EXECUTORS AND ADMINISTRATORS.

68. A trader by his will empowers his executors to carry on his business for the benefit of his infant children. Upon his death the executors accordingly continue the business. What are the rights and liabilities of the executors in respect of profit arising from and losses incurred in such trading?

The executors have a discretion in such a case to carry on or sell the business. If they consider that to carry on the business it would really benefit the infants, they should do so. The executors having determined to carry on the business will have to account for all profits received by them whilst doing so, and will not, in the absence of a special direction being contained in the will, be entitled to retain any sum so received by them for their own use, except to the value of any moneys paid out of their own pocket. (Robinson v. Pett, Haynes's Student's Leading Cases, 312.) As to the loss, the executors ostensibly carrying on the business will be liable to the debts they may thereby incur as fully as if they were carrying on the trade for their own benefit. (Williams on Personal Property, 11th ed., 367, 368.) If the will provides a fixed fund for the carrying on of the business, as is usually the case, although the executors are personally liable, as just stated, for the debts, they have a right to resort for indemnity to the fund so provided, but to no other part of the estate, and the creditors are entitled to stand in the place of the executors, and to have the benefit of their rights so as to obtain payment of their debts. This rule does not apply where a sole executor is indebted to the estate, as then he has no claim for indemnity until he has made good his default, and then the creditors are in no better position. (Re Johnson, Shearman v. Robinson, 49 L. J. Ch. 745; L. R. 12 Ch. D. 548.)

69. A. is indebted to B. for money lent, and is also indebted to the firm of which B. is a partner for goods supplied; A. dies, having made a will, of which he has appointed B. executor. His estate is found to be insolvent. Has B. any and what advantage over the general creditors in respect to the debt due to himself and his firm, or either of them?

B., by virtue of his appointment as executor, has one advantage from his office, and that is, he can retain out of any assets received by him as executor such debts as are due to him or to any firm of which he is a member out of the legal assets and as against all creditors in equal degree, provided such other creditors have not, by having obtained a personal judgment against the executor, secured to themselves a priority in the payment of their claims. (See 2 Williams on Executors, 6th ed., 971; Lee v. Nuttall, L. R. 12 Ch. D. 61; Re Morris, L. R. 10 Ch. App. 68.) This right is unaffected by the Judicature Act, 1875, sect. 10. (Richmond v. White, 48 L. J. R. Ch. 798; L. R. 12 Ch. D. 321.)

EXECUTORY BEQUESTS.

70. What is the effect of a bequest of leaseholds for years to A. for life, and after his decease to B. and the heirs of his body, and in case of the death of B. without issue, to C.? Also of a bequest of similar property to A. for life, and after his decease to his eldest son (not then born) and the heirs of his body, and in default of such issue to C., supposing (1) that A. subsequently had a son, (2) that A. never had a son?

In the first case, A. takes an estate for life, or rather is entitled to keep the leaseholds during his lifetime, and the residue of the term then existing will devolve upon B. absolutely, for words which would confer an estate tail in real estate give an absolute interest in personal estate. C. will take nothing in that case, because no second absolute limitation of personalty can be of any effect. Such a limitation of realty can only be effectual when it is valid as an executory interest.

In the second case, A. takes also an estate for life, or rather is entitled to keep the leaseholds during his lifetime, and on his death the existing residue therein will in event (1) devolve upon A.'s sor, for the reasons and upon the same grounds as stated above in the first case, and will in event (2) devolve upon C. absolutely; for

in the first case C. could not take anything, because there his was an absolute interest limited to him after another absolute interest made in favour of an existing person (i.e. B.) in the same personal property; in the latter case, if A. never had a son there is, it is true, an absolute interest limited before C.'s interest, but in favour of a non-existing person, which is ineffectual. (See Leventhorpe v. Ashbie, Tud. L. C. Conv. 763; Haynes's Student's L. C. 193.)

FAMILY COMPROMISES.

71. On the death of A., intestate, B. his first cousin and C. his second cousin agree in writing (before his next of kin are ascertained) that they will share equally what may come to them from A.'s estate. Apply to this case the rules which govern the Court in supporting or setting aside family arrangements.

The law clearly gives all the personalty to B., if there are no other relations of A. than B. and C., and C. during B.'s lifetime has no legal right to any part of A.'s estate. However, the Court would support such an agreement, unless C. had induced B. to execute it under a misrepresentation wilfully made, or by an artifice or fraud, on the ground that it is a fair compromise entered into by B. and C. to preserve harmony and affection between them, being members of the same family, and to prevent doubts and disputes which might otherwise arise, for, as a fact, they did not know that either would come into anything at the time the agreement was entered into. The Court will, sometimes, support family compromises, though they rest on grounds which would not have been considered satisfactory if the transaction had occurred between mere strangers. There must, however, be a full disclosure by each and all of them of all the material circumstances known to each and all of them. The intention of the parties and the circumstances of each case naturally influence the Court. To uphold them, there must be no taint of fraud, and no mistake as technically understood. (H. A. Smith's Equity, 182; Stapilton v. Stapilton, 2 Wh. & Tud. L. C. Eq. 836; Gordon v. Gordon, 3 Swanston's Rep. 400; Haynes's Student's L. C. 197.)

FRAUD.

72. Can an infant or married woman be made responsible for fraud, misrepresentation, or concealment; and, if so, under what circumstances, and upon what principles? Does mere silence ever amount to fraud?

An infant or married woman can be made responsible for their fraud, fraudulent misrepresentation, or fraudulent concealment, notwithstanding their infancy or coverture respectively, on the principle that no person can take advantage of his own wrongful act or omission, though in practice it is impossible to do so directly. They can be, and are, made responsible indirectly by the Court preventing them from recovering or deriving any benefit from their own fraud, &c., and in the case of a married woman the Court can, though there are no reported cases directly in point, be compelled out of her separate estate (if any) to make compensation for any injury done to other persons through her fraud, &c., and such a woman might before the Married Women's Property Act, 1882, have lost any equity to a settlement which she might otherwise have had but for her fraud; as, for instance, fraudulently concealing her marriage to an intending purchaser of property subject to such equity. (See Savage v. Foster, 2 Wh. & Tud. L. C. Eq. 620; Haynes's Student's Leading Cases, 199.) In certain circumstances silence may be as fraudulent and fatal as falsehood.

The matter concealed, to amount to a fraud, must, however, be— (1.) A material fact;

(2.) The concealment of which was instrumental in bringing about the injurious act complained of by the other party; and

(3.) The fact concealed must be one which the party concealing it was under some legal or equitable obligation to disclose to the other party. (See H. A. Smith's Equity, 142.)

73. A. brings an action of deceit in the Chancery Division, alleging that he has been induced by fraud to purchase shares in a company. What must he prove to succeed? Will it suffice if he

proves facts which would entitle him to succeed in an action to rescind the purchase, on the ground that the rules of equity ought to prevail?

"An action of deceit " (says Cotton, L.J., in Arkwright v. Newbold, 50 L. J. Ch. 376) "must be decided on the same principles whether brought in the Chancery or any other division. There

is, in my opinion, no equitable action for deceit. It is a common law action, to be decided, wherever brought, on common law principles. In such an action it is necessary to prove that a statement has been made which, to the knowledge of the person making it, was false, or which was made by a person with such recklessness as to make him liable, just as if he knew it to be false, and that the plaintiff acted to his prejudice or damage on the statement made."

A. must therefore prove, to succeed: (1) the falsity of the prospectus in a material respect; (2) that he was misled thereby; and (3) has sustained damage thereby. However true it may have been formerly that in a Court of Equity a plaintiff could more easily succeed, or could succeed with lighter evidence of the defendant's guilt, it does not apply now, for by the Judicature Act, 1873, every branch of the High Court is made a Court of Law as well as a Court of Equity.

It will not suffice if he proves facts which would entitle him to succeed in an action on an equitable ground,-as, for instance, that his signature was obtained under duress, or when suffering under a delusion which was taken advantage of by the other party, or when a fiduciary relation existed between the parties, and all independent advice was excluded, for as James, L.J., in Arkright v. Newbold, supra, points out, such cases stand by themselves, and are entirely distinct from a case of common law deceit. (See also the recent important decisions in Redgrave v. Hurd, 51 L. J. Ch. 113, and Smith v. Chadwick, 51 L. J. Ch. 597.)

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