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retained you,' was Herle's reply?. We hear of the laughter in court occasioned by a foolish answer? ; and we sometimes get criticism of the rulings or manners of the Judges. A ruling is noted as marvellous 3' Your answer is double,' said Brumpton J., ' and cannot be received,' but, adds the reporter,' he did not assign the reason 4' Hervey le Stanton gets nick-named Hervey le Hasty. Thirning said to Counsel that he had spoken with his fellow Justices and that he (Counsel) must answer. Upon which Hull (another Counsel) remarked aside that he had never before seen that laid down for law, and, sympathetically added the reporter, 'I myself have seen the contrary adjudged by the same Judges 6. Mr. Justice Rickel had been a plaintiff together with some others in a plea of trespass. The writ was abated, with the assent of all the Justices except the plaintiff,' drily observes the reporter? He notes, too, the smile with which Paston J. pointed what he considered to be a mildly, humorous illustration 8. Similarly we get extraneous facts noted which struck the reporter's fancy. He is reporting a case in the Exchequer Chamber, and notes that it was heard by the new Treasurer, about whom he gives us a few details. He tells us that other arguments were used on another day when I was not present 10.' Often his notes express his doubts or queries on points of law-and sometimes they are of a lengthy and argumentative kind". Such notes show us the court at work, and something of the minds of the lawyers. But the Year Books

, are not primarily collections of pithy sayings, and picturesque incidents. The teaching and the publishing of the law is their object. We must now say something of the light which they shed upon legal development during these centuries.

W. S. HOLDSWORTH.

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(To be continued.)

1 Y. B. 1, 2 Ed. II (S. S.), 64.

? Y. B. 33-35 Ed. I (R. S.), 326. 3 Y. B. 16 Ed. III (R. S.), i, 242. * Y. B. 31, 32 Ed. I (R. S.), 192. * Y. B. 2, 3 Ed. II (S. S.), 200.

* Y. B. 14 Hy. IV, Hil. pl. 37. ? Y. B. 2 Hy. IV, Mich. pl. 48.

8 Y. B. 19 Hy. VI, Pasch. pl. 5, 'Mettons que si un home veut defouler votre femme, vous justifierez de luy battre en defence de votre tres cher compagnon, et subridebat.'

* Y. B. 4 Ed. IV, Hil. pl. 3, . En l'Exchequer Chambre devant touts les Justices le matiere fuit reherce que fuit perentre le Roy et Sir John Paston, et la fuit le novel Tresorer que fuit fait meme cel terme id est Sir Walter Blount que fuit Tresorer de Calice ii ou iii ans ore passes.'

10 e. g. Y. B. 21 Ed. IV, Mich. pl. 6 (p. 47), ' Ad alium diem plusiors des Serjeants argueront mes jeo ne fue a lour arguments.'

0.g. Y. BB. 12, 13 Ed. III (R. S.), 74 ; 17, 18 Ed. III (R. S.), 204 ; 38 Hy. VI, Pasch. pl. 9.

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11

THE CONSEQUENCES OF A TRUSTEE'S FAILURE TO

CONVERT AS BETWEEN TENANT FOR LIFE AND
REMAINDERMAN.

EY
IVERY lawyer knows that, according to the rule in Howe v.

Earl of Dartmouth", where a testator indicates an intention that the residue of his personal estate shall be enjoyed by persons in succession, it is the duty of the trustee in the absence of evidence of a contrary intention on the part of the testator to convert so much of the estate as is of a wasting or perishable nature, or consists of securities not authorized for the investment of trust funds, and so much of the estate as is of a reversionary or expectant nature, into authorized investments. It may be doubted, however, whether the consequences as between the beneficiaries of failure to apply the rule when it ought to be applied or, what comes to the same thing, to perform an express trust for conversion are well known, having regard to the confused statements which appear in the textbooks upon the subject.

The matter is of importance in adjusting accounts between tenant for life and remainderman, for it often happens that when property ought to be converted either under the rule or by the express terms of the trust instrument, it is found impossible to convert it within a year

from the settlor's death. Sometimes, especially when conversion is expressly directed, this is foreseen and provided for by the testator, but often it is not. An examination of the authorities appears to show that the rights of the parties are then governed by a series of somewhat complicated rules according to the circumstances of the case. The following is believed to be a correct statement of these rules :

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RULE I. In adjusting accounts between tenant for life and remainderman, the first rule is that the tenant for life is entitled to the whole of the income produced by the property to be converted where the settlor indicates an intention to that effect. In the form of express trust for conversion generally used by conveyancers, this intention is clearly expressed ; the following cases show that whenever there is a duty to convert,

1

(1802) 7 Ves. 137, 6 R. R. 96; White & Tudor, Leading Cases in Equity, 7th ed., vol. i. 68. VOL. XXII.

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the intention may be inferred from the terms of the will although not clearly expressed :

Illustrations, 1. Testator gives his residuary personal estate, consisting partly of ships, to A for life, with remainder to her children. He directs his executors not to sell any of his ships for seven years from his death, unless the keeping them unsold should cause loss. entitled to the whole income to be derived from the ships while retained, Green v. Britlen (1863) i De G. J. & S. 649.

2. Testator gives his estate upon trust for conversion, the proceeds to be invested and held in trust for his wife for life, remainder to his children. The will contains a power to postpone conversion and a direction that until conversion the rents, profits, and income are to be paid and applied in the same manner as the income of the trust estate. The testator's estate consists principally of a business carried on by him, which the executors carry on with a view to its sale as a going concern. The wife is entitled to the whole of the profits of the business, In re Chancellor, Chancellor v. Brown (1884) 25 Ch. D. 4.

3. Testator gives his residuary estate upon trust for conversion and investment of the proceeds on specified securities, with power to the trustees in their absolute discretion to retain any securities unconverted, and to stand possessed of the stocks, funds, shares, and securities for the time being constituting or representing the residuary personal estate and the income thereof' upon trust to pay the income to certain persons for life with remainder over. The estate includes redeemable American bonds. The tenants for life are entitled to the whole net income of those which are retained, In re Thomas, Wood v. Thomas (1891] 3 Ch. 482 '.

RULE II.

Sometimes however, although the settlor has foreseen that it will not be possible to convert the property immediately and has provided for this by giving the trustee power to postpone the conversion, he has furnished no indication of his intention as to the application of the income until conversion; sometimes the settlor has made no provision at all, but it is impossible to convert the property immediately without loss to the estate. In these cases the rule is that a value must be put upon the property as at the death of the settlor, and the tenant for life is entitled to 3 per cent. interest on such value from the day of the settlor's death, and the residue of the

Compare In re Sheldon, Nizon v. Sheldon (1888) 39 Ch. D. 50.

income must be invested as capitall. This rule was first formulated by Lord Eldon in the case of Gibson v. Bottl, and its foundation is that, although there is no breach of trust in delaying to convert in such cases, the delay must not be allowed to prejudice anybody 2.

The rate of interest allowed was formerly 4 per cent. But in 1900, in a case in which the conversion of a reversionary interest was in question, the Court of Appeal allowed interest at 3 per cent. only, in view of the rate of interest which can now be obtained on securities upon which trustees may invest 3, and it has since been held that the same rate must apply in a case within this rule 4.

The tenant for life is of course entitled to the income produced by the invested interest 5.

In referring to the case of Gilson v. Bott, Mr. Lewin says that although it does not appear from the report at what time the value was to be taken, according to recent cases it should have been ascertained at the expiration of one year from the testator's death The cases he cites are Caldecott v. Caldecott?, Sutherland v. Cooke 8, Re Llewellyn's Trust', and Meyer v. Simonsen

In Caldlecott v. Caldecott the order of the Court certainly was that the tenant for life was entitled to so much of the dividends and interest of the unauthorized securities as would not exceed 4 per cent. on the sums ascertained to be the value thereof respectively at the end of one year after the testator's death 10. But in that case the testator had given the residue of his estate to his executors in trust to be by them from time to time as they should think fit turned into moneys, and subject thereto to lay out and invest the same on trust for persons in succession, and Vice-Chancellor Knight Bruce said (1 Y. & C. C. C. p. 322) that he could not read these words as expressing more than the law would direct or imply without them. The case is in fact almost identical with Brown v. Gellatly 11 as the third class of securities in that case was concerned. It seems therefore to fall rather under Rule III below than this one.

so far

1 Gibson v. Bott (1802) 7 Ves. at p. 97, 6 R. R. 90; Meyer v. Simonsen (1852) 5 De G. & Sm. 723; Re Llewellyn's Trust (1861) 29 Beav. 171-in each of which there was no power to postpone conversion but it was impossible to convert without loss : Brouen v. Gellatly (1867) L. R. 2 Ch.751 ; Cooper v. Laroche (1869) 38 L, J. Ch. 591 ; Furley v. Hyder (1873) 42 L. J. Ch. 626-in each of which there was a power to post pone.

2 See per Lord Eldon in Gibson v. Bott, supra, and per Lord Cairns in Brown v. Gellatly, supra.

3 Roulls v. Bebb (1900) 2 Ch. 107. 4 In re Woods, Gabellini v. Woods (1 904) 2 Ch. 4. 6 Meyer v. Simonsen, supra; In re Woods, Gabellini v. Woods, supra. 6 Lewin, Trusts, 10th ed., 328. This is followed by Snell, Equity, 12th ed., 181. ? (1842) 1 Y. & C. C C. 312, 737, 57 R. R. 345. 8 (1845) i Coll. 503, 65 R. R. 166.

Supra. 10 See the form of order 1 Y. & C. C. C. at p. 738.

11 In Brown v. Gellatly, supra, the testator gave his property to his trustees in trust to realize the same · when and in such manner as they may see fit,' and Rule III was applied by Lord Cairns to the unauthorized securities. See below.

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9

Sutherland v. Cooke was likewise a case within Rule III below; there was no power to postpone conversion, and the property which ought to have been converted might easily have been sold, but by an innocent mistake the whole income had been paid to the tenant for life. It was argued that she was entitled only to such interest as would have been payable had the property been sold at the end of one year after the testator's death, and the produce invested in Bank 3 per cent. annuities. As will be shown presently this was

Vice-Chancellor Knight Bruce, however, thought there was no positive rule on the subject, and, as he had done in Caldecott v. Caldecott, allowed 4 per cent. on the value of the property at the end of a year after the testator's death.

In Re Llewellyn's Trust there were two classes of property to be converted—one falling under this rule because it could not be realized immediately, and one under Rule III below. Sir John Romilly said in the course of his judgment, 'the period for ascertaining the value of the property will be twelve months after the death of the testator,' but he appears to have been referring to the latter class. There was no question of ascertaining the value of the former class, which consisted of unpaid balances of purchase money carrying interest at 5 per cent.

In Meyer v. Simonsen it is not stated when the value should be taken for a similar reason; the fund in question consisted of a debt of £12,000 payable by eight yearly instalments of £1,500 with interest at 5 per cent.

The cases cited by Mr. Lewin therefore do not support his statement, and it is directly contrary to the decision of Lord Cairns in Brown v. Gellatly, who says in the course of his judgment, 'it seems to me that the case falls exactly within the third division pointed out by Sir James Parker in the case of Meyer v. Simonsen, and that a value must be set upon the ships as at the death of the testator, and the tenant for life must have 4 per cent. on such value. And this was the order actually made in the case as appears from the minutes of it given at the foot of the judgment. The statement in Lewin consequently appears to be erroneous. It is the result of a confusion of Rules II and III.

The above rule was applied by Mr. Justice Kekewich in Re Eaton', but it is submitted that the decision was incorrect. The securities to be converted in that case were unauthorized, and there was no power to postpone conversion, nor was it suggested that they could not be converted without loss. The case therefore fell within the decision in Dimes v. Scott or Rule III below.

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