the express provision that it should be during the life of B. 4, Here there is an express limit, but where " one gives by will an annuity, not existing before, 5 to A., A. shall have it only for life; for if A. might give it to his executors, it might go from executors to executors for ever," there being no limit expressed. 6 A specific annuity given to more than one between them equally is presumed to be several and not joint if there is no clause of survivorship, and the death of one relieves the estate of that one share of the common annuity. 7 " Each annuitant will have his share of the annuity for his own life, and upon his death that share, or, in other words, his separate annuity, will have come to an end." 8 An annuity to one person for life and, on his death, to others equally between them, or the survivors or survivor of them, is a several and not a joint annuity to the survivors of the liferenter. 9 The survivorship refers here only to the death of the liferenter. But where the gift is of an annuity to more than one equally among them, or the survivors or survivor, there being no previous liferent to the expiry of which to refer the survivorship clause, " the annuity in its entirety would subsist until the death of the survivor, and when any of the lives dropped it would become divisible among a smaller number of persons." 10 An annuity to a widow for the maintenance and education of a child does not cease to be payable by reason of the death of the widow during the child's minority. 11 chap, x.] CHAEGES BETWEEN ALL PAETIES 631 1 Even where there is a direction to purchase an annuity, and that cannot he carried out till a later date (Bobbins, 1907, 2 Ch. 8, at p. 13). 2 Rule in 3 Ruling Cases, 151, following Houghton v. Franklin, 1823, 1 Sim & St. 390, and vide discussion of cases ; Brunning, 1909, 1 Ch. 276. 3 Blewitt v. Roberts, 1841, Cr. & Ph. 274, per Lord Cottenham, C, at p. 280. " Primd facie an annuity is given for the life of the annuitant " (Evans, 1908, 99 L. T. 271). 4 Of. Phillips u Gutteridge, 1862, 3 De G. J. & S. 332. 6 " There is a difference between an annuity existing at the time of the will and one created by it de novo " (Savery, infra, at p. 140) ; and see Turner, 1783, Amb. 776, at p. 782, as to the annuity " not existing before in the possession of the testator." 6 Savery v. Dyer, 1752, Amb. 139, per Lord Hardwicke, C, at p. 140. 7 Evans, supra. 8 Mansergh v. Campbell, 1858, 3 De G. & J. 232, per Lord Chelmsford, C, at p. 240. 9 Blewitt v. Roberts, 1841, Cr. & Ph. 274, per Lord Cottenham, C, at p. 283. 10 Mansergh, supra, at p. 240. Lord Chelmsford's reference here to Blewitt, supra, must be understood as referring to the wording of the second gift in that case. 11 Yates, 1901, 2 Ch. 438. (5) Heir and Uxecutor 1009. Unless the contrary is expressed, 1 the liability for the Liability payment of death and testamentary expenses and of debts falls first upon general movable estate, then undisposed of heritable estate, then specially bequeathed movables, and lastly specially bequeathed heritage. 2 Where heritage has been sold to meet a supposed deficiency in executry funds, any movable estate coming into the hands of the trustees afterwards is to be applied pro tanto to replacing, for the purposes of the trust, the heritage sold. 3 A revenue duty for which the executor is not accountable is Testamen- J tary payable by the persons beneficially entitled in proportion to their expenses. shares. 4 The executor is not accountable for the duty on real estate. 5 " Testamentary expenses " are the same as " executorship Duty on heritage. expenses," which are expenses incident to the proper performance of the duty of executor. 6 Testamentary expenses do not therefore include the duty on real estate. Where there is a mixed fund of real and personal estate, the duty on the real estate still remains payable by the devisees of that estate, though converted under a trust for sale, and is not a charge on the executor as such. If he takes the real estate he does so not as executor, but as devisee. 7 Testamen- tary expenses do not therefore include the duty on real estate, whether devised for sale or not, in a mixed fund of real and personal estate. 8 "It is well settled that the estate duty payable by the Estate duty executors is included in the expression ' testamentary expenses,' 9 632 CHARGES BETWEEN ALL PARTIES [chap. x. but not ' settlement ' estate duty." 10 Where the residuary personal estate is insufficient to provide the. estate duty, the undisposed of or residuary real estate has to meet the deficit under the ordinary marshalling of assets in the payment of truster's debts, including testamentary expenses. 11 Testamentary expenses do not include estate duty of property covered by a power of appoint- ment which has not been exercised, 12 nor of property that is the subject of a donation mortis causd. 13 The costs of an originating summons taken out by the trustees to obtain authority to pay to certain persons as legatees on evidence Judicial adduced by them have been found to be testamentary expenses, expenses. •* . on the ground that if the trustees had made their own inquiries without coming to Court the expense of these would have been testamentary expenses. 14 In an action challenging the validity of the trust deed, the pursuers, though unsuccessful, were allowed their expenses out of the trust estate. The expenses of the success- ful defenders were held to be " testamentary expenses," but not the expenses of the pursuers. 15 Where the gift of the "testa- mentary expenses " of another person's estate is made, this may extend to the expenses of administration of that estate under an intestacy. 16 Administra- Costs of administering real estate 17 are primd facie to be tion of heritage, borne by the real estate, and if a truster intends that these costs shall be borne by the personal estate, the deed must contain a specific direction to that effect. 18 " The personal estate is primarily liable for the payment of debts and funeral and testamentary expenses; but the testator may exonerate it, either by express words or by an indication of intention to be found in the will which leads to the Court being judicially satisfied that it was the testator's intention to exonerate it. It is not enough that he charges his real estate with the payment of debts. It is necessary to find, not that the real estate is charged, but that the personal estate is discharged. This need not be done by express words, but there must be found in the will plain intention or necessary implication to operate exoneration." 19 1 Trott v. Buchanan, 1885, 28 Ch. D. 446. 2 See s. 719. 3 Stainton v. Dawson, 1868, 6 M. 240. 4 Berry v. Gaukroger, 1903, 2 Ch. 116, per Vaughan Williams, L.J., at pp. 131, 132. 6 Finance Act, 1894 (57 & 58 Vict. c. 30), s. 6 (2) and s. 8 (3). Cf. Sharman, 1901, 2 Ch. 280. 6 Sharp v. Lush, 1879, 10 Ch. D. 468, per Jessel, M.R., at p. 470, but see Treasure, 1900, 2 Ch. 648. 7 Smith v. Claxton, 1819, 4 Madd. 484, per Leach, V.-C, at p. 492. chap, x.] CHAEGES BETWEEN ALL PAETIES 633 8 Spencer Couper, s. 1011, distinguishing Trenehard, 1905, 1 Ch. 82. Of. 9 Pullen, 1910, 1 Oh. 564, per Warrington, J., at p. 571. Cf. Pimm, 1904, 52 W. R. 648 ; Olemond, 1900, 2 Ch. 182 ; Treasure, 1900, 2 Ch. 648, at p. 653. 10 King, 1904, 1 Ch. 363. 11 Pullen, supra, at pp. 570, 571. 12 Porte v. Williams, 1911, 1 Ch. 188. 13 Hudson, 1911, 1 Ch. 206, following Porte, supra. " Baumgarten, 1900, 82 L. T. 711, Order LXV., Rule 14 (6) ; and see oases in note to rule in both Yearly Practice and Annual Practice. 16 Prince, 1698, 2 Ch. 225, See Kekewich, J., as to expenses of successful challenge in Clemond, infra, at pp. 192, 193. 16 Clemond, 1900, 2 Ch. 182, a full discussion of the whole question of "testamentary expenses" by Kekewich, referring to Sharp v. Lush, 1879, 10 '" Cf. s.'l010. 18 Betts, 1907, 2 Ch. 149. 19 Banks, 1905, 1 Ch. 547, per Buckley, J. 1010. Though a testator charges his real estate with the pay- Debts of ment of his debts in exoneration of his personalty, the real estate are not x ^ truster's is not fixed with the costs of litigation to which the executor has debts - been wrongfully put by a person setting up against the testator's estate an unfounded claim of debt. If such costs have been properly incurred by the executor, he may retain them out of any fund coming to his hands as executor, because they have been costs necessarily incurred in the due administration of his testator's estate ; and the rule in England and in Scotland is the same, that the costs of administration are paid out of the general personal estate. An executor properly incurring costs for the benefit of third parties claiming under the trust deed is entitled to be in- demnified out of the executry estate itself, and not out of the estate for the benefit of which they were incurred. 1 1 Lovat v. Fraser, 1866, 4 M. (H. L.) 32, per Lord Cranworth, O, at pp. 36, 37. 1011. "Where the truster has not made an annuity a charge how annuity upon any particular part of his estate, an annuity of an indefinite chargeable. currency is chargeable upon (1) the income of the general residuary estate held by the trustees, and (2) the general corpus of the residuary estate, unless where such annuity exists as a continuing debt affecting his gross estate at the time of his death. 1 In this case the annuity is a charge upon (1) the residuary legatee of heritage or the heir-at-law, and (2) a special legatee of heritage, in both cases to the extent only of the inheritance. 2 The ratio of the distinction is obscure, but has been expressed thus. An executor is appointed for the purpose of winding up the estate of the deceased by ingathering its assets and discharging thereout its liabilities. A liability of the nature of an annuity for an indefinite 634 CHAEGES BETWEEN ALL PAETIES [chap. x. period cannot be satisfied by the executor during his limited term of office. It is therefore presumed that the deceased intended that the liability should attach to the person taking the heritage, this being the only part of his estate existing in formd specified after the close of the executry. 3 The rule is, however, not to be extended beyond precedent. 4 where Where the annuity is made a real burden on the heritage real of the deceased these questions do not arise, but an annuity is burden. only made a real burden by express words, which must be used in an appropriate part of the deed, or by clear implication. 5 indicia of The rules as to the chargeability of an annuity are merely a intention. presumption to be followed in the absence of any intention of the truster expressed or implied in his trust deed as to the incidence of the annuity. On the interpretation of intention from expressions as to the incidence of the gift of an annuity, the English authorities are ranged under three heads. " The first class is where you have a simple gift of a legacy or annuity, with a mere charge upon real estate — there the personal estate is not only not exonerated, but remains primarily liable, just as in the case of a charge of debts. 6 Another class is where the legacy or annuity is a specific gift out of real estate, which is assumed to be sufficient to cover the amount. There the personal estate is in no way liable, and if the specific fund fails 7 the gift must fail with it. The third class is intermediate to these, where a legacy or annuity is, as it is termed, demonstrative, there being a clear general gift, but a particular fund pointed out as that which is to be primarily liable, on failure of which the general personal estate remains liable." 8 Legacies. A general direction to pay legacies out of a mixed fund of residue charges them rateably on the portions attributable to realty and personalty. 9 The rule in Greville v. Brown 10 is that where a mixed estate is left, and general legacies are given without express allocation with a residuary gift of the mixed estate, these general legacies are charged thereby on the real estate falling into residue as well as on the personal estate, but only on the real estate after exhaustion of the personal and not rateably between them, unless the legacies are expressly charged upon the mixed residue. 11 1 Hill, 1872, 11 M. 247 ; Advocate-General v. Oswald, 1848, 10 D. 969, per Lord Ivory, at pp. 983, 984. 2 The trustee is primarily liable qud trustee, and the heritable beneficiary is bound to relieve him of the obligation qud beneficiary. Wallace v. Ritchie, 1846, 8 D. 1038, special legatee ; Crawford, 1867, 5 M. 275 ; Robertsons v. Baillie, 1705, Mor. 5473, heir-at-law ; Hill v. Maxwell, 1663, Mor. 5473. chap, x.] CHAKGES BETWEEN ALL PAETIES 635 3 Ewing v. Drummond, 1752, Mor. 5476, and see both cases of Hill, supra. 4 Hill, 1872, supra. r 6 Buchanan v. Eaton, 1911, S. 0. (H. L.) 40 ; A. 0. 253 6 Of. Kaye & Hoyle, 1909, 53 Sol. J. 520. 7 Cf. Peat, 1901, 38 S. L. R. 269, per Lord MoncreifF, at p 272. 8 Paget v. Huish, 1863, 1 H. & M. 663, per Page Wood, V.-C, at p. 668, quoted by "Warrington, J., in Trenchard, 1905, 1 Ch. 82, at pp. 91, 92, as laying down " general principles." 8 Spencer Cooper, 1908, 1 Ch. 130. 10 1859, 7 H. L. Cas. 689. 11 Boards, 1895, 1 Ch. 499 ; 1 White and Tudor, pp. 13, 14, 8th ed. This is a long-established rule of construction in England which does not appear to have been expressly or consciously followed in Scotland. (6) Lifer enter and Fiar 1012. As a usual motive for creating a trust is to pro- tect the interest of a fiar while giving the enjoyment of the estate to a liferenter, 1 questions as to the respective rights of these classes of beneficiaries are frequently discussed. Though both classes have a common interest in the success of the trust administration, yet in the division of the trust estate their interests are directly antagonistic. 2 1 A legal tenant for life in England has the right to demand possession of the liferented estate on giving security for any burdens thereon, differing from the position of an equitable tenant for life — a cestui que trust for life — who cannot demand possession, but may be put in possession at the discretion of the Court, where his personal possession was plainly the intention of the truster, as in the case of a family residue (Richardson, 1900, 2 Ch. 778, at pp. 783, 784). An heir of entail in Scotland is a fiar, subject only to the restrictions of the entail — not a liferenter. He is, however, a mere liferenter of money held in trust for the purchase of land to be entailed (Advocate v. Sprot, 1901, 3 F. 440, at p. 444, per Lord M'Laren). 2 In all discussions of this question, the difference between the nature of the legal interest vested in the liferenter in Scots law and that in English law must be kept in mind. In England there are two separate " estates," of which the principal is the " liferent," the fee being only the " remainder." In Scotland there are no such separable "estates" known; there is only one estate or property known — " the fee " — and a burden upon it called "the liferent" — Lord President Dunedin (unreported) in Mackenzie v. Kilmarnock, 1909, S. C. 472. Cf. Dawson v. Smart, 1903, 5 F. (H. L.) 24, per Lord Robertson, at p. 29 ; A. C, at p. 469 ; and Chaplin v. Hoile, 1890, 18 R. 27, at p. 33, per Lord Rutherfurd Clark. Thus a liferent interest in Scotland being only a burden on the fee, cannot be conveyed as a feudal property to a third party ; the liferent interest can only be assigned as a personal right. Ewing v. Drummond, 1752, Mor. 5476 (see argument for executor). The right is heritable for succession, not sud naturd, but as bearing a tractum futuri temporis. (1) Wliere Estate is in Proper Form of Investment 1013. Where the trust estate is in a proper state of invest- ment the liferenter takes the nett income actually accruing 1 on the investment. 2 The question is always one of the truster's intention; and where he has directed the trustees to hold certain investments and has created a different interest in the income of the trust estate from that in the fee, it is pre- 636 CHAKGES BETWEEN ALL PAETIES [chap. x. Income is that receivable) not that received. But only net balance of whole estate. What is one-half. sumed that he intended the extent of each interest to be measured by the respective proceeds in income and capital of these investments. Thus "every tenant for life of residue is entitled to the income of all such part of the residue as is not required for the payment of debts, and which is found to be in a proper state of investment. He is entitled to the income of that property from the death of the testator." 3 Where the trustees are empowered to retain investments made by the truster, but are not themselves empowered to make them, as long as they • are retained the liferenter is entitled to enjoy them in specie,* whether of a wasting or of a permanent nature. 5 " Primd facie the fact that there is only one gift is an indica- tion of an intention that the legatee shall take either the whole [income] or none at all" according as it turns out. 8 Therefore in making up an account of the " free annual proceeds " of the estate " the income of the estate in each year is not con- fined to the money actually received in each year by the trus- tees. A sum of income due and payable in one year but not actually received until the following year, is income of the former year, and should be so treated in dealing with the interests of the respective beneficiaries." 7 On the other hand, the liability of the liferenter for interest on charges properly affecting the estate liferented is not limited to the income of each subject charged, but the surplus income on one subject is applicable to the balance of the interest due on another subject. 8 During the same liferent period all charges payable out of revenue 9 which are unpaid are a charge on future revenue in an accounting with the fiar, 10 and that whether the revenue is derived from one or more estates subject to the same trust. 11 All such arrears of charges against revenue still remain a continuing charge against future revenue though the estate liferented or part of it is sold. Such realisation of its value is not held to recoup the fiar for the arrear of charges against revenue which have had to be borne by the capital. 12 The liferent of one-half of the income of the trust estate is a different thing from the income of one-half of the estate. Thus where several liferenters have a gift of a share each of the income of the estate, each is entitled to have the whole estate retained by the trustee in order that he may have his share of the general income of it. He is not bound to rely upon the income of a corresponding share of the capital of the estate, and to release his claim on the other portions of it. 13 chap, x.] CHARGES BETWEEN ALL PARTIES 637 I For treatment of dividends and bonuses on shareholding, see s. 1027. 9 For possible exception, vide s. 1014. 3 Allhusen v. Whittell, 1867, 4 Eq. 295, per Page "Wood, V.-C, at p. 302. His Lordship states the proposition as being " well covered by authority." 4 Sheldon, 1888, 39 Ch. D. 50. Of. Norrington, 1879, 13 Ch. D. 654 ; Wilson, 1907, 1 Ch. 394. 6 Nicholson, 1909, 2 Ch. Ill ; Heath v. Ramsay, 1903, 10 S. L. T. No. 300. Cf. Stainer, s. 563. This is only an application of the rule in Howe as to enjoyment in specie. See s. 570. 6 Guthrie?;. Walrond, 1883, 22 Ch. D. 573, per Fry, J., at p. 577. 7 Martin, 1904, 41 S. L. R. 588, per Lord Trayner. 8 Frewen v. Law Society, 1896, 2 Ch. 511 ; Honywood, 1902, 1 Ch. 347. 9 For position of an annuity, see s. 1002. 10 Revel v. Watkinson, 1748, 1 Ves. sen. 93 ; Caulfield v. Maguire, 1845, 2 J. & Lat. 141, per Lord St. Leonards ; Honywood, 1902, 1 Ch. 347. II Frewen, supra; Honywood, supra. 12 Honywood, supra. These charges against revenue are, of course, only burdens on the gift of the revenue and not a personal obligation of the life- renter as such. 13 Ayr v. Shaw, 1904, 12 S. L. T. No. 65. Cf. s. 755. (a) Wasting Investment 1014. Where the investment, though authorised, is what is known as a " wasting " investment it is presumed that the truster did not intend to give the whole income to the liferenter, and it requires to be shown that such was his clear intention. 1 The specific gift " must be made out, not by conjectures, but by declaration plain, or manifest intention." 2 In the absence of evidence of such an intention, the duty of the trustees is to convert 3 the " wasting " investment into a permanent one, under the rule 4 in Howe v. Lord Dartmouth, and thereafter 5 give the liferenter only the income of the converted security. 6 1 Thomas, 1891, 3 Ch. 482, per Kekewich, J., at p. 487 — case of redeemable American railway mortgages. See article in 22 Law Quarterly Review (1906), at p. 285. 2 Howe v. Dartmouth, 1802, 7 Ves. 137, per Lord Eldon, C, at p. 149 ; 6 R. R, at p. 103. Cf. Galbraith v. Minister of Bo'ness, 1893, 21 R. 30. 3 But cf. s. 1018. 4 It must be noticed that this rule applies to testamentary trusts only — not to trusts by inter vivos deed (Slade v. Chaine, 1908, 1 Ch. 522, per Cozens- Hardy, M.R., at p. 533). 6 See s. 1021. 6 Porter v. Baddeley, 1877, 5 Ch. D. 542. But see Nicholson, s. 1021, where Porter differed from. For rule in Howe, vide s. 566. 1015. Some of the indicia of the truster's intention are indma of i. . . n • intention. described in the following opinion : — " bometimes a testator specifies particulars and mentions leaseholds, money in the funds, debts owing, etc., or all his real and personal estate, wherever situate, whether in possession, reversion, etc. Words such as these have little effect on the question of conversion, because they are merely used to include everything, and do not refer to the manner in which it is to be enjoyed. Where there is 638 CHAEGES BETWEEN ALL PARTIES [chap. x. General a general gift, supposing it includes every item, concluding with the comprehensive words, ' and all other, etc., whereso- ever situate, and whether in possession, etc.,' the rule ought to be, and is, that if these words are used in a gift to a trustee, they are not used as intending an enjoyment in specie, Liferent of but only to comprise everything. But where they occur in particular estate. a gift to a tenant for life, then they may — not necessarily must — be used to point out the mode of enjoyment." 1 And again, where any property to which the testator may be en- titled at his death will satisfy the gift, "that, in my opinion," says Wigram, V.-C, " shows that the testator could not have had any particular object in his mind to which the direction (to pay income) was applicable, but that he referred to the income of his property generally." 2 1 Craig v. Wheeler, 1860, 29 L. J. Ch. 374, per Kindersley, V.-C, at p. 376. 2 Pickup v. Atkinson, 1846, 4 Hare, 624, at p. 631 ; and see s. 570. 1016. "In the leading case of Howe v. Earl of Dartmouth 1 it was contended, on behalf of the legatee of the income, that as the [Government Long] Annuity had not in fact been sold, she was entitled to the income which had accrued on these obliga- tions, so long as they were in fact held by the truster's repre- sentatives. But this argument was rejected by Lord Eldon, who held that the case was governed by the principle quod fieri debet infectum valet." 2 But " when a testator himself expressly directs what shall be done with the income accruing during the period the sale is postponed, the general rule 3 does not apply, and we are at liberty to give effect to the plainly expressed intention of the testator." 4 1 1802, 7 Ves. jun. 137. 2 Strain, 1893, 20 R. 1025, per Lord M'Laren, at pp. 1030, 1031. Cf. s. 989. 3 Cf. s. 1018, infra. i Chancellor, 1884, 26 Ch. D. 42, per Cotton, L.J., at p. 46. Gf. Norring- ton, s. 1013. Power to 1017. A power to alter investments is not held to be equivalent vary in- a vestments . ^ a direction to convert a wasting security. A gift by a truster to his wife of a life interest in all the funds which were standing in his name at the time of his death, is an express gift of a life interest in Long Annuities held by him. If afterwards he gives to his trustees the common and general authority to alter and vary the securities from time to time, he is held not to have " meant to authorise the trustees, at their pleasure, to diminish the gift he had before made to his wife. Such a power is given to chap, x.] CHAKGES BETWEEN" ALL PAETIES 639 trustees with a view to the security of the property, and not with a, view to vary or affect the relative rights of the legatees." x 1 Lord v. Godfrey, 1819, 4 Madd. 455, per Leach, V.-C, at pp. 458, 459, referred to by Stuart, V.-C, in Marshall v. Bremner, 1854, 2 Sm. & G. 237, at p. 240, as a case " where the principle [governing conversion] is very succinctly laid down." 1018. It is not the duty of the trustees to actually con- where notional vert wasting investments, in the case " where property is so conversion laid out as to be secure, and to produce a large annual income, but is not capable of immediate conversion without loss and damage to the estate. 1 There the rule is not to convert the pro- Rule, perty, but to set a value upon it, 2 and to give to the tenant for life £4 per cent. 3 on such value, and the residue of the income must then be invested, and the income of the investment paid to the tenant for life, but the corpus must be secured for the remainderman. 4 The difference between the natural income of the estate and that received under the operation of the rule in Howe v. Lord Dartmouth is to be treated as capital and the interest thereon paid to the liferenter. 5 1 Cf. Gibson v. Bott, 1802, 7 Ves. 89 ; Caldecott, 1842, 1 Y. & C. Oh. 312. 2 Cf. a. 1022, as to the manner of doing so. This is known as " notional conversion." See Kekewich, J., in Woods, infra, at p. 12. 3 This seems to have been reduced to 3 per cent. Woods, infra, following Lynch Blosse, 1899, W. N., at p. 27. Cf. s. 1108. 4 Meyer v. Simonsen, 1852, 5 De G. & Sm. 723, per Parker, V.-G, at p. 726, followed in Eaton, 1894, 10 T. L. K. 594. Cf. Wentworth, 1900, A. 0. 163, per Lord Macnaghten, at p. 171. 5 Woods, 1904, 2 Ch. 4 ; Wilson, 1907, 1 Ch. 394. coal mine. 1019. An example of a purely wasting investment is a coal opened r coal mil mine. In dealing with such an investment confusion 1 must be avoided between two distinct situations — that where the receipts are held to be capital — and that where the receipts are held to be income, but income of a wasting investment which is not all payable to the liferenter, unless specially given in specie by the truster. In the former case there is no wasting investment at all, only a realisation of capital ; there the receipts are added to capital, and interest allowed upon them. In the latter, the receipts are paid to the liferenter to the extent allowed by Brown v. Gellatly, 2 and the surplus goes to capital, i.e. the liferenter gets 4 per cent, interest upon the capitalised value of the mineral lease to the lessor, 3 and the balance of the yearly profits in excess of that interest is treated as accumulating capital bearing interest. An illustration of the former situation is a case where the truster 640 CHAEGES BETWEEN" ALL PAETIES [chap. x. directed his trustees to pay to his widow the free annual income of the residue of his estate. Part of his estate was two mineral leases, which had then five years to run. The trustees carried these on, and the widow claimed the profit as income. The Court there held that the profit on the mineral leases was not income but capital, and that the liferentrix i was only entitled to interest on that as capital. 5 In a later case the truster directed his trustees to pay to his widow, during her lifetime, "the whole free annual income and produce of the residue" of his estate. Part of his estate consisted of mineral leases of going collieries. Here the Court held that the liferentrix was entitled to the nett proceeds of. the collieries. 6 It is extremely difficult to see what distinction can be drawn between the two cases; still the later case does not profess to overrule the earlier. 7 If both cases are to stand, they form together an excellent illustration of Lord M'Laren's remark in the later one, that " decisions on the par- ticular provisions of a will are not in general of much value as precedents." 8 In the later the Court read into the terms of the will an intention of the truster not only to treat the proceeds of the mineral leases as income but to give the enjoyment of this wasting investment in specie to the liferentrix. 9 The attitude of the Court towards this question 10 is expressed by Chitty, J., in saying that " it is preferable that the mind should be saturated with the actual will under consideration, rather than be beguiled by the consideration of decisions on similar questions arising on other wills." u 1 An example of this confusion is seen in Miller, 1872, 13 Eq. 263, where Bacon, V.-C, refers to the argument that the liferenter " is entitled only to the interest on the profits, as if the trustees had sold the property." This alternative would be quite different, and more like the rule in Brown v. Gellatly, 1867, 2 Ch. App. 751. 2 Brown, supra, and see s. 1018. 3 " Interest on the capitalised rents " (Lord Stormonth-Darling in Baillie, 1898, 6 S. L. T. No. 41). See s. 1018, note 3, as to 3 per cent. rate. 4 Distinction between legal liferent and liferent under trust taken by Lord M'Laren in Miller, 1907, S. C. 833, at p. 837. 5 Ferguson, 1877, 4 R. 532. Gf. Profits of a law firm— Freer, 1897, 24 R. 437 ; Dykes, 1903, 6 F. 133, both followed in Hood, 1905, 13 S. L. T. No. 268 — a question of dividends on shares. Damages recovered by the trustees from a tenant of the truster for breach of a covenant to repair are capital — Pyke, 1912, 1 Ch. 770, distinguishing Lacon, 1911, 2 Ch. 17 ; and ss. 1018 and 1022. « Strain, 1893, 20 R. 1025. Gf. Belhaven, 1896, 23 R. 423 ; Mein, 1901, 3 F. 994. 7 Strain, supra, per Lord M'Laren, at p. 1031. 8 Strain, supra, at p. 1031. 9 Strain, supra, per Lord M'Laren, at p. 1031. For cases of rents and royalties of brickfield falling to liferenter, see North, 1909, 1 Ch. 625 ; Miller, 1872, 13 Bq. 263; and of "rents and profits" of stone quarry, also timber cut in connection therewith falling to liferenter, Nugent, 1900, 2 F. chap, x.] CHAEGES BETWEEN ALL PAETIES 641 (H. L.) 21 ; A. C. 83 ; coal and iron to liferenter, Dick v. Robertson, 1901, 3 F. 1021, followed in Naismith, 1909, S. C. 1380. 10 This question is at present in a most unsatisfactory state. The opinions in the House of Lords in the case of Campbell, s. 1020, are directly contra- dictory of the decision in the case of Ferguson, supra, yet the case of Ferguson is spoken of in Strain, supra, as being still good, and not overruled by either Campbell or Strain itself. It is curious to note that Lord Rutherf urd Clark, who dissented from the decision in Strain on the ground that Ferguson had settled the rule, and that the decision proposed in Strain was contradictory thereof, was the Lord Ordinary in Ferguson, whose judgment was overturned in the Inner House. In this conflict of later authority it is only necessary to cite the older cases for reference : "Waddell, 1812, 21st January, 16 F. Dec. 481 ; Guild, 1872, 10 M. 911 ; Wardlaw, 1875, 2 R. 368 ; and Wood v. Menzies, 1871, 9 M. 775, cited and commented on by L. P. Inglis in Ferguson, at pp. 536, 537. 11 Doane, 1893, 10 T. L. R. 100. 1020. In a Scots case in this connection the truster directed unopened , . ... coal mine. his trustees to pay to his widow " the whole annual profits and rents" of his estate, heritable or movable. Part of his estate was minerals, but these were not opened till after his death. In these circumstances the Court held the liferentrix was not intended by the truster, and was therefore not entitled, to get the proceeds of those minerals as income. 1 In another case the truster directed his trustees to pay to his widow " the free annual proceeds of my estate, and of minerals therein." This was held to be an express declaration of the truster's intention that the liferentrix should enjoy the income of the estate in specie, includ- ing therein not only minerals being worked at the date of his death, but also certain mines whose working had been abandoned by the truster as unprofitable. 2 This may be compared with an English case, where the truster gave all the seams of coal under his estate. Only two seams were known at the time of his death, but afterwards another seam on a lower level was discovered, and was opened by a new shaft. There the liferenter was held entitled to the proceeds of the new seam as well as those of the old seams. 3 In a later English case the truster gave, inter alia, all his lease- Lease of , coalmine. hold estates, and he held leases of collieries. "Here Bacon, V.-C, found indications of intention on the part of the truster that the general rule of conversion was not to be followed, and gave the whole profits of the working of the collieries to the liferenter. 4 The cases allocating proceeds of minerals between fiar and liferenter have been followed in dealing with royalties and profits of literary copyright. work. The proceeds of works published before death are held to be income and go to the liferenter; the proceeds of works pub- lished after death by the trustees are capitalised, and only the income of such capital value will go to the liferenter. 5 1 Campbell v. Wardlaw, 1883, 10 R, (H. L.) 65, followed in Ranken, 1908, S. C. 3. 41 642 CHAEGES BETWEEN ALL PAETIES [chap. x. 2 Of. Baillie, 1891, 19 R. 220, where proceeds of mines opened during truster's life, and Baillie, 1898, 6 S. L. T. No. 41 ; where proceeds also of mines opened after death of truster, given to liferenter. 3 Spencer v. Scurr, 1862, 31 Beav. 334. 4 Thursby, 1875, 19 Eq. 395. In this case Bacon, V.-C, gives an exhaustive review of the English case law on the question of wasting investments. 6 Davidson v. Ogilvie, 1910, S. 0. 294. Extent of 1021. In one English case, Lord Lyndhurst, C, decided that the liferenter's ° J co^nvOTsfoD 6 lif erent er was entitled, during the period between the death of the where no truster and the date of conversion implied by law, only to the direction. m * interest on the investment as converted, the calculation being made on the assumption of the conversion taking place at its legal date, i.e. in the absence of direction, a year from the truster's death. 1 In a case decided a few days later, Lord Langdale, M.E., decided in the other sense, holding that the liferenter was entitled to the actual interest earned during the period before the proper date of conversion. 2 The whole law on the subject was reviewed in a later case by Sir John Eomilly, M.E., and as the result of this exhaustive discussion, his Lordship confirmed the rule as laid down in the first case by Lord Lyndhurst. 3 Trust for Where there is a trust for sale, 4 and the sale has not been improperly 5 postponed, 6 it is a general principle that the rents and profits of the real estate until sale that have not been expressly 7 disposed of 8 otherwise are payable to the person who would have been entitled to the income of the proceeds of sale, Buie where and nothing more than these rents and profits. Eeal estate real estate. ■*■ differs from personal estate in this matter and does not follow the rule in Brown v. Gellatly, 9 which governs the interests of the liferenter of personal estate where there is a direction to eon- vert. By that rule 10 the liferenter of personal estate is not by implication entitled to the actual income derived from invest- ments of the truster not authorised to be held by his trustee before these investments are converted, but only to a sum representing interest at a fixed rate on their value, the surplus going to the fiar. 11 Where the security is a wasting one or a reversion, the interest is 4 per cent. 12 from the truster's death on the value at that date of the investment to be converted - where it is a permanent one, the interest is to be that receiv- able from the amount of Consols which could be bought with the sum realised by a conversion of the security, but without the accrued interest thereon, 13 at a year from the truster's death, power to Where there is no trust for conversion and a power to retain investments is given, the liferenter takes the actual income of chap, x.] CHAEGES BETWEEN ALL PAETIES 643 wasting investments so retained as well as of those that are per- manent. 14 Where a mixed fund, arising out of the proceeds of M i x ? d real as well as of personal estate, is given to a single person, the whole fund is not subject to the rule affecting personal estate. The liferenter of the fund is entitled to the rents and profits of the real estate till sold, 15 unless this application of the rule affecting real estate results in giving the beneficial interest in the real estate to a different person from that taking the beneficial interest in the personal estate under the rule affecting it. 16 1 Dimes v. Scott, 1827, 4 Russ. 195. Cf. Wood, s. 1018, at p. 12. 2 Douglas v. Congreve, 1836, 1 Keen, 410. 3 Morgan, 1851, 14 Beav. 72, at p. 89 et seq. Cf Taylor v. Clark, 1841, 1 Hare, 161, where the older cases are discussed by Shadwell, V.-C, and the difference between the position of the legatee of a residuary liferent and other legatees is referred to at p. 175. 4 Cf. Nicholson, infra, for case where power to retain. 6 Postponement may be proper though there is no express power to postpone. See Hope, infra, at p. 367. 6 Cf. s. 575 for proper date of conversion. 7 Hope v. D'Hedouville, 1893, 2 Ch. 361, at pp. 367, 368. 8 Cf. Wentworth, 1900, A. C. 163, at p. 171, referring to Brown v. Gellatly, as explained in Oliver, infra, at p. 78. 9 1867, 2 Ch. App. 751 ; Oliver, 1908, 2 Ch. 74, following Darnley, 1907, 1 Ch. 159, where there was reconsidered and approved Searle, 1900, 2 Ch. 829, which followed Casamajor v. Strode (see 1900, 2 Ch. p. 833, note 2, for report), and distinguished Yates, 1860, 28 Beav. 637. Cf. Pyke, 1912, 1 Ch. 770. 10 In the case of Chaytor, 1905, 1 Ch. 233, the gift was expressly limited to the proceeds of conversion, and the application of the rule was unnecessary ; see p. 240. 11 Cf. Woods, s. 1018. 12 But see s. 1018. The 4 per cent, is to be paid on the aggregate value of all the investments. Should this prove greater than the actual income, the overpayment is to be debited to subsequent income in favour of the fiar s- * J ° cretionary the trustee with the capital uninvested and interest, " because ? rust t to there never was any right in the cestui que trust to compel the purchase" of a particular investment. The trustee is not bound to make good the loss of profit that would have accrued on any particular investment, unless there are special directions to so invest which he has not implemented. 1 Where the trustee has changed a proper investment into where investment an improper one, the beneficiary has the option of charging ™ r ^5 perIy the trustee with the proceeds of the sale of the proper invest- ment, with interest, 2 or of making him replace that invest- ment. 3 Thus where the trustee changed a fund out of Consols into an improper mortgage which failed, he was held to be liable to replace the original investment, though Consols had risen in the interval. It was argued for the trustee here that he was only liable to account for the proceeds of the sale of the proper investment with interest, as that fund was properly in his hand, and all that the beneficiary could claim was interest thereon during the improper investment. As, however, there was a specific investment which could be made good, the trustee was held to be in breach of trust in having disturbed it, though he had a power of varying investments. "If the investment which they contemplated making, and actually did make, was an investment which was of itself a breach of trust, then the sale in order to make that investment was a breach of trust." 4 1 Robinson, 1851, 1 De G. M. & G. 247, at p. 258. The rule laid down by Lord Langdale, M.R., 1848, 11 Beav. 371, at p. 376, that the cestui que trust had an option in such a case, is here discussed and rejected. In England, if there is no express trust for investment, there is at common law an implied trust for investment in Consols only. Thus the beneficiary would have his option to claim the profit in such a case. In Scotland it is different. Consols and loans on heritable security are both open to the trustee as investments at common law where there is no express trust for investment, and therefore in such a case this option does not exist for the beneficiary in a Scots trust. Statutory investment powers now put the beneficiary in an English trust in the same position. 2 See s. 1108 for rate. s Phillipson v. Gatty, 1848, 7 Hare, 516. 4 Massingberd, 1889, 60 L. T. 620, per Kay, J. ; affd. 1890, 63 L. T. 296. 696 CHAKGES BETWEEN ALL PAETIES [chap. x. autSU° r 1086, The liabilit y of tne trustee to repair a breach of a trust investment improperly made. for investment varies according as the investment made is alto- gether ultra vires of the trustee, or is a good investment improperly executed. 1 In the former case the right of the beneficiary is either to take the investment, or to reject it and call upon the trustee to replace the trust fund, he having a right to demand an assignation to the investment as a condition of making good the trust fund. In the latter case the beneficiary has an unconditional right to have the investment realised, and to charge the trustee with the loss to the estate. 2 The point is illustrated by a case where new trustees had a mortgage transferred to them from a retiring trustee. The mortgage proved unproductive, and on realisation a loss was incurred. The old trustee, on being called upon to make good this loss, pleaded that he had no notice of the sale. The Court held that he was not entitled to any notice, as the trust investment was a proper one, though badly executed, and fell under the second class above, where there was no right to call for an assignation. 3 " It is urged," says Fry, L.J., " that an offer of restitution of the property to the trustee who lias improperly invested upon it is a sine qua non, if it be sought to make him liable for the investment. 4 I think that is not so. There is no case to show that where trust money is improvidently invested on an insufficient security of an authorised description, the trustee cannot be made liable unless an option is given him of taking to the security. In some cases it may be right to make him pay at once the whole sum improperly invested, and let him take the benefit of the security." 6 The latter ease was exemplified where a curator bonis was charged with the capital, and trust interest thereon, of an improper investment, and was held to be entitled to take credit for the interest 'actually paid on the improper investment, and to receive an assignation of the investment at his own expense. 6 1 Of. distinction between unauthorised investments and improper invest- ments, Hotham, 1902, 2 Ch. 575, at p. 578. 2 Salmon, 1889, 42 Ch. D. 351, per Cotton, L. J., at pp. 368, 369. Of. Ritchies, 1888, 15 R. 1086, at pp. 1092, 1093; Beveridge, 1908, S. C. 791 (an investment in " redeemable " stock, and so unauthorised). 3 In M'Lean v. Soady, 1888, 15 R. 966, the beneficiaries were "willing to give an assignation of the security." L. J.-C. Moncreiff, at p. 984. 4 Of. Head v. Gould, 1898, 2 Ch. 250, at p. 266. 6 Salmon, supra, at pp. 370, 371. 6 Crabbe v. Whyte, 1891, 18 R. 1065, per Lord Kyllachy (Ordinary). Liability 1087. Where an investment on the security of heritage limited in , J e heritable which is proper in itself is negligently executed, the measure of chap, x.] CHAEGES BETWEEN ALL PAETIES 697 liability of the trustees is to make good to the trust estate the difference between the sum actually advanced upon the mortgaged property and the largest sum which might have properly been advanced by the trustees on the security thereof. 1 1 Trusts Act, 1891 (54 & 55 Vict. c. 44, s. 5 (1)) ; ef. a. 666. See also Trustee Act, 1893 (56 & 57 Vict. c. 53, s. 9)— practically re-enacting Trustee Act, 1 888 (5 1 & 5-2 Vict. c. 59, s. 5), from which the Scots Act is copied — and Somerset, 1894, 1 Ch. 231, per Kekewich, J., at pp. 257, 258. This was not appealed against. Waite v. Parkinson, 1901, 85 L. T. 456 ; Dive, 1909, 1 Ch. 328, at p. 342. 1088. An example of an unauthorised investment is to be found in a case where trustees built a villa on part of a freehold belonging to the trust, in the belief that they could thereby improve the value of the rest. They had, however, no authority for doing so, and they were ordered to take the villa to themselves, and account to the trust estate for the amount thereof expended upon the villa and for the value of the site. 1 1 Vyse v. Foster, 1874, 7 E. and I. App. 318. 1089. The option in the case of an unauthorised investment 1 No option r to trustee. is limited to the beneficiary only. "The trustee who made the investment with trust money, and for the purposes of the trust, cannot arbitrarily say that he will claim the investment as his own, and be a debtor personally to his cestui que trust for the breach of trust he has committed'." 2 2 Pinkett v. Wright, 1842, 2 Hare, 120, per Wigram, V.-O., at p. 127. 1090. " Wherever a trustee, or one standing in the relation of Liawmy^or a trustee, violates his duty, and deals with the trust estate for his ™&bjr own behoof, 1 the rule is, that he shall account to the cestui que trust for all the gain which he has made. Thus if trust money is laid out in buying and selling land, and a profit made by the trans- action, that shall go, not to the trustee who has so applied the money, but to the cestui que trust whose money has been thus applied." 2 » DocterTsomes, 1834, 2 My. & K. 655, per Lord Brougham, C, at p. 664. Of s 1092 ; vide, for statement of rule and principle on which it is founded, Robinson 1851, 1 De G. M. & G. 247, per Lord Cranworth, L.J., at pp. 256, 257 ; Bag'nall, 1901, 1 I. R. 255. Cf. s. 439. 1091. Where the trustee uses 1 trust money for his own pur- Tjmtee^ poses, he must account to the beneficiary, at the option of the ***»■ latter, for all profit 2 actually made by him, or return of the capital with interest at 5 per cent. 3 "This is a doctrine well established 698 CHABGES BETWEEN ALL PAETIES [chap. x. in the law of England. The rule is, that whenever a trustee, or one standing in the relation of a trustee, violates his duty, and deals with the trust estate for his own behoof (which the law holds to be a breach of trust, even when there is no specific direction as to the investment of the trust fund), he shall, in the election of the cestuis que trust, either account for all the gain which he has made, or be charged with interest at 5 per cent, or 4 per cent, according to circumstances — 5 per cent, being the lowest rate when the funds have been embarked in trade, the law presuming that every busi- ness yields a profit to that amount." 4 Thus where trustees com- mitted a breach of trust by allowing the truster's, funds to remain in a banking business carried on by them, one of the trustees who died soon after the truster was held not to be responsible for that breach, and his estate was charged with the ordinary trust rate, viz., 4 per cent, simple interest in accounting for the trust funds, while the other trustees were charged 5 per cent, with annual rests, they not having made a profit out of the business. 5 In England a trustee who deals with the trust property for his own benefit is not chargeable with interest upon profits and rents for which he has to account, but where he is in actual possession of the trust estate, and not receiving a rent, he is chargeable with an occupation rent. 6 1 The trustee is not liable for interest on money he has not used, though he may be liable to account for it (Jones, 1897, 2 Ch. 190, per Kekewieh, J., at p. 200). 2 Nett profit. Vide Norrington, 1879, 13 Ch. D. 654, at p. 662, as to deduc- tions from gross profit. Gf. West Lothian v. Mair, 1892, 20 R. 64, at p. 70, per Lord Young, dealing with leading case of York Buildings v. Mackenzie, 1795, 3 Pat. App. 378. See s. 1081. 3 Gf. a. 1078. Where no personal use is made of trust money by the trustee, he is only liable in trust interest. 4 Cochrane v. Black, 1855, 17 D. 321, per Lord Wood, at p. 331 (quoted by Lord Cowan in Douglas, 1864, 2 M. 1379, at p. 1386) ; vide also s. 1121. 5 Penny v. Avison, 1856, 3 Jur. (N. S.) 62, per Wood, V.-C. Gf. Duncan, in s. 1072. 6 Silkstone v. Edey, 1900, 1 Ch. 167. This rule is held to be settled by practice in England as applying both to the trustee and to a purchaser with notice from him ; but Stirling, J., in so applying it, seems to look with favour on the proposal to draw a distinction between their positions and to charge the trustee with interest on the ground of his breach of his fiduciary duty. This view seems to be nearer to the complete restitution required from the wrongdoer than the English practice. Cf. Mills v. Brown, 1901, 3 P. 1012, where interest not charged, as circumstances showed an honest mistake as to powers. Trustee 1092. The rule has not always been applied where the mixing truattaids trust funds have been unmixed with those of the trustee. "Where, having engaged in some trade himself," says Lord Brougham, C, " the trustee had invested the trust money in that trade along with his own, there was so much difficulty in severing with own. chap, x.] CHAKGES BETWEEN ALL PAETIES 699 the profits which might be supposed to come from the money misapplied, from those which came from the rest of the capital embarked, that it was deemed more convenient to take another course, and, instead of endeavouring to ascertain what profit had been really made, to fix upon certain rates of interest as the supposed measure or representative of the profits, and assign that to the trust estate. This principle is undoubtedly attended with one advantage : it avoids the necessity of an investigation, of more or less nicety in each individual case, and it thus attains one of the important benefits resulting from all general rules. . . . The principal objection which I have to the rule (formerly applied) is founded upon its tendency to cripple the just power of this Court in by far the most wholesome and indeed necessary exercise of its functions, and the encouragement thus held out to fraud and breach of trust. Surely the supposed difficulty of ascertaining the real gain made by the misapplication is as nothing compared with the mischiefs likely to arise from admitting this rule, or rather this exception to one of the most general rules of equitable jurisdiction. . . . Should in any case a serious difficulty arise in tracing and apportioning the profits, this may be a reason for preferring a fixed rate of interest in that case." x 1 Docker v. Somes, 1834, 2 My. & K. 655, at pp. 665 et seq. Cf. s. 1095. 1093. This view has now been expressly adopted by the Scots Court : — " "What has thus been laid down by Lord Brougham x will be found," says Lord Wood, " to be stated to be the law by all the writers on the subject. Any attempt, indeed, to represent the case of Docker as proceeding on a new principle, or adopting views which had not been previously fully acknowledged as the law, must be sufficiently answered by simply referring to what fell from Lord Eldon, when remitting the case of Montgomerie 2 to this Court in 1822. His Lordship said : — ' In England there could be no difficulty. There a trustee can make no profit of the trust money, and if he offered to pay a certain rate of interest the cestui que trust might say: ISTo, you must account to me for all the profits you have made off my money ; and I have a right to know from you what profit you have already made off it, and if you have 10 per cent. I am entitled to it.' " 3 i Vide s. 1092. 2 Montgomerie v. Wauchope, 1816, 4 Dow, 109, at p. 131. s Cochrane v. Black, 1855, 17 D. 321, at pp. 331, 332. Vide also Laird, 1855, 17 D 984 (First Division). Cf. Lord Hatherley, in Edinburgh v. M'Laren, 1881 '8 K. (H. L.) 140, at p. 150. 700 CHAEGES BETWEEN" ALL PAETIES [chap. x. Trustee 1094. Where trust funds have been immixed with the trustee's entitled working personal funds by being lodged in the same bank account, the SS trustee has been held liable in the highest legal rate of interest. 1 In all such cases, however, where a trustee is charged with interest for retaining in his hands trust funds, an exception must be made of the amount reasonably retained in hand by the trustee for the purpose of the execution of the trust. Thus where the subject of the trust was a going farm, the trustee was held to be entitled to retain £100, free of interest, as a working balance. 2 In an Irish case Lord Chancellor Hart says : — " We are not to look so closely into the dates of a running account to calculate interest upon it, as to deter respectable men from undertaking the office of executor ; and, on the other hand, we are not loosely to permit any man, however respectable, to retain the money of others in his hands without making it productive." 3 For instance : — " Where an executor retaining a balance was at the same time liable to outstanding demands which, though not called for, it was un- certain when they might be made, the balance in such a case may be called only an ostensible balance." 4 And, again, in a later English case, it is laid down that, where a trustee is charged with having retained balances on hand, he can "excuse or justify himself where he shows that the exigencies of the trust required that he should retain the money in question in his hands for the purpose of due administration of the estate." 6 1 Wellwood v. Boswell, 1856, 19 D. 187. The words " highest legal rate " in the judgment are wrong, and should read " rate of 4 per cent." ; vide Errata of volume, which makes the judgment agree with the interlocutor, which only- gives " in the circumstances of the case 4 per cent, with annual rests." This is followed in Malcolm, 1869, 8 M. 272. But cf. generally s. 1099. 2 Malcolm, supra. 3 Flanagan v. Nolan, 1828, 1 Moll. 84. 4 Flanagan, supra, p. 86. " Hulkes, 1886, 33 Oh. D. 552, per Chitty, J., at p. 558 ; cf. s. 1103. Profits 1095. A distinction is to be drawn between the case where the made by skiii. trustee uses trust funds in his business, or the like, and the case where the trustee, by his professional or industrial skill exer- cised upon the trust estate, greatly increases its value. Instances have been given of the case of " an apothecary buying drugs with £100 of trust money, and earning £1000 a year by selling them to his patients," and the case of " trust money laid out in purchas- ing a piece of steel or a skein of silk, and these being worked up into goods of the finest fabric, Birmingham trinkets or Brussels lace, where the work exceeds by 10,000 times the material in value." Lord Brougham, C, says of these cases :— " They are chap, x.] CHAEGES BETWEEN ALL PAETIES 701 cases, not of profits upon stock, but of skilful labour very highly paid ; and no reasonable person would ever dream of charging a trustee, whose skill thus bestowed had so enormously augmented the value of the capital, as if he had only obtained from it a profit, although the refinements of the civil law would certainly bear us out, even in charging all gains accruing upon those goods as in the nature of accretions belonging to the true owners of the chattels." 1 The following case is a curious example of the use of the argument in favour of the trustee's retaining the profits arising from his skill: — A person held a mixed estate, one-half in trust and one-half personally. As an individual he acquired a right over certain further property, combined this with the mixed estate, and thereupon sold the whole combined properties at a large profit. The proceeds he proposed to distribute accord- ing to the respective values of the mixed estate and of the last acquired property. After paying the price of the rights over the last acquired property, there was a balance of profit between that price and the share of the proceeds of sale allocated to that pro- perty. This the trustee claimed as personal profit, as it did not arise out of the trust property but out of the personal skill and judgment of the person who was trustee. It was held that the free proceeds of the whole transaction, after payment of the price of the rights over the acquired property, must be treated as part of the trust estate. The ratio of the decision was that, while there was no duty upon the trustee to have entered into the speculation of the slump transaction, yet, having done so, the profits made thereon must be accounted for to the trust. 2 » Docker v. Somes, 1834, 2 My. & K. 655, at p. 668. 2 Natal Bank v. Rood, 1910, A. C. 570, at pp. 584-586. 1096. "Where a professional man who is a trustee obtains Remote x professional profit 1 indirectly from the investment of the trust funds, as P roflts - where a solicitor-trustee, through advances of trust money on securities of his other clients, obtains other business from these clients, his profit on that other business cannot be claimed by the beneficiary. "No authority has been cited in support of a proposition so wide as this — that a solicitor ought to be charged with profits merely because he has lent out some por- tions of the testator's estate upon mortgage of property which has been used for building purposes, and thus by means of these building operations he has been employed as a solicitor, and has made some profits." 2 " The utmost the matter comes to is this : 702 CHAEGES BETWEEN" ALL PAETIES f chap. x. that he being a solicitor, the loans probably put him in the way of getting some business, and by this means conduced to his getting profits from that business. But that is not fairly the produce or profit of the trust estate, or a matter with which the cestuis que trust have anything to do." 3 The case quoted from? was cited in a later case* as an authority for the proposition that the trustee-solicitor was entitled to retain the fees paid him by the borrower in the loan transaction for the work done on behalf of the lender, the trust estate. Kay, J., there, 5 however, says that the earlier case 2 " showed plainly " that he could not retain such fees, 6 and that all it decided was that the beneficiary, in attempting to charge the solicitor-trustee with the profits made upon other business 7 with the client introduced by the loan trans- action, was extending the rule to charges " too remote and outside and beyond the mischief the rule was intended and designed to prevent." 8 The allowance to the partner of the solicitor-trustee of certain steward's fees from copyholds must be regarded as a specialty limited to the circumstances of the case. 4 1 Cf. s. 442. 2 Whitney v. Smith, 1869, 4 Oh. App. 513, per Selwyn, L.J., at p. 519. 3 Whitney, supra, per Giffard, L. J., at p. 521. 1 Corsellis, 1887, 34 Ch. D. 675. 6 Corsellis, 1886, 33 Ch. D. 160, at p. 170. Cf. Sleigh, s. 440. 7 Cf. s. 1178. 8 Kay, J., was affirmed upon this point in the Appeal Court. The inquiry ordered by the Court in Whitney, supra, was so framed as to limit their decision as stated by Kay, J. See also the plaintiffs argument, 4 Ch. App., at p. 517. The reports in both Whitney and Corsellis are apt to be misread, unless the whole report in each case is carefully perused. Resale 1097. Where a trustee has interfered, though indirectly, at a trust h ° f sa ^ e °^ tne trus * estate, and, owing to his purchase being voided, has made a second sale necessary, if the sum then realised is less than what had been validly bid at the first sale, the trustee is liable in damages for the difference between the sum so offered at the first sale and the sum realised at the second. 1 Where the estate has been exposed in lots, and bought by the trustee, and the sale has been annulled by the beneficiary, the trustee is chargeable with the loss on all lots resold at a loss, without getting credit for any gain on the resale of others. 2 1 Whyte v. Burt, 1851, 13 D. 679. Cf Norrington, 1879, 13 Ch. D. 654, at p. 662, for position where a trustee's purchase of a business forming part of the trust estate was set aside. 2 Lewis, 1819, 1 Gl. & J. 69. chap, x.] CHARGES BETWEEN ALL PAETIES 703 (3) Breach of Trust in Paying Over the Estate 1098. Where the trust estate turns out to be insolvent, an insolvent estate. unpaid legatee can only claim that, in an accounting with him, the trustee, who has improperly paid another legatee, shall bring into the account the money paid to the other legatee so that the fund in account may be divided rateably between them, the trustee being liable for no more than the share of the unpaid legatee in that fund. The unpaid legatee is not permitted to set up the fact that the trustee has paid another legatee in full as a personal bar against the trustee who is pleading the defence of insufficient assets to an action for the full legacy. 1 Where the trustee is liable for trust property paid in error to the wrong person, the trustee is chargeable by the proper recipient with interest on his share while unpaid. 2 1 Schneider, 1906, 22 T. L. R. 223, at p. 226 ; Postlethwaite v. Mounsey, 1842, 6 Hare, 33, at p. 35. 2 Hulkes, 1886, 33 Ch. D. 552, per Chitty, J. (4 per cent, given), dissenting from Saltmarsh v. Barrett, 1862, 31 Beav. 349, and following Att.-Gen. v. Kohler, 1861, 9 H. L. Cas. 654, and Att.-Gen. v. Alford, s. 1099. Of. Heritable Association v. Miller, 1893, 20 R. 675, where 3 per cent, given. 1099. In dealing with this question of interest, which he calls interest. "a very unintelligible question," Lord Oranworth, C, says: — "What the Court ought to do, I think, is to charge him only with the interest which he has received, or which it is justly entitled to say he ought to have received, or which it is so fairly to be presumed that he did receive, that he is estopped from saying that he did not receive it. I do not think there is any other intelligible ground for charging an executor with more interest than he has made, than one of those I have mentioned. Misconduct does not seem to me to warrant the conclusion that Misconduct. the executor did in point of fact receive, or is estopped from saying that he did not receive, the interest, or that he is to be charged with anything he did not receive, if it is not misconduct contributing to that particular result." 1 i Att -Gen. v. Alford, 1855, 4 De G. M. & G. 843, at pp. 851, 852. Cf. Pollexfen v. Stewart, 1841, 3 D. 1215, per Lord Medwyn, at p. 1230, and Lord Moncreiff, at pp. 1233, 1234. 1100. The principle here laid down has been expressly approved as a sound principle in a later case, where money of a principal was employed by an agent, who was a solicitor, in his business ; he was held only chargeable with 5 per cent, simple compound interest, for "there is nothing like compound interest obtained 704 CHAKGES BETWEEN ALL PAKTIES [chap. x. upon the money employed by a solicitor." 1 Again, where the trustee allowed trust money to remain uninvested in the hands of her solicitor, as the trustee could not be said or presumed to have herself received any interest, the case was held to fall under the rule that charges the trustee with the interest he ought to have received, and that was held to be compound interest at 3 per cent., with half-yearly rests. This is what would have come about had the interest been put into Consols and accumulated with interest. 2 1 Burdick v. Garrick, 1870, 5 Ch. App. 233, per Lord Hatherley, C, at pp. 241, 242. 2 Gilroy v. Stephen, 1882, 30 W. R. 745, per Fry, J., approving and quoting Att.-Gen. v. Alford, s. 1099. Of. Heritable Association v. Miller, 1893, 20 R. 675, at p. 703, where held 3 per cent, average trust interest, and that rate charged on sum improperly paid away. Presumed 1101. The rule of law is that general legacies are payable d&t/B of payment of at the end of a year from the truster's death, 1 and interest legacies. General is payable upon them from that time. Actual payment of the legacies may be impracticable at that time, yet, in legal con- templation, the right to payment exists and carries with it the interest. right to interest until actual payment. 2 "Where there is delay in paying a legacy owing to the conduct of the legatee, the legatee cannot claim any higher rate of interest on the unpaid legacy than has been actually received by the trustees. It is only where the trustees are in mora in paying the legacy that the legatee is entitled to 5 per cent. 3 Thus where a legatee delayed making an election competent to her, the trustees were held to be only liable to pay the actual interest received on the legacy until the date of the election, and 5 per cent, thereafter till payment. 4 The above rule as to the date of payment only fixes it where there is no date fixed by the truster. If there is a date fixed by him for payment, interest on the legacy will run from that date till actual payment. The fixing of a date by the truster is often a question of an inference from the language of his deed, but the general rule will not be lightly held to be altered, and some pointed indication of the truster's intention to fix another date is required in order to avoid the rule. 5 special The rule as to general legacies depends upon an assumption legacies. . c that in practice a year and no more is required to get in and convert the truster's estate and have it ready to pay general legacies. 6 This does not apply to specific legacies, which are immediately vested in the trustees, and upon the truster's death are then available for transfer to the legatees. Where, in the chap, x.] CHAEGES BETWEEN ALL PAETIES 705 proper administration of the estate, they are not transferred till later, they bear interest from the date of the truster's death. 7 In so far as they can be extracted from the Scots decisions, English the two leading principles seem to be in accordance with those practice s , i T-i i • i /* t compared. governing the English cases: first, that interest on general legacies is only due from the time at which a legacy becomes payable; and, second, that a legacy is payable where there is no date fixed by the truster at the date when the trustee has in a proper course of administration realised enough free estate to meet the legacies. In applying this second principle, however, the Scots Court has looked to the actual date in each case at which the realisation should have taken place, and has thus involved itself in the difficult investigation of discovering in each case what that date is. 8 It was expressly to avoid the trouble and expense of such an investigation that the English Court adopted the rule of practice that fixes the date at the expiry of one year from the death of the truster. 9 The obvious convenience of this rule and its economy of judicial expenses are strong arguments in favour of its formal adoption in Scotland. 10 " A legacy payable at a future day carries interest only from General principle the time fixed for its payment. "Where no time for payment is stated- fixed the legacy is payable at, and therefore bears interest from, the end of a year after the testator's death, even though it be expressly made payable out of a particular fund which is not got in until after a longer interval." 11 The rule applies, where the " particular fund " is a reversion. 12 A legacy of a specific sum to be paid out of a reversionary fund is not a specific legacy, but is a "typical demonstrative legacy." 13 1 Cf. Cottrell, 1910, 1 Ch. 402, per Warrington, J., at p. 408. 2 Whiteley, 1909, 101 L. T. 508, per Cozens-Hardy, M.R., quoting Grant, M R , in Wood v. Penoyre, 1807, 13 Ves. 325, at p. 333, and Lord Cairns and Turner, LL.J., in Lord, 1867, 2 Ch. App. 782. 3 The only form of damages for mere delay in the payment of money is interest on the money (Roissard v. Scott, 1897, 24 R. 801). * Inglis v. Breen, 1891, 18 R. 487, commenting on and explaining Kirk- patrick v. Bedford (cited in Court of Session as Sharpe v. Kirkpatriek), 1878, 6 R. (H.L.) 4. Cf. Edmonson v. Copland, 1911, 2 Ch. 301, as to equity be- tween mortgagor and mortgagee as to interest on money at call. 5 Lord, supra, where date held to be fixed. Cf. circumstances in White, 1909 128' L. T. Jo. 150 ; death of liferenter of legacy immediately after truster, and legacy held then payable ; and similarly in Gyles, 1907, 1 1. R. 65, ■where liferenter died after year from truster's death ; Wood, supra, " when received " held not to alter rule ; Whiteley, supra, a direction against hasty realisation held not to alter rule ; Yates, 1907, 96 L. T. 758, rule applied. 6 Wood, supra. i Of. Curry, 1908, 53 Sol. J. 117 ; but see West, 1909, 2 Ch. 180, which shows that the distinction in England may be founded on a technicality, viz. that on assent by the executors to the specific legacy, the legal title, and not merely the equitable title, passes to the legatee, and the executor is answerable at law where the defence of due administration is not available. 45 706 CHARGES BETWEEN ALL PARTIES [chap. x. 8 May v. Paul, 1900, 2 P. 657 ; see Lord Trayner, at p. 660. 9 " Constructive receipt (of funds by the trustee) is held equivalent to actual receipt for the purpose of the right to interest " (Wood, supra, at p. 335). 10 The actual position of the Scots law on this point is unsettled. In May, supra, the rubric follows the dictum of Lord Adam that "the law of Scotland has always been that where a testator gives a legacy to A. B. without specifying any particular term of payment, interest is due from the date of the testator's death" (p. 659). His Lordship follows Hutcheon v. Mannington, 1791, 1 Ves. jun. 365, as cited and approved in Kirkpatrick v. Bedford, 187b, 6 R. (H. L.) 4, per Lord Selborne, at p. 12. Now Lord Selborne says : — " I see no reason at all why the words of Lord Thurlow in Hutcheon should not be applicable to a trust of this sort under the will of a Scotch as well as an English testator," and he proceeds to quote the part of Lord Thurlow's opinion relevant to the case of Kirkpatrick. But the immediately preceding words are, " The legacies must have been computed with interest from a year after the death of the testator, if no other time was appointed " (pp. 366, 367). Hutcheon itself was not cited in May, and Lord Adam seems to have taken Lord Thurlow's opinion from the quotation by Lord Selborne in Kirkpatrick. In any case Lord Thurlow's definite statement of the rule and Lord Selborne's approval of his opinion as good Scots law seems to warrant the statement in the text. Gf. M'Innes v. MAllisters, 1827, 5 S. 801, where the express question (p. 805) whether the interest was due according to the "English rule" was answered in the affirmative ; Kirkpatrick, supra, where the Scots rule was assumed, solely on admission at the bar, to be different from the English rule, the decision turning on whether the wording of the deed in question took the case out of the rule, Paterson v. Danson, 1897, 5 S. L. T. No. 85 ; the " general rule," whatever it may be. seems to be incorrectly reported here ; Ewingi;. Mathieson, 1901, 9 S. L. T. No. 308 (reported also under date 1904, in 41 S. L. R. 594), where Lord Stormonth-Darling " admits the rule that where a legacy is conceived in general terms interest is due from the testator's death. " It is not easy to avoid the suspicion that the supposed difference of the rule in Scot- land from that in England has arisen from a confusion between the position of a legatee and that of a claimant for legitim, and that the supposed Scots rule is founded on the position of the latter (cf. s. 1102), a position which is foreign to the conceptions of the English law. It also does not appear as if the distinction were always clearly in view between delay in payment as the result of the circumstances of a due administration, and delay involving breach of duty on the part of the trustees — the former being a mere question of accounting between the particular legatee and the residuary beneficiary, while the latter is a personal claim against the trustee by the legatee for damages in the shape of interest. 11 Lord, 1867, 2 Ch. App. 782, per Lord Cairns, L. J., at p. 789, cited as stating authoritatively "a perfectly clear general principle" (Walford, 1912, 1 Ch. 219, per Cozens-Hardy, MR., at p. 225, and A. C. 658, per Lord Haldane, C, at p. 663). 12 Walford, supra, dealing with Earle v. Bellingham, 1857, 24 Beav. 448, as being misconstrued in Gyles, 1907, 1 I. R. 65. 13 Walford, supra, at p. 227, per Cozens-Hardy, M.R. See also Lord Haldane, C, in A. C, at pp. 662, 663, distinguishing general, special, and demonstrative legacies. interest on 1102. The rule applied to the payment of interest on a claim legal rights. of legitim is thus stated by Lord Rutherfurd Clark, delivering the judgment of the Court : — " Legitim is a debt due at the date of the father's decease, and it bears interest at 5 per cent, from that date till payment." 1 But where no claim has been made for legitim and the trustees of the parent's estate are therefore not in mora as debtors, they are only bound to account, upon a claim afterwards being made, for their proper administration of the estate, and to pay the interest they have thereby earned. 2 chap. x.J CHAEGES BETWEEN ALL PAETIES 707 1 Bishop, 1894, 21 R. 728, at p. 732, following expressly M'Murray, 1852, 14 D. 1048. In this case the interlocutor does not specify the rate of interest ; it merely says '' with legal interest." Gf. Gilchrist, 1889, 16 R. 1118, per Lord Fraser (Ordinary). In the Outer House decision of Mason v. Mitchell, 1895, 3 S. L. T. No. 2, Lord Low (Ordinary) found interest due on unpaid legitim at the rate of 4 per cent. His Lordship, however, said that he was only doing " substantial justice in the case before him " (unreported). 2 Ross, 1896, 23 R. 802, distinguishing Bishop and M'Murray, supra; Grant, 1898, 25 R. 948 ; M'Call, 1901, 3 F. 1065, per Lord Moncreiff, at p. 1071 ; Davidson «. Mackenzie, 1898, 6 S. L. T. No. 36. In Maben, 1901, 8 S. L. T. No. 390 (a case of jus relictm), 5 per cent, was given, as the estate had been used in trade. 1103. The point of time from which interest runs against a where interest trustee depends on whether the beneficiary has a claim to a runs from L "* breach certain definite sum which has been dealt with in breach of of trust - trust, or whether his claim depends upon the result of an accounting. 1 In the former case the interest runs from the date of the breach of trust. Thus Lindley, L.J., says : — " As regards interest, the Court almost invariably charges a trustee with interest on trust money misapplied by him from the time of its misapplication ; and although the Court has sometimes only given interest from the filing of the bill, yet this can only be properly done, if at all, under very special circumstances. A trustee who has honestly paid trust money to the wrong person is liable to refund it with interest at 4 per cent, from the time when the right person ought to have received it. 2 The trustee is treated as if he had the funds still in his hands." 3 In the case of & breach of trust for investment or for accumulation, interest runs against the trustee from the date of the breach. 4 o 1 The several principles upon which interest is payable in different cases are discussed at length by Lord Fraser in Blair v. Payne, 1884, 12 R. 104, and .see also Greenock Harbour v. Glasgow and South-Western, 1909, S. C. (H. L.) 49 and also at p. 1441 ; Somervell v. Edinburgh Assurance, 1911, S. C. 1069. Cf. s. 1104 as to the principle being reparation for a wrong done through breach of duty. 2 Cf. s. 1076. 3 Sharpe, 1892, 1 Ch. 154, at pp. 169, 170, referring to Hulkes, 1886, 33 Ch. D. 552 {vide p. 558), where " the law on this point was very care- fully investigated by Mr. Justice Chitty, following A. G. v. Kohler," 1861, 9 H. L. Cas. 655. Gf. s. 1094, note 5. * Barclay, 1899, 1 Ch. 674, following Knott v. Cottee, 1852, 16 Beav. 77— •compound interest given here. 1104. On the other hand, where there is a balance due by the And from i • p j.1 • jj result of trustee, the interest does not run on the items from their date, accounting. ■e.g., on arrears of income, but from the date of the balance being struck in an accounting. For " the claim for interest is not made on account of the arrears, but for the improper keeping back of a sum of money, from whatever source derived, which the executor or trustee ought to have paid over." If the beneficiary desires 708. CHAEGES BETWEEN ALL PAETIES [chap. x. he can have an accounting, and if he puts off taking the account the blame is his. " The mere omission to account will not make a person liable as if he had accounted ; and till the account was taken, there was no certain sum which the trustee was bound to pay." 1 1 Blogg v. Johnson, 1867, 2 Oh. App. 225, per Lord Chelmsford, C, at pp. 228-30, citing Holgate v. Haworth, 1853, 17 Beav. 259 ; Stafford v. Kddon, 1857, 23 Beav. 386 ; Att.-Gen. v. Alford, 1855, 4 De G. M. & G. 843. Cf. Hardie v. Graham, 1896, 3 S. L. T. No. 428. Penal 1105. The claim for interest lost by a fiar through breach of trust interest * ° on to fiar. differs from that of a mere liferenter, in that the former can and the latter cannot demand penal interest on funds not invested by the trustee. "I consider, 1 ' says Lord President Inglis, "the accountant did wrong in charging interest at 5 per cent. He has dealt with the question between the trustee and the liferenter as though he were fiar — I think without authority. Penal interest. is inflicted upon the trustee or agent in the case of a fiar, because of his risk in the loss of good security. In the case of the liferenter this does not apply nearly so strongly." J 1 Graham, 1870, 8 S. L. R. 107, at p. Ill, 1st col. Cf. Maben, 1901,. 8 S. L. T. No. 390—5 per cent, given on account of risk ; Ross, 1901, 9 S. L. T.. No. 286 — 3 per cent, as against deposit interest. (2) Bate of Interest Chargeable compound 1106. In the ordinary relation of creditor and debtor 1 simple interest. , r interest is the rule, 2 but compound interest is charged in the case of a fiduciary relation like that of trustee and beneficiary. The trustee has a duty to invest the trust funds and make them profitable, and he is also bound to invest the interest in like manner if it remains in his hands. Hence a pre- sumption of fact that he has received and is therefore liable in compound interest. 8 But the trustee is not liable for compound interest if he proves that he has not received such interest and that there is no misconduct on his part contributing to that result. 4 In an English case, however,. Eomilly, M.E., complains that the principle on which compound interest is charged "is not clearly defined, nor are the decided cases by any means free from obscurity or contradiction." In some- cases the trustee is chargeable with compound interest " because the trust under which he acted in distinct terms required him to accumulate the fund at compound interest " ; in other cases he is charged with compound interest " in the nature of a penalty for- his misconduct." 5 chap, x.] CHAEGES BETWEEN ALL PAETIES 709 1 Where interest on advances to beneficiaries falls to be paid, it is calcu- lated at simple and not compound interest (Matthew, 1905, 13 S. L. T. No. 225). 2 Vide Munro v. Murray, 1871, 9 S. L. R. 174, per Lord Kinloch. 3 Douglas v. Lindsay, 1867, 5 M. 827 ; 39 S. J. 464, per L. J.-O. Patton, at pp. 469, 470 ; c/. Emmet, 1881, 17 Ch. D. 142 ; Gilroy, s. 1100 ; Barclay, 1899, 1 Ch. 674 ; but vide Burdick, s. 1100. 4 Raphael v. Boehm, 1805, 11 Ves. 92, at p. 107 ; Att.-Gen. v. Alford, s. 1104, at pp. 851, 852 ; Rochefoucald v. Boustead, 1897, 1 Ch. 196, at p. 212. 5 Jones v. Foxall, 1852, 15 Beav. 388, at p. 393. Gf. s. 1111. 1107. The fall 1 in the rate of interest that has been experienced Legal _ . interest. for some time has led to considerable discussion as to the lowering of rates charged by the rules of the Court in trust accountings. For long the legal rate of interest has remained at 5 per cent., but in recent cases, both in England and in Scotland, opinions have been expressed that such a rate is in present circumstances too high, though no definite judgment changing the rate has yet been pronounced. " The old rule," says Lord Eutherfurd Clark, " cer- tainly was 5 per cent., and I do not think it has yet been altered. It may, however, be worthy of reconsideration, looking to the fact that investments now earn so much less than they used to do." And in the same case Lord Young expressed the opinion that 4 per cent, was enough. 2 In a later case the Court held 5 per cent, to be too high a rate for mercantile interest. 3 Again, in an English case, Kay, J., says: — "Interest at 5 per cent, has been allowed, because that was considered to be the mercantile rate of interest. But it is very hard to say now that that is the mercantile rate of interest when from real bond fide good security you cannot get more than 3 per cent. I think, therefore, 4 per cent, is quite sufficient." 4 Kekewich, J., refused to change the old rate except with "some consensus of opinion." 5 In the appeal in this case, however, it was laid down that the Court are not bound to give 5 per cent., but will follow the current rate of interest at the time. 6 The necessity for the Court adapting its legal rate of interest to the varying commercial rate is discussed by Lord Loughborough, in a case more than a century old, in a manner curiously appropriate to the present circumstances. The opinion emphasises the consideration that the rate of mercantile interest fluctuates, and that the Court may yet have to follow, as it did in Lord Hardwicke's time, an increase in the mercantile price of money, instead of its present decrease. It is worth noting that it was Lord Loughborough's opinion that "it is certainly better not to let the legal rate fluctuate to any considerable degree." 7 710 CHAEGES BETWEEN ALL PAETIES [chap. x. 1 But see Cozens-Hardy, M.R., in Davy, 1908, 1 Ch. 61, at p. 64, as to higher rate. 2 Dunn v. Anderston, 1894, 21 K. 880, at p. 882 ; 5 per cent, was given here. Cf. Nicholson, 1895, W. N. 106. 3 Waverley, 1895, 3 S. L. T. No. 247. * Metropolitan Coal, 1890, 62 L. T. 30, at p. 33. Cf. Morley, s. 1111. s London, Chatham, and Dover, 1892, 1 Ch. 120, at p. 130. 6 1892, 1 Ch. 120 ; vide interlocutory remarks, and see 1893, A. C. 429. Cf. Phillips v. Homfray, 1892, 1 Ch. 465 ; Dracup, 1894, 1 Ch. 59. Vide also Ross, 1896, 23 R. 802. 7 Lewis v. Freke, 1794, 2 Ves. jun. 507, at p. 512 ; 2 R. R. 301, at pp. 306, 307. Trust 1108. The considerations that apply to the question of reduc- tion of the legal rate of interest apply to the question of the reduction of the trust rate of interest. In a leading Scots case t in 1893 the Court unanimously declared "the average rate of trust interest " to be 3 per cent. 1 In a case shortly before that, the interest to be earned by trust funds was put down at 3£ per cent., but the question of the rate of interest does not seem, from the report, to have been raised in argument at the bar at all, and the subsequent interlocutor puts it at 4 per cent., without explaining the change. 2 1 Heritable Association v. Miller, 1893, 20 R. 675, at p. 703. Cf. Taylor v. Mather, 1873, 10 S. L. R. 461. Vide ss. 1100 and 1101. 2 Baird v. Duncanson, 1892, 19 R. 1045, at p. 1049. Cf. Hardie v. Fulton, 1895, 2 S. L. T. No. 520 ; Melville v. Noble, 1896, 24 R. 243—3 per cent, rate given. Chancery 1109. A new rule was introduced by Kekewich, J., into the practice. English Chancery practice, lowering the rate of trust interest to 3 per cent., as in Scotland. " It does seem to me," says his Lord- ship, " to be bordering on an absurdity for judges of the Chancery Division to say that interest is to be calculated at 4 per cent, when not only trustees, but ordinary prudent investors deter- mined not to speculate, cannot obtain 3 per cent." 1 It was argued in this case that as the property should have been con- verted as far back as 1854, and during much of that time 4 per cent, could be got on trust security, 4 per cent, should be given against the trustees. " The answer to the objection raised on that head," continues his Lordship, " is that this is not a question of investment, but the application of an arbitrary rule adopted by the Court with reference to the rate of interest, and it is impossible to vary the rate according to circumstances; it is necessary to take some one rate which is fair to tenant for life and remainder- man, having regard to the commercial rate of interest current among investors. If I acted on the principle suggested, I should have to take 4 per cent, for part of the time, and 3 per cent, for chap, x.] CHAEGES BETWEEN ALL PAETIES 711 the last few years. That is not in accordance with the rule, which is arbitrary, and fixes the rate of interest in the manner I have mentioned. The rate may in one case bear hardly on the tenant for life, and in another on the remainderman. Eules of this kind cannot be made to fit all cases with equal fairness." 2 1 Goodenough, infra, at p. 540 ; Whiteford, 1903, 1 Ch. 889, at p. 896 ; but vide opinion of North, J., as reported in article in 40 Sol. J., pp. 233, 234. 2 Goodenough, 1895, 2 Ch. 537, at p. 541 ; and vide also same judge in Cleveland, 1895, 2 Ch. 542. Cf. article on "Interest" in Juridical Review, vol. vii. p. 119. 1110. The rate of interest due to the trustee in the accounting, interest where he happens to be in advance to the trust estate, has tmstee. been but little noticed in the reported decisions. The only refer- ence to such a charge lays it down that the trustee is entitled to bank interest on his advances, as shown on an annual balance. 1 The altered circumstances of bank interest would necessitate the application of a different rule now. In taking the accounts of a trustee of coffee plantations in Ceylon the English Court of Appeal held that the trustee " must be allowed all his advances and outlays, with colonial interest." 2 1 Wellwood v. Boswell, 1856, 19 D. 187. In England, in a similar case, 4 per cent, was allowed the trustee (Finch v. Pescott, 1874, 17 Eq. 554). Cf. s. 1152. 2 Rochefoucauld v. Boustead, 1897, 1 Ch. 196, at p. 212. 1111. The result of the principles underlying the somewhat summary of * r J ° position of varying decisions on this question of interest seems to be that interest - there are three classes of claims against the trustee. First, where he has made personal use of the trust funds. Here the beneficiary can claim the profits made by the trustee, if any, or the return of his capital with interest at 5 per cent. 1 This rate of interest is penal, and is not calculated with any relation to an actual rate. It is a presumption of law that the trustee has received this rate. Second, where the beneficiary is merely deprived of the personal use of his money by breach of trust on the part of the trustee. Here 5 per cent, was formerly given, but latterly the tendency is to reduce it to 4 per cent, or less, as representing the interest to be obtained in investments by a private individual. Third, where the trustee has in breach of trust failed to recover trust funds or to invest them when recovered. 2 Here the beneficiary can only claim the trust rate of interest, now 3 per cent., as this is all he has lost by the breach of trust. In all cases the interest chargeable is compound. 3 The case of a trustee being compound . interest. charged as a penalty 5 per cent, for keeping trust funds uninvested, 712 CHAEGES BETWEEN ALL PARTIES [chap. x. though he has not made any use of them personally, is somewhat Advances, illogical, and appears to have heen departed from. 4 Interest on advances to beneficiaries is still taken at 4 per cent, in England in marshalling the assets. This is done on the analogy of an interest Legacies, payable on legacies which is fixed by statute at 4 per cent. 5 In Legitim. Scotland the rate, where there is no improper delay in pay- ment, is on legacies 3 per cent, 6 and on legitim the rate conversion, earned by the trust administration. 7 In an accounting between liferenter and fiar in the case of wasting or reversionary estate the rate is now 3 per cent., not 4 per cent., as the calcula- tion required to adjust the situation assumes an imaginary trust investment. 8 In a Privy Council case 9 the Judicial Committee did not think it expedient to lay down any fixed rule as to the rate of interest, but gave the rate that would have been got if the estate had been converted, this rate to be arrived at by the Master in Equity. The discussion of this question may very appropriately be closed by the remark of Lord Eomilly after reviewing the cases dealing with the question of interest : — " In all these cases, how- ever, a large discretion seems to have been exercised by the Court with regard to the facts and circumstances attending each par- ticular case ; and it is to the exercise of this discretion that the obscurity in discovering the principle in some of the reported cases is to be attributed." 10 1 Christie v. Hardie, 1899, 1 F. Y03 ; Davis, 1902, 2 Ch. 314. In M'Ardle v. Gaughran, 1903, 1 I. R. 106, 4 per cent, is given, but evidently this is the result of splitting the difference between 3 per cent, and 5 per cent., the two rates contended for, and not on any principle. But cf. Rochefoucauld, s. 1110. 2 Cf. Morley, 1895, 2 Ch. 738, per Kekewich, J., at p. 742 ; and see Lees v. Dun, 1912, S. C.*50 ; affd. in House of Lords, sub. nom. Schulze v. Tod, 1913, 1 S. L. T. No. 76. 3 But cf. Romilly, M.R., in Jones v. Foxall, 1852, 15 Beav. 388, at p. 392. 4 Of. a. 1099. 6 Davy, 1908, 1 Ch. 61. 6 Campbell, 1898, 25 R. 687. Cf. s. 1101. 7 M'Call, 1901, 3 F. 1065 (3 per cent, suggested by Lord Moncreiff at p. 1071). Cf. a. 1102. 8 Davy, supra; Woods, 1904, 2 Ch. 4 ; Whiteford, 1903, 1 Ch. 889, at p. 896. 9 Wentworth, 1900, A. C. 163, at pp. 171, 172. 10 Jones v. Foxall, 1852, 15 Beav. 388, at p. 39 3. (3) Defences to Claims by Beneficiary (1) Prescription Negative 1112. Lapse of time has an important influence on the rights prescrip- ° tion. f beneficiaries against trustees. It acts in two distinct ways which are apt to be confounded, viz. prescription and homologa- tion. 1 By ancient statutes 2 it is enacted that all creditors by chap.x] CHAEGES BETWEEN" ALL PAETIES 713 obligation shall follow forth their right and take document upon it within forty years, otherwise that the right shall prescribe. This is known as the long negative prescription, and is defined by Erskine as "the loss or forfeiture of a right by the proprietor's neglecting to exercise or prosecute it during that whole period which the law hath declared to infer the loss of it." 3 The scope of these statutes was originally strictly interpreted, but was ex- pressly extended to trust obligations by a case towards the end of the eighteenth century. There the defence that " an action to implement a trust may be cut off by the negative prescription as much as any other" was expressly sustained by the Court. 4 Where trustees had administered a public trust for the prescrip- Public tive period without challenge, any deficiency in their title as trustees was held to be protected from challenge by the negative prescription, and their title was held preferable to that of a body who originally might be the proper administrators. 5 In England the Statute of Limitations formerly could not be pleaded by an express trustee. 6 This has been altered by the Trustee Act, 1888. 7 1 Vide a. 1118. 2 1469, c. 28, and 1474, c. 54. (In Thomson's Acts these appear as c. 4 and c. 9 respectively.) 3 Erskine, iii. 7, 8. 4 Pollock v. Porterfield, 1778, Mor. 10702 ; affirmed by House of Lords, 1779, 2 Pat. 495. 6 Baird v. Dundee, 1862, 24 D. 447 ; vide L. P. M'Neill, at p. 455. The introduction of the consideration of good faith in this opinion suggests the influence of the positive prescription upon the decision. 6 Cross, 1882, 20 Ch. D. 109, at p. 121, referring to the Judicature Act, 1873, s. 25, rule 2. 7 51 & 52 Vict. c. 59, s. 8. This section was not repealed by the Trustee Act, 1893. Of. Robinson v. Harkin, 1896, 2 Ch. 415, at p. 425 ; How v. Winterton, 1896, 2 Ch. 626. 1113. Prescription is a good defence to an action of general interrup- accounting by beneficiaries against trustees only where the trust g^ crip " has de facto come to an end outwith the years of prescription. " As the negative prescription of a debt owing by bond or other- General 6 r r ° J accounting wise is interrupted by every payment of interest thereon by the debtor, so the negative prescription of the general obligation to account for the trust estate and its proceeds and revenues has been interrupted by every payment made by the trustees to the beneficiary for the time, of what they held to be the free yearly revenue, and, indeed, by every act done by them, or their factor in their name, in the exercise of their power, or in the perform- ance of their duties under the trust." 1 Where, however, there is no such interruption 2 the trustee or his representative 3 is entitled 714 CHAKGES BETWEEN ALL PAETIES [chap. x. to take advantage of the irrebuttable presumption of the law that he has already accounted. 4 2St ption -^ e * s a * a ^ ti mes liable in a direct action by the beneficiary the trust. f or delivery or payment of trust estate still in his hands. The negative prescription only protects him against claims founded upon his improper administration of the trust estate of which he has divested himself. He can only acquire a title in himself as an individual to alleged trust property in virtue of the long positive prescription, and this is only effective upon his showing an ex facie good title in himself as an individual to that estate at the beginning of the prescriptive period. 5 1 Barns, 1857, 19 D. 626, per Lord Curriehill, at p. 646. 2 As to whether the act of one of more trustees will interrupt the running of prescription cf. discussion in opinion of Stirling, J., in Macdonald, 1897, 2 Oh. 181. The English common law appears to hold that it is not an inter- ruption. See p. 186. Where the act is done hy a trustee who holds another character in which also the act might be performed, he is held to have done the act in both capacities and so in that of trustee (Macdonald, supra, at pp. 184, 185). 3 Murray v. Mackenzie, 1897, 4 S. L. T. No. 331. 4 Barns, supra; vide Lord Ivory, at pp. 641, 642. 6 Aberdeen, 1877, 4 R. (H. L.) 48. Of. s. 446 and s. 1117. Prescription 1114. Where interruption of the prescriptive period leaves of particular tit tmnsac- the general obligation to account still incumbent on the trustee, tions. ° ° ' the question remains whether this general obligation to account prevents him from pleading the negative prescription against a challenge of a particular transaction, which would, if by itself, be covered by prescription. "I am humbly of opinion," says Lord Deas, after putting this question, "that the subsistence of the trust, and the liability of the trustees to account generally for their intromissions, has no such effect. Many trusts, either from accident or from their nature and objects, may last for more than forty years ; and it would, I think, be very strange if, for no act whatever, done, it may be, at the outset of the trust, openly, and in the knowledge of all the beneficiaries, could the trustees claim the protection of the negative prescription. . . . The principle of the long prescription, as Mr. Bell observes, 1 'is not a presumption of payment, but a presumption of abandonment, not to be overcome, but available to the debtor as equivalent to a discharge. . . .' This principle of abandonment is obviously just as applicable to the objections pleadable against a distinct act by trustees under a going trust, as it is to the objections to any other act whatever." 2 Belief Where one trustee has been made to repair a breach of trust against a L co-trustee. anc i ma kes a claim upon his co-trustee for contribution towards chap, x.] CHAEGES BETWEEN ALL PAETIES 715 the cost thereof, the prescriptive period begins to run against that claim only from the date of a decree fixing the liability of the trustees for the breach of trust. 3 1 Com., vol. i. p. 352. 2 Barns, s. 1113, at p. 651. In this case Lord Deas referred specially to the grounds of judgment in the case of Kinloch v. Rocheid, 1808, Mor. Prescription," App. No. 7, which case, his Lordship stated, he found from his manuscript notes of Professor Hume's lectures, was " cited by that eminent lawyer as a sound decision upon the law of prescription." In Barns the cases of Lindsays v. Balgony, 1627, Mor. 10718, and Pollock v. Porterfield, 1778, Mor. 10702, 2 Pat. 495, are referred to, and largely commented upon. 3 Robinson v. Harkin, 1896, 2 Ch. 415, at p. 426. 1115. One of the best known interruptions to the running of Minority. the years of prescription is the minority of the person against whose claim the prescription is pleaded. Thus, on the one hand, where a beneficiary is in minority at the date at which the term of prescription begins, the remaining years of his nonage must be added to the normal period of forty years to find the date at which the plea of prescription will be competent against his claim. On the other hand, where a beneficiary is born within the limits of the forty years of prescription, the running of the prescription is stopped, as against his claim, during the whole period of his nonage, and the normal period of prescription is in his case changed from forty to sixty-one years. 1 1 Tod v. Beattie, 1802, Hume, 487. 1116. The long negative prescription raises an insurmountable Good faith. barrier, and no question can be raised as to the bona fides of the plea. With the lapse of time the obligation comes to an end, and the plea cannot be elided by reference to anything occurring after the lapse of the period of prescription. "All our lawyers are agreed," says Erskine, " that in the long negative prescription, the creditor, barely by his silence for the whole course of prescrip- tion, is understood to have abandoned his claim, and so loseth his right of action, without the necessity of bona fides in the debtor. Hence, if a creditor who has made no demand within the years of prescription should afterwards offer to prove, by the debtor's own oath, that the debt still subsisted, even that offer would not save the debt from being extinguished by the lapsing of the forty years ; though it is obvious that the debtor's consciousness of the subsistence of the debt excludes bona fides." l 1 Erskine, iii. 715. 1117. Eeference to the conduct of the trustee during the Fraud. period of prescription is relevant, and the plea can be elided by 716 CHAEGES BETWEEN" ALL PARTIES [chap. x. an allegation of fraud on his part during the running of the prescriptive period. Where a fraudulent breach of trust has been committed, the terminus a quo the period of prescription runs is not the commission of the breach of trust, but the opportunity of its discovery. " In the case of a breach of trust," says Lindley, L.J., " a cause of action founded upon it accrues to the cestui que trust upon the commission of the breach of trust, unless that breach of trust is a fraudulent breach of trust, and is concealed by the trustee committing it, or by some person for whom he is legally responsible." In such a case, " the cause of action will not accrue to the beneficiary until its discovery by him, or at all events until he might have discovered it with reasonable diligence," 1 and therefore the prescriptive period will not begin to run till the opportunity for such discovery emerges. "For, pending the concealment of the fraud," says Lord Eedesdale, in an old case, "the Statute of Limitations ought not in conscience to run; the conscience of the party being so affected that he ought not to be allowed to avail himself of the length of time." 2 Fraud really interrupts prescription, and is an application of the general Scots doctrine of non valens agere, which is purely equit- able, 3 and thus his Lordship proceeds : — " But after the discovery of the fact, imputed as fraud, the party has a right to avail himself of the statute ; he has a right to say, ' You shall not bring this matter into discussion after such a length of time, when it is only through your own neglect that you did not do so within the time limited by the statute.' " * It is to be noticed, however, that no lapse of time will convert the trust title in the trustee into a title in him as an individual to any part of the trust estate. 5 1 Thome v. Heard, 1894, 1 Ch. 599, at p. 605 ; affd. 1895, A. C. 495 ; Bulli v. Osborne, 1899, A. C. 351. It is not an essential character of the fraud that the perpetrator should have taken active steps to conceal it. 2 Hovenden v. Lord Annesley, 1806, 2 Sch. & L. 607, at p. 634 ; 9 R. R. 119, at p. 122. 3 Fife v. Duff, 1887, 15 R. 238, per Lord Adam, at pp. 249, 250. 4 Hovenden, ut supra. 6 Thain, 1891, 18 R. 1196, and vide s. 448, and s. 1113. (2) Homologation Distin- 1118. Prescription must not be confused with homologation, 1 guished x ° ' scripS an( ^ otner pleas in bar, such as mora, acquiescence, taciturnity. 2 In the case of prescription, all that is necessary under the proper conditions is the lapse of the statutory term, behind which one cannot go with any inquiry as to the particular circumstances or the character of the act that has prescribed. " I agree," says Lord chap. x.J CHAEGES BETWEEN ALL PAETIES 717 Deas, " with Lord Curriehill, that if we are right in sustaining the plea of prescription, the character of the act can never be inquired into." 3 In regard to the various pleas in bar, on the other hand, the character and circumstances of the particular act are every- thing, and the lapse of time is only one of the conditions of each case. 4 " Supposing prescription not to be applicable, the purchase," says Lord Deas, " would be barred by mora, acquiescence, and homo- logation. I do not say that it would be so barred if the purchase had been altogether ultra vires, unwarranted, and illegal." 5 Where a payment in error has been made to a supposed beneficiary, prescription in favour of the payee begins to run from the date of the erroneous payment, 6 but the plea of bar against the trustee only from the date when there emerged an opportunity of discovering the error. 7 Homologation is a personal bar against the individual bene- piea against particular ficiary. Where a particular beneficiary is barred from seeking relief beneficiary. against the trustees for a, breach of trust, he cannot take benefit from a payment to the trust estate made by the trustees at the instance of another beneficiary in order to repair the breach of trust. Thus where the liferenter is barred, he cannot claim the liferent of a fund replaced by the trustees at the instance of the fiars. The claim of the liferenter here is limited to the actual proceeds of what is left , of the original trust fund, the proceeds of the fund made good by the trustees being retained by them till the fiar comes into possession. 8 Homologation must be distinguished from a contract of man- date — the former is only a plea in bar of a claim founded upon past actings, and does not set up a contract to be bound by similar actings in the future. 9 1 Homologation affects past acts only and must be distinguished from con- sent which is not retrospective and affects only future acts (Wiles v. Gresham, 1854, 2 Drewry, 258). Cf. Heath, infra. 2 " The usual and proper mode of stating the plea is, that the action is barred by mora, taciturnity, and acquiescence" (Assets Co. v. Bain, 1904, 6 F. 692, per L. P. Kinross, at p. 705). " Mora is not a good nomen juris " (Mackenzie v. Cotton, 1877, 5 R. 313, per Lord Deas, at p. 317). Cf. Erlanger v New Co., 1878, 3 App. Cas. 1218, per Lord Blackburn, at p. 1279. s Barns, 1857, 19 L>. 626, at p. 652. * Johnston, 1897, 24 R. 611, per Lord Adam, at p. 614. In addition to lapse of time " the party founding on mora must show that his position was prejudiced by the delay." 5 Barns, ut supra. " Baker v. Courage, 1910, 1 K. B. 56. 'Brooksbank v. Smith, 1836, 2 Y. & C. Ex. 58; Baker, supra; Lees v. Dun 1912, S. C. 50, per Lord Salvesen, at p. 66 ; affd. in House of Lords, sub mom. Schuke v. Tod, 1913, 1 S. L. T. No. 76. The plea in bar, being equitable, runs from the opportunity of discovery where that is earlier than the actual discovery of the error. 718 CHAEGES BETWEEN ALL PAETIES [chap. x. 8 Somerset, 1894, 1 Ch. 231 ; Fletcher v. Collis, 1905, 2 Ch. 24 j Dive, 1909, 1 Ch. 328, at p. 336. 8 Cf. Heath v. Ramsay, 1903, 10 S. L. T. No. 300, a case of personal bar against re-opening of settled accounts. Natureof 1119. These pleas in bar are purely equitable and are founded Faw! slE on the dilatory action of the claimant. " Our law upon this ques- tion may be stated in these three propositions : — (1) That delay per se, so long as it is within the years of prescription, does not bar a pursuer's claim ; (2) that to avail a defender anything it must be delay in prosecuting a known claim — that is, a claim known to the pursuer to exist; 1 and (3) that the delay has been prejudicial to the defender in depriving him of evidence which would or might Taciturnity, have supported his defence." 2 " The plea of taciturnity is very often misunderstood, and is frequently maintained when there is no other foundation for it except silence for a length of time. That is not taciturnity. To found this plea, the relation of the parties to each other, and the whole surrounding circumstances, must be looked at ; and unless these naturally infer a presumption of payment, satisfaction, or abandonment of the claim, there is no ground for taciturnity." 3 Thus while, in one case, over forty years had elapsed but prescription could not be pleaded owing to its interruption by minority, the circumstances were held to show a presumption of discharge, and a plea of homologation was sustained ; i in another case, a similar presumption was held to be raised by the circumstances of the case, though only thirteen years had elapsed. 5 In a case where, thirty-six years after the distribu- tion of an estate, claimants appeared and pleaded that they had no previous knowledge of their right, the plea of mora was sustained, and it was held that as all the ordinary methods of publication had been observed, and no claim had been made debito tempore, there was an implied acquiescence in the actual distribu- Homoioga- tion, and a discharge of the trustees. 6 It is worthv of notice that tion. ° • from its nature "homologation implies a right to challenge"; hence an attempt to set up homologation as a plea in bar is an admission by the defender of the right of the pursuer to challenge, and where the plea is unsuccessful, the right to challenge is thereby Minority, substantiated. 7 " Homologation cannot be inferred against a minor, even when acting with the consent of his tutors and curators." 8 Where, however, a period of conventional majority, e.g., twenty- five, is expressly appointed for the purpose of defining the date of payment, the beneficiary is capable, after attaining legal majority, of homologating the trustees' action. 9 chap, x.] CHAEGES BETWEEN ALL PAETIES 719 1 Probably there should be added " or which in equity he must be held to have known to exist." Such constructive knowledge is found against the claimant in Bain v. Assets Co., 1905, 7 F. (H. L.) 104, at p. 108 ; A. 0. 317, at pp. 332, 333. 2 Assets Co. v. Bain, 1904, 6 F. 692, per Lord Trayner, at p. 740. ' This case was reversed in the House of Lords, 1905, 7 F. (H. L.) 104 ; A. C. 317, but that without affecting the law as stated in the text — the judgment pro- ceeding on a different application of it to the facts. 3 Moncrieff v. Waugh, 1859, 21 D. 216, per L. J.-C. Inglis ; vide also Gourlay v. "Wright, 1864, 2 M. 1284 (where Lord Ormidale (Ordinary) cites and quotes from cases of Lindsay v. Kinloch, 1796, 3 Pat. App. 432 ; Seath v. Taylor, 1848, 10 D. 377 ; Allan, 1851, 13 D. 1220 ; Moncrieff, supra) and Lees v. Dun, 1912, S. C. 50, per Lord Salvesen, at p. 64 ; affd. in House of Lords, sub. nom. Schulze v. Tod, 1913, 1 S. L. T. No. 76. For "family under- standing" influencing an accounting, vide Graham, s. 1105, and Darling, 1802, Hume, 488. 4 Tod v. Beattie, 1802, Hume, 487. 6 Wilsons, 1783, Mor. 11646. 6 Scotts v. Mitchell, 1830, 8 S. 820. * Irvine v. Tait, 1808, Mor. " Deathbed," App. No. 6. 8 Irvine, supra. Cf. Brodie, 1827, 5 S. 900, per Lord Balgray, at p. 902. 9 Mackie, 1875, 2 R. 312, per Lord Neaves, at p. 316, and Lord Gifford, at p. 317. 1120. Homologation by acquiescence may be instructed from Acquiea- " long delay in instituting any challenge " ; x as where a bene- ficiary, with full knowledge of the purchase by the trustee of the trust estate, and his subsequent intromission with it as his property, brought no challenge of the transaction for thirty-nine years thereafter. 2 Periods of twelve 3 and thirteen 4 years respec- tively have been found not to be sufficient delay to instruct homologation and bar a challenge ; 5 and a transaction between trustees and beneficiaries challenged on the ground of advantage taken by the trustees must be so challenged " within a reasonable time," and thirty-five years was held 6 not to be a reasonable time, because the materials for enabling the Court to inquire into the case and judge it were no longer available. 7 "Length of time," says Turner, L.J., " where it does it does not operate as a statutory or positive bar, operates simply as evidence of assent or acquies- cence. The two propositions of a bar by length of time and by acquiescence are not distinct propositions. They constitute but one proposition ; and that proposition, when applied to a question of this description, is that the cestui que trust assented to the breach of trust." s i Fraser v. Hankey, 1847, 9 D. 415, per L. P. Boyle, at p. 427. 2 Fraser, supra. s Jeffrey v. Aitken, 1826, 4 S. 722. * York Buildings v. Mackenzie, 1795, 3 Pat. App. 3/8. 6 The case of Gillies v. Maclachlan, 1846, 8 D. 487, which has been cited in this connection as an illustration of a period of thirty-two years' delay not instructing homologation, was really decided as a case of fraud ; and in a case of fraud the lapse of time can afford no protection,' per L. J.-C. Hope, at p. 499. Of. ss. 115, 116. 720 CHAKGES BETWEEN ALL PAETIES [chap. x. 6 Buckner v. Jopp, 1887, 14 R. 1006. Of. Scott v. Mitchell, 1830, 8 S. 820. 7 Of. Taylor, 1900, 81 L. T., 812— sixteen years and loss of securities through bankruptcy. 8 Life Association v. Siddall, 1861, 3 De G. F. & J. 58, at pp. 72, 73 ; Gallard, 1897, 2 Q. B. 8— it is " a question of more or less "—of the " balance of justice " in the circumstances, including therein the " degree of change that has occurred " (at p. 15). As to destruction of trust books, see Campbell, s. 1 122 ; Glasgow, 1897, 24 R. 628. Special conduct may raise a direct implication of abandonment of a debt, apart from the negative prescription (at p. 638, per L. P. Robertson). After a lapse of twenty years from the act there is a presumption that it has been lawfully and properly done. Bain v. Assets Co., 1905, 7 F. (H. L.) 104, A. C. 317. Acquies- 1121. The implication of acquiescence from lapse of time pre- CBIlCft implies sumes a full knowledge of the facts, and where the beneficiary has Knowledge. ° not such knowledge, no equitable bar is raised against him by lapse of time. 1 Mora is a plea of personal bar and not mere delay. It cannot be pleaded against a pursuer before he could become capable of taking action. 2 " A breach of trust is not incapable of homologation or confirmation by consent, but only with very great difficulty, and only if it be clear that the parties were fully aware of their rights. Where trustees in defence of a breach of trust, especially when it is one by which they profit, plead the consent of the beneficiaries, they must show that the beneficiaries were aware of the breach of trust and the legal wrong and condoned it." 3 Where the stepfather of unmarried daughters who continue to reside with him after their mother's death is also the trustee of their mother's estate of which they are beneficiaries, there is a presumption that their maintenance is a gift from their stepfather. Therefore the onus is on him to set up a contract with the step- children that their maintenance was to be charged to their interest in the trust estate. 4 Where the trustees have misled the bene- ficiary by an erroneous statement, made to him as such, regarding his rights in the trust estate, they cannot set up the plea of acquies- cence against him merely because the beneficiary accepted and acted upon that statement. 5 The trustee cannot throw upon the beneficiary the responsibility for the trustee's actings in the trust administra- tion. 6 The beneficiary is not put upon inquiry as to their nature. " The cestui que trust is entitled to trust in and place reliance upon his trustee, and is not bound to inquire whether he has committed a fraud against him unless there is something to raise his sus- picion." 7 " There are two indispensable conditions," says Lord Kinnear, " which must concur in order that acquiescence should create a personal bar. In the first place, the conduct which is said to have been acquiesced in 8 must have been known to the party who is alleged to have acquiesced ; and in the second place, the party raising the plea must have altered his position to his pre- chap, x.] CHAEGES BETWEEN ALL PAETIES 721 judice, in reliance upon the conduct of the other party in acquiescing." 9 Active interference, however, by a beneficiary in the distribution of a trust fund is held to be acquiescence on his part in any breach of trust thereby committed, though he is at the time of the distribution unaware of the existence of his beneficial interest in the estate. 10 1 Seath v. Taylor, 1848, 10 D. 377 ; Burrows v. Walls, 1855, 5 De G. M. & G. 233. 2 Bosville v. Macdonald, 1910, S. C. 597, per L. P. Dunedin, at p. 609. 3 Taylor v. Hillhouse, 1901, 9 S. L. T. No. 19, per Lord Kincaimey. There the beneficiaries' consent, about which there was no doubt, was held to have been given in ignorance of there being a breach of trust committed, and so not binding upon them. Of. Heath v. Ramsay, 1903, 10 S. L. T. No. 300, where beneficiary held barred on account of knowledge. * Moulton, 1906, 94 L. T. 454. 6 National Trustees v. General Finance, 1905, A. C. 373. 6 Rix, 1912, 56 Sol. J. 573. See discussion of position by Turner, L.J., in Life Association, s. 1125. ' 7 Vernon, 1886, 33 Ch. D. 402, per Cotton, L. X, at p. 410, following Shrop- shire v. The Queen, 1875, 7 Eng. & Ir. App. 496 ; vide also Carritt v. Real Co., 1889, 5 T. L. R. 559. Cf. Donald v. Hodgart, 1893, 21 R. 246, at p. 252 ; Phillipson v. Gatty, 1848, 7 Hare, 516 ; Currey v. Watson, 1895, 11 T. L. R. 371 — non-interference of beneficiaries. 8 The report reads "acquiescence," a palpable error; cf. 32 S. L. R., at p. 222. 8 Scott v. Great North Co., 1895, 22 R. 292. Cf. Smethurst v. Hastings, 1885, 30 Ch. D. 490, per Bacon, V.-C, at p. 497. 10 Evans v. Benyon, 1887, 37 Ch. D. 329 ; vide Cotton, L.J., at p. 344. 1122. Challenge can be barred by the plea of acquiescence Aoquies- only where that acquiescence is clear and unequivocal. Consent j^gy^ to a breach of trust must be " specifically directed to the defect in question," and is not to be instructed from a " vague and general " discharge. To make a statement of acquiescence of " any value it should show what knowledge of the material facts the beneficiaries had, and how they had obtained such knowledge, and by what acts of theirs their acquiescence was shown." 1 "It is said," says Lord Mackenzie, "he knew and approved of the sale by the creditor, and of the upset price. But it is one thing to consent to a sale by a certain person and an upset price, and another thing to consent to that per- son being purchaser at that sale as well as seller." 2 Lord Cran- worth, C, thus states the position :— " Although it is perfectly clear, on all the authorities and all principle, that no cestui que trust can allege that to be a breach of trust which has been done under his own sanction (for that is the meaning of acquiescence, either previous sanction or subsequent ratification), or, as was said by Lord Eldon in Walker v. Symonds, 3 ' either concurrence in the act or acquiescence without original concurrence, will release the 46 722 CHAEGES BETWEEN" ALL PAETIES [chap. x. trustees,' yet, as was added by Lord Eldon, ' that is only a general rule, and the Court must inquire into the circumstances which induced concurrence or acquiescence. . . .' In order to be favour- able to the trustee who alleges acquiescence, it must be a consent on the part of the persons who have a right to call the trustees to account that they (the trustees) shall be absolved from liability, and that they (the beneficiaries) will adopt the misapplication of the funds, as having been done under their assent and sanction." i There may be circumstances in which acquiescence by the bene- ficiaries in the payment of a claim by the trustee will be instructed by some concession made by them, or by some failure or neglect on their part to bring before him the true nature of the objection to the claim. 6 But a beneficiary is not barred from claiming arrears of an annuity because he has failed to enforce payment of the annuity regularly. 6 1 Williams v, Scott, 1900, A. C. 499, at pp. 504, 505— case of purchase by a trustee from himself ; title objected to by purchaser from trustee, and objection upheld on want of evidence of acquiescence of beneficiaries, who were not parties to the action. 2 Taylor v. Watson, 1846, 8 D. 400, at p. 406. 3 1818, 3 Sw. 1, at p. 64. 4 Burrows v. Walls, 1855, 5 De G. M. & G. 233, at pp. 251, 252. Cf. Camp- bell v. Gillespie, 1900, 1 Ch. 225, where the trust books were destroyed in the belief that no further accounting was required, and a claim for a general accounting refused. 6 Buttercase v. Geddie, 1897, 24 R. 1128, at p. 1134. 6 Rix, 1912, 56 Sol. J. 573. Acceptance 1123. The acceptance of partial satisfaction for a breach of of part notacquies- trust does not imply acquiescence in the breach and abandonment cence. ■*■ ^ x of further claims. 1 "We consider it to be a well-established rule that a cestui que trust who, knowing that his trustee has committed a breach of trust, obtains from him a part only of that to which he is entitled, does not thereby waive his right to such further relief as he may be able to obtain, unless there is something in the sur- rounding circumstances from which an intention so to do can be clearly inferred." 2 Thus where a beneficiary has received interest at the rate of 5 per cent, for funds used by the trustee in his own business, this does not necessarily bar the beneficiary from raising an action of accounting for profits. 3 1 See Edwards v. Hood-Barrs, 1905, 1 Ch. 20, for joint and several liability of trustees for breach of trust where compromise with, and discharge of, one trustee. The principle is that until the beneficiary receives 20s. in the pound he is entitled to claim the whole debt from any one trustee, notwithstanding a payment made by another trustee. Cf. s. 1142. 2 Cross, 1882, 20 Ch. D. 109, at p. 122, per Baggallay, L.J., delivering judg- ment of Court. 3 Cochrane v. Black, 1855, 17 D. 321. Cf. s. 1090. chap, x.] CHAKGES BETWEEN ALL PAETIES 723 1124. Acquiescence by the beneficiary in a certain act involves Acts covered by acquiescence in all that follows bond fide on that act. Thus " the acquies- ° cence. cestuis que trust having sanctioned one trustee alone exercising his judgment on the matter of investment, and he having exercised it erroneously but fairly, they could not afterwards complain. It was their own act in not relying upon the judgment of the two trustees, the benefit of which the will had given them a right to have: they selected one trustee to act for them, and could not afterwards complain that he acted erroneously " — that is, complain against the other trustee — " whose judgment they expressly relin- quished." 1 "Where, on the other hand, actings in mala fide follow on the act acquiesced in, the beneficiary is not barred from chal- lenging these. To relieve the trustees, the course acquiesced in by the beneficiary must be bond fide carried out by the trustees, and not adopted as a subterfuge to cover a breach of trust. Where the beneficiary had acquiesced in funds being left with a firm of solicitors for the purpose of being invested in mortgage, and the firm, being pressed for the money by the trustees, handed them a mortgage which was not really an investment of the money of the trust but the best security the firm could give for the funds, which they had themselves used, the trustees were held liable. 2 1 Griffiths v. Porter, 1858, 25 Beav. 236, per Romilly, M.R., at p. 242, following Raby v. Ridehalgh, 1855, 7 De G. M. & G. 104. 2 Griffiths, supra, at p. 241. 1125. Acquiescence by a beneficiary in reversion is not so easily Acquies- C6DCG fov presumed as acquiescence by a beneficiary in present enjoyment of contingent his interest. But a beneficiary is not less capable of giving assent to a breach of trust when his interest is in reversion than when it is in possession. Where the trust is not definite or precise the trustee may apply to the beneficiary for his advice and assistance in the exercise of it, or the trustee may give notice to the bene- ficiary of an intention to do a particular act, unless he interferes ; and if he does not interfere, the Court might well hold that the trustee was not liable for doing that act. But where the trust is definite and clear, a breach of trust cannot be held to have been sanctioned or concurred in by mere knowledge and non-interfer- ence on the part of the beneficiary at a time when his interest has not come into possession. 1 1 Life Association v. Siddall, 1861, 3 De G. F. & J. 58, per Turner, L.J., at pp. 73, 74, citing March v. Russell, 1837, 3 My. & Cr. 31, as a " strong authority." 724 CHAEGES BETWEEN ALL PAETIES [chap. x. Principle of 1126. "The general principle (of homologation by aequies- homologa- . , tion by cence) was thus stated by the Lord Chancellor (Campbell), with acquies- ' ^ \ j. ' cenoe. th e f u \\ concurrence of Lord Kingsdown * : — ' If a man, either by- words or by conduct, has intimated that he consents to an act being done, and that he will offer no opposition to it, although it could not have been lawfully done without his consent, and he thereby induces others to do that from which they otherwise might have abstained, he cannot question the legality of the act he had so sanctioned, to the prejudice of those who have so given faith to his words or to the fair inference to be drawn from his conduct.' " 2 . . . And again, to a similar effect, it has been laid down : — " If a person having a right, and seeing another person about to commit, or in the course of committing, an act infringing upon that right, stands by in such a manner as really to induce the person committing the act, and who might otherwise have abstained from it, to believe that he assents to its being com- mitted, he cannot afterwards be heard to complain of the act." 3 1 Cairncross v. Lorimer, 1860, 3 Macq. 827, at pp. 829, 830. 2 Sarat Chunder Dey v. Gopal Chunder Lala, 1892, 8 T. L. R. 732, per Lord Shand, at p. 733. 3 De Bussche v. Alt, 1878, 8 Ch. D. 286, at p. 314, per Thesiger, L.J., quoted with approval as definition of acquiescence by Fry, J., in Pepperell, 1879, 27 W. R. 410. where 1127. Of course, the trustee must bear in mind that acquies- acquies- x riresoi tra cence i s n0 * pleadable in bar of the claim of a beneficiary where benenciary. ^at beneficiary is not empowered to acquiesce to the extent of discharging his or her interest. The picture drawn by Lord Langdale, M.E., in the following quotation, should serve as a practical warning : — " Cases which are very painful are not in- frequent in this Court: we find a married woman throwing herself at the feet of the trustee, begging and entreating him to advance a stfrn of money out of the trust fund to save her husband and her family from utter and entire ruin, and making- out a most plausible case for that purpose; his compassionate feelings are worked upon; he raises and advances the money; the object for which it was given entirely fails; the husband becomes bankrupt; and in a few months afterwards the very same woman who induced the trustee to do this, files a bill in a Court of Equity to compel him to make good that loss to the trust. These are cases which happen; they shock everybody's feelings at the time ; but it is necessary that relief should be given in such cases ; for if relief were not given, and if such rights were chap, x] CHAEGES BETWEEN ALL PAETIES 725 not strictly maintained, no such thing as a trust would ever be preserved. The hardship, therefore, of individual cases must not be taken into consideration ; and if these parties think fit to insist on their strict rights, they are entitled to have them." 1 Under the Trusts Act, 1891, 2 the trustee may, however, have relief against the interest of such a beneficiary. Even where the homologation was ultra vires, if it has induced the party performing the act homologated to alter his position thereafter, the circumstances may raise an equity against the party homologating such as to prevent him from setting up a claim against the other to his detriment in defiance of the homologation. 3 1 Fyler, 1841, 3 Beav. 550, at pp. 563, 564. Vide similar opinion per Page Wood, V.-C, in Leedham v. Chawner, 1858, 4 K. & J. 458, at p. 465. 2 54 & 55 Vict. c. 44, s. 6 (1). 3 MacNaghten v. Paterson, 1907, A. 0. 483, at pp. 493, 494. 1128. Though mere acquiescence may bar the claim of the Acquies- cence d068 beneficiary against the trustee for loss through breach of trust, f& involve it cannot be taken to found, at least at common law, 1 a claim for indemnity by the trustee against the acquiescing bene- ficiary. " One can quite understand," says Lord President Inglis, " persons being barred by their conduct — by their acquiescence or assent to a certain thing that has been done — from afterwards challenging it, or seeking relief against the consequences of it. But that they, the persons sinned against, should by their mere conduct or acquiescence be held to take the place of the sinner, and to relieve him of all the consequences of his transgression, is an entire novelty. I never heard of such an indemnity as that; and I never heard of such an implication from mere conduct, or silence, or acquiescence, or what amounts to consent." 2 1 Consent in writing is required to give the statutory indemnity. Gf. s. 1227. 2 City of Glasgow Bank v. Parkhurst, 1880, 7 R. 749, at p. 754 ; but cf. Booth, 1838, 1 Beav. 125. Acquiescence must be distinguished from instiga- tion or request. See 54 & 55 Vict. c. 44, s. 6 (1), for circumstances in which instigation or request gives rise to a statutory claim for indemnity out of the interest of the beneficiary ; and cf. s. 1227. (3) Special Defences 1129. A trustee is not liable for a breach of trust committed Misieadin g statute. in consequence of his being misled by the language of a statutory provision. Thus where there had been no decision on a statute, when the trustee's action on the statute came before the Court, 726 CHAEGES BETWEEN ALL PAETIES [chap. x. the Court found he had acted wrongly, but did not find him liable in the consequences, as he had been misled by the language used by the legislature. A trustee is not " personally answerable," says James, L. J., " for money which has been bond fide paid by him under a misapprehension of the state of the law, which mis- apprehension was really occasioned by the language of the legis- universai lature." l The same principle is illustrated by a well-known Scots practice. case, where the House of Lords overturned a long-standing and universal rule of Scots practice, but found that the trustees in the case before them were not liable for a breach of trust, which consisted in having followed that rule. 2 1 Ogle, 1873, 8 Oh. App. 711, at p. 715. 2 Home v. Pringle, 1841, 2 Rob. App. 384. But cf. Rennie v. Morison, 1849, 6 Bell's App. 422, where an alleged practice to allow a remunerated trustee both a commission and his charges as a law agent was not defended in the House of Lords, and was condemned there as not being a question of practice but of principle. Breach of 1130. It is not a relevant defence to a claim of the beneficiary trust by J co-truBtee. founded on' breach of trust that the trustee, was not actively engaged in the breach of trust. He is equally liable if he has negligently allowed another to effect a breach of trust. " The rule of law is this: if one executor does any act which enables his co-executor to obtain sole possession of money belonging to the testator's estate, which but for that act he could not have obtained possession of, and this money is afterwards misapplied, the executor who thus enables his co-executor to obtain possession of the money is liable to make good the loss." * 1 Candler v. Tillett, 1855, 22 Beav. 257, per Romilly, M.B., at p. 263. 1131. Homologation of the acts of a co-trustee, and eon- sequent liability therefor, has been held to be instructed where the trustee has assisted his co-trustee in doing something which could not be completely carried out without the act of the trustee which it is pleaded makes him liable. Thus a trustee, G., left the management of the trust in the hands of his co-trustee M. In order to sell part of the trust property, M. got the title-deeds from a solicitor, who had over them a right of hypothec, and granted on behalf of the trustees an undertaking to pay the solicitor's claim. G., when sued along with M. by the solicitor, pleaded that M. had no authority to get up the title-deeds. As G., however, had signed the articles of roup and the disposition, and the deeds in question were necessary for the sale, he was held to have acquiesced in M's conduct. 1 1 Hamilton v. Gibb, 1823, 2 S. 315. chap, x.] CHAEGES BETWEEN ALL PAETIES 727 (7) Remedies of Beneficiaries 1132. The first remedy of a beneficiary against a trustee is interdict. naturally a preventive one. Where the beneficiary desires to interfere with the action of a trustee who proposes to do any- thing that the beneficiary thinks ultra vires, the proper legal process for the purpose is that of suspension and interdict. 1 Where fraudulent abuse of their position as trustees is alleged against a majority who have resolved upon a line of conduct, a petition for their removal, and not an interdict, is the proper remedy. 2 1 Lauderdale, s. 1133 ; Brown v. Elder, 1906, 13 S. L. T. No. 391. Gf. Lord Watson in Campbell v. Wardlaw, 1883, 10 R. (H. L.) 65, at p. 70, to the effect that beneficiary " entitled to interfere by interdict to stop " a proceeding on the part of the trustees injurious to his interest. This remedy is competent to the member of a trade union despite the provision of the Trade Unions Act, 1871, s. 4 (3) (Yorkshire v. Howden, 1905, A. C. 256). 2 Mills v. Brown, 1901, 8 S. L. T. No. 380, per Lord Low. 1133. The diligence of inhibition is not a habile remedy, for inhibition. the Court will not interfere with a trustee except on cause shown. " An inhibition is a diligence, which is generally allowed to pass as a matter of course without inquiry. An interdict, again, is an action, and is never granted but upon cause shown." * " If an inhibition was to be granted," says Lord Balgray, " it should only have been granted according to the old forms of the law of Scotland — that is, causd cognitd." 2 Inhibition is, further, an objectionable form of process for enforcing the right of the beneficiary against the trustee, as it stops the performance of the trust. " If the beneficiary have any just cause of suspicion or complaint, he can present a bill of suspension and interdict, under which his rights will receive protection consistently with the due administration of the trust." 3 1 Lauderdale v. Fife, 1830, 8 S. 675, per Lord Gillies, at pp. 680, 681. 2 Lauderdale, supra, at pp. 679, 680. 3 Hay v. Morison, 1838, 16 S. 1273, per Lord Mackenzie, at p. 1276. 1134 Arrestment in the hands of a debtor to the trust is also Arrestment. an improper form of process for enforcing the beneficiary's right. " I venture," says Lord Justice-Clerk Inglis, " to lay it down as a general — though it may not be a universal — proposition, that a beneficiary, when raising an action against his trustee to compel payment of money to which he is entitled under the trust, is not entitled to use arrestments on the dependence of that action, so as to prevent the trust funds coming into the hands of the trustee." 1 An exception arises in the case of a beneficiary who has a jus ad 728 CHAEGES BETWEEN ALL PARTIES [chap. x. rem, e.g. a special legacy to be paid from an appropriated fund. Here the beneficiary can arrest the subject of his right, both to found jurisdiction against foreign trustees, and to prevent the fund leaving the country. 2 "A truster is not entitled to use arrestments against the trustee who, under an arrangement with him, is vested with the trust administration, unless malversation or some other ground is alleged to justify so extraordinary a proceeding." 3 1 Dundee v. Taylor, 1863, 1 M. 701, at p. 703. 2 Innerarity v. Gilmore, 1840, 2 D. 813. 3 Maedonald v. Stewart, 1871, 9 S. L. K. 72, at p. 73, per L. P. Inglis. Here arrestments used in hands of factor. Examples. 1135. The following cases are examples of the use of interdict of interdict. ... in this connection. Where the object of the trust was to sell pro- perty to pay a composition to the creditors of the truster, the trustees were interdicted from selling more than was necessary for that purpose. 1 Trustees were interdicted from paying trust funds to a beneficiary who was acting in contempt of Court. 2 In a statu- tory trust, trustees have been interdicted from applying the trust funds to defray an application to Parliament for new powers, where Parliament had not empowered them to do so. 3 In a case where public trustees had passed a resolution to sell certain subjects, an interdict was brought against the trustees to prevent them " acting on, or attempting to carry into effect, any agreement or resolution " to sell the said subjects. 4 1 Pender v. Ferguson, 1831, 10 S. 19. Of. Pechel v. Fowler, 1795, 2 Anstr. 549 ;3E.E, 627. 3 Edgar v. Fisher, 1893, 21 R. 59. 3 Brown v. Adam, 1848, 10 D. 744 ; vide opinion of Lord Mackenzie, at p. 747 ; Macintosh, 1852, 14 D. 928. 4 Ballantine v. Merchant Company, 1870, 7 S. L. R. 352. Of. Simpson v. Moffatt Institute, 1892, 19 R. 389. interdict by 1136. The suspender must show that his interests are actually conditional x J institute. b e j n g imperilled before the Court will interdict the trustees ; and where a suspension was brought by the conditional institute to interdict the trustees from making a payment to the institute until the question of vesting was competently settled, the Court refused to grant the interdict. If the trustees, however, though not interdicted, paid away the estate, they did so at their own risk, should the payment turn out afterwards to be wrongly made. 1 1 Sawers, 1861, 24 D. 101. Of. Pechel, s. 1135. chap, x] CHAEGES BETWEEN ALL PAETIES 729 1137. The next remedy of the beneficiary is a retrospective Action of * «* -*• count and one. "Where an individual beneficiary desires to challenge ex post reckoning. facto the administration of the trustee, the proper legal process is that of count and reckoning. Certain acts, if challenged as having been done ultra vires, require to be reduced, while the validity of others can be tested in an action of count and reckoning alone. 1 Questions involving the personal liability of particular trustees should be tried in a direct action against these trustees, and should not be combined with questions of construction and ad- ministration affecting all the trustees as such, which questions are properly raised in an action of count and reckoning. 2 A conclusion Joint *■ x " ° accounting. for a joint accounting does not fail because all the defenders do not turn out to be liable to account. " A general demand against several persons to account for their intromissions implies a demand against each to render an account of the intromissions had by himself." 3 The Court has refused, in determining a petition for the appointment of a judicial factor on the trust estate, to go into any questions of accounting. 4 On the bankruptcy of a trustee, the beneficiary has cwm a claim for a dividend on the trustee's estate where any trust pro- ruptcy. perty in which he is interested has vested in the trustee in the sequestration. 5 Where it is desired to challenge the management of a judicial factor, "it is apprehended that this can only be done in an application for having the factor's accounts audited and adjusted under his factory in common form." 6 1 Clelland v. Brodie, 1844, 7 D. 147. Such questions were formerly tried before a jury. Vide Home v. Menzies, 1845, 7 D. 1010 ; Robertson v. Mac- kenzie, 1854, 26 S. J. 498. 2 Brodie, 1893, 1 S. L. T. No. 87. 3 M'Kenzie v. Macallister, 1909, S. C. 367, per Lord Kinnear, at p. 372. 4 Harvey v. Lacy, 1836, 14 S. 1112. 6 Heritable Co. v. Millar, 1892, 19 R. (H. L.) 43, per Lord Watson, at p. 46. 6 Carmicbael v. Todd, 1853, 15 D. 473, per Lord Cuninghame, at p. 476. 1138. A multiplepoinding cannot be competently raised by Muitipie- poinding. a beneficiary where the only question is the conduct ot the trustee. There must be double distress. Trustees and executors are entitled to raise an action of multiplepoinding to obtain judi- cial exoneration for their whole intromissions with the estate, where they have any real difficulty in obtaining from the benefi- ciary a proper and safe discharge, fully exonering them. It is not necessary, therefore, that there should be any double distress in their case. 1 The position of those beneficially interested in the trust is, as regards this matter, different. As they have no interest in securing the exoneration of the trustees, they will only 730 CHARGES BETWEEN" ALL PARTIES [chap. x. be allowed to raise an action of multiplepoinding in the name of the trustees where there is actual double distress — where there are proper competing claims. 2 1 Gf. s. 936, etc. 2 Gray v. Paterson, 1854, 27 S. J. 32 ; Paterson, 1854, 17 D. 117, at 120. Gf. Carmichael v. Todd, 1853, 15 D. 473 ; Tait v. Geddie, 1895, 3 S. L. T. No. 265. 1139. Thus where a son raised an action of multiplepoinding against his father's executor-nominate, who was also residuary legatee, stating that the real raiser had a claim to legitim, and that his claim was resisted by the executor and other parties, it was held that the action, which was objected to by the executor, was incompetent. There were no competing claims, and the proper course was to have raised an action of constitution against the executor. 1 A similar case occurred where a truster had been twice married, and the next-of-kin of the first wife raised an action in the trustees' name, stating that the nominal raisers were interpelled from paying over the estate to the beneficiaries by a claim being made by the real raisers for the goods in communion falling under the first marriage. The action was held to be incompetent, the claimant being merely a creditor, who should have constituted his claim directly. 2 Again, the trustees of an annuity payable to an heir of entail were served with a protest by a person claiming to be the legitimate heir of entail, with the view of interpelling them from paying the annuity to the heir actually in possession. The claimant then raised a multiplepoinding in the name of the trustees, to have the com- petition between the two claimants to the annuity determined. The action was dismissed as incompetent. 3 1 Crokat v. Panmure, 1853, 25 S. J. 443, 15 D. 737. Lord Cockburn's dissent in this case is based on considerations which are equally applicable to the case of an action raised by the trustee. 2 Middleton v. Mitchell, 1843, 6 D. 316. 3 Gray v. Paterson, 1854, 27 S. J. 32 ; Paterson, 1854, 17 D. 117, at p. 121. Declarator. 1140. The Court will not in an action of declarator decide any question of a " contingent eventuality," because " the judgment would not be an operative and conclusive judgment against the parties who may ultimately come to have the only interest in the question." The Court will only decide a question raised ' in a declarator when the question comes to " be tried between the parties who have an interest, when the question properly arises." 1 Where, however, the eventuality is not contingent but determinate, the Court will decide the question raised in the declarator before the actual occurrence of the event raising the question. In treating chap, x.] CHAEGES BETWEEN ALL PAETIES 731 of such a case, Lord Justice-Clerk Inglis says :— " There it is abun- dantly clear that the judgment of the Court being once pronounced, finally and conclusively determined the question as regarded every individual who then was or could come into existence having an interest in that question." 2 And in another such ease his Lord- ship justifies the decision on the ground that "the judgment then pronounced was an operative and conclusive judgment, which never could be disturbed, but must form res judicata against all concerned." 3 n * 'H^yey 8 . 18 6°, 22 D. 1310, per L. J.-C. Inglis, at pp. 1326 and 1328. Cf. Mackie v. Edinburgh, 1896, 3 S. L. T. No. 486. 2 Harveys, supra, at p. 1326, where case of Provan, 1840, 2 D. 298, is discussed. 3 Harveys, supra, at p. 1327, discussing case of Mackenzie, 1846, 8 D. 964 ; also vide discussion here of case of Scott, 1852, 14 D. 1057. 1141. A legatee is entitled to decree of constitution against Action of the executor or trustee even where it has not been ascertained <*»?. ' ' that there will be sufficient funds to pay the legacy, and the will has provided for a pro rata diminution in the event of insufficiency. " If there be no trust funds, the decree will be of little avail ; and if there be a defalcation, there must be a diminution corresponding with that to be suffered by the other legatees." 1 The guardian appointed by the Chancery Court to an English Petition. infant presented a petition to the noUle ojficium of the Court of Session craving it to " authorise and ordain " Scots trustees to pay the interest of the infant to the petitioner. The petition was dismissed as incompetent, the proper remedy being a direct action against the trustees for payment. 2 1 Bazett v. Heugh, 1826, 5 S. 50, per L. P. Hope. 2 Lake (Fraser's Trs.), 14th March 1913. The petitioner founded upon the cases of Seddon and of Webb in s. 824. 1142. In working out his remedy by action, the beneficiary Actions on must notice a distinction in procedure according as the trustee is and ™ ° delict dis- being sued ex contractu 1 or ex quasi delicto? a distinction 8 of which Anguished. Lord Watson says that it has "led to consequences which are inconvenient, if not absurd." * In the former case all the trustees must be called, while in the latter the beneficiary can proceed against any delinquent separately. " If a body of private trustees," says Lord Watson, "commit a wilful breach of directions given by the truster to the great detriment of the trust estate, all its members must be made parties to any suit for reparation, because they are held in that case to be liable ex contractu? whereas if the same body commit a comparatively venial breach of duty in 732 CHAEGES BETWEEN- ALL PARTIES [chap. x. Liability ex contractu. And ex delicto. Joint and several decree. One bene- ficiary can raise action. Where intimation of action necessary. violation of the general law regulating trust administration, any member may be sued for the whole loss resulting, because he has been guilty of a quasi-delict." 6 In so far as the liability of the trustees and the corresponding rights of the beneficiaries are to be measured either by an express stipulation between the trustees and the beneficiaries or by one between the truster and the trustees, by which the beneficiaries are to benefit, the liability to repair a breach of this stipulation arises ex contractu. But in so far as such liability and rights are to be measured only by the duty owing by the trustee to the beneficiary in virtue of the fiduciary relation created by the trust, the liability to repair a breach of this duty arises ex delicto.'' In an action on delict, if the pursuer proceeds against all the delin- quents and obtains a joint and several decree against all, he may enforce it against one or more, leaving the person or persons so distressed to make good a claim of relief against the remaining defenders if able to do so. 8 If the pursuer fails to get a decree against all the defenders he may still get a decree for the full sum against any one who is found liable. 9 This distinction between contract and delict as the ground of action does not affect the title of the individual beneficiary to raise proceedings. " Where there is an alleged breach of trust, it is quite within the power of any one beneficiary to bring an action by himself." 10 But where the action is of such a nature as to be res judicata against other beneficiaries, as in an action to replace trust funds, the pursuer must intimate the dependence of the action to such other beneficiaries so that they may either sist themselves to the action or stand aside and allow the decree to settle the question quoad their interests also. It is not competent to call such other beneficiaries as defenders. 11 1 The general rule is that parties to an obligation are bound only pro rata, and a decree will not be given against defenders jointly and severally unless expressly concluded for. Thus if expenses are desired to be made recoverable jointly and severally, this must be moved for when expenses are asked (Warrand v. Watson, 1907, S. C. 432). 2 The proper form of the conclusions of an action against co-delinquents is "jointly and severally or severally" (Ellerman, infra, per Lord M'Laren, at pp. 692 and 693). 3 Gf. s. 290. 4 Palmer v. Wick, 1894, 21 R. (H. L.) 39, at p. 43 ; A. C. 318. 6 I.e. unless the contract expressly provides otherwise. 6 Palmer, supra, at pp. 43, 44. See also Oroskery v. Gilmour, 1890, 17 E. 697, expressly following, as to the liability of joint delinquents, the case of Western Bank v. Douglas, 1860, 22 D. 447. In Croskery all the trustees were called to account, but the operative conclusions were limited to one only. " The law so laid down," says Lord Salvesen, dealing with Croskery, " may sometimes operate very harshly, and in a suitable case where a defender was being sued alone with the object of shielding others who were equally respon- sible, I think it might well be reconsidered" (Sim v. Muir, 1906, 8 F. 1091, chap, x.] CHAKGES BETWEEN ALL PAETIES 733 at p. 1093). Cf. Smith v. Patrick, 1901, 3 F. (H. L.) 14, per Lord Robertson, at p. 28; A. C. 282, at p. 296; Mackay, 1897, 4 S. L. T. No. 466— a loan to one of the trustees ; Beatt v. Ogg, 1897* 4 S. L. T. No. 374; and Edwards, s. 1123. 7 Allen v. M'Combie, 1909, S. C. 710, per Lord Kinnear, at 721. In the light of the opinions in this case, it is difficult to figure a case of liability arising ex contractu. Lord Watson, in Palmer, speaks of a " wilful " breach of directions as giving rise to liability ex contractu, but the innocent non-fulfilment of a direction would equally give rise to liability ex contractu. Cf. s. 21. 8 Ellerman v. Clyde, 1909, S. C. 690, at p. 692. 9 Ellerman, ut supra. 10 Of. Cowin, 1886, 33 Ch. D. 179. 11 Allen v. M'Combie, 1909, S. C. 710. The necessity for intimating the action is obviously limited to cases affecting the interests of other bene- ficiaries. 1143. Though decree maybe obtained for a quasi-delict against Relief of trUSt60S one of more trustees, 1 this does not shut him out from his relief inter se - against his co-delinquents. 2 The old English rule 3 admitted of no apportionment or relief amongst those jointly liable for culpa. The Scots rule 4 is that inter se those liable for culpa have relief pro rata. Neither rule attains accurate apportionment. " The only real principle which in such a situation could apply would be that the quantum of damage should be measured and apportioned in the ratio of the quantity of blame." 5 This right of relief amongst co-delinquents must be distinguished from the case where there is a joint and several decree against the trustees and the beneficiary enforces it against one trustee. Here there is a legal debt estab- lished by the decree. Therefore the trustee against whom it has been enforced can call on his co-trustees to make good to him their proportions of the loss ; for it is a universal doctrine of equity that " where more than one are liable for the same debt, and the creditor enforces his right against one, the person who has paid more than his share is entitled to contribution." 6 " The right of contribution depends, according to the better view, on a broad principle of equity, 7 though it has sometimes been regarded as based upon an implied contract." 8 i Cf. s. 1238. 2 Croskery, s. 1142, per Lord Shand, at p. 701, quoted by Lord Watson in Palmer, s. 1142 ; Allen v. M'Combie, 1909, S. C. 710, at pp. 718 and 721 ; Beatt, s. 1142. Cf. Romilly, M.E., in Rehden v. Wesley, 1861, 29 Beav. 213, at p. 215, as to English practice. There is no order of liability according to benefit received from breach of trust (Butler, 1877, 5 Ch. D. 554, per Fry, J., at p. 557). Liability may be limited by the terms of the acceptance of the trust, at least in an inter vivos trust. In an old English case, one trustee accepted on the condition that the trust fund would be divided equally between himself and his co-trustee, each being liable for his share only. Though the trust deed was in common form, the trustee was found only liable for his share on the insolvency of his co-trustee (Birls v. Betty, 1821, 6 Mad. 90, per Leach, V.-C). 3 Merryweather v. Nixon, 1799, 8 T. R. 186, now modified, see infra. * Palmer, s. 1042. « Tongariro v Drumlanrig, 1911, A. C. 16, per Lord Shaw, at p. 26. e Bacon v. Camphausen, 1888, 58 L. T. 851, per Stirling, J., citing an old judgment of Lord Chief Baron Eyre in Dering v. Winchelsea, 1787, 1 Cox, 318, 734 CHARGES BETWEEN" ALL PARTIES [chap. x. and Lord Redesdale in Stirling v. Forrester, 1821, 3 Bligh, 575, at p. 590. The case of Merryweather, supra, dealing with the doctrine of contribution between wrongdoers, has had its scope limited by the judgment of the House of Lords in Palmer, s. 1142 ; and see Moxham v. Grant, 1900, 1 Q. B. 88, at pp. 93 and 95. There must now be fraud, and not mere actings ultra vires, before the paying trustee is shut out from relief. 7 Dering, supra. 8 Bentinck, 1899, 80 L. T. 71. Where one 1144. It has been decided that a trustee who is also a bene- trustee is a beneficiary. fi c i ar y has no claim against his co-trustees for his loss as a beneficiary through a breach of trust committed by all of them, even where the trustee has acquired his beneficial interest since the date of the breach of trust. In so far as the trustees are liable to other beneficiaries, though the trustees must, in a question with these beneficiaries, share the loss equally, the trustee who is a beneficiary must, to the extent of his beneficial interest, indemnify his co-trustees for that loss. 1 1 Chillingworth v. Chambers, 1896, 1 Ch. 685, and cases cited and dis- cussed in opinion of Lindley, L.J, Cf. s. 1238. (c) Claims of Belief by the Trustee against the Trust Estate (a) Claims by Beneficiaries against the Trustee, qud Trustee, as under Section (b) (a), supra 1145. The charges for which the trustee is liable only qud trustee are dealt with in earlier sections, 1 as falling more con- veniently to be considered there. They are only referred to here to complete the methodical division of the subjects in the general index. 1 S. 986, etc. (/?) Claims by Third Parties against Trustee as an Individual for Administrative Charges (1) General Rules as to the Expenses of the Trust Administration Gratuitous H46. It is the primary rule of all trust accounting that the gratuitous trustee shall, to the extent of the trust estate, be kept free of all personal expense incurred in the proper execution of the trust. Lord Eldon, C, puts the "well-known rule" thus: — "It is in the nature of the office of a trustee, whether expressed in the instrument or not, that the trust property shall reimburse him all the charges and expenses incurred in the execution of the trust. That is implied in every such deed." 1 Even where trustees have acted in bond chap, x.] CHAKGES BETWEEN ALL PAETIES 735 fide on an appointment found afterwards to be invalid, the same rule is held to apply to them. 2 The trustee's indemnity for out- lays extends to the trustee who in good faith acts on a bad title. Where a person has in good faith, acting as a trustee on a title subsequently invalidated, recovered debts due to the trust estate, he is entitled, in accounting for the moneys so recovered to the trustee holding the true legal title, to deduct outlays properly incurred in recovering these moneys. 3 But this does not apply where there is not a proper trust title in the so-called trustee. 4 The rule applies to a constructive as well as to an express trustee, 6 unless the constructive trustee is a party to a fraud upon the bene- ficiaries for his own benefit. 6 The principle is that if you treat a person as a trustee in one way by making him account, you must treat him as a trustee all through and allow him the rights of a trustee for proper outlays in the accounting required of him. 7 The rule is equitable, and cannot be pleaded by a trustee acting mala fide? Where a trustee is paid for the execution of his duty, it is Paia always a question of fact whether any particular item was intended to be covered by his remuneration or not. He cannot get paid twice over — once by remuneration and again by indemnity. 9 1 Worrall v. Harford, 1802, 8 Ves. 4, at p. 7. 2 Travis v. Illingworth, 1868, W. N., p. 206. 3 Vaughan, 1884, 14 Q. B. D. 25. 1 Mess v. Hay, 1898, 1 F. (H. L.) 22, A. C. 1899, p. 233 ; Thomson v. Tough, 1880, 7 R. 1035. 6 Keech v. Sandford, 1726, 2 White and Tudor L. C. (8th ed.), p. 693. 6 " It is a universal rule that a fraudulent deed, though operative against the fraudulent party to it, is not operative for him, and therefore confers on him no rights whatever" (Cross, 1848, 4 De G & S., p. 364 (note), approved by Lord Esher in Phillips, 1888, 36 W. R. 567). See Myers, 1908, 1 K. B. 941. If the position giving the right is acquired by fraud, the result is the same though not acquired by a deed (Phillips). 7 Rowley v. Ginnever, 1897, 2 Ch. 503 (a case of rights acquired through the holding of a lease). Thus where a voluntary trust for creditors is cut down by sequestration, the statutory trustee must elect to treat the voluntary trustee as a constructive trustee or as a trespasser (Davis v. Petrie, 1906, 2 K. B. 786). A constructive trustee is bound to deliver the trust estate, subject to the following charges in his favour upon it— first, the purchase-money paid by him and the costs of the conveyance to him (with interest at 4 per cent. from his death if the claim is against his representatives) ; second, the sums expended by him which have resulted in permanent improvements with interest on said sums at 4 per cent. Where the action was against the executor of the constructive trustee, the costs of all parties as between solicitor and client were allowed to be charged on the trust estate made over by the constructive trustee (Rowley, supra, at p. 508). Cf. Vaughan, 1884, 14 Q. B. D. 25, as explained by Farwell, L.J., in Davis, supra, at p 792 8 ' Bulii Co v. Osborne, 1899, A. C. 351, at p. 362, where Lord Hatherley in Livingstone v. Rawyards Co., 1880, 5 App. Cas. 25, at p. 34, 7 R. (H. L ) 1, at V 4 and Lord Hardwicke in Chesterfield v. Jansen, 1750, 2 Ves. sen. 125, at p 155 (124, at p. 154, in 4th ed.), are both cited. Cf. Cotterell, s. 1147. 9 Young v. Naval Society, 1905, 1 K. B. 687, at p. 694. 736 CHAEGES BETWEEN" ALL PAETIES [chap. x. 1147. In a later case Lord Cottenham lays it down that " the first object of a trust is to indemnify those who administer it against any costs properly incurred in "its administration," x and that " without any express provision for that purpose." 2 The ratio of the rule is thus put by Lord Selborne, C. : — " The contract between the author of a trust and his trustees entitles the trustees, as between themselves and their cestuis que trust, to receive out of the trust estate all their proper costs incident to the execution of the trust. These rights, resting substantially on contract, can only be lost or curtailed by such inequitable conduct on the part of a trustee as may amount to a violation or culpable neglect of his duty under the contract." 3 After quoting the above, Jessel, M.E., 4 continues : " It is not the course of the Court in modern times to discourage persons from becoming trustees by inflicting costs upon them if they have done their duty, or even if they have committed an innocent breach of trust. The earlier cases had the effect of frightening wise and honest people from undertaking trusts, and there was a danger of trusts falling into the hands of unscrupulous persons who might undertake them for the sake of getting something by them." outlay Proper administrative charges include outlays before accept- before .... „ acceptance, ance in investigations as to the nature of the trust and the titles to the trust estate. 5 And by statute, the expenses connected with Ana after, the readjustment of the trust title, on the resignation of a trustee, resignation. . , 1 , ,«-»-. , are a good charge against the estate." But the expenses of a petition by a sole trustee for authority to resign are not a good charge against the trust estate if the petition is withdrawn. 7 1 Heriot v. Ross, 1846, 12 CI. & F. 507, at p. 515. 2 Att.-Geu. v. Norwich, 1837, 2 My. & Or. 406, at p. 424, quoted by Lord Blackburn in Robinson v. Eraser, 1881, 8 R. (H. L.) 127, at p. 135. Of. For- shaw v. Higginson, 1857, 8 De G. M. & G. 827, at p. 834, relying on Blue v Marshall, 1735, 3 P. W. (6th ed.) 381. ' 3 Cotterell v. Stratton, 1872, 8 Ch. App. 295, at p. 302. * Turner v. Hancock, 1882, 20 Ch. D. 303, at p. 305. 6 Dee Estates, 191 1, 2 Ch. 85. In this case the charges incurred by a trustee who ultimately did not accept, seem to have been allowed. See p 86 6 30 & 31 Vict. c. 97, s. 10. 7 Hilliard, 16th July 1908, per Lord Salvesen (unreported). indemnity 1148. The claim of the trustee for reimbursement is a prefer- is first * charge. ential claim. Before the nett estate to be divided among the beneficiaries, whether onerous or gratuitous, is arrived at, this claim of the trustee must be satisfied in full. He is not " a mere creditor, entitled to a ranking." 1 Trustees' outlays take priority on a trust fund in Court in competition with an order for costs chap, x.] CHAKGES BETWEEN ALL PAETIES 737 out of the fund to another party. 2 Trustees' costs are preferable even to the solicitor's charging order. 3 The claim would appear to be one of retention only, and limited Betention to estate coming into the trustee's hands. 4 But he is entitled to his relief out of any trust funds readily available, leaving over the question of distribution of the burden among the beneficiaries till the winding up of the estate. He is under no obligation to advance money to finance the administration of the trust, and is entitled to help himself from time to time out of any convenient personal advances. trust funds to meet proper outlays. 5 Advances made by the trustees as individuals to the beneficiaries against their prospective interests can be satisfied by retention of those interests when they are realised. 6 1 Thomson v. Tough, 1880, 7 R. 1035, opinion of Court ; Macgregor v. M'Lennan, 1898, 25 R. 482. 2 Moore v. M'Glynn, 1904, 1 I. R. 334 ; Griffith, 1904, 1 Ch. 807. 3 Turner, 1907, 2 Ch. 126. 4 Fell v. Official Trustee, 1898, 2 Ch. 44, at p. 52, per Lindley, M.R., and argument of Farwell, Q.C., at p. 49. Cf. s. 1215; Macgregor, supra; and Salaman v. Rosslyn, 1900, 3 F. 298. 6 Chisholm, 1902, 1 Ch. 457, per Kekewich, J., at p. 463. « RothwelU. Stuart, 1898, 1 F. 81. 1149. Each individual trustee is entitled to reimbursement for indemnity is personal, his personal outlay. " The indemnity to the trustees is not to the not joint, trustees as a body, but to each of the trustees. Each of them who has acted properly is entitled to be indemnified against the debts properly incurred by him in the performance of the trusts imposed upon him." 1 So where one trustee, is a defaulter and has run away with trust money, every other trustee who has a clear account is still entitled to an indemnity, except in the case where he is held responsible for the acts of the defaulter. 2 Again, where the trust account is in debt to the trustees jointly, and one of the trustees, who is in debt to the trust account, becomes bankrupt, the trustees are entitled to be paid the full amount due to them individually, and the set-off is limited to the amount due to the bankrupt trustee. 8 1 Frith, 1902, 1 Ch. 342, per Kekewich, J., at p. 346. 2 Frith, supra. 3 M'Ewan v. Crombie, 1883, 25 Ch. D. 175, per North, J. 1150. The trustee will not be deprived of his claim for the vouchers, expenses of management solely on the ground that there are no vouchers x for them, if the sum charged is a fair one. Where such an objection was taken to a trustee's accounts, the Court repelled 47 738 CHARGES BETWEEN" ALL PAETIES [chap. x. the objection to the sum claimed on the ground that "there must have been some outlay in the management, and the sum was a fair allowance." 2 The presumption is against a trustee who has failed to keep regular accounts ; at the same time a trustee, who has in other respects done his duty, is entitled, even in the absence of such accounts, to a fair and reasonable allowance for outlay. 3 1 As to law agent's accounts, see a. 1154. 2 Douglas v. Monteath, 1864, 36 S. J. 701, at p. 706 ; Paterson, 1897, 24 R. 499, per Lord Kyllachy (Ordinary), at pp. 505, 506, and Lord M'Laren, at p. 510. 3 Boss, 1896, 23 R. (H. L.) 67, per Lord Watson, at p. 78 ; Barnes o. Ross, 1896, A. C, at p. 644. (2) Outlays and Advances salvage. 1151. " Trustees have always this right, that if they bond fide expend moneys in managing their trust property, and when these moneys have been' so expended, the trustees come to the Court and prove that they have done that which is beneficial to the property, and in the nature of salvage expenditure, the Court will do all in its power to indemnify the trustees." 1 Thus, where a trustee paid out of his own pocket a sum of £20 to an objection- able tenant to get him to break his lease and quit possession, he was held to be entitled to be reimbursed from the trust, as he had acted prudently in getting rid of a vexatious tenant. 2 Outlay upon a derelict trust property, the subject of a foreclosed mort- gage, for the purpose of making it productive and realisable, is a Charge good charge. 3 Where a beneficiary under the condition affecting particular his interest is bound to make outlays for the trust estate and fails beneficiary. to do so, the trustees are entitled to make these outlays on his behalf, where the beneficiary's failure to do so would result in forfeiture of the subject in which he is interested ; for instance, where the subject is a leasehold property subject to forfeiture if the covenants in the lease are not fulfilled. For these outlays they have a lien over any other interest under the same trust vested in that beneficiary. Where this other interest is an inde- pendent gift under the trust, a mortgagee thereof who has entered into possession under the powers in the mortgage is not affected by the lien. 4 Travelling Travelling expenses properly incurred in connection with the outlays. trust administration are a good charge against the trust by a gratuitous trustee. 6 The trust matters must be of such urgency or importance that justice could not be done to them except by personal attendance and consequent travelling expenses. 6 A chap, x.] CHARGES BETWEEN ALL PARTIES 739 voluntary subscription by a trustee is not a chargeable outlay subsorip- unless the reason for it is to avoid a heavier compulsory pay- ment, such as a voluntary subscription to a school to avoid the imposition of a public rate. 7 Even damages recovered by a third Damages. party from the trustee for the fault of a person properly employed by him for the benefit of the trust estate are a good charge against the estate where the trustee has acted with due diligence in the matter. 8 Statutory trustees are liahle, and entitled, to pay statutory out of the funds in their hands raised by statutory powers for the purposes of their trust, damages for the wrong or negligence of those for whom they are responsible. 9 1 Round v. Turner, 1889, per Kay, J., 60 L. T. 379. 2 Blue v. Marshall, 1735, 3 P. W. (6th ed.), 381, followed in Forshaw v. Higginson, 1857, 8 De G. M. & G. 827. 3 Neill, 1904, 1 I. R. 513 — case of an Australian sheep run ; De Teissier, 1893, 1 Ch. 153, at pp. 161, 162 — case of house property condemned by sanitary authorities. 4 Loom, 1910, 2 Ch. 230. 6 Young v. Naval Society, 1905, 1 K. B. 687, at p. 694. 8 Smith, 1902, 71 L. J. Ch. 411, at p. 414. 7 How v. Winterton, 1903, 51 W. R. 262. Kekewich, J., was inclined to regard it as a payment under a compromise. 8 Bennet v. Wyndham, 1862, 4 De G. P. & J. 259, followed in Raybould, 1900, 1 Ch. 199. Cf. case of judicial factor in Baillie v. Shearer, 1894, 21 R. 498 ; vide Lord Young, at p. 509. 9 Virtue v. Alloa, 1873, 1 R. 285. The history of the law on this point, which reveals a most remarkable vacillation of judicial opinion both in this country and in England, is fully treated by L. P. Inglis in this case, dealing with Mersey Dock v. Gibbs, and Mersey Dock v. Penhallow, 1866, 1 Eng. & Ir. App. 93, and Duncan v. Pindlater, 1839, M'L. & Rob. 911. Of. Ross v. Heriot, 1846, 5 Bell's App. 37, 18 S. J. 386. 1152. The claim of the gratuitous trustee is limited to outlay only outlay only. 1 Thus in the case of the management of a farm, "the beneficiary Faming. will be credited with the full produce of the farm, and all moneys received in respect of it ; and he will only be debited with such sums as the trustee can prove that he, the defendant, has properly advanced and expended in stocking and managing the farm — the trustee having no allowance for his time and labour bestowed upon it." 2 Again, where trustees happen to be bankers, they Banking. cannot, as bankers, advance money to themselves as trustees, so as to make a profit for themselves as bankers, unless under very special powers ; and " the power to borrow from any banker does not mean that they could themselves, as bankers, advance the money." They can, therefore, only charge simple interest on their advances. 3 With this may be compared an Australian case, where the trustees were authorised to raise money for repairs on mort- gage bearing interest, and they were held not to be entitled to charge interest if they advanced the money themselves. 4 740 CHAEGES BETWEEN ALL PAETIES [chap. x. Benefit to The measure of the claim of the trustee for reimbursement estate not test is the sum he has properly expended, and not a speculative estimation of its value to the estate. This latter method might do great injustice to the trustee, or result in a windfall never contemplated. Any such loss or gain should follow the beneficial interest in the estate and not the trustee. 5 outlay The outlay must be undertaken solely in the execution of the must be •> J trust*" tru st. In eases where the outlay by the trustee as trustee has also been of personal value to himself, or where outlay by him as an individual has been of value to the trust, he must charge himself as an individual with all such outlay, on the principle that he cannot make a profit out of his trusteeship. 6 He is not entitled to the benefit of the ordinary rules of contribution between parties not standing in any fiduciary relation to one another. 7 » Vide s. 1154. 2 Kendall v. Marsters, 1860, 2 De G. F. & J. 200, per Lord Campbell, C, at p. 206. Cf. Malcolm, 1869, 8 M. 272, where commission to a trustee for management of a farm disallowed. 3 Crosskill v. Bower, 1863, 32 Beav. 86, per Romilly, M.R., at p. 99. Cf. s. 1110. 4 Sichel v. O'Shanassy, 3 V. L. R., E. 208, Davis' Supreme Court of Victoria Cases, p. 697. 6 Rowley, s. 1146. The rubric and the arguments speak of the " value " of outlay on improvements as the extent of the claim by the trustee, but the judgment speaks of "the sums by which the value" has been increased, the word sums being read as " sums expended on the estate." 6 But see Turner, s. 1175, for case where empowered to make profit. 7 These rules are laid down in Ruabon, 1900, A. C. 6. opinion of 1153. Where trustees are found entitled to their expenses counsel. r out of the trust funds, these expenses include that of consulting counsel before the action was raised, 1 and from time to time during its course at the proper stages, for deciding future steps, or, in a watching appearance, for deciding whether overt inter- vention has become necessary. 2 " Trustees are," says Lord Murray, " clearly entitled to the expense of consulting counsel." a It has been stated 4 to be the practice to allow trustees to charge the estate with fees sent to counsel to watch a case of competition between beneficiaries, but this practice seems justifiable only where the competition is likely to lead to questions between the successful competitor and the trustees. 5 i Shepherd v. Hutton, 1855, 17 D. 516. ° Martin, infra. 3 Shepherd, supra, at p. 523. 4 M'Laren, s. 2328. 6 Cf. Martin v. Hunter, 1897, 25 R. 125. chap, x.] CHAKGES BETWEEN ALL PAETIES 741 (3) Payments for Agency 1154. The trustee, it has been seen, 1 is entitled to take all the assistance he requires for the execution of his trust where he is not specially remunerated for the performance by himself of any part of it, 2 and it has been laid down that " the power of employ- ment involves that of remuneration at the cost of the trust estate." 3 The rule holds good though the trustee receives a fixed annuity for his "care and trouble." 4 In England the law has always accepted and acted on the Trustee rule that there is no implied power in trustees to appoint a paid agent. trustee, whether sole or one of more, a paid agent of the trust. 6 "The rule really is, that no one who has a duty to perform shall place himself in a situation to have his interests conflicting with that duty ; 6 . . . the result therefore is, that no person in whom fiduciary duties are vested shall make a profit of them by employing himself, because in doing this he cannot perform one part of his trust, namely, that of seeing that no improper charges are made. The general rule applies to a solicitor acting as a trustee." 7 The trustee is entitled to charge against the estate only the taxed Law agents account. amount of the law agent's account, unless the beneficiaries agree to the account being paid without taxation. Where there is no such agreement expressly entered into by the beneficiaries, the trustee is not in safety to pay a law agent's account against him for work done for the trust without having the account taxed by the Auditor of the Court of Session 8 in the absence of agreement upon Audit. another auditor. 9 It is not a necessary formality that the law agent's account should be taxed, and the trustees may, either from their own knowledge or from competent advice, come to the con- elusion that the account is reasonable in amount without sending it to taxation. A reasonable and justifiable course in practice where the account is not very large is to pay it without taxation if satisfied as to its reasonableness, subject to repayment of any- thing disallowed upon taxation should that afterwards be required by anyone interested. 10 A general discharge by the beneficiaries does not bar any of them from insisting upon taxation of any law agent's account included in such discharge and the trustee's- being debited with the amount taxed off. 11 Into a question as to the pay- Noaiioca- ■"• " tion of ment of a law agent's account by the trustees there does not enter jj^f?y n any consideration as to the allocation of the account amongst the beneficiaries, although the interests of one beneficiary more than 742 CHAEGES BETWEEN ALL PAETIES [chap. x. another may have benefited by the employment of the law agent. Such allocation arises in the final distribution of the estate among the beneficiaries. "Where such final distribution is to take place, though not immediately contemplated, charges therefor by antici- pation may properly be made and allowed in the taxation of the law agent's account. 12 1 S. 191. 2 By Rule 16 of the Judicial Trustee Rules, 1897, framed under the authority of the Judicial Trustees Act, 1896 (59 & 60 Vict. c. 35, s. 4 (1) (10)), such trustees are not " allowed any deduction on account of the expenses of professional assistance, unless the Court is satisfied that it is justified by the strict necessity of the case." 3 Weall, 1889, 42 Ch. D. 674, per Kekewich, J., at p. 677. Cf. Goodsir v. Carruthers, 1858, 20 D. 1141, and 30 & 31 Vict. c. 97, s. 2 (1). As to pensions, see s. 273. 4 Wilkinson, 1825, 2 S. & S. 237. " It matters not that he was a paid agent of the truster (Sheriff v. Axe, 1827, 4 Russ. 33). 6 Cf. s. 451. 7 Broughton, 1855, 5 De G. M. & G. 160, at p. 164, per Lord Cranworth, G, There is a series of leading cases in the English reports forming a cumula- tive mass of authority on this point : — New v. Jones, 1833 (Lord Lyndhurst, C.B.), reported in note in 1 M'N. & G. 668, expressly approved and followed in Moore v. Frowd, 1837, 3 M. & Cr. 45, per Lord Cottenham, C, at pp. 50, 51, followed in Fraser v. Palmer, 1841, 4 Y. & C. 515, per Alderson, B., at p. 518. Much of the English case law illustrating this subject is brought together in 2 "W. & T. L. C. (8th ed.), in a note to the case of Robinson v. Pett, at pp. 607 8 M'Farlane, 1897, 24 R. 574, at p. 577 ; King, 1906, 14 S. L. T. No. 153. 9 Turner v. Fraser, 1897, 24 R. 673. 10 Peel, 1910, 1 Ch. 389, per Warrington, J., at pp. 395, 396. ii M'Farlane, supra. "Miles, 1903, 2 Ch. 5L8. Difference 1155. A competent trustee 1 may be appointed, and perform sco 8 ts is iaw nd *k e duties of, an agent of the trust, 2 but he has no claim for remuneration against the trust estate unless by the special authority of the truster, 3 or by arrangement with the bene- ficiaries if they are all sui juris* The fact that the trustee was agent of the truster does not except him from the general rule. 6 Such has not always been taken to be the law of Scotland ; but by a judgment of the House of Lords the law of Scotland was declared to be the same as that of England, to the effect above stated. "There can be no reason for any difference in the rule upon this subject in the two countries. The benefit of the rule, as acted upon in England, is not disputed ; and as there is no de- cision to the contrary, there cannot be any reason for sanctioning a contrary rule in Scotland." 6 1 As to position of directors where the company is in a fiduciary relation, see s. 210. 2 Goodsir v. Carruthers, 1858, 20 D. 1141, per Lord Ivory, at p. 1148, and Lord Deas, at p. 1150. Cf. ss. 192, 210, 1165, and 1177. 3 Kg. Carruthers, 1896, 23 R. (H. L.) 55 ; A C. 659. chap. x.J CHAEGES BETWEEN ALL PAETIES 743 i Of. Brown v. Home, 1905, 12 S. L. T. No. 322— differentiating relation of mortgagor and mortgagee in this connection. Of. s. 1162. 6 Lauder v. Millars, 1859, 21 D. 1353. Of. Goodsir, supra, as to "peculiar suitableness or expediency " not being sufficient to authorise such an appoint- ment. Vide Lord Ardmillan, at p. 1145. 6 Home v. Pringle, 1841, 2 Rob. 384, per Lord Cottenham, C, at pp. 432, 433 ; 14 S. J. 535, at p. 541, dealing with Montgomerie v. Wauchope, Fac. Coll., 4th June 1822, as supposed foundation of what was taken to be the Scots rule. The position of the Scots authorities on the point is reviewed in the opinion of Lord Eobertson (Ordinary) in the Bon Accord Co. v. Souter, 1850, 12 D. 1010. 1156. The declaration of the law by the House of Lords 1 English rule not was interpreted by the Scots Court not to act retrospectively. 2 ^f pe °- Persons appointed and acting on the strength of the older Scots Seotland - practice were held not to be affected by the declaration, at least as regards actings before its date. "I would not," says Lord Mackenzie, "sustain an action by parties in the position of cashier and factor, who were also trustees, for payment of their accounts; but after the money had been once paid to them by the trustees, I would have great difficulty in holding that they were obliged to pay it back. It would be extremely perilous to hold it a wilful wrong and gross culpa lata that the trustees went upon the common practice of the time, and did a thing which no one objected to, and which does not appear to have been at all prejudicial to the estate. The House of Lords, no doubt, reprobated the practice, but they dealt tenderly with it — they merely admonished practitioners for the future." s 1 Vide s. 1155. 2 In the Bon Accord Co. o. Souter, 1850, 12 D. 1010, Lord Medwyn speaks of " the hardship of introducing into Scotland a rule taken from the practice of the law of England, and giving it a retroactive effect." 3 Miller, 1848, 10 D. 765, at p. 787. 1157. Even as to appointments and actings before 1841 1 it Position of sole appears that the Scots practice only applied to a trustee being trustee m appointed as agent by his co-trustees: that it never was held to apply to the case of a sole trustee. "It appears to me," says Lord Neaves, "that from first to last the rule of the law of Scotland has been that anyone holding a fiduciary character, whether that of guardian or trustee, cannot lawfully become auctor in rem suam. I think that that principle has never been changed or departed from. . . . But it was thought that this might be obviated by having other tutors as auctores. I think that those who allowed this exception to the general rule over- looked that an accepting tutor or trustee is not entitled to draw his neck out of the collar into which he has placed it, nor to with- 744 CHARGES BETWEEN ALL PAETIES [chap. x. hold his surveillance of the others, and that by doing so he ceases to be an efficient guardian. ' Quis custodiet ipsos custodes ? ' That seems to me to be a reason for altering our law, and it was altered. But our law never permitted a man, by his sole vote, to appoint himself agent on the estate which he was by law bound to superintend." 2 Thus " while the case of Miller 3 exonerated the party who had paid bond fide, another decision might have been given against the party who was lucmtios by the payment." 4 1 The date of Home, s. 1155. 2 Aitken v. Hunter, 1871, 9 M. 756, at pp. 761, 762 ; 43 S. J. 413, at p. 416. 3 S. 1156. 4 Aitken, supra, per Lord N eaves, at p. 763. solicitor- 1158. In practice this question of payment to an agent who trustee. , , . .,... , is a trustee has chiefly 1 arisen in connection with solicitors who are trustees. The position of such trustees is thus declared by Cotton, L.J. : — " It is a well-established rule, and one founded on sound principles, that a trustee who is a solicitor cannot as a rule make any profits as a solicitor on business which is done by him- self or by a firm of which he is a member 2 in matters relating to the estate. ... If he chooses to do work he cannot make a charge against the estate." 3 Taxation of the solicitor's account is not a sufficient check. "The estate," says Lord Lyndhurst, C.B., " had a right not only to the protection of the taxing officer, but also to the vigilance and guardianship of the executor, in addi- tion to the cheek of the taxing officer. ... A solicitor might, if he were allowed to perform the duties of a solicitor, and to be paid for them, find it very often proper to institute and carry on legal proceedings, which he would not do were he to derive no emolument from them, and were to employ another person." * The inability to charge affects also the period before the trustee takes up the office of executor. "The general rule of law is that the executor derives his title from the will, and that the probate is merely the authenticating evidence of his title, and the probate is said to have relation to the time of the testator's death." 5 1 The rule is quite general, and applies to all professional trustees, and not to solicitor-trustees only (White, 1898, 2 Ch. 217, per Ohitty, L.J., at p. 219). 2 Of Collins v. Carey, 1839, 2 Beav. 128 ; Christophers v. White, 1847, 10 Beav. 523 ; Gray, 1856, 19 D. 1 ; Matthison v. Clarke, 1854, 3 Drewry, 3— a case of a firm of auctioneers. Vide s. 1159. 3 Corsellis, 1887, 34 Ch. D. 675, at p. 681. 4 New v. Jones, 1833, reported as note in 1 M'N. & G. 668 ; quoted in Gray, supra, per L. J.-C. Hope, at p. 5. Of. Lord Cranworth, C, in Broughton, 1855, 5 De G. M. & G. 160, at pp. 164 and 166. In Bray v. Ford, 1896, A. C. 44, chap, x.] CHARGES BETWEEN ALL PARTIES 745 the solicitor-trustee was a governor of a public institution, and no profit costs were allowed. 6 Barber, 1886, 34 Ch. D. 77, per Chitty, J., at p. 83, following Robinson v. Pett, 1734, 3 P. W. (6th ed.), 249. 1159. It has been held, however, that the objection to the solicitor- employment of the firm of which the trustee is a partner to do nrm - business for the trust, and charge therefor, is got over by the trustee making an arrangement with his partners or partner, to the effect that he shall be treated " as a stranger in the management of the particular business," and that he shall not share in the profits. In effect, he ceases to be a partner quoad the trust affairs. 1 And where And corre- the solicitor-trustee does perform work for the trust, though he is spond ' Mlt disallowed his own fees, he is allowed the fees of his town agent as expenses out of pocket. 2 1 Clark v. Carlon, 1861, 9 W. R. 568, 30 L. J. Ch. 639, per Wood, V.-C. Of. Gray, 1856, 19 D. 1, per Lord Wood, at p. 10, and Lord Handyside, at p. 11. 2 Burge v. Brutton, 1843, 2 Hare, 373. Of. Taylor, 1854, 23 L. J. Ch. 857. 1160. One exception to the rule forbidding the employment of Exception ,, ,. . in England the solicitor- trustee as a paid agent for the trust has now been injudicial r proceeding. firmly established in England. It has reference solely to work done in judicial proceedings, and has been thus stated authori- tatively : — "Where there is work done in a suit not on behalf of the trustee, who is a solicitor, alone, but on behalf of himself and a co-trustee, the rule will not prevent the solicitor or his firm from receiving the usual costs if the cost of appearing for and acting for the two have not increased the expense ; that is to say, if the trustee himself has not added to the expense which would have been incurred if he or his firm had appeared only for his co-trustee. For that there is an obvious reason — that it is not the business of a trustee, although he is a solicitor, to act as solicitor for his co-trustee." 1 1 Corsellis, 1887, 34 Ch. D. 675, per Cotton, L.J., at p. 681, following Cradock v. Piper, 1850, 1 M'N. & G. 664, and referring to Broughton, 1855, 5 De G. M. & G. 160, as criticising but not overruling Cradock, and to Lincoln v. Windsor, 1851, 9 Hare, 158, where Turner, V.-C, treated Cradock as a well-established exception. Cotton, L. J., also refers with approval to the opinion of Chitty, J., in Barber, 1886, 34 Ch. D. 77, to the effect that Cradock was not overruled either by Broughton or by Manson v. Baillie, 1855, 2 Macq. 80. All the judges ex- pressed doubt as to advisability of the rule, but regarded it as too well settled a rule to be disturbed. Of. remarks of Lindley, L. J., in Doody, 1893, 1 Ch. 129, at p. 141. Cf. Smith's estate, 1894, 1 I. R. 60. 1161. The exception thus established in England by precedent 1 Exception not recog- does not appear to be recognised in Scotland. In a leading Scots nised in case 2 shortly after the date of Cradock v. Piper, 3 the decision in that case is treated as of little weight, 2 Lord Wood there quoting 746 CHAKGES BETWEEN ALL PAETIES [chap. x. Lord Cranworth, C, as follows : — " It is, in the first place, sought to take this case out of the rule on the authority of Cradock v. Piper ; 2 and here I must own, speaking with all deference, and not meaning to decide anything upon the point, that I cannot see any distinction hetween costs incurred in a suit and costs incurred in administering an estate without a suit : the danger may probably be less in the former case than in the latter, but the principle is the same. As every trustee is bound to protect the estate against improper charges, there must also exist the same difficulty in principle in acting for himself and others as in acting for himself alone." i This ease 2 does not decide expressly that the exception in Cradock v. Piper 3 does not exist in Scots practice, but in a later case 5 Lord Deas does expressly decide against the application of the exception, on the ground that its application in Scots practice had been directly negatived by the decision in the case of Gray, 2 though personally he would have favoured the exception as a "reasonable modification to which the strict rule is subject." 6 1 It is to be noted that the English judges in Corsellis, s. 1160, do not look with any favour on the exception, but regard themselves as bound by the precedent of Cradock v. Piper, s. 1160. 2 Gray, 1856, 19 D. 1, per L. J.-O. Hope, at p. 6. 3 S. 1160. 4 Gray, supra, at p. 9. 6 Mitchell v. Burness, 1878, 5 E. 1124. 6 Scott v. Handyside, 1868, 6 M. 753, per Lord Deas, at p. 763, citing Findlay ■u. M'Omie, 1852, 14 D. 621, at p. 624. In Gray, supra, Lord Deas did not take any part in the judgment, a declinature by him on the ground of propinquity being sustained. Agreement 1162. The rule may be avoided by the solicitor-trustee entering, permitting charges. a t the proper time and in the proper manner, upon an agreement with the truster, or with all the beneficiaries, 1 that he shall be allowed to charge for his professional services as a condition of his accepting or continuing in the trust. A solicitor who is a trustee may "under a deed or contract, properly entered into and expressed, be entitled to his professional charges as a solicitor though he act as a trustee." 2 Where, however, the solicitor- trustee draws the deed by which he is expressly allowed to charge profit costs, "the agreement must be distinct, and in its terms explain to the client the effect of the arrangement ; and the more particularly when the solicitor for the client, becoming himself a trustee, has an interest personal to himself, adverse to that of the client." 3 1 Stewart v. Chalmers, 1904, 7 F. 163, at p. 167. Gf. Scott, s. 1164, for case of acquiescence. 2 Sherwood, 1840, 3 Beav. 338, per Lord Langdale, M.R., at p. 341. Here he was allowed his charges ; vide clause to that effect, as settled by counsel, chap, x.] CHAEGES BETWEEN ALL PAETIES 747 PT *i n re P ort °f- Ge ddes, 6th April 1865 ; Goudy on Bankruptcy, p. 374 (3rd ed.), for law agent in bankruptcy disallowed charges while acting as commissioner. 3 Moore v. Frowd, 1837, 3 My. & Cr. 45, per Lord Cottenham, C, at p. 48. Here the directions of the trust deed were held not to permit the solicitor- trustee to charge. 1163. The beneficiary can authorise the solicitor-trustee to charge in as far as he is himself actually paying the charges. " One trustee cannot effectually authorise another to make charges against the estate which the law does not sanction. On the other hand, there is no doubt that the beneficiaries under the trust may dis- pense with the objection, and allow the charges. This is only another form of their doing what they please with their own." 1 The authority of the truster to pay the trustee for his professional Effect of services cannot make his fees a valid debt against the truster's authority. estate in competition with his creditors. Such a trustee is only a legatee taking after the truster's creditors are satisfied-. 2 1 Munro v. Murray, 1871, 9 S. L. R. 174, per Lord Kinloch. Cf. Ommaney v. Smith, 1854, 26 S. J. 314, 16 D. 721, at pp. 725, 726. 2 White, 1898, 2 Ch. 217 ; Salmen, s. 1165. 1164. Where the party on whom the charges and expenses Acquies- might be expected ultimately to fall has knowledge of and ohar s es - acquiesces, even by implication, in the charges made by a trustee who is acting as agent to the trust, he is barred from afterwards taking objection to them. 1 " I have looked," says Lord Deas, " at all the cases in which the legal objection has been sustained. They are either cases in which there was no knowledge and acquiescence on the part of the beneficiaries, or where there was no room for the effect of knowledge and acquiescence — such as the case of pupils, or others in a state of incapacity, or of creditors who had nothing whatever to do with the management of the trust." 2 1 Scott v. Handyside, 1868, 6 M. 753. 2 Scott, supra, at pp. 760, 761. His Lordship discusses and summarises the effect of the following cases :— Home v. Pringle, 1841, 2 Rob. 384 ; Miller, 1848, 10 D. 765 ; Ommaney v. Smith, 1854, 16 D. 721. 1165. An express power to appoint a trustee as agent implies Express „ . power to a power to remunerate him for his services, 1 but only in the appoint capacity in which his employment is sanctioned. 2 The ques- £?£™ nera " tion is discussed in the following opinion of Lord Neaves: — "The trust deed here contains a special clause which clearly empowers the trustees 'to appoint agents and factors, either of their own number or other fit persons, for managing the said trust.' The only point of inquiry is, whether a power so con- 748 CHAKGES BETWEEN ALL PAETIES [chap. x. ferred to appoint agents or factors does not involve a power to do so on the only terms on which any reasonable man will accept such an appointment — the right, namely, to a fair remuneration for doing his duties. In the real business of life an appointment as factor or agent for the management of trust affairs infers a hiring and location of skill and services, and implies a fair recom- pense." 3 " It is not necessary," says Lord Ivory in the same case, " if the factor is to exercise his functions gratuitously, that any power should have been given in the deed to the trustees to appoint any of their own number to the office. It has all along been competent to do so if the office is to be executed gratuit- ously. I can see no motive or inductive cause for the power except to do that which, in law, cannot be supported without the truster's authority." 4 The burden of proving the authority to pay the trustee's charges lies on the trustees. "The trustees must support the charges, and instruct the exceptional peculiarity which withdraws the case from the operation of the general rule." 5 1 Of. ss. 192, 210, 1155, and 1177. * Mills v. Brown, 1900, 2 F. 1035, at p. 1039. A power to appoint and pay a trustee as factor is not a power to pay him as manager of a business. Of. Salmen, 1912, 56 Sol. J. 632, also s. 1168 ; and see Wertheimer, 1912, 28 T. L. R. 337, for commission allowed to art expert. 3 Goodsir u. Carruthers, 1858, 20 D. 1141, at pp. 1142, 1143, and affirmed by Court. 4 Goodsir, supra, at p. 1148. Of. Carruthers, 1896, 23 R. (H. L.) 55, at p. 56 ; A. C. 659, at p. 663 ; Lewis v. Pirie, 1912, S. C. 574. 6 Goodsir, supra, per Lord Ardmillan, at p. 1146. Truster's 1166. Where a truster appointed his partners in business to be partners as managers. £ w0 f hj s trustees, he directed the trustees to carry on his interest in the business, and to allow the business to be conducted by his two partners, which directions were within the powers conferred on the truster by the deed of copartnery. In an action raised by the whole of the trustees to have it ascertained if the two partners, though trustees, were entitled to remuneration out of the trust funds, the pursuers pleaded that " the law was, that if a truster appointed his trustee to exercise an office, not usually gratuitous, in connection with the trust, he might receive remuneration." This was supported, and the two partner trustees were found entitled to a suitable remuneration for their trouble and responsi- bility in managing the share or interest in the business of the partnership which formerly belonged to the truster. 1 1 Cameron, 1864, 3 M. 200, per Lord Jerviswoode (Ordinary). Truster's 1167. Where a person who had managed a business for the manager • i • » i t continued, truster in consideration of a share of the profits was nominated a chap, x.] CHAEGES BETWEEN" ALL PAETIES 749 trustee, he was held to be entitled to continue to take the same share of the profits from the trust while he continued to act as manager of the business for the trust. Here the truster had agreed with his brother that the latter should manage a public- house business belonging to the former, in consideration of half of the profits. The trustees, of whom the truster's brother was one, paid over one-half of the profits as formerly to the truster's brother while the public-house was carried on by the trustees and managed by him. This was held to be a valid arrangement, apparently on the ground that the circumstances implied a direction to the trustees to that effect. 1 1 Lawrie, 1892, 19 R. 675, Lord Kyllachy (Ordinary). Cf. Thorley, 1891, 2 Ch. 613, as to legacy duty being chargeable on such an interest in a business. 1168. "Where there is a power given to appoint a trustee as an Power to agent for the trust, carrying with it the power to remunerate him {? jj^jjjjjj out of the trust funds, 1 the power must be strictly exercised. Thus a power to appoint a trustee as " commissioner, factor, cashier, and attorney," does not include a power to appoint as law agent, " none of the latter denominations establishing in him the character of agent or manager of law processes." 2 1 S. 1154. 2 Cullen v. Baillie, 1846, 8 D. 511, per L. P. Boyle, at p. 518 ; 18 S. J. 231, at p. 237. Cf. Lord Deas in Laird, 1858, 20 D. 972, at p. 988 ; 30 S. J. 582, at p. 590, and s. 1165. 1169. Where property was assigned to a person who was known Auctioneer. to the truster to be an auctioneer, though not described in the deed as such, in trust to sell, it was held that a power given to the trustee to pay expenses of the trust, "including the usual auctioneer's commission," authorised him to charge that commis- sion though he acted as auctioneer himself. 1 But where the Broker, trustees were brokers, who were assigned goods in trust to sell, and pay their own advances to the truster, they were held not to be entitled to brokerage " for the discharge of a duty which, as such trustees, they were bound to perform." 2 1 Douglas v. Archbutt, 1858, 2 De G. & J. 148. But cf. Kirkman v. Booth, 1848, 11 Beav. 273. 2 Arnold v. Garner, 1847, 2 Ph. 231. 1 170 The rule that the trustee must not make profit of his Rule ' applies to trust applies quite as strictly to a non-gratuitous as to a gratuitous £™'J™ rate i »i-, /i • i of minority. a course of action involving them in personal liability, this does not of itself involve the minority in that liability, though it binds the trust estate effectually. " If the majority thought or any part of it thought fit to make' themselves, by their con- tracts, personally responsible, it would not be enough to say that, at such a meeting, the majority had bound themselves ; but in order to show the minority were bound, they must go on to show by what individual acts, by what species of concurrence, by what kind, of homologation, by what kind of approbation, these individuals became parties, not for the execution of the trusts, but for the execution of the acts for which they were to be made responsible." * 1 Higgins v. Livingstone, 1816, 6 Pat. 243, per Lord Eldon, C, at p. 255. Cf. s. 169, etc. 804 CHAKGES BETWEEN ALL PAETIES [chap. x. 1261. Where the truster and his son had been in business together, the truster directed his trustees to allow his son to carry on the business, making certain payments thereout, and accounting to the trustees. The trustees had power, in the event of their not being satisfied with the manner in which the son conducted the business, to put a stop to it, and have the business wound up. In the sequestration of the firm, the trustees were found not to be liable as partners. 1 1 Morrison v. Learmont, 1870, 8 M. 500. obligation 1262. A trustee who incurs an obligation as trustee is liable for as trustee ^mjfcjrights any breach of that obligation by acts that are within his rights as viduai. an individual, and unchallengeable but for his position as trustee. An embankment stood partly on land belonging to trustees as such, and partly on land belonging to one of the trustees as an individual. The trustees entered into an agreement with the tenant of the trust property, binding them not to do anything to weaken the embankment. The trustee, on whose land part of the embankment stood, made some alteration on the embankment on his own property, and the tenant of the trust property alleged that, in consequence of that alteration, the embankment had been weakened, and his lands had been flooded and damaged. It was not averred that this was done nimiously and recklessly. This was held to be a relevant averment to found an action of damages against the trustee, who made the alteration, for breach of his obligation as trustee, though it was admitted that the alteration was one that he was quite entitled to make as proprietor of the embankment, apart from his position as trustee. Prom the obligation incurred by the trustee, says Lord Benholme (Ordinary), "there seems to arise against him a responsibility or warrandice that he should do no act as proprietor which was inconsistent with what he had done as trustee. Trustees incur a warrandice from their own acts and deeds, which must extend not only to acts and deeds as trustees, but also as individuals." "To say that a private party who is a trustee," says Lord Justice-Clerk Hope, " may do in his private capacity what he could not do as trustee, is an extraordinary doctrine, both in law and in morality." x 1 Hill v. Kinloch, 1856, 18 D. 722. income tax 1263. The assessment for income tax on the trust is an on trust. assessment on the trust income of the trustees — not on the chap, x.] CHAEGES BETWEEN ALL PAETIES 805 beneficial income of the beneficiaries. Hence the trustees are not entitled to deduct, for the purposes of assessment, from the trust income, the expense of distributing the estate amongst the beneficiaries. 1 1 Inland Revenue v. Maodonald, 1894, 22 R. 88. (P) Judicial Expenses 1264. The older cases show some misapprehension as to the position of proper rule of law governing the liability of trustees for judicial expenses awarded to an opposing litigant. A clear distinction must be drawn between the position of a trustee as to judicial expenses in relation to his opponent in a litigation, and the position in relation to the trust estate in an accounting with the beneficiaries. 1 In the former position, the trustee is to be treated as an Towards individual, and may be liable as an individual to his opponent for judicial expenses awarded to him. 2 "Expenses are not awarded as in the nature of penalty, but as compensation to the successful party for the cost to which he has been put in establishing a right which his opponent ought to have known to be well founded." 3 That expenses are concluded for against the defenders " as trustees " does not limit the effect of an award implying liability as individuals. 4 In the latter position, the claim of the trustee against the Towards beneficiary. trust estate, both for judicial expenses paid to his opponent and for his own expenses in the litigation, depends, not on the con- siderations that affect questions of expenses between litigants, e.g. success, but on the propriety and bona fides of the litigation as far as the interests of the trust estate are concerned. 5 If the trustee has entered upon and conducted the litigation properly, 6 he will get his relief from the trust estate, though he has had to pay judicial expenses to his opponent. 7 1 Craig v. Hogg, 1896, 24 R. 6, per Lord Moncreiff, at p. 25. 2 Anderson, 1901, 4 F. 96 ; Bonner, 1902, 4 F. 429. 3 White v. Steel, 1894, 21 R. 649, per L. P. Inglis, quoting M'Laren, s. 2319, 3rd ed. * Kay v. Wilson, 1850, 12 D. 845, at p. 847 ; Mitchell v. Baird, 1902, 4 F. 809. 5 Of. Paterson, 1897, 24 R. 499, at p. 510. 6 See Buckle v. Kirk, 1907, 15 S. L. T. No. 45, end of opinion. » Gibson v. Pearson, 1833, 11 S. 656. Cf. s. 1181. 1265. As the trustee is personally liable to his opponent under cases for . . . guarantee of a simple decerniture for expenses, it is not m such a case a expenses, relevant defence to his claim for expenses to aver that there are no trust funds. 1 The trustee who litigates must see either that 806 CHAEGES BETWEEN" ALL PAETIES [chap. x. he has funds, or that he gets caution for the expenses, if he would avoid the risk of personal loss. 2 "Where the question at issue is whether there is a validly constituted trust or not, the trustees should always get a guarantee of their expenses from the persons whose title as beneficiaries is at stake, as the relief of the trustees here against the trust estate depends as a rule s on their success in the litigation. 1 Of. with this the liability against the trust estate of a trustee to personally implement the award of an arbitrator. Pearson v. Henry, 1792, 5 T. R. 6 ; 2 R. R. 523 ; Davies v. Ridge, 1800, 3 Espinasse, 101, 6 R. R. 817. 2 Wylie v. Smith, 1834, 13 S. 40. The decision to the contrary in Dickson v. Bonnar, 1829, 8 S. 99, is unique, and has received no countenance from later authorities. Lord Cringletie's emphatic protest against the judgment is notice- able. Some weight seems to have been given to the fact that the trustees were defenders and not pursuers of the action. Of. Robertson v. Morrison, 1823, 2 S. 479 and 553. 3 Cf. ss. 1197 and 1201. Trustee 1266. A trustee in bankruptcy who sists himself in the place mptcy. of his bankrupt is responsible to his opponent for all the judicial expenses since the beginning of the action. 1 He cannot sist himself conditionally as to his liability for expenses; he must sist himself unconditionally, if at all. 2 In the House of Lords, Lord "Watson laid it down as a ground of judgment, and with the express approval of Lord Shand, that "if a trustee chooses to litigate he must see that the creditors assent to his proceed- ings, or he must litigate at his own risk"; and the House refused to limit the order for costs to an order against the trustee qud trustee. 8 1 Torbet v. Borthwick, 1849, 11 D. 694. 2 Sandeman v. Shepherd, 1835, 13 S. 1037. Of. Watson v. Duncan, 1896, 4 S. L. T. No. 117. 3 Cowie v. Muirden, 1893, 20 R. (H. L.) 81, at p. 88. Deoernitare 1267. It is competent for the Court to award expenses against for expenses. x r ° any party before it to any extent and under any conditions it sees fit, but, having once pronounced formal judgment, its effect falls to be determined by construction of the words used, and the intention of the Court is an irrelevant consideration. The technical form of the deeerniture is therefore of importance. The proper form of deeerniture for judicial expenses awarded against "Person- a trustee is decree against the trustee "personally," where it is intended that he must pay these expenses out of his own pocket without any relief against the trust estate. 1 "Where the trustee trustee is decerned against "qud trustee only," this decree limits his onl y-" liability to the extent of the trust estate. 2 This form of decree, chap, x.] CHAEGES BETWEEN ALL PAETIES 807 though always competent, is only appropriate in cases where the beneficiaries are before the Court, 8 as the question of relief, in which they are interested, is involved. 4 Where it is desired to make the trustee liable as an individual to his opponent, but to leave the question of the trustee's relief open, the decerniture should be against the trustee as a party simpliciter. The expression " as an Decree individual" should not be inserted in the finding, for it might mwplw ' be read as implying that the trustee has litigated improperly. 6 1 Craig v. Hogg, 1896, 24 R. 6. As to his opponent's right to proceed against the trust estate upon failure of the trustee, see s. 1312. 2 Davidson v. Carr, 1850, 12 D. 1069 ; vide L. J.-C. Hope. As to a finding against statutory commissioners " qud commissioners," vide Young v. Nith, 1880, 7 R. 891. . 3 Paterson, s. 1264, per Lord M'Laren, at p. 510. This case is apt to be read in the sense that the introduction of the words "as judicial factor" would have limited the factor's liability to his opponent. Nothing more was decided than that the insertion of the limitation would foreclose the question of the factor's relief against the estate — a question it was desired to keep open. 4 Cf. s. 1180, note 2. 6 Stiven v. Reynolds & Co., 1891, 18 R. 422, at p. 426. 1268. Whether the trustee be decerned against simpliciter, or "personally," is of no interest to the opposing litigant. 1 The debtor in either case is the trustee who is found liable. 2 1 " Perhaps there are no funds," says L. P. Hope, " but a third party has nothing to do with that" (Scott v. Pattison, 1826, 5 S. 172). 2 Gibson v. Pearson, 1833, 11 S. 656, per Lord Cringletie (Ordinary). 1269. The effect of the various forms of decerniture for summary. expenses against a trustee may thus be summed up. First, where expenses are decerned for simpliciter, the trustee is liable as an individual to pay them to his opponent; and the question of relief against the estate is left open, to be tried with the beneficiaries in accounting for intromissions. 1 Second, where decree for expenses is given against the trustee "person- ally," he is not only liable as an individual to his opponent, but the question of relief against the estate is closed, and nothing can be charged against the beneficiary. 2 Third, where expenses are decerned for against the trustee "qud trustee only," his opponent's claim for expenses is limited to the available trust funds. 3 1 Paterson, 1897, 24 R. 499, at p. 510; Anderson, 1901, 4 P. 96; Kilmarnock v. Buchanan, 1911, S. C. 607. 2 Kilmarnock, supra. 3 Craig, s. 1267, as interpreted in Stewart v. Forbes, 1897, 24 R. 1112. The cautioner in the suspension there was found liable without limitation, though the suspender's liability was only as trustee. Cf. Lord Salvesen in Kilmarnock, supra, at p. 611. 808 CHARGES BETWEEN ALL PASTIES [chap. x. (b) Charges between Beneficiaries and Third Parties (1) Following Trust Estate Constructive Trustee 1270. In treating of the right to follow the trust estate, it must be noticed that it is only the right of the beneficiary that falls to be dealt with here. The right of the trustee to follow the trust estate is the ordinary case of a man following his own property. 1 In such a case another question 2 arises — Has the property which has passed into other hands assumed another shape as well ? This factor does not enter into the question to be dealt with here, except in so far as it is necessary to establishing that the property that passed was property affected by the trust of which the claimant is a beneficiary. The claim of the bene- ficiary is a claim in ■personam against the person who is affected with the trust — not a claim in rem as in the case of an individual following his own property. 3 1 See the position in Pullan v. Koe, 1913, 1 Ch. 9. 2 Cf. s. 1289. 3 The position of the beneficiary in suing an action of accounting for his interest in the estate against the constructive trustee must be distinguished from that in suing a debtor of the trustees for payment to the beneficiary of the debt due to the trustees. He has no title to sue the latter action. Cf. s. 1307. Threeciasses 1271. Constructive trusts 1 arise in three ways : First, where tive trust, an express trustee is held to have acquired, qud trustee, property other than that expressly conveyed to him in trust, he is constructive trustee of property so acquired. Second, where funds affected with a trust 2 come into the hands of another than the beneficiary, either gratuitously or with knowledge 3 of a breach of the trust, the transferee is a constructive trustee.* It is " an established principle that a person cannot avail himself of what has been obtained by the fraud of another unless he not only is innocent of the fraud, but has given some valuable con- sideration." 5 Third, where a sum of money in the hands of the owner becomes payable to the express trustee, the owner is a constructive trustee of that sum. 6 The first case has already been dealt with. 7 The latter two cases fall to be dealt with here. 1 Cf s. 4 for fiduciary relations analogous to trusteeship arising out of con- tract, including that of vendor and purchaser after sale, but before delivery by vendor. 2 There can be no proper constructive trust unless the estate to be accounted for was acquired by virtue, or has passed from, or should pass to, the holder, of a trust title. In any other circumstances, the property is being followed by its legal owner in an action in rem. Cf. Soar, infra, per Bowen, L. J., at p. 395. The transferee from an alleged constructive trustee can only be made account- able for property passing after judicial declarator that the transferor is a constructive trustee. CHAP, x.] CHAEGES BETWEEN ALL PAETIES 809 3 Note distinction between constructive notice where notice will be pre- sumed to exist if it ought to exist, and actual notice, which is a fact to be proved. Constructive notice does not apply to commercial matters and com- mercial documents (The "Draupner," Times, 18th March 1909, C. of A., Kennedy, L.J.). A mere reference in a commercial document to another document — e.g. a charter-party referred to in a bill of lading — does not put any duty upon the person acting on the document in his hands to inquire whether the contents of the document referred to affect him. The ratio of this rule is that there is no time in commercial dealings to investigate such matters, as there is in formal legal transactions (Lloyds v. Swiss Verein, Times, 25th January 1913.) 4 Soar v. Ashwell, 1893, 2 Q. B. 390, per Bowen, L.J., at p. 396. Cf. argu- ment in Dixon, 1900, 2 Ch. 561, and Keane v. Robarts, 1819, 4 Mad. 332, per Leach, V.-C, at p. 357. 6 Scholefield v. Templer, 1859, 4 De G. & J. 429, per Lord Campbell, C, at p. 433, cited by Lord Shand in Clydesdale Bank v. Paul, 1877, 4 R. 626, at pp. 628, 629, and Lord Skerrington (Ordinary) in New Mining v. Chalmers, 1912, S. C. 126, at p. 133. Lord Skerrington regards this as "the same rule of equity " as that expressed in the maxim "Nemo debet ex alienodamno lucrari," applied by Stair (i. 6, 33) to the case of money borrowed by a minor. It must be noticed, however, that the creditor of the minor has to prove that the money borrowed was applied "profitably " to the minor's use, while the inno- cent transferee of even a fraudulent breach of trust has no heavier onus than proof of having parted with "some valuable consideration," though the bene- ficiary may not have had any " profitable " application of such consideration to his use. 6 In this discussion of the law the term constructive trustee is used for any person whom it is competent for the beneficiary to call to account, though that person may be able to propound a good defence that he can instantly verify, and the term is not limited to a person who is due an actual accounting. An example of the distinction is found in the difference of the position in England from that in Scotland of a purchaser of trust estate after he has paid the express trustees, and received their discharge of the price. In either case the purchaser can be competently called to account by the beneficiary, and is a constructive trustee in the sense in which the term is used here. Such a purchaser in Scotland is not a constructive trustee in the sense of being due an actual accounting, because the selling trustee, if he has power to sell, can discharge the purchaser, and this discharge is by itself a complete answer to the call to account ; the purchaser in England is a constructive trustee in this sense unless the selling trustee has express power to discharge the purchase money. If not, the trustee's discharge is not by itself an answer to the call to account. The term constructive trustee is so often used in this sense that it is necessary to mark its distinction from the sense in which the term is used here. The position of a purchaser also illustrates the different effect of a notice of trust from that of a notice of breach of trust. Quoad the purchase money, notice of a trust is sufficient to make him a constructive trustee ; quoad the estate purchased, notice of a breach of trust is necessary. 7 Cf. s. 439. • 1272. The constructive trustee is a bare trustee in the sense Accounting by construe- that he is affected with a duty to account to the beneficiary for tiTB trustee. the estate without being chargeable in the accounting for the failure to execute any trust for him. 1 Thus an executor who Executor " holding holds the residue of the property of a deceased person virtute officii «swue. and not as an express trustee, is a bare trustee for those beneficially interested, and is not affected with any express trusts. 2 • A third party dealing with trustees is entitled to regard the Debtor ... paying to exercise of an express power of the trustees as ordinary administra- trustees. tion in the execution of their trust, and is not responsible for the misapplication of funds paid by him to the trustees in their exercise 810 CHAEGES BETWEEN ALL PAETIES [chap. x. of such a power, 3 unless there is such knowledge on the part of the third party of the intended misapplication as makes him ancillary to it. 4 Where the trustees' powers are not express, it is doubtful how far there is a duty upon the third party to see to the appli- cation of funds paid to the trustees for a purpose for which they have implied powers to deal with the estate. An example is that of selling or borrowing to pay debts. 5 onus of The onus of proof of the facts from which constructive trust is to be inferred is upon the person claiming to be the beneficiary in the trust thus sought to be declared. 6 1 The English Trustee Act of 1893 (56 & 57 Vict. c. 53, s. 50) applies to constructive as well as to express trusts (Ruddington, 1909, 1 Ch. 701). The Trusts (Scotland) Acts are limited to express trusts created in writing (47 & 48 Vict. c. 63, s. 2). 2 Mackay, 1906, 1 Ch. 25. 3 Buchanan v. Glasgow, 1908, S. C. 47, at p. 54. 4 Buchanan, ut supra. s In M'Millan v. Armstrong, 1848, 11 D. 191, it was said that money lent must be "profitably applied for behoof of the beneficiaries," but this was doubted in Buchanan, supra, per Lord Johnston (Ordinary), at p. 52. In Buchanan the borrowing was for a good trust purpose, and was not ultra vires. The trustees made a mistake in the manner in which they administered it. Much of the English case law on this subject is concerned with the position . of a purchaser from a trustee in a trust for sale. The English Conveyancing Act, 1882, s. 3, subsec. (1) (i.) and (ii.), deals with the position of a purchaser from a trustee in this connection, and the liability of the purchaser to the bene- ficiaries for the application of the purchase money by the vendor trustee (Robinson, 1911, 1 Ch. 502, at p. 513). In such a trust the English law imposes a duty on the purchaser of seeing to the proper application of the purchase money, unless the trustee has express power to discharge him. In Scotland there is no such doctrine. Lenders have no concern with the applica- tion of the money lent by the trustees upon its repayment to them if they have power to borrow (Paterson v. Caledonian Co., 1885, 13 R. 369, per L. J.-C. Moncreiff, at p. 378), and the trustee who is empowered to sell can discharge at his own hand the purchase money (see s. 1271, note 6). This was the position as expressed by Lord M'Laren in a late dictum (Buchanan v. Glasgow, 1908, S. C. 47 (unreported)). The English cases on purchase with notice of a trust must therefore be carefully distinguished. In England, however incidental the notice of trust may be, if it exists the purchaser is bound to see to the application of the purchase money, as if the trust had appeared on the face of the title (Blaiberg, 1899, 2 Ch. 340). Limited liability companies registered in England or in Ireland are prohibited from entering upon their register anything inferring a notice of a trust (Companies Act, 1 908, 8 Edw. vn. c. 69, s. 27). Where trustees in a Scots trust hold interests in such a com- pany, the practice is to endorse the document of title with a declaration of their trust (Brodie v. London and North-Western, 1912, 2 S. L. T. No. 154). 6 Corser v. Cartwright, 1875, 7 E. & I. App. 731 ; Union Bank v. Murray- Aynsley, 1898, A. C. 693, at p. 697. As to the circumstances in which a specific legatee or an annuitant can follow estate assigned by a residuary beneficiary, see Evans, ss. 735, 996, and 1002. Good 1273. Where the trust estate has come into the hands of a faith and . . . valuable third party in good faith and for valuable consideration 1 he is not considera- *■ " ° tion - a constructive trustee, and the beneficiary cannot follow the estate into the hands of the transferee. In this case the only 2 remedy of the beneficiary is against the express trustee, who, if he is in breach chap, x.] CHAEGES BETWEEN ALL PAETIES 811 of trust, will be bound to replace the estate that has been so lose. "Where, however, the third party is a gratuitous 3 alienee, who has Notice as r J ° affecting acquired trust estate, whether knowingly or not, through a breach gratuitous of trust, or is an onerous alienee affected by a knowledge of the a" i e n °ee erouB breach of trust through which he has acquired the trust estate, he is a constructive trustee of the estate so acquired. An illustra- tion of this distinction is afforded by the two cases following. In one case, clients had paid money to a stockbroker to pay for stock bought for them by him, and he paid it into his bank account, and while the money was there he failed. Here the bank account stood with an amount to the credit of the stockbroker larger than the sum paid him by the clients, and the banker was acting as a mere depositary. The clients were held entitled to follow their money into the harids of the banker in as far as it was distinguish- able. This is the ease of the conveyance to a volunteer — the gratuitous conveyance spoken of above. 4 In the other case, the facts were to all effect the same, but that the account of the stock- broker was overdrawn, and the money was paid into the bank to reduce the debit account. Here it was held that the client could not follow the money, it being used to pay a debt due to the banker. This is the case of the purchaser for valuable considera- tion, bona fide, and without notice 5 of breach of trust. 6 There is no duty upon a banker to inquire into the state of Banker. account between the trustee and the trust before transferring trust funds into the personal account of the trustee upon an ex facie valid order of the latter. 7 Even a transfer made by the bank without any request by the trustee, if made bona fide and without the intention of benefiting themselves, may be homolo- gated by the trustee. 8 The words "in trust" added to the signa- "intrust.' ture of a bank manager are presumed to mean in trust for the bank, and are not notice to a transferee from him of any other trust as affecting the money to which the document refers. 9 1 "Valuable consideration may consist in the giving of property or in the giving or surrender of something which is not property, something which is not measured by any pecuniary equivalent" (Pope, 1908, 2 K. B. 169, per Buckley, L.J., at pp. 174, 175). 2 " It is well established that you can sue a person who is liable to replace trust estate, and you may also pursue your other remedies against the trustees who have improperly dealt with it" (Smith v. Patrick, 1901, 3 F. (H. L.) 14, per Lord Davey, at p. 27 ; 1901, A. C, at pp. 294, 295). Of. Lees-u. Dun, 1912, 8. C. 50, per Lord Salvesen, at p. 66 ; att'd. sub norm. Schulze v. Tod, 1913, 1 S. L. T. No. 76. 3 A volunteer cannot retain against the beneficiary money received by a breach of trust though the breach has been condoned by the beneficiary quoad his claim against the trustee therefor (Lyons v. O'Brien, 1911, 2 I. R. 539 ; Neate v. Harding, 1851, 6 Ex. 349). 4 Cooke, 1876, 4 Ch. D. 123. Of. and distinguish Hallett, 1894, }0 T. L. K. 812 CHAKGES BETWEEN ALL PAETIES [chap, x, 287. There money was paid into an account in one bank — Hallett's — which paid it into their account in another bank— Cocks & Co.— and thereafter failed. Notice that there Hallett's bank takes the place of the stockbroker as the recipient of the money, and that Cocks' bank takes the place of the bank in Cooke. Hallett's bank, however, did not receive the money for any special purpose ; they were mere debtors for a sum of which the money in question was a part, and therefore no question of constructive trust arose. 6 For definition of constructive notice see Jones v. Smith, 1841, 1 Hare, 43, per Wigram, V.-C. 6 Thomson v. Clydesdale Bank, 1893, 20 R. (H. L.) 59. In both cases the stockbroker is really a trustee for the client, who has paid him the money for a definite purpose. Of. M'Adam v. Martin, 1872, 11 M. 33 ; Hofford v. Gowans, 1909, 1 S. L. T. No. 153. 7 Bank of New South Wales v. Goulburn, 1902, A. C. 543, at p. 550. Of. Lloyd i7. Swiss Verein, Times, 25th January 1913, on doctrine that no constructive trust arises in commercial dealings. Of. a. 1271. 8 Coleman v. Bucks, 1897, 2 Ch. 243. The circumstances here were very special (Shields v. Bank of Ireland, 1901, 1 I. R. 222, at pp. 237, 238). Of. s. 1279. London Co. v. Duggan, 1893, A. C. 506. where 1274. The crucial importance of notice of breach of trust to notice necessary. an onerous alienee — of the third party being, in the words of Lord Manners, C, "a purchaser with notice of a fraudulent title," * — as a condition of following trust funds into his hands, is thus put by Bacon, V.-C. : — " "Where a trustee, however unjustly and improperly as regards his own actions, deals with a trust fund, and parts with it to another person, justly as between those two actors in the transaction, and without notice to that other person of any want of title or any infirmity of right on the part of the trustee, no instance can be referred to in which the Court has ever said that the property so acquired upon such a transaction between debtor and creditor without notice can be interfered with on the ground that the debtor had misapplied money in his hands as trustee." 2 Again, in a case between the client of a stockbroker and the stockbroker's bankers, arising out of the misapplication by the stockbroker of his client's money, Lord Herschell, C, says : — " Under ordinary circumstances a person, be he banker or other, who takes money from his debtor in discharge of a debt, is not bound to inquire into the manner in which the person so paying the debt acquired the money with which he pays it. Even if a person receiving money knows that such money has been received by the person paying it to him on account of other persons, that of itself is not sufficient to prevent the payment properly discharging the debt due to the person who receives the money. If the person receiving the money has reason to believe that the payment is being made in fraud of a third person, the person taking such payment would not be entitled to retain the money." 3 And in the same case Lord Watson adds : — " When a chap. x.J CHAKGES BETWEEN ALL PAETIES 813 broker, or other agent entrusted with the possession and apparent ownership of money, pays it away in the ordinary course of his business, for onerous consideration, I regard it as settled law that a transaction which is fraudulent as between the agent and his employer will bind the latter, unless he can show that the recipient of the money did not transact in good faith with his agent." 4 1 Dunbar v. Tredennick, 1813, 2 B. & B. 304, at p. 319. 2 Taylor v. Blakelock, 1886, 32 Ch. D. 560, at p. 566, relying on Thorndike v. Hunt, 1859, 3 De G. & J. 563. 3 Thomson v. Clydesdale Bank, 1893, 20 R. (H. L.) 59, at p. 60. See London Joint Stock Bank v. Simmons, 1892, A. C. 201, cited by Lord Herschell, C, in Thomson as authority for the proposition that the lender must have reason to believe that the borrower was acting fraudulently (1893, A. C, at p. 285 (not in Rettie)). Gf. Simpson v. Mobson, 1895, A. C. 270, at p. 280 ; Taylor v. Forbes, 1830, 4 W. & S. 444, where a banker " assisted a trustee to act in violation of his trust " (Lord Wynford in Taylor, at p. 454), and had to refund money paid to him. 4 Thomson, supra, at p. 61 ; vide also Lord Shand, at p. 63. 1275. Though the beneficiary who is a trustee has no relief Trustee ° beneficiary. against a co-trustee for loss to the beneficiary from a common breach of trust by them, 1 he is not barred from following his estate into the hands of a third party who has benefited by the breach, and who holds as a constructive trustee for him. 2 1 S. 1144. 2 Butler v. Carter, 1868, 5 Eq. 276, per Romilly, M.R., at p. 281. 1276. "Where there is, on the part of his solicitor, 1 actual know- Knowledge of agent. ledge of breach of trust, there is an implication of knowledge on the part of the person taking the trust estate. " It is a moot question," says Kindersley, V.-C, " upon what principle this doc- trine rests. It has been held by some that it rests on this: — that the probability is so strong that the solicitor would tell his client what he knows himself, that it amounts to an irresistible presumption that he did tell him; and so you must presume actual knowledge on the part of the client. I confess my own impression is, that the principle on which the doctrine rests is this : that my solicitor is alter ego : he is myself : I stand in pre- cisely the same position as he does in the transaction, and there- fore his knowledge is my knowledge ; and it would be a monstrous injustice that I should have the advantage of what he knows without the disadvantage. But whatever be the principle upon which the doctrine rests, the doctrine itself is unquestionable." 2 1 Gf. Buchanan v. Glasgow, 1908, S. C. 47, at p. 55 — knowledge of one member of corporation does not affect corporation with knowledge. 2 Boursot v. Savage, 1866, 2 Eq. 134, at p. 142 ; but see question in Thome v Marsh, 1895, A. C. 495. Gf. Simpson v. Molson, 1895, A. C. 270. 814 CHAEGES BETWEEN ALL PARTIES [chap. x. Fraud of 1277. There is an exception to the presumption in the case agent r . of fraud on the part of the solicitor. "If a professional man is employed in a transaction, the law imputes to the client who employs him the knowledge which the solicitor so employed possesses, subject to this qualification : If the disclosure of that fact of which knowledge is sought to be fixed upon the client would have imputed fraud to the solicitor, it is not to be presumed that the solicitor did make disclosure of that fact." 1 1 Waldy v. Gray, 1875, 20 Eq. 238, per Bacon, V.-C, at pp. 251, 252, following Kennedy v. Green, 1834, 3 My. & &. 699, at p. 719. Boursot, s. 1276, seems at first sight contradictory of this, but the circumstances were special, and raised a special presumption against the purchaser. Trustee in 1278. In the case of the trustee's bankruptcy, his trustee bankruptcy. takes the estate in sequestration affected with the bankrupt's knowledge of trust. Hence the beneficiary is entitled to follow the trust estate into the hands of his trustee's trustee, and to claim it against creditors, even where the trust is a latent one. 1 "There is a great difference where the question is with the creditors of the trustee and a bond fide, purchaser. The creditors stand in the situation of the bankrupt, whereas a purchaser is entitled to rely on the holder being the true owner." 2 1 Heritable Co. v. Millar, 1892, 19 R. (H. L.) 43 ; Gordon v. Cheyne, 1824, 21 F. Dec. 444. Of. 19 & 20 Vict. c. 79, s. 102. The corresponding English Act, 46 & 47 Vict. c. 52, s. 44, reads thus: — "The property of the bankrupt divisible among his creditors, and in this Act referred to as the property of the bankrupt, shall not comprise the following particulars : (1) Property held by the bankrupt, on trust for any other person." Of. s. 1293. 2 Dingwall v. M'Combie, 1822, 1 S. 431 (3rd ed., 1834), per Lord Gillies. Of. opinions of Lords Redesdale and Eldon in the leading case of Redfearn v. Somervails, 1813, 5 Pat. 707, holding that a bond fide onerous assignee took the estate against the beneficiary where the trust was latent. Banker. 1279. Where a banker holds money on an account expressly kept as a trust account, he is a constructive trustee. 1 Hence, when a trustee opens two accounts, one personal and the other trust, the banker cannot of himself apply, a credit balance of the latter to meet a debit balance of the former, on the bankruptcy of the trustee. " If an account is in plain terms headed in such a way that a banker cannot fail to know it to be a trust account, the balance standing to the credit of that account will, on the bankruptcy of the person who kept it, belong to the trust." 2 Again, where a banker took a discharge from an executor for a sum due by the banker to the executor as executor, and applied the sum to the executor's personal account, the discharge was chap, x.] CHARGES BETWEEN ALL PARTIES 815 held not to be good against the beneficiaries. 8 And where a con- veyance adverse to the right of a beneficiary was taken by one in knowledge of the marriage-contract trust creating the beneficial interest, the conveyance was reduced. 4 1 Of. s. 1271, note 6. Contrast case of Union Bank v. Murray-Aynsley, 1898, A. C. 693. 2 Kingston, 1871, 6 Oh. App. 632, per Hellish, L.J., at p. 640. Of. Coleman, s. 1273, and see factorial account in factor's name in Alison v. Fairholms, 1765, Mor. 15132. 3 Taylor v. Forbes, 1830, 4 W. & S. 444. 4 MacGowan v. Robb, 1864, 2 M. 943. 1280. The purchaser from a constructive trustee is in the Purchase from con- same position as if he had purchased from the express trustee, 1 structiv but a purchaser with notice from a purchaser without notice is not a constructive trustee. 2 Where, however, such purchaser with notice is the express trustee himself, the trust title revives on the ground that " a person shall not take advantage of his own wrong." 8 1 Mertins v. Joliffe, 1756, Amb. 311, per Lord Hardwicke, C, at p. 312. 2 Mertius, tit supra; M'Queen v. Farquhar, 1805, 11 Ves. 467, per Lord Eldon, at p. 478. 3 Barrow, 1880, 14 Ch. D. 432, per Jessel, M.R., at p. 445. Mr. Lewin, ch. xxxi. s. 1 (4), p. 1102, 12th ed., says that this equitable doctrine follows the legal rule of market overt. If so, it is only by analogy, and the equitable doctrine laid down in Barrow is not limited to England by its analogy with the working of the purely English doctrine (Sale of Goods Act, 56 & 57 Vict. c. 71, s. 22) of market overt. 1281. Questions of considerable importance arise in connec- partner . of trustee. tion with the liabilities of partners for trust money improperly employed by a co-partner who is an express trustee. The rule to be applied in such a case is laid down by statute in these terms : — " If a partner, being a trustee, improperly employs trust property in the business or on account of the partnership, no other partner is liable for the trust property to the persons beneficially interested therein: Provided as follows: — "(1) This section shall not affect any liability 1 incurred by any partner by reason of his having notice of a breach of trust ; and " (2) Nothing in this section shall prevent trust money from being followed and recovered from the firm if still in its possession or under its control." 2 Where in the case of a firm of solicitors, one partner so acted where > partner as to make himself responsible as a constructive trustee, it was g,^™^ held that the other partner, who took no part in the transactions that fixed his partner with responsibility, and who was ignorant of 816 CHAEGES BETWEEN ALL PAETIES [chap. x. their nature, did not share the responsibility. "In my opinion," says Lord Herschell, " it is not within the scope of the implied authority of a partner in such a business that he should so act as to make himself a constructive trustee, and thereby subject his partner to And with the same liability." 3 But "where parties in the position of a knowledge. J x company are implicated in a breach of trust by one of its partners, and take the benefit of that breach of trust, they are just as much bound to repay any sum they may have got in that way as the individual partner whose active agency procured this money." 4 1 The liability is " for the trust property." Whether this includes liability for a profit made by the use of the trust property has never been tested (c/. Laird, s. 1283). But Lord Skerrington (Ordinary) points out in New Mining v. Chalmers, 1912, S. C. 126, at p. 133, that the case is unlikely to arise in practice. If it did, the statute would not exclude liability. 2 Partnership Act, 1890, 53 & 54 Vict. c. 39, s. 13. 3 Mara v. Browne, 1895, 12 T. L. R Ill, at p. 113. Of. Wynne v. Tempest, 1897, 1 Ch. 110. 4 Scottish Co. v. Falkner, 1888, 15 R. 290, per Lord Adam, at p. 306, follow- ing Imperial Association v. Coleman, 1873, 6 Eng. & Ir. App. 189. Profits. 1282. A further question arises where profits have been earned by the use of the trust money. The liability to account for such profits is categorically treated by Lord President M'Neill in the following opinion : — "It has not been fixed that whosoever makes profits in any way by the use of the funds of a trust estate is accountable for those pro- Borrower fits. If a trustee lends to third parties the trust funds upon a is not trustee. contract of loan, I know no authority which would enable us to hold the borrowers liable to account for whatever profits they might make by the use of them. If the funds should be lost, the trustee may be liable on account of his having made a recklessly insecure investment; but it does not follow that the parties borrowing the money are bound to account for the profits made by them on the trust funds." x 1 Laird, 1858, 20 D. 972, at p. 981 ; vide also Strond v. Gwyer, 1860, 28 Beav. 130, at pp. 141, 142. Of. s. 954. Partners 1283. His Lordship then proceeds to the case where the profits of express * r trustee. are ma de by a partnership and " one partner is a trustee ; and the question arises, Whether, here, the beneficiaries are entitled to demand all the profits made through the use of their funds, not only by the partner who was a trustee, but by the other partners, and from whom ? If none of the partners had been trustees, the beneficiaries could not have got these profits from the parties who made them. But here one of the partners was a trustee; the others were not. Some of the profits were made by the trustee ; chap. x.J CHAEGES BETWEEN ALL PAETIES 817 the rest of the profits by persons who were not trustees. We have no ground for holding that the other partners who earned these profits must disburse them. The liability of a trustee arises from his position, the gain having been made through his position. The other partners here did not hold that position." x Here the truster was a partner of the firm and his estate was allowed by the trustees to remain in the firm. The firm were treated as merely debtors to the trust. The question of the other partners being constructive trustees was not, and could not have been, raised, as they were not parties to the action. 2 1 Laird, s. 1282, at p. 981. Of. Vyse v. Foster, 1874, 7 Eng. & Ir. App. 318 ; Smith v. Nelson, 1905, 92 L. T. 313. (Here there was an alternative finding to the effect that the interest paid on the loan would cover any share of profits falling to the trust, if profit had to be accounted for. See p. 319.) 2 Cf. s. 1281. 1284. " The next question is — Are the trustees liable to account for the profits made, not by them, but by other parties holding no fiduciary character ? There are two branches to this inquiry — first, the liability of the trustee who was a partner ; and secondly, that of the other trustees who were not partners. . . . I cannot hold that the partner-trustee, in his fiduciary character, is to be liable to account for profits made by other parties who were not in a fiduciary character, nor do I see how the benefi- ciaries can get from him profits which he did not make, and which he is not entitled to exact from the parties who did make them. If the beneficiaries cannot demand these profits from the partner- trustee as a penalty — if the partner-trustee is not liable for the profits made by these other parties — it is still clearer that the other trustees are not liable. They have made no profits, and could make none." 1 1 Laird, s. 1282, per L. P. M'Neill, at pp. 981, 982. 1285. '' What liability did the partner-trustee incur by not enforcing payment from the other partners of the sums which were payable by them ? The answer is — all loss, if any, which the defunct's estate thereby suffered. The principle on which an executor is held to be liable to account for the profits, which he himself makes of the money which he ought to have transferred to the executry estate, is, that a trustee is not entitled to convert his office into a lucrative one for himself, and to enrich himself by exposing the money of the beneficiaries to the risks of his trade. But, in order to bring this principle into operation against any party, there must concur the two elements of his being in 52 818 CHARGES BETWEEN" ALL PAKTIES [chap. x. the position of holding a fiduciary office and of his making gain beyond the legal interest and accumulations of the money. But the alleged profits which are now in dispute were not made by him, and are not in his hands, and he has not been, and will not be, lucratus by them." 1 1 Laird, s. 1282, per Lord Curriehill, at pp. 985, 986. Agent of 1286. Agents who are employed by the trustees in the trust not ,. , , trustee. administration of the trust are not on that account liable as constructive trustees. "Strangers are not to be made construc- tive trustees," says Lord Selborne, C, " merely because they act as the agents of trustees in transactions within their legal powers, unless those agents receive and become chargeable with some unless part of the trust property, or unless they assist with knowledge fraud. m a dishonest and fraudulent design on the part of the trustees. If those principles were disregarded, I know not how anyone could, in transactions admitting of doubt as to the view which a Court of Equity might take of them, safely discharge the office of solicitor, 1 of banker, or of agent of any sort to trustees." 2 Similarly, Chatterton, V.-C, says : — " The general rule of the Court is, that an agent employed by a trustee is accountable only to the trustee who employed him, and that he cannot be considered a con- structive trustee, and held liable as such, merely because he knew of the trusts. Such an agent is not bound to see to the applica- tion of the trust funds received by him and paid over to the trustee, — at least, unless he is aware that the trustee is about to misapply the same fraudulently." 3 Thus where the agent allowed the liferenter to spend the capital of a sum then under the agent's charge, knowing the same to be a breach of trust, the agent was held liable as a constructive trustee. 4 1 Thus where solicitors advise trustees wrongly as to an investment on a contributory mortgage, they being the contributors along with the trustees, damages for wrong advice is the only remedy of the trustees against the solicitors. A claim by the trustees to priority of payment out of the proceeds of the mortgage on the ground that the solicitors are constructive trustees and so cannot set up a claim in competition with the trust cannot be maintained (Stokes v. Prance, 1898, 1 Ch. 212, at p. 225). Of Vernon, 1886, 33 Ch. D 402 a Barnes v. Addy, 1874, 9 Ch. App. 244, at pp. 251, 252 ; vide also Spencer, 1881, 45 L. T. 645 ; M'Ardle v. Gaughran, 1903, 1 I. R. 106. 3 Archer v. Lavender, 1875, 9 Ir. Rep. Eq. 220, at p. 225. 4 Morgan v. Stephens, 1861, 3 Gift 7 . 226. Of. Brinsden *. Williams, 1894, 3 Ob. loo. Maries 116 " 12817 ' Where P a y men t has been wrongly made by the trustee trasteesfor to a beneficiary, leaving creditors unpaid, 1 the creditor can follow creditors. t h e trust esta t e mto ^g hands of the beneficiary, who, being a chap, x.] CHAEGES BETWEEN ALL PAETIES 819 gratuitous alienee, 2 took it as a constructive trustee. 3 Thus Page "Wood, V.-C, says : — " Where moneys which have been paid to residuary legatees were properly applicable to the payment of the testator's debts, and must have been so applied if they had remained in the hands of the executors, the residuary legatees, standing as they do in the character of volunteers, can be in no better position than the parties by whom the payment to them was made." 4 And again : — " Even if the executor has distributed the assets under the decree of the Court, so that there is no claim against him, still creditors who come within a reasonable time, and have not in any way barred themselves, retain their right as against the legatees." 5 " Delay alone is not sufficient to prevent the creditor from asserting his right. There must be, to produce that effect, changes of position in the legatees during that period, or other circumstances which would make it inequitable to allow him to do so." 6 1 S. 721 et seq. Cf. s. 1235 for questions between beneficiaries. 2 There is no right in an unpaid creditor of the truster of higher degree, because of that position only, to follow assets into the hands of a paid creditor of lower degree (Fludyer, 1898, 2 Ch. 562 ; cf. Jervis, s. 1320). 3 S. 1319. 4 Bordham v. Wallis, 1852, 10 Hare 217, at p. 226 ; Tomlinson, 1898, 1 Ch. 232, at p. 234. 5 Blake v. Gale, 1886, 32 Ch. D. 571, per Cotton, L.J., at p. 580. 6 Blake, supra, per Cotton, L.J., at p. 578. Cf. Bidgway v. Newstead, 1861, 3 De G. F. & J. 474 ; Harrison v. Kirk, 1904, A. C. 1 at p. 7. 1288. The case must be noticed, however, where, after a pay- case where not paid ment has been made by the trustees to a legatee, there turns out of trust ij.~jta.to, out to be no assets of the truster, and the money paid is actually paid by the trustee out of his own pocket. " If the payment to the legatee were really out of the property of the executor, and not out of the goods of the testator, I do not see," says Cotton, L. J., " how any creditor could have recalled that, because the right of a creditor is to follow the assets, and it is only on that footing that he gets payment of a legacy, or calls back a legacy that has been paid where the assets were insufficient." 1 i Brogden, 1888, 38 Ch. D. 546, at p. 569. (2) Doctrine of Subrogation 1289. Not only may property change hands — it may in identifying changed addition change its shape ; and it remains to treat here how *™t estate. the beneficiary may identify the property affected by the trust through its different changes, and so make good his claim against the holder of it as a constructive trustee for him. This is, of course, tinguished. 820 CHAKGES BETWEEN ALL PAETIES [chap, x merely a particular application of the general doctrine of subroga- tion. That doctrine as applied to property was thus enunciated by Lord Ellenborough, C.J. : — " It makes no difference in reason or law into what other form, different from the original, the change may have been made, ... for the product of or substitute for the original thing still follows the nature of the thing itself, as long as it can be ascertained to be such, and the right only ceases when the means of ascertainment fails." 1 Again, Turner, L.J., says: — "It is an undoubted principle of this Court that, as between cestui que trust and trustee, and all parties claiming under the trustee, otherwise than by purchase for valuable consideration without notice, all property belonging to a trust, however much it may be changed or altered in its nature or character, and all the fruit of such property, whether in its original or in its altered state, continues to be subject to or affected by the trust." 2 cypres dis- The doctrine of subrogation must be distinguished from that of ey pres. The former is applied to a change of the form of the trust estate in all trusts, the latter to a change in the beneficiary in a charitable trust only. Thus where shares in a private firm were converted into shares in a limited company, the latter were held to be a surrogatum for the former, but the proceeds, which were directed to be distributed amongst the employees of the private firm, had still to be so applied, and not given to the employees of the limited company, as this would be extending the doctrine of cy pres to a private trust. 3 1 Taylor v. Plumer, 1815, 3 M. & S. 562, at p. 574, quoted by Jessel, M.R., in Hallett, 1880, 13 Ch. D. 696, at p. 717, and by Kay, J., in Patten v. Bond, 1889, 60 L. T. 583, at p. 585. To the statement quoted in the text Lord Ellenborough adds, "which is the case when the subject is turned into money, and mixed and confounded in a general mass of the same description." This was upset in Hallett, supra; vide criticism of Jessel, M.R., at p. 717, and see also Thesiger, L.J., at p. 723, who refers to Lord Bramwell's opinion in Cooke, 1876, 4 Ch. D. 123, as supporting same doctrine as in Hallett. Cf. Macadam v. Martin, 1872, 11 M. 33. 2 Pennell v. Deffell, 1853, 4 De G. M. & G. 372, at p. 388. See 14 Law Quarterly Review, 1898, p. 272. 3 Hedderwick, 1910, S. C. 333. 1290. The doctrine of subrogation in relation to trust funds is thus stated by a United States judge : — " Whenever a trust fund has been wrongfully converted into another species of property, if its identity can be traced, it will be held, in its new form, liable to the rights of the cestui que trust. No change of its state and form can divest it of such trust. So long as it can be identified, either as the original property of the cestui que trust or as the product of it, equity will follow it ; and the right of reclamation chap, x.] CHAEGES BETWEEN ALL PAETIES 821 attaches to it until detached by the superior equity 1 of a bond fide purchaser for a valuable consideration without notice. The sub- stitute for the original thing follows the nature of the thing itself, so long as it can be ascertained to be such. But the right of pursuing it fails when the means of ascertainment fail." 2 And " the identity of a trust fund consisting of money may be preserved so long as it can be followed and distinguished from all other funds, not by identifying the individual pieces or coins, but by showing a separate and independent fund or value, readily dis- tinguishable from all other funds." 3 1 The doctrine is purely equitable. The fiction of subrogation is only applied subject to the maxim " In fletione juris semper existit mquitas " (Wrexham, 1899, 1 Ch. 440, p. Lindley, M.R., at p. 448). 2 Lathrop v. Bampton, 1866, 89 Am. Dec. 141, per Sanderson, J., Cali- fornia, at p. 144, quoting Lewis, J., in Thompson's Appeal, 22 Pa. St. 17. 3 Lathrop, supra, at p. 145. 1291. The property which is alleged to be held under con- structive trust must be capable of being traced back under the doctrine of subrogation into actual trust property in the hands of a trustee for the claimant. Thus notes to the same amount as the trust fund that were paid into a bank account, were proved to have come from another source, and though they were in a separate account, they were not surrogatum of the trust fund. 1 Again, a truster conveyed certain property to trustees, which turned out to be of much less value than it should have been owing to the fault of a solicitor employed by the truster. From the solicitor the truster obtained a sum of damages for negligence, but the trustees failed in their claim to recover this sum as part of the estate. 2 1 Hardcastle, 1881, 29 W. R. 615. 2 Macleod, 1895, 11 T. L. R. 445. 1292. The following case is an example of the doctrine of subrogation as applied to the case of an individual following his own money. Trustees had granted a mortgage over the trust estate, and on the mortgagee calling up the mortgage, they found themselves unable to pay, from want of ready funds. In these circumstances, the trustees on another trust estate advanced the necessary money, and saved the estate from foreclosure. The lending trustees, in an action against the beneficiaries under the first trust, were found entitled to a lien over the disburdened property to the extent to which it had been disburdened by their advance. This was expressly decided on the ground that the 822 CHAEGES BETWEEN ALL PAETIES [chap. x. lending trustees, having advanced their money at the request of the trustees of the mortgaged property, were entitled to be subrogated to the claims against the "beneficiaries that would have been competent to the borrowing trustees had they advanced the money themselves to salve the property. 1 1 Patten v. Bond, 1889, 60 L. T. 583, per Kay, J. cash. 1293. The trust estate does not become immixed to the extent of becoming irrecoverable from the bankrupt's trustee simply because it has been converted into cash x or notes 2 if they remain distinguishable in the hands of the bankrupt trustee, and only cease to be so when put into circulation, where they cannot be followed. 3 1 Tooke v. Hollingworth, 1793, 5 T. R. 215, at p. 227, per Lord Kenyon, C.J. 2 Anon, case cited in Dumas, 1754, 2 Ves. sen. 585. 3 Miller v. Eace, 1758, 1 Burr. 452, at p. 457, per Lord Mansfield ; Hartop v. Hoare, 1743, 3 Atk. 43, at p. 50, per Lee, C.J. Estate pre- 1294. Where a trustee is directed to purchase land, there is converted a presumption that a purchase made by him is a fulfilment of under power and to be that direction, and therefore with trust funds, and that the land surrogatum. 7 forms trust estate. The principle was thus stated by Lord Talbot : — " Where a man is under an obligation to lay out £30,000 in lands, and he lays out part as he can find purchases which are attended with all material circumstances, it is more natural to suppose those purchases made with regard to the obligation than without it ; . . . more natural to ascribe it to the obligation he lies under than to a voluntary act independent of the obligation." x The length this doctrine has been carried is illustrated by a case where an agent fraudulently spent money given him by his principal to buy grain, and instead ordered some on credit. It was held that the grain bought on credit was a surrogatum for the money, though in this case it is the thing into which the money should have been converted, not that into which it had actually been converted. 2 1 Lechmere, quoted by Stuart, V.-C, in Mathias, 1857, 3 Sm. & Giff. 552 at pp. 560, 561. Cf. s. 633. 2 Harris v. Truman, 1882, 9 Q. B. D. 264. Snitaed nds 1295- The P rinci P le expressed in the maxim quod debet fieri phonal. f acile presuviitur, and that underlies the presumption that con- version of trust estate is made under a power, is thus applied by Jessell, M.E., "to the case of a trustee who has blended trust moneys with his own. It seems to me perfectly plain chap, x.] CHARGES BETWEEN ALL PARTIES 823 that he cannot be heard to say that he took away the trust money when he had a right to take away his own money. The simplest case put is the mingling of trust moneys in a bag with money of the trustee's own. Suppose he has a hundred sovereigns in a bag, and he adds to them another hundred sovereigns of his own, so that they are commingled in such a way that they cannot be distinguished, and the next day he draws out for his own purposes £100, is it tolerable for anybody to allege that what he drew out was the first £100, the trust money, and that he misappropriated it, and left his own £100 in the bag ? It is obvious he must have taken away that which he had a right to take away — his own £100. What difference does it make if, instead of being in a bag, he deposits it with his banker, and then pays in other money of his own, and draws out some money for his own purposes ? Could he say that he had actually drawn out anything but his own money ? This money was there, and he had a right to draw it out ; and why should the natural act of simply drawing out the money be attributed to anything except to his ownership of money which was at his tankers'." His Lordship then refers to the rule in Clayton's case, 1 by ^se tons vhich " you attribute the first sum drawn out to the first sum paid ia," which rule does not " in the slightest degree affect the principle," which he has laid down, that rule being " a mere presumption " 2 that gives way to "evidence of circumstances from which a contrary intention must be presumed." 3 1 Devaynes v. Noble, 1816, 1 Mer. 572; 15 R. R. 161 ; 3 Ruling Cases, 329. A. lucid statement of the law and the position of Clayton's case therein is to be found in Lord Macnaghten's opinion in the case of "The Mecca," 1897, A. C. 286, at pp. 293 et seq. Cf. Hay v. Torbet, 1908, S. C. 781. 2 The rule in Clayton's case is founded upon a presumption of the creditor's intention which will be rebutted by an inference from the conduct of parties to a different effect. Deely v. Lloyd, 1912, A. C. 756, at p. 771. 3 Hallett, 1880, 13 Ch. D. 696, at pp. 727, 728, overruling Brown v. Adams, 1869, 4 Ch. App. 764 ; see Oatway, 1903, 2 Ch. 356. Cf. Davis v. Petrie, 1906, 2 K. B. 786, at p. 791. Clayton's case applies between two beneficiaries ; vide Fry, J., in Hallett, at p. 699. Mutton v. Peat, 1899, 2 Ch. 556. Interest is presumed to be paid before principal, Parr v. Yates, 1898, 2 Q. B. 460. Cf. Ulster, 1889, 25 L. R. Ir. 24. 1296. "Where a party does an act which may be lawful, a Court of justice will, even in favour of the party doing it, intend that it was so, until the contrary is shown ; and a fortiori will the Court so intend in favour of a stranger, who would be injured by a different intendment. If £20,000 consols were standing in the name of a party who was trustee of one moiety and beneficial owner of the other moiety, and that party were to sell and transfer 824 CHAEGES BETWEEN ALL PARTIES [chap. x. Allocation of pay- ments to beneficiary out of funds. Payment by debtor both of trust and of trustee. £10,000 of the stock, it cannot, I think, be doubted for a moment that a Court of Equity would, as against the trustee and his assignees in bankruptcy, hold that the £10,000 transferred was the property of the bankrupt, and that the remaining £10,000 was not the property or in the order and disposition of the bankrupt, but was subject to the trust." 1 In a case of a mixed account in the name of a trustee the Court will disentangle the account and separate the trust mone7S from the private moneys, and award the former specifically to the trust beneficiaries. 2 1 Pinkett v. Wright, 1842, 2 Hare, 120, per Wigram, V.-C, at p. 129. Of. Hallett, 1894, 10 T. L. R. 287. 2 Jopp v. Johnston, 1904, 6 F. 1028. 1297. The maxim quod fieri debet facile presumitur is also applied to payments made to the beneficiary of more than one fund held by the same trustee without allocation be tweet the funds. " The equitable rule seems to be that where a trustee holds two different funds for the same beneficiary and makes indefinite payments to the beneficiary without fixing at the time from which fund the payments come, ther. these indefinite payments must, whenever occasion arises, be equitably apportioned between the two trusts if the trustee held funds belonging to both, or must be held to have been made from that fund or trust of which the trustee at the time had a balance in his hands, and not from any other trust of which at the time the trustee had no balance in his hands from which the payment could be made." 1 Where the same person is debtor to the trust estate and also to the trustee individually, and the trustee receives payment of his debt, he is bound to divide it pro rata between the trust estate and himself, "since he is bound to take as good care of the trust property as of his own." 2 1 Beith v. Mackenzie, 1875, 3 K. 185, per Lord Gifford, at pp. 187, 188, delivering the opinion of the Court. 2 Scott v. Bay, 18 Pick, 360, cited in Lawson's Rights, Remedies, and Practice, s. 2028, note 5. Cf. Rochefoucauld v. Boustead, 1898, 1 Ch. 550. Failure to identify. 1298. "Where a trustee, in violation of his trust, invests the trust property or its proceeds in any other property, the cestui que trust may elect to hold the substituted property subject to the trust, or to hold the trustee personally liable to him for the breach of trust. The former he can do, however, only when he can follow and identify the property, either in its original or sub- stituted form. If this cannot be done, the right of the cestui que chap. x.J CHAKGES BETWEEN ALL PAETIES 825 trust to elect is gone, because its exercise has become impossible, and he is therefore forced to rely upon the personal liability of the trustee. When thus forced to rely upon the personal liability of the trustee, a cestui que trust occupies a position towards the estate of the trustee which is no better, but is identical, with that of a simple contract creditor." 1 In such a case, therefore, he has no claim against his trustee's trustee in bankruptcy as holding by a constructive trust for him. 1 Lathrop v. Bampton, 1866, 89 Am. Dec. 141, per Sanderson, J., California, at pp. 144, 145. 1299. " When the purchase," says Jessell, M.R., " is clearly Purchase with mixed made with . . . the trust money . . . the beneficial owner is fund - entitled at his election, either to take the property, or to have a charge on the property for the amount of the trust money. 1 But . . . where a trustee has mixed the money with his own, there is this distinction, that the beneficial owner can no longer elect to take the property, because it is no longer bought with the trust money simply and purely, but with a mixed fund. He is, however, still entitled to a charge on the property purchased, for the amount of the trust money laid out in the purchase ; and that charge is quite independent of the fact of the amount laid out by the trustee. The moment you get a substantial portion of it furnished by the trustee, . . . the right to the charge follows." 2 Where trustees are ordered to replace a fund which they have Lien on investment improperly invested, and the sale of the improper security is tuinind postponed at the desire of the trustees, the beneficiaries have " a lien on, or a claim to be enforced against the property, if the money is not otherwise provided," till the time at which it is realised. 3 1 Cf. Vernon, 1886, 33 Ch. D. 402, a charge on a substituted security. 2 Hallett, s. 1295, supra, at p. 709. 3 Whiteley, 1886, 33 Ch. D. 347, per Cotton, L.J., at p. 355. 1300. "When a trustee pays trust money into a bank to his Money paid A into hank. credit, the account being a simple account with himself, not marked or distinguished in any other manner, the debt thus constituted from the bank to him is one which, as long as it remains due, belongs specifically to the trust as much and as effectually as the money so paid would have done, had it specific- ally been placed by the trustee in a particular repository and so remained." 1 1 Pennell v. Deffell, 1853, 4 De G. M. & G. 372, per Knight Bruce, L.J., at p. 383 ; followed in Macadam v. Martin, 1872, 11 M. 33. Cf. Jopp, s. 1296. 826 CHAEGES BETWEEN ALL PARTIES [chap. x. (e) Claims by and against Trust Agents (1) Claims against Trustees by Trust Agents 1301. That trust agents in general have a claim for their remuneration against the trustees personally, irrespective of the extent of the trust estate, has been doubted. 1 Where a trust agent was also a trustee and a beneficiary, it was held that nothing short of "the most express legal covenant" between him and his co-trustees, who were not beneficiaries, would bind such co- trustees as individuals to make good the sums due to him as trust agent. 2 Still the presumption that the trustee contracts as an individual with third parties, where he has not limited his occasional liability, seems to apply. 3 Where the agent performs incidental agents. work on the employment of the trustee, there seems no room for doubting that the trustee is liable as an individual. In Permanent the case of the permanent agents of the trust, on the other agents. hand, it may well be held that there is an implied contract that they will have no claim against the trustee beyond the trust funds. It is greatly a question of fact in many cases. The intimate knowledge of the exact state of the trust available to an agent in the position of the solicitor or the factor may be held to instruct dependence by him on the trust estate alone for his remuneration. 4 1 Lord M'Laren says that " the presumption is that he is employed as agent for the estate, and not on the personal responsibility of the trustees or trustee " (M'Laren, s. 2296). If the word " only " is added to this statement, it would appear to be a better definition of the position ; but see Lord Low (Ordinary) in Ferme, s. 1302. 2 Cullen v. Baillie, 1846, 8 D. 511 ; vide L. P. Boyle, at p. 517 ; affd. as Manson v. Baillie, 1855, 2 Macq. 80. 3 M'Gregor v. M'Lennan, 1898, 25 R. 482, per L. P. Robertson, at p. 484 ; and see Lord Cran worth in Manson, supra, at p. 81. Of. ss. 1190, and 1302. In Dee Estates, 1911, 2 Oh. 85, the assumption of the personal liability of the trustees to the solicitor underlies the opinions and judgment. 4 Of. s. 1249. The case of Swan v. Wright, 1829, 7 S. 268, is cited by Lord M'Laren, s. 2299, as supporting the proposition that the trustee is personally responsible for having paid over the trust funds without satisfying the trust agents' claims, but the case is very special. (2) Claims against the Trust Estate by Trust Agents Agentciaims 1302. A trust agent has no claim against the trust estate in against ° thr a ou™ enciar y- were sufficient funds to pay both claimants at the time when the legatee was paid, the creditor must claim first against the trustee qud trustee, and then against him qud individual. 2 If the trust funds have become exhausted, and the trustee is unable personally to meet the debt, the creditor can then call the legatee to account for the trust funds paid to him, and demand payment of the debt to the extent of such funds. 3 It has been laid down that to make good this claim against the legatee, the creditor must have made a claim against the executor, debito tempore* But even if the creditor ° in -mora. creditor has not made his claim debito tempore, though he has no claim for his debt against the trustee, he can still call the bene- ficiaries to account. His claim is, first, against the residuary beneficiary for his whole debt if the residue is sufficient to meet it and if not, second, against pecuniary legatees. As the creditor Extent of claim. was to blame in allowing the estate to be paid away, he is only allowed to claim from each beneficiary the proportion of his debt by which that beneficiary's share would have been affected had the debt been paid out of the estate before distribution. 6 This also applies to his claim against any part of the estate still undistributed. He cannot claim his whole debt from any one pecuniary legatee and leave him with the burden of enforcing contribution against the others. 6 Where the creditor has claimed debito tempore and creditor • claiming the fund has been paid away improperly as regards his claim, wmeousiy. which includes the case where a contingent debt has emerged, as a call upon shares, 7 if his claim cannot be met by the trustee personally, the creditor can claim payment of his whole debt out Extent of 836 CHAEGES BETWEEN ALL PAETIES [chap. x. against residuary. of any estate left in the hands of the trustee, or he can sue any legatee who has received payment for the whole debt to the extent of the legacy, and throw the burden of seeking recourse against the trustee or the other legatees upon the beneficiary whose interest has been taken to satisfy the debt. 8 A specific legatee has a claim for repetition against a residuary legatee where an appropriated investment of the specific legacy has failed to meet it when due, unless the specific legatee has assented to the appropriation. 9 1 In Buik v. Patullo, 1854, 17 D. 44, the question was whether they had been paid. Of. a. 745. 2 Gillespie v. Riddell, 1908, S. C. 628, per Lord Salvesen, Ordinary, at p. 636, and Lord Kinnear, at pp. 636, 637. Of. Armour v. Glasgow, 1909, S C 916 3 Jervis, s. 1320. Of. s. 1287. See Lees v. Dun, 1912, S. C. 50 ; aflfd. sub worn. Schulze v. Tod, 1913, 1 S. L. T. No. 76. 1 St. Andrews v. Forbes, 1893, 31 S. L. R. 225, discussing Wyllie v. Black, 1853, 16 D. 180, which followed Kobertson v. Strachans, 1760, Mor. 8087, and was followed by Threipland v. Campbell, 1855, 17 D. 487. Of. Ridgway v. Newstead, 1861, 3 De G. F. & J. 474, and cases there. How soon a claim must be made so as to be held as made debito tempore has never been decided. Vide article in 6 Juridical Review, 1894, p. 89. Of. Croydon, 1908, 125 L. T. Jo. 282, where claim against trustees barred by lapse of time, but not claim against beneficiaries. 6 Under the Law of Property Amendment Act, 1859 (22 & 23 Vict. c. 35, s. 29), the unpaid creditor, who is in mora in making his claim against the trustee has a right to claim against the paid beneficiary, but only to the extent to which that beneficiary has received what would have come to the creditor had he made his claim timeously. 8 Gillespie v. Alexander, 1826, 3 Russ. 130, per Lord Eldon, C. ; Greig v. Somerville, 1830, 1 Russ. & My. 338, per Lord Lyndhurst, C. 7 National Assurance v. Scott, 1909, 1 I. R. 325. 8 Davies v. Nicolson, 1858, 2,De G. & J. 693. 9 Salaman, 1907, 2 Ch. 46. Trustee's claim for relief against beneficiary. 1320. When the executor has in breach of trust paid away to a beneficiary funds due to a creditor, and is held to be person- ally liable to pay the unpaid creditor, the executor, where he paid away the funds in knowledge of the existence of the creditor's claim, has no claim for repetition against the beneficiary. 1 If the creditor's claim were not actual but possible merely, e.g., for calls on shares, 2 or a liability under a lease, 3 the executor can claim repetition from the beneficiary to the extent of indemnifying himself for the claim paid to the creditor. 4 1 Jervis *. "Wolferstan, 1874, 18 Eq. 18, per Jessel, M.R., at p. 25. 2 Jervis, supra, followed in Whittaker v. Kershaw, 1890, 45 Ch. D. 320 Such contingent claim is not knowledge of a creditor's claim (Jervis) Of Stewart, in s. 729. ' J ' 3 Noble v. Brett (No. 2), 1858, 26 Beav. 233. 4 As to claims between the legatees, special and residuary, resulting from the creditor's claim against funds in the hands of the executor, or against him personally, after partial distribution of the estate amongst beneficiaries vide Noble, swpra, and Prowse v. Spurgin, 1868, 5 Eq. 99. chap, x.] CHAKGES BETWEEN ALL PAETIES 837 1321. Where the beneficiary is the true dominus litis, the Judicial " expenses person litigating with the trustee has recourse against the bene- js 1 '""* ficiary personally for the expenses awarded in the litigation. Where " a beneficiary or a creditor under a trust, voluntary or judicial, desires to try some question which the trustee or trustees decline to try themselves, but which they agree 1 to allow the creditor or beneficiary to try in their name and at his own expense, it is always understood that the creditor or beneficiary, although not appearing in the suit, and having only an indirect interest in its subject-matter, is yet liable, in case of failure, for the expenses to the opposite party." 2 1 Of. express authority to directors required to make shareholder personally- liable to creditor of company (Risdon v. Furness, 1906, 1 K. B. 49). 2 Fraser v. Malloch, 1896, 23 E. 619, per Lord Kyllachy (Ordinary), at p. 624. APPENDIX APPENDIX NOTE ON VESTING Vesting is the technical term used to denote the acquiring of an Definition. attachable 1 right in, or to, property forming the subject of a gift. 2 The right in property is acquired where the gift is by direct conveyance to the donee ; the right to property where the gift is by conveyance to trustees for his behoof. The questions of vesting with which this note is concerned arise only in connection with the latter right. A direct conveyance with a destination of the gift altering the Heritable destination natural order of succession to the first taker of the fee 3 is in distin- guished. practice limited to conveyances of heritage, 4 and the principles applicable to the construction of such a conveyance are inapplic- able to that of an indirect conveyance through the medium of a trust. 5 In this case, vesting is the acquiring of a right of action 6 The trust by the beneficiary against the trustee permanently affecting the " c ^* n of allocation by him of the beneficial interest in the property of which he is the legal owner, and the questions at issue always are, At what date did the truster intend the trustee to recognise the existence of such a right ? and, What did the truster intend that right to be ? The answer to the first question decides the date of vesting ; the answer to the second the nature of the right vested. 1 The Bankruptcy Consolidation Bill, 1913, distinguishes between a right that is "attachable," and one that is only " capable of voluntary alienation," s. 97 (1). The latter is referred to as a " non- vested contingent " right, s. 97 (4). 2 The gift must be actual, as it always is where a trust exists, and not merely an expectancy, before any question of vesting can arise. Cf. ss. 373 and 961. 3 In the case of rights to current income, such as liferent rights and annuities, vesting and payment cannot be dissociated, as the right of action is only contemporaneous with the existence of the beneficiary. 4 For substitution in movables, see s. 750. The expression " substitutional gift " has been introduced (see Addie, 1913, 1 S. L. T. No. 120) from the law of England. This expression does not refer to a gift to a substitute in the sense of the Scots law, but to a gift to a conditional institute who is instituted not as an independent, original, or substantive donee, but as the natural heir of a prior conditional institute, and takes the gift affected by the same con- ditions as the prior conditional institute {cf. Fraser, 1913, 1 S. L. T. No. 74). 6 Turner v. Gaw, 1894, 21 E. 563, per Lord M'Laren, at p. 567. 6 Though the thing vested is always a right of action, a contingent bene- ficiary may have a right of action that is not vested, but is a purely personal jus, affecting the administration but not the allocation of the trust estate, such as 'a right to an accounting. Cf. ss. 373 and 961. "Right of action" is hereinafter used as defined in the text. S41 Value of precedent. 842 APPENDIX intention The intention of the truster is the sole test of what the soie'test. 1 answers should be, and the law of vesting is properly confined to supplying the inquirer with some general principles as "guide posts" 1 to the discovery of that intention. A considerable amount of reported case law has grown up around these " guide posts," but there appears continually throughout the opinions in these cases a warning as to the danger of applying them to any particular question of vesting that does not arise upon the construction of a deed identical in every part with that there under discussion. Naturally this condition is not met with in practice in cases requiring judicial decision. Thus in 1846 Lord Jeffrey says: — ''As Lord Fullerton has observed, every one of those cases of vesting must depend on its own circumstances, and there is no one that can be cited as a precedent for another." 2 In 1896 Lord Kinnear speaks of "ascertaining the fair meaning of the words used in the deed according to the ordinary acceptation of language, irrespective of any previous decision." 3 And in 1912 Lord Skerrington says, after referring to certain cases cited at the bar : — " I have dealt with these authorities as being more or less in point ; but, after all, the present case, like all others of its kind, must be decided upon the best construction one can put upon the language of the particular instrument under consideration." 4 Similarly, in England, Eomilly, M.R., in 1857, says : — " I cannot say that any precedents assist us in a case of this description. 1 have come to this, opinion of the case from a perusal of the whole will " ; 6 and Chitty, J., in 1893, speaks of it being " preferable that the mind should be saturated with the actual will under consideration than be beguiled by the consideration of decisions on similar questions arising on other wills." 6 Again in 1912, in the House of Lords, Lord Haldane, C, says: — "In cases of this kind, cases of wills of personal estate, it is useless in nearly all cases to try to compare the will under consideration with some other will upon which there has been a decision. The will in each case must be read as a whole, and unless the words are substantially identical, very little light can be got from a decision on any other will, except so far as that decision lays down some general principle of construction of wide application." 7 * Inverclyde, 1910, S. C. 420, per L. P. Dunedin, at p. 425. 2 Robertson v. Davidson, 1846, 9 D. 152, at p. 161 3 Blackburn, 1896, 22 R. 698, at p. 703. 4 Swan, 1912, S. C. 273, at p. 279. 6 Bennett v. Wyndham, 1857, 23 Beav. 521, at p. 528. 6 Doane, 1893, 10 T. L. R. 100. ? Walford, 1912, A. 0. 658, at p. 664, instancing the case of Lord, 1867 2 Ch. App. 782 (see s. 1101), as laying down such a principle. APPENDIX 843 In the face of a stream of judicial opinion in this direction, any useful purpose to be served by individual cases on a pure question of vesting can only be attained after a perusal of a full report of a case dealing with a deed in terms throughout 1 similar to those of the deed under discussion — not only similar in a disputed expression or clause, which is all that either text-book or digest can, and that most reports do, deal with. The " guide posts " to the truster's intention take the form Guiding „ . presump- ot certain presumptions. The first presumption is that the f^ tt intention of the truster has been literally expressed by him. expreasei1 - The only criterion of his intention is the " meaning of the Technical .. words. words used by him. 2 The Court must apply "common sense to the words which the truster has used " and not speculate as to his intention being something which he has not suc- ceeded in expressing correctly. 3 Thus "words employed in the vocabulary of ordinary life" are to be given their "natural ordinary meaning," and not " an artificial, secondary, or technical meaning," 4 but where technical words are used, even by a layman, which have " an intelligible conventional meaning," they are not to be held as having been used with any other meaning, " unless the context of the instrument shows that the maker of the deed intended to do so." 5 The leading example of the application of this presumption is the interpretation put by the Court upon an unqualified reference to death as the time limit of a contingency. This is held to mean that the contingency is operative during life and entails a forfeiture. Thus where there is a gift to A. with a gift over to B. upon the contingency of A. dying without issue, the contingency is not limited to A.'s death before B., but extends to A.'s death at any time without issue. Therefore where B.'s interest has lapsed by his predecease of the truster and A. dies without issue, the gift to A. also lapses and falls into residue or into intestacy. 6 The unambiguous statement of the truster is not subject to inter- pretation on the strength of any such presumption as that in favour of vesting or that against intestacy. The presumption that he has expressed his intention correctly can only be rebutted by words used by him in another part of the deed of such a 1 For effect of a slight difference, see Addie, 1913, 1 S. L. T. No. 120. 2 Morrall v. Sutton, 1841, 14 L. J. Ch. 266, per Parke, B., at p. 269. 3 Walford, 1912, A. C. 658, per Lord Haldane, C, at p. 664. 4 Young v. Robertson, 1862, 4 Macq. 314, per Lord Westbury, C, at p. 325. 6 Hamilton v. Ritchie, 1894, 21 R. (H. L.) 35, per Lord Watson, at p. 36. 6 O'Mahoney v. Burdett, 1874, 7 Eng. & Ir. App. 388. 844 APPENDIX Meaning direction to convey heritage. First claimant to take gift. Inter vivos trust. Testamen- tary trust. Mutually exclusive claims. Survivor- ship. nature as to show his intention to be other than his literal expression of it in the clause of gift. 1 A conflict of opinion has arisen over the application of this presumption to the case of a direction to trustees to convey heri- tage to a series of beneficiaries. On the one hand, the destination in such a gift has been treated as intended by the truster to be a conditional institution of successive claimants upon the trustees for the conveyance in fee simple ; 2 on the other hand, it has been treated as intended by the truster to be a direction to settle the heritage upon the beneficiaries as substitutes in a heritable destination. 3 It is not clear how a right of action by a beneficiary against the trustees can differ in the case of heritage from that in the case of movables under a similar trust direction. The second presumption is that a right of action is intended by the truster to be recognised by the trustees as soon as it is recognisable. This presumption is generally expressed in the form of a rule to the effect that the law favours vesting. In an inter vivos trust, e.g. a marriage-contract trust, a right of action becomes recognisable whenever the trustees acquire a legal interest in the trust estate, 4 — in a testamentary trust on the death of the truster. Hence the familiar expression in such a trust that vesting is pre- sumed to take place a morte testatoris. If there are two or more recognisable rights of action, and the claims thereunder are mutually exclusive, the time at which the trustees are intended by the truster to recognise any one of these rights does not arrive till the date at which some contingency affecting them has been resolved, and this has given priority to one of them. If no other date is indicated by the truster for this purpose, the decisive date is that of payment of the gift. 5 In practice the vesting of a right in a beneficiary is made to turn upon one or more of three events — birth, marriage, or death. 6 The first two, birth and marriage, are always contingencies — events which may or may not happen. The third — death — is an event certain to happen but uncertain as to when it may happen. It is, therefore, by itself a condition certain but in relation to another event — not too remote — a condition contingent. "Where the death of a beneficiary is referred to as a contingency affecting his i Ward v. Lang, 1893, 20 E. 949, per Lord Kinnear, citing Wake v. Varah 1876, 2 Ch. D. 348, as an example. > s » * «■", 2 Marshall, 1900, 2 F. 1023. Of. ss. 752 and 815. 3 Baillie v. Whiting, 1910, S. C. 891. Of. p. 841 (note 4). 4 See, e.g., Boyd, 1905, 7 P. 576. 6 Edwards, 1852, 15 Beav. 357; O'Mahoney, supra; MacKinlay 1911 56 Sol. J. 142. ' 6 Conditional gifts are dealt with in s. 833. APPENDIX 845 interest, but no event is indicated as creating the contingency, it is presumed that the event is the death of the truster. 1 Where the event creating a contingency is the death of an indicated person, the presumption is that the death of that person before the date of payment is intended. 2 Where a direction to pay to an indicated person upon an indicated date is the only foundation for a claim upon the trustees, no right of action by him is to be recognised till that date. 3 Where the date of death of an indicated person is referred to only as the date of payment of a gift previously made to another, his right of action is to be recognised as existing at the opening of the trust, payment in this case being postponed by a condition certain, and not by a contingency. Where the right of action is one by a class, the position Class gift. of individual members of the class inter se must not be con- fused with that of competing and mutually exclusive claimants. Where there is a gift to all the members of an indicated class, the class takes the place of an individual beneficiary in a ques- tion of vesting. If any member of a class is in existence at the date upon which, had the gift been to an individual, he would have taken a vested interest, the class takes a vested interest, and any member of the class in existence at the date of payment, though a different individual from that in existence at the date of vesting in the class, shares in the gift. 4 Of the many possible rights of action, the term " vesting " was vesting originally limited to such as were indefeasible. When the term defeasance, was so limited the common contingency of birth gave rise to a difficulty. Where a child who might be born to a beneficiary was given a claim, was its claim to be dealt with as a competing and exclusive claim to that of the living beneficiary? If so, vesting in the living beneficiary was suspended till the date of payment. The difficulty was met by regarding the claim of the child, not as an exclusive claim but merely as a derivative one, intended to meet the event of the possible parent not surviving the truster. 6 Another solution, however, has been offered by a develop- ment of the law of vesting, which, under the influence of the 1 Allen v. Farthing, as explained from MS. in Jarrnan on Wills, chap, lvii vol. ii. p. 2160 (6th ed.) ; Peacock, 1885, 12 R. 878. 2 Peacock, supra; Young v. Robertson, 1862, 4 Macq. 314 ; Brysonw Clark, 1880, 8 R. 142 ; Baillie, supra. 3 Bryson, supra. 4 O'Reilly or Carleton v. Thompson, 1867, 2 Paterson's App. 1534 ; 8 M. (H. L.) 151. 6 O'Reilly or Carleton, supra ; Hay, 1880, 17 R. 961, at p. 965 ; see Lord Kyllachy (Ordinary) in Wyllie, 1906, 8 F. 617. 846 APPENDIX Right, not vesting, is defeasible. Heirs. Issue. presumption that when a right of action is recognisable it is intended to be recognised, extended the term " vesting " to in- clude rights that are defeasible. The doctrine known as "vesting subject to defeasance" has been looked upon as an illogical develop- ment of the law of vesting — it has been regarded as " a contradic- tion in terms." 1 This view assumes that the right vested can only be an indefeasible one as if it had its origin in a direct conveyance. Where, however, there is a trust, the gift is a right of action, and this can be conditioned in any manner desired by the truster. It is the vested right and not the vesting of it that is defeasible. 2 The development of the doctrine of vesting subject to defeasance is a recognition of the fact that the claim of the beneficiary is a right of action and not a real right. This doctrine first took shape in a case where the influence of this presumption upon it is seen in the opinion of Lord Blackburn : — " It is in general for the benefit of the objects of the testator's bounty that they should be able to deal with their expectant interests at once, . . . and therefore it is to be presumed that a testator intends the gifts he gives to be vested subject to being divested rather than to remain in suspense. As it is no more than a presumption of his intention it must yield to anything in the testamentary deed which shows a contrary inten- tion." 3 Where " heirs " or " issue " are made beneficiaries, they are therefore now treated as conditional institutes whose claims suspend indefeasible vesting in the institute. 4 The claim of issue, however, being a claim contingent upon the happening of a sub- sequent event, does not suspend vesting altogether, and a defeasible right is presumed to vest in the institute a morte. 5 The claim of " heirs " raises a different question, as the existence of heirs is not a contingency, as the existence of " issue " is. The heirs of the institute are certain to exist and to survive him, and their claim should, therefore, suspend vesting of any right in him. The question is not in a settled state, but it would appear that where the truster gives a right to A. " and his heirs," the Court may hold that the truster does not mean this to be i Searcy v. Allbuary, 1907, S. C. 823, per L. P. Dunedin, quoting with approval Lord Rutherfurd Clark. 2 Vide Lord Shand in Smiths v. Chambers, 1877, 5 R. 97, at p. 122. 3 Taylor v. Gilbert, 1878, 5 R. (H. L.) 217, at p. 221. Of. Lord Colonsay in O'Reilly or Carleton v. Thompson, 1867, 2 Paterson's App. 1534, at p. 1537. 4 Bowman, 1899, 1 P. (H. L.) 69, and see discussion of position by Lord Low in Cairns, infra. ■o Corbet v. Elliot, 1906, 8 P. 610 ; Cairns, 1907, S. C. 117 ; Searcy v Allbuary, 1907, S. C. 823 ; Penny v. Adam, 1908, S. C. 662 ; Nisbet, 191 1, 2 S. L. T. No. 66. The fact that the conditional institution is in a separate clause, as in Searcy, instead of in the same clause as the gift to the institute as in Corbet, makes no difference. APPENDIX 847 equivalent to A., " whom failing, to his heirs," but to be a merely derivative right or substitution, not suspending the vesting of an indefeasible right. 1 Though the doctrine of vesting subject to defeasance is enunciated in quite general terms by Lord Blackburn, 2 its application was at first limited to the circumstances of the case in which it was enunciated, viz. the condition subsequent of the birth of a more favoured claimant. The doctrine in that stage of development has been thus stated by Lord Kyllachy : — " Where in a will or settlement a gift, either of Doctrine of defeasance a legacy or a share of residue, is so expressed that, notwith- defined. standing a postponed term of payment or distribution, there is at the testator's death no obstacle to immediate vesting, except the existence of contingent interests, either prior or subse- quent, conceived in favour of issue (either the legatee's issue or the issue of some other person, e.g. a liferenter), the contingency thus affecting the legatee's right is presumed to constitute not a sus- pensive, but only a resolutive condition operating a divestiture if the issue exist and survive, 3 but otherwise not operating at all." 4 Later the doctrine has been applied to the existence of a widow Extension of, doctrine of of the possible parent as an alternative contingency to that of the defeasance. existence of issue at the date of the opening of the enjoyment of the gift. 5 In this case 6 the general nature of the doctrine was emphasised. The application of this doctrine seems to afford the proper solution of a vexed question of trust law, viz., What is the right of a sole indicated beneficiary, whose interest is vested, but is subject to a later date of payment ? If the expression " vested right " may sole bene- . ficiary with* be interpreted so as to include any right of action that is only payment defeasible by a simple contingency, this covers the case of the vesting of a right in a sole indicated beneficiary to payment on a given contingency — viz. the survivance of a specified age later than the date of vesting. 7 As a clearly expressed contingency may even operate a complete forfeiture of a gift and pass 1 Thompson v. Jamieson, 1900, 2 F. 470. 2 Taylor, supra. 3 Whether the issue must survive the date of payment (Cairns, supra; Penny supra) depends upon the nature of the contingency that defeats the defeasible right, such as whether the gift is substitutional or independent in the case where the defeasible right was in the parent (see p. 841, note 4). 4 Cairns, 1907, S. C. 117, at p. 122. 6 Coulson, 1911, S. C. 881. 6 Coulson, supra. 7 In the typical case in question here, the right is expressly vested at a date before payment, and this case must be distinguished from that where vesting is itself in question, and would be suspended by the contingency. 848 APPENDIX it to the truster's heir at law, 1 there is no reason why such a contingency may not so limit a right expressly "vested" as to make it defeasible in his favour. 2 Limits to Whatever be the extent of the doctrine of vesting subject to defeasance, limits have been set to its application. The doctrine does not apply where the right of the conditional institute is subject to a contingency. 3 Another limitation of the doctrine occurs in its application to a class gift. Where the gift has vested in the class through one member of the class taking a vested interest, if the class is closed — e.g. children of a parent who is dead — the doctrine to be applied to the right of that member is accretion, not defeasance, and he takes a vested interest in no more than his aliquot share, subject to accretion in the event of lapse of any contingent interest. If the class is not closed — e.g. children of a living parent — this vested interest is also subject to partial defeasance on the appearance and survivance of a fresh member of the class. 4 vesting and The third presumption is that a recognised right of action is payment D simui- one f or immediate implement of the claim thereunder. This pre- sumption is not rebutted by there being under the same deed other rights not intended to be yet recognised. There is no presumption that a truster has intended one uniform scheme of vesting. 5 This third presumption has been carried so far as to set aside an express direction in conflict with it, as where payment of a vested interest is postponed only by such an express direction. 6 Nature of The second question is, What is intended by the truster to xight vested. be the nature and the extent 01 the right of action conferred by him ? The principal value of the decided cases lies in the light they may throw upon the solution of this question. 7 This subject has therefore been dealt with in the text. 8 1 O'Mahoney, supra, shows that the heir at law has a residuary interest sufficient to support the defeasance or forfeiture. A forfeiture if express takes effect, though a gift over has failed ; see Lord Selborne, at pp. 407, 408. 2 See discussion of case of Miller in s. 755. 3 Johnston v. Dewar, 1911, S. C. 722, as explained in Coulson, supra. As to the effect of "heirs " as such a gift over, see Thompson, supra. * Holford, 1894, 3 Ch. 30, per Lindley, L.J., at p. 46, dealing with Mills v. Norris, 1800, 5 Ves. 335, and Scott v. Scarborough, 1838, 1 Beav. 154 6 Jacks, 1913, 1 S. L. T. No. 105, per Lord Kinnear. 6 See Miller and other case discussed in s. 755 ; also Colt, 1868, 5 S. L. R. 660, where Lord Deas says that the result of what was asked there would be that there was "no use in anybody making a trust deed at all," and Williams (1907) in s. 759. 7 See Lord Haldane, C, in Walford, supra, at p. 664. 8 See ss. 739 et seq., 987 et seq., and 1098 et seq. II NOTE ON OFFICES OF EXECUTOR AND OF TRUSTEE The fact that trustees in a mortis causd trust are almost in- variably nominated or, at least, confirmed, as executors of the deceased, is apt to lead to a confusion of the radically distinct offices held by them. " Although the executors and the trustees are the same persons," says Page Wood, V.-C, " they fill wholly different characters." x There is a real and fundamental distinction between the two positions, though both are subject to the general rules of the fiduciary relations. The points of difference may be classed under three heads : — First, a difference in the title. Second, a difference in the duties. Third, a difference in the liabilities. v The powers powers, of executors have been assimilated to those of trustees by the Executors Act, 1900 (63 & 64 Vict. c. 55). 2 The title of the trustee is a proprietary one 3 — the title of the Title of executor executor is a factorial one. He deals with the estate as the repre- j nd ? f , r trustee dis- sentative of another person — of the defunct — while the trustee tin g ,lished - deals with it as his own. Thus Lord Selborne says : — " Trustees have not, in any proper sense of the word, a representative char- acter, but executors have."* His lordship, in that case, points out that the executor is a mere agent representing the testator with power to transfer his personal estate and give a title to the transferee. The executor can transfer the estate of the deceased to himself as well as to a third party, and where the executor transfers it into his own estate, he becomes a trustee proper. Where he is nominated both executor and trustee this is the regular and ordinary procedure, though the steps of it are not so patent in practice. They are better seen and appreciated where one of several trustees is executor, and he, as executor, transfers the personal estate of the defunct out of his executry into the persons 1 Fordham v. Wallis, 1852, 10 Hare, 217, at p. 230. 2 See Allan, 1908, S. C. 807, per Lord Kinnear, at p. 812. The powers of executors both at common law (Rigby, 1815, 19 Ves. 462 ; Attenborough v. Solomon, 1913, A. C. 76) and under statute (Pawley, 1900, 1 Ch. 58) in England are different from those in Scotland. 3 S. 5, supra. * Buchan v. City of Glasgow Bank, 1879, 6 R. (H. L.), 44, at p. 50. 849 54 850 APPENDIX of the trustees, including himself. "It would have been," says Lord Watson, " in entire accordance with the just construction of the deceased's disposition and deed of settlement had one of the trustees nominated been confirmed as executor, and, after paying debts, transferred the free exeeutry funds to the whole body of trustees, to be disposed of by them in conformity with the pur- poses of the trust." x And Lindley, L.J., states the position thus : — " Under such a will as this the duty of the executors was simply to call in the testator's unsecured debts and to convert into money as much of his personal estate as was necessary to enable them to pay his funeral and testamentary expenses and his debts and pecuniary legacies, and to hand over to the trustees whatever personal estate was not wanted for those purposes." 2 This position was thus illustrated by Leach, V.-C. : — " When an executor, who happens also to be named a trustee, of a legacy to be laid out in stock, has fully administered the estate, and assented to the legacy, and retains the legacy in his hands, not as assets of the testator, but as trustee of the legacy, then the principles that apply to another trustee apply to him. He is no longer _ clothed with the character of executor, but is as to the legacy a mere trustee." 3 The executor, even where not appointed a trustee, makes himself a trustee when he transfers the estate of the defunct into his own person. 4 "It is a case of everyday occurrence," says Lord Eomilly, M.E., "for executors to be turned into trustees. . . . When you have realised and set apart a fund you become a trustee." 5 And again, Lord Cottenham, C, says : — " What he would have done by paying it to a trustee, he has done by severing it from the testator's property, and appro- priating it to the particular purpose pointed out by the will. It is impossible to consider that the executor, so acting, is acting as an executor ; he has all this while been acting as a trustee." 6 Transferor In practice a common case of this transference of the estate SSo 1 ? out ° the executr y lnto the persons of the trustees is that where part of the estate consists of shares in a joint-stock company. The manner of transference is treated of thus by Lord Shand : "The executors may either simply make up a title by confirmation, 1 Orr Ewing, 1885, 13 E. (H. L.) 1, at pp. 25, 26. 2 Chapman, 1896, 2 Ch. 763, at p. 773. . 3 Byrchall v. Bradford, 1822, 6 Mad. 235, at pp. 240 241 4 Of. Pettigrew, 1890, 28 S. L. R. 14. 6 Dix v. Burford, 1854, 19 Beav. 409, at p. 412 « Phillipo v. Munnings, 1837, 2 My. & Cr. 309, at p. 315 ; and see Atten- borough v. Solomon, 1913, A. 0. 76, for discussion of position APPENDIX 851 and so vest themselves with a right or title to the shares, which will enable them to dispose of the shares without going on the register, and may intimate the fact of confirmation to the company as a mere notice that they have made up such a title; or they may, if they think fit, intimate the confirmation to the company and request that the shares shall be transferred to their names, the legal result of which is that they thereby make up a title of ownership in themselves to the shares, and thereby become partners. 1 And I think the simple question of fact that arises in this class of cases is, whether the executors have not only made up a title of con- firmation, but have completed a title of ownership in their own persons by recording their confirmation in the bank's books, or requesting that it should be recorded, so as to have the shares transferred to themselves." 2 The power of executors to transfer shares in a joint-stock company without going on the share register of the company as a partner is declared by the 29th section of the Companies Act, 1908. In referring to the 24th section of the Companies Act, 1862, which is the corresponding section of the former Companies Act, Lord President Inglis speaks of it as authorising "a procedure which, even before the passing of that Act, would, according to the law of Scotland, have been competent to executors in that position, because it was clearly an assignable interest, and I think, by the law of Scotland, every assignable interest could be made the subject of sale." 3 It may be a question of considerable nicety whether executors- have involved themselves in liability as trustees where such pro- perty of the defunct as joint stock shares has been transferred into their own names. Of course, "if," says Lord President Inglis, "they send in their confirmation without any such qualification" as that it is a mere notice of their title as executors, " it will be forthwith recorded, and recorded in such a way as to make the executors partners of the company." * There is always a presumption that the executors did not intend to become partners. 5 The presumption is, however, overcome where the action of the executors shows that it was their intention to hold the property as trustees. Thus where the law agent of the 1 Cf. position of curator bonis in Lindsay v. City of Glasgow Bank, 1879, 6 R. 671 , per Lord Shand. 2 Wishart v. City of Glasgow Bank, 1879, 6 R. 1341, at pp. 1349, 1350. Cf. Lord Cowan in Stewart v. Evans, 1871, 9 M. 810, at pp. 816, 817; MacDonald. „ City of Glasgow Bank, 1879, 6 R. 621, at p. 628. ' 3 M'Ewen v. City of Glasgow Bank, 1879, 6 R. 1315, at p. 1319. 4 M'Ewen, supra, at p. 1319. 6 Vide Lord Shand in Wishart, supra. 852 APPENDIX executors sent their confirmation to the company for registra- tion under the mistaken idea that its registration did not make the executors liable as partners, the executors attempted to escape liability as partners by alleging that the law agent had no authority to make them partners, and that they never intended to become such. They were found liable as partners, their con- duct being held to be inconsistent with the idea that they were merely executors. " The reason they give," says Lord President Inglis in dealing with this case, " for keeping this stock is rather a remarkable one. It is not that they were unable to sell it to advantage, because the stock was bearing a very good price in the market, and they got very good prices for what they did sell, and it is not said that they could not have sold the rest of the stock to the same advantage. But they say that they kept this stock, or did not sell it, because they had not ready a suitable investment for the money which would have been realised by its sale. Now, that may or may not be a good reason for not proceeding to sell the stock in terms of the instructions of the trust deed, but, at all events, it was certainly not in their character of executors, nor with a view to the performance of any duty of executors, that they retained this stock ; it could only be in their character of trustees, because it was with a view to securing a better permanent invest- ment than they could command at the time that they kept on the stock. If they had been executors only they could not consistently with their duty have kept on this stock ; it would have been their imperative duty certainly to have sold it and realised it. But being trustees they seem to have thought themselves entitled to keep it on, notwithstanding the direction to sell, until they could get what they thought a favourable investment for the money." 1 Title to sue. The title to sue an action is complete in the case of a trustee- nominate upon his raising the action ; he thereby accepts office and completes his title — the title to sue of an executor is only inchoate until he confirms. 2 compensa- An important distinction between the title of an executor and that of a trustee arises out of the doctrine, now settled, that the former is eadem persona cum defuncto. The title of the executor is therefore subject to all objections pleadable against that of the defunct, and all pleas competent to the defunct may be pleaded by his executor. Thus there is compensation between a debt due 1 Gordon v. City of Glasgow Bank, 1879, 7 R. 55, at pp. 58 59 2 Att.-Gen. v. New York, 1897, 1 Q. B. 738, per Wills, J., 'at p. 746. APPENDIX 853 to the executor and one due by the defunct. 1 The title of the trustee is always independent and individual, influenced by the title of the truster only in respect that the title of the trustee is based upon the conveyance of the estate to him by the truster. The duty of the executor is to "gather in and distribute/' 2 to Duties of liquidate the estate, and pay over the residue to the legatee. To this and of or tnisteB dis- end the executor must realise part, at least, of the estate within tinguishea. a certain definite time to pay debts. In so doing he acts practi- cally as a hand for conveying the estate from the debtor of the defunct to his creditor. Lord Hobhouse says that it is not the duty of the executor " to turn all the assets into money. It is laid down that his duty is to liquidate the estate. But an estate is liquidated when it is reduced into possession, cleared of debts and other immediate outgoings, and so left free for enjoyment by the heirs." 3 The trustee, on the other hand, where his discretion is not limited by express directions, realises when in his discretion it seems a good and proper time to do so with a view to the benefit of the trust estate, and that not with the object of transferring it to another, but of holding it as his own, subject to the condi- tions of his trust. This distinction seems to underly the opinion of Lord President Inglis. " An executor," says his lordship, " is not a trustee in the sense of being a depositary. A trustee has to hold as a depositary ; not so an executor, who has to administer, not to hold. . . . An executor is nothing else than a debtor to the legatees or next of kin. He is a debtor with limited liability ; but he is nothing else than a debtor; and the creditors of the deceased and the legatees who claim against him do so as creditors." 4 This leads up to the proposition of an American judge, who says : — " The theory upon which the distinction seems to have been founded is, that the duties of an executor pertain to the office, and those of a trustee to the person ; that the char- acter given to a trustee has relation to a personal trust, while that of an executor is official solely." 5 The official duty of the executor is thus described by North, J. : — " It is the duty of the executor to clear the estate, to pay 1 Mitchell v. Mackersy, 1905, 8 F. 198, and see a. 715 (notes 6 and 7). 2 Erskine, Institutes, bk. ii. tit. 2, s. 3. s Hiddingh v. Denyssen, 1887, 12 App. Cas. 624, at p. 638. * Jamieson v. Clark, 1872, 10 M. 399, at 405. Of. Ainslie, 1886, 14 R 209, per L. P. Inglis, at p. 211. « Greenland v. Waddell, 1889, 15 Am. State Eep. (N. Y.), 400, per Bradley, J. 854 APPENDIX the debts, funeral and testamentary expenses, and the pecuniary legacies, and to hand over the assets specifically bequeathed to the specific legatees." 1 Thereafter the residue falls to be paid to the residuary legatees, either beneficially or in trust. In the latter case the trust administration proper then begins. Liability of The liability of the executor is representative and limited ; executor i • i_ i. • and of he is protected by the inventory of the estate on which he is trustee dis- l j j tinguished. confirmed. The liability of the trustee to his creditor, on the other hand, is personal and unlimited, and the trustee has at best a claim for indemnity against the estate and the beneficiary. 2 This distinction in the liability attaching to the offices is a direct result of the distinction between the title of the trustee and that of the executor. Nowhere is the distinction more sharply accentuated than where the property that is dealt with involves its holder in further obligations, the most familiar example being that of shares in an unlimited company. These the executor deals with as the representative of the defunct and incurs no personal liability, being only bound to make the estate forthcoming to meet all demands as far as it will go. The trustee, however, holds and deals with such property as his own, and involves himself personally in liability, irrespective of the extent of the estate. 3 1 Smith, 1889, 42 Ch. D. 302, at p. 304. 2 See s. 1220. 3 Buchan v. City of Glasgow Bank, 1879, 6 R. (H. L.) 44, at p. 51. INDEX INDEX OF CASES [The Figures refer to the Sections of the Text.] Section. A. (1894) .... . 910 A. (1898) . 919 A. (1904) . 56, 815 A. B. v. 0. D. (1900) . 720 Abadam (1864) 1005 Abbot v. Massie . 830 Abbott (1900) 1045 Abdallah v. Rickards 602 Abercorn v. Grieve 1248 Abercromby (1897) 825 Aberdeen (1876) . 30, 454 Aberdeen (1877) . . 293, 440, 446, 452, 454, 1113 Aberdeen v. Blaikie . 452, 453, 459 Aberdeen v. Cooper . 334, 339, 384 Aberdeen v. Irvine . 350 Aberdeen v. March . 225 Aberdein v. Stratton . 455 Abrahams (1908) . 714, 715 Abrahams (1911) . . 994 Abram v. Cunningham . 718 Accountant of Court v. Baird 565, 625 Accountant of Coxirt v. Crumpton 49, 71, 637, 644 Accountant of Court v. Geddes . 625 Ackroyd v. Smithson 813, 1056 Adair (1909) . 327 Adair v. Connell . . 352 Adam (1861) . 927 Adam v. Forsyth 296, 822 Adam v. Grieve 97 Adam v. Wilson 995, 997 Adams (1878) 595 Adams (1884) 3 Adams v. Rowley . . 555 Adamson v. Abernethy . 808 Addie(1913) . . pp. 841, 842 Addington v. Mellor . 1048 Addison v. Cox . 185 Adkins(1908) . . . . . 739 Advocate v. Clyde Navigation Trustees 6 Advocate v. Sprot . 51, 1012 Advocate v. Stewart 795, 809 Advocate v. Wemyss 600, 929 Advocate (H.M.) v. City of Glasgow Banl ; Directors . . . 291 Advocate-General v. Blackburn . . 809 Advocate-General v. Oswald 1011 Aikman (1881) . . 47, 56, 59, 61, 63, 68 857 858 INDEX OF CASES Ainslie (1886) Ainslie v. Henderson Aird (1879) Airdrie v. Smith Aitchison (1895) Aitken v. Munro Akerman (1891) Aldersey (1905) Aldritt v. Maconochy Alexander (1861) . Alexander v. Dymock Alexander v. Johnstone Alexander v. Lowson Alexander's Case (1871) Alison (1886) Alison v. Fairholmes Allan (1851) Allan (1869) Allan (1872) Allan (1893) Allan (1895) Allan (1897) Allan (1908) Allan v. Adamson Allan v. Glasgow . Allan v. Hairstens Allan v. Kerr Allan v. Thomson . Allen v. Embleton Allen v. Farthing Allen v. Gillette . Allen v. M'Combie Allhusen v. Whittel Alsbury (1890) Alston (1901) Alven v. Bouch Alves <1861) Amalgamated Society (1910) Amalgamated Society v. Osborne Ambler (1905) Ames (1883) Ames v. Parkinson Amyot v. Dwarris . Ancketill (1891) . Ancona v. Waddell Anderson (1876) . Anderson (1895) . Anderson (1896) . Anderson (1898) . Anderson (1901) . Anderson (1904) . Anderson (1911) . Anderson v. Ainslie Anderson v. Berkley Anderson v. Buchanan Anderson v. Cameron Section. 27, 133 ; p. 853 . 202, 522, 531 556, 990 . 382 350, 1046 • 809 . 715 . 828 185, 360 . 597 . 167 . 544, 651, 654, 656, 665, 693 . 582, 583, 684 148 533, 870, 875, 934, 1200 . 1278 728, 1119 319, 740 . 57, 750, 752 . 3, 445, 1046 . 825 336, 432, 975, 982, 1215 27, 316, 1046 ; p. 849 . 832 299, 341 46 . 775 . 827 . 1021 . p. 844 . 496 21, 22, 1142, 1143 . 994, 995, 1002, 1013, 1033 . 1027 1042 496 761 1053 . 374 . 714 . 1174 . 560 25 . 1042 . 818 377,409 806, 809, 810, 813 . 432 30 998, 1264, 1269 . 754, 761, 768 185, 1046 . 770 833, 834 . 794, 796, 797 . 998 INDEX OF CASES 859 Anderson v. Dick , Section. . 600 Anderson v. Gow . . 432 Anderson v. M'Dowall 1311, 1315 Anderson v. Muirhead . 826 Anderson «. Smoke . 3, 1045, 1047 Anderson v. Thomson . 739 Andrew (1905) . 1045 Andrews (1816) . 441, 442 Andrews (1885) . . 1218 Andrews v. Barnes . 1189 Andrews v. Ewart . 18, 290, 293, 350 Andrews v. Partington . 766 Andrews v. Ramsay . 440 Andrews v. Weall . . 198 Angier v. Stannard . 271 Angus (1901) 91 Annandale v. MacNiven . 764 Anon 293, 509 Anon (1821) 387, 550 Anson (1907) 626, 1027, 1034 Anstis (1886) . 989 Appleby (1903) . 325, 755 ,, 775, 1034 Archer v. Lavender . 1286 Archibald (1882) . 760, 779 Argo v. Elmslie . 834 Armitage (1893) . . 1029 Armour v. Glasgow . 945, 1236, 1308, 1319 Armstrong v. Wilson 299, 328 Arnold v. Dixon . . 813 Arnold v. Garner . . 1169 Arnott(1899) 157 , 162, 1238 Arnott(1906) . 1046 Arnould v. Grinstead . 625 Ashburner v. MacQuire . . 739 Ashburnham v. Thomson . . 1208 Ashburton v. Escombe . 352, 453, 454, 456, 482, 977 Askew v. Woodhead . 1026 Assets Co. v. Bain . 947, 1118, 1119 Assets Co. v. Falla . 712 Assets Co. v. Shiress . 877 Association of Episcopalians v. Lindsay . 353 Aston (1913,i . 981 Atherstone (1896) 336, 824, 929, 930 Athole v. Stewart . . 145 Atkins (1899) 276, 548 Atkinson (1904) . 1034, 1042 Atlay(1912) . 739 Attenborough v. Solomon . pp. 849, 850 Att.-Gen. v. Alford 1098, 1099, 1100, 1104, 1106 Att.-Gen. v. Becher . 1046 Att.-Gen. v. Belgrave . 834 Att.-Gen. v. Brecon . 328 Att-Gen. v. Caius College 71 Att.-Gen. v. Christ's Hospital . 1183 Att.-Gen. v. Clarendon . 475 Att.-Gen. v. Day . 827, 1046 860 INDEX OF CASES Att.-Gen. v. Dixie . Att.-Gen. v. Draper's Co. Att.-Gen. v. Drummond Att.-Gen. v. Eastlake Att.-Gen. v. Exeter Att.-Gen. v. Eyres Att.-Gen. v. Felce . Att.-Gen. v. Holland Att.-Gen. v. Hubbuck Att.-Gen. v. Johnson Att.-Gen. v. Kohler Att.-Gen. v. Meyrick Att.-Gen. v. Mill . Att.-Gen. v. Munro Att.-Gen. v. New York Att.-Gen. v. Norwich Att.-Gen. v. Poulden Att-Gen. v. Retford Att.-Gen. v. Scott . Att-Gen. v. South Sea Att-Gen. u. Sudeley Att-Gen. v. Wade . Att.-Gen. v. West Ham Auchincloss v. Duncan Auld (1856) Auld v. Anderson . Ayerst v. Jenkins . Aylesford v. Poulett Ayliffe v. Murray . Ayr v. Shaw Ayr Harbour v. Oswald Bacon (1800) Bacon (1893) Bacon (1907) Bacon v. Camphausen Bagley v. Mollard . Bagnall (1901) Bagot's Estate (1900) Bahin v. Hughes . Bailey v. Gould Baillie (1891) Baillie (1896) Baillie (1898) Baillie (1899) Baillie v. Clark Baillie v. Shearer . Baillie v. Whiting (No. 1) Baillie v. Whiting (No. 2) Baillie v. Young Bain v. Assets Co. Bain v. Black Bain v. Nisbet Baird (1872) Baird (1910) Baird v. Duncanson Section. . 516 . 1197 . 1198 . 1194 . 293 874, 1173 . 983 . 332 . 809 . 977 . 1098 754, 1045 . 1052 . 447 . p. 852 . 1147 855, 862, 1003 . 1205 156, 242 . 384 . 977 . 824 . 415 . 1306 319, 339 . 809 352, 1047 . 291 486, 503 755, 1013 . 300 192, 209, 234, 552 . 1002 148, 158, 287 . 1143 . 832 440, 1090 . 602 75, 1238, 1239 . 330 366, 1020 423, 424, 1001 1019, 1020 . 833 . 761 1151, 1171 . 334 . pp. 843, 844 . 1070 947, 1119, 1120 717, 966, 1046 83 . 280, 336, 425 817, 818 . 1108 INDEX OF OASES 861 Baird v. Dundee .... Section. 1112, 1198 Baker (1881) .... 727, 1245 Baker (1904) .... . 818 Baker v. Carter .... . 1208 Baker v. Courage .... . 1118 Baker v. Peck . 499 Bald (1897) .... . 556 Bald v. Scott .... . 393 Balderston v. Fulton 753, 762, 1053 Baldwin v. Smith .... . 813 Balfe v. Halpenny .... 3, 1045 Balfour v. Inland Revenue . 1032 Ball v. Harris .... . 340 Ballantine v. Merchant Co. 384, 1135 Ballantyne (1899) .... . 1307 Ballantyne v. Kid .... . 756 Balsh v. Hyham . 1220 Bank of Africa v. Cohen . . 982 Bank of England v. Cutler . 709 Bank of England v. Vagliano . 709 Bank of Ireland v. M'Carthy . 741 Bank of New South Wales v. Goulburn . . 1273 Bankes •;;. Jarvis .... 4 Banks v. Cartwright . 970 Bannatyne (1906) . 1316 Bannatyne v. Dunlop 27 Bannatyne v. M'lver . 415 Bannerman (1842) . 103, 125, 870 Bannerman (1895) . . 903 Bannerman (1906) . . 834 Barber (1886) . 461 Barber (1888) 0-10, 1158, 1160 Barclay (1899) 1103, 1106 Barclay v. Watson . 796 Barclay, Curie & Co. v. Laing . 781 Baring (1893) 1036, 1037 Baring v. Stanton . 440 Barker (1875) 85, 915 Barker (1898) 514, 575, 578, 1083 Barker (1903) .... . 366 Barkley & Sons v. Simpson . 600 Barlow (1887) . 1202 Barnes v. Addle .... . 1286 Barnes v. Ross. See Ross (1896). Barnet(1872) 315, 944 Barnett (1902) . 1049 Barns (1857) . 633, 1113, 1114, 1118 Barras v. Scottish Widows . 801 Barrell v. Joy .... 16 Barrett v. Hartley .... 463, 504 Barrington v. Liddell 844, 845, 846 Barron v. Dewar . 761, 783 Barrow (1880) . 1280 Barry v. Thorburn 913 Bartholomew (1904) . 1050 Barton (1868) . . 1027 862 INDEX OP CASES Section. Barton (1909) ........ 158 Barton v. North Staffordshire . 178 Barwell (1865) . 1078 Basham (1883) 1191 Baskerville (1910) . . 367 Bassil v. Lister . 843 Bate v. Hooper 571, 1197, 1233, 1234 Bateman v. Davis . . 294 Bateman v. Faber . 793, 818 Bateman v. Hotchkin . 844 Bates (1907) . 566, 570, 818 Bath v. Standard Co. 210, 440 Baxter (1909) 327, 739, 761, 775 Baxter v. Wood 179, 1036, 1201, 1304 Baylis v. Dick 236, 244 Bayne (1894) . 1039 Bazett v. Heugh . 1141 Beach v. Lord St. Vincent . 845 Beal v. South Devon . 512 Beale(1905) 739, 995 Beard (1908) 327, 611 Beatt v. Ogg 1142, 1143 Beattie v. Meffan . . 770 Bective v. Hodgson 852, 994 Beddingfield (1893) . 294 Beddoes v. Pugh . 328, 705 Bedfords v. Kirkpatrick . . 1101 Bedingfield v. D'Eye . 505 Beecher v. Major . . 1045 Behrend (1911) . . 556 Beith v. Mackenzie 728, 1297 Belchier (1754) . . 192, 248, 516 Belham (1901) . 714 Belhaven (1896) . 1019, 1030 Bell (1859) . 72 Bell (1891) . . 282 Bell (1896) . 718, 739 Bell (1897). . 720 Bell (1907). . 734 Bell (1908). 34 Bell v. Borthwick . . 750 Bell v. Cheape , . 814 Bell v. City of Glasgow Bank 138, 1254 Bell v. Maxwell . 354 Bell v. Trotter ... 353 Bell v. Turner . 1182 Bellairs (1874) ...... . 1021 Bellamy (1854) . . 336 Bellinger (1898) . 298, 419 Bellringer v. Blagrave . 365 Beloved Wilkes's Charity (1851) . . 285 Bence v. Gilpin 113 Benett(1906) . 714 Bennet v. Going .... . 1004 Bennet v. Maclellan . 1188 Bennett (1805) .... tel , 458, 464, 496 INDEX OF CASES 863 Bennett (1891) Bennett (1896) Bennett v. Gaslight Co. Bennett v. Merriman Bennett v. Wyndham Bentham (1906) . Bentinck (1899) . Bentley (1909) Bentley v. Craven . Bernard v. Minshull Bertram (1909) Bertram v. Stewart Berwick (1874) Bethell v. Abraham Betts (1896) Betts v. Macnaghten Betty (1899) Bevan (1869) Bevan v. Habgood . Bevan v. Waterhouse Bevan v. Webb Beveridge (1872) . Beveridge (1908) . Beveridgea (1878) . Bhagabati v. Kali . Biel (1873) Bigge (1907) Bills v. Betty Bingham v. Clanmorris Binnie (1888) Binnie v. Broom . Binnie v. Prendergast Binns (1896) Birch v. Sherratt . Birch v. Wade Birchall v. Ashton Bird (1873) Bird (1901) Birkmyre (1881) . Birks v. Micklethwait Birnie v. Christie . Bishop (1894) Biss (1903) Bisset v. Rainie Black v. Miller Black v. Scott Blackburn (1896) . Blackburn v. Cunlitfe Brooks Blackstaff v. Cameron Blackwell v. Pennant Blackwood (1894) . Blackwood v. Dykes Bladon (1911) Blaiberg (1899) . Blain v. Patterson . Blair (1863) Section. 12 1036 443 600 1151, 1211 ; p. 842 570 1143 660 455 3 15, 790 29 336, 347, 371 615 821 173 1036, 1037, 1038 1022 496 1035 442 628 674, 688, 1086, 1222 57, 751 . 834 . 483 746, 1002 . 1143 . 124 311, 333, 334, 338, 385, 413, 414 414 834 . 990 . 746 . 834 128 . 236 . 1034 341, 376, 377, 412 . 1242 . 177, 546, 908 . 1102 . 442 . 750 . 56, 62 . 1310 . p. 842 . 415 222, 1254 . 834 62 705, 1053 . 1036 . 1272 112, 117, 531, 533, 1190 865, 937 864 INDEX OF CASES Section. Blair v. Duncan . . 1046 Blair v. MacFarlane . 286 Blair v. Maxwell . . 330 Blair v. Payne 247, 1103 Blair*. Stirling . 599 Blair v. Taylor . 1050 Blake (1885) . 277 Blake (1912) 132 Blake v. Gale 730, 1287 Bland (1899) . 567 Bland v. Buchanan . 166 Blann v. Bell . 571 Blantyre v. Clyde . . 300 Bleakley v. Johnston . 777 Blewit v. Roberts . . 1008 Blisset v. Hope 165, 181 Blithman (1866) . . 818 Blodwell v. Edwards . 327 Blogg v. Johnson . . 1104 Blossom (1864) . 824 Blount v. O'Connor . 611 Blower v. Morritt . . 741 Bloye(1849) . 437 Blue v. Marshall . 603, 1147, 1151 Bkmdell (1893) . 413, 432 Blundell (1901) . . 376 Bkmdell (1906) . . 739 Blunt (1904) . 327 Blyth v. Bridgewater . 1027 Blyth v. Fladgate . 654, 658, 1305 Boag v. Walkinshaw 334, 339 Boards (1895) . 1010 Boden (1907) 746, 1002 Boddington (1884) 833, 834 Boddington v. Langford . . 496 Boehm v. Goodall . . 1220 Bogie v. Christie . 827, 834 Boles (1902) 459, 502, 506 Bolitho v. Gidley . . 793 Bolland v. Young . . 637 Bolton (1886) . 832 Bolton v. Curre 1227, 1228,' 1232 Bomore (1906) 374, 895 Bon Accord Insurance Co. v. Souter 171, 668, 681, 691, 1155, 1156, 1245 Bond (1900) . 1049 Bonithon v. Hockmore . 273 Bonnar (1893) 310, 923 Bonner (1902) 599,1264 Boorer(1908) . 739 Booth (1838) . 107, 332, 1128, 1223, 1238 Boreham v. Bignall . 834 Boss v. Godsall 324 Bostock v. Blakeney . 1032 Bostock v. Floyer . . 234 Boston Deep Sea v. Ansell 440 Bosville v. Macdonald . 1121 INDEX OF CASES 865 Boswell v. Ogilvy . Bosworth (1889) . Bouch (1885) . Bouch v. Sproule . Bourne v. Buckton Boursot v. Savage . Bousfield v. Hodges Bouts v. Stenning . Bowie v. Watson . Bowlby (1904) Bowman (1899) . Bowman (1910) Bowman v. Hill Bowman v. Richter Bowman v. Russell Boyce v. Edbrooke Boyd (1905) Boyd (1908) Boyle v. Glasgow . Boynton v. Richardson Bradby v. Whitchurch Bradshaw (1908) . Brailey v. Rhodesia Braithwaite v. Att.-Gen. Bramley (1902) Brand v. Kent Brand v. Scott Brandt v. Dunlop Bray v. Ford Brazilian Rubber (1911) Breatcliff v. Bransby Brewer (1896) Brewster v. Angell Brice v. Stokes Bridge v. Brown Bridgenorth v. Collins Bridgman (1860) Bridgwater (1910) . Brier (1884) Briggs (1869) Briggs v. Massey Briggs v. Penny Bright v. North Brighton v. North . Brinsden v. Williams British v. De Beers British Power Co. (1910) Brittlebank (1881) Brittlebank v. Goodwin Broadwood (1911) . Broatch v. Jackson Brockie (1875) Brocksopp v. Barnes Brodie (1827) Brodie (1893) Brodie v. London and North- Western 336 Section. . 969 960, 963 . 1027 1027, 1029, 1030 845, 846, 1057 1276, 1277 . 386 185, 225 . 182 423, 929, 994 . p. 846 43 344, 1211 . 827 . 911 . 496 . p. 844 . 586 . 1048 . 957 . 537 3 . 300 1045, 1049 . 739 . 781 . 283 185, 225 . 1158 . 525 . 651 790, 818 . 341 332, 436 . 328 . 839 . 914 . 554 200, 273 334, 343 . 1071 3 1193, 1194 1193, 1194 . 1286 71, 982 722, 1249 282 553 995 215 65,66 505 1119 1137 696, 1272 55 866 INDEX OF CASES Brodie v. Macfarlane Brogden (1888) Brook (1839) Brooke (1894) Brooke (1898) Brooks (1902) Brooksbank v. Smith Brotchie v. Stewart Brotherston (1893) Broughton (1855) Browell v. Reed Brown (1858) Brown (1865) Brown (1867) Brown (1885) Brown (1886) Brown (1890) (17 ft.) Brown (1890) (18 R.) Brown (1904) Brown (1910) Brown (1911) Brown v. Adam Brown v. Adams Brown v. Burt Brown v. Elder Brown v. Gellatly Brown v. Hastie Brown v. Hay- Brown v. Higgs Brown v. Home Brown v. Oakshott Brown v. Smith Brown v. Warden Brown v. Wright Brown v. Young Brown's Tutors (1867) Browne (1903) Browne (1912) Browne v. Anderson Browne v. Butter . Browne v. Savage . Browning (1905) . Browning v. Hamilton Brownlie (1879) . Brownlie v. Cleland Bruce (1894) Bruce (1908) Bruce v. Hamilton Bruce v. Robson . Bruce v. Smith Bruce v. Stewart . Brunning (1909) . Bryan v. Collins . Bryant v. Banque du Peuph Brydone (1903) Bryson v. Clark Buchan v. City of Glasgow Bank Section. . 1309 88, 514, 521, 529, 1071, 1076, 1288 87 . 1211 . 3,4 1180, 1197 . 1118 . 298 . 646 154, 1158, 1160 . 405 637, 676, 1216 . 825 . 226 615, 621 . 1073 753, 756, 765 560, 806, 811, 1186 833 319 761 1135 1295 454, 498, 506, 908, 1203 278, 1132 570, 1019, 1021 . 136 . 177 274, 321, 834 4, 509, 1155 . 552 807 . 1050 . 610 286 . 336 . 834 . 830 185, 225 . 1274 . 185 347, 563, 578 . 486 380, 559, 563, 564, 578, 609 260 742 714 103 829 828 408 1003, 1006, 1008 839, 848 . 250 . 834 pp. 844, 845 1254 ; pp. 849, 854 INDEX OF CASES 867 Section, Buchan v. His Creditors . . 817 Buchan v. Melville . 600 Buchanan (1877) . 766 Buchanan v. Angus . 809, 810, 811 Buchanan v. Dalziel . 750 Buchanan v. Dunnett . 716 Buchanan v. Eaton . 236, 540, 554, 603, 604, 1011 Buchanan v. Glasgow 380, 413, 415, 416, 1272, 1276 Buckingham v. Breadalbane . 1202 Buckle v. Kirk 268, 998, 1264 Buckner v. Jopp . 482. 490, 1120 Budge v. Gummow . 263, 516, 660 Buell v. Buckingham . 157, 456, 481 Bugden v. Tylee . . 550 Buik v. Patullo 745, 1319 Buist(1896) 756,771 Bulkeley v. Stephens . 1032 Bull (1887) . . 1313 Bulli v. Osborne 1117, 1146 Bullock (1886) 191, 192, 259, 536 Bullock (1891) 277, 816, 818, 819, 820, 821, 823 Bullock v. Wheatley . 199, 229, 580 Bunten v. Muir . 873, 877, 922 Burdick v. Garrick . 6, 1100, 1106 Burge v. Brutton . . 1159 Burgess v. Booth . . 813 Burgess v. Crawford . 1046 Burgis v. Constantine 6, 71, 637 Burke (1908) . 634 Burland v. Earle . 4 Burnett (1909) . 752, 814, 967 Burnett (1911) . 350 Burnie v. Getting . . 639 Burns (1911) . 923 Burrage (1890) . 276 Burridge v. Row . . 1317 Burrough v. Philcox . . 321 Burrowes v. Lock . . 543 Burrows (1895) . . 834 Burrows v. Greenwood . 1204 Burrows v. Walls . 553, 1121, 1122 Burt v. Bull . 1252 Burt v. Sturt 846, 847 Burton (1901) . 547 Burwell v. Mandeville . 1211 Butler (1877) 1143, 1227, 1238 Butler v. Carter . . 1275 Buttercase v. Geddie . 600, 702, 1122, 1197 Buxton (1835) 579, 594 Byam(1854) 282, 286 Byrchall v. Bradford p. 850 Byres v. Gemmell . 10, 796 Byrne v. Norcot . 532, 1182 Cabhurn (1882) . . 1204 Cadett v. Earle . 624 Cadogan (1883) . 739 INDEX OF CASES Cafe v. Bent Caffrey v. Darby . Cairncross v. Lorimer Cairns (1901) Cairns (1907) Caithness v. Sinclair Caldecott (1819) . Caldecott(1842) . Caledonian Ely. v. Colt Caledonian Ely. v. Helensburgh Calisher v. Forbes . Calverley (1904) . Cambnslang v. Bryce Cameron (1864) . Cameron (1873) . Cameron (1907) . Cameron v. Anderson Cameron v. Hunt . Cameron v. Panton Campbell (1761) . Campbell (1837) . Campbell (1838) Campbell (1847) . Campbell (1880) Campbell (1894) . Campbell (1895) . Campbell (1898) . Campbell (1900) . Campbell v. Adamson Campbell v. Edderline Campbell v. Gillespie Campbell v. Montgomery Campbell v. Walker Campbell v. Wardlaw Candler v. Tillett . Caney v. Bond Cann (1884) Canterbury v. Wyburn Cardiff Bank (1892) Carew (1896) Carleton v. Thompson Carmichael v. Gee . Carmichael v. Greenock Carmichael v. Todd Carmont v. Mitchell Carnegie (1892) . Camochan (1894) . Carr v. Anderson . Carr v. Ingleby Carrick v. Hancock Carrick v. Hutchison Carritt v. Real Co. Carroll v. Graham . Carron Co. v. Hunter Carron Co. v. Stainton Carruthers (1895) . 334, 339, 266, 340, 366, 756, 212, 366. Section. . 569 595, 1071 . 1126 . 774 pp. 846, 847 . 327 . 690 . 1018 . 1305 71 . 185 328, 1037 125, 170, 1188 . 1166 . 1032 15, 106 997, 998, 1180 333, 377 . 926 4 . 1187 855, 859, 1055 . 1193 . 739 . 1030 . 901 . 1111 . 809 . 739 144, 1062, 1065 1120, 1122 . 947 386, 492, 493, 496 368, 1019, 1020, 1132 . 209 . 580 . 612 1046, 1052 156, 524 . 818 844, 845, 846 . 1003 . 282 1137, 1138 . 898 . 350 . 364 389, 586 . 1007 . 971 . 356 182, 1121 . 1202 . 739 . 979 22 pp. INDEX OF CASES 869 Oarruthers (1896) . Carruthers v. Cairns Carruthers v. Finlay Carstairs (1776) . Carswell v. Munn . Carta Para (1881) . Casamajor v. Strode Castlehow (1903) . Cathcart (1906) . Cathcart (1907) . Cathcart v. Allardice Cathcart v. Heneage Cattanach (1901) . Cattanach v. Thorn Cattell (1907) Caulfield v. Maguire Canvin's Hospital v. Falconer Cavendish (1875) . Ceylon (1891) Chaigneau v. Bryan Chalinder (1907) . Challen v. Shippam Chalmers (1845) . Chalmers (1903) . Chalmers v. Bradley Chalmers v. Scott . Chalmers v. Sinclair Chalmers v. "Watson Chambers (1901) . Chambers v. Minchin Chambers v. Smiths Chambers v. Waters Champion (1893) . Chancellor (1884) . Chandler v. Bradley Chandler v. Tillett Chant (1900) Chaplin (1839) Chaplin v. Hoile . Chapman (1896) . Chapman (1901) . Chapman v. Browne Chapman v. Perkins Chappie (1884) . Charitable Corporation v. Sutton Charlton (1901) . Charteris (1712) . Chaston (1881) Chatard (1899) Chauncy v. Graydon Chaytor (1905) . Cherry v. Boultbee Cherry v. Patrick . Cheshire v. Bailey . Chesterfield (1883) Chesterfield v. Jansen 22, 202, 244, 372, 512, 518, 975, 300, 755, 756 : Section. 1071, 1155, 1165, 1215 436, 516, 580, 597 1302 866 998 359 1021 622 1036 679, 1225, 1227, 1232 1033, 1039 843, 859 . 834 . 778 . 835, 848, 850 1013 . 147 404, 651 282 . 555 . 1174 251, 612 34 3 . 544 . 1187 73 . 108 . 798 192, 436 777, 781, 815, 818, 987 . 502 . 834 584, 1016 459, 510 . 1130 . 834 . 637 334, 814, 1012 701, 1076 ; p. 850 . 636 233, 292, 665, 1071 . 818 . 1173 . 435 338, 373 . 925 . 818 . 825 553 . 1021 . 715 . 910 . 198 1022, 1024 . 1146 870 INDEX OF CASES Section. Chetwynd (1902) .... 870, 922 Chichester v. Coventry . 739 Child (1855) . . 294 Chillingworth v. Chambers 954, 1034, 1144 , 1222, 1223, 1226, 1227, 1238 Chippendale (1854) . 1220 Chisholm (1902) .... 330, 995, 997, 1148, 1213 Chivas v. Stewart .... 280, 768 Christchurch (1888) 327, 1046 Christian v. Devereux . 830 Christie (1877) .... . 336 Christie v. Fife Coal Co. . . 600 Christie v. Hardie . 790, 798, 1111 Christie v. Murray . 756 Chrystal (1912) .... 24 Church Patronage (1904) . 20 Church of Scotland v. Watson . 334 Churchill (1909) .... 336, 423, 994 Churchill v. Hobson . 209 Cigala (1878) .... . 977 City of Glasgow Bank v. Geddes . 312, 347, 369, 601 City of Glasgow Bank v. Parkhurst 290, 1128 Clack v. Carlow .... . 1159 Clack v. Holland .... 329, 592, 597 1215, 1317 Claremont (1896) .... . 999 Clark (1871) .... . 1039 Clark (1884) .... . 502 Clark (1895) . 424 Clark (1904) .... 24 Clark (1911) .... . 166 Clark v. Dawber .... . 235 Clark v. M'Rostie .... . 49, 158, 878 Clark v. Mitchell .... . 554 Clark v. Taylor . 1046 Clark v. Trelawney . 1085 Clarke (1881) ... . 1032 Clarke v. Berkeley . 833 Clarke v. Calls .... . 834 Clarke v. Franklin . 809 Clarke v. M'Nab .... . 357 Clarke v. Ormonde . 550 Clarke v. Swaile .... . 487 Clarkson v. Fleming . 720 Clarkson v. Robinson . 1174 Clavering v. Ellison . 818 Clay v. Rufford .... 302, 386 Clayton's Case. See Devaynes v. Noble. Cleaver v. Mutual Life . 352 Clegg v. Rowland .... . 367 Cleghorn v. Gordon . 998 Clelland v. Brodie .... . 277, 341, 601, 1137 Clelland v. Brownlie 231, 260 Clemens v. Macaulay . 973 Clephane v. Edinburgh . 293 Clergy Society (1856) . 1046 Cleveland (1893) .... ■ , ■ . . 1058 Cleveland (1894) .... . 834 Cleveland (1895) .... . 1109 INDEX OF CASES 871 Cleveland (1902) . Clifford (1912) dough v. Bond Clouston v. Bullock Cloutte v. Storey . Ckilow (1859) Clutterbuck (1901) Clutton (1853) Clydesdale Bank v. Paul Clyne (1848) Clyne (1894) Coaks (1911) Coaks v. Boswell . Coats (1903) Cobbold (1903) Cochran (1732) Cochrane v. Black . Cocker v. Quayle . Cockerell v. Barber Coggs v. Bernard . Cohen v. Bayley-Worthington Cole v. Sewell Cole v. Wade Colebrooke (1913) Coleman (1888) Coleman v. Bucks . Coleridge (1895) . Coles v. Trecothick Coley (1903) Collingham v. Sloper Collins (1886) Collins (1913) Collins v. Carey Collinson v. Lister . Collyer (1907) Colman v. Sorrel . Colquhoun (1892) . Colquhoun (1894) . Colquhoun (1907) . Colt (1868) Colville (1902). See Cowan (1902) Colville v. Marindin Colyer v. Finch Combe v. Hughes . Comfort v. Betts . Comiskey v. Bowring-Hanbury Commercial Bank v. Muir Commercial Bank v. Sprot Commissioners of Stamp Duties v. Connell (1898) Connell v. Ferguson Connolly v. Bent Colliery Conolly (1909) Conron (1858) Const v. Harris Consterdine (1862) Conway v. Fenton . Byrnes 95. Section. 198, 206,694 . 739 192, 1071 57, 750, 752 22, 600 . 860 . 849 79 . 1271 519, 741, 1175 . 379 . 1022 . 493 755, 764, 768, 769 . 834 438, 445 561, 1091, 1093, 1123 . 294 744, 995 198 286 17 286 1002 814, 821 1273, 1279 . 634 458, 484, 485, 506 834 1048 994 833 1158 584 834 15 853 336 845 p. 848 25 416 860 14 3 937 417, 1259 3 646 717 58, 929 3 741 173 679, 694 299, 328 872 INDEX OF CASES Section. Conyngham (1750) .109 Cooke (1876) 1273 Cooke v. Cholmondeley . 450 Cooke v. Crawford . 136 Cooke v. Dealey . 813 Cooke v. Smith 1044 Coomber (1911) . 480 Cooper (1853) 860, 861 Cooper (1876) . 396, 397, 39! 1, 399, ' W0, 401, 402, 403, 404 Cooper (1888) . 801 Cooper (1899) 25 Cooper v. Fife 58 Cooper v. Jarman . . 298 Copland v. Milne . . 834 Coppinger v. Shettledon . 1204 Corbet v. Elliot . . p. 846 Corbet v. Waddell . . 66, 781, 1000 Cordiner v. Duffus . 738 Cork Railway (1869) . 415 Corlass (1875) . 834 Cormaek v. Keith . . 205 Corporation of Bridgenort l v. Collins . 839 Corsellis (1887) . 460, 1096, 1158, 1160, 1161 Corser v. Cartwright 416, 1272 Corser v. Orrett . 1077 Cosens v. Stevenson . 782 Cosgrove (1909) . 739 Cosier (1897) . 990 Costabadie (1847) . . 277 Cotgrave (1903) . .818 Cottam. v. Eastern Co. 182 Cotterell v. Stratton 1146, 1147 Cottrell (1910) 1007, 1101 Cotton (1882) 296, 379, 389, 754 Coulson (1908) . 1037 Coulson (1911) . p. 847 Coulter v. Forrester . 177 Courtenay v. Williams . 714 Courtier (1886) . 275, 1037, 1038 Courtney v. Rumley . 1180 Cowan (1887) 755, 812, 1056 Cowan (1902) . 373 Cowan v. Crawford . 244, 296, 913 Cowan v. Ferrie . 651, 674, 675 Cowan v. Kerr . 708 Cowan v. Law 349, 1193 Cowell v. Taylor . 358, 359 Cowen v. Truefltt . . 834 Cowie v. Muirden . . 1266 Cowin v. Gravett . 550, 967, 1142 Cowley v. Wellesley . 1039 Cowper (1897) . 154 Cowper v. Mantell . . 321 Cox (1869) . 991, 1022, 1042 Cox v. Bennet 273, 1218 Cozens v. Stevenson . 750 INDEX OF CASES 873 Section. Crabbe v. Whyte ..... 260, 262, 520, 659, 1086 Craokett v. Bethune . 1208 Cradook v. Piper . 1160, 1161 Craig v. Caledonian Rly. . 250 Craig v. Fleming . 380 Craig v. Hogg 1264, 1267, 1269 Craig v. Pollard . 962 Craig v. Wheeler . . 1015 Craigcrook v. Sawers 384, 410 Craigie v. Gordon . 766, 927 Cramond v. Gordon . 1308 Crampton v. Walker . 665 Crane (1908) . 994 Craufurd v. Hunter . 331 Craven (1908) . 1039 Craven v. Craddock . 563 Craven v. Elibank . . 354 Crawford (1867) . . 1011 Crawford (1873) . . 795 Crawford (1905) . . 833 Crawford v. Black 954 Crawford v. Fleck . 25 Crawford v. Forshaw . 286 Crawford v. Hepburn . 439 Crawfurd v. Cook . . 712 Crawley (1835) . 841, 995 Crewe v. Dicken 120 Crichton (1855) . 825 Crichton v. Grierson . 1046 Crichton v. Henderson . 1186 Crofts v. Beamish . 750, 834 Crokat v. Panmure . 1139 Croll v. Alexander . . 794 Crook v. Hill 832 Croom v. Adams . . 755 Croome (1890) 1045 Croskery v. Gilmour 21, 22, 291, 473, 1142 Croskery v. Ritchie . 321 Cross (1848) . 1146 Cross (1882) 1112, 1123 Cross v. Lloyd-Graeme 9 Crosskill v. Bower . 440, 1152 Crow v. Crisford . 568 Crowder v. Stewart . 714 Crowther (1895) . . 834 Croydon (1908) . . 1319 Croxon (1904) . 818 Croxton v. May 770 Cruickshank v. Ewing . 328 Cruikshank(1845). . 723, 732, 734 Crum Ewing v. Bayley 793, 831 Crunden (1909) . 136 Crutchley (1912) . . 834 Cull (1875) 537, 702 Cullen v. Baillie . 1168, 1249, 1301 Culley (1878) . 595 874 INDEX OF CASES Section. Cuming (1896) 9 52 Gumming (1824) .... . 1027 Cumming v. Hay .... 106, 935 Cummins (1845) .... 583, 593 Cumstie (1876) 4 Cundell v. Peacock 938, 1181 Cunliff (1900) .... . 1027 Cunnack v. Edwards 717, 1045 Cunningham and Bradley (1877) . 90 Cunningham v. Duke 752 Cunningham v. Smith . 929 Cunninghame v. City of Glasgow Bank . 169, 170, 221 Cunninghame v. Macleod . . 804 Curie (1903) . 1030 Curie v. Lester . 352 Currie (1901) . 1081 Currie (1911) . 833 Currie v. Goold . 1005 Currie v. M'Lennan . 739 Currie v. Threshie . . 1006 Curror (1870) . 1192 Curror (1874) . 768 Curror v. Loudon . . 1221 Curror v. Walker . . 233 Curry (1908) 734, 1101 Curteis v. Wormald . 1056 Curtis (1871) 79 Curtis v. Hutton . 838, 1052 Curtis v. Lukin . 759 Curzon (1912) . 766 Cuthbert (1908) . . 334, 767, 999, 1000 Cuthill v. Jeffrey . . 1248 Cyclists' Club v. Hopkinson . 273, 298, 440 Da Costa (1912) ........ 1046 Dacre v. Patrickson . 1045 Dalgleish v. Land Co. 147, 891 Dalgleish v. Rudd .... . 324 Dalglish (1889) .... 755, 771 Dallas (1710) 118, 121 Dallas (1904) .... 185, 187 Dallmeyer (1896) .... . 990 Dalmellington v. Glasgow and South- Western . 1233 Dalrymple (1901) .... 327, 734 Dalziel (1905) .... . 834 Dance v. Goldingham . 390 Dangar (1889) .... . 1308 D'Angibau (1880) .... 72 Danson v. Bell .... . 849 Darling (1802) .... . 1119 Darling (1898) .... . 173 Darling (1909) .... . 1236 Darling v. Adamson . 177 Darling v. Watson .... . 73, 104, 117 Darnley (1907) ... . . 1021 INDEX OF CASES 875 Davenhill v. Fletcher Davenport v. Coltman Daveron (1893) Davey v. Ward Davidson (1906) Davidson (1907) Davidson (1909) Davidson v. Carr Davidson v. Ewen Davidson v. Kempton Davidson v. Mackenzie (1835) Davidson v. M'Kenzie (1898) Davidson v. Ogilvie Davidson o. Simmons Davie (1900) Davies (1871) Davies v. Bush Davies v. Hodgson . Davies v. Kent Davies v. Nicolson . Davies v. Parry Davies v. Ridge Davis (1898) Davis (1902) Davis (1908) Davis v. Angel Davis v. Barrett Davis v. Dendy Davis v. Hutchings Davis v. Petrie Davoue v. Fanning Davy (1908) Dawson (1888) Dawson (1896) Dawson (1906) Dawson (1907) Dawson v. Hearn Dawson v. Small Dawson v. Smart Dawson v. Stirton Day (1860) . Dean (1852) Dean (1889) Deane (1900) Deare (1895) Dearie v. Hall De Beauvoir (1852) De Burgh v. M'Clintock De Bussche v. Alt De Clifford (1900) D'Este(1903) De la Chaumette (1902) De Lusi (1879) De Manneville v. Crompton De Pothonier (1900) De Quetteville (1905) Section. . 741 . 809 325, 994 . 277 . 334 . 720 . 1046 1267, 1268 . 937 . 770 111, 125 . 1102 . 1020 923, 935, 1189 . 327 . 1059 . 741 . 1034 . 81, 85 . 1319 . 714 . 1265 . 761 1046, 1111 . 459 . 373 . 509 . 273 198, 225, 226 574, 1146, 1295 439, 442, 452, 464, 498 . 1111 . 770 . 734 . 1002 267, 660, 708 . 1003 20 764, 1012 . 158 . 995 . 898 20, 281 . 834 . 1083 185, 823 . 834 . 716 . 1126 514, 537, 685 . 1059 . 794 . 1059 . 282 182, 252, 698 . 1007 22' 234, 236, 272 876 INDEX OF CASES Section. De Rosaz (1877) .... .25 De Teissier (1893) . 1151, 1215 De Vesci (1908) . 510 Dee Estates (1911) 1147, 1301, 1302, 1309 Deely v. Lloyd . 1295 Deep Sea Fishery (1902) . 185 Deeth v. Hale 966 Delves v. Gray . 499 Delahunty (1907) . 3 Dempsey v. Ward . 442 Denholm (1908) . 3 Denmaw v. Torry . 25 Dennis v. Gould . . 261 Derbyshire (1906) . . 739 Dering v. Winohelsea . 1143 Derry v. Peek 11 Detmold (1889) . . 818 Devaynes v. Noble 573, 1295 Devaynes v. Robinson 419, 551 Deveron (1893) . . 775 Devey v. Thornton 271, 1206 Dewar(1885) 234, 238 Dewar (1910) . 781 Dewhurst (1866) . . 375 Dias v. De Livera . . 834 Dibbs v. Goren . 1235 Dioconson v. Talbot . 510 Dick (1891) . 686 Dick (1899) .61,266, 348, 694, 912 Dick (1907) 280, 1046 Dick v. Alston . 233 Dick v. Audsley 280, 586 Dick v. Pergusson . 130 Dick v. Gillies . 1054 Dick v. Pridie 123, 870 Dick v. Robertson . 361, 366, 1019 Dickinson (1902) . 87 Dickonson v. Player . 620 Dickson (1884) . 336 Dickson (1889) . 636 Dickson (1894) 919, 921 Dickson v. Halbert . 945 Dickson v. Hygienic Institute . 205 Diggles (1888) 3 Dimes v. Scott 1021, 1034, 1080 Dingwall v. M'Combie 1278 Dive (1909) 228, 261, 653, 695, 1087, 1 118 Dix v. Burford 330, 332, 524 ; p. 850 Dixon (1857) . 445 Dixon (1900) . 1271 Dixon (1903) 750 Dixon .11. Rutherford . 270 Dixon's Tutor . 336 Doane (1893) . 1019 ; p. 842 Dobson v. Land 4, 330, 464, 509 Docker v. Somes . 1090, 1092, 1095 INDEX OF OASES 877 Section. Dodds v. Tuke ........ 1214 Dods v. Ireland . 595 Doe v. Clarke . 834 Doering (1889) . 1075 Donald v. Hodgart . , . 1121 Donaldson (1851) . . 1032 Donaldson (1884) . . 1178 Donaldson v. Kennedy . 708 Doody(1893) . 509, 1160 Doorman v. Jenkins . 514 Dougan (1901) . 481 Dougan v, M'Pherson 481, 549 Douglas (1864) 1078, 1081, 1091 Douglas (1872) 280, 336 Douglas (1887) . 322 Douglas (1902) 761, 781 Douglas (1906) . 977 Douglas v. Arehbutt . 1169 Douglas v. Congreve . 1021 Douglas v. Kay . 750 Douglas v. Lindsay . 1106 Douglas v. Mason . . 1310 Douglas v. Monteath . 1150 Douglas and Powell (1902) . 502 Douglas-Menzies v. Umphelby 738, 995 Dove v. Everard . . 129 Dover (1809) 437, 440 Dow v. Kilgour . 324 Downes v. Grazebrook . 385 Downie (1879) . 374, 377, 407 Downie (1901) . 327 Downs v. Gourlay . 720 Dowse v. Gorton 584,1211 Dowsonv. Solomon 4, 329, 553 Doyle v. Blake 97, 267 Doyle v. Crean 1053 Doyley v. Att.-Gen. 321 Dracup (1894) 1107 Drake v. Trefusis .... 299 Draupner (1909) . 1272 Drax(1887) 834 Drew (1899) 834 Drewett v. Pollard 845 Drosier v. Brereton 16 Drucker (1902) . 6 Druitt(1903) . 642, 674, 675 Dryburgh v. Walker . 297, 318, 347 Drynan v. Eennie . 30, 38 Drysdale v. Nairne 328, 488 Duart(1911) 350 Du Bochet (1901) . 832 Duffy (1906) 464 Duguid v. Dundas 1197 Dumas (1754) 1293 Dumbreck v. Stevenson . 825 Dun v. Angus 987 878 INDEX OF CASES Section. Dunbar (1909) .... . 1045 Dunbar v. Sinclair 935, 937, 938, 939 Dunbar v. Tredennick . 1274 Duncan (1877) .... 824, 994 Duncan (1892) . 177, 328 Duncan v. Crighton . 1188 Duncan v. Findlater . 1151 Duncan v. Forbes . 29 Duncan v. Part .... 1072, 1091 Dundas(1837) .... . 1046 Dundas(1869) .... 313, 942 Dundas v. Strathmore 329, 993 Dundee (1861) . 293 Dundee v. Morris . . 1046 Dundee v. Taylor . . 1134 Dunlop(1903) . 1030 Dunn (1904) . 1183 Dunn v. Anderston 1107 Dunn v. Chambers . 451, 470, 600 Dunn v. Flood .... . 229, 282, 390 Dunn v. Pratt .... . 2, 30 Dunning (1885) .... . 714 Dunster (1909) . 1050 Durand (1859) .... . 225 Durran (1905) 818 Duthie v. Forlong .... . 756 Duthie v. Kinloch . 783 Dykes (1903) 1019 Dyson (1910) .... . 807 Dyson and Fowke (1896) . 379, 382, 550 E. W. A. (1901) . . 923 Earl (1890) 581, 595 Earl of Buchan v. Monypenny . 1310 Easson v. Mailer .... 991 East (1846) .... . 598 East v. Eyal .... . 1208 Eaton (1894) .... 571, 1018 Eaton v. Buchanan. See Buchanan v. Eaton. Eaton v. Macgregor . 1258 Eaves v. Hickson . . 709 Ebbern v. Fowler .... . 377, 832, 834 Eccles(1910) .... . 290 Ecclesiastical Commissioners v. Pinney . 386, 633 Eddowes ..... . 1206 Edelstein v. Schuler . 258 Edgar v. Fisher . 1135 Edgar v. Kennedy . 599 Edgar v. Plomley . . 1075 Edge v. Kavanagh . 387 Edinburgh v. Irvine . 145 Edinburgh v. M'Laren . 303, 350, 1093 Edinburgh v. Mann (1891) 13 Edinburgh v. Mann (1896) 13 Edinburgh v. Muir . 739 Edinburgh v. University . . 293 INDEX OF CASES 879 Edinburgh Heritable v. Miller . Edinburgh Institute (1893) Edinburgh (Trades of) v. Heriot's Hospital Edmiston v. Miller Edmond (1898) . Edmond v. Dingwall Edmonds v. Blaina Co. Edmonds v. Peake Edmonson v. Copland Edwards (1852) . Edwards (1908) . Edwards (1910) . Edwards v. Edmunds Edwards v. Hood-Barrs Edwards v. Tuck . Egan v. Stack Egerton v. Brownlow Eglin v. Sanderson Egmont (1908) . Egmont v. Annan Egmont v. Smith Eivers v. Curry Eland v. Baker Elborne v. Goode Elder (1894) Elder (1895) Elder (1903) Elder v. Free Church (1881) Elder v. Free Church (1892) Elder v. Watson Elford (1910) Elgin v. Innes Elgin v. Morrison Elias v. Black Eliott (1893) Eliott (1894) Ellenborough (1903) Ellerman v. Clyde Elliot (1828) Elliot (1873) Elliot (1896) Ellis (1895) Ellis (1898) Ellis (1905) Ellis (1909) Ellis v. Barker Ellis v. Eden Ellis v. Maxwell (1841) Ellis v. Maxwell (1849) Ellison (1802) Elsey v. Cox Elve v. Boyton Emanuel v. Symon Emma Co. v. Grant Emmet (1880) Emmet (1881) Section. 418, 1248 334, 336, 337, 347 . 166 824, 825, 1200 755, 762, 1053 10, 298, 369, 937 . 672 229, 273 . 1101 . p. 844 327 . 833 572, 579, 586, 629 1123, 1142 845, 846 . 442 327, 818 . 957 1036 16 . 328 . 830 . 282 839, 1054 . 827 352, 760 . 825 . 760 . 760 . 714 . 834 . 351 384, 410 . 458 . 365 324, 783, 784, 788, 789 . 558 . 1142 . 940 . 706 . 3, 750 . 1037 . 334 . 718 . 1076 . 548 . 624 848, 850 838, 1048 15 . 1186 622, 640 . 971 22 . 766 . 1106 880 INDEX OF CASES Section. Emmins v. Bradford . 834 England v. Slade .... . 295 Erentz (1897) .... 887, 1189, 1211 Erlanger v. New Co. . 1118 Erskine v. Sachs . . 440 Erskine v. Wemyss . 334, 339, 344 Essery v. Cowlard . 1048 Evans (1887) . 1316 Evans (1908) . 1008 Evans (1913) .... . 1027 Evans v. Benyon .... 1121, 1222, 1226 Evans v. Craig .... 35 Evans v. Hellier .... . 846, 855, 860 Evans v. Jackson . . 365 Evans v. Jennings 34 Evans v. John .... . 116 Evans and Bettell (1910) ... 735, 996, 1002, 1272 Eve (1909) .... . 832 Evered (1910) . 379 Everitt (1870) . 1201 Ewart v. Hogg .... . 131 Ewing(1872) .... . 1030 Ewing (1884) .... . 347 Ewing (1909) .... 761, 783 Ewing v. Druminond 1011, 1012 Ewing v. Mathieson 1002, 1101 Exhall(1866) .... . 1211 Exmouth v. Praed . . 818 Eyre (1883) . 3, 300 Eyre v. Marsden .... . 853 Fairbairn v. Neville . 1197 Fairgrieves v. Hendersons . 824 Falconer (1908) . . 614 Falconer Stewart v. Wilkie . 334 Falkirk v. Ferguson 9 Farmer v. Dean . 493 Farquharson v. Kelly 827, 1050 Faulds v. Corbet . . 455 Faulds v. Roxburgh . 460 Fauntleroy v. Beebe 808, 813 Faure(1888) . 11, 12 Faweett v. Whitehouse . 445 Fazakerley v. Culshaw . 342 Fearn v. Gordon . 234,238 Fearnsides (1903) . . 720 Featherstone v. Cooper . 437 Fell v. Oificial Trustee . . 1148 Feltham v. Turner . 282 Fenwick v. Clarke . 735 Fenwick v. Greenwell . 323, 345, 346, 527, 539, 555 Ferguson (1874) . . 825 Ferguson (1877) .... 1004, 1019 Ferguson (1906) .... . 739 Ferguson v. Douglas . 973 Ferguson v. Hamilton . 739 INDEX OF OASES 881 Section. Fergusons. Marjoribanks. ..... 136,983 Ferguson v. Paterson. See Wyman v. Paterson. Ferguson v. Robertson ...... 304, 334 Fergusson (1902) . . 834 Ferme v. Stephenson 1301, 1302 Ferraby v. Hobson . 498 Ferrie (1849) 766, 777 Ferrier (1899) 15 Field (1894) 182, 240, 252, 698 Field v. Debenture 4 Field v. Lord Donoughmoi e . 271 Fielden v. Asbworth . 834 Fife Coal v. Bernard 143, 145 Fillingham v. Bromley . 818 Finch v. Pescott . 1110 Finden v. Stephens . 206 Findlay (1855) . 150 Findlay v. Mackenzie . 833 Finlay (1858) . 1255 Finlay v. M'Omie . . 1161 Fireman (1898) . . 1037 Firth v. Fielden . '. 834 Fish (1893) . 7, 932, 1174 Fisher (1844) . 720 Fisher (1903) . 1030 Fisk v. Att.-Gen. . . 1046 Fitzgerald (1856) . . 1208 Fitzgerald (1887) . 10 Fitzgerald (1904) . 327, 3. 29, 781, 983, 996, 1000 Fitzgerald v. O'Flaherty . 1208 Fitzhardinge (1899) . 634 Fitzpatrick v. Waring 317, 364 Fitzroy v. Cane . 327 Flanagan . . 813 Flanagan v. Nolan 1094, 1208 Fleeming v. Howden 2 Fleming v. Brown . . 923 Fleming v. Craig . 904, 908 Fleming v. Imrie . . 470 Fleming v. M'Hardy 10 Flemyng (1885) . . 833 Fletcher (1844) . 15 Fletcher (1888) . 998, 1189 Fletcher v. Ashburner . 813 Fletcher v. Birkenhead . 932 Fletcher v. Collis . 1118, 1222, 1227 Flower (1884) . 537 Flowerdew (1854) . . 1170 Fludyer (1898) . 728, 1287 Flynn v. Dalgleish . 632 Foggo (1893) . 910 Forbes (1823) 108 Forbes (1894) . 139 Forbes (1913) 975, 982, 1215 Forbes v. Eden 5 Forbes v. Honeyman . 163 56 882 INDEX OF CASES Forbes v. M'Condach Forbes v. M'Intosh Ford (1911) Ford v. Stephenson Fordham v.Wallis Fordyee v. Bridges Forest of Dean (1878) Forman v. Burns . Forrest v. Martine Forrest v. Reid Forrester v. Edinburgh Forrester v. Robson Forshaw v. Higginson Forster v. Abraham Forster v. Davies . Forster v. Elvet Forsyth (1853) Forsyth v. Kilgour Foster (1886) Foster (1890) Foster v. Blackstone Foster v. Ooekerell Foster v. Elsley . Foster v. Ridley Foster v. Tod Fotheringham (1797) Fothringham v. Salton Foucart (1897) Foulis (1857) Fountaine (1909) Fountaine v. Pellet Fowkes v. Pascoe Fowler (1898) Fox (1875) . Fox v. Mackreth Francis (1905) Fraser (1826) Fraser (1854) Fraser (1894) Fraser v. Forbes Fraser v. Hankey Fraser v. Malloch Fraser v. Murdoch. See Robinson Fraser v. Palmer Fraser v. Pattie Fraser v. Rose Fraser v. Turner Fraser v. Wallace Fraser's Trs. (1913) Freake (1902) Free Church v. M'Knight Free Church v. Overtoun Freeman (1887) . Freeman v. Bruce . Freeman v. Fairlie Freeman v. Laing . v. Fraser, 229 Section. . 777 . 392 . 834 . 1250 . 1287 ; p. 849 . 321 12 590, 597 . 299 763, 771 . 293 . 31, 33 340, 603, 1147, 1151 . 81, 87 905 . 557 262, 653, 661, 691 . 689, 987, 988 . 914 . 1042 . 225 . 185 205, 206 . 460 . 931 . 775 941, 1207 775, 1064 777, 1197 224, 955 . 273 . 990 . 796 . 756 480, 508 437, 1029 . 1310 . 913 . 298 . 739 454, 455, 1120 . 1321 . 1154 1187, 1265 . 327 19 . 937 . 1141 . 1037 349, 927 375, 378 84, 505 . 927 244, 550, 830, 952 . 185 INDEX OF CASES 883 Freen v. Beveridge Freer (1897) Freke v. Oarbery . Freman v. Whitbread Frere v. Winslow . Freshfield (1879) . Frewen v. Law Society- Friend (1898) Friend (1906) Friend v. Young Frith (1901) Frith (1902) Frith v. Cameron . Frogley (1905) Frog's Creditors (1735) Fry (1859) . Fry v. Tapson Fullarton v. James Fulton (1880) Fulton v. M'Allister Furnivall v. Coombes Fyfe v. Duff Fyler (1841) G. (1899) . Gabbett v. Lawder . Gainsborough v. Watcombe Galbraith v. Bo'ness Gallard (1897) Galletly v. Ross Galloway (1897) . Galloway v. Campbell Galloway v. Dairy . Galloway v. Garlies Gait v. Boyd Game (1897) Gandy (1885) Gardiner (1901) . Gardner v. Baillie . Gardner v. Hamblin Gardner v. Munro . Gardner v. Pearsons Garland (1804) Garland v. Beverley Garner v. Moore Garnett (1885) Garney v. Hibbert Garrard v. Lauderdale Garret v. Noble Gatty v. Phillipson Gaussen v. Whatman Gavin v. Johnston Geaves (1856) Geddes (1865) Geddes'V. Quistorp Geddis v. Semple . Section. 95, 156, 157, 159, 165, 173, 375 . 1019 . 838 . 1032 . 735 185, 823 . 1013 . 1006 17 5,6 834, 1054 1149, 1190, 1211 . 419 327, 832 25, 739 330, 579 195, 235, 237, 263, 666, 1079 865, 884 . 761 . 205 . 1252 . 1117 1071, 1127 . 833 . 444 824, 1076 . 1014 498, 1120 3 321, 834 . 334, 341, 380 . 166 . 334 . 824 570 22 . 843 222 . 1053 . 720 710, 728 . 1211 . 834 277, 330 . 924 . 834 8, 10, 21, 28 . 584 . 1085 . 1036 . 833 328, 538, 969 . 1162 . 1070 327, 1046 884 INDEX OF CASES Section. General Baptist Churches v. Taylor . . 31, 32, 33 General Corporation (1904) . 921 Genery v. Fitzgerald . 1021 Gentles (1908) 832 George (1877) 994 Gerrard v. Monifieth 432 Ghormley v. Smith . 781 Giblin v. M'Mullen . 512 Gibson (1900) . 350 Gibson v. Bott . 1018 Gibson v. Caddall 1030, 1180 Gibson v. Pearson 1264, 1268 Gibson v. Boss 750, 751 Gibson v. Watt . 771 Giddings (1826) 444 Gieve (1899) . 768 Gifford (1903) 25, 298, 299, 702, 739, 766 Gilbert (1896) . 714 Gilbert (1908) . 990 Gilchrist v. Dick . 903 Gill v. Arizona 71, 130 Gill v. Fife . 334 Gillespie v. Alexander . 1319 Gillespie v. City of Glasgow Bank . 27, 121, 122 Gillespie v. Gardner 483, 511 Gillespie v. Eiddell . 1319 Gillies v. Bain .... . 859 Gillies v. Hodge 761, 763 Gillies v. MacLachlan . 494, 496, 499, 1120 Gillon(1903) . 790, 798, 801 Gilmour (1851) . . 132 Gilmour (1852) ... .894 Gilmour (1873) . . 1060, 1062, 1067, 1069 Gilroy v. Stephen . 1100, 1106 Gimblett v. Purton . 766 Gisborne (1877) .... 278, 282 Gittings v. Steele . . 1236 Gladstone v. M'Callum . 1211 Glasgow (1844) . 56, 63 Glasgow (1897) . . 1120 Glasgow v. Iron Co. . 334 Glasgow Infirmary (1887) . . 350 Glasgow Infirmary (1888) . . 350 Gleeson (1911) . 827 Glen v. Miller . 305, 937, 938 Glendinning v. Hope . 1211 Glendinning v. Smith . 1188 Glendonwyn v. Gordon . 739 Globe Insurance v. Mackenzie . 715 Globe Insurance v. Scott . 728, 731, 1244 Glover (1912) 1002, 1036, 1040 Glover v. Barlow . . 1215 Gluckstein v. Barnes 13 Glukman (1908) . 3, 1045 Goddard v. Overend . 739 Godden (1893) . 1022 INDEX OF CASES 885 Section. Godden v. Crowhurst ... . . 819, 820 Godfrey (1883) 199 Gollan v. Booth 766, 770, 834, 839 Gollan v. Dallas 839, 855 Gompertz (1846) . 833 Goooh (1890) 34 Goodenough (1895) . 1109 Goodsir v. Carruthers 522, 1154, 1155, 1165 Goold (1856) . 898 Gordon (1854) 864, 870 Gordon (1866) 299, 324 Gordon v. Andersons . 573 Gordon v. Cameron . 224 Gordon v. Campbell 172, 416, 417, 744, 1252, 1256 Gordon v. Cheyne . . 1278 Gordon v. City of Glasgow Bank . 27, 579, 682 ; p. 852 Gordon v. Eglinton . 136, 147, 152 Gordon v. Gordon . 244, 314 Gordon v. Watson . . 939 Gordon v. Williams . . 142,318 Gordon's Hospital v. Aberdeen . 166 Gordon's Trust (1909) . 349 Gore v. Bowser 555 Gorst v. Lowndes . 854 Gosling (1859) . 759 Gosling v. Gaskell 243, 1250 Goudie v. Forbes . 319 Gough v. Offley . 550 Gough v. Smith . 332 Gonld (1899) 4, 510, 1030 Goulder (1905) . 818 Gourlay v. Kerr 479, 487 Gourlay v. Wright 953, 1119 Govan v. Richardson 825 Govan Club v. Geddes 29 Gow v. Foster . 1040 Gowans v. Christie . 361 Gower v. Mainwaring 320, 321 Gracie (1910) 188, 1310 Graham (1850) 340, 344 Graham (1868) 62, 141, 827 Graham (1870) 1105, 1122 Graham (1898) 768, 769, 787, 995, 1002, 1007 Graham (1899) . 755 Graham (1901) . 963 Graham v. Boswell . 352 Graham v. Hunter . . 1307 Graham v. Marshall 998, 1186, 1187, 1304 Graham v. M'Cashin 602, 1186 Graham v. Stewart . 299 Grainger (1876) . . 609 Grange (1881) 54 Grange (1907) . 813 Grant (1873) . 794 Grant (1876) . 775 Grant (1898) . 29, 327, 1102 886 INDEX OF CASES Section. Grant (1904) . 375 Grant v. Baillie . 9, 993 Grant v. Campbell . 164 Grant v. Fyffe .... . 834 Gray (1835) .... . 995, 996, 997 Gray (1856) . . .954 , 1158, 1159, 1161, 1171, 1179 Gray (1877) 766, 767 Gray (1907) 831, 995 Gray v. Elgin .... . 334 Gray v. Haig .... . 959 Gray v. M'Dougall . 286 Gray v. Paterson . 1138, 1139 Gray v. Royal Bank 714, 715, 1244 Gray v. Siggers 570, 1021 Gray v. Trinity 71, 164 Gray v. Walker . 708 Gray burn v. Olarkson 575, 576 Graysbrook v. Fox . . 718 Great Northern v. Dawson . 437 Great Western v. Cunliffe . . 440 Green v. Belchier .... . 994 Green v. Gasooyne . 83G, 841, 853, 859 Greene (1869) 3 Greenham v. Gibbeson . 294 Greenland v. Waddell p. 853 Greenlees (1894) . 756, 771 Greenock Harbour (1908) . . 318 Greenock Harbour v. Glasgow and South- Wester a . . . 1103 Greenock Harbour Cases . 651, 654, 656, 665, 693, 694 Greenock Harbour Trustees (1888) 651, 694 Greenwell v. Porter . 389 Greenwood (1892) . . 741 Greenwood (1901) . 23, 818 Greenwood (1903) . . 818 Gregorson v. M 'Donald 312, 336 Gregory (1815) .... . 498 Gregory v. Alison . 834, 1054 Greig v. Malcolm . . 827 Greig v. Somerville . 1319 Grenville-Murray v. Clarendon . 9 Gresham v. Price . 958 Greville v. Brown .... 735, 1011 Grey (1677) 3 Grey v. Johnston .... 249, 250 Grierson v. Ramsay . 1310 Grieve (1907) . 1235 Grieve v. Bethune .... 765, 1197 Grieve v. Wilson . 286, 319 Griffith (1904) .... . 1148 Griffith v. Hughes . 1229 Griffith v. Ricketts 809 Griffiths (1903) . . 834 Griffiths v. Porter .... 1034, 1124 Griffiths v. Pruen . 830 Griffiths v. Vere 854, 856 Grigor(1903) . . 433 INDEX OF CASES 887 Grilfin (1826) Grill v. General Co Grimond (1905) Grimthorpe (1908) Grindey (1898) Grindlay (1853) Grindlay v. Hill Grove v. Price Grove v. Search Grover v. Mathews Guild (1872) Guild v. Glasgow Gunn(1892) . Gunnis (1903) Gurney v. Gibb Guthrie (1895) Guthrie v. Walrond Gyles (1907) H. v. W. (1857) Hadden v. Bryden Haig ii. Gray Halbert v. Dickson Haldane (1895) . Haldane v. Lindsay Haldenby v. Spofforth Hales (1907) Haley v. Bannister Halford v. Stains HaU (1869) Hall (1880) Hall (1899) Hall (1903) Hall (1912) Hall v. M'Donald Hall v. Noyes Hallett (1879) Hallett (1894) Halliburton (1884) Halliday (1886) Hallows v. Lloyd Halston (1912) Hambleton (1863) Hamilton (1860) Hamilton (1879) Hamilton (1895) Hamilton (1896) Hamilton (1903) Hamilton v. Boyes Hamilton v. Gibb . Hamilton v. Ritchie Hamilton v. Wright Hammond (1911; . Hampton v. Holman Hanbury (1904) . Hanbury (1909) . Section. . 183 . 512 1046, 1186, 1209 . 807, 809, 812 234, 267, 514, 580, 590, 598 . 340 . 144 . 580 . 260, 261, 545 . 330 . 1019 . 656 . 341, 344, 383 . 1027 11 870 . 1013 1101 . 327 . 602 . 959 945 735, 757, 768 609 419 9, 35 848, 850 845 65 187 274 735 739 316 . 466 4, 574, 1289, 1295 1273, 1296 833 981 187, 540, 969 834 277 428 790, 999 3 987 827 1054 1131 p. 843 458 833 350 750 1033, 1036 888 INDEX OF CASES Section. Hanbury v. Spooner ..... . 830 Hancock (1901) . . 833 Hancock (1905) . . 831 Hannah v. Sharp . 1307, 1308 Hannay (1913) . 834 Hanson v. Graham . 994 Harbin v. Darby . . 1173 Harbin v. Masterman 757, 759 Harbison (1902) . . 1046 Hardcastle (1881) . . 1291 Harden v. Parsons . . 613 Hardicke v. Friern . 710 Hardie v. Fulton . 579, 621, 1108 Hardie v. Graham . . 1104 Hardman v. Guthrie . 725 Hardman v. Johnson . 444 Hardoon v. Belilios 1, 1220 Hardwicke v. Vernon . 952 Hargrave v. Schofield . 755 Hargreaves (1903) . . 990 Harkness (1896) . 73 Harkness v. Graham . 727 Harman (1685) . 728 Harrington v. Atherton . . 1025 Harris (1861) . 618 Harris (1904) . 336 Harris v. Howie . . 903 Harris v. Truman . 23, 1294 Harrison (1910) . . 327 Harrison v. Kirk . 727, 1287 Harrop (1883) 81 Hartland (1911) . . 972 Hartop v. Hoare . . 1293 Hartopp v. Huskisson 35 Harvey (1860) 334, 1140 Harvey v. Lacey . . 1137 Harvey v. Lambert . 507 Harvey v. Spittal . . 833 Hastie (1887) 327, 832 Hastie v. Steel 30 Hatch (1804) 463, 481 Havelock (1881) . . 994 Hawkins (1864) . . 830 Hay (1890) . p. 845 Hay (1903) . 570 Hay (1913) . 833 Ray v. Baillie (1908) . 1046 Hay v. Binnie . 213, 216, 906 Hay v. Brown . 715 Hay v. Hay Miln . . 349, 374, 377 Hay v. Morrison . . 1133 Hay v. Torbet . 1295 Hay-Cunningham v. Blackwell . . 834 Haydon v. Forrest . 999 Haynes (1866) . 770 Hayward (1897) . . 818 Hayward (1901) . . 714 INDEX OF CASES 889 452, 589, 590, 614, Hazeldine (1908) . Head v. Gould Healy v. Donnery . Heath v. Kamsay . Heathcote (1904) . Heathcote v. Hulme Heather (1906) Hedderwick (1909) Hedderwick v. Morison Hellman (1866) . Helps v. Clayton . Henderson (1890) . Henderson (1893) . Henderson (1894) . Henderson (1900) Henderson (1901) Henderson (1907) . Henderson (1911) . Henderson v. Bank of Australasia Hendersons. Dougall Henderson v. Huntington . Henderson v. M'lver Henderson v. Merthyr Tydfil Henderson v. Norrie Henderson v. Robb Hendersons. Rothschild . Henderson v. Somerville Henderson v. Stewart Hendersons (1901) . Hendry v. Patrick Henry (1907) Heriot v. Fyffe Heriot v. Ross Heritable Association v. Miller . Heritable Co. v. Millar Hervey (1889) Hetling (1893) Heugh v. Scard Hewat v. Smith Hewats v. Roberton Hewett (1765) Hewett v. Foster . Hewitt v. Wright . Hickley (1876) Hickling (1898) . Hiddingh v. Dennyssen Hiddleston (1906)". Higginbotham (1886) Higginbotham (1897) Higgins v. Livingstone Higginson and Dean Hill (1850) Hill (1855) Hill (1872) Hill (1881) Section. 317, 716, 734, 814, 818 78, 1082, 1086, 1239 . 274 1013, 1118, 1121 . 844 1081, 1082 . 990 350, 1046, 1289 . 833 . 825 . 1187 827 205, 909 3, 1046 618, 625, 679, 1081, 1082, 1224, 1230 413, 898 810, 813 . 739 . 273 . 1049 438, 550 . 272 . 1189 147, 779, 1219 . 1307 . 8, 9 334, 344 14 . 347 . 777 . 1002 164, 415 . 1147 714, 720, 721, 722, 724, 725, 726, 728, 729, 730, 1098, 1100, 1108, 1245 2, 755, 1137, 1278 . 1075 156, 537 956, 1184 131 781 320 1208 809 435, 464, 491 827, 1186 575 ; p. 853 . 377 795 1002, 1052 156, 164, 1260 1049 . 160 336, 347 . 1011 . 1034 890 INDEX OF CASES Section. Hill (1897) . ■■', Hill «. Boyle .... . 967 Hill v. Burns . 130, 965, 1046, 1209 Hill v. City of Glasgow Bank 72, 73, 74, 102 Hill v. Crook . 832 Hill v. Edinburgh . . 143 Hill v. Kinloch . 395, 1262 Hill v. Maxwell . . 1011 Hill v. Mitchell . 867, 870 Hill v. Thomson . 287, 322 Hilliard (1908) . 1147, 1207 Hilton (1909) 177, 622 Hindmarsh (1860) 6 Hinton v. Connell . . 1307 Hinves(1844) 571 Hippesley v. Knee . 440 Hirsche v. Sims . 437 Hirst (1892) . 274 Hiscoe (1902) . 1006 Hitch v. Leworthy 283 Hoare v. Parker . 1043 Hobbs v. Wayet . . 1221 Hobday v. Peters . 329, 597 Hobson(1885) 1022, 1023 Hockey v. Western 718, 739 Hocking (1898) . 761, 770 Hodges (1899) . . ■ 1211 Hodgson (1904) . . . 423, 824 Hoffe(1900) 554 Hofford v. Gowans 1273 Holdsworth (1838) 552 Holford (1894) . . p. 848 Holgate v. Haworth . 1104 Holloway v. Radcliffe 834 Holmes v. Dring . . 613 Holt v. Sindrey . 832 Home v. Belhaven . 366, 932 Home v. Lyell 144, 145 Home v. Menzies . . 1137 Home v. Pringle . o 01, 245, 532, 1129, 1155, 1157 Honey man v. Donaldson . . 834 Honywood (1902) . 1006, 1013, 1033 Hood (1905) . 1019 Hood v. Clapham . . 1234 Hood Barrs v. Heriot 793, 822, 987, 1218 Hooley v. Hatton . . 739 Hope (1855) . 566 Hope (1870) 794, 797 Hope (1884) . 63, 348, 912 Hope v. D'Hedouville . 1021 Hope Johnstone (1904) . 327 Hope Johnstone v. Sinclair . 766 Hopgood v. Parkin . 199, 229, 230 Hopkins v. Myall . . 294 Hordern (1910) . . 451, 476, 600 Horlock (1895) . . 739 INDEX OF CASES 891 Home (1905) Home v. Morrison Horsbrugh (1848) . Horsbrugh v. Welch Horsfleld v. Cooper Horsnaill (1909) . Horton v. Brocklehurst Hotohkin (1887) . Hotohkys (1886) . Hotham (1902) Houghton (1904) . Houghton v. Franklin Houldsworth v. Cambusnethan Houston v. Mitchell Hovenden v. Annesley How v. Winterton Howard (1901) Howard (1908) Howard v. Baillie . Howard v. Ducane Howard v. Richmond Howarth (1909) . Howat (1838) Howatson v. Webb Howden (1910) . Howden v. Yorkshire Howe (1903) Howe (1908) Howe v. Dartmouth Howes (1905) Howes v. Goodlet- Campbell Howgate (1902) . Howling v. Smith . Hoyles (1911) Hoyles (1912) Hubbuck (1905) . Hudleston v. Gouldsbury Hudson (1885) Hudson (1911) Hudson v. Spencer Huggius (1882) Hughes (1802) Hughes v. Edwardes Hughes v. Empson Huguenin v. Baseley Hulkes (1886) Hull v. Hill Hume (1894) Hume v. Stewart . Humphrey v. Oliver Hunter (1894) Hunter (1908) Hunter v. Allan . Hunter v. Att.-Gen. Hunter v. Burnley Hunter v. Dowling Section. . 1235 7 744 394, 395, 417, 1250, 1257 182 . 768 . 955 . 544, 546, 547 328, 1037 678, 694, 1086 . 600 1008 1045 . 752 . 1117 6, 22, 953, 1112, 1151 . 833 20 222 . 510 334, 390, 454 746, 1002 . 1076 . 924 . 807 15 . 750, 754, 761, 1054 . 1039 566, 567, 570, 571, 609, 1014 1045 707 73 . 1254 . 1052 . 1034 25 . 617 . 298 . 1009 739 . 834 . 475 774, 777, 782, 783, 827 . 577 . 480 1094, 1098, 1103 . 624 . 1052 744, 948 282, 740 1005, 1235 . 739 . 442 . 1046 743, 995 295, 989 892 INDEX OF CASES Sfiction. Huntington v. Henderson Huntly v. Fife Hurlbatt (1910) . Hurst (1874) Hurst (1892) . 437 . 144 . 844 . 705 297, 592, 734, 735 Hutcheon v. Mannington Hutcheson v. Hoggan . 1101 . 824 Hutcheson v. Porter 15 Hutchinson v. Morritt . 449 Hutchison v. Aberdeen . 1314 Hutchison v. Young Hutton (1847) Hutton v. Anderson 324, 752 739, 751 992 Hutton v. Annan . 310, 609, 651, 656 Hyett v. Meakin . Hyman v. Rose . 813 . 1227 Ideal Co. v. Holland 1186, 1189 Imperial Association v. Co Imperial Corporation (189 Ingle v. Partridge . Inglis (1887) Inglis v. Breen leman . . . 954, 1281 2) . . 621 . 262 924 . 1101 Inglis v. Caledonian Ely. 1 3o. . . 35, 67 Inglis v. Gillanders . 702 Inland Revenue v. Macdoi laid ... . 1263 Innerarity v. Gilmore . 1134 Innes (1909) Innes (1910) Innes v. Eeid 3 34, 714 242, 243 Inverclyde (1910) Ireland v. Glass . p. 841 . 159 Ironmongers' Co. v. Att.-G Irvine (1873) Irvine v. Sullivan . en. . . 350 . 834 3 Irvine v. Tait . 1119 Irving v. Houston . 1027 Irwin v. Eogers Isaac (1897) Isaac v. Worstencroft ' . 1183 . 1182 . 182 Izod (1863) 321 Jack v. Burnett . 1046 Jack v. Downie 27 Jack v. N. B. Ely. Co. Jacks (J 91 3) Jackson (1882) Jackson (1907) Jackson v. Black . 824, 929 995, 1237 ; p. 848 419, 1215 . 834 . 712 Jackson v. Dickinson Jackson v. Minister 1220, 1241 . 332 Jacubs v. Eylance . Jagger (1883) Jago (1893) James (1803) James v. Dean . 1075 848; 850, 851 . 105, 109, 112 458, 459, 506 442 INDEX OF CASES 893 Jameson v. Sharpe Jamieson (1884) . Jamieson v. Allardice Jamieson v. Clark . Jamieson v. Lesslie Jee v. Audley Jeffcock (1882) Jeffrey v. Aitken . Jeffreys (1901) Jenkins (1903) Jennes (1909) Jennings v. Mather Jerdon v. Forrest . Jermy v. Preston . Jervis v. Wolferstan Job (1877) . Jobson v. Palmer . Joddrell (1890) Johns v. James Johnson (1880) Johnson (1886) Johnson (1903) Johnson (1904) Johnson v. Crook . Johnson v. Newton Johnston (1880) . Johnston (1897) . Johnston (1900) . Johnston (1903) . Johnston v. Canongate Johnston v. Cox Johnston v. Dewar Johnstone v. Baber Johnstone v. Beattie Johnstone v. Bucoleuoh Johnstone v. Mackenzie Johnstone v. Smith- Clark Johnstone v. Thorburn Jones (1874) Jones (1885) Jones (1897) Jones (1898) Jones (1910) Jones (1912) Jones v. Dexter Jones v. Foxall Jones v. Lewis Jones v. Maggs Jones v. Selby Jones v. Smith Jopp v. Johnston . Joy v. Campbell . Judd and Poland (1906) Jump (1903) Jupp (1903) Section. 96, 186 . 410 . 319 . p. 853 57, 752 . 770 . 365 . 1120 . 818 344, 382, 1081 715 . 1211 . 834 . 813 1220, 1236, 1287, 1319, 1320 . 516 273, 513 . 834 10 . 722 586, 621 . 618 . 818 . 818 606, 612 3 1118 51, 918 702, 755 334, 377 . 185 834 ; p. 847 . 450 985, 1180, 1199 . 144 . 924, 926, 1038, 1039 . 923 215, 233, 654, 655, 1305 15 . 714 . 714, 715,' 1091, 1181 . 761 . 350 . 834 . 501 1106, 1111 . 516 . 845 . 739 225, 708, 1273 1296, 1300 . 192 363, 388 . 754 828, 995 894 INDEX OF CASES Section. Kavanagh v. Working Men's Society- . 210 Kay (1897) .... 725, 728 Kay v. Soates .... 754 Kay v, Watkins .... . 1043 Kay v. Wilson .... . 1264 Kaye(1909) 379, 1011 Keane «. Robarts . . 1271 Kearsley v. Woodcock . 819 Keating (1835) .... 365 Keays v. Lane .... 632 Keck (1904) .... . 547 Keech v. Sandford 442, 459, 1146 Keeson v. Aberdeen . 293 Keir v. Lethem .... . 225 Keith (1857) .... 837, 854, 859 Keith (1893) .... . 318 Keith (1908) .... . 827 Kekewich v. Barker . 834 Kekewich v. Marker . 277 Kelland v. Douglas 160, 1046 Kellaway v. Johnson . 1071 Kelly (1909) .... . 990 Kelly v. Larkin 22 Kelsey(1905) 556, 990 Kemp (1883) .... . 81,85 Kemp v. Burn . 952, 956, 961 Kendall v. Marsters . 1152 Kennedy (1843) .... . 813 Kennedy (1884) .... 514, 534, 977 Kennedy v. Daly .... . 446 Kennedy v. De Trafford . 4 Kennedy v. Green .... 1277 Kennedy v. Incorporation of Maltmen . 935 Kennedy v. Stark .... . 1002 Kennedy v. Warren . 324, 781, 782, 1000 Ker (1830) ..... . 1069 Ker (1855). . 374 Ker (1895). .... 787, 794, 1060 Ker v. Brown .... 879, 1310, 1311 Ker v. City of Glasgow Bank . 889 Ker v. Justice .... . 987 Kerr (1895) .... . 809 Kerr (1907) .... . 415 Kerrison v. Glyn .... . 1233 Kettlewell (1908) .... . 833 Kidd v. Paton .... . 735 Kidstons v. MacFarlane . 1000, 1213 Kiersey v. Flahavan . 994 Kilbee v. Sneyd .... . 208 Kilmarnock v. Buchanan . . 1269 Kilmarnock v. Ossington . 25 Kilpatrick (1881) . 347, 348 Kimball v. Reding . 680 King (1857) . 537 King (1865) . 1208 King (1906) .... . 924 INDEX OF CASES 895 King v. Archbishop of Canterbury King v. Bellord King v. Denison . King v. Frost King v. Stewart . Kingdon v. Castleman Kingham (1897) . Kingsbury v. Walter Kingston (1871) . Kinloch (1859) Kinloch (1880) Kinloch v. Rocheid Kinloch v. Secretary for India Kinmond (1873) Kinmond (1904) Kinmond v. Mess Kinnaird v. Ogilvy Kinnear (1875) Kippen (1871) Kirby (1892) Kirby (1902) Kirby v. Mash Kirby's case (1871) Kirk (1904) Kirk v. Eddowes Kirkland (1886) Kirkland v. Cadell Kirkland v. Gibson Kirkman v. Booth . Kirkman v. Pym . Kirkpatrick (1853) Kirkpatrick v. Bedford Kirkwood (1912) . Kleinwort v. Dunlop Knapp (1895) Knight (1859) Knight (1884) Knight v. Boughton Knight v. Marjoribanks Knight v. Plymouth Knollys (1912) Knott v. Cottee Knowles (1868) Knowles (1893) Knowles v. Scott Knox (1887) Knox (1899) Knox (1907) Knox (1912) Knox v. Mackinnon . 194,231, Kutner v. Addenbrooke Kyd v. Waterson . Lacey (1802) Lacon (1911) Lady well v. Brookes 750, 756, Section. 285 72 J, 1045 833 7, 1309 78 1036 834 1279 336 1038 1114 9,28 746 1060 802, 815 834 326 324 25 25 599 148, 168 637, 675 . 739 . 967 . 1309 . 1248 561, 563, 1169 . 929 . 927 . 1101 . 995 . 1233 . 766 . 267 . 1181 3 437, 480, 509 . 248 . 652 206, 1103, 1182 630, 1035 291 14 795 377 827 833 514, 515, 525, 632, 663, 681, 684, 685 293, 1202, 1209 . 937 . 458, 465, 496 . 1019 13 896 INDEX OF CASES 216, 564, 584, 1093, 1168, Lagunas (1899) Laidlaw (1882) Laidlaw v. Laidlaw's Trustee (1882) Laidlaws v. Newlands Laing (1895) Laing (1899) Laing (1912) Laird (1858) Laird (1884) Laird (1911) Laird v. Miln Lake (1901) Lake (1903) Lake (1913) Lake v. Bell Lake v. De Lambert Lamb v. Cncliran Lambe v. Eames Lambert (1873) Lambert (1897) Lambert (1908) Lamond v. Croom Lamont (1908) Lamont Campbell v. Carter-Campbell Lampet v. Kennedy L'Amy v. Nioolson Lanark v. "Wylie . Landauer v. Asser . Lands Allotment (1894) Lane v. Debenham Lang (1893) Langdale (1870) . Langdale v. Briggs Langston v. Ollivant Lantsbery v. Collier Largs (1899) Lassence v. Tierney Latham v. Edinburgh Railway Lathrop v. Bampton Latta (1880) Lauder v. Millars . Lauderdale v. Fife . Lauderdale v. Hogg Laurie v. Brown . Lawrie (1892) Lawrence v. Murray Lawson (1864) Lawson (1890) Lawson (1902) Lawton v. Campion Leach (1912) Lead, etc., Society (1904) Leake v. Robinson . Learmonts v. Shearer Learoyd v. Whiteley 156, 220, 702 Section. 11 . 872 . 795 794, 795 . 1237 . 632 . 833 1281, 1282, 1283, 1284, 1285 . 30, 33 . 728 73, 74, 164 23, 1077, 1313 185, 1078, 1082 . 1141 6 73 607, 631, 632, 651 3 . 1033 . 990 . 833 704, 723, 726, 731, 733, 1240 56 . 1030 . 1050 765, 776 . 334 4 6, 11, 12 287, 294 646, 647 624, 643 . 818 . 685 296, 768 . 1198 . 833 . 1175 1290, 1298 336, 347 . 1155 54, 1132, 1133 143 286, 1046 711, 1167 15, 796 374 771 963 600 834 717 834 1310 196, 197, 265, 515, 517, 521, 653, 654, 655, 666, 1079, 1299 INDEX OF CASES 897 Lechmere . Lechmere v. Carlisle Leedham v. Chawner Leeming (1912) Lees (1893) Lees (1896) Lees v. Dun Legg v. Mackrell . Leigh v. Caledonian Co. Leighton (1867) . Leith (1899) Leng (1895) Lennock (1880) . Lennox (1901) Leonard (1880) Lepine (1892) Leslie (1814) Leslie (1883) Leslie (1911) Leslie v. Baillie Lester v. Garland . L'Estrange v. Winniet Letterstedt v. Broers Lever (1897) Levy v. Abercorris Lewin (1752) Lewis (1819) Lewis (1895) Lewis (1904) Lewis v. Freke Lewis v. IsTobbs Lewis v, Pirie Lewis v. Trask Life Association v. Siddall Lincoln v. Windsor Lincoln v. Wright Lindsay (1714) Lindsay (1847) Lindsay (1880) . Lindsay (1911) Lindsay v. Balgony Lindsay v. Barmcotte Lindsay v. City of Glasg Lindsay v. Giles . Lindsay v. Kinloch Linsley (1904). Lister v. Stubbs . Livesey (1827) Livingstone (1886) Livingstone v. Allans Livingstone v. Eawyards Livingstone v. Waddell Llanover (1903) . Llewellin (1887) . Lloyd (1841) Section. 1294 987 1127 739 919 144 352, 405, 523, 574, 599, 969, 1111, 1118, 1119, 1236, 1273, 1307, 1319 96 . 1076 . 822 1183, 1195 . 341 . 802 47 .' 570 . 744 . 166 329, 1215 90 . 542 . 854 . 833 . 902 5, 1037 . 672 i 741 . 1097 . 161 553, 734 . 1107 182, 625, 698 . 1165 . 1191 545, 1120, 1121, 1125 . 1160 . 1223 . 725 41 755, 771 839, 857 . 1114 . 31, 34 Bank p. 851 1060, 1061, 1065, 1066 1119 See Lockhart Linsley. 205. . 437 . 1235 999, 1000 . 19, 29 . 1146 766, 937, 938 273, 547, 849 . 1183 . 995 57 898 INDEX OF CASES Section. Lloyd (1866) 818 Lloyd v. Carr . 1042 Lloyd v. Grace . 182 Lloyd v. Jones 328, 539 Lloyd v. Swiss Verein 1271, 1273 Lloyd's Bank v. Pearson . 185 Lockhart v. Martin . 801 Lockhart v. Keilly . 1239 Lockhart Linsley (1904) 956, 1239 Lofthouse (1885) . 544, 740 Loftus-Otway (1895) . 818 Logan (1896) . 1055 Logan (1897) . 336 Logan v. Maclellan 1074 Logan v. M'Rostie . 158 Logan v. Meiklejohn . 866 Londesborough v. Somerville . 1032 London v. Goddard .... 4, 26, 509 London Association v. London Docks . 341 London Bank v. Simmons 699, 1274 London, Chatham and Dover (1892) . 1107 London Co. v. Duggan .... . 1273 London, etc., Co. v. Gomm . 327 London University (1909) .... 717, 1046 Long (1901) ..... . 751, 818, 825 Long v. Hughes ..... . 1007 Long v. Watkinson .... . 445 Longdon v. Simson .... 835, 850 Longfield v. Bantry .... . 739 Longmore v. Broom . 321 Longton v. Wilsby .... 442, 444 Loom (1910) . . . . . 1151 Lord (1867) ... . 1101 ; p. 842 Lord (1896) ..... . 124 Lord v. Colvin . . . . 839, 854, 856, 858, 859, 1054 Lord v. Godfrey ... . . 1017 Lord Advocate, vide Advocate. Loring v. Thomas ....... 833 Loscombe v. Wintringham . 1046 Lothian Co. v. Mair .... . 1091 Louson v. Dicksons .... 770, 798 Lovat v. Eraser . . . . 1010, 1183 Love (1885) . Ii89 Love (1907) . ... 975, 1215 Love v. Mack ..... 262, 653 Loveland (1906) . . 832 Loveridge v. Cooper 185 Low (1873) . 1046 Low (1877) 797, 801 Low v. Bouverie . 189, 543, 550, 967 Low v. Whitworth . 834 Lowdell (1877) . 80 Lowe v. Shields . 183, 247, 693 Lowman (1895) . 750, 761, 770 Lowry v. Fulton . 97 Lowson v. Copeland . 565, 594, 600 INDEX OF CASES 899 Lowson v. Urquhart Lowther (1806) . Lucas (1881) Lucas v. Beresford Lucena v. Crawford Luff v. Lord Luke v. South Kensington Lumsden v. Buchanan Lundie v. Falkirk . Luther v. Bianconi Lyddon v. Ellison . Lynch Blosse (1899) Lynch v. Giffin Lynders (1910) Lynedoch v. Ouchterlony Lyon (1901) Lyon v. Sibbald Lyons v. Advocate-General Lyons v. Bengal Lyons v. Harris Lysaght (1898) Mabbet (1891) Maben (1901) Maberly (1886) . Mabon v. Christie . M'Adam v. Martin M'Adam v. Scott (1913) M'Adam v. Souters M' Alley (1900) Macandrew (1868) M'Ardle v. Gaughran Macarthur v. M'Lean M' Asian (1841) . Macbrair (1886) . M'Caig (1907) M'Caig v. Glasgow M'Call (1901) M'Call v. Murray . M'Callum v. M'Culloch M'Caskill v. Cameron M'Clelland v. Manchester M'Clymont v. Osborne M'Conochie (1909) M'Connell (1897) . M'Cormack v. Barber M'Cormick v. Grogan M'Cowan v. Baine M'Creight (1849) . M'Cuaig v. Macaulay M'Culloch (1903) Macdonald (1864) M'Donald (1875) MacDonald (1896) Macdonald (1897) M'Donald (1907) 170 ', 171, 172, 417 1250, Section. 770 457 760 1245 331 483, 489 164, 177, 306 1252, 1253, 1255, 1257 5 282, 592 . 770 . 1018 735, 991, 996 4 157, 159 794, 796 . 172 350, 1046 . 827 . 571 . 1032 . 324 1102, 1105 . 630 . 219 1273, 1289, 1300 . 923 . 807, 808, 813 182, 347 . 433 1111, 1286 . 954 . 56, 63 . 645 . 755 20, 327, 1046 1102, 1111 811 69, 750, 790, 803 . 768 . 511 . 750 . 1046 317, 423, 881 . 296 36 . 528 . 825 . 205 327, 735, 754, 755 84 . 816 . 826 . 1113 755, 834 900 INDEX OF CASES Section. Macdonald v. Bryce ....... 841 Macdonald v. City of Glasgow Bank . p. 851 Macdonald v. Hall 775, 834 MacDonald v. Irvine 568, 569, 571, 734 Macdonald v. Stewart . 1134 M'Donell (1911) . . 1046 M'Donnell v. Morrow . 617 M'Dougall (1878) . . 350 Macdougall v. Watson . 1030 M'Dowall v. Russell 1066, 1069 Macduff (1896) . . 1046 Macduff v. Spence . 1046 M'Eacbarn (1911) . 330, 1036 M'Enaney v. Caledonian Co. . 1076 M'Ewan v. Crombie 1149, 1190, 1191 M'Ewen v. City of Glasgow Bank . 223; p. 851 Macfadyen (1908) . . 11, 22 Macfarlane (1897) . 244, 924, 1154 Macfarlane (1903) . 28 S, 301, ' 755 r 756, 777, 816, 822 Macfarlane (1910) . 739, 813 M'Farlane v. Donaldson . . 946 Macfarlane v. Greig . 807 MacFarlane v. M'Arthur . 1034 M'Farlane v. Oliver 831, 995 M'Gaan(1883) . 711 M'Gennes v. Rooney . 978 M 'Gibbon v. Hope 705, 1237 Macgillivray v. Dallas 267, 937 M'Gowan v. Robb .... . 1278 M'Gregor (1894) . 932, 933 M'Gregor (1909) .... . 761 M'Gregor v. Ballachulish . . 11, 89 M'Gregor v. Bosomwortb . 1046 Maegregor v. Gordon . 334 M'Gregor v. Kimbell 831, 1189, 1214 Maegregor v. M'Lennan .... 1148, 1301, 1302 Maegregor v. Sobn 796, 798 M'Grouther (1911) 43 M'Grouther v. Hill . 1237 Macguire (1870) . . 1046 Macharg (1894) . 813 M'Innes v. M'AUisters . 1101 M'Intire (1904) .... . 834 Macintosh (1852) . 1135, 1195 Macintosh v. Wood 334, 824 M'Intyre v. Grimond . 1046 Mackay(1878) . 780 Mackay(1897) 755, 771, 971, 1142 Mackay (1906) . 553, 557, 734, 1272 Mackay (1909) . 841, 845, 859 Mackay (1911) . 192, 234, 236 Mackay v. Ewing . . 347 M'Kechnie (1912) . . 627 M'Kenna v. Eager . 105 Mackenzie (1846) . . 1140 Mackenzie (1854) . . 870 INDEX OF CASES 901 Section. Mackenzie (1855) .... 33g M'Kenzie (1872) . 49 Mackenzie (1877) . 859 Mackenzie (1878) . 796, 799 Mackenzie (1883) . . 324 Mackenzie (1886) . 164, 178 Mackenzie (1896) . . 1037 Mackenzie (1899) . . 1202 Mackenzie (1907) . . 833 Mackenzie (1908) . . 495 Mackenzie (1909) . . 755 Mackenzie (1911) . . 983 Mackenzie v. Baird 242, 1175 Mackenzie v. Ootton ' . 1118 Mackenzie v. Fowler 923, 937 Mackenzie v. Johnstone. See Johnstone v. Mackenzie. Mackenzie v. Kilmarnock . 761, 763, 1012 Mackenzie v. Macallister . 25, 1137 Mackenzie v. Sutherland . . 937, 938, 939 Mackenzie v. Thomson . 1247 Mackie (1845) . 567 Mackie (1872) 740, 824 Mackie (1875) . 455, 468, 495, 1119 Mackie v. Edinburgh 965, 1140 Mackie v. Gloag 791, 796 Mackinlay (1898) . . 761 Mackinlay (1911) . . p. 844 Mackinnon (1909) . 1046 Mackinnon v. M'Neill . 334 Mackinnon v. Official Receiver . 756 Macknight (1875) . . 155 M'Laren v. M'Alpine 755, 1050 M'Laren v. Stainton . 1022 M'Larty v. M'Laverty . 837 M'Lay v. M'Queen 10 M'Lean (1892) 137 Maclean (1895) 451, 476, 867, 870, 871, 876, 909 Maclean (1897) . 777 MacLean (1898) . . 43, 56, 350 Maclean v. Mackintosh . 965 Maclean v. Soady . . . 517, 5 19, 652, 661, 664, 665, 670, 689, 1086 M'Leish (1841) . 327, 344, 964, 965, 1045 Macleod (1895) . . 1291 M'Leod v. M'Luckie . 133 M'Leod v. Wilson . . 714 MacMaster v. Stewart . 973 MacMath (1896) . 879, 884 MacMillan (1908) .... 614, 634 M'Millan v. Armstrong . 415, 649, 1272 M'Millan v. Campbell 1062, 1065 Macmillan & Son, Ltd. v. Rowan & Co. . 600 M'Murdo (1897) . 774, 781 M'Murray (1852) . . 1102 M'Nair(1791) . ... . 327 MacNaghten v. Paterson . . . . . .793,798,1127 Macnamara v. Carey . 131, 328, 554 902 INDEX OF CASES M'Naught (1909) . M'Neil (1883) M'Nish v. Donald . Maophail v. Maclean MacPhee (1912) MaoPherson (1841) MaoPherson (1894) MaoPherson (1907) M'Pherson v. A. B. Macpherson v. Hill MaoPherson v. "Watt M'Queen v. Farquhar Macqueen v. Tod Macrae (1913) Macrae v. Assets Co. Macrae v. Gregory Macray (1910) MacTavish v. Reid M'Whirter v. Latta Maddison v. Andrew Maddock (1899) . Maddock (1902) . Magnus v. Queensland Mailler v. Allan . Maire (1905) Maitland v. Bateman Majendie v. Carruthers Malam (1894) Malcolm (1869) . Malcolm v. Goldie Malim v. Keighly . Mallott v. Wilson . Malzy v. Edge Mann (1851) Mann (1912) Mann v. Edinburgh Mann v. Thompson Manners v. Pearson Manners v. Strong Manners v. Wilson Manning v. Chambers Mansel (1881) Mansergh v. Campbell Mansfield v. Scone . Manson v. Baillie . Mant v. Leith Mara v. Browne Mare (1902) Marsden v. Kent . Marsh v. Att.-Gen. Marshall (1897) . Marshall (1900) . Marshall v. Blew . Marshall v. Bremner Marshall v. Crowther Marshall v. Holloway Section. . 1045 . 419 . 752 . 1250 . 1046 947, 948 27 . 1032 . 913 705, 766, 770, 1233 . 479 . 1280 . 277 1211, 1302 . 1236 152, 167, 573, 1000, 1249, 1310, 1311 . 1046 334, 336 904, 905, 907 . 321 . 1183 . 3,34 . 253 25, 337, 432, 931 . 634 . 1076 . 775 . 1027 1094, 1152 42, 161, 173, 361 3 15, 130 120 826 739 300 834 744 537, 612, 701 221 818 676 1008 104, 324 1160, 1301 . 651 1225, 1227, 1229, 1281 834 594 1046 344, 375, 377 p. 843 1039 1017 1033 505 1223, INDEX OF OASES 903 Marshall v. Lyell . Marshalls v. Milne Martin (1900) Martin (1904) Martin v. Bannatyne Martin v. Ferguson Martin v. Hunter . Martin v. Milliken Martin v. Nadel . Martin v. Persse . Martin v. Wright . Marvin (1905) Maryon-Wilson (1900) Maryon-Wilson (1912) Maskelyne v. Russell Mason (1878) Mason (1891) Mason (1910) Mason v. Cattley Mason v. Mitchell Mason v. Skinner Massey v. Banner Massiugberd (1890) Massy v. Scott Master (1911) Mathias (1857) Mathison v. Clarke Matthew (1905) Matthews v. Bagsh Matthews v. Brise Matthews v. Keble Matthews v. Ruggles-Brise Mattison v. Tanfield Maxwell (1874) . Maxwell (1877) . Maxwell v. British Co. Maxwell v. Drummond Maxwell Heron (1892) May v. Paul Mayne (1897) Mayne v. M'Keand Mecredy v. Brown . Medland (1889) Medows (1898) Meiklam (1852) . Meiklam v. Glassford Mein (1901) Meinertzagen v. Walters Meldrum v. Scorer Mellis v. Legge Mellor (1871) Mellor (1912) Melville v. Noble . Melville v. Preston Mendes v. Guedalla Menzies (1898) 173 Section. . 30, 37 . 593 . 982 423, 424, 1013 781, 805 25 . 1153 . 827 315 . 1188 353, 1251 . 714 . 995 614, 643 . 585 . 1302 . 843 . 833 485, 551 . 1102 327, 835 . 516 695, 1085 692, 752 . 994 . 1294 . 1158 990, 1106 . 460 259, 608, 698, 1071 840, 844, 845 . 1220 . 834 46, 717, 869, 881, 885 839, 859 599, 1186 494 773 1101 739 231, 523, 650, 654, 944 602 667 4 23, 812 1065 1019 990 1307 830 833 830 524, 537, 606, 612, 952, 1108 56,63 182, 195, 239, 252, 698 1050 904 INDEX OF CASES Section. Menzies v. Murray 770, 772, 791, 792, 793, 794, 795, 796, 797, 798, 802, 804 Merchant Company v. Heriot's Hospital .... 384, 410 Mercier (1903) Meredith (1898) . Meredith v. Heneage Meredith v. Vick . Merrilees v. Leckie Merry v. Pownall . Merryweather v. Nixon Mersey Dock v. Gibbs Mersey Dock v. Penhallow Mertins v. Goliffe Mess v. Hay Messeena v. Can- Metcalf (1903) Metcalfe (1891) Metcalfe (1909) Methven's Executors v. Edinburgh, etc., Railway Metropolitan Coal (1890) Meux v. Bell Mexborough v. Saville Meyer v. Simonsen Michie (1905) Middlemas v. Gibson Middleton (1909) . Middleton v. Losh . Middleton v. Mitchell Midgley (1893) . Milard (1895) Miles (1903) Mill (1877) Millar (1896) Millar v. Brodie . Millar v. Morrison . Millar v. Poison Miller (1848) Miller (1872) Miller (1890) Miller (1906) Miller (1907) Miller v. Black Miller v. Findlay . Miller v. Race Miller Richard (1903) Millichamp (1885). Milligan (1910) . Millner (1872) Mills v. Brown Mills v. Carson Mills i). Norris Milne (1842) Milne (1905) Milne v. Aberdeen Milne v. Cowie Milne v. Fraser Milroy v. Lord . 1045 . 1032 3 . 806 1186, 1189, 1202, 1312 . 1186 . 1143 . 1151 . 1151 . 1280 10, 26, 1146 183, 324 . 1007 . 818 . 833 . 623 . 1107 185, 187, 541 3 . 1018 . 3,43 6 15, 794, 796 . 845 . 1139 . 713 . 1211 227, 1154 3 . 334 101, 124, 157,215,233 . 995 332, 596, 597, 1071 314, 315, 736, 737, 1156, 1157, 1164 . 1019 327, 754, 755, 756, 759 ; pp. 847, 848 . . 3 1019, 1039, 1043 56, 62, 445, 1192, 1197 . 761 . 1293 . 755 . 1040 . 827 . 770 242, 266, 1091, 1132, 1165 . 383 - p. 848 . 353 . 1027 927, 1046 280, 283 . 1180 15 INDEX OF CASES 905 Milroy v. Tawse Milson (1895) Milson (1898) Miiiet v. Morgan Minnitt v. Talbot Mirrlees (1910) Mitchell (1864) Mitchell (1902) Mitchell (1912) Mitchell v. Baird Mitchell v. Bumess Mitchell v. Cables . Mitchell (Alexander) v. City of Glasgow Bank Mitchell v. DavidsoD Mitchell v. Mackersy Mitchell v. Major . Mitchell v. Pearson Mitchell v. Reynolds Mitford v. Reynolds Moffat v. Robertson Mohamidu v. Pitchley Moir (1826) Moir (1884) Moir v. Argyll Molleson v. Hope . Mollison v. Murray Molyneux v. Fletcher Moncrieff (1856) . Moncrieff v. Bethune Moncrieff v. Usher Moncrieff v. Waugh Moncrieffe v. Ferguson Monnypenny v. Dering Montagu (1897) . Montefiore v. Browne Montefiore v. Guedalla Montgomerie v. Alexander Mpntgomerie v. Vernon Montgomerie v. Wauchope Montgomerie-Fleming (1901) Montgomery (1811) Montgomery (1880) Montgomery (1895) Montreal v. Stuart Montreal Co. o, Robert Moody (1895) Moon (1899) Moore (1881) Moore (1885) Moore (1888) Moore v. Clench Moore v. Frowd Moore v. M'Dermid Moore .v. M 'Glynn . Moore v. Wilson Moran (1910) Section. 90, 310 43 . 646 367, 447, 541 . 1211 . 350 54, 431 . 350 . 1046 1186, 1264 . 1161 . 832 889, 891 109, 115 715, 1244, 1302; p. 852 382 1248 327 20 469, 562 103, 107 56 . 833 145 49, 374, 376 102, 112 282, 740 813 744 739 1119 1248 350 419 10 83, 185, 818, 823, 990 . 794 475, 502 1093, 1155 . 1030 30 744, 768, 1048 794 233 167 994 845, 859, 1048 464, 498 . 1042 . 327 . 302 461, 504, 1154, 1162 . 1233 1148, 1211 334, 384 815, 961 906 INDEX OF CASES Section. Mordan(1905) ... . 649,677 More v. Malcolm . 598, 601 Morgan (1851) 571, 1020 Morgan (1881) . 1316 Morgan (1910) . 327 Morgan v. Stephens . 1286 Morison v. Gowans 159, 176, 180, 900 Morison v. Haldane . 336 Morison v. Kerr . 973 Morland v. Cowan . 913 Morley (1678) . 516 Morley (1895) 1024, 1107, 1111 Morrall v. Sutton . . 614 ; p. 842 Morris (1885) 572, 626 Morris v. Bain . 898 Morris v. Debenham . 404 Morris v. Tennant . . 763 Morrison (1848) . . 1186 Morrison (1912) . . 1308 Morrison v. Allan . 632, 653 Morrison v. Learmont . 1261 Morrison v. M'Ferran 3, 1045 Morrison v. Maclean . 355 Morrison v. Miller . 270, 1084 Morrison v. Vallance . 977 Morse v. Royal 484, 485 Mortimer (1905) . . 350 Mortimer v. Ireland . 136 Mortimore (1859) . . 651 Mortimore (1879) . . 834 Mortlock v. Buller . . 296 Morton (1880) . 136 Mosley v. Ward . 1208 Motherwell v. Manwell . 1030 Motion v. Michaud 7 Moubray (1904) . . 377 Moulton (1906) . . 1121 Mousley v. Carr . 1197 Moxham v. Grant . . 1143 Moyle (1831) 96 Mucklow v. Fuller . 107 Muffet (1887) . 1177 Mnir (1887) 336, 376 Muir (1889) . 1050 Muir (1899) . 336,376,990 Muir v. City of Glasgow B ank 1 72, 353, 1251, 1252, 1253, 1254, 1257 Muir v. Jameson . . 845 Muir v. Pollock . 295 Muire v. Fleming . . 727 Muirhead (1890) . . 760, 764, 774, 776, 777, 857 Mulvany v. Dillon . 457 Munch v. Cockerell . 192 Mundell (1862) . . 378, 424, 428 Munro (1899) 768 Munro v. Macarthur 786 Munro v. Murray . 1106, 1163 INDEX OF CASES 907 Section. Munro v. Young .... 46 Murdoch v. Brass . . 1046 Murphy v. Deichler . 1059 Murphy v. Doyle .... 615, 616, 617, 618, 683 Murray (1901) 795, 1045 Murray (1905) . 584, 722, 727, 1076 Murray v. Bloxsom . 825, 923, 930 Murray v. Champerknowne . 982 Murray v. Hume-Campbell . 1030 Murray v. Johnston . 961 Murray v. MacFarlane . 57, 751, 753 Murray v. M'Kenzie . 1113 Murray v. Matheson 345, 750 Murray v. Scott . 374 Musammat v. Kinwar 4 Muspratt-Williams . 983 Mustard v. Robertson . 597 Mutton v. Peat . 1295 Mutual Life v. Langley . 185 Myers (1908) . 1146 Nairn (1893) .... . 781 Nairn (1910) .... . 205 Naismith (1909) . . 1019 Naismith v. Boyes . 831 Napier (1908) 834, 1050 Nash (1910) .... . 717 Nasmyth v. National Society . 1046 Natal Bank v. Rood . 1095 National Assurance v. Scott . 1319 National Society (1890) . . 639 National Trustees v. General Finance 227, 267, 513, 545, 1121 Naylor v. Winch .... . 477 Neale v. Davies .... 99 Neate v. Harding .... . 1273 Neil (1890) 821, 822 Neill(1904) . 1215 Neilson (1865) 896,909 Neilson (1885) .... 52, 53, 85, 175 Neilson v. Mossend 174, 179 Neilson v. Stewart . 1056 Neish(1897) .... . 766 Neligan v. Roche .... 99 New (1901) .... . 305 New v Hunting . 7, 8, 10 New v. Jones .... 460, 1154, 1158 New Bank v. Brocklebank . 679 New Mining v. Chalmers . 1271, 1281 Newall v. Inglis .... 750, 751, 752, 815 Newlands (1794) .... 25 Newlands v. Miller 41, 795 Newman (1899) . . 914 Newman v. Maxwell 4 Newton v. Askew .... . 550 Nicholls v. Knapman . . . . 10 Nicholson (1895) . . 1107 908 INDEX OF CASES Section. Nicholson (1909) ..... 567, 570, 1013, 1014, 1021 Nicholson v. Johnstone 10,360 Nickels (1898) . 744 Nickison v. Cockill . 274 Nicol v. Cameron . . 550 Nieolson v. Smith . . 185 Nicolson -a. Wordsworth . . 120 Niddrie (1892) . 430 Nisbet (1911) . p. 846 Nisbet v. Fraser . . 160 Nisbet v. Tod 319, 347 Nixon (1904) 721, 722 Nixon v. Borthwick . 1006 Noble (1912) 328, 336, 364, 411, 609 Noble v. Breth . 1320 Noble v. Cass . 1029 Noble v. Edwards . 386 Noel v. Bewley . ,554 Nordenfelt v. Maxim 258, 327 Norfolk (1900) . 547 Normand (1900) . 740, 994 Norrington (1879) . 464, 5 86, 594, 1013, 1016, 1034, 1091, 1097 Norris v. Le Neve . 336, 428, 444, 824 Norris v. Wright . . 665 North (1895) 854 North (1909) 1019 North American v. Watkii is 5,6 North British v. Budhill 364 Northage (1891) . 1027 Northumberland v. Percy 1031 Norway (1834) 125 Noyes v. Blakeman 1217 Nugent (1900) 1019 Nugent (1908) 496 Nunburnholme (1911) 755 Nyce (1843) . 609, 610, 630 Oakes (1852) . 739 Oatway (1903) . 1295 Obers v. Paton 15 O'Brien (1911) 1273 O'Brien v. Condon 1045, 1046 O'Brien v. M'Meel. 9 Occleston v. Fullalove 327, 832 Oceanic v. Sutherberry . 292, 302, 386 O'Connor (1911) . . 739 Oddie v. Brown 852 Oddy (1911) . 244, 960, 968 O'Flaherty v. Browne 15 Ogilby (1903) . 834 Ogilvie v. Dundee . 857,859 Ogilvie v. Hamilton . 296, 385, 389 Ogilvy v. Boswell . 969, 1239 Ogilvy v. Erskine . . 1060 Ogle (1873) 604, 702, 1129 Ogle v. Knipe 617 Ogle v. Morgan . 834 INDEX OF CASES 909 O'Herlihy v. Hedges Old Meldrum (1908) Old Monkland v. Bargeldie Oldfield (1904) Olive (1886) Oliver (1908) Oliver v. Bank of England Oliver v. Court Olivieri (1912) Olphert (1903) O'Mahoney v. Burdett Ommaney v. Bingham Ommaney v. Smith Oncken v. Reimers O'Neil v. Lucas Onslow v. Londesborougl Oppenheimer (1907) Ord v. Noel O'Reilly v. Thompson Ormiston v. Wood Orphoot (1897) Orr (1885) . Orr v. Auld Orr v. Newton Orr Ewing (1884) Orr Ewing (1885) Orrett v. Corser Osborne v. Kowlett Oswald v. City of Glasgow Bank Ottley v. Gilby Ouchterlony v. Lynedoch Overend v. Gibb . Ovington v. M'Vicar Owen (1912) Owens (1882) Oxenden v. Compton Paddon v. Richardson Pagan v. Cowan Pagan v. Eaton Pagan v. Haig Page v. Broom Page v. Cooper Page v. Williamson Paget (1892) Paget v. Huish Palairet v. Carew Palk (1892) Pallard (1896) Palmer (1912) Palmer v. Emerson Palmer v. Wakefield Palmer v. Wick Pant Mawr v. Fleming Park (1890) Park (1910) 305, 557, 899, 902, 148 273, PP' PP 305. 168, 895, 975 Section. . 438 . 377 . 432 3 264, 653, 666 . 1021 . 543 385, 405, 532 . 734 . 833 843, 844, 847 . 327 1163, 1164 . 720 . 841 . 392 . 1032 385, 387, 388 844, 845, 846 . 725 . 871 . 644 . 202 111, 199 ,314, 334, 899 3, 974 ; p. 850 1077 136 76, 1191, 1259 961 119, 523 11 1305 1021 588 813 560 1197 1063 353 365 419 1186 1028 1011 78 168 376 1029 260, 666 183 1142, 1143, 1241 30,36 787 833, 834 910 INDEX OF CASES Park Co. (1881) . Parker (1880) Parker (1897) Parker v. Mackenna Parkes v. Royal Botanic Parkes v. "White . Parkhill v. Chalmers Parlane (1902) Parnell v. Lyon Parr v. Yates Parry (1889) Parry (1904) Partington (1887) . Pass v. Dundas Passingham v. Sherborn Paterson (1626) . Paterson (1854) Paterson (1885) Paterson (1890) . Paterson (1893) . Paterson (1897) . Paterson (1909) . Paterson v. Baxter Paterson v. Caledonian Paterson v. Danson Paterson v. Glasgow Patersons (1849) Paton (1903) Patten (1883) Patten v. Bond Pattie v. Thomson Pattison (1870) Pattison (1890) Pattison v. M 'Vicar Patton v. Hamilton Patullo (1908) Paul v. M'Leod Pawley (1900) Payne (1886) Payne v. Evens Paxton v. Cowie Peacock (1885) Peake (1884) Pearce (1909) Pearce v. Baron Pearce v. Carrington Pearce v. Gardner Pearse v. Green Pearson (1885) Pearson v. Cassamajor Pearson v. Henry . Pearson v. Houston Pearson v. Malachi Peat (1901) Pechel v. Fowler . Peddie (1891) Section. 967 756 832 499 9 477, 793 . 441, 442, 506 . 768 . 833 1295 . 758 15 197, 227, 229, 267, 521, 653, 654, 660 192, 530 . 476 . 707 1138, 1139 . 262 . 347 761, 763 . 29, 243, 953, 1150, 1188, 1264, 1269 . 1046 . 999 420, 649, 1272 . 1101 . 1181 767, 768 . 1036 . 382 329, 1289, 1292, 1317 . 1315 373, 424 . 878 75 . 442 55, 60, 310 . 1318 . p. 849 . 445 . 970 . 1050 . p. 844 . 353 . 997 . 342 . 834 . 295 . 952 199, 653 . 1036 . 1265 . 540, 968, 969 . 334 998, 1011 1135, 1136 . 801 INDEX OF CASES 911 Peddle v. Beveridge ...... Section. . 272 Peel (1910) ....... . 1154 Peel (1911) . 739 Peers v. Ceeley ....... . 267 Peggie v. Wemyss ....... . 921 Pell v. De Winton ..... 294, 669 Pemsell (1891) ....... . 1046 Pena Copper v. Rio Tinto ...... . 976 Pender (1903) . . . 334, 432, 975, 1215 Pender v. Fergusson . . . . . 1135 Pender v. Henderson ..... . 460 Penfold v. Bouch ...... . 1185 Penn v. Baltimore ...... . 971 Pennell v. Deffell .... 1289, 1300 Penney v. Avison ...... 1072, 1091 Penny v. Adam . . . . . . p. 846, 847 Penny v. Turner ...... 321 Pennycook (1851) . . . 129 Peppercorn v. Wayman 123 Pepperell (1879) .... 498, 1126 Perham v. Kempster . 185 Perkins (1907) ...... . 1C02 Perpetual Executors v. Swan . 560, 609, 739 Perrins v. Bellamy . 267, 292, 535 Perrott (1904) ...... . 288 Perry v. Meddowcroft ..... 997, 998 Perston (1863) . . 451, 455, 466, 467, 469, 471, 475 !, 473, 474, 700 Perth v. Butter ...... . 1046 Perth v. M'Donald . ... . 1194 Peters v. Greenock 168 Peters v. Lewes . . . 290. 379, 386 Peters v. Martin ...... . 973 Petrie v. Ramsay . . 334, 384, 412 Pett v. Fellows 994 Pettigrew (1890) . . . 132, 3( 56, 409 ; p. 850 Pettingall (1842) ... 20 Petty v. Taylor . . . . 6 Pettyt v. Jameson . . 989 Peyton (1861) 386, 388 Phene(1868) . 834 Phene(1870) 828 Phillimore (1903) . 1042 Phillip (1880) . . . . . . 841 Phillip (1903) 185, 187 Phillipo v. Munnings . p. 850 Phillips (1888) . . 1146 Phillips (1899) . . 1047 Phillips v. Davies . 834 Phillips v. Gutteridge 1002, 1008 Phillips v. Homfray . 1107 Phillips v. Mullings . 799 Phillipson v. Gatty 1085, 1121 Philp(1893) . . ... . 350 Philpott v. St. George . 375 Phipps v. Lovegrove . . . . . 187 Pickering (1839) . 570 912 INDEX OF CASES Pickup v. Atkinson oeu wuu. 570, 1015 Pigg v. Clarke . 834 Pimm (1904) . 1009 Pinede(1879) . 1059 Pink (1912) . 714 Pinkett v. Wright . 1089, 1296, 1317 Pistor v. Dunbar . . 208 Pitcairn (1834) 356 Pitcaim (1896) . 570 Pitman v. Crum Ewing . . 831 Pitt v. Mackreth . . 480 Pitt v. Rivers 20 Playf air (1894) . 743, 809, 810, 811, 813 Playfair (1900) . 1046 Plenty v. West 90 Plo wright v. Lambert 486 Plumpton v. Burkinshaw . 7 Phvmptre (1910) . 15, 989 Pollexf en v. Stewart 270, 649, 1099 Pollock (1885) . 739 Pollock v. Porterfield 1112, 1114 Pollok v. Anderson . 739 Ponton (1913) 971, 981 Poole (1878) 13 Pooley (1869) . 1212 Pooley v. Quilter . 477, 478, 479, 485, 497 Pope (1901) . 841 Pope (1908) . 1273 Pope (1911) . 380 Popham v. Aylesbury . 1039 Porte v. Williams . . 1009 Porter (1892) . 818 Porter v. Baddeley 570, 1014, 1021 Porter v. Noare . 550 Portland v. Topham 282, 740 Postlethwaite v. Mounsey . . 1098 Pottie (1902) . 4, 372, 409 Pouey v. Hordern . 72 Poultney (1912) . 833, 834 Pounder (1886) . . 761 Powell v. Evan Jones . 440 Powell v. Evans 563, 580 Powell v. London and Provincial Bank . 250 Power v. Banks 344,382, 1081 Poyser (1908) . 990 Poyser (1910) . 1002 Pratt (1897) . 377 Prendergast (1850) 321, 609 Prestonpans (1891) 432 Pretty v. Newbigging 17, 765, 774, 775, 779 Price (1887) . 1075 Price (1905) 626,739 Prichard (1870) . . 739 Pride v. Fooks . 1182 Priestly v. Ellis . 10 Pringle (1912) . 983 INDEX OF CASES 913 Pringle v. Anderson Pringle v. Larken . Printer's, etc., Society (1899) Proctor v. Gordon . Provan (1840) Prowse v. Spurgin . Pryce(1911) Public Trustee v. Blacker- Douglas Pugh (1887) Pullan v. Koe Pullen (1910) Pulman v. Meadows Pursell v. Elder . Pursell v. Newbigging Pyke (1912) Queen v. Justices of Oxfordshire Queen v. Norfolk . Queen of Spain v. Parr Queensberry (1898) Queensberry v. Scottish Union Rabbeth v. Squire . Raby v. Ridehalgh Rackham v. Siddall Radford v. Willis . Raeburn (1888) Raes v. Meek . 194, 204, 265, 352, 514, 515 Rainsford v. Maxwell Rajah Vurmah Valia (1876) Ralli v. Universal Co. Ralston v. Hamilton Ralston v. Macintyre Ramage v. Womack Ramsay (1871) Ramsay v. Anderson Ramsay v. Shelmerdine . Randall v. Errington Randall v. Russell . Randell (1888) Ranken (1908) Rankin v. Lamont . Rankine (1904) Raphael v. Boehm . Rattenberry (1906) Rattray (1899) Raveusworth (1905) Raw v. Outten Rawsthorne v. Rowley Raybould (1900) . Rayner (1904) Rea v. Crozier Redding (1897) . Rede v. Oakes Redfearn v. Somervails Reech v. Kennegal Section. 793, 794, 796, 797 . 827 717, 1045 . 318 334, 1140 . 1320 . 556 640, 649, 674, 675 . 629 . 1270 719, 1009 . 1211 750, 761, 763, 994 . 1246 1019, 1021 . 215 . 1194 . 440 43, 289, 636, 643, 868, 878 . 1044 . 1039 609, 1223, 1238 . 114 . 834 . 309 516, 525, 527, 528, 657, 1308 764, 774 . 438 4 . 739 . 415 . 1309 795, 1045 . 1044 . 1050 479, 484 442, 444 . 327 840, 1020 . 144 . 436 1106, 1182 . 739 . 761 . 834 273, 513 667, 701 . 1151, 1211 614, 616, 617, 618 . 1046 . 1037, 1038 . 404 . 1278 . 549 58 914 INDEX OF CASES Section. Reed v. Devaynes ...... 97 Rehden v. Wesley . 612, 1143, 1224 Reid (1862) . 79, 81, 321 Reid (1897) 919, 920 Reid (1899) 761, 782, 789, 795, 798 Reid v. Maxwell . 157, 173, 177 Reid v. Moir . 720 Reid v. Morison . 967 Reid v. Swan. , . 834 Reid v. Thompson . . 294 Reis(1904) . 556 Reliance Society v. Halkett 781, 790, 795, 803 Rennie (1849) . 440 Rennie v. Morrison 1129, 1170, 1187 Rennie v. Ritchie . . 156, 196, 793 Renton v. M'Dowall . 353 Revel v. Watkinson 994, 1013 Rex v. Humphris . 26 Rex v. Lovitt . 982 Rex v. Rowlands . . 918 Rhoades (1899) . 714 Rhodesia (1910) . . 715 Richards (1901) . . 714 Richards (1910) . . 834 Richardson (1896) . . 744 Richardson (1898) . . 377 Richardson (1900) . . 1012 Richardson (1911) . 1211 Richardson v. Mellish . 327 Richardson v. Nixon . 813 Richardson v. Watson . 614 Richardson v. Yardley . 350 Riche v. Ashhury . 71 Richmond v. Railton . 358 Rickards v. Gladstanes 225, 226 Ricketts (1891) 1231, 1232 Rickman (1887) . 485, 551 Riddells (1802) . . 1001 Ridgeway v. Newstead 1287, 1319 Ridley (1904) 96, 714 Rigby(1815) p. 849 Rigg(1905) 3 Rigg v. Ramsay . 1197 Riley v. Ellis 554, 1076 Rimmer v. Webster . 545 Rintoul v. Garroway . 977 Ripley v. Waterworth . 809 Risdon v. Furness . 621, 625, 1321 Rishton v. Cobb , 833 Rising (1904) . 350 Ritchie (1888) 474, 619, 1086 Ritchie (1894) 762, 777 Ritchie v. Davidson . 279 Ritchie v. M'Intosh . 962 Ritchie v. Malcolm . 602 Rix(1912). 1121, 1122 INDEX OF CASES 915 Section. Robarts v. Tucker , . . . . 709 Robb(1872) 132, 938 Robb(1896) .... . . . 771 Robb v. Gow 225, 254 Robbie v. Macrae .... . 319, 320, 347, 1046 Robbing (1907) .... 1003, 1007, 1008 Roberton v. Davidson 765, 774 ; p. 842 Roberts (1903) .... . 1050 Roberts v. City of Glasgow Bank . 169, 170 Roberts v. Death .... 34 Roberts v. Kilmore . 834 Robertson (1865) .... . 826 Robertson (1892) . 15 Robertson (1896) .... . 644 Robertson (1909) . 423, 909 Robertson v. Baillie . 1011 Robertson v. Black . 768 Robertson v. Fleming . 1306 Robertson v. Mackenzie . . 1137 Robertson v. Morrison (1823) . 1265 Robertson v. Morrison (1849) 440 Robertson v. Nicholson . 977 Robertson v. Richardson . . 818 Robertson v. Scott . 947 Robertson v. Strachans . 1319 Robertson v. Taylor . 283 Robinson (1851) . 610, Gal, 10->4, 1085, 1090 Robinson (1876) .... . 1081 Robinson (1911) . . 1272 Robinson (1912) . 416, 1252 Robinson -o. Fraser . 282, 284, 560, 561, i 35, 992, 99 J, 1147,1220, 1221 Robinson v. Harkin 253, 1112, 1114, 1238, 1239 Robinson v. Pett . 461, 462, 1154, 1158 Robson(1891) .... . 1039 Roby(1908) . 990 Rochefoucauld v. Boustead 36, 1106, 1110, 1111, 1297 Rochford v. Hackman 750, 818 Rocke (1845) . 759 Rodbard v. Cooke . 272, 532 Rodger (1875) . 1039 Rodger v. Allfrey . 553, 728 Roffey v. Bent . 818 Rogers (1856) . 185 Rogers (1867) . 1037 Rogerson (1885) . . 781 Rogerson (1901) . 20 Rogerson v. Barker 164, 177 Roissard v. Scott . . 1101 Romanes v. Kellar . 1307 Rose (1904) .... . 274 Rosebery (1892) .... 337, 943 Ross (1894) .... 423, 424 Ross (1895) . 379 Ross (1896) . • ■ 740,952 , 1102, 1107, 1150, 1245, 1246 Ross (1898) .... . 1186 Ross (1900) .... 1003, 1007 916 INDEX OP CASES Boss (1901) Ross (1902) Ross v. Allan . Ross v. Dunlop Ross v. Heriot's Hospital Ross v. Masson , Ross v. Nicoll Rosslyn (1848) Rossmore v. Brownlie Roth (1896) Rothvvell v. Stuart Roughhead v. Hunter Round v. Turner . Routledge (1909) . Routledge v. Carruthers Rowe (1898) Rowland v. Witherden Rowley v. Adams . Rowley v. Ginnever Rowlls (1900) Rownson (1885) Rowth v. Howell . Roxburghe (1876) . Roy (1895). Royal Bank (1893). Royal Infirmary v. Advocate Royds(1851) " . Ruabon (1900) Ruddington (1909) Rumney (1897) Russel (1882) Russell (1912) Russell v. Bell Russell v. Dunn Russell v. Lawder . Russells v. Lawson Rutherford v. Dickie Rutherfords v. Turnbull Ruthven (1906) . Ruthven v. Drummond Ruthven v. Pulford Ryan v. Nesbit Ryder v. Bickerston Rymer (1895) Sack ville- West v. Holmesdale Sadler v. Lee Saffron Walden v. Rayner . St. Andrews v. Forbes St. Thomas v. Richardson Salaman (1907) Salaman (1908) . Salaman v. Morrison Salaman v. Rosslyn Salaman v. Tod . Salamon v. Sopworth Section. 375, 413, 1105 755, 775 . 177, 523, 671 . 766 277, 965, 1151, 1311 . 993 . 1030 . 851 984 164, 177, 302 . 1148 52, 898 3-12, 1151 137 775 720 238 555 1037, 1146, 1152 567 714 248 19 625 . 49, 56, 158, 876, 878 119 1197 1037, 1152 1271, 1272 . 136 1201, 1202 830 755, 756, 771, 777, 815 . 268, 602, 604 . 57, 750, 792 794, 798 . 834 . 766 . 971 781, 790 1000, 1310 . 271 631 . 1046 . 298 . 1071 185, 215, 225 . 1319 . 1211 735, 1319 . 834 963, 967 . 1148 . 961 302, 365 INDEX OF CASES 917 Salisbury v. Keymer Salmen (1912) .... Salmon (1888) Salomon (1897) Salomons v. Pender Saltmarsh v. Barrett . Salusbury v. Denton Salvin(1912) .... Samaradi Wakara v. De Saram . Sampson (1906) .... Samson (1906) Sandeman v. Shepherd Sanders (1879) Sanderson (1857) .... Sanderson v. Kerr .... Sanderson v. Walker Sandon v. Hooper .... Sandys v. Bain .... Sarat Chunder Dey v. Gopal Chunder Lala Saul v. Pattinson .... Saunders v. Vautier Savery v. Dyer Sawer(1873) Sawers (1861) Sawers v. Penney . Sawrey-Cookson (1905) Sawyer (1885) Sawyers v. Kyte . Scarlett v. Abinger Scheniman (1828) . Soheniman v. Willison Schneider (1906) . Scholefield v. Redfern Scholefield v. Templer Scholfield v. Londesborough Schulze v. Tod. See Lees v. Dun. Scott (1850) Scott (1867) Scott (1870) Scott (1882) Scott (1895) Scott (1902) Scott (1905) Scott (1909) Scott v. Bruce Scott v. Craig Scott v. Gray Scott v. Great North Scott v. Handyside Scott v. Muir Scott v. Pattison Scott v. Peebles Scott v. Price Scott v. Bay Scott v. Reid Scott v. Scarborough Section. . 261 1163, 1165 017, 654, 662, 1086 38 440 1098 321 1006 755 83 728 1266 623, 782, 1078 739, 1045 . 771 492, 496 . 328 298, 299 . 1126 . 300 759, 760 . 1008 . 966 1136 913 796, 798, 927 . 1225 . 460 327, 755, 768, 776, 777 . 705 . 768 555, 586, 1098 746, 1039 . 1271 . 701 777, 1140 910, 1203 . 824 . 813 560, 735, 991, 996 795 177, 348 . 766 . 334 49, 51, 164, 177, 178, 600, 1308 . 969 . 1121 1161, 1162, 1164 871, 876 1268 25 1043 1297 165 p. 848 278, 282, 284, 544, 918 INDEX OF CASES 112, 201, 217, 218, 244, Scottish Co. v. Falkner . Scottish Equitable (1902) . Scotts v. Mitchell . Sculthorpe v. Tipper Searcy v. Allbuary Searle (1900) Seath v. Taylor Second East Dulwich (1899) Secretary of State v. Charlesworth Seddon(1893) Seers v. Hind Selkirk v. Ferguson Selot(1902) . . Selous (1901) Service (1902) Seton (1854) Seton v. Dawson Severn (1896) Sewell(1909) Sewell v. Denny . Seymour v. Lucas . Shand (1893) Shanks v. Aitken . Sharp (1890) Sharp (1906) Sharp (1908) Sharp v. Jackson . Sharp v. Kirkpatrick Sharp v. Pathhead Spinning Co., Ltd. Sharpe(1892) Sharpe v. "Wakefield Shaw (1894) Shaw v. Cates . . 237, 261, Shaw v. City of Glasgow Bank Shaw v. Essor Shaw v. Foster Shaw v. Lawless . Shaw v, Rhodes Shaw v. Shaw Shedden (1867) . Shedden (1895) . Sheffield (1911) . Sheffield v. Aizlewood Sheffield Corporation v. Barclay Sheldon (1888) Shepherd v. Harris Shepherd v. Hutton Sheppard (1885) Sheppard (1911) Sheriff v. Axe Sherwood (1840) Sheward (1893) Shields (1901) Shields (1910) Shields (1912) Shields v. Bank of Ireland 652, Section. 954, 1281 . 1045 1119,1120 575, 586 . pp. 845, 846 . 1021 1119, 1121 512, 544 . 653 336, 824, 1141 . 1208 924 825 . 714 . 828 . 299 436, 523, 525, 528, 531, 532, 631 10, 11 1073 1056 . 818 . 646 . 181 622, 679 1005 834 10, 23, 35 1101 58 . 1103 . 282 . 832 653, 655, 657, 664, 666, 678, 701, 889, 893 . 1046 4 . 206 836, 839, 845, 846, 855 . 705 318, 897 15, 790 . 834 12, 665 . 709 . 1013 182, 198, 253, 259, 513 98, 931, 1153, 1198, 1302, 1303 807, 809, 810 . 234 1154 1162 818 247 3 739 1273 INDEX OF CASES 919 Shiell (1906) Shiells v. Blackburne Shore v. Wilson Shrewsbury (1836) Shropshire Union (1875) Shropshire v. The Queen Sichel v. O'Shanassy Silkstone v. Edey Sillars (1911) Silver Valley (1882) Sim (1895) . Sim (1902) . Sim v. Muir Sim v. Robertson Simmons v. Pitt Simons v. Neilson Simpson (1897) Simpson (1907) Simpson v. Bathurst Simpson v. Lester . Simpson v. Moffat Institute Simpson v. Molson Simpson v. Taylor . Simson (1883) Sinclair (1897) Sinclair v. City of Glasgow Bank Sinclair v. Traill . Sisson (1903) Skeats v. Evans Skinner (1817) Skinner (1904) Skinner v. Gumbleton Skrynisher v. Northcote Slade v. Chaine Slaney v. Watney . Slater (1907) Sleigh (1908) Sly (1911) . Small v. Smith Smart (1892) Smart v. Stewart . Smart v. Stuart (1912) Smellie v. Glasgow (1905) Smethurst v. Hastings Smith (1832) Smith (1833) Smith (1862) Smith (1873) Smith (1889) Smith (1893) Smith (1896) Smith (1897) Smith (1900) Smith (1902) Smith (1903) Smith (1904) 282. 192 Section. 327, 755 513, 514 . 614 . 450 . 545 15, 1121 29", 1152 . 1091 929, 927 513, 1181 . 810 . 831 632, 684, 1142 84 861, 1057 795, 1045 84 84, 870, 971, 977 . 550 . 570 384, 717, 1135 43, 1274, 1276 796 . 319 1007 889 . 1048 182 83 . 498 956, 1184 834 . 995 566, 1014, 1034 830 . 739 232, 437, 440, 1096, 1178 . 159 273, 298 . 258 . 954 . 1039 . 1046 264, 639, 665, 1121 913 185 160, 173, 318, 916 317, 787 . p. 852 . 291 524, 622, 625, 640, 643, 1078 . 827 735, 768 234, 240, 511, 544, 626, 1151 . 834 . 286 920 INDEX OF CASES Section. Smith (1912) .... . . 1188 Smith v. Anderson 11 Smith v. Bennie 687, 1035 Smith v. Bolden . . 716 Smith v. City of Glasgow Bank 17, 221, 222 Smith v. Claxton . . 806 Smith v. Cock 285, 815 Smith v. Cooke . 1044 Smith v. Dale 1190, 1211 Smith v. Glasgow Infirmary 841, 859, 1048 Smith v. Hurst 10 Smith v. Kerr 27 Smith v. Langf ord . . 439 Smith v. Lord Advocate . . 350 Smith v. M'Coll . . 334 Smith v. Nelson . 1283 Smith v. O'Reilly . . 1241 Smith v. Patrick . 574, 582, 1142, 1273 Smith v. Sellar . . 990 Smith v. Stoneham . 261 Smith v. Stuart . 1068 Smith v. Telford . 537, 1181 Smith v. Wallace . . 554 Smith v. Warde 28 Smiths v. Chambers . 816 ; p. 845 Smith's Estate (1894) . 1160 Smith's Estate (1905) . 746 Smithwick (1861) . . 665 Smitton v. Tod . 1064 Smyth (1898) 23, 971 Smyth v. Kinloch . 842, 1051 Snaith v. Dove 419 Soar v. Ashwell 6, 11, 1271 Solomon (1912) . 261, 264, 653, 662, 666, 702 Solomon v. Attenborough . . 557 Somerset (1894) . . 196, 264, 514, 653, 666, 670, 1029, 1087, 1118, 1227, 1229, 1230 Somervell v. Edinburgh Assurance ... . 1103 Somerville v. Wetness 540, 969 Soutar v. Brown 913 Soutar v. MacGrugar . 1044 Souter v. Robertson 768 South-Eastern Railway v. Portland Ceme at . 327 Southwell v. Martin . 1204 Soutter (1897; .... 375. 376 Spark (1904) 15 Speak (1912) .... . 833 Spearman (1900) . . 818 Spears (1873) .... . 341 Speer ■;;. Colbert .... 3 Speight *. Gaunt . 4, 191, 192, 197, 198, 199, 209, 229, 234, 235, 241, 251, 253, 254, 255, 256, 257, 258, 513, 521, 536, 592, 606 Speir(1848) . . . . . _ 364 Spencer (1881) ...... 1286 Spencer (1903) ...... ri Spencer v. Clarke . . 185 INDEX OF CASES 921 Spencer v. Scurr . Spencer Cooper (1908) Spens v. Monypenny Spiers v. English . Spink v. Simpson . Spratt (1897) Spring v. Pride Springett v. Dashwood Sprot (1830) Srinavasa v. Venkatavarad Stacey v. Elph Stafford v. Fiddon . Staffordshire (1893) Stainer v. Hodgkinson Stainton (1850) Stainton v. Dawson Stair (1896) Stallon (1907 Stamford (1896) . Standard Co. v. Cowe Standing v. Bowring Stanes v. Parker . Staniav v. Evans . Stanley (1878) Stanley (1906) Stanley v. Potter . Stapleton (1879) . Starkey v. Dyson . Starkweather v. Jenner Staveleys (1883) . Steed v. Preece Steeden v. Walden Steel v. St. Cuthbert Steel v. Steed man Steele v. Kerr Stein (1826) Stelfax v. Sugden Stenhouse (1902) Stephens (1904) Stephens v. Hotham Stevens (1897) Stevens (1898) Stevens v. Austen Stevenson v. Currie Stevenson v. Dumbreck Stevenson v. Wilson Steward v. Vanner Stewart (1871) Stewart (1896) Stewart (1897) Stewart (1908) Stewart (1909) Stewart (1913) Stewart v. Bruce Stewart v. Chalmers Stewart v. Dobie . Section. . 1020 1009, 1011 324 1186 771 833 506 550 299 447 115, 126, 502 1104 1214 563, 1013 295, 827, 928, 929 . 1009 310, 702 34 83, 85, 533 . 803 35 . 949 . 1302 . 793 622, 625 . 739 . 1202 . 294 . 496 . 430 . 813 . 268, 1181, 1185, 1187 19 809, 813, 833 . 1044 295, 296 746 609 845 . 365 . 110 104, 1076 . 386 796, 798, 1186 . 930 1,34 . 763 544, 824 715, 755, 761, 771 755 . 3,714 . 432 870, 971, 977, 9S4 . 231, 545, 549, 553, 947, 1202 90, 905, 912, 1162 1180, 1185 922 INDEX OF CASES Section. Stewart v. Elder ...... . 244 Stewart v. Evans . . 723, 728, 729, 1320 ; p. 851 Stewart v. Forbes (1888) ...... . 1312 Stewart v. Forbes (1897) ...... . 1269 Stewart v. Kingsale . • • . 1042 Stewart v. Morrison . ill, 348, 1210 Stewart v. Sanderson ....-■ . 688 Stewart v. Stewart's Executor . . 1244 Stewart v. "Williamson ... . 600 Stickney v. Sewell ... - ■ 660, 666, 701 Stiles (1898) 130 Stiles v. Guy . 1076 Stillie (1901) .... • ■ 786, 787, 789 Stilwell v. Mellersh . .... 25, 834 Stinson (1910) . 813 Stirling (1838) . 299 Stirling (1898) 816 Stirling u Forrester . 1143 Stiven v. Reynolds . 1267 Stocks v. Dodsley .... . 445 Stoddart v. Nelson ..... . 834 Stoddart v. Rutherford 73 Stoddart v. Saville . . . 834 Stogdon v. Lee 792 Stokes (1898) . 222 Stokes v. Cheek . 324 Stokes v. Prance . . . . 695, 1286 Stone (1869) ... 555 Stone (1873) . . . 1041 Stone v. Godfrey . . 446 Storey v. Cooke . . 1044 Storey v. Gape . . . . 555 Stott v. City of Glasgow Bank 221 Stott v. Milne . . . . 2 68, 1185, 1213 Stourcliffe v. Bournemouth . . . . . 300 Strachan (1894) .... . . . 1308 Strain (1893) ..... 1016, 1019 Strathmore (1831) . . 327 Straubenzee (1901) . 566 Stretton v. Ashmall ... . . . 666 Strickland v. Symons .... . 1316 Strong v. Bird . . . . . . 3, 714 Strong v. Manufacturer's Co. .... . 331 Stroud v. Gwyer . . . . . . 1034, 1282 Stroughill v. Anstey ...... 340, 419 Strutt v. Tippett ...... . 1215 Stuart (1897) . . ... 261, 262, 483 Stuart (1899) . 234 Stuart v. Colclough 353, 717 Stuart v. Maconochie ..... . 925 Stuart v. Norton ...... . 220 Stuart v. Orkney . . ... . 707 Stubbins (1881) ...... . 1313 Stubbs v. Slater ... . . . 440 Stultz(1853) .... . 188 Sturrock v. Rankin 327 INDEX OF CASES 923 Section. Styles v. Guy . 209, 557 Sudeley (1894) 379, 754 Sudeley v. Att.-Gen. 23 Sugden v. Crossland . 438 Sullivan (1903) . 3 Summers (1893) . . . . 1245 Sutcliffe v. Wardle . 190 Sutherland (1892) . . 377 Sutherland (1893) . 280, 364 Sutherland (1901) . 336, 824 Sutherland v. Stafford 46 Sutherland v. Tait 145 Sutherland's Trs. (1893) . 6, 1046 Suttie v. Tod 327, 835 Sutton (1612) 71 Sutton v. Goodrich 818 Sutton v. Jones . 477 Sutton v. "Wilders . 231, 606 Swaffield v. Nelson 665 Swaile v. Clarke . 487 Swale (1856) 173 Swan (1912) . p. 842 Swan <«. Wright . 1301 Swannell (1909) . 818 Swans v. Western Bank . 554 Sykes (1869) 359 Sykes (1909) 437, 439 Sym v. Charles 213, 244, 1084 Symes v. Hughes . . 1047 Synnot v. Simpson 10 Taafe(1902) 714 '. ■ 282 Tabor v. Brooks Tait v. Geddie (1895) Tait v. Neill 1138 761, 763 Taite v. Swinstead 768 Talbot v. Marshfield 282, 552, 740 Tancred (1903) 818 616, 649 • 489 634, 674 ', 328, 558 336 Tapp and London Docks (1905) . Tate v. Williamson Tattersall (1906) . Taylar v. Millington Taylor (1851) 898, 905 Taylor (1857) 1002 Taylor (1874) 556 Taylor (1881) 990 Taylor (1882) 1313 Taylor (1886) . 373, 1120 Taylor (1900) 994 Taylor (1901) 70, 921 Taylor (1904) 1029, 1042 Taylor (1905) 834 Taylor (1912) 214, 312, 612, 903 Taylor v. Adam 83 Taylor v. Allhusen 924 INDEX OF CASES Taylor v. Barnett . Taylor v. Blakelock Taylor v. Clark Taylor v. Forbes . Taylor v. Gilbert . Taylor v. Glass Taylor v. Hillhouse Taylor v. Kilmarnock Taylor v. London Banking Co. Taylor v. Mather . Taylor v. Noble Taylor v. Plumer . Taylor v. Tabrum . Taylor v. Watson . Teacher (1890) Teacher v. Calder . Tebbs v. Carpenter Tee v. Ferris Tempest (1866) Tempest v. Camoys Tench v. Cheese . Tendring v. Jones . Tennant (1889) . Tennant v. Trenchard Tennent (1868) Tennent (1869) Te Teira v. Te Roera Tewart v. Lawson . Thacker v. Key Thain (1891) Thellusson v. Woodford The "Mecca" (.1897) Thomas (1891) Thomas (1900) Thomas v. Devonport Thomas v. Tennent Thomas v. Walker . Thompson (1905) . Thompson (1908) . Thompson v. Finch Thompson v. Jamieson Thompson v. Whitelock Thomson (1840) . Thomson (1889) . Thomson (1897) . Thomson (1903) . Thomson v. Blair . Thomson v. Campbell Thomson v. Christie Thomson v. Clydesdale Bank Thomson v. Dalrymple Thomson v. Davidson Thomson v. Eastwood Thomson v. Henderson Thomson v. M'Lachlan Thomson v. Miller . Section. 833 1274 1021 250, 707, 1274, 1278 . p. 846 720, 728 454, 496, 1078, 1121 . 177 34 953, 1108 177, 937, 940 . 1289 . 1181 4, 459, 494, 509, 1122 . 735, 991, 992 600, 931 . 1182 . 3,34 . 82, 87 69, 81, 82, 83, 275, 276 . 836, 839, 856 1306 . 324 332, 465, 487, 496 . 37, 38 15 . 9, 27 844, 1002, 1033 . 282 100, 107, 448, 1117 834, 835, 836 . 1295 570, 1014 1037 931 1053 243 71 1002 545, 693, 694, 1239 . pp. 846, 847 . 995 277, 755 . 626 . 334 . 834 . 761 203, 213, 216, 554, 589 405, 406, 682 1273, 1274 909, 1210 277, 280 . 481 679, 700 417, 1258 336,341,378,426,431 INDEX OF CASES 925 Section. Thomson v. Moubray ...... 707 Thomson, v. Muir ... 601 Thomson v. Robb ...... 1175 Thomson v. Shakespear 327 Thomson v. Tough . . . . , 1146,1148 Thomson v. "Wilson ..... 981 Thorburn (1894) . 646 Thorbum v. Martin 455 Thorley (1891) 1167 Thorndike v. Hunt 1274 Thorne v. Heard . 1117 Thorne v. Marsh . 1276 Thornton v. Hawley 585, 808 Threiplaud v. Campbell 1319 Thursby (1875) . 566, 070, 1020 Thurston (1886) . 1059 Thynne v. Glengall 739 Tiekner v. Old 1234 Tillet(1892) . .... 550 Tilt (1896) . ... 1050 Timmis (1902) 557 Timson v. Ramsbottom ... 187 Tindal(1892) ..... 1027 Tochetti v. City of Glasgow Bank . 138, 890, 892 Tod (1871) .... 324, 931 Tod (1890). 27 Tod v. Beattie . .111 5, 1119 Tod v. Clyde 334 Tod v. Marshall . 875, 901, 9 18, 920 Todd v. Wilson 949 Tollemache (1903) . 305 Tomlinson (1898) . . 721, 103 7, 1287 Tongariro v. Drumlanrig 1143 Tooke v. Hollingworth . . ... 1293 Torbet v. Borthwick 1266 Torrance v. Bryson 177 Torrie v. Munsie . . ■ . 1049 Torry Anderson v. Buchanan 793 Tottenham (1864) . 442 Tovey v. Tennent .... . . 41 Towart(1823) . . ... 913 Town and County v. "Walker . . 290, 9 32, 968 Towndrovv (1911) . 1075 Townley v. Bond ... ... 328 Trades Hospital v. Mackersy 143 Trades of Edinburgh v. Heriot's Hospital 166 Trafalgar v. Francis ... . . 1186 Traill (1737) ... 775 Train v. Bell . ..... 682 Train v. Buchanan .... 278, 279, 280, 7 34, 815 Train v. Clapperton . .... 1183 Trappes v. Meredith . . . 818 Travis (1900) . • 1048 Travis v. Illingworth ...... 1146 Trefond (1899) 1059 Trenchard (1902) 600 926 INDEX OF CASES Section. Trencbavd (1905) • 1011 Trevanion (1910) .... 759 Trinity Chapel (1893) .... 337 Trott v. Buchanan ..... 1009 Trotter (1895) ..... 154 Trotter v. Cunninghame .... 299 Trover v. Knightley 768 Trower v. Butts . 834 Tryon(1844) . . . 118,119 Tucker v. Kayess ..... • • 860 Tuckett(1888) ..... . 635 Tudball v. Medlicott ... . 556, 599 Tullett v. Armstrong ... . 793 Tunstall (1851) .90 Turbine v. Leuchars ..... . 184 Turnbull (1897) . • 136 Turnbull (1905) . . .310 Turnbull (1907) . . .770 Turnbull v. Duval . • • 545 Turnbull v. Garden . . . 440 Turnbull v. Robertson . . .739 Turnbulls v. Tawse ..... . 1064 Turner (1783) ... . 1008 Turner (1862) ........ 336 Turner (1897) . . . 535, 695, 834, 1239 Turner (1907) ... . . 1148, 1214 Turner (1911) . . . 715 Turner v. Corney .... ... 952 Turner v. Fernie . . . 324, 750, 752, 781 Turner v. Fraser ..... 1152,1154,1175 Turner v. Gaw ..... . . p. 841 Turner v. Hancock .... .1147 Turner v. Hill ... . .441 Turner v. Newport . . . 1034 Turner v. Stallibrass . . . . 290 Tweedale (1905) . . 761 Tweedie (1858) ... ... 309 Tweedie (1884) ... . 296, 768 Tweedie and Miles (1884) . . .502 Twist v. Tye ... . 1186 Tyrrell v. Clark .... . 1032 Ulster (1889) ... . 1295 Underhill v. Roden ....... 350 Underwood v. Bell . 1063 Underwood v. Trower . 960 Union Bank v. Murray -Aynsley . 1272, 1279 Upperton (1891) .... . 932 Upton v. Brown (1879) . . 834 Upton v. Brown (1884) . . 1040 Urch v. Walker .... . 113 Urquhart (1886) .... 762, 770 Urquhart v. Abbott 3 Urquhart v. Brown 523, 531 Utley(1912) .... 960 INDEX OF OASES 927 Van Grutten v. Digby Vans Dunlop (1912) Varlo v. Faden Vaughan (1883) Vaughan (1884) Vaughan v. Booth Vaughton v. Noble Vavasour (1900) Vere (1791) Vere v. Dale Verney (1898) Vernon (1886) Vez v. Emery Vickery v. Evans Viditz v. O'Hagan Villar v. Gilbey Vine v. Raleigh Vines (1910) Virtue v. Alloa Vyse v. Foster Waddell (1812) Waddell (1851) Waddell (1896) Wagstaff (1908) Waidaimis (1908) Waite v. Parkinson Wake v. Varah Wakefield v. Renfrew Walcot v. Botfield Walcott v. Lyons Waldie v. Gray Walford (1912) Walker (1837) Walker (1868) Walker (1874) Walker (1886) Walker (1890) Walker (1897) Walker (1901) Walker (1905) Walker (1908) Walker v. Amey Walker v. Frobisher Walker v. Linom Walker v. Muill Walker v. Symonds Walker and Oakshott (1901) Wall v. Stanwick . Wallace (1891) . Wallace (1893) Wallace v. Braid . Wallace v. Ritchie Wallwyn v. Coutts Walne v. Hill Walsh (1905) 1101 ; pp. 538. 549, 550, 589. Section. . 983 . 735 . 844 . 843 . 1146 . 834 . 480 233 162 . 929 . 1035 1121, 1286, 1299 . 270 686, 691 . 983 . 834 . 633, 840, 843 . 833 . 1151 476, 1088, 1283 . 1019 . 347 . 827 . 834 25 . 1087 . p. 843 1194 . 833 262, 966 . 1277 842, 843, 848 898, 913 . 917 . 287 . 845 262, 696, 700 . 832 377, 824, 921 336, 423 . 808 15, 796 . 437 . 545 . 1307 613, 631, 1122 . 363 6 . 802 . 755 1037, 1317 812, 1011 10 . 830 750, 818 928 INDEX OF CASES Section. Walters v. Northern Coal . . 1309 Walters v. Woodbridge . 1183 Want v. Carapain . . 665 Ward (1843) 591, 593 Ward (1903) . 746 Ward (1911) . 702 Ward v. Butler . 107 Ward v. Duncombe . 185, 186, 187 Ward v. Dyas . 1053 Ward v. Lang . p. 843 Ward v. Wallis . 524 Wardrop v. Gossling . 825 Wardlaw (1875) . . 1019 Wareham (1912) . 568, 570 Waring (1852) 193, 232 Warner v. Jacob . . 509 Warrand v. Watson . 1142 Warren (1884) . 602 Warren (1895) 1005, 1235 Warren (1903) . 614 Warrender v. Anderson . 1046 Wasdale (1899) . . 187 Waters (1899) . 735 Watkins (1911) . 746, 1002 Watling v. Lewis . . 1252 Watson (1814) . 561 Watson (1875) 1180, 1201 Watson (1896) . 715 Watson (1902) 809, 811, 813 Watson (1904) 6 Watson (1910) 334, 831 Watson v. Crawcour 112, 117, 123, 160, 870 Watson v. Duncan . . 1266 Watson v. Morrison . 595 Watson v. Row . 1190 Watson v. Stormonth 73 Watson v. Toone . . 484 Watson v. Woodman 6 Watson v. Young . . 766 Watt (1895) . 350 Watt v. Greenfield . . . 769 Watt v. Jervie . 827 Watt v. Richmond . 981 Watt v. Roger . 1308 Watt v. Watson . . 754 776, 791, 793, 794, 795, 796, 798, 1186 Watt v. Wood 845, 846 Waugh(1892) . . . , . 161, 183, 916 Waverley (1895) ... . 1107 Weall(1889) . . , . , 198, 273, 435, 1154 Wears v. Roger ... . . 1035 Weatherall v. Thornburgh 758, 994, 1048 Weaver (1882) . 739 Webb (1840) . ... • , . . 855 Webb (1897) 363 Webb v. Cleland . 824, 1141 Webb v. Crosse 651 INDEX OF CASES 929 Webb v. Jonas Webb v. Shaftesbury Webb v. Stenton . Webster (1882) . Websters v. Miller . Weddell (1848) . Wedderburn (1838) Wedderburn (1878) Wedmore (1907) . Weir (1877) Weir (1910) Weir v. Crum Brown Weir v. Hutchison . Weir v. Young Weld-Blundell v. Wolseley Weller v. Ker Wells (1903) Wellwood v. Boswell Welsh (1871) Wemyss (1913) . Weniger (1910) Wenlock v. River Dee Wentworth (1900) . Wertheimer (1912) West (1900) West (1904) West (1909) West v. Williams West Lothian v. Mair Western Bank v. Baird Western Bank v. Bairds Western Bank v. Douglas Westfield Bank v. Corneu Weston (1900) Wharncliffe (1904) Wharton v. Masterman Wheate v. Hall Wheddale v. Partridge Wheeler (1899) . Wheeler (1904) Wheeler v. Warner Whelpdale v. Cookson Whichcote v. Lawrence White (1855) White (I860) White (1893) White (1896) White (1898) White (1901) White (1909) White v. Anderson White v. Butt White v. Chitty White v. Lincoln White v. Steel White v. Whyte Section. 694, 695 273, 449, 460 23 . 747 336, 373, 426, 431 . 761 . 561 634, 635 . 741 377, 425 . 375 . 1046 . 714 . 1046 . 1030 296, 300, 301 . 305 1094, 1110 42 . 1002 . 185 71 718, 987, 1018, 1021, 1111, 1186 . 1165 . 1045 73 1101, 1236 818, 823 1091 92 1241 1241 250 16 1175 759, 1048 296 809 793 739 833 459, 464 438, 466, 479, 496 . 929 761, 809 . 1046 756, 771, 777 720, 1158, 1163 770 1101 136 358 818 1176 1264 750, 785, 787 59 930 INDEX OF CASES Section. Whiteford (1903) . 1109, 1111 Whitehead (1897) . 735, 755 Whiteley (1909) . . 1101 Whiteley (1910) . 156 Whitfield (1911) . 833 Whiting (1905) ... 327, 834 Whitney v. Smith . 669, 1096 Whittaker v. Kershaw . 1320 Whittle (1896) . 913 Whyte (1885) 899 Whyte (1891) 341, 347, 383, 905, 907 Whyte v. Burt 498, 506, 1071, 1097 Whyte v. Forbes . 962, 964 Whyte v. Murray ... . 1070 Widdows (1871) . 770 Wightwiok v. Lord . 1022 Wilday v. Sandys . . 688 Wildman (1803) . . 748 Wild ridge v. Anderson 5 Wild's Case . 350 Wiles v. Gresham .... 1083, 1118 Wilken(1904) 792, 798 Wilkie *. Wight . . . 756, 771 Wilkins (1881) . 818 Wilkins v. Hogg .... 522, 324, 528, 529, 530, 1154, 1177 Wilkinson (1825) . . . . 273, 1154, 1177 Wilkinson (1849) .... . 1002 Wilkinson (1871) .... . 327 Wilkinson v. Duncan 1022 Wilkinson v. Malin . 156 Wilkinson v. Parry . 867 Willcocks (1827) . . . . 157 Willes v. Greenhill 185, 715 Williams (1897) . 3, 1237 Williams (1904) . . 714 Williams (1907) .... 759, 761 ; p. 848 Williams (1910) .... . 315, 705, 720, 1237 Williams (1912) .... . 833 Williams v. Arkle . . . . . . 1047 Williams v. Byrom 231, 235, 238, 253 Williams v. Corbett . 207 Williams v. Giddy . 282 Williams v. Hathaway . 1252 Williams v. Scott .... . 483, 499, 924, 1122 Williamson (1900). . 904 Williamson (1906) .... 1036, 1037, 1039, 1043 Williamson v. Boothby . 795, 797, 800 Williamson v. Trench . 818 Willis (1911) . 618, 641, 834 Willis v. Barron 233, 545 Willis v. Hiscox .... . 1183 Willis v. Kibble .... . 460 Willmot v. London . 365 Willonghby (1911) . 990 Wilrner (1903) . 834 Wilmer(1910) .... . 350 INDEX OF CASES 931 Wilson (1851) Wilson (1863) Wilson (1894) Wilson (1895) Wilson (1907) Wilson (1909) Wilson (1911) Wilson v. Beveridge Wilson v. Brett Wilson v. Guthrie Smith Wilson v. Lindsay . Wilson v. Moore . Wilson v. Scott Wilson v. Taylor . Wilsons (1789) Wilton (1907) Winehelsea (1888) Wink v. Speirs Winslow v. Baltimore Wise (1845) Wise (1913) Wise v. Perpetual Trustee Wishart (1910) Wishart v. City of Glasgow Bank Wishart v. Morison Wolley v. Jenkins . Wood (1861) Wood (1886) Wood (1890) Wood (1896) Wood v. Dunn Wood v. Menzies . Wood v. Middleton Wood v. Penoyre . Wood v. White Woodburn (1857) . Woodhouse (1903) . Woodhouse v. Herrick Woodin (1895) Woods (1904) Worley v. Frampton Wormald v. Muzeen Worms v. De Valdor Worral v. Harford Worssam (1882) . Wotherspoon v. Laidlaw Wren v. Kirton Wrexham (1899) Wright (1870) Wright (1894) Wright (1904) Wright (1907) Wright v. Callender Wright v. Carter . Wrightson (1908) . Wroughton v. Colquhoun Section. 850, 856 191, 212, 1172 812, 1050, 1054 . 899 6, 567, 570, 1013, 1018 830, 874 . 714 . 768 . 512 526, 952 3 . 1072 . 375 . 108 441, 442, 1119 349, 386 . 1215 30, 36, 38 . 182 . 105 . 834 1211, 1220 . 901 222, 223 ; p. 851 . 1000 . 296 . 766 556, 990 13 347, 1045 315 1004, 1019 . 622 . 1101 . 295 . 706 834 . 818 . 994 1018, 1021, 1111 . 365 . 746 . 825 1146, 1302 . 490 . 328 . 248 415, 1290 . 1192 . 816 . 793 327, 833 . 1007 . 480 902, 905 . 1007 932 INDEX OF CASES Section. Wylie v. Black . . 1319 Wylie v. M'Jannet . 1317 Wylie v. Smith . . . . . . 1265 Wyllie (1906) . . p. 845 Wyman v. Paterson . 231, 235, 238, 241, 523, 525, 538, 693, 1173 Wynne (1837) ... . 818 Wynne v. Humberston .... . 551 Wynne v. Tempest 1238, 1239, 1281 Wyse v. Abbott . . . . . 157, 173, 879 Yates (1860) . . . . . 1002, 1021 Yates (1901) . . . . . 3, 1008 Yates (1907) . . 1101 Yates v. Compton . . 1003 Yeap Cheah Neo v. Ong Cheng Neo . 1045 Yonge v. Toynbee . 10 York Buildings Co. v. Mackenzie . . 457, 1081, 1091, 1120 Yorkshire v. Howden 22, 1132 Youde v. Cloud . 538 Young (1853) . 753 Young (1893) . 1046 Young (1901) . 129, 908 1054, 1056 Young (1910) . 990 Young (1912) . 1002 Young (1913) . 1045 Young v. Grierson . . 391 Young v. Janes . 834 Young v. Johnston 724, 733 Young v. Naval Society 11, 1146, 1151 Young v. Nith . 1267 Young v. Perth . 1046 Young v. Robertson 827 ; pp. 843, 844 Younghusband v. Gisborne . 814 Yuill v. Ross . 348 Yuill v. Thomson 754, 755, 761 Zacklynski v. Polushie 27, 375, 378 Zoller (1868) 62, 68, 142 INDEX OF STATUTES [The Figures refer to the Sections of the Text.] Section. Ja. in. 1469, c. 28. [Scots Act— Prescription] .... 1112 Ja. ill. 1474, c. 54. [Scots Act^Prescription] . . . 1112 43 Eliz. c. 4. [Charitable Gifts Act, 1601] .... 1046 Will. in. 1696, c. 25. [Scots Act— Proof of Trust] ... 29 14 Geo. in. c. 48. [Insurance Act, 1774] . . . .331 39 & 40 Geo. in. c. 98. [Accumulations Act, 1800— The Thellusson Act] 327, 835, 844, 845, 848, 858 9 Geo. iv. c. 58. [The Licensing (Scotland) Act, 1828] ... 5 2 & 3 Will. iv. c. 65. [The Representation of the People (Scotland) Act, 1832] . . . . . . .5 4 & 5 Will. iv. c. 22. [Apportionment Act, 1834] . . . 1032 1 & 2 Vict. c. 110. [Judgments Act, 1838] . . . .637 4 & 5 Vict. c. 38. [School Sites Act, 1841] . . . 1045 8 & 9 Vict. c. 17. [Companies Clauses Act, 1845] . . . 318 8 & 9 Vict. c. 18. [Land's Clauses Consolidation Act, 1845] . . 1026 8 & 9 Vict. c. 19. [The Lands Consolidation (Scotland) Act, 1845] 381, 636 8 & 9 Vict. c. 83. [Poor Law Act, 1845] . . . . 719 8 & 9 Vict. c. 97. [Testamentary Disposition Act, 1845] . 71, 636, 1026 8 & 9 Vict. c. 106. [The Real Property Act, 1845] . . .125 10 & 11 Vict. c. 16. [Commissioners Clauses Act, 1847] . . 318 11 & 12 Vict. c. 36. [The Entail Amendment Act, 1848] 324, 327, 761, 791, 835, 837 12 & 13 Vict. c. 51. [The Judicial Factors Act, 1849] . 347, 606 12 & 13 Vict. c. 106. [Bankrupt Law Consolidation Act, 1849] . 914 13 & 14 Vict. u. 60. [The Trustee Act, 1850] . . . .920 19 & 20 Vict. c. 79. [Bankruptcy (Scotland) Act, 1856] 54, 131, 289, 308, 464, 933, 1278, 1310 20 & 21 Vict. c. 26. [The Registration of Leases (Scotland) Act, 1857] 411 20 & 21 Vict. c. 56. [Distribution of Business Act, 1857] . . 429 22 & 23 Vict. c. 35. [The Law of Property Amendment Act, 1859] 204, 728, 1319 23 & 24 Vict. c. 143. [The Titles to Land (Scotland) Act, 1860] 141 23 & 24 Vict. u. 145. [Powers of Trustees Act, 1860] . . .602 24 & 25 Vict. c. 84. [Trusts (Scotland) Act, 1861]— s. 1 25, 52, 103, 151, 164, 286, 523, 866, 868, 881 s. 3 . . . . . .882 25 & 26 Vict. c. 89. [Companies Act, 1862] . . 74, 622 ; p. 851 26 & 27 Vict. c. 87. [The Trustee Savings Bank Act, 1863] . . 524 26 & 27 Vict. c. 118. [Companies Clauses Act, 1863] . . . 318 27 & 28 Vict. c. 121. [The Railways Construction Facilities Act, 1864] 381 28 & 29 Vict. c. 78. [Mortgage Debenture Act, 1865] . . .672 30 & 31 Vict. c. 97. [The Trusts (Scotland) Act, 1867]— s. 1 . . . 460, 874, 875, 876, 877 s. 2 212, 215, 361, 364, 370, 573, 600, 711, 932 s. 3 . 372, 380, 408, 409, 411, 413, 1200 934 INDEX OF STATUTES 30 & 31 Vict. c. 97. [The Trusts (Scotland) Act, 1867]— s. 4 . s. 5 s. 6 s. 7 s. 8 s. 9 s. 10 s. 11 s. 12 •s. 13 s. 14 s. 16 s. 17 s. 18 s. 19 Section. 388, 409 . 609, 634, 980 634, 650 . 336, 373, 423, 1001 . 421 . 922, 933, 934 48, 64, 157, 865, 879, 881, 883, 1147 139, 161, 533, 916 59, 60, 141, 286, 919, 920 47, 50, 68, 880 . 154 429, 432 434, 644 31&32 31 &32 31 &32 32 &33 32&33 33&34 33 &34 33 &34 33&34 33&34 34&35 34&35 36 Vict. 37&38 37&38 38&39 38&39 40&41 42 Vict. 43&44 43&44 44&45 44&45 45&46 45&46 45&46 45&46 45&46 46&47 274, 277, 378 Schedules . . . 868,883 [Entail Amendment (Scotland) Act, 1868] 327, 761, 775 [Court of Session Act, 1868] . . .920 [The Titles to Land Consolidation (Scotland) 393, 807, 1053 [Bankruptcy Act, 1869] .... 1077 [The Titles to Land Consolidation (Scotland) Amendment Act, 1869] .... Vict. c. 14. [The Naturalisation Act, 1870] . [Mortgage Debenture Act, 1870] . [Forfeiture Act, 1870] [The Apportionment Act, 1870] . [National Debt Act, 1870] [Debenture Stock Act, 1871] [Trade Unions Act, 1871] . u. 17. [East India Stock Act, 1873] . Vict. c. 37. [Powers of Appointment Act, 1874] [The Conveyancing (Scotland) Act, 1874] 135, 137 [The Friendly Societies Act, 1875] [Local Authorities Loans Act, 1875] [Colonial Stock Act, 1877] c. 11. [Bankers' Evidence Act, 1879] . Vict. c. 8. [Isle of Man Loans Act, 1880] [Married Women's Policies of Assurance Act, 1880] [Married Women's Property (Scotland) Act, 1881] Vict. c. 84. Vict. c. 100. Vict. c. 101. Act, 1868] Vict. c. 71. Vict. c. 116. Vict. c. 20. Vict. u. 23. Vict. c. 35. Vict. c. 71. Vict. c. 27. Vict. c. 31. Vict. c. 94. Vict. c. 60. Vict. c. 83. Vict. c. 59. Vict. c. 26. Vict. c. 21. Vict. c. 41. 387 76 . 653 . 389 . 1032 696, 697 . 673 352, 1132 . 643 . 4, 816 54, 92, 132, 142, 143, 1310 24 . 696 39, 643, 696, 697, 980 247 648 24 74 Vict. c. 38. Vict. c. 51. Vict. c. 53. Vict. c. 61. Vict. c. 75. Vict. c. 52. 47 & 48 Vict. c. 63. [Conveyancing and Law of Property Act, 1881] 45, 90, 287, 288, 336, 388, 390, 404, 713, 1036 [Settled Land Act, 1882] . . . 327, 510, 547 [Government Annuities Act, 1882] . . 696 [Entail (Scotland) Act, 1882] 47, 58, 67, 164, 289, 606, 636, 868 [Bills of Exchange Act, 1882] . . . 524 [Married Women's Property Act, 1882] . 74, 75, [Bankruptcy Act, 1883] 233, 818, 914, 923, 933, 1077, 1278 [Trusts (Scotland) Amendment Act, 1884] — s. 1 49 s. 2 . . 164, 212, 287, 317, 643, 882, 1272 s. 3 634, 637, 638, 639, 640 641, 642, 643, 649, 650, 672, 675, 676, 677, 980 INDEX OF STATUTES 935 Section. 48 & 49 Vict. c. 25. [East India Unclaimed Stock Act, 1885] . . 697 49 & 50 Vict. c. .27. [Guardianship of Infants Act, 1886] . 825, 929 50 Vict. c. 11. [Conversion of India Stock Act, 1887] . . .643 50 & 51 Vict. c. 18. [Trusts (Scotland) Act, 1867, Amendment Act, 1887] 51, 371, 369 50 & 51 Vict. c. 69. [Conveyancing (Scotland) Acts, 1874-1879, Amendment Act, 1887] ...... 145 51 Vict. c. 2. [National Debt Conversion Act, 1888] 335, 427, 635, 669, 748, 1031 51 & 52 Vict. c. 15. [National Debt (Supplemental) Act, 1888] . 635 51 & 52 Vict. c. 42. [Mortmain and Charitable Uses Act, 1 888] 828,1052 51 & 52 Vict. c. 59. [The Trustee Act, 1888] 204, 262, 330, 390, 1087, 1112, 1229, 1230' 52 & 53 Vict. c. 39. [Judical Factors (Scotland) Act, 1889] 51, 269, 289, 310, 369, 371, 702 52 & 53 Vict. u. 63. [Interpretation Act, 1889] . . . 643, 849 53 & 54 Vict. c. 39. [Partnership Act, 1890] . . 19, 460, 1281, 1309 53 & 54 Vict. c. 64. [Directors Liability Act, 1890] ... 13 54 & 55 Vict. c. 21. [Savings Bank Act, 1891] . . . .921 54 & 55 Vict. c. 29. [Presumption of Life Limitation (Scotland) Act, 1891] ....... 828, 831 54 & 55 Vict. c. 30. [Law Agents Act, 1891] .... 1302 54 & 55 Vict. c. 34. [Local Authorities Loans (Scotland) Act, 1891] 674, 697 54 & 55 Vict. c. 44. [Trusts (Scotland) Amendment Act, 1891]— s. 1 ..... 51, 882 . 901 261, 264, 665, 666 . 1087 1127, 1128, 1227, 1229, 1230 140, 151, 885, 886 533, 901, 916, 918, 919, 921 s. 2 s. 4 s. 5 s. 6 . 373, 545 s. 7 s. 8 54 & 55 Vict. c. 48. [Purchase of Land (Ireland) Act, 1891] . . 381 55 & 56 Vict. c. 35. [Colonial Stock Act, 1892] . . . 643 55 & 56 Vict. c. 39. [National Debt (Stockholders Relief) Act, 1892] . 71 55 & 56 Vict. c. 43. [Military Lands Act, 1892] . . .364 55 & 56 Vict. c. 58. [Accumulations Act, 1892] . 327, 835, 849 56 Vict. c. 14. [Statute Law Revision Act, 1893] . . .882 56 & 57 Vict. c. 53. [The Trustee Act, 1893] 4, 45, 90, 141, 156, 164, 240, 247, 264, 288, 388, 390, 600, 602, 638, 640, 641, 688, 713, 922, 971, 980, 1036, 1087, 1227, 1228, 1272 56 & 57 Vict. c. 69. [Post Office Savings Bank Act, 1893] . . 72 56 & 57 Vict. c. 71. [Sale of Goods Act, 1893] . . . 524, 1280 57 Vict. c. 10. [Trustee Act, 1894] . . . . .701 57 & 58 Vict. c. 13. [Arbitration (Scotland) Act, 1894] . . 600 57 & 58 Vict. c. 30. [Finance Act, 1894] . . . 719, 1009 57 & 58 Vict. c. 44. [Heritable Securities Act, 1894] . . 364, 422, 464 58 & 59 Vict. c. 19. [Court of Session Consignations (Scotland) Act, 1895] 623 59 & 60 Vict. c. 14. [Short Titles Act, 1896] .... 51 59 & 60 Vict. c. 25. [Friendly Society Act, 1896] 24, 72, 101, 380, 408, 411, 413, 550, 649, 701, 1046 59 & 60 Vict. c. 35. [Judicial Trustees Act, 1896] 192, 235, 483, 693, 725, 728, 1154 60 Vict. c. 8. [Trusts Act, 1897] .... 369, 371 60 & 61 Vict. c. 38. [Public Health (Scotland) Act, 1897] . . 5 61 & 62 Vict. c. 42. [Trusts Act, 1898] . . . . .674 62 & 63 Vict. c. 20. [Bodies Corporate Act, 1899] . . .71 936 INDEX OF STATUTES Section. 62 & 63 Vict. c. 47. [Private Legislation Procedure Act, 1899] . 349 63 & 64 Vict. c. 55. [Executors Act, 1900] 27, 137, 164, 557, 600, 612, 714, 868 ; p. 849 63 & 64 Vict, c. 62. [Colonial Stock Acts, 1900] . . 643, 980 1 Edw. vii. c. 20. [Youthful Offenders Act, 1901] . . 423 2 Edw. vii. c. 21. [Shop Clubs Act, 1902] . . . .701 3 Edw. vii. c. 9. [County Councils Act, 1903] . . . .1194 3 Edw. vii. c. 25. [Licensing (Scotland) Act, 1903] . . 5 3_Edw. vii. c. 37. [Irish Land Act, 1903] . . 379, 524, 635, 1251 4Edw. vii. c. 8. [Savings Bank Act, 1904] 173, 175, 273, 380, 408, 411, 649 5 Edw. vii. c. 12. [Churches (Scotland) Act, 1905] . . .349 5 Edw. vii. c. 15. [Trade Marks Act, 1905] • . . . .696 6 Edw. vii. c. 41. [Marine Insurance Act, 1906] . . . 524 6 Edw. vii. c. 55. [Public Trustee Act, 1906] . . 244, 524, 882, 1251 7 Edw. vii. c. 18. [Married Women's Property Act, 1907] . . 73 7 Edw. vii. c. 29. [Patents Act, 1907] . . . . .696 7 Edw. vii. c. 47. [Deceased Wife's Sister's Marriage Act, 1907] . 1047 7 Edw. vii. c. 51. [Sheriff Courts Act, 1907] . . . 947, 971, 981 8 Edw. vii. c. 64. [Agricultural Holdings;Act, 1908] . . 289, 422, 600 8 Edw. vii. c. 69. [Companies Act, 1908] 14, 23, 29, 74, 524, 622, 696, 1254, 1272 ; p. 851 10 Edw. vii. c. 8. [Finance Act, 1910] . . . .39, 413, 652 3 Geo. v. [Bankruptcy Consolidation Bill, 1913] . . . p. 841 INDEX [The Figures refer to the Sections of the Text.] Section. Abandoning Action, expenses of trustee . . . .1207 Abandonment of Debt, presumption from conduct . .1120 Abatement, Rent, lordship, royalty, etc. ... . 369 Legacies ...... . 741 Annuities ..... . . 1007 Abroad, Trustee, notice of meeting to ..... 173 Power of remaining trustee, where one . . .183 Trustee, removal because ..... 916, 921 Factor may be appointed to attend to matters . . 220 Trustee going, where negligence implied in . . . 532, 533 Trustee intending to go, should resign .... 533 Absence, From country, where negligence instructed by . . 327, 532, 533 Not negligence, where trustee resident out of locality . . 534 Absent, Trustee, duty to consult with . . . 173 Beneficiary, presumption of life of . . . 828 Absolute Disposition, ex facie, trust constituted by .26 "Absolutely," meaning of in precatory trust .... 4 Acceleration of Date of Payment .... 749 et seq. At request of all the beneficiaries . . . 754, 755, 766, 768 In the case of lif erenter and fiar .... 764, 766 By statute ........ 766 Conditions of 768, 772, 774, 778, 779 Beneficiaries must be free from incapacity .... 772 May take place though conditional institute ousted . 775, 776 Distinguished from acceleration of vesting .... 777 Acceptance of Office, Acceptances and disclaimers in one minute, advantages of Admission of truster's title .... Admission, not, of validity of conveyance in trust deed Advice as to . Confirmation as Corresponding about trust as Course of conduct as . Conveying the trust estate as Delay in, effect of J 937 . 124 99 . 100 . 93, 94 106, 107 . Ill 109 et seq. 113, 114, 118 104, 105 938 INDEX Acceptance of Office — continued Section. Denuding of estate, not implied . 118 Duties of trustee upon .... 95 Effect of, as to title of trustee 90, 108, 131 Executry, acceptance of, effect of, on 97 Ex officio trustee ..... 98 Express, how made ... . 101 Implied, how made . • 109 et seq. Infeftment as . 106 Instructing co-trustee to do a trust act, as . . 112 Joining as trustee in trust acts . . 113,114,117 , 118, 119, 120 Keeping trust deed temporarily for safe custody not . 116 Late, condition of . . 104 Letter of . 101 Liability incurred by . 92, 95 Title, making up as . . • 101, 106 Married woman, how made by 73, 101 Minute of ... . 101 Nature of act of . 91, 93 Probate as • . 107 Promise of, effect of . 96 Partial, cannot be 106, 120 Partial, where limited by memorandum . 120 Presumption of . .104, 105, 109, 115 , 118, 119, 120 Voluntary . . 96 Summons, raising, as . . . 112 Recall of, with consent of Court . 103 Discharge, signing, as 112 Receipt, signing, as . . 112 Trustees nominated to other office . . 102 Writing minute of meeting not . 115 Written, may be proved conditional by parole . 122 Duty of trustee upon ..... . 554 Acceptors, Nomination of 25 Account, see Agent, Law Agent, and Remuneration Accountability of trustee for profits made . . . 1090 et seq. Accountant, Employment and position of . Of Court, superintendence of, where to be applied for „ „ effect of Of Court, remit not necessarily to, for approval of investment Audit by, discharging trustee Accounting, see also Discharge Asset of trust acquired by trustee, only after challenge Action of, instead of damages Borrower of trust funds, by . Onus as to opening balance .... Duty of trustees as to Lapse of time in demanding, effect of Where exact, impossible, sum fixed by Court Constructive trustee can be sued for Borrower of trust funds not liable in By one trustee adopted by co-trustee Refused, trustees liable in expenses of action for accounts 272 269 310 702 ent 645 931 942 437 . 952 954 953 952 et seq. 953 953 954 954 955 956, 960 INDEX 939 Accounting — continued Section. Refused, where to be implied that .... 958 Contingent beneficiary, to , . . . 961, 1136 By trustee for creditors, to truster ... . 962 By trustee in bankruptcy to bankrupt .... 962 By trustee in voluntary trust to trustee in subsequent sequestration 962 " Family understanding " as a defence to . . . .1119 To beneficiary in resulting trust . . . . 964 In charitable trust to representatives of truster . . . 965 In public trust, who can sue . . . 965 To beneficiary with small interest . . 966 To beneficiary who is also trustee . . . 966 Books destroyed, effect of, in . . 1120,1122 To assignee of beneficiary ...... 967 Title to call for ..... . 373, 968 Ex-trustees, by, to acting trustees, not to beneficiaries . . 968 Constructive trustee, by, credits allowed . . 1146 By assumed trustees ....... 969 Where long delay in calling for .... . 970 Court in which to call for . . . . 971 et seq. What law governs ..... . 982 Scots, for expenses of litigation in foreign Court . . 985 Unauthorised investment, for ... . 1081, 1082 What right in truster's creditors to call for . . . 1245 Trustee not chargeable with interest on arrears till after . . 1104 Joint-accounting, each defender liable to account . . 1137 Court will not go into, in petition for factor . . .1 137 Accounts, Law agents', are not trustees' . . . 224, 955 Factor must present ..... . 244 Factor's, how checked ...... 245 New trustees, duty of, to examine . . . 540 Where plea of confidentiality good against call to inspect . . 952 Destroyed, presumption against destroyer .... 959 Must be produced free to beneficiary .... 960 Copy of, cannot be required free by ordinary legatee . . 961 Required by persons not frimA facie beneficiaries . . 963 Who are liable to produce .... . 968 Extent of, what may be required ..... 968 Taken at wrong date, result to beneficiary depending thereon . 989 Only what appears in regular, non-gratuitous trustee gets . 1176 Neglect to furnish, expenses of litigation owing to . 1184, 1208 Accretion, Of title . .... .554 As principle in class gift .... .p. 848 Accumulated Income, allowance out of, petition for 336 Accumulation, Application of Thellusson Act . . . 757, 758 Directed, where sum may be paid over . . 760 Improvements, payments for, where . . . 840, 843 Thellusson Act against . . . . 835 et seq. Trust for, distinguished from perpetuity .... 835 Indirect, if necessary, affected by the Act . . . 839 Mineral rents, as ...... 840 Amount of, does not affect question ..... 840 Maintenance and repair, not ...... 843 940 INDEX Accumulation — continued Trust for improvement is not Interest on, is also accumulation Legal, debts must be paid out of Insurance premiums are not . For payment of debts legal . For raising portions legal At what date stopped by Act For purchase of land only During grantor's life may exceed twenty-one years Where cessation of, accelerates enjoyment of fund What, is to be paid over under Act . Of charitable funds, questions as to . To whom payable under Act . Acquiescence, see also Homologation Act of quorum, in As a plea in defence to claim by beneficiary By a beneficiary in reversion . Where it ultra vires of the beneficiary Only where knowledge Beneficiary, of, in question of title . Contingent beneficiary, by . Distinguished from request . Claim for indemnity by trustee through In charges made by solicitor-trustee . Acquirenda, Position of, after bankruptcy Gift by husband to wife as . Act of Parliament, see also Statute Where necessary .... Section. . 840 . 841 . 842 . 843 . 844 845, 846, 847 48 et seq , 854, 855, 856 . 849 . 851 . 853 . 854 760, 857 858 et seq. . 170 1118, 1120 . 1125 . 1127 . 1121 . 1122 . 1125 . 1128 . 1128 . 1164 . 556 . 1076 348, 349 "Acting " trustee . ....... 96 Action, see also Litigation and Title to Sue Disclaimer of, by minority . . . . .170 Abandoned by majority, what right of minority . . 177 Against truster, right of trustee to appear .... 356 By trustee in name of truster . . . . 356 Cannot be raised by less than quorum . . 174 „ „ as by one of three trustees against another . 176 Duty of each trustee to take, against co-trustees to protect estate . 332 Exception affecting beneficiary affects trustee in . . 352 For protection of estate, where competent . . . 177 Trustee sues, in his own name . . 352, 353 Against trustees, who must be called in . 1142 By one of more trustees .... 1180, 1185 Where trustees formally called, duty of pursuer . . . 1188 Actio personalis moritur cum persona . . 554, 1076 Ademption, Of legacies ...... . 739 By advances ........ 990 Adjudication, Where proper diligence to attach beneficial interest . . 1310 Where may be used to recover judicial expenses . . . 1312 INDEX 941 Administration by Court By sequestration Difference between English and Scots How limited .... Indirect, through judicial factor Refused even where truster's direction therefor Scots Court, attitude of, towards How conducted where object of discretion denned . ,, „ „ „ not defined Whether competent in Scotland Admission, False, by limited beneficiary, effect of Power of trustee to make On record, as proof of trust . Adultery, widow living in, trustees need not pay to " Advancement in life," what .... Section. 304, 305, 317, 318, 319, 320 . 311 305, 306, 307 . 310 317, 318, 319 . 313 312, 313 320, 322 321, 322 308, 309, 310 . 793 . 360 34 . 834 282, 740 Advances, see also Outlays Discretion to make, improper use ..... 282 Where necessary for preservation of estate, trustee's duty as to . 329 To minor beneficiaries .... 336, 423, 740 Recital of, erroneous ..... . 556 Winding up estate, how treated . . . 715, 990 Capital, power to make, to liferenter, where infers fee . . 761 Collation of . . . . . . . . 990 Interest on ...... 990 Where imputed to account of succession .... 990 Where, made, how loss on authorised securities apportioned . 991 To trust, profit made on, how apportioned .... 993 Trustee's claim for reimbursement of . 1151 To protect policies, lien for . . . . . 1215, 1216 Where stranger has lien on estate for .... 1317 Advantage, Beneficiary and trustee, taken in dealing between . . 484, 485 Need not be alleged in dealing by trustee with trust estate 457, 458, 459 Advertisement, Of sale, what proper . ..... For creditors ..... . . Advice, see Law Agent Age, in questions of childbearing, connected with acceleration of payment ...... 387 728 Agency, charges for, by non-gratuitous trustee Agenda, see Meeting Agent, see also Servants Acts of, statutory indemnity for in England Bound personally where no homologation Directors as, of trustee company Employment of „ duty of trustee as to „ effect of „ trustee's position regarding 761, 766, 770 1170, 1172, 1173, 1174, 1176 . 204 224 210 191 et seq. ,273 193 198 et seq. 209 192, 1173 942 INDEX Agent — continued Homologation by trustee of act of . How employed .... Implied indemnity for acts of Must not be employed out of his proper business Nomination of, by truster, effect of . One, of trustees may be Permanent ; law agent and factor, appointment of „ no extraordinary power to bind trustees „ position of ... . represent trustees in questions of notice Section. . 221, 223, 224 195 et seq., 1173 203, 204 195, 234, 1173 205, 206, 207, 208 210, 1154 211 et seq. 221, 224 221 et seq. . 225 Responsibility of trustee for . 198, 199, 204, 208, 227, 228 „ „ under "indemnity clause" . 201,202,217 „ „ where, not employed . . . 194 Skill, quality due by . . . . . . .205 Skilled, only supplies data for judgment of trustee . 196, 197 Skilled, trustee acting as ..... 194 Trustee as .... . . 210, 1154 Trustee distinguished from . . . . 5, 6, 7, 8, 9, 10 Truster's agent, choice of ... . . 209 Temporary ..... . 246 et seq. What agents may be employed . . . 273, 1173 Who has title to sue for negligence . . 1.305, 1306, 1308 Who may be employed as . . . . 205 et seq. Where employed by trustee specially remunerated for same thing . 1177 Trust, what claim against trustees personally . . 1301, 1302 Trust, has no lien on trust fund for remuneration . . 1302, 1304 Title of, to sue beneficiary ...... 1309 Agent of the Trust, Is not constructive trustee ...... 1286 Accountable to trustees ...... 1305 Partner of, where liable to trustees for negligence . . . 1305 Has beneficiary a title to sue ? . . . 1306 1308 Has, title to sue beneficiary ? . . . . 1309 Trustee cannot be appointed paid . . . . 1154 1158 >, „ „ though agent of truster . 1154, 1155 Trustee may act as, gratuitously ..... 1155 Where charges by, who is trustee, acquiesced in . . 1164 Express power to appoint trustee, includes power to enumerate . 1165, 1166, 1167, 1168, 1169 Power to pay trustee, strictly limited to office named . . 1168 Notice to ...... 185, 225 Firm of, when can charge ...... 1159 Forms of powers to make extraordinary charges . . 1173,1174 Agent Disburser, Retention by trustee, in question with Agricultural Holdings Act, Reference under Effect of, on discretion of trustee Powers under .... Alien as trustee .... Alienation of Interest, restriction on . 1148, 1214, 1235 . 600 . 289 . 422 76 814, 818 INDEX 943 Section. 719, 725 . 1001 765, 767, 781 et seq. 781 et seq. . 767 783, 784 Aliment, Of family of deceased, not a privileged debt Are trustees bound to give, to truster's family? Alimentary Annuitant, Protection of trust must be kept up for Cannot discharge alimentary provision Can excess over proper allowance be discharged by ' With power of appointment of fee . Where protective arrangement made in place of trust 785, 786, 787, 794 Alimentary Interest, Effect on acceleration of payment ..... 767 Cannot be renounced with consent of truster . 788, 789 Marriage contract, wife can create in own favour . 790 Difference from interest at discretion of trustees . . 814, 817 Legitim as an . . . . . . . 1000 Alimentary Provision, Rights of trustee for outlays in question with Amount of ....... In marriage contract presumed to cease with dissolution of marriage . Payment of . What legal extent of Order of claims upon . Arrestment of Allowance, Increase of, over specified maximum Increased, petition for ... To trustee, vide Remuneration. Ambiguity, where proof allowed in Amenity, not an item of value for loan . American, State Governments, securities of, investment in Government securities during civil war, view of Court as to "Among," meaning of ..... Animals, As beneficiaries ... Trust for, how executed .... Annual, see Yearly. Annuitant, Right to follow capital due .... Following residue assigned .... Partnership, liability of, for debts . Annuities, Long, conversion of . Long, as investment ..... Alimentary, investment for .... Perpetual, interest on Government stock Provisions of National Debt Conversion Act anent . Annuities and Legacies, proportional abatement of, where estate insufficient ....... 1213 767 805 814 999 1000 1310 343 336 1046 661 624 630 834 20 281 . 1002 1272 1309 566 688 689 748 748 1007 944 INDEX Annuity, Residue, where charged on income of Perpetual, where Life, presumed for Alimentary, directions to purchase . Capitalised, how Trust to pay, where value may be paid over instead Railway, investment on Distinction from liferent Must be wholly paid over within the year . Trust of residue must be kept up to secure . Arrangement agreed to by annuitant to secure Is a charge against whole trust capital Purchase of . . . . . 1002, 1003, Is not apportionable . Deductions from To survivors . To widow for maintenance of child Out of business profits Arrears of, acquiescence of beneficiary Appropriation of capital to secure Abatement of, on insolvency .... Proportions in which, is a charge against interests of liferenter of fiar Heritage, where chargeable against Interest on arrears of . Extent of gift of an . Vesting of Anticipation, Restraint on . . „ affecting lien of trustee for expenses Appeal, Trustee's expenses in an Where beneficiaries claim trustee's instance in Expenses of, in question as to charitable trust Appointed Fund, Position of, as asset .... How administration expenses charged Appointment, Resulting trust on failure of . Power of, none in French law Donee of power of, not trustee Powers of, distinguished from trustee's powers Lapse of, effect on legacy, Of trustees, vide also Nomination. Donee of power of, cannot alter investments Power of, of fee .... Lapsed, effect on substituted gift Failure of power of, to whom estate results . Funds affected by power of, as assets Apportionment, Of revenue ..... Of purchase money in joint sale Power of, in trustees .... Section. 746 746 746 752 768 325 641 746 747 768, 769 . 769 746, 1002 1007, 1008 . 1004 . 1005 . 1008 . 1008 . 1040 . 1122 768, 1002 . 1007 and . 1006 . 1011 . 1006 . 1008 . p. 841 . 750 1218 . 1202 . 1202 . 1209 . 556 . 995 . 1059 . 1059 4 274, 379 . 739 . 614 763, 783 . 995 . 1059 . 720 . 1032 398, 399 814, 816 INDEX 945 Approbate and Reprobate Appropriation, Of investment for creditor . For beneficiary Minute of, form of Arbiter, Trustee regarded as . Valuator as . Arbitration, where competent .... Arrears, Division between capital and liferent Trustee not chargeable with interest on, till accounting Of rent, power to discharge .... Arrestment, Discretionary payment, where valid Where proper remedy for beneficiary How executed against trustees Where proper remedy to attach beneficial interest Becall of, alimentary provision, test of Alimentary provision, extent of " As trustee," extent of Assets, marshalling of, for payment of debts Assignation, Completion of title by Intimation of, to one of more trustees Of beneficial interest takes effect from its date To security, where trustee can claim Section. . 831 . 724 734, 735, 744, 745, 995, 996, 1220 . 735 . 278 600 600 1022 1104 369 818 1134 1310 1310 781 1310 1310 719 131 185 823 1086 Assignee, Of beneficiary not beneficiary under Trust Acts . . .155 Position of 4,497,823 To collect debts, position of . . . . . .14 Payment to . . . . 708, 734, 739, 814, 818, 823, 833 Of beneficiary, accounting to . . . . . . 967 Of beneficiary instigating breach of trust, claim against . 1228, 1235 Of beneficial interest of trustee in no better position than trustee, where trustee in breach of trust .... 1075 Assumed Trustee, Discretion of, delectus personce Tutor, position as How title completed . Legacy to " accepting " trustee Resignation of, under Trusts Acts Accounting by On company register is liable Assumption, Where impossible by equal division of trustees Of new trustees An act of discretion . By assumed trustees . Circumstances in which exercised Deed of, where joining in, not acceptance 286, 287 . 287 138, 139 . 874 . 868 . 969 1253, 1254 61 43, 78, 85 . 52,78 45 53 . 117 60 946 INDEX Assumption — continued By non-gratuitous trustees .... Power of, in new trustees appointed by Court to be craved ...... Power of, can less than quorum exercise ? . Power of, where less than quorum can exercise By trustees appointed by Court Where limited power of Who have power of . Of new trustees by sole trustee resigning '" As Trustee," Obligation taken, effect of „ „ limits action as individual Decree against, diligence upon Arrestment against, extent of " At Home,'' when property is .... Attorney, ' Power of ..... Power to appoint, how treated Auction, Public, purchase by trustee of trust estate at ' Sale by, vide Sale. Auctioneer, Employment of, conditions of Trustee, where authorised by truster to charge Auctioneers, trustee member of firm of, firm cannot charge Auctor in rem suam, trustee cannot be . Audit, Factor's accounts ..... Discharge of trustee by ... . Law agent's accounts ..... Auditor, Position of, when nominated by truster Duty of, ..... Austrian Bonds, as investment in " foreign funds " Bailiff, vide Sent Collector Balance, working, trustee entitled to retain in hand Balances, factor's, how checked ..... Bank, Account, where trustee immixes trust funds with his own in his Notes, where can be followed .... Overdraft, liability of individual trustee for Trustee partner in, resignation of Bank of England, Cannot be made a trustee .... Number of names on register limited Stock as investment ..... Registration of trustees as individuals on books of . Bank of Ireland, stock of, as investment Section. , 49 expressly 68 160 161 47, 68 46 44 et seq., 160 48, 880 1256, 1257, 1262 332, 1262 . 1310 . 1310 807 156, 818 . 1168 . 464, 465, 501 . 273 . 1169 . 1158 451 et seq. 244, 245 931, 942 . 1154 . 207 . 931 624 1094 245 1094 1293 1259 71 90 609, 617, 638 637, 696 . 638 INDEX 947 Bank Shares, Investment in (Irish) investment in, Bank Stock, Investment in ... Conversion of . Banker, vide also Agent As broker Choice of ... . Custody of valuables properly with . Relation of, to trustee Exhibition of books by, to discover estate Banker trustee cannot lend money to trust as Where express trust account, position of Section. . 683 . 616 617 566 . 251 247, 693 252, 698 249, 250, 693 . 554 440, 1152 1273, 1279, 1300 Bankrupt, As trustee . . . . . . . . 70, 77 As new trustee ....... 85 Consent of ....... . 294 How can fund be applied for maintenance of beneficiary who is 819, 820 Right to sue trustee in bankruptcy in accounting . . . 962 Radical right of ...... . 1070 Trustee in debt to estate becoming, should claim against trustee in his bankruptcy ....... 1077 Bankruptcy, Trustee in, position of Of beneficiary, discretion to pay over after As ground of removal of trustees Discharge in, effect of, Of beneficiary, position of alimentary provision „ „ realisation of reversionary interest . Fraudulent preference in ... Trustee in, of trustee, following cash or notes into hands of Of trustee, beneficiary can claim dividend . Of co-trustee, effect on relief for expenses Trustee in, liability for judicial expenses Beneficiary following estate into hands of trustee's trustee in Are payments made on eve of, to repair breach of trust, reducible . 1313 Bare Trustee, meaning of ..... . 754 Bearer, Debentures to, validity of Bonds payable to, custody of . Securities payable to, custody of Stock to, as an investment " Bearer" Securities, Investment in, illegal Custody of Law as to transference of " Behalf of," where a trust . " Behoof, for,'' where a trust "Beneficent " purposes, effect of Beneficial Interests, limited, difference between 14 . 818, 819, 821 . 913, 914, 915 . 933, 1073, 1077, 1123 . 1000 . 1041 1077, 1313 1293, 1296 . 1,137 . 1190 . 1266 . 1278 29 . 182 . 252 . 643, 674, 697 . 697 . 698 . 699 27 . 4,27 . 1046 . 817 948 INDEX Beneficiaries, where all agree, payment to Section. 754, 766 Beneficiary, Where no human Creditor of trustee Solicitor of, as new trustee . Agent nominated by truster not a Appointment of new trustee by As new trustee Consultation with Reconversion, election for, by Exception affecting, affects trustee in litigation Meaning of .... Nature of interest of, When, can petition for order on factor Relation of, to truster and trustee Title of, completed by warrant Trustee dealing with, about trust estate 20 23 81 206 54 79,82 284, 545 325 352 373 23 347 21,22 154 478, 481, 483, 484, 485, 486, 487, 489, 490, 506 „ „ about matters outwith the trust Consent of, to transaction by trustee with estate Reduction by, of transaction of trustee with estate . Trustee must not depend on . Who is, under Trusts Acts . Evidence of identity of claimant with Unpaid, claims of, in distribution Cannot hold security pro itidiviio with trustees Whether fixed sum or proceeds of investment to be paid to 480 437, 452 . 437 . 545 . 155 706 736, 737 . 743 . 744 Sole, payment over to .... 755, 759, 761, 762 Assignee of, payment to ... . 734, 814 et seq. Can demand payment when discretion exercised . . . 822 Deceased, payment over to representative of 827 Where unborn child is ..... 830 Disappearance of, procedure on . . . 828 Nominated by description ..... 833, 834 Claim of, cannot be affected by action of trustee . . . 987 „ is against trustees jointly and severally . . . 1123 Where, paid in error, claim of unpaid creditor of truster against . 1319 Claim of unpaid creditor of truster against, after discussing trustee and trust estate Where executor has claim for repetition against Remedies of . Has, title to sue trust agents or debtor of trust estate ? Has trust agent any title to sue ? . Where claim against, for judicial expenses . Payment to, challenging deed Relief of trustee against, personally . Creditor, where, in marriage contract Time for payment of . Creditor of, position of ... Adoption of breach of trust by . 1319 . 1320 . 1132 77, 1306, 1308 . 1309 . 1321 . 734 . 1220 . 720 . 728 734, 818 1078, 1082 Benefit, Meaning of Trustees dealing with estate, not necessary 376, 600 . 457 INDEX 949 Benefit Society,. section. Charitable trust distinguished ..... 350 Distribution of funds . . . . . .717 " Benevolent " purposes, effect of ..... 1046 Bill, parliamentary, rules of relief for expenses . . 1193, 1194, 1195 Bill of Exchange, Accepting, for loan, personal liability .... 417 Realisation of . . . . . . . 598 Effect of acceptance of .... . 1257, 1258 By trustees, debt due on, is good charge against trust estate . 1315 Birth as a contingency in vesting . . . . .p. 844 Blank in nomination of trustee .... .25 Bona fides, Effect of want of, where indemnity clause . . . 524 Degrees of ....... . 524 Investment, condition of ..... . 685 Paying over estate ....... 702 Bond, see also Mortgage Pro indiviso estate, over ..... 695 Personal liability under, how instructed by facts and circum- stances ........ 418 Prior, purchase of, by holder of postponed, where mortgagee trustee, and where not . . ... 509 Can trustee with power to borrow but not to sell, grant, with power of sale ? . Transferable by delivery, custody of Realisation of ... And disposition in security, investment on Postponed, where good security Assignation of, distinguished from postponed For series of years, where not suitable investment . Taken " as trustee," effect of . By trustees binds them singuli in solidum . Trustees cannot be personally charged upon truster's Bondholder, prior, purchase at sale by . Where trustee is, foreclosure by Bonus, To trustee, result of . . . . . . . 445 Where trustee may get ... . 440, 504 Allocation of, between capital and income . . . 1027, 1028 "Cnder National Debt Conversion Act , 1031 Books, Duty to keep .... ... 526 Destruction of, effect 1120, 1122 Borrow, see also Loan Position of lender ..... 416 Direction to sell, where generally inconsistent with intention to . 419 „ „ circumstances in which allowed to . . 419 Power to . ■ • ■ • 413 et seq. „ danger of exercising, where no express power 413, 414, 1257 „ as act of management . . • .415 „ meaning of ..... 413, 414 420 182 . 592, 593, 594 651, 668 665, 685, 686, 687 691 1256 1259 1310 649 332 950 INDEX Borrow — continued Section. Power to, personal liability, how escaped in exercise of 416, 418, 1252 „ trustee with, but not to sell, can grant bond with power of sale .420 „ where no, extent of lender's recourse against estate 415, 1316 Borrower, Position of, may it be taken into account in loan ? . Position of, as to accounting . Of trust funds is not a constructive trustee . Brazilian Bonds, terms of investment clause covering . . 670 . 954 1282, 1284 . 625 Breach of Trust, Charitable trustees, how treated Civil and criminal, distinguished Homologation of, effect of In dealing with trust estate, when Nature and effect of . No, where act within powers, though these Position of banker in regard to Where beneficial to estate Por investment, remedy of beneficiary „ „ position of liferenter Por conversion, position of liferenter „ „ accounting by trustees for Claim against interest of beneficiary instigating „ „ „ in hands of an assignee Consent to, must be in writing to give indemnity . „ what kind of, necessary for indemnity . Indemnity against co-trustee for, where Extent of trustee's liability for All trustees equally liable to repair . Must be repaired before any benefit taken from trust Where trustee having beneficial interest is in, position assignee ...... In getting in estate ..... „ „ extent of liability for Option to beneficiary to adopt Gain on one, cannot be set off against loss on another By non-investment, liable for loss by appreciation of security „ „ liability where choice of investment . Por investment, vide also Investment. By trustee using trust funds for own purposes, liability for 1090, 1091, 1092, 1093 By bidding at sale, liability for .... 1097 . 293 . 291 545, 1273 452, 453 290, 292, 1273, 1274 exceptional . . 297 249, 250, 1273 . 292 1078, 1081, 1299 . 1079 . 1080 . 1080 1222, 1227, 1231 . 1228 . 1229 . 1230 1238, 1242 . 1071 . 1072 1073, 1074 of his . 1075 1076 et seq. . 1076 1078, 1082 . 1083 1084 1085 Interest chargeable against the trustee in Through misleading statutory provision Through following universal rule By omission or negligence By trustee with beneficial interest . Ex contractu or ex delicto, difference between Ignorance of duty, not defence to . Accounting instead of damages for . Repair of, not fraudulent preference Indemnity of trustee for, where request Notice of, distinguished from notice of trust . 1099 . 1129 . 1129 . 1130 . 1144 290, 1142 . 538 . 952 . 1077 . 1222 . 1271 INDEX 951 Section. Brewery, debenture, English, Licensing Act .... 660 Bribe, where trustee takes ...... 1078 Broker, Banker as ....... 251 Employment of, conditions of .... 253 Necessity of paying money to, meaning of . . . . 257 Purchase-money should not pass through hands of, unless neces- sary ..... . . 255 Purchase money paid to, under rules of Stock Exchange . . 256 Relation of, to trustee, depends on general usage, and may change 258 Securities must not be left for unnecessary time with . . 259 Relations of, to trustee ...... 254 Trustee who is, where authorised by truster to charge . . 1169 Buying client's stock, accounting ..... 440 Bankruptcy of, right of clients to follow property . . . 1273 Buildings, Power to erect, implied extent Unfinished, not proper security Unoccupied, as a security New, are an accumulation Power implied to finish „ „ to rebuild Burden, vide Debt Gift under, where a trust . 300 656, 657 . 659 . 843 . 298 299, 419, 1151 4 . 1046 Bursaries, where charitable .... Business, " Setting up in," meaning of . . . . 740 Power to continue, where truster partner . . 627, 628 Trustees collectively are one partner in, as representing truster . 628 Losses in, charge against liferent interest .... 1040 Carrying on, rights of trustee against truster's creditors . . 1211 Trustee using trust funds in his, liability for . . 1090, 1091, 1092, 1093, 1095 Management of, where power to remunerate trustees who act in . 1166, 1167 Business Creditors, Liability of trustee to .... How trustee's liability to, to be limited Business of Truster, Retention of . „ „ acquiescence of creditors of truster in . Winding up . Buy, vide Purchase . 1249 1251, 1252, 1253 563, 584, 627, 1211 . 1211 584, 592, 1211 Called, who must be, in action against trustees . Calling in depreciating security . Calls on Shares, Out of what fund payable A charge against capital Relief for, where obligation taken at request 1142 667 995 1035 221 952 INDEX Canadian Stock approved of, as investment Canal Shares, as an investment .... Cape of Good Hope Stock as investment Capital, Advance of, to make up deficiency in income „ to minor beneficiaries, at common law . „ „ under Trusts Acts Of a trust fund, meaning of, . Not fully paid up, investment in company with Loss of, falls against residue .... Capital and Income, vide Liferenter " Carriage," meaning of . Cash, where it can be traced and followed Cashier, what not included in power to appoint Casualties, What, due by trustees „ „ „ where holding for heir Allocation of, between capital and income . Caution, see also Security, where trustee entitled to demand paying over ..... 705, Cautionary Obligation not advance Cautioner for trustee, extent of liability Cedent, where, is only trustee in knowledge of assignation Cestui que Trust, vide Beneficiary Changing Investments, trustee's duty as to Charge, power to, see Borrow Charges, see Agent, Law Agent, and Remuneration Charging Order, solicitor's, postponed to expenses of trustee Retention by trustee, in question with Effect of . . . Charitable Funds, questions as to accumulation of Charitable Purposes, what are . Charitable Trust, Benefit society, distinguished Failure of, where destination over . Accounting in, who can sue . "Where resulting trust in Where, disputed, expenses . Appeal in dispute as to, expenses Local authorities, title of, in Charitable Trustees, Powers granted on petition . . Effect of Agricultural Holdings Act on, Breach of trust by, how treated Procedure where their trust unworkable Charity, as a class of objects Section. . 646 . 617 . 646 . 427 . 428 . 423 . 425 . 621 . 995 . 739 1291, 1293 242, 1168 143, 144 . 145 . 1030 before 766, 770, 1237 . 990 722, 1186 . 185 . 701 1148, 1214 . 1235 . 1302 760, 857 . 1046 . 350 . 1046 . 965 . 1046 1198, 1209 . 1209 432, 1198 337 289 293 350 1046 INDEX 953 Chartered Banks, what are, for investment Cheque, Crossed, use of, by trustee .... Signed by one of more trustees and given to co-trustee Trustee's, duty of banker ; see also Banker . Cheque-hook, custody of .... Child, Meaning of, as to advances .... As conditional institute .... Child-bearing, age of woman past, and payment over . Child Unborn, where, is a beneficiary . Children, Trustee dealing with trust estate through his " Without leaving," meaning of . Claim, By truster's creditor, whether valid or not . What can be compromised .... Class, Attaining majority, payment Who form ...... Selection from, by trustees .... Gift to, vesting of Clause of Indemnity does not bind truster's creditors . " Clerks,'' meaning of Club, right of trustee of, against members College, nomination of, as trustee Coal Mine, liferent of, what is . Collateral Security, value of Collation of advances Colonial Bonds not included in " foreign " bonds Colonial Stock, Transfer of, . As an investment Stocks that have been approved of . As investment, reapproval by Court, question as to Colony, factor appointed in Commission, Trustee entitled to retain, when Granted to trustee on receipts To non-gratuitous trustee, what is covered by What proper, to factor trustee Improper, returned, effect of . Commissioner, Distinguished from factor „ „ law agent Commissioners for public purposes, paying damages out of funds Section. . 623 . 255 183, 238 . 250 234, 240 . 990 . 827 761, 770 . 834 498 834 . 710 . 602 . 766 . 834 . 1046 . pp. 845, 847 733 834 . 1220 71 1019, 1020, 1022 663, 670 . 990 . 624 643, 648 . 646 701 220 440, 460, 1078 . 505 1170, 1172, 1177 . 1175 . 513 216 . 1168 1151 954 INDEX Common Law, section. Petition at ....... 336 Procedure, at, for ascertaining powers .... 334 Company, see also Register What authority necessary to register trustee as member of . 222, 223 Homologation of registration as member of . . . . 223 Lease to, power to grant . . . . 365 Trust, as new trustees ...... 88 Incorporated by Act of Parliament, shares of, as investment 618, 640 Joint stock, power to invest in, .... 625 Reconstructed, power to continue shares in . . . . 626 How trustee may limit his liability as member of . . 1253, 1255 Assumed trustee on register of, is liable .... 1254 Resigned trustee on register of, is liable .... 1254 Liable as constructive trustee ..... 1281 Nomination of, as trustee . . . . . . 71, 72 Shares of, registered in trust for shareholders . . .71 Unlimited, investment in . . . . . 621 Companies Act, under, as investment . . . 622 Transfer, duty of ... . 250 Reconstruction of . . . . 626, 739, 1289 Shares in, allotted to trustee selling to ... . 496 United Kingdom, in . . . . . . . 622 Private, truster's business turned into . . . 627 Public, what ..... 622 Corporation distinguished from ..... 625 Where trustee, dissolution of, equivalent to death . . . 895 Share certificates of English, practice of endorsing trust upon . 1272 Compensation, Extinction of obligations in executor by . . . 715 Between trustee's debt to estate and relief for judicial expenses . 1191 Competency, vide Title to Sue Completion of Trust Title . . 131 et seq. By heir of last trustee . .... 137 Of assumed trustee ...... 138, 139 Of ex officio trustee ....... 135 Of trustee appointed by Court .... 141, 142 Where trustee designated but not named .... 134 Where trustee not express disponee ..... 132 Composition due by trustees ..... 143, 144 Compound Interest chargeable against trustee .... 1106 Compromise, Of claims, where proper ..... 600 et seq. Decree distinguished from, effect of . . . . . 600 Payment without decree distinguished from . . . 711 Expenses in, of trustee ...... 1186 Concealment, in dealing between beneficiary and trustee about trust estate ...... 484, 485 Conclusion, what proper form of, for personal decerniture against trustees ........ 1311 Concurrence, Of trustees, where necessary . .... 157 Without signature . . . .171 INDEX 955 Conditio si sine liberis ..... Section. . 827 Condition, Gift subject to "Where, creates trust ..... Paying under, form of receipt 4, 818, 830, 833 4, 1045 751, 818 Conditional Institute, Where, cannot object to acceleration of payment over Vesting subject to defeasance in 775, 776 . p. 845 Conditions, Powei-s exercised under Illegal. .... . 294 . 327 Conduct, Inferring acceptance ... Inferring disclaimer .... Only raises presumption of acceptance 109 et seq. . 126 . 115 " Confidence " as precatory trust 4 Confidentiality, where plea of, good against call to inspect documents 551, 552, 952 Confirmation, Acceptance by taking out . . . 106, 107 Completion of trust title by . . . . . . 131 Trustee should not intromit with estate without obtaining . 108 Confusio, extinction of obligation in executor by . . 714 Consent, Bankrupt, of . . . . . . . .294 Deed of, under Trusts Acts . . . . 372 „ use of .... . . 373 How and when to be given ...... 294 Homologation, distinguished from k. 294 To breach of trust, effect of, writing on indemnity . . 1227, 1229 Of beneficiary to transaction by trustee with estate . 437, 452 Marriage with ...... 818, 833 Consideration, valuable, what is ..... 1273 Consignation of Estate, right to sue for .180 Consigned Money, Lands Clauses Act, powers of investment . . 636 Consols, As investment .... 609,610,611,637,687 Extraordinary powers of investment where, converted . . 635 Constituting claim by judicial process ... . 710 Constitution, Decree of, proper form of . . . . 710, 712, 728 Decree of, legatee entitled to, though failure of funds . . 1141 Constitution of Trust, By delivery of estate ..... .26 Manner of . . . . . . 26, 27 Words of style not necessary to .27, 28 Construction, question of, expenses in . ... 1197 Constructive Trust, meaning of ... 4, 437, 439, 1270 956 INDEX Constructive Trustee, Who is ... Beneficiary can sue, express as well as Where partner of trustee is . Company liable as Of profits, where partner is . Borrower of trust funds is not Agent of trust is not . Beneficiary wrongly paid before creditor is, for him Residuary legatee as . Register, by notice of trust on Credits allowed in accounting Purchaser from Consultation, With beneficiaries . „ co-trustees . Consumption, bond fide, of fruits, no claim for repayment " Contents," bequest of . Contingency in vesting .... Contingent Debt, see also Caution Where emerges, position of creditor . As known claim ..... Contingent Legacies, paying vested interest where Contra bonos mores, trusts .... Contract, Action founded on, who must be called Trust as .... . Breach of trust out of ... . Contribution between trustees for loss . Contributory Mortgage, as investment . Conversation, opinions of truster in, trustee may consider Conversion, see also Reconversion Government Stocks, deficiency of income through, how t Duty of trustee as to . Rule in Howe v. Lord Dartmouth . Wasting subject Reversionary securities . . ' Express direction for, of part, effect of Effect of discretionary power of sale on Presumption in favour of Proper time for Discretion to postpone Personal security, should be summary Uncontrolled discretion for . Principle of law of . Where it takes place . Power, but not direction, to sell Direction " to pay " and to convey in specie . Under resulting trust Rule of, is technical . Section. 437, 735, 1271 . 1273 . 1281 . 1281 1282 1282 . 1286 . 1287 1272, 1319, 1320 71 1146 1280 . 284 . 173 . 1236 . 1039 pp. 841, 844, 846 1319 1320 . 1237 . 327 1142 22 . 290 171, 172 . 695 283 to be met . 427 554, 557 et seq. 566, 569 566 567 569 570 . 571, 1018 575, 576 585, 586 579, 586 580 586 806 807 808 809 808, 809 ,810 813 811 809, 812, 1049 . 809 ,810 ,813 INDEX 957 Conversion — continued section. Improperly delayed, accounting by trustees for . . . 1080 Effect of, on beneficiary under resulting trust . . 1056, 1057 Notional, claims of liferenter under ..... 1018 Intention, indicia of . . . . . 570, 813, 1015 Sale by Court ........ 813 Official administrator, by . . . . 586, 813 Rate of interest where . . . . . .1111 Law at death governs ...... 807 Beneficiaries' request, effect on . . 808 Heritable security, effect of taking . . . . 809 Forced, extent of, . . . . . . .813 Jurisdiction, effect of direction for, upon .... 982 Conveyance, gratuitous, trustees taking cum onere . . 1310 Convict, nomination of, as trustee . . . . .70 Copyright, liferent of ... . . . 1020 Corporation, Distinguished from company . . . . .625 As trustee ........ 71 Where, trustee, how vote taken ... . 166 Municipal, stock as investment .... 642 Dissolved, Crown takes beneficial interest of . . 1049 Trustees are not a ...... . 1251 As vassal ........ 143 Correspondence about trust estate, acceptance by taking part in . Ill Costs, vide Expenses Co-Trustees, Consultation with . . . . . . .173 Indemnity against, for breach of trust, where 1238, 1242 Homologation of action of . . . .1131 Relief of trustee called in action against . . 1143 Relief of trustee with beneficial interest against . . 1144 Duty on each of, to take action against others for protection of trust estate ... . . 332 Each trustee must act independently of . . 544 Must act openly to one another .... 173, 549 Cottage Property, as security for loan . . . 662 Counsel, Disclaimer at bar by . . . . . . . 125 Opinion of, as to joining in necessary act without implying accept- ance ....... 119 „ expenses, where action raised on . . 271,1185 „ responsibility of trustee for . . 227, 267 „ trustees acting on, position of . . 266 et seq. „ view of English Court as to trustee acting on . . 267 „ when beneficiary has right to inspect . . 551, 552 „ where trustee should be indemnified for acting upon . 268, 269, 270 . 270 . 270 . 600 . 1153 „ trustee responsible for memorial „ proper use of „ joint, as reference Expense of consulting, before action . 958 INDEX Counsel — continued Where entitled to fee, to watch case . Advice of, action raised on, effect on expenses Count and Reckoning, where proper remedy of beneficiary Court, Administration by, vide Administration. Appointment of new trustees by, at common law . „ „ „ under Trusts Acts Practice and powers of, in appointment of new trustees Appointment of officers of, where proper Assumption and resignation by officers of . Authority of, for exercise of powers, how obtained Discretion of trustees, when interference with, by Opinion of, where duty to get Position of, towards exercise of discretionary powers by Putting estate into, vide Multiplepoinding. Treatment of trustees by Trust created by ... Trustees appointed by, no power of assumption Trustees, relation of, towards Proper, to call accounting in New trustees, example of, as to Statutory discretion, should not limit, by rules Court of Session, Where approval of, required for an investment How approval of, to be obtained " Cousins," meaning of, ..... Creditors, Order of payment to . Beneficiary's ...... Trust for, nature of . . . . .10, In business, liability of trustee to How trustee's liability to, can be limited Section. . 1153 1185, 1206 . 1137 . 56, 63 59, 60, 61, 62, 63, 64, 65, 66 . 86, 87 63 50 . 333 280, 304 227, 228 trustees . 275, 278, 279, 280 . 199 . 57, 58 47 435, 436 971 et seq. 85 . 1227 Creditors of Trustee, Competition between, and truster's creditors Title to sue beneficiary .... Where remedy against estate .... Creditors of Truster, see also Truster's Creditors Decree, payment upon, only .... Order of payment of . Must be paid before beneficiaries Who are in marriage contract Extent of trustee's liability to Security for claims ..... Claim against trustee and against estate distinguished Must show themselves and intimate their claim Time for payment of . Duty of trustee to find Advertisement for Where personal bar against claim Not bound by conditions of trust „ „ clause of indemnity 643, 644 644, 647 . 834 . 718 734, 818 1062, 1063, 1067 . 1249 1251, 1252, 1253 . 1211 1309, 1319 . 1316 710, 728 718, 731 . 720 . 720 . 722 . 724 . 727 727, 728, 1319 . 728 . 728 . 728 728, 729, 730 . 732 . 733 INDEX 959 Creditors of Truster— continued section. Relation of trustee to, in carrying on business . . . 1211 Competition between, and creditors of trustee in business . .1211 Duty of trustee towards, as to custody of estate . . . 1245 What interest due to, unpaid ..... 1246 Measure of claim for loss against trustee .... 1247 How trustee may incur personal liability towards . . . 1248 Claim against beneficiary wrongly paid . . . 1287, 1319 „ „ „ wben trust estate and trustee discussed . 1319 „ „ „ where paid in error . . . 1319 Remedies of, against beneficiary who has been paid . . . 1319 „ not claiming timeously . . . .1319 Criminal Breach of Trust, nature of . . . .291 Crown, Nomination of, as trustee . . . . . .71 Position of, as to conversion ..... 809, 1049 Resulting trust, position of . . . . . 1045, 1049 Not an heir in destination to heirs of bastard . . . 1049 Culpa lata, vide Negligence Curator, see also Guardian Of minor not trustee .... . . 4 Position of, where minor trustee . . 72 Acceptance of office of, by trustee . . . . .102 Curator ad litem, Where should be applied for .... . 1187 Where should be appointed ...... 1265 Curator bonis, Is a trustee under Trusts Acts ... 49 Distinguished from judicial factor ..... 347 Appointed to uplift and discharge minor's beneficial interest . 826 Resignation, power of, given to, on behalf of ward . . . 876 Custody, Safe, of funds, what proper ...... 183 Funds, law agent ....... 234 Securities, law agent . . . . . 238 „ broker . . . 259 Title-deeds ........ 606 Cy pres, Doctrine of, how applied Different from scheme of endowment Distinguished from subrogation 182, 350, 717, 1045 . 432 . 1289 Damages, Implied trust to recover Truster, claim of, by, as asset Action of accounting instead of Share of capital and income . No collateral, in breach of trust Interest only, for mere delay to pay money . Public or statutory trustees paying, out of funds Trustee's relief for claim of . Proper claim by truster's creditor against trustee is for, not for debt . 328 554, 1076, 1291 . 952 1019, 1029 . 1071 . 1101 . 1151 1151, 1211 1247 960 INDEX Death, Effect on title Insurance against Of absent beneficiary, when presumed " Shall die," meaning of . . Of trustee, effect on continuing liability As condition and as contingency Section. 153, 154 . 330 . 828 . 833 . 895 pp. 843, 844 Deathbed, Conveyance on, to trustees, position of heir-at-law, where trustee Expenses ...... Debenture, Bearer, validity of Brewery, English, Licensing Act "What is .... Railway, investment in Stock Act, 1871, effect of Trustee under, position of, under Trusts Acts Debenture Stock of railway company, investment in . 100 719 29 660 672 672 673 882 640, 672 Debito tempore, what is Debt Collector, employment of 727, 1319 . 273 Debtor, Is trustee, of beneficiary ? . . . . .23, 1313 Where, to both estate and trustee, how part payment apportioned . 1297 To trust, has beneficiary title to sue 1 1306, 1308 Debts, Trust to pay, nature of . . . .10, 21, 1062 Assignee to collect, position of ... 14 Trustee to pay, casualty not due from .... 144 Payment of, power to sell for ..... 344 Heritable, power to remove ... . . 421 Truster's, duty of trustee to ascertain .... 554 Assets, how marshalled for payment of . 719, 1009 Erroneously recited, where gift . ... 720 When, should be recovered by litigation .... 588 Payment of, without constitution ..... 711 Proper, of estate, what are .... . 713 Privileged, what are ..... . 719 Must be paid out of legal accumulations .... 842 Accumulation for payment of, legal . . . 844 Truster's, chargeable against movables . . . 1009 „ where specially charged on heritage . . . 1010 Fund required for paying, not liferented .... 1033 Contingent, where emerge, position of creditor . . . 1319 Deceased Beneficiary, payment to representatives of . . . 829 Declaration of Trust, From facts and circumstances Must be in favour of pursuer of action of declarator Ways in which made .... Writ or oath of trustee required for . Written, whether delivery required . Declarator, implied in petition under Trusts Acts 34 35 26 29 35 338 INDEX 961 Declaratory Action, section, Procedure by, for ascertaining powers .... 334 For fixing allowance ....... 336 Rules guiding Court in .... 338 et seq. Where trustees should raise . . . . . . 269 ,, „ for discharge .... 935 What Court will decide in . . . . . . 1140 Decree, Payment only upon ...... 710, 728 " As trustee," diligence upon ..... 1310 Personal, competent though not concluded for . . . 1311 Deed of Consent under Trusts Acts, Use of ........ 373 What is ........ 3-72 Deed of Trust, Registration of ...... . 328 Implied trust to support ... . . 328 Deeds, power to grant all necessary ..... 362 Defeasance, vesting subject to, in class gift . . . .p. 848 Defeasible Rights, vesting of . . . -pp. 845, 847 Defences, Disclaimer by statement of . . . . . .125 Of trustees to action of constitution . . . 712, 713 To claim by beneficiary . . . . . .1112 Deficiency of funds to meet legacies, proportionate diminution . 741 Definition of trust . . . . . 1, 2, 21 Delay in accepting, effect of, . 104, 105 Delectus persons, Effect of, on administration by Court .... 319 Result of, on discretion ..... 286, 287 Survivors, how discretion exercised by, where, . . . 287 Delegation of Trust, By absence from country ...... 532 How far sanctioned ...... 156, 192, 243 Where trustee resident out of locality where trust administered . 534 One of two trustees to other . . . . . .183 Where assumption not, trustees being equally divided . . 53 Delict, Action founded on, who must be called .... 1142 „ „ proper form of conclusion . . . 1142 Breach of trust as ...... . 290 Relief between trustees where loss through .... 1241 Delivery, Completion of trust title by . . . . . .131 Of deed, effect of . . . . . .15 Demonstrative Legacy, what is . . . . .1101 Deposit, Lost, position of depositary . . . . . .514 Temporary, of trust funds ..... 183, 247, 248 Trust as combination of, and mandate . . . .21 Meaning of . . . . . . . .739 61 962 INDEX Section. 612 560 606 612 606 Deposit Receipt, Executor and trustee, duties of, as to, distinguished For term of years, retention of Proper temporary investment Permanent investment, where Annual interest should be reinvested Of Heritable Security Company, whether good temporary investment 607 Depreciation, how charge for, apportioned .... 1037 Depreciating Security, trustee's duty as to . . 667, 701 Depreciatory Conditions of sale must not be introduced un- necessarily ....-• 390, 391, 404 Description, beneficiary nominated by . . . . 833, 834 Designation, where only, of trustee given, how title completed . 134 •" Desire," as precatory trust ...... 4 Destination, Where both special and general ..... 739 Liferent and children in fee ...... 739 Movables, substitution ...... 750 Heritable, distinguished from trust direction . . pp. 841, 843 Devise, power to, to liferenter . . . .761, 763 Diligence, Conditional, where indemnity clause . . . 522 Prudence, how differing from ..... 537 Simple, trustee liable in _ . . . . . 512 Want of, is want of bona fides ..... 202 What is ....... 511 etseq. What required of non-gratuitous trustee .... 513 Whether actual or reasonable, required . . . 514, 515, 516 Whether " in own affairs," or " as trustee," proper test . 517-521 When, should be done to recover estate . . . 588 et seq. Required of trustee in making investment .... 693 Where decree " as trustee " .... . 1310 ■"Direction," As precatory trust .... . . 4 Trust, ineffective, whether need be executed . 324 „ statutory interference with .... 327, 349 „ unworkable . . . . . . 345, 348 Heritage, to convey, interpretation of . . pp. 843, 844 Director, Position of . . . . . . 11, 12, 14 As agent of trustee company . , . . 2 10, 440 Fees of, where retainable by trustee ..... 437 Sole trustee, of purchasing company . . . .451 Fees received as, by trustees are capital .... 1029 Discharge, Signing, acceptance of trust by Truster's debtor, by trustee . Secretary of creditor company Embodying conditions of trust, where to be taken Representative of deceased beneficiary Of trustees ..... . 112 . 573 . 729 751, 752 827, 928 922 et seq. INDEX 963 Discharge — continued And receipt, distinguished Exoneration and Reduced on ground of error "Where held to be implied Capacity of beneficiaries to discharge trustees Pupil — minor and curator— married woman, by Third party named by truster Audit .... Statutory, by co-trustees „ by the Court Not given in petition for resignation Multiplepoinding Public trustees Effect of Joint, by beneficiaries Warrandice of, effect of Challenge of, procedure and grounds for Institute's, binds substitute in entail Effect of, where charges made by solicitor-trustee Barring claims in another capacity . Foreign trustee .... Consideration, want of Trustee for creditors, by Quorum, by . Sequestration, in, effect of One trustee, of, effect on others Acceptance of part, where Disclaimer, . . . 123 et seq. And acceptances in one minute, advantages of . . . 124 All trustees, by, effect of . . . . .130 Letter as ....... . 124 Minute as ....... . 124 Expenses of stating, in action .... 125, 1188 Express, how made . . . . . . .124 Conduct as . . . " . . . 125, 126 Action, defence to, as . . . . . . 125 Trustee nominate stranger to trust after . . . .129 Resignation distinguished from . . . . 123 Office, also of title . . . . . . .128 Other offices ........ 102 Title, effect of, on . . . . . . 127, 128 Oral ........ 124, 125 Position of married woman as to . . . . .125 Express ....... 123, 124 Trustee nominate after, will not be appointed judicial factor on trust .... ... 129 Defences as, expenses of action .... 125,1188 Action, of, by minority . . . . . .170 Defence, of, by minority . . . . . .1188 Infeftment, refusing, as ..... . 127 Partial ........ 124 Discretion, vide also Powers Beneficiaries, in consultation with, exercise of 284 Court, how exercised by .... . 317-321 Section. . 923 . 924 . 924 925, 926 . 927 . 929 . 931 931, 942 . 932 933, 934 . 934 935, 944 et seq. . 943 944 et seq. . 945 . 946 947, 948 . 948 . 949 . 1237 . 1314 . 574 . 574 167 933, 1073, 1077, 1123 923, 1123 . 1123 964 INDEX Discretion — continued English case law, value of, on questions of . Equal division, where, exercised by making Exercise of, by trustee .... Limited or conditional, exercise of, by trustee Proper exercise of, what is Eeasons for manner in which exercised, need not be stated Statute, limited by . Trustees only, as, never beneficially, must be exercised Value of informal opinion of truster in exercising . Varies in different trustees .... As to what to be paid over In trustees to limit beneficiary's interest When, formally exercised, beneficiary can demand payment Where trustees fail to exercise, what action of Court Arbiter, trustee regarded as, in exercising . Consultation with interested party, in exercising Interest, trustee having, effect on Truster's opinion, effect on . Beneficiary's opinion, effect on New trustees, of ... Assumed trustees, of . Future exercise of, cannot be limited Statutory, Court should not limit its, by rules Disposal, power of, to liferenter . Disposition, Of heritage to trustee, where presumed Where no express, how title completed Distributing the Estate, duties of trustee in . Distribution, power of, exercise of, before period for Divestment of Office .... Section. . 288 321, 322 . 277 . 277 280, 281, 282 . 285 . 289 . 281 . 283 286, 287 739, 740 815 822 988 278 282 282 283 284 286, 287 286 302 1227 761, 763 . 133 . 132 702 et seq. . 296 863 et seq. Dividends, see also Bonus Mandate to draw, homologation of registration as member of company ........ 223 Wasting investment, liferent of . . . 1019 Partially accrued, allocation of, between capital and income . 1032 Division and Sale, action of, not proper form for distributing trust estate ..... . . 935 Division of Commonty, action of, trustee cannot sue . . . 352 Division of Estate, How carried out by Court, where discretion in trustee, . 320, 321, 322 Where directed, carried out by borrowing instead of sale . . 419 Divorce, effect on payment ..... 764 833 Dogs, vide Animals Domicile of Trust, What is proper ...... What law determines ..... Dominus litis, where beneficiary is, liable for judicial expenses Donee, where trustee is, result .... 983, 984 . 982 . 1321 . 445 INDEX 965 Seetiom 739, 995 . 552 . 1037 . 1030 Double portions ....... Draft of trust deed, right of beneficiary to inspect Drainage reconstruction, how charged .... Duplicand, allocation of, between capital and income . Duty, Trustee must not allow interest to conflict with 437, 438, 451, 452, 476 Of trustee where bondholder over estate .... 332 East India Stock, as an investment ..... 643 Ecclesiastical Trustees, Agricultural Holdings Act, effect of, on . 289 " Educational " Purposes are not charitable .... 1046 Educational Trustees, Agricultural Holdings Act, effect of, on . 289 Education of Minor, payment to parent or guardian for . . 824 Egyptian Bonds, terms of investment clause covering . . . 625 " Eldest," meaning of . . . . .834 (note 27) Election, Beneficiary's right of, in breach of trust . . . 1298, 1299 Of legal rights .... . 831 Reconversion for .... . 325, 502 Duty of trustee, where ...... 553 Electric Lighting, where charged to repairs .... 1037 " Employ," meaning of, where used instead of " invest " . 620 " Endow," meaning of . . . . . . 834 Endowment, Scheme of, different from ey prte ... . 432 Modification of . . . . . . . 432 English Court, practice of, in administration of trust . . 305 English Law, as to exercise of discretion by new trustees . . 288 Entail, Direction to, effect of ...... 299 Trustee himself institute, right of his creditors against estate . 1318 Heir of, not trustee ...... 4 Trust to, how executed .... . 702 Heir of, position of . . . . . . . 1012 Entail Acts, Payment accelerated under ..... 761, 766, 775 Effect of, on duration of trust .... 327, 766 Majority are quorum in trust under . . . .164 Trustee appointed under ..... 43, 47, 67 Trust created under, by Court . . . t . 58, 67 Trustees under, powers of . . . . . 289 1882, power of resignation of trustees under . . . 868 Fee payable to liferenter under, how valued . . . 739 Entailed Fund, powers of investment of .... 636 Equality is equity, rule that ..... 321, 322 Equitable Compensation ..... 831, 995 966 INDEX Error, In payment, extent of liabilty f or . Of fact, intromission under, not creating liability . As ground of reduction . Payment in, where claim for repayment " Establish," meaning of . Estate Duty, liability for ... Evidence of identity of claimant with beneficiary Excamb, power to, petition for, and conditions of Exceed, sum not to, bequest of . Exception, Effect of, from power to sell . Exchange, foreign, expenses of, fall on residue . Exchequer Sills, as temporary investment Executor, Intended gift to, complete by appointment . Majority quorum .... Eadem persona cum defuncto . Accepting trustee not bound to confirm as . Beneficiary dealing with Confirmation as, is acceptance of trust Of trustee, only represents him as individual Trust rules governing Is trustee, where duties of a trustee . Where not express disponee, how title completed And trustee, offices compared Duty to deposit, not invest . May require constitution of claim . Sale, paying himself out of proceeds . Resignation of office of Where, has claim against beneficiary for repetition Where, takes beneficially Powers and title of . Duties of .... . Liabilities of . Executory Trust, Powers implied Entail, direction to . How executed Radical right in " Existing " beneficiaries , Ex officio Trustee, Acceptance by ... . Completion of title by ... Exoneration, Action of, by one of two trustees How obtained for acts during course of multiplepoinding To be distinguished from resignation ., „ „ discharge . Section. 1098 121 924 1233 834 719, 1009 . 766 . 408 4 . 383 995 608, 637 4 . 164 . 715 97, 107 502, 507 106, 107 168 4 850 132 849 612 710 ,728 27 557 714 1320 1045 p. 849 p. 853 p. 854 298, 299 . 299 299, 702, 739 1061, 1064 . 373 98 . 135 . 177 . 315 . 864 . 924 INDEX 967 Expediency, section. Nqt of itself sufficient for grant of powers under Trusts Acts . 375 Only, not necessity, required in petition under Trusts Acts . 374 What is, in question between fiar and liferenter . . . 379 Proof of ....... 375 Expenses, see also Outlays Disclaimer in defence to action Security for, position of executor „ „ insolvent trustee . „ „ trustee for creditors Of litigation in foreign Court, properly settled in Scots accounting Management chargeable against capital, „ „ how, in appointed funds Judicial, what chargeable against special legatees Testamentary, how chargeable Of administration between heir and executor Where all parties get, out of fund, trustees have priority Of trust administration, trustee kept free Trustee's claim for, is preferential . „ remedy for, is only retention „ out of any funds available . „ claim for, where no vouchers, Travelling, where good charge Parliamentary, rules of relief for Judicial, restraint from anticipation does not affect „ where action by one of more trustees „ trustee entitled to be reimbursed . „ English authority upon, value of . „ where misconduct on part of trustee where trustee in breach of trust „ where trustees appear separately „ extent of claim for relief „ where two counsel in separate appearance „ where trustee has beneficial interest „ character, where trustee defending „ where no legal adviser consulted , „ where action raised on legal advice „ where compromise . „ where beneficiaries should be applied to for a guarantee „ extent of guarantee for „ where beneficiary incapable of consenting „ where defending trust deed „ how can minority escape liability for, in trustees „ where defender disclaims trust „ where trustees formally called „ trustee's, taxed between agent and client „ between agent and client, interlocutor should be express . „ where trustees' solicitor paid a salary „ bankruptcy of co-trustee, effect on relief for „ proportionate liability and right of each trustee „ trustee gets no relief for, where in debt to estate „ in a special case .... „ in multiplepoinding „ where promoting and opposing bills where question of construction, or validity of deed 125 359 358 359 985 . 995 995, 998 . 997 . 1009 1009, 1010 1148, 1214 . 114S . 1148 . 1148 . 1148 . 1150> . 1151 1193, 1194, 1195 . 1218 1180, 1185 . 1180 . 118a 1181, 1184, 1208 . 1182. 1182 . 1183 1183 . 1183 . 1183 . 1185 . 1185 . 1186 1186 . 1186 . 1187 1186, 1265 action against . ' . 1188 125, 1188 . 1188 125, 1189, 1197 1189 . 1189 . 1190 . 1190 . 1191 . 1192 1192, 1197 1193, 1195 1197, 1265 968 INDEX Expenses — continued section. Judicial, claim, of assignees of trustee .... 1198 „ where claim against beneficiary for . . 1220, 1321 „ where question as to domicile of truster . . . 1197 „ of opponents to scheme of charity .... 1198 „ where instance fails . . . . .1198 „ general declarator for benefit of trust . . . 1198 „ where longstanding breach of trust followed bond fide . 1198 „ litigation as to title of trustees . . . 1199 „ in question of jurisdiction ..... 1199 „ in competition for trusteeship .... 1199 „ of trustees in petitions ..... 1200 „ of trustees, where trust recalled .... 1201 ., where voluntary trust voided by bankruptcy . . 1201 „ where trustees appeal .... 1186, 1202 „ petition for removal of trustee . . . 1203, 1210 „ where trustee shows unreasonable caution . 1181, 1204 „ where trustee obstructive ..... 1205 „ where unnecessary litigation .... 1206 „ where trustee abandons action .... 1207 „ where trustee in bad faith, does not get . . . 1208 „ where trustee charged with interest on breach of trust . 1208 „ where charitable trust disputed by truster's relations . 1209 „ of appeal in question as to charitable trust . . 1209 „ opposing petition for judicial factor . . . 1210 „ personal liability of trustee for .... 1264 „ forms of decerniture for . . . . 1267, 1269 „ where poinding or adjudication of estate for . . 1312 „ beneficiary liable for, of trustee, where . . 1220, 1321 Expert, vide Agent Express, Acceptance, how made ...... 101 Prohibition, meaning of ..... 426 Extraordinary and Ordinary acts of administration . .165 Tactor, vide also Agent Accounts, how checked Acts of, bind trustees Administration of estate by, trustee's duty to check Balances in hand of . Duties and powers of . Exercising power of sale Family solicitor acting as Homologation of acts of Judicial, vide Judicial Factor. Law agent to the trust may be appointed Abroad appointed Accounts and vouchers Common law power to appoint Statutory power to appoint . Delegation of duty to Appointment of Payment to Trustee, what proper commission to . 242, 243, 244, 245 . 243 . 244 . 245 1168, 1175 . 242 . 218 . 243 . 216 . 220 . 244 . 213 . 212 242, 244 216, 243 . 574 . 1175 INDEX 969 Factor — continued Section. Accounting in petition for . . 1137 Judicial, management challenged . 1137 Trustee appointed paid 244, 1154 Appointment of, proper 217, 221 Commissioner distinguished from . 216 Firm, position of 219 Manager does not include 242 Supervision of 244 Truster's agent allowed to act as 218 Fees of, how apportioned 1037 „ not deduction for " yearly value " 1175 Law agent distinguished from 1168 Extra remuneration, how account for, to be stated . 1175 Facts and Circumstances instructing declaration of trust 34 Failure, Of trust purposes, where, in charitable trust . 1046 „ „ result of . 350, 1053 834 . 1037 . 1152 . 825 . 546 . 566 4 763-783, 784 . 1037 " Family," meaning of Farm, Liferenter of, position of Management of, accounting in Father, payment to, of pupil's beneficial interest Favouritism, trustees removed for Fee, And liferent of wasting subject Limited, where trust . Power of appointment of Fencing, charges for upkeep and renewal of, how apportioned Feu, Power to, charitable trustees have, at common law . . . 410 „ conditions of . . . 409 „ prohibition against selling or alienating, effect of on 409, 410 Feu-duty, May be reserved in sale As an investment .... Personal liability for, incurred by trustees . Fiar, vide also Liferenter Where trustee . . ... Fiar and Liferenter, vide also Liferenter Where, interested in investment Fideicommissa, distinguished from modern trusts Fidelity, insurance of Fiduciary Fiar, position under Trusts Acts Finance Act, see Valuator Fire Insurance, vide also Insurance, on house property must be care fully kept up Firm, trustee partner of, when, can firm charge ? . 388 . 649 1219, 1248 686, 687 ,688 151 330 * 372 ; care- 682 440, 1159 970 INDEX Fishing, vide Sporting Following Trust Estate Where right of, in beneficiary Where shape changed Where money can be traced . Where cash or notes can be traced . Where trust funds mixed with trustee's Residuary legatee, against Section. 1272 et seq. . 1289 1290, 1300 . 1293 . 1295 1272, 1319, 1320 332 624 744 985 . 624 . 542 . 625 . 76, 84 818, 833 (note 1) . 709 Foreclosure, trustee's duty as to, where bondholder on estate . " Foreign Bonds " do not include Colonial bonds Foreign Coinage, legacy in • Foreign Court, expenses of litigation in, properly settled in Scots accounting .....•• Foreign " Funds," investment in, what is ? ... Foreign Law, knowledge of, position of trustees as to . " Foreign Securities," can trustee invest in ? Foreigner as trustee ..... Forfeiture, conditions of . Forged Title, payment on ... Forms, see Agent, Solicitor-trustee, and Minutes Forum competens, Where, is forum conveniens .... Statutory limitation of English and Irish Courts as Forum conveniens, Value of authority in question of Where Scots Court not, may aid, as forum competens What is proper test of Does not affect claim by creditor Where Scots Court is, what law applicable . " Found," meaning of Fraud, Beneficiary and trustee, in dealing between . By law agent, in question of notice, effect of By trustee in knowledge of assignation Proof of trust where, alleged Effect of, in question of prescription French Rentes as investment in "foreign funds" Friendly Societies, trustees of, nomination " Friends," gift to, where good . Fruits, lond fide consumed, no claim for repayment of Funds, The, as investment Funeral Expenses chargeable against movables Furnished House, liferenter of, position of Furniture, liferenter of, position of 971 et seq. . 980 973 975 976 979 982 834 484, 485, 508 225 185 36. 37, 38 1117 624 24 1046 1236 609, 610, 611, 687 . 1009 . 1039 . 1043 Gain on one breach of trust cannot be set off against loss on another ....... 1083, 1097 INDEX 971 Section. Gamekeeper, employment of 273 Gardener, employment of 273 Garnishee, effect of, ovder ..... 23, 818 Georgia Bonds, as investment in " foreign government " stock . . 624 German States, securities of, investment in 624 Getting in estate, breach of trust in . 1076 et seq. Gift, Limited by object . . . 739 To trustee by beneficiary . . . 480 „ by third party, result of . 445 Debt erroneously recited, where . . . 720 Necessary to make vesting possible . . .p. 842 Good Faith, see Bona fides Government Duties, Where charge on residue . . . . 995 Heir and executor . . . . 1009 Government Stock, As investment .... Railway company with guarantee is not Graft, Irish doctrine of Grassum, allocation of, between capital and income Gratuitous, vide also Non-gratuitous Trusteeship presumed to be . Gratuitous Trustees, And non-gratuitous, what diligence required of either Trusts Acts not limited to Great Northern Railway, preference shares, investment in Greenock Harbour Trustees Debenture Stock as heritable security Gross, discussion of word, as applied to negligence Ground Annuals, May be reserved in sale .... As an investment .... Guaranteed Railway Stock, Investment in ...... Indian, as investment ..... Guaranteed Stock of railway company not Government securities Guardian, see also Curator Trustees must act independently of . Where payment of minor's interest to 609, 610, 611, 637, 687 . 624 439, 442 . 1030 460, 461, 462, 463 513 49 618 651 512 388 649 641 676 624 544 824, 1141 Harbour Trustees Debenture Stock as heritable security . .651 Heir, ■ .834 As trustee, where conveyance in trust on deathbed . . 100 Where, may make up title against trust title, through trustee 100, 448 Title, completion of . . . . . . 136, 137 972 INDEX Section. 136, 152 . 137 . 834 . 1053 1054, 1055 1056, 1057 806 et seq. . 812 833 ; p. 846 Heir— c When held to be nominated . Of last trustee .... "Eight" ..... "Where, takes under a resulting trust Who is, under resulting trust Takes converted heritage under resulting trust • Heir and Executor, Questions between, as to conversion Rights of, where trust deed fails " Heirs and assignees " Heirs of the Body, Destination to, acceleration of payment Meaning of Heritable Debt, power to remove Heritable Destination distinguished from trust direction Heritable Property, Implied powers of management of . Implied trust to let . Completion of trust title to . In Scotland, loan on security of, as investment Purchase of, not proper investment . In Scotland, how Thellusson Act affects Heritable Securities Act, Leasing, power of Power under ..... Heritable Security, Loan on, as investment Bond must be registered to form proper Company, loan to, good investment . Harbour Trustees Debenture Stock as Loan on, how to be carried out Depreciating, duty of trustees as to . Investment on, to protect beneficial interests Improper investment on, extent of liability for Heritable Security Company, deposit receipt of, whether good temporary investment ...... 607 Heritage, see also Land and Lex Kei Sitae Where truster's debts specially charged against Annuity chargeable against, where . Where, liable for debts Direction to trustees to convey, how interpreted . 766 . 834 . 421 . p. 841 . 363 . 328 . 131 . 609 609, 649 837, 838 . 364 . 422 . 650 . 650 . 651 . 651 652 et seq. . 667 . 752 . 1087 Heritors, position of Hold, investments, power to Homologation, see also Acquiescence Consent distinguished from , Effect of, on breach of trust . Of act of agent .... „ „ where necessary to protect agent Of acts of factor .... . 1010 1011 . 719 pp. 843, 844 19 . 629 . 294 . 545 221, 223 . 224 . 243 INDEX 973 Homologation — continued Of registration as members of company As defence to claim by beneficiary . Where it is ultra vires of the beneficiary Never founds claim for indemnity by trustee Of action of co-trustee Section. . 223 545, 1112-1118 . 1127 . 1128 . 1131 Horses, vide also Animals, duty to realise, where estate includes . 577 Hotchpot, Advances, how treated in . . . . 715, 990 Annuities overpaid ....... 1007 Hotel, as security for loan .... . 660 House, vide also Mansion-house and Buildings To finish, implied power, where . . . . .98 Furnished, liferenter of, position of . . . . . 1039 House of Lords, position of, in questions of jurisdiction . . 972 House Property, As real security ...... 655, 662 As a security for loan ...... 682 Houses, small, at weekly rents as security . . . 662 Hunting, vide Sporting "Husband," Meaning of . 834 (note 52) And wife both trustees 73 Fiduciary position of, of trustee . 498 New trustee ..... 80 Where wife a trustee .... 73, 74, 75 Loan to, of marriage-contract funds . . 671 Proof of trust, limitation does not apply to . 30 Consent of, to acts of wife as trustee 74 Identification necessary in following property Ignorance, vide also Knowledge Of act of quorum, effect on liability . Illegal Trust, Acceleration of payment under Need not be carried out Where resulting trust in . , Illegitimate Children, Trust for .... Preferential claim of . . 1298 . 171 . 775 . 327 . 1047 327, 832 . 720 Ill-health, absence from trust management on ground of . . 533 Immixing trust funds with trustee's own in trustee's bank account 1094, 1111 Immunity, see Indemnity Impartially, duty of trustee to act . . 282, 283, 284, 546, 548 Implications, in immunity clause , 202, 204 Implied Acceptance, how made . . . 109 et seq. 974 INDEX Section. 298, 299 . 361 328 et seq. . 833 840 . 633 Implied Powers ..... Statutory ... Implied Trusts, what are Impossible condition, effect of . . Improvement, Trust for, where accumulation „ what is . ■ Incapable, where trustee has become .... 60, 161 Incapacity of Beneficiaries, where curator ad litem should be appointed 1265 Incapax, beneficiary, where dealing with trustee . . 492 " Income," Meaning of .... • • 834 Deficiency in, where made up out of capital . 427 Discretion of trustees as to amount .... 814 Trustee's right of retention out of . . . . . 1213 Income Tax, how trust assessed for . , . . . 1263 Inconsistent with intention of trust, what is . . . 377 Indefinitely, meaning of ... . . 586 Indemnity, see also Caution and Belief Clause of, bad faith, effect of, on „ protection, where, under .... „ does not bind truster's creditors . „ examples of ... . For agents, vide Agents. From beneficiaries for expenses of realisation Against trust funds, vide Lien. Claim of, against particular beneficiary, personally, where Against interest of beneficiary who is party to breach of trust 201, 204, 522, 523 524-528 529-531 . 733 525, 529 Against assignee of beneficiary To give, consent to breach of trust must be in writing Against co-trustee for breach of trust, where Claim for, by trustee, never founded on homologation Trustee has, for all proper charges . Trustee's claim of, is preferential „ „ applies to each trustee individually „ „ for judicial expenses Acquiescence and request distinguished in relation to 599 1220 1144, 1222, 1227, 1231 . 1228 1229 1238, 1242 1128 1146 1148 1149 1180 1128 Independently, duty of trustee to act . . . 282, 283, 284, 544 India, East, Stock as an investment ..... 643 Indian Government, investment in securities, interest of which guaranteed by . . . . . . . 639 Indian Eailway Stock, &c, investment in . . . 676 Indian Trusts Act, 1882, definition of trust in . . . .2 Infant, Beneficiary where, dealing with trustee J 492 In England as trustee ...... 72 INDEX 975 Infeftment, section. AGceptance by taking ...... 106 Necessary to complete trust title to heritage . . . 131 Personal liability incurred by taking . . . 1219,1248 Informal expression of opinion of truster, trustee may consider . 283 Information, Duty of trustee to give ..... 549, 550, 553 Liability of trustee for nature of . . . . 543 When duty to volunteer ..... 553, 734 Inhibition as remedy for beneficiary .... 357, 1133 Inn as security for loan ..... 660 Inquiries by third parties as to state of trust .... 543 Insane, see also Lunatic Where trustee has become ..... 60, 161 Person, curator bonis of, given power to resign on behalf of ward . 872 Insanity as a ground of removal Inscribed Stock, transfer of ... . Insolvency, Where direction to pay to beneficiary falls on his . As ground of removal of trustees Insolvent not a trustee for his creditors . Insolvent Trustee, right to litigate Instalments, how money payable by, should be recovered Instance, Of trustees cannot be used by less than quorum In individual names ..... Instigation, see Request Institution, position of, as beneficiary ..... 1046 Insurance, see also Policy Fire, duty of trustee as to . Interest of trustees .... Marine, trustee's position as to Of debtor's life .... Fire, must be carefully kept up on house property Not accumulation .... Against fire, how premiums apportioned As security against error in payment 918, 919 696 325 913 914 915 10 358 589 595 174 353 Intelligently, trustee must act . Intention, Conversion where no evidence of truster's . Where any tangible indication of truster's, that rules conversion Intention of Trust, what is . Interdict, Where proper remedy for beneficiary Conditional institute, by Interdictor, position of . 330 331 331 331 682 843 1036 1233 538 . 569 mvei csion . 570 375, 377, 378, 738 1132, 1135 . 1136 976 INDEX Interest, Trustee having, discretion Party having, opinion of, influence on discretion Reduction of, by National Debt Conversion Act On accumulation is also accumulation On legacies ..... Where follows capital What, due to unpaid truster's creditors None chargeable on working balance in hands of trustee Chargeable against trustee who has paid to wrong person „ against solicitor-trustee iising trust funds „ by legatee for delay in payment . „ on legitim for delay in payment From what point of time, runs against trustee Section. , 282 282, 283, 284 . 748 . 841 994, 1111 . 994 . 1245 . 1094 1098, 1099 . 1100 1101, 1111 1102, 1111 1103, 1104 Claim for, on uninvested funds, by liferenter, differs from that by fiar Compound, chargeable against trustee Legal, what proper rate of Trust, what proper rate of . . Rate due to trustee on advances Presumed paid before principal .... Date from which trustee becomes accountable for . Liferenter and fiar, where conversion Where trustee charged with, on breach of trust, expenses against Truster's creditors, rate due to ... . 1105 1100, 1103, 1106 . 1107 1108, 1109 1110, 1152 1295 1076 1111 1208 1246 Intestacy, Heir in, where, takes under resulting trust . . . 1048, 1050 Who are heirs in, where resulting trust . . . 1054, 1055 Intimation, vide Notice Intromission, With trust estate implies acceptance of trust . . 109, 111 Where unauthorised use of name, or under error in fact, not creating liability . . . . . .121 " In trust," meaning of ....... 1273 Invest, Implied trust to ...... . 332 Duty of trustee to ...... . 605 Executor should not, but deposit ..... 612 Direction to, must not be carried out if imprudent . . . 630 Investment, Heritable security, trustee must not depend on word of law agent as to existence of title-deeds .... 238, 239, 240 Money for, must not be left with law agent . . 234, 235, 239 Particular, trust to make, where need not be made . . . 324 Estate not in a proper state of, to be converted . . . 557 Example of truster in, effect of ... . 561, 564, 565 Perishable or wasting, conversion of . . . . . 566 General conditions of good . .... 568 Deposit receipt for a term of years ..... 560 Truster's, investigation of ... 560 Power to retain, strictly construed . . . 560, 572 Trade, continuing truster's ..... 563, 627 Temporary, what suitable ...... 606 INDEX 977 Investment — continued Temporary deposit receipt . „ Exchequer Bills as Permanent, what proper at common law „ deposit receipt, when good as On personal obligation Directions for, by truster, how interpreted Power of, and bequest, difference in interpretation of Powers of, where estate in Court in England On " securities," what allowable On Bank shares (Irish) Canal shares ..... Bank stock ..... Great Northern Railway preference shares . In shares of any company incorporated by Act of Parliament In public company, meaning of In chartered banks, meaning of In " foreign funds," what is . In securities of American State Governments " Present form of," meaning of Power of, differs from power to continue truster's investments On personal security, meaning of In purchase of land, how to be executed Statutory powers of . „ „ not cumulative On Debenture Stock of railway company On preference and other stocks of railway companies On "split "stock On municipal corporation stock „ „ bonds, &c. On East India stock .... On Colonial stock . . Approval of Court for, how obtained Colonial stocks that have been approved of for In Isle of Man stock .... On feu-duties or ground annuals Purchase of heritable property not proper . On loan on heritable security On unfinished buildings In Local Loans stock .... In stock at premium .... On Indian railway stock, &c. Improper, distinguished from unauthorised . „ adoption of, by beneficiary Powers of, how properly exercised . Choice of, how to be made On loan on house property . In shares not fully paid up . On personal credit .... Where fiar and liferenter interested . Nature of, should suit objects of trust In redeemable stocks .... For alimentary annuity With dividends payable at suitable times . For series of years, where, should not be made To protect successive rights, should be in heritable security Diligence required of trustee in making Section. 660 608 609 et seq. 612 613 614 et seq. 614 615 616, 618, 619 616 617 617 618 618 622 623 624 . 624 626, 627 560, 629 631, 632 . 633 634 et seq. 634 640 641 641 642 675 643 643, 648 644, 645, 647 . 646 . 648 . 649 . 649 650 et seq. 656, 657 674 674 676 678, 1078, 1086 1078 678 et seq. 680 682 683 684 686, 687, 688 688 688 689 690 691 692 693 62 978 INDEX In vestme nt— continued In what names to be taken and held On contributory mortgage For specific object, how to be earmarked In " bearer " securities illegal Change of, where justified Revaluation of security for . Colonial stock, reapproval of Court Depreciating, duty to call up Appropriation of, for creditor „ for beneficiary In names of beneficiaries, equivalent to paying over Stock, amount of, to be bought to answer direction In name of trustees for certain beneficiary, effect of Powers of, under National Debt Conversion Act Loss on authorised securities, how apportioned Profit on, who has claim to . "Wasting, position of liferenter „ claim of liferenter against income, before conversion Power to alter, liferenter not affected by Change of, -how expense of, apportioned Breach of trust for, position of beneficiary Unauthorised, power of sale of „ trustee's outlays allowed What proper, for fund for payment of truster's creditors Failure to carry out, liability for appreciation of security 991 Section. . 694 . 695 . 696 . 697 . 700 . 701 . 701 . 701 . 724 . 734 744 . 744 . 745 . 748 , 992, 995, 996 993 1014 1016 1017 1035 1078, 1081, 1082 . 1081 . 1081 . 1245 . 1084 „ „ liability where choice of investment . . 1085 Authorised, improperly executed, and unauthorised, liability for, distinguished . . . . . 1086, 1087, 1088 Authorised, improperly executed, measure of liability for . . 1087 Unauthorised, option to take is beneficiary's only . . . 1089 Truster's, power to continue, how interpreted . . 626, 679 Ireland, Land in, power to sell .... Thellusson Act does not apply to Irish Freehold Lands, investment in Irish Land Act, powers under .... Irrevocable, marriage-contract provision declared, effect of Testamentary deed, power to make . " Issue," meaning of, .... 381 838 630 635 796 763 834 Jewellery, liferenter of, entitled to possession . Joint, Nomination ...... Nomination never presumed . Trust title is . Where, interest in beneficiaries, payment in equal shares Joint and Several, Nomination ...... Liability ...... „ effect of, on debt to beneficiary Decree not presumed ..... . 1043 25, 148, 158 . 158 146, 149 . 742 25 . 1259 . 1123 . 1142 INDEX 979 Joint Sale, Section. Conditions of sale in . . . 404 Power to sell with other proprietors in 396 et seq. Purchase money, apportionment of, in 398, 399 Title, questions of, in 400, 404 When expedient 401 et seq. Joint Stock Companies, As trustees 71 Power to invest in . 625 Judge, trustee can act as, if no beneficial interest Judicial Exoneration, by multiplepoinding .... Judicial Expenses, vide also Expenses Trustee entitled to be reimbursed ..... Personal liability of trustee for ..... Judicial Factor, vide also Factor and Removal of Trustees Appointed to extricate action, where want of title to sue in trustees Curator distinguished from Discretionary powers of ... How relations of, to Court differ from those of trustee Special powers, how obtained by „ „ what, may be granted to Title of . . . Trustee-nominate who disclaims will not be appointed Unworkable trust, trustees differing, where appointed „ „ sole trustee, duty and interest conflicting Petition for order upon Where number of trustees less than quorum, appointed to extricate trust ........ 159 Wherever trust unworkable, should be appointed . . 347 Effect of appointment of .... . 897, 898 Appointment of, to investigate state of trust . . . 898 Appointed where deadlock in administration . . 899, 900 Must not charge beyond commission . . . 1170,1171 Where, should be applied for in public trust . . . 1187 Opposing petition for, expenses . . . 1210 315 1180 1264 176 . 347 317, 318, 319 . 347 . 318 319, 320 142, 318 . 129 . 348 451 347 Jurisdiction, vide also Forum competens and Forum conveniens To remove trustees ..... Court having, in question of accounting Position of House of Lords ... Value of authority in questions of . Scots Court declines, though no lis alibi pendens Auxiliary, to assist foreign Court Questions of, between Sheriff Courts New trustee, person out of . Prorogating ..... Jus qusesitum, distinguished from spes successionis Jus relictse, Trustees must see, is discharged before paying beneficiaries Effect of claiming ..... Widow shares in profits made with, where . . 901 971 et seq. . 972 . 973 . 974 975, , 1215 . 981 84 600, 971, 977 . 373 734 831 993 Kirk-session, minister acting for, where they are trustees 184 980 INDEX Knowledge, section. Actual, though casually acquired, must be acted up to . 541 Not liable for, to third party ...... 543 What, required of trustee ...... 538 „ „ new trustee ..... 540 As equal to notice ...... 185, 188, 226 812. 727, Labourers' Houses, as security for loan Land, see also Heritable Property Purchase of, investment in, how to be executed Power to acquire, conditions . Specific, authority to acquire, petition Special legacy of Meaning of, in accumulation Landlord, Agricultural Holdings Act, trustee has full powers as, under " Lands " does not include feu-duties ..... Lands Clauses Act, Powers of investment under ...... Sum paid under, how divided between liferenter and flar Lapse, Of trust nomination ..... Of gift, where increases residue Of trust purposes, result of . Lapse of Time, As a defence to claim by beneficiary „ „ „ by creditor . Lapsed Trust, appointment of new trustees by Court . Law Agent, vide also Agent and Solicitor Advice of, must be asked „ responsibility for . Appointment of, manner of . „ „ where the estate is small Duty of trustee to consult independent Employed outside his professional duty Money in hands of Factor appointed as . Money with, by executor to pay debts Valuator, not left to appoint . Appointment of Notice to, effect of „ conditions of valid „ effect of, where he commits fraud Practice to appoint, as solicitor to trust Position of Common law power to appoint Employment of, rule in Scotland and in England Loan taken in name of Statutory power to appoint 662 633 300 330 741 849 422 649 636 1026 130 995 1053 1112 1319 62 Trustee must not depend on word of, that investment has been made Trustee must not depend on word of, for existence of title-deeds of security 238,239 Trustee's responsibility for conduct and advice of . . 227 229 230 233 227 215 214 214 234, 235, 237-241 234, 235 . 216 . 236 . 237 . 215 . 225 . 226 . 225 . 214 222 et seq., 1168 . 213 . 241 . 224 212 238-240 INDEX 981 Law Agent — continued Section. Where, acting for adverse interest, duty of trustee . . 231, 232 Loan for trust, duty in ..... 654 Accounts of, not trustee's accounts ..... 224 Firm, position of . . . . .215 Mandate, extent of . . . . . . 222 Advice independent of, where proper .... 231 Instructions to ...... 233 Investment, position of, as to . . . . 233, 238 Securities, custody ..... . 240 Cheque-book, custody .... 234, 240 Trustee, appointment of, as . . . . . 286, 1158 Taxation of account of . . . . . .1154 Correspondent of, position of . 1159 Statutory charge, in question with retention by trustee 1148, 1214, 1235 Profits of business of, liferent of ... 1019 Lease, Clause of renewal, power to grant, with .... 365 Company, power to grant, to ..... 365 Long, meaning of ... .411 „ power to grant . . . 411 „ ,, „ how affected by prohibition against selling or disposing . . . .412 „ „ „ where directed to hold estate as revenue-pro- ducing subject . . 412 Mineral, power to grant . . . 361, 366-368 Of land for military purposes, power to grant . . 364 Ordinary, power to grant . . . 364 „ what is .... . . 364 Power to grant for specified time, longer lease excluded 342 To relative by trustee . . . 498 Renewal of, to trustee personally .... 441, 442, 506 Renunciation of, power to accept . . . 371 To trustee by co-trustees .... 475, 476 Trustee's power to grant, where trust for sale . . 365 Warrandice, what proper, in . 365 With power to buy, trustees cannot grant . . . 302 Where, adopted by trustee . . . 1248 Renewal, claim of ... 365 Legacies, Deficiency of funds to pay all, proportionate diminution 741 Double, where ..... 739 Legacies and Annuities, Proportional abatement of, where estate insufficient . 1007 Legacy, Where investment to meet fails Amount of stock to be bought to make up . Trustee, " as trustee," to . . Appropriation of investment for Stock, of, amount ... Foreign coinage, in Interest on . . Chargeable on mixed fund Different classes of When payable . . ... . 735 . 744 . 830 735, 744, 745 . 744 . 744 994, 1101, 1111 . 1011 . 1101 . 1101 982 INDEX Section. Legacy Duty, on interest in business . . . . 1167 Legal Interest, what proper rate of 1107 Legatee, Unless residuary, cannot require copy of accounts free . 961 Interest chargeable by, where delay in payment . 1101 Legatees, Special and residuary, claims of 734, 735, 1101 Unpaid, claims of, in distribution 736, 737 Special, expenses chargeable against . . 997 Legitim, Trustees should see, is discharged, before distributing estate . 734 Effect of claiming ..... 831 Interest chargeable on, where delay in payment 1102, 1111 As an alimentary fund ... . 1000 Lender, Position of . . . . . 416, 735 Eights of, where trustees no power to borrow . . . 1316 Lessee, where beneficiary is, and lessor's interest purchased by trustee 444 Letter, acceptance of trust by . 101 Letting, implied trust for . 328 Lex fori applied in Scotland, where it is forwm conveniens . . 982 Lex rei sitae, Applied to heritable property . . . 982 Questions between trustees and beneficiary . . . 982 Liability of Trustees, For agents, vide Agents. Leniency of modern judges in construing . . 199 Same, however trust constituted . . 16-18 Under " immunity clause " . . . 201, 202, 522 et seq. Where no " immunity clause "... . 203 Words limiting ..... 1252 Licensing Act, English, brewery debenture .... 660 Licensing Bench, trustee connected as such with liquor trade can sit on Licensed Premises, as security for loan . Lien, vide also Retention Railway stock, investment in Trustee's right of, for enforcing relief „ „ extent of ... „ „ over policies preserved by his advances No right of, for obligations undertaken by trustee as beneficiary . ' 1219 On other interests of beneficiaries, who have been overpaid in error • ... . 1235 Of beneficiary on surrogatum of trust estate . . 1299 Solicitor's, on papers .... 1302 Where stranger has, on estate for advances . . 1317 Life, Presumption of ... ggg Debtor's, insurance of .... 330 331 5 660 641 1211 1212, 1213 1215, 1216 INDEX 983 Section. 327 566 746 746 748 771 761 834 1012 547 376 81 510 444 Liferent, Entail Acts, effect of, upon . And fee, how wasting subject divided between Distinguished from annuity . Liferent annuity, what is National Debt Conversion Act as affecting Only expressly given, is fee in intestacy ? Reservation, by, distinguished from gift of Gift of, presumed joint Scots, distinguished from English ... Liferenter, And fiar, trustee must act impartially between „ where interests opposed, what is " expedient " for trust . As new trustee ....... Position of, not fiduciary, towards the other beneficiaries . Where beneficiary is, and reversionary interest purchased by trustee ........ And fiar, where, considerations in making investment for . 686, 687, 688 With power of appointment of fee, payment over to assignee of 763, 784 Direction to pay to children of, in fee, effect . . 739 Power to " dispose " or " devise " in . . . 761 Power to advance capital to, where infers fee . 761, 763 Discharge by, effect on payment . . 764 Divorce of, effect on payment . . . 764 Legal, and under trust, distinguished . . 101 & And fiar, accelerated payment to . . . 761, 764, 766, 771 What extent of claim of, against income . . . 1013, 1014 Claim of, where wasting investment . . . . 1014,1018 „ against income before conversion .... 1016 „ „ „ „ proper date of conversion . . 1021 „ not to be affected by power to alter investments . 1017 „ in case of coal mine . . . 1019, 1022 „ against reversion, arrears, or windfall falling in . . 1022 „ against policy moneys falling in . . . . 1024 „ against reversion dependent on own life . . . 1025 „ against sum paid under Lands Clauses Acts . . 1026 Where has claim to bonus ..... 1027, 1028 Claim of, to extra capital returned in liquidation . . . 1029 „ to casualties ...... 1030 „ to a grassum . .... 1030 „ to a duplicand . .... 1030 „ to cutting timber . .... 1030 „ to partially accrued dividend .... 1032 „ against fund required for paying debts . . . 1033 Of real estate keeps down interest on burdens thereon . . 1033 Claim of, where estate improperly invested .... 1834 „ where expense of changing investments charged against 1035 Expense of defending existence of trust not a charge against 1036 Insurance against fire, how charged against .... 1036 What charged against, for repairs, depreciation, etc. . . 1037 Of a farm, position of ...... 1037 Of furnished house, position of .... . 1039 Distinguished from right of occupancy .... 1039 Losses in business, charge against interest of 1040 Claim of, against proceeds on failure of mortgage . . 1029, 1042 Of furniture, plate, or jewellery, position of . . . . 1043 984 INDEX Liferenter— ci Position of, on failure of unauthorised investment . „ where conversion improperly delayed . Where bound to repay excess paid him Claim for interest on uninvested funds differs from fiar's ,, „ where conversion Limitations, Statute of, in England, effect of . Limited Beneficial Interests, difference between Section. 1079 1080 1234 1105 1111 1112 817 Limited Liability, Words effecting ..... . 1252 Particular trustee is not involved by act of quorum in personal liability ...... .172 Liquidation, right of trustee not on register in . . . 1254 Liquidator, position of . . . . . . .14 Litigation, vide also Action and Title to Sue Powers of trustee in connection with . . . .351 When should trustee resort to, in recovering estate ? . 588 et seq. Where trustees entitled to be reimbursed expenses of . .1180 Proper instance for trustee ...... 353 „ „ where also tutor .... 354 Loan, vide also Borrow and Valuator To trustee by co-trustees Valuation of security for On heritable security, good investment What proportion of reported value . On margin of several burdened properties Where, given to accommodate borrower Revaluation of security for . Beneficiary, to, whose consent required to Calling up, through depreciation Personal liability f or . Loss on, how apportioned Local Authorities, charitable trust, title in Local Loans Stock, investment in Long Annuities, as investment . Lord Advocate, intimation to . Lords, House of, position of, in questions of jurisdiction 471-474 261 650 666 681 685 701 632 701 413, 416, 1252, 1257 1042 432 674 688 432 972 Loss, Contributory relief between trustees . On authorised securities, how apportioned . In business, charge against interest of liferenter On mortgage, how apportioned Of securities, how value assessed Extent of liability for, through breach of trust Indemnity for, where trust undertaken at .request On one breach of trust cannot be set off against gain on another 1083, 1097 Lots, sale by, when should be . . . . . 388 171, 172 991, 992, 995, 996 1040 1042 1071 1071 1220, 1221 INDEX 985 Lunatic, Nomination of, as trustee Child, position of, Support of, condition Section. 70 720 751 Maintenance, Gift for, of third party where a trust for him Petition for, by minors Gift for, where alimentary provision Interest of gift to minor for . Of bankrupt beneficiary, how carried out Of minor, payment to parent or guardian Majority, see also Quorum Are statutory quorum .... How settled where some trustees with interests adverse Improper conduct of, removal for Of quorum, powers of Conventional date of, what effect of . Class attaining, payment Man, Isle of, Stock, as an investment Management, Expenses of, chargeable against capital Of business, power to remunerate trustee for Mandatary, Act of quorum is act of For beneficiary abroad Mandate, trust as combination of, and deposit Mansion-house, implied power to build Margin of security in loan Marine Insurance, vide Insurance Market Overt, English doctrine of, effect of Marriage, Conditions in restraint of Consent to As a contingency in vesting . Marriage Contract, Beneficiaries, where creditors of truster Resulting trust in Marriage-contract Provisions, Protection of wife by . . Whether protective is a question of interpretation Effect of . . . Renounced by mutual settlement Where administrative and not protective . Declared irrevocable, effect of Conditional institutes' position where no institute born Who donor of estate, no difference as to effect of Must be proper, to protect wife Distinguished from testamentary in respect to protection „ trust not made in view of marriage 4, 739, 761 . 336 . 781 . 994 . 820 824, 994 to trust 164 181 . 1132 . 157 756, 759 . 766 ; p. 848 . 648 . 995 1166, 1167 170 . 963 21, 156 . 299 . 1280 . 327 818, 833 . p. 844 . 720 1045, 1053 . 791 792, 798 793, 794 . 794 . 795 796 . 796 797 798, 799, 800 798 . 799 986 INDEX Marriage-contract Provisions— continued Postnuptial as protective .... What extent of protection ..... Protection of, ceases with dissolution of marriage . Marriage- contract Trust, Domicile of . Jurisdiction of Sheriff " Married, without having been," meaning of, . Married Woman, Policies of insurance Discharge by . Acquiescence by Acceptance of trust by .... As trustee . , ... Disclaimer by .... Suing as trustee, effect of Married Women's Property Act . Restrained from anticipation, judicial expenses excepted . position of Section. . 801 802, 803 . 804 . 983 . 901 . 834 24 . 929 . 1127 101 70, 73, 74, 75 125 74 1218 . 750 Where interest of, liable to indemnity for instigation of breach of trust ....... 1227, 1232 Beneficiary, how can trustee get guarantee for expenses . 1187 Marshalling, Assets for payment of debts . „ for distribution to beneficiaries Maryland Bonds, as investment in " foreign funds," Massachusetts Stock, „ „ „ Meeting, Minute of Minute of, acceptance of trust by writing Voting at Adjournment of, when some absent . Business of, notice .... Solicitor-trustee, charges for attending Meetings, Duty to hold ...... Neglect to attend, not same as neglect of trust duty Notice to co-trustees ..... Messenger, employment of ... . Military Man, as trustee, duty when ordered abroad . Mill, as security for loan ..... Mine, Coal, what is liferent of ... . Unopened, power to grant lease of . Mineral Kent, where, accumulation Minerals, Lease, power to, implied .... Reserved, may be, in feuing . „ „ in sale What are .... 719, 1033 990, 991, 992 . 624 . 624 . 157 . 115 . 166 . 173 . 173 . 1175 . 173 . 156 . 173 . 237 532, 533 . 660 1019, 1022 366-368 . 840 361 409 388 364 INDEX 987 Minister, vide also Official Trustees section. Acting for Kirk-session, where they are trustees . . .184 Minor, Acquiescence by . . . . .1127 Gift to, presumed beneficial, not trust .... 1045 As trustee . . . . . . . . 70, 72 Descendants of truster, petition at common law by . . 336 Where beneficiary is, dealings with trustee by him . 492, 495, 506 Where beneficiaries are, purchase of estate by trustee, how com- petent ....... 493-495 Duty of trustee to, on majority .... 553 Discretionary payments to, for maintenance . . . 740 Payment to parent or guardian for . . 824, 994, 1141 Power to discharge ... ... 929 „ grant receipt . .... 930 Legacy, interest on, for maintenance .... 994 Where, beneficiary, how can trustee get guarantee for expenses . 1187 Minority, see also One of two Trustees Action by, where competent ...... 177 Cannot use instance of whole trustees, where action abandoned by majority ........ 177 181 1115 1188 1260 170 1188 173 177 Minute, Solicitor-trustee, appointment and fixing remuneration . 1175 Acceptances and disclaimers in one, advantages of . . .124 Of acceptance of trust .... . 101 Of meeting, writing, not acceptance of trust . . 115 How authenticated ..... . 157 Minority of trustees disclaiming action by . . . 170 „ „ disclaiming defence by 1188 Appropriation of investment, form of . 735, 777 Appropriating capital for annuity, form of . . . 768 Misconduct of trustee, what is ...... 1181 " Missions," foreign, as good bequest ..... 1046 Mixed Fund, How estate to be followed, where trustee has made . . . 1295 What presumed paid out of . . . . 1295, 1297 Purchase by trustee with Money, where it can be followed " Money," what is Monument, trust to erect Where, may act as majority . As an interruption of prescription .... How can, escape liability for expenses of action against trustees, Where, not personally liable .... Action, disclaimer of, by Defence, disclaimer of, by Meeting, notice to Powers, where no quorum ..... . 1299 1290, 1293, 1300 . 739 20 Mora, Plea in defence to claim by beneficiary . . . 1118,1121 When creditor in ...... 1319 988 INDEX Mortgage, Investment on Postponed, where good security Sub-mortgage distinguished from postponed Sub-mortgage as security for loan Depreciating, duty of trustees as to . Stock, not proper trust mortgage Railway, investment in Debentures as investment Contributory, as investment . Revaluation of security Where, fails, how proceeds apportioned Improperly executed, liability for . Power to repay, includes equitable mortgage Mortgagee, Where also trustee, duty of . Position of Mortified Land, power to sell, .... Mortmain Acts, Effects on Scots settlement .... English law of, where produces resulting trust Mother, payment to, of pupil's beneficial interest Motor Car, where gift includes .... Movables, Completion of trust title to . What charges against .... Substitution in destination of Multiplepoinding, Exoneration, how obtained, for acts during course of Trustees claiming estate in, procedure Factor checked, though estate in Trustee not relieved of duty by existence of Competency of, for returning funds to subscribers . To be brought in case of challenge of beneficiary right Raised, for getting discharge .... Not competent to beneficiary unless double distress Expenses of judicial exoneration in Expenses in . One of two trustees, by ... Powers, to ascertain ..... Municipal Corporation, Stock as investment ..... Bonds, etc., ,,.... Section. 651, 665, 672 665 665 665 667 669 672 672 695 701 1042 1087 415 332, 509 4, 331, 509 . 384 1046 1052 825 739, 1039 131 719, 1009, 1010 750 315 316 244, 314 314 717 745 935 et sec, ., 944 1138, 1139 1181 1192, 1197 177 336 641 675 Narrative, see Recital Natal Stock National Debt Conversion Act, Summary procedure under . Naturalisation Act, effect of 646 1031 335 76 INDEX 989 Section. Necessity, must be instructed for declarator .... 374 Negligence, vide also Diligence Absence from country instructing ..... 532 Gross, implies want of bona fides ..... 525 „ meaning of ...... . 512 Kinds of, how distinction drawn between .... 512 Breach of trust through . . . . . .1130 Aggravated by misconduct, trustee loses expenses . . . 1184 On part of agent, who has title to sue him ?. . 1305, 1306, 1308 New South. Wales, Bonds not " foreign bonds," . . . . . .624 Stock, approved of for investment ..... 646 New Trustees, Appointment of, by beneficiary „ by Court, .... 47 „ „ at common law . „ „ to make up number of quorum, „ „ under Trusts Acts „ by third party „ by truster . „ to part of estate „ where already appointed by foreign Court „ under Entail Acts . Assumption of, by acting trustees, . Beneficiary as . Completion of title of, where appointed by Court Direction of truster as to appointment of Discretion of, delectus personm Donee of power of appointment as . Foreigner as . General rule for appointment of Husband of beneficiary as . Knowledge required of ..... . Liferenter as . Nomination of ... . . Not appointed, where trust foreign ..... Not to be appointed, where contrary to intention of truster Number of, to be appointed ...... Residuary as . Petition for appointment of, should expressly crave power of assumption for them ...... Power of truster to nominate ..... Power to nominate, different from power to change actual trustees Trust corporation nominees as .... . Truster's nomination as example .... Who may be . Accounting by ... Stamp duties ...... Donee of power of appointment of, appointing self or solicitor Court, example of, in appointing .... Solicitor of beneficiary as New Zealand Stock, approved of as investment " Next Eldest," meaning of 54 61, 64, 86, 87 . 56, 63 . 159 . 59, 66 . 55, 83 40, 41, 42, 43 54 65 43, 61, 67 . 43, 45, 46, 78 . 79, 82 141, 142 87 286, 287 83 84, 870 . 85, 87 80 . 540 . , 81 39 66 62 90 81 68 42 78,85 969 39 83 85 81 646 834 990 INDEX Next of Kin, Take rents of converted movables under resulting trust "Where gift to, too vague .... Meaning of . • Nobile officium, Application to .... „ by foreign trustees for powers Nomen juris, " trustee of A." not Nomination, Of trustee Joint ... Joint and several . . . . New trustees . Revocation of Non-gratuitous Trustee, see also Remuneration Must not make profit beyond commission . Only gets remuneration for what accounts show Where, employs agent to do what specially remunerated for Notice, Conditions of valid, to agents Permanent agents represent trustees in questions of Of sale, to beneficiaries Should be given to all the trustees To one of more trustees, as notice to trustees, falls when he ceases to be a trustee . „ „ does not interpel others „ „ where, is sufficient What sufficient, where contract thereanent . Of breach of trust, effect of . „ through knowledge of solicitor Action, of, to co-beneficiaries Register, of trust on Defect in title Meeting, of Constructive . Knowledge as Power to waive Trust and breach of trust, of, distinguished , " Now," meaning of Null, trustee dealing with himself, transaction not Number of New Trustees to be appointed . Section. . 1057 4 . 834 336, 432 . 336 353 24, 25, 69 25, 149, 158 25 39 25 . 1170 . 1176 . 1177 185, 226 . 225 . 387 187, 188 187, 189 188, 189 . 185, 186, 189 . 190 1273, 1274, 1280 735, 1276 . 1142 71 167, 735 . 173 185, 735, 1271, 1273 . 185, 188, 226 . 300 . 1271 . 834 454, 455 90 Oath, Of verity, how taken where several trustees Reference to . Obligation, Power to invest on . By trustees binds them singuli in solidum . " As trustee," where limits action as individual Obstruction by trustees, expenses where Occupancy, right of, distinguished from liferent . 595 29 . 621 . 1259 . 1262 1205, 1208 . 1039 INDEX 991 Official Trustees, section. Neglecting rights, cannot limit successors by 303 Petition at common law by . . . . . . 337 Officials of Trust, vide Agents Ohio Bonds, as investment in " foreign government " stock . . 624 Omissions, trustee's liability for . . . . . 202, 204 One of More Trustees, powers of . 182 et seq., 328, 332, 694, 1180, 1185 Open Account, at bankers ...... 248 Openly, trustees must act ...... 549 Opinion of Counsel, vide Counsel Option, beneficiary has, as to unauthorised investment . . 1078, 1082 Oral, Declaration of trust ....... 26 Disclaimer ....... 124, 125 Original Trustees, who may be . . 69, 70 Outlays, see also Expenses Unauthorised investment, on . 1081 Trustee's claim for reimbursement for . 779, 1081, 1146, 1147, 1151 How charged after " residue " paid over .... 995 Constructive trustee, what, allowed to ... . 1146 Retention remedy for recovery of . . . . . 1148 Relief for, not limited to benefit to estate . . . .1152 Allocation of, between trustee and estate, where common interest . 1153 Overdraft, Trustee's liability for . . . . .417 Liability of individual trustees for . . . 1259 Overpayment, where beneficiary bound to repeat . 1233 Parent of beneficiary, where payment to .... 824 Park-keeper, employment of 273 Parliamentary Expenses, rules of relief for 1193,1194,1195 Partiality, trustees removed for . . . . . 546 Partner, see also Firm Payment for services to, where trustee . . . 468 Of trust agent, where liable to trustees for negligence . . 1305 Of trustee, where, is a constructive trustee . . . 1281 „ where accountable for profits from trust funds . . 1282 Buying estate from trustee ...... 498 Partners, where trustees not liable as . . . .1261 Partnership, Nature of . . . . . . .19 Where factor member of ..... . 219 Where question of, how proved ..... 31-33 Change in, effect of, on loan to ... . 581, 582, 583 Trustees collectively are one partner, where representing truster . 628 Trustee member of, resignation of . . . . . 889 „ „ when can firm charge .... 1159 How trustee may limit his liability as member of . . 1253, 1255 Annuitant of, liability of, for debts ..... 1309 992 INDEX 811 761 752 Section. Passive Trustee, not recognised as different from acting . . 96 Patronage, vide Presentation "Pay," Direction to, does not infer conversion Effect on limitation ...... Pay Over, direction to, to be distinguished from direction to settle Paying Over, Done by one of more trustees ..... 183 The estate, duties of trustee in .... . 702 To holder of ex facie good title . . . 705,707 On caution to repeat ...... 705, 1237 Title of claimant must be regular before .... 708 On forged title ....... 709 Without constitution of debt .... 710, 711 How much, where discretion .... 739, 740 Legacies, deficiency of funds, proportionate diminution . . 741 Discretion in trustees as to time and manner . . 815, 816 In error, where claim for repayment . . . 1233 Where two funds, out of which payment held to be made . . 1297 To wrong person, liability for .... 1098 Where no doubt as to beneficiary, expenses for refusing . 1181, 1204 Sole executor, to himself ...... 714 Assignee, title of ... . . 708, 814 Compulsion short of decree . . . . . .710 Without decree distinguished from compromise . . . 711 Payment, Proper method of, to trustees Nature of liability for wrong Must be made unconditionally Of claims on estate, proper order of . Where, falls due, before security realisable By investment in names of beneficiaries Acceleration of date of On receipt embodying conditions of trust Unconditional, to be made, where payments on conditions directed 752, A , . t , 753, 761, 762 Acceleration of date of, at request of all beneficiaries „ ,, by statute . To sole beneficiary, acceleration of . Where accumulation directed To assignee of lif erenter with power of appointment of fee Accelerated, to liferenter and fiar . „ alimentary provision, effect of . Acceleration of, conditions of . . >jq S -j-j^ 774 77a „ beneficiaries must be free from incapacity .' may take place, though conditional institute ousted 775,776 „ distinguished from acceleration of vesting ' 777 Can be demanded, when trustee's discretion irrevocably exercised ' 822 To representative of deceased beneficiary . . g29 » „ absent beneficiary . . 8 „, Part, by one trustee, effect on others . \ 1123 Time for, of creditors and beneficiaries \ -„„ 574 702 716 718 743 744 749 et seq. 751. 752 754, 766, 768 . 766 755, 759, 761 . 760 764, 763 766 767 779 772 INDEX 993 Payment — continued Beneficiary challenging deed, to Kesolution for, effect of Guardian of minor .... Error in, repetition where Vested interests, to, where pending contingencies " Pecuniary," meaning of .... Penal Conditions .... Pensions, payment of, to servants " Per Capita," division, where .... " Per Stirpes," division, where . Perishable Subject, conversion of Perpetuities, rule against, how applied to Scotland Perpetuity, Trust in, power to sell .... Distinguished from accumulation Personal Estate, what charges against . Personal Liability, Bill, in signing, for loan .... Bonds, in, how instructed from facts and circumstances Borrowing, how evaded in . . . , Can act of quorum involve other trustees in Of trustees to third parties, where . "Words limiting ..... Of trustee for judicial expenses As gratuitous disponee, under Conveyancing Act Decree for, competent though not concluded for Personal Obligation, as investment Personal Security, Conversion of, should be summary . Investment on, meaning of . As collateral to heritable .... Section. 734 822 824 1233 1237 739 . 833 (note 1> . 273 . 834 . 834 566, 569 . 327 . 384 . 835 1009, 101O 417, 1257 . 41& 416, 1252 . 169 1249, 1257, 1260 . 1252 . 1264 1310 . 1311 613, 632 . 580 . 631, 632, 684 663, 670 Petition, Advance of capital, for, motion in original petition sufficient when change . . ..... 428 Alternately at common law and under Trusts Acts, presented to Inner House . . 431 Beneficiary, when competent by, for order on factor . . 347 By beneficiary to complete title . . . . .154 Common law, at, for powers, when and by whom competent 336, 337, 347 Nobile officium, to, procedure in ... 336, 432 Power to, difference between judical factor and trustee in regard to 347 Procedure in, under Trusts Acts .... 429, 430 Settling scheme, for, procedure in . . . . . 432 Under Trusts Acts ...... 372 et seq. „ „ effect of introduction of . . . . 374 „ „ intimation and service of, can be ordered by Lord Ordinary on Bills in vacation . . 430 63 994 INDEX Section. 1200, 1203, 1207, 1210 1141 336 Petition — continued Expenses of trustees in Guardian, foreign, for payment Foreign trustees, for powers . " Philanthropic " purposes, effect of . . . . 1046 Pictures, liferenter of, rights of . . . 1039 Plate, liferenter of, rights of ..... . 1043 Poinding of Estate, where proper, for judicial expenses . 1312 Policy, Advances to protect, lien for .... 1215,1216 Duty of trustees to keep, from lapsing . . . 329 „ „ as to information of lapsing . . 553 Assignee of, not trustee of profit for assignor . . 4 Lapsed, beneficiary entitled to premiums . . . 996 Policy Moneys, Falling in, how divided between liferenter and fiar . 1024 Claim of advancing trustee ...... 440 Population, census, determined by . 674 Portions, accumulation for raising, legal . 845, 846, 847 Possession, purchase money to be paid in full before, given . . 405 Postnuptial contract, effect of . . . . . . 801 Postponed Bond, where good security .... 665, 681 Postponement of enjoyment of estate by sole beneficiary 755, 759, 762, 763 Power, Where trustees fail to exercise, what action of Court Of attorney ..... . . Powers, vide also Discretion Affecting heritage, where, given, disposition of subjects presumed . Alter, vary, or limit, trustees have no power to Conditions of exercise, effect of Coupled with trust, position of Court towards exercise of Declarator of, only on grounds of necessity . Divest themselves of, trustees cannot Doubtful, authority to exercise, how obtained Exhausted, whether ..... Implied ...... „ by statute ..... „ such as are necessary for trust, where In connection with litigation Particular statutory .... Presumed to be limitative .... Revocation of, by revocation of trust Specific, must not be exceeded „ where exceeded .... Nature of, and trusts ..... Technically so called, position of Court towards exercise of Time, conditions of, for exercise of . Truster may give any, he sees fit Trusts, in the nature of ... . 988 156 133 300, 301, 302 . 294 . 276 . 339 301-303 333 et seq. . 301 298, 299, 363 . 361 . 340 . 351 379 et seq. 290, 341 . 340 341, 342 . 343 274, 275, 277 275, 278, 279 295, 296 . 297 . 323 INDEX 995 Powers — continued Section. Trusts Acts, conditions of granting under . . . 373, 375 „ nature of, under . . ... 379 Unrealised purpose of truster, to finish .... 298 Want of, making trust unworkable .... 345, 346 Investment, of, interpretation ..... 614 Bare ........ 274 Executory trust, implied ...... 298 Buildings, to finish, implied ... . . 298 Conveyancing expedient, implied as . . . . . 363 Survivorship of ..... . 148, 286 Consent, deed of, under Trusts Acts . . . . 373 Appointment, of, distinguished from trustee's . . 274, 379 Precatory Trust ... .... 4 Preference, see also Bankruptcy, accidental, of certain beneficiaries in distribution . . . . . . 735, 736, 737 Preference Railway Stock, investment in . 641 Premium, stock at, investment in .... . 688 Premiums on policy, implied trust to pay . 329 Prescription, Bights accrescing by, to trust title . . 446, 447 As a defence to claim by beneficiary . .... 1112 Co-trustees, claims between, of . . .1114 Interruption by minority . . . 1115 No question of bona fides . . . 1116 Effect of fraud on part of trustee . . .1117 Debt, abandonment presumed apart from . . 1120 Presence of Trustees, whose necessary . . . . .157 '" Present," meaning of . . . . . 834 Presentation, rights of, how to be exercised by trustee . . 450 Presumption of Life, in case of absent beneficiary . . 828, 831, 937 Presumptions in vesting .... pp. 842, 844, 848 Price, Grossly inadequate, effect of sale at . . . . 386 Must be fixed in view of present circumstances . . . 386 Upset, vide Upset Primo Venienti ..... 728 Privileged Debts, what are . .719 Probate, acceptance of trust . . . . 107 Procedure, For obtaining statutory powers .... 372 et seq. In petition under Trusts Acts . . . 429, 430 Powers, for ascertaining or acquiring . . . 333 et seq. „ „ „ at common law . . 334 Difference in, where breach of trust ex contractu and where ex delicto 1 143 Profit, Made, who can claim ....... 993 Distinguished from payment for services .... 440 Trustee, making out of estate .... 437, 440 996 INDEX Section. Profits on one breach of trust cannot be set off against loss on another ....... 1083, 1097 Must be accounted for by trustee using trust funds . 1090, 1091, 1092, 1093, 1095, 1111 Indirectly made, trustee not accountable for . . . 1096 From trust funds, where partner of trustee accountable for . 1282 Made with trust funds by debtor to estate, trustee not accountable for ..... . 1284 Liferent of ...... . 1019 Prohibition, express, meaning of ..... 426 Pro indiviso, Proprietor, title of, distinguished from that of trustee . . 147 „ bond by, as investment ..... 695 Promissory Note, Realisation of ..... 580, 590, 598 Is it security ? . . . . . 631 Granted " as trustees," effect of . ... 1258 Promoters, position of . . . 13 Proof, Intention of truster, extrinsic, of . . . . 614 Burden of, in question as to dealing between beneficiary and trustee ...... 483, 490 „ on pursuer in action for breach of trust . 200 Of conditions varying written acceptance may be by parole 122 Of trust, and limitations thereof . 29, 30, 34, 35 . 36, 37 706, 1046 . 1046 1071, 1076 . 862 „ where fraud alleged Of identity of claimant with beneficiary Where allowed in case of ambiguity Onus of . " Property " means land, not house property Protected beneficial interests, difference between . . 817 Protection, of trust estate, right to raise action for, vide Title to Sue Provisional Order, where resorted to . . 34^ " Provision " for, meaning of 734 Proxy, voting by, not permitted . . . 155. Prudence, Diligence, how differing from . . 537 Overprudence, none where any risk, however small . 537 Trustee may be over prudent What measure of, required of trustee " Public Benefit," how tested Public Company, investment in, meaning of Public Funds, Investment in Municipal debentures not Public Policy, trusts against " Public " Purposes are not charitable . 537 535 1046 622 637 675 327 1046 INDEX 997 Section, Public Trust, accounting in, who can sue . . . 965 Public Trustee, English ... . 610, 625, 1251 Sc °ts ..... 310 h'ish . ...... 1251 Public Trustees, Petition at common law by . . ... 337 Right to pay damages out of funds . . 1151 Pupil, see also Tutor When may beneficial interest of, be paid to father . . 825 As trustee ... . . ; . 72 Purchase, vide also Sale Power to, where sale by prior bondholder . . . 649 Direction to, where may remove debt instead . . 421 Of trust estate, by trustee through third person . 458, 496-501 „ „ resigned trustee . . . . 502 Of land, investment in, how to be executed . . . 633 Of heritage not investment .... 609, 649 Purchase Money, Joint sale, apportionment of, in . . 398, 399 Possession not to be given until, paid in full . . . 405 Re-sale, where, not paid ... . . 406 Duty to see to application of . . . . . . 1272 Consignation of ...... . 407 Advance of, creating a trust of it . . . . . 1045 Purchaser, Power to sell in trustees, should certify himself of . . . 382 Price grossly inadequate, at, has notice of breach of trust . . 386 Constructive trustee, from ...... 1280 Not trustee of accretion to estate for seller ... 4 Purposes, see Failure Queensland Stock not appoved of for investment . . . 646 Quod, fieri debet infectum valet .... 987, 989 Quorum, Absolute numerical, incidents of . . . .159 Act of, binds all present and future trustees . . . 167 „ concurring trustee not bound by, as individual, where he could have limited his liability if himself acting . 172 Acceptance by less than ...... 159 Act of, ignorance of, effect on liability . . . .171 „ is act of mandatary ...... 170 „ passive, concurrence in .... . 170 Can, involve other trustees in personal liability '! . .169 Can less than, exercise power of assumption ? . . 160, 161 Concurrence of, required ...... 157 English trust, majority not implied in . . 156, 164, 177, 306 Homologation of act of . . . . . 169,170 How, struck, where corporation a trustee . . . .166 Where some of trustees have interests adverse to those of trust . 181 Majority are implied statutory quorum .... 164 998 INDEX Quorum — continued Majority of, powers of Majority are implied, under Trusts Acts Meeting of, notice to co-trustees .... Must act within knowledge of all the trustees, and not independ ently ...-•• Nature and powers of None where only two trustees Number less than, powers of t) „ cannot use instance of trustees Powers of „ limits of Reason for . Where none, powers of less than all the trustees Section. 157 25 173 173 . 157 . 164 174 et seq. . 174 167 et seq. 171, 173 et seq. 156, 157 . 165 Radical Bight, Of truster, what is „ distinguished from resulting trust „ is heritable, and can be adjudged Of bankrupt .... Radical Title, In truster, nature of . Only where purposes of trust limited 1060, 1062, 1067 . 1061 . 1068 . 1070 1060, 1065 . 1069 Railway, Power to sell to .... Preference shares, investment on Stocks, English, terms of investment clause covering Mortgage, good heritable security Debentures or mortgages, as investment Indian, stock, &c, investment on Company with Government guarantee not Government security Company, debenture stock, investment on . „ preference and other stocks, investment on Rates, Municipal, investment on bonds, etc., secured on . What are ..... Real Security, investment by loan on . Realisation, Of estate, duty of trustee as to „ proper time for Of personal security .... Of estate at specified time Reasons, trustees need not state, for action Receipt, Signing, as acceptance of trust Effect of trustee's, to discharge debtor Embodying conditions of trust where to be taken And discharge distinguished . By tutor, or minor and curator, valid Recital of Estate in Deed, value of Reconstruction of company Reconversion, election for . 381 618 625 651 672 676 624 640 641 675 675 650 . 554, 564, 575 . 575, 576, 585 . 580 596 . 285 112 573 751, 752 818 923 930 554, 555, 556, 720 626 739 325 INDEX 999 Section. 34 15 924 1137 369 437 Record, admissions on, proof of trust Recording deed, effect of . . Redeemable Stocks, as investment Reduction, Of discharge, grounds of Of particular act, whether required, before count and reckoning Rent, lordship, royalty, etc. ..... Transaction by trustee as to trust property, of Reference to arbiter, of claim .... Register, Stock, allowing name on What trusts noticed in stocks on Executor on, effect ..... Registration, Completion of title by Of trust deed, where implied trust for Of trustees as individuals on books of Bank of England Of title, as affecting security Relative, trustee dealing with trust estate through " Relatives," meaning of Relief, see also Indemnity Against trust funds, vide Lien „ particular beneficiary personally where . 1220, 1223, 1227 „ co-trustees of trustee called in action . . .1143 „ „ by trustee with beneficial interest . . 1144 Loss, for, between trustees .... 171, 172, 1238, 1241 Trustee's claim of, for expenses is preferential Where trustee, against paid beneficiary " Religious " purposes, not charitable . Remainderman, vide Fiar Remaining, see Survivors " Remaining," meaning of 600 et seq. 169, 171, 1254 71, 696, 1272 . p. 850 131 328 71, 637 665 498 834 1148 1320 1046 Remedies, Trustee's, for enforcing relief Of third parties ..... Of beneficiaries ..... Remedy of beneficiary where breach of. trust for investment Remit, when, to rejyorter required by Court Removal, purchase from trustee completed after his Removal of Trustees, .... For partiality ... Bankruptcy as ground of Absence from country as ground of . .916. Insanity as ground of Incapacity as ground of As connected with sequestration of estate Grounds of, at common law . 833 (note 6) 1211, 1227 . 1310 1132, 1273 1078, 1081 . 375 . 382 896 et seq. . 546 913, 914, 915 917, 918, 921 918, 919 918, 920 896, 897 902, 903 1000 INDEX Removal of Trustees — continued section. Where all parties interested petition f or . . . 907 Where interests antagonistic to trust . . . 908, 909, 910 Where threatening to remove estate out of jurisdiction . .911 Where not acting harmoniously ..... 912 Petition for, expenses in . . • 1203, 1210 Where proper remedy for beneficiary . .1 132 . 901 Remove, jurisdiction to . Removing Tenants, power of . Remuneration, see also Non-gratuitous Solicitor drawing trust deed with clause of, in own favour Trustee, where may receive . What proper, to paid trustee . Extra, how account for to be stated . Renewal, Clause of, lease with, power to grant Of valuable agreement to trustee personally Renewals, against whom to be charged . Rent, Slump sum payable by instalments, capital charge Abatement or reduction of, power to make . Arrears of, power to discharge Trustee using trust property, where chargeable with Rental, as basis of value for loan Rentcharge Railway Stock, investment on Rent-collector, employment of . " Rents," Meaning of . Of converted movables, who takes, under resulting trust Liferent of . Renunciation of Lease, power to accept Repairs, Duty of trustee as to . Where specific sum to be spent on, must not be exceeded How charges for, apportioned Reparation by trustee in breach of trust, extent of Repayment, To subscribers .... Where claim for, after payment in error Of fruits cannot be claimed . Where trustee has claim for, against beneficiary Repetition, vide Repayment Report, see also Remit Report by Valuator, nature of proper . Representatives of trustee, as trustee and as individual 370 . 504 460-463, 503-505 1170, 1171, 1175 . 1175 . 365 . 441-443, 506 . 1037 . 1033 369 369 . 1091 . 664 . 641 . 273 834, 1030 . 1057 1019, 1021 . 371 328, 342 . 342 1037, 1038 . 1071 717, 1045 . 1233 1236 1320 Repugnancy, directions void from Repugnant to gift, condition . 653 . 168 750, 756, 757, 761, 771 4 INDEX 1001 Section. Re-purchase by trustee of trust estate . . . 499-501 "Bequest," In precatory trust ....... 4 By beneficiary, effect of, in breach of trust . . 1220, 1222, 1227 Re-sale, Where purchase-money not paid ..... 406 Loss on, through breach of trust . 1071, 1097 Reserve Price, how fixed ...... 386 Residence as condition ... .327 (note 30), 833 Residuary, Charity as, effect on scheme cy pres ..... 350 New trustee, as ....... 81 And special legatees, claims of 734, 1272, 1319, 1320 Special, distinguished from general . . .841 (note 3), 1048 Residue, Loss of capital falls against ..... 995, 996 Clause presumed to cover everything .... 1044 Meaning of ..... . . 995 Government duties not implied, charge upon . . 995 Expense of management falls against . . . 995 Contingent legacy is, till wanted ... . 995 Lapse of gift, where increases . . • 995 Annuitant or special legatee following . . . 1272 Resign, military man allowed to ..... 533 Resignation, .... 864 et seq. Distinguished from disclaimer . . . 123 Effect on conflict of duty and interest . 451, 502 Title, effect of, on 140,886 While action in Court, effect of, on instance . . 355 To be distinguished from exoneration . • 864 Is, revocable? . . • 865,884 At common law . . ■ 866, 870, 871 By consent of beneficiaries . . • 867 Under Trusts Acts ... ■ 868,869 Of office of executor .....•• 868 Power of, given to curator bonis on behalf of ward . . . 872 Of trustee to whom legacy, etc., given, . 871, 874, 875, 876, 877 Of non-gratuitous trustee . . . 876, 878 Of sole trustee . . 879,893 Of whole body of trustees ...... 881 Of trustee appointed under the contract of any trading company . 882 Procedure in . . . . • • • 883, 884, 855 Effect on trustee's liability . . .887 et seq. Effect on liability to third parties . . 888 et seq. Intimation of, to third parties . . . 888 et seq. „ not enough in case of sole trustee . . 893 During litigation, form of Distinguished in its effect from death Expenses occasioned by, fall on trust Resigned Trustee, on company register, is still liable . 894 895 1147 1254 1002 INDEX Resolution, Of trustees to pay, gives right to demand payment . „ future discretion cannot be limited by . Ultra vires, effect of, on trust . Responsibility of Trustees, how limited by special conditions Resulting Trust, Subscriptions to fund, where Conversion under Accounting to beneficiary in Where emerges Not to be presumed in charitable trust Where, in illegal trust What falls under Where destination to heirs of natural child On predecease of donee of equal share None, where prior destination not evacuated Where English law of mortmain produces Who takes benefit under Conditions of trust do not affect beneficiary under Who takes under, where estate converted Section. . 822 . 302 . 167 522 et seq. 717, 1045 . 812 . 964 . 1044, 1047 . 1046 . 1047 . 1048 . 1049 . 1050 . 1051 . 1052 1053, 1054, 1056 . 1053 . 1056 1058 1059 1061 1069 movables held in trust for investment in land „ „ where failure of appointment Distinguished from radical right Title of heir of grantor, how made up under Retain, power to, given, conversion not necessary . . 560 Retention, vide also Lien Sole executor, by ..... 714, 728 Breach of trust, in, against trustee beneficiary and his assignee . 1075 Lien distinguished from . . . . .1211 Payment made for co-trustee, for ..... 1242 Trustee's right of, for relief, first charge on estate . . . 1211 limit of extent of . . . 1148, 1212 ,, against income and corpus . . .1213 „ for expenses in priority to other parties 1148, 1214 Revaluation of Security, when to be made .... 701 Revenue, vide also Capital and Government Loss of, how apportioned ..... 995 Reversion, How divided between fiar and liferenter .... 1022 Where sum paid for lease under Lands Clauses Acts . . 1026 Reversionary Beneficiary, acquiescence in breach of trust by . .1125 Reversionary Interest, purchase of, by trustees . . . 444 Reversionary Eight, in charitable trust, where destination over . 827 Reversionary Securities, conversion of . . . . 567 Revocation, Of bequest .... . . 739 Of nomination of trustee . . 25 Of trust direction, effect on powers ..... 340 Risk, trustee not bound to take any, however small . . . 537 Rite esse acta, ........ 1120 Road Bonds, good investment on real security .... 651 INDEX 1003 Section. Koup, Articles of, vide also Depreciatory Conditions „ warrandice, clause of, prevails over, . . . 393 Sale by, vide Sale Royal Charter, company under, investment . . . 622, 623, 640 Royalties, liferent of ..... 1019, 1020 Russian, Bonds, terms of investment clause covering . . . 625 Railway bonds, terms of investment clause covering . 625 Russian Stock as investment in " foreign funds '' . 624 Sale, vide also Sell and Purchase-money Articles of roup Auction, by, purchase of estate by trustee at Beneficiaries, notice to, of Beneficiary, by, to trustee . . 478, where minor, to trustee 481 . 391, 393, 404 464, 465 . 387 483, 487-489, 491, 506 493, 494 Bond with power of, can trustee with power to borrow but not to sell, grant Completed with trustee after his removal . Court will not confirm sale made without power Depreciatory conditions of, when may be introduced Executor, to, of trust estate Expediency of, where interests of fiar and liferenter opposed Future, at price now fixed, not good Grossly inadequate price, at, effect of How to be carried through . Join other proprietors in, power to . Joint, conditions of sale in „ where expedient Lease, trustee's power to, where trust for Lots, by, when Of trusteeship Power of, exercised by factor „ implies disposition of subjects to trustee Price, upset ..... Private bargain, by, may be . „ „ where no offer at auction . Public roup, by, may be ... . Purchase-money, where, not implemented by payment of Re-sale, when ..... What reservations may be made in . Validity of, tested by suspension Proyjer time and place of Time of, trustee should inform beneficiary of Title for, clearing .... Trustee nominate, to, of trust estate . Trustee, to, of trust property, through third party . „ „ after failure of public sale Express direction for, of part, effect of Discretionary power of, effect on conversion Valuation to fix price .... Voided by trustee's bidding, liability for Trust for, duty to see to application of purchase-money 390, 420 382 380 391 502 . 376 386 . 386 386-388 396 et seq. . 404 401 et seq. . 365 . 388 . 438 242, 243 . 133 386 388 . 386 . 388 . 406 . 406 . 388 . 334 387, 389 . 550 . 362 . 502 496-501 . 487 569 . 570 386 . 1097 . 1272 1004 INDEX Section, 273 329 419, 1151 , 1215 1316 624 524 337 433 43i ,433 350, 1045 1046 30E ,312 83" ,838 665 327 9 Salesman, employment of Salvage, Trustee's duty Buildings, of . Relief for outlay for . Stranger, by, claim upon estate Sardinian Rentes, as investment in " foreign funds " Savings Bank, trustees of, indemnity under statute Scheme, cy pi-es. See also Endowment Limit to powers in . Settled only for administration of endowment Settling, procedure in Nature of . School, trust for, effect of Scots Court, practice of, in administration of trusts Scots Heritage, Thellusson Act in relation to . Second Bond, where good security Secret Trust Secretary of State, position of . Securities, Law agent, position of ... 238 Trustee's duty to see that, timeously transferred to him by broker . 259 Power to invest on, what allowable . . . 616-619, 621 Interest guaranteed by Parliament, investment on . 639 Loss of, how value assessed . . 1071 Security, vide also Borrow and Caution Effect of, where loan by trustees to one of their number . . 474 For expenses, executor, position of . . . . . 359 „ insolvent trustee, position of . . 358 „ trustee for creditors, position of . 359 Heritable, taken in name of law agent .... 224 „ sufficiency of, how tested ..... 652 Depreciating, trustee's duty as to . . . . . 667 Not realisable when payment due to beneficiaries . . 743 Truster's debtors, where, taken from .... 589 Form of .... . .694 Creditor of truster, for claims of . 724 Beneficiary, for share of 735 Error in payment, against, what proper . 1233 Contingent liability, for, by beneficiary . . . 1237 Sederunt, Acts of .... . . . 434 Selection from class by trustees .... 1046 Sell, Power to, effect of exception of certain subjects . 383 „ for payment of debts implied . . 344 „ how to be exercised .... 385-388 „ nature of ... . .380 „ did property, become unfit, and buy new, craved, con- ditions on which granted .... 407 INDEX 1005 Sell — continued Power to, proper time to exercise „ property after vested in beneficiaries „ purchaser should certify himself of ,, to statutory undertaking . „ where trust in perpetuity . „ unauthorised investment . Seller, question whether, a trustee Sequestration, Trustee in, completion of title by Trustee in, discretion of Trust estate put into, for administration by Court . Of trust estate as connected with removal of trustees Of trust estate, effect of ... . As a preliminary to investigation Where deadlock in trust administration Discharge in, effect of Servants, Employment of .... . Pensions to Gifts to ... . . Section. 389 . 389 . 382 . 381 . 384 . 1081 . 131 . 289 . 311 . 896 897, 898 . 898 899, 900 . 933 . 273 . 273 834, 1046, 1289 Settle, direction to, to be distinguished from direction to pay over 752, 815 ; p. 844 54 Severance of Trusts, where resorted to Shareholder, whether trustee can limit his liability as . Shares, see also Stock Held by truster, retention of „ „ with uncalled liability In joint stock company, time to realise And securities, difference between, for investment . Stocks, distinguished from .... Liability on, changed, power to continue New, power to take up Not fully paid up, investment in One trustee only registered . Gift of, by name Transfer of, by executor .... Sheriff, power of, to remove trustees Sheriff Courts, Jurisdiction over foreign trustees Question of jurisdiction between Shipping, insurance of, vide Insurance Shipping Register, notice of trust on . Shooting, vide Sporting Si sine liberis, effect of condition, accelerated payment . 1253 563, 564, 578 563, 573, 586 578, 579 618, 619 618, 621, 641 . 626 629 683 . 694 . 739 . p. 851 . 901 . 971 . 981 71 775 Sine quo non, Trustee, advisability of appointment of 162 concurrence required . 162 „ disclaimer by ... . 130 „ position of . 162 „ result of non-acceptance of . . 163 1006 INDEX Section. " Single," meaning of ...... 833 Singular Successors, trustees are . 144 Sole Trustee, Deceased, how divested of title .... 153, 154 Resigning, assumption by . 48 Where, should assume new trustee . 90 Resignation of ... 879, 880 Removal of, for insanity, procedure . . . 919 „ „ incapacity, procedure .... 920 Assumption by ....... 48 Appointment by Court of new trustees at instance of .64 Position of Court as to appointment of .90 Conflict of duty and interest .... . 451 Solicitor, vide also Law Agent Advantage taken by, in drawing deed .... 504 Communications between trustee and, when right in beneficiary to inspect ....... 551, 552, 952 How differing from trustee, as to dealing with estate . . 479 Not accountable for profits indirectly made through trust funds . 1096 Using trust funds, interest chargeable .... 1100 Knowledge of, where, is notice of breach of trust . . . 1276 Has no lien on trust fund for remuneration . . . 1302,1304 Accountable to trustees ...... 1305 Where partner of, liable to trustees for negligence . 1305 Account, taxation of . . . . . . . 924 Of beneficiary as new trustee .... 81 Of donee of power of appointment as new trustee . . 83 Solicitor-trustee, Position in competition with creditors of truster . . 720,1163 Where discharge held to be given for charges by . . 949 What proper charges, where empowered to charge 1170, 1171, 1173-1175 Where charges authorised by truster .... 1163 Allowance for trust meetings . . . . .1175 Accounts of, should be taxed ..... 1175 Appointment strictly interpreted ..... 1168 Can charge for trust work, where expenses not out of trust . 1178 Firm charging, where expenses settled by Act of Parliament obtained ..... . 1179 Cannot charge trust with fees . . . 1154, 1158 Allowed fees paid to correspondent . . . . 1159 Where allowed expenses of appearance in Court . 1160, 1161 Agreement to charge, form for . . 1162,1173,1174 Where held that charges acquiesced in . 1164 Remunerations implied in power to appoint . 1165 Position as to indemnity of co-trustee . . . 1239 Son, trustee dealing with estate through ..... 498 South Australian Stock not approved of, as an investment . . 646 Special Case, Procedure by, for ascertaining powers . . 334 Where trustees should raise ... . 269 Expenses in . . . , _ 1192 Special Destination, effect of general disposition upon . . 739 INDEX 1007 Special Legatee, section. Following residue ..... 1272, 1319, 1320 What expenses chargeable against . . . 997, 998 When shares left to, to be valued . . 995 Special and Residuary Legatees, claims of 734, 1272 Specific Legacy, test of existence of 739 Specific Powers must not be exceeded . 341, 343 Spes, see also Jus quassiturn ... . . p. 841 "Split," Stock or shares as investment . . 641 Shares, effect on gift . . . 739 Sporting Rights, trustee must not exercise 449 Statute, vide also Act of Parliament, Powers implied by . . 361 Duty to follow, if clear . . . 932 Statutory Powers, particular 379 Statutory Trustee, Right to pay damages out of funds . . 1151 Effect of statute on his beneficial interest . . 1045 Stock, And share distinguished . . . 618, 621, 641 Government, as investment . . 609, 610, 611 Mortgage, not proper trust mortgage . . . 669 Amount to be bought to answer direction to invest . 744 " Split," as investment ... . 641 Registered, transfer of . 696 Legacy of, amount .... . 744 Advance of, how valued for collation . . 990 Stockbroker, vide Broker Stock Exchange, vide Broker Submission of Claims, where proper . . 600 et seq. Sub-mortgage, as security for loan . ... 665 Subrogation, Doctrine of ....... . 1289 Distinguished from cy pres .... . 1289 Subscribers, unknown, how funds to be returned to . . 717 Subscription, Funds, depositaries of, as trustees .... 9, 1045 Fund raised by, resulting trust of . . . . . 1045 Subscriptions, where chargeable as outlays by trustee . . . 1151 Substitution, in destination of movables . . . 750 ; p. 841 "Substitutional gift," pp. 841, 847 Succession, questions of, what law governs .... 982 Succession Duty, new trustee taking annuity .... 874 " Successors," meaning of ..... . 834 Sue, see Title Summary Procedure, under National Debt Conversion Act . . 335 1008 INDEX Summons, raising, as trustees, is acceptance Superiorities, purchase of, as investment Supervision of Court, vide Administration Surrogatum, What is Of trust estate, lien of beneficiary on Survivor, Discretion, when exercised by- Nomination of Title to sue . As condition ..••■• Survivorship, In trust title ...••• „ whether limited to trusts mortis caitsd Annuity, in gift of Suspension, procedure by, for ascertaining powers Suspension and Interdict, proper remedy for beneficiary Tacit Relocation, trustee's power to prevent . Taciturnity as a plea in defence to a claim by beneficiary Taxation, solicitor's account .... Taxes, see also Government Municipal, investment on bonds, etc., secured on . Technical Words, how interpreted Tenant for Life, vide Liferenter Tenants, power to remove Testamentary Expenses, how paid Theft, insurance against ... Thellusson Act, Against accumulation Effect of ..... Application of How heritable property in Scotland affected by Affects indirect as well as direct accumulation At what date does, interfere with accumulation 848 Only affects direction to accumulate . Effect on vesting of provisions What to be paid over under . How twenty-one years calculated under To whom accumulations payable under Timber, liferenter's right in Time, Conditions of, in exercise of powers . Debtor, given to ... . Lapse of, as a defence to claim by beneficiary Timeously, when claim made , SectiOD. . 112 . 649 1289, 1294, 1298 . 1299 . 287 25 . 177 . 833 147, 148, 149, 152 150, 151 . 1008 . 334 1132, 1136 . 370 1118, 1119 924, 1154 . 675 . p. 842 . 370 719, 1009 . 330 835 et seq. . 327 757, 758 837, 838 . 839 et seq., 854, 855, 856 . 853 . 853 . 854 . 854 858 et seq. 1019, 1030 . 295, 296, 301 . 596 . 1112 727, 1319 INDEX 1009 Title, Accretion of . Accounting, to call for Acceptance by making up a . Completion of trust . „ „ by heir of trustee „ „ of assumed trustee „ „ of ex officio trustee „ „ of trustees appointed by Court . „ „ of trustee where not express disponee „ „ where trustee designated but not named Defend, to Death, effect on Defect in, notice Joint, nature of Local authority's, in charitable trust Difficulty in, must not be suggested unnecessarily Disclaimer of office is necessarily disclaimer of Flaw in, where disposition by trustee to himself, how cured General mandate to make up, effect of Questions of, in joint sale . ... Nature of trust ...... Necessity of acting in trust to extricate, not implied acceptance Section. . 554 373 101, 106 131 et seq. 136, 137 138, 139 . 135 141, 142 132, 133 . 134 351 . 153 . 167 148, 149 . 432 390, 391 . 128 . 390 . 222 400, 404 146 et seq- . 119 Condition that purchaser must accept, offered, should be introduced 391 Trustee and pro indiviso proprietor distinguished . . . 147 Of truster admitted by acceptance of the trust . . .99 • Personal and trust, in competition .... 447, 448 Refusal to make up, effect of . . . . . 127, 128 Resignation, effect of, on . . . . . 140, 886 Sole trustee deceased, how divested of 153, 154 State of, trustee should know ..... 539 Superior and vassal, of trustee in questions between . . 143 Survivorship in . . . . . . .148 To sue, change in beneficial interest does not affect trustee's . 357 „ circumstances where, in one of two trustees or in minority, or survivors . . . 174-181, 332, 1180, 1185 „ for consignation of estate . . . . .180 „ none in one of three trustees against another . . 176 „ want of, cured by appointment of judicial factor . 176 „ both express and constructive trustee, beneficiary has . 1273 „ trust agents .... 1305, 1306, 1308 „ debtor of trust estate, has beneficiary 1 177, 1306, 1308 „ beneficiary, has trust agent ? . 1309 „ law agent and trustees jointly 177 „ co-trustee, negligence not bar to, 352 Trust, accretion to, is accretion to trust estate 43S , 440 Ex facie good, trustee bound to pay to holder of . 705, 707 , 735 Claimant must have regular . 708 Forged, payment on . 709 Registration of, as affecting security . 665 Completing, trustee refusing to assist in 694 Shares, only registered in one name . 694 Trustee's, reduced, effect of . 718 Acquiescence of beneficiary in question of . 1122 Title Deeds, Beneficiary has right to inspect 550 64 1010 INDEX Title Deeds — continued section. Custody of 182 Duty of trustee as to safe custody of .... 328 Trustee must not depend on word of law agent as to existence of . 238 Titles to Land Consolidation Act, directions of, where trust purpose fails ........ Trade carried on by Truster, retention of Trade Union, interdict by member of . Trading with trust funds, liability of trustee 1053 . 563 . 1132 1090, 1091, 1092, 1093, 1095, 1111 Trading Company, position of trustee of, under Trusts Acts Transfer, Where required on resignation Company's duty ..... Of shares by executor .... Travelling Expenses, where good charge Trust, Constituted by delivery Constitution of, manner of . Court will not complete constitution of Created by Court Declaration of, ways in which made Direction, effect of revocation of, on powers Duty to execute, time when . Illegal, need not be carried out Implied, instance of . Ineffectual to attain object, need not be carried' out ji j; ,, „ unless to its being ineffectual . ... Intention of, inconsistent with, what is Manner of constitution immaterial if complete Nature of contract of . No one to enforce, result .... Not a word of style ..... Powers implied, where, if necessary to carry out trust Proof of, limited in certain cases Technically so called, nature of . Trust Acts only apply to, constituted by writing . Unworkable when ..... Notice of, none on register of stocks at Bank of England Court will not create machinery for private . Purposes, where none declared To pay debts, nature of ... Definition of . Failure through uncertainty .... Word, not necessary to create Power in nature of . Ineffective, whether need be executed Precatory ..... Gift to minor, presumed not to be in Uncertainty, failure through Where condition creates .... Purchase money, advance of, where creates . . 882 . 893 . 250 . p. 851 . 1151 26 3, 26, 27 15 57, 58, 67 26 . 340 . 323 . 327 328 et seq. 323, 324, 325 doubt as . 326 . 377 15, 16, 17, 151 21, 22, 1313 20 . 27, 28 . 340 29, 30, 34, 35 274, 275, 323 26 345 71, 696 751 1053 10, 21, 1062 1,2 4 27 323 323, 324 4 1045 4 1045 1186 INDEX 1011 Trust Corporation, nominees of, as new trustees Trust Deed, vide also Deed of Trust Draft of, right of beneficiary to inspect Taking custody of, temporarily, not acceptance of trust Defending, position of trustees Section. 88 550, 552, 553 . 116 . 1186 Trustee, see also "As Trustee" and Solicitor-Trustee Acting as, is acceptance Legal owner ..... Judicial factor and, how relations to Court differ As such, dealing with himself as individual „ „ „ „ „ where allowable Beneficiary, dealing with, about trust estate Dealing with other trustees . „ „ „ knowledge of truster that Definition of . Distinguished from agent Distinguished from similar offices Duties, general, of Duty and interest, must not allow to conflict Duty of, on appointment In office, power of truster to change . Sequestration, in, completion of title of Liability same, however trust constituted . New, vide New Trustees Nominate, beneficiary dealing with . „ intromission by . Nomination of ... . Of Friendly Society .... One, of more trustees, powers of Only as trustee, must act ,. „ „ unless excepting clause in deed Original, who may be -, . . Passive, not recognised Position and duty of, as to employment of agents Public, liability to different beneficiaries Relations of, to truster and to beneficiary . Relations of, to law agent, vide Law Agent Representatives of, as trustee and as individual Responsibility of, for agents . Sine quo non, vide Sine quo non Dealing with trust estate through third party Treatment of, by Court ...... And executor, offices compared ..... Where, is both debtor and creditor of trust estate Where legacy to, " as trustee ''..... Action of, cannot affect claim of beneficiary Remedies of, for enforcing relief ..... Using trust funds for own purposes, liability for 1090, 1091, 1092. Personal liability of, to third parties .... „ „ „ words limiting Liability of, to business creditors ..... Where, has claim against beneficiary for repetition . Description, nomination by . Under Entail Acts, not, under Trusts Acts, .... 114 5 . 347 451 et seq. . 477 478, 481-490 466-477 . 476 1, 22 . 5-10 4 . 435 437, 451, 452 . 328 42 . 131 16, 17, 18 502, 503 109 et seq. 24, 25, 69 24 182 et seq. 437, 451, 452 . 437 . 69, 70 96 191, 192, 193 18 21, 22, 23 . 168 198, 208 496 199 557 714 830 987 1211 1111 1249 1252 1249 1320 25 43 1012 INDEX Trustee — continued Survivorship in title of Title of Trustees, Obligation by, binds them singuli in solidum Joint and several liability to beneficiary Truster, Instructions by, as to agents . Intentions of, must rule Nomination of new trustees by Relations of, to trustee and beneficiary Wishes of, as to new trustees Example of, effect of . Business of, retention of Creditors, cannot protect himself against Powers, new, granted by, in charitable trust Radical right of, what is Statement of, as to extent of estate, effect . Section. . 148, 150, 158 131 et seq. . 1259 . 1123 205, 206 375, 378 89 21, 22 87 544, 561, 564, 565 . 563 . 750 . 350 1060 et seq. . 554 Truster's Creditors, see also Creditors of Truster Liability of trustees to, extent of . 722 Relation of trustee to, in carrying on business . . 1211 What proper investment of fund for payment of . . 1245 What right to call for accounting . . . . 1245 What interest due to unpaid . . . 1246 Measure of claim for loss against trustee . . 1247 How trustee may incur personal liability towards . . . 1248 Claim of, against beneficiary after trustee and trust estate discussed 1319 Claim of, against beneficiary where paid in error . . 1319 Remedies of, against beneficiary who has been paid . 1319 Truster cannot protect himself against . . 750 Appropriation of security for . . . 724 Trusts Acts, English trustees, position under . . 372 Difficulty of reading, together . .51 Particular powers under ... . . 379 Powers under, conditions of granting . . 375 Procedure under ... . 372 et seq. „ „ effect of introduction of . . 374 Apply only to trusts in writing . . . . 26 Trustees under Entail Acts not under . . 43 Fiduciary fiar's position under ..... 372 Tutor, see also Pupil Acceptance of office of, by trustee . . . 102, 158 Trustee, where also, position of, as to litigation . . . 354 Nominate, distinguished from trustee as to power to petition Court 336 Payment to, of pupil's beneficial interest .... 825 Power to grant discharge for pupil . . 929 » „ receipt for pupil .... 930 Is a trustee ... 4 Ultimes haeres, Crown as, does not take under destination to heirs of bastard . . ... 1049 Ultra vires resolution, effect of 167 INDEX 1013 Section. Unborn Child, where, is beneficiary 834 Uncertainty, Failure of trust through ... . . 4 What is . . . 1046 Unfinished Buildings not proper security . 656, 657 United Kingdom, Securities of, investment in ... . 637 Company in . . . . 622 United States Stock, As investment in " foreign funds," ..... 624 During Civil War, view of Court as to investment in . . 630 University, where bequest to, charitable . . . 1046 Unlet Property as a security for loan . . . .664 Unlimited Companies, investment in . . . 621 " Unmarried," meaning of ... . 834 Unoccupied Buildings as security for a loan .... 659 Unworkable, Trust, trustees being equally divided .... 348 „ where private Act of Parliament necessary . . 349 Where charitable trust becomes, procedure . . . 350 When trust becomes . . 345 Where trust, judicial factor should be appointed 347, 348 Upset Price, How fixed .... . . 386 Sale at, after auction . . ... 386 Usual, implies " usual and prudent " . . . . 536 Valuable Consideration, what is ... 1273 Valuables, properly left with banker ..... 252 Valuation, Revaluation, when ....... 701 Of security for loan of trust funds ... . 261 Of property for sale should be got .... 386 Trustee cannot purchase trust estate at . 464 Former, when used ....... 260 Not disclosed to beneficiary dealing with trustee, effect where . 549 Valuator, Advice of, proper nature of . . . . . .196 Appointment of, not by law agent . ... 237 Instructions to, nature of . . 264 Local, need not be . . . . . 261, 263 Mortgagor's, no action against by mortgagee . . 261 Instructed independently of any owner of security . 261, 262 Report from, circumstances in which trustee should get . . 260 Report of, use to be made of . . . . . . 265 Trustee acting as . .194 Report of, nature of proper . . . 653, 666 Who may be ...... . 261 1014 INDEX Valuator — continued section. Second, when employed ...... 260 Qualification ...... 261 Payment of . . . . . ■ • • 261 Guarantee Society's, position of .... . 262 Report of, trustee has no duty to investigate beyond . 264, 666 Finance Act, under, right to check by another valuator . . 652 Duty of, to state both value and amount of loan . . . 666 Several properties as security, duty of ... 666 Value, Of property as stated in trust deed — trustee not responsible for 555, 556 Of property for loan, proper test of . . . . . 655 „ „ amenity not item of . . . . 661 Eeported, what proportion of, may be lent .... 666 Where, of security depreciating, duty of trustees . . . 667 Vary Investments, Power to ........ 380 „ not to be confused with conversion . . 1017 Vassal, Trustee as Corporation as Trustee to pay debts, not 143, 144, 147 . 143 . 144 Vendor, position of, whether trustee ..... 4 Vested Interest, Meaning of, in Trusts Acts and at common law . . 373, 424, 428 Where, must be paid over . . . 755, 756, 759, 774 ; p. 847 Must be in beneficiaries jointly, before acceleration of payment . 774 Payment to, where contingent interests . . . .p. 848 Vesting . . . . . . . . p. 841 et seq. Exercise of power after, in beneficiaries .... 296 Power to sell after, in beneficiaries ..... 389 Acceleration of, distinguished from acceleration of payment . 777 Effect of Thellusson Act upon .... 853 A irwrte . ..... p. 844 Subject to defeasance . . ... pp. 845, 848 Victoria, Bonds, terms of investment clause covering .... 625 Stock, not approved of for investment .... 646 Villa Property, value of, as security for loan . . . 653, 661 Virginia Stock, as investment in " foreign funds " . . 624 Vitious Intromitter, Where trustee liable as ... 108 Not constructive trustee ...... 954 Void, vide also Null, directions, from repugnancy . . 750, 757 Voidable, transactions by trustee with estate . . . 437, 454, 457 Volunteer Corps, lease to, power to . . 364 Vote, Of corporation as a trustee ... . igg Parliamentary elections, trustee as such has no . . 5 Trust meeting, how taken . . . . . .166 INDEX 1015 Voting, by proxy ..... Vouchers, Factor must present .... Where none, what is trustee's claim for outlays Section. 156 244 1150 Warrandice, " As trustee,'' effect of ... . Clause of, prevails over articles of roup From fact and deed, consent to act of truster covered by In lease by trustee, what proper In sale by trustee, what proper Of discharge, effect of ... . From act and deed, includes acts as individual as well as Warrant, Beneficiary's title completed by Completion of title by, where new trustees . Wasting Investment, position of liferenter Wasting Subject, conversion of . Widow, Where, living in adultery, trustees need not pay to Election by, duty of trustee . Shares in profit made with jus relictce Meaning of Gift to, conditional, for children Legal rights, claiming Wife, Trustee dealing with estate through Where, trustee, position of husband . Will, interpretation of " Without Leaving," meaning of Woman, Married, as trustee .... Unmarried, appointment by Court . Words, interpretation of . Workmen's Compensation, Insurance against .... Claim of trustee under Writ, proof of trust by, what necessary . Writing, Of beneficiary in trustee's indemnity for breach of trust Meaning of 395, 1262 393 . 394 . 365 . 392 946 trustee . 1262 . 154 . 141 1014, 1019 . 566 . 833 553 993 834 4 . 831 . 498 73, 75 738 ; p. 842 . 834 . 73, 74 87 . 834 330 . 437 29 1227, 1229 833 ' Yearly Value," deductions 1175 PRINTED BY WILLIAM GREEN AND SONS, EDINBURGH