VJ' J; .V- 0'- ■/ .-4 P'.- * ,* M •** j: LAlfiT BOOKS rLi;HSHELi UY SWEET & MAXWELL, Limited, 3. CHANCERY LANE, LONDON. Action \irw L;i«'. .if th. Trirr Admir and I I, aw. Annua ti.'L', Orilc Traii Supr tlle 1 Ban-i Chiel F. A Itr.ya Arbitr Sill ] Attach uf Ll( Jl. Aueti Bankr Marsliall iEiiitttii (Eollerttan (gift nf S. 31- marahall, Cffi. 1. 1394 Yai k- liiUs Prac Sale Prici Eeport lianl lligl Ap|j( at-L Pts. _,_,.,,. A Wisest to the abore, 1881-7, by C. F. MoitiiELL. Price 10s. Qil., cloth." 1888. Bills of Exchange.— Bylen on Bills of E.xibaiise. MthKd. Py JI. U. livi.r.s and A. K. Luvii, Barristers-at-Law. 2(i.v. 18So. Bills of Sale. — Bills of Sale Arts, l,s78 and 1882, with Notes, l-orTos, and a short account of certain Rights afl'ertinL,^ Pills of Sale. ]!yE. P. Peakce, Pariister"-at-l 'i- 5.«. clotli. ■.F.A.) Land riland, 188J. raidii'O, ndbook . F. A. 1887. iliction lie Acts -1883, - rin the rrister- .. 1887. '., Q.c.) Clergy. lllIPPS, 1886. iVI.EU'.s Jolliers V CoiiE I S wan- t-Law. 1881. IITI'Y's Bench ee, and Appeal edmgs. issisted Price 1885. in as in e High TlLLES 1883. n Law. Lii and Demy 1888. .lie Law Idcd. ion of 3 of the IIenn niNOT, al 8vo. 1887. panics, ■tice of By the , one of of Ap- l', M.A., ana n . kj, uoi,l, m.a., oi rancoin's-inn, Fsqrs., Barristers-at-Law. 5th Edit. In lYol. Eoyal 8vo. Price 2/. 1889. Companies Act. Thiuxg'.s (Lord) Law and Practice of Joint Stock and other Com- panies. By J. M. Pendel. 5th Edit. Poyal 8vo. Price 30s. 1881). Eeports of Cases under the Companies Acts, decided in the High Court of Justice, the Court of Appeal, and the House of Lords. T!.T W 15 Ar.....^»TT. T}.,,.„:^+..,. „* T 3, CHANCERY LANE, LONDON. Constitutional Law. — ConsStutWal J. aw (BiiooM, Dr.), viewed in rcIHti6l^^to Common Law and exeniplilied by '(.IjiseB. 2nd Edit. Bv G. L. Dknmax, Barristt>4:- at-Law. 8vo. "Price 1/. lis. 6a'. doth. lS8o.~ Contracts.— Chitty's (J., ji'") Treatise on the Law of Contracts. I'Jth Ed. ByJ. M. Lelv & Ni.viLL G.-.i.itY. I'rice 30s. 1890. Smith's (J. W.) Law of Contracts. SthEdit. By V. T. Thomi'so.n. Trice 21s. 1885. Conveyancing'. —Bythewood and Jae- man's Pi'ecedents in Conveyancing. 4th Ediiion. By L. G. G. Eobbins. Xow completed in 7 vols. Koval 8vo. Price n/. Us. ' 1885 90. %* The Vols, may be had separatel}'. Davidson's Concise Precedents in Convey- ancing. 15th Edit. By M. G. Davidson. In the press. Practical Introduction to Conveyancing. By H. "^'. Elphinstone, Barrister-at-Law. 3rd Edit. 8vo. Price 14s. cloth. 1884. Convictions.— Palky's Law and Prac- tice of Suuimarv Convictions by Justices of the Peace. 6th Udit. By W. H. Macxa- MAEA. Price 1/. 4s. 1879. Coroner.— .Tervis (Sir John) on the Ufliceand Duty of C*ironer; with Appendix of Forms and Precedents. 5th Edit. By E. E. JlELSHEiMElt. Price IDs. M. 1888. County Councils.— The Connty Coun- cillor's Guide. Being a Handboolt of the Local Government -Vet, 1888, wilh an In- troduction, an Epitome of the Powers and Duties of the new Ci unty Councils. By H. HoBHorsE, M.P., and E. L. Fax- SH.^WE, liarristers-at-Law. Demy 8vo. Price 7s. 6d. cloth. 1888. CountyCouneillor's Manual.— SrEAK- man'«. a Compendium of the Constitu- tion, Procedure, and Powers of County Councils, and of the Statutes they have to administer. "With an introductory C'hapter on the Conduct of County Business, by W. L. Lowndes, Esq., Lite Chairman of the Shropshire Sessions. By K. H. Spear- man, BaiTister-at-Law, llecorder of Bridg- north. Demy 8vo. 7s. 6(f. cloth. 1889. County Courts. — Nicol and Hey- wood's Annual Practice of tlie County Courts ; containing all the County Court Acts, the Rules, Orders, Forms and Tables of Fees, Costs, &c. 2 vo's. By H. NicOL and G. W. Heywood. Price 30s. 1889. Criminal Law.— Aeohbold'r (J. F.) Pleading and Evidence in Criminal Cases, with the Statutes and Precedents of In- dictments, by Sii- John Jervis. 20th Edit. By William Bruce. Eoyall2mo. Price 1/. lis. 6d. cloth. 1886. EusSELL (Sir W. 0.) on Crimes and Misde- meanors. The 5th Edition. By S. Pren- tice, Q.c. 3 vols, royal 8vo. Price 51. 15s. &d. 1877. A Digest of Criminal Cases from 1756 to 1883 inclusive. By J. Mews, C. M. Chap- man, H. H. W. Sparham, and A. H. Todd. Eoyal 8vu. Price 21s. 1884. Eoscoe's (II.) Digest of the Law of Evidence in Criminal Cases. 11th Edit. By Horace Smith & GlLBEKTGEORGEKENNEDY,Me- i Dii CORNELL UNIVERSITY LIBRARY 1924 085 504 870 Demy »vo. Trricc JS.-crer;;. - j^^uv,. Deeds. — Kules for the Interpretation of Deeds. With a Glossary. By H. W. Elphinstone, m.a., E. F. Norton, LL.B., B.A., and J. W. Clark, m.a., Esqrs., Barristers-at-Law. Demy 8vo. Price 25s. cloth. 1885. Digest. — Fishek's Digest of the Reported Decisions of the Courts of Common Law, Banliruptcy, Probate, Admiralty, and Di- vorce, together with a Selection from those of the Court of C'nancery and Irish Courts from 1756 to 1883 inclusive. By John Mews, C. M. Chapman, H. H. W. Spar- ham, and A. H . Todd, Barristers-at-Law. In 7 vols. Eoyal 8vo, cloth. 12^. 12s. Continuation for 1884, 12s. M. ; 1885, 1886, 1887, 1888, and 1889. 15s. each. Mews' dmsolidated Digest, 1884-88, being a Digest of all tlie Exports in all the Courts for the years 1884-88 inclusive, Bringing Fisher's Common Law and Chitty's Equity Digests down to date. Eoyal 8vo. Price 1/. Us. Qd. cloth. 1889. A Digest of Cases, OveiTuled, Not Followed, Disapproved, Approved, Distinguished, Commented on and Specially Considered in the English Courts from the year 1756 to 1886 inclusive. By C. "W . M. Dale, and R. C. Lehmann, Barristers-at-Law. In 1 Vol. Eoyal 8vo. Price 50s. cloth. 1887. Divorce. — Browne & I'uwles' Law and i'ractice in Divorce and Matrimonial Causes ; with the Statutes, Eules, Fees and Forms. 5th Ed. 26s. 1889. Easements. — Gale on Easements. 6tli Edition. By G. Cave, Barrister-at-Law. Eoyal 8vo. Price 26s. 1888. Elections. — Cunningham's (J.) Law re- lating to Parliamentary and Municipal Elections, and Petitions. 3rd Edition. By C. Tyrrell Giles, Barrister-at-Law. 8vo. Price 25s. cloth. 1885. Equity. — A Practical Compendium of Equity, arranged alphabetically under distinct Titles, 2nd Edition. Eevised with Supp. to 1888. By W. W. Watson, and B, P. Neuman, Barristers-at-Law. 2 Vols. Eoyal 8vo. Price 60s. 1888. Chitty's Equity Index. 4th Edit, By H. E, Hirst, Barrister-at-Law. 9 Vols. Eoyal 8vo. Price 12^. 12s. *^* The Vols, may be had separately, to complete sets. White & Tudor's Selection of Leading Cases in Equity, with Notes. Vol. I. — By F. T. White and 0. D. Tudor, Barristers- at-Law. Vol. II. -By 0. D. Tudor, BaiTister-at-Law. 6th Edition. In 2 Vols. Eoyal 8vo. Price 4^. 4s. cloth. 1886. Estoppel.— The Principles of Estoppel. By Michael Cababe, Banister-at-Law. Ciown 8vo. Price 3s. &d. cloth. 1889. 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/cletails/cu31924085504870 THE LAW RELATING TO THE INVESTMENT OF TRUST MONEY. THE TRUST INVESTMENT ACT, 1889. THE LAW RELATING TO THE INVESTMENT OF TEUST MONEY. JOHN SAVILL VAIZEY, OF THE MIDDLE TEMPLE AND LINCOLN'S INN, BABR16TEE-AT-LAW ; AUTHOR OF "a TREATISE ON SETTLEMENTS," ETC. LONDON : SWEET AND MAXWELL, Limited, 3, CHANCERY LANE, MEREDITH, KAY, AND LITTLER, MANCHESTER. 1890. LONDON : BRADBUEY, AGNKW, & CO., PRINTERS, WHITEFEIARS. PEEFACE. The bulk of tbis book consists of extracts, varied in accordance witb recent legislation and decision, from' my Treatise on the Law of Settlements of Property. The extracts include part of Section 1, and Sections 4 to 22 inclusive of Chapter IX., with so much of Section 33 of that Chapter as comprises and relates to the Investment Clauses (ss. 21 to 30) of the Settled Land Acts, and Section 5 of Chapter XVI. ; but the order of many parts is changed, chiefly in consequence of the changes in the law : parts are re-written, some shortened and some omitted, while addi- tions have also been made ; in particular the print of the Trust Investment Act, 1889; the List of Authorised In- vestments, and Chapter XVI. January 10, 1890. TABLE OF CONTEi^TS. CHAPTER I. „ ■ PAGE The Teust Investment Act, 1889 1 CHAPTER II. List oi' Attthoeised Investments . . .... 8 CHAPTER III. General Rulss op Fiduciaky Duty with eefekbncb to Teust Money 15 CHAPTER IV. Retention oe Convbesion oe Existing Investments . . 19 CHAPTER V. Teusts and Powees poe Conveesion and Investment . . .31 CHAPTER VI. GENEEAL E0LES OP PiDirCIABY DUTT WITH EBPBEENCB TO Investment H CHAPTER VII. DiSCEETION TeUSTEES MAY EXEECISB 51 CHAPTER VIII. Intbeim Investment 58 Vm TABLE OF CONTENTS. CHAPTER IX. PAGE Permanent Investment .... . 61 CHAPTER X. Successive Statutoey Enlaegements of the class op Invest- ments ELIGIBLE BY TE0STEES 64 CHAPTER XI. Statutoey Investments .... .... 76 CHAPTER XII. Stock Exchange Investments genbeally consideeed . . 155 CHAPTER XIII. Investment Clauses 163 CHAPTER XIV. Investment op Capital Money arising under the Settled Land Acts 183 CHAPTER XV. Purchase op Land — Section 1. — powbe to invest in eithee eeal or peesonal peopeety 209 Section 2. — powers in settlements op peesonalty to invest in purchase of land . . . 210 Section 3. — trusts and powers in settlements of realty and in acts of parliament for investment IN LAND 215 CHAPTER XVI. Responsibilities of Trustees ... ... 240 INDEX 249 TABLE OF CASES. Adams v. Claxton 16 Adie V. Pennilitteau 93 Adye v. Feuilleteau 61 A. G. V. Doyley 57 i!. Higham 180 Aldred's Estate, i>8 re 226 Allen, Ux parte 235 Ames V. Parkinson 16, 17, 23, 47 Andenshaw's School, He 238 Angell ■«. Dawson 54, 79, 92 Angersfein r. Martin 23 Anon. V. Walker 119, 178 Askew I). Woodhead 238 Aston I: Meredith 229 AtweUv. Atwell 209,210 B. Bakbham, JRe 238,239 Barker, 7>j re 228 Barrett, Ex parte 233 Barrington's Settlement, In re, 216 Barry «. Marriott 98 Bate «. Hooper 94 Batsman's Trusts, /» re 233 Baud D. Fardell 27,28,30,93 Beauolerk T. Ashburnham ...21,47, 54, 211 Beaufoy's Estate, In re 229 Beck, In re 183, 194 'SeMoes, Ex parte 220 Bedford (Duke of) v. Abercorn (Marquis of) 35 Belchier, Ex parte 15, 155 Belfast Water Commissioners, Be 226 PA(iB Bellamy, Re, and The Metro- politan Board of Works 156 Bell's Case 168 Bellot «. Littler 216 Beloved Wilkes's Charity, Re, 51, 52 Belt, Re 228 Bethell v. Abraham 55, 181 Bethlehem & Bridewell Hospital, In re 205 Bethlem Hospital, Re 236 Bethune t>. Kennedy 26 Bilston, Ex parte, (Curate of) 239 Birmingham Blue Coat School. . . 68 Bishop V. Bishop 128 Blake, i« 7'e 51 Blann ^. Bell 28 Blomfield, In re 224 Blyth's Trusts, In re 236 Bolton Estates Act, 7n, re 196 Boss v. Godsall 54, 178 Bostock f. Moyer 155 Howiaa,!!, Ex parte ,. 229 Boyce's Minors, iJe 122 Boyd, Re 68, 102 Brackenbury's Trusts, Re 70, 71 Bradfield, St. Claire, Ex parte, (Rector of) 226 Bradshaw, Ex parte 233 Brandon's Estate 237, 238 Bredioot, Ex parte, (Rector of) 232 Brindley v. Partridge 21, 53 Briscoe, Re 68 Brittlebank, Re 51. Broadwater Estate, In re... 205, 207, 208 Brogden, In re ...20, 24, 32, 116, 158 Broke, .Ete^arfe, (Lord) 238 Bromley ■». Kelly 120 Brooshooft's Settlement, /» re. . . 238 TABLE OF CASES. PAGE Brophy v. Bellamy 55, 56 Brown, 7»j re 54, 180, 181 i;. Adams 17 ■ ■W.Brown 90,91,97,172 I). Gellatly 29 I'. Higgs 56 Brunskill v. Calrd 217 Buchan's Case 168 Buokingham, l7i re 223 Backs Ey. Co., Be 225, 236 Budge I). Gummow 116,117 Bullocks. Bullock 160 Bulwer Lytton's Will, 7» re ... 207 Surges V. Lamb 212 Burnell's Estate, iJe 239 Burnie 1). Getting 91 Burrough v. Philcox 56 Butcher's Co., Zft re 236 Butler, Be 228 V. Withers 28, 51, 54, 169 Buxton V. Buxton 54 Byam t). Byam 52 Byrom, In re 239 Byron's Charity, Be ...139, 170, 183, 185, 219, 227 C. Caddick, In re 223 Cadetti). Earle 97, 172 Cadogan v. Essex (Earl of)... 54, 211 Gutev. Bent 55 CaflErey «. Darby 20 Caldecott v. Caldecott 92 Oalthorpe, Hx parte 98 Camden (Marquis) v. Murray... 52 Caney ^. Bond 20 Cann's Estate, In re 222 Cardigan t!. Curzon-Howe ...55,194 Carritt v. Eeal and Personal Advance Co 119 Carthew ». Enraght 56 Castle ». Warland 17 Cavendish w. Cavendish 106 Challen «. Shippum 155 Chambers «. Smith 52 Champion, Ex parte 91 Chaplin, i>i re 136 PAGE Chaplin, Ex parte 96 Charlton ii. Eolleston 234 Chaytor's Settled Estate Act, In re 189, 190,194 Chennell, iji »'e 102 Cheshunt College, lure 222, 224 Chesterfield's Trust, (Earl of) . . . 30 Child V. Child 177, 178 Clack 1). Holland 20 Clarke v. Thornton . . .183, 184, 197, 204 Claypole, Ex parte, (Eector of) 225 Clergy Orphan Corporation, In re 37,130 Clitheroe's Settled Estates, Be. . . 226 Clough i-. Bond 17 Cock p. Goodf ellow 179 Cookburn v. Peel 54, 55, 128 Cockers. Quayle 178 Coe's Trusts, Be 56 Cohen -!). Waley 37,122 Cole «. Wade 57 Colne Valley and Halstead Eail- way. In re 54, 124 Collin's Charity, Be 232 CoUinson v. Lister 118 Consterdine V. Consterdine 23, 170 Conway v. Fenton 195 Cookes f . Cookea 193, 196- Cookson D. Eeay 209 Cook's Settled Estates, In re ... 68 Cooper's Trusts, /« )'e 38 Corpus Christi College, Oxford, Ex parte 238 Costabadie r. Costabadie 52 Gottam V. Eastern Counties Ry. Co 175 CottrelU'. Cottrell 199 Courtier, In re 51, 53 Cowley (Earl) v. Wellesley 216 Coyte's Estate, In re 222 Cranch ^). Cranch 27 Craven, Ex parte 223- Crowe «). Crisford 21 Cuninghame v. City of Glasgow Bank 168 TABLE OF CASES. XI PAGE u. Dakke v. Martyn 18 Darwin v. Darwiu 91 Davidson, In re 32 Davis, Ex-jiarte 221, 227 Dean, &c., of Christ Church Coll., Manchester, Ex parte the... 99 De BeauYOir, In re ... 225, 228, 235, 237 De Gray's Entailed Estate, In re Earl 226, 233 Denn ■». Moir 103 Dent i: Dent 213 Derby Municipal Estates, In re 220 Dereham, £*^a)'ie Vicar of ... 223 Dickonson -v. Player 179 Dimes v. Scott 27 Dixon V. Jackson 222 Dodd, In re 237 Doe r. Allen 103 Donaldson c. Donaldson ... 216, 217 Doorly i-. Arnold 182 Dowling, i?« 282 Drake r. Greaves 237 r. Trefusis 216, 217, 226 Drosier v. Brereton 104 Dudley & L. & N. W. Ey. Co., ire re Countess of 196 Dummer's Will, iJe 225 Dunne v. Dunne 217 E. Eaelom i;. Saunders 209,210 East, In re 229, 230 r. East 20 Eastern Counties By. Co., In re, Ex parte Yicar of Sawstou . . . 223 Eastern Counties Ey. Co. v. Hawkes 112, 224 Edenc. Thompson 238,239 Edmonds «. Millett 51 f. Peake 156 Edwards i\ Warwick 209 BUice, Ex parte 98 EUisw. Eden 97, 172 Ellison's Estate, In re 233 PAGE Emelie c. Emelie 62 English's Settlement, /« 7'e ... 239 Equitable Heveisionary Int. Soo. D. Fuller 128 Esdaile i-. Esdaile 189 Eton College, -Ec/iarte 233 Evans, /?s re 229 Eyton's Settled Estate 194 Faebae r. Barraclough ... 102, 121 Feltham v. Turner 51 Fenwick v. Clarke 16 Ferguson t'. Ferguson 217 Fisher t). Fisher 235 Fitzgerald i). Fitzgerald 104 1). Pringle 179 Flemon's Trusts 235 Fletcher r. Walker 17 Forbes i\ Eoss ... 177, 178, 182, 241 Fordyce ii. Bridges 57 Fowler D. Keynal 179 Foxton f. Manchester and Liver- pool District Banking Co. ... 17 Foy, 7ft7'e 232 France 1;. Woods 16 Francis v. Francis 119, 244 Franklyn, Ex parte 98, 232 Yiench., Ex parte 109 French's Trusts, In re 139, 140, 174 Frewen, In re 189 Fromow's Estate, i?e 124 Fryi'. Tapson ...113,116,117,240 Fryer's Settlement, /ft !'e 68 FuUer r. Knight 103 Fylerii. Fyler 19,47, 103 6. Gamston, Ex parte Eector of 225 Gardner v. London, Chatham and Dover Eailway Co 107 Gartside, Ex parte 216,222 Gaskell, Ex parte 239 Gedling Eectory, In re 236 German Mining Company, In re 213 Xll TABLE OF CASES. PAGE Ghost v. WaUer 156 Gibbins r. Taylor 17 GiUespie v. City of Glasgow Bank 168 Gilioy r, Stephens 19 Gisbome v. Gisbome 51, 52 Godfrey, Re 113, 114, 117 Goldney v. Bower 175 Gooch's Estate, In re 229 Gore Langton's Estates, Xn re. . . 238 Graybum r. Clarkson 32 GTeat^OTtheTn.'Rj.Co., Ex parte 68 Great WestemKy. Co., i'.z'^arfe 238 Green v. Angell 128 GreenTUle Estate, Tn re 193 Griffiths V. Porter 156 Grimoldby, Ux parte Kector of 221 , 226 Grove r. Price 20 H. Hallett, Re 17 Hanbury's Trusts, i?£ 235 Hancock r. Smith 17 Harborough, Ex parte 233 Harris r. Harris 169 Harrison r. Thexton 21, 24 Harrisons' Estate, J» re 235 Harrop's Trusts 196, 230 Hartington, Ex pa rtc Sector of 226, 227 Haynes 1-. Barton 2.39 Hemsley's Settled Estates 230 Henniker 1-. Chafy 239 Hewett V. Hewett 56 HiU D.Hill 35 Hilliard, i?« 222 Hobson's Trusts, In re 22'J, 230 Hockley ». Bantock 47 Hodge, Ex parte 239 Hodges, In re, Darey c. Ward 56 Hoey V. Green 113, 115 Holgate !'. Jennings 2H, 106 Holmes r. Dring 62 T. Moore 54. 178 Holywell, Ex parte Kector of 236 Holywell - cum - Needingworth, Ex parte Uectoi ot 227 PAGE Hope !•. Hope 20,40 Hopewell t. Ackland 103 Hopgood V. Parkin 112, 156 Horwood's Estate, In re 229 Hotchkins' Settled Estates 191, 207 Hotham'sTrosts, In re Lord 216,217 Houghton Estate, ^ 205 Howard r. Kay 94 Howe V. Lord Dartmouth . . . 22, 25, 26, 29, 62. 91, 92 Hubbard v. Young 25 Hudleston «. Gouldsbury 169 HuU». Hill 97, 172 Hume i: Eichardson 54, 64, 91 Hungeriord, Re 238 Hurdr. Hurd 128 Hynes v. Kedingtou 62, 91 I. iLLMAJf, Jm re 229 Ingle r. Partridge 116 Ingram, In re 55 Ingram's Trusts, Re 122 J. Jackson, r. Jackson 54, 91 r. Tyas 69 Johnson r. Xewton 16 Johnson's Settlement, In re 226 Johnston r. Lloyd 106 JoUifiEe, In re 239 Jones, In re 232, 237 V. Lewis 58. 114, IIS, 237 Jones's Trust Estate, i?« 238 Jourdaine c. Lefevre 17 K. EJELLAND V. Fulford 219, 228 Kellaway 1). Johnson 47, 94, 212 Ker's Case 168 Kingston, Ex parte 17 Kirkpa trick's Tmst, 7« r« 109 Kirksmeaton, Ex parte Kector of 68,128,221, 231 TABLE OF OASES. XIU PAGE Knatehbull's Settled Estate, In re 1S6, 191, 207 Knott V. Cottee 95, 241, 243, 244 Knox V. Mackinnou...24, 46, 52, 111, 177 L. Laing's Trusts 53 Lander v. Weston 104 Langdale's Settlement Trust, Inre 97,172 Langford's Trusts, i?e ... 68,122,128 Langmead r. Cockerton 68 Langston D. OUivant 178 Leadbitter, J« re 227 Learoyd®. "Whiteley 117 Lee 1'. Hemingway, In re 235 r. Young 24 Legg V. Mathieson 106 Leigh, Inre 239 Leigh's Estate, In re... 226, 227, 231 Leinster's Settled Estates, In re Duke of 188 Leonard, /» re 30 Leslie's Trusts, In re 217 Lewis D.Nobbs 176, 180, 181 Little 1). Neil 56 Liverpool, Ex parte the Cor- poration of 225 Liverpool, &c. Ry. .Be 232 Livesey v, Harding 55, 56 Llewellin, 7>8 re 194 Lloyd, ire re 172,185 Lockhartu Keilly 104, HI Lockwood, Ex paite 221 Lofthouse, /» re 51 Lomax, Me 235 London, Brighton, &c., Railway Co., /rare 220 London Discount Co., The, v. Brown 169 London Street, &c.. Act 1881, /« re 23.5,239 Lord V. Godfrey 26, 30, 40, 94 Lowson D. Copeland 20 Lunham v. Blundell 16 Luther v. Bianconi 21, 25, 180 M. Mabbeley, In re 24, 110, 147, 185, 215 Macaulay, Ex parte 221,222 Macdonnell 11. Harding 17 Mackenzie's Trusts, /« ?■« ... 154,184, 197 Macleod v. Annesley ... 46, 103, 113, 116, 117 Magnus v. Queensland National Bank 155 Maitland 1!. Bateman , 20 Manchester, Ex parte Dean & Canons of 222, 237 Manchester, etc., Ey. Vc,.,In re, E.r ^arfoGaskill 239 Hansel, Re 136 Mant V. Leith. 100, 106, 107, 244 Marlborough's Settlement,/?} re the Duke of 190, 192, 198 Marsden v. Kent 54 Marsh r. Hunter 47 Martin, In re 223 Maryport Ey. Act, In re 238 Massey v. Banner 17 Mathias r. Mathias 213, 223 Matthews v. Brise ... 16, 47, 58, 175 Medland, J?i re 118 Melwsad, Ex parte 225 Meudes v. Guedalla 176 Mercer's Co., Ex parte 235 Merceron, In re 235 Merchant Taylor's Co., In re The 237,239 Meyer v. Simonsen .23, 29 Miles' Will, iJe 64,108 Mill's Estate, J» re 235 Mills V. Mills 106 V. Osborne 178 Milsington D. Mulgrave 51 Mitchell's Case, Alexander 168 Morgan's Settled Estates, Hr. . . 229, 230 Morris, In re 21, 33 Morris' Settled Estates, In re... 232 Mortimers). Picton 29, 128 Mortimore r. Mortimorc ... 106,107 Moyle 1'. Movie 16, 19, 20 XIV TABLE OF CASES. PAGE Mair v. City of Glasgow Bank, 168 Mure, Ex parte 20 Murray r. Glasse 52 N. Nash, i«r« 238 Neath, &c., Ey. Co., In re 234 Nether Stowey Vicarage, In re 217, 218, 226 Nettlefold's Trusts, Re 56 New London & Brazilian Bank r. Brocklebank 170 Newman's Settled Estates, Jre re 225, 226 Newton's Settled Estates, In re 188, 208 Norhury f. Norbury 98 Norcop, Re 228 Norris v. Wright ... 46, 104, 109, 113, 117 North Staffordshire, &c., Ey. Co. Re, E.r parte Vaudrey's Trusts 2B6 0. Olive, In re 113, 116, 117 Orr r. Newton 23 Oxford, ire, Ey. Co., In re, E.v jjffj-id Mil ward 225.236 P. Paddon r. Eichardson 177, 178 Panama, &c.,Eoyal Mail Co., Rr 107 Parker, Jm re 222,237 t'. Bloxam 177 Partington, i?e 114,116,117, 158, 227 Patten v. Guardians of Edmon- ton 213 r. Wood 17 Pattison, in re 238 Pawlet, Ex parte 109 Peacock, i?e 229 Peake t\ Penlington 35 Peat r. Crane 91 Pcillon r. Brooking 124 Pell r. De Winton 120 PAGE Pennell r. Deffell 17 Penny r. Turner 56, 57 Peyton's Settlement Trusts, In re 216 Phillips f. Sarjent 229 Phillipson v. Gatty 40, 103, 113 Pickard r. Anderson 177, 182 Pickering v. Pickering 19, 26, 27 Pick's Settlement, /» re. . . 238, 239 Platel u. Craddock 20 Pocock D. Eedington 180 Portadown, &c., Ey. Co., In re 223 Porter r. Baddeley 29, 94 Poulett r. Somerset 216 Powell i). Cleaver 27 ■». Eyans 20 Poynder, Jn re 227 Prendergast i\ Lushington 54 Pretty r. Fowkes 116 Pride r. Fooks 98 Pryor's Settlement, Re 239 Pugh, In re 24 Pumfrey, In re 213, 223 E. Eabt f. Eidehalgh 24, 98 Eaer. Meek 115,116,248 Eansome 1). Burgess 57 Eeastons' Estate, 7» re 229 Eehden v. Wesley 18 Eehoboth Chapel, In re 222 Eeynolds, In re 228 Eich r. Whitfield 20, 209, 210 Eoberts v. Morgan 122, 146 Eobinson r. Eobinson,... 22, 23, 106, 107, 108, 212, 241, 243 Eobson r. Flight 57 Eound r. Turner 195 Eow, In re 228 Rowland r. Witherden 155 Eudd, /rare 184 Eudyerd's Trusts, .He 225 Eutherford's Case 168 Eutland's Settlement, In re Duke of 196,230 Eyder, In re 234 t\ Bickcrton 180 TABLK OF CASES. XV St. Bartholomew's Hospital, E.r parti: 239 St. John's Coll., Oxford, Ex parte fi8, 69, 70, 231 Salmon, In re 114, 115, 243, 244,245, 247 Salway r. Salway 17 Sampayo v. Gould 35, 76 Sawston, Ex parte the Vicar of 223 Sculthorpe v. Tipper 32, 168 Sebright's Settled Estates, In re 199 Sewart's Estate, In re 236 Sewell's Estate, 7« re 52 Shakespeare Walk School, In re 238, 239 Shaw, Ex parte 225 Shaw's Settled Estates, In re 68 Sheffield, Ex parte Corpora- tion of 221 Sheldon, /ft re 28 Sheppard v. Scinde, Punjaub & Delhi Ey. Co 136 Shipton-under-Wychwood, Ex- parte Rector of 225 Sidney t). Wilmer 239 Sillibourne v. Newport 55, 56 Simson's Trusts, Re 64, 99, 180 Slingsby r. Grainger 77,91 Smethurst i>. Hastings. ..106, 113,116 Smith, Inre 230 In re 174 Smith V. CameKord (Lord) 212 Smith's Estate, In re William... 232, 235 South- Western Ey. Co., E.r parte 96 Southwold Ey. Co.'s Bill, In re 68 SowTj, l7i re 230 Speer's Trusts, Be 225 Speight, Re 112, 155, 156, 158 V. Gaunt . . .155, 158, 1 59, 160, 162 Stamford's Estate, In re Lord 197 Stanley of Alderley's Estate, J» re Lord 235 Stewart v. Sanderson. . ,28, 47, 94, 182 Stickney r. Sewell 113, 119, 178 Stock's Devised Estates, Re 227 TAGE Stretton r. Ashmall 46. 113, 115 116, 117, 181 Strickland v. Symonds 20 Stroud r, Groyer 179 Stuart r, Morton 57 V. Stuart 24, 109 Styles <'. Guy 20, 181 Sudeley's Settled Estates. In re Lord 188 Sutton r, Wilders 16, 112, ir,6 Swann v. Fonnereau 20. 209 Swinfen t). Swinfen 10 T, Tabob V. Brooks r,l Taddy's Settled Estates, In re. . . 68 Tait r. Lathbury 211 Taylor, In re 223 1), Blacldow 112 Tegg's Trusts, lyi re 56 Tempest v. Camoj'S (Lord) , , ,52, .'S, 5r,. 56 Teunant, In re 154, 184, 197 Terry 1). Terry ISO Thomas i'. Williams 52 Thornhill v. Milbank 228 Thornton v. Ellis 27 I!. Stokill 243,244 Thorold's Settled Estates, In re 68 Ticknerr. Old 28, 30 Tomlin r. Luce 156 Townend 1'. Towneud 102 Townley i\ Sherborne 20 Trafford v. Boehm 62, 91, 93, 94 Trench r. Harrison 212 Trinity House, Ex parte Cor- poration of the 233 Tuckett's Trusts, In re 43, 154 Tudballu Medlicott 20 Turner r. Turner 55 U, Undertaking, -Kr^pffirfe an, 77,93 Ungless r. Tuff 128 XVI TABLE OF CASES. Vatjdeet's Trusts, In re 236 Yenour's Settled Estates, lir ... 100. 216, 217. 226 Vemou V. Mauvers (Earl). ..218, 221. 227 Xei^c^ojle, Ex parte 230 Verstonne -r. Grardiaer 177 Vicar of St. Mary's, Wigton, Ex parte 68 Vincent r. Newcome 26 Vickeiy r. Evans 29, 114, 121 Vidler r. Parrott .i.5. 128 Vigrass r. Binfield 61 Waite r. Littlewood 37, 55 Walcott r. Lyons 116 Walker r. Walker 56 Wall r. Hall 68. 100 Walter T. Mande 36 Ward r. Tyrrell 56 Warde, In re 37, 38 Warde's Estates, In re 229 Waring D. Waring 104,111, 117 Warner r. Torkington 53 Watts r. Girdlestone 47 Webb r . Shaftesbury, Earl of . . . 55 f. Jonas 96, 119 Wedderbnm's Trusts, In re ... 65, 70 Wellington's Settled Estates, In re Duke of 225 Westover r. Chapman 178, 180 Whiter. Baugh 17 Whiteley, In re 115, 118 Whitfield. He Incumbent of ... 225 PAGE Whitney v. Smith 120 Widdowson f. Duck 55 Wigan Glebe Act. Re 226 Wight's Devised Estates, In re 233 Wightwick r. Lord 28 Wildayr. Sandys 23,94 Wiles r. Gresham 20 Wilkes r. Steward 180 Wilkinson r. Bewick 16 c. Duncan 29 Wilkinson's Estate, In re 68 Wilis f. Groom 16, 18 Williams' Estate, In re 235 Williams' Settlement, In re ... 56 Williams v. Aylesbury & Buck- ingham Ky. Co 227 V. Colonial Bank 161 Wilson's Estate, lie 223 Winchester, Ex parte Bishop of 229 Windham r. Cooper 51 Windsor, &:c., Ky. Act, In re ... 233 Woodcock's Settled Estates, In re 69 Wood's Estate, In re 233, 234 Settled Estate 228 Worman «. Worman 223 Wren r. Kirton 17 Wright V. Lambert 29 Wright's Trusts, In re 196, 230 TOTTL. In re 239 Z. Zambaco v. Cassavetti 57. 182 ADDITIONS. Pp. 3, 5, 7, 39 : Since this Volume was printed, Mr. Justice Nortli appears to have decided : 1st. That stock in the funds standing in the names of trustees for a B&nefit Building Society incorporated under the Act of 1874, does not constitute "trust funds" within the meaning of the Trust In- vestment Act, 1889 ; that Act extended the powers of trustees who had a power to invest, but did not confer a power of investment on trustees who had not one ; the trustees of the building society had no power of investing ; investments were in the discretion of the society acting by their directors ; trustees for a person absolutely entitled would not have the powers conferred by the Act ; nor, in the opinion of the learned judge, were the directors trustees for investment, though they were agents of the society, in a fiduciary position, and in the position of trustees as regarded their liability for misappropriation of the society's funds. In re The National Permanent MiUiial Benefit Building Society, Solicitors' Jam-nal, Dee. 28th, 1889, 143 ; Weekly Notes, 1889, 229 ; Law Times, Jan. 4th, 1890, p. 169. 2ndly. That a corporation of which the funds were applicable by it to purposes of charity was a trustee, and the funds were trust funds, to which respectively the Trust Investment Act, 1889, applied. The Man- chester Royal Infirmary Dispensary and Lunatic Hospital v. The Attorney- General, Solicitors' Journal, Dec. 28th, 1889, 143 ; Weekly Notes, 1889, 230 ; Law Times, Jan. 4th, 1890, p. 168. 3rdly. That in the last-cited case the Acts of incorporation not having given to the Corporation power to vary investments, the Trust Invest- ment Act, 1889, did not give them that power; the words "and also from time to time to vary any such investment " were inserted in s. 3, Mr. Justice North intimated, lest, where trustees had under their own instrument a more limited power of investment and also a power to vary, there might be a question whether that power could extend to investments not made under the power to invest contained in the instrument creating their trust. 11. Pp. 189, note (/) ; 190, note (c) ; 193, line 6 from foot ; 199, S. L. A. 1882, s, 24, sub-s. 2 ; 200, /*. sub-s. 5 ; In re Lord Stamford's Settled Estates, 43 Ch. D. 84. V.T.M. THE LAW BELATING TO THE INVESTMENT OF TRUST MONEY. CHAPTEE I. THE TRUST INVESTMENT ACT, 1889. Before the year 1859, a trustee who had money to invest, and had not hy means of an express power in the instrument creating his trust hberty to do otherwise, was bound to invest it in the funds, that is to say, to buy with it a sum or sums of one or some of the perpetual 3 per cent, annuities of the United Kingdom {a). In that and several subsequent years Acts of Parliament were passed authorising trustees to make choice of other investments, and in the year 1889 the following statute repealed most of those just referred to, and re-enacted and extended their provisions. 52 & 53 Vict. c. 32. An Act to amend the Law relating to the Investment of Trust Funds. [12th August, 1889. Be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual (fl) Below, p. 61. r.T.M. B TRUST INVESTMENT ACT, 1889. Short title. Aathorised inTestmenta, and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows : — 1. This Act may be cited as the Trust Investment Act, 1889. Extent of Act. 2. This Act shall not extend to Scotland. 3. It shall be lawful for a trustee (a), unless expressly ■ j forbidden by the instrument (&) (if any) creating the trust, ; to invest any trust funds in his hands in manner foUow- ' ing, that is to say : — (a.) In any of the Parliamentary Stocks or PubUc funds or Government Securities of the United Kingdom (c) : (b.) On Real or heritable Securities in Great Britain or Ireland (d) : (c.) In the Stock of the Bank of England or the Bank of Ireland (e) : (d.) In India Three-and-a-half per Cent. Stock and India Three per Cent. Stock, or in any other Capital Stock which may at any time hereafter be issued by the Secretary of State in Council of India, under the authority of Act of Parliament, and charged on the revenues of India (/) : (e.) In any securities the interest of which is or shall be guaranteed by Parliament (g) : (/.) In Consolidated Stock created by the Metropolitan Board of "Works, or which may at any time here- after be created by the London County Council, or in Debenture Stock created by the Receiver for the Metropolitan Police District (h) : (a) See s. 9 ; below, p. 7. (i) lb. ; see below, p. 69. (c) Below, pp. 8, 76. (d) Below, pp. 9. 97. () Below, pp, 34, 36. lie authorities, see s. 7, bclovs', p. li. TRUST INVESTMENT ACT, 1889. Application of Act. Investments of sinking fond by local aathorities. Repeal of enactments in Bchednle. Interpretation any consent required by the instrument (if any) creating the trust with respect to the investment of the trust funds (a). 6. This Act shall apply as well to trusts created before as to trusts created after the passing of this Act, and the powers hereby conferred shall be in addition to the powers conferred by the iastrument, (if any), creating the trust (fe). 7. Where the council of any county or borough or any urban or rural sanitary authority are authorised or required to invest any money for the purpose of a loans fund or a sinking fund, any enactment relating to such investment shall be modified so far as to allow such money to be invested in any of the stocks, funds, shares, or securities in which trustees are authorised by this Act to invest, except that such council or authority shaU not by virtue of this section invest in any stocks, funds, shares, or securities issued or created by themselves, nor in real or heritable securities. Provided that it shall not be lawful for any such council or authority to retain any securities which are liable to be redeemed at a fixed time at par or at any other fixed rate and are at a price exceeding their redemp- tion value, unless more than fifteen years will elapse before the time fixed for redemption. 8. The enactments specified in the schedule to this Act are herebj- repealed to the extent in the third column of that schedule mentioned, but without prejudice to the validity of any act done under any enactment so repealed. 9. For the purposes of this Act the following terms (a) BeloTT, pp. 3.S, 40, 51-57, 211. (*) Below, p. 7. TRUST INVESTMENT ACT, 1889. have the meanings hereinafter respectively assigned to them, that is to say : — The expression " trustee " shall include an executor or administrator and a trustee whose trust arises by construction or implication of law as well as an express trustee. The expression " stock " shall include fully paid-up shares. The expression "instrument" shall include a Private Act of Parliament. The expression " the court " shall mean (except as to Irish trusts) the High Court of Justice in England, and as to Irish trusts, the High Court of Justice in Ireland. SCHEDULE. Enactments repealed. Section 8. Session and Chapter. 4 & 5 WiU. i, c. 29. 22 & 23 Vict. c. 35 23 & 24 Vict. c. 38 30 k 31 Vict. c. 132. 34 & 35 Vict. i;. 47 Title. Extent of Repeal. An Act for facilitating the loan of The -whole Act. money upon lauded securities in Ireland. An Act to further amend the law of property and to relieve trus- tees. An Act to further amend the law of property. An Act to remoTe doubts as to the power of trustees, executors, and administrators to invest trust funds in certain securities and to declare and amend the law relatiug to such invest- ments. The Metropolitan Board of Works (Loans) Act, 1871. Section thirty- two. Section eleven. The whole Act. Section thirteen. AUTHORISED INVESTMENTS A., I CHAPTER II. LIST OF AUTHORISED INVESTMENTS. The following is a list, classified accordiag to the sub- titles, of the investments which by the general law trustees are now permitted to make : — A. INVESTMENTS SPECIFIED IN THE TRUST INVESTMENT ACT, 1889. I. Investments the authority to make which is unqualified. Amounts existing according to Wetenhall's Stock and Share List, Jan. 2, 1890. £225,746 £39,026,057 £514,314,702 £4,647,799 £33,228,820 £4,583,200 Funds and Securities of the United Kingdom (a). Perpetual Annuities (6) ; — 3^ per cent, redeemable at par in 1894. 3 per cent. Local Loans Stock redeemable at par in 1912. 2| per cent. Consols till 1903, then to be 2^ per cent, till and redeemable at par in 1923. 2| per cents. ) , ,, . ,„„_ n, , (■ redeemable at par in 1905. 2|^ per cents. ) ^ Exchequer Bills (c). (a) Tr. Inv. A. 1889, s. 3 (ffl), above, p. 2 ; below, pp. 76-97. (J) Below, pp. 78-89. The Red Sea Telegraph and other termin- able annuities are not, it is believed, in the marltet, and if they were they would not be fit investments for trust money, unless part* of the annuities could be appropria- ted to sinking funds to replace the capital when the annuities ceased, (c) Below, p. 89, SPECIFIED IN ACT OF 1889. A., I. 2. English and. Irish Mortgages of realty, including terms of not less than 200 years free from rent greater than one shilling a year, right of redemption and condition for re-entry except for non-payment of rent (a). Scottish Heritable Securities (a). Amotmts existing 3« according to "Wetenhall's Stock r» 7 a^ 7 / t \ and Share List, ±SanlC btOCK (p). Jan. 2, 1890. £14,553,000 Bank of England Stock. £2,769,231 Bank of Ireland Stock. 4. India Stock (c). £63,498,245 Z\ per cent, redeemable at par on one year's notice in and after 1931 {d). £19,748,548 3 per cent, redeemable at par on one year's notice in and after 1948 (e). Metropolitan Consolidated StocJc (/), otherwise Metro- politan Board of Works Stock. £16,984,326 3| per cent, redeemable in 1929 (g). £10,850,000 3 per cent, redeemable in 1931 (g). £1,000,000 2 J per cent, redeemable in 1949 (h). (a) Tr. Inv. A. 1889, o. 3, sub-s. (d) Notice by Sec. of State, 19 (J), above, p. 2. Trustee A. 1888, 51 Ap. 1887 ; Burdett, Official Intelli- & 52 Viet. c. 59, s. 9 ; below, p. 102. gence (1888), 73. As to real securities generally, («) Burdett (1888), 73. below, pp. 97-121. (/) Tr. Inv. A. 1889, s. 3 (/), (J) Tr. Inv. A. 1889, s. 3 (c), above, p. 2 ; below, pp. 72, 129. above, p. 2 ; below, p. 122. (^) Burdett (1888), 77. (fl) Tr. Inv. A. 1889, s. 3 (<«) ; (ft) Below, p. 181. above, p. 2 ; below, pp. 122^129. 10 ADTHORISED INVESTMENTS A., I. 6. Amonnts existing according to ^^ following Indian Railway Debenture Wetcnhalls Stock /a 3 and Share List, Stocks (a). Jan. 2, 1S90. ^ ' £348,666 Eastern Bengal Guaranteed 4 per cent. ; but qy. (6). £1,435,650 East Indian Irredeemable 4J per cent. ; but qy. (c). £2,701,450 Great Indian Peninsula 4 per cent. (d). £425,000 South Indian 4| per cent. (e). 'The B. Annuities (/). £74,936 Eastern Bengal Railway, to continue till 1957 (6). £624,900 East Indian Eailway, to continue till 1953 (c). £300,264 Scinde, Punjaub and Delbi Railway, to continue till 1958 ig). 8. The follovring Indian Railway Ordinary Stocks (h). £7,550,300 Bombay, Baroda and Central India Guaranteed 5 per cent., redeemable in 1905. £20,000,000 Great Indian Peninsula Guaranteed 5 per cent., redeem- able in 1899. £8,757,670 Madras Guaranteed 5 per cent. ) £999,960 Madras Guaranteed 4| per cent. / redeemable m 1907. (a) Tr. InT. A. 1889, s. 3 (0, Vict. c. 26. above, p. 3 ; below, p. 132. All the (J) 47 & 48 Vict. c. coiv. ss. .6, four stocks specified were con- 9-33,36-40,54. See note (J), p. 11. stituted by arrangements between (c) 42 & 43 Vict. c. ccvi. ss. 5, the GoTernment and the Com- 7-25, 33-40. See note (V), p. 11. panies of which I have not (d) Burdett's Official Intelli- complete and original information; gence, 1888, 373. but they appear from Burdett's (e) 37 & 38 Vict. (Loc. & Pers.), Official Intplligence, 1888 (pp. 371, cxii. ss. 10, 12, Sch. cl. 21. 373, 375, 381), to bear interest paid (/) Tr. Inv. A. 1889, s. 3 (J ), or guaranteed by the Secretary of above, p. 3 ; below, p. 132. State in Council, and none of them (^) 49 & 50 Vict. (Loc. & Pers.), appear to be redeemable at par i;. slii. ss. 6-35. or any other fixed rate. They are (A) Tr. Inv. A. 1889, s. 3 (*), all created under the powers of 31 above, p. 3 ; below, p. 132. These SPECIFIED IN ACT OF 1889. 11 Amouuts existing according to Weteu- hall's Stoclt: and Share List, Jan. 2, 1S80. £500,000 Madras Guaranteed 4| per cent., redeemable in 1907. £3,060,691 South Indian Guaranteed 5 per cent. £148,114 South Indian Guaranteed 41 per cent. A., II. redeemable in 1890. II. Investments the authority to accept which is qualified BT THE requirement THAT THE StOCK PURCHASED SHALL neitheb be liable to be redeemed for less money within Fifteen Years after its Purchase nor be purchased AT A price exceeding 15 PER CENT. ABOVE THAT AT WHICH IT MAY BE REDEEMED : Tr. Inv. A. 1889, S. 4. 1. The following Indian Railway Debenture Stocks (a). £384,700 Oudc and Rohilkund Railway, redeemable at par after 1908 (b). £1,160,500 Southern Mahratta Railway Co., Limited, redeemable at par after 1936 (b). stocks are inserted in this class with some hesitation. They seem to fall within the class, because, although redeemable hereafter, they will not be redeemable at par or any other fixed rate, but at prices calculated by the market prices of the stocks. If, however, the com- panies fail to work the railways satisfactorily, the Government may take possession on repayment of the outlay. Possibly that might be held to be redemption at a fixed rate. Moreover the rights of the stock- owners are not ascertained by Act 6t Parliament accessible to every one, but by agreements between the Government and the Companies. Although the Indian Government has purchased the undertakings of the Eastern Bengal, East Indian, and Oude, &c., railway companies and undertaken their obligations to their debenture shareholders, yet the companies do not appear to be dissolved, and these stocks appear to be still stocks of those companies. (fl.) Tr. Inv. A. 1889, s. 3 (i), above, p. 3 ; below, p. 132. (*) Burdett, Off. Int. 1888, pp, 379, 383. 12 AUTHORISED INVESTMENTS A., III. 2. Amounts existing according to Weten- haii;s Stock and Share Indian Railway Companies Ordinary Stocks (a). £100,000 Bengal Central, Limited, Guaranteed 3J per cent, and one- in £10 shares fourth net earnings (b), redeemable at par in 1905, or after three half-years working at loss. £2,987,520 Bengal-Nagpur, Limited, Guaranteed 4 per cent, and one- fourth of surplus profits, redeemable at par in 1913 (c). £3,000,000 Indian Midland, Limited, Guaranteed 4 per cent, and one- fourth of surplus profits, redeemable at par in 1910 (d). £3,500,000 Southern Mahratta, Limited, Guaranteed 4 per cent, till 1890, and then 3^ per cent, and one-fourth net earnings, redeemable on repayment of capital in 1907 (f). III. Investments the authority to make which is qualified BY conditions IN ADDITION TO OR OTHER THAN THE RULES AS TO Purchase above Redemption Price. Debenture, rentcharge, guaranteed or preference stocks of British and Irish railway companies (/). Stocks of leased British and Irish railway and canal companies (g). Debenture, guaranteed, and preference stocks of British and Irish water companies (k). Municipal corporation, and county nominal and inscribed stocks (i). (a) Tr. Inv. A. 1889, s. 3 (A), (p) Burdett (1888), p. 369. s. 9, above, p. 3 ; below, p. 132. ((^) lb., 377. (J) The quarter per cent, is to (b) lb., 383. recoup the Government a J per cent. (/) Tr. Inv. A. 1889, s. 3 (g), it is engaged to pay on £250,000, above, p. 3 ; below, p. 138. and it is not clear from the state- (y) lb. sub-s. (A), above, p. 3 ; ment in Burdett (p. 369), whether below, p. 140. the 3i per cent, is guaranteed (7i) Tr. Inv. A. 1889, s. 3, sub-s. on all or on half only of the (Z), above, p. i ; below, p. UO. £1,000,000. Stock includes fully («) lb. sub-s. (m), above, p. 4 ; paid-up shares. Tr. Inv. A. 1889, below, p. 141. s, 9, above, p. 7. SPECIFIED IN ACT OF 1889. 13 Wate?- commissioners' nominal and inscribed stocks (a). Stocl-s, funds, or securities for the time being authorised for the investment of cash under the control or subject to the order of the Court (b). Under this title there are at present comprised, in addition to many of those specified in the preceding sub-sections of s. 3 of the Act of 1889 (6), Stocks of Colonial Governments guaranteed hy the Imperial Government (c). Debenture preference guaranteed or rentcharge stocks of railways in Great Britain or Ireland having for ten years next before the date of investment, paid a dividend on their ordinary stock or shares {d). Local loans, nominal debentures, and debenture stocks under the Act of 1875, if irredeemable for 15 years («). IV. Investments authorised by Law, of which a supply is not usually available. Securities, the interest of which is or shall be guaranteed by Parliament (/). Consolidated stock hereafter to be created by the London County Council (g). Debenture stock created by the Receiver for the Metropolitan Police District (A). Future Indian Railway B. Annuities (i). (a) lb. sub-s. (n), above, p. i ; (e) Below, pp. 145, 146. below, p. 143. (/) Tr. Inv. A. 1889, s. 3 (e), (i) Tr. Inv. A. 1889, s. 3, sub-s. above, p. 2 ; below, p. 148. (o), above, p. 5 ; E. S. C. 0. 22, r. (^) lb. sub-s. (/), above, p. 2 ; 17 ; below, p. 143. below, p. 130. Whether such stock (c) This appears to be only will be distinguished from or form another description of the stocks part of the Metropolitan Consoli- referred to in Tr. Inv. A. 1889, s. 3 dated Stock remains to be seen, (e), above, p 2 ; below, p. 144. Qi) lb. (d) Cf. Tr. Inv. A. 1889, s. 3 (j), (0 Tr. Inv. A. 1889, s. 3 0). above, p. 3 ; below, p. 138. A., TV. 1^ AUTHORISED INVESTMENTS. B INVESTMENTS NOT SPECIFIED IN THE TRUST INVESTxMENT ACT, 1889. Charges and mortgages of charges on land' created by the Inclosure Commissioners (a) under the Land Improvement Act, 1864 {b). Possibly these charges can only be accepted where the trustees are " directed or authorised " by the instrument creating their trust, "to invest on real security;" but that doctrine does not appear to be a fair interpretation of the modern statute law (c). There may be some corporation stocJci in which, by the Local Acts authorising their creation, trustees are empowered to invest, although they do not answer the description in sub-section (m) of the Trust Investment Act 1889 (d). In some few cases Isle of Man Government Securities may be accepted (e). (a) Afterwards Land Commis- 23 & 24 Vict. u. 38, o. 11 ; R. S. C. sioners, 45 & 46 Vict. c. 38, s. 48, 0. 22, r. 17 ; 52 & 53 Vict. o. 32 ; and now the Board of Agriculture, below, pp. 97, 110, above, p. 2. 52 & 53 Vict. c. 30. ((i) Below, p. 150. (1) Below, p. 110. (e) Below, p. 150. (c) 22 & 23 Vict. c. 35, s. 32 ; with trust money. CHAPTER III. GENERAL RULES OF FIDUCIARY DUTY WITH REFERENCE TO TRUST MONEY. The general rule that a trustee sufficiently discharges General rule his duty if, in managing the trust affairs, he takes all dutyi^delling those precautions which an ordinary prudent man of business would take ia managing similar affairs of his own (a), applies generally to the duty of dealing with trust money, but with reference to its investment the general rule of duty is modified by a particular one stated below. With reference to the custody as well as the investment Employment of agents. of trust money, another general rule of fiduciary duty expressed in the maxim delegatus non potest delegare is also modified in accordance with the terms of the first- mentioned rule by the liberty which has always been accorded to trustees of employing agents in proper cases. What those cases are will appear as we proceed ; but they are all cases in which, according to the usage of prudent men, agents are employed in the conduct of like business (6). Trust money (1) may be at once payable to some one entitled to receive and give a discharge for it ; or (2) may (a) Lord Blackburn, 9 App. Ca. Lord Hardwicke, C, Amb. 219. 19 ; Lord Watson, 12 ih. 733 ; Sir (i) Ex parte Sdchier, Amb. G. Jessel, M.R., 22 Ch. D. 739; 218. Sir N, Lindley, L.J., 33 Ch. D. 355 : 16 TBUSTEES DUTY May deposit money with bankers for safe custody in his own name to a separate ac- count showing the tru£t. Reason for retaining fund uninvested necessary. need to be taken care of for a short time, pending arrange- ments for its payment or investment ; or (3) may need to be invested. In the first case the trustees' duty is of course dis- charged by payment. In the second the trustees may, and in most cases should, deposit the money for safe custody in a bank which is at the time in good credit (a) ; the money must be kept somewhere and no place is so safe as a bank ia good repute (5) . Accordingly, trustees have been justified in depositing money with bankers for safe custody while awaiting the appointment of new trustees (c), the com- pletion of a purchase {d), and even an opportunity to invest in the funds or on mortgage (e). But a trustee has been held liable for loss through failure of a bank, where there was no sufficient reason for keeping the money unproductive there (/) ; and though Wood, V.C, called this a very strong and hard ease he, obviously, did not intend to cast doubt on the doctrine for which the case is here cited as an authority (g), and in application of which, where on the appointment of a new trustee the banker of the retiring trustee failed before he had paid over the fund, the retiring trustee was held liable (h). {«) 21 Vin. Ab. 534 ; 2 Ves. 241 ; Amb. 248 ; France v. Woods, Taml. 172 ; Wilks v. Groom, 3 Drew. 584 ; Johnson t. Newton, 11 Ha. 160 ; Swinfen v. Swinfen (No. 5), 29 Beav. 211 ; FenwicTi v. Clarle, 4 De G. F. & J. 240 ; 31 L. J. Ch. 728. (V) Sutton V. Wilders, L. R. 12 Eq. 373, 377. (^) Adams v. riii^nfmi, 6 Ves. 226. (d) France v. Woods, Taml. 172. (e) Matthews v. Srise, 6 Beav. 239 ; Fenioick t. Clarhe, w. s. (/) Moyle V. Moyle, 2 R. & M- 710. O) 11 Ha. 169. (A) Imnham v. Blundell, 4 Jul. N. S. 3 ; 27 L. J. Ch. 179. See also Wilkinson v. Sewid, 4 Jar. N. S. 1010 ; Amfs y. ParHiison, 1 WITH REFERENCE TO TRUST MONEY. 17 In order to exonerate himself from responsibility for Deposit J -i J • 1 -/.111 should be to money deposited with a banker it the banker should fail, trustee's sole the trustee should malce the deposit to the credit of him- distinct self alone — for he must not either fetter his own power ^°a"rus*°'* or give power to another over the fund (a) — and to an *'^'"*' account by itself, not mixed with money of his own, for although in the latter case, in the event of his insolvency, his cestui que trust would, notwithstanding some remarks attributed to Lord Eldon (b), be entitled to the money as against the creditors of the trustee (c), yet he thereby subjects the cestui que trust to the difficulty of separating the parts of the fund (d), and to the more serious risk of the banker's lien (e). Moreover, on account of that risk, the deposit should not only be to a separate account, but to one which discloses the existence of a trust (/), for without such disclosure the banker is entitled to set off the trust account which is in credit against another of the trustee which may be overdrawn (g) — a right which, of com-se, notice of the trust would exclude (h). Bi?aT. 379 ; Gibbing v. Taylor, 22 ( Vict. c. 38, s. 53 ; observations thereon, Vaizey, Set- tlements, p. 721. (e) Stuart v. Stuart, 3 Beav. 430 ; Lee v. Young, 2 T. & C. C. C. 532 ; Raly v. Bidehalgh, 7 De Gr. M. Sc G. 104. See also Harrison V. Tlicxton, 4 Jur. N. S. 550 ; In re Maberly, 33 Ch. D. 455 ; 34 W. E. 771 ; In re Srogden, 38 Ch. D. 546. OF EXISTING INVESTMENTS. 25 out of tenderness for a tenant for life, and without due regard to the interests of other cestuis que trustent (a) . . The question most frequently raised by the application of this principle is, whether a trust fund should be per- mitted to remain in its existing state of investment, or should be converted into some other. Some species of property, such as leaseholds for short terms, if uncon- verted, will yield a comparatively large income to the persons presently entitled to it, but leave little or nothing for their successors. On the other hand, reversionary interests are wholly unprofitable while they remain reversionary, and if left unconverted the remainderman profits at the expense of the tenant for life. As to the first example the doctrine of the Court is Rule in Howe that wasting securities should be converted. This is mouth that known as the rule in Howe v. Lord Dartmouth (b). It ritie™should" has been thus stated : Where personal property is be- ^® converted, queathed for life, with remainder over, and not specifi- cally, it is to be converted into the 3 per cents., subject, in the case of a real security, to an inquiry whether it will be for the benefit of all parties ; and the tenant for life is entitled only upon that principle (c). This doctrine was established, and has been applied in Extent of the cases of general or residuary bequests. If a legacy be the doctrine" specific the rule does not apply (d). Ex vi termini the ^^^"^^ *'t3 legatee for life is entitled to enjoy during his life the respectively benefit of the specific property bequeathed, although it (a) Liither v, Bianeoni, 10 Ir. (d') In JSuhhard v. Yoit/ng, 10 Ch. E. 19. Beav. 205, Lord Langdale made an (6) Reported 7 Ves. 137. observation inconsistent with this (c) Wms. Exors., 6th ed. 1292. statement. 26 RETENTION OR CONVERSION consists of wasting property, such as long annuities (a) or leaseholds (6) ; for where a person gives certain property specifically to one for life with remainder over, then, although there is a danger that one object of his bounty will be defeated by the tenancy for life lasting as long as the property endures, yet there is a manifestation of intention which the Court cannot overlook (c). In two cases, probably, the rule is applicable to trusts in settle- ments created by deed. One is that in which the whole or an aliquot part of the unrealised estate of a deceased person is settled. The other is the case of a covenant to settle after-acquired property. In the former case, although, as in that of a residuary bequest, the particular pieces of property of which the estate consists may be unknown to the settlor, yet there is an important differ- ence. In the case of the residuary bequest its scope is not determined when the will is made, and must needs remain uncertain untU. the death of the testator ; but the constituents of every general fund of which a settlement is made, though they may not be known to the settlor at the date of the deed, are at that time determined. In the case of a covenant to settle after-acquired pro- perty the parallel is more complete, and the forms in use for effectuating the intent of those covenants show that the framers of them apprehended both the rule in Howe V. Lord Dartmouth, and that which prescribes the con- version of future interests, to be applicable in that case. Principle of Sir J. AYigram, Y.-C, thought that the rule in Howe v. (a) Lord t. Godfrey, i Madd. (J) 4 My. & Cr. 299. 455 ; nnper, L. K. 13 Eq. 232 ; In re (c) Vaizey, Settlements, Ch. Broi/de^i, 38 Ch. D. 546. XI. ». 10. FOE CONVERSION AND INVESTMENT. 33 a change of circumstances as may make a change of investment expedient, to authorise the trustees, with the consent of the beneficiary for the time being, to call in or sell the property and reinvest it or the proceeds of its sale. With reference to the authority frequently given in "Inthesama state of settlements and wills, to permit funds to remain " in the investment." same state of investment " as that in which they are at the date of the settlement or the death of the testator, it has been held — the question arising under a will — that after a change in the constitution of a banking company made under the Banking and Joint Stock Companies Act, 1879 — whereby the Company was registered with limited liabUity, the number of shares was doubled, and the trustees of the will obtained with part of the money paid up on the old shares and returned for that purpose, new shares instead of old ones which had constituted part of their original trust fund — the fund does not remain in the same state of investment (a). The direction for collection and conversion, if there be Direction to invest. one, is usually followed by a trust for investment. If the fund settled is money paid to the trustees, this trust in most settlements stands first in order. With reference to it Mr. Jarman wrote : "In general, trusts for the Consents. original investment of money should be made exerciseable with the consent of the person entitled to the immediate income, exclusively of the ulterior owner, whose refusal to concur in any investment might otherwise be greatly prejudicial to the former, though, of course, such con- tumacy would not leave the damnified party without (a) In re Morris, 33 W. E, 445 ; 54 L. J, Ch. 388. V.T.M. D 34 TRUSTS AND POWERS remedy " (a). According to common usage, the consent of a husband and wife who take successive interests, or of the person for the time being entitled to the income, is the only consent prescribed, and often none is required. Classes of The direction should embrace, according to the circum- stances of the case, all or any of the following descriptions of money : such money as may at first be paid to the trustees ; such money as they may receive upon calling in and compelling payment of any things in action com- prised in the trust fund, the collection of which may have been previously directed ; and such money as the trustees may receive upon the conversion into monej'' of any trust property, the conversion of which may have been-previously directed or authorised. Powers of sale, The above-mentioned duty of a trustee, unless there exchange, and . p' ■• ■ , ■ of variation be some suf&cient reason for domg otherwise, to retain usual. in its existing state the property in his charge, coupled with the necessity, or at least the expediencj^, of enabling the trustees from time to time to make changes in that state, at an early time in the history of settlements gave rise to the practice of inserting in those of land powers of sale and exchange, — a topic too large for treatment in this volume (b), — and in settlements of personalty powers to alter and vary investments. Except in the cases of family estates, and of some chattels, such as family pictures and works of art, it is seldom that a settlor desires the preservation of the particular subject-matter of the settlement, but only of some property of the value of that settled. Moreover, in the course of the period during which a settlement (ffl) fl Jarm. By. 425. (ft) Vaizey, Settlements, 574-746. FOR CONVERSION AND INVESTMENT. 35 endures, it very frequently happens that occasions arise on which it is expedient that the settled property, or some part of it, should be parted with, and some other property substituted. This expediency may be so great as even to outweigh the original desire, where such a desire existed, that some family estate or chattels of especial interest should be preserved. Often, indeed, a family estate, which the settlor wishes to preserve, may be improved by parting with portions of it, and acquiring other land of more importance to the enjoyment of the bulk. In order that such substitutions of property might Powers of sale, exchange, &o., from time to time be made, powers of .sale, exchange, usually in- serted until partition and enfranchisement were, until statutory pro- supplied by visions for the purpose were made by the Settled Land Act, 1882, inserted in settlements of real estate, and still in settlements of personal estate, powers to convert and to alter and vary investments, and often also a power to invest in the purchase of land are inserted. Powers of sale and exchange (a) and a power to alter and vary investments of personalty (5) have been held to be usual powers, as probably powers to make partition (c) and to enfranchise would have been in settlements comprising undivided shares and copyholds, and made before the commencement of the Settled Land Act, 1882. While, however, in accordance with the intent, changes in the particular subject-matter of the settlement are authorised, the powers given for that purpose are usually so framed, (a) Peahe v. Penlington, 2 V. & (V) Sampayo v. Gould, 12 Sim. B. 311 ; ma V. mil, 6 Sim. 136 ; 426, 434. Biilie of Bedford v. Marquis of (c) Chance, s, 266 ; 9 Jarm. By. Aberoorn, 1 M. & Cr. 312. 60, D 2 36 TEITSTS AND POWERS Powers of conversion of settled land given by the S. L. A. 1882. Powers to alter and vary. None in Lord St. Leonards* Act. or are accompanied with such clauses as, also iu accord- ance with the intent, may insure the preservation of the real or personal character in equity of the property acquired, according as the property settled may be in fact, or by means of a trust for conversion, real or personal. A power to sell real estate does not, like a trust for sale, operate as a conversion of it into person- alty (a), and, ordinarily, it is not intended to be so used as to convert land into money permanently (b). Since 1882, by virtue of the Settled Land Act (c), all tenants for life, as defined by that Act, and certain other owners of limited interests in land, and in some cases trustees, whether the settlements under which such tenants for life, limited owners, or trustees claim, were then already, or have since been made, have been en- dowed with certain powers of sale, exchange, partition, and enfranchisement (d). In settlements of personalty the power ordinarily used to enable trustees to vary the investments of personal property is commonly called " a power to alter and vary," and notwithstanding the recent legislation it will probably still be found convenient and indeed necessary to insei't the few words of which this power consists. The investment section of Lord St. Leonards' Act, now repealed («), being expressly made applicable where a trus- tee is not by the " instrument creating his trust forbidden to invest " the " trust fund '' in the manner specified in the section, it was argued, where a sum of Government (a) Walter v. Maunde, 19 Ves. 424 ; see below, p. 40. (*) Sug. Pow., 8th ed. 863 ; Chance, S8. 2418, 2419. (c) 45 & 46 Vict. c. 38. ((?) 45 & 46 Vict. c. 38, Vaizey, Settlements, Ch. IX. ss. 28-33. (e) Above, pp. 6, 7. FOR CONVERSIOK AND INVESTMENT. 37 annuities had been settled on a marriage upon trust during the lives of the spouses to pay the dividends to them, and after the death of the survivor to sell and divide the proceeds among the children, and there was not an ex- press power to vary investments, that the trustees might safely sell and reinvest the proceeds ; but Sir W. P. "Wood, V.-C.,held that the trustee not having power to vary the investment, the section was inapplicable (a). In a pre- vious case {b) not said to have been cited to Sir W. P.Wood, Sir J. Stuart, V.-C, and in a later one (c) Lord Eomilly, M. E., held that trustees might sell existing investments in order to make others authorised by Lord St. Leonards' Act, but In re Warde does not appear to have been cited to Lord Romilly. In neither case is it stated that there was neither a power to vary investments nor any circum- stance from which the intent that the trustees should have such a power could be inferred, and in each case the words attributed to the judge related to the trustees' power to invest in the proposed manner and not to their autho- rity to sell the stock they held. Subsequently, Sir E. Malins, V.-C, while not saying that the decision in In re Warde was wrong, did not see very clearly the grounds of it, and thought it depended on its special circumstances (cZ). Those circumstances didnotindeedexist in the case before him, for there the applicants were trustees of a charity whose act of incorporation authorised the investment from time to time of money given for the purposes of the Act " in any of the public funds." The Vice-Chancellor did not refer to s. 32 of Lord St. Leonards' (a) In re Warde, 2 Jo. & H. 191. J. Ch. 636. (i) Cohen v. Waley, 7 Jur. N. S. (d) In re Clergy Orphan Cor- 937. poration, L. R. 18 Eq. 280 ; but see (e) Waite v. Littlewood, 41 L, Additions, p. xyii. 38 TRUSTS Amy powers first Act but to s. 11 of that of the following year (a), though for the present purpose that circumstance is not important, and held that the trustees might invest in the stocks, funds, and securities from time to time sanctioned by the Court, and might sell out their existing stock with a view to reinvestment. Sir E. Malins's decision does not appear to touch that of Sir "W. P. "Wood, or to afford any authority for the proposition that either of Lord St. Leonards' Acts of 1859 and 1860 did by imphcation, as Lord Cranworth's Act of 1860 expressly did, give a power to vary investments. Sir E. Malins's decision appears to mean that from an authority to invest money in such investments, whether of a specified class or not, as the trustees shall choose, and to apply the income for specified purposes, an authority to vary original in- vestments for others of the specified class, if there be one, is to be inferred (b). That whether right or wrong is a wholly different proposition from the one which was affirmed in In re Warde (c), and may be confirmed by the insertion in the Act of 1889 after powers given in terms like those interpreted by Wood, V.-C, of a clause stated below on the absence of which his decision rested. Statutory Lord Cranworth's Act {d), passed on the 28th August, and'raiy. 1860, being in the same year as Lord St. Leonards' Amending Act, enacted as follows : — Stat. 23 & 24 Trustees having trust money in their hands which g/25.'^ ' it is their duty to invest at interest shall be at (a) 23 & 24 Vict. c. 38. below, authority for the same proposition, p. 65. (c) 2 Jo. & H, 191, above, p. 37. (J) In re Cnrper's Trusts, W. K, (_([) 23 & 24 Vict. c. 145. 1873, S7, seems to have been an FOR CONVERSION AND INVESTMENT. 39 liberty, at their discretion, to invest the same in any of the Parliamentary Stocks or Public Funds, or in Government Securities, and such trustees shall also be at liberty, at their discretion, to call in any trust funds invested in any other securities than as aforesaid, and to invest the same on any such securities as aforesaid, and also from time to time, at their discretion, to vary any such invest- ments as aforesaid for others of the same nature : Provided always, that no such original investment as aforesaid (except in the Three per cent. Con- solidated Bank Annuities), and no such change of investment as aforesaid, shall be made vi^here there is a person under no disability entitled in posses- sion to receive the income of the trust fund for his life, or for a term years of determinable with his life, or for any greater estate, without the consent in writing of such person. Tbis enactment, however, has been repealed as from Repealed, the end of 1881 (a) ; and as its provisions have not been re-enacted, it is only of importance with reference to acts by trustees during the period throughout which it operated. The Trust Investment Act, 1889, after declaring that ^"^^'^ i^ Trust " InTestment it shall be lawful for a trustee, unless expressly forbiddep Act, 1889. by the investment (6), (if any), creating the trusts, to invest trust funds in his hands in a manner specified in the Act, adds, " and also may from time to time vary any such investment" (c). Where trustees are empowered to vary their investments Buty of trustees witli they may sell Government stock for the purpose, even refereuceto , 1 ■ i 1 • • , 1 Tariation of though it may have become depreciated since its purchase ; investments. but, of course, they should exercise the care of prudent (a) 44 & 45 Vict. u. 71, ss. 1,71. (e) /J. s. 3, above, p. 5. See (&) 52 & 53 Vict. 0. 32, ss. 6, 9. Additions, p. xvii. 40 TJRDSTS AND POWERS Power to alter and vary does not affect rights of beneficiaiies. Consents to ex«rcise of po«er. men, and not sell at some moment of casual depression (a). If, however, they sell out stock and invest the proceeds in an improper manner, not only the reinvestment but the sale is accoimted a breach of trust (6). The ordinary power to alter and vary securities is given to them with a view to the security of the property, and not with a view to alter or affect the relative rights of the beneficiaries (c) . So an ordinary trust to sell with consent does not work a conversion {d). The remark cited above (e), that to the performance of trusts for original investment the consent of the person entitled to the immediate income, exclusively of the ulterior owner, should be required, does not, Mr. Jarman wrote, apply to the transfer of trust money from one pro- ductive security to another ; for in such a transaction it seems reasonable that the persons taking the ulterior interest (being of competent age) should have a voice conjointly with the immediate cestui que trust, whose interest may incline him, in the choice of an investment, to pay more regard to the present productiveness than the ultimate safety of the fund (/). In the greater number of cases, however, — comprising as they do life interests for a husband and wife, — and interests in remainder for their issue, while, on the one hand, both the trust for original investment and the power of varying investments, are usually directed to be performed and exercised with the consent of both spouses during their joint lives, of whom one is usually interested only in expectancy ; yet. (a) Lewin, Trusts, 4th ed. 241. (J) PMllipsoR T. Gatty, 7 Hare, 516. (r^ Lord V. Godfrey, i iladd. 455, 459. ((f) Hope V. Hope, 1 Jur. N. S. 770. (e) P. 33. (/) 9 J arm. By. 425. FOE, CONVERSION AND INVESTMENT. 41 on the other hand, it is impracticable to give any power to unborn or infant children, and it is not usual to give them any voice in the choice of investments after they come of age. Mr. Jarman's observations, however, may be usefully recollected in framing settlements giving suc- cessive interests to adults, though even in such settlements it is more usual to require the consent of only the bene- ficiary for the time being to changes of investment, than to give any like power to the owners of expectant interests (a). The National Debt (Conversion) Act, 1888, under National Debt Conversion which the old stocks or New Consolidated and Eeduced Act, 1888. 3 per cent, annuities were converted and paid off, not only declared that the reception of the new stock having a lower rate of interest instead of New 3 per cents., or the exchange of Consolidated or Eeduced 3 per cents, for the new stock, " should not be considered to be a change or variation of investment by the holder " (&), but also, after indemnifying persons not dissenting from the conversion of New 3 per cents., or exchanging or consenting to the exchange of Consolidated or Reduced 3 per cents, (c), enacted as follows : — Trustees and other persons acting in a fiduciary Stat. 51 Vict. character are hereby expressly authorised to make ^' ' ' such exchange or give such consent. When any stock, converted or exchanged by virtue of s. 27. this Act into new stock, is held by a trustee, such Power to sell trustee shall be at liberty to sell the same, and to reWsf ^""^ invest the proceeds arising from such sale in any proceeds. (a) See 3 Bar. Conv., 3rd ed. Rules and Orders, Mar. 1888 ; W. 61 ; and as to consent see Vaizey, N. 1888, 153. Settlements, Ch. VIII. s. 2. (e) lb. o. 26. (*) 51 Vict. c. 2, s. 1 (1), s. 8 (1). 42 Stat. 51 Vict, c. 2, s. 20. Provisions as to annuitants. Settlement TEL'STS AND POWERS of the securities for the time being authorised for the investment of cash under the control of the High Court, notwithstanding anything to the con- trary contained in the instrument creating the trust (a). An earlier section of the Act is as follows : — Where, 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 shaU. not be liable for any loss arising from any such sale or investment. Subsequent clauses of the same section empowered the Courts in England, Ireland and Scotland to authorise " any such sale or investment " of stock in Court, and without affecting any power to order the appUcation of capital for the purpose, declared that when stock appro- priated to provide an annuity was under the Act con- verted into or exchanged for new stock the trust or duty should, so far as related to the payment of the annuity, be performed by the payment of the dividends on the new stock. The Act authorised trustees to apply to the Court to (rt) As to Scotland, see 61 Vict. c. 15, b. 8. FOE CONVERSION AND INVESTMENT. 43 determine questions as to their powers and duties (a), ^y Court of doubts as to In a case where Consolidated £3 per cents, had been trustees' ... , . duties. bequeathed upon trusts, which did not authorise a change of investment, and appropriated the dividends to the pay- ment of certain annuities, and they, as the will did not charge the capital with their payment, would have to abate if the conversion were effected, Chitty, J., upon a petition by the trustees for advice, said that as the trustees could, if they accepted the new stock, sell it under the power given by s. 27, and re-invest the proceeds, and as it would be for the benefit of the annuitants to sell the £3 per cents, and invest in such securities as cash under the control of the Court might be invested in, he could advise the trustees that they could safely do so (&). S. 20 does not appear to have been referred to. (a) n>. a. 28. (*) In re TuoTiett's Trusts, 36 ^7 . E. 542 ; 57 L. J. Ch. 760. CHAPTER VI. Trustees must choose an investment authorised by the general law or the pai-ticular trust. 1/ Prudence ia investment regards the object to be attained. GENERAL RULES OP FIDUCIARY DUTY WITH REFERENCE TO INVESTMENT. The modification of the above-stated general rule of fiduciary duty, wMch is required when it is applied to the duty of investing trust money, is that a trustee may not choose any investment which an ordinary prudent man of business might choose, but only any investment which, being one an ordinary prudent man of business might choose, is also one which either the general law or the instrument constituting his trust expressly authorises him to accept (a). The investments authorised by the general law have been akeady specified (&), and points needing attention when the acceptance of them respectively is proposed are discussed below (o). Instruments con- stituting trusts usually contain clauses specifying the investments eligible by the trustees of it, and some observations upon those clauses, and upon some of the investments often specified by them, are also offered for consideration (d). In applying to the business of investment the above- mentioned general rule of duty, the word " similar " must be recollected. The duty of a ti-ustee is not to take such (ffl) Lord Blackburn, 9 App. Ca. 9. (J) Above, pp. 8-li. 19. (c) Below, Chs. XI., XII. id') Below, Ch. XIII. CtEneral rules. 45 care only as a prudent man would take if he had only himself to consider, but rather such care as he would take if he were minded to make an investment for the benefit of other people for whom he felt morally bound to provide (a). He has two objects to seek, the safety and the productiveness of the fund. Hence a trustee cannot always invest his trust fund in a manner in which he could prudently invest his own money. He may have special knowledge and habits enabling him prudently to make investments which another prudent man could not prudently make, or which he himself could not make prudently, if he must make the investment jointly with another person. Thus, a dealer or broker on the London Stock Exchange might have opportunities of making prudently purchases which another equally prudent man, engaged in country life, would not know of, or justly estimate, and which the supposed dealer or broker could not himself prudently make unless he retained control of the investment, so as to be able to avail himself at any moment of his special means of information, to avert loss by prompt sale on the first appearance of any cause of depreciation. It does not follow from these circumstances that such special ac- quaintance with a particular class of investments cannot be of service in the administration of trust property; but such a trustee as is above described must consider both whether he can as effectually guard the fund from loss, when made subject to the trust, as he could if the fund were his own and under his . sole control, and, (a) 33 Ch. D. 355. 46 GENEEAL RULES Objection to the acceptance of wasting investments. Duty of trus- tee to consider first whetlier the proposed investment be of a kind he may accept ; secondly, if it be, whether it is prudent to accept it. secondly, whether the investment would be one which, if a change in the trusteeship occurred, his successors might prudently retain. One great principle already treated of, and applicable to the duty of investment, is that trustees should ad- minister the trust equally for the benefit of all the beneficiaries (a), a principle which makes it usually improper to invest a settled fund in wasting securities, such as the purchase of leaseholds or terminable annuities. In considering the propriety of a proposed investment, a trustee should first inquire whether it is one of a kind which he is authorised to accept ; and if the power requires consents or any other condition for its exercise, the trustee must see that those requirements are complied with. He must further inquire whether it is prudent to accept the security proposed (6). The general law, or the terms of the instrument creating the trust, gives the trustee liberty to choose among a limited class of invest- ments, but it does not thereby exonerate him from re- sponsibility for the manner in which he exercises that liberty. He is bound to exercise it prudently, and is, of course, responsible for the consequences of his failure to do so (c), and the burden of proof that an investment is fit and proper lies on him (d). Even words which make it imperative on trustees to accept securities of a certain class may not deprive them of their discretion or (a) Above, p. 24. Enox v. Mac- Tiinnon, 13 App. Ca. 753. (J) Norris v. Wright, 14 Beav. 291. (c) It. Macleod v. Annesley, 16 Beav. 600 ; Stretton v. Ashmall, 3 Drew. 9. (d') Norris v. Wright, u. t. AS TO INVESTMENT. 47 exonerate them from responsibility for their choice within the class (a). If loss occur in consequence of an improper investment Consequence to trustee of by a trustee, the extent of his liability may depend on neglecting the question whether his misfeasance consisted in choos- ing an investment which was unauthorised, or in choosing imprudently an authorised investment. Thus, where trustees accepted an unauthorised, although ample security for the money lent, they were held responsible for loss traceable to that first error {b) ; but where a trustee authorised to invest in the funds or on mortgage invested imprudently on a mortgage of property of in- adequate value, he was held liable for the money lent, but not for the stock he might have bought (c). Where a trustee having only a similar authority had lent the fund on personal security (d), or placed it at deposit account in a bank (e), or had not accounted for it (/), he was held liable at the option of the cestui que trust either for the sum itself or for the consols it would have bought when it ought to have been invested (g). Until about forty years ago wills and settlements seldom authorised trustees to invest money otherwise than in the public funds or Government securities, (o) Beamclerk v. Ashhurnham, Beav. 188. 8 Beav. 322. See Stewart v. San- (e) Ames t. Parldnson, u. s. derson, L. E. 10 Eq. 26. (/) Hockley Y.JBantoek,! Kuss. (J) Fyler v. Fyler, 3 Beav. 550, 141. 568. (?) See ace. Kellaway v. Juhn- (c) Ames v. Parldnson, 7 Beav. son, 5 Beav. 319, cont. Marsh v. 379. Comp. Matthews v. Brise, 6 Hunter, 6 Madd. 295. As to in- Beav. 239. As to loans on mort- demnification, see Vaizey, Settle- gage, see below, p. 97. ments, Ch. 16, s. 8. this duty. ((?) Watts V. GirdlestoTie, 6 48 GEKERAL RULES Difficulty of the per- formance by trustees of their duties where choice of investments is large. and on real securities in England or Wales (a). The writer here referred to showed how the great multiplica- tion of investments producing a higher rate of interest than the funds, and with little if any difference in point of safety, and more easily acquu'ed and transferred than mortgages of land, had induced the use of powers giving a great latitude of investment ; but the old practice, he said, had not been replaced by any other equally precise and general. Modern instruments, it was observed, pre- scribed every variety in the power of investment, and it may be added here that the variety is now greater than when the passage just cited was written. The writer of it pointed out the greater knowledge, judgment, and trouble required in and imposed on trustees who had such powers, and the greater risks incurred by them, the need of a superior class of persons to be intrusted with such powers, and the likelihood of an increasing unwillingness to accept the more onerous responsibilities (h). The experience of the years which have elapsed since these words were written has painfully proved their truth, although in the interval the need for yet further extension of the choice of investments formerly given has become imperative. Trustees seldom, it is to be feared, understand, when they undertake their office, the difficult position in which they may be placed by a power of investment which enables them to lay out their trust money in classes of securities comprising property of every variety of worth. The per- sons in the enjoyment of the income are usually their (ffl) 3 Dav. Conv., 2nd ed. 13 ; (J) /*. 3rd ed. 14. AS TO INVESTMENT. 49 personal friends, and may much need an increased income. If they urge the trustee to jDlace the money in a security of a kind authorised by the power, and yielding a higher income than that already produced by the fund, he has, unless he chooses at once to refuse, to undertake the business of attempting to ascertain the value of the pro- perty proposed. This inquiry may sometimes be easy, and may also sometimes satisfy the trustee that he may prudently accede to the proposal ; but in a far greater number of cases the task is neither easy nor capable of being satisfactorily performed. No certain conclusion can be arrived at, and that which seems probable to the beneficiary will often seem improbable to the trustee. He must, of course, in obedience to his own judgment, refuse to invest in a purchase or on a loan which he does not think a prudent one, yet his conduct will often seem to his cestui que trust unreasonably timid and unaccommo- dating. Nor is that all ; for if he have persuaded himself that the investment is one which may be safely made, and he makes it — or if, in reliance on the authority to make investments of the kind proposed, and in ignorance of his responsibility for the exercise of his own discretion in choosing an investment of the kind, he makes it without investigation — and, in the event, such a loss occurs as in the judgment of the Court would have been avoided if the trustee had made all the investigation and exerciseci the judgment which he ought, he may be responsible for that loss to other persons than those at whose instance he acted. It is very important that competent men of business importanoe should not be made more averse than they already are to competeit" accept the office of trustee, and it is also necessary that *™^*'^^^' V.T.M. E 50 GENERAL RULES. trustees should be held to a strict performance of their duties. In order to attain both these ends it is also necessary that the burden commonly imposed on trustees should not be needlessly increased, and this point needs more attention than it has yet received in framing invest- ment clauses. Some observations on how in the existing state of the law it may be expedient to frame them, will be added after the several statutory investments have been considered (a), (a) Below, Ch. XIII. CHAPTER VII. DISCRETION TRUSTEES MAY EXERCISE. Before entering on the subject of the statutory invest- The discretion trustees may ments it may be convenient to consider the question exercise. what discretion trustees may exercise when by deed, will or statute, powers to choose investments are given them. The Court does not needlessly interfere with a dis- Discretion respected by cretion given by the settlor to his trustees (a), and the Court and exercised by them in good faith (6), with a fair considera- i^bie by some tion of the subject (c), and neither capriciously (b), mis- ^™eficianes chievously, ruinously, nor fraudulently (d), and the bur- den of proving such faults lies on those who impeach the conduct of the trustee (e). The Court has refused to interfere with what it deemed the injudicious exercise by trustees of a discretion given to them uncontrollably and irresponsibly (/). If it interferes at all, it can do so only in an action properly constituted for the purpose (g), but it has done so where there was a complete miscarriage of the discretion (h), and necessarily where the trustees could not agree (i). (a) Sutler v. Withers, 1 Jo. & monds v. Millett, 20 Beav. 54. H. 332. (/) Tabor v. Brooks, 10 Ch. D. (i) Milsington v. Mulgrave, 3 273. See also Gisborne v. Gis- Mad. 491. Urne, 2 App. Ca. 300. (c) Be BelovedWillies'sCliarity, (y) In re Lofthouse,29 Oh. D. 3 Mac. & G. 440. 921. ((J) BsBrittlehanh, SOW. K, 99 ; (A) Feltham v. Turner, 23 L. T. la re BUU, 29 Ch. D. 913 ; In re N. S. 345. Courtier, 34 ih. 136. (t) WindTiam v. Cooper, 24 ib. (e) Re BriUUbank, u. j. ; Ed- 793. E 2 52 TRUSTEES Whether the trustee is bound to state the reason for the exercise of his discretion. Discretion to be exercised judicially. Where trustees have discretionary powers over funds held by them for the benefit of several persons, their powers cannot, of course, be aifected by the acts of some only of the beneficiaries (a). In Costabadie v. Costabadie (6) Wigram, V.-C, although he repudiated any authority in the Court to deprive the donee of a discretionary power of the right to exercise it honestly and reasonably, said that a beneficiary whose interest was liable to variation by the exercise of the discretionary power was entitled to a discovery of the donee's reasons for her acts ; but, in a later case, Lord Truro, C, held that trustees invested with a discretionary power were not bound to state their reasons, though if they did the Court might consider those reasons, and if it was dissatisfied with them, correct the decision founded on them (c). It is apprehended, however, that in all such cases trustees are bound to exercise their discretion, to act not arbitrarily but judicially, with an equal regard to the interests of aU the beneficiaries and after fair considera- tion of the subject (d) ; and that the trustees may he under an obhgation to do an act, but be left at liberty with reference to some incidents of its performance. A trust to sell " at the discretion " of trustees was held to autho- rise them, if they thought it expedient, to defer the (a) Chambers v. Smith, 3 App. Ca. 795 ; Murray v. Glasse, 23 L. J. Ch. 126 ; s. c. 17 Jur. 816 ; In re ScncfIVs Estate, L. E. 11 Eq. 80; Marqitis Camden t. Hurray, 16 Ch. D. 161 ; Thomas v. Williams, 24 Ch. D. 558 ; Gislorne v. Gis- honie, 23 W. K. 151, 410, CO 6 Ha. 410. (c) He Beloved IFilhes's Cliarity, 3 Mac. & Gr. 440. See Tempest v. Lord Camoys, 21 Ch, D. 571, 574. ((Z) ReBeloved Wilhes's Charity, ■a. s. See Knox t. Macldnnon, 13 App. Ca. 753 ; By am v. By am, 19 Beav. 58, 65, 66. DISCEETION. 53 sale (a) ; but there can be no doubt that it would be their duty to seU when it became expedient to do so. With reference to a particular power of leasing for twenty-one years given to trustees, Lord Cairns, C, said that it did not vest in them the absolute discretion of saying, according to their own pure arbitrium, that there should be or should not be a lease made ; it was nothing more than part of a general scheme for the management of the estate ; and the estate being brought under the manage- ment and superintendence of the Court on a scheme then before the Court, the Court would see that that part was, as much as any other part, attended to (&). So also Sir G. Jessel, M.R., said : where there is a trust or duty coupled with the power, the Court will compel the trus- tees to carry it out in a proper manner and within a reasonable time. If there be a trust for investment in land at the absolute discretion of the trustees, a trustee will not be permitted to refuse to exercise it at all, but it does not follow that the Court will take from the trustees their uncontrolled discretion as to the particular time for the investment and the particular property which should be purchased (c). The test of discretion is what the Court would do (d), Court may not but where a settlement authorises investments of which thougrit may the Court does not approve, it will not, if it has occasion "nvestments' to deal with the fund, make or retain such investments, ?f''^°'^'^®'^ ^^ though it might not interfere with the discretion of the (a) Laing's Ti-usts, L. R. 1 Eq. 34 Ch. D. 136. 416. See Britidley v. Partridge, (c) Tempest v. Lord Camoys, 13 Ch. D. 654. 21 Ch. D. 571, 578. (V) Tempest v. L'ird Camoijs, 21 (rf) Warner v. Torkington, 4 L. Ch. D. 576 n. Cf. In re Courtier. J. N. y. Ch. 193. 54 TRUSTEES Trustee not responsible for loss through hond-fide exercise of a reasonable discretion. The Court leaves trustees free to exer- cise, and protects them in the exercise of the statu- tory powers. Principles upon which statutory powers should be exercised. trustees if tliey chose to lay out the trust money in the manner so authorised (a). A trustee is not responsible for a loss which has arisen because, either in obedience to a direction in the instru- ment creating the trust he has invested (h) or lent (c) money in a particular manner, or in the hondfide exercise of a reasonable discretion he has arrived at a conclusion ■which has turned out unfortunately {d). Consequently, trustees are not responsible for loss by a fall in the value of investments which by the terms of their trust they were authorised to retain (e) or make, even though the investment be of a kind the Court would not itself have made (/). The Court appears to leave trustees as unfettered in the exercise of the powers of investment conferred on them by statute, and to protect them in the exercise in good faith and with reasonable prudence of those powers, as it does in the exercise of powers contained in the instruments which have created their trusts {g). In exercising the powers of investment given by statute trustees should nevertheless consider the rule laid down by the Court for its own guidance in the exercise of similar powers. This rule, Lord Campbell, C, said, the (a) Butler v. Withers, 1 J. & H. 332 ; Solmes v. Monre, 2 Moll. 328. Cf. Prendergast v. Lushmg- ton, 5 Ha. 171 ; 3 H. L. C. 195 ; In re Brown, 29 Ch. D. 889. (ft) Beauclerli v. AslilmrnTtam, 8 Beav. 322 ; Cadogan v. Earl of Msex, 2 Drew. 227. (c) Boss V. Godsall, 1 T. & C. C. C. 617. id) Pepys, M. R., 1 My. & Cr. 96. (e) Jackion i. Jackson, 1 Atk. 513 ; 1 Dick. 126 ; Buxton v. Buxton, 1 M. & C. 80 ; 3 My. & Cr. 496 ; Angell v. Dawson, 3 T. & C. 308 ; Marsden v. Kent, 5 Ch. D. 598. (/) 7 De G. M. & G. 633, 634 ; In re Brovyn, 29 Ch. D. 889. (y) In re Colne Valley and Halstead Bailway, 1 De G. F. & J. 53 ; Sume v. Richardson, 4 ib. 29, 32 ; Cockbwn v. Peel, 3 ih. 170, 174. DISCRETION. 55' Court could not lay down more precisely than that, in the absence of any special circumstances which might make the desired transfer asked for by the tenant for life beneficial to those in remainder irrespective of pecuniary calculations, the transfer ought not to be permitted if, on pecuniary calculations, it might be injurious to those in remainder (a) . Lord Romilly, M.R., intimated that on an exercise of Redeemable stock should the statutory power of investment, redeemable stock should not be bought not be bought at a premium (b) ; but that doctrine is in part abrogated and for the rest modified by the Act of 1889 (c) . The need of the tenant for life, of course, is usually Interests of . , . , . , , remaindermen the special circumstance which induces a proposal to to be guarded. make changes of investment, and the question for special consideration is whether the change can be made with safety to the interests of those in remainder (d). By the commencement of an action for the adminis- Control of . discretion by tration of the trust the trustees are not deprived of the Court after discretionary powers conferred on them by the settle- idmiuistra- ment (e), even though they be the plaintiffs (/) ; but after judgment their discretion — whether as to invest- ment (g), or leasing (h), or other matters, such as the appointment of new trustees (i) or the exercise of a (a) Ceekburn v. Peel, ii. 172. 798 ; Cardigan v. Curzoii-Hoioe, 30 (V) Waite v. Littlewood, il L. Ch. D. 531. J. Ch. 636. (/) Sillibcurne v. Neioport, 1 K. (c) Above, p. 5. & J. 602. Cf. Turner v. Turner, (. Ricliardsmi, ii.s.; EARLY STATUTES. G5 It remained in operation till the 12th August, 1889, when it was superseded and repealed by the Trust In- vestment Act of that yeai- (a). An Act of 1860 authorised the English and Irish I860. Courts of Chancery respectively to make general orders cash under from time to time as to the investment of cash under the q^^^° ° * ^ control of the Court, either in the ^3 per cent, con- solidated or reduced or new Bank annuities, or in such other stocks, funds, or securities as the Lords Chan- cellors and other judges of those courts should see fit, and gave to the Lords Chancellors the following further authority — viz., to make such orders - as he or they ConTersion of . £3 per cent. should deem proper lor the conversion of any £3 per annuities cent. Bank annuities then standing or which might there- approved by after stand in the name of the Accomitant-General (&) ^^"'''^' "'^^"■ of the said Court of Chancery, in trust in any cause or matter, into any such other stocks, funds, or securities upon which, by any such general order as aforesaid, cash under the control of the Court might be invested ; aU orders for such conversion of Bank annuities into other funds or securities to be made upon petition (c) to be presented by any of the parties interested in a summary way, and such parties to be served with notice thereof as the Court should du-ect (d). The Act next declared : — When any such general order as aforesaid shall ^^^- 23 & 24 have been made, it shall be lawful for trustees, s. il. After executors, or administratoi's having power to invest ™'''^ general III re Wcdderbum'g Trusts, 9 Ch. Vict. c. 77, s. 30. D. 112. - (c) Now presumably by sum- (a) 52 & 53 Vict. c. 32, es. 3 (*), mons. E. S. C. 1883, 0. 55, r. 2, (9-90, 783. (J) Sead now Paymaster-Gene- Qd') 23 & 24 Vict. c. 38, s. 10. ral : 35 & 86 Vict. c. 44 ; 38 & 39 V.T.M. F 66 EARLY STATUTES AS TO orders, tnis- tets 1o have similar powers («). General Orders of 1st February, 1861, and ' 1883. their trust funds upon Government securities, or upon Parliamentary stocks, funds, or securities, or any of them, to invest such trust funds, or any part thereof, in any oi the stocks, funds, or securities in or upon wliich by such general order cash under the control of the Court may from time to time be invested. In exercise of the power created by this enactment, a General Order was issued on February 1st, 1861, which was repealed by the Rules of the Supreme Court, 1883, and was substantially identical with the following regula- tions, which in the last-mentioned year were substituted for those first promulgated. Cash under the control of or subject to the order of the Court may be invested in Bank stock, East India stock, Exchequer bills, and £2 10s. per cent, annuities, and upon mortgage of freehold and copyhold estates respectively in England and Wales, as well as in consolidated, reduced, and new £3 per cent, annuities. Every application for the purpose of the conversion of any stocks, funds, or securities into any other stocks, funds, or secmities, authorised by the last preceding rule, shall be served upon the trustees thereof, if any, and upon such other persons, if any, as the Coiu-t or judge shall think fit {b). The Eule of 1883 differed from that of 1861 in adding to the words " under the control of," the words " or sub- ject to the order of," — in substituting " application " for "petition," — and in referring to conversion not merely of " £3 per cent. Bank annuities," but of " any stocks, funds, or securities." (a) Superseded and repealed. 52 & 53 Vict. u. 32, ss. 3 (o), 8. (*) R. S. C. 1883, Ord. XXII. rr. 17, 18 ; Ann. Pr. 1889 90, 442. TRUST INVESTMENTS. 67 The rule of 1883, for which that of November, Annulled Order of 188S {a), has been substituted, had been annulled in August, 1888. the previous August by an Order which was to come into oj)eration on the '2-kth October, 1888, and authorised a class of investments differing somewhat from that described in the Order of November now in force ; but by a memorandum dated the 24th October, 1888, the Rule Committee suspended the operation of the Order of August, and it was annulled by that of the following November. It is believed that the Paymaster-General did not make any investment in reliance on the Order of August, but it has been suggested that trustees entitled to invest in stocks, funds, or securities, in or upon which cash under the control of the Court might for the time being be invested, may, in the interval between the 24th of October and the 26th of November, have made investments described in the Order of August, 1888, but not in that of 1883, and that in such a case they would be justified bj'the Order of August, inasmuch as, according to a further suggestion, the Rule Com- mittee, though thej^ could annul, could not suspend the operation of an existing order (b) . The only investment authorised by the Order of August and not by that of November, 1888, is " The inscribed stock of any British Colony, provided that such inscribed stock shall not at the time of investment be quoted in the ofEcial list of the London Stock Exchange at a price below £105 sterling for everj £100 of inscribed stock, bearing in- terest at the rate of 4 per cent, per annum, or in the case of inscribed stock bearing interest at a lower rate (fl) Below, p. Ui. (*) Sol. Journ. Feb. 1SS9. 26.S. F 2 'J8 EARLY STATUTES AS TO than 4 per cent, per annum below the price proportionate to £105 sterling, for £100 of inscribed stock at 4 per cent, per annum." What is "cash Money paid into Court under any of the following Acts under the coatrol of the is cash Under the control of the Court within the meaning Court." of 23 and 24 Vict., c. 38, s. 10 ; A private Act passed before 1860, and directing an investment in Exchequer bills (a), or in consols, or reduced Bank annuities (b) ; the Leases and Sales of Settled Estates Act, passed in 1856, and directing investment in consols or Exchequer bills (c); the Lands Clauses Consolidation Act, 1845, directing investment in consols or reduced annuities, and Govern- ment and real securities (d) ; the Parliamentary Deposits Act, 1846 (e) ; and the Trustee Eelief Acts (/). A decision, indeed, of Lord Selborne, C, sitting for the Master of the Rolls, in Re Boyd's S. E. (g), followed by HalL V.-C, (h) appeared to show that money paid into Court under the provisions of either the Leases and Sales of Settled Estates Act or the Land Clauses Con- solidation Act, 1845, s. 69, was not cash under the control (a) In re Birmingham Blue 93. But see Me Briscoe, 4 N. R. Coat School, L. K 1 Bq. 632. 311 ; Re Boyd, 42 L. J. Ch. 506 ; (i) In re Wilkinson's Estate, 21 W. R. 667 ; Ex parte Vicar L. B. 9 Eq. 343. of St. Mary's, Wigton, 18 Ch. D. (b) Wall Y. Hall, 11 W. R. 646. 298 ; In re Coolt's Settled Estates, (e) In re Sowthwold Railway L. E. 12 Eq. 12 ; In re Thorold's Company's Bill, 1 Ch. D. 697 ; Settled Estate, L. E. 14 Eq. 31 ; not following Ex parte Great In re Taddy's Settled Estates, Kortliern Ry. Co., L. E. 9 Eq. L. E. 16 Eq. 532, not following In 274. re Shaw's Settled Estates, L. R. (/) In re Lang ford's Trusts, 14 Eq. 9 ; Langmead v. Cockerton, 2 Jo. & H. 458. 25 W. R. 315. (j.) 42 L. J. Ch. 506 ; 21 W. E. (d) In re Fryer's Settlement, 667. L. K. 20 Eq. 468 ; Ex parte St- (A) Ex parte Rector of Kirk- John's College, Oxford, 22 Ch. D. smeaton, 20 Ch. D. 203. TRUST INVESTMENTS. 69 of the Court. The Court of Appeal, however, has disregarded Lord Selboi-ne's decision, Lord Justice Cotton pointing out that it was plain that Lord Selborne intended to follow the last decision of Lord Romilly, in whose court he was sitting, as to which decision he appears to have been mistaken (a). Subsequently, Pearson, J., said that in the last cited case, the Court of Appeal meant that whenever money was under the control and care of the Court, the intention of the General Order of February 1st, 1861, was to give the enlarged power of investment (5). The Court does not invest cash under its control with- out an application for an order (c), but it is placed on deposit without any request (d). When stock, shares, or securities in Court are converted into some other invest- ments, the orders applicable to the original investment become applicable to the substituted one (e). The authority conferred by Lord St. Leonards' original Operation of 1 -71, 1 23 & 24 Vict. Act (J) was to be exercised only where the trustee c. 38, s. ii, .1,1 • , , ,* 1 • i i £( r notwithstand- was not by the mstrument creatmg his trust lor- it,g prohibition bidden " to make the investments described in the Act ; '" *™^'' ''^'-''^• but the amending statute of 1860 did not, in terms, contain any such limitation of its scope ; and a settlement made before either statute, having authorised the trustees of it to invest in Government or Parliamentary stocks or funds or securities, and none other, Malins, V.-C, held that the Act of 1860 empowered them (g) to invest upon (a) Ex parte St. John the Bap- 22, r. 16 ; S. C. F. B. 1886, r. 45 ; tist College, 22 Ch. D. 93, 97. Ann. Pr. 1889-90, 442 ; Supp. 30. (J) Jackson v. Tyai, 52 L. J. {d) S. C. F. E. 1886, r. 76. Ch. 830. («) Ih. 109. (o) In re Woodcock's Settled (/) Above, p. 64. Edates, L. B. 13 Eq. 183. See (j) Above, p. 65. Rules of Sapreme Court, 1883, 0. 70 EAr.LY STATCTES AS TO Incl'a stock created after General Order. Fand in court invested in foreign bonds. Stilt. 23 & -24 Yict. c. 14.5, s. -2.') (2Sth Aas., 1860). real securities (a). I am not aware of any subsequent case in which this authority has been either questioned or relied on, and if it may be doubted whether the Yice-Chancelloi rightly interpreted the statute, it must be recollected that trustees may have acted in reliance on the authority ol his interpretation. The section relied on is repealed (h). The General Order of 1861 was held to authorise the investment of cash under the control of the Couil. in India stock created after the date of the Order (c). A fund in Court belonging to a married woman subject only to a restraint on her power of alienation was allowed by Mains, V.-C, to be invested in foreign bonds, the interest being payable to bearer by coupons passing from hand to hand (rf). The ground of the Vice- Chancellor's order could not have been the General Order. Lord Cranworth's Act, where trustees had trust money in their hands which it was their duty to invest at interest, authorised them, at their discretion, to invest it in any of the parliamentary stocks or public funds, or in Govern- ment securities, provided that no such investment as aforesaid (except in the 3 per cent, consolidated Bank annuities), should be made where there was a person under no disability entitled in possession to receive the income of the trust fund for his life, or for a term of yeai-s determinable with his hfe or for any greater estate, without the consent in writing of such person. This provision did not enlarge the powers of trustees, unless it authorised them to invest with consent permanently in such securities as Exchequer bills and bonds, or meant, (fl) In re Wnlilerhiru's Trusts, 9 Ch. D. 112. (*) Above, pp. 'i, 7. (tO Ej- pnrte Sr John's Colhg,- Orf,.rd. 22 Ch. D. US ; beluw, p. 12:-; ((0 l>f Brackenhinij'i. 'J'l-uacs, z2 W. R. li.so , 31 L, T. T'J TRUST INVESTMENTS. 71 which it is conceived it did not (a), by the term Govern- ment securities, to include the securities of foreign or colonial Governments as well as those of the Government of the United Kingdom. The whole Act is now repealed, and the section just cited is not re-enacted (b). Since the 29th July, 1864, trustees directed or autho- i86i. rised to invest on real security, unless the contrary be '^^"^ """ provemeut provided by the instrument directing or authorising such charges, investment, have been at liberty to invest money in charges made by the Commissioners for the execution of the Improvement of Land Act, — being in Great Britain then the Inclosure, afterwards the Land Commissioners, and now the Board of Agriculture, — or on mortgage of those charges (c). Since the 20th August, 1867, it has been lawful for 18«''- . . . Securities trustees, executors, and administrators to invest trust tiie interest r 1 • ,-1 ■ • 1 _Li • j_ 1 • whereon is lunds in their possession or under theu' control m any gnn-iiitc. d W securities the interest of which is or shall be guaranteed Parliament 'rf) by Parliament to the same extent and in the same man- ner as they may invest such trust fund in such securities as those specified in the above (e) cited section of Lord St. Leonards' Act of 1859. In 1869 and subsequently, the Metropohtan Board of 1871. Works being empowered to raise money by the creation M>=t'''i"' ''" of "Metropolitan consolidated stock," called afterwards in the Acts giving those powers "consolidated stock " (/), it was in 1871 enacted as follows : (fl) See the definition of " Go- 45 & 46 Vict. c. 38, s. 64. Ternment Securities" in the (c) Below, p. 110. Court of Chancery Funds Act, (_cl) 52 & 53 Vict. u. 32, sa. 3 1872 (35 & 36 Vict. u. 44), s. 3 ; (e), 8. but see lie JBrachenhury, «■. s. (ji) Above, p. 64. and below, p. 95. (/) 32 & 33 Vict. c. 102, s. 4 (6) 44 & 45 Vict. c. 41, s. 71 ; 72 EAELY STATUTES AS TO Stit. 34 & 35 Vict. c. 47, B. 1 i (a). Debenture stocks. 1876. Debenture and debenture Btock of loeal authoiity. Corporation stocks. 1880. Isle of Man Government securities. A trustee, executor, or other person empowered to invest money in public stocks or funds or other Government securities may, unless forbidden by the ■will or other instrument under which he acts, whether prior in date to this Act or not, invest the same in consolidated stock. Since the 29th June, 1871, a power to invest in the mortgages or bonds of companies, unless the contrary is expressed in the instrument creating the power, has been deemed to include a power to invest in the debenture stock of a company (b). Since 1st January, 1876, trustees authorised to invest in the debentures or debenture stock of a company, unless the contrary is provided by the instrument authorising such investment, have had power to invest in nominal debentures or nominal debenture stock issued under the Local Loans Act, 1875 (c). The stocks of late years created by the corporations of our larger cities and towns, have been created under the authority of Local Acts, which, it is believed, have in most, if not all cases, provided tliat trustees authorised to invest in mortgages, debentures, or debenture stock of any company, may, unless the contrary is provided by the instrument authorising the investments, invest in cor- poration stock not being represented by a certificate to bearer (c). Since the 19th July, 1880, trustees authorised to invest in securities in the Isle of Man, or in the securities of the Government of a colonj^ have had, unless the contrary is provided by the instrument authorising the (a) Eepealed, above, p. 7. (J) Below, p. 170. (c) Below, p. 146. TRUsT INVEkSTMENTS. 73 investment, the same power of investing in securities of the government of the Isle of Man under the Isle of Man Loans Act, 1880 (a). Since the 3rd July, 1884, by virtue of an Act passed to 1884. enable holders of £3 per cent, annuities to convert them ^^ ]^'- *"'' ^ £2 lOs. per into some new stocks then created of £2 15s., and <=«"*• stocks. £2 10s, per cent, annuities, powers to invest in £8 per cent, stock have authorised investments in 2| and 2| per cent, stock (&). Since the purchases by the Indian Government in 1879—1886. 1879, 1883, and 1886 respectively of the East Indian, g jJ4"y g. Eastern Bengal, and Scinde, &c., railways, trustees Annuities. holding stocks of these companies have been authorised to accept, in lieu of those stocks, certain annuities called B. Annuities, which are charged on the revenue of India, are payable for a term of years, and are accompanied by sinking funds to replace the capital at the termination of the annuities (c). Since the 27th March, 1888, a power or direction to 1888. invest in Consolidated Eeduced or New 3 per cent. ^^ ^^i- P'^' cent. Consoil- annuities, has authorised investment in the new stock, "lated Stock. yielding for the present dividends at the rate of 2f per cent, per annum, created in that year (d). Since the 26th of November, 1888, it has been lawful 1888 for trustees " having power to invest upon Government Chancery securities, or upon Parliamentary stocks, funds or securi- Order, ties, or any of them," to invest in the stocks, funds, or gent, ann^ui- securities specified in the Order of that date (e). Loaks^stock, Many of the enactments cited in this section have been Indian guaran- •^ teed railway stocks or (a) Below, p. 150. (.d) Below, p. 84, shares, (J) Below, p. 83. («) Below, p. 144. (c) Below, p. 132. 74 EARLY STATUTES AS TO Colonial Gi:>veniment stocks witt Imperial guarantee. Suggestions as to future legislation. repealed or superseded by the Trast Investment Act, 1889 (a). The close of this account of the successive legislative enlargements of the class of investments generally eligible by trustees, is the place most suitable for two observa- tions, the fuU force of which, nevertheless, is derived in part from facts subsequently stated. The first is that it may be worthy of consideration on the occasion of making any future change, whether it is not better to designate by its individual title, rather than by reference to the cur- rent name of some species of which it may be a specimen, any stock intended to be brought within the class of generally authorised investments — whether, for instance, the precedent of " Stock of the Bank of England " should not be followed, rather than that of " Preference Stock of any railway company" answering a specified description (6). The first gives a clear direction to trustees which they can hardly misunderstand. The other leaves them still to find their way by means of other guides through tracks in which, it wiU be seen, error is possible. The second observation is that, considering the varia- bility of the worth of different kinds of property, and the likelihood of the need and possibility of fui'ther changes hereafter of the character of those above described, and made within the past thirty years, and considering also the difficulty of making statutory changes, it is also worthy of consideration whether it would not be better to express the statutory authority in the terms of the final clause of the 3rd section of the Act of 1889 : " in any of the stocks, funds, or securities for the time being autho- (a) Above, p. 1. (*) Above, pp. 2. 3. TKUST INVESTMENTS. 75 rised for the investment of casli under the control of the Court," or rather in terms analogous to those. The duty of considering from time to time the advisabihty of adding to or taking from the class of eligible investments for trust money might he deputed to a small body of persons specially qualified for the purpose (a). (a) See a paper in the Solicitors' appeared since the above passage Journal of 2 Not., 1889, which has was written. CHAPTER XI. (rovemment stocks, funds, and securities. "Public" not Bynonymous ■with "liovern- ment." STATUTORY INVESTMENTS. Class A. — I. Investments, the Authority to make which is Unqualijied. 1. "Parliamentary Stocks or Public Funds or Government Securities of the United Kingdom " : Trust Invest- ment Act, 1889, s. 3, sub-s. a (a). The old rule of the Court of Chancery having been, that trust money, as to the investment of which the instrument creating the trust did not contain any direc- tion, ought to be invested in £3 per centum annuities ; and it being a nearly universal practice to insert in trusts or powers of investment the words " parliamentary," " public," or " government " " stocks," " funds," or " securities," with or without the addition of the words "of England," "of Great Britain," or " of the United Kingdom," as descriptive of a class of investments intended to be authorised, it is necessary to learn what the several words mean, and which are most fitted for the purpose for which they are used. Sir L. Shadwell is reported to have said on one occa- sion, that all public securities are not Government securities (b). It does not appear what other public (a) Above, pp. 2, 8. (*J Sampayo v.G.nild, 12 Sim. 43.5. GOVERNMENT SECURITIES. I'J securities the Vice-Cliancellor was thinking of, but the securities of municipal corporations may perhaps be properly called public securities. None, however, of the epithets " public," "parliamentary" and " government " l^f^^^^i^g seem to be essential to the description of the stocks, preferable epithet. funds, or securities intended, though the prevalence of the use of some or one of them may be a reason for its con- tinuance. Of the three, the word " public " seems least apt, for the reason pointed out by Sir L. Shadwell ; " parliamentary " indicates one quality essential to the investment intended, but " government " appears to be the most appropriate, inasmuch as it denotes the executive as well as the legislative authority of the country, and so expresses the whole instead of a part only of the character to be indicated. The stocks, funds, and securities of the government of the United Kingdom consist of perpetual and terminable annuities and of Exchequer and Treasury Bills and Bonds. The words "stocks" and "funds" appear to be "Stocks 'and "funds." equally well adapted to denote the annuities which con- stitute the permanent debt of the country, and are the property investment in which is usually meant to be authorised. The two words are verj' frequently used in combination, but either of them would be sufficient with- out the other. It was once urged in argument that while "stocks" "Securities." and "funds " refer to the annuities, the word "securities " in the clause under consideration referred to Exchequer bills (a). The judgments of the learned lords in Slingsby V. Grainger (b) support the proposition, but if it be sound (ff) Ex parte an Undertaking, (J) 7 H. L. C. 273. etc., 11 Jur. 160. 78 STATUTORY INVESTMENTS. Government of the United Kingdom. Furmerly existing stoclis. Creation of the £3 ptr ci-nt. Consoli- dated and £3 per cent. Re- duced stocliS, Subsequent CI cations of hii,dier de- nfiminations of annuities. Conversion of £5 per cents, into ci.n.^ols. " securities " must also include Exchequer bonds and Treasurj' bills and bonds. Of the additional words denoting the country the Government of which is referred to, " United Kingdom " should now be emploj'ed, and not " England " or " Great Britain." Formerly, indeed, there were distinct debts of Great Britain and of Ireland, but in the year 1817 the re- venues of both countries were consolidated into one fund, though for the accommodation of shareholders in Ireland parts of the several stocks are capable of transfer and the dividends on them paj'able at the Bank of Ireland (a). Stocks now extinct being frequently found to have been the subject-matter of old settlements, the following account of some of the principal creations, consolida- tions, and extinctions of stocks of perpetual annuities, may be useful. In 1752 several stocks bearing higher rates of dividend were consolidated into two new stocks bearing 3 per cent, per annum dividends, one of which was the origin of the Consolidated, and the other of the Reduced £3 per cent, annuities (b), which with the New £B per centum annuities for many years before April, 1888, constituted the bulk of the National Debt. Funds of 8|, 4 (c), and again 3J per cent, annuities were created in the years 1818, 1826-9 and 1836 (d). Stocks known as the Imperial Five per cents., and the Five per cent. Royalty Loans 1797, were in 1824 con- verted into consols (p). (a) Fairman on the Funds, 7th ed. 203 ; The National Debt Act, 1870, 33 & U Vict. c. 71, ss. 43-50. (J) 25 Geo. II. c. 27 ; Fenn on the Funds, 13th ed. 5, 21, 2.i. (c) Fenn on the Funds, 13th ed. Ifi. (rO /*. (0 Jb. ]2th ed. 22. GOVEE^MEXT SECUEITIES. T9 The history of the New £B per cent, annuities is as follows : la 1822, x^ersons holding certain stocks called Nav}' £5 Conversion of Niivv £5 per per cent, annuities and Irish £5 per cent, annuities cents, into and certain Irish 5 per cent, debentures respectively, ^^.^^g became entitled at their option, in lieu of every £100 of sucb. £5 per cent, annuities, to either £100 sterling or £105 in a new stock to be called the New £4 per centum annuities carrying interest at £4 per cent, per annum payable half-yearly on the 5th of January and the 5th of Julj'. Trustees were authorised to dissent, but were indemnified for not dissenting («). Those who dissented were protected by the circumstances (b). In 1830 persons entitled to New £4 per cents, and not Conversion in dissenting became entitled to an equal nominal amount of £i per cents. New £3 10s. per centum annuities — the dividends to be £3°ior"per payable from 5th January, 1831, on that day, and the 5th ™°'^' July in every year (c). Holders of the old stock were empowered, if they preferred, to subscribe to a new stock to be caUed New £5 per cent, annuities, of which each holder of £100 of the old stock might have £70. A time was allowed for dissenting, and dissentients were to be paid off at par. Trustees might dissent, but were indemnified for not dissenting (d), and they were autho- rised to subscribe to the New £5 per cents. Trusts of and directions as to New £4 per cents., or as to the pay- ment or distribution of dividends thereon, or as to the transfer thereof, were extended to the New £3 10s. per (a) 3 Geo. IV. c. 9. (^) 11 Geo. IV. c. 13, ». 1. (J) Angell v. Dawson, 3 Y. & C. (<•/) H. 7. 308, 315. 80 STATUTORY INVESTMENTS. Conversion of New £3 10s. per cents, and other £3 10». per cent, an- nuities into £3 5s. per cents. And ulti- m-itel>" into New £3 per cenU. cents., and transfers of equal nominal amounts of the new stock and j)ayment of the reduced dividend were to dis- charge trustees (a). The £5 per cent, stock created pursuant to this Act was known as New £5 per centum annuities, and was paid off in January, 1873 (6). In 1844 not only the " New £3 10s. per centum annuities " created in 1830, but several other stocks, — one known as " Three pounds ten shillings per centum annuities 1818," of which the dividends were payable in April and October, and the others known in Ireland by the several names of " £3 10s. per cent. Old Stock and Government Debentures," " Irish £3 10s. per cent, reduced Annuities," and " New £3 10s. per cent. Annuities and Government Debentures," and in England by the name of £3 10s. per cent, reduced annuities, were, at the option of the holders, paid off or converted into a new stock, of which the acceptors were to have amounts nominally equal to their holdings in the extinguished stocks. The new stock was to bear dividends at the rate of £3 5s. per cent, per annum, payable in April and October until the 10th October, 1854, and afterwards at the rate of £3 per cent, per annum, payable in the lastly mentioned months, and to be called New £3 per centum Annuities (c). Trustees were authorised in the one case (d) to assent to and in the other to dissent from (e) the proposed commutation ; trusts of the extinguished stocks were (o) 11 Geo. IV. 0. 13, s. 7, ss. 2, 4, 5, 8, 19. (*) Fenn on the Funds, 12th ed. 20. («) 7 & 8 A^ict. cc. i, 5. W C. 4, s. 9. (e) C. 5, s. 6. GOVERNMENT SECURITIES. 81 made applicable to the new ones (a), and the Coui'ts were specially empowered to determine questions which might arise (&). The annuity payable to the South Sea Company, the Conversion in 1853 of South Old and New South Sea annuities, the Bank annuities Sea and other -^ „ , . . stocks into llAo, and the ±3 per cent, annuities 1751, were in 1853 £2 lOs. per redeemed by giving to each proprietor, at his option, £3 jog. per either a share of a new stock of £3 10s. per cent. ti^es'andEx- annuities at the rate of £82 10s. of the new for £100 of chequer bonds, the redeemed stock, or a share in another new stock of £2 10s. per cent, annuities at the rate of £110 of the new for £100 of the redeemed annuities, or for every sum of £100 of the redeemed stocks an Exchequer bond bear- ing interest at £2 15s. per cent, per annum, until a day named in the bond not later than 1st September, 1864, and thenceforth of £2 10s. per cent. Those new stocks and bonds were to be irredeemable until after the 5th January and the 1st September in 1894 respectively (c). Commutations of Consols and £3 per cent. Reduced annuities into the new stocks and bonds were also authorised to be made in the same year (d). Necessary powers were given to trustees (e), and trusts of the com- muted stocks were extended to the new ones (/). In 1870 an Act for consolidating with amend- National Debt ° _ Act, 1870 (33 ments certain enactments relating to the National & 34 Vict. . . .0. 71). Debt, after providing, among other definitions, that in that Act "stock" meant the several capital or joint stocks of Perpetual Annuities described in the first schedule to that Act, and included any share or interest (a) C. 4, s. 20 ; c. 6, s. 17. W Ss. 13, 14. (*) C. 4, s. 21 ; c. 5, o. 18. («) Ss. 11, 16. (c) 16 & 17 Vict. c. 23. (/) S. 29. V.T.M, G 82 STATUTORY INVESTMENTS. Security and nature of tlie property. Dividends. Transfera. therein respectively — that " The Consolidated Fund " meant the consolidated fund of the United Kingdom of Great Britain and Ireland — and that " representatives " meant executors, administrators, successors and assigns, enacted (a) that the perpetual annuities mentioned in the first schedule to the respective amounts subsisting at the passing of the Act, and the several capital sums in respect whereof those several annuities were payable, did and should form part of the National Debt, due to the several persons who at the passing of the Act were entitled thereto and to their representatives. The annuities were to be payable and transferable at the Banks of England and Ireland, and redeemable at the times stated below at the rate of £100 sterling for every £100 of the capital sums in respect whereof they were to be payable. The annuities and dividends were to continue charged on and payable out of the consolidated fund, and fiee from taxes, charges, and impositions. The interests of stock- holders and their representatives were to continue inde- feasible, and the annuities to be personal estate (b). Dividends were to be payable at the Banks of England and Ireland respectively (c), but provisions were made for the payment of dividends by sending warrants through the post if so desired by the stockholder for which others applicable to the stock since created have been sub- stituted (d). The stock was to pass by transfers in the books of the Banks of England and Ireland respectively (e), and (a) 33 & 34 Vict. u. 71, s. 5. (J) Ss. 6,7, 8, 9, 10. (f) 8s, 12-16, 20, 21. () 33 & 34 Vict. c. 71, above, (6), s. 15 ; above, p. 83. p. 81. W /J. s. 8 (1). 86 STATUTORY I^" VESTMENTS. Stat. 51 Vict. c. 2, a. 19. Previous powers of investment in 3 per cent, stocks. Four accounts in same names now permis- sitle. Stat. SI Vict. c. 2, s. 18. Power to hold stock on diiferent accounts. Is. 6d. per cent. The 5s., it was enacted, " may be treated by trustees and others as income, but if so treated shall not be subject to income tax" (a). A power or direction, whether subject or not to any restrictions or conditions, to invest in any of the stocks which may be converted or exchanged under this Act, or generally in 3 per cent, stock, shall ex- tend to authorise an investment subject to the same conditions and restrictions (if any) in new stock. Formerly the Bank did not allow holders of Govern- ment annuities to have more than one account in the same name, or in the same names, standing in the same order. As it often happened that the same persons were trustees of several funds on distinct trusts, they had, if they wanted to invest these several funds in Government annuities, to resort to the device of investing one fund in one of the stocks of annuities and the others in other stocks, or to that of varying the order of the names of the trustees in the accounts in the bank books. The conversion attempted in 1888 being expected to result, as it has resulted, in the substitution of one great stock of Consolidated 2f per cent, stock for the three stocks of Consolidated, Reduced and New 3 per cent. Annuities, made it likely that trustees would no longer be able to resort to the first of the above-mentioned devices. The Act, however, contained the following section : — In the registers of new stock, the Bank shall allow any holder or joint holders to have more than one account, provided that each account is dis- tinguished either by a number or by such other (a) 51 & 52 Vict. c. 2, s. 10. OOVEKNilENT SECUKITIES. 87 designation as may be directed by the Bank, and that the Bank shall not be required to permit more than four accounts to be opened in the same name or names. In practice the Bank distinguishes the four permissible accounts by the letters A., B., C, and D., and it has ceased to distinguish from each other accounts in the same names, but in various orders ; so the new provision is the sole substitute for both of the old methods of distinguishing accounts. Provisions for the subsequent interpretation of some investment clauses (a), for cases of trusts for annui- tants (b), for those of stock mortgages (c), for the indemnity of trustees accepting new stock {d}, for the need trustees may have to sell the new stock and to reinvest the proceeds (e), as well as declarations that the acceptance of New stock in substitution for New Consolidated or Reduced 3 per cent, annuities should not be considered a change of investment (/) which are contained in the Act, are more fully stated elsewhere. New stock accepted instead of old is subject to the New stock same trusts, charges, rights, distringases, and restraints as trusts of aud the old, and powers of attorney, requests as to dividends that for which and other documents relating to the old investment and f^/"'^^*''' the dividends on it, apply to what is substituted. References in previous Acts or instruments to stock liable to be converted or exchanged under the Act may, if the stock is so converted or exchanged, be construed as re- (a) S. 19 ; above, p. 86. see also ss. 5, 9. (J) S. 20 ; above, p. 42. (e) S. 27 ; above, p. 42. (c) S. 21 ; below, p. 121. (/) S. 1 (1), s. 8 (1) ; above, ((i) S. 26 ; above, pp. 41, 42 ; p. 41. 88 STATUTORY INVJiSTMENTS. Bank un- atfected by notice of trusts. National Debt Kedemption Act, 1889. ferences to new stock, and there is a provision with reference to testamentary dispositions which would have operated as specific bequests of sums of any stocks which may be converted, exchanged, or paid off (a). Nothing in the Act or in any rules under it will affect the Bank with notice of any trust (b). In consequence of the above described Act, the whole fund of New 3 per cent. Annuities was extinguished iu 1888, but of the Consolidated and Reduced 3 per cent. Annuities sums of considerable amount remained unre- deemed in the spring of 1889. The year's notice requisite before they could be redeemed at par had, however, been given on the 6th of July, 1888, and in 1889 it was enacted that every holder on the 6th of July, 1889, of those stocks should be paid off at par, and thereupon those annuities should cease. Persons not claiming theu' redemption money before the 1st of October, 1889, were to become then entitled in exchange for their redeemed stock to an equal nominal amount of 2| per cent, stock, whereof the first dividend was to be payable on the 5th of the same month (c). The Treasury was em- powered to offer before the 6th July, other terms of redemption, and the National Debt Commissioners to take in exchange for other stocks they might hold, old Consols or Reduced 3 per cent, annuities, and trustees were authorised to accept those terms {d). The Treasury was also empowered to create 2| per cent. Consolidated stock to the requisite amount, which was to be consolidated with that created under the Act of (a) 51 & 52 Vict. c. 2, ». 25. (J) n. s. 30 (3). (c) 52 & 53 Vict. c. 4, ss. 1, 13. (rZ) /*. ss. 2, 3. GOVERNMENT SECURITIES. 89 1888 («). The above-mentioned provisions of that Act relating to trusts for annuitants and stock mortgages as well as others were made applicable to commissions under the Act of 1889 {b). The result of the financial changes since 1870 which are above stated is that the funds of Perpetual Annuities now constituting part of the National Debt are as stated in the table printed above (c). The old stock of terminable annuities, called Long Terminabio Annuities. Annuities, to which frequent reference is made in old cases and text-books, expired in 1860 (d). Many millions of new terminable annuities have been created since 1855. Of these some have akeady expired, and about £86,000,000 are still subsisting, but very little of this stock is in the market. Exchequer bonds at 2| per cent, irredeemable until Exchequer bonds. 1894 (e), and at d^ per cent, for other fixed terms, are also in existence. Their creation is now regulated by 29 Vict. c. 25. They are said to be held by the savings banks, and not to be in the market. Exchequer bills are in practice issued for six months. Exchequer There are usually two classes of them in the market, — those bearing interest on the 11th of March and the 11th of September, and those bearing interest on the 11th June and 11th December. The interest is fixed at the time of issue, and notice of the rate at which they may be renewed is given in the month preceding their maturity (/). The issue of Exchequer bills is also regulated by (a) 52 & 53 Vict. c. 4, s. 5. (e) 16 & 17 Vict. cc. 23, 132 ; (J) /*. 8. 9. 29 Vict. c. 25, s. 28. (c) P. 8. (/) The Stock Exchange Tear (_d) 11 Sweet's Jarm. By. 457. Book, 1890, p. 9. 29 & 30 Vict. c. 90 STATUTORY INVESTMENTS. 29 Vict. c. 25. Exchequer Bills are, usually, dealt in " clean," and pass by delivery merely, but they may be made payable to order. TreMuty bills. By the Treasury Bills Act 1877 (a) the Commissioners of the Treasury are, when authorised to raise money in the manner in the Act mentioned, empowered to raise it by bills, to be called Treasury BOls, every such bill to be for the payment of the principal sum named therein, in the manner and at the date therein mentioned, so that the date be not more than twelve months from the date of the bUl. Interest shall be payable at such rate and in such manner as the Treasury may direct. The bills are to be issued by the Bank of England (b). These bills are issued for sums of ^1000, £5000, and £10,000. They do not bear interest, and are disposed of by tender, and are paid without days of grace (c). They are not dealt in, on the Stock Exchange, but are purchased by the discount houses and brokers. "When the Government public or parliamentary stocks, funds, or securities are referred to in English settlements it is apprehended that the Government of the United Kingdom is that pointed at. It has been said that Government or Parliamentary stocks or funds are funds either managed by Parliament or paid out of the revenues of the British Government, or, at least, guaranteed by that Government (d). The " funds," Lord Cranworth is reported to have said, means that portion of the public debt which is payable out of the consolidated fund (e). What are GoYei'nment or Pai'Iia- mentaiy stocks or funds ? 25 ; 40 & 41 Vict. u. 2, s. 6 ; 52 & 53 Vict. 0. 6, s. 6. (a) 40 Vict. c. 2. (S) Ss. 4, 8. (c) The Stock Exchange Tear Book, 1879, p. 4. (l, (rf) Waring V. Wariv g, 3 It. Gh. citing Waring v. Waring, «. .^.,■ E. 331,3.B6. In Lorlihart V. TlfiUy, see Knox v. Maclnnnnii, 13 App. 1 De G. & Jo. 464 ; 25 L. J. Ch. (X 753, 763, 767. borrower. 112 STATUTORY IXVESTMENT3. Duly of solici- tor acting both for mortgagor and luortgagee. Stat. 51 & 52 Vict. 0. 59, s. 4, sub-s. 2 (e). Dispensation with lessor's title. Sub-s. 3. Acceptance of short title. If one solicitor act for both parties he must not, if he finds the mortgagor's title defective, disclose the defects to the proposed mortgagee (a) ; but it is apprehended that he may, and must, advise the proposed mortgagee not to make the advance. It should also be remembered that trustees have been held responsible for the laches of their solicitor (b), and for his fraud (c). Trustees, of course, are not entitled to waive serious defects of title to hereditaments proposed to be mortgaged (d). The Trustee Act, 1888, contained the following enact- ments : — No trustee (/) lending money upon the security of any leasehold property shall be chargeable with breach of trust only upon the ground that in making such loan he dispensed, either wholly or partially, with the production or investigation of the lessor's title. No trustee (g) shall be chargeable with breach of trust only upon the ground that, in effecting the purchase of any property, or in lending money upon the se'curity of any property, he shall have accepted a shorter title than the title which a purchaser is, in the absence of a special contract, entitled to require, if in the opinion of the Court the title accepted be such as a person acting with prudence and caution would have accepted. (a) Taylor v. BlacMow, 3 Bing. N. C. 235. (S) Sopgood V. Parliin, L. E. H Eq. 74 ; but see observations in Re Speight,2% Ch. D. 727, 761 ; below, p. 157. (c) Sutton V. TVUders, L. E. 12 Eq. 373. (rf) Lord Campbell in Eastern Counties Railway Co. v. Sawhes, 5 H. L. C. 331, 368. (e) Sub-s. 1 ; below, p. 114. (/) Includes an executor, ad- ministrator, and constructive trus- tee, and applies where the trust was created by au instrument exe- cuted before the Act. (17) See last note. REAL SECURITIES. 113 This section shall apply to transfers of existing Stat. 61 & 52 securities as well as to new securities, and to g. 4_' sab-s.' 4. investments made as well before as after the passing of this Act, except where some action or other proceeding shall be pending with reference thereto at the passing of this Act (a). Two general, but far from inflexible rules as to the Rules as to proportion of proportion the value of the security should bear to the loan to value of security. loan proposed have been established by the Court, and it is conceived still subsist modified by the enactment stated below. First. An advance upon the security of property of permanent value, such as freehold land, to the extent of two-thirds of its value is within the rule of ordinary prudence (b). Second. The first rule does not apply to houses which fluctuate in value and are always deteriorating (c). Upon freehold houses not more than half the value should be lent {d). The same rule was applied to a loan on per- petually renewable leaseholds in Ireland (e). The rule as to lending two-thirds or one-half the value Rules not inflexible. of the proposed security, according to its nature, is not a fixed one, liable to no variation, but is a rule of ordinary discretion (/). In one case trustees were held to be not (ffi) See last page, note (p). 307 ; 16 Beav. 60.5 ; per Kinders- (i) Per Pepys, M. K., in StirJi- ley, V.-C, Stretton v. Ashmall, 3 nr-y V. Sewell, 1 M. & Or. 8, 1.5 ; Drew. 9, 12 ; Fryy. Tapson,'i?, Ch. per Homilly, M. R., in Norris v. D. 268 ; Smi'th'urst v. Hastings, 30 Wriglit, 14 Beav. 291, 307 ; Mac Ch. D. 490. See also Hoey v. .Icod V. Annesley, 16 Beav. 600, Green, W.N. 1884, p. 236 ; In re 605 ; Re Godfrey, 23 Ch. D. 483. Olive, 34 Ch. D. 70 ; but see below. (c) 1 M. & Cr. 16 ; Phillipson (e) Macleod v. Annesley, u. s. V. Gatty, 7 Ha. 516. (/) 3 Drew. 12 ; 23 Ch. D. 496. (<^) Per Romilly, M.R., 14 Bear. V.T.M. I 114 STx\TUTORY INVESTMENTS. responsible for loss where, having taken the advice of a survej'or, they had advanced more than two-thirds of the value of freehold houses (a), hut this case is said to have been reversed (h). In another a loan on mortgage of ground rents of less value than one-third more than the amount of the advance was approved, on the ground that the value of the hereditaments out of which the rents issued should be taken into consideration (c). It will, however, be safer for trustees to regard the rules as indicating rather that they should not lend more, than as justifying them in lending so much as the pro- portions specified by the rules. It has been said that if the proportion has been exceeded it is for the trustee to justify his conduct (d). Upon this point the Trustee Act, 1888, enacts : — Stat. 51 & 62 No trustee (e) lending money upon the security of Tict. c. 59, g^jjy property shall be chargeable with breach of Loans by trust by reason only of the proportion borne by trustees. ^-^^ amount of the loan to the value of such property at the time when the loan was made, 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 reasonably believed to be an able practical surveyor or valuer, instructed and employed independently of any owner of the property, whether such surveyor or valuer carried on business in the locality where the property is situate or elsewhere, and that the amount of the (a) Jones y. Lewis, 3 De G. & (d) In re Partington, Wl L. T. Sm. 471. N. S. 65i ; In re Salmon, 42 Ch. D. (V) Lewin, Trusts, 4th ed. 242 n. 351. («) Vickery v. Erans, 33 Beav. (e) Defined s. 1, above, p. 112, 376 ; s. c. 33 L. J. Ch. 261. See note (e). also He Godfrey, 23 Ch. D. 483. REAL SKOUIUTIES 115 loan does not exceed two equal third parts of the value of the property as stated in such report, and that the loan was made under the advice of such sur- veyor or valuer expressed in such report. And this section shall apply to a loan upon any property of an)' tenure, whether agricultural or house or other property, on which the trustee can lawfully lend (a). Where a trustee (b) shall have improperly advanced S. 5, sub-s. 1 , , , *j_ 1 • 1 11 Liability for trust-money on a mortgage security which would j^gg ^y reason at the time of the investment have been a proper ?* improper investment in all respects for a less sum than was actually advanced thereon, the security shall be deemed an authorised investment for such less sum, and the trustee shall only be liable to make good the sum advanced in excess thereof with interest. This section shall apply to investments made as Sab s. 2. well before as after the passing of this Act, except where some action or other proceeding shall be pending with reference thereto at the passing of this Act. The Act applies to trusts created by previously exe- cuted instruments, and subject to any express prohibitions and directions (c). That the property is unlet and the borrower a builder, Value depend- are circumstances calling for additional caution before carious . », /-,< 11J-J circumstances lending upon mortgage oi houses (a) ; and value derived from the accidental absence of competition in trade (e), from shifting circumstances (/), or the continuance of the conduct of a particular business on the land (g), or of the (b) See also subs. 2, 3, i, and 558. B. 1 ; above, pp. 112, 113. (e) 1 My. & Cr. 15 ; Stretton v, (J) Definedabove,p.ll2,note(<0- ^s/tmaZZ, 3 Drew. 9. fc) S. 12. (/) •^'* ''^ Salmon, u. s. (jT) Hocy V. Green, W. N. 1884, (.9) In re Whiteley, 32 Ch D. p. 236. Cf . In re Salmon, 42 Ch. D. 196 ; 33 ib. 847 ; 12 App. Ca. 727 351, 370; Rae v. Mceli, 14 App. Ca. 116 STATUTORY INVESTMENTS, Evidence of value re- quisite. licence of a recently opened public-house (a), is not such as trustees ought to rely upon (b). The test of the value of any property', it has been said, is what it actually lets for(c). But that may be misleading; and the report of an independent, com- petent, and trustworthy survej'or is the evidence which a trustee should, it is conceived, usually require before he agrees to make a loan ; nor, it has been said, should he adopt such advice blindly, but should exercise his judg- ment upon it {d). The report, Kay, J., has said, should not merely state the property to be a sufficient security for the proposed loan. It should state how many years' purchase the property would fetch, or what its value is(e). The valuer should be employed by, and value on behalf of the proposed mortgagee, who, if he be a trustee and neglect proper precautions, will be responsible for any loss which may be incurred. A man bond fide forms his opinion, but he looks at the case in a totally different way when he knows on whose behalf he is acting (/). In Hopgood V. Parkin (g) one point against the trustee was that the valuer had been recommended by the solicitor of the mortgagor. Moreover, the valuer should be a person whose business is in such a locality as to fit him to judge of the value of the proposed security (h) ; he should be told that the money proposed to be lent is trust-money (e); (a) JUndge v. Gummotii, L. B. 7 Ch. 719. See also SmetharH v. Hasthwis, 30 Ch. D. 490. (J) My. & Cr. 15 ; Strettoii v. Aslimall, 3 Drew. 9. (c) Maclend v. Annesley, 16 Beav. 600, 606. (d) Stirling, J., in In re Par- tington, 57 L. T. N. 8. 654 ; of. In re Brogden, 38 Ch. D. 546. (e) In re Olire, 34 Ch. D. 70, 73. (/) Ingle Y.Partridge, 34 Beav. 411 ; Fry v. Tapson, 28 Ch. D. 268 ; cf. Pretty v. Fowke, 31 Sol. J. 693. See above, p. 114. (?) L. R. 11 Eq. 74 ; Walcott v. Lyons, 54 L. T. N. S. 786 ; Bae v. Meek, 14 App. Ca. 558. (/i) Fry v. Tapson, u. s.; though see late statute above, p. 114. 'J-J REAL SECURITIES. 117 evidence of rental should be obtained, but rental not exclusively relied on, nor, of course, should the state- ments of the borrower be alone depended on (a) ; and the report must not on its face be untrustworthy, as in a case where a valuer included in the property valued, and attributed value to, the licence of a recently opened hotel (fc). It should be recollected, where property is let at weekly rents, that the rates are probably paid by the landlord, and that where houses have been newly built on land laid out for building, they may be or have become chargeable for payments to a local authority for road- making, sewerage, &c. (c). In one case trustees were not held responsible, though they had lent on the valua- tion of a valuer for the vendor to the borrower, and their own judgment (d) ; but the loss in that case was sup- posed to have depended, not on an error in the original value of the property, but on subsequent depreciation from bad seasons. The afifidavits of the proposed mort- gagor and his steward are, obviously, not evidence of value on which trustees should rely. They should always have the opinion of a disinterested person (e) ; and the price given on a sale made twenty-three years previously, coupled with subsequent outlay on the property, does not afford trustworthy data for an estimate of present value (/). Trustees who have lent upon mortgage must from time Changes ia (a) In, re Partington, w. s. (rf) Re Godfrey, 23 Ch. D. i83. (J) Budge v. Gvmmow, w. s. ; (c) A^'orris v. Wright, 14 Beav. Fry v. Tapson, u. s. ; cf. Learoyd 291, 301, 302 ; Marleod v. Annes- V. Wliiteley, 12 App. Ca. 727 ; Re ley, u. s.; Waring v. Waring, 3 Partington, v. s. Ir. Ch. B. 331, 337. (c) In re OUie, 34 Ch. D. 70, (/) Strettonv.AihmaU,3Dr(iw^ 73. 9, 12. 118 STATUTORY INVESTMENTS. value of securities to he watched. Trustees authorised to lend on mortgage and taking proper pre- cautions not responsible for defect in security. Advance for the improve- ment of inadequate security. Trustees should not lend to one of themselves to time consider whether there is any reason to appre- hend a depreciation in the mortgaged property. It may become their duty to call in the money or realise the security, but that it has may not necessarily follow from the mere circumstance of the property becoming worth less than half as much again as the loan (a). Where trustees, being authorised to lend on mortgage of the species of property accepted as a security, take the proper precautions for ascertaining the validity of the title and the adequacy of the security, they will not be held responsible for a loss if eventually the property should prove to be of insufficient value (&). That decision is said to have been reversed (c), and the principle may have been applied by it with too great leniency to the trustees ; but the principle itself is unquestionable {d). If a trust fund when it comes into settlement is already lent, or, it is conceived, if afterwards it be justifiably lent, on the mortgage of a property which proves to be of insufficient value, the trustees, according to an opinion of Sir J. Eomilly, M.R., may lay out other trust-money in improvements of the mortgaged property, if there be good reason to suppose that the outlay will make that property an adequate security for both advances. But if a loss should be the result, the burden of proving that they had carefully investigated the probabilities of success would lie upon the trustees (e). Trustees should not lend to one of themselves, al- though on authorised and apparently adequate security. (ffi) In re Mcdland, 41 Ch. D. 476. (V) Jones V. Lewis, 3 De G. & Sm. 471. (c) Lewin, Trusts, 4th ed. 242 n. (iZ) 3 Dav. Conv., 2nd ed. 29. Cf. In re Whiteley, 32 Ch. D. 196 ; 33 a. 347 ; 12 App. Ca. 727. (fi) Collinson v. Lister, 20 Beav. 356, 366. REAL SECURITIES. 119 The settlor intends the estate to have the benefit of the discretion of all the trustees (a). Trustees should not join with others in a mortgage, so Objection to as to miK up the trust fund with the rights of strangers ; mortgages. and still less can they safely take a joint mortgage in the name of a common trustee ; for to do so would be a delegation of theii- dut3r(6). Mr. Davidson, to a quota' tion of this passage, appends a note that occasionally a special power to invest in mortgages of this description is given, but he j astly reprobates the practice (c). Upon lending trust-money upon mortgage, it is usual Concealment . of trust in SO to frame the deed as that it shall appear that the mortgages to mortgagees are jointly entitled, and that the survivors or survivor of them, or the executors or administrators of such survivor, or their or his assigns, can give a good receipt for the money secured, but so also as that it shall not appear that the mortgagees are trustees {d). A declaration of trust is made by a separate deed. This course, to which the cestuis que trustent have no reason to object, is taken in order to keep the title to the land clear of the trusts affecting the money (e). It is not infrequently supposed that trustees are acting stock more prudently if, when lending on mortgage money pro- ^° ^*°^^' duced by sale of stock, they lend upon the terms that the mortgage shall secure the replacement of the stock sold, (■(j) V. Walker, 5 Russ. methods adopted on transfers of Y ; Stichney v. Sewell, 1 M. & Cr. the mortgage on the occasion of a 8, 15. See Francis v. Francis, 5 change in the trusteeship, see De G. M. & G. 108. Vaizey, Settlements, Ch. V. s. 3 ; (J) Lewin, 4th ed. 245 j Wehb Lewin, 4th ed. 246 ; 3 Dav., 2nd v. Jonis, 39 Ch. D. 660, 666. ed. 30-32 ; 5 Sweet's Jarm. By. ' (c) 3 Conv., 2nd ed. 30. 499, 573 ; Carritt v. Real and Per- (d) 44 & 45 Vict. c. 41, s. 61. sonal Advance Co., 42 Ch. D. 263. (e) As to this practice, and the 120 STATUTORY INVESTMENTS. Provisions as to stock moiigages in ] the National rather than the repayment of the money lent. The error of this notion was pointed out by Mr. Lewin (a) and Lord Cranworth, C. (&). Obviously, as far as the security is concerned, whether stock or money be secured, a less perfect security, that is a private one, is substituted for a more perfect, that is a Government one. Whether, in the event, it will be more advantageous to have stock retransferred to the trustees or the money they lend repaid, is a matter purely of speculation, dependent on the subsequent fluctuations of the market. If the trus- tees are justified in selUng the Government stock, they thenceforth become responsible for the money produced by its sale, and repayment of that, not of something else, which may be of either greater or less value than that money, should be secured to them. The species of mortgage under consideration frequently provides that interest equivalent to the dividends on the stock sold shall be payable during the continuance of the loan. In these cases no one benefits by the transaction. If higher interest be reserved, at least the tenant for life gains some benefit. That under the usual powers to vary securities a loan upon the terms of replacing the stock sold is not justified, but that the mortgage should be made to secure a fixed capital was not long since ex- pressly decided, and that in a case where the stock had been sold above par (c) . An agreement to transfer any amount of New, Con- solidated, or Eeduced 3 per cent. Annuities, or generally any amount of 3 per tent, stock, may be satisfied by (a) Ti-usts, 4th ed. 241. (J) Pell V. De Winfon, 2 De G. It .T. 13, 19. M Whitney v. SiiiifJi, L. E. 4 Ch. 513 ; Bi-omley v. Kelly, 39 L. J. Ch. 274 ; 18 W. R. 374. HEAL SECURITIES. 121 making a transfer of an equal amount of the stock at Debt (Con- version) Act, present called 2f per cent. Consolidated stock (a). 1888. Moreover, Where under any mortgage or agreement for a loan Stat. 51 Vict. any person is bound to pay half-yearly sums equal "• ■ ^- ' '• to the dividends on any specified amount of stock, and that amount of stock is under this Act con- verted into or exchanged for new stock, the obliga- tion shall be satisfied by the payment of quarterly sums equal to the dividends on the same amount of new stock. Care should be observed in lending trust-money on a Consequence .of lending mortgage with a contract that it shall not be called in for trust money a specified number of years, for if the particular interests period. determine before the period expires, the person then absolutely entitled may require either a transfer of the mortgage or to have it sold, and the deficiency made up by the trustees, because he is entitled to payment at once (b). Sir J. Stuart, V.-C, held that trustees had not com- Power of sale. mitted a breach of trust in taking a mortgage without a power of sale (c). Now, unless a contrary intention is expressed, that power is incident to a mortgage (d). (a) 51 Vict. c. 2, s. 21, and Pre- Sm. & G. 231. amble, and s. 2 (4). id') 44 & 45 Vict. u. 41, s. 19 ; (S) Vlckcnj V. Evans, 33 Beav. and previously 23 & 24 Vict. c. 376 ; s. c. 33 L. J. Ch. 2B1. 145, s. 11. (c) Farrar v. Barracluugh, 2 122 STATUTORY INVESTMENTS. Different terms in Act and Orders. 3. " Stock of the Baiik of England or the Bank of Ireland ": Trust Investment Act, 1889, s. 3 c (a). In the statute 22 & 23 Vict. c. 35, s. 32, " stock of the Bank of England or Ireland " is the expression used. In the General Orders of 1861, 1883, and 1888 (6) " Bank Stock" are the only words. The Irish Orders of 1861 and 1889 specify Bank of Ireland stock only (c). In exercise of the authority conferred hy the General Order, 1st Feb- ruary, 1861, orders for the investment of cash under the control of the Court in Bank stock have been made in several reported cases (d). In Ireland an application to sell Government £2 per cent, annuities and invest in Bank of Ireland stock was at first refused, but afterwards sanctioned (e). India Stock. " India Three-and-a-half per Cent. Stock and India Three per Cent. Stock, or in any other Capital Stock which may at any time hereafter he issued hy the Secretary (a) Above, pp. 2, 9. (J) Above, pp. 65-68 ; below, p. 144. (c) Below, p. 145. (<2) lie Langford's Trusts, 2 J. & H. 458 ; s. c. 31 L. J. Ch. 334 ; Cohen v. Waley, 3 L. T. N. S. 436 ; Trutts, 11 W. R. 980. As to the right of a tenant for life to the dividends on Bank Btock, see Vaizey, Settlements, Ch. XI. s. 5. (e) Re Boyce's minors, I. B. 1 Eq. 45 ; 2 ih. 255. Of. Roberts v. Morgan, 23 L. K. I. 118 ; below. 6. c. 9 W. K. 137 i Re Ingram's p. 146. INDIA STOCK. 123 of State iti Council of India, under the authority of Act of Parliament, and charged on the revenues of India ": Trust Investment Act, 1889, s. 3 d (a). Up to the passing, in 1859, of the above-mentioned East India Stock. Act, which authorised (b) investments in " East India Stock," the only fund known by that name was the capital stock of the East India Company, which bore a fixed dividend of ^GIO 10s. per cent, per annum, and was charged upon the revenues of India ; a guarantee fund was provided by statute, and the stock was redeemable at any time after April, 1874, upon payment of £200 for every £100 of stock (c). That stock, before and in 1859, usually commanded a much higher price than £200 for every £100 stock, and, as the time for its becoming re- deemable arrived, might be expected to diminish in market value. In 1874 it was redeemed (d), and the East India stock primarily referred to in Lord St. Leonards' Act ceased to exist. On the day, however, on which that Act received the roj^al assent, another (e) was passed autho- rising the Secretary of State in Council of India to raise £5,000,000 by the creation of capital stock bearing interest or annuities to be charged on the revenues of India, and accordingly money was so raised. Large additional sums of like stock have been created under powers conferred by subsequent Acts (/). It being doubted whether " East India Stock " in 22 Annuities of the GrOTem- (a) Above, p. 2. (c) 22 & 23 Vict. c. 39. (J) 22 & 23 Vict. c. 35, s. 32 ; (/) 23 & 24 Vict. c. 130 ; 24 &25 above, p. 64. Vict. cc. 25, 118 ; 32 & 33 Vict. c. (c) 3 & 4 Will. IV. c. 85, ss. 9, 106 ; 36 & 37 Vict. c. 32 ; 37 & 38 11, 12, 14, 16, 17 ; 21 & 22 Vict. c. Vict. i;. 3 ; 40 & 41 Vict. c. 51 ; 42 106, s. 42. Vict. c. 60 ; 43 Vict. c. 10 ; 48 & (^) 36 & 37 Vict. u. 17. 49 Vict. c. 28 ; 51 Vict. c. 5. 124 STATUTORY INVESTMENTS. ment of India, if not origin- ally, are now within the scope of 22 & 23 Vict. u. 35, s. 32. Stat. 30 & 31 Vict. c. 132, s. 1. The annuities of the Govern- ment of India called India Stock. & 23 Vict. c. 35, s. 32, comprised stock created under the powers of c. 39 (a), an Act passed in 1867 (h), but superseded and repealed by the Trust Investment Act, 1889 (c), so extended the meaning of the words " East India Stock " in 22 & 23 Vict. c. 35, s. 32, as that they should include as well the East India Company's Stock as East India Stock charged on the Revenues of India and created under the later Act of the 13th day of August, 1859. Every subsequent Act, authorising the raising of money by the creation of capital stock or annuities charged on the revenues of India, has provided that any capital stock created under that Act shall be deemed to be East India stock within the Act 22 & 23 Vict. c. 35, s. 32, unless and until Parliament shall otherwise pro- vide {d). These stocks, however, have been distinguished from the formerly existing stock of the East India Company by a statutory definition. An Act passed 11th April, 1862, enacted (e) that in that Act " India Stock" meant stock created or to be created for the raising of money in the United Kingdom on the credit of the revenues of India, but not the stock then commonly known as East India Stock, which, as already stated, ceased to exist in 1874. In the India Stock Certificate Act, 1863, men- fa') Me Cohie Valley and Hal- stead Railway, Johns. 528 ; 1 De G. F. & J. 53 ; 5 Jur. N. S. 1123 ; 29 L. J. Oh. 33 ; Re Fromow's Estate, 8 W. R. 272 ; Peillon v. Brooldng, i L. T. N. S. 731. (6) 20th Aug. ; 30 & 31 Vict. c. 132. (c) 52 & 53 Vict. c. 32, ss. 3 (d), 8. ((?) 32 & 33 Vict. c. 106, s. 16 ; 36 & 37 Vict. c. 82, s. 16 ; 37 & 38 Vict. c. 3, s. 17 ; 40 & 41 Vict. o. 51, s. 18 ; 42 & 43 Vict. o. 43, o. 9 ; c. 60, s. 18 ; 43 Viot. u. 10, ». 14 ; 48 & 49 Viot. 0. 28, s. 14 ; 51 Vict. c. 5, s. 18. (e) 25 Vict. u. 7, s. 1. INDIA STOCK. 125 tioned below, " India Stock" means " any stocks which had been or might be created and issued under 22 & 23 Vict. c. 39, 23 & 24 Vict. c. 130, and 24 & 25 Vict. c. 25 (a). Subsequent Acts apply the same title to the stocks created under them (6). The above-mentioned Acts also authorised the Secre- Secretary for India autho- tary of State to borrow upon bonds or debentures or rised to borrow bills, as well as by the creation of stock or annuities, debentures An earlier Act authorised loans upon bonds or deben- "^ ' ^' tures only (c). The debentures with coupons for the interest pass by delivery. Provisions are made for the exemption of both bonds and debentures from liability to stamp duty. The stocks created under the powers of these Acts are Registration, registered, and pass bj' transfers which are exonerated deKnitio'n of from stamp duty(rf) in books kept at the Banks of """^'^ S*"*- England and Ireland. Transfers may be made from the books of one bank to those of the other (e). The bank may close the transfer books periodically (/), and the dividends may be paid by warrants sent by post (g). The India Stock Certificate Act, 1863 (h), provided Certificates that proprietors of " India stock " might obtain certifi- India Stock, (a) 24 & 25 Vict. c. 118, is not capital stock issued or to be issued mentioned. by the Secretary of State for India (J) 40 & 41 Vict. i;. 51,8. 18 ; 42 under the authority of Parliament. & 43 Vict. c. 43, ». '■) ; c. BO, s. 18 ; The M. W. P. A. 1870 (33 & 34 43 Vict. c. 11, s. 14 ; 43 Vict. o. 10, Vict. c. 93), s. 3, was extended to s. 14 • 48 & 49 Vict. c. 28, s. 14 ; 51 the.se stocks ; 37 Vict. c. 3, o. 18 ; Viot.'o. 5, a. 18. *0 ^ *1 "^'Ot. c. 51, s. 19 ; 42 & 43 (c) 22 Vict. c. 11. Vict. c. 43, s. 10 ; c. 60, s. 19 ; 43 ((?) 23 Vict. c. 5, o. 2. ■^ict. c. 10, s. 15. See now M. W. (e) 25 Vict. c. 7. P- A. 1882 (45 & 46 Vict. c. 7.5), (/) 24 Vict. c. 3, 8. 10. s. 74. (,7) 34 & 35 Vict. u. 29, extended 00 26 & 27 Vict. u. 73, ss. 1, 2, 3. by '43 Vict. u. 10, s. 16, to all 126 STATUTORY INVESTMENTS. •with coupons for dividends payable to bearer. Redemption of £5 per cent, stock. India 3^ per cent. Stock. cates of title to their shares of the stock, having coupons annexed entitling the bearer to the dividends ; but that no trustee of any share in the said stock should apply for or hold a certificate of title to that share, unless he were authorised so to do by the terms of his trust, and that any contravention of that provision by a trustee should be deemed to be a breach of trust, and be punishable accordingly. The two banks were exonerated from re- sponsibility (a). Capital stocks created under subsequent Acts are stock within the above-recited provisions of the Act of 1863 (b). A part of the India stock created under the Acts which bore interest at ^5 per cent, per annum, was in 1880 redeemed or commuted into 4 per cent, stock. Powers of attorney for the sale and transfer, and for the receipt of dividends on 5 per cent, stock, and requests for transmission of dividend" warrants relating to such stock, were made applicable to India 4 per cent, stock (c). Again, in 1887, the Secretary of State for India offered to holders of India 4 per cent, stock like amounts of India Sg- per cent, stock. Holders of the former stock were authorised to accept the latter provided they had the consent of persons without whose consent they were not authorised to change their investments, or, where the holder was a trustee without power under the terms of his trust to vary investments, with the consent either of every person interested in the stock, or, in case of dis- abilities, of such guardians, committees, curators, and (a) Ss. 4, 5. (&) 32 & 33 Vict. c. 106 ; 36 & 37 Vict. o. 32, s. 16 ; 37 & 38 Vict. c. 3, s. 17 ; 40 & 41 Vict. o. 51, s. 18 ; 42 & 43 Vict. c. 43, s. 9 ; 43 Vict. c. 10, s. 14 ; 48 & 49 Vict. c. 28, s. 14. (c) 43 Vict. c. 11. INDIA STOCK. 127 judges as were in the section specified. A power, whether subject or not to any restrictions or conditions, to invest in India 4 per cent, stock was extended to authorise an investment, subject to the same conditions and restric- tions (if any) in India 3J per cent, stock. Stock taken in exchange, and the interest thereon, was made subject to the same trusts, charges, rights, distringases, and re- straints as affected the stock cancelled and the interest thereon. Provisions were added making existing powers of attorney and requests for post dividend warrants applicable to stock taken in exchange, to the proceeds of its sale, and to the dividends on it ; and the conversion of sums of stock not exceeding £1,000, and belonging to infants or persons of unsound mind, was made com- pulsory (a). According to the returns to Parliament made in 1889, the loans raised in England under the provisions of Acts of Parliament chargeable on the revenues of India out- standing on the 31st March, 1889, comprised not only the India 3J and 3 per cent, stocks (&), there stated as £64,480,687 and £19,955,079, and the East Indian, Eastern Bengal, and Oude and Eohilkund Kailways Debenture Stocks, which with other railway debenture stocks are described in the above printed table (c), but also India Debentures at 3J per cent., for £2,000,000, due 16th August, -1889, and for £3,000,000, due 16th August, 1891, and Oude and Eohilkund Eailway Deben- tures, given for several sums, amounting together to ia) 50 & 51 Vict. c. 11. See 1887, 209. Order for Conversion of Funds (J) Above, p. 122. in Court, 30 Ap. 1887; W. N. (<>) Above, pp. 9-11. 128 STATUTORY INVESTMENTS. Indian RaiU ■way Com- pany's stock not India Stock. Investment in East India Stock. a£3, 030,300, and respectively payable at several dates from 1890 to 1893. Stock of the Eastern Bengal Railway Compan}'^, interest upon which was charged upon the revenues of India, appears to have been held not to be India stock within its statutory meaning (a). The authority given (6) to the Court to sanction the investment of cash under its control in East India Com- pany's stock was only very unwillingly exercised by Wood, V.-C. (c), on account of the probability that the stock would be — as it was — redeemed at less than its then existing value. In several cases the Court did sanction such an investment, however (d), but in others refused to do so (e), and in one case even though a sinking fund to compensate depreciation was proposed (/). Though the stock no longer exists, these cases may still afford guidance with reference to proposed investments of trust money in other stocks at prices above their re- demption value. Where the primary object of the settlement was to provide an annuity, but there was no charge on the corpus, and sufficient income could- not be obtained except by an investment in East India Company's stock. Lord Westbury, C, ordered such an investment (g). With reference to such investments. (a) Above, 124 ; 6reen\.AngeU, W. N. 1867, p. 305. (S) Above, p. 65, and cf. p. 5. (e) EqnitaMe Reversionary In- terest Socisty V. Fuller, 1 Jo. & H. 379 ; 30 L. J. Ch. 497 ; affd., though hardly approved, 30 L. J. Ch. S48. (rf) Bishop V. Bisliop, 30 L. J. Ch. 624 ; Hnrd v. HuriJ, 11 W. E. 50 ; ViiUer v. Parrott, 12 W. K. 976. («) Ungless v. Tuff, 30 L. J. Ch. 784 ; B£ Langford's Trusts, 2 Jo. & H. 458 ; Eai parte Rector of Kirksmeaton, 20 Ch. D. 203. (/) Cockburn, v. Peel, 3 De G. F. & Jo. 170 ; 30 L. J. Ch. 575. (y) Mortimer v. Picton, 4 De G. J. & Sm. 166 ; 33 L. J. Ch. 337. METROPOLITAN CONSOLS. 129 when proposed to be made under the Trust Investment Act, 1889, the provisions of its 4th section must be observed (a) ; but they do not apply to India 3| or 3 per cents. Consolidated Stock created by the Metropolitan Board of Works, or which may at any time hereafter he created by the London County Council, or in Debenture Stock created by the Receiver for the Metropolitan Police District; Trust Investment Act, 1889, s. 3, sub-s. f. {b). In 1869 the Metropolitan Board of Works was authorised to raise money by the creation of capital stock, to be called " Metropolitan Consolidated Stock," on such terms, with such dividends, and redeemable (at the option of the Board) at par at such times as the Treasury might approve (c). No holder of the stock was to have any preference by reason of prior creation, and aU of it and the dividends thereon and the sums required for its redemption were to be charged on property specified in the Act and on all money which could be raised by the Board by rates under the Act (d). The stock was to be personal estate (2 STOCK EXCHANGE INVESTMENTS. obtain the securities not from a vendor of them, but from the officer of the borrowing corporation. This point, however, was treated of by the Earl of Selborne, L. C, and Lord Blackburn, in their opinions on the appeal to the House of Lords in Speight v. Gaunt; and they appear to have been of opinion that if the securities be obtained directly from the borrowing corporation, and the trustee purchasing or lending have notice of that fact, he is not justified in paying. CHAPTER XIII. INVESTMENT CLAUSES. It has long been customary to insert in wills and Purpose of investment settlements clauses specif3'ing investments which the trus- clauses, tees may make of money becoming subject to their trusts. "When the old Chancerj' rule prevailed and trustees, unless specially authorised to do otherwise, were bound to invest in the three per cent, perpetual annuities, settlements and wills in most cases authorised also loans upon mortgage of land, or, to use the phrase most commonly found, " real securities." Even before Lord St. Leonards' Act of 1859, whereby a wider choice was given by the general law, many trust instruments authorised the acceptance of other investments than the funds and mortgages ; and since that year the vast increase of trust money needing investment on the one hand, and of debts and capital stocks, incurred and created by many sovereign and other public bodies and by joint stock companies, on the other — many of those debts and stocks constituting property accounted secure, and parts of them beiag at all times in the market — ^has induced the enlargement from time to time of the choice of investments by trustees. How the legislature has enlarged the choice given by the general law has been shown, and that enlargement might be thought to supersede the necessity of inserting in settle- ments and wills any specification of eligible investments. The practice, however, has not been generally abandoned, and for several reasons it remains a useful one, although M 2 1(U INVESTMENT Reasons for still using investment clauses. Some invest- ments very frequently authorised by settlements and wills, though not by the general law. probably the legal advisers of settlors and testators ought to regard the choice of inyestments given by the statute law as affording a test of what the Court will judge prudent. A settlor or testator is at liberty to give a more restricted or more extensive choice, but his solicitor or counsel should inform him of the judgment of the legislature, and if he suggests any variation from that judgment he should make clear the reasons for his suggestion. There are the following reasons for inserting an in- vestment clause. First, it is convenient to trustees to find in the instruments which create their duties and powers a list of the investments among which they may choose. Secondly, there is a great variety of opinion among the creators of trusts upon the expediency of making parti- cular investments, and it is well that by the insertion of a detailed list of investments in the draft of a settlement or will which is submitted for the consideration of the intending maker of it, he may have his attention drawn to the subject and express his wishes concerning it. Thirdly, there are several investments not now authorised by the general law which are authorised by widely used investment clauses and which the creators of many trusts would wish to leave open to the acceptance of their trus- tees, and there are others permitted by the general law which many settlors and testators would wish to exclude. Among the investments not authorised by the general law, but specified in many of the clauses just referred to are ; first, the stocks, funds or securities of either colonies or dependencies of the United Kingdom, other than India, or of any foreign country ; secondly, mortgages of lease- holds held for less than 200 years, and subject to a rent and condition for re-entry for other cause than non-pay- CLAUSES. 165 meut of rent ; thirdly, the stocks, shares, debentui'es, mort- gages or securities of corporations, companies or public bodies, municipal, commercial or otherwise, in the United Kingdom, India, or the Colonies other than those specified in sub-sections (e), (f), (g), (h), (i), (k), (1), (m), and (n) of s. 3 of the Trust Investment Act, 1889 (a), and the last two clauses of the Investment Order of November, 1888 (6). lioans on mortgage of Irish land and Scottish heritable Objectionable ° ° statutory seciirities, many English investment clauses exclude. investments. The use of an investment clause, adhering generally to li«lief by investment the lines of the statutory power, but enlarging and re- clauses of trustees from strictmg its scope in the manner indicated in the last two difficulties to ,,...» , , , -which the law paragraphs, relieves trustees trom several embarrassments leaves them to which they are subject in exercising some of the ^" ■''^° ' statutory powers. Whether that relief of the trustees is purchased at any substantial sacrifice of safety to the beneficiaries must be left to the judgment of settlors and their advisers ; but it may be worthy of consideration whether it is not more expedient to trust the prudence of the trustees than to the rules that a railway company must, during each of the ten last preceding years, have paid a dividend or perhaps must have paid one of three per cent. per annum on its ordinary stock, before its debenture, rent-charge, guaranteed or preference stock can be accepted as an investment. So also it may be doubted whether the conditions imposed on the powers to invest in stock of leased railwaj' and canal companies — in the debenture guaranteed or preference stock of water com- panies, and in the nominal or inscribed stocks of municipal corporations and water commissioners, compensate by (a) Above, pp. 2-4. (i) Above, p. lU. 106 INVESTMENT Statute coH- fcemplatcs conveBftional restrictions of the power it gives. Two and three- q uarter per cent, consols. the conference of additional security for the difficulty they add to the performance of their duties by trustees. Such a power leaves the donees of it free also from the difficulty of determining the meaning of the words " Or- dinary," "Debenture," "Rent-charge," "Guaranteed," " Preference " and " Ordinary " when qualifying " Stock " of a joint stock company, or of deciding whether a par- ticular railway or canal company is leased in the manner prescribed, and to such another company as is for that purpose referred to in the Trust Investment Act, 1889 (a). The Trust Investment Act, 1889, like Lord St. Leonards' Act of 1859, and unlike the amending Act of 1860, authorises trustees to make the investments it specifies, only " unless expressly forbidden by the instru- ment (if any) creating the trust," and requires a trustee to exercise the statutory power at his discretion, but subject to any consent required by the instrument, if any, creat- ing the trust with respect to the investment of the trust funds (6). Authorities and directions to invest in Consolidated, Reduced or New 3 per cents., or generally in 3 per cent. Stock, now authorise or direct investment in 2| per cent. Consolidated Stock. Stocks and shares of joint stock com- panies. STOCKS AND SHARES. Stocks and shares in joint stock companies being kinds of property investment in which is frequently authorised by settlements and wills, several circumstances of such investments and some decisions and enactments relating to them need attention. Qa) Above, p, 3. (i) 6s, 3r 5, above, pp. 2, 5. CLAUSES. 167 Stock or shares of stock of a joint stock company are "Securities." not " securities " within the ordinary meaning of that word, though in the Conveyancing Act, 1881 (a) and the Settled Land Act, 1882 (6), securities includes stocks and shares. The stock or shareholder becomes a partner, not a creditor, of the company, and his stock or share, if not he personally, is liable for the debts of the company. If the company be one in which the liability of the stock or shareholders is unlimited, they are personally liable for the company's debts to the extent of their fortunes, and if the company be one in which these liabilities are limited, yet, if the whole capital be not paid up, the stock or shareholders remain personally liable for payment of their respective portions of the unpaid capital. These facts show the unsuitability, generally speaking, of such stock or shares for the investment of trust money (c). An exception, as has already been seen, has been made by statute in the cases of stock of the Banks of England and Ireland respectively {d). In making their choice of investments trustees must Personal responsibility consider what personal liability they may themselves of trustees incur by means of their acceptance of the ownership of to some property to which burdens are attached. In one frequently occurring instance of this risk, that of taking a mortgage of leasehold property, the liability under the lessees' covenants is commonly escaped by the trustees taking their mortgage by way of demise instead of assignment. The same kind of risk has been often incurred, and in some (a) S. 2, xiv. W 22 & 23 Vict. o. 35, a. 32 ; 23 (*) S. 2(10), viii.; below, p. 169. & 24 Vict. o. 88, and General (c) See Lord Justice Liudley on Orders ; above, pp. 66, 144. Partnership, 3rd ed. 682. investments. 168 INVESTMENT Redtiction of capital or shares bell by tnistees. times with most calamitous consequences, by investments in the purchase of shares in joint stock companies, in which the liability of the shareholders for the obligations of the companies was unlimited, or in which the shares purchased were not fully paid up. The failure, a few years since, of the City of Glasgow Bank afforded a large number of unhappy instances (a). These cases were decided upon the law of Scotland, but that of England is in this respect the same (b). A trustee may in some cases be entitled to look for his indemnity to his cestui que trust (e), but he may not in every case be so entitled, or, if he is, his cestui que trust may not be able to indemnify him. Even if a trustee is, by the express terms of his trust, authorised to invest in the purchase of such stock or shares, he must, before exercising such a power, satisfy himself that he is not incurring for his trust estate or for himself liabilities which a prudent man would refuse to undertake. The Companies' Act, 1880, which authorises companies to return accumulated profits to the shareholders in reduction of paid up capital, the unpaid capital being thereby increased by a similar amount, enables share- holders to require the company to retain the money which, in consequence of such reduction, would otherwise be returned to them, and to invest and keep invested the moneys so retained ia such securities authorised for (a) Mwir v. City of Glasgow Bank, i App. Ca. 337 ; Bell's Case, ib. 547 ; Alexander 3IitcliclVs Case, ib. 548 ; Rutherford's Case, ib, ; Buohan's Case, ib. 549 ; Ker's Case, ib. ; Cuninghame v. City of Glasgow Banlt, ib. (i07 ; Crillespie V. City of Glasgow Banlt, ib. 632. (i) See Lindley on Partnership. 3rd ed. 682 ; SeuWiorpe v. Tipper, L. R. 13 Eq. 232. (c) Lindley on Partnership, 3rd ed. 1390, and cases there cited. CLAUSES. 169 investment by trustees as the company shall determine, and upon the money so invested, or upon so much thereof as from time to time exceeds the amount of calls sub- sequently made upon the shares in respect of which such moneys shall have been retained, to pay such interest as shall be received from time to time on such securities. The amount so retained and invested shall be held to represent the future calls which may be made to replace the capital so reduced on those shares, whether the amount obtained on sale of the whole or such proportion thereof as represents the amount of any call when made, produces more or less than the amount of such call (a). "Where trustees, authorised to do so, had invested Conversion of shares carry- trust-money m the purchase of London and West- ing liabilities minster Bank shares, the Court, upon an application on of beneficiary. behalf of infant remaindermen, and in accordance with the wish of one of the trustees, ordered a sale of the shares and the investment of the proceeds in consols (&). It has been held that a power to invest "on the Power to invest ' ' on the security of the funds of any company incorporated by security of the Act of Parliament " does not authorise a purchase of company, shares of the Great Northern Eailway Company (c). That was an investment, not on the security of the com- pany's funds, but in its business (d). A power to invest "upon the stocks, shares, or secu- "Upon the ^ ... stocks, shares, rities of any company incorporated and paying a divi- or securities " ,. <. oi ^ company. dend," was held to authorise the purchase of preference (a) 43 Vict. c. 19, ss. 3, 5. W Cf. The London Discount Co. (*) Butler V. Withers, 1 Jo. & v. Brown, L. R. 3 Eq. 139, 143 ; 8 Tj 002 '*■ ^^^' ^^^ ' Hudleston v. Gould^s- (<•) Harris v. Harris, 29 Beav. hury, 10 Beav. 547 ; above, p. 167. 107. 170 INVESTMENT Shares "which cannot be registered in more than one name ineligible. Risk of shares becoming liable to answer debts of trustees to the company. Power to invest in cer- tain stocks and securities of companies made de- pendent on payment of dividend on ordinary stock. railway company's stock paying a fixed dividend in per- petuity (a). A power to several trustees to invest in the purchase of shares does not authorise them to purchase shares of a company, the regulations of which do not permit the registration of its shares in more than one name (b). If trust-money be invested in the purchase of shares in the capital of a joint stock company, and the com- pany, by its constitution, is entitled to a charge on the shares of its shareholders in respect of monej' owing by them to the company, then, if a trustee in whose name the shares are standing becomes a debtor to the com- pany, the charge in favour of the company wiU prevail over the interest of the cestuis que trustent (c). Trusts and powers authorising investments in the preference stocks or on the securities of companies often make, as the Settled Land Act, 1882, and the Trust In- vestment Act, 1889, make (d), the right to choose that species of investment dependent on the payment by the company of a dividend on its ordinary stock. In a case iu which the sanction of the Court to an exercise of the authority was required, formal evidence of the payment of a dividend was called for (e). DEBEKTUEE STOCK. Debenture Stock Act, 1871. In 1871 an Act of Parliament, after stating that by divers Acts companies authorised to issue debenture (a) Consterdine v. Consterdiiie, 31 Beav. 330. (ft) /*. (c) Xew London 4' ■Brazilian, Sank y, Brockleianli, 21 Ch. D. 302. ((«) Above, pp. S, 153. (e) Re Byron's Charity, 31 W. E. 617. CLAUSES. 171 stock were empowered to raise, by means of such stock, all moneys which they might for the time being be autho- rised to raise on mortgage or bond : and that doubts were entertained whether it was lawful for trustees who might he authorised to invest trust funds in the mortgages or bonds of companies to invest such funds in debenture stock, enacted as follows : — - Where a power has before the passing of this Act Stat. S4 & 35 V f 97 been or shall at any time hereafter be given to g { Trustees trustees to invest trust funds in the mortgages or empowered to bonds of a railway company or of any other de- gages of a scription of company, such power shall, unless u°°''^^1f ^^fg the contrary is expressed in the instrument stock, creating the power, be deemed to include a power to invest such funds in the debenture stock of a railway company or such other company as afore- said, and an investment of trust funds in deben- ture stock may be made accordingly. The expression "trustees" shall include executors S. 2. "Trus- and administrators and any other persons holding *if persons^ "^ funds in a fiduciary capacity. holding funds in a fiduciary This enactment was not repealed by the Trust Invest- capacity. ment Act, 1889 (a), which, however, contains the express authority to invest trust-money in certain debenture stocks already commented on (b). FOREIGN INVESTMENTS. Foreign investments are open to the objection that Objectionato '^ i " foreign and they are protected only by foreign law, and where the colonial invest- ments, trust is English it is prima facie improper to carry the fund out of the jurisdiction of the English Courts. (fl) Above, p. 3. (*) Above, p. 139. 172 INVESTMENT Accordingly, where persons resident in America were primarily entitled, under trusts of English land, Pearson, J., refused, without the consent of all persons interested, to sanction the remittance to trustees of the settlement in America, for investment there, of the proceeds of the sale of the land (a). But foreign and colonial invest- ments are authorised by many settlements. Colonial and A trust to invest in the bonds, debentures or other foreigu funds and securities. Securities, or the stocks or funds of any colony or foreign country, was held not to authorise investment on obliga- tions of the Compagnie des Chemins de fer du Midi, the payment whereof was guaranteed by a sinking fund, and the interest meanwhile made a charge on the French Treasury (b). " Stocks of the United States of America, of the Government of France, or any other foreign Government," have been held to include stocks and bonds of the Government of Ohio and othei; States of the Union (c). A direction to sell " stock in the foreign funds " has been held to include all foreign securities for which the faith of the Government of the foreign country is pledged {d). Stock of the East India Company was not a foreign stock or fund (e). Colonial bonds are not foreign bonds (/). COLONIAL STOCKS. Registry in Some Colonial stocks — of which Canada ^5 per cents. the United -^t r-, i Kingdom of were the first (g), and New South Wales stock. New colonial stocks. (o) In re Lloyd, W. N. 1886, p. W Mlis v. Men, 23 Beav. 643. 87. (e) Brown v. JBroum, 4 K. & J. (S) In re LangdaWs Settlement 704. Trust, L. E. 10 Eq. 39. (/) Htill v. Uill, 4 Ch. D. 97. C(?") Cadettv. Earle,^ Ch.D.TlQ. (y) 37 Vict. u. 26. As to com- CLAUSES. 173 South Wales £3 10s. per cents., New Zealand £4 per cent, consols, and Queensland stock, are other examjDles — are inscribed and transferred in books kept in the United Kingdom, and the transfers of these stocks are chargeable with stamp duty of half-a-crown per cent., but transfers made for effecting the appointment of new trustees are not chaxgeable with more than ten shillings each, and provision is made for the payment by the Colonial Governments, if they think fit, of a composition which will exempt the transfers from chargeability with stamp duty (a). This Act contains provisions with reference to the mode of transfer (b) ; the payment of dividends to the donee of a power of attorney executed by one of two joint stockholders who is not under dis- ability, where the other is an infant or of unsound mind ; for the issue of stock certificates to nominees or to bearer ; a prohibition of the receipt by the registrar of notice of a trust (c) ; and several other matters ; and, among them, the jurisdiction of the Courts of the United Kingdom over the Colonial stock inscribed here (d), and retransfer to the Colonial registers (e). In- vestment in some stocks of this description was autho- rised by the Chancery Division Investment Order of August, 1888, which was superseded by the existing Order of November, 1888 (/). In a late case a testator had authorised an investment Authority to invest in of a share of the money to be produced by the sale and puWio funds of a colony. position for transfer stamps, see 43 is not in 37 Vict. c. 26. & 44 Vict. 0. 20, ss. 53, 54 ; 45 & (*) Ss. 4, 5. 46 Vict. c. 72, a. 17. (e) Ss. 6, 7-14, 15. (a) 40 & 41 Vict. c. 59, ss. 2, 3. ((i) S. 20. The provision relating to transfers (e) S. 25. on appointments of new trustees (/ Above, pp. 67, 144. 174 INVESTMENT Opinion of Court, collection of his estate, in the public funds of any colony or dependency of the United Kingdom, and had empowered his trustees to appoint other trustees for the management of that share. The beneficiary for life having married a domiciled Canadian, permanently resident in the Dominion, the Court approved of the appointment of Canadian trustees and the trans- mission of the fund to them for investment in securities in Canada (a). If it be doubtful whether a proposed investment is authorised by the terms of the trust, the opinion of the Court may be obtained by the trustees on summons with- out suing any one (b). NEGOTIABLE SECURITIES. Cnfitody of negotiable Negotiable securities are open to the objection that the loss of the documents involves, generally speaking, the loss of the property they represent. Hence it is a common and wholesome practice to except them from the invest- ments eligible by trustees. Many foreign government and other securities accounted good in other respects are of this class and in many cases they constitute trust property. When they do originally or may subsequently constitute part of a trust fund the instrument creating the trust should contain a precise direction concerning the custody of the securities. The duty of trustees with reference to the custody of securities which pass by delivery is not clearly ascertained. Lord Langdale, M.R., held that a trustee was not justified (a) In re Smith, 20 W. R. 695 ; 26 L. T. N. S. 820. (*) 22 & 23 Vict. c. 35, s. 30 ; In re French, L. E. 15 Eq. 68 ; R. S. C. 0. 55, r. 3 O) ; Ann. Pr. 1889-90, p. 785, CLAUSES. ] 75 in leaving Exchequer bills undistinguished from others in the hands of the brokers who had purchased them for the trustee (a). He might have kept them perfectly safe, either in his own hands, or he might even have kept them in the hands of the brokers, who in some respects acted as bankers — distinguishing the bills, however, from the oth.er property the brokers had — and though the securities would still be liable to loss by fraud or embezzlement, they would be free from that species of misapplication which had been resorted to in that case (&). The mis- application had been a sale by the brokers, and an appro- priation by them of the proceeds. This seems to have been a fraud ; and though the Master of the Rolls said that the bills should have been distinguished from other property of the brokers, he did not show how that was to be done. Sir W. P. Wood, V.-C, in one case held that trustees were not chargeable for negligence in leaving debentures payable to all of them in the custody of one who also received the interest. No agency to receive the principal could be implied from the permission to receive the interest (c). In another case the same judge held that securities payable to bearer, capable of passing by delivery, and of which the interest was payable upon coupons half-yearly, might without breach of trust be deposited in a box at a banker's on account of all the trustees, one being allowed by the rest to keep the key of the box in order to obtain the coupons. Moreover, if the bankers, without the (a) Matthews v. Brise, 6 Beav. It. C, 1 Jo. & H. 243, 247. Sir J. 239. Leach made a similar decision in (V) IT). 244, 24a. the case of a mortgage : Gnlihicy (c) C'ottam V. Eastern Countirs v. Bower, not reported, ih. 176 INVESTMENT privity or concurrence of the co-trustees, delivered the box to the trustee who had the key, the co-trustees remaining ignorant of the fact were not liable to make good securities which the latter might subsequently with- draw from the fund (a). The only other course which suggested itself to the Vice-Chancellor in the two cases just referred to was, to deposit the property in a box with three locks, opened by three different keys, one to be kept by each of the three trustees ; so that the box could not be opened without the permission of all the trustees. But where the interest of property is payable upon coupons, and twice a year, and the box must be opened twice a year for the purpose of obtaining access to the coupons, it is too much to say that a man of ordinary prudence in the management of his affairs would think it necessary, for the protection of the property, to adopt a course of that kind — knowing, as he would, that it would be the banker's duty to see that the coupons only were taken out of the box on each occasion, and that neither the box itself nor the securities were removed (fc). More recently, where trustees, having authority to do so, invested in the purchase of bonds which passed by delivery, each retained possession of half of the bonds and one committed a breach of trust. The other was held liable to make good the loss (c). Care, said Sir C. Hall, V.-C, should have been taken that there could not be any improper disposi- tion of the bonds (d). The learned judge did not say what precautions would have been proper. (a) Mendes v. Guedalla, 2 Jo. & (c) Lewis v. Xohhs,?i Ch. D. 591. H. 259. (_d^) lb. 595. (J) n. 278 ; IJo. & H. 247. CLAUSES. 17/ PERSONAL LOANS. Settlements often authorise the loan of money upon Investment • 1 1 /> T p T "" personal merely personal security ; but the most frequently found security. form of this authority is one whereby the trustees are em- powered or directed to lend to a husband or some other 'member of the family for whose benefit the settlement is made. Occasionally, however, "personal securities "have been found specified among those upon which the trustees have been authorised to invest, and in such cases they have been justified in lending upon bond (a). In an investment clause it seems that the words "personal security" do not mean the security of personal property, but that of some person's obligation (b). Sometimes, indeed, in favour of the intent, such powers Sometimes ^.^, 1 iTij_ construed have been construed nberaily ; as where one was held to liberally in authorise the repetition of a loan after that originally made intent- was repaid (c) ; and where a power to lend to a son and son-in-law of the testator was held to authorise loans to each of them (d). Generally speaking, however, a direction or authority sometimes 1 . 1 , strictly. to lend on personal security must be strictly construed and obeyed. When the direction was to pay to a person named, on condition that he should, to the satisfac- tion of the trustees, give them the best and most (a) Fories v. Host, 2 B. C. 0. (o) Venturme v. Gardiner, 17 430 ; 6. c. 2 Cox, 113. Comp. Beav. 338. Cf. Child v. Child, 20 Paddon v. Richardson, 7 De G. M. Bear. 50. & G. .563. (d) Parlier v. Bloxam, 20 Beav. (*) Picliard V. Anderson, L. R. 225. See Picard v. Anderson, 13 Eq. 608 ; cf. Know v. Mac- L. R. 13 Eq. 608. kinnon, 13 App. Ca. 753, 765. V.T.M. N 178 IJfVESTMENT Trustees must not lend to one of them- selves. sufficient security in his power, the trustees were not held to have heen authorised to lend on bond alone, the borrower having the power to give some better security (a). In Langston v. Ollivant (b) a power to lend on personal security was held not to authorise a loan, as an accommo- dation, to a trader then in good credit. If, however, this doctrine be allowed, it is difficult to see how a power to lend on personal security can be exercised at all. That the exercise of such a power after the proposed borrower had become insolvent has been disapproved is more intelligible (c). Where there was a trust to lay out upon personal or Government security. Lord Chancellor Manners, at the suit of a person interested, directed the monej'' not already laid out on personal security to be laid out on Government security {<£). Trustees authorised to lend upon personal security must not, unless, as in Paddon v. Richardson (e) , further authorised to do that also, lend to one of themselves, as the settlor must be taken to have relied on the vigilance of all (/). The doctrine is applicable to a loan on the real security of one of the trustees if the security proves deficient (g) ; and it of course applies much more strongly («) Mills V. Osborne, 7 Sim. 30. Cf. 13 App. Ca. 765. (J) G. Coop. 33. (c) JBoss V. Godsall, 1 Y. & C. C. C. 617. See Lewin, Trusts, 4th ed. 238 ; and in reference to consent when required to such loans, Cocker v. Quayle, 1 K. & M. 53.5 ; CMld y. Child, 20 Beav. 50. (rf) /rulniex V. Moore, 2 Moll. 328. Cf. 13 Ap. Ca. 765. (<;) 7 De G. M. & G. 563. (/) V. Walker, 5 Euss. 7. See, however, Forbes v. Ross, 2 B. 0. C. 430 ; s. c. 2 Cox, 113, where, though the loan was disapproved, the disapproval was on the ground of inadequate interest being re- served. (^) Stiehicy v. Scwcll, 1 M. & Or 8 ; above, p. 118. CLAUSES. 179 to a retention of the monej^ bj' all the trustees for the purposes of then- business (a). In the following case there was breach of duty both in Taking secu- lending on merely personal security at all, and in lending iustead'™f "" to two persons instead of three. Trustees were autho- atd deZyln' rised to lend to three owners of Vauxhall Gardens on first, oi'taining it. second, or third mortgage. They lent without at first taking any security; but afterwards, when one of the three borrowers had ceased to be an owner of the Gardens, took a covenant to mortgage from the other two, and there was a loss. The trustees were, of course, held responsible (b). A direction to place out to interest, or other way of Authority to improvement, does not authorise the employment of the ™bJi°sL"sr^^ fund in trade (c), but a direction to " employ " property as the executors should think proper, the " interest or produce thereof " being given to the testator's wife during widowhood, was thought, by Lord Langdale, M.R., to authorise the executors of a tradesman to employ money in the continuance of his business (d). The unauthorised loan of trust money to traders for use in their business does not make them liable to account for a share of the profits (e). Lord Manners C. (I.) held that a power to call in trust Purchase of money, and lay it out at greater interest if the trustees not laying out could do so, did not authorise them to purchase a life ^ ^° ^^^^ ' aunuity and have the life insured (/). (a) Westover v.CJia2>ma>i,l Coll. (d) Siohonson v. Player, C. P. 177. C. 1837-38, p. 178. (J) Fowler v. Reynal, 2 De G. & (r) Stroud v. Gwyer, 28 Beav. Sm. 749 ; 3 Mao. & G. 500. 130. (i?) CocU V. Goodfellow, 10 Mod. (/) Fitzgerald v. PriTigle, 2 489. Moll. 534. N 2 ]80 INVESTMENT Power to act for the advan- tage of infant. Investment at discretion of the trustees. Power to lend at discretion does not authorise loan on personal security. Power to lend on bond, and warrant to enter judg- ment. An authority to act in everything for the advantage of an infant was in an old case held to authorise trustees to lay out personalty in the purchase of land (a). Sometimes the mode of investment is left wholly to the discretion of trustees; and in all cases the exercise of this, as of other powers, is committed more or less to their discretion. The way in which this discretion is to be exercised is considered elsewhere (b), but it may be noted here that trustees should be governed in the exercise of even an " uncontrolled discretion " by the rules which the Court adopts (c). Probably, trustees could not, in the exercise of such a discretion, prudently choose investments not within the jurisdiction of the Court, or shares not fully paid up in a banking com- pany (cZ). A direction to lay out at interest at the discretion of the trustees (e), or to lay out in the funds " or such other good security as they could procure and think safe " (/), or an authority to invest on " good private securities " (g), or, "in or on any funds or securities whatsoever " (/i), does not authorise a loan on merely personal security (i). On exercising an authority to lend on the security of a bond and warrant of attorney to enter up judgment, the trustees must, it has been said, enter up the judgment {k). (a) Terry t. Terry, Free, in Ch. 273. (J) Above, Oh. VII. p. ,51. (c) In re Brown, 29 Ch. D. 889. ((?) lb. 891. (e) Pococlt T. Redington, 5 Ves. 794. ( /) Wilkes Y.Steward,G.CooTp. 6. (17) Weftover v. Chapman, 1 Coll. 177. Qi) Lewis v. Nolls, 8 Ch. D. 591. (i) See also Ryder v. Rickerton, 1 Ed. 149 n. ; s. u. 3 Swans. 80 n. Ct Re Simsoii's Trusts, 1 Jo. & H. 89 ; A.-e. T. Higham, 2 T. & G. C. C. 634 ; Terry v. Terry, •«.. ». (Ji) Luther v. Rianeoni, 10 Ir. Ch. E. 194 ; but see now 27 & 28 Vict. c. 112, 8. 1. CLAUSES. 181. Sir G. Jessel, M.R., doubted whether a direction Securities of which the m Lord "Westbury's will that his trustees should not trustees may -,,,._ , . approve. be obliged to alter any investment, or to convert perishable into permanent securities, but might continue or change securities from time to time as (a) the majority should seem meet, authorised the trustees to invest La United States Government and railway securities ; and if it did, the estate, being administered by the Court, and infants being interested, refused to permit the trustees to make the proposed investments (b). Lord Cottenham held a direction in a will, that the executors should call in securities not approved by them, to be referable to securities upon which a testator's property might, from their nature, be invested, and not as authorising a kind of investment which a Court of Equity would not sanction (c). Of course, a power to invest upon such secmities as the donees should approve does not exonerate them from the duty of exercising a careful discretion as to value (cZ). A trust to invest in the parliamentary stocks or funds Any funds ••!• pn 11 jij or securities or upon real secmuties being followed by a power to alter whatsoever. and vary, and invest in or on any other funds or securities whatsoever, was held to authorise a sale of New £3 per cents., and a reinvestment in Russian railway and Egyptian bonds which passed by delivery (e). In a previous and somewhat similar case an- investment in railway company's stock bearing a high rate of dividend (a) Sic. 422, 428. (*) Betliell V. Abraham, L. E. (d} Strettonv.AshmaU,3'Dv&vr.9. 17 Eq. 24. See In re Brown, 29 (e) Lewis v. Nobhs, 8 Ch. D. Ch. D. 889. 591. (c) Stylei V. Guy, 1 MoN. k G, 182 INVESTMENT CLAUSES. Trust to invest on such secu- rity, real or personal, aa trustees shall think fit. Power to buy business. was disap23roved. The trustees were bound to invest upon securities of a permanent nature ; and, in the absence of evidence to the contrary, it must be assumed from the rate of interest that these investments were not permanent (a). A trust to invest on such security, either real or personal, as the trustees, with the consent of the husband and wife, should think fit, was held to authorise the trustees to continue, after the separation of the spouses, but with the consent of the wife, a loan she had made to the husband before marriage. He was ordered to execute a bond (b). A power ia a settlement " at the request and on the authority of the wife " to withdraw funds and lay them out in the purchase of a trade for the benefit of the husband and wife, or either of them, was permitted to be exercised after the death of the husband at the request of the wife, and it was held that in exercising it the trustees were bound to see that the purchase was bond fide made, but not to inquire into the value of the property oi? the expediency of the purchase (c). (a) Stewart v. Sanderson, L. R. 10 Eq. 26. Cf. Zambaoo v. Cassa- vetti, L. E. 11 Eq. 439, 445. (J) Piokard v. Anderson, L. K. 13 Eq. 608. Cf. Forles v. Ross, 2 B. C. C. 430 ; s. c. 2 Cox, 113. (c) Doorly v. Arnold, 18 W. E. 540. CHAPTER XIV. INVESTMENT OF CAPITAL MONEY AEISING UNDER THE SETTLED LAND ACTS. The Settled Land Acts, 1882 to 1889, contain the following provisions for the investment and application of capital money arising under them. In the S. L. A., 1882, it is stated : — " Capital money arising under this Act, and receivable Stat. 45 & 46 for the trusts and purposes of the settlement, is in g/g*' s°Jb^a.' 9. this Act referred to as capital money arising under this Act." The net price of land sold under the Acts (a) — presum- ably, money received for equality of exchange or partition, or for dedication of streets — fines on leases (6), the price of land purchased under options on building leases (c), the purchase money of leaseholds and reversions (d), certain shares of mining rents (e), accumulations of rents under a trust, which are to be reinvested in the purchase of land to be settled (/), money raised by mortgage (g) or produced by conversion of securities in which capital arising under the Act has been invested (h) or received for the variation or rescission of a contract (i), certain (a) In re Byron's Charity, 23 (e) lb. s. 11. Ch. D. 171 ; In re jBecli, 24 Ch. D. (/) ClarU v. Thornton, 35 Ch. 608. D. 307. (J) 47 & 48 Vict. c. 18, s. 4. (g} io & 46 Vict. c. 38, s. 18. (c) 52 & 53 Vict. c. 36, s. 3. (ft) lb. a. 22, sub-s. 7. («:) 45 & 46 Viot. c. 38, s. 34. (0 lb, s. 31, sub-s. 1 (ii.). 184 CAPITAL MONEY UNDER money in Court (a) or in the hands of trustees for invest- ment in land to he settled (b), three-fourths of the net proceeds of the sale of timber (c), and the price of heirlooms (d) are all capital money arising under the Act. Stat. 45 & 46 Vict. 0. 38, a. 21. Capital money under Act ; invest- ment, &c., by trustees or Court. INVESTMENT OE OTHER APPLICATION OP CAPITAL TRUST MONEY. Capital money (e) arising under this Act, subject to payment of claims properly payable thereout, and to application thereof for any special authorised object for which the same was raised, shall, when received, be invested (/) or otherwise applied wholly in one, or partly in one and partly in another or others, of the following modes (namely). "Arising under this Act: " money bequeathed upon trust to buy land and settle it has been ordered, at the instance of the person who would have been tenant for life of the land, to be invested in a manner permitted by this section, although that manner was one not permitted by the terms of the will. It was absurd to hold that that could not then be done which a tenant for life could do after an estate had been purchased, by selling the estate and investing the money arising from the sale {g). "Or otherwise applied:" such an application is authorised, not directed {h), and the expenses of a sale of jan infant's land have been ordered to be paid out of income (i). (a) 45 & 46 Vict. c. S8, s. 32. (J) J5. s. 33. (e) lb. s. 35. Id} It. s. 37. (0 S. 2 (9). (/) S. 22 (1), (2), (3). (j) In re MacJienzie's Trusts, 23 Ch.D.750; Be Termmt,iOGh.D.oU. (A) Cotton, L.J., 41 Ch. D. 378. (0 In re Bwdd, W. N. 1887, 251 ; but see Clarke v. Thornton^ 35 Ch. D. 307 ; below, pp. 197, 204. SETTLED LAND ACTS. 185 (i.) In investment on Government securities (a), or on other securities (6) on whicli the trustees of the settlement (c) are by the settlement {d) or by law («) authorised to invest trust money of the settlement, or on the security of the bonds, mortgages, or debentures, or in the purchase of the debenture stock, of any railway company in Great Britain or Ireland incorporated by special Act of Parliament, and having for ten years next before the date of investment paid a dividend on its ordinary stock or shares, with power to vary the investment into or for any other such securities. The Court has refused without the consent of all persons interested to let the money be sent abroad for investment, though those primarily interested lived abroad (/). The Court requires evidence that a railway company payment of has paid a dividend on its ordinary stock for the last ten years, whatever common knowledge of the fact there may be (g). (ii.) In discharge, purchase, or redemption of incum- brances (h) affecting the inheritance of the settled land (i) or other the whole estate the subject of the settlement, or of land tax, rent charge in lieu of tithe. Crown rent, chief rent, or quit rent, charged on or payable out of the settled land. "Land tax and tithe rentcharge," not being incum- (ff) Above, p. 76. 455 ; In re Lloyd, W. N. 1886, 37 ; (V) " Securities " includes stocks, 54 L. T. N. S. 643. funds, and shares : s. 2 (10) viii. (^) Re Byron's Charity, 31 W. fc) S. 2 (8). R- 517 ; In re Maberly, u, s. id) S. 2 (1). (f^') S. 5. (e) Above, pp. 8-14. (i) S. 2 (3), (4). (/) In. re Maberly, 33 Ch. D. 186 CAPITAL MONKY UNDER brances in the strict sense, but charges to which land is presumptively subject (a), are properly named in addition to " incumbrances " ; the several rents specifically men- tioned are incumbrances, and to name them separately appears to be at least superfluous. Charges " Incumbrances " on the life estate only do not of course under Land Improvement affect the inheritance, nor do charges, like jointure rent- charges, and rentcharges for terms of years granted under the Land Drainage and Improvement Acts. The latter are charges -which a tenant for life would be bound to keep down. Hence, in a case in which a settled estate was subject to such charges, and the tenant for life applied for an order directing the trustees, who had a large fund of capital money, to apply it in discharge, so far as it would suffice for that purpose, of those incumbrances, Mr. Justice Pearson, and afterwards the Court of Appeal, refused the application. It was admitted that there was great force in the applicant's argument, that under ss. 25 and 26 he might obtain an application of capital money in defraj'ing the cost of making just such improvements as those, to provide a fund for defraying the cost of which the charges in question had been made ; but it was replied that the last-cited sections were prospective only in their operation, and did not constitute a reason for inferring that s. 21 (ii.) authorised the Court to alter the bargain under which the money charged had been borrowed (b). Mr. Justice Pearson regarded the matter as a casus omissus from the Act, and as such the legislature afterwards treated it, by passing, on the 23rd August, 1887, (ffl) Dart, V. & p., 3rd ed. 238, (*) In re KnatckiulVs Settled 239. JSstate, 27 Oh. D. 349 ; 29 il. 588, SETTLED LA.ND ACTS. 187 an Act to amend the Settled Land Act, 1882, which is as follows : — Whereas hy the twenty-first section of the Settled Stat. 50 & 51 Land Act, 1882 (in this Act referred to as the Act '^''°*- '• ^°- of 1882), it is provided that capital money arising under that Act may be applied in payment for any improvement by that Act authorised : Be it therefore enacted as follows : — (1) Where any improvement of a kind authorised by Amendment the Act of 1882 has been or may be made either j^/gg^tti"^ before or after the passing of this Act, and a rent- Land Act, charge, whether temporary or perpetual, has been or may be created in pursuance of any Act of Parliament, with the object of paying off any moneys advanced for the purpose of defraying the expenses of such improvement, any capital money expended in redeeming such rent-charge, or otherwise providing for the payment thereof, shall be deemed to be applied in payment for an improvement authorised by the Act of 1882. (2) Any improvement in payment for which capital Section 28 of • T ;, A A ^ V, r A A Settled Land money is applied or deemed to be applied under Act, 1882, to the provisions of the preceding section shall be ^^^'^ *° ™" ■^ ... . provemeats deemed to be an improvement within the meaning within pre- of s. 28 of the Act of 1882, and the provisions °''''°° '''*'''°- of such last-mentioned section shall, so far as applicable, be deemed to apply to such improvement. (3) This Act shall be construed as one with the Settled Land Act, 1882, and the Settled Land Act, 1884, and may be cited together with those Acts as the Settled Land Acts, 1882 to 1887, and separately as the Settled Land Acts (Amendment) Short title. Act, 1887. Upon the meaning of this statute the following decision has already been made. In 1879 £2704 had been CAPITAL MONEY UNDER Kedemption- money of tenninable rentoharge. Mortgages for long terms. borrowed for the purposes of improvements of a settled estate which would since 1882 have been improvements within the meaning of the Settled Land Act, 1882. The Enclosure Commissioners had charged the estate with the repayment of the loan by equal half-yearly instal- ments so calculated as to pay off the debt within twenty- five years, the earlier instalments being constituted more largely of interest and the later ones of capital. Upon an application by the tenant for life, who had hitherto paid the whole of the instalments, that thereafter the parts of them which represented capital might be paid out of capital money in the hands of the trustees, Kay, J., made the order asked for. It was admitted by the applicant, and stated by the judge, that the tenant for life must keep down the interest (a). Where in Ireland a tenant for life had sold under the Act, and in order to complete the sale, and in compliance with a direction of the Land Commissioners, had redeemed an annual sum of £57 which was payable during a term of years in redemption of tithe rent-charge, the Vice-Chan- cellor allowed the tenant iot life's claim to repayment out of capital money of a part of his outlay according to a calculation which appears to have been intended to guard against the inheritance losing by the trans- action (b). Mortgages for long terms of years such as portions terms may, however, be such "incumbrances" as this section means. When the mortgage was for a term of 2000 years. North, J., held that capital money might be (as) In re Lord Siideley's Settled Estates, 37 Ch. D. 123 ; 36 W. E. 162. Cf. In re Newton's Settled Estates, below, p. 208. (i) In re Dnlte of Leinster's Settled Estate, 23 L. E. 152. SETTLED LAND ACTS. 189 applied in its discharge, for the mortgagee might fore- close, and then he could acquire the fee (a), and if he did the learned judge did not see how it could be said that his incumbrance was not one which did affect the inherit- ance (b). An annuity for 1000 years granted out of tithes has also been held to be an "incumbrance," which may be discharged out of capital money (c). The practical equivalence of a long term to the fee and the power given to invest capital money in the purchase of leaseholds, having not more than 60 years to run (d), afford additional reasons for the conclusion. A second reason given by Mr. Justice North for his decision that a mortgage for a long term might be dis- charged out of capital money, was that the Act authorises the tenant fcg: life to sell the whole, free from incum- brances, and unless the mortgage could be paid off he did not see how that could be done(e). The observation is an important one, but it is as forcible for showing that a shortly terminable charge may be paid off out of capital money, as one which affects the whole inheritance. Sir J. Pearson, J., read " inheritance of the settled land" as "inheritance of the settled land sold, or any other land which is subject to the settlement " (/), and held apparently that the price of land sold might be applied, both in payment of a mortgage debt on the land sold and in discharge of other land subject to the same settle- ment from an incumbrance which did not affect the land sold. (a) Conv. A. 1881, s. 65 ; Conv. W 45 & 46 Vict. o. 38, s. 21, A. 1882, s. 11. Bub-s. vii. (J) In. re Frewe!i,38 Ch. D. 383. (e) 38 Ch. D. 384. (c) Esdaile v. Endailr, 54 L. T. (/) In re Chaytor's Settled N. S. 637. Estatr Act, 25 Ch, D. 651, 654. 190 CAPITAL MONEY UNDEK Incumbrance on part of the settled land. Redemption of rents. 45 & 46 Vict, c 38, B. 21, continued. Charges created on holdings under or in pursuance of the Agricultural Holdings (England) Act, 1883, are in- cumbrances which may under the Settled Land Act be discharged out of capital money (a). The price of heirlooms has been applied in discharge of incumbrances on the settled land, without keeping them alive for the benefit of a remainderman on whom the heirlooms might, if unsold, have ultimately devolved (fo). So, as Mr. Eobbins suggested (c), if the settlement includes freeholds and also leaseholds for years, the tenant for life may, subject to the checks on abuse of his authority imposed by the Act (d), sell the freeholds in order to free the leaseholds from incumbrances. Rents issuing out of land in England or Wales may in certain cases and with certain exceptions be redeemed (e) through the medium of the Board of Agriculture to which the powers and duties of the Land Commissioners have been transferred (/). (iii.) In payment for any improvement authorised by this Act. The improvements authorised by the Act are specified in s. 25, printed below (g), under which the cases which have been reported are stated, and in the S. L. A., 1887 (/;). The question raised, but expressly left undetermined by the judges of the Court of Appeal, whether the payment (a) 46&47 Vict. c. 61,s. 29. (*) In re The Duke of Marl- iorougJi's Settlement, 30 Ch. D. 127 ; 32 ib. 1. (ff) S. L. A. 53. The Duhe of Marlborough's Settle- ment, u. s. (e) 44 & 45 Vict. c. 41, s. 45 ; S. L. A. 1882, B. 48. (/) 52 & 53 Vict. c. 30. ((Z) Sa. 53, 54. See Be Chaytor's (?) P. 201. JSstate Act, 25 Ch. D. 651 ; I?i, re (7i) Above, p. 187. SETTLED LAND ACTS. 191 out of capital money of the expense of improvements of land, which are no longer in settlement, seems to be made well nigh incapable of arising by the decision in the same case that the scheme for the expenditmre must be approved before the work is done (a). Still the scheme might be approved, the work done, and the improved land sold before authority to pay for the improvement out of capital money was sought. Under the Land Improvement Act the expense of im- provements when charged on the land had to be repaid by yearly sums during a term of years. So the principal might be partially or even wholly repaid by the tenant for life. Under this Act he becomes chargeable with interest only (b). (iv.) In payment for equality of exchange or parti- tion of settled land (c) : (v.) In purchase of the seignory of any part of the settled land (d), being freehold land (e), or in pur- chase of the fee simple of any part of the settled land, being copyhold or customary land. This provision amounts to a power to enfranchise copy- holds. An application for that purpose of money paid into Court under the Lands Clauses Consolidation Act, 1845, has been approved (/). (vi.) In purchase of the reversion or freehold in fee of any part of the settled land {g), being leasehold land (/t) held for years, or life, or years determin- able on life. (a) In re HotcMhi's Settled ((?) S. 2 (3), (4). Estates, 35 Ch. D. 41 ; below, p. 206. (e) S. 2 (10) i (J) In re KnatclibulVs Settled (/) Below, p. 222. Estate, 29 Ch. D. 588, 593. (?) S. 2 (3), (4). (c) S. 2 (3), (4), (10) i. Qi) S. 2 (10) i. 192 CAPITAL MONEY UNDER Merger of interest settled in reversion acquired. 45 & 46 Vict. c. 38, s. 21, continued. With reference to reversions on long terms of years held free from rent, the power of enlargement given by the Conveyancing Acts, 1881 and 1882, ss. 65 and 11 respectively, is to be recollected. The words " so as to merge the leasehold interest in the reversion," which were at the end of this sub-section of the bill, were struck out by the Commons Select Com- mittee (a) . The result is that a reversion not immediately expectant on the settled term may be purchased. A con- veyance of the reversion in fee, if taken as conveyances of freehold land are directed to be taken (6), to the uses of the settlement, will not in ordinary cases, even if the re- version is immediately expectant on the determination of the leasehold interest, merge the term, because that is usually vested in trustees. As under some settlements the leasehold and freehold interests may in certain events devolve differently, it seems that in such cases, without an authority to do so being expressly given by the settlor, the term ought not to be merged, as its merger would change the course of devolution of interest (c). In fram- ing settlements under which such an application of capital money may possibly be made, this point should be provided for (d). (vii.) In purchase of land (e) in fee simple, or of copyhold or customary land, or of leasehold land held for sixty years or more unexpired at the time of purchase (/), subject or not to any exception or (a) Wolst. & T., S. L. A. 2iLd ed. 37. (J) S. 24 (2). (c) Consider, however. In re JDvlie of Marlbormiffh's Settlement, above, p. 190. id) Wolst. & T., S. L. A., 2nd ed37. (0 S. 2 (10) i. (/) Below, p. 212. SETTLED LAND ACTS. 193 reservation of or in respect of mines or minerals [a] S. 21 therein, or of or in respect of rights or powers relative to the working of mines or minerals there- in, or in other land. (viii.) In purchase, either in fee simple, or for a term of sixtj^ years or more, of mines and minerals (b) convenient to be held or worked with the settled land, or of any easement, right, or privilege convenient to be held with the settled land (c) for mining or other purposes. (ix.) In payment to any person becoming absolutely entitled or empowered to give an absolute dis- charge. "Who is "a person becoming absolutely entitled " is discussed below ( Beav. 112. W A Jarm. By. 166. p 2 !12 INA'^ESTMENT IN Power to lend on mortgage of, does not authorise pur- chase of land. Land settled in equity oil payment of price by trustees. Trustee ad- vancing excess of price over buy a house merely, that being of a wasting nature (a) ; or leaseholds (b) ; or a timber estate, if the tenant for life will be unimpeachable of waste (c). If, as in man}-, probably indeed in the greater number of cases, the purchase of a house is contemplated, the power should expressly authorise it (d). A power to invest in the purchase of freehold, copyhold, or leasehold hereditaments, the leaseholds to be held for not less than sixty years when purchased, does not authorise a purchase of copyholds for lives to which the husband was admitted tenant (e). A power to lend on mortgage or to invest in real securities does not authorise a purchase of land. In Ireland, trustees, who were only authorised to lend on mortgage of land, having bought some, and having subsequently received an offer to purchase it at a profit, were ordered to sell and bring the money into court (/). Personalty having been transferred to a husband to pay for land which he alleged that he had purchased, in order that it might, in accordance with the provisions of the settlement, be settled, it was held that the land became subject to the settlement, notwithstanding that the land remained legally vested in the husband, and that he treated the money as the subject-matter of the settle- ment (g). There being a power to invest, at the request of the husband and wife, in the purchase of land, and to (a) Lewin, Trusts, 4th ed. 247. (i) Kellaway v. Jolmson, 5 Beav. 319. (c) Surges v. Zamb, 16 Vejs. 174. ((?) Bolow, sect, 3. (e) Trench v. Harrison, 17 Sim. 111,119. (/) Robinson v. Robinson, Ir. K. 10 Eq. 189. (jr) Smith v. Tjorrl Camrlfnrd. 2 Ves. Jnn, 698. PURCHASE OF LAND. 213 re-sell, the trustees, at that request, purchased a property ti"st f"'"! of which the price exceeded the amount of the trust to indemnity . out of land. lund. One of the trustees borrowed the difference from his banker and advanced that money to complete the purchase. Kay, J., held that, subject to a charge on the property for the full amount of the trust fund, the trustee, having bond fide and without any intention of benefiting himself advanced the money, he, and through him his banker, was entitled to be indemnified out of the property (a). The doctrine, it is conceived, must be relied on with caution. A trustee could hardly be justified in purchasing property much in excess in value of the sum he had to invest (b). Eecently, where trustees, without any power to do so, Unauthorised had invested settled money in the purchase of land which land, they afterwards sold for six times the sum they had in- vested, Pearson, J., held that they could, upon investing the purchase-money in proper securities directed by the will, and obtaining the concurrence of one of the cestuis que trustent, make a good title. The concurrence of one cestui que trust was required because if all the beneficiaries elected ■ to retain the land they would have been entitled to do so, but if one required it to be sold the others could not compel him to take a share of the land as representing his share of the money (c). In marriage settlements, when the intended husband is Powev to buy advowsoij. a clergyman, power is sometimes given to the trustees to (a) In re Pwmfrey, 22 Ch. D. G. 533. Cf. Dent v. Dent, 30 255. The learned judge relied on Beav. 363. the case of In re German Mining (J) But see 4 T. & C. 518. Company, i De G. M. & G. 19; (c) Pattern 7. Guardiam if M- and Mathias v. Mathias, 3 Sm. & monton, 31 \W R. 785. 214 INVESTMENT IN raise out of the settled property a sum not exceeding some specified amount, and with it to buy an advowson, in order that the husband may become incumbent of the benefice. If such a power be given, it may be well to direct that the purchase shall be made either on the terms of deferring payment of the price until the benefice becomes vacant, or of receiving until that event interest on the price from the vendor, payment of that interest being secured by the covenant of the vendor and the investment of the price in the names of trustees upon trust to secure the payment, or by one of those means. A trust of the interest corresponding with that which would have been applicable to the money raised for the purchase must be declared. The trusts appro- priate for the settlement of an advowson (a) will be those upon which, 7n'utatis mutandis, the purchased advowson should be conveyed. Like provisions for in- surance of the husband's life, and for the contingency of the benefice becoming vacant while the trustees hold it, and when the husband cannot succeed to it, may also be inserted. In framing the trusts of the money to be received under the husband's life policy, it may be necessary if they are declared, by reference to other trusts, to make a special provision securing that money, in default of issue, to the husband's representatives. (a) 3 Dav. Conv. 3rd ed. 921 ; 2 Prid. & White. Conv. llth ed. 285, note. PURCHASE OP LAND, 215 Section 3. Trusts and Powers in Settlements of Realty and in Acts of Parliament for Investment in Land. The powers of sale which until the commencement of Piovisions tor ^ ^ ^ re-investmeDt the Settled Land Act, 1882, it was usual to insert in of proceeris of strict settlements of real estate, were accompanied by land. trusts for the reinvestment of the proceeds of sale in the purchase of other land to be settled to like uses, and ia the several statutes (a) which have authorised sales of settled land similar provisions have been inserted. Questions have frequently arisen with respect to those trusts and pro- visions, and the investments or applications of money they authorise. The trusts and provisions themselves, although all framed with the same general purpose, vary verbally from each other. A number of decisions upon these trusts and provisions, except those in the Settled Land Act, 1882, which have been afready stated (b) are collected in this section. These trusts usually specify the country within which the land purchased must be situate. In 1886, Bacon, V.-C, being asked by trustees to be relieved from a trust to invest in the purchase of land in Ireland, said that they must not so invest until, as prudent men, they found that they could do so with safety (c). It has been held that, under a trust to purchase " here- Rsversion on ditaments m lee simple in possession, what are called minerals. (a) Such as the L. C. 0. A. 1845 ; 658-746. the Partition Act, 1868 ; the S. E. (*) Above, Ch. XIV. A. 1877, Vaizey, Settlements, 608- (c) In re Maberly, 33 Ch. D. 657 ; and the S. L. A. 1882, ii. 455 ; 34 W. E. 771 ; below, p. 223. 216 INVESTMENT IN Perpetual rent. Money to be invented in purchase of bind may be expended in building on set'led land. freehold ground-rents — that is, land subject to long leases at rents — may be bought (a), and a trust to invest in the purchase of land to be held with other land devised in strict settlement, was held to authorise a purchase of mines and minerals, some being under part of the settled estate, and others under adjacent land (b). It was held that a trust for " the purchase of freehold lands, tenements or hereditaments, and the fee simple and inheritance thereof" was not properly performed by a purchase of a fixed rent-charge, or a reversion on a term of 1000 years to which a rent was incident ; there was no expectation of increase of value (c). The expenditure of money in building a house on a vacant piece of ground forming part of the settled pro- perty, or in rebuilding such structures as have become so ruinous that they must be taken down, has been held to be in substance the same thing as buying a house. Previous cases of this kind having been governed by the Lands Clauses Consolidation Act, 1845, and other statutes, the proposition has since been laid down in several cases with reference to trusts in settlements (<^) ; but Lord Romilly refused to apply in building, money subject to a trust for investment in the purchase of land which was to be settled (e), (o) In re. Peyton's Settlement • Trusts, L. R. 7 Eq. 463. (6) Bellot T. Littler, 22 W. B. 836. See Vaizey, Settlements, Ch. XI. s. 17. (c) Ex parte Gartside, 6 L. J. N. S. Ch. 266. (d') In re Barrington's Settle- ment, 1 Jo. & H. 142 ; In re Jjnrd Ifotliam's Truxts, ly. E. 12 Eq. 76 ; Drake v. Trefasit, L. E. 10 Ch. 364. See also In re Ventmr's Settled Estates, 2 Ch. D. 522 ; Earl Cowley v. Wellesley, 46 L. J. Ch. 869 ; Donaldson v. Donaldson, 3 Ch. D. 743. (e) Ponlett v. Somerset, 19 W. R. 1048. PURCHASE OF LAND. 217 and Sir G. Jessel, M. E., described the above-men- tioned decisions as anomalous, and, though binding, not to be extended (a). Accordingl}^ it has been held But not in repairs or that money subject to be laid out in the purchase of land other improve- cannot be applied in adding to the mansion on the settled estate (6), or in reinstating a mansion which had been burnt down, and permanent improvements which did not put new buildings on the ground (c). Sir Richard Malins, V.-C, in one case {d) authorised expenditm'e in rebuilding or repairing a vicarage house the advowson of which formed part of the settled estate ; but it was one in which, according to Lord Selborne, the estates were vested in trustees, and the Court might possibly have been act- ing in the exercise of a general discretion. Accordingly, Lord Selborne refused to authorise money directed to be laid out in the purchase of land to be expended in repairs and improvements, however necessarj-, on the settled estates, over which, the estates being legal ones, the Court had no jurisdiction (e). His lordship's distinction is exemplified in a later case, where trustees, empowered to manage and make such outlay of income for the improvement of the estates as they should think fit, and to hold the surplus as capital, were allowed expenditure in draining — the tenants paying interest on the money so expended — as well as in new buildings (/). The powers (a) In re Venonr's Settled Es- age, L. E. 17 Bq. 156. tates, u. g. (A) ^'"^ ™ Loi'd MotJiam's Trusts, (V) Dunne v. Dunne, 3 Sm. & u. s. GifE. 22 ; 7 De G. M. & G. 207. (e) BrnnsMl v. Caird, a. s. (f) Drake v. Tfcfusis, u. a. ; Cf. Ferguson v. Ferguson, 17 L. S. BrvnsUU v. Caird, L. R. 16 Eq. I. 5.52 ; and above, p. 194. 493. Cf. Donaldson v. Donaldson, (/) In re Leslie's Triists, 2 Ch. «. s. ; In re Xet/ier Stinrey Yiear- D. 18."i. 218 INVESTMENT IN Surplus price of land sold to raise money for reflemption of land tax. Payment to tenant for life in satisfaction of payments he was entitled to charge on inheritance. Investment of purchase and compensation money for land, &c., taken under the Lands Clauses Con- solidation Act, 1845 (8 Vict, c. 18), ss. 3, 69. of trustees in such cases are now extended by the Settled Land Act, 1882 (a). Surplus money arising from a sale, mortgage, or charge made for the purpose of redeeming land tax, is authorised to be applied, under the direction of the Court, in the discharge of any debt or debts, or parts thereof, affecting the hereditaments, the land tax whereon shall have been redeemed, or in the purchase of other hereditaments which shall be conveyed to the uses of the hereditaments sold, mortgaged or charged (6). Money produced by sale under an ordinary power in a settlement of real estate, and thereby made applicahle to the purchase of land or the discharge of incumbrances, was paid by the trustees to the tenant for life, who re- tained it in satisfaction of expenses incurred by him in effecting inclosures ; he being entitled to charge the in- heritance with the sum so expended by him (c), and having died without effecting the charge, Eomilly, M.K., declared the money to be a charge on the allotments made to him on the inclosures (d). The purchase-money or compensation for land, or any interest therein, purchased under the powers of the Lands Clauses Consolidation Act, 1845, from tenants for life or other persons not entitled to seU the same except under the provisions of that or the special Act, or the compensation for any permanent damage to any such lands, if the same amount to or exceed £200, is to be (a) Above, Ch. XIV. (J) 42 Geo. III. u. 116, s. 100. See In re yether Stouvy Viraragp, L. E. 17 Eq. 1.56 ; above, p. 217. See now the S. L. A. 1882, s. 32. (f) 8&9 Victc. 118,8.133; 11 & 12 Vict. c. 99, s. 8. ((i) Vernon v. Earl Manrcrs, 31 Beav. 617. PURCHASE OF LAND. 2L9 paid into the Bank of England or Ireland, as prescribed by the Act, and to remain so deposited until applied in some or one of the following ways : — In the purchase or redemption of the land tax, or Stat. 8 & 9 the discharge of any debt or incumbrance affect- ^ gg ' ' ingthe land in respect of which such money shall have been paid, or affecting other lands settled therewith to the same or the like uses, trusts, or purposes ; or in the purchase of other lands to be conveyed, Umited, and settled, upon the like uses, trusts, and purposes, and in the same manner, as the lands in respect of which such money shall have been paid stood settled ; or If such money shall be paid in respect of any build- ings taken under the authority of this or the special Act, or injured by the proximity of the works, in removing or replacing such buildings, or substituting others in their stead, in such manner as the Court of Chancery shall dii-ect ; or In payment to any party becoming absolutely entitled to such money. Such money may also be invested or applied as capital money arising under the Settled Land Act (a). In the foregoing section of the L. C. C. A., 1845, the "Settled" word " settled " means simply " standing limited " (&). The Copyhold Acts (c), the Settled Estates Act, 1877 {d) Copytoid, and the Partition Act 1868 (e) also authorise the apphca- Estates and tion of money produced by sales under them in the pur- chase of other hereditaments to be settled in the same (a) 45 & 46 Vict. c. 38, s. 32. (r) 4 & .5 Vict. c. 35, s. 73. (J) Kelland \. Fulford, 6 Ch. D. (<«) 40 & 41 Vict. c. 18, 3. 34. 491, 494 ; In re Byron's Charity, («) 31 & 32 Vict. c. 40, s. 8. ■a Ch. D. 171. 220 INVESTMENT IN Redemption of land tax. Discharge of incumbrances. Temporary incumbrances. manner as the hereditaments in respect of which the money was paid. These powers have been in like manner enlarged by the above-mentioned provision of the Settled Land Act (a). Money received on the enfranchisement of copyhold of settled manors (fo), or on sales under the Settled Estates Act, 1B77 (c), or the Partition Act, 1868 {d), and capital money arising under the Settled Land Act, 1882(e), as well as money paid into Court under the Lands Clauses Consolidation Act, 1845 (/), may be applied in redemp- tion of land tax. Money received on enfranchisements of copyholds (6) on sales under the Settled Estates Act, 1877 {g), or under the Partition Act, 1868 (/i), and capitalmoney arising under the Settled Land Act, 1882 (e), may also be applied in the discharge or redemption of any incumbrance affecting the hereditaments in respect of which such money was paid, or affecting any other hereditaments subject to the same uses or trusts. The price of land of a municipal corporation paid into Court under the Lands Clauses Consolidation Act, 1845, has been allowed to be applied in payment of money borrowed on mortgages and bonds (i). The price of a parcel of glebe, however, was not allowed to be applied in discharge of a yearly rentcharge on glebe (a) is & 46 Vict. c. 38, B. 32. (ft) 4 & 5 Vict. u. 35, s. 73. (p) 40 & 41 A'ict. K,. 18, s. 34. ( L. (,9) Ex parte Ri'rtor of O J. ('h.'-'-S:. oUmi,2V^. D. 22.'-.. rim~ 222 INVESTMENT IN Enfranchise- ment of copyholds. Price of freeholds not, geuei-rUly speaking, to 1)6 invested in purchase of copyholds or leaseholds. Price of lease- holds invested in purchase of copyholds. Price of crpy- hold invested in copyholds. another part of the same estate as their contribution towards the expenses of paving a street (a). An enfranchisement of settled copyholds has been regarded as in substance a purchase of other lands (b). Generally speaking, the price of freehold hereditaments may not, under the words of this section, be invested in the purchase of copyholds ; but Knight Bruce, V.-C, sanc- tioned such an investment on evidence being given that it would be beneficial to the parties interested to do so (c). In a subsequent case the same judge, when Lord Justice, and Turner, L.J., thought the last cited case had gone quite far enough, and refused to sanction the investment of money produced by sale of freeholds and copyholds in the purchase of leaseholds (d) ; but such an investment has been sanctioned where the persons interested were trustees of a charity, having an absolute legal title (e), and where a corporation were the owners and also owned the reversion of the leaseholds proposed to be bought (/). Upon the report of the Master that it would be bene- ficial to the parties, the price of leaseholds has been ordered to be invested in the purchase of copyholds (g) and freeholds (h) both of inheritance. The price of copj^hold glebe has been directed to be (a) Re miliard, 38 L. T. N. S. 93. (ft) In re CTwshunt College, 3 W. E. 638 ; 1 Jur. N. S. 995 ; Bitxon V. Jai^ltson, 25 L. J. Ch. 588. (c) Inre Cann's Estate,\b3uT.i. (d) Ex parte Macavlay, 23 L. J. Ch. 815. Cf. Ex parte Gart- .lidr, 6 L. J. N. S. Ch. 266. (i") In re Rnlinhotli Clinprl. L. R. 19 Eq. 180. (/) Ex -parte Bean and Canom of Manchester, 28 L. T. N. S. 184. (y) In re Coyte's Estate, 1 Sim. N. S. 202. The Act governing the case contained a provision similar to s. 74 of the L. C. C. A. 1845 ; "Vaizey, Settlements, Ch. XI. s. 10. (*) In re Parlter. L. E. 13 Eq. 4i)r,. PURCHASE OF LAND. 223 applied in the purchase of other copyhold heredita- ments (a). The fine on admittance is part of the price and not Fine on admittance. payable by the Company as costs (6). Sir J. Bacon, V.-C, sanctioned the investment of Exceptional n 1 . . /. cases. the price of land situate in England in the purchase of land in the Isle of Man, notwithstanding an objection by the company that the Isle was out of the jurisdiction, and it might be impossible to settle land there to the same uses (c). A purchase requiring more money than the fund in Court amounted to was in one case sanctioned (d) ; and in another the price of land of a lunatic, being, it is pre- sumed, tenant in fee, was allowed to be laid out in the purchase of stock of an Indian railway company, as a permanent investment equivalent to a purchase of land (e). The purchase of an equity of redemption has been objected to (/). The Court does not usually sanction a purchase without Reference a? a reference as to the title (g), to one of the conveyancing coimsel of the Court Qi) ; but the Court has accepted a title without a reference, on the opinion of another counsel (i) ; and where only £50 was to be invested, leave was given to apply in chambers that the investigation of (a) In. re Eastern Counties Rail- (/) In re Buehingham, 2 Ch. D. way Co., Ex parte the Vicar of 690. Sawston, 27 L. J. Ch. 755. (/) E!eparteCraven,171,.J.Ch. (J>) L. C. C. A. 1845, ss. 95, 96 ; 215 ; In re Portadown, etc., Rail- Ex parte the Vicar of Sawston, way Co.,1t.'R. 10 Eq.SGS; Worman u. s. ; Re Wilson's Estate, 2 Jo. & v. Wurman, W. N. 1889, p. 189. H. 619 ; 3 De G. J. & S. 410. (?) Ex parte Craven, n. s. (c)' In re Taylor, 40 L. J. Ch. (A) In re Caddiok, 9 Ha. App. 454 ; see above, p. 215. ix.; e. c. 22 L. J. Ch. 10; In re (rf) 4 T. & C. 518. See also Martin, 22 L. J. Ch. 248. Mathias v. Matliias, 3 Sm. & Or. (J) Ex parte Vicar of Di-re- 552 ; Re Pmnfrcy, 22 Ch. D. 255. Imm^ 21 L. J. Ch. 677. 224 INVESTMENT IN Trustee buy- ing should require marketable title. title might be dispensed with (a). In the case of an enfranehisement, the reference is as to the power to obtain a valid enfranchisement (&). Trustees cannot waive a serious defect of title to land proposed to be purchased (c). Consequently, they ought not, without express authority, to buy under stipulations which preclude them from insisting on a marketable title((i). Such an authority ought not, as a matter of course, to be vested in trustees (d). That they were expressly authorised by the Vendor and Purchaser Act 1874 (e) to buy without excluding the operation of s. 2, suggested that they might not buy without excluding the operation of s. 1, which precludes a purchaser, in the absence of stipulation, from requiring more than forty year's title. Whether they may buy an underlease or property purporting to be enfranchised, copyhold, or customary hereditaments, without excluding the operation of the Conveyancing Act 1881 (/), may be still doubtful; but trustees have now a qualified authority to accept on a purchase a shorter title than that to which without stipulation they would be entitled (g). It may when possible be prudent for pur- chasing trustees to exclude from their contracts the operation of all the enactments which restrict a purchaser's right to evidence of title ; but in this as in other transac- tions they ought not to be required to exercise greater caution than that exercised in like transactions by men of ordinary prudence. (a) In re BlomfieU, 25 W. R. 37. (J) In re Chesliunt College, 1 Jur. N. S. 995. (c) Lord Campbell in Eastern CnuntJes B-ailway Cn. v. ffnwke.i, :, TI. L. C. .S31. 36.S. ((f) 9 Jam. By. 406. («) 37 & 38 Vict. c. 78, s. 3. (/) U & 45 Vict. c. 41, s. 3. C?) 51 & 52 Vict. c. 59, s. 4, sub-SR. 2, 3 ; above, p. 112. PCJECHASE OF LAND. 225 " To be conveyed to the like uses." If, before the re- " '^^f, lita investment, the property has become subject to new uses, the conveyance must, it seems, be to those uses (a). Not only where the money has been paid in respect of Price of T.-1T Til 1 •! • T • c settled land Duilclings, but also where it has been paid m respect oi may be land, application of it in building has been asked for (6). ifuiuiing.' Notwithstanding some hesitation on the part of eminent judges (c), it is determined by numerous decisions that the price of settled land taken under the powers of a railway company's Act {d), or of the Lands Clauses Con- solidation Act, 1845, may be expended in the erection of new buildings on other parts of the settled property, which win. be, substantially, an augmentation of it. It is equivalent to a purchase of land (e). The price of glebe has been so applied in building a parsonage house (/), and a farmhouse and buildings (g). The price of settled estates has been ordered to be invested in erecting new buildings (h) and cottages (i), and a steam-engine and buildings where the land was taken under the Defence Acts (k), and in lateral additions to an existing house (l). (a) In re Be Beauvoir, 2 De G. 1 Jo. & H. 610 ; 30 L. J. Ch. 816 ; F. & J. 5 ; 29 L. J. Ch. 567. Eai jjarte Rector of Sldpton-under- (J) Be BiicTis Bailway Co., 14 Wyohwood, 19 W. E. 549. Jur. 1065 ; I)i re Oxford, ete., {g) Ex parte Bector of Gam- Railway Co., 27 Beav. 571. ston, 1 Ch. D. 477. (c) See Re Rudyerd's Tru.sts, 2 (/t) Ex parte Sliaw, 4 Y. & C. Glfi. 394 ; s. 0. 6 Jur. N. S. 816 ; 506 ; Ex parte Melward, 27 Beav. Ex parte the Corporation of 571 ; 29 L. J. Ch. 245. Liverpool, L. K. 1 Cb. 596 ; In re (i) Re Dimmer's Will, 2 De G. Kewman's Settled Estates, L. K. 9 J. & S. 515 ; s. 0. 34 L. J. Cb. 496. Ch. 681, 683. CO I'"- 1'^ Dalle of Wellington's (JT) Ex parte Shaw, 4 Y. & C. Settled Estates, 3 De G. F. & J. 13. 506. (0 Re Speer's Trvsts, S Cb. D. (e) 1 Jo. & H. 612 ; L. B. 9 Cb. 262 ; Ex parte Rector of Clay- 683. pnle, L. R. 16 Bq. 574. (/) Re Ineiimbenf of niiitjield, V.T.M. Q 226 INVESTMENT IN Or in re- building. But not mere repairs. Cases under the Settled Estates Acts. An application for payment to the tenant for life upon his undertaking to lay out the money in making roads was refused (a). Expenditure in rebuilding has also been authorised where the old structures have been ruinous {b), or made useless by public work (c) ; or where cottages having been purchased by the promoters, new ones were needed for the estate (d). Expenditure in mere repairs of a rectory house has been sanctioned (e) ; but generally speaking, the Court will not approve of expenditure in repairs or permanent improvements not placing new buildings on the land (/). The Court of Appeal ordered the produce of timber cut on a settled estate under the order of the Court to be expended in new farm buildings and other permanent improvements (g). Sir G. Jessel, M.R., said that the doctrine was not to be extended (h), and he refused to sanction the application of settled money in making roads and sewers on building land (i), though he permitted the trustees to borrow the same money on mortgage of the land, and to apply it in the manner proposed. The proceeds of a sale of settled land under the powers of the (a) Re Selfast Water Commis- sioners, Ir. E. 6 Eq. 63. (*) Re Wigan Glebe Act, 3 W. R. 41 ; In re Aldred's Estate, 21 Ch. D. 228. (c) In re Johnson's Settlement, L. E. 8 Eq. 348. See In re Leigh's Estate, L. R. 6 Ch. 887 ; Ex parte Rector of Hartington, 23 W. E. 484 ; Ex parte Rector of Brad- Jield St. Cla,ire, 32 L. T. 248. (_d') In re Earl de Grey's En- tailed Estate, W. N. 1887, 241. (e) Ex parte Rector of Grim- oldby, 2 Ch. D. 225. (/) Dralie v. TrefvMs, L. E. 10 Ch. 364 ; la re Nether Stowey Vicarage, L. E. 17 Eq. 156. ig) In re Neioman's Settled Estates, L. E. 9 Ch. 681. See also Re Clitheroe's Settled Estates, 17 "W. E. 345. (70 2 Ch. D. 526. (j) Be Venour's Settled Estates, 2 Ch. D. 522. PURCHASK OP LAND. 227 Settled Estates Act, 1877, have been applied in building a weir for the protection of an unsold part of the settled pro- perty (a), but not in draining for agricultural purposes (6). Now, money to be invested under the Land Clauses "Improve- ments, " Consolidation Acts or the Settled Estates Act may be applied in " improvements " (c). Though the Court will authorise an expenditure in Recouping . , . , , . expenditui'e bmlding, it will not sanction a payment to the tenant for by tenant life to recoup him money which he has already expended, unless either the money laid out by him is a charge on the inheritance (d), or, if the money had not been ex- pended, the estate might have been sold under a statutory power (e). In Re Partington (/) the payment was to trustees ; but in Ex parte Rector of Holy well- cum- Need- ingworth (g), Fry, J., appears to have made such an order — inconsistently with the above statement — on evidence that the outlay had produced a permanent valuable im- provement. Not only money received on any sale under the Lands Party abso- lutely entitled.. Clauses Consolidation Act, 1845 (h), but also money re- ceived on any sale under the Settled Estates Act, 1877 {i), or the Partition Act, 1868 (k), may be paid " to any per- son becoming absolutely entitled," and capital money (a) In re Leadbitter, 30 W. R. (e) Ex parte Davis, 3 De G. & 378. Jo. 144 ; 27 L. J. Ch. 712. See Ex (J) In re Poynder, 30 W. E. 7. parte Rector of Martington, 23 (c) S. L. A. 1882, 83. 21 (iii), 26, W. E. 484. above, pp. 190, 201, and s. 32. (/) 7 L. T. N. S. 522 ; 11 W. E. (cT) In re Leigh's Estate, L. E, 160. 6 Ch. 887 ; Williams v. Aylesiury (_g) 27 W. E. 707. See S. L. A. and Bueldngham Railway Co., L. 1882, s. 25, above, p. 201, and s. 32 ; E. 9 Ch. 684 ; Re Stock's Devised Re Byron's Charity, 31 W. E. 517. Estates, 42 L. T. K. S. 46. Cf. Qi) Above, p. 219. Vernon v. Earl Manvers, 31 Beav. («) 40 & 41 Vict. c. 18, b. 34. 617 ; above, p. 218. (*) 31 & 32 Viot. c. 40, a. 8. Q a 228 INVESTMENT IN Lunatics and infants. Tenant in tail. Wife. arising under the Settled Land Act, 1882 (a), may be applied in payment to any person becoming absolutely entitled or empowered to give an absolute discbarge. The proceeds of the share of a lunatic in land sold in a partition action under the Partition Act are not, though belonging absolutely to him, treated as money, but on his death his heir-at-law becomes entitled to them (6) ; so the price of land of an infant tenant in fee remains realty, and if the infant dies his heir is entitled to the money (c). Notwithstanding two cases to the contrary relating to money brought into court under the Leases and Sales of Settled Estates Acts (d), money produced by sale of land to which a tenant in tail is entitled will not, if in court, be paid out to him until he has executed a disentailing deed (e). An af&davit of non- indebtedness also appears to be necessary (/). Where the vendor, being tenant in fee, devised the land by way of settlement and died before completion, no one was absolutely entitled (g). Where a husband and wife were entitled jointly for their lives with remainder to the survivor. Bacon, V.C, required that the wife should execute and acknowledge a deed under the Fines and Recoveries Abolition Act, before he would order payment to the joint order of her husband and herself (A). (a) 45 & 46 Vict. o. 38, s. 21 (ix). (J) In re Barker, 17 Ch. D. 241. (c) Eelland v. Fulfm-d, 6 Ch. D. 491. (i^) III re Mmv, L. E. 17 Eq. 300 ; In re Wood's Settled Estate, Jj. E. 20 Eq. 372. («) In re Butler, L. E. 16 Eq. 479 ; Be Koreop, 31 L. T. N. S. 85 ; confirmed by In re Beynolds, 3 Ch. D. 61. (/) ThornJdll v. Milbank, 12 W. E. 523. C?) Be Be Beauvoir, 2 De G. F. &J. 5 ; 29 L.J. Ch. 567. n.-' Tin Belt, 25 W. E. 901. PURCHASE OP LAND. 229 Thd tenant for life of a leasehold interest which determines during his life is absolutely entitled, and payment has been made to such a person without prejudice to any equity of the remainderman (a). Where land, vested in trustees for the separate use of Trustees for sale. a married woman during her life and after her death for sale, was sold under the powers of the Leases and Sales of Settled Estates Act, Malins, V.-C, directed payment to the trustees of the purchase-money (fc). In another case the tenant for life consented to the payment (c). In a case under the Partition Act, 1868, Sir J. Bacon, V.-C, refused to pay to the surviving trustees of a settle- ment, or to a trustee to be appointed for the purpose, the shares of purchase-money to which married women Uving in Australia were entitled (d). In 1861, Stuart, V.-C, refused to order payment of money paid in under the Lands-Clauses Consolidation Act, 1845, to trustees for sale, as "persons absolutely entitled " under s. 69 (e), and in 1872, Malins, V.-C, followed that decision (/). In 1853, Wood, V.-C.,in 1870, Romilly, M.R., in 1876, Bacon, V.-C, and, subsequently, Jessel, M.R., the Court of Appeal, Pearson, J., and Chitty, J., made orders for payment to trustees for sale ( ''« English's Settlement, (*) E.e parte Bodge, 16 Sim. 39 Ch. D. 556. 159. (/) In re London Street, A'c, (c) 44 & 45 Vict. 0. 44 ; In re Act, 57 L. T. N. S. 673. CHAPTER XVI. Correlative with duties. Joint and several. Not respon- sible for loss by deprecia- tion merely. RESPONSIBILITIES OF TRUSTEES. The responsibilities of trustees being correlative with their duties, to state those of their responsibilities which relate to the investment of money v^ould be for the most part to repeat, with the variations needed to adapt them to that end, the numerous propositions in which the duties and powers of trustees with reference to invest- ment are above set forth. There are, nevertheless, some propositions relating to this department of fiduciary re- sponsibility which need distinct statement, and without being able to hope to do that exhaustively, I trust that the few following observations may be useful. It may be premised that the responsibility of trustees in this as in other respects is joint and several (a). Generally speaking, the only consequence of any in- vestment or non-investment for which a trustee can be responsible is pecuniary loss to the beneiiciaries, and he is not responsible for loss caused merely by the deprecia- tion of an investment, provided that he was bound or authorised to invest the money laid out at the time he laid it out, — ^that the investment was of a kind he was bound or authorised to choose, — that he exercised ordinary prudence in accepting the particular specimen of that kind of investment, — and that he did not retain it when (a) Fry v. Tapson, 28 Ch. D. 268. RESPONSIBILITIES OF TRUSTEES. 241 ordinary prudence would have dictated his realisation of it. Generally speaking, also, an executor merely retaining Interest, balances he ought to have invested, is charged with interest at 4 per cent, (a), but if he is shown to have made more interest he must account for all he has received (b) ; if he has acted improperly or traded with the money for his own benefit he is charged with interest at 5 per cent, (c) or the profits (d) ; the mere choice of an unauthorised investment, however, was not treated by Eomilly, M. R., as a reason for charging interest at 5 per cent. (e). The cases on this subject are numerous (/), and the ap- plicability of this general statement must depend in every case on its peculiar circumstances. Where a trustee, bound to invest in one specified Disobedience to direction manner, invests otherwise, he is responsible, of course, to inYeet in for the consequences of his disobedience. Accordingly, -(vray. when it was the rule of the Court that a trustee, in the absence of a special authority to choose another invest- ment, was bound to invest in Consols, a trustee who, without any such special authority, invested in some other manner, was chargeable, at the option of the cestui que trust, either with the principal sum received and interest, or with the amount of the Consols or other specified investment which would have existed if the money had been properly invested (gr). This doctrine (a) Knott r. Cottee, 16 Bear. 77 ; G. M. & G. 256. Lord Cranworth, L.J., 1 De G. M. («) Knott v. Cottee, v.. s. p. 80. Sc G. 255. (/ ) See a collection of them in (J) Lord Thurlow, C, in Forbes Lewin, Trusts, 8th ed. 338—344. T. Moss, 2 Cox, 113, 116. G') Robinson v. Moiinson, 1 De (c) Knott V. Cottee, u. s. G. M. & G. 247, 256, 261. {dT) Lord Cranworth, L.J., 1 De V.T.M. R 242 RESPONSIBILITIES OF TRUSTEES. Failure to make any of seTeial authorised investments. would be applicable wherever an instrument creating a trust directed an investment in some one mode of in- vestment only. It would be necessary to consider it also if a trustee had, without authority to do so, parted with an existing investment. Where a trustee, being directed to invest in one or some of several kinds of property, leaves the trust fund invested in some other manner, he is chargeable with the sum of sterling money he had or ought to have had to invest, with interest from the date at which he ought to have invested it ; but not with the value of such one of the investments he was authorised to make as the cestui que trust may choose. Lord Cranworth, L.J., adduced, in support of the decision of the Court, the analogy of a covenant to do one of two things where, if the covenantor does neither, the measure of damage is, in general, the loss arising by reason of the failure to do that which is least beneficial to the covenantee ; but the Court did not foUow the analogy any further than the point at which it served to defeat the claim of the cestui que trust to measure the damage by the best choice of investments which might have been made. It was not followed to the point of allowing the trustee to account on the footing of having chosen the investment which, in the event, would have been least profitable. Though the beneficiary was not entitled, by the neglect of the trustee in not having at the proper time made choice of one of the permitted investments, to require the trustee to account on the footing of the investment most beneficial to the cestui que trust having been chosen, the trustee, after the loss occurred, was not permitted to account on the footing least onerous to himself, of his having made an invest- RESPONSIBILITIES OF TRUSTEES. 243 ment he might have but had not made ; he was charged with the sum of money he ought to have invested, with interest from the date at which he should have invested it (a). It should be observed, that while before 1859 a trustee Application unauthorised by the instrument to choose among several doctrines t°^ kinds of investments was, by the then prevalent rule of thrmodem"" the Court of Chancery, in the category of those whose '^^" duty it is to invest in one specified manner, that is to say, 3 per cent, perpetual Government annuities, now, a trustee without any special private authority is put, by means of the above-mentioned statutes, in the category of those who are entitled to choose among several in- vestments. Where a trustee had made an investment of an un- Property in . . improperly- authorised kind, and loss was sustained, Sir J. Komdly, made invest- M.R., said that the case must either be treated as if these investments had not been made, or had been made for the trustee's own benefit out of his own money, and had at the same time retained money of the tes- tator in his hand (6). This proposition was cited with approval by Kekewich, J., in a recent case (c), but with reference to such an investment of trust-money. Sir W. P. Wood, V.-C, said : "You still foUow and impress the trust on that propertj'. It is as much trust property as the money was before " (d). It may be doubted whether either statement is quite correct, and whether it would (a) RoUnson v. Robinson, 1 De 79, 80. G. M. & G. 247, 257, 258 ; settling (e) In re Salmon, 42 Ch. D. 351, the law after several discrepant 357. decisions ; Knott r. Cottee, 16 (rf) Thornton v. StuUll, 1 Jur. Beay. 77, N. S. 751. (S) Knott v. Cottee, 16 Beav. 77, E 2 ments. 244 RESPONSIBILITIES OF TRUSTEES. not be more accurate to say that the beneficiaries may elect to take the investment though improperly made, if it be their interest to do so, but that they are not bound to accept it if it be not their interest to do so. Lien of Cestuis que trustent have been held to be entitled to attach a debenture upon which trust money had been im- properly lent {a), — to have paid into Court the purchase- money of land forming part of a mortgage security improperly accepted by the trustee, that part having been sold by him (b), — and to have houses wliich had been improperly purchased by their trustee sold, and the proceeds applied in or towards satisfaction of their claim (c). It was held in one of those cases that the beneficiaries did not abandon their lien by filing a bill against the trustee in which they neither sought to follow the money nor to adopt the investment, and had obtained an order against the trustee for payment (6) ; and in another that the cestuis que trustent could not take the improperly purchased houses at an estimated value less than the trust-money and claim the residue from the trustee (c). Trustee's right In a recent case Mr. Justice Kekewich said that cestuis improper and ?"^ trustent were not entitled to sell property improperly purchased by their trustee without giving him the oppor- tunity of redeeming it (d). The decision was reversed by the Court of Appeal, but the reasons for reversal did not conflict with Mr. Justice Kekewich's proposition, and Lord Justice Cotton appears to have recognised it as (a) Mant v. Leith, 15 Beav. (o) Thornton t. Stokill, 1 Jur. 624 ; see also Enott t. Cottee, 16 N. S. 751. Beav. 77, 81. (