PART I. CHAPTER II. SECT. 1. institutions, or societies. this was decided, the acquiescence does not seem to have been for a Very long period. This exception will also prevail in favour of large societies of persons, Nor charitable such as a society of dissenters, for whose benefit relief was decreed in one case by Sir William Grant after a delay of twenty-two years, although without costs on account of the length of time (z). And the same rule has been established in favour of charities generally (a). But this subject will be considered more at length in a future chapter (b). Contracting parties are trustees the one for the other. The person, on SECT. 2.-By Equitable Construction in the Absence of Fraud. It not unfrequently happens, that the principles, adopted by courts of equity in administering justice, differ materially from those, that have been established by courts of law. The former are often carried to a greater extent, and occasionally indeed are at direct variance with the latter. In such cases the courts of equity vindicate their own principles by means of their peculiar jurisdiction in personam, and convert the holder of the legal estate, though unaffected by fraud either actual or constructive, into a trustee for the party, who is entitled by the rules of equity to the beneficial interest. For instance when a contract has been entered into for the sale of an estate, the legal title to the property remains unaffected, and at law the parties have only acquired a right of action for breach of the contract, in case it is not performed. But one of the first principles of equity is, that it looks upon things, agreed to be done, as actually performed (c); and acting on this principle, when the contract is made, it considers the vendor as a trustee for the purchaser of the estate sold (d); and the purchaser as a trustee of the purchase-money for the vendor (e). This equity attaches immediately on the making of the contract, and will not therefore be affected by the subsequent death, or bankruptcy, or any other act of either of the parties, before the contract is carried into execution (ƒ). Another rule of equity, which admits of no exception, is, that the whom the legal court will never allow a trust to fail for want of a trustee (g). Therefore where a trust is created, but the party creating it has appointed estate devolves for want of a trustee. (z) Att.-Gen. v. Ld. Dudley, Coop. 146. (a) Att.-Gen. v. Hungerford, 8 Bl. N. C. 437; Att.-Gen. v. Flint, V. C. Wigram, Mich. Term, 1844. (b) Post, Pt. 2, Ch. 2, s. 5. Francis's Maxims, 13; 1 Fonbl. Eq. (d) Atcherley v. Vernon, 10 Mod. 518; (e) Green v. Smith, ubi supra; Pollexfen v. Moore, 3 Atk. 273; 1 Sugd. V. & P. 171. (f) Paul v. Wilkins, Toth. 106; Barker v. Hill, 2 Ch. Rep. 113; Winged v. Lefebury, 2 Eq. Ca. Abr. 32, pl. 43; Orlebar v. Fletcher, 1 P. Wms. 737; Bowles v. Rogers, 6 Ves. 95, n.; Whitworth v. Davis, 1 V. & B. 545; 1 Sugd. V. & P. 171, 2. (g) Co. Litt. 290, b.; Butl. note 1, VI.; 1 Mad. Ch. Pr. 580. no trustee (h), or the trustee by the rules of law is incapable of taking (i); or the appointment of the trustee fails by his death, or refusal, or otherwise (k). In all these cases the court will follow the estate into the hands of the party, in whom it becomes vested at law, and will treat him as the trustee for the execution of the trust (1). This description of trust is clearly within the recent statute (4 & 5 Will. IV. c. 23) for the amendment of the law relative to the escheat, and forfeiture, of trust estates. The fourth section of that act, expressly extends its operation to trusts arising or resulting by implication of law or construction of equity. There is therefore no doubt, but that this equity would be enforced against the crown, or any lord by escheat, upon whom the legal title to an estate so circumstanced would devolve in default of an heir or next of kin of the creator of the trust (m). Again where a testator appoints a debtor to be his executor; such an appointment will operate at law as a release, or extinguishment, of the debt. The principle being, that as an executor cannot maintain an action against himself for the debt, the right of action, which has been thus once voluntarily suspended by the act of the party, is for ever gone and discharged (n). In Volunteer, taking from a trustee without notice of the trust. In equity however the executor will be accountable for the amount of the debt, due from himself as general assets for the payment of the testator's debts and legacies (o). And this equity will be enforced in favour of the residuary legatee or next of kin of the testator (p). Another instance of a constructive trust of this description is, the case of a person taking property from a trustee without notice of the trust, but without having given any valuable consideration for it. such a case the party, in whom the property thus becomes vested, will be bound by the trust to the same extent, as the trustee, from whom he took (q). However we have seen that it would be different with regard to a bonâ fide purchaser for a valuable consideration (r). But Disseisor not persons, who obtain possession of an estate by actual ouster and dis- bound by a seisin, without collusion with the trustee will not be bound by the possession trust, although they may have had notice of it. For the disseisor taken by him (h) Co. Litt. Butl. not. ubi supra; White v. White, 1 Bro. C. C. 12. (i) Sonley v. Clock Makers' Company, 1 Bro. C. C. 81. (k) Hewett v. Hewett, 2 Ed. 332; Co. Litt. 113 a, n. 2; Doiley v. Sharratt, 2 Fonbl. Eq. 216; Lewis v. Lewis, 1 Cox, 162. (1) 1 Mad. Ch. Pr. 580; White v. While, 5 Beav. 222. (m) 1 Mad. Ch. Pr. ubi supra. (n) Nedham's case, 8 Co. 136, a; Wentw. Off. Ex. Ch. 2, p. 73, 14th ed.; 2 Wms. Exors. 811, and cases cited. (0) Flud v. Rumcey, Yelv. 160; Phillips v. Phillips, Freem. 11, and 1 Ch. Ca. 292; Errington v. Evans, 2 Dick. 456; Carey v. Goodinge, 3 Bro. C. C. 111; Berry v. Usher, 11 Ves. 90; Simpson v. Gutteridge, 13 Ves. 264; 2 Wms. Exors. 815, 16. (p) Brown v. Selwyn, Cas. temp. Talb. 240; S. C. 3 Bro. P. C. 607; Carey v. Goodinge, 3 Bro. C. C. 110. (q) Pye v. Gorge, 1 P. Wms. 128; 1 Cruis. Dig. Tit. 12, Ch. 4, s. 16; Mansell v. Mansell, 2 P. Wms. 681. (r) Ante, p. 140. trust though with notice. PART I. CHAPTER II. SECT. 2. Heir of mortgagee in fee a trustee for the sentative. Mortgagee, who is paid off a trustee for the mortgagor. Banker not a trustee for his customer. Trustees de son tort. And a term creates a title for himself paramount to the trust (s). Upon the death of a mortgagee in fee, who has not foreclosed, the mortgage debt will constitute part of his personal assets, but the legal personal repre- fee in the lands will descend, if not otherwise disposed of, to his heir at law. The heir however will hold, as a trustee by construction of equity for the benefit of the parties entitled to the personal estate (u). So where the legal interest in real or personal estate, is vested in a mortgagee, or other incumbrancer, to secure a debt; which is afterwards paid; he becomes a trustee for the mortgagor immediately upon the satisfaction of the debt, until a reconveyance be executed (x). Money deposited by a person with a banker creates a legal debt between the parties, which may be recovered by an action at law. But in the absence of special circumstances, the customer is not at liberty to treat the banker as a trustee, and sue him in equity for an account (y). There is another class of trustees, which may be referred to a constructive trust of the description now under consideration. This is, trustees de son tort, or those, who of their own authority enter into the possession or assume the management of property, which belongs beneficially to others. Such persons will of course be always liable to be deprived of the possession, which they have thus assumed, at the will of the parties beneficially entitled. And as a general rule they will doubtless be liable to the payment of any costs or expenses, which their unauthorized intrusion may have occasioned. Although cases may be easily imagined, where the interference of a stranger has proceeded from necessity and from the sole desire of protecting and benefiting the property, and where consequently a trustee of this description would be decreed to have his costs and other expenses. During the continuance of their possession or management, such trustees are subject to the same rules and remedies as other constructive trustees (z). Bank of Eng It is to be observed, that the general doctrine of constructive trusts land not bound will not be enforced against the Bank of England with regard to sums of stock in their books. And as a general rule they will only be bound to recognize the person who has the legal title to the stock (a). by constructive trusts. (s) Finch's case, 4 Inst. 85; Sugd. Gilb. Us. 429. (t) Reynolds v. Jones, 2 S. & St. 206. (u) Ellis v. Guavas, 2 Ch. Ca. 60; 1 Fonbl. (x) Baldwin v. Banister, 3 P. Wms, 251, (z) See Wilson v. Moore, 1 M. & K. 127, 146. (a) Pearson v. Bank of England, 2 Bro. C. C. 529; Hartgo v. Bank of England, 3 Ves. 55; Bank of England v. Parsons, 5 Ves. 665; Austin v. Bank of England, 8 Ves. 522; Bank of England v. Lunn, 15 Ves. 583; Bristed v. Wilkins, 3 Hare, 235. DIVISION III. THE CONSTITUTION OF TRUSTEES BY WAY OF SUBSTITUTION IN THE PART I. Drv. III. CHAPTER I. Trustees sub THE machinery of trusts would be very imperfect, if means were not provided for filling up the vacancies which may be occasioned from time to time by the death or resignation or refusal to act of the original trustees. New trustees may be created, either 1st, in exercise of a power contained in the trust instrument; or 2nd, by the interpo- 1st. Under a sition of the Court of Chancery. stituted. power. CHAPTER I. THE SUBSTITUTIONARY CREATION OF TRUSTEES IN EXERCISE OF A POWER. THE office and duties of a trustee, being matters of confidence, cannot be delegated by him to another, unless an express authority for that purpose be conferred on him by the instrument creating the trust. Therefore upon the death, or refusal to act, of one or more of several co-trustees, the office of trustee will devolve with the legal estate upon the survivors, or upon those who accept the trust, and ultimately upon the heir, or personal representatives of the last survivor. Nor will there be any means of continuing the original number and the proper succession of trustees by any fresh appointment, except under a decree of the Court of Chancery. The office of trustee cannot be delegated without a power for that purpose. unauthorized conveyance by a trustee. If a trustee convey away the trust estate to another, though it be Effect of an to his co-trustee, without any such authority created by the trust instrument, or the sanction of the court, the conveyance will doubtless operate to pass the legal estate in the property, but the office of trustee with all its responsibilities will still remain unchanged in the original trustee. He will therefore continue personally answerable to the cestuis que trusts for any misconduct or breach of trust, committed by the party, in whose power he has thus placed the trust estate (a). And the person to whom the property is so conveyed, will be unable to exercise any of the powers, annexed to the office of trustee, in any dealings with third persons respecting the trust estate (b). (a) Chalmers v. Bradley, 1 J. & W. 68; Wilkinson v. Parry, 4 Russ. 272; 6 Jarm. Bythewood's Conveyancing, 506, 3rd ed.; Adams v. Paynter, V. C. Bruce, 14 Law Journ. N. S., Chanc. 54. (b) Ibid. et vide Lord Braybroke v. Inskip, 8 Ves. 417. PART I. Div. III. CHAPTER I. to A power, appoint new trustees, not given to trus A power to nominate new trustees can seldom exist, except where the trust has been expressly created by deed or will. In all other cases of trust the continuance of the trustees by substitutionary appointment must be provided for by application to the Court of Chancery, which will form the subject of consideration in the next chapter. A power to appoint new trustees can only be created by the author of the trust himself. The court cannot in general delegate to others the authority, which it assumes in these cases; and trustees, appointed tees, appointed or substituted by the court, will not usually be authorized to appoint others in their stead (c)*. by the court. Except in cases of charity. Every settlement should contain a power trustees. However, there seems to be an exception to this rule in cases of charity. For in charitable trusts equity will not only appoint new trustees to fill the vacancies actually created, but it will also sanction the insertion of a direction in the scheme, that regular appointments may be made by proper parties from time to time, as often as occasion may require (d). Every well drawn deed of settlement and will creating trusts, which may by possibility endure beyond a very short period, contains powers, to appoint new enabling any of the trustees for the time being to relinquish the trust, as well as provisions for supplying by fresh nominations the vacancies to be occasioned by the resignation, or the death or incapacity of any trustee (e). A suit in Chancery will be the almost certain consequence of the omission of these provisions. Such a power inserted in a settlement as a "proper and reasonable power." Such a power will be inserted in a settlement under articles as a "reasonable and proper power. Thus in Lindow v. Fleetwood (f) under articles, a strict settlement was directed by a will, and that there should be inserted in it powers of leasing, sale, partition and exchange, and that in such settlement should be inserted "all such other proper and reasonable powers, as are usually inserted in settlements of like nature." Sir J. Leach, M. R., held, that a power to appoint new trustees was a proper and reasonable power to be inserted in the settlement (f). Some reliance indeed was placed by the court upon the direction being in a separate and distinct sentence, but Sir E. Sugden (c) Bayley v. Mansell, 4 Mad. 226; Southwell v. Ward, Taml. 314; but see Joyce v. Joyce, 2 Moll. 276; 2 Sugd. Pow. 533, 6th ed.; Brown v. Brown, 3 Y. & C. 395. (d) Att.-Gen. v. Shore, 1 M. & Cr. 394; 2 Sugd. Pow. 533, 6th ed.; Att.-Gen. v. Winchelsea, 3 Bro. C. C. 373; S. C. Seton, Decr. 131; case, 12 Sim. 262. (e) 6 Jarm. Bythew. Convey. 506, 3rd ed. (f) Lindow v. Fleetwood, 6 Sim. 152; Lampayo v. Gould, 12 Sim. 426. *However in Joyce v. Joyce, 2 Molloy, 276, which was a suit for the appointment of new trustees, the decree directed a proviso to be inserted in the deed, authorizing the parties from time to time thereafter to appoint new trustees; and see White v. White, 5 Beav. 221: and Lampayo v. Gould, 12 Sim. 426, and post, Chap. II., sect. 3. |