Powers
Cases
Re Enever’s Trusts
[1912] 1 IR 511 (Chancery Division)
Ross J: By an indenture of 4th June 1872, which was a deed executed on the occasion of a separation between William Power and his wife, Cleopatra Power, it was declared that all property acquired during the joint lives of the husband and wife should be enjoyed by the wife for life, and that on her death it should go among the children of the marriage as she should by her will appoint. There were three children of the marriage, Susan Amelia, who died in 1884, intestate and unmarried; Frederick Joseph Power; and John Power. Certain property came to Cleopatra Power, which is to be disposed of under the terms of the deed of 1872.
The said Cleopatra Power was subsequently divorced from the said William Power, and lived with a man called Samuel Bennett, by whom she had one child, James Samuel Bennett. She afterwards married Augustus Enever. She made her will on 24th December 1883, and bequeathed the property in dispute to her son, James Samuel Bennett, for life, and after his death she bequeathed it to her husband Augustus Enever, in trust for the children of the marriage with him, and in case there should be no children, which event happened, she bequeathed it to her husband absolutely. In case neither her said son nor her said other children, nor her said husband should live to take the said property, then the testatrix gave the same to John Power, one of her children by her first marriage, with remainders over.
The testatrix died in February, 1911, and her husband died shortly after. A number of the questions before me admit of an easy answer. Did James Samuel Bennett take anything? Certainly he took nothing. He is not an object of the power. Who is entitled to the rents and dividends due at the death of testatrix? Her personal representative. Did Augustus Joseph Enever take any, and what, estate? He took nothing whatever, not being an object of the power.
There remains the question – Did John C Power take the estate under the appointment, or does it go to him, to Frederick Joseph Power, and to the representative of Susan Amelia, as if unappointed.
When an appointor exercises his power partly in favour of objects of the power, and partly in favour of those who are not objects of the power, there are cases in which the law holds good so much of the appointment as confers the benefits on objects of the power. Everything turns on the intention of the appointor. In Crozier v Crozier 3 Dr & W 353 the testator appointed to his wife for life, who was not an object of the power, and then to his eldest son, who was an object of the power. Lord St Leonards held that the appointment in favour of the eldest son was good, but that the rents and profits during the lifetime of the mother passed as in default of appointment.
On the other hand, where there are appointments in favour of persons not objects of the power, with an ultimate limitation in favour of somebody who is an object of the power, and this last limitation is dependent on the former void appointments, such last limitation must fail. There is no means of ascertaining the appointor’s intention, or rather, to give effect to the last limitation would be to defeat the appointor’s expressed intention.
Take the present case. There is, first of all, a life interest given to James Samuel Bennett. Secondly, after his death, there is a trust to Augustus Enever for the benefit of his family; and thirdly, there is a trust for Augustus Enever himself, in the event of there being no children. All these are void. Lastly, there is an appointment in favour of John, an object of the power. It is plain that the last appointment is dependent on those going before, and that when they fail it must fail with them. I must, therefore, answer the last question by declaring that the estate and all the rents and profits accruing since the death of Cleopatra Enever go as in default of appointment equally between Frederick Joseph and John Power, and the personal representative of Susan Amelia Power.
Re Robertson’s and Cardew’s Trusts
[1960] IR 7 (High Court)
Dixon J: This is not an easy question, but on the whole I am inclined to the view that the power of appointment was not exercised – or, rather, was invalidly exercised. It is clear that at the date of the will the wife had no power of appointment which she could exercise, as the husband was still alive. But even, apart from that, if the will had been made after the husband’s death, I do not think it would have been an exercise of the special power. It is well settled that there has to be some sufficient indication of intention to exercise a special power, and I do not think the phraseology used here, which is in the ordinary general form, could be any indication of an intention to exercise a special power. There is, moreover, a reference to a fund over which the testatrix had a general power of appointment at the time. I think, considering the matter quite apart from the date of the will, there is no sufficient reference to the special power of appointment.
The real crux of the matter turns on the codicil. Was there such sufficient indication of intention to exercise the special power of appointment contained in the codicil? I do not think there was. I think it might be possible that the lady thought, or was advised, that, by declaring that her husband had died and by confirming her will, that would have the legal effect of operating as an exercise of this special power of appointment. I consider it as a possibility, but it seems a somewhat subtle approach. All the lady had to do was to put in a provision that the residuary clause in her will was to be taken as an exercise of the special power. On the whole, I think that if there was any intention to exercise the special power there would have been more specific mention of it. There is the difficulty as to what was the object of the declaration in the codicil, but it may be that there were circumstances that gave some point to that declaration other than the exercise of the special power. My view is that there is not evidence in either will or codicil of sufficient intention to exercise the special power. The power was therefore not exercised.
Duggan v Duggan
(1880) 7 LR Ir 157 (Court of Appeal)
Lord O’Hagan C: The question in this case is, whether an appointment to the plaintiffs by their mother, Honoria Duggan, of a fund brought into Court under the Trustee Relief Act, and a deed, of the same date, by which she assigned to them her life interest in that fund, are valid or void? The claim of the plaintiffs is full and candid, and states all the facts which are necessary to be considered for the fair decision of the point in controversy.
Mary Donohoe, the sister of the defendant Honoria Duggan, made a will, by which she gave a farm called Borahard and a legacy of £2000 to the latter, for her separate use, without power of anticipation, and to her children according to her appointment, and in default of appointment to her sons at the age of twenty-one, and to her daughters at that age, or marriage.
Honoria Duggan and her husband had four children, the plaintiffs, and two of the defendants who are still minors. Mrs Duggan and her husband took possession of Borahard, after the death of her sister, and he afterwards died. She possessed, also, another farm called Ladytown. After the sister’s death, Mr and Mrs Duggan borrowed £1000 from the Hibernian Bank, which was secured by a policy of insurance and a mortgage of her interest in the fund in Court.
The plaintiff Mary, whilst still under age, joined her father and mother in further securing the advance by a promissory note to which she was a party.
The husband having died, the Bank required further security; and the plaintiff Christopher, who was of age, and his sister Mary, who was then also of age, became parties with their mother to her promissory notes, instead of that which had been executed in her husband’s lifetime. The defendant Honoria Duggan got into great embarrassment, sold off her stock, and allowed a large sum for rent of her farms to grow due.
The claim sets forth what was done thereupon and in that state of facts by the mother and her adult children, in the 12th and 13th paragraphs –
“12.Under the foregoing circumstances, and in order to provide for her children and support her family, the said defendant Honoria Duggan, by deed poll dated the 13th day of January 1880, under and by virtue of the power given to her by the said will of Mary Donohoe, appointed irrevocably the said sum of £4234 0s 3d Government Stock to the plaintiffs, their executors, administrators and assigns, in equal shares, subject however to the life estate and interest of the said Honoria Duggan.
“13.By an indenture of even date with the said deed poll, and made between the said Honoria Duggan of the one part, and the plaintiffs of the other part, after reciting, as the facts were, that the plaintiffs were desirous of obtaining possession of the said sum of £4234 0s 3d Government Stock, and for that purpose had proposed to the said defendant Honoria Duggan to sell to the plaintiffs her life interest in the said Stock, in consideration of a sum of £2015, the estimated value of the said life interest, to be paid by the plaintiffs to the said defendant in the following manner, namely, by transfer to the said Hibernian Bank of so much of the said Stock as should be equivalent to the sum of £997 6s 8d, interest and costs, and by a transfer to the said defendant of so much of the said Stock as should be equivalent to the balance of the said sum of £2015, provided it should seem fit to this Honorable Court to make the necessary order for effectuating the said proposal, and reciting that the said defendant had accepted the said proposal, it is witnessed that in pursuance of the said agreement, and in consideration of the said sum of £2015, to be paid as aforesaid, the said defendant granted to the plaintiffs and their executors, administrators and assigns, all the estate and interest of her the said defendant in the said sum of £4234 0s 3d Government Stock, in equal shares absolutely.”
The final paragraph of this claim states that this transaction was perfectly bona fide, and for the purpose of getting rid of the debts and difficulties in which the estate derivable under the will of Mary Donohoe was involved; and not for the purpose of giving any advantage exclusively to Honoria Duggan; but, generally, for that of benefiting her family – as well the plaintiffs as the minor defendants.
The two deeds must be taken together and dealt with really as one, carrying out one purpose and aiming at a single end. And, so considered, upon the admissions of the claim and the facts established by the evidence, I am clearly of opinion that the agreement between the plaintiffs and the mother to purchase her life interest and pay for it out of the moneys appointed to them, for the purpose of discharging her debts and saving her property, must be considered, in a Court of Equity, to have been a corrupt agreement made for a corrupt purpose, and, therefore, invalidating the exercise of the power.
The mother was in difficulties. She had induced her children to become her sureties in getting money. She desired to avoid eviction by her landlord, and possible foreclosure of the mortgage by the bank directors: and she sought to effect her purpose by making the appointment, and thus obtaining the sums required to accomplish it. The appointment appears to me to have been made in the interest of the mother, the donee of the power, and not to have originated in a direct and honest purpose to execute it, with a single regard to the intentions of the donor and the interest of the objects of her bounty. Mrs Duggan was in embarrassment, and the relief of her embarrassment, the discharge of her liabilities, and the preservation of her lands, were plainly the objects which were to be attained by the double deed, to which she induced her children to be parties – possibly for their future and contingent advantage, but actually and presently for her own.
As to the law of the case, I apprehend no doubt can be suggested. A power cannot be executed with a view to the interest of the donee, or with an object really and substantially different from that for which it was conferred.
A great many authorities have been cited, on either side, with much research, and commented upon with much ability, but I do not think it necessary to discuss them in detail, or to suggest, by such a discussion, that any real doubt exists as to the law. The principle they establish is summed up in part of a sentence by the Lord Chancellor in Topham v The Duke of Portland 11 HLC 32, in the House of Lords, in which he says, that the donee of a power must act with an entire and single view to the real purpose and object of the power (11 HLC 84). It seems to me clear, as I have said, that the donee of the power in this case acted alio intuitu, and with quite another object; and that, therefore, the execution of it ought not to be sustained.
It has been urged, that the power was executed for the benefit of its objects, though the donee derived some profit from the execution; and under certain circumstances, no doubt, the enjoyment of an advantage by the donee would not vitiate the appointment. The principle seems to me very properly stated by the Master of the Rolls in England in Re Huish’s Charity LR 10 Eq 9:
“The meaning and the good sense of the case appears to be that if the appointor, directly or indirectly, obtain any exclusive advantage to himself, and that to obtain this advantage is the object and the reason of its being made, then that the appointment is bad; but that if the whole transaction taken together shows no such object, but only shows an intention to improve the whole subject-matter of the appointment for the benefit of all the objects of the power, then the exercise of the power is not fraudulent or void; although, by the force of circumstances, such improvement cannot be bestowed on the property which is the subject of the appointment without the appointor, to some extent, participating therein.”
This seems to me quite right and reasonable, but the doctrine does not apply to the facts before us. If the primary and simple purpose had been to serve the objects of the power, and if, in serving them, in the peculiar position of affairs, the donee necessarily served herself, there would be no good ground for saying that the execution should be invalidated. But here the primary purpose was to serve the mother; to relieve her embarrassment and discharge her debts; and, although the retention of the farms might possibly benefit her children at some distant day, and under circumstances not to be foreseen, the only immediate and certain advantage was to herself, whilst, as to the debt to the bank, they were merely sureties who could recover against her if they were compelled to pay anything, and find their protection in the mortgage and the insurance. In Re Huish’s Charity LR 10 Eq 5 the suggested benefit of the donee was ancillary and accidental, and did not invalidate the appointment because it was subordinated to and, in a sense, inseparable from that of the appointees. But here we have the donee of the power trafficking for her own advantage. That of her children was only secondary and equivocal, whilst she supplied the real motive for the transaction as that which was certain and primary, and for her present advantage.
On these short grounds, I am of opinion that the decision of the Vice-Chancellor was right, and that the appeal should be disallowed. I do not go into the question raised before him as to the nature of the life estate, the age of the appointor, and the somewhat strange valuations of the actuary. There may be reason for maintaining, upon the evidence, that the price of the life estate was inadequate, whether it be considered with reference to the facts with which the actuary had to deal, or with the principle on which he proceeded; and if this was so, there could be no validity in the execution of the power, as the exclusive advantage given to the donee must, in that case, have been at once considerable and unfair. But I prefer to rest my judgment on facts which are undisputed, and principles, which, I agree with the Vice-Chancellor, it is of the highest importance to maintain untouched, as they are established beyond doubt or question. The appeal must be dismissed with costs.
Deasy LJ: I entirely agree with the Lord Chancellor. The purpose of the whole arrangement was to benefit Mrs Duggan. She derived an advantage from her age being represented as forty-five instead of fifty-one, which was of itself sufficient to vitiate the transaction as an appointment, though it might be better for the family to adopt it. The children had no interest in the farm of Ladytown, which it was part of the arrangement to preserve. The doctrine established by the cases is that the donee of a power must stand in a position of quasi-judicial impartiality.
FitzGibbon LJ: In one sense, I am sorry that we cannot accede to this appeal, but we should make a dangerous precedent is we did so. It may be conceded that the mere fact that the donee of a power derives a benefit from its exercise would not vitiate the appointment, if the arrangement were for the benefit of all the parties concerned, as well the objects as the donee of the power. But here the parents have involved the children in personal liabilities as sureties for themselves; and the transaction is one not for the benefit of the objects of the power as such, nor for the increase or improvement of the fund, but merely for anticipating the time when the property should fall into possession, converting it into cash, and dividing its present proceeds between the prospective owners and those now entitled to the current income. No doubt it is proposed to discharge the debts out of the donee’s share of the anticipated fund, ascertained by actuarial calculation- but no benefit is conferred upon the objects of the power by giving them now the present value, ascertained by an actuary, of their future interest. If we were to yield to this arrangement as one for the benefit of the objects of the power, we should encourage parents and donees of powers to involve their children, the objects of their powers, in embarrassment, under the belief that they could escape by anticipating the very fund which was settled with the purpose of preventing such liabilities from being incurred.
Skelton v Flanagan
(1867) IR 1 Eq 362 (Rolls Court)
The facts are set out in the judgment.
Walsh MR: By a marriage settlement, dated in 1809, Hamilton Skelton conveyed certain lands to trustees, to the use of himself for life, then to secure an annuity of £165 to his intended wife; and subject thereto to the use of the children of the marriage in such shares, and for such estates, and subject to such restrictions and sums for their benefit, as Hamilton Skelton should by deed or will appoint, and, in default of appointment, to the use of such child or children, issue of the marriage, who should attain the age of twenty-one, and their heirs, share and share alike, as tenants in common.
Of this marriage there was issue, the petitioner, John Skelton, and six daughters, all of whom, except one, Harriet Victoria, had attained the age of twenty-one prior to the year 1854, and of whom in that year two – Mrs McFadden and Mrs Ruckly – were married women.
Hamilton Skelton was indebted to the Respondent Flanagan, on foot of two judgments, recovered subsequently to the settlement, and he had extended a receiver appointed over the lands to pay them. He had been insolvent in 1844. On the 2nd of March 1853, he entered into an agreement in writing with Flanagan that all accounts between them should he settled thus – that Skelton, his wife, and all his children then of age, should join in mortgaging the settled property for £850, and that the amount should be liquidated in part by some money due by a railway company, and further instalments paid in the manner mentioned; and that this should he taken as settling all accounts between them; and Flanagan agreed to discharge the receiver, and that Hamilton Skelton should be put into possession on the execution of the mortgage.
On the 13th of May 1854, Hamilton Skelton executed a deed by which he appointed the lands to the Petitioner, John, charged with £300 each for three of his daughters (one of whom was the then minor, Harriet Victoria), £150 each for two other daughters, and an annuity of £25 yearly for the remaining daughter. Having regard to the value of the property, this would appear to have been a not unreasonable but on the contrary a natural exercise of his power; and it is not disputed that, so far as anything appears on the face of the deed, it is a good appointment.
A few days after the date of this deed – that is, on the 31st of May 1854 – a mortgage was executed between Hamilton Skelton of the first part; Eliza, his wife, of the second part; the Petitioner of the third part; the six daughters, and the husbands of the two married daughters, of the fourth part; and the Respondent Flanagan of the fifth part. It recites the settlement of 1809, and various securities then held by Flanagan (including the two judgments, two insurances on Skelton’s life, and a trust deed of 1842), and that the receiver was then in possession: it recites also (though not accurately) the appointment. It then recited that Flanagan had agreed to abate part of his demands and remove the receiver, on condition of the several parties joining in the mortgage as a collateral security, to secure him £1000 and interest, in full of all his demands; and that Eliza Skelton (the wife) and all the children – naming them – in consideration of the affection which they bear to their father, and in order to enable him to carry into effect this arrangement, had agreed to convey all and each of their estates in the premises to Flanagan as after-mentioned. The deed then witnesses that Hamilton Skelton and John (the Petitioner) convey to Flanagan the lands, with ample general words, subject to redemption on payment of £1000 and interest; and further witnesses, that the wife conveys her annuity of £165; and all the daughters, and the husbands of those that were married, assign the several sums payable to them under the appointment, and all their estates in the annuity, sums, and premises to Flanagan, subject to a similar proviso for redemption. Hamilton Skelton and the Petitioner covenant for payment of the money. This deed was duly acknowledged under the Act for the Abolition of Fines and Recoveries, by Eliza (the wife), and the two married daughters, Mrs McFadden and Mrs Ruckly.
Neither the wife nor any of the children received any consideration for the mortgage. It is admittedly a simple security for an amount ascertained by way of compromises as due on the antecedent debt of Hamilton Skelton; the only new consideration being the agreement to discharge the receiver. The receiver was in fact discharged, as agreed upon. The only benefit that can be suggested as obtained by the children from the transaction is, that their father was thus enabled to support some who were then living with him, and there is some slight evidence that the family desired this.
The petition states that the Petitioner was fraudulently induced to execute this deed, under pressure and misrepresentation as to its real nature: and that his sisters were induced to execute it on a representation by the father that the amount would be entirely discharged out of the money coming from the railway company, and also in ignorance of its real nature. It further impeaches the demand of Flanagan as between him and Hamilton Skelton. But these charges have either failed in proof, or have been wholly displaced by the Respondent’s evidence, and it is now admitted by the Petitioner’s counsel that they cannot be sustained.
Flanagan presented a petition for sale in the Landed Estates Court, in 1862. Cause was shown against the conditional order for sale, by the Petitioner John, and some of his sister; but in November 1862, the cause was disallowed, and the order for sale made absolute, with certain directions calculated to facilitate any remedy over against Hamilton Skelton’s life estate, and without prejudice to any application which the parties showing cause might make for an assignment of Flanagan’s securities against Hamilton Skelton, or to any steps that might be taken in Chancery to set aside the mortgage.
This suit was instituted soon afterwards – that is, in April 1863 – and came on for hearing before the late Master of the Rolls. As originally framed, the petition prayed relief against the mortgage only; and, the ground of actual fraud being abandoned, the Court held that that relief could not be given; but, as the Petitioner insisted that the appointment was invalid, he was permitted to amend the petition by praying that it might be set aside. The petition was accordingly amended, and is now again brought to a hearing. In the mean time the lands have been sold in the Landed Estates Court. It is stated in the answer to the amendment that the petitioner’s former solicitor agreed that Flanagan should go on and sell. It appears that there was first a sale in Dundalk, in June 1866, which the Judge, on the application of the present petitioner, John Skelton, refused to confirm, as the price was inadequate. The property was then set up to be sold in Dublin, in July – a motion by John Skelton to stay the sale having been refused, with costs. The final schedule of incumbrances was settled in November last. It is stated, and not disputed, that the representative of Harriet Victoria, the daughter who was a minor in 1854, made a claim under the deed of appointment, and by the schedule as ruled is declared entitled to the £300 and interest, which she took under that deed.
The amendment of the petition, besides praying the additional relief of setting aside the appointment, puts in issue a letter of Flanagan, and brings before the Court, as additional parties, the heir-at-law, and personal representative of Mrs Ruckly, who died since the institution of the suit, and the personal representative of another daughter, Caroline, who had died before the institution of the suit. It appears by the answer to the amendment, that Harriet Victoria, who had married a Mr Hynes, has died; and it is insisted that the suit is abated and defective for want of parties, her representatives not being before the Court, and the estates of Caroline and Mrs Ruckly being also not properly represented. No suggestion has been filed, and there has been no revivor.
In answer to these objections, it is insisted that Mrs Hynes’ husband was a party to the original petition, and is in fact her personal representative, in proof of which a copy of the grant of administration to him was offered; and it is said that her father would be her heir-at-law, and Caroline’s, and that he is a party to the original petition. Mrs Ruckly’s heir and personal representative and Caroline’s personal representative are made parties by the amendment, and so far the objections are untenable; but I do not think that I can assume, in the absence of any allegation in pleading or proof, that the interest which Mrs Hynes and Caroline would take if the appointment be invalid, and which would be real estate, necessarily descended to their father; nor do I think that the mere fact that he is a party to the original petition, and that another party to the original petition happens to have become the administrator to Mrs Hynes, dispenses with the necessity of putting this transmission of interest in issue, and reviving the suit. The position and interests of the parties are entirely changed. The personal representative would take nothing in default of appointment, and no appointment could be now made to him. The relief now sought by setting aside the appointment is quite different from that originally prayed. I think, therefore, that there has been an irregularity which the Respondent is entitled to rely on. There has been so much delay and irregularity, that I should have some difficulty in allowing this to be now remedied; but I might do so, if it were the only objection against giving the Petitioner relief.
Upon the merits of the case, in the argument before me, it was admitted that the case alleged, so far as it rests on actual fraud, cannot be sustained, and there is no allegation of any undue exercise of parental influence. The case was rested solely on the proposition that the appointment, being really intended for the father’s benefit, was a fraud upon the power in the settlement of 1809. It follows – and I understood the Petitioner’s counsel to admit – that the mortgage, qua mortgage, cannot be impeached; and I was asked to set aside the appointment merely, leaving the parties afterwards to derive from that what benefit they can. Now, the Respondent resisting this suit, and against whom this relief is asked, is the mortgagee. I do not see how it is possible, if the mortgage stands, that the Petitioner, who is a granting party in it, purporting to convey under this very appointment, can, as against the mortgagee, have this relief. But there is a further singularity in this case; for every one of the objects of the power on whom the fraud was committed have confirmed the appointment. The mortgage not being impeachable on other grounds, they, with full knowledge of the facts, have concurred in it, and thereby made themselves all, with one exception, parties to the transaction, and confirmed the appointment. The married women formally acknowledged the deed. The one exception is Mrs Hynes, who was a minor in 1854; but she attained age many years ago, never disputed it, and her representatives have confirmed it; her administrator having proved in the Landed Estates Court, and her heir – if the petitioner’s allegation that her father is her heir, be true – being conclusively bound. Indeed, if the appointment fails, her interest must be bound by the mortgage; for, as I have said, no new appointment could be made to hers even supposing that the power could be again exercised; and her interest, in default of appointments has descended to her father.
A fraud upon a power as pointed out by Sir P Wood, in Rowley v Rowley Kay 258, is either on the donor of the power, or the objects of it. It is the former when a power to create a burthen on the estate in settlement is used for a purpose not intended. It is the latter – which alone is in question here – when a power to control the devolution of the estate is used to give a benefit to some one not an object of it. When all the objects, on whom only such a fraud could be committed, concur in or confirm the transaction – there being no imposition or undue influence used to procure their concurrence or confirmation – how can any of them complain of it as a fraud? If there had been no appointment at all, and the children had divided the estate in the same proportions as the appointment divides it, it would have been binding, and the subsequent mortgage would not have affected its validity. Had there been no arrangement, and no appointment, the adult children concurring in the mortgage, in the absence of actual fraud or undue influence, would be bound to give effect to it. There is more than their mere concurrence in the deed; for on the faith of this transactions acquiesced in and confirmed by all who could ever take any interest in the reversion, the mortgagee discharged the receiver, and lost the benefit he might have had from the life estate. During the delay of this suit, the whole has been sold.
The argument for the Petitioner must be pressed to this extent, that it is impossible for children entitled in remainder, subject to a power of appointment vested in the father, to concur with him in a mortgage, and that in all such cases undue pressure must be presumed. But, in the absence of some other ground for imputing it, I think, as I have said, that such a transaction would be good if there were no appointment at all; and I do not see the distinction where all adopt and confirm the appointment. In the absence of fraud or undue influence it is in the power of children to contract with each other, as put by Lord Eldon, in Davies v Uphill 1 Swanst 130, to give a parent who has a power of appointment among them an advantage which he otherwise could not have.
I do not think that any argument in favour of the petitioner can be rested on the circumstance that, though the appointment is now adopted as to Mrs Hynes’ share, the mortgage does not bind it, and a larger burthen is thus thrown on the other children’s shares. All the others knew of her minority, and must be assumed to have taken this risk. Indeed, if the appointment be set aside, the curious consequence before mentioned might follow, that her interest passing to her father might be bound, while the petitioner’s would not.
The authority mainly relied on, and I think the only authority cited which bears on the part of the case which I have been considering, is Palmer v Wheeler 2 Ball & B 18. There an estate was settled on a father for life, with an exclusive power to appoint among his children; and, in default of appointment, on his eldest son and his heirs. The father applied to his eldest son for the purpose of getting him to join in securing a debt of the father, subject to which the estate was resettled. The son having died very soon after the father, his heir disputed the appointment. There were two children on whom the appointment was a fraud: to one of whom £1000 was appointed under the settlement, subject to the mortgage. The case is certainly a remarkable one, from the circumstance observed on by Lord St Leonards Sugd Pow p 614, that the son of the appointee, being the only remainderman, was allowed to impeach the appointment, although probably that very appointment prevented one being made in favour of the other objects. But when Lord Manners is dealing with the objection that the plaintiff, claiming through the son, who was a party to the fraud on the power, could not impeach it, he answers it, as I understand his judgment, not by the proposition argued in the present case, that that was immaterial, but by applying to the case another equitable doctrine, not necessarily connected with the rules applicable to powers at all, but applicable to all dealings between father and child. He held that the son’s assent had been procured by the exercise of undue influence, and as he calls it oppression; and he held that, as this continued during all the father’s life, and the son had survived him but a very short time, laches could not be imputed to him. If this were so, the son in the view of this court was in the same position as if he had not concurred even with the father, as he plainly had not with the other objects of the power, who were not parties to the transaction. I have consulted the Registrar’s book for the decree in that case, and I find that it dismissed so much of the bill as sought to set aside the appointment of the £1000, and declared the plaintiff entitled, as heir of his father, to the estates comprised in the deed of appointment, discharged from the mortgage. It would appear, therefore, that the appointment was not set aside at all, except as to some provisions in the settlement inapplicable to the present case. I would infer from the mortgage alone being set aside, that the ground of relief was undue pressure on the son, which the existence of the power enabled the father more effectually to exercise; and that the decision, so far, did not rest merely on the doctrine of this court applicable to powers. The relief, at all events, is wholly different from what is asked here, and such as the decision of the late Master of the Rolls has already determined cannot be given in the present suit.
In deciding the present case I am not to be understood as stating a general rule, or holding that in no case can one who is a party to a fraud on a power impeach it; or even that, when all the objects of the power concur in the transaction, it may not still in some cases be impeachable. I express no opinion upon any such general proposition. The circumstances under which the transaction here is sought to be set aside as a fraud on the power are very peculiar; and I merely hold that, after what has occurred, and in the absence of any proof of any other ground of impeachment of the mortgage, it is not open to the petitioner, as against the Respondent Flanagan on that ground alone to set aside the appointment.
As to the objections which were urged to the frame of the suit, and the inconsistency of the relief now sought with that originally prayed, I express no opinion; but I should perhaps add, that I entirely dissent from the argument urged on behalf of the Respondent as to a previous arrangement or understanding being requisite to constitute a fraud upon a power in cases like the present. I do not think that is so. I disapprove of the letter of the Respondent Flanagan, which is unexplained. I am not satisfied that this is a bona fide suit on behalf of the Petitioner; and that the father, Hamilton Skelton, is not connected with it. I shall dismiss the petition; and, as to the charges of fraud, and the impeachment of the mortgagee’s demand, it must be dismissed with costs.
Greene v Greene
(1845) 8 Ir Eq R 473; 2 Jo & Lat 529 (Chancery)
Sugden LC: In this case a question arose with regard to the rights of the plaintiffs, who are the younger children of a second marriage. The case is one of some difficulty it arises out of a will by which the property was given to trustees, with a very unusual power to them to settle the estate on the sons of the testator, either in fee, in tail, or for life, with such conditions, and so on, as they might appoint. A dispute having arisen after the death of the testator, as might naturally have been expected, a suit was instituted by one of the sons. That was compromised, and the estate was divided into three portions and was conveyed to certain uses in favour of the three sons and their issue. Those uses were to each son for life, then to trustees to preserve contingent remainders, then with a limitation in case he should marry with the consent of the surviving trustee, but not otherwise, that such woman or women as he should so marry should receive such jointure, in a certain proportion to her fortunes as the son should appoint; and in case he should marry with consent, but not otherwise, then that he should have power to charge £500 for the portions of his younger children; and in case he should marry with such consent (this condition being again and for the last time repeated), to the use of his first and other sons, in quasi tail, remainder subject to the appointment of the son to the daughters, as tenants in common in tail and in default of such issue to the other two sons for their lives, with remainders to their issue, subject to the same condition.
The first marriage of Samuel Greene was had with the consent of Powell, the surviving trustee, and a settlement was entered into by which Samuel Greene exercised his power of jointuring, and covenanted that in case there should be one or more younger children of the intended marriage, the trustees should raise the £500 which he had power to charge, to be divided among such younger children as he should appoint, and in default of appointment to be divided among them equally, in the ordinary way.
The Act of Parliament was afterwards passed, for which I am responsible; it permitted persons having a power of this natures not to exclude any child, but to give any sum that the donee of the power might think proper. Treating the first execution of the power as a bad one, and having married a second time, necessarily without the consent of the trustee (for he was dead), Samuel by his will again exercised this power substantially in favour of the children of the second marriage giving but one shilling to the younger children of the first marriage. The children of the second marriage then filed this bill claiming the portions so appointed to them.
The first question is, whether the consent of the trustee to one marriage was sufficient. I am of opinion that it would not have been sufficient if the trustee had been living, particularly as regards the widow, because it is expressly declared, that in case he shall marry with consent, “such woman or women as he shall so marry” shall have the jointure. Nobody is to have it except the woman or women whom he shall so marry; that is, whom he shall marry with consent. In that respect this case is distinguishable from Hutcheson v Hammond 3 Br CC 128. If the case turned on that, I should be of opinion that in this case the consent to the first marriage did not render it unnecessary to obtain consent to the second marriage.
But a different question arises in the case. Powell, the trustee, died before the second marriage. The question is, whether his consent to the marriage is a condition so inseparable from the power that it could not be executed after his death. Mansell v Mansell Wilm 36 was referred to as an authority against the execution of the power, but that case is also distinguishable from this. That, in truth, whether rightly or wrongly decided, was a case in which the Court saw an intention that the power should never be exercised without consent, and held that there was continually a person whose consent might have been obtained if he had thought proper to give it. On the true construction of the settlement executed here, my opinion is, that all the trustee was intended to do was himself personally during his life to have control over the marriage, and as he was no longer in existence his consent to the second marriage was not capable of being obtained. As regards the widow, there is a difficulty in giving effect to this meaning, although I think it should prevail against the technical construction of the words; but there is no such difficulty as to the children. The difficulty as regards the widow arises from the words “woman or women as he shall so marry.” But, as I think that the consent was intended to be a condition only during the lifetime of the party whose consent was required, I do not hesitate to struggle with the words and give effect to the intention. The frame of this settlement satisfies me as to that. By the will the sons were to take the estate in fee as tenants in common in default of a settlement by the trustees and if the preliminary condition imposed by the settlement, viz, the consent of the trustee, was such as might prove impossible to be complied with, from not supplying a new trustee, ex gr, then the whole settlement would have been defeated, and the sons would fall back on their estate as tenants in common in fee under their father’s will. Therefore, on the whole, my opinion is, that the consent of the trustee was not so inseparable as to prevent the execution of the power after his death.
As to the objects of the power, I am bound to follow Lord Eldon’s authority in Burrell v Crutchley 15 Ves 544, and hold that the deed of one 20th of September 1786 includes all younger children. By the settlement executed before the first marriage, and therefore for valuable consideration, independently of the marriage portion of the wife, the power was exercised, and the £500 was directed to be raised. That was a good execution of the power to raise the £500. But then it was appropriated exclusively to the children of that marriage, and that now is not a due execution of the power. It might, however, have been a due execution of it, and was not void on the face of it; for non constabat that Samuel would ever marry again; he might not have had power to do so, for his wife might have survived him; and if he had not married again, the power would have been properly exercised, because the execution of it would have included all his younger children. Therefore that was not necessarily and on the face of it a bad execution of the power, although liable to become so by the birth of children of another marriage. I quite agree that, if a man executed a power imperfectly, and there is nothing in the way of contract to prevent the re-execution of it, he may afterwards execute it formally. Therefore I think that the mere previous execution was no impediment in the way here, and that Samuel Greene had still the ability to exercise his power in a valid manner. But then, this important question arises – Could he exercise this power as against the younger children of the first marriage so as to defeat the contract to provide for them, made by the settlement on his first marriage? There is no doubt, both on authority and principle, that a man having a power may, in defeasance of that power, impose conditions on the exercise of it. He may release the power. He may enter into a covenant so as to bind the execution of the power, and this Court will execute that; or he may covenant not to execute the power, and that too will be good, provided in these cases there be a sufficient consideration. If he exercises the power, he must execute it properly; but he may bind by contract that which is a benefit to himself, though it operates directly as a benefit to his children. He may deal with it in any manner so as to bind himself within the limits of his authority as to its exercise or non-exercise. Here Samuel Greene bound himself by his marriage settlement to exercise this power by appointing in favour of the children of the first marriage, reserving nothing to appoint to other younger children. The second marriage necessarily put an end to that, and he could no longer apportion the sum among the children of the first marriage exclusively, as the settlement directed; for the children of the second marriage became entitled with them, and therefore the power to appoint among them became incapable of being exercised. But in default of appointment, the younger children of both marriages are to take the fund among them equally. Is this not in effect a contract by him, so that so far as he could bind the power, his younger children of the first marriage should take the sum, or as much as he can give them, equally between them? And was he at liberty by his own voluntary act to defeat that contract? I am of opinion that he was not; that he had bound himself so far as he could to give effect to the first settlement; and that he could not by a voluntary disposition defeat the provision which he had already made.
Then, what am I to do with the case? I consider the first settlement no longer operative as an execution of the power of appointment. I am of opinion that there cannot be an exercise of the power so as to defeat the interest which the children of the first marriage would take as between themselves and the children of the second marriage. The conclusion, therefore, to which I have come, but not without considerable difficulty, is, that the children of the first marriage and the children of the second marriage take the fund equally between them. I am not called on by the frame of the bill to consider whether the power could be exercised over that portion which belongs to the younger children of the second marriage, because they have filed a bill, content to take whatever they are entitled to. Therefore, meaning to act within the authorities, and not to strain the rule of law, but at the same time meaning so far as I can carry the contract of the parties into effect, and to do that justice to the children of the first marriage to which they are entitled. I shall hold that the £500 belongs to all the children of both marriages as a class, and that the father, after the settlement, could no longer deprive any of the younger children of the first marriage of the share he would take as one of a class in default of a fair exercise of the power in the sum directed to be raised, which was no more than would be a valid execution of the power in the first instance.
I shall, therefore, give a decree for the plaintiffs, and declare that they and the two younger children of the first marriage are entitled to share the fund equally between them, as the younger children of their father. The widow is to be at liberty to go before the Master and establish her right if she can and if she succeeds in establishing it, declare her claim the first in priority. The costs of raising the money must come out of the estate. That has been often questioned, but I think they ought to come out of the estate. I do not mean the costs of the suit, but only the costs of raising the money.
Declare that the younger children of the first marriage, and all the children of the second marriage, take the sum of £500 in the pleadings mentioned, between them as one class; and that the plaintiffs in this cause are entitled in the events that have happened, and under the instruments which have been executed, to their portions of the said sum of £500, accordingly. Let the expense, if any, of raising said monies, be borne out of the estate; and let the costs of all parties to this cause be paid out of the fund.
Declare, that the defendant Frances Greene, otherwise Moffett, having married Samuel Barker Greene, deceased, in the pleadings mentioned, after the death of Caleb Powell, in the pleadings named, his consent to the said marriage was not necessary to enable the said Samuel Barker Greene to charge his portion of the lands in the pleadings mentioned with a jointure for the said Frances Greene; and let the said Frances Greene be at liberty to go before the Master, and establish her right to the jointure in her answer in this cause mentioned; and if she should established it, declare that she is entitled to have the same provided for her out of the lands, &c.
Pennefather v Pennefather
(1873) IR 7 Eq 300 (Chancery Appeal)
The facts are set out in the judgments.
Lord O Hagan LC: This case comes before the Court by way of appeal against a decree of the learned Vice-Chancellor, which was pronounced on the 5th of November 1872.
Some time has elapsed since it was argued before us, and I shall make my judgment more intelligible if I briefly state the circumstances out of which it has arisen.
By an Indenture of Settlement, dated the 15th of November 1852, and executed on the marriage of William Pennefather and Kate Scott, William Pennefather granted and demised to certain trustees the lands and premises described in it, to hold for the term of 1000 years from the solemnisation of the marriage, upon trust, inter alia, in case there should be two children of the marriage, to raise the sum of 3000 for their portions; and if there should be three or any greater number, to raise the sum of 4000 for the portions of those children. And the settlement reserved to William Pennefather a power of appointment amongst the children of those sums of 3000 and 4000, and in default of his exercising it, a similar power to Kate Scott, his intended wife, and in default of its exercise by her, then the 3000 or 4000, as the case might be, was to be divided amongst the children equally, at the times and in the manner prescribed by the deed.
There were ten children issue of the marriage – five boys and five girls. William Pennefather, who was the father of the plaintiffs, the five sons, and of the defendants, the five daughters, made his will on the 9th of October 1866; but did not, as is conceded on both sides, exercise by it his power of appointment. He directed the sale of all his landed property, the produce to be divided so as to give three of his daughters 1000 each, and the residue, after paying off all incumbrances, to go equally amongst his five sons. It is not necessary to state the bequests more fully. To that will he made a codicil, dated 26th May 1869, on the construction of which the question in this case has been raised, as between the sons and the daughters. That codicil is in these terms: (His Lordship read the codicil.) William Pennefather made a further codicil on the 31st of May 1869, but did not, by it, execute his power of appointment, or in any way alter or affect the character of the former codicil, so far as it dealt with the trust fund of 4000.
In this state of things, William Pennefather died on the 2nd of June 1869.
It is conceded, that William Pennefather never executed the power of appointment by any deed or deeds, and that it remained unexecuted, save in so far as the codicil of the 26th May 1869, unrevoked and unaltered by the subsequent codicil, may be held to have been a valid execution of it.
Mrs Pennefather survived her husband. The children were made wards of the Court of Chancery. The lands comprised in the term of 1000 years were sold, in accordance with the directions of the will of William Pennefather, and the sum of 4000 was paid into Court. The expectations of the testator as to the produce of the sale were disappointed; and a controversy then took place as to the effect of the first codicil to his will, and its operation as an execution of the power of appointment. Under the advice of counsel, Mrs Pennefather made a deed-poll of the 18th of June 1872, by which she purported to execute the power as still existing. She gave 1100 to her son, William Pennefather, and 600 to each of her other four sons; and, thereupon, on application to the Court, it was ordered that a proceeding, by way of special case, should be instituted in order to obtain a decision on the effect of the codicil as an execution of the power. Under this order, two questions were submitted for the Vice-Chancellor s opinion – viz, Whether the codicil of the 26th May 1869, to the will of William Pennefather, operated as an execution by him of the power of appointment reserved to him by the indenture of marriage settlement over the sum of 4000, raiseable under the trusts of the term of 1000 years thereby created, as and for the portions of the children of William Pennefather and his wife? And second, who should pay the costs of the special case and of the proceedings incident thereto?
In answer to the first of these questions, the Vice-Chancellor decided that the codicil operated as an execution of his power of appointment by William Pennefather; and, to the second, that the plaintiffs and the defendants respectively were entitled to the costs of the incidental proceedings out of the sum of 4000. After much consideration, I have felt myself constrained to differ from the learned Judge as to his answer to one of the queries, whilst I adopt his answer to the other.
The principles which are applicable to cases such as this are well established, and no longer open to contention or cavil. In the latest of the cases to which our attention has been called, Garth v Townsend LR 7 Eq 223, the true test is suggested by Lord Justice James in the question – Is there a distinct intention to execute the power? It is always a question of intention – and of distinct intention. Before we can hold that a power has been executed, we must satisfy ourselves that the donee of it intended its execution, and acted distinctly for the purpose of executing it. Lord St. Leonards says (Sugd Pow 350), It is the intention that in these cases governs; therefore, where it can be inferred that the power was not meant to be exercised, the Court cannot consider it as executed. And Lord Thurlow put it in strong language, which has been since approved, in numerous cases, that the act which can be deemed an execution by the donee of a power must be of such a character, that it is impossible to impute to him any other intention than that of executing the power: Andrews v Emmot 2 Bro CC 303. I need cite no other authority to show that the question is of intention, and of intention distinct and unequivocal, which, according to Lord Tenterden (Denn v Roake 10 Moo 142), should be clearly demonstrated or manifested by the will.
We have next to consider how such an intention can be so demonstrated? And this, according to the cases, may be done either by an express reference to the power, and a specific declaration of the purpose to execute it, or by a reference to the subject-matter on which the power was designed to operate, and a plain indication of design to do such acts in relation to it as can only be accomplished by the execution of the power. It is not necessary, in this second view of the matter, that there should be a recital of the power, or that the donee of it should consciously design to execute it, or even that he should be aware of the possession of it, at the moment. If he intends to convey property or arrange it in such a mode as makes the exercise of the power an essential condition of its validity and effect, the presumption will be, that he did intend to execute it. Lord Romilly states the doctrine thus in Carver v Richards 27 Beav 495: It is, as I consider, the rule of this Court, that if the intention to pass the property, subject to the power, be clearly established, even though the intention to dispose of it under or by virtue of the power is not shown, still that equity will give effect to the disposition, and hold that the property passes under the power.
It is important to observe that in all the cases in which intention to execute the power has been presumed in the absence of specific reference to it, the intention on the part of the donee to pass the property, or do an act with reference to it operative under the instrument which he signs, has been clearly indicated. He must intend to make the gift which is to be validated by implication. In Adams v Adams 1 Hare 540, the Vice-Chancellor says:
Where a testator in one part of his will has recited that he had given a legacy to a certain person, but it has not appeared that any such legacy was given, the Court has taken the recital as conclusive evidence of an intention to give by the will, and, fastening upon it, has given to the erroneous recital the effect of an actual gift. Where, however, the testator says that only which amounts to a declaration that he supposes the party who is referred to has an interest independent of the will, such a recital is no evidence of an intention to give by the will, such a recital is no evidence of an intention to give by the will, and cannot be treated as a gift by implication.
The distinction between the two cases is obvious. In the former, the erroneous recital is evidence of an intention to give by the will, inadvertently not expressed. In the latter, as is observed by Mr Jarman, such recitals do not in general amount to a devise: for, as the testator evidently conceives that the person referred to possesses a title independent of his own, he does not intent to make an actual disposition in favour of such person. And so, I think, it will be found that, in the various cases adopting the doctrine that the execution of a power must be presumed when it is necessary to validate an act, the act has been always the act of the donee – the gift has been the gift of the donee, meant by him to have effect from himself, of his own will and by his own authority, through the instrument which he executes, and not through some other, establishing a title independent of him and not believed by him to derive force or validity from any interest or choice of his. So it was in Andrews v Emmot 2 Bro CC 303. So it was in Innes v Sayer 3 M & G 606. So it was in Hunloke v Gell 1 Russ & M 525, and in Maples v Brown 2 Sim 326. In all these cases, and many others, the want of a reference to the power involved the necessity of mention of the property which it affected, and of that property as dealt with by the owner of the power and by the instrument held to execute it. If this be absent – if the property be not so dealt with – there can be no presumption of intent that the power has operated. And, further, if there be not only such absence of presumable intention to execute, but proof that the owner meant not to execute it, the presumption becomes still more clearly impossible.
These seem to me the principles deducible from a careful consideration of the authorities; but though they are very intelligible in themselves, they are sometimes difficult of application. It is often, as was said in Carver v Richards 27 Beav 496, extremely difficult to distinguish or define the limits between an intention not to execute a power, and the case of no knowledge of the existence of the power; in which case, strictly speaking, there is no intention to execute it; while, in the former, there is an intention not to execute it. The facts from which such intention and such absence of intention are to be inferred may very often run very near to each other, and possibly lead in some cases to very nice and perhaps technical distinctions. And I am not sure that, in the cases before the Court, I might not fairly borrow the words of the Vice-Chancellor in Westcott v Cullingford 3 Hare 269, and say that satisfactory reasons might be stated for a decision in favour of either the plaintiffs or the defendants.
But, some things are manifest. There is not in the codicil with which we are dealing any reference to the power created by the settlement, or any declaration of a design to exercise that power. And, therefore, it cannot be considered to be an execution, within the principle affecting the first class of cases to which I have adverted. The question is – does it come within the principle governing the second class? Has the testator done such an act, in relation to the trust fund of 4000, as would require for its validity the execution of the power, and so demonstrated an intention to execute it? Or, having done no act in relation to that fund, and leaving it to be operated upon not by his will, but by the provisions of the settlement, which he believed, erroneously, to have put it beyond his control, has he failed to demonstrate any such intention?
It is, further, plain that the testator acted in error when the codicil was signed. He believed that his daughters were actually entitled to the 4000. He did not advert to the estate given to his wife, and the power vested in her after his own decease, and he assumed that, without intervention of his or hers, the trust fund was vested distributively in the children.
Making the assumption and acting upon it, he added to the bequests given by his will to his daughters, and directed that his sons should not receive any portion of the produce of his estate until those bequests and the 4000 should have been paid off. But, quoad the 4000, this provision added nothing to the operation of the will, which only gave the sons the residue after paying off all incumbrances, including that 4000, which the settlement had charged upon the estate.
Now, in this state of facts, have we any grounds to say that the action of the testator, as to the 4000, was such as to warrant the imputation of intention necessary to the Respondents case? Did he affect to pass any property in it? Did he purport to make any gift? Did he pretend to do any sort of thing which would have needed the exercise of the power to give effect to it? It appears to me that he did not. He gave legacies to his daughters; he imposed conditions on his sons. In these things he was active – manifesting intention, and giving it force: but, as to the 4000, looking on it as vested in his daughters, he left it as he found it, exerting no volition, and shaping his course in the belief that he could not exert any. There is no indication that, by the will, he meant in the least degree to deal with the interest of his daughters in the 4000. He treats it as a thing disposed of by another instrument, irrespective of any purpose of his, and incapable of being made subservient to any. Mr Jarman (Wills, I 490) considers the case of a testator showing by a recital that he incorrectly supposes a third person to have title to property belonging to himself, and he says:
Such recitals do not amount to a devise, for, as the testator evidently conceives that the person referred to possesses a title independently of any act of his own, he does not intend to make an actual disposition in favour of such person; and though it may be probable, or even apparent, that the testator is influenced in the disposition of his property by the mistake, yet there is no necessary implication that, in the event of the failure of the supposed title, he would give to the person the benefit to which it is assumed he is entitled.
And he cites in support of this proposition the case of Wright v Wyvell 2 Vent 56, where it was held that certain expressions, erroneously implying that lands had been settled on a widow, did not amount to a devise, on the ground that the testator did not mean to devise her anything by his will, for he mentions that she was estated in it before. And so here, the testator can scarcely be held to have intended to exercise a power in disposing of property to which he declares that his daughters are already entitled, and which he does nothing whatever to effect.
If there had been only a reference in the codicil to the 4000, and the interest of the daughters in it, as given by and under the settlement, could it have been considered an execution of the power? Could it then have been said that there was any intent to execute it? And yet that seems to me exactly what is, in substance, set forth in the codicil as it stands. The daughters are said to be entitled to the fund. How entitled? Only under the settlement. They had no other title. And is not the implicit reference quite as effectual as if it had been express, to negative the notion that the title, so created and so subsisting under an anterior instrument, could be and was meant to be made better or worse by the exercise of a power unnamed and unthought of?
Or, suppose there had been no reference whatever to the 4000 in the codicil, would not the effect on the daughters have been precisely the same? Would not they have taken, in addition to the several legacies of 1000 each, whatever the settlement secured to them, and nothing more?
The codicil seems to me to have been designed not to alter the disposition of the settlement, but, by reference to it, whether correct or erroneous, to guard against any presumption that the legacies were meant to stand in substitution for the 4000, but not to alter the fixed relations to, and interest in, that fund, whatever they might be.
We have been pressed by an argument, founded on the provision that the sons shall not have the produce of the sale of lands until the legacies shall have been paid to the daughters, over and above the equal distributive share of the 4000. But this ignores the condition of the will that the sons shall only take their share of that produce – after paying off all incumbrances, one of which was the trust fund in question; so that, as I have already said, the codicil made no change in that regard.
The attention of the learned Vice-Chancellor does not appear to have been called in any way to the terms of the will, which in this respect, are material for consideration. The testator only applied the general provision for the discharge of incumbrances to one of them specially, leaving it to be determined from the settlement, under which he believed the daughters to be entitled what was its character and effect.
I do not, therefore, see evidence of that clear intention to execute the power which governs in such cases. Whilst, on the other hand, if there be necessity for observing the distinction, it has not unfairly been urged that an intention not to execute it is more apparent when we find the testator – in error, it is true, but according to his own conception and belief, – alleging a title in his daughters which could really have accrued to them only by reason not of the execution, but of the non-execution, of the power. They were to be entitled under the settlement to equal distributive shares, if that power remained unexecuted by their father and their mother: and when we find the father averring that they are entitled to such shares, is there ground for the inference of intent to execute it? Or is it not rather to be inferred that he did not contemplate for himself or his wife any such execution? If, as it seems to me, he dealt with the 4000 as disposed of definitively and beyond his control, by the settlement, it is not easy to reach the conclusion that the title he assumed, erroneously, to exist was helped by any execution of a power which, by its exercise, would have removed the conditions creating the very foundation of that title.
For these reasons, I am of opinion that the codicil ought not to be held an execution of the power. I do not think that any of the authorities cited to support the opposite view do really sustain it, when well-considered. In none of them has intention been presumed, under such circumstances as exist in this case to negative it, or without such proof of purpose to do an act, or make a gift necessitating such a presumption for the purpose of its validity as, in my judgment, is wanting here.
It has been argued that, though an erroneous statement of a person s rights, independently of the will, and a clear intention to do him a service, will not avail to give him those supposed rights, it is otherwise when the testator has made his arrangements relying on the correctness of his own mistaken assumption. But I do not find that, without clear indication of intention, this doctrine has ever been applied; and in Westcott v Cullingford 3 Hare 272, which Mr Jarman (I 492) cites to sustain it, I observe that Sir J Wigram makes the matter clear, distinguishing that case from Adams v Adams, also decided by himself, to which I have already had occasion to refer, and which had been pressed on him as warranting the refusal of the relief which was sought. In that case, he says, I refused relief to the widow, because I could not find any expression of intention to confer any benefit on her by the will itself. And so, in this case, although there is indication of a clear intention to bestow the legacies by the codicil, there is none of such an intention to bestow by it the 4000, although the accomplished fact of its bestowal by the settlement is asserted and connected with the bequests probably for the purpose I have already suggested.
Then we were very properly pressed by the considerable authority of Wilson v Piggott 2 Ves Jun 351. But that case is clearly distinguishable upon its special circumstances, as pointed out by Lord St Leonards (On Powers, 202). There, an erroneous recital in a settlement described the intended wife as entitled to 1000, and to another sum, both of which would belong to her husband. In the settlement, says Lord St Leonards, he (the father) declares her entitled to this sum, to which she could only be entitled by his appointment, and the husband makes a settlement in consideration of it. He could have compelled the father to execute the appointment. It is a covenant by the father. And again: As appointments had been made to some of the other children, there was no mode in which Sarah could take a full fourth, except by an appointment, and the recital was treated as a contract with the husband that he should have the 1000, which was treated as a contract to exercise the power. I need not dwell on the manifest points of distinction between that case and this. The contract, the covenant, the consideration, the necessity of appointment – all are absent here. But, on the other hand, we have a wife who brought to her husband a substantial fortune, and, in consideration of it and of marriage, purchased the power which her husband, who was no purchaser, could not take from her but by his own previous exercise of it in favour of his children. She has exercised that power after his decease, and it has been not unreasonably urged, that we ought not lightly to declare her execution of it a nullity, or strain equitable principles, or go beyond decided cases, to deprive her of a right which she claims for the benefit of her family.
And this brings me to the last observation which I shall make. It is said that, if the codicil be not held an execution of the power, we shall defeat the testator s intention in favour of his daughters. I answer, first, that it is not enough for us to find he had a desire to serve them; we must find whether he meant to execute the power. In Garth v Townsend LR 7 Eq 221, the mother s purpose to benefit her children and her relations was expressed strongly and with minute details, but it failed of effect, because her power was left unexecuted. Next, I see no reason why we should be astute to maintain the execution by the, at the least, obscure and equivocal codicil of her father, as against the mother s distinct and unmistakable execution by deed. And, finally, I feel some relief from anxiety as to the consequences of our decision, when I remember that, confessedly, the testator acted in error as to the operation of the settlement, and in worse error as to the state of his property, and that, in sustaining the action of his wife, warranted by accurate knowledge of the law and facts of the case, we not only, in all probability, are doing that which is practically best for his family, but that which he would himself have done, if he had lived to obtain that knowledge.
On the whole, I am of opinion, on the first question differing from the learned Vice-Chancellor and on the second agreeing with him, that the codicil was not an execution of the power, but that the costs of both parties should be borne by the trust estate.
Christian LJ: Although the question which this special case has invited the Court to answer is whether a power has been exercised, nevertheless, the case is quite unembarrassed by the specialities of that kind of learning. It is simply a question of construction of a few words of a codicil. If, by construction, we can educe an intent to alter existing rights, the power has been exercised. If we cannot educe that intent, the power has not been exercised. What, as matter of mere construction, is the true meaning of this passing and parenthetic reference, which, while distributing among his children property that was his own, the testator has made to other property which was theirs already, but over which he had a distributing power? Did he make this allusion to the settled fund with the purpose of putting his will in the place of the settlement, as the distributing instrument, or rather with the purpose of excluding all idea that his will should interfere in any way with the settlement? That is the whole question, and it is purely one of construction.
It sometimes happens that the argument in favour of a particular instrument operating as an exercise of a power is aided conclusively by the nature and occasion of that instrument. A contract for valuable consideration stands in this, as in so many other particulars, on a very different footing from a merely voluntary act. For example, supposing that the clause in question, instead of being in a will, were in the recitals of a settlement on the marriage of one of the children, and the settlement had then gone on (the father being a party to it) to settle to the uses of the marriage the subject matter of the recital, there, although, literally, the recital would be but a reference to an existing right, and not an expression of intent to create a new one; nevertheless, there could be no doubt at all but that the power would be well exercised. For there the thing would speak for itself. The occasion would construe the act. The necessities of the contract, the obligation to keep faith with the parties to the marriage treaty, would make it necessary to hold that the father of the intended wife had done what he had the power to do, and what he in effect contracted to do. It would be simply Wilson v Piggott 2 Ves Jun 351, and Poulson v Wellington 2 P Wms 533, over again. But such guidance is wholly wanting when the instrument is a will. There the occasion furnishes no aid to the construction. You have nothing to go upon but the words that have been used. There is no bias in favour of the power being exercised. Rather (if anything) the other way, for the burthen of construction is on him who asserts that it has been exercised. It is for him to show that the widow s right to a survivorship of the power, and the other children s chances of a survivorship of the fund, have been taken away or diminished by the will of the husband and father. As Lord Redesdale once expressed it, Blake v Marnell 2 B & B 38, n(a), When a person voluntarily executes an instrument which may have effect under a power, he must demonstrate that he meant to execute the power; but when a person acts for valuable consideration, he is understood in equity to engage with the person whom he deals with to make the instrument as effectual as he has power to make it.
The degree before us declares that the will operated as an execution of the power but, strangely enough, it has not told us how. The parties interested are left to find out as best they can what rights this appointment created, and in whom. This is the more unfortunate, as the two learned counsel who appeared in support of the decree were unable for a time to agree as to those matters amongst themselves. In the leader s view, it was an appointment of the whole fund to all the ten children in equal shares; but the junior thought that it operated only to give 400 each to the five daughters, leaving the remaining 2000 unappointed. The leading counsel gave us his idea as to the exact modus operandi with which the will did exercise the power. It was, he said, this – it stereotyped (I think that was the word) that clause of the settlement which provided for a default of appointment; by which I understood him to mean that the testator took that clause, which was in itself, of course, liable to be defeated at any time by an exercise of the powers, and made it indefeasible by adopting it as his appointment. Well that does seem to be a somewhat whimsical, not to say fantastic, mode of accomplishing a very simple purpose. If the testator wished to divide the whole fund among his ten children, as one counsel thought, or half the fund among his five daughters, as his learned colleague thought, he might have said so in plain words, instead of stereotyping a clause in another instrument, which was meant for the case of there being no appointment at all. It scarcely prepossesses one in favour of a contention to find it needing such far-fetched support. But is there no construction which will give to this clause a signification more simple and natural?
One thing is plain. The main purpose, at all events, for which this testator proceeded to make his will was that of disposing of his own property. If it were not for this parenthesis thrown in near the end of the codicil, the conclusion would be inevitable that he had either forgotten his marriage settlement, or intended to ignore it. There is no recital of it, no recognition of the charge it had created, still less any intimation of an intention of exercising his power over that charge. He treats the estate as all his own, measures the amount of the purchase money which he expects the sale of it will bring, and then goes on to distribute the whole of that as if it were all subject to his will. Each daughter is to have 1000 of it, and the residue is to be divided among the sons. And with the purpose merely of making it clearer that it is residue only that the sons are to have, and that the daughters legacies are at all events to be secure, he goes on to direct (in the codicil), that no part of the produce of the sale of my lands shall be paid to any of my sons until the said sums of 1000 each shall have been first paid to each of my said five daughters, or 5000 amongst the survivors of them, – and then there follows the first and only reference to the marriage settlement, which the will contains, being the clause which has given rise to the present question – over and above and in addition to the equal distributive share of the 4000 mentioned in my marriage settlement which each of them are entitled to.
It is plain that if we construe that clause strictly within itself, it is no more than a reference to the existing status quo under the settlement, and does not aim at being constituent of a new or altered state. That is self-evident, and comment could not make it plainer. Nor was it disputed. The argument in support of the decree was that we must not keep within the clause itself, but must carry down into it the word paid from the preceding branch of the sentence, and that, thus aided, the clause amounts to a positive direction by the testator that each daughter shall be paid that share of 4000, which she would only presumptively take by way of distribution under the settlement in the event of no appointment being made. I say each daughter, for I entertain no doubt that if the clause could operate as an appointment at all, it would be according to Mr O Brien s view, that is to say, 400 to each daughter, leaving the remaining 2000 unappointed. But can you, in sound construction, so modify the clause? It is clear that to do so is not a grammatical requirement. Grammatically, the word paid is applied specifically to the five sums of 1000, part of the proceeds of the sale of the estate, and there is no pretence for carrying it on to the other subject, unless to do so be a necessity of the conjoining of the two subjects. But is there any such necessity? Cannot these two subjects be conjoined, in the sense of being cumulative the one upon the other, without necessarily importing into the one all the attributes of the other. The one subject is the legacies given by the will, as to which it is directed that they shall be paid, and in certain priority; the other subject is, the equal distributive shares. which the legatees are already entitled to, dehors the will, and which may or may not ever issue in payment at all, according as the daughters shall or shall not attain the prescribed times of payment. Why are we to import into the description of this latter subject an element which that description does not contain or require? The description has a subject-matter, which in its own unaided language it precisely and accurately fits, namely, the presumptive distributive share of each child under the non-appointment clause in the settlement. Why not allow the clause to be satisfied by that subject-matter, instead of wresting it to a purpose for which its own language is inappropriate? For the argument of the plaintiff s counsel requires that we shall not only import a foreign term into a clause which, without it, is perfect and satisfied, but that we shall reverse the language of the clause itself. For if it were held to enure as an exercise of the power, then the daughters shares, instead of being distributive, would be taken out of distribution, and instead of being interests which they are entitled to, would be interests which they would be, by the will, for the first time, made to be entitled to. The thing which is to be over and above and in addition to the legacies, instead of being, as the clause describes it, an existing right, in shares distributive, is turned into a new-made right, in shares no longer distributive; so that, to use the clause in the way that counsel seek to do, it must be subjected to a double violence – interpolation and rejection – both alike uncalled for and arbitrary.
If no motive could be assigned for the clause save that exercising the power, there would, of course be, so far, a reason for allowing it so to operate. But its presence can be accounted for in a way much more accordant with the general tenor of the will. To pass over the settlement altogether in silence would be sure to give rise to questions which would scarcely fail to issue in litigation. One of them was referred to by Mr McDermott – satisfaction, upon the equitable doctrine of presuming against double portions. The other would be, election. It will be seen at a glance that if the will had been without this clause, it would contain all the elements for raising, if not a case of actual satisfaction of the portions by the legacies, at all events, a case of election between them. For, until we come to this clause, we find that the testator has been, both in will and codicil, treating the family estate as at his absolute disposal, and making testamentary distribution of the whole proceeds of the intended sale. But we know that the settled fund consisted in a charge upon the same estate, and would therefore come into collision with the will; so that you have at once the inconsistency which would put the children to their election between the settlement and the will. It is true that in the early part of the will he refers to incumbrances: the residue of the proceeds of the sale of the property, after paying off all incumbrances, which would prima facie include the settled 4000. But these incumbrances are afterwards, in the codicil, referred to as the mortgages, and upon the tenor of both instruments the argument would be strong, if not invincible, that by incumbrances he meant outside incumbrances whilst as to so much of the proceeds of the sale as would be available for his own family, he intended that that should be distributed and governed exclusively by his will. Thus you would have distinctly raised, first, a question of actual satisfaction of the portions by the legacies; secondly, failing that, then one of election between them. But the addition of the clause under construction at once puts an end to both those questions, for it contains the testator s explicit declaration that the legacies he is giving to his daughters shall not interfere with their settled portions, but shall leave those simply as they were.
Having, then, a clause couched in language simple and unambiguous, which has a subject to which that language, taken in its own ordinary and natural signification, is most germane and appropriate, and for which, confining it to that subject, a motive and a purpose substantial and sufficient are assignable; why are we, in construing this voluntary instrument, to depart from an interpretation which combines in it all those advantages, for the sake of adopting one which cannot be approached without doing violence to the language? Why are we to force construction in order to take away from the widow that check upon her infant daughters which the survivorship to her of the power under the settlement would afford, and from the sons the chance of being bettered in their condition which the same power would supply?
To test the argument further. Let us look a little more closely into the consequences to which it would lead. If the words shall have been paid can be carried down so as to be applied not only to the legacies of 1000 each, but to the distributive share of the 4000 also, the whole sentence will then run so that no part of the produce of the sale of the lands can be paid to any of the sons until not only the 1000 legacies, but the distributive shares of the 4000 also, shall have been paid to the daughters. Now, when was that to be? The will is itself wholly silent as to the times of payment of the distributive shares; it merely refers to the settlement. Now, the effect of that was, according to the argument, to adopt for an appointment by will the non-appointment clause in the settlement. It is to the latter clause therefore that we must look for the times of payment of the shares. Well, when we do so, what we find is this: The shares are not to be paid until after the death of the survivor of the husband and wife. Now, the widow might survive her husband for so many years as that the sons might have passed middle age before the day of her death arrived. Thus, they might be kept absolutely penniless for the best part of their lives. By the settlement (adopted into the will) they could not claim a farthing of the 4000 during their mother s lifetime, at least, without her consent, and by the coupling together the two subjects in the way the plaintiff s counsel contend for, they would be prevented from claiming a farthing of their father s legacies either, until after the same period.
I do not myself appreciate a difficulty which seems to have been felt below, namely, that confining this clause to its own natural signification of saving existing rights, not creating new ones, would enable the widow, by means of the power thus preserved to her, to convert equality of portions into inequality. To put it in that way is really to beg the question. The very object of such powers in settlements is to enable that very thing to be done. It was in the highest degree desirable that the surviving mother should retain over her five young daughters, made partially independent of her, as they were, by their father s legacies, that amount of control which the survivorship of the power over the other fund would confer: and it should not be presumed that her husband intended to deprive her of it, unless, to borrow Lord Redesdale s language, he has demonstrated that he meant to do so. Nor is the word equal in the least opposed to this. It is merely part of the description of the existing status quo – equal distributive shares which they are entitled to. Equality in all conditions is a characteristic of shares, so long as they remain merely distributive equal in amount, presumptively, but equal also in their common liability to be increased or diminished by an exercise of the power.
Upon the whole, I am of opinion that this testator has not evinced any intention, either by consciously exercising the power, or in any way, to alter the condition of the subject fund. On the contrary, I think he has most distinctly conveyed it to be his will that the gifts he was making out of his own estate should be without prejudice to the settlement.
The Vice-Chancellor s declaration must therefore be discharged and a declaration in the contrary sense substituted. The costs of the special case at both sides, both below and here, will come out of the special fund.
Notes
See further, Wylie, Irish Land Law (3rd ed, 1997, Butterworths) para 11.15
Moffett v Lord Gough
(1878) 1 LR Ir 331 (Court of Appeal)
The facts are set out in the judgments.
Sullivan MR: The plaintiff has filed his bill to obtain the aid of this Court, as against Lord Gough, to make good a lease of the 12th July 1851, executed by a tenant for life under a leasing power, alleging a mere formal defect in the execution of the power, and praying that Lord Gough, the remainderman, should be decreed specifically to perform the terms of the lease as a contract binding upon him. The case which the Rev Mr Moffett presents is as follows: He sets out the will of Benjamin Bunbury, dated the 10th September 1820, and proved on the 20th November 1823. Under it the fee of the three denominations of land included in the lease of 1851, viz, Clonken, Cordevin and Trillickatemple, became limited to Thomas Bunbury for life, with remainder to his first and other sons successively in tail male, remainder to Kane Bunbury for life, with remainder to his first and other sons successively in tail male, remainder to Sir Hugh Gough (under whom the defendant Lord Gough claims) in fee. The will conferred a leasing power on the tenant for life for the time being, in the following terms:
I do hereby declare that it shall and may be lawful for each and every of the several persons to whose use the several estates, lands, hereditaments and premises is or are limited as aforesaid, when they shall respectively be in the seisin and possession thereof by virtue of the limitations in this my will contained, to make any lease or leases of all or any part thereof for the term of one, two, or three lives, provided such demise or demises be made by indenture to be duly signed and sealed and delivered in presence of and attested by two or more credible subscribing witnesses, in possession, and not in reversion, or by way of future interest, and so as by every such lease there be reserved and made payable during the term to be thereby granted a fair improved yearly rent for the premises to be therein comprised, without taking any fine or premium for or in respect of the making thereof; and that in every such lease there by contained the usual clauses of entry in default of payment of the rent to be thereby reserved, and that such leases shall not be made dispunishable of waste, and that the lessees therein to be respectively named shall execute counterparts thereof.
In 1851 Kane Bunbury was tenant for life in possession under the will, and had that power vested in him. It appears that of the three denominations of land comprised in the lease of 1851, two, viz, Clonkeen and Cordevin, containing together 168A 3R 11P, had been leased by the testator Benjamin Bunbury to a Rev Robert Moffett, grandfather of the plaintiff, on the 10th November, 1787, for three lives, at the yearly rent of 138 14s (Irish), and in that lease there was contained a covenant that the lessee, his heirs, executors, administrators and assigns, would during the demise preserve, uphold, support, maintain and keep the demised premises, and all improvements made and to be made thereon, in good and sufficient order, repair and condition; and at the end or other sooner determination of the demise would so leave and yield up the same to Benjamin Bunbury, his heirs and assigns. The lands of Trillickatemple (the third denomination in the lease of 1851), containing 106A 1R 0P together with 39A 1R 21P of bog, had been leased on the 27th July 1795, by the same Benjamin Bunbury to the same Rev Robert Moffett, also for three lives, at a rent of 132 16s (Irish), with a covenant substantially the same as that I have already read from the lease of 1787. Jane Moffett, one of the lives named in each of these leases, having survived the other lives named therein respectively, was still living on the 12th July 1851. There is no evidence in the cause that she is even yet dead; but it was stated at the bar that she died in the year 1863. The lease of 1851 from Kane Bunbury (which the plaintiff obtained under very peculiar circumstances indeed) demises the three denominations of land comprised in the two old leases for three new lives, one of them being that of the Prince of Wales, and another that of a boy then about thirteen years old. It reserves a rent of 262 10s of the present currency, which, allowing for the difference of Irish currency, is precisely equivalent to the total of the two previous rents fixed in 1787 and 1795, with a sum equal to the tithe rentcharge which the tenant under the old leases was bound to pay. This lease of 1851 purports to be a lease in possession, and is made without any reference to the leasing power, and not in consideration of the surrender of the existing leases. On reading this lease, one is at once struck by the fact that the lands are demised for three lives, of which two were very young, at a rent which is no more than that reserved out of the same lands at the close of the last century. This seems to have struck the present plaintiff and his advisers, because, by way of accounting for that somewhat startling fact, they put forward the case that the lands had been allowed to become reduced to a wasted and desperate condition when the new lease was made. For this condition of the lands be it observed that, even on the plaintiff s own evidence, he was himself, to say nothing of his tenants, to a considerable extent directly answerable. This is apparent on reading the 6th and 11th paragraphs of the plaintiff s affidavit, filed the 14th February 1876. The plaintiff in his bill states his title to get the lease of 1851 in such a way as to avoid the obvious point which arises upon it as an exercise of the power, viz, that it was a lease in reversion, and not in possession, unless the old leases were in fact or in law surrendered. He says that on the 12th July 1851, he was the owner of the two old leases, and he alleges his title in these words (par 4 of bill):
The said Rev Robert Moffett (that is, the lessee in the old leases) died about the year 1819, and his son Andrew Moffett thereupon became entitled to the lessee s interest in the said two leases. The said Andrew Moffett, the plaintiff s father, afterwards died in the year 1819, and thereupon the plaintiff became entitled to the lessee s interest in the two said leases.
It is quite plain upon that averment that he is claiming as heir-at-law of his father and grandfather; he mentions no will or other document of title; he asserts a title accruing and consequent upon death, and therefore the natural conclusion suggested – if it were true – is that the lease of 1851, though made without any formal surrender of the other two, was a good lease in possession, the plaintiff being at the time of its execution entitled to the interest then subsisting under the old leases. If that were true, the point as to the lease being one in possession, and not in reversion, would have a safe and sure foundation.
The lease of 1851 was attested by only one witness, and the plaintiff states on the face of his bill that that is the only defect, and it being purely formal he comes into equity to have the lease fastened on the remainderman. He suggests that everything else was right and proper, and that therefore he is entitled at the hands of this Court to have the prayer of his bill carried out.
Kane Bunbury having died in November 1874, and the title in possession of the defendant having then accrued, who refused to recognise the lease of 1851. Lord Gough answered the bill, and at once took issue with the plaintiff upon the case he set out in his bill, and the answer submits that the plaintiff has not shown any title by descent, occupancy, devise, conveyance or otherwise, to the lands demised by the said leases, or either of them; he denies that the rent reserved by the lease of 1851 was a fair improved rent, and he submits that the fact that the lands were then reduced in condition demonstrates that the rent could not having been a fair improved rent. He further asserts that the lease of 1851 was a fraud upon the leasing power. On that answer the plaintiff took a course which it is right to advert to. He filed a replication and proceeded to hear the cause upon replication, which had the effect that he was able to adduce his evidence without Lord Gough, the defendant, having had the slightest opportunity of meeting or answering any new allegation which the plaintiff might put forward or introduce therein.
I need scarcely say that when a cause under the old system was heard on replication, each party addressed himself to the issues knit by adducing evidence which his adversary could not see or be informed of till after the time allowed for giving such evidence had closed. Lord Gough s advisers evidently taking the plaintiff s averment of his title as I have stated it, and having plainly discovered by reason of the Will of the plaintiff s father, made in the year 1819 (to which I shall again advert), having devised the lands comprised in the old leases to his son John, that the plaintiff s statement in his bill was not correct, actually examined the plaintiff by taking his deposition on the 10th of February 1876, in which he had to admit that his brother John had only attained his age of twenty-one in the year 1841, and that he had no reason to believe that he was dead. Now a few days after making that deposition, the plaintiff filed his affidavit in support of the bill, and then for the first time, behind the back of his adversary, went into an entirely new and remarkable case, utterly at variance with the title he had stated in his bill. In this affidavit, he alleged that on the 31st August 1808, the Rev Robert Moffett, the original lessee, had made a settlement upon his son Andrew for life, of the lands of Clonkeen and Cordevin, with remainder to his first and other sons in tail male. The plaintiff then says that Andrew s father died in January 1819, and that Andrew the plaintiff s father became entitled to Clonkeen and Cordevin for life; that Andrew died in December 1819; and that then the plaintiff became entitled as remainderman to the lands of Clonkeen and Cordevin; that Robert the original lessee, being seised of the lands of Trillickatemple, devised them by his will of 1817 to his son Andrew; that Andrew made a will in 1819, and purported to dispose of the lands of Clonkeen, Cordevin and other premises therein mentioned (a designedly vague statement of the will, as will afterwards appear), but that the will was inoperative as to the settled lands, and was not acted on, but an arrangement was entered into by which the rights of himself and the several members of his family were amicably adjusted, and under which they obtained equal shares of his father s personal property, he himself getting Clonkeen, Cordevin and Trillickatemple. He says that this arrangement was acted on, and that about 1836 he went into possession of those lands and paid the rent therefor, and has since continued in possession of the same.
Evidence was gone into on the part of the plaintiff and defendant as to the rent reserved in the lease of 1851, and a good deal of the defendant s evidence went strongly to show that, even apart from the condition of the lands as brought about by the plaintiff and his undertenants, the rent reserved in the lease of 1851 was not a fair improved rent. In that state the cause came before the Lord Chancellor for hearing, and he pronounced the decree of the 7th of March 1878, from which this appeal has been brought. By that decree an issue is directed to be tried by a jury of the county of Longford, where the lands are situated, as to whether the rent reserved in the lease of 1851 was at that date the fair improved yearly rent. It is plain, on reading the judgment of the Lord Chancellor, that in directing this issue he decided all the other points in controversy against the defendant. We are all of opinion that the decree so made cannot stand, and that upon the evidence adduced in this cause the plaintiff s bill ought to have been dismissed. I think that, entirely apart from the question of the amount of rent reserved in the lease of 1851, and even before that point is reached in the consideration of the case, there are ample grounds for holding that the lease of 1851 was, in truth, a positive fraud upon the leasing power. In the view I take of this case it will be unnecessary to discuss the question of the rent; but I must observe that it appears to me that there were materials, even on that point, for coming to a safe conclusion within the Court of Chancery itself, without having that question tried upon an issue before a jury. I will say no more as to the direction of that issue, save this, that the defendant, Lord Gough, would, in my opinion, go heavily weighted to the trial of that issue.
I now proceed to state the reasons which have induced me to think that, altogether outside the question of rent, the plaintiff s bill must be dismissed from this Court. When one reads the statements of the plaintiff s title set out in his bill, and the statements in reference to the same matter set out in his affidavit made by way of evidence, the first thing which strikes one is, that the very curious matters alleged in the affidavit are not merely suppressed from the bill, but are at variance with the title therein stated: but what is still more remarkable is the fact that the peculiar title sought to be made out on this affidavit was suppressed from Kane Bunbury and his solicitor when the lease of 1851 was obtained; for on that occasion, when on the part of Kane Bunbury it was insisted on that the lease about to be then made should be a lease in possession, and that the old leases should be surrendered, the plaintiff distinctly represented that there was no necessity for such surrender, as he was then entitled to the lessee s interest therein, as the heir-at-law of his father and grandfather. That in my opinion, was a positive misrepresentation made in obtaining the lease of 1851, for it was on the faith of that most incorrect statement that Kane Bunbury and his advisers were induced to act, and to dispense with a valid surrender of the old leases by a person competent to make it. It was of essential moment in relation to the exercise of the leasing power that the tenant for life who was about to execute it in favour of the plaintiff, Mr Moffett, should see that, when no actual surrender of the old leases was to be executed, the estate therein was vested in the person to whom the new lease was to be made, so as to effect a surrender in law, so that Kane Bunbury, or at any rate those in remainder, should not be put to the inconvenience and embarrassment of having two leases existing on the estate, one in possession and the other in reversion, the latter being a positive violation of the terms of the power. The misrepresentation of the plaintiff on this material point does not rest upon oral evidence only. Letters are produced which show that the tenant for life insisted that the lease should be substantially one in possession, and the plaintiff is found getting over the necessity of executing a surrender by representing that he was heir-at-law of his father and grandfather, and therefore in a position to surrender the old leases by accepting the new one. Now – when the title that he avers for the first time in his affidavit which I have read, and which the defendant had not the smallest opportunity of meeting or answering, comes to be examined – it first appears that there is no evidence at all of a settlement having been executed. Upon the Lord Chancellor s decree it appears that what purported to be a copy of that settlement was admitted in evidence, and, having regard to the fact that there was no proof whatever of an original settlement, or of proper search made for the same, or any proof of the copy, I think the Lord Chancellor s attention cannot have been directed to the circumstance that he was admitting a copy of an alleged settlement, upon the following passage found in the plaintiff s affidavit:
I beg to refer to an ancient copy of the said indenture which I now produce and mark A and which I believe to be a genuine copy thereof. I never had the original thereof in my possession. I do not know where it is, and I believe that the same is lost. I have diligently searched for the said settlement, but could not find it.
We think that there is no evidence whatever of the contents of the alleged settlement adduced by such a statement, unless we are prepared to hold that any copy which an interested party throws down as a copy is to be treated as a true copy of an original settlement alleged by such party. There is no evidence as to where this copy came from, how it was made, or where it was got, or that it was ever acted on, there being all this time not the smallest proof of the original deed. But it was said that the memorial of the settlement was evidence of it; unfortunately even if the memorial was properly in evidence, there is no statement in it of any of the trusts or limitations affecting the lands. The memorial was not, however, receivable in evidence, and the proposition put forward at the bar that a memorial of an ancient deed, signed by the grantee, when produced from the Registry Office is evidence without more of the original deed – and for which proposition Biggs v Sadlier 10 Ir Eq R 522; 4 Cl & Fin 435 was cited – cannot be maintained for one moment. The proper limits within which such a memorial can be admitted in evidence will be seen in the judgments in that case. It will be found that the Chief Baron prefaced his judgment (p 532) there with these words:
The principal question in this case arises upon the evidence tendered by the plaintiff as secondary proof of the articles of the 5th of January, 1746, for which ineffectual searches appeared to have been made in the quarters in which they would be reasonably expected to be found.
Lord St Leonards in his judgment lays down the same rule; he says (p 460):
I certainly am of opinion – and I think the authorities will not impeach that opinion – that the memorial is good secondary evidence of the contents of the deed of 1746, it being proved upon search that the deed has actually been lost.
This settlement then being out of the case, see how the title stands. The grandfather of the present plaintiff, whose will is entirely suppressed from the bill, and from the tenant for life in 1851, devised the property in these terms:
I devise and bequeath to my son Andrew Moffett, his heirs and assigns, my lease of the lands of Trillick … and all the rest, residue and remainder of all my property, real and personal, I give, devise, and bequeath to the said Morgan Crofton and John Robinson, their heirs, executors, administrators and assigns, upon trust to pay three parts of the interest, profits and produce thereof to my grandchildren Jemima, Catherine, Jane, Robert, and Samuel Richardson, equally to be divided between them on their attaining their several ages of twenty-one years (with gifts over between them in certain cases.) And my further will is that the remaining fourth part of the said remainder and residue of all my property shall be equally divided between all the children of my son Andrew Moffett (as therein mentioned).
If there was no settlement, that residuary gift embraced the lands of Clonkeen and Cordevin, and passed then as to three-fourths to the testator s grandchildren, the Richardsons, and as to one-fourth to the children then living of his son Andrew, the devisee of Trillick. Andrew came to make his own will soon after, and he devises to his son John the lands of Clonkeen, Cordevin, and Trillick, and to the present plaintiff other lands called Park Place, Liskett, and Aughentemple. That will ignores the alleged settlement, even if it existed, as alleged, a serious question suggests itself, whether a case of election did not arise. But, be that as it may settlement or no settlement – the lands of Trillick under those wills were the undoubted property of John – a positive and startling fact, directly opposed to the misrepresentation of title made by the plaintiff, as well when he got the lease of 1851 as in his bill in this cause. The extraordinary statement of the plaintiff as to some family settlement by which John s rights to these lands were given over to the plaintiff, made for the first time in his affidavit, under peculiar and most suspicious circumstances, rests on the plaintiff s loose and uncorroborated averment. At the time this arrangement is supposed to have been entered into, John, as is now proved, was a boy of fifteen years of age; there is not even an assertion that after he came of age he ever did anything to confirm or even sanction such an arrangement. It is not even alleged that he ever was made aware of his rights, nor is it shown what he got for abandoning his property; the plaintiff s statement that this boy got a share of his father s personalty, which may have been anything at all, cannot have the slightest weight. The plaintiff says that John would readily have assented to the lease of 1851: if so, he might as well have told the landlord all about this supposed family arrangement, in which case John s readiness to surrender the old leases in favour of the plaintiff would have been put to the test. In truth, there was a positive suppression from the tenant for life of all the material facts connected with the title: and I cannot conceive a stronger case of misrepresentation than that which the plaintiff was guilty of in 1851, to induce the then tenant for life to exercise his power.
It has been contended that, as the plaintiff has been in undisturbed possession under the lease of 1851 since its execution, this Court must, therefore, assume that John s rights were legitimately dealt with; that would be a very convenient doctrine for persons who enter on a minor s estate with the view of making it their own. Is it to be forgotten that the plaintiff, when he took possession of John s estate during his minority, was nothing but John s bailiff, and that it is quite consistent with all that has been averred, that John was kept in entire ignorance of his rights, and that he, or those claiming under him, may have this moment, in this Court, ample grounds for making the plaintiff answerable for all his past possession? Indeed there appears to me no reason why John, if he had known his rights, might not have brought an ejectment, at all events for Trillick, within twenty years after he came of age.
I think that the plaintiff has failed to show any title to get the lease of 1851, and that that lease was obtained by misrepresentation, and I think that this Court ought never to aid such a transaction. The lease of 1851 was clearly a lease in reversion, and not one in possession, and was in plain violation of and a fraud upon the power.
It clearly follows from what I have said, that the Acts of Parliament (12 & 13 Vict c 26 and 13 & 14 Vict c 17) cannot be relied on as aiding the defective execution of the power; those Acts themselves at once present an answer to the argument put forward, for they are only intended to aid defects where the leases have been bona fide executed by tenants for life; and in my opinion it would be a total subversion of language to hold that this lease of 1851 was bona fide executed. It is not necessary to go into the question of the extent of authority which this Court, has under those statutes, to aid the defective execution of powers. Speaking for myself, I believe the construction of these Acts must be very much controlled by the words of the preamble of the first one.
We all agree, as I have said, that the decree must be reversed, and that the bill must he dismissed and we think that such dismissal must be with costs.
Christian LJ: The bill in this case is based exclusively on the statute 12 & 13 Vict c 26. It treats the indenture of the 12th of July 1851, as being, notwithstanding the defect in the attestation, a good contract in equity under that statute for a lease under the power; and its sole prayer is for the specific performance of that equitable contract. Now I agree with the Lord Chancellor that this case does not fall within that statute, but not for the reasons assigned by his Lordship. His construction of the words in the second section – in case the lessee named in the lease shall have entered thereunder – is, I think, too narrow. I cannot doubt that the lessee s continuance in possession after the accepting of a new lease on the giving up of an old one, was tantamount to an entry under a new lease. My own reasons for excluding the statute are, first, that the lease was not made bona fide, and, secondly, that one at all events of the points of substance in which the invalid lease departed from the terms of the power is now incapable of being supplied.
The Lord Chancellor remarked very truly that in several respects it is difficult to say what is the meaning of this section. It certainly is, and in none is the difficulty greater than in the two particulars I have just indicated. Luckily for himself, the view the Lord Chancellor was able to take of the little point about the lessee entering relieved him from the necessity of forming an opinion on the graver difficulties of the case. I am less fortunate. What is bona fides in the making of a lease under this statute? If the donee of the power knowingly, and, if knowingly, wilfully, ignores the two most substantial of the safeguards provided by the donor for the protection of the remainderman – viz, that the lease shall not be in reversion and that the rent shall be fair and improved – can that lease be said to have been made bona fide? I venture to think not. Again, the statute says that the lessee shall be entitled to a valid lease under power, to the like effect as the invalid lease, save so far as any variation may be necessary in order to comply with the terms of such power. What is the force of these latter words? Can any lease be within the statute if there be a defect in substance which is incapable of being made good by the variation? Again I think not. Well, one of the defects in this case was of that character. We could not now by any variation to be introduced into the new lease purge the lease of 1851 from the fault of having been a lease in reversion. Its status in that particular was defined once for all at the time of its execution. The insufficiency of the rent you might cure by a variation; but the other defect is indelible. On that ground alone, if there were no more, I should be prepared to hold that this lease derives no aid from the statute. But more – I am also of opinion that this lease was so palpable a sacrificing of the interests of the remainderman to those of the tenant and of the lessor that it is idle to claim for it the character of bona fides which is the primary condition of the statute. For these reasons, I think with the Lord Chancellor, that the plaintiff can derive no aid from the statute 12 & 13 Vict c 26, and that his case must be sustained, if at all, on the old equitable doctrines of relieving purchasers against formal defects in the execution of powers.
Although, as I have said, the statute exclusively is made the groundwork of this bill, I am not going to hold the plaintiff so strictly to his pleadings as to exclude him from the other equities: but his position in invoking that jurisdiction is in one important particular the same as it would be prior to the statute. He is asking for the special extraordinary interposition of the Court in his favour, to set up and make valid for him a title which as against the remainderman is legally null and void. The defendant resists this relief on the grounds that, besides the formal defect of the attestation – which is what gives him his advantage at law, but is certainly relievable in equity – neither of the two substantial safeguards of the remainderman was complied with; for the lease was a lease in reversion instead of being one in possession, and the rent reserved was conspicuously the reverse of being either fair or improved . With respect to the first of these two objections to substance, it is undoubtedly true that unless the whole remaining interest under the two old leases of 1787 and 1795 was at the time of the making of the lease of 1851 vested in the plaintiff that objection is sustained; and it is equally true that the burden of proof here lay only on the plaintiff. Whether he has successfully sustained that burden was the question mainly argued at the bar. It has been now fully discussed by the Master of the Rolls; and I concur in his view of it – that it is alone sufficient to decide the case. Nevertheless I prefer myself to rest my whole decision on the other objection; and for this reason that I feel sure of the facts. As regards the title to the old leases, the success of the defendant is rather a negative than a positive one. It is plain that we have not all the facts before us; but looking even at what we have, there are forty-two years of unbroken possession of this farm by the plaintiff, and thirty-seven of these since his brother John came of age; and observe, the whole of these thirty-seven years must be counted, because if John had in him at the time of the lease of 1851 the legal estate in the old existing lease, the new lease of 1851 would have been a graft upon the old one for his benefit, and he would have been entitled to that as well as to the old lease. Therefore his title – if title he had – would stand good during those thirty-seven years. Well, of these thirty-seven years from the time of his coming of age, ten had elapsed before the making of the lease of 1851. It does appear difficult not to feel a certain misgiving that in some way or other, either before or at the time of making the lease of 1851, the whole interest under the old leases had, in truth and substance, if not in technical legality, passed into and become the property of the plaintiff. But still the proof is incomplete, and it is of course on the party on whom lay the burden of proof that the consequences of that incompleteness must fall. Therefore I concur in the Master of the Rolls view; still it is at the utmost but a case of not proven.
I turn willingly to the other objection, where I find myself upon firmer ground. Before discussing the facts, I will refer to a case containing a very instructive reading by a very great authority, as to the duty which a tenant for life exercising leasing powers owes to the remainderman – I mean the case of Harnett v Yielding 2 Sch & Lef 549. In that case the defendant, the tenant for life, made a lease to the plaintiff for a term of twenty-one years. There was contained in it a covenant by the lessor for and during the term of his life to renew the said lease for the said D Harnett, his executors, administrators and assigns, by giving unto him or them a lease for twenty-one years of the said demised premises, when applied to by him or them so to do. The lease contained a clause of surrender. The tenant, thinking the rent too high, availed himself of the clause of surrender and put an end to that lease. The parties immediately came to a new agreement which was worded in these terms: I promise and agree the tenant for life says, – to perfect a fresh lease to Mr Daniel Harnett at any time he shall demand the same, at 5 a-year less than the within-mentioned rent. This was indorsed on the old lease. The tenant went back into possession. He remained in possession under the original lease until within a very short period of its expiration, and then called for a renewal on the terms of that instrument which I have just read; and the landlord refusing to grant the renewal, the tenant filed his bill to enforce it – the defendant being, observe, not the remainderman, but the tenant for life himself, who had made the lease, and the plaintiff seeking first for a renewal in the terms of the power so as to be binding on the remainderman, and seeking further, if he could not get that, at all events what the tenant for life had power to give him, namely, a lease for twenty-one years if the tenant for life should so long live. Well, the Court refused to give him either the one relief or the other – not even the relief of a lease for twenty-one years if the tenant for life should so long live – because it held that the lease was, under the circumstances under which it was executed – and which I shall mention presently from the judgment – a fraud upon the power; and that being such, the Court would not make it the groundwork of any decree whatever, even as against the tenant for life himself. The first question in the case was whether the agreement was not too uncertain to be performed at all, on the ground that it was not clear whether it was an agreement for one lease for twenty-one years, or an agreement for a lease for twenty-one years with a renewal for a fresh term of twenty-one years afterwards. Lord Redesdale, after discussing that question, came to consider how the case would be upon the assumption that it was sufficiently certain that it was to be a lease for a double term, namely twenty-one years in possession and a right of renewal for a further term when called for; and here is what he says, at page 558 of the report:
Then there is in this case another consideration which appears to me to be a ground for refusing performance of this agreement; and that is, that this is evidently, on the face of the instrument, a contract by a person having a limited interest, with a leasing power, to act in fraud of that power. It is a contract to execute a lease for twenty-one years, and a further lease for twenty-one years at any time during his life; consequently to execute a lease for twenty-one years, whatever may be the increased value of the property at the time of the lease granted.
In other words, it was a contract which would deprive the person, whoever he might be, who should be in possession at the time when the renewal lease was called for – and he might be the remainderman, though it did not happen to be so in that case – of the advantage of a presumptive rise of rents in the interval. That is the ground on which Lord Redesdale holds it to be a fraud on the power, because of its tendency to deprive the remainderman, if he be the person, or the reversioner at the time, of the benefit of the presumptive rise of rents in the interval between the making of the original lease and the time when the renewal is called for. How infinitely stronger does that apply to a case where it is a renewal, at the old rent reserved some fifty or sixty years ago, of a very old existing lease, still existing for one life, that is sought for; so that the remainderman, when his time should come, would not only be deprived of the presumptive rise of rent from the date when the renewal is being executed down to the death of the old existing life, but also of an infinitely greater rise of rent, counting from the time of the original lease some half-century before down to the time of the expiration of the last life? Therefore this case is far stronger in its circumstances than that which was there considered as constituting a fraud on the power. Then Lord Redesdale goes on:
I think Courts of Equity should never enforce such contracts, whether with a view to the party himself or to the person entitled in remainder. In the first place, it is unconscionable in the tenant for life to execute such a lease, because it brings an incumbrance on the estate of the remainderman, and puts him to litigation to get rid of it; and as to the tenant for life himself, it is compelling him to do what is to be the foundation of a future action for damages, if he dies before the twenty-one years. The Court will never do this, but will leave the party at once to bring his action for damages. And I also conceive that this sort of contract, obtained by a person who knew at the time the nature of the title, is unconscionable in him, as he makes himself a party knowingly to that which is a fraud on the remainderman; and under such circumstances he has no claim to the assistance of a Court of Equity.
So we may say here to this gentleman: Make the best of your case with a jury; bring an action against the personal representative of your lessor, Colonel Kane Bunbury; if you do so you will be certain to have a more sympathetic jury than Lord Gough would have if he were so ill-advised as even to bring such an issue to a trial.
Bearing in mind these principles, and turning to the case before us, the requirement of the power in it as regards rent is, that there be reserved and payable during the term a fair improved yearly rent, without taking any fine or premium for or in respect of the making thereof. Fairness must be understood relatively to all the interests involved – those of the remainderman as well as those of the tenant for life and of his lessee. Improvement, in the case of lands which were let on lease at a rent at the time of the creation of the power, and where the new lease is being made to the old tenant, can hardly have any other meaning than increase. The same or even a lesser rent, if reserved from a new or more solvent tenant, might well be an improved rent. But to renew an old lease to the same tenant at the old rent, and to make the doing so serve the purpose of procuring the payment by the lessee of arrears otherwise of doubtful solvency, does seem from the point of view of the remainderman to respond to the requirements neither of fairness nor of improvement .
Turning to the facts of the case, the first thing that it startles one to find is, that the fair improved rent reserved by the lease of 1851 is identically the same rent, reduced to English currency, at which the same lands had been demised for terms then unexpired of sixty-four years as to one denomination, and of fifty-six as to the other, before the date of the new lease. Let me here correct a mistake into which the Lord Chancellor fell in his judgment. He speaks of the new lease of 1851 as having been made at an increase in the rent of 12 a-year. The gross total of the rents in the old leases was 271, of the then currency. But at that time, as we all know, the tenant paid the tithes. When the new lease was made in 1851 the 217, reduced to the currency of the day, would be only 250; but adding the tithe-rentcharge, which in the meantime had been thrown on the landlord, the amount is brought up to the exact rent reserved, namely, 262 odd. So that it is the common case of both parties that the rent reserved in the lease of 1851 is the exact equivalent – in figures I mean of the rent reserved in the two old leases of 1787 and 1795, plus the tithe. Well, this ancient and expiring rent – for it was then, that is in 1851, depending on one life, necessarily an extremely old one – the new lease professed to resuscitate and fasten on the inheritance for three new lives; one, that of the lessee himself; another, that of a boy of thirteen; and the third, that of the Prince of Wales, then a boy of ten; in other words, according to the ordinary duration of human life, some fifty or sixty years. If we had been furnished with information to enable us to make a comparison between the purchasing power of 271 10s Irish, plus the tithe, in 1787 and 1795, and its numerical equivalent of 262 3s 10d English in 1851, we should be in a better position for estimating the truth of the assertion which, startling as it seems, is an essential of the plaintiff s case – that the latter was an improvement upon the former; that is to say, a better thing for the remainderman. I should be curious to know what sum would in 1851, or at the present day, most nearly correspond with what 271 was in 1795. But even without such precise information I think we may fairly infer, from what we know historically of the main current of progress in these matters, that it would be something vastly above 262 sterling of the money of the present day. The Solicitor-General said that we were to look not at the general value of money, but at its value in relation to the particular commodity – land. With great respect, that would be entirely misleading. It is in the light of its value as the general purchasing medium of the kingdom that we must regard it. The number of pounds sterling which at given periods can be got as rent will vary inversely with the purchasing power of the pounds sterling at those periods, that is, with the quantities of the necessaries and luxuries of life that would be given in exchange for them. If the number of pounds sterling in 1787 and 1795 would have produced double the quantity of those things that it would in 1851, then it follows that there ought to have been 2 reserved in 1851 for every 1 that was reserved at the older dates. We all know how the falling in of old leases has been looked forward to by proprietors as what would often raise the man of straitened means to a position of wealth, and the man of wealth to that of a millionaire – as is witnessed by what has happened in the cases of some of the great English families, the Grosvenors and the Russells. It is really self-evident that, except under some extraordinary and exceptional casualty, a renewal made in 1851 under a limited leasing power, at the same rent as was reserved in 1787, must stand condemned on the face of it as one of monstrous undervalue. And observe, this is not a case of the kind dealt with in the English authorities, or a case of reforming a lease, such as those to which Lord Eldon s language, relied on by the Lord Chancellor, in the Queensberry Leases Case 1 Bligh 339, applies; it is not a case of that kind. It is the renewal to a middleman for a lengthened term of a most valuable interest outstanding to the prejudice of the inheritance – so valuable that, as the plaintiff himself tells us, it has been dealt with as the fit subject of marriage settlement and of elaborate family arrangements. The Lord Chancellor seems to have viewed this point of rent precisely as if in 1851 there had been no existing lease, and the question was simply what rent could the lands, if then in hand, be reasonably expected to bring, under the circumstances of that time. And assuming, as he must have done, that this, which would undoubtedly be a question purely of fact, was the turning-point of the case, he, as the decree expresses it, being desirous of ascertaining the truth, dismissed the task of ascertaining it from himself in Chamber to the more discriminating analysis of a county of Longford jury. With the utmost possible deference, I dissent both from the Lord Chancellor s mode of disposing of the question, and from his choice of the tribunal for ascertaining the truth. There are elements in this case which the Court alone possesses competency to deal with, and which we should be merely escaping from if we allowed the case to go to a jury. If we had the finding of a jury tomorrow in the plaintiff s favour upon the issue directed by this decree, the question would be still unanswered – Could the plaintiff have the relief he claims by this bill? Were the circumstances under which this power was professed to be exercised such as to make it equitable, just, and according to the spirit and policy of the power, to make valid this invalid lease against the remainderman who is a stranger to it? What were the circumstances? Five years before, a terrible calamity had fallen upon, I will not say the land, but the masses of pauper tenantry whose existence upon the land had been the insuperable barrier to all agricultural progress and improvement, and the immediate consequences of which not only entailed suffering to the afflicted masses, but the ruinous depression of all selling and letting values. It needed, however, but a very scanty measure of prescience to be able to foresee that the evil was but temporary, and that prices and rents must ere long regain their buoyancy, for that the visitation under which all were passing was in reality a sure, if sharp, remedy for some of the worst influences that had hung over the Irish soil. Before 1851 the tide had turned – a reaction was already imminent. This was the moment selected for the new letting of the 12th of July 1851. What were the interests of the several parties to be affected? The land was under an existing lease at a rent calculated on the value of money as it was nearly half a century before. That lease must continue at that rent for one surviving life unless it was surrendered by the lessee. Colonel Kane Bunbury, the then tenant for life of the reversion, could not himself have been a very young man; and he was named the devisee in a will made thirty-one years before. What his age then was we do not know. But running his life against that of the cestui que vie under the old existing lease, it may fairly enough be inferred that personally he was not likely to lose very much by granting a renewal at the existing rent, which, under any circumstances, in all probability would last during his own time, and he had no sons to succeed him. His presumptive successor was a collateral descendant, not even of his own name, and about whose interests he would probably be not too solicitous. One personal interest he undoubtedly had, namely, to procure payment of arrears of two years rents his tenant then owed him, and the payment of which the plaintiff himself tells us was made the express condition of the granting of this renewal. That was the lessor s position. As to the lessee, his interest in getting a renewal at the ancient rent of some half century old is a thing that needs no dwelling on. These were the two parties to the dealing. The one had little or nothing to lose by it, but, on the contrary, a loss to be saved, while the other had an immense advantage to gain. But how about the absent remainderman for whose interest alone this leasing power had its existence? I answer – it was simply sacrificed: for what was done was, out of the fact that in a crisis like that of 1846 to 1851, under the terror of which no one could be found to offer more than the nominal sum that had been reserved half a century earlier, a pretext was made for stereotyping the panic – for that is what it comes to. What was that but to exercise this power in a way which, even if it would not induce a Court of Equity to set aside as a fraud a lease that had been duly consummated according to all the forms, ought certainly to be held sufficient, as Lord Redesdale says in Harnett v Yielding 2 Sch & Lef 549, to prevent the Court from lending its extraordinary aid to enforce against the remainderman what is no legal exercise of the power at all? This lease is void at law against the defendant. What the Court is now asked to do is, by an extraordinary effort of its extraordinary jurisdiction, to compel him to validate it, and by so doing to stamp upon the inheritance against himself and his successors, for a generation or two from its date, the panic-bred depression of an unparalleled, but still temporary, emergency, and to do this under colour of a power, the essential term in the exercise of which was, that a fair and improved rent should be reserved. The rents reserved in 1787 and 1795 were to be still in 1851 regarded as fair and improved , and thus projected onwards well into the twentieth century.
Now let me test one extreme case by another which is hardly more extreme. In place of a devastating famine, let me put a devastating war. Suppose the country had been in the occupation of a hostile army, and that districts had been devastated, houses burned down and lands ravaged to a condition in which nothing could be given, and no one would offer anything, for the ground – would it be a fair exercise of such a limited leasing power, suppose, for the tenant for life to take advantage of the existing state of circumstances – obviously but a temporary one, which sooner or later when peace must come to an end – and make a lease to some speculator at a rent of 5s or 10s an acre, – would that be a fair exercise of the power, and would the Court of Chancery afterwards interpose to compel the remainderman, when better times came and when the land had again become valuable, to execute a lease at a nominal rent? Well, I suppose nobody would contend for that; and in truth there is no difference between the cases. The very specialities to which the plaintiff appeals are in reality destructive in his case. In proof of his prima facie amazing assertion, that the same figures represented in 1851 a better rent that they did in 1787 and 1795, he refers first to the bad and exhausted condition of the land, that is to say, to his own breach of the covenant in the lease to keep it in good order; and secondly to the famine, that is to say, the very thing for which he made the abuse and perversion of his power. This tenant for life, with no prejudice to himself as regards the rent of the future, and with large benefit to himself as regards the arrears of the past, sacrifices to this reverend gentleman, his tenant, the interests of all his successors, for whose benefit as well as his own he had been entrusted with the power. The answer charges that this was a fraudulent exercise of the power. Well, as we are dealing with the case of a reverend plaintiff, we may as well drop that ugly word, but I cannot designate it more mildly than by calling it a mis-use of the power, so gross as to amount to a flagrant abuse of it. Common fairness, and the expressed intentions of the testator, demanded that until the storm had blown over and the country recovered itself, the status quo should be maintained and the power held in abeyance. If care had been taken to comply with the formalities of the power, the plaintiff would have had a legal estate prima facie, and the defendant must have taken the initiative either by bringing an ejectment or by filing a bill in Equity to set aside the lease as a fraud. But as matters are, it is the tenant who has had to take the initiative and to come before a Court of Equity asking it to pronounce that the contract embodied in this document of the 12th of July 1851, is in accordance with the spirit and policy of the power, and so well-timed, and just and equitable towards all in the line of succession, that the Court will interpose its extraordinary authority to enforce it, and legally validate it by a decree.
That is the question which confronts us at the threshold of this case, and I ask what light a jury could throw on it? The Judge at the trial would listen to no equities. He would say, and properly say – The Lord Chancellor must have decided all that in the plaintiff s favour before he directed this issue; you and I, gentlemen, have nothing to do but to inquire whether the rent is a fair and improved rent according to the standard of the time when it was made, that is to say, the famine years. Is that a true standard by which to rule this case? Most certainly not; for the very circumstances which supplied that standard, and which alone would make such a verdict possible – exceptional, transitory and fugitive as they were because of the terrible depression of the moment which was but the harbinger of better times than ever came – were precisely the circumstances which gave to the lease of 1851, viewed as an exercise of the power under M Bunbury s will, its true character of mere perversion and abuse. Therefore assuming, as I have done throughout, that at the date of this lease no better rent could have been got for the farm than that which is reserved in the lease, I hold to the opinion that this bill must be dismissed with costs.
Well, there is yet a view of this decree by which I must confess I am a good deal embarrassed, and which I do not feel ought to be passed over altogether in silence, because the feature which it presents is from a general point of view by much the most important which appears in the case. Supposing I could agree with the Lord Chancellor that the whole controversy was reducible to the one question on which he directed an inquiry, still I should be obliged to differ from him entirely in the selection he has made of the forum to which to refer that inquiry. The decree is somewhat curiously framed – The Court being desirous of ascertaining the truth by the verdict of a jury, and being of opinion that the question in controversy may be more conveniently and properly tried in the county where the lands are situate – and then follows the direction of the issue. Well, that is a somewhat peculiar preamble. I do not myself remember to have seen one like it before. It would almost seem as if his Lordship had some little misgiving lest, perchance, it might be imagined that the course he was taking tended rather in an opposite direction to that in which he hastens to say he was desirous of proceeding. I confess I should myself have thought that if further inquiry on this point were desirable, the Lord Chancellor himself in chamber, with the powers he now possesses of seeing and hearing witnesses examined, and examined viva voce, and, if he pleases, of himself conversing with them, would under the circumstances of this case be an infinitely more promising extractor of the truth than a jury, and most of all, a jury of the county where the lands are situate. No doubt the issue is in its terms of a very plain and naked one:
Whether the rent of 262 3s 10d reserved by the lease of the 12th day of July 1851, was at the date thereof the fair improved yearly rent for the lands by the said lease demised, without fine or premium in respect of the making thereof?
A very simple inquiry. Could any tribunal apparently be more suited to enter on such an inquiry than a jury of farmers – and let us say, of gentlemen-farmers, as it appears that the jury is to be one of the kind at present called special jurors – could any tribunal be more fitted for the investigation of a question of the kind? I answer certainly not, if one could only be sure that they would confine themselves to the terms of the issue and to the evidence properly and legitimately, bearing on the issue. But is there no danger that extraneous topics might be managed to be got into the jury-box? Just look at the repertory which would be at the disposal of some eloquent inflamer of the north-west Bar! Three generations of a respectable tenant family, in undisturbed possession of the farm for now close on a century, at an unaltered rent, and under these a body of occupiers, the old landlord family never thinking of disturbing them on the contrary, the last of these landlords granting a renewal at the old rent, which would have prolonged for another generation or two the ancient and kindly union of tenant and landlord; but suddenly there comes a change. The old landlord family dies out, and a stranger takes its place; and who is that stranger? An aristocrat, a great lord, whose first step is to serve a peremptory, almost offensive, notice on the old clergyman tenant of the last three generations, saying: Sir, your lease is void as against me, and I require you forthwith to give up possession of the land. Tenant-right in its most attractive form – landlord oppression at its worst! Well, all this would of course be entirely irrelevant to the issue. The strongest Judge that ever presided at a trial would be unable to keep it out of the jury-box; and there are some Judges who probably would not deem it at all their duty to try to do so. The jury themselves, or some of them, would be pretty sure to be ardent sympathisers.
Now, I ask, why should the Court go out of its way to expose the claims of property to be baffled by more rhetoric practised upon interested prejudices? It is to no purpose to quote cases in England on leases before the late reforms in the Chancery procedure. Those cases were sent to juries, not because of the superior merits of a jury trial, but because in no other way could at that time a viva voce examination and cross-examination of the witnesses be obtained. The jury was a necessary evil. But now that viva voce examination before the Judge himself is established as a normal part of the procedure of Courts of Equity, why should rights of property of a kind which class antagonisms are sure to gather round to he consigned to the rude lottery of the jury-box? Look at what has been happening in England ever since the Judicature Act passed Suitors obtained thereby the option of originating their cases in any Division of Law or Equity that they preferred; and what has been the consequence? Why, a steady current has set in from the Law side to the Chancery side of cases formerly triable only at Law; and it has so set in by reason of the anxiety of those suitors who thought that they had good cases to have a trial by a single cultivated practised intelligence. Those who distrust their cases still prefer the Common Law Divisions for the sake of the chances of jury trials.
Again let us look at home. Let us for a moment eschew conventionalities and speak what everyone knows to be the truth, though not what everyone would like to avow. To send certain questions to a jury in England may mean something very different indeed from sending them to a jury in Ireland. The average English juror is a prosaic sort of person, unimaginative, unexcitable, docile to the evidence, and amenable to the advice and guidance of the Judge. His Irish counterpart will be a man of another temper: and, not to push invidious distinctions too far, suffice it to say, that in certain classes of cases which need not be particularized, but of which those of an agrarian order are undoubtedly an example, he is – to put it mildly – prone to be a little unreliable. Nor does he now represent at all the same grade of society, or the same order of education and intelligence, as he did in the days when the late Master of the Rolls, Mr Smith, made an order in some case in which the Lord Chancellor tells us he was counsel, sending an inquiry of this kind to a jury of the county of Carlow. It is not the course of criminal justice only which has been paralysed by tampering with the jury-box: the course of civil justice has been also enfeebled, and the ordinary rights of property and powers to dispose of the ownership of it shaken and made insecure. Looking back over the last few years, surveying the action of the tribunals, and seeing what verdicts have been given, and still more, what have not been given in some remarkable cases, civil as well as criminal, I profess myself unable to understand how any Court which can choose, and which has at its own command all the best resources and methods of investigation, can imagine that the surest way of ascertaining the truth, or indeed of ascertaining anything, is to bundle off an inquiry to one of our popularised Irish Juries.
It may be said that this is not a matter for the Court of Appeal – that if it were right to direct an inquiry at all, the form of it must be left to the discretion of the primary Judge. I answer that it is in this particular case no matter of form at all, but a matter of the gravest substance; for I not only look upon this issue as one in which, as the Master of the Rolls has just expressed it, Lord Gough would have to go to trial heavily weighted, but I regard the directing of it as being simply an indirect mode of deciding this case against Lord Gough. It would be far better for Lord Gough to put him out of pain at once by ordering him to reform this lease, and to pay the costs of the suit. No one would ever advise him to take this case down to trial; and if he did, it needs no gift of prophecy to be able to predict the result. There would be either a verdict against him or the jury would disagree. And so they might disagree if it were tried again and again: and the inevitable result of all, after a more or less protracted litigation, would be either total defeat, or – worse far – the forced abandonment and compromise of an undoubted right in pure despair of being ever able to bring the case to any definite end at all. That is the course held out by the issue which has been directed in this case. But it is needless to dwell further on it, because, as I have already stated, I am of opinion that this issue ought never to have been directed at all. I hold it to be wholly beside the case – to be wholly indecisive of the case. If we had a finding upon it in the plaintiff s favour tomorrow, it would place him in no better position than he is in without it: and so on the common principles of the Court, his bill must be dismissed with costs: and I fear that, according to the rule now established in all the Courts of Appeal both in this country and England, to the costs of the dismiss must be added the costs of this appeal.
Deasy LJ concurred.
Vatcher v Paull
Privy Council [1915] A.C. 372
LORD PARKER read the judgment of the court: . . . The only objection to the appointment urged before their Lordships was that it constituted a fraud on the power.
The term fraud in connection with frauds on a power does not necessarily denote any conduct on the part of the appointor amounting to fraud in the common law meaning of the term or any conduct which could be properly termed dishonest or immoral. It merely means that the power has been exercised for a purpose, or with an intention, beyond the scope of or not justified by the instrument creating the power. Perhaps the most common instance of this is where the exercise is due to some bargain between the appointor and appointee, whereby the appointor, or some other person not an object of the power, is to derive a benefit. But such a bargain is not essential. It is enough that the appointor’s purpose and intention is to secure a benefit for himself, or some other person not an object of the power. In such a case the appointment is invalid, unless the Court can clearly distinguish between the quantum of the benefit bona fide intended to be conferred on the appointee and the quantum of the benefit intended to be derived by the appointor or to be conferred on a stranger: see Sadler v. Pratt ((1833) 5 Sim. 632) and In re Perkins ([1893] 1 Ch. 283).
In the present case, by the very terms of the settlement creating the power, the donee is entitled to appoint to one or more of the objects of the power exclusively of the others or other of them. He is also entitled to appoint upon condition. The mere fact, therefore, that he intended to benefit the issue of the second to the exclusion of the issue of the first marriage cannot be alleged against the validity of the execution of the power, nor is it any objection to the validity of such execution that the appointment is subject to a condition subsequent with a defeasance in case the condition be not performed. If, therefore, the appointment is open to any objection it must be by reason of the nature of the condition imposed.
It should be noticed that in the present case the condition is not one to be performed by the appointees; it is to be performed if at all by third parties over whose actions the appointees have no control. The case therefore is clearly dis tin uishable from In re Perkins and also from Stroud v. Norman ( (1854) Kay 313). It is also unlike these cases in another respect, namely, that the defeasance in case the condition is not fulfilled is not inserted with a view to an alternative appointment, but with the intention that on failure of the condition the funds are to go upon the trusts limited by the settlement in default of appointment. In their Lordships’ opinion both grounds of distinction are of importance. Apart from cases of appointments made in pursuance of a bargain under which the appointor or a person not an object of the power is to derive a benefit there is no authority for holding an appointment bad because it is made on a condition to be per formed not by the appointee but by a third party. The real vice of an appoint ment on condition that the appointee shall benefit the appointer or a third party is that the power is used not with the single purpose of benefiting its proper objects but in order to induce the appointee to confer a benefit on a stranger, and obviously the vice is absent where the condition is not to be performed by the appointee. Nor is there any case in which a bargain to allow the funds to go in default of appointment, or a condition the non-performance of which will leave the funds to go in default of appointment, has been successfully impeached. The limitations in default of appointment may be looked upon as embodying the primary intention of the donor of the power. To defeat this intention the power must be bona fide exercised for the purpose for which it was given. A bargain or condition which leads to the fund going in default of appointment can never therefore defeat the donor’s primary intention. Even in the case of a condition to be performed by the appointee the condition does not necessarily invalidate the appointment. As explained by Sir William Page Wood in Stroud v. Norman, it can only do so if the purpose of the appointer in imposing it is to benefit himself or a third person not an object of the power. It is not enough that the appointer or some person not an object of the power may conceivably derive some benefit.
Re Greaves
[1954] Ch. 434; [1954] 2 W.L.R. 557;
[1954] 1 All E.R. 771; 98 S.J. 214
EvERSHED M.R.: … Vaisey J…. said [at p. 440]: “The truth is that the scheme in the present case may well be regarded as a meritorious one, but the very tact that it is beneficial to all parties, non-objects as well as objects and including Mrs. Ash herself, makes it impossible for me to say that it complies with the requirements laid down by Lord Westbury and Lord St. Leonards in Portland v. Topham ( (1860) 11 H.L.C. 32), and the many other cases which illustrate the same principle. The scheme may be very good indeed, and there may be many ways in which to carry it out, but, in my judgment, it cannot be validly effected in any manner which gives to the appointer, Mrs. Ash, many thous_ands of p nds of capital through and by means of her execution of a fiduciary power. . ..
Vaisey J. drew attention to the extreme paucity of authority upon the first point. The matter seems twice only to have been before the court, at first instance-in Shirley v. Fisher ( (1882) 47 L.T. 109) before Baron V.-C., and m In re Jones’ Settlement ([1915] l Ch. 373) before Astbury J.-and it has never been, until today, before the Court of Appeal. ..
In order to answer the general question posed, it is useful to discover and to state what is the essential quality of the vice which constitutes a fraud on a power. In our judgment the essential characteristic is that the appointor, having assumed the burden of making the appointment, that is, of deciding whether (in preference to allowing the trust in default of appointment to take effect) a selec tion or discrimination should be made by him among the whole class designated by the creator of the power, and, if so, what kind of selection or discrimination, then proceeds to decide the matter, not with the single view of conferring benefits among the designated class, but with the purpose of procuring the receipt of a material benefit by some person not among the designated class, and to that extent defeating or departing from the intention of the donor of the power. The well-known language of Lord Parker of Waddington in Vatcher v. Paull may once more be cited: ” The real vice of an appointment on condition that the appointee shall benefit the appointer or a third party is that the power is used not with the single purpose of benefiting its proper objects but in order to induce the appointee to confer a benefit on a stranger.”
It is, therefore, in our judgment, fundamental to the vice that the appointer should have assumed the burden of making an appointment which (in uch a case as the present) he was never bound to do; and should then have distorted its stated purposes….
[The appointor] is under no positive duty to exercise the power at all. The only relevant duty which he owes is to the persons designated by the donor of the power to take in default of appointment, the duty ,not to exercise the power of divesting them save strictly to the extent and in the manner prescribed by the donor. No one can, therefore, complain of a fraud on the power if the power has been, in the end, repudiated.
To this reasoning, however, the objection has been raised that the appointor, having once exercised the special power, cannot thereafter disembarrass himself of the duty in which, by such exercise, he has involved himself; so that he cannot revoke the power; he cannot recall what he has done and wipe the slate clean again, save in the exercise of the same ” duty ” to which he was subject in making the original appointment.
In our judgment this argument is erroneous and, also, logically impossible. The ” duty ” in relation to any exercise of the power of appointment is no more than a ” duty ” not to exercise the power otherwise than for the single benefit of the members ?f the designat d class of objects. If, therefore, ,th_e ” duty” applies to the revocat10n of an appomtment already made, to whom 1s ·1t owed? Clearly not to the original appointees or to the class of possible appointees; for the donee of the power never owed any duty to them to exercise it at all, and they can, therefore, have no valid ground for complaint if he chooses to recall a revocable exercise of it. Moreover, if the “duty” were held to be owed to these persons, it could only be a duty not to exercise the power of revocation otherwise than for their single benefit; and as revocation per se can never benefit the objects of the power as such, this would mean that the power of revocation could never be exercised save with a view to re-appointment. It has not been suggested that the donee of a special power of appointment, who has once exercised the power, could not in any circumstances revoke the appointment and thereafter wholly release the power. If it were otherwise the donee of a power, if an earlier exer cise by him of the power had for any reason failed of effect, would be bound to re-appoint. Equally, in our judgment, the “duty” cannot be owed to the class of possible appointees, plus the persons to take in default of appointment, since the interests of the latter might be directly in conflict with the interests of the former. Finally, the “duty” cannot be owed to the persons to take in default of appointment, so as (for the first time) to disable the donee of the power from taking or even (we suppose) permitting anyone else to take directly or indirectly
any benefit from or through any of such persons: for those persons have taken, once and for all, vested interests granted to them by the original donor, subject only to the power of the appointor wholly or partly to divest them. And revoca tion without re-appointment must necessarily benefit the persons taking in default as such, so that the conception of a duty to them not to revoke an existing revocable appointment is a contradiction in terms. Further, as the donee of the power is plainly under no obligation to them to revoke the existing appointment but is free to revoke it or not as he pleases, it follows that there is no objection in law to his stipulating for some benefit to himself or some third party as a condition of revocation….
Intheresult the appellant is entitled in our judgment to succeed upon her first point, the more general question. The second point … does not, therefore, strictly arise.
We add that our judgment is confined to the facts of the present case and to facts strictly analogous thereto; that is, when the following conditions are found:
(1) a special power of appointment expressed to be exercisable by deed, revocable or irrevocable, or by will, with a gift over in default of and subject to any such appointment; (2) an exercise of that power by deed expressed to be liable to be revoked at any time; and (3) a subsequent total revocation followed by, or (if you will) coupled with, a general release of the power. We can, for example, conceive of a case in which there is conferred a power to revoke previously declared trusts which is so closely related to a power of re-appointment that, as a matter of con struction, the former power should be held to be only exercisable for the purposes of, and as an essential step towards, a re-appointment. In such a case we can well understand that, if for any reason the re-appointment were ineffective, the revocation might fall with it so as to leave the original trusts persisting. That kind of case is not before us and we express no opinion, therefore, on it. But in the present case we think that the appeal should be allowed and an order made as prayed in the notice of appeal.
Re Dick
Court of Appeal [1953) Ch. 343; [1953) 2 W.L.R. 477; [1953) 1 All E.R. 559; 97 S.J. 149
EvERSHED M.R. : . . . I confess that I have found the case one of most vexing difficulty, and I have been conscious of some vacillation and many doubts during the course of the careful arguments to which we have listened. I have, however, come to the conclusion that I cannot hold that the judge wrongly determined the issue presented to him, and my doubts have been, perhaps, assuaged by the circumstance that my two brethren have felt, perhaps with less nervousness than I, that the conclusion reached is right.
Before I proceed to justify my answer to the froblem, let me say that I shall not attempt to make an exhaustive formulation o the principles on which, or the circumstances in which, the court will hold an exercise of a limited power to have been “fraudulent.” We have been referred to a recent decision in this court, In r wshay_([1948] Ch. 123) (the second case of that name involving frauds
on a power). Cohen L.J., delivering the reserved judgment of the court, referred to certain propositions which had been accepted by tbe unsuccessful appellant. “The six propositions are as follows: (1) One case of a fraud on a power is where the donee of a special power of appointment makes an appointment intended to benefit some person not an object of the power. (2) To establish a f:.–aud on a power it is not necessary to prove a bargain between the donee of the power and the appointee. (3) What the court looks to is the intention or purpose of the appointer in making the appointment. (4) It is not necessary that (a) the appointee should be a party to or know of the corrupt intention or purpose or (b) that the purpose should in fact take effect. (5) The relevant date as at which the intention of the appointer has to be ascertained is the date of the exercise of the power. (6) Evidence is admissible as to the state of mind of the appointer, including statements by the appointer which go to show his or her state of mind at the material date. Such statements may be material though they are not contemporaneous with the date of exercise of the power.”
It will be observed that some of those six propositions are affirmative in form and some are negative; some are general in scope, some are particular, and indeed procedural. I do not understand that Cohen L.J. intended those six propositions
exhaustivell to formulate the principles governing frauds on a power or the methods o establishing allegations of frauds on a power. They had been put forward by the respondents and accepted by the appellant for the purposes of the argument….
Cohen L.J. stated that the propositions which he enunciated were derived from certain observations of P. 0. Lawrence J. in In re Wright ([1920] 1 Ch. J
108), and he said: “We respectfully agree with those observations. We would add that the seconrl proposition “-that is, that to establish a fraud it is not necessary to prove a bargain-” is founded on the observations of Lord Parker of Waddington in the Privy Council in Vatcher v. Paull ([1915] A.C. 372), which )
were cited by Vaisey J. in the court below, namely: ‘A bargain is not essential.
It is enough that the appointor’s purpose and intention is to secure a benefit for himself or some other person not an object of the power.’ A difficulty, how- ever, arises in determining what, short of a bargain, establishes such purpose and intention. On the one hand, if the appointer appoints to an object of the power, hoping that the appointee will so dispose of the appointed property as to benefit a non-object, but intending to benefit the object whatever disposition he may make of the appointed property, the appointment will be valid. But if he makes the appointment to an object with the belief that the object will be subject to
strong moral suasion to benefit a non-object, which suasion the object would, in the appointor’s opinion, be unable to resist, the appointment would, we think, be invalid as a fraud on the power.”
Counsel for the appellant has submitted that that antithesis embraces all possible cases short of a bargain and, in consequence, that unless it is shown by proper proof (the onus, it has been conceded, lying on him who challenges the validity of the exercise of the power) that the object of the power in whose favour it was exercised is ” subject to strong moral suasion to benefit a non-object, which suasion the object would, in the appointor’s opinion, be unable to resist,” then the case must fall within the first alternative and be regarded as being no more than a hope or expectation, subject to an overriding intention of benefiting, or benefiting primarily, the object of the power. In other words, it is submitted that unless a moral suasion of the character indicated is proved, the appointment must be good.
I do not think that that is a just interpretation of this passage in the judgment of Cohen L.J. He was stating the propositions in order to found his judgment on the facts of In re Crawshay, and on those facts it is perhaps not entirely sur prising that the court came to the conclusion that, though Jack Crawshay had never made any sort of bargain or any kind of promise, he was under a moral suasion so strong that in Rose Williams’ opinion he could not be expected to have resisted. I think the more general rule which should guide the court was stated by Lord Parker of Waddington and was quoted by Cohen L.J.: “‘ It is enough that the appointor’s purpose and intention is to secure a benefit for himself or some other person not an object of the power’.” I should not wish to be thought to lay down that whenever there is any intention, however secreted in the bosom of the appointor, to benefit some non-object in some measure, that therefore the exercise of the power is bad. After all, although the phrase ” fraud on the power ” does not carry the sense of deceit which the word ” fraud ” bears in other contexts, it indicates the doing of something which is not right, using those words in their broad sense-at least, a deliberate defeating of what the donor of the power authorized and intended. To take an example which has been dis cussed during the argument: if A, having no free estate but having a limited power of appointment, exercises that power in favour of some object to whom he has natural inclinations of affection, and says to that person, either by contem poraneous document or otherwise, “I am in this difficulty, that I have no free estate, and I therefore hope that you will find it in your heart to look after the persons to whom I feel a natural obligation”; and, if he not only says that, but thinks that the object will be sensible of those claims, I should not wish it to be thought that I was holding that such an appointment, made in such circum stances, must be invalid. But refinements of that kind are not necessary, in my judgment, for consideration in the present case; for if (to go to the other end of the scale) the proper inference from all the facts is that what the appointor has deliberately set out to achieve, by means of the appointment he has made, is the benefiting of some non-object, then, as it seems to me, the appointment falls within the disability expressed by Lord Parker; and, as I have already indicated, on the whole I am not prepared to say that Wynn-Parry J. was wrong in reaching that result in the present case…. Iconfess, finally, that I am not entirely uninfluenced by this: that if we were to hold in this case that this was an effective appointment which involved no fraud upon the power, it would, I suppose, become a model in other cases. Wills would be accompanied by statements of this kind and, unless it were proved that the appointee was (within the language used in In re Crawshay) under a moral suasion so strong that in the opinion of the appointor it was irresistible, then a person who had, by the bounty of another, a limited power to dispose of that other’s property, could, by such device, contrive to defeat the intention of the original donor and secure the enjoyment of the donor’s property, or a substantial part of it, by persons who were altogether outside the ambit of the intended benefaction.
Re Nicholson’s Settlement
Court of Appeal (1939] Ch. II; 107 L.J.Ch. 338; 159 L.T. 314; 54 T.L.R. 1060;
[1938] 3 All E.R. 532; 82 S.J. 603
CLAUSON J.: . . . For the present purpose it is to be noted that there are two types of powers of appointment which have to be distinguished. Of the first type are powers for an appointor to alienate in favour of a person filling a particular qualification (for example, husband or wife, to take the common case) a part of or an interest in the property, with the result of diminishing pro tanto the interest passing to persons to whom (subject to the exercise of the power of appointment) the property is given. Of the second type are powers for an appointor to select and define the beneficial interests inter se of the several members of a class of beneficiaries or their issue in a fund which (subject to the exercise of the power of appointment) is to pass in defined proportions to some or all of the members of the class.
In the case of either type of power the appointment will or may be vitiated either wholly or pro tanto if it is shown to have been made upon a bargain or even arrangement or understanding which fetters the appointed interest in the appointee’s hands in favour either of the appointor himself or some outside party, or is directed to providing some advantage for the appointor or some outside party. The principle is that such an appointment amounts in substance to an appointment pro tanto in favour of some one outside the qualification stipulated for, or the class of beneficiary defined, by the donor of the power. The execution of the power is alien in reality, though possibly not in form, tothe power conferred. The application of the principle is complicated by the fact that certain arrangements in respect of jointures have, under circumstances con sidered in this Court in the case of Saunders v. Shafto ([1905) 1 Ch. 126), been treated as good, though on the face of them obnoxious to the principl_e : and further difficulties are occasioned by the authorities which have dealt with the question how far appointments which are in part obnoxious to the principle can be treated as severable and supported in part though held to be bad in part. As, however, in the present case the evidence fails to disclose any bargain, arrangement or un derstanding between the appointor and appointee and there is no suggestion of any dishonesty or of any fraud in the ordinary sense of the term, it is unnecessary to examine the principle or to discuss the limitation to which its application is subject.
There are, however, cases in the books in which there has been no fraud
in the sense of dishonesty, and no bargain or arrangement between appointor and appointee such as above mentioned; but nevertheless the appointment has been treated as invalid by reason of the existence, though unknown to the appointee, of an intention that the purpose for which the power was created should be defeated (to use the language of Kindersley V.-C. in In re Marsden’s Trust ( (1859) 4 Drew. 594) ), and that an object foreign to the power should be achieved. Such cases were those of Topham v. Duke of Portland (No. 2) ( (1870)
L.R. 5 Ch.App. 40), and others are to be found referred to in Farwell on Powers, 3rd ed., at pp. 477 to 480.
It would seem that in all the reported cases in which appointments have been invalidated on this ground, the power in question has been one which falls within the description of the second type above stated. It is not easy to see how this ground of invalidity can be applicable to the case of a power which is not one of selection and definition among members of a class but merely a power to carve out an interest from the property for the benefit of a person filling a particular qualification, where it is found, as in the present case, that such a power has been exercised so as to create the interest in favour of the qualified person without placing any fetter upon the enjoyment by him of that interest. In particular it is not easy to see why that person’s position should be affected by the hope or even expectation on the part of the appointor that the appointee will use or apply the interest so given to him for some particular end. The pos1t10n is different where the appointor has allowed himself, in exercising a duty, imposed on him by the donor of the power, of choosing among members of a class, to be swayed, not by a consideration of the needs or merits of the appointee, but by collateral considerations. The donor of the power, it may be said, gave the appointer the power of selection in order that his bounty might be fairly distributed among the possible beneficiaries, and not in order that a collateral purpose should be achieved. Where the power can be exercised only in favour of a particular person, and there is no question of selecting among a class, there is no room for any complaint of unfairness if the appointment results in fact in the appointee taking the appointed interest without any fetter. The appointee and no one else is benefited, as the donor of the power intended should be the case if the appointer chose to exercise the power; and there is no detriment to any one else. Where, however, there is a power to select among a class, and a particular beneficiary is selected in order to achieve a collateral purpose, the result is pro tanto to diminish the interest of the other beneficiaries, a diminution which the appointor is no doubt authorized to effect in a bona fide attempt to achieve what he considers justice and fairness as between the bene ficiaries, but which he is not authorized to effect in order to achieve a collateral purpose. While therefore it may well be that in the case of powers of the second type defined above the Court may inquire into the ultimate object which the appointor hopes to achieve, and where that object is collateral may invalidate the appointment, there is no authority for the proposition that such an inquiry is appropriate or permissible in the case of a power of the first type defined above; and we can discern no principle which would justify such an inquiry: on the contrary the very nature of the power, containing as it does no element of selection among competing objects of bounty, would seem to negative the appropriateness of any such inquiry….
Re Simpson
[1952] Ch. 412; [1952] 1 T.L.R. 868; [1952] 1 All E.R. 963; 96 S.J. 262
VAISEY J. stated the facts and the questions raised by the summons and con tinued: -I think that this is not such a very easy question. The authorities, which appear to support the proposition that this kind of scheme by quasi application of the principle of e1ection or otherwise, is operative are to be found in, I think, only two places, namely, In re Neave and the Irish case of King v.
King ((1864) 15 Ir.Ch.R. 479). Farwell J. in In re Neave ([1938) Ch. 793, 797)
held that the conditions sought to be imposed by the proviso in that will were ineffective and invalid, and that the appointees took under the appointment free from the conditions which were designed to bring about the settlement of the appointed share. In the course of his judgment the judge said that the testator ” has sought to impose as a condition upon the two sons in connexion with their enjoyment of the property, which they take under the power, that they shall settle the appointed property in a way which, if such settlement had been contained in the appointment itself, would have rendered the appointment invalid on the ground that it was in excess of the power. A testator cannot validly impose any such condition as to the enjoyment of the property which he is appointing under a special power and such condition is wholly ineffective.” Then the judge proceeds: “But a testator may do this; he may say: ‘I exercise the special power of appointment in favour of the objects of the power and I give a portion of my own property, to those objects, but if those objects do not make a settlement of the property which they take under the appointment then they shall forfeit what they would otherwise have taken out of my own pro perty.'” Then the judge continues: “It is said in this case “-that is in the case of In re Neave-” that on t.he true construction of this will that is really what the testator has done.” The judge decided, however, that that was not
the effect of the will in that case. It seems to me that that dictum-and it is a dictum-of Farwell J. really covers the present case. Further, when I look at the Irish case of King v. King, which is a much older case, there, not merely by
way of dictum but as a matter of decision, it was held that, because of the express clause in that will, the legatees could not take the legacies which were given to them by the will without settling their shares in the appointed fund according to the direction of the testatrix. Those two cases, one by decision and the former by dictum, are undoubtedly in favour of the view that the testator’s appointment was valid and was not vitiated by any taint of fraud.
On the other side there is a great mass of authority as to what is and what is not a fraud within the meaning of that expression as used in connexion with powers. I have been referred to In re Marsden’s Trusts ( (1859) 4 Drew. 594) and to Pryor v. Pryor ( (1864) 2 De G.J. & S. 205), neither of which cases really comes very near to the present case, because in each of those cases there was something in the nature of an understanding, which raises entirely different questions from that which I have now to decide. There is no question of bargain here so far as I know. The father had not approached the children to induce them to do any thing with their shares after his death, but the whole matter turns on what appears in the will itself.
I think that the law on the subject is best to be found in the case of Vatcher v. Paull ([1915] A.C. 372; supra, p. 317), where there is a very clear enuncia tion of the principle by Lord Parker of Waddington in the Privy Council. Then I might also refer, not because of anything which it decides, but because it is a case in which the authorities are summed up, to my own decision in In re Crawshay ([ 1947] Ch. 356), which was approved in the Court of Appeal ([1948] Ch. 123). There, again, the authorities were exhaustively considered in
the judgment of the court which was delivered by Cohen L.J.
In my opinion this doctrine of fraud on the power has received a good deal of illumination in recent times, and I think that much greater emphasis is laid on that principle today. The doctrine can be summed up in the shortest possible way by saying that an appointment will be held to be fraudulent if it is executed with a view to furthering some object which the appointor had in view and not with the sole object of benefiting the appointee who is the object of the power. In the case of In re Crawshay that which the appointor had in view was to bring in some children who had been excluded from the father’s will. The appoint ment was made to a relative who, she had good reason to suppose, would remedy what was regarded as a grave injustice.
In the present case it seems to me that the exercise of the power under this I marriage settlement was made for the purpose of furthering an object which selves. I think he was determined that, so far as he could, he would tie up the
property with his own property and have it dealt with as if it were his own property.
In my judgment, according to the modern trend of authorities, as exemplified in the case in the Privy Council, and as explained by reference to the earlier authorities in my own judgment and the judgment of the Court of Appeal in In re Crawshay, that kind of intention on the part of the appointor vitiates the appointment, because he was doing something to serve his own ends, to carry out his own projects, to give effect to his own ideas of what was right and proper, and not merely, without any regard to those issues, to benefit the appointees themselves. Therefore, I think that this appointment of the marriage settlement fund in the will of the testator was void, and that it was not clear of that taint of equitable fraud which, according to very well-settled principles, destroys the efficacy of the exercise of the power. I hold, though not without some hesitation, that, as the appointment was in my judgment invalid, the trust funds are now held on trust for the three surviving children and the personal representative of the deceased child, in equal fourth shares, not under the appointment, but in disregard of the appointment, by virtue of the trusts in default of appointment which are contained in the settlement.
Re Burtons’s Settlement
Chancery Division (1955) Ch. 82; (1954) 3 W.L.R. 581; (1954) 3 All E.R. 193; 98 S.J. 734
UPJOHN J.: . . . The general scheme of the testator’s will is perfectly simple. He makes out and out appointments to his daughter Ida under the first marriage settlement and to the children of the second marriage under the 1915 settlement. No one, I think, can doubt that those appointments were intended to give real benefits to his children respectively. The testator then gives his own residue to the children of the second marriage, and if none of them attained 21 to Ida, and he is careful to settle the daughters’ shares of residue. He then provides that the daughters of the second marriage will forfeit their interests in residue unless they settle the shares appointed to them under the 1915 settlement. He also provides that if, but only if, Ida becomes entitled to the 1915 settled funds and to residue (in fact she cannot) then she also is to settle her appointed interest if she desires to enjoy her interest in residue.
The obvious intention of the testator in making that provision was to try to secure, if he could, that his daughters would settle the shares appointed to them, and that, of course, would benefit non-objects of the power, namely, the issue of daughters none of whom were born in his lifetime.
Is that sufficient to constitute a fraud on the power as defined by Lord Parker? The matter is not free from authority. In the Irish case of King v. King ( (1864) 15 Ir.Ch.R. 479), the testatrix appointed certain marriage settle ment funds to her three sons and also bequeathed to them certain legacies, and she directed that the funds so appointed to the sons and also the legacies should be settled on the three children for life with remainders to their issue who were non-objects of the power, and if such settlements were not made the legacies were to fall into residue. It was held that the condition was valid, although it does not seem to have been argued that the imposition of such a condition con
stituted a fraud on the power. Nevertheless, as pointed out by Vaisey J. in In re Simpson’s Marriage Settlement ([1952] Ch. 412), it is an express decision in favour of the view that the testator’s appointment was valid and not vitiated by fraud. The same view was expressed by Farwell J., obiter, in In re Neave ([1938] Ch. 793; [1938] 3 All E.R. 220). As the relevant passage in the judgment
of Farwell J. is fully set out in In re Simpson, I do not propose to repeat it here. Both those authorities were considered by Vaisey J. in In re Simpson’s Marriage Settlement and, after referring to In re Crawshay ([1948] Ch. 123), he came to
the conclusion that a much greater emphasis is today laid on the doctrine of fraud on the power than formerly, and he held that a condition annexed to the enjoyment of residue in substance not unlike the present did constitute a fraud on the power. He said this: ” In the present case it seems to me that the exercise of the power under this marriage settlement was made for the purpose of furthering an object which the testator had in view and was not confined to benefiting the appointees themselves. I think he was determined that, so far ashe could, he would tie up the property with his own property and have it dealt with as if it were his own property.” …
With all respect to Vaisey J., I find nothing in the more recent cases which
lays any greater emphasis on the doctrine than that in one of the earliest of the leading cases, Du e of Portland v. Topham (Lady) ((1864) 11 H.L.C. 32, 54), where Lord Westbury said this: “the ar ointor under t o er, shall, at the time of the exercise of that power, and for any purpose for which it is used, with ood faith and sincerity, and with an entire and single view to th real pur ose and object of the power, and not for the purpose of accomplishing or carrying into effect any bye or sinister object (I mean sinister in the sense of its being beyond the purpose and intent of the power) which he may desire to effect in the exercise of the power.”
I venture to think that Vaisey J. gave too literal and strict an interpretation to
the words quoted earlier of Lord Parker in Vatcher v. Paull ( [ 1915] A.C. 372; supra, p. 317). Those words must be read in the light of the earlier authorities and it must be remembered that Lord Parker was not dealing with a case where the condition imposed was to be performed by the appointees. In my judgment, ” the purpose and intention ” of the appointor is to be ascertained as a matter of substance and not solely by analysing the effect of the appointment, though, of course, that is important. One must try to discover his genuine intention. In many cases contemporaneous evidence of memoranda or letters make the real purpose and intention of the appointor clear, as in In re Crawshay and In re Dick ( [1953] Ch. 343), and vitiate the appointment. In other cases it may be that the phraseology used in the document making the appointment makes it clear as to what was the appointor’s real purpose and intention. Possibly that may serve to distinguish In re Simpson’s Marriage Settlement from this case, though the distinction seems to me one of form rather than of substance. Then, again, the surrounding circumstances by themselves may be sufficient to deter mine the matter one way or another, as in the cases I have mentioned which were quoted in Roach v. Trood ( (1876) 3 Ch.D. 429). But, in the absence of such aids to assist in determining the appointor’s real purpose and intention, the mere fact that the appointor purports to attach conditions intended to compel the apeointees to settle the fund or make certain payments is not, in my judg ment, by itself sufficient to constitute a fraud on the power. n such circum stances the appointment to the appointees is valid, and if the condition is attached to the enjoyment of the appointe un itself it must be rejected as being an excessive execution of the power. If, on the other hand (as here) the condition is annexed, not to the enjoyment of the appointed fund but to the testator’s own property, the doctrine of excessive execution is not available. In such a case the appointee is put to his election. He can either enjoy his share of the appointed fund unfettered and forfeit his interest in the appointor’s property or he can enjoy his share of the appointor’s property upon the terms of settling the appointed fund….