his executors and trustees, to set aside or invest and stand possessed of the sum of 600l., and pay the interest to Elizabeth, Ellen, and Ann Burgess, the three sisters of his late wife, during their lives and the life of the survivor, and after the death of the survivor to pay the said 600l. to his cousin Walter Walker, and in the event of his being dead then to pay the same equally amongst his children; and subject to this and other legacies he gave the whole of his personal estate to his executors. The testator also declared that it should be lawful for the trustees to permit so much of his residuary personal estate as should at his death be required to be invested for the purposes of his will to remain, either in the whole or in part, invested in such investments as he might have at his death; and he empowered his trustees from time to time to call in, sell, and dispose of any such investments and invest as therein mentioned, including mortgages of freeholds.

The testator died on the 5th Oct. 1871, and Elien Burgess, the survivor of the three tenants for life, died on the 26th Dec. 1887. Walter Walker had died in 1872, leaving three children, whose interests were all represented by the plaintiffs, who were absolutely entitled to the‍ 6001. After the testator's death this legacy remained invested (together with another similar legacy of 6001.) in two 4 per cent. debenture bonds for 5007. and 7001. of the South Yorkshire and River Don Company, which formed part of the investments made by the testator himself. bonds were transferred into the joint names of the defendants.

These

In 1880 the plaintiffs applied to the defendants for information as to the manner in which the legacy of 600l. was invested, and on the 7th Oct. 1880 the defendant John Saunders Walker replied that it was invested as above stated.

In Jan. 1881 the plaintiffs, through their solicitor, expressed a desire to have the legacy kept separate; and on the 12th Jan. 1881 J. S. Walker wrote refusing to do so. However, in July 1881, the defendants sold the two bonds for 14867. 08. 8d., and invested 1200l., part thereof, upon two mortgages for 6001. each, at 5 per cent., upon two shops at Tooting. The houses were not finished for habitation at the time, and were unlet. In making the investment the defendants acted upon a report made by Messrs. Brown, which contained a valuation of numerous houses. The defendants had not instructed Messrs. Brown, and knew nothing of them. The security proved insufficient.

The plaintiffs brought this action claiming a declaration that there had been an appropriation of the sum of 600l., or one moiety of 1200l. bond or debenture stock of the South Yorkshire and River Don Company to answer the legacy of 6007.; that the realisation of the bonds and re-investment upon mortgage was improper and a breach of trust; and that they should be ordered to replace the bonds, or pay their present value with interest at 4 per cent. from the 26th Dec. 1887.

The defendants pleaded that the change of investment was made bonâ fide, and the re-investment proper; and that they reasonably believed Messrs. Brown to be able, practical surveyors and valuers, and that they were instructed and employed independently of the owner of the property.

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Warmington, Q.C. and Farwell for the plaintiffs. -The defendants are liable to make good to the plaintiffs the loss arising from the bonds having been parted with. There was, on the evidence, an appropriation of the bonds to satisfy the legacy, and the sale and conversion was therefore improper. Besides, the investment upon the two mortgages was a breach of trust. No proper valuation was made, and the amount advanced exceeded the amount proper for trustees to advance upon such property:

Learoyd v. Whiteley, 58 L. T. Rep. N. S. 93; 12
App. Cas. 727;

Re Salmon; Priest v. Uppleby, 62 L. T. Rep. N. S.
270; 42 Ch. Div. 351.

Sect. 4 of the Trustee Act 1888 does not apply, as the valuation was really made on behalf of the borrowers.

Neville, Q.C. and Bunting for the defendants.— There cannot be said to have been an appropriation for this legacy. Even if there was, the trustees have a power to vary investments, and they may do so to benefit the tenant for life, if the investment is a proper one. We submit that the investment upon the mortgages was within the powers of the trust. A report as to the value was made, and was "reasonably believed" by the trustees to have been made by a valuer instructed and employed independently of the owner. The trustees are thus protected by the 4th section of the Trustee Act 1888. (a) Nor should they be directed to restore the bonds, but merely to make good the sum advanced upon the mortgages in excess of that which would have been a proper advance: (sect. 5 of the Trustee Act 1888.)

Warmington, Q.C. in reply.-The 5th section is inapplicable to an investment which should never have been made at all; it only deals with the amount lent on a security which would in other respects be a proper investment.

KEKEWICH, J.-There are two important questions in this case, one depending on the Act, which has not yet received much judicial construction, and the other depending on the duty of trustees to whom is given what is generally called a trust legacy. I have here a clear and

(a) Sect. 4 (1). No trustee lending money upon the security of any property shall be chargeable with breach of trust by reason only of the proportion borne by the amount of the loan to the value of such property at the time when the loan was made, provided that it shall appear to the court that in making such loan the trustee was acting upon a report as to the value of the property made by a person whom the trustee reasonably believed to be an able practical surveyor or valuer instructed and employed independently of any owner of the property, whether such surveyor or valuer carried on business in the locality where the property is situate or elsewhere, and that the amount of the loan does not exceed two equal third parts of the value of the property as stated in such report, and that the loan was made under the advice of such surveyor or valuer expressed in such report. And this section shall apply to a loan upon any property of any tenure, whether agricultural or house or other property, on which the trustee can lawfully lend.

Sect. 5 (1). Where a trustee shall have improperly advanced trust money on a mortgage security which would at the time of the investment have been a proper investment in all respects for a less sum than was actually advanced thereon, the security shall be deemed an authorised investment for such less sum, and the trustee shall only be liable to make good the sum advanced in excess thereof with interest.

I

simple case of a trust legacy, and one which is made more clear and simple than often is the case, by reason of the residuary gift, which is to the trustees themselves, so that, so long as other trust legacies are properly dealt with, the trustees had only to account with themselves. The legacy is of 600l., which is given, in a very few words, in this way: [His Lordship read the words of the gift in the will and the declaration empowering the trustees to permit the residuary estate to remain as then invested, or to sell and convert.] That sum of 600l. is given to a person for life, and afterwards to the plaintiffs. That particular direction gave the trustees the option of either taking what the testator had left for security, and to appropriate so much of his invested property as was equivalent to 600l., taking care, of course, that it was a good investment in the terms of the trust; or, having converted the whole or part of his estate, to invest some of the proceeds of conversion, to the extent of 600l., in one of the authorised investments. They might have done either. That is the common case. am not prepared to say that, where trustees have several trust legacies of that kind, and have a large sum of debentures or other stock, which is an investment authorised by the will, and one which they consider a good and sufficient trust investment, they may not put aside the entire amount without dividing it into portions, which is practically impossible without a sale, and simply appropriate it in their books; that is to say, if they have three trust legacies of 5001. each and 1500l. stock, I am not prepared to say they may not properly appropriate 500l., one-third of that, say, to Jane and her children, one-third to Mary and her children, and one-third to Elizabeth and her children, in their books. That does not seem to me to be open to the great objections which there are to a contributory mortgage, one only of which objections I dealt with in the case of Webb v. Jonas (58 L. T. Rep. N. S. 882; 39 Ch. Div. 660), because that was sufficient on that occasion. If, on the other hand, the trustees take a different course, and convert the personal estate, and are minded to invest part of the proceeds for the benefit of their trust legatees, then I apprehend their duty is perfectly plain-to invest that particular sum in a particular stock for the benefit of those particular legatees. Then, again, there is not so strong an objection to a contributory investment when there is the same set of trustees for different children and grandchildren as there is when there is a contributory mortgage in the names of two different sets of trustees claiming under two different instruments, which was the case in Webb v. Jonas (ubi sup.). But, although the objection is not strong and not the same altogether, yet I apprehend the trustees who do not invest the sums separately so as to ear-mark them in some way, are committing a breach of trust. That result is avoided frequently as regards investments in the public funds by changing the order of the trustees in the bank-books, so as to make it different stocks. It seems to me to be the duty of the trustees to do one or the other, and conveniently in the first place, but necessarily in the second, there must be an appropriation of a particular investment, ear-marked to that particular trust. The trustees in this case elected, as I think under the terms of the will they were entitled to do, to set apart an

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investment for this particular trust. They say now that they did not; and one question which I have to decide is, whether that is true or not. I have their distinct assertion, signed by one of the trustees (whose authority is not repudiated), in a letter of the 7th Oct. 1880, written in answer to an inquiry by the plaintiffs' solicitors, who were entitled to an answer, that the 6001. legacy was "invested by the trustees, Robert Walker Smith and myself, in the South Yorkshire and North Devon Company." Further correspondence ensued, and eventually the plaintiffs' solicitors insisted on that 600l. being sepa rately invested. As at present advised, I do not think they were strictly entitled to that; but, on the other hand, they did not know how the matter stood exactly. Very little turns on that, except as an excuse on behalf of the trustees, to which I will refer presently. From first to last there was no departure from the original statement, that the 6007, was invested in this way, and possibly they have set apart too much. If so, they were the only persons who could complain of that excess, and they cannot be heard now to allege that, although there might have been a breach of trust against stranger residuary legatees, that is any reason why the appropriation was not good as against themselves. They stated as clearly as possible, and in a way which they cannot repudiate now, that the 600l. was invested in these bonds, and was half of the larger sum of 12001. There is no doubt about that, because in the last letter of the 12th Jan. 1881 Mr. Walker says, "Allow me to inform you that she has only interest to the extent of half in the matter." That was the understanding throughout. As to the first point, it is clear the 600l. was appropriated and invested in that way. Shortly after this correspondence, which ended by the solicitors insisting on a separate investment, the trustees, for some reason or other which it is difficult to ascertain, realised those bonds, and invested, not the proceeds of sale, but 12001., on mortgage. The time for appropriation was gone for the best of all reasons, namely, that the appropriation had been made once for all. However, they did invest only the 12001. I have been endeavouring to find out why that was done, and a great many reasons, but by no means consistent with each other, have been suggested, and I do not think any of them are satisfactory. The first reason, and the one the trustees now seem to prefer, is that the solicitors, Messrs. Dibb and Co., had been importuning them, so that they thought they had better comply with their request; that they had looked into the matter, and that it would be better to invest this 6007. separately, and do in fact what was wished. But they did not invest it separately. If that was their object, they took the worst means to accomplish it, because they invested 12001. Although it is true they invested two sums of 600l. on two mortgages, they took no means to sever one from the other, so as to say that one belonged to one trust and the other to the other. If that was their reason, they entirely failed to accomplish their object. One would have thought that there was another reason, one that Mr. Neville has fairly argued might have entered into their heads as a good reason, namely, that by changing the investment they would have increased the income of the tenant for life; and, so long as they exercised their powers honestly, I

should not find fault with trustees who sold out stock, and who invested the money on a good trust mortgage for the purpose of getting, and thereby getting, an increased income for the tenant for life. Whether 31. per annum was enough increase to justify the change I will not pause to inquire, but one of the trustees told me distinctly that that had nothing to do with it; he never considered whether it would increase the income of the tenant for life; and my conclusion is, that it had nothing to do with the change of investment. I do not believe that that was the object at all. Somebody suggested a mortgage. It does not seem to have come from Messrs. Learoyd in the first instance, upon the evidence before me, but from the trustees talking it over. What they said, and why they thought of this, has not been explained. Messrs. Learoyd had instructions to find a good security. When those instructions were given, how, and for what purpose, is all left in the dark. That is an unsatisfactory way of dealing with trust property. My conclusion is, without using the word in an offensive sense, that this was a wanton change of investment-one which the circumstances of the case did not require, and one for which the trustees had not themselves any good and sufficient reason. However, the change was made; the bonds were realised, and the 12007. invested on two mortgages of 6001. each. It is immaterial to this part of the case whether they ought or not to have made the change. Now, I have to consider whether, having the money in their hands, they ought properly to have invested it as they did? In the first place, I need hardly repeat that it was improper to invest the two sums of 6007. in such a way that they really made 12001., so that the plaintiffs have to go against two mortgages instead of one. They cannot lay their hands on their own 600l., half of the proceeds. That is a question of non-investment and loss rather than of an improper investment. What did they do? They instructed Messrs. Learoyd to find good security, and Messrs. Learoyd laid before them some valuation by Messrs. Brown. Now Messrs. Brown were not instructed by the trustees. The trustees knew nothing about them, and I do not know that they ever saw them. I should think probably they did not. The money was invested in this way, and the question is, whether it comes within the Trustee Act. It is admitted to be an insufficient security now, whatever it was then. It was a security on unfinished houses-houses which were not properly a trust security, and, even if they were so, it was not a commendable transaction on the part of the trustees. I need not pursue it further, because I think the change was wrong, and therefore whether the second investment was wrong or not is comparatively of little importance as regards the character of it. As regards the Act of Parliament, if the transaction is saved by the Act, that may make a great difference. There are two sections of the Act to be considered, and they are entirely separate. One is the 4th section, by which a trustee is indemnified if "in making such loan the trustee was acting upon a report as to the value of the property made by a person whom the trustee reasonably believed to be an able practical surveyor or valuer, instructed and employed independently of any owner of the

[CHAN. DIV.

property." Then, further down, it says, or “that the loan was made under the advice of such surveyor or valuer expressed in such report." Now, this report does not suggest a loan, and does not advise one on this property. It is about divers others properties as well as this, and advises a loan on the whole of the property taken together, which is an entirely different thing from a loan on one or two of the houses. As regards these two houses, there is no value put on them either separately or together, and, seeing that their estimated rents are different, one would have expected the estimated value to be different, and the amount that might be lent on mortgage to be different; so that the case is not within the purview of the Act as regards that. There is the report of a surveyor, and I take him to be an able and practical surveyor; but I cannot take it, upon the evidence, that the trustees believed him to be an able and practical surveyor, because they knew nothing about it. The surveyor was certainly not employed or instructed independently of the owner at least that has not been proved-nor by the trustees, and I cannot adopt the construction that the words "reasonably believed" apply to instructing and employing, as suggested by Mr. Neville. I do not think they do grammatically, or that that is the right construction. Therefore the case is not within the 4th section. Then, as regards the 5th section of the Act, a different question arises. That is a beneficial section, the object of which 18 to provide that, when a trustee has advanced more money on mortgage of the property than was reasonably prudent, and the estate fails, then he is not to be chargeable with the whole, but only with so much as would have been a loss if you take the real value at the time of investment, not the value he put upon it. That is the substance of it. Supposing, for instance, a man invests 1001. on property that would bear only 801.; he is not to lose the whole 1001. because of that. That is a reasonable provision on behalf of trustees. But the whole section depends on this:

When a trustee shall have improperly advanced trust money on a mortgage security which would, at the time of the investment, have been a proper investment in all respects for a less sum than was actually advanced thereon." That I understand to mean that the impropriety consists in the amount invested. If the investment is otherwise improper—as, for instance, if a man invests on mortgage of trade buildings when he is only entitled to invest on mortgage of agricultural laud-he cannot claim the benefit of the section, and say, "I might take the value at two-thirds of the advance, although not the whole." He must establish the propriety of the investment independently of value, and then he has the benefit of the section to save him from any loss greater than that which would have been incurred by advancing too large a sum on what otherwise would be a proper security. That section therefore does not apply. The result is that the trustees ought not to have sold these bonds; they sold them without excuse, and must make the amount good. so that the plaintiffs are absolutely protected. I see no reason to direct the trustees to repurchase the bonds. They must account to the plaintiffs for the value of the bonds sold as at this time, and as from the 31st Dec. 1887 they must also account. I take the 31st Dec. 1887, because the

26th is so near the half-year that it is not worth while to make the proportionate division. They must also account for the interest the bonds would have earned-interest on the 600l. at 4 per cent. That is until to-day. From to-day there will be an order on them to make good that sum, and, as regards the interest, that will follow the usual rule in such cases. There will be judgment for that sum. If there is any question about the exact sum, there must be an account; and the trustees must pay the costs of the action. Solicitors for the plaintiffs, Paterson, Snow, and Bloxam, for Dibb and Co., Leeds.

Solicitors for the defendant, Learoyd and James, for Learoyd and Simpson, Huddersfield.

S. entered into a written agreement of service with W. and Co., who were general drapers, haberdashers, &c., and agreed not to " engage in a similar business within half a mile of W.'s premises for six months after leaving the same. S. left W's service, being at the time buyer in one of the departments at a fixed salary, and almost immediately entered the service of a rival esta blishment of universal purveyors next door, where he was appointed to a salaried post in a precisely similar department.

Held that, without precisely defining the meaning

of the words " engage in business," the defendant had done that which the agreement intended he should not do, and an injunction must be granted.

THIS was a motion by Watts and Co., who carried on business at Compton House, Liverpool, as general drapers, haberdashers, and house furnishers, for an injunction to restrain the defendant, David Smith, from engaging in any business similar to that carried on by the plaintiffs, within half a mile of Compton House. The defendant had been in the plaintiffs' employment since 1882, and on the 14th July 1885 he entered into a written agreement for service with the plaintiffs upon certain terms and at a salary therein mentioned, and he agreed not to engage in a similar business within half a mile of Compton House for six months after leaving the said Watts and Co. The agreement also contained a clause by which the engagement could be termi nated by either party thereto on giving a week's notice to the other.

On the 26th Feb. 1890 the. defendant gave a week's notice and left.

At that time he was buyer in the glass and china department of the plaintiffs' establish

[CHAN. DIV.

On the 6th March 1890 the plaintiffs gave notice of motion for an injunction as above.

Warmington, Q.C. and Clare appeared for the plaintiffs, and stated the facts of the case.

Bardswell appeared for the defendant.-This is the first time that a construction will have to be put upon the words "engage in business." I submit that, upon the authorities, a covenant of this sort is intended to prevent the person entering into it from setting up in a rival establishment, and carrying it on as owner or principal. A mere clerk at a salary cannot be said to be "engaging in business" so as to break an agreement of this nature:

Clark v. Watkins, 8 L. T. Rep. N. S. 8; 11 W. R. 253;

National Provincial Bank of England v. Marshall, 60 L. T. Rep. N. S. 341; 40 Ch. Div. 112;

Allen v. Taylor, 24 L. T. Rep. N. S. 249; 19 W. R. 556.

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In the last case it was held that a covenant not to "exercise or carry on" a certain trade was not broken by the covenantor becoming the manager, at a fixed salary, of a person carrying on the same trade. In the case of Hill and Co. v. Hill (55 L. T. Rep. N. S. 769; 35 W. R. 137), which was before your Lordship, the defendant covenanted not to "engage in or be in any way concerned or interested in any similar business,' and your Lordship held that the words concerned in" were sufficient to cover the case then in question. There is a case (Rolfe v. Rolfe, 15 Sim. 88) where a man, who had been a tailor's cutter, afterwards became foreman in another tailoring business, although he had covenanted not to "carry on, practise, or engage in the business of a tailor," and he was restrained by injunc tion. That case is, however, distinguishable, as a foreman in a tailor's business is in a different position from a clerk at a salary. In Palmer v. Mallet (58 L. T. Rep. N. S. 64; 36 Ch. Div. 411) the words of the covenant were wide and applied to an assistant in a business. Then in the present case the two businesses are not similar. The plaintiffs are general drapers and haberdashers, whereas the defendant is now acting as buyer in the glass and china department of the Bon Marché" establishment, and the proprietors are universal purveyors. The business engaged in must be one ejusdem generis as that of the plaintiffs, or the covenant does not apply. Warmington, Q.C. in reply. The evidence shows that the businesses are practically the

same.

KEKEWICH, J.-Mr. Bardswell has, not for the first time, displayed considerable industry and ingenuity; but I am not disposed to follow his researches into the meaning of the word "engage," whether construed by the courts or elsewhere. I do not think it necessary to investigate the meaning of the word etymologically, or to consider how it ought to be construed when used with a different context to that which I now find before me. It is obviously a word of bargain is made between them and their emflexible meaning. Servants are engaged when a ployers, and they are engaged for a particular purpose. Solicitors certainly, and I also think counsel, may be said to he engaged in a case; and, apart from another meaning of the word with which we are all familiar, all persons in all classes

of life are frequently engaged without meaning more than that they are much occupied. In this case I find that a man is engaged, or employed; and a bargain is made with him to enter into the service of the firm of Watts and Co. for a certain time, and upon certain terms. When I come to the terms of the bargain and the consideration that it was for a limited period and a limited distance, that he should not engage in a similar business, I think it means that he should not go and do that, within these limits, which he, until then, was doing in the employment of these persons here. That seems to me to be the reasonable construction of this agreement. I think it is sufficiently expressed to prevent this defendant being engaged, that is being occupied, being a servant in a similar business" to that carried on by the plaintiffs. Though the evidence as to the character of the business is not quite so express as I should wish, still it is not denied that the house next door to the plaintiffs is a rival establishment, and that both are universal purveyors. I do not think that, within the limits specified, the defendant can, according to his bargain, engage as a servant in the establishment next door to the plaintiffs, and that therefore the injunction must go.

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Solicitors for the plaintiffs, Norris, Allens, and Chapman, for North, Kirk, and Cornett, Liverpool.

Solicitors for the defendant, Wynne, Holme, and Wynne, for Howard, Jones, and Broughton, Liverpool.

Friday, March 14.

(Before KEKEWICH, J.)

Re JAMES; CLUTTERBUCK V. JAMES. (a) Life interest-Forfeiture on bankruptcy-Scotch sequestration.

H. J. was entitled under a will to the income of a legacy of 15,000l. for his life, or until he shall become a bankrupt or shall do or suffer something whereby the same or some part thereof would, through his act or default, or by operation of law, or otherwise, if belonging absolutely to him, become vested in or payable to some other person or persons." On the 31st July 1889 sequestration of the estate of J. H. was awarded in Scotland, upon a petition by himself and another; but at the first meeting resolutions for windingup the estate by a deed of arrangement were passed, and no trustee was elected. On the 15th Oct. 1889 the sequestration was recalled by the Lord Ordinary. Between the dates of the presentation of the petition and the recall certain dividends and sums of interest payable in respect of the legacy of 15,000l. came into the hands of the trustees of that legacy, and were lodged in a bank. According to Scotch law H. J. was made a bankrupt by the sequestration; but until the election and confirmation of a trustee a sequestered estate did not become vested in another person.

Held, that, although there was a bankruptcy, the right to receive the income had not vested in any other person, and therefore the forfeiture clause did not operate as a defeasance.

THE plaintiffs in this action were Richard Henry (a) Reported by G. MACAN, Esq., Barrister-at-Law.

[CHAN. DIV.

Clutterbuck and Sydney William Trevenen; and the defendants were Herbert James and Annie Augusta James.

By his will, dated the 14th Oct. 1873, Edward James appointed executors, and after various bequests devised and bequeathed all his residuary estate to his son Walter James.

On the 2nd July 1874 the testator made a codicil to his will, and thereby bequeathed to his brother John James the sum of 15,0007. upon trust for investment, and to pay the income thereof to his son Herbert James "during his life, or until he shall become bankrupt, or shall assign, charge, or incumber the said income, or some part thereof, or shall do or suffer something whereby the same or some part thereof would, through his act or default, or by operation or process of law, or otherwise, if belonging absolutely to him, become vested in, or payable to, some other person or persons," and after the failure or determination of this trust, upon trust as therein mentioned as to the capital and income.

Walter James, the residuary legatee under the will, died intestate on the 2nd Nov. 1883, and administration was granted to his widow, the defendant, Annie Augusta James.

The testator died on the 10th July 1874. The trust legacy was now represented by two mortgages and a sum of India Stock.

On the 31st July 1889 a petition in Scotch form was presented in the Sheriff Court of Ayrshire by Herbert James and another for the sequestration of the estate of Herbert James; and on the same day sequestration was awarded thereof.

At the first meeting of creditors it was resolved that the estate should be wound-up under a deed of arrangement, and the creditors resolved not to appoint a trustee.

On the 15th Oct. 1889 the Lord Ordinary recalled the sequestration. Between the date of the petition and the recall of the sequestration certain sums in respect of interest upon the investments representing the legacy of 15,000%. were received by the plaintiffs, who had been appointed trustees of the legacy; and such sums were deposited by them in a bank.

An originating summons was then issued by the trustees to have it determined whether or not the income of the legacy was forfeited by the operation of the forfeiture clause in the will.

Various questions were submitted for the opinion of the Lord Advocate in Scotland, to which he replied (inter alia) that, according to the law of Scotland, Herbert Jones was made a bankrupt on the sequestration of his estate; but that, until the election and confirmation of a trustee, a sequestered estate under the Scotch Bankruptcy Act did not become vested in another person; and that Herbert James was now the person entitled to give the trustees a good discharge for the interest due before and since the order for sequestration.

The question as to whether or not there was a forfeiture now came on for decision before

Kekewich, J.

Edward Beaumont appeared for the trustees, and, as the widow of the residuary legatee did not desire to argue in favour of the forfeiture, he submitted the argument to the court. In the present case the fact that moneys came into the