by another. that such other person did not intend to pay or provide such consideration paid consideration for the benefit of the transferee, the transferee must hold the property for the benefit of the person paying or providing the consideration 1. Nothing in this section shall be deemed to affect the Code of Civil Procedure, section 317, or Act No. XI of 1859 (to improve the law relating to sales of land for arrears of revenue in the Lower Provinces under the Bengal Presidency), section 36. execution 83. Where a trust is incapable of being executed, or where Trust inthe trust is completely executed without exhausting the trust- capable of property, the trustee, in the absence of a direction to the con- or executed trary, must hold the trust-property, or so much thereof as is exhausting unexhausted, for the benefit of the author of the trust or his trustlegal representative 2. Illustrations. (a) A conveys certain land to B upon trust,' and no trust is declared; or upon trust to be thereafter declared,' and no such declaration is ever made; or upon trusts that are too vague to be executed; or upon trusts that become incapable of taking effect; or ' in trust for C,' and C renounces his interest under the trust. In each of these cases B holds the land for the benefit of A3. (b) A transfers Rs. 10,000 in the four per cents. to B, in trust to pay the interest annually accruing due to C for her life. A dies. Then C dies. B holds the fund for the benefit of A's legal representative. (c) A conveys land to B upon trust to sell it and apply one moiety of the proceeds for certain charitable purposes, and the other for the maintenance of the worship of an idol. B sells the land, but the charitable purposes wholly fail, and the maintenance of the worship does not exhaust the second moiety of the proceeds. B holds the first moiety and the part unapplied of the second moiety for the benefit of A or his legal representative". (d) A bequeaths Rs. 10,000 to B, to be laid out in buying land to be conveyed for purposes which either wholly or partially fail 16 Moore, I. A. 53. A and his son B, two Hindús, live together as an undivided family. B buys a house with funds forming part of the family property, and has it transferred to himself. There is nothing to show that A intended that the purchase should be made for the sole benefit of B. B holds the house for the benefit of A and himself, Suth. 1864, Civ. R. 103. The presumption 2 2 Bom. 410. Cooke v. Stationers Co., 3 My. & K. 264, 265. 3 See Lewin, 148, for the cases from which these illustrations are taken. Here the English rule (Lewin, 161,162) is intentionally departed from. without property. Transfer purpose. to take effect. B holds for the benefit of A's legal representative the undisposed of interest in the money or land if purchased'. 84. Where the owner of property transfers it to another for illegal for an illegal purpose and such purpose is not carried into execution, or the transferor is not as guilty as the transferee, or the effect of permitting the transferee to retain the property might be to defeat the provisions of any law, the transferee must hold the property for the benefit of the transferor2. Bequest purpose. 85. Where a testator bequeaths certain property upon trust for illegal and the purpose of the trust appears on the face of the will to be unlawful, or during the testator's lifetime the legatee agrees with him to apply the property for an unlawful pur pose, the legatee must hold the property for the benefit of the testator's legal representative 3. Bequest of which is prevented. Transfer Where property is bequeathed and the revocation of the revocation bequest is prevented by coercion 4, the legatee must hold the property for the benefit of the testator's legal representative. 86. Where property is transferred in pursuance of a conpursuant to tract which is liable to rescission or induced by fraud or contract. mistake, the transferee must, on receiving notice to that effect, hold the property for the benefit of the transferor, subject to repayment by the latter of the consideration actually paid. rescindable Debtor 87. Where a debtor becomes the executor or other legal becoming creditor's representative of his creditor, he must hold the debt for the represen- benefit of the persons interested therein 5. tative. Advantage gained by fiduciary. 88. Where a trustee, executor, partner, agent, director of a company, legal adviser, or other person bound in a fiduciary character to protect the interests of another person, by availing himself of his character, gains for himself 10 any pecuniary advantage, or where any person so bound enters into any dealings under circumstances in which his own interests are, or may be, adverse to those of such other person and thereby gains for himself a pecuniary advantage, he must hold for the benefit of such other person the advantage so gained1. Illustrations. (a) A, an executor, buys at an undervalue from B, a legatee, his claim under the will. B is ignorant of the value of the bequest. A must hold for the benefit of B the difference between the price and value. (b) A, a trustee, uses the trust-property for the purpose of his own business. A holds for the benefit of his beneficiary the profits arising from such user. (c) A, a trustee, retires from his trust in consideration of his successor paying him a sum of money. A holds such money for the benefit of his beneficiary. (d) A, a partner, buys land in his own name with funds belonging to the partnership. A holds such land for the benefit of the partnership. (e) 4, a partner, employed on behalf of himself and his copartners in negotiating the terms of a lease, clandestinely stipulates with the lessor for payment to himself of a lákh of rupees. A holds the lakh for the benefit of the partnership2. (f) A and B are partners. A dies. B, instead of winding up the affairs of the partnership, retains all the assets in the business. B must account to A's legal representative for the profits arising from A's share of the capital. (g) 4, an agent employed to obtain a lease for B, obtains the lease for himself. A holds the lease for the benefit of B. (h) A, a guardian, buys up for himself incumbrances on his ward B's estate at an undervalue. A holds for the benefit of B the incumbrances so bought, and can only charge him with what he has actually paid3. exercise of influence. 89. Where, by the exercise of undue influence, any ad- Advantage vantage is gained in derogation of the interests of another, gained by the person gaining such advantage without consideration, or undue with notice that such influence has been exercised, must hold the advantage for the benefit of the person whose interests have been so prejudiced ". 1 In L. R. 4 I. A. 84 the Judicial Committee thought that a custom permitting the sale of a trusteeship for the pecuniary advantage of the trustee would be bad in law. See Sugden v. Crossland, 3 Sm. & G. 192, 2 Fawcett v. Whitehouse, 1 R. & 3 Powell v. Glover, 3 P. W. 251 n. Maitland v. Irving, 15 Sim. 43. owner. Advantage 90. Where a tenant for life, co-owner, mortgagee1 or other gained by qualified qualified owner of any property, by availing himself of his position as such, gains an advantage in derogation of the rights of the other persons interested in the property, or where any such owner, as representing all persons interested in such property, gains any advantage, he must hold, for the benefit of all persons so interested, the advantage so gained, but subject to repayment by such persons of their due share of the expenses properly incurred, and to an indemnity by the same persons against liabilities properly contracted, in gaining such advantage2. Illustrations. (a) A, the tenant for life of leasehold property, renews the lease in his own name and for his own benefit. A holds the renewed lease for the benefit of all those interested in the old lease 3. (b) A village belongs to a Hindú family. A, one of its members, pays nazrána to Government and thereby procures his name to be entered as the inámdár of the village. A holds the village for the benefit of himself and the other members. (c) A mortgages land to B, who enters into possession. B allows the Government revenue to fall into arrear with a view to the land being put up for sale and his becoming himself the purchaser of it. The land is accordingly sold to B. Subject to the repayment of the amount due on the mortgage and of his expenses properly incurred as mortgagee, B holds the land for the benefit of A1. Property 91. Where a person acquires property with notice that acquired with notice another person has entered into an existing contract affecting of existing that property, of which specific performance could be enforced, the former must hold the property for the benefit of the latter to the extent necessary to give effect to the contract 5. contract. 1 Where a mortgagee, in execution of a simple decree for money, the repayment of which is secured by mortgage, attaches and sells the mortgagor's right to redeem, and purchases that right himself, he holds the right as a trustee for the mortgagor, 5 Ben. 450, 460. That a mortgagee is not a constructive trustee for the mortgagor of his power of sale (supra, p. 782), see Warner v. Jacob, 20 Ch. Div. 220. 2 Where the interest acquired by the qualified owner is distinct from, and not in substitution of, the property, see Randall v. Russell, 3 Mer. 190. 3 Eyre v. Dolphin, 2 B. & B. 290. 92. Where a person contracts to buy property to be held Purchase on trust for certain beneficiaries and buys the property acby person contracting cordingly, he must hold the property for their benefit to the to buy proextent necessary to give effect to the contract. perty to be held on trust. the secretly gained by 93. Where creditors compound the debts due to them, and Advantage one of such creditors, by a secret arrangement with debtor, gains an undue advantage over his co-creditors, he commust hold for the benefit of such creditors the advantage so creditors. gained. pounding tive trusts 94. In any case not coming within the scope of any of the Construcpreceding sections, where there is no trust, but the person in cases not having possession of property has not the whole beneficial expressly interest therein, he must hold the property for the benefit of for. provided the persons having such interest, or the residue thereof (as the case may be), to the extent necessary to satisfy their just demands 1. Illustrations. (a) 4, an executor, distributes the assets of his testator B to the legatees without having paid the whole of B's debts. The legatees hold for the benefit of B's creditors, to the extent necessary to satisfy their just demands, the assets so distributed 2. (b) A by mistake assumes the character of a trustee for B, and under colour of the trust receives certain money. B may compel him to account for such moneys 3. (c) A makes a gift of a lákh of rupees to B, reserving to himself, with B's assent, power to revoke at pleasure the gift as to Rs. 10,000. The gift is void as to Rs. 10,000, and B holds that sum for the benefit of A. 17 All. 25. Sec. 94 would include the case of the widow or some other member of the family of a missing person having possession of his estate, 2 Agra, Civ. Court Ap. 78. It would also seem to include the case of a wrongful invasion or continuance in possession of a stranger, whether with or without knowledge of the infirmity of his title. In such case, however, the Madras High Court held that the wrongdoer was not a constructive trustee unless he had been admitted into possession by a trustee so as to be affected by the trust, 5 Mad. 91, 105. Sec. 94 would include the case of a Hindú executor who, by the will, is made an express trustee for 2 Wis. Exors., 8th ed. 1457, 1458. * See the Transfer of Property Act, sec. 126, supra, p. 811. 5 As to the case of an absent co-sharer, see 3 All. 458. |