Sale & Maintenance
The Trustee Act 1893
Power of trustee for sale to sell by auction, &c.
13.-(1) Where a trust for sale or a power of sale of property is vested ina
trustee, he may sell or concur with any other person in selling all or any part of the property, either subject to prior charges or not, and either together or in lots, by public auction or by private contract, subject to any such conditions respecting title or evidence of title or other matter as the trustee thinks fit, with power to vary any contract for sale, and to buy in at any auction, or to rescind any contract for sale and to re-sell, without being answerable for any loss.
(2) This section applies only if and as far as a contrary intention is not
expressed in the instrument creating the trust or power, and shall have effect subject to the terms of that instrument and to the provisions therein contained.
(3) This section applies only to a trust or power created by an instrument
coming into operation after the thirty-first of December one thousand eight hundred and eighty-one.
Power to sell subject to depreciatory conditions
14.-(1) No sale made by a trustee shall be impeached by any beneficiary upon the ground that any of the conditions subject to which the sale was made may have been unnecessarily depreciatory unless it also appears that the consideration for the sale was thereby rendered inadequate.
(2) No sale made by a trustee shall, after the execution of the conveyance, be impeached as against the purchaser upon the ground that any of the conditions subject to which the sale was made may have been unnecessarily depreciatory, unless it appears that the purchaser was acting in collusion with the trustee at the time when the contract for sale was made.
(3) No purchaser, upon any sale made by a trustee, shall be at liberty to make any objection against the title upon the ground aforesaid.
(4) This section, applies only to sales made after the twenty fourth day of December one thousand eight hundred and eighty-eight.
Power to sell
15.-A trustee who is either a vendor or a purchaser may sell or buy without excluding the application of section two of the Vendor and Purchaser Act, 1874.
Power to insure building
18.-(1)A trustee may insure against loss or damage by fire any building or other insurable property to any amount (including the amount of any insurance already on foot) not exceeding three equal fourth parts of the full value of such building or property, and pay the premiums for such insurance out of the income thereof or out of the income of any other property subject to the same trusts, without obtaining the consent of any person who may be entitled wholly or partly to such income.
(2) This section does not apply to any building or property which a trustee is
bound forthwith to convey absolutely to any beneficiary upon being requested to do so.
(3) This section applies to trusts created either before or after the commencement of this Act, but nothing in this section shall authorise any trustee to do anything which he is in express terms forbidden to do, or to omit to do anything which he is in express terms directed to do, by the instrument creating the trust.
Power to Compound Liabilities
Power for executors and trustees to compound, &c
21.-(1) An executor or administrator may pay or allow any debt or claim on any evidence that he thinks sufficient.
(2) An executor or administrator, or two or more trustees, acting together, or a sole acting trustee where by the instrument, if any, creating the trust a sole trustee is authorised to execute the trusts and powers thereof, may, if and as he or they may think fit, accept any composition or any security, real or personal, for any debt or for any property, real or personal, claimed, and may allow any time for payment for any debt, and may compromise, compound, abandon, submit to arbitration, or otherwise settle any debt, account, claim, or thing whatever relating to the testator’s or intestate’s estate or to the trust, and for any of those purposes may enter into, give, execute, and do such agreements, instruments of composition or arrangement, releases, and other things as to him or them seem expedient, without being responsible for any loss occasioned by any act or thing so done by him or them in good faith.
(3) This section applies only if and as far as a contrary intention is not expressed in the instrument, if any, creating the trust, and shall have effect subject to the terms of that instrument, and to the provisions therein contained.
(4) This section applies to executorships, administratorships and trusts constituted or created either before or after the commencement of this Act.
Power of Maintenance
Section 43 of the Conveyancing Act 1881:
Application by trustees of income of property of infant for maintenance, &c.
43.-(1) Where any property is held by trustees in trust for an infant, either for life, or for any greater interest, and whether absolutely, or contingently on his attaining the age of twenty-one years, or on the occurrence of any event before his attaining that age, the trustees may, at their sole discretion, pay to the infant’s parent or guardian, if any, or otherwise apply for or towards the infant’s maintenance, education, or benefit, the income of that property, or any part thereof, whether there is any other fund applicable to the same purpose, or any person bound by law to provide for the infant’s maintenance or education, or not.
(2) The trustees shall accumulate all the residue of that income in the way of compound interest, by investing the same and the resulting income thereof from time to time on securities on which they are by the settlement, if any, or by law, authorized to invest trust money, and shall hold those accumulations for the benefit of the person who ultimately becomes entitled to the property from which the same arise; but so that the trustees may at any time, if they think fit, apply those accumulations, or any part thereof, as if the same were income arising in the then current year.
(3) This section applies only if and as far as a contrary intention is not expressed in the instrument under which the interest of the infant arises, and shall have effect subject to the terms of that instrument and to the provisions therein contained.
(4) This section applies whether that instrument comes into operation before or after the commencement of this Act.
Conveyancing and Law of Property Act, 1881.
IX.—Infants.
Infants.
Management of land and receipt and application of income during minority.
Infants.
42.—(1.) If and as long as any person who would but for this section be beneficially entitled to the possession of any land is an infant, and being a woman is also unmarried, the trustees appointed for this purpose by the settlement, if any, or if there are none so appointed, then the persons, if any, who are for the time being under the settlement trustees with power of sale of the settled land, or of part thereof, or with power of consent to or approval of the exercise of such a power of sale, or if there are none, then any persons appointed as trustees for this purpose by the Court, on the application of a guardian or next friend of the infant, may enter into and continue in possession of the land; and in every such case the subsequent provisions of this section shall apply.
(2.) The trustees shall manage or superintend the management of the land, with full power to fell timber or cut underwood from time to time in the usual course for sale, or for repairs or otherwise, and to erect, pull down, rebuild, and repair houses, and other buildings and erections, and to continue the working of mines, minerals, and quarries which have usually been worked, and to drain or otherwise improve the land or any part thereof, and to insure against loss by fire, and to make allowances to and arrangements with tenants and others, and to determine tenancies, and to accept surrenders of leases and tenancies, and generally to deal with the land in a proper and due course of management; but so that, where the infant is impeachable for waste, the trustees shall not commit waste, and shall cut timber on the same terms only, and subject to the same restrictions, on and subject to which the infant could, if of full age, cut the same.
(3.) The trustees may from time to time, out of the income of the land, including the produce of the sale of timber and underwood, pay the expenses incurred in the management, or in the exercise of any power conferred by this section, or otherwise in relation to the land, and all outgoings not payable by any tenant or other person, and shall keep down any annual sum, and the interest of any principal sum, charged on the land.
(4.) The trustees may apply at discretion any income which, in the exercise of such discretion, they deem proper, according to the infant’s age, for his or her maintenance, education, or benefit, or pay thereout any money to the infant’s parent or guardian, to be applied for the same purposes.
(5.) The trustees shall lay out the residue of the income of the land in investment on securities on which they are by the settlement, if any, or by law, authorized to invest trust money, with power to vary investments; and shall accumulate the income of the investments so made in the way of compound interest, by from time to time similarly investing such income and the resulting income of investments; and shall stand possessed of the accumulated fund arising from income of the land and from investments of income on the trusts following (namely):
(i.) If the infant attains the age of twenty-one years, then in trust for the infant;
(ii.) If the infant is a woman and marries while an infant, then in trust for her separate use, independently of her husband, and so that her receipt after she marries, and though still an infant, shall be a good discharge; but
(iii.) If the infant dies while an infant, and being a woman without having been married, then, where the infant was, under a settlement, tenant for life, or by purchase tenant in tail or tail male or tail female, on the trusts, if any, declared of the accumulated fund by that settlement; but where no such trusts are declared, or the infant has taken the land from which the accumulated fund is derived by descent, and not by purchase, or the infant is tenant for an estate in fee simple, absolute or determinable, then in trust for the infant’s personal representatives, as part of the infant’s personal estate; but the accumulations, or any part thereof, may at any time be applied as if the same were income arising in the then current year.
(6.) Where the infant’s estate or interest is in an undivided share of land, the powers of this section relative to the land may be exercised jointly with persons entitled to possession of, or having power to act in relation to, the other undivided share or shares.
(7.) This section applies only if and as far as a contrary intention is not expressed in the instrument under which the interest of the infant arises, and shall have effect subject to the terms of that instrument and to the provisions therein contained.
(8.) This section applies only where that instrument comes into operation after the commencement of this Act.
Application by trustees of income of property of infant for maintenance &c.
Infants.
43.—(1.) Where any property is held by trustees in trust for an infant, either for life, or for any greater interest, and whether absolutely, or contingently on his attaining the age of twenty-one years, or on the occurrence of any event before his attaining that age, the trustees may, at their sole discretion, pay to the infant’s parent or guardian, if any, or otherwise apply for or towards the infant’s maintenance, education, or benefit, the income of that property, or any part thereof, whether there is any other fund applicable to the same purpose, or any person bound by law to provide for the infant’s maintenance or education, or not.
(2.) The trustees shall accumulate all the residue of that income in the way of compound interest, by investing the same and the resulting income thereof from time to time on securities on which they are by the settlement, if any, or by law, authorized to invest trust money, and shall hold those accumulations for the benefit of the person who ultimately becomes entitled to the property from which the same arise; but so that the trustees may at any time, if they think fit, apply those accumulations, or any part thereof, as if the same were income arising in the then current year.
(3.) This section applies only if and as far as a contrary intention is not expressed in the instrument under which the interest of the infant arises, and shall have effect subject to the terms of that instrument and to the provisions therein contained.
(4.) This section applies whether that instrument comes into operation before or after the commencement of this Act.
Appointment by personal representatives of trustees of infant’s property.
Succession Act 1965
[New]
Appointment by personal representatives of trustees of infant’s property
57.—(1) Where an infant is entitled to any share in the estate of a deceased person and there are no trustees of such share able and willing to act, the personal representatives of the deceased may appoint a trust corporation or any two or more persons (who may include the personal representatives or any of them or a trust corporation) to be trustees of such share for the infant and may execute such assurance or take such other action as may be necessary for vesting the share in the trustee so appointed. In default of appointment the personal representatives shall be trustees for the purposes of this section.
(2) On such appointment the personal representatives, as such, shall be discharged from all further liability in respect of the property vested in the trustees so appointed.
Annotations
Modifications (not altering text):
C14
Meaning of “infant” subjected to transitional provision (1.03.1985) by Age of Majority Act 1985 (2/1985), s. 7(1) and sch. para. 4.
Powers of Personal Representatives During Minority of Beneficiary
4. In the case of a beneficiary whose interest arises under a will or codicil made before the commencement of this Act or on the death before that date of an intestate, section 2 shall not affect the meaning of “infant” in sections 57 and 58 of the Succession Act, 1965.
Powers of trustees of infant’s property.
[New]
58.—(1) Property vested under section 57 may be retained in its existing condition or state of investment or may be converted into money and invested in any security in which a trustee is authorised by law to invest, with power, at the discretion of the trustees, to change such investments for others so authorised.
(2) F26[…]
(3) A person who is sole trustee under section 57 shall be entitled to receive capital trust money.
(4) Persons who are trustees under section 57 shall be deemed to be trustees for the purposes of sections 42 and 43 of the Conveyancing Act, 1881.
(5) Without prejudice to any powers under the said sections 42 and 43, persons who are trustees under section 57 may at any time or times pay or apply the capital of any share in the estate to which the infant is entitled for the advancement or benefit of the infant in such manner as they may, in their absolute discretion, think fit and may, in particular, carry on any business in which the infant is entitled to a share.
(6) The powers conferred by subsection (5) may also be exercised by the surviving spouse F27[or civil partner] as trustee of any property of an infant appropriated in accordance with section 56.
Annotations
Amendments:
F26
Repealed (1.12.2009) by Land and Conveyancing Law Reform Act 2009 (27/2009), S.I. No. 356 of 2009.
F27
Inserted (1.01.2011) by Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010 (24/2010), s. 71, S.I. No. 648 of 2010.
Modifications (not altering text):
C15
Meaning of “infant” subjected to transitional provision (1.03.1985) by Age of Majority Act 1985 (2/1985), s. 7(1) and sch. para. 4.
Powers of Personal Representatives During Minority of Beneficiary
4. In the case of a beneficiary whose interest arises under a will or codicil made before the commencement of this Act or on the death before that date of an intestate, section 2 shall not affect the meaning of “infant” in sections 57 and 58 of the Succession Act, 1965.
Guardianship of Infants Act 1964
Applications to court.
11.—(1) Any person being a guardian of a F39[child] may apply to the court for its direction on any question affecting the welfare of the F39[child] and the court may make such order as it thinks proper.
F40[(2) The court may by an order under this section—
(a) give such directions as it thinks proper regarding the custody of the child and the right of access to the child of each of his or her parents, and
(b) order a parent of the child to pay towards the maintenance of the child such weekly or other periodical sum as, having regard to the means of the parent, the court considers reasonable.]
F41[(3) An order under this section may be made on the application of either parent notwithstanding that the parents are then residing together, but an order made under paragraph (a) of subsection (2) shall not be enforceable and no liability thereunder shall accrue while they reside together, and the order shall cease to have effect if for a period of three months after it is made they continue to reside together.]
F40[(4) In the case of a child whose parents have not married each other—
(a) a reference in subsection (2)(b) to a parent of that child shall be construed as including a parent who is not a guardian of the child, and
(b) the right to make an application under this section regarding the custody of the child and the right of access thereto of each of his or her parents shall extend to a parent who is not a guardian of the child, and for this purpose references in this section to the parent of a child shall be construed as including such a parent.]
F42[(5) The court may, of its own motion or on an application under this section, by an order under this section give such directions as it thinks proper to procure a report from such person as it may nominate on any question affecting the welfare of the F43[child].]
F44[(5) A reference in subsection (2)(b) to a child shall include a reference to a person who—
(a) has not attained the age of 18 years, or—
(b) has attained the age of 18 years and is or will be, or if any order were made under this Act providing for payment of maintenance for the benefit of the person, would be, receiving full-time education or instruction at a university, college, school or other educational establishment, and who has not attained the age of 23 years.
(6) Subsection (2) (b) shall apply to and in relation to a person who has attained the age of 18 years and has a mental or physical disability to such extent that it is not reasonably possible for the person to maintain himself or herself fully, as it applies to a child.]
F42[(6) In deciding whether or not to request a report under subsection (5) of this section the court shall have regard to the wishes of the parties before the court where ascertainable but shall not be bound by the said wishes.
(7) A copy of any report prepared under subsection (5) shall be made available to the barrister or solicitor, if any, representing each party in the proceedings or, if any party is not so represented, to that party and may be received in evidence in the proceedings.
(8) Where any person prepares a report pursuant to a request under subsection (5) of this section, the fees and expenses of that person shall be paid by such party or parties to the proceedings as the court shall order.
(9) The court may, if it thinks fit, or either party to the proceedings may, call the person making the report as a witness.]
F45[(10) An application under subsection (1) shall be on notice to each other person who is a parent or guardian of the child concerned.]
Cases
Re Murphy
[1957] NI 156 (High Court)
Lord MacDermott LCJ: [stated the facts substantially as set out above and continued]: This question raises a matter of general importance in this jurisdiction where land is commonly held on long lease or fee-farm grant, and where alienation by way of sublease or sub-fee-farm grant is a matter of everyday practice. I have no hesitation in accepting the evidence given by Mr Murdoch to the effect that it would be in the interests of the beneficiaries to have the vacant dwellings disposed of by the method which he has described, namely, by giving purchasers a long sub-lease or sub-fee-farm grant, as the case may be, in consideration of any appropriate ground rent and the payment of a fine. The question is whether the trustees have power in law to follow that method.
At this point it must be emphasised that if the trustees have such power they propose to exercise it as and when houses become vacant and opportunity arises to act on the advice they have received. There is no question here of dividing a specific parcel of property into suitable smaller parcels and disposing of each of the latter by way of sub-grant or sub-lease as a conveyancing expedient for disposing of the entirety. Here, we are dealing with the odd house which falls vacant on a large estate, and what the trustees want to do cannot fairly be described as a means of disposing of the entirety. Conditions may change. The entirety may never be disposed of by methods which are now profitable. The question posed must therefore be considered in relation to the odd house that has become vacant and available for sale, and not in relation to the whole estate or to such parts thereof, as are held under different titles.
Moreover, it is also to be remarked that the rent to be reserved by the trustees in the form of transaction which they now propose is not fixed as a proportionate part of the head rent to which the house for disposal is, with other premises, subject. The intention is that as the proposed sales proceed the rents reserved thereon will, in the aggregate, exceed the head rent payable in respect of the grant or lease under which the houses sold are held. It may, therefore, be taken that there is a profit element in the rents proposed to be charged, but the general design of disposal has not, so far, provided for the realisation of these rents.
I must now return to the express powers conferred upon the trustees. Of these (1) is in wide terms, but it remains a trust for sale and does not afford a plain answer to the question under consideration. (2) contains a comprehensive power of investment and all I need say of it now is that, in my opinion, it authorises investment in rents reserved by long leases and fee-farm grants, whether sub-leases or sub-grants or not: see In re Peyton’s Settlement Trust (1869) LR 7 Eq 463. (3) is a power of management. Read literally, it empowers the trustees to act as absolute owners, but I do not think this should be construed as authorising any form of alienation open to an absolute owner. I think this power must be confined to matters of management and, so read, it does not give the trustees the power they now seek. (4) is also in very wide terms, but in my view it does not help the trustees on this occasion. It provides for the making of grants or leases, with the option of taking a fine, but the power seems clearly restricted to cases in which the trustees put the grantees or lessees under an obligation to improve the land, as by building thereon or rebuilding, enlarging or repairing existing buildings.
So far, then, as the express powers are concerned we are left with – (1) the trust for sale and (2) the power of investment, to the extent to which it may affect the matter in hand. To these should be added a reference to the power conferred upon the trustees by s 13(1) of the Trustee Act 1893, which, omitting what is not material, says:
“Where a trust for sale or a power of sale of property is vested in a trustee, he may sell or concur with any other person in selling all or any part of the property … either together or in lots, by public auction or by private contract, subject to any such conditions respecting title or evidence of title or other matter as the trustee thinks fit …”
Before going further it will be convenient to note several points that may be taken as settled and that will help to narrow the issue if mentioned now.
In the first place it is clear, beyond question, that the trustees can sell in parcels or lots, such as single houses. There is no obligation on them to sell together all that is comprised in one title. This is plain from the terms of the trust for sale and s 13(1) of the Act of 1893.
Secondly, a mere power of sale will not normally import a power to alienate the property in question for some lesser interest than that held. For example, if A holds Blackacre in fee simple upon trust for sale, this does not empower A to lease for a long term of years.
But thirdly, what is essentially a sale, that is to say, what is substantially an alienation of the interest held, may be carried out by vesting in the purchaser an interest which is technically less if that is a proper conveyancing expedient for completing the transaction. The limits of this proposition have not been very precisely defined and I must now turn to the principal decisions on which it is founded.
In In re Webb [1897] 1 Ch 14, 149, part of the property held under a lease was sold by auction subject to a condition that the purchase should accept an underlease for the unexpired term less three days at an apportioned ground rent The question for decision was whether the vendor’s solicitor was entitled to a further scale charge in respect of the rent. Stirling J held that he was not on the ground that the transaction, though in the form of an underlease, was in fact a sale, and in the course of his judgment he said this:
“Then, is it a lease? In a sense, no doubt, it is a lease, but in truth it is a sale. It is described as a sale in the conditions of sale, and it is so described in the plaintiffs’ bill of costs. It is a sale carried out by an underlease, which is a well-known conveyancer’s expedient, where the property sold is held with other property under one lease, to avoid an apportionment of the rent, about which there might be a difficulty with the superior landlord.”
Then in In re Judd and Poland and Skelcher’s Contract [1906] 1 Ch 684, the Court of Appeal in England held, overruling the decision of Kekewich J in In re Walker and Oakshott’s Contract [1901] 2 Ch 383, that trustees for sale who had sold some but not all of the houses held under a single lease could validly exercise their trust for sale by granting sub-leases of the houses sold at apportioned rents. Romer LJ said [1906] 1 Ch at 690:
“I may take it that an underlease in substance is not justified, but where an underlease is a pure matter of a conveyancer’s expedient, a method of conveyancing for carrying out a sale, then I cannot see that there is any valid objection to it, especially as I have pointed out that this conveyancer’s expedient is the best known method of carrying out such a sale, and the best for the trust estate.”
Then Cozens-Hardy LJ said ibid 691:
“… I think it is a fallacy to say, because trustees for sale are not authorised to grant a lease, that they have not power in a case like this to carry out the sale by means of that which is a mere piece of machinery, viz, the grant of an underlease with a nominal reversion, which is something wholly distinct from what I have, in the course of the argument, ventured to call a real underlease.”
In Alexander v Clarke [1920] 1 IR 47, the matter was considered in this country by O’Connor MR. In that case the trustees were trustees for sale with a power of leasing for any term of years at such rent and subject to such covenants as they should think fit. It appears that much of the trust estate was held, as here, under fee farm grants and long leases and the question submitted to the court on behalf of the plaintiff, the surviving trustee, was in very similar terms to that which I have to consider in these proceedings. In the course of his argument for the plaintiff Mr Charles Murphy conceded that a trustee for sale had no implied power of leasing but that the trustee in that case had an unlimited power of leasing, and he submitted that “the plaintiff can combine these two powers, and do what is asked for in the summons.” As here, what was proposed was to carry out the sale of certain houses by granting the purchasers sub-grants or sub-leases for long terms in consideration of fines and rents which would in aggregate, exceed the head rent payable under the grant or lease by which the property was held and thus create a profit rent, which could also be sold. The Master of the Rolls was satisfied that this mode of sale was the most advantageous for the trust estate and he then addressed himself to the question whether it was authorised by the trust. He said ibid 49: “It has been decided that the ordinary trust for sale does not authorise a mere lease, and so it may be said that the making of a sub-fee-farm grant or lease is in itself not a sale: but the substance of the contemplated transaction must be considered rather than the form.” Then, after a reference to s 13 of the Act of 1893, he considered the judgment of Kekewich J in In re Walker and Oakshott’s Contract [1901] 2 Ch 383 and passed from that to the judgments of the Court of Appeal in In re Judd and Poland and Skelcher’s Contract [1906] 1 Ch 684. These, he thought covered the case before him. “The object of the trustee,” he said [1920] 1 IR at 51, “is to dispose of the entire estate of the testator. He does not propose to make sub-fee-farm grants or sub-leases for the purpose of retaining rents for the trust estate. No doubt, he will carve out sub-interests, but so far as the trust estate is concerned, these will have only a momentary existence, because the rents reserved will also be disposed of. Further, there will not be any liability cast on the trust estate.”
The facts of Alexander v Clarke [1920] 1 IR 47, take the Master of the Rolls’ decision somewhat further than the decision in In re Judd and Poland and Skelcher’s Contract [1906] 1 Ch 684. In the latter case no question of a profit rent arose as the rents reserved were apportioned parts of the head rent. In the case before the Master of the Rolls the proposal, as here, was to reserve rents exceeding in the aggregate the head rent. But then – and here so far as I can gather from the report of Alexander v Clarke [1920] 1 IR 47 is where the similarity between the case and the present ends the profit rents were to be sold. The Master of the Rolls concludes his description of the proposal before him in the first paragraph of his judgment by saying “… and thus create a profit rent, which could also be sold.” That seems vague, but later, when he is applying the decision of the Court of Appeal in England, he apparently takes it for granted that the profit rents will only be held by the trustees for the purposes of realisation because he says “… so far as the trust estate is concerned, these will only have a momentary existence, because the rents reserved will also be disposed of.” I therefore think it must be assumed that the Master of the Rolls proceeded on the basis that the scheme which was before him was a scheme for the complete realisation of the estate with any profit rent arising out of the disposal of the houses being sold as well as the houses. It may be observed that the head-note of this case refers to the trustee for sale having an unlimited power of leasing, but I would not gather from the terms of the judgment that this circumstance was one of its foundations. In the present case there is no suggestion as to when the profit rents which it is proposed to create will be sold, and I think I must proceed on the assumption that no immediate realisation is intended and that, until some occasion arises to indicate a different course, the trustees will be content to hold such profit rents as part of the estate and to apply them as income thereof.
In In re Braithwaite’s Settled Estate [1922] 1 IR 71, Wilson J held that a tenant for life, selling lands held under a fee-farm grant in exercise of the powers conferred by the Settled Land Acts, could sell in lots and carry out the sales by making sub-fee-farm grants or long leases to the respective purchasers. The decision only is reported, but it is clear from the argument of Mr Megaw, for the tenants for life, that it was an application of the principle enunciated in In re Judd and Poland and Skelcher’s Contract [1906] 1 Ch 684, and it is to be noted that the proposal before the court was different from that in Alexander v Clarke [1920] 1 IR 47, and in the present case, as the rents to be reserved on the sales of the lots were to be such as would amount to the rents reserved by the respective head fee-farm grants.
In the High Court of Eire, in Sims-Clarke v Ilet Ltd [1953] IR 39, Dixon J had to consider the nature of a transaction for the purchase of a portion of leasehold premises, to be carried out by an underlease for the residue of the term save the last day thereof. The question arose on a dispute as to costs and was resolved by a finding that the transaction was really a sale carried out by way of underlease. The learned judge thought the decision in In re Webb [1897] 1 Ch 144 ruled the matter and pointed out that the only possible distinction between that case and the case he was considering was that in the latter the rent reserved was such that, having regard to the other property contained in the head lease, there was a profit rent. Though this decision was as between vendor and purchaser, the point arose, as I have said, on a question of costs and not on a question of title. The vendors seem to have been under no restriction such as might affect trustees for sale, and for that reason the case has not a direct bearing on the matter I have to determine.
Now that it seems to me that the current of authority comes near the present case without quite reaching it. I do not think the power of the trustees can be tested merely by asking what people would call the type of transaction they propose. What they propose may well be spoken of, in common parlance, as a sale, for the testator’s interest, under that proposal, would pass substantially to the purchaser. But none of the cases raising a question of title regards that as conclusive in itself. They all rely, in addition, on being able to describe the vehicle of completion, the sub-grant or the sub-lease, as a conveyancing expedient for carrying out the sale. They show that this description will apply where what is sold is part of what is held at a head rent and completion is by a sub-grant or sub-lease at an apportioned rent. And Alexander v Clarke [1920] 1 IR 47, as I understand it, goes on to say that this description of a conveyancing expedient will still apply where the sub-rents exceed the head rent so as to create a profit rent, if the scheme of realisation provides, not for the keeping of the profit rent, but for its sale as well.
The facts of the present case are different in an important respect. The intention no doubt, includes the eventual covering of the head rents, but it goes beyond that. The proposed transactions are provident and in the interests of the trust because they will each produce a profit in the rent as well as a price that will not suffer on account of that profit element. The reality of that sort of transaction seems to me to be that the trustees will get, and get to keep at their discretion, two things for every house sold – (1) the price, and (2) an investment in the shape of a long-term or perpetuity rent. Now I am unable to see how a power or trust for sale, without more, can authorise the acquisition or holding of such an investment. Take the case of trustees with a trust for sale of five houses held under one title, and with a power of investment limited to government stock. If they hold in fee simple it is difficult to see how they could sell each house by fee-farm grant or long lease for a fine and a rent. Not only would such a course not be called for as a conveyancing expedient, but the trustees would have no power to invest in land. If, however, they themselves held in fee-farm or for a long term at a rent of, say, £10 there is no doubt that they could sell, at any rate four of the houses, for a fine and a sub-rent of £2 each. That would be a proper and recognised way of proceeding to realise the entirety. But suppose the houses can only be sold as they fall vacant and there can be no settled scheme of selling the entirety, how could the trustees sell for a fine and, say a £5 rent? Ex hypothesi, they have not the power to change from one form of landed property into another.
And so, if the trustees here had no power to put the proceeds of realisation into anything but stocks and shares. I would conclude that they had not power to do what they propose. But in fact they have power to invest in rents. Does this justify a different answer to the question posed? In my opinion it does. What they propose is (a) to use a method of alienation that is justified by the title under which they hold, (b) to dispose, not of the entirety of the testator’s interest, but of such a substantial part thereof as to warrant describing the transaction as a sale, and (c) to retain what remains of that interest for the time being as an authorised investment.
I see no sound reason why the trustees should not do that. It is a sensible way of realising what can be realised, it is beneficial to the trust estate and, as I read this will, it is authorised by the joint effect of the trust for sale and the power of investment. In short, what they propose is to carry out what is, in substance, a sale by what, in view of the title and their powers of investment, can fairly be regarded as a proper conveyancing expedient.
I would therefore answer the question submitted in the affirmative, the term sub-fee farm grant being, of course, related to property held under grant and the trustees remaining under an obligation to consider each sale on its merits and in the light of prevailing conditions.
Re Kinahan’s Trusts
[1921] 1 IR 210 (Chancery Division)
Powell J: I have no doubt whatever that I have jurisdiction to make the order, having regard to the emergency that has arisen. Romer LJ, in In re New [1901] 2 Ch 534, at p 544, says:
“In the management of a trust estate, it not infrequently happens that some peculiar state of circumstances arises for which provision is not expressly made by the trust instrument, and which renders it most desirable, and it may be even essential, for the benefit of the estate and in the interest of all the cestuis que trust, that certain acts should be done by the trustees which in ordinary circumstances they would have no power to do. In a case of this kind, which may reasonably be supposed to be one not foreseen or anticipated by the author of the trust, where the trustees are embarrassed by the emergency that has arisen, and the duty cast upon them to do what is best for the estate, and the consent of all the beneficiaries cannot be obtained by reason of some of them not being sui juris or in existence, then it may be right for the Court, and the Court in a proper case would have jurisdiction to sanction on behalf of all concerned such acts on behalf of the trustees.”
In the present case, I am satisfied that an emergency has arisen. A duty is cast on the trustees, and it is right for the Court “to sanction on behalf of all concerned” the acts proposed to be done. In ordinary circumstances the trustees would not be justified in doing what is supposed in this case, but in the circumstances I am satisfied that I have jurisdiction to make the order, and I therefore sanction the payment of this insurance premium out of capital, that is to say, out of the proceeds of the sale of the lands.
Re Boyle
[1947] IR 61; 82 ILTR 115 (High Court)
Overend J: The testator, Thomas Boyle, of “Clevedon,” Terenure Road, Rathgar, was an old man, aged about 88 years, at the date of his will, 22nd March 1941. His second wife had died some two years before and he had long retired from business. He had no family, but several nephews and nieces, and after his wife’s death a maid, Elizabeth Hayden, kept house for him and looked after him.
By his will he revoked previous wills and appointed Mr Alfred McCullagh and the defendant Charles BW Boyle, executors and trustees, and bequeathed to the former £100 for his trouble in acting as executor.
He directed his executors to sell “Clevedon” and his investments and to pay his debts, funeral and testamentary expenses.
He bequeathed the following legacies: To Elizabeth Hayden £40 free of duty, £200 each, to his nieces Jean Boyle, Alice K Wallace, the plaintiff, and Caroline Slack. £200 each, to his nephews Frederick William Sloane, Thomas Boyle Carson and James Boyle; and £100 each, to his nieces Edith Byrne and Rebecca Crick, and he appointed the plaintiff, Alice Wallace, his residuary legatee. The defendant, George A Sothern, is not referred to anywhere in the will.
Ten months later, on the 27th January 1942, the testator made a codicil whereby he revoked the appointment of Mr McCullagh as executor and also the bequest to him, and appointed the defendant, George A Sothern, in his place and bequeathed to him the sum of £50 for his trouble in acting as executor.
The testator died upon the 6th May 1943, and upon the 27th September 1943, probate was granted to the defendants, the executors named in the codicil, and duty was paid on the assets on a valuation of £4,419 odd.
The solicitor on record for the defendants is Mr Cyril A Boyle, a son of the defendant, CBW Boyle. After the son was admitted to the profession some years before the war he was employed by his father, with permission to carry on, for his own benefit, any business given to him personally, and to have the free use of his father’s office and staff for such purpose. After the outbreak of war Mr Cyril A Boyle joined the RAF and before leaving, his father agreed to act gratuitously on his behalf, as his agent, and to transact any business given him without any fee or reward of any kind.
The defendants agreed that Mr Cyril A Boyle should be employed as solicitor and the administration of the estate conducted by his father as such agent, until he should be demobilised.
The probate was extracted in Mr Cyril Boyle’s name and all subsequent correspondence and proceedings were conducted in his name though in fact carried on by his father. The plaintiff’s solicitors were all along well aware of Mr Cyril Boyle’s absence “on active service” and that the defendant, CBW Boyle, was “carrying on this matter in his son’s name and on his behalf.” (See letter 4th July 1945.) However, they raised no point or objection prior to receiving the bill of costs on the 6th July 1945, and to the end addressed their letters to Cyril A Boyle. They do not appear to have been fully apprised of the precise business arrangements between father and son and assumed they were partners until the true position was stated by the defendant in his affidavit, which is uncontroverted.
In this case the arrangement has proved inconvenient and has led to an unfortunate unreality in the correspondence and entries, in the effort to give it full effect, eg “my father tells me that,” “I have advised my father,” etc, etc, when in fact no communication had been made one way or other. Fortunately this created no misapprehension on the part of the plaintiff’s solicitors.
Having thus made the true position clear, I can refer to the “defendants’ solicitor,” which means Mr Cyril Boyle acting by his father, the defendant, as his agent.
About five weeks after the testator’s death the defendant, Sothern, furnished to the defendant’s solicitor a claim, dated 14th June 1943, for £337 10s 0d, for work and labour done, and services rendered to the testator, by his instructions, between the 5th January 1939, and 5th May 1943. (His Lordship read the claim.)
It is to be noted that there is no suggestion that the testator ever did make any payment to this defendant for his services, or every promised to pay a reasonable, or indeed any sum, beyond the statement that the work was done “on the testator’s instructions.” It is clear no figure was agreed, for the claimant says “I would consider 30s per week a reasonable sum …”
It is not suggested that the defendant ever asked the testator himself for any payment during this protracted period of almost four and a half years and it is to be noted that in January 1942, after three of those years had expired, the testator bequeathed to Mr Sothern a legacy of £50 free of duty “for his trouble in acting as executor,” but no other sum.
On the 11th August 1943, the defendants’ solicitor wrote to the plaintiff saying “Amongst the debts is a sum of £337 10s 0d, due to Mr Sothern for services rendered to the deceased from the 5th January 1939, to the 6th May 1943.” Then follows a resumé of the claim and the letter concludes “My father, who is one of the executors, tells me that he knows Mr Sothern gave all his time and attention, and sacrificed his evenings, summer and winter, looking after the deceased and shortly before the deceased died he assisted the maid and got outside help. I will be glad to hear from you that you approve of this debt being paid as I have advised my father that it is honestly due.”
This letter indicates Mr Charles Boyle’s attitude of mind at that time, viz, that he was aware of services rendered so extensive as to create an obligation to reward them. It does not appear that the testator considered Mr Sothern’s name either as a beneficiary or creditor when making his will, in 1941, and the legacy given him by the codicil is expressly given for his trouble in acting as executor. It is clear, therefore, that so far as the testator was concerned, these protracted services remained still unremunerated.
The plaintiff replied to the letter of 11th August 1943, on the 16th August. She asks did Mr Sothern make an agreement with the testator; a matter she thought unlikely? She also said she did not consent to Mr Sothern’s “debt being admitted for payment.” Mr Boyle in his letter of 19th August 1943, emphasises the personal attendance by Mr Sothern on the deceased and adds that, as he is instructed, the deceased should have had a male nurse for two years prior to his death. To this the plaintiff replied on the 28th “that the position now adopted by Mr Sothern in no way resembles the position previously mentioned” and that her question (i.e. whether there was any agreement) remained unanswered. On the 31st August, Mr Boyle replied stating there was no written agreement between the deceased and Mr Sothern.
On the 16th September 1943, the plaintiff’s solicitors wrote to Mr Cyril Boyle stating that as there was no agreement, the plaintiff instructed them to dispute Mr Sothern’s claim, unless he was able to satisfy them that the amount claimed was properly due, and giving formal notice that the plaintiff reserved the right to take action if it was paid.
It is unnecessary to review the voluminous correspondence further, in regard to this matter; it is sufficient to say that the plaintiff never receded from the position she had taken up.
The plaintiff had also required “Clevedon,” which the deceased directed to be sold, to be handed over in specie, and the executors, when sending a case to counsel in October 1943, on this point, also asked counsel to advise whether Mr Sothern was entitled, not only to claim, but to retain, his own debt out of the assets, leaving it to the plaintiff to take whatever proceedings she might be advised. To which counsel replied that if the co-executor considered the claim honest and fair this course could be adopted. (This case was put in without objection.)
Accordingly on the 7th March 1944, a cheque for £337 10s 0d, was drawn in Mr Sothern’s favour, signed by him and his co-executor.
Before parting with it, however, a further case on this point only was sent to senior counsel, who after referring to s 21 of the Trustee Act 1893, and the decision in In re Houghton [1904] 1 Ch 622, suggested (as I read the opinion) that if further and better details were furnished the defendant, Boyle, might serve the estate well by effecting a compromise, although not satisfied beyond all doubt as to the validity of the claim. I assume that counsel meant compromise as an alternative to litigation. (This case was also entered without objection.)
There is no question that an executor has power to compromise even a doubtful claim, if he bona fide believes it to be in the interest of the estate. This is clear from the use in the statute of the words “debt or claim” and again “settle any debt, account, claim, or thing whatever …” in the section itself (and see In re Warren; Weedon v Reading 32 WR 916).
Whatever the reason, the cheque was not handed to Mr Sothern until the 3rd July 1945, fifteen months later.
The plaintiff’s solicitors in March 1945, and subsequently, were pressing to have the estate wound up and on the 5th July 1945, the defendants’ solicitor furnished his costs, on the 9th the executors’ account (showing the cheque to Mr Sothern), and on the 25th July, a copy of the residuary account.
No exception seems to have been taken to the payment to Mr Sothern from the date of the receipt of the executors’ account until the issue of the summary summons on the 29th November 1945, claiming administration, and an enquiry what sums (if any) were due by the testator at the date of his death to the defendant, Sothern, and that the defendants be ordered to account for all sums paid to, or retained by, him.
The plaintiff’s counsel say that the alleged compromise is invalid because:
1.The executors had no sufficient proof of any debt legally recoverable, and they rely on the decision in Cleary v Sibley 46 ILTR 25 – that was not a case of a claim by an executor, nor of compromise or payment by an executor under the Trustee Act.
2.Want of corroboration – which they contend is essential unless the claimant’s case is supported by evidence other than the claimant’s. This is not the law if the Court is satisfied that the claimant’s evidence may be accepted as trustworthy. (See Minister of Stamps v Townend [1909] AC 633.)
3.The compromise was improper – payment in full cannot be regarded as a compromise if there is room for doubt, – Kekewich J refused to accept this view in Houghton’s Case [1904] 1 Ch 622.
The defendants’ counsel rely on s 21 of the Trustee Act 1893, the decision in In re Houghton; Hawley v Blake [1904] 1 Ch 622, and the affidavit of the defendant, CBW Boyle. He deposed that from investigations he made, coupled with his own personal knowledge, he was satisfied that the services were rendered and at the request of the deceased; that the amount claimed was less than the deceased would otherwise have had to pay for the like services, and was reasonable, and having so satisfied himself that the claim was fair, honest and sustainable, he came to the conclusion that it ought to be paid, and did so in all good faith.
This the defendants contend ends the matter. The section says: “An executor . . . may pay or allow any debt or claim on any evidence that he thinks sufficient.” Mr Boyle has done so and his affidavit is uncontradicted, and there is no suggestion that he did not act in good faith.
This appears to have been the contention put forward by Lord Warrington as counsel in Houghton’s Case [1904] 1 Ch 622, and this possible view of the Act was adumbrated by Sir George Jessel MR in Re Owens; Jones v Owens 47 LT 61 at p 64, but in my opinion it is not supported by the decision in Houghton’s Case [1904] 1 Ch 622. In that case the widow, Mrs Blake, had possession of securities to the value of £1,180 which she claimed as hers. She had produced evidence showing that she was entitled to the amount claimed, from her father’s estate or her mother’s, and receipts which showed that of this amount £820 was clearly her separate estate; as to the balance there was no evidence, apart from her own testimony, that she was entitled for her separate use. The co-executor was entitled to treat the receipts for £820 as corroboration of her entire claim. (See Minister for Stamps v Townend [1909] AC 633.)
The co-executor had admitted the widow’s claim to £1,180 and Kekewich J refused to hold he was wrong in so doing. He says he would be infringing the rule that each executor represents the estate for all purposes, if he held that one executor could not compromise the claim of his co-executor and he concludes:
“Whether I take the case simply on his executorial power, or whether I take only the last statute to which I have referred (The Judicial Trustees Act 1896), it seems to me that I must uphold this executor as having done what is right.”
I think that I may possibly be differing to some extent from the opinion of that very experienced judge, but I cannot help the feeling that he was affected by the fact that 70 per cent of the claim had been conclusively established by documents.
Co-executors are regarded in law as one individual: Bac Abr Vol 3, Tit “Executors and administrators.” D 1, p 30; Lord Eldon in Chapman v Turner 2 Eq Cas Abr 450; Vin Abr Vol 2, Tit “Executors.” D 2, p 72; Halsbury: Laws of England, Vol 14, p 235; Williams on Executors, 11th Ed, Vol 1 p 708. That is the reason one can bind all executors and can give a good discharge for a debt: Smith v Everett 27 Beav 446 or assign a term: Simpson and Others v Gutteridge 1 Madd 609. One executor therefore cannot exercise a right of retainer to the prejudice of the other, and a retainer by one can be claimed by all: Chapman v Turner 2 Eq Cas Abr 450, (and see In re Gilbert (1898) 1 QB 282; Halsbury: Laws of England, Vol 14, p 256).
Could a sole executor when called on to account by the residuary legatee justify a retainer of the amount he claimed by saying “I allowed my claim on evidence that I thought sufficient and I rely on the Trustee Act, s 21”? If so the Act would make him judge on his own cause. If there are two executors A and B can one allow the claim of the other, the two being but one individual? If so A can allow or compromise B’s claim, and B allow or compromise A’s, and the residuary legatee could not have either scrutinised or investigated. The proposition put in this way, appears to me only to require to be stated to prove its unsoundness, and I think this is the explanation of the passage quoted from the opinion of the Privy Council delivered by Sir Barnes Peacock in de Cordova v de Cordova 4 App Cas 692, at p 703, which says:
“It is unnecessary to consider whether the doctrine (ie that executors and trustees cannot deal with themselves) is applicable to a case in which several executors compromise a debt due from one of them, or how far such a compromise if beneficial to the estate will be excused and upheld by the Court …”
This was nineteen years after the passing of Lord Cranworth’s Act.
But in Houghton’s Case [1904] 1 Ch 622 the claim was against the executor of the testator who had compromised with his co-executor, the testator’s widow. He was also executor of the widow. The case was fought on the grounds that one executor cannot compromise with another, and that payment in full is not a compromise.
In my opinion the true position is clearly stated by Sir Page Wood VC in Hill v Curtis LR 1 Eq 90, at p 98 dissenting from a dictum of Lord Cottenham’s in Carmichael v Carmichael 2 Ph 101, at p 103. The Vice-Chancellor says:
“It is plain that an executor cannot discharge himself by accounting to his co-executor, because he is himself authorised, and it is his duty, to see how the assets are applied. When he has paid over the assets he is not discharged …”
An executor cannot divest himself of his office, or his duties and responsibilities, he cannot absolve himself from liability to account, except by accounting to beneficiaries entitled to call for an account. How can Mr Sothern refuse to account for the £337 10s 0d, of the assets retained by him and in his own hands? Is it enough to say “I satisfied Mr Boyle, my co-executor”? In my opinion it is not enough; it is a devastavit on the part of an executor to pay a debt which is not legally enforceable: In re Rownson; Field v White 29 Ch D 358, – subject to an exception in favour of payment of a statute-barred debt. See Halsbury: Laws of England, Vol 14, pp 251, 258. In my opinion it cannot be held to be a devastavit for an executor, acting bona fide, to pay a claim on evidence which he thinks sufficient, because he is protected by s 21, sub-s 1 of the Trustee Act 1893. Suppose for instance that an executor acting bona fide pays a claim made by his co-executor, apparently vouched by documents under the testator’s hand, will the section not protect him though the documents afterwards turn out to have been forged by the co-executor? But will it also protect the forger? I find nothing in the statute to relieve an executor from the duty of justifying a retainer made by him – though it may, and I think it does, absolve a co-executor who assents to it bona fide. It is a remarkable feature of this case that the defendant, Mr Sothern, has not himself attempted to justify the payment of £337 10s 0d to him by his own testimony. He has not deposed that he undertook to do any work for the deceased, on the basis that he would be remunerated, or that the deceased asked him to do any of the work on the understanding, express or implied, that he would be paid for it, he has not even stated on oath what work he did. He has merely made a claim and left it to his co-executor to justify his action in allowing it. It was contended that if Mr Boyle was justified in paying Mr Sothern’s claim, as I think he was, it followed necessarily that Mr Sothern was justified in retaining the money without accounting. As I have indicated I cannot share this view. If there was any debt legally payable it arose from a contract, express or implied, between the deceased and Mr Sothern. The deceased is dead, and the other party to the contract has refrained from giving any evidence. In the circumstances I can see no answer to the claim of the residuary legatee for “an enquiry as to what sum (if any) was due by the deceased at the date of his death to the defendant, George A Sothern,” and I shall direct such enquiry accordingly. This will afford Mr Sothern an opportunity of supporting his claim by his own testimony and stating the facts as to what passed between him and the testator.
This brings me to the second point raised, the objection as to costs.
As Mr Harris pointed out, the plaintiff’s solicitors at the date of the summary summons were not clear as to the business relationship between Mr CBW Boyle and his son and were under the impression that a partnership existed. This is not surprising for the names of father and son both appear on the notepaper though when looked at carefully there is nothing which would indicate partnership. Further the father annually renewed his son’s licence and did so as “Dublin Agent,” but in one year 1944, the printed alternative description was entirely struck out and the word “Partner” inserted in writing, which is not Mr Boyle’s and which he cannot identify, though “Dublin Agent” was always the prior and subsequent description.
Mr Boyle’s affidavit has now explained the true relationship and his statement has not been questioned. It seems to me a most natural thing that a father should endeavour to preserve the post-war interests of a son who, as a volunteer, was serving in that branch of the British Forces which bore the highest percentage of casualties in the last war.
That, however, has nothing to do with the case. It is fair to the plaintiff to say that some months after the copy of the bill of costs was furnished to her solicitors, and shortly before the issue of the summons, an offer was made, and on its refusal she relied on her strict rights, whatever they might be, and that is the question I have to decide, a question which it appears is entirely novel, for no similar case has been cited, nor have I been able to find one.
Mr Cyril Boyle, the solicitor on record for the defendants, may not, and probably did not, know more of the case than its name, and that his father was conducting it for his benefit. His father has done the entire work personally at his own expense. He had told his son he would do all work personal to him gratuitously, as his agent, and he had done so with his son’s acquiescence and no doubt grateful consent.
If Mr Cyril Boyle had been here and had done the work himself no question could arise; he would be clearly entitled to the costs, subject to taxation, for his father does not participate directly or indirectly in the profits of his personal work. This is clear from the decision of Wood VC in Clack v Carlon 30 LJ Ch 639. This is an even stronger case. On the other hand, if Mr CBW Boyle had acted as solicitor for the executors it is plain he could get no profit costs, for as executor he would be subject to the rule and he could make no profit from his position.
What is the law when a principal, who can lawfully make a profit employs an agent, who could not be allowed to make a profit, to do all the work?
In my opinion a principal who acts by an agent, who is under a disability, cannot claim to be in any better situation than his agent. So far as I know this is a new proposition and I propound it with some diffidence.
I think, however, that it is involved in the statement of the law as laid down by Lord Cranworth in Broughton v Broughton 5 De GM & G 160.
He says (at p 164):
“The rule applicable to the subject has been treated as the bar as if it were sufficiently enunciated by saving, that a trustee shall not be able to make a profit of his trust, but that is not stating it so widely as it ought to be stated. The rule really is, that no one who has a duty to perform shall place himself in a situation to have his interests conflicting with that duty and a case for the application of the rule is that of a trustee himself doing acts which he might employ others to perform, and taking payment in some way for doing them. As the trustee might make the payment to others, this Court says he shall not make it to himself: and it says the same in the case of agents, where they may employ others under them . The good sense of the rule is obvious, because it is one of the duties of a trustee to take care than no improper charges are made by persons employed for the estate. It has been often argued that a sufficient check is afforded by the power of taxing the charges, but the answer to this is, that that check is not enough, and the creator of the trust has a right to have that, and also the check of the trustee. The result, therefore is, that no person in whom fiduciary duties are vested shall make a profit of them by employing himself, because in doing this he cannot perform one part of his trust, namely, that of seeing that no improper charges are made. The general rule applies to a solicitor acting a trustee, and the only question is how far the circumstances of the present case take it out of this rule.”
Now in the present case the will, which I assume was drafted by the defendant, Mr CBW Boyle, refrains from authorising the executor to act as solicitor and charge the usual professional charges, a clause frequently inserted, and while both will and codicil give legacies to the person to him for his trouble in acting. Yet he has proved the will and he has undertaken the burden of acting as executor without any benefit to himself, directly or indirectly. The case is not one in which there is a conflict of duty and interest such as Lord Cranworth referred to, but in my opinion it is a case where there is a conflict of duty and duty.
His duty as agent to his son was to do all the work in connection with administration, which his son might have done if here to do the work personally; while his duty as executor was, as Lord Cranworth pointed out to keep an additional check on professional charges. The correspondence and the bill of costs, as drawn, contain a number of illustrations of the difficulty created by Mr Boyle’s dual capacities. Mr Boyle, as executor, could not also act as solicitor and be entitled to profit costs, and I do not see that his son can be in any better position. In my opinion when Mr Boyle became executor and proved the will he created in himself an inherent incapacity to earn profit costs in this administration either for himself or anyone else; therefore, when Mr Cyril Boyle agreed that his father should act for him as agent, he was employing a person who, in this particular case, was under a disability peculiar to this case, viz, that he could earn no profit costs.
It seems to me unfortunate that the plaintiff’s solicitors, who appear to have been under the impression that the father and son were in partnership, did not raise this point at an earlier stage when it would have been possible for Mr Cyril Boyle to appoint another agent to act for him in this case and to participate to some extent in the legitimate profit costs of administration when taxed. However, that point may not have occurred to them although they were aware from the first of Mr Cyril Boyle’s absence and that his father was doing the entire work, as they then assumed, as partner. That this does not amount to such acquiescence as would disentitle the plaintiff to raise the point is clear from Broughton’s Case 5 De GM & G 160 in which the solicitor executor was originally employed to do the work by the testator himself, and continued to do it at the express request of the sole beneficiary, yet Lord Cranworth dismissed his appeal, but without costs – a precedent I am much disposed to follow. However, I shall reserve the question pending the enquiry directed.
Fitzpatrick v Waring
(1882) 11 LR Ir 35 (Chancery Division)
Law C: This is an appeal from a decree of the Master of the Rolls, and involves the determination of an important though narrow question, viz whether a trustee of lands, in receipt of their rents and profits, can make an effectual letting of them from year to year. The question arises in this way:
James Waring, being owner of an estate in the county of Cavan, by his will, dated the 24th May 1836, devised it to his nephew Richard Waring in fee, upon trust out of the rents and profits thereof, or by mortgage, to raise a sum of £5000, to be paid to the trustees of the settlement executed on the marriage of the testator’s daughter Marion with the Rev Charles Waring; and subject thereto, upon trust out of the rents and profits, to raise and pay an annuity of £300 to testator’s widow for her life; and subject thereto, to hold the lands upon trust for the sole and separate use of the testator’s said daughter Marion, for her life, and, after her death, if she should have issue her surviving, upon trust for all and any of her children, as she should by deed or will appoint; and in default of appointment, for such children equally as tenants in common in fee, &c. The testator died some time in the year 1842, and thereupon Richard Waring, the trustee, entered into the receipt of the rents and general management of the estate. The testator’s widow died many years ago, and so the trust for payment of her annuity ceased to be operative: but the £5000 remained still to be raised, and the trust for that purpose, as well as for the separate use of Mrs Marion Waring, continued in force until the death of that lady in 1877, soon after which the £5000 was paid off by her son, the defendant James Waring, to whom she had, in the year 1870, duly appointed these lands in fee, subject to her own life estate and who accordingly succeeded thereto at her death. Richard Waring, the trustee seems to have died about the same time as Mrs Marion Waring, so that it may be assumed that in the year 1877 all the active trusts came practically to an end. Up to the death, however, of Mrs Marion Waring, in 1877, and the payment by James Waring of the £5000, the duties of the trustee remained subsisting. Now it appears to us that in and prior to 1872, ie whilst Mrs Marion Waring, the tenant for life, was living, James Waring held the lands here in question, with others, as tenant from year to year, under Richard Waring, the trustee, but whether at any or what rent is not shown. Being such yearly tenant, and having also the equitable fee-simple in remainder, expectant on his mother’s death, he, by lease dated the 31st January 1872, demised part of the lands to one Michael Shields, to hold for thirty-five years, from the next 1st May, at a rent of £33. In 1875, however, a notice to quit having been served on James Waring by Richard, the trustee, an ejectment was brought by him and Mr and Mrs Waring against James Waring and Shields, and judgment having been obtained, an habere issued under which James and his subtenant, were both evicted, and possession of the lands delivered to Richard Waring. The farm being then vacant, and in the hands of the trustee, he, by deed dated the 17th July 1875, demised it to the defendant James Smith, as yearly tenant, at a rent of £43, and Smith accordingly entered and held possession until January 1878, when Shield brought an ejectment to recover possession of the farm, serving James Waring and a caretaker of Smith’s, who alone resided there, but taking no notice of Smith; and the caretaker omitting to take defence, whilst James Waring gave Shields a consent for judgment, Smith was turned out of possession, and the farm re-delivered to Shields, who wisely made haste and sold it to the present plaintiff, the assignment being dated the 8th February 1879. In the following month of June, however, Smith brought another action to recover the land; and though the plaintiff filed his defence, relying on many of the points which he now raises here, Smith got a verdict and judgment in April 1880, and again obtained possession of the farm. Under these circumstances, the present proceedings were instituted by the plaintiff in the Chancery Division against Smith and James Waring, making certain charges of fraud and collusion between the defendants and Richard Waring, which were ultimately abandoned, but insisting that Richard Waring, the trustee, had no power to make an effectual letting of the lands in 1875, as he purported to do, and claiming that the lease of the 31st January 1872, should be declared valid and subsisting as against the estate of the defendant James Waring, in priority to the letting of the 17th July 1875, to the defendant Smith, and that Smith should be declared a trustee for the plaintiff of any legal estate vested in him by that letting, and for an account of the rents received by the defendants since the assignment to the plaintiff, and payment of what might be found due.
The defendant James Waring did not dispute the plaintiff’s claim. He, in fact, as I gather from his defence, is indifferent as to which of the lettings is to prevail, being willing as far as he is concerned that the plaintiff should have possession under the lease of 1872 if thought so entitled; and, on the other hand, being equally willing, if Smith’s tenancy under the letting of 1875 be established, to let the plaintiff have the benefit of the £10 additional rent during the remainder of his thirty-five years. Mr Waring’s defence seems to be that the plaintiff never asked him for either one or the other measure of relief, but commenced his action without making any such application, though, had such been made, he (Mr Waring) would at once have acceded to it.
The case is thus reduced to a simple dispute between the plaintiff and the defendant Smith as to the possession of the farm, and this ultimately depends, as the Master of the Rolls clearly shows, on the question whether Richard Waring, the trustee, had power to make the letting of July 1875, to the defendant Smith as tenant from year to year. The Master of the Rolls having considered the question decided that the trustee had not such power, and has therefore made a decree in the plaintiff’s favour with costs as against the defendant Smith, and ordered him within a specified time to deliver up possession of the lands to the plaintiff. From this decree the defendant Smith has now appealed.
There is one part of the case which I own appears to me not to have been satisfactorily explained, and that is how this controversy which was raised, or at all events might have been raised, in the action of 1879-80 in the Exchequer Division came to be re-opened forthwith by another action in this Division. However, as the Appellant did not press this strongly either here or (according to the Master of the Rolls) in the Court below, I pass it by, and deal with the case on the simple issue – can a trustee of lands holding them upon trust for raising money out of rents and profits or for paying the rents and profits over to a married woman for her separate use, let the lands from year to year, when from any cause they become vacant and so unproductive of income? But for the respect I have for the learning and sound Judgment of the Master of the Rolls, who entertains a contrary opinion, I own I should have no hesitation in answering this question in the affirmative; and having read the report of His Honour’s Judgment, which has been furnished to us, and carefully considered his reasoning, I still feel unable to concur in his views on this narrow but very important point. What, it may be asked, is a trustee to whom the management of an estate has been committed to do with premises which become tenantless from time to time? If he cannot let them even to yearly tenants, as they probably were let before, must he undertake to farm them himself, and that at no little risk in many ways? Well, the answer given is; – no, he need not assume such labour and responsibility. His proper course is to seek the aid of the Court of Chancery, by which I presume is meant that he should institute an action here for administration and execution of the trusts imposed upon him. Well, putting aside the expense and inconvenience of having to take this course merely to let a farm, I would still venture to ask if a trustee, as such, could not make any letting of even from year to year, however desirable, and for the benefit of the trust, how is it supposed that the Court of Chancery could help him? In the exercise of its jurisdiction for the administration of trusts this Court, I apprehend, has no power to make or authorize any leases or other dispositions of the trust property which the trustee could not have made himself. The Court, in such a case, whether it assumes the place of the trustee, or guides him in the discharge of his duties, is still confined within the limits of the trust as constituted by its author, and has no authority to go beyond those limits. Its business is to execute the trusts, not to alter them; and if the committing the management of an estate to a trustee did not involve giving him authority to make reasonable lettings (as I believe it does), I do not see what right the Court of Chancery would have to enlarge the conditions of the trust in that respect. That, where property is thus under the control of the Court, it constantly does make or authorize such lettings is well known, but this is simply because such a power is inherent in the trust which the Court in such case is carrying into execution. The admitted practice of the Court of Chancery, therefore, in that case, in itself making or in authorising the trustee to make, reasonable lettings, instead of showing that the trustee could not make such lettings without the aid of the Court, seems to me to prove the contrary proposition, the only use of the Court being to preclude all future questions as to whether the letting was in fact a reasonable one or not. We find, accordingly, in all the text books statements to the effect that a trustee, or at least a trustee who, in the discharge of his duties as such, is bound to receive the rents and profits of the property committed to his care, may make any reasonable demises of it. The only difficulty of the position is that he or the person taking from him must always be prepared to show, if challenged, that the demise in question was reasonable.
In the Attorney-General v Owen 10 Ves 560 Lord Eldon states the matter thus:
“Upon a devise in fee to A in trust for his infant son, to be conveyed to him at the age of twenty-one, and without imposing terms upon the trustees as to the rent, the terms, or the length of the lease, this Court would say the trustee was to do what was reasonable. The Court would (simply) put it upon the trustee and the lessee taking under him to show that the act was reasonable and done in the fair management of the estate.”
And this, be it remembered, is Lord Eldon’s language when discussing, not lettings from year to year, but leases for substantial terms. I am, therefore, not prepared to subscribe to Lord Langdale’s or Sir John Wickens’ condemnation of the decision in Naylor v Arnitt 1 Russ & M 501, where Sir John Leach had refused to set aside a trustee’s lease for ten years, which, for all that appears in the meagre report of the case, may have been under the circumstances a very reasonable letting. It is also to be observed that, in Naylor v Arnitt 1 Russ & M 501, the trusts were to receive the rents and pay thereout certain annuities – trusts which therefore involved the active management of the estate – whereas in the cases of Wood v Patteson 10 Beav 541 and Shaw’s Trust LR 12 Eq 124, before Lord Langdale and Wickens, VC, there were practically no duties to be discharged by the trustees. They were interposed merely as so much conveyancing machinery, and, besides, their immediate cestui que trusts were sui juris, and apparently themselves in possession. Under such circumstances it was quite right to decline to sanction the trustee making a sixty years’ mining lease in the one case, or even a ten years’ lease in the other, especially as in the latter the application was made, not in any properly constituted suit, but merely by way of a special case, and some of the cestuis que trust presently entitled were out of the jurisdiction.
But after all the question here is not as to the validity of a lease for ten, twenty, or any other number of years, but as to whether a managing trustee can let at all. For if he has any authority to let it, it must be competent for him to let from year to year, that being the shortest term for which any letting can be made. Now that a trustee, entrusted with the active management of an estate, may so let has, as far as I know, never before been denied. On the contrary the argument of Mr Pemberton, seeking to set aside the ten years’ lease in Naylor v Arnitt 1 Russ & M 501, was based on the assumption that it was the duty of the trustees there to let the lands from year to year. No case indeed, has been cited by counsel in which the precise point has been decided; but considering how prevalent has been the practice of trustees to make yearly lettings, the absence of any instance in which such a letting has been questioned, may not unfairly be regarded as telling strongly in favour of their validity. There is, too, one reported case in which a letting of this character would certainly have been challenged if it had been thought possible to do so with any success, that is the case of Ferraby v Hobson 2 Phi. 255; 16 LJ Ch 499 before Lord Cottenham. There a testator had died in 1832, having devised his estate to trustees for certain purposes. In 1835 the tenant of one of the farms threw it up, and the trustees, after offering it at £408 to a Mr West, who refused to take it on these terms, let it at that rent to a Mrs Rawlins, the sister of one of the trustees, as tenant from year to year. She so held it till Lady Day 1839, when the trustees having previously served her with notice to quit, and thus determined her tenancy, re-let it to her at an increased rent of £450. A bill was then filed against the trustees by a person beneficially interested in the property, charging collusion between them and the tenant, alleging that the farm had been let at a gross undervalue, and seeking to make the trustees answerable for the higher rent which they might and ought to have obtained. Sir Knight Bruce, VC, made a decree charging the trustees with £42 a-year more than they had actually got for the three years ending Lady Day 1839; and from this there was an appeal. Now, throughout the case, it was assumed and admitted by all concerned, Lord Cottenham included, that when after the testator’s death the tenant threw up the farm in question, it was the duty of the trustees to re-let it on a yearly tenancy as before, and the only question was whether in so re-letting it they had got the highest rent which could then reasonably be obtained, again it was admitted that the moment they had reason to believe that the rent at which they had thus first re-let the farm was too low, it became their duty to serve a notice to quit, and again re-let it from year to year at an increased rent. I venture to think that Lord Cottenham or Sir Knight Bruce, VC, when so holding that it was the duty of the trustees to let and re-let from time to time, so as to get the best rent obtainable for the trust property, would have been greatly surprised if it had been suggested that the trustees had in fact no power to let at all. It is, however, right to say that Mr Walker in his able argument took much lower ground than this. He frankly admitted that trustees in receipt of rent and profits could make any reasonable letting: and that this of course might be from year to year. But his contention was that the letting by Richard Waring to Smith in 1875 was not a reasonable one, because the yearly tenancy was not made determinable on the death of Mrs Marion Warinq, the tenant for life. I believe, however, we are all of opinion that such a letting would have been most unreasonable, as it would have been plainly unjust to the tenant for life, for obviously no tenant would pay the full value of a farm for a tenure so absolutely uncertain. Nor can we, I think, regard the Land Act of 1870 as having any bearing on the present question, for if trustees could make yearly lettings before 1870, as I think they clearly might, they can do so still.
On the whole then, both on principle and authority, I am of opinion that the yearly letting made by Richard Waring to the defendant Smith in 1875 was valid; that the decree appealed from should be reversed so far as regards the defendant Smith, and the plaintiff’s action be dismissed as against him with costs. If, as would appear to be the case, Mr Waring is willing to secure to the plaintiff the additional £10 a-year, this may perhaps be sufficiently provided for by the decree: but having regard to the action having been commenced without any previous application to Mr Waring, and to the unfounded charges of collusion and fraud, I agree with the Master of the Rolls that the plaintiff should pay his costs in the Court below.
May CJ: The testator James Waring the elder devised the lands in question to Richard Waring and his heirs in fee-simple, upon certain trusts, viz on trust to raise a principal sum of £5000 by sale or mortgage of the lands, and subject thereto on trust out of the rents and profits to levy an annual sum of £300, and subject thereto on trust to the separate use of Marion Waring for her life, with remainder to such of her children as she should appoint, with a further limitation over in default of such appointment. In 1870 Mrs Marion Waring made an absolute appointment of the lands to James Waring the younger, one of her sons.
It appears that Richard Waring, the trustee, demised a portion of these lands to the said James Waring the younger, as tenant from year to year; in 1879 James Waring, who was then entitled to this tenancy from year to year in possession, and was also entitled to the estate in remainder, subject to the trusts above expressed, including the estate for life of his mother, demised the lands, with which this suit is conversant, to Michael Shields to hold for a term of thirty-five years subject to the annual rent of £33. Subsequently Richard Waring determined the tenancy from year to year of James Waring by notice to quit, and recovered possession of the lands demised; and on the 17th of July 1875, demised the same lands to James Smith, as tenant from year to year, subject to the annual rent of £43. In 1877 Mrs Marion Waring died, and James Waring the younger entered into possession of the estates, and received the rent of £43, payable by the defendant James Smith. Subsequently, in January 1878, the said Michael Shields brought an ejectment on the title against James Waring and one William Mee, who was then in occupation of the premises in question, as the agent of James Smith. James Smith was not made a party to these proceedings. James Waring and William Mee let judgment go by default, and Shields recovered the possession of the lands. Afterwards, in June 1879, James Smith brought a counter-ejectment against Shields and the present plaintiff Fitzpatrick, who claimed as assignee of the interest of Shields. Shields and Fitzpatrick appeared, and filed a defence in which they relied on the equitable title as derived from James Waring the younger. The defendant James Smith recovered judgment in that ejectment; and this suit was then instituted, in which the plaintiff, as purchaser from Shields, claims to recover possession of the lands. James Waring and James Smith being made defendants. Charges of collusion between the defendants James Smith and James Waring, contained in the statement of claim, were withdrawn.
The only point apparently relied on in the Court below, as entitling the plaintiff to relief, was that the creation of the tenancy from year to year in favour of the defendant James Smith, in 1875, had no legal validity, Richard Waring, the trustee, being incompetent to make any demise of the lands binding on those beneficially entitled to the estate. The Master of the Rolls decided that such tenancy was invalid in equity, and his judgment in favour of the plaintiff rests entirely on that proposition. And this Court has to consider whether that decision can be maintained.
The question is whether it was competent for Richard Waring to demise the lands, of which he was trustee, to a tenant from year to year. This question is, I think, to be determined, having regard to the true construction, intent, and meaning of the will of 1836. It is certainly true that no express power of leasing was given to the trustee Richard Waring by that instrument. The lands were devised to him upon the trusts above referred to, and it is material to consider the nature of those trusts. In the execution of the trust to raise the sum of £5000 by mortgage it would be absolutely necessary that the trustee should be enabled, after the execution of such a mortgage, to raise the annual interest on the sum borrowed out of the annual rents and profits of the lands; and so the annuity of £300 would be prima facie receivable out of the same rents and profits, and be payable by the trustee to the annuitant; and so also the residue of the rents and profits would be collectable by the trustee for the benefit of Mrs Marion Waring entitled to her separate use. I think it may be assumed that the estates were in the hands of the tenants. Supposing any of these tenancies to determine, whether by ejectment for non-payment of rent, by efflux of time, or by surrender, and thus the possession of parcels of these lands to become vacant, how was the trustee to receive the annual rents and profits of the lands so vacated? It seems to me that the maxim, that the grant of any subject-matter includes by implication a grant of all powers necessary for the enjoyment of such grant, applies to a case such as the present, and that the will of 1836 should be held impliedly to confer on the trustee such power as was necessarily required in order to enable him to discharge the active duties imposed upon him, including, in the present case, a power to demise vacant and untenanted lands, so as to make them produce an income; and it is, I think, all important to consider the character of the trusts reposed in the trustee.
The case was in the present instance treated in the Court below as one almost closed by authority. I have examined the authorities to which the Court has been referred, and consulted other cases and the text books, and I will shortly refer to those principally relied upon as supporting the decision of the Master of the Rolls.
In the case of Naylor v Arnitt 1 Russ & M 501 Sir John Leach supported a lease for ten years, made by the trustee, as a reasonable lease. In that case the lands in question were devised to the trustee, upon trust out of the yearly rents and profits to raise two annuities of £60 and £10, and subject thereto, upon trust to permit and suffer William Naylor and his wife to receive the rents for their lives, with remainder in favour of their children. The case was argued by Mr Pemberton on the one side, and Mr Bickersteth on the other, counsel of the very highest eminence: and it apparently was assumed by the counsel on both sides that it was quite competent to a trustee under such circumstances to demise the lands from year to year. The only question was whether it was within the power of the trustee to bind the inheritance by an absolute term of ten years. It is to be observed that in that case the trustee was directed to raise the annuities out of the annual rents and profits.
In the case of Wood v Patteson 10 Beav 541 a testator devised some mining property of which he was seised in fee, subject to a term of ninety-nine years, to a trustee, on trust to divide the rents among his four daughters for life, with remainder to their children. The term of years expired, and the tenants for life found they could not work the mines with a profit. Some of the children entitled in remainder were infants. Application was made to the Court to authorize the trustee to grant a mining lease of sixty years. Lord Langdale declined to make such an order. In that case authority was asked from the Court to make the lease as being for the benefit of the minors, and the decision did not turn upon the powers of the trustee, but upon the jurisdiction of the Court to order such a lease to be made. It does not appear to me that that case bears upon the point argued before the Court.
In Re Shaw’s Trusts LR 12 Eq 124 the testator, after giving legacies and annuities, gave the residue of his estate and the annual produce thereof to trustees on trust, as to one-third, to pay the income to a nephew for his life, and after his death to his children, and the other two-thirds to two other nephews and their children in the like manner. The case came before the Court on a special case one of the questions being, whether the trustees were entitled to lease the real estate for any and what term. Vice-Chancellor Wickens doubted the decision in Naylor v Arnitt 1 R & My 501, and declined to answer this question. The Vice-Chancellor expressed no opinion as to the power of the trustees to demise the lands from year to year, and it can hardly be contended that this case can be relied on as an authority in support of the decision of the Master of the Rolls.
I can find no authority, not even a dictum, that a trustee in whom an estate is vested upon such trusts as exist in this case, cannot make valid demises of the trust property for tenancies from year to year. Such a doctrine would, I think, lead to most inconvenient consequences. I think the decision of the Master of the Rolls on this point cannot be supported.
A good deal was said in argument as to the extensive rights and interests which under the Land Acts of 1870 and 1881, had become vested in tenants from year to year. It is, I think, enough to say that this question must be determined as if the case had arisen shortly after the date of the will. If that instrument gave by implication a power to demise the lands from year to year, the trustee had such a power under it when it came into operation, and could not afterwards be deprived of it because the legislature subsequently conferred rights and privileges on tenants from year to year.
On the whole, I think that upon this point, which was the only point argued before us, the decision of the Master of the Rolls must be reversed.
Deasy LJ: Assuming that the case set up by the plaintiff is open to him after the adverse decision of the Exchequer Division in the action in which it was distinctly raised – a decision to which the plaintiff was a party, and from which he never appealed to this Court – I think it is not well founded in law. There is no authority for the proposition on which the plaintiff relies, that a trustee of a landed estate occupied by tenants cannot in any case let a part of that estate to a yearly tenant during the life of the tenant for life, so as to make that tenancy binding on the remainderman. Sir J Wickens enunciated no such proposition in Re Shaw’s Trusts LR 12 Eq 124, he simply declined to follow Sir J Leach’s order in Naylor v Arnitt 1 R. & My 501, directing trustees to grant a lease for ten years. In Wood v Patteson 10 Beav 541 the application was for an order sanctioning a mining lease which Lord Langdale declined to make.
In The Attorney-General v Owen 10 Ves 560 Lord Eldon says that trustees are bound to at lease as provident management as a provident owner. This Court would say that the trustee was to do what was reasonable. The Court would put it both upon the trustee and the tenant taking under him to show that the act was reasonable and done in the fair management of the estate.
Applying that test, is not the act reasonable and done in the fair management of the estate? This estate was in the occupation of tenants holding at yearly rents the trustee had it vested in him upon trust to receive the rents and pay them to a married woman for her separate use. He was in the actual receipt of the rents through his agent, and he appears to have made lettings of other parts of the estate. He had recovered the possession of this part in an ejectment founded on a notice to quit, and was put into the actual possession of it by the sheriff. What was he, then, to do with it? He could not allow it to remain unproductive. He could not be expected to farm it himself. That might involve a loss both to himself and to the trust estate. He could not make a demise of it for less than a yearly tenancy, for that is provided against by the 69th section of the Land Act of 1870. It may be said that he might have made the yearly letting determinable at the death of the tenant for life, but that would be a very improvident arrangement to make. It could not be expected that as high a rent could be got for it as upon an ordinary tenancy from year to year, and the tenant holding by that uncertain tenure would have an interest in getting as much as possible out of the land, and putting as little as possible into it in return. It would, I think, be dangerous to hold that a trustee of an estate held by occupying tenants can never make a yearly letting of any part of it which will be binding upon the parties beneficially entitled.
I concur with the Lord Chancellor and the Lord Chief Justice that the decision of the Master of the Rolls should be reversed.
FitzGibbon LJ: I fully concur in the opinion that the authority of an acting trustee of the legal fee must include the power to make reasonable lettings of lands which at the inception of his trust he finds in the hands of tenants, and which during the trust come into his possession. If empowered to let at all, his power must at least extend to the creation of a tenancy from year to year in an agricultural holding, at all events where the holding had been previously so held. There is no authority to the contrary. The cases cited seem to recognize such a power, and without it I do not see how the trusts of landed estates could in many cases be executed. Is the trustee to leave the land unproductive, or to embark upon farming at the risk of his trust fund? The Master of the Rolls says he may come to the Court “for a receiver.” If “receiver” is here strictly used, it implies that rents are to be received, and so that lettings are to be made; if it means “manager,” it implies that the Court would sanction a trustee’s undertaking the actual management of lands previously let to tenants, which I do not think it ought; if it means that the trustee should bring the administration of his trust into Chancery, it leaves the matter where it was, for a trustee may at least do out of Court what the Court would sanction if administering the trusts. The Court ought to sanction only what a trustee could do out of Court. It cannot be laid down that lands can be let only through the machinery of the Settled Estates Acts or of statutory leasing powers, and it remains as the only and, I think, as the necessary conclusion, that an acting trustee of the legal fee may make reasonable lettings of vacant tenantable lands.
It remains to apply this power to the present case, and here I confess I am not altogether satisfied that the defendant’s case has been made out. A reasonable letting must be one reasonably necessary for the due execution of the trust on behalf and in the interest, not of one, but of all the cestuis que trust. It further rests upon the person alleging a tenancy under such a letting to show its reasonableness, having regard to the whole scope of the trusts. Here the lands were let by the remainderman from year to year, and he had bound himself by a lease which would operate, not only on his legal tenancy from year to year, but also on his equitable estate in remainder. The trustee’s duty and authority were to act reasonably for all the cestuis que trust, and did not enable him to make a letting even from year to year, which would unreasonably involve the remainderman in liability, and which his previous lease forbade the remainderman to make for himself, unless it was reasonably necessary in the interests of the other cestuis que trust to disregard the special interest of the remainderman. I am not satisfied that the defendant has given sufficient proof that, having regard to James Waring’s position, it was reasonable to determine his tenancy from year to year, and, when re-letting the lands, to omit a provision that the new tenancy from year to year should determine on the death of the tenant for life so as to leave James Waring’s estate in remainder free to meet the lease by which he had bound it. Still I am not so confident upon this as to warrant me in dissenting from the other members of the Court, especially as the letting to the defendant certainly brought in an increased rent, and was of the same character as that for which it was substituted, as a provision for determination must to some extent have diminished the value of the tenancy, and so pro tanto diminished the rent receivable by the tenant for life, and lastly as the great importance of the tenancy from year to year now, as against the plaintiff and the remainderman, has arisen from legislation subsequent to its creation, and not from any unreasonableness in the letting itself.
I wish to add that I am entirely unable to understand why the points at issue in this suit were not fully discussed and finally decided in the action brought in 1879.
Re O’Flanagan and Ryan’s Contract
[1905] 1 IR 280; 39 ILTR 87 (Chancery Division)
Porter MR: This is a summons under the Vendor and Purchaser Act brought by the vendors, asking that it may be declared that a good title has been shown, in accordance with the particulars and conditions of sale, to the premises mentioned in the summons, a licensed house and premises, at Thurles, in the county Tipperary. I shall take the will and deed under which the premises are held as read.
The gift to the widow of the testator is “in trust for herself and the children of our marriage, to be applied by her as she shall deem most expedient.” Whatever may be the exact effect of these words, it is clear that some trust is imposed upon the widow, and that she is thus a trustee for herself and the children of the marriage, though with wide discretionary powers. The case is not like Lambe v Eames LR 6 Ch 597, for there is a trust; nor Haley’s Trusts 23 LR Ir 130, for the widow takes some beneficial interest. (In that case the majority of the Court of Appeal held that the legatee took none, though it was not necessary to decide that point, as she died before the testator.) Perhaps it most closely resembles Crockett v Crockett 2 Ph 461. At any rate it is clear that there is a trust; and that the cestuis que trustent are the widow and the children of the marriage, and no one else. It is possible, too, that, as the shares (when settled on) could only be worked out by a sale of the property and distribution of the proceeds, the widow, who is also executrix, may have an implied power of sale. I think that this is so. Obviously, however, any such sale ought to be made in perfect good faith for the benefit of the class interested, and no one else. What took place in 1891, on the occasion of the second marriage of Mrs Maher, was not a sale; nor was it authorised by anything in the will. Mrs Maher had no right to convey away the assets to any delegated trustee. Had she died soon after the execution of the deed of 23rd January 1891, all the assets would have vested in a stranger, subject only to £1000 charged on them for the children, and to £200 left to the son of the testator’s first marriage. The transaction was apparently entered into not for the benefit of the entire class, but for her own benefit mainly if not exclusively by securing for her a second husband. It is not necessary, nor would it be proper, to decide this, but it is needful to refer to it as, at least, an extremely serious difficulty in the way of upholding the transaction, even if it were not plain, as it is, that Mrs Maher had no right whatever to assign away her trust and the trust estate. Indeed her doing so was in fact a complete breach of trust, independently altogether of the question whether a provision of £1000 for the children was under the circumstances a bona fide discharge of her duty to exercise, as trustee, an impartial discretion. The vendors claiming under the deed could not give no valid discharge for the property of the minors; and the offer made subsequent to the sale to procure Mrs Maher’s, or rather Mrs Rahill’s, concurrence in the conveyance to the purchaser was no more than a proposal to obtain her ratification of her own improper dealings with the property. The purchaser would have to pay Patrick O’Flanagan and Martin Rahill for property which did not belong to them, and for which they could give no valid receipt. All this is plain, and in great part, admitted.
But Mr Wilson’s argument is that the purchaser is bound by the conditions of sale, so as to be precluded from raising the question, relying on Scott v Alvarez [1899] 2 Ch 611 and cases of that character. But in Scott v Alvarez [1899] 2 Ch 61 1, and all the decisions of similar import, the question has arisen upon the effect of positive restrictive conditions, in terms binding the purchaser to admit certain facts or to forgo inquiry or investigation of title before a particular period or the like; whereas no such condition forms part of this contract. The only colour for this contention in the present case is the sixth condition, which is as follows:
“By his will the said William Maher bequeathed (inter alia) the said premises to his wife in trust for herself and her children to be applied as she should deem most expedient. To give effect to the trust contained in the said will, Mrs Maher, on the occasion of her re-marriage, vested (inter alia) the said premises to trust to raise by sale or mortgage the sum of £1000 for the benefit of the said children, and in pursuance of this trust for sale the vendors are now selling the said premises, and shall convey the same to the purchaser in their character as trustees and not otherwise, and shall not be bound to obtain the concurrence of any other parties to such conveyance as conveying parties.”
This, it is said, fully states the facts, and informs the purchaser of what he is to buy; and as it discloses the title which the vendors are prepared to give, no objection founded upon those facts can be admitted. It states correctly enough the sentence of the will, in reference to the matter in hand, and it shows that title is to be made under the deed of 1891. If that title is bad, it is, at least, the title which alone the vendors are prepared to give, and thus the purchaser is precluded from raising the question.
In my opinion this argument is founded on a fallacy. A purchaser under such a condition is entitled to assume that he is getting a good title if it be possible consistently with what is stated that the title may be a good one; and it is plain that, consistently with what is stated, the title here might be a perfectly good one. He is told that the deed of 1891 was made “to give effect to the trust contained in said will,” and that by it Mrs Maher “vested the premises in the vendors in trust,” &c. Anyone reading that condition would be entitled to assume, and would assume, that there was some provision in the will, or in some other instrument of title, enabling Mrs Maher to make a settlement on the occasion of a future marriage in the way stated; that the transaction in short was (as it is affirmed to be) a giving effect to the trusts of the will, and not a breach of them. When the will came to be examined, the purchaser would expect to find at least some power enabling Mrs Maher to appoint subsidiary trustees, with authority to give receipts for purchase-money. Had this been the case, the difficulty would not have arisen. As it is, if the title were forced upon the purchaser, he would raise the question against him at some future time, when, being fixed with notice of a breach of trust, he would or might be practically defenceless, being constructively a trustee for the persons entitled under the will, and bound to justify a transaction of the merits of which he would know nothing personally, and which is illegal on the face of it. The will contains no other provision, and no other authority is shown, enabling this thing to be done.
If, then, on the conditions of sale, he was entitled to assume that a power to do what was done would be shown, the meaning of that is that he was entitled to have this by the contract, and as he has not got it, a good title has not been shown pursuant to the conditions of sale.
There must be a declaration accordingly, and the vendors must pay the costs of the purchaser. If it is desired, I shall state on the face of the order that the deed of 1891 was a breach of trust. This will enable Mrs Maher to call upon the trustees of that deed to re-convey the property to her, and place her in the same position as she was before .
The order, which was made on January 20th 1905, was as follows:
“THE JUDGE, being of opinion that the execution of the said indenture of settlement constituted a breach of trust on the part of the said Kate Maher, the settlor, who was a trustee under the said will of William Maher, doth declare that a good title has not been shown by the said vendors, in accordance with the said particulars and conditions of sale; and doth order that the said purchaser’s costs of this application and order be paid to him by the said vendors, when taxed and ascertained.”
Re O’Connell’s Estate
[1932] IR 298 (High Court)
Kennedy CJ: The above-named testator, Timothy Jeremiah O’Connell, died on the 25th of February 1927, leaving his widow, Hanora O’Connell, and his five children, Jeremiah, then aged eight and a half years, Peter, then aged seven and a half years, Dinah, then aged six and a half years, Eileen, then aged about five years, and Tess, then aged about three and a half years, surviving. He was possessed of a farm of registered land containing 60 acres 2 roods and 15 perches in County Limerick, bought out under the Land Purchase Act of 1903, subject to a purchase annuity of £23 19s 6d. He had also on the farm live and dead stock and in Bank a sum of money on deposit receipt in the joint names of his wife and himself. His gross personal estate was sworn for probate at £365. The testator made his will, dated the 1st of February 1927, which was duly proved on the 30th of June 1927, by the plaintiffs, Denis O’Connell, David O’Connell and John Leahy, the executors therein named. This summons has been taken out for the construction of the will, which is a very defective piece of drafting, though a reference to the Settled Land Acts suggests that the draftsman may have had some contact with law. I will go through the document clause by clause.
After a direction for payment of debts, funeral and testamentary expenses, the testator appointed the three plaintiffs to be his executors and trustees of his will. He then gave to his trustees all his “moneys, stocks, chattels, securities and farm, including the £200 on deposit receipt in the Munster and Leinster Bank” (which receipt he declared to be his own sole property, though in the joint names of him and his wife) to hold upon trust for his wife until she should re-marry or until his son Jeremiah should reach the age of 30 years, whichever should first occur. The will continued:
“When my son Jeremiah reaches the age of 30 years I give him my farm, stock, household furniture and everything on the lands, for his own use and benefit, but charged with the sum of £100 each in favour of my four remaining children, which sum shall not be payable until they reach the age of 21 years respectively.”
The testator’s widow, on the 17th of March 1928, married one, Richard Sheehy, and is now the defendant Hanora Sheehy.
After certain provisions, depending on his wife not remarrying, the testator made the following provisions to take effect in the event of her re-marriage. In the first place, he directed that she should leave the lands, and that she should get from his trustees or from his son, as the case might be, the sum of £100, payable by annual instalments of twenty pounds, the first instalment to be paid on the expiration of six months from the date of her leaving the lands, but he directed the trustees to make good any discrepancy in the amount of the stock on the lands out of the £100 (except for loss by death or disease). The testator then directed that in the event of his wife re-marrying or dying before his son should attain the age of 30 years, his trustees should, if his son should have attained 21 years, hand the bequeathed property over to him, subject to the said charges thereinbefore created, as if 21 years had first been stated, but in case his son Jeremiah should be under the age of 21 years on the happening of either of such events, then he directed his trustees “to manage the place generally until he should attain 21 years.”
The testator then directed that in the event of Jeremiah dying before attaining 30 years, the will should be read as if the name of his son Peter had been substituted for Jeremiah throughout, and in the like event of Peter’s death the name of his eldest daughter, and so on.
He appointed his trustees to be trustees for the purpose of the Settled Land Acts and he gave them a discretion to withhold payment of legacies of children requiring payment before Jeremiah should reach 30 years.
Finally, the will contained the following residuary gift: “I direct all of my moneys to go to Jeremiah on reaching 30 years, but my trustees shall have power to utilise same for payment of the charges in this my will if they think fit.”
The first and most important question submitted for determination is as to the disposal of the income of the testator’s farm during the period from the end of the widow’s beneficial interest to the happening of the event upon which the son Jeremiah will become entitled, a gap left uncovered by the draftsman except as regards management.
Now, it is important to observe that, subject to payment of his debts, funeral and testamentary expenses, the testator begins with a universal residuary gift to his trustees on trust for his wife until she re-marries or their son Jeremiah attains the age of 30 years, but the gift to Jeremiah which follows, to take effect on the happening of either of the events mentioned, is not a residuary gift, but a gift of the farm and stock and everything on the lands, and at the end of the will he makes a separate residuary gift to his son, but on different lines, of all his “moneys.”
The rule stated in Genery v Fitzgerald Jac 468 (Lord Eldon) and In re Dumble; Williams v Murrell 23 Ch D 360 (Pearson J), is not, in my opinion, applicable to the present case in precisely the way in which it was in argument assumed to apply.
To return to the will, reading it as in the events which have happened, let us see the exact position. On the re-marriage of the testator’s widow the general residuary trust in her favour came to an end and the residuary property was severed. The farm with the stock, furniture, and everything on the lands, are taken out of general residue and, subject to five charges of £100 each in favour of the widow and the four other children of the testator, are given specifically to the son Jeremiah contingently on his reaching the age of 21 years, to be managed in the meantime by the trustees but with no direction as to the disposal of the interim income. The way in which the gift itself is made, the provision for management by the trustees during minority, and the provision for replacement of stock out of the £100 given to the widow on her re-marriage, go to show that the testator made a specific gift of his farm and farming business, “as a going concern” as the phrase is, to his son Jeremiah, contingently on his reaching the age of 21 years, in the events which have happened. Though not a residuary gift of real and personal estate “mixed up in one mass” as Pearson J put it in In re Dumble; Williams v Murrell 23 Ch D 360, yet (assuming for the moment that a farm bought out and registered is to be considered real estate in this connection) it is a very similar thing, an analogous mixture, for we have real property along with personalty severed from the rest of the estate given to the same person on the same contingency; and a like principle as regards the intention to be inferred would appear to be applicable to the income of the gift as a whole, with the result that the income of the whole should be accumulated until Jeremiah reaches the age of 21 years and should then follow the corpus of the gift as an addition to it.
A question was raised in the course of the argument as to whether registered land was within the rule of Genery v Fitzgerald Jac 468, and it was suggested that there is not authority on the point, which may be so, but one case certainly deserved mention, viz: In re John Ferguson, deceased, Curry v Bell 49 ILTR 110. There, a testator gave his farm to a nephew (to whom he stood in loco parentis), when the nephew should be of age, making no other provision for him. The farm was the subject of an agreement for purchase under the Land Purchase Acts made by the testator and was vested after his death during the nephew’s minority. It was argued that the farm should be treated as real estate and In re Longworth [1910] 1 IR 23 was cited. The late Master of the Rolls, however, dealt with the farm throughout his judgment (as reported) as a chattel real, and, having discussed the question whether the specific bequest of the farm was a sufficient segregation of the subject matter of a contingent bequest to carry the income with the corpus of the gift to the donee under the well-established exception to the rule as to pecuniary legacies, he left the question unanswered and decided the case on the point that it was a bequest by a person in loco parentis to the donee, for whose maintenance he made no other provision: In re Bowlby, Bowlby v Bowlby [1904] 2 Ch 685. I do not find it necessary for the purposes of the present case to decide whether a registered purchased holding is to be regarded as realty or as a chattel real, because, however the matter is regarded, and especially having regard to the always paramount intention of the testator so far as it can be ascertained from the will itself, whether the gift is one of realty and personalty (the personalty being clearly segregated from the rest of the testator’s property) mixed in a mass to which, in my opinion, a principle analogous to the principle of Genery v Fitzgerald Jac 468 and in re Dumble; Williams v Murrell 23 Ch D 360 ought to be applied; or is a gift of a specific chattel real and specific personalty so segregated; I am of opinion that the income from the widow’s death to the son’s majority is carried with the gift not only on principle supplementing or taking the place of express evidence of intention but also by the intention of the testator in so far as I can see actual evidence of that intention in the will itself. If the income were not carried with the gift of the corpus, the question would then arise as to whether such income was not carried by the residuary gift to Jeremiah in the words “all of my moneys”. In the view I take, however, it is not necessary to pursue this question.
It follows from the view I have taken of the gift of the farm stock, furniture and property on the lands that the son Jeremiah is entitled during his minority to have the income of that property, or so much of it as may be necessary, applied to his maintenance, education or benefit; any surplus of such income being accumulated to pass with the corpus of the property: Conveyancing Act 1881, s 43; In re Bowlby, Bowlby v Bowlby [1904] 2 Ch 685.
On the other hand, Jeremiah is not entitled to have any provision made for his maintenance out of the property comprised in the gift of “all of my moneys” which is contingent on reaching the age of 30 years and has no reference to his infancy: In re Abrahams, Abrahams v Brendon [1911] 1 Ch 108.
The next question which arises on this will is as to whether the son Jeremiah is to become absolutely entitled to the farm on reaching the age of 21 years or, if not, what estate or interest does he take. It is to be observed that the acceleration of the gift to him by substituting the age of 21 for the age of 30 is in express terms applied only to the first statement of age in the will referring, I think, to the contingency upon which he is to take the benefit of the gift. It has not been made applicable to what follows. Accordingly the provision stands unaltered which says: “In case Jeremiah shall die before attaining 30 years then I direct that this my will shall read as if my son Peter’s name had been substituted for Jeremiah throughout and in the like event of Peter’s death then my eldest daughter’s name, and so on.” The effect of this is that Jeremiah if he reaches the age of 21 years is entitled to go into beneficial possession and enjoyment of the farm and farming stock and business and of the income of the fund constituted by accumulations of the interim income left after providing for his maintenance and education, but that the whole gift is subject to an executory gift over to Peter if Jeremiah should die under the age of 30 years, the gift to Peter being subject to similar contingent limitations. Jeremiah, therefore, will not become absolutely entitled to the property unless and until he reaches the age of 30 years, up to which event the property will continue subject to the trusts of the will which may be applicable in the events that shall have happened.
I now come to the questions which arise as to the four sums of £100 for the testator’s other children. The first point to be observed about these gifts is that they are not generally pecuniary legacies but charges, and, secondly, that they are charged both on the farm and on the stock, household furniture, and property on the lands. In the third place, these several charges do not arise until the contingent gift to Jeremiah (or Peter, or as the case may be) takes effect. Fourthly, the several sums are not to be payable until the donees respectively reach the age of 21 years. Fifthly, none of the donees may require and insist on payment before Jeremiah reaches the age of 30 years, an absolute discretion being given to the trustees up to that time, if payment be called for, either to withhold payment or to raise the amount. The trustees are, however, empowered to apply the residuary gift of “moneys” in payment off of these charges, not of course before they become payable, i.e., at the respective donees’ ages of 21 years. No other provision was made by the testator for the maintenance of these four children. The questions to be decided upon these charges are two, namely, first whether they are given absolutely or contingently on the respective donees reaching the age of 21 years, and, secondly, whether the donees are respectively entitled to have their maintenance provided for out of the interim interest on the several sums.
In my opinion as a matter of construction of the terms of the will itself, each of these gifts of £100 is a legacy to the donee contingent on his or her attainment of the age of 21 years, charged upon the property given to Jeremiah, payment whereof may be postponed by the trustees until Jeremiah reaches the age of 30 years. If the donees were not children of the testator or persons in whose regard the testator stood in loco parentis, the donees would not be entitled to have either interest or maintenance during minority, but upon reaching the age of 21 years would become entitled to interest from the time of reaching that age until payment of the principal sum of the legacy. But inasmuch as the legatees are children of the testator, for whose maintenance he has made no other provision, and to whom the legacies are given respectively on the contingency of attaining the age of 21 years, I am of opinion that these legacies fall within the old rule of practice in the Court of Chancery and that they respectively carry interest during the minority of their several donees, and that the donees are entitled to maintenance out of such interest on their respective legacies, in this case indeed to have the whole of the wretchedly small sums of interest so applied.
The declarations which I must make in answer to the questions in the originating summons will therefore be as follows:
1.Upon the true construction of the said will and in the events that have happened, the defendant Jeremiah O’Connell, is entitled to the testator’s farm, stock, household furniture, and everything on the lands, for his own use and benefit, but subject to the several charges of one hundred pounds each if and when he reaches the age of 21 years, subject, however, to an executory gift over to his brother Peter in the event of his (Jeremiah’s) dying before he attains the age of 30 years.
2.The said Jeremiah O’Connell is entitled to have the income of the said farm, stock, furniture and other property (after payment of all proper outgoings), or so much of such income as may be required for the purpose, applied for his maintenance, education and benefit, from the date of the re-marriage of the testator’s widow until he (Jeremiah) shall attain the age of 21 years; so much of such income as shall not be required for that purpose to be accumulated by the trustees and held upon the same trusts as the said farm and other property.
3.The defendants, Peter O’Connell, Dinah O’Connell, Eileen O’Connell and Tessie O’Connell, are not, nor is any of them, entitled to any part of the rents and profits of the said lands during the minority of the said Jeremiah O’Connell.
4.On the true construction of the said will, there is not an intestacy as to the rents and profits of the said lands.
5.Upon the true construction of the said will each of the sums of £100 bequeathed contingently to the defendants, Peter O’Connell, Dinah O’Connell, Eileen O’Connell and Tessie O’Connell respectively, carries interest as from the date of the re-marriage of the testator’s widow until the legatee reaches the age of 21 years, and the legatee is entitled to have such interest applied for his or her maintenance.
6.The defendant Jeremiah O’Connell is not entitled to any part of the income arising from the bequest of the property described in the will as “all of my moneys” unless and until he reaches the age of 30 years, but all such income must be in the meantime accumulated by the trustees and held upon the same trust as the principle moneys.
7.The defendants Peter, Dinah, Eileen and Tessie O’Connell are not nor is any of them entitled to any part of the said last mentioned income, either now or at any time, if the defendant Jeremiah O’Connell attains the age of 30 years.
8.If the defendant Jeremiah O’Connell attains the age of 30 years, there will not have been an intestacy as to the said income.
The questions submitted were raised by the will on the face of it and this construction summons was unfortunately inevitable. I must give the several parties their costs, to be paid primarily out of the general residuary personal estate. I will reserve liberty to apply, in order to avoid the expense of a new summons, if the happening of any other contingency should raise any further question on the will.
Johnston v O’Neill
(1879) 3 LR Ir 476 (Chancery Division)
A testator directed his trustees and executors to invest out of the produce of his personal estate a sum of £4000, and to hold the said sum and the securities upon which it should be invested, in trust for the younger children of the testator’s nephew, who being sons should attain twenty-one, or being daughters should attain that age or marry; and if there should be no child of his said nephew who, under the said trusts, should become entitled to the said sum of £4000, the testator directed the same to sink into and form part of his residuary estate. The will contained no express disposition of the interim income of the fund, and the only provision for maintenance of the legatees was given out of the testator’s real estate. There was a complete disposition of the testator’s residuary property.
Chatterton VC: The question remaining for decision is, what are the rights of the parties in the interest of the sum of £4000 directed to be invested, and held in trust for the younger children of Edward O’Neill. These children contend that it follows the principal, while the eldest son of Edward O’Neill contends that it forms part of the testator’s residuary estate, and is to be invested, with the other residuary estate, in the purchase of real estate, to be settled for the benefit of him and the other devisees of the testator. The trustees of the will were directed to set apart, out of the general personal estate, this sum of £4000, and it was their duty to do so not later than a year from the testator’s death. The will requires that it should be invested by the trustees in the manner therein provided for the investment of the rents and profits of the testator’s real estate; that is to say, in the public stocks or funds, or Government securities the interest, dividends, and annual produce of which the trustees were directed to receive. It is therefore a fund which, by the express terms of the will, is to bear interest from the time of its investment. The trustees were to hold this sum, when so invested, in trust for all the children or any child of Edward O’Neill other than an eldest or only son entitled to the testator’s real estate, who, being a son or sons should attain twenty-one, or, being a daughter or daughters, should attain that age, or marry, and if more than one in equal shares. There was, therefore, a complete segregation of this sum from the residue of the testator’s personal estate, to be held from its segregation and investment upon the special trusts declared concerning it by the will. The testator further declared that, if there should be no child of Edward O’Neill who, under the trust declared by his will, should become entitled to this sum, it should sink into and form part of his residuary estate, and be applied in the manner thereinafter provided; that is to say, in the purchase of real estate. There is no express disposition of the income of this sum, and thus the present question arises.
It has been contended on the one hand that this legacy, being made payable at a future time, carries to the legatees the interest only from the time of payment, and that the interim interest is undisposed of, and falls into the residue. It is, no doubt, the general rule that general legacies payable at a future day, even though vested, do not carry interest before the day of payment, except legacies given to a child by a parent, or a person in loco parentis. But to this general rule there are exceptions, one of which is, that where a fund is directed to be presently separated from the general personal estate for the purpose of providing for the future payment of certain legacies, it carries the interest accruing up to the time of payment, to the legatees, with the capital sum. In such cases, the rule that the interest follows the capital prevails, and the legatee gets his legacy with its interim accretions. The effect of a direction to set apart the special fund at once, or at some time prior to the day of payment, is to dedicate that fund, with its increase, from the time appointed for setting it apart, to the particular purpose, and to take it out of the general personal estate, without waiting for the arrival of the time of payment. In the case of Boddy v Dawes 1 Keen 362, where there was a gift to trustees of a sum of stock for grandchildren of the testator on their attaining twenty-one, and a gift over in case they all should die under that age, Lord Langdale held that the intermediate dividends belonged to the grandchildren. The case was argued for them chiefly on the ground that the fund was separated from the residue of the testator’s estate: and this was plainly the main ground of Lord Langdale’s decision, though there were expressions in the context of the will aiding the argument. In Saunders v Vautier CR & Ph 240, the separation of a fund to be held by trustees till the legatee should attain the age of twenty-five, and then to pay over to him the principal and accumulation, was held to make the legacy vested, though there was no gift but in the direction to pay the legatee on attaining twenty-five. I refer to this case only to show the efficacy of a direction to set apart the fund, for it differed from the present in other material respects. In the case of Dundas v Wolfe-Murray 1 H & M 425, a similar decision was made by Sir WP Wood, VC, and on the same ground. There the testatrix directed her trustees immediately after her death to raise a sum of money and pay it to her nephews and nieces, the shares of sons to be payable at twenty-one, and those of daughters at twenty-one or marriage, with benefit of survivorship among them. There was no gift over in case all should die before the prescribed periods. The Vice-Chancellor held that the legacy was vested, and that the legatees were entitled to the intermediate income. It was, however, contended here on the part of the eldest son that the present case differs from those cited, or at least from Saunders v Vautier Cr & Ph 240, and Dundas v Wolfe-Murray 1 H & M 425, on the ground that the younger children only take contingent interests in this sum of £4000, while in those cases the legacies were vested on the death of the testator. It was urged that here there are no words of gift except in the trust to pay; that the only children capable of taking are those who in the case of sons should attain the age of twenty-one years, or of daughters should attain that age or marry; that there is no clause of accruer or survivorship between the children, nor any gift of the interest in the interim for maintenance or otherwise, and that the provision for maintenance out of the rents of the real estate shows that the interest of this fund was not intended for that purpose. The gift over, or rather the direction that this sum should fall into the residuary estate, was also strongly relied on to show that the gift was contingent. I agree with this argument so far as regards the vesting of the gift, and I am of opinion that it cannot be deemed vested. The futurity here is attached to the substance of the gift; no child could take who did not become a member of the class to whom the legacy was given, which could only be by living to attain the prescribed age, or if a daughter, by sooner marrying. There are none of the circumstances which the Court has seized upon in other cases to enable it to hold that the gift was vested, and the gift over here is dependent merely on the failure of all these children to become entitled, and is not coupled with any words imparting any other contingency to which it could be referred. But it appears to me that in consequence of the severance of this legacy from the general personal estate, whether it be vested or contingent, the interest up to the time of payment did not fall into the residue. If vested there is no question; if contingent it must be accumulative, subject to any order for maintenance that may be made under Lord Cranworth’s Act, till the time of payment, and then these accumulations, or the portion of them not paid for maintenance, will with the capital belong to the children or child becoming entitled to payment. If no child becomes entitled, they will fall with the capital into the residue. The case of Kidman v Kidman 40 LJ Ch 359 is an express authority on this point. The fund there was to be set apart on the testator’s death, and invested and held in trust for Elizabeth Kidman for life, and from her decease for her children, when and as they should respectively attain the age of twenty-one, but if Elizabeth should die without issue, over. It was there contended, on the language of the gift over, that the legacies were vested, as that gift was not confined to dying without issue who should live to attain twenty-one. Sir R Malins VC, held that the legacy was contingent upon the children attaining that age; but he held that the interest from the death of the tenant for life up to the time of payment was to be accumulated and to go with the capital, each child on attaining twenty-one taking his or her share of the fund as it should then exist. He based his decision on the severance of the legacy from the residue, for a purpose connected with the legacy, namely, to provide the interest for the tenant for life.
The case of Gotch v Foster LR 5 Eq 311 was relied on for the eldest son, as showing that even in the case of a severed fund, where the interests of the legatees are future, they are not entitled to the interim interest. But, on looking to the terms of the appointment there, it will be seen that it was not a case of severance of the shares as to which the question arose. The severance there was of a larger fund out of which the appointments in question were made, but those appointed sums were not to be at once severed from that fund, but were to be raised out of it only on the happening of the events on which they were to become payable. It was contended that the words of the clause directing the residue to be invested by the trustees in the purchase of real estate must be held to include the interim interest on the £4000, as being “interest, dividends, and annual produce not otherwise applied under the trusts hereinbefore mentioned.” I think that this argument is met by the complete severance of the £4000 from the general personal estate, carrying with it, in my opinion, all the intermediate interest. By the terms of the will the fund was to sink into the residue only in the event of there being no child who should become entitled to it. Unless and until that event should happen, it was not to become a part of that residue which was to be invested in the purchase of real estate.
I shall, therefore, declare that the income of this sum of £4000 does not fall into the residue unless it shall happen that none of the younger children shall become entitled to the capital sum of £4000, and that in the meantime it shall be invested, but subject to any orders that may be made for maintenance thereout of the younger children. The £4000 must be placed to a separate credit and the dividends invested from time to time to the same credit until further order.
Re O’Neill
[1943] IR 562 (High Court)
Income from a trust fund for minors, who had been made wards of Court, was insufficient to meet their school fees and maintenance charges. An application was made for payment out of the capital.
Maguire P: I have previously granted at least two applications of this nature. In one case the facts were very similar to those now presented to me, and I allowed an advance out of the capital of a trust fund which was not sanctioned by the will of the settlor, but which was clearly for the benefit of the minors. In the other case I also allowed an advance out of capital but I required that an assurance policy upon the life of the minor concerned should be taken out to cover the extent of the advance.
Neither of these cases appears to have been reported. In both cases I took the view that in applications of this kind something more is required than evidence that an advance would be of benefit to the minors. I must be satisfied that such a course is not only beneficial but necessary to the welfare of the minors. As to this I accept the view expressed by Kekewich J in In re Tollemache [1903] 1 Ch 457, at p 459. He says:
“The most common application going beyond the administration of a trust according to the instrument creating it is one for advances for the benefit of an infant out of capital not sanctioned by the instrument creating the trust. I have never hesitated to do this where satisfied that the advancement is certainly beneficial, and where the infant is contingently interested, as, for instance, entitled only on attaining majority. I have included in the advance the sum necessary to effect a policy of insurance to cover the contingency. This is an illustration of the maxim that necessity has no law.”
The jurisdiction to make an advance out of capital is not to be exercised lightly. Where a minor is actually destitute the way is clear, but where the minors, as here, are not destitute, the question of the existence of a sufficient element of necessity becomes a difficult problem.
In the present case there is a considerable capital fund subject to the trust of the will of the minors’ father. The terms of the will require that the trustees shall pay to the minors’ mother the entire income of the estate during widowhood for her own support and maintenance, and the support, maintenance and education of the four minors, and that on her death the capital of the estate shall pass to the minors equally as tenants in common. The evidence before me shows that the minors have reached an age when, if they are to take the position in life for which their upbringing has been preparing them, the expenditure upon their education and maintenance must be increased to a sum greater than the income available. Their mother strongly supports the application. It clearly may be to the advantage of a child to expend capital moneys to which he is absolutely entitled upon his education. Where, however, as here, the interest of the child in the fund is merely an interest in remainder, I have to ask myself, not only would such an expenditure be to the child’s advantage, but is it necessary.
Taking all the circumstances into consideration, I hold that the expenditure which I am asked to sanction is necessary. Accordingly I allow the application, and direct the payment out of capital of the sum of £301 8s 4d, being the amount of the past expenses already incurred on foot of the maintenance and education of the minors, together with the sum of £146, being the amount certified by the Registrar to be required for their maintenance and education for the coming year.
L’Estrange v L’Estrange
[1902] 1 IR 467 (Court of Appeal)
A testator devised the residue of his property to trustees for the benefit of six of his children, with power to his said trustees to advance such sum or sums as they might think fit, for the education and advancement in life of his said children.
Lord Ashbourne C: Notwithstanding the very clear and able arguments of Mr Molony and Mr Wilson, we are all of opinion that the decision appealed from is correct. It is a case turning on the construction of a will, and, like all cases of that class, its decision depends upon the intention of the testator, to be gathered from all the language he has used.
There is no doubt that at the commencement of this residuary bequest the testator used words which would, standing alone, make the children joint tenants, but then they are followed by this clause – “With power to my said trustees to advance such sum or sums of money as they may think fit for the education and advancement in life of my said daughters and my son Patrick.” The questions is – Does the use of these words indicate an intention on the part of the testator to cut down the joint tenancy to a tenancy in common? It is one of those clauses of which, when read for the first time, one may not see the full effect, or ascertain how far the words will go; but when read more closely it is clear that the words confer a power, not of maintenance, but of advancement. If a sum, perhaps of a considerable amount, were advanced for one child, it would be right to debit that sum against his or her share, and that debit could not be worked out if these children were joint tenants, and could not be done unless they were tenants in common.
We find abundant authority to support this view. In Taggart v Taggart 1 Sch & Lef 88 Lord Redesdale said: “Joint tenancy as a provision for the children of a marriage is an inconvenient mode of settlement, because during their minorities no use can be made of their portions for their advancement, as the joint tenancy cannot be severed.” These words express this view of the question in a clear and pointed manner, and that decision was referred to in Mayn v Mayn LR 5 Eq 150. In the course of the argument counsel said: “Amongst powers usually inserted in marriage settlements is certainly a power of advancement which, according to Lord Redesdale’s judgment in Taggart v Taggart 1 Sch & Lef 88, is in itself a presumption against a joint tenancy having been intended.” In giving judgment Lord Hatherley approved of the decision in Taggart v Taggart 1 Sch & Lef 88. He read the passage from Lord Redesdale’s judgment to which I have referred, and he adopted the principle of that decision.
In the present case the testator has used words which show that the governing idea in his mind could only be satisfied by holding that these legatees took the property as tenants in common.
In my opinion the decision of the Vice-Chancellor is right, and should be affirmed, and the appeal dismissed, with costs.
Fitzgibbon LJ :The incompatibility of a discretionary power of advancement with a joint tenancy is absolute, because the exercise of such a power implies the reduction of several parts of the property into possession. Mr Molony tried to get out of it by contending that if an advancement was made, it was to be made out of cash, and cash might be produced by savings of income. But the words of the will, which describe the subject of the power, are not confined to cash. There was no obligation to save income, and advancement is usually made out of capital. The words of the testator are – “The rest, residue, and remainder of my property, real, freehold, and chattel.” He did not confine the power to his cash, though cash must be provided before an advancement could be made. Before any advancement could be made the share of each child would have to be segregated, so that each advancement might be made, not out of the property as a whole, but only out of the share of the child who was to receive the advance. This negatives joint tenancy.
In my opinion the appeal is wholly unsustainable.
Holmes LJ: The only ground upon which it would be possible to support this appeal would be by showing that the advancement to the children, which, by the terms of the will, the trustees are given power to make, is an advancement out of the whole of the property, and not out of the share of it devised and bequeathed to the child to whom the advancement is made. But this is opposed to the idea of advancement, which is a term of legal art. It implies that it is to be made out of the property to which the person advanced is actually or contingently entitled. It is now well settled that where a devise or bequest is made to children, followed by a power of advancement, such a power is inconsistent with a joint tenancy in the children, and upon this principle we hold that they took as tenants in common.