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OF THE DUTIES AND LIABILITIES OF TRUSTEES,
11. The trustee is bound to fulfil the purpose of the trust, Trustee to and to obey the directions of the author of the trust given at the time of its creation, except as modified by the consent of all the beneficiaries? being competent to contract.
Where the beneficiary is incompetent to contract, his consent may, for the purposes of this section, be given by a principal Civil Court of original jurisdiction.
Nothing in this section shall be deemed to require a trustee to obey any direction when to do so would be impracticable, illegal or manifestly injurious to the beneficiaries.
Explanation.- Unless a contrary intention be expressed, the purpose of a trust for the payment of debts shall be deemed to be (a) to pay only the debts of the author of the trust existing and recoverable at the date of the instrument of trust, or, when such instrument is a will, at the date of his death ?, and (6) in the case of debts not bearing interest, to make such payment without interest.
Illustrations. (a) A, a trustee, is simply authorized to sell certain land by public auction. He cannot sell the land by private contract.
(6) A, a trustee of certain land for X, Y and Z, is authorized to sell the land to B for a specified sum. X, Y and Z, being competent to contract, consent that A may sell the land to C for a less sum. A may sell the land accordingly.
(c) A, a trustee for B and her children, is directed by the author of the trust to lend, on B's request, trust-property to B's husband, C, on the security of his bond. C becomes insolvent, and B requests A to make the loan. A may refuse to make it *.
it, 2 Bom. H. C. 133.
Supra, p. 553. * The author of the trust when once it has been created cannot modify it: à fortiori he cannot defeat
Purefoy v. Purefoy, 1 Vern. -& * Bo88 v. Godsall, 1 Y. & C.C.
Trustee 12. A trustee is bound to acquaint himself, as soon as to inform
possible, with the nature and circumstances of the trusthimself of state
property; to obtain, where necessary, a transfer of the trustof trustproperty. property to himself; and (subject to the provisions of the
instrument of trust) to get in trust-moneys invested on insufficient or hazardous security?
Illustrations. (a) The trust-property is a debt outstanding on personal security. The instrument of trust gives the trustee no discretionary power to leave the debt so outstanding. The trustee's duty is to recover the debt without unnecessary delay
(6) The trust-property is money in the hands of one of two co-trustees. No discretionary power is given by the instrument of trust. The other co-trustee must not allow the former to retain the money for a longer period than the circumstances of the case
required Trustee 13. A trustee is bound to maintain and defend all such to protect title to
suits, and (subject to the provisions of the instrument of trust.
trust) to take such other steps as, regard being had to the property.
nature and amount or value of the trust-property, may be
the trustee's duty is to cause the instrument to be registered“. Trustee 14. The trustee must not for himself or another set-up or not to set up adverse aid any title to the trust-property adverse to the interest of title. the beneficiary. Care re- 15. A trustee is bound to deal with the trust-property as quired from trustee.
carefully as a man of ordinary prudence would deal with such property if it were his own; and, in the absence of a contract to the contrary, a trustee so dealing is not re
1 As a general rule, it may be taken the debt was a loan by the author of that if the security is worth less than the trust on what he deemed a good two-thirds of the money invested it is investment, 5 Ves. 839. 'insufficient,' and that it is 'bazardous' 9 Bom. 8. C. 333. if it is merely personal, or produces a • Macnamara v. Carey, 1 Ir. Rep., ‘gh rate of interest in proportion to · value.
Eq. Loyd v. Spillet, 3 P. W. 344 . 4 Moore, I. A. 452, even though
sponsible for the loss, destruction or deterioration of the trust-property.
Illustrations. (a) A, living in Calcutta, is a trustee for B, living in Bombay. A remits trust-funds to B by bills drawn by a person of undoubted credit in favour of the trustee as such, and payable at Bombay. The bills are dishonoured. A is not bound to make good the loss”.
(6) A, a trustee of leasehold property, directs the tenant to pay the rents on account of the trust to a banker, B, then in credit. The rents are accordingly paid to B, and A leaves the money with B only till wanted. Before the money is drawn out, B becomes insolvent. A, having had no reason to believe that B was in insolvent circumstances, is not bound to make good the loss ?.
(c) A, a trustee of two debts for B, releases one and compounds the other, in good faith, and reasonably believing that it is for B's interest to do so. A is not bound to make good any loss caused thereby to B
(d) A, a trustee directed to sell the trust-property by auction, sells the same, but does not advertise the sale and otherwise fails in reasonable diligence in inviting competition. A is bound to make good the loss caused thereby to the beneficiary'.
(e) 4, a trustee for B, in execution of his trust, sells the trustproperty, but from want of due diligence on his part fails to receive part of the purchase-money. A is bound to make good the loss thereby caused to B'.
(f) 1, a trustee for B of a policy of insurance, has funds in hand for payment of the premiums. A neglects to pay the premiums, and the policy is consequently forfeited. A is bound to make good the loss to B.
(9) A bequeaths certain moneys to B and C as trustees and authorizes them to continue trust-moneys upon the personal security of a certain firm in which A had himself invested them. A dies, and a change takes place in the firm. B and C must not permit the moneys to remain upon the personal security of the new firm?
(k) A, a trustee for B, allows the trust to be executed solely by his co-trustee, C. C misapplies the trust-property. A is personally answerable for the loss resulting to B
of a wasting able pro
16. Where the trust is created for the benefit of several Conversion
of perish. persons in succession, and the trust-property
perty. Burge, Comm. iii. 967, 968. Beav. 603, where the trustees, having · Grant on Bankers, 4th ed. 276. no funds available, were not liable for • Blue v. Marshall, 3 P. W. 381. the loss.
Ord v. Noel, 5 Maddock, 440. ? Cummins v. Cummins, 3 Jones & • Mayer v. Murray,47 L.J., Ch.605.
nature or a future or reversionary interest, the trustee is bound, unless an intention to the contrary may be inferred from the instrument of trust, to convert the property into property of a permanent and immediately profitable character.
Illustrations. (a) A bequeaths to B all his property in trust for C during his life, and on his death for D, and on D's death for E. A's property consists of three leasehold houses, and there is nothing in A's will to show that he intended the houses to be enjoyed in specie. B should sell the houses, and invest the proceeds in accordance with section 20.
(6) A bequeaths to B his three leasehold houses in Calcutta and all the furniture therein in trust for C during his life, and on his death for D, and on D's death for E. Here an intention that the houses and furniture should be enjoyed in specie appears
clearly, and B should not sell them. Trustee 17. Where there are more beneficiaries than one, the trustee to be impartial
. is bound to be impartial, and must not execute the trust for the advantage of one at the expense of another?
Where the trustee has a discretionary power, nothing in this section shall be deemed to authorize the Court to control the exercise reasonably and in good faith of such discretion.
Illustration. A, a trustee for B, C and D, is empowered to choose between several specified modes of investing the trust-property. A in good faith chooses one of these modes. The Court will not interfere, although the result of the choice may be to vary the relative rights
of B, C and D 3. Trustee to 18. Where the trust is created for the benefit of several prevent active
persons in succession and one of them is in possession of the waste. trust-property, if he commits, or threatens to commit, any act
which is destructive or permanently injurious thereto, the
trustee is bound to take measures to prevent such act *. Accounts 19. A trustee is bound (a) to keep clear and accurate and information. accounts of the trust-property 5, and (6), at all reasonable times,
1 if any. See Morgan v. Morgan, 14 tion, Kerr, On Injunctions, and ed. 79. Beav. 82 : Craig v. Wheeler, 29 L. J., The trustee is not responsible for N.S., Ch. 374, 376.
suffering permissive waste, Powys F. · Ellis v. Barker, 7 Ch. App. 104. Blagrave, Kay, 495 : 4 De G. M. & G.
3 Minet v. Leman, 7 De G. M. & G. 448, unless of course there is a special 351 : Dart, 89.
clause of management. • Such as, e.g. suing for an injunc- 5 Springettv. Dashwood, a Giff. 521.
at the request of the beneficiary, to furnish him with full and accurate information as to the amount and state of the trustproperty
20. Where the trust-property consists of money and can- Investment not be applied immediately or at an early date to the purposes
money. of the trust, the trustee is bound (subject to any direction contained in the instrument of trust) to invest the money on the following securities, and on no others :
(a) in promissory notes, debentures, stock or other securities of the Government of India, or of the United Kingdom of Great Britain and Ireland ;
() in bonds, debentures and annuities charged by the Imperial Parliament on the revenues of India;
(c) in stock or debentures of, or shares in, Railway or other Companies the interest whereon shall have been guaranteed by the Secretary of State for India in Council;
(d) in debentures or other securities for money issued by, or on behalf of, any municipal body under the authority of any Act of a legislature established in British India ;
(e) on a first mortgage of immoveable property situate in British India : Provided that the property is not a leasehold for a term of years and that the value of the property exceeds by one-third, or, if consisting of buildings, exceeds by onehalf, the mortgage-money; or
(f) on any other security expressly authorized by the instrument of trust, or by any rule which the High Court may from time to time prescribe in this behalf.
Provided that, where there is a person competent to contract and entitled in possession to receive the income of the trust-property for his life, or for any greater estate, no investment on any security mentioned or referred to in clauses (d), (e) and () shall be made without his consent in writing.
21. Nothing in section 20 shall apply to investments Mortgage made before this Act comes into force, or shall be deemed to
pledged to preclude an investment on a mortgage of immoveable property Governalready pledged as security for an advance under the Land ment under Improvement Act, 1871, or, in case the trust-money does not of 1871.
i Clarkev. Earl of Ormonde, Jac, 120. Macleod v. Annesley, 16 Beav.6co.