Deposit in exceed three thousand rupees, a deposit thereof in a Government Savings Bank. Savings Bank. Sale by directed to 22. Where a trustee directed to sell within a specified time trustee extends such time, the burden of proving, as between himself sell within and the beneficiary, that the latter is not prejudiced by the extension lies upon the trustee, unless the extension has been authorized by a principal Civil Court of original jurisdiction1. Illustration. specified time. Liability for breach of trust. A bequeaths property to B, directing him with all convenient speed and within five years to sell it, and apply the proceeds for the benefit of C. In the exercise of reasonable discretion, B postpones the sale for six years. The sale is not thereby rendered invalid, but C, alleging that he has been injured by the postponement, institutes a suit against B to obtain compensation. In such suit the burden of proving that C has not been injured lies on B. 23. Where the trustee commits a breach of trust, he is liable to make good the loss which the trust-property or the beneficiary has thereby sustained, unless the beneficiary has by fraud induced the trustee to commit the breach, or the beneficiary, being competent to contract, has himself, without coercion 3 or undue influence 3 having been brought to bear on him, concurred in the breach, or subsequently acquiesced therein, with full knowledge of the facts of the case and of his rights as against the trustee 4. A trustee committing a breach of trust is not liable to pay interest except in the following cases : (a) where he has actually received interest: () where the breach consists in unreasonable delay in paying trust-money to the beneficiary: (c) where the trustee ought to have received interest, but has not done so : (d) where he may be fairly presumed to have received interest 5. He is liable, in case (a), to account for the interest actually received, and, in cases (b), (c) and (d), to account for simple 1 Dart, i. 58. 2 Pearce v. Gardner, 10 Hare, 287. Walkerv.Symonds, 3 Swanst. 1.64. as where he has traded with the trust-money, Penny v. Avison, 3 Jur. N. S. 62. interest at the rate of six per cent. per annum, unless the Court otherwise directs 1. (e) Where the breach consists in failure to invest trustmoney and to accumulate the interest or dividends thereon, he is liable to account for compound interest (with half-yearly rests) at the same rate 2. (f) Where the breach consists in the employment of trustproperty or the proceeds thereof in trade or business, he is liable to account, at the option of the beneficiary, either for compound interest (with half-yearly rests) at the same rate, or for the nett profits made by such employment. Illustrations. (a) A trustee improperly leaves trust-property outstanding, and it is consequently lost: he is liable to make good the property lost, but he is not liable to pay interest thereon 3. (b) A bequeaths a house to B in trust to sell it and pay the proceeds to C. B neglects to sell the house for a great length of time, whereby the house is deteriorated and its market-price falls. B is answerable to C for the loss 1. (c) A trustee is guilty of unreasonable delay in investing trustmoney in accordance with section 20, or in paying it to the beneficiary. The trustee is liable to pay interest thereon for the period of the delay. (d) The duty of the trustee is to invest trust-money in any of the securities mentioned in section 20, clause (a), (b), (c) or (d). Instead of so doing, he retains the money in his hands. He is liable, at the option of the beneficiary, to be charged either with the amount of the principal money and interest, or with the amount of such securities as he might have purchased with the trust-money when the investment should have been made, and the intermediate dividends and interest thereon 5. (e) The instrument of trust directs the trustee to invest trustmoney either in any of such securities or on mortgage of immoveable property. The trustee does neither. He is liable for the principal money and interest. (f) The instrument of trust directs the trustee to invest trustmoney in any of such securities and to accumulate the dividends thereon. The trustee disregards the direction. He is liable, at the option of the beneficiary, to be charged either with the amount of the principal money and compound interest, or with the amount of No set-off allowed to trustee. Prede cessor's default. Co-trustee's default. such securities as he might have purchased with the trust-money when the investment should have been made, together with the amount of the accumulation which would have arisen from a proper investment of the intermediate dividends 1. (g) Trust-property is invested in one of the securities mentioned in section 20, clause (a), (b), (c) or (d). The trustee sells such security for some purpose not authorized by the terms of the instrument of trust. He is liable, at the option of the beneficiary, either to replace the security with the intermediate dividends and interest thereon, or to account for the proceeds of the sale with interest thereon. (h) The trust-property consists of land. The trustee sells the land to a purchaser for a consideration without notice of the trust. The trustee is liable, at the option of the beneficiary, to purchase other land of equal value to be settled upon the like trust, or to be charged with the proceeds of the sale with interest 2. 24. A trustee who is liable for a loss occasioned by a breach of trust in respect of one portion of the trust-property cannot set-off against his liability a gain which has accrued to another portion of the trust-property through another and distinct breach of trust 3. 25. Where a trustee succeeds another, he is not, as such, liable for the acts or defaults of his predecessor. 26. Subject to the provisions of sections 13 and 15, one trustee is not, as such, liable for a breach of trust committed by his co-trustee 1 : Provided that, in the absence of an express declaration to the contrary in the instrument of trust 5, a trustee is so liable(a) where he has delivered trust-property to his co-trustee without seeing to its proper application : (b) where he allows his co-trustee to receive trust-property and fails to make due enquiry as to the co-trustee's dealings therewith, or allows him to retain it longer than the circumstances of the case reasonably require : (c) where he becomes aware of a breach of trust committed or intended by his co-trustee, and either actively conceals it or does not within a reasonable time take proper steps to protect the beneficiary's interest. 1 See Pride v. Fooks, 2 Beav. 430. 2 Compare the Specific Relief Act, sec. 12, ill. (a), which is repealed wherever the Trusts Act is in force. 3 Wiles v. Gresham, 2 Drew. 258,271. * Lewin, 263. 5 See Wilkins v. Hogg, 3 Giff. 116. That a Hindú trustee, who, having 1 A co-trustee who joins in signing a receipt for trust- Joining in receipt property and that he has not received the same 1 is not proves for conanswerable, by reason of such signature only, for loss or formity. misapplication of the property by his co-trustee. Illustration. A bequeaths certain property to B and C, and directs them. to sell it and invest the proceeds for the benefit of D. B and C accordingly sell the property, and the purchase-money is received by B and retained in his hands. C pays no attention to the matter for two years and then calls on B to make the investment. B is unable to do so, becomes insolvent, and the purchase-money is lost. C may be compelled to make good the amount2. of co 27. Where co-trustees jointly commit a breach of trust, or Several where one of them by his neglect enables the other to commit liability a breach of trust, each is liable to the beneficiary for the trustees. whole of the loss occasioned by such breach3. tion as between But as between the trustees themselves, if one be less Contribuguilty than another and has had to refund the loss, the former may compel the latter, or his legal representative to the extent co-trustees. of the assets he has received, to make good such loss; and if all be equally guilty, any one or more of the trustees who has had to refund the loss may compel the others to contribute 4. Nothing in this section shall be deemed to authorize a trustee who has been guilty of fraud to institute a suit to compel contribution ". trustee 28. When any beneficiary's interest becomes vested in an- Non-liaother person, and the trustee, not having notice of the vesting, bility of pays or delivers trust-property to the person who would have paying been entitled thereto in the absence of such vesting, the trustee notice of is not liable for the property so paid or delivered. without transfer. where 29. When the beneficiary's interest is forfeited or awarded Liability by legal adjudication to Government, the trustee is bound to benehold the trust-property to the extent of such interest for the ficiary's in accepted a trust, remains passive and takes no steps to see the trust carried into execution, is liable for losses arising from the breach of trust of his co-trustee, see 9 Bom. H. C. 333.. 1 Brice v. Stokes, 11 Ves. 319. In the absence of all evidence the effect of a joint receipt is to charge each of the trustees in solido, Lewin, 265. 5 Lingard v. Bromley, I V. & B. terest is forfeited. Indemnity benefit of such person in such manner as the Government may direct in this behalf1. 30. Subject to the provisions of the instrument of trust of trustees. and of sections 23 and 26, trustees shall be respectively chargeable only for such moneys, stocks, funds and securities as they respectively actually receive, and shall not be answerable the one for the other of them, nor for any banker, broker or other person in whose hands any trust-property may be placed, nor for the insufficiency or deficiency of any stocks, funds or securities, nor otherwise for involuntary losses 2. 1 In this section the expressions 'the Government' and 'Government' would doubtless be construed with reference to the Penal Code, sec. 17, supra, p. 94. Act XXVIII of 1866, sec. 37 |