therein mentioned; and she directed that, subject and without prejudice to the raising of the trust fund, the trustees should hold the residue upon trust to pay one moiety thereof to the trustees of a certain settlement under which Richard was tenant for life, and the other moiety to the trustees of another settlement under which his brother Edmund was tenant for life.

Then followed a specific provision in regard to the mode in which the trust fund was to be created. In substitution for the power conferred upon personal representatives by the Land Transfer Act, 1897, the testatrix empowered her trustees, at any time or times, in their uncontrolled discretion," to appropriate any part of the property, whether real or personal, thereinbefore devised upon trust for sale and conversion in its then actual condition or state of investment in or towards satisfaction of the trust fund on any legacy or share in the premises, and for that purpose to determine conclusively the value of the trust premises, or any part or parts thereof, in such manner as they should think fit.

a

Application of the income of the testatrix's property until sale or conversion had then to be dealt with; and she directed that meanwhile the rents and profits and income arising from the real or personal property so remaining unsold or unconverted into money (whether such property were of a permanent or wasting nature), after payment thereout of all rates, taxes, expenses of insurance, and repairs, and other outgoings which her trustees should think fit to pay, should from the period of her death go and be paid to such person or persons, and be applied in such manner as the actual income of the moneys to be produced by such sale or conversion into money would go and be payable unto or be applicable in "if such sale or conversion into money were actually made," but so that no

reversion or other property not actually producing income should be treated as producing income for the purposes of her will; and the testatrix authorised her trustees to determine all questions or matters of doubt arising in the administration of her estate or the execution of the trusts of her will, every such determination to be conclusive and bind all persons under her will.

Circumstances of the Case.

Language more explicit it would be difficult to suggest; and why it became necessary for the Courts to consider the precise nature of the foregoing powers conferred upon the trustees can be very briefly stated:

After the death of the testatrix, which took place in February, 1915, the trustees of her will refused to raise, or appropriate to, the trust fund of £230,000, or any part thereof. The reasons assigned by them for that refusal were substantial enough. The view which they submitted to the beneficiary interested as tenant for life in that legacy was that, having regard to the terms of the will, the appropriation or realisation of the securities would have to be on the footing that, at the date of the payment or appropriation, the legatee was entitled to £230,000, but that, having regard to the depreciation in the value of all securities owing to war, the time was most unfavourable to realise the securities. Accordingly, in the exercise of the wide discretion, the trustees said, which the testatrix reposed in them, they had determined to postpone the sale or conversion into money of investments forming part of her estate until times were more favourable.

The great depreciation in securities was evidenced by the fact that securities listed very shortly after the death of the testatrix as representing the trust fund of £230,000 were shown, when revalued a year, subsequently, to have fallen to about £211,000. Therefore, in the interval between the date of the death of the testatrix and of the new

valuation, there was a depreciation of nearly

£19,000.

Decision Arrived At.

The bona fides of the trustees in declining to sell or appropriate, but relying upon their "uncontrolled discretion" as to the appropriation of unconverted investments in or

towards satisfaction of the trust fund, was in no wise questioned. All that was asserted was that they had failed to exercise the discretion which was vested in them upon right principles. And in the Court of first instance Mr. Justice Younger acceded to that view. The learned Judge held that the trustees, in refusing to sell or appropriate, although they had acted with an honest intention, had proceeded on a misconception of the relative rights of the beneficiaries interested in the testatrix's estate. His Lordship was opinion, therefore, that they had not exercised their discretion with due regard to the purposes for which alone it was conferred upon them. The matter was consequently referred back to them to consider such exercise, but on a proper basis.

of

That decision, we feel constrained to admit, came as a distinct shock to the profession, for it was regarded as an utterly unexpected curtailment of the discretionary powers which the usual common form clauses were assumed to confer upon trustees. With a marked sense of relief, therefore, while not on all sides unanticipated, it was learnt that the learned Judges of the Court of Appeal had no hesitation in reversing the decision of the learned Judge in the Court below. Their Lordships were unanimously of opinion that, in postponing the sale or appropriation, the trustees had not improperly exercised the discretion which they possessed. It was held to be impossible, therefore, for the Court to interfere.

Grounds of the Decision.

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"

It is axiomatic that anyone who has a discretion conferred upon him whether or not declared to be "absolute or uncontrolled "-for those words do not connote that the discretion is to be exercised 'without any conditions, without any check, and without any control" (see per Mr. Justice Chitty in Tempest v. Lord Camoys (21 Ch. D. 571)-is bound to exercise the same "judicially. That is equivalent to saying that he must not act capriciously, but must exercise his power honestly and in good faith. As regards trustees, they, of course, furnish no exception to the universal rule. Their position in this respect has indeed been the theme of innumerable judgments of the Courts. And it has not been found difficult for text writers to deduce

therefrom that trustees may exercise the discretionary powers which had been confided in them by a settlor so long as they exercise them honestly and for the benefit of all the beneficiaries for whom they are acting. They must weigh the interests of all of them. On no account must they favour some individuals at the expense of others. If they are acting unjustly towards those whose interests they were bound to protect-and the Court can see it, although they cannot-the duty of the Court is to interfere (see per Lord Lindley in Hampden v. Earl of Buckinghamshire, [1893] 2 Ch. 531, at p. 544).

One thing is perfectly clear, however, and that is that the Court will not interfere with a discretion expressly given to trustees so long as they exercise it in good faith and upon no wrong principle. For that proposition there is the decision of the highest tribunal in Gisborne v. Gisborne (2 App. Cas. 300). The Courts, however, have always laid it down that the discretion of trustees, if exercised at all, must be properly exercised, as was said by Sir George Jessel, M.R., in Tempest v. Lord Camoys (ubi supra). But trustees certainly would not be exercising their discretion upon a right principle if they did not look to the interests of all of the beneficiaries, and not to any particular member of, or class of members among, them. Lord Justice Turner made that plain beyond all controversy when his Lordship expressed his views in Re Tempest (L. R. 1 Ch. App. 485). And Lord Justice Fry gave utterance to the same opinion when he stated in Re Lepine; Dowsett v. Culver ([1892] 1 Ch. 210, at p. 219), "that it is the duty of trustees to hold a perfectly even hand between all their cestuis que trust.'

The contention in the present case was that the trustees, although acting bonâ fide, were improperly considering only, and were actuated by a desire solely, to benefit the persons interested in the ultimate residue of the estate of the testatrix to the disadvantage of the person who was entitled for life to the income of the trust fund, and who was entitled to a prior charge on that estate. That aspect of the case was, however, disposed of by Lord Justice Swinfen Eady when he said this: Their duty is, on the one hand, not unduly to delay the payment or provision of any of the legacies, but on the other hand

not to sacrifice the interests of persons entitled in remainder by, at an inopportune time and when all securities are unprecedentedly low, and some practically unsaleable, realising the estate and applying it, so far as it will extend, for the benefit of a pecuniary legatee. They must act prudently and properly in the management of the estate as a whole.

Life Tenant or Remainderman Benefited. It is obvious, however, as was said by Lord Justice Bankes, that a decision which is considered to be for the ultimate benefit of the estate may be for the immediate advantage of one beneficiary and to the disadvantage of another." Lord Justice Warrington spoke to the same effect when he said that he supposed that "there never was a power to postpone conversion which did not to some extent affect some of the persons interested in the testator's estate prejudicially and others advantageously." Do as they may, therefore, and consider the interests of the estate as a whole as much as they can, it is inevitable that, whichever way discretion is exercised in such a case as the present, tenant for life or remainderman-and not both of them--will benefit thereby to the disadvantage of the other. "Discretion" would indeed be positively meaningless if trustees were not entitled, while never neglecting to do their best for the whole estate, to determine which beneficiary, or class of beneficiaries, shall suffer if all cannot equally profit. When the solution of that problem grows too onerous for them to tackle they will always be wisely advised to seek the assistance of the Courts.

Common Form Clauses.

It will be observed that the adroitly drawn clauses in the will in the present case, which came under the consideration of Mr. Justice Younger and of the Court of Appeal, are substantially the same as those appearing in Key and Elphinstone's Precedents in Conveyancing (ubi supra), and likewise in Bythewood and Jarman's Conveyancing Precedents (1915 edit., vol. 2, p. 558), to say nothing of various other conveyancing works of importance. The decision of the Court of Appeal will consequently have an extremely far-reaching application. In short, we shall not be

Concerning the Case of an Infant Contingently
Entitled to the Income of a Fund Only.
Section 43 of the Conveyancing Act, 1881,
has given rise to various technical problems.
An interesting point presented itself for deci-
sion in the very recent case of Re Boulter;
Bank
Capital and Counties

The

v. Boulter (reported on page 384 of vol. 144 of the Law Times Journal). Put briefly, the case was this: A. (testator) gave a fund to trustees upon trust to pay the income to the child or children of B. on attaining twenty-one, for life. corpus and the income, after the life interests, he gave in remainder. B. only had one child, C., and B. requested the trustees to apply the income of the fund to C.'s maintenance and education. The trustees were advised that it was doubtful whether sec. 43 (supra) applied, as C. was contingently entitled to the income only and not to the fund. Mr. Justice Younger was asked to decide the position. Two cases tend to create a serious difficulty in the solution of this problem, although, having regard merely to sec. 43, there seems no reason why the matter ought really to present serious difficulties. In Re Dickson; Hill v. Grant ([1885] 29 Ch. D. 331; 54 L. J. Ch. 510), it was decided that an infant is not entitled to maintenance under sec. 43 unless the property given him bears interest and unless, in addition, he will be absolutely entitled to the corpus of that property when the contingency matures. Take the concrete example: Gift of a fund to A. if and when he shall attain twentyone; but on the contingency happening he is not to be entitled to the intermediate interest, it meantime being given elsewhere. Hence, as

he is not entitled to that interest on attaining twenty-one, he is not entitled to any maintenance ad interim under sec. 43 (Re Dickson, supra). Take again the case of Re Bowlby; Bowlby v. Bowlby ([1904] 2 Ch. 685; 73 L. J. Ch. 810). A. (testator) gave a £50,000 legacy to each of his daughters who should attain twenty-one, such legacies to be held by trustees for the daughters for life, with remainders. It was held that the unapplied income (up to the happening of the contingency) went as an accretion to the corpus and not to the legatee for life. This, of course, is quite in accord with the view of Sir W. Grant, M.R., in Hanson v. Graham (6 Ves. 239, 249), that what is not taken out of the fund for maintenance must follow the fate of the principal. So far so good. But in Re Dickson (supra) the judgment of Lord Justice Cotton gives authority for the proposition that, even where a legacy carries interest, the legatee will not take the intermediate interest on his attaining twenty-one unless he also becomes absolutely entitled to the corpus-in other words, just as the legatee in Re Dickson was not entitled to maintenance under sec. 43, so the legatee not entitled to the corpus on attaining twenty-one is also not entitled to interim maintenance. If this is so, Re Boulter must be answered in the negative. Let us test the matter. What did Cotton, L.J., say?" Under that Act"-meaning Lord Cranworth's Act, 1860, sec. 26-" it had been decided that the infant could not be maintained out of income unless, if he attained twenty-one, he would have become entitled to past income as well as to the corpus of the property. In my opinion, the case is the same under the present (1881) Statute. Undoubtedly a few words have been left out, but one cannot guess why they have been left out, nor, indeed, why this section (sec. 43, supra) was introduced at all. It was possibly with a view to codify the law. It is said that it must have been introduced to amend the blot found to exist under Lord Cranworth's Act. But was it a blot? In my opinion Lord Cranworth's Act went a considerable length in enabling income to be applied for the benefit of an infant who was only contingently entitled, where, if the infant did not attain twenty-one, the whole of the fund, both capital and accumulations, was to go over to somebody else. The present contention goes

much further and I am not at all satisfied that there was any such evil under Lord Cranworth's Act as that we ought to come to the conclusion that the words of the present (1881) Act are to be extended beyond what I think is

their proper significance." This is a very

strong view and in addition comes from an eminent Judge. But Mr. Justice Younger

avoided its effect on the facts in the case of Boulter, on the reasoning that it was given in a case where the fund was not set apart in the hands of trustees. Moreover, it is to be observed that in Re Dickson the intermediate income had been given elsewhere during the period preceding the contingency, and it was on this that Fry, L.J., the other member of the Court who delivered judgment, founded his decision. Fry, L.J., reasoned thus: "This will, as I have already pointed out, has given the income during the infancy of the legatee to the residuary legatee, and it has given it not by implication but by express words, because there is an express gift of the residue and that residue includes the income of the legacy. Therefore, the contention on the part of the infant is one as to which a contrary intention has been expressed by the testator. It appears to me, therefore, that the third sub-section (of sec. 43, supra) furnishes a complete answer to this appeal." This latter is indisputable and really renders the further proposition laid down by Cotton, L.J., unnecessary to the decision of the case, and in the nature only of obiter dicta. The same proposition has, however, been recognised and reiterated by the late Master of the Rolls (then a Lord Justice of Appeal) in Re Bowlby (supra), but merely as a dictum, and, as Mr. Justice Younger observed, not concurred in by the other Lords Justices. At p. 711 of (1904) 2 Ch. he says: "It is settled that section 43 has no application unless, apart from the Act, the infant would under the terms of will be entitled to arrears of income on attaining twenty-one (Re Dickson). This must mean either as tenant for life or absolutely. If a share of residue is given absolutely to an infant, contingently entitled on his attaining twenty-one, the infant will be entitled to both capital and arrears of income on attaining twenty-one, and section 43 will apply. But if the infant only becomes tenant for life of the share of the residue with its accretions on attaining twenty-one, the case does not fall

within the language of section 43 as interpreted by the Court of Appeal." Here, again, if this latter proposition be true, Re Boulter is practically decided by it. It should be noted that, as already observed, Re Dickson was a case where the fund had not been set apart in the hands of a trustee. Section 43 was, therefore, not properly satisfied. Re Bowlby was, on the face of it, quite a different case from Re Boulter. The right to maintenance was not in issue, because the legatee was at the time of the action past the age of twenty-one and the contest was simply who was entitled to the unapplied intermediate income, the corpus or the legatee for life? It was properly held to go with the corpus, in accordance with Hanson v. Graham (supra). L.J. Cozens-Hardy's proposition was, therefore, a maxim in excess of the requirements of the case before him, but it is certainly a proposition which anticipates Re Boulter. From what has been observed, it is at least fair to say that the facts of the previous cases leave it open to argument and reconsideration as to whether the judicial dicta quoted interpreted accurately the effect and scope of section 43. The object of the Legislature seems to have been to confer an enabling power on trustees and the Courts to apply the income of property contingently given to infants for their benefit during minority or until the contingency should happen. Where the income is merely accumulating, such a provision appears both proper and logical. That is obviously the purport of this legislation. Of course, even before the 1860 Act, as Lopes, L.J., informs us in Re Holford ([1894] 3 Ch. 30), the ordinary jurisdiction of the Chancery Court enabled them to give maintenance out of the income of property vested in possession; but the Court in some cases had assumed jurisdiction to grant maintenance where a number of infants were entitled contingently on attaining twenty-one, and the property, both principle and interest, must ultimately come to them or the survivors of them." The 1860 Statute in this view appears only to have sanctioned legislatively what previously was effected judicially. Then came section 43 of the later Statute. Whatever may be said as to the similarity and co-equality of the terms of section 26 of Lord Cranworth's Act and section 43 of the 1881 Act, it seems fair to say

66

66

that the forty-third section is certainly appreciably wider than its predecessor as regards such a case as Boulter's. So much so is this apparent that Younger, J., gave the infant in that case maintenance (inter alia) on the ground that sec. 43 in terms expressly applied to the case of an infant contingently entitled to the income only of a fund. The effect of the section is shortly this. By sub-section 1, where any property is held by trustees in trust for an infant, for life or any greater interest, and whether absolutely or contingently on attaining twenty-one, the trustees may apply the income or any part thereof for the infant's maintenance, education, or benefit; by subsection 2, the residue of the income is to be accumulated and held for the benefit of the person who ultimately becomes entitled to the property," &c.; and by sub-section 3, sec. 43 is made to apply only if and as far as a contrary intention is not expressed in the trust instrument. Sub-section 1 begins begins thus: "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 twentyone," &c., as outlined already. Sec. 26 of the 1860 Act reads thus: "In all cases where any property is held by trustees in trust for an infant either absolutely or contingently on his attaining the age of twenty-one years "and so on in very much the same terms as sec. 43. It is evident, however, that the two sections are not completely coterminous, for the words for life or for any greater interest are not found in sec. 26. Now in Boulter's case there was property held by trustees in trust for C. (the infant) for life contingently on his attaining twenty-one, just as the language of sec. 43 prescribes. How it is proposed to demand another and extraneous requisitenamely, that the infant be entitled to the corpus as well as the income on attaining twenty-one, it is difficult to understand. Certainly there is no warrant for it within the language of sub-section 1, which expresses the full scope of the section. It may, of course, well be quite another thing to contend for this under the earlier Act; there the phrase "for life" is not present; but we are not required to examine that. But under the later Statute the case of Boulter would seem to square exactly with the express terms of its forty