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Rejection of the Executor and Trustee Bill.
115 EXECUTOR AND TRUSTEE BILL. tenant for life has been to the trustees to ask
them to commit a breach of trust, and the We gave last week a full report of the trustees refuse, the tenant for life says, “If you speech of Mr. Selwyn against the South Sea do not, I know two or three who will,' and the
old trustees know that the new trustees are Company's Arrangement and Trust Bill. appointed for that precise purpose, and they We are now enabled to lay before our hand over the money to them knowing it will readers the objections to the Executor and be misapplied, then the old trustees continue Trustee Bill, comprised in Mr. Selwyn's an- liable.” swer to the arguments of Mr. Clark, with Lord St. Leonards :-" That is quite right, comments on the evidence adduced in sup. that is not a new decision.” port of this second Bill. After some in- Mr. Selwyn :-“That is a most useful rule troductory remarks, Mr. Selwyn said
of law; and that is the very thing that will be
evaded by the institution of this company; “This second Bill affords an instance of because, instead of going to the old trustees, that sort of competition to which I adverted on and saying, “We have found somebody else a former occasion. Very properly disclaiming who will do it,' they will say, “Transfer it to any intention of executing the very difficult this company and you are indemnified.' And ofice of administering the estates of testators, all that the tenants for life will have to do is, the South Sea Company acknowledge, by the to find out which of these companies is most Bill which they propose to your lordships, the obliging, and least scrupulous, and the busiincompetence of such a body as theirs, or, in- ness will be transferred to them, and the deed, any corporation, to execute such trusts. breach of trust will take place. Also, there is The second company, my lords, is a little the danger which will be involved in every title bolder. They come and tell your lordships, where real property comes within the adminithat, although the first company, with Mr. stration of one of these companies. Because, Franks and eight or ten legal gentlemen upon my lords, in the present state of the law, all tbeir board, do not think themselves compe- that the person investigating the title has to tent, yet we, the directors of the second com- see is, that the new trustees are appointed in pany say, do feel ourselves competent, and pursuance of the powers contained in the deed we hope to make it a principal part of our creating the trust. But when we look at each business.' I use that, to show the extent of of these two Bills, the framer has found it nethe competition that would be likely to arise, if cessary to provide in all cases for the interyou once give your deliberate sanction to such vention of the Court of Chancery, or some companies, each would be going one step be- other means, to see that those persons who yond his neighbour, and the result would be, are not sui juris shall be properly represented. that that one which is the most accommodating, Then, if so, if one of these two companies are and the least regardful of the objects of the appointed new trustees, and there is a transfer trast, that company would be most in favour to them and afterwards a sale, on every occawith tenants for life, and would be the com- sion, it will be necessary to state how far that pany who would get the most business. section of the Act of Parliament has been carThey would go on trading against each other, ried out. The purchaser would have to conand, ultimately, it would become like a race in sider, first, who are all the persons interested ; committing breaches of trust, and they would next, he would have to consider whether they come to guarantee themselves, in fact, against are sui juris; and then, whether they were that. Your lordships will observe, that in all properly represented or not before the Court. these Bills, there is introduced the same pro- Every one of those questions must be decided vision; that if the trustees merely transfer the before you can safely take the title when the property to this company, they are to be in- property has once passed through this comdemnified. That is the foundation of both the pany. Mr. Bellenden Ker has told us somemeasures. Then we shall have the company thing further. He says, “As I understand it, offering what we have heard from one of the all persons who are unborn who might by witnesses, commissions to solicitors and other possibility take an interest, ought to be repreparties,—they will offer more inducements, by sented by the Court of Chancery.' way of loans, or investments, to tenants for life; “Another difficulty would be thrown upon they will get the money by some means or other the person taking the title. He would say, 'I in their hand, and then, by these acts which see there are tenants in tail and certain chil. you are asked to sanction, the trustees are to dren, but there was another class of children, be absolutely and finally indemnified. were they represented before the Court, and
“Now, my lords, it is with reference to that were they properly represented ?' I think that danger that those decisions, which have been your lordships would introduce the greatest the subject of the question which has been possible difficulty and complication in titles, if put, more than once by a noble lord, will be- you were to sanction such a measure as this. come so important ; namely, the question as to It is one which must inevitably, arise in every how far, upon the appointment of new trustees, case in which property or land is transferred the Courts go into the question of acts of for- to this company, and your lordships have heard ner trustees. I think that the decision which to what an extent it is proposed to transfer the noble lord referred to is this : that where al property to this company.
Rejection of the Executor and Trustee ill. “ With reference to the difficulty of obtain appoint this corporation ; but the Vice-Chaning trustees, I think all the evidence upon that ceilor said, -" The absence of that individual subject brought forward to day is as inconclu- and personal responsibility is so fatal to such a sive as that which your lordships heard proposition, that though I know that applica-, before. I went through the evidence on the tions must be made to the Court of Chaucery, former occasion, and therefore I do not go and although I admit that there is no objection through it now. But I would say this, that to the individuals now constituting the corpoeven if such difficulties do arise, and even ration, I will, if you think fit, appoint the indiadmitting the principle that the law does viduals who compose the corporation, but I not prevent trustees from accepting remu- will not appoint the corporation itself.' That, neration; can it be said that there would my lords, was his decision,-and that was the be any difficulty in finding firms such as decision of a Vice-Chancellor having the greatQuilter and Company, who we know do est possible experience, and in a much stronger undertake to wind up the affairs of trus. case than that which is brought before you of tees, and who as individuals under private trusts; because it was in its nature a that individual and personal responsibility perpetual and continuing trust, in which there which is so necessary an ingredient. There was no power in any person to appoint new is no doubt that persons could be found who trustees, and therefore necessitating, on every would undertake these trusts, without the ne- occasion where the trustees were reduced to cessity of having a joint-stock company at all. five, a reference to the Court of Chaucery to But Mr. Ker has also said, that there is no ob- appoint new trustees. Neither of those cases jection to a corporation being trustees; and that would occur in private trusts; because, in the objection that I have mentioned as having many cases, there is no occasion to appoint been sanctioned by the Legislature with regard new trustees, and even where there is, there is to municipal corporations where they were a simple provision in a late Act of Parliament, trustees for charity, was an objection of a po- -namely, for the appointment of trustees, at litical nature, and arose simply from the mal. the expense, as one of the witnesses told your practices of these companies in having inade lordships, of a skin of parchment, or even less. use of them
as an engine for purely political " But, my lords, even if the noble lord who purposes. That was answered by one of the answered that objection as to municipal cornoble lords, who said, that that was not the porations, and if the Vice-Chancellor Kindersprincipal ground of objection ; the real objec- ley were completely wrong; and if the objection was the obvious inattention and irregu- tions to corporations being trustees is to be larity in the administration of the trusts of confined simply to their having abused it for which those corporations, almost without ex- political purposes, what is to prevent similar ception, had been guilty, and the inevi- abuses in the case of any of these corporations table tendency in all corporations and bodies - what is to prevent persons in the South Sea to leave their affairs to some one person, Company buying up stock for political purwhich, after a lapse of time, became mis- poses, and using the enormous power they managed.
will obtain for this purpose, just as much as “But, my lords, it is very curious ; it was any municipal corporation, and much more, beonly yesterday a case came before one of the cause the trustees of those municipal corporaVice-Chancellors of the greatest possible ex- tions are appointed by election entirely by their perience, not only as having had a large busi. 'fellow-citizens, and they are not continuing ness himself as a barrister, but also as having bodies, whereas, these directors are to be confilled the office of Master in that Court, and tinued or removed by the vote of their own now filling the office of senior Vice-Chancellor. shareholders, and there is nothing to prevent I need cot follow the example of Mr. Ker, in any political party purchasing stock and obquoting from the report in the newspaper ; but I taining the appointment of directors, using all was present in Court myself, and I can state the powers they acquire for the same political the case was a charity which was perpetual, and purposes, which was found so objectionable in a scheme was brought forward, among other the case of municipal corporations; but then, things, to settle the manner in which new my learned friend, Mr. Clark, says the remedy trustees should be appointed. It appears that for all that is very easy, because they propose it had been administered by a corporation, by the Bill, as they must, that they are all to the Governors of Crediton. It was proposed be subject to the Court of Chancery. The that the corporation should be appointed trus- answer to that is.-So were the old corporatees; upon which the Vice-Chancellor express- tions; for the books are full of suits, showing ed, although in better terms than I did on the injuries done by them, and constant and great former occasion, the same objection-namely, I breaches of trust which were remedied in the the absence of personal and individual respon- Court of Chancery, but the Legislature did not sibility, which was of the essence of the trust, think that sufficient. and stated that a corporation could not be “Then, my lords, I would only refer to the made liable in such a manner-the answer questions which one of your lordships put to was made precisely as here: this is a perpetual my friend, Mr. Clark, at the conclusion of charity, and you will have continually applica- his address, and which he was entirely unable tions to appoint new trustees; whereas the ex- to answer. Your lordships will bear in mind pense of all that will be avoided if you will it was then suggested to him in what manner
Rejection of the Executor and Trustee Bill.
he could propose to meet that objection, which they bring in, proposes that that should be the arose upon the evidence of Sir John Patteson mode of operation, for your lordships will find and some of the other witnesses, namely, by the 31st section the commission is to be that it was essential that there should be a paid, "and such commission may be agreed board of management who would give their upon between the executive council and the individual personal attendance to the matter, settlor, testator, or next of kin of any intestate; and who would not allow it to get into the hands or in case no such agreement is made, then of one person. What answer have we had to such commission shall be after such rate as that? Have we had any in the evidence of shall at the time of the acceptance by the comto-day? I should suggest to your lordships to pany of any trust, be actually provided by any take the Bill and look at the names here pro- bye-law of the company, or general resolution posed. Take, for instance, the first name, the or regulation of the executive council sanctioned Earl of Zetland—it is no extravagance to say by the Board of Trade.' Then, by the 32nd that that name may be considered as purely clause of this proposed company, your lordships ornamental. Take next the name of my learned will find—“With respect to any trusts transfriend, Mr. Headlam, an active Member of Par- ferred from other trustees to the company, the liament, a Queen's Counsel, in practice at the commission in addition to such costs, charges, Bar, and also illing the high ecclesiastical office and expenses incurred by them in the admiof Vice-Chancellor of the Diocese of Ripon. nistration of the trusts reposed in them as Is it possible for him to give his un- trustees or executors, are in the like cases in divided attention? We have, amongst the ordinary, entitled to be reimbursed, shall be of rest, Mr. Clark himself. Your lordships have such amount as shall be agreed upon between heard with what eloquence and ability he has the ecclesiastical council and the persons beargued the case of his society. I will leave neficially interested, if sui juris, or if incapaciyour lordships to judge whether it is likely that tated, as shall be approved by the said Court.' the person whom you so heard will have time I think your lordships will find that is a most now to go into the City and manage the affairs material provision, because, in fact, in every of such a company as this. The same with the case of this kind, you are first to have the exothers. There is an entire absence of that pro- pense of an application to the Court for the vision which ought to be made to obviate the purpose of considering whether the transfer difficulty suggested by Sir John Patteson, ought to be made at all—that would be the which, if not got over, he says, will be fatal to first expense necessary. You are then by the the success of such a company.
provisions of the Act, to have a deed declaring "The next case my learned friend, Mr. Clark, the trusts in the company. That is the second put was, that of solicitors intrusted by a num- expense. Then, thirdly, under the 32nd ber of poor persons with a large amount of their clause there is to be in all cases where there is savings, and misappropriating them,—that is a person not sui juris, another application to entirely beside the point which you have now the Court to deterinine what is to be the amount to consider. Those persons would not have a of commission; then there will remain a fourth trust deed or any trust to be continuous and expense, the commission itself; therefore, this to be administered by a corporation. They scheme for saving expense, and rendering merely chose a solicitor instead of going to a things more easy, would necessitate those four sarings' bank, probably tempted by an offer of things—first, the transfer; second, the deed; a little higher interest. Instead of depositing third, the application to the Court to determine their money with a savings' bank, they went the amount of commission ; and fourth, the to a solicitor; but in the case put of those commission itself. solicitors who misappropriated the funds en- · Now, when you come to consider the extrusted to them, would those persons have gone pense of those things-that the Court must to a joint-stock company, who would at once be informed of all ihe circumstances of the have mulcted them of one per cent., when their trust-although the application may be made principal object was, that they might have their in a summary way within that Act before money more readily at hand without those in the Vice-Chancellor, it will be his duty fully cumbrances which the Savings' Bank Act has to inform himself of all the circumstances of imposed upon persons who deposit their money. the trust, and to see whether it is rightMy lords, the case is entirely inapplicable to whether all those who are not sui juris, or the present.
those who are not born, should have their proThen, with respect to the mode in which the perty mulcted. The very investigation must company were to be paid for the services which necessarily involve considerable expense. I were rendered, your lordships will recollect, my can foresee that what was intended was that learned friend, Mr. Clark, differed entirely from which my learned friend, Mr. Clark, candidly the views of Mr. Franks. He considers that admitted. He says, not merely for the pur. it will be much more beneficial, instead of de- pose of the public, but also for the purpose of ducting the one per cent., as Mr. Franks pro- these applications, your lordships' names are posed in the outset or at the beginning of the to be made use of, and it is to be said, "All trust, that a sum of money to be decided upon these objections were taken before a Com. afterwards, should be deducted when the mittee, and such a committee, composed of money is ultimately distributed; and accord such persons as we are now before, have sanc ingly, your lordships will find the Bill which tioned this ; therefore, of course, the Vice
Rejection of the Executor and Trustee Bill. Chancellor is not to feel himself at liberty obliged to employ solicitors, and then the ap. to doubt or question the decision of such a plications to the Court of Chancery, all of tribunal.' If that is so, the reference to the which would be entirely novel, and in fact Vice-Chancellor will become nugatory, but if would be creating a new branch of business there is any substance in this matter,-if it is altogether. I need not say to your lordships intended that he is bona fide to exercise his that the Society and the individuals who pejudgment in the matter, he cannot exercise tition your lordships are altogether above any that judgment until he has made himself ac such consideration. quainted with all the facts and circumstances Then, with respect to the guarantee fund, connected with the trust, and that, of course, which my learned friend, Mr. Clark, has elocannot be done without great expense. In quently compared to a cistern always filling, any other place and presence, I would the observation I made before, is sufficient to state in quite as high terms as my learned dispose of that. The guarantee fund is altofriend, Mr. Clark, did, the importance which gether unnecessary, so long as the affairs of will be attached to the decision of this the company are properly managed. But the Committee, and I agree with him as to necessity arises when once any malversation the high sense which the public would or negligence begins, and then I say, all exentertain of that decision, and I do not perience shows that when malversation or negthink it would be worth while to take the lect or inattention once begins in one of these trouble of passing either of these schemes, but joint-stock companies, it proceeds at a rate for what is proposed to be done,-namely, that and to an extent almost incredible. Then, I the decision of this Committee is to be trum- say, that if it does once begin, the guarantee peted abroad, and it will be said that your fund, or any other such sum, whether it is lordships have decided that a board of zi di- 200,0001. or 300,0001., as compared with the rectors are better trustees than individual trus- amount that will be at stake, will be nothing, tees,—that you have decided they are persons -the cistern, be it ever so well supplied, will competent to manage landed estates; and be dried up by the soles of the feet of the therefore it will be presumptuous in trustees, cestuis que trustent who will be coming and decestuis que trustent, or Vice-Chancellors to doubt manding their money from this company. As the decision of such a Committee. That is what one of the witnesses shows, the proposed seis intended, and that it is which makes it the curity would be very much less than that almore important that this Committee should ready possessed by the cestui que trusts in the hesitate before they arrive at such a decision. amount of property pledged to them upon
“ Then, my lords, there was one other ob- the individual and personal responsibility of the servation which fell from my learned friend, present trustees. Mr. Clark, which I confess I heard with some “With respect to the next observation of surprise and regret, because it was one which my learned friend, he says, as to the disclohad been at once and gracefully withdrawn by sure of family matters and their case before my learned friend, Mr. Rolt,-namely, the in- such a board, that is immaterial, because at terest of that body whom I represent. I think the present time any will may be inspected for it is hardly necessary, before such a Com- a shilling at Doctors' Commons. That, allow mittee, to notice such a point. It might as me to say, is an entire misconception of the well be said that the Law Society, or even the question. It is not as to those family matters Benchers of Lincoln's Inn or the Temple, when which appear in the trust deed, but it is those sitting, as they do most usefully, for the pur- family matters which arise in the course of the pose of investigating into the character of any execution of the trust-matters such as Mr.
ri persons whose admission into the Profession Henley described : the education of children, of the Law may be in question,—that any one the marriage of children, the advancement in of those gentlemen would be influenced by any life of the children, -some of the sons of the personal interest or jealousy in regard to the in- family turning out profligate, and it being nedividual whose case is before them,-an imagi- cessary to take some extraordinary measure, nation that would not be more unreasonable than but still justified by the terms of the trust to say that the body I represent are actuated in deed with reference to the state of circumcoming forward in the way they have done by stances which has then arisen, to get them any other motive than that of doing their duty abroad, to make some provision for them, or under the charter which is granted to them, - some different provision for other members of knowing that if this company is sanctioned by the family. Those are things that must be this Committee, that decision will be put for- discussed, -those are things most painful to ward to the world in a way that will be most be disclosed to a board of directors; and, beinjurious to the public. "I say, that if they yond that, it would be necessary, before that considered their own personal and pecuniary board of directors could arrive at a satisfactory interest, it would be altogether the other way, conclusion, that they should have before them for I have shown to your lordships the nu. a plain and distinct statement of all the affairs merous applications that must necessarily take of the family, so that they may be able to place,—the number of things in which it would judge of every delicate circumstance that has be necessary for cestuis que trustent to embark arisen. That is a thing which the trustees before they could even get to the board of direc. originally appointed would do at once. They tors, and in all of which cases they would be would know, à priori, all, or almost all, the
Rejection of the Executor and Trustee Bill,
119 circumstances which had arisen. The great this,-although there was a trust, and aldifficulty would be for cestuis que truslent to go though the matter was brought before the atbefore the board and to lay before them a plain tention of the Legislature, they did not think statement for that purpose. They must incurfit to vest it in any corporation, but they said, some expense, and all experience shows that we will perpetuate the individual and perprofessional skill is required to make such a sonal responsibility of one man, and the person plain statement of the case as to render it in- filling the office shall represent his predecessor telligible to persons who have no previous ac- without the necessity of any bills of revivor quaintance with the facts. That would be a or any other process. solicitor in every such case—it would neces- “Then, my lords, I would only observe upon sitate, at least, the employment of one so- this Act, that it contains a similar clause to the licitor.
other one, with respect to the dissolution and “With reference to the Court of Chancery, winding up of the affairs of the company, either as to which my learned friend, Mr. Clark, in- in the event of the guarantee fund not being dulged in some facetious observations, in the sufficient, or of any breach of trust being compresence of such a committee, it is not neces- mitted, or being decided by the Court of sary that I should stand up as the humble de Chancery to have been committed. Your lordfender of that Court; but with reference to the ships will find that in the 30th section of this statement which I made, which was contra. Act, the only difference between the two is, dicted on the other side, as to the duties and that the proceeding which is contemplated to office of a receiver-how they may get on in put an end to their affairs is a suit, and the the Common Law Courts, I do not know, but decree is to be made upon a summary applicaI do not think it would be an answer for a tion by the Attorney-General. I think I need Chancery barrister to say, that the practice of not any further dilate upon the consequences the Court was of such a petty nature that of such a suit. It would be a suit by the it is not necessary to make himself ac- Attorney-General for the administration of a quainted with it. What I said was, that when fund in which thousands of persons would be these things are taken into the Court of Chan- interested. No Court could be guilty of such cery they are not brought into Court at all; injustice as to pay away a single shilling of counsel are never employed in them. By an that fund without first ascertaining who were order of the Court it is expressly provided, that the persons interested and in what proportions. if difficulties arise, it is not to be brought into They would be all necessary parties to that Court, but all that is then done is, the receiver suit. It would be a suit as one of the witgoes before the Judge's clerk at Chambers, nesses very aptly described it, such as was where counsel by no possibility can be em- never heard of; something more frightful than ployed, because no counsel may be employed he could conceive; and yet that is contembefore Judges' clerks; therefore, all that is plated in both of these acts. done is, the receiver goes to the Judge's clerk, “This gives rise to another observation. he gets his instructions from him and he acts Such a suit will be necessary in the event of upon them. My learned friend, Mr. Hope the company voluntarily determining to close Scott, may not be so familiar with the Court of their business. What is to prevent their doing Chancery as I am ; but that is the present law it? We have Mr. Headlam and his coof the Court.
adjutors now willing to undertake this office. "Then, my lord, with reference to the Act But suppose any dissension arose,-suppose of Parliament to which my learned friend, Mr. they got tired of it, and wished to get rid of Clark, and also the last witness referred, which the business, and determined to close it and was passed on the occasion of the death of Mr. wind up their affairs : in any one of those Maule, I need not tell, at least one of your cases such a suit must become necessary, -a lordships, that that was merely an Act for the suit that one cannot contemplate without the purpose of vesting certain properties, which greatest possible alarm. In every one of those were in one individual by virtue of his office, cases, the question will arise, To whom do in another individual who afterwards filled the the funds now standing in the name of this same office. The principal object of that Act company belong, and in what proportions ? of Parliament was to avoid expense in the That, of course can only be contemplated in many suits pending where the Crown was in-one winding-up suit, such as I have described, terested as to personal property,—to avoid the and independently of the probability which necessity of having a revivor of those suits, those two clauses contemplate, of a breach of on the death of an individual and the re- trust having been committed and being found
sult was, that those many suits in which Mr. out, and a final decree being made against 1: Maule was administrator, go on without any them in the Court of Chancery, which is not,
order for revivor, but his successor takes certainly, a very violent supposition, ---they exactly the same place, but always, be it re- bring it forward themselves, and experience membered, with the same personal and indi- shows that it has happened over and over vidual responsibility that Mr. Maule, his pre- again. That is one case. There is another : decessor, had while he was alive. So far from there is the case of a dispute between the comthat Act of Parliament being an authority for pany themselves. There is a third : their vothe application now before your lordship, if it luntarily retiring from the business. In each achas any application to the present case, it is of those cases a winding-up would be neces