benefit of all his creditors, merely because one of them is proceeding, or about to proceed to enforce her demand? It has been said that there was no consideration for the deed. But the trustees swear, in their answer, that it was understood and agreed, between Stewart and his creditors executing the deed, that he was not to be made a bankrupt or be otherwise molested, by them, in respect of their debts. It is, however, quite immaterial whether there was that agreement or not. The debts due from Stewart, were, alone, a sufficient consideration for the deed. The decisions in Garrard v. Lord Lauderdale and Walwyn v. Coutts, were founded not on there having been no consideration for the deeds in those cases, but on the ground that the deeds had not been communicated to the creditors. If they had been communicated, a trust would have been raised, and the debtor could not have revoked them. In this case, however, it is not the debtor who is seeking to set aside the deed, but one of his creditors; and there is no instance in which such an attempt has been made by a creditor. The case of Acton v. Woodgate, is an authority in our favour; for, there, the conveyance which had been executed by the creditors, was supported. The case of Gibbs v. Glamis, has no application to the present for, there, the Plaintiff, who sought the benefit of the deed, had not executed it. The learned Counsel then referred to Fitzgerald v. Stewart (h), Browne v. Cavendish (i), and Simmonds 1850. MACKINNON v. STEWART, 1850. MACKINNON v. STEWART. v. Palles (k), and, particularly, to the observations made by Sir E. Sugden, C., in the last two cases, upon Garrard v. Lord Lauderdale and Gibbs v. Glamis. Mr. Stuart replied. (k) 2 Jones & Lat. 489. See 504, et seq. The following are the observations referred to in the text. In Browne v. Cavendish, Sir E. Sugden said: "Wallwyn v. Coutts and Garrard v. Lord Lauderdale are, certainly, authorities for my decision. In speaking of Garrard v. Lord Lauderdale, I observe that the Master of the Rolls, in Acton v. Woodgate, says: "That it seems to have been considered, in that case, that a communication, by the trustees, to creditors, of the fact of such a trust, would not defeat the power of revocation by the debtors.' It appears to me, however, that this doctrine is questionable; because the creditors, being aware of such a trust, might be, thereby, induced to a forbearance in respect of their claims, which they would not otherwise have exercised. When I first read that case, I made this observation in the margin; 'This has always been my opinion;' but, in stating this, I do not mean to bind myself to hold that, in every case, a representation to a creditor will give him the benefit of the trust. It must depend on the character of the representation and the manner it is acted on. On the other hand, I should be sorry to have it understood that a man may create a trust for the benefit of his creditors, communicate it to them, and obtain, from them, the benefit of their lying by until, perhaps, the legal right to sue was lost, and then insist that the trust was wholly within his own power. The case of Gibbs v. Glamis, which has been much relied upon at the Bar, is also an authority of considerable weight in favour of my decree. There, several persons were entitled to a fund in a Cause; some of them being liable to the costs of a third party, they all assigned the fund, to trustees, to pay the costs of that third party; then in trust for themselves and it was held that the person whose costs were so provided for, had no right to enforce the trust, he not The VICE-CHANCELLOR : 1850. This was a bill filed, by Mrs. Mackinnon, against MACKINNON James Stewart and three persons named William Cripps being a party to the deed: though it was a case in which an actual trust was created for the benefit of the third party, and money was received, by the trustees, and was in their hands to answer the trust: and some of the assignors had an interest, as against the others, to have the trust carried into execution. The Vice-Chancellor thought the creditors had the right; but the Chancellor reversed his decision (a). Here the parties have defeated their own trust; but, in Gibbs v. Glamis the trust never was defeated. It was an existing trust; and yet it was ultimately held that the creditor could not enforce it." In Simmonds v. Palles, Sir E. Sugden said :-"The cases which were understood to apply to the present, were Garrard v. Lord Lauderdale, and others of that class. Those cases have, certainly, gone a great length; and I am not disposed to carry the principle further than authority compels me: but they establish this; that, if parties make arrangements between themselves, behind the back of a third person, even though they should declare a trust for the benefit of that third person by name, if that be not in the nature of a settlement, though voluntary, but is merely an arrangement for the benefit of the parties themselves who enter into it, the third person cannot, upon that naked state of circumstances, file a bill to establish his demand as a cestui que trust. Garrard v. Lord Lauderdale went far enough: for, there, the creditor was, in point of form, a party to the deed, and the deed was communicated to him; yet it was held that that circumstance did not enable him to file a bill to enforce the trust. * * * In the last case upon the subject, (Gibbs v. Glamis,) which has not been cited, but to which I have had occasion, lately, to refer, the Vice-Chancellor held one way, and the Chancellor another. It was of this nature. Several persons were interested in a fund, in respect of which a suit had been instituted: they made an arrangement of their claims between themselves, and (a) See 11 Sim. 591. v. STEWART. 2nd December. 1850. MACKINNON v. STEWART. Edward William Burgess and Joseph Hannah, to whom assigned the fund to trustees; and one of the trusts was, expressly, to pay to a Defendant in the suit, who was not a party to the arrangement, his costs to which one of the parties to the deed was liable. The fund was realized and actually in the hands of the trustees; and, they not having paid the costs, a bill was filed, by the third party, to have the trusts carried into execution, and his costs paid. The Vice-Chancellor was of opinion that these circumstances distinguished the case from Garrard v. Lord Lauderdale, and took this distinction; that it was not the case of a person voluntarily making a provision for payment of his creditors, but of several persons, some of whom were liable to the demand, agreeing, amongst themselves, that a particular fund in which they were all interested, should be the fund for the payment of it. Lord Cottenham reversed that decree, and said that it was competent for any of the Defendants to make the objection, and that it was immaterial what interest the party making the objection, had: and he held, even in that case upon which I should have had considerable doubt, that the Plaintiff could not maintain his bill. * * * I never was quite reconciled to the authorities. I submit to them, as I am bound to do; but I will not carry them further. Garrard v. Lord Lauderdale followed the principle laid down by Lord Eldon, as to which there was no doubt: whether the facts of that case warrant the decree, is another question; and men's minds may differ on it. But, as to the principle, no person will dispute it. It was settled, before that case, that, if a man, without communication with his creditors, make a provision for paying them for which they have not bargained, he may, before the execution of the trusts, destroy them. The questions in that case, were whether, under the circumstances, the Duke of York had exercised that power; and whether it was competent for him to do so. Without going through the cases, I will refer to Gibbs v. Glamis, a remarkable case, one upon which learned persons differed for the decree of the Vice-Chancellor was reversed by the Chancellor; and I am not satisfied that some learned persons would not prefer the first decision. That : ment of such of his creditors as should execute that deed. case was of this nature. A Mr. Hele claiming to be interested in a sum of 40007., filed a bill in respect of it. Gibbs, the Plaintiff, was, I suppose, properly a Defendant in that suit. There was a contest as to who was entitled to the 40007.; and the several claimants came to an agreement, between themselves, that they would divide the money amongst them in certain proportions; and that all the costs of the suit should be provided for; and, in particular, Gibbs's costs: and, without any communication with him, they assigned the 4000l. to trustees in trust, first, to pay the costs and expenses, of all parties to the deed, in or about the suit of Hele v. Fernie, or of the deed or otherwise relating to their claims on the 40007., as between solicitor and client; and also the costs of Gibbs, and other costs; and then to pay 800l. to Hibbert, 1800l. to Hele, and the residue to Lady Glamis. So that Lady Glamis had no right to receive anything until after payment of the costs to Gibbs. There was as express a trust to pay Gibbs his costs, as to pay Lady Glamis the residue. The trustees received the money, and paid the other persons named in the deed; and were willing to pay Gibbs, when Lady Glamis objected that he was not entitled to be paid out of that fund. The Vice-Chancellor held that the several parties to the deed, had a common interest in the payment of Gibbs's costs out of the fund; that the agreement had only been entered into on the condition that payment of Gibbs's costs would be provided for out of the fund; and, therefore, that the case was not within the authorities; and he sustained the bill: but the Chancellor reversed the decree; and that reversal appears to have been submitted to. He said, in his judgment, that Hele was liable to pay the Plaintiff, Gibbs, his costs; and, in order to protect him against the consequences of that liability, the parties provided, incidentally, that the Plaintiff's costs should be paid out of the fund that the question then was whether that provision gave the party whose costs were to be so provided for, a right to institute a suit as a cestui que trust, he having no interest in the fund; not having been a party to the arrangement; and the agreement having been made, between the parties inter 1850. MACKINNON v. STEWART. |