actually received the money will in general only be accountable. 37. In all deeds by which trusts are created, a clause is inserted, that each trustee shall be accountable for such sums only, as shall actually come to his hands. And it has been determined, in a modern Bartlett v. case, that this does not bind the trustees as a covenant, Hodgson, but is a clause of indemnity: and the sense of it is this, 42. that the trustees and their heirs shall not be accountable for more than they receive. 1 Term. R. from the 38. The Court of Chancery will not in any case Can derive permit a trustee to derive any benefit from the trust. no Benefit Therefore if a trustee compounds a debt, or buys it Trust. for less than is due upon it, he shall not derive any 3 P. Wms. advantage to himself from such a transaction. But 251. where a trustee releases or compounds a debt, if it v. Ross, appear to have been done for the benefit of the trust, 130. the trustee will be excused. Forbes 1 Bro. R. reimburse Smith v. 39. Wherever trustees are guilty of a breach of Bound to trust, the Court of Chancery will compel them to the Cestui reimburse the cestui que trust for any loss which he que Trust. may have sustained. Thus if a trustee sells the French, estate, he will be compelled in equity to make a full 2 Atk. 243. compensation to the cestui que trust: and if a trustee conceals any act done by his co-trustee, which Boardman v. amounts to a breach of trust, he will thereby make 1 Bro. R. 68. himself equally liable. Mossman, 384. 40. Lord Hobart is said to have been of opinion, that 1 Ab. Eq. an action at law might be maintained against a trustee for breach of trust. This is not consistent with Lord Hardwicke's definition of a trust; namely, that it is 2 Atk. 612. such a confidence between parties, that no action at law will lie; but is merely a case for the consideration of a court of equity. It is however observable that even in equity the cestui que trust is considered only as a 2 Atk. 19. Forrest, 109. simple contract creditor, in respect of such breach of trust; unless the trustee has acknowledged the debt to the trust estate, under his hand and seal. Perry v. Philips, ante, c. 1. Montfort v. Have no Allowance for Trouble. 41. It is usual to insert in all deeds by which trusts are created, a clause that the trustees shall not be answerable for any misfortune, loss, or damage, which may happen in the execution of the trusts, unless they arise from their own wilful default. But courts of equity charge trustees, and also their representatives, with the consequences of a breach of trust, whether they derive a benefit from the trust or not. 42. It is an established rule that a trustee shall have no allowance for his care and trouble in the execution Treat. of Eq. of the trust; for on pretences of this kind the trust B.2.c.7.§3. estate might be impoverished; besides the great Ellison v. 1 Ves. 112. difficulty there might be in adjusting the quantum of such allowances; as one man's time may be more valuable than another's. Nor can there be any hardship in this; because every person who is appointed a trustee, may choose whether he will accept the trust or not. 43. But in a case where there was a direction in a will that the trustees should be paid for their trouble, as well as expence; and it being objected that this might be of general prejudice, Lord Hardwicke said, this was a legacy to the trustees, to whom the testator might give satisfaction, if he pleased. In Serjeant Hall's will, Sir Richard Hopkins's, and the Duchess of Marlborough's, there was a great allowance made to the trustees for their trouble, and no inconvenience: because it could carry it no farther than where there were particular directions. The Master was therefore directed to inquire what the trustees might reasonably deserve for their trouble. 44. A trustee will however be allowed all costs and But allowed all Costs and expences which he has been put to in the execution Expences. of his trust; unless he has been guilty of improper Treat. of Eq. conduct. Id. 128. 45. Thus if a trustee sues in Chancery for the Amand v. Bradburn, trust estate, and obtains a decree, with costs; and 2 Cha. Ca. afterwards the cestui que trust exhibits a bill against Trott v. him for an account of the trust estate; the trustee Danson, 1 P. will be allowed in his disbursements his full costs, 7 Bro. Pari. Wms. 780. and will not be concluded by the costs that taxed. were Ca. 266. 455. 46. It is said by Lord King to be a rule that the 2 P. Wms. cestui que trust ought to save the trustee harmless, as to all damages relating to the trust: therefore where a trustee has honestly and fairly, without any probability of being a gainer, laid down money, by which the cestui que trust is benefited, he ought to be repaid. 47. In all modern deeds whereby trusts are created, there is a clause authorizing the trustees to reimburse themselves all costs and expences which they shall· be put to in the execution of their trust. 48. It was formerly held, that a trustee should not Trustees seldom permitpurchase any part of the trust estate for himself, on ted to puraccount of the dangerous consequences that might chase the ensue from such a practice. Gardner, Thus it was declared by Lord Hardwicke, that the Davison v. Court of Chancery will not suffer a trustee to pur- MSS. R. chase the estate of the cestui que trust, during his 1743. minority; though the transaction were fair and honest, and as high, or a higher price given than any other person would give. This the Court had always discountenanced, upon account of the general inconvenience that might happen from bargains of this kind. But where there was a decree for sale of a Whelpdale v. Cookson, 1 Ves. 9. trust estate, and an open bidding before the Master, there the Court had permitted the trustee to purchase; for that was an open auction of the estate. At the same time, he said, the rule of the Court against trustees purchasing, did not extend to trusts for persons of full age. 49. In another case, where on a devise to sell for payment of debts, the trustee himself purchased part; Lord Hardwicke said, he would not allow it to stand good; although another person, being the best bidder, bought it for him at a public sale; for he knew the dangerous consequence. Nor was it enough for the trustee to say, you cannot prove any Vide 6 Ves. fraud; as it was in his own power to conceal it. But if the majority of the creditors agreed to allow it, he should not be afraid of making the precedent. 628. Killick v. Flexney, 4 Bro. R. 161. Whichcote v. Lawrence, 3 Ves. Jun. 740. 50. A trustee, who had acted improperly in other respects, bought a lease, which was part of the trust property, at an appraisement; and afterwards renewed it in his own name. Decreed, that he should be a trustee only, and account for what he purchased. 51. In a subsequent case it was held, there was no general rule that a trustee to sell should not himself be the purchaser; but he should not thereby acquire a profit. 52. An estate was conveyed to six persons, in trust to sell for the benefit of creditors. The estate was put up to auction, and purchased by one of the trustees, who afterwards sold it at a profit. Upon a bill filed by some of the creditors, praying that this purchase by the trustee might be for the benefit of the creditors; Lord Rosslyn said, it was a plain point of equity, and a principle of clear reasoning, that he who undertakes to act for another in any matter, shall not, in the same matter, act for himself. Therefore a trustee to sell shall not gain any advantage by being himself the person to buy. He is not acting with 8 Ves. 315.. that want of interest, that total absence of temptation, that duty imposed upon him, that he shall gain no profit. The consequence is beyond doubt, that in whatever shape that profit redounds to him, whether by management, which is the common way, or by superior good fortune, it is not fit that benefit should remain in him. It ought to be communicated to those whose interests, being put under his care, afforded him the means of gaining that advantage. The trustee was decreed to account for the profits, with costs. 53. In another case it was resolved, that where a trustee purchases the trust estate, however fair the transaction, it must be subject to an option in the cestui que trust, if he comes in a reasonable time, to have a resale. Walker, 54. A person devised his estate to two trustees, Campbell v. upon trust to sell. One of the trustees purchased part of the estate at auction. A bill was filed by the residuary legatees, praying that the sale might be set aside, and the premises resold. It appeared upon the evidence, that the sale was perfectly fair and open. Sir R. P. Arden, M. R. said he would lay it down as a rule, that any trustee, purchasing the trust property, was liable to have the purchase set aside, if in any reasonable time the cestui que trust chose to say he was not satisfied. The trustee purchased, subject to that equity. And referred it to a Master to inquire whether it was for the benefit of the plaintiffs that the premises should be resold. If the Master should be of opinion that it would be for their benefit, then it was declared that they should be resold. 6 Ves. 625. |