Rights of beneficiary.

England, void at the option of the beneficiary. Nor must the trustee, without the permission of the Court, buy or take a mortgage or lease of the trust-property (sec. 53), and such permission is not to be given unless the proposed purchase, mortgage or lease is manifestly for the advantage of the beneficiary. The Act here deviates from the English law, according to which a trustee is allowed to buy trust-property from his beneficiary if the latter is sui juris and the former can show that the relation of trustee and beneficiary was, at the time of the purchase, virtually dissolved, and that the fullest information and every advantage were given to the beneficiary. Such a rule seemed too vague for insertion in a Code intended to be worked, for the most part, by unprofessional judges. It has, moreover, been disapproved in Morse v. Royal, 12 Ves. 372. And no trustee whose duty it is to buy or to obtain a mortgage or lease of particular property for his beneficiary may buy it, or obtain a lease or mortgage of it for himself.

CHAPTER VI. OF THE RIGHTS AND LIABILITIES OF

THE BENEFICIARY.

The beneficiary's rights are: to have the rents and profits of the trust-property (sec. 55); to have the intention of the author of the trust specifically executed to the extent of the beneficiary's interest (sec. 56); where the beneficiary is competent to contract, to require the trustee to transfer the trust-property to him or such person as he may direct (sec. 56); and to inspect and take copies of the instrument of trust, title-deeds relating solely to the trust-property, accounts, vouchers, etc. (sec. 57). If competent to contract, he may transfer his interest, subject to the law as to the circumstances and extent to which he may dispose of it (sec. 58). He has a right to sue for execution of the trust by the Court, where no trustees are appointed, or all the trustees die, disclaim, or are discharged (sec. 59). He has a right (sec. 60) that the trust-property shall be held and administered by proper persons and a proper number of such persons. And the following are declared not to be 'proper persons' for this purpose: a person domiciled abroad; an alien enemy; a person having an interest inconsistent with that of the beneficiary; a person in insolvent circumstances; and, unless the personal law of the beneficiary allows otherwise, a married woman and a minor. The words in italics were inserted because, in Hindú and Muhammadan families,

1 See Lewin, 8th ed., pp. 487, 488.

a minor son often succeeds to property burthened with a trust for dependent relations of his father, and a married woman is sometimes made by her father trustee for herself and her son or daughter. Section 61 declares the beneficiary's right to have his trustee compelled to perform any particular act of his duty as such, and restrained from committing any contemplated or probable breach of trust. Sections 62, 63, 65 declare the rights of the beneficiary (a) in case of a wrongful purchase by the trustee, (b) in case the trust-property comes into the hands of a third person inconsistently with the trust, or the trustee has converted it into money or other property, and (c) in case the trustee wrongfully transfers trustproperty and afterwards becomes its owner. Section 64 agrees with the English rule, which, to prevent stagnation of property, exempts from the trust a purchaser with notice from an innocent purchaser without notice, who has got the legal estate. Where the trustee wrongfully transfers the trust-property, and afterwards himself becomes its owner, the property again becomes subject to the trust (sec. 65). Where the trustee wrongfully mingles trust-property with his own, the beneficiary (sec. 66) is entitled to a charge on the whole fund for the amount due to him. This accords with Cook v. Addison, L. R., 7 Eq. 470. Section 67 declares that if a partner, being a trustee, wrongfully employs trust-property in the business, his co-partners are personally liable if they have notice of the breach of trust, but not otherwise.

of bene

Section 68 declares the liability of a co-beneficiary, 1, where one of Liability several beneficiaries joins in a breach of trust, or, 2, knowingly obtains ficiary. any advantage therefrom without the consent of the other beneficiaries, or, 3, becomes aware of a breach and either conceals it or does not take steps to protect the interests of the others, or, lastly, deceives the trustee and thereby induces him to commit a breach. In each of such cases the other beneficiaries are entitled to have all his beneficial interest impounded until the loss caused by the breach has been compensated.

CHAPTER VII. OF VACATING THE OFFICE OF

A TRUSTEE.

The office of a trustee is vacated by his death or by his discharge from office, and the six modes in which he may be discharged are stated in section 71. Power is given to trustees to petition the Court for a discharge (sec. 72). The rest of this chapter contains rules as to the appointment of new trustees, and as to the survival of the trust on the death or discharge of one of several co-trustees. It

Construc

trusts.

was supposed that retiring trustees would probably be indifferent to the interest of the beneficiary. The power of such trustees to appoint a new trustee is therefore exerciseable only with the consent of the Court (sec. 73, cl. b).

CHAPTER VIII. OF THE EXTINCTION OF TRUSTS.

The Act here declares the four cases in which a trust is extinguished-when its purpose is fulfilled, or becomes unlawful; when the fulfilment becomes impossible; when the trust is revoked. It also shows when a trust may be revoked by its author, but declares that no such revocation can be made so as to defeat or prejudice what the trustees may have duly done in execution of the trust.

CHAPTER IX. OF CERTAIN OBLIGATIONS IN THE
NATURE OF TRUSTS.

Where no trust is declared, but for the purposes of justice the tive trusts. law deems one to have been created by certain acts of parties, the Resulting trust is by English lawyers termed 'constructive.' Where an interest is given for purposes to which the trust is not commensurate, as, for instance, to pay debts which are afterwards satisfied, or an annuity which afterwards expires, the trust is termed 'resulting.' Chapter IX, the most important in the Act, corresponds with the chapter on Quasi-contracts in the Contract Act, and specifies some twenty of the commonest cases in which such trusts arise. They are

(a) where the owner of property transfers or bequeaths it, and it cannot be inferred consistently with the attendant circumstances that he intended to dispose of the beneficial interest therein (sec. 81);

(b) where property is transferred to A for a consideration paid by B, and it appears that B did not intend to pay the consideration for A's benefit (sec. 82);

(c) where a trust is incapable of execution or is completely executed without exhausting the trust property (sec. 83);

(d) where A, the owner of property, transfers it to B for an illegal purpose, and such purpose is not carried into execution (sec. 84);

(e) where A bequeaths certain property for an illegal purpose (sec. 85);

(f) where property is transferred in pursuance of a contract which is liable to rescission or induced by fraud or mistake (sec.

(g) where a debtor becomes the executor or other legal representative of his creditor (sec. 87);

(h) where A, bound in a fiduciary character to protect the interests of B, by availing himself of such character gains any pecuniary advantage (sec. 88);

(i) where A, being so bound, enters into any dealings under circumstances in which his own interests are, or may be, adverse to those of B, and thereby gains for himself a pecuniary advantage (sec. 88);

() where by the exercise of undue influence A gains some advantage in derogation of the interests of B without consideration, or with notice that such influence has been exercised (sec. 89);

(k) where a tenant for life or other qualified owner of any property, by availing himself of his position gains an advantage in derogation of the rights of the other persons interested in the property (sec. 90);

(1) where any such owner, as representing all persons interested in the property, gains any advantage (sec. 90);

(m) where A acquires property with notice that B has entered into an existing contract affecting that property, of which specific performance could be enforced (sec. 91);

(n) where a person contracts to buy property to be held on trust for certain beneficiaries, and buys the property accordingly (sec. 92); (0) where creditors of B compound the debts due to them, and one of such creditors, by a secret arrangement with B, gains an undue advantage over his co-creditor (sec. 93);

(p) in any other case, where there is no trust, but the person having possession of property has not the whole beneficial interest therein.

Whoever holds property in accordance with any of these clauses, must, so far as may be, perform the same duties and is (with two exceptions) liable to the same disabilities as if he were a trustee of the property for the person for whose benefit he holds it. The two exceptions are, (1) where he rightfully cultivates the property or employs it in trade or business he is entitled to reasonable remuneration for his trouble, skill and loss of time, and (2) where he holds the property by virtue of a contract with the person for whose benefit he holds he may, without the permission of the Court, buy or take a lease or mortgage of the property.

trusts.

The resulting trusts provided for by sec. 83 are treated by the Resulting Act as obligations in the nature of trusts, for here there is no declaration of trust as to the portion of the trust-property which is not wanted for the purpose declared, and such declaration is

History of the Act.

required by sec. 6. Where a person gives property to charitable purposes, and either specifies no objects, or such as do not exhaust the proceeds, the law of England does not suffer the property or its surplus to result to the donor or his legal representatives; but the Court takes upon itself to execute the donor's intention by declaring the particular purposes to which the fund shall be applied. A similar exception is made when the purposes of the gift at the time exhaust the whole proceeds, but in consequence of an increase in the value of the property an excess of income subsequently arises. The Act (sec. 83, ill. e) ignores these exceptions, which were introduced when the law of resulting trusts was imperfectly understood, and which unfairly disregard the interest of the donor's legal representative.

Lastly, it may be remarked that the Act contains no provisions as to the presumption against trustees that advantages gained by them from their beneficiaries are gained by undue influence, or as to the escheat of beneficiaries' interests. The former matter seems sufficiently provided for by the Evidence Act I of 1872, sec. 111: the latter, by the Succession Act X of 1865, sec. 28, and the general law as to bona vacantia1. See now in England 47 & 48 Vic. c. 71, sec. 4.

The Bill which became the Trusts Act was drawn by the writer, revised by the Law Commission in 1879, published and circulated to local authorities in 1880, introduced into the Council in June 1881, and referred to a Select Committee, from which it emerged with but little alteration. It was passed in January 1882. Having been five years in force throughout the greater part of British India 2, without (so far as can be judged from the law-reports and the total absence of amending legislation) giving rise to any hardship or difficulty, it now seems ripe for extension to the Lower Provinces and Bombay.

See 16 & 17 Vic. c. 95, sec. 27: 21 & 22 Vic. c. 106, sec. 39. 2 The population to which it applies is 111,398,002 in number.