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The following cases illustrate the application of this second rule:


1. Testator gives his residuary estate upon trust to convert and hold the proceeds in trust to pay the income to A for life with remainder over. The residuary estate includes leasehold property which cannot be sold owing to defects in the title. A value must be set upon this, and A is entitled to interest at [3] per cent. upon that value from the death of the testator, Gibson v. Bott (1802) 7 Ves. 89, 6 R. R. 87.

2. Testator gives the residue of his estate upon trust to pay the income and profits to his widow for life with a gift over. The will contains no direction as to the conversion of his estate, which includes £12,000 invested in a partnership. Under the provisions of the partnership deed the £12,000 is repayable by instalments of £1,500 with interest at 5 per cent. on the unpaid balances. The tenant for life is entitled to [3] per cent. on the sum from time to time remaining due; the difference between the 3 per cent. and the 5 per cent. must be invested, and the dividends thereon paid to the tenant for life, Meyer v. Simonsen (1852) 5 De G. & Sm. 723".

3. A by will gives his residuary estate to B for life with remainder over. The residuary estate includes ships. A directs his executors to realize his estate'when and in such manner as they may see fit,' and gives them power to sail his ships for the benefit of his estate till they can be satisfactorily sold. B is entitled as from A's death only to [3] per cent. per annum on the value of the ships at the date of A's death, and the residue of the profits produced by the ships must be invested, Brown v. Gellatly (1867) L. R. 2 Ch.



In any other cases than those falling within the foregoing rules, except that of reversionary interests which need to be dealt with separately, the rule is that when property which ought to be converted is not converted, the tenant for life is entilled as from the settlor's death to the interest on so much 21 per cent. consols as the amount that would have been realized by a conversion at the end of a year after the settlor's death would have purchased.

Re Llewellyn's Trust (1861) 29 Beav. 171 is similar. > Cooper v. Laroche (1869) 38 L. J. Ch. 591; Furley v. Hyder (1873) 42 L. J. Ch. 626 ; Wentworth v. Wentworth [1900] A. C. 163, are similar.

This rule was laid down by Lord Lyndhurst in the case of Dimes v. Scott?. It is sometimes confused with the preceding rule.

1 Mr. Lewin, for example, gives this rule, but does not clearly distinguish Rule II above from it. Mr. Underhill' gives only one rule instead of two. But that there are two distinct rules appears clearly from Lord Cairns' judgment in the case of Brown v. Gellatly 4. The residuary estate in that case comprised three classes of property(1) certain ships belonging to the deceased which the testator had given his executors full power to sail for the benefit of his estate until they could be satisfactorily sold ; (2) investments in securities which the testator had authorized bis executors to retain ; (3) other investments not within the power of investment contained in the will. Lord Cairns said:

I think that with regard to the ships the testator put them simply in the position of property which was to be converted cautiously, and in proper time, and as to which there was no breach of trust in the executors delaying to convert it, but which when converted was to be invested, and when invested to be enjoyed as the residue of his estate. In that state of things 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 the residue of the profits must of course be invested and become part of the estate. Then, secondly, as to the authorized securities ... the tenant for life is in my opinion entitled to the specific income of the securities just as if they had been 3 per cent. consols. Then comes the

3 third question in the case, the securities not ranging themselves under any of those mentioned in the last clause of the will. ... I think the proper order to make is that which was made in Dimes v. Scott followed by Vice-Chancellor Wigram in the case of Taylor v. Clark, namely, to treat the tenant for life as entitled during the year after the testator's death 5 to the dividends upon so much 3 per cent. stock as would have been produced by the conversion and investment of the property at the end of the year.'

And there is reason in the distinction between the two rules. When the trustees have a discretion to postpone conversion or the property cannot be converted without loss, the trustees are not guilty of a breach of trust in refraining from converting it. When 1 (1828) 4 Russ. 195, 28 R. R. 46.

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? Lewin, Trusts, noth ed., 327. 3 Trusts and Trustees, 6th ed., 187, Art. 37 (1) b.

(1867) L. R. 2 Ch. 751; the distinction between the rules is also drawn by Sir J. Parker in Meyer v. Simonsen, supra, and by Sir J. Romilly in Re Llewellyn's Trust, supra. The two rules are also given in White & Tudor, L. C. Eq., 7th ed., vol. i, 86, 87; Brett, L. C. Eq., 4th ed., 155, 157; and Gover, Capital and Income,

In the minutes of the order given at p. 760 of the report the words as from the 6th March 1862 the day of the testator's death' are substituted for these, and they appear to be more correct.

99, 100.

the property could be sold, and there is no power to postpone the sale, the trustees are guilty—at least technically—of a breach of trust in not converting it within the year; and though they may not be morally blameworthy, the rights of the beneficiaries must be regulated as if they had performed their duty and sold the property not later than one year after the testator's death. Whether this difference is sufficient to make it worth while to have two rules where one might be made to do may be open to question, but as the authorities stand the two rules clearly exist.

The following cases are illustrations of the application of this rule:

Illustrations, 1. Testator gives the residue of his personal estate to trustees upon trust to convert and invest it in government or real securities and to stand possessed thereof in trust for 4 for life with remainders over. The estate includes £2,000 invested in a loan redeemable in ten years with interest meantime at 10 per cent. The trustees must account as if the £2,000 had been converted and invested in consols at the end of a year from the testator's death, and any higher rate of interest than the consols produce paid to A by them must be refunded, Dimes v. Scott (1828) 4 Russ. 195, 28 R. R. 461.

2. Testator gives the residue of his estate on trusts for persons in succession. He gives his executors full power to realize the same 'when and in such manner as they may see fit' ? and to invest at their discretion or allow to remain as at present invested all his funds in government and other specified securities. The estate includes stocks, shares, and securities not coming under any of these descriptions and not being proper investments for trust moneys. The tenants for life are entitled as from the day of the testator's death to the interest of so much Bank 3 per cent. annuities 3 as the amount that would have been realized by a conversion thereof at the end of the year after the death of the testator would have purchased at the end of the year, Brown v. Gellatly (1867) L. R. 2 Ch. 751.

RULE IV. The above rules are not applicable when the property which ought to be converted consists of a reversionary interest or other


Taylor v. Clark (1841) 1 Hare, 161, and Morgan v. Morgan (1851) 14 Beav. 72, are similar.

· These words do not amount to a power to retain the residue in its existing state of investment. See per Knight Bruce V.-C. in Caldecott v. Caldecott (1842) 1 Y. & C. C. C. at p. 322, 57 R. R. 349.

* The investment would now be 24 per cent. consols. See In re Game, Game v. Young (1897) 1 Ch. 881, a similar case.

property which is not got in until more than a year after the testator’s death. In the case of such property the rule is that when the property is received it is apportionable between tenant for life and remainderman by ascertaining the sum which put out at 3 per cent. per annum on the day of the testator's death, and accumulating at compound interest calculated at that rate with yearly rests and deducting income tax, would with the accumulations of interest have produced at the date of receipt the amount actually receired ; and the sum 80 ascertained ought to be treated as capital and the residue as income 1.

Here also the rate of interest formerly allowed was 4 per cent., but in view of the rate of interest now obtainable on trustees' securities the Court now only allows 3 per cent.?

The authorities seem to show that it does not matter in this class of cases whether the trustees delay getting in the reversionary or expectant property in the exercise of a power to postpone conversion, or because it was for the benefit of the estate to postpone it, or simply because they did not appreciate that it was their duty to get it in. In each case the tenant for life is entitled to have the income he has lost made good to him. There was a power to postpone in Beavan v. Beavan and in In re Chesterfield's Trusts 1, but there was apparently no such power in In re Goodenough 1. There was a power to postpone in Rowlls v. Bebb?, but the Court held it had not been exercised. In each case the rule was applied.


1 In re Earl of Chesterfield's Trusts (1883) 24 Ch. D. 643 following Beavan v. Beavan (1869) ibid. 649 n. See also In re Goodenough (1895] 2 Ch. 537.

· Roulls v. Bebb [1900] 2 Ch. 107.



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YASE-LAW, as it exists to-day, consists of a vast fabric of juri

dical reasoning built up principle upon principle, and rule upon rule, of which part only-perhaps we might say a small part only-finds its ultimate basis either in custom, whether general or local, or in rules of Roman or Canon law incorporated into the English system. The object of the present article is to endeavour to penetrate below the mass of judicial decisions which have no such starting-point, and discover on what it is in truth based. In his recent brilliant work on Law and Opinion in England in the Nineteenth Century, Mr. A. V. Dicey, in treating of what he terms judicial legislation,' speaks in one or two places as though it entirely consisted of interpretation' in the sense of which the Editor of this REVIEW uses that word, when he says, in a passage quoted by Mr. Dicey : It may with equal verbal correctness be affirmed in one sense, and denied in another, that interpretation (whether performed by judges or text readers) makes new law i' Sir Frederick Pollock, however, defines "interpretation' in the book referred to as 'the scientific process of applying legal rules in detail. It necessarily assumes the existence and authority of the rules which it explains and applies ?? Mr. Dicey seems to take the view that judge-made law wholly consists of such interpretation still more clearly in another passage of his book, where he says

that the existence of such law arises from the general acceptance of two ideas, of which one is that a Court or a Judge must follow precedents, and the other is

• That a Judge or Court when deciding any case must act, not as an arbitrator, but strictly as a judge; or that it is a judge's business to determine not what may be fair between A and X in a given case, but what, according to some definite principle of law, are the respective rights of A and X. Hence it follows that every Court in deciding a case must tacitly or expressly apply to it some definite principle 3.'

1 The First Book of Jurisprudence, 2nd ed., p. 236; see Dicey, ibid., p. 359, n. 2 (y).

2 Pollock, ibid., p. 229.

* Law and Opinion in England, pp. 481-2. Again he says :—Judge-made law is subject to certain limitations. It cannot openly declare a new principle of law: it

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