to charge the trustees with a breach of trust, and to make them responsible for the stock which the money produced by the sale of the estate would have purchased at the time when it was received by the trustees. Mr. Pemberton Leigh and Mr. Hubback, for the plaintiffs, the cestuis que trust. * Mr. Kindersley and Mr. C. Bellamy for the representatives of one of the trustees. March 20. Mr. Drewry and Mr. Austen, for other parties. Mr. Pemberton Leigh, in reply: The object of the parties was to re-invest the money in land; the investment in the funds, or on real security, *was to be merely temporary and until the money could be invested in land. It seems obvious that the trustees ought not to have risked a conversion of land into money, without providing themselves with an authority which would enable them to invest the produce. That alone would make them responsible for the purchase-money arising from the sale, though it might not, perhaps, make them liable for the stock. The trustees having placed themselves in a position in which their option could not be exercised, it may be a question if they were not bound to make the investment in such a way as the Court would have directed. THE MASTER OF THE ROLLS: Whether the trustees are to be charged with the money or stock is a question of great importance, and I will consider it. No sale could have taken place without the consent of the trustees; and I cannot say that it was a proper exercise of the discretion of the trustees, to concur or consent to a sale of the real estate, without knowing beforehand what was to be done with the purchase-money. By not making a provision for the re-investment, the whole control was left in the hands of the tenant for life, who might then exercise his power in such a way as to induce the trustees to commit a breach of trust. THE MASTER OF THE ROLLS: If trustees are directed to invest trust money on Government or real securities, and they do neither, I *conceive that they are answerable, at the option of the cestuis que trust, either for the sum which was to be invested, or for such amount of Bank Three per cent. Annuities as might have been purchased with the sum at the time when it ought to have been invested according to the trust (1). In the present case, I think that, in a prudent execution of the trust, the cestuis que trust ought not to have consented to a sale, until they had first obtained the consent of the husband and wife, either to the purchase of other land, or to the due investment of the purchase-money until other land could be conveniently purchased. The settlement, however, did not contain a plain direction for that purpose; and, the consent of the husband and wife not appearing to have been given, the trustees may have been under difficulties respecting the investment; and some time may not have been improperly employed in endeavouring to obtain a proper real security. The circumstances are not explained; and during the time which elapsed between the receipt of the money and the loan to Mr. Watts, I do not think that there are sufficient grounds on which to charge the trustees with more than the amount of the money which they had received; but in lending the money to the husband without real security, they acted in direct violation of their duty, and committed a plain breach of trust; and for that breach of trust I think that they are answerable in the manner most beneficial to the cestuis que trust; upon that principle it appears to me that the plaintiffs are entitled to have so much Bank Three per cent. Annuities, as the sum of 2,2001. would have purchased on the 16th day of July, 1816, when the money was lent to the husband. WATTS v. GIRDLE STONE. [191] FULLER v. KNIGHT. (6 Beav. 193-212; S. C. 12 L. J. Ch. 182.) A trustee cannot, by contract, waive his right to resort to the life interest of a tenant for life, for the purpose of replacing a trust fund, which, in breach of trust, he has lent to the tenant for life. A trustee, in breach of trust, lent the trust fund to A. B., the tenant for life. The trustee afterwards concurred in a creditors' deed, by which A. B.'s life interest was to be applied in payment of his debts, and the trustee (1) The law upon this point is now altered. The trustee is liable only for the principal money and interest, and the beneficiaries have no option in such cases of claiming the value of the stock 1843. Jan. 26, 27. Feb. 28. Rolls Court. Lord LANGDALE, M.R. [205] received thereunder a debt due to him from A. B. Before the other creditors had been paid, the trustee retained the income to make good the breach of trust: Held, upon a bill filed by the trustees of the creditors' deed, that this Court would not prevent such an application. By a settlement made in 1795, on the marriage of the defendant Charles Fuller with Jane his wife, two sums of 20,000l. and 16,000l. Consols were vested in trustees, upon trust for the husband for life, with remainder to the wife for life, with remainder to the issue of the marriage, with remainder on certain trusts, under which the wife was entitled to a contingent reversionary interest in a portion of the fund. In 1805, the trustees of the marriage settlement committed a breach of trust, by lending 9,000l. (the produce of 15,5171. Consols part of the trust fund) to the husband, on the security of certain leasehold property. In 1816 Charles Fuller, the husband, executed a creditors' deed, whereby his interests in the leaseholds and under the marriage settlement, including the 9,000l., besides other property, were assigned to trustees for the payment of certain debts. The defendant Robert Knight, the surviving trustee of the marriage settlement, was one of the creditors of Charles Fuller, the tenant for life, whose debt was provided for by the creditors' deed. Robert Knight concurred in that deed, and received his debt thereunder. He had lately, and before the trusts of the creditors' deed had been fully carried into execution, commenced proceedings by ejectment to recover the possession of the leasehold premises, and he threatened to apply the life interest of the tenant for life in reparation of the breach of trust, alleging that the leasehold security was inadequate. The trustees of the creditors' deed, who were also unsatisfied creditors under it, thereupon filed this bill against Robert Knight and Mr. and Mrs. Fuller, praying to have the trusts of the creditors' deed carried into execution, and that the rents and interest of the trust funds and securities might be applied in payment of the monies thereby secured, and that Knight might be restrained from interfering therewith, and particularly with the rents of the leasehold property. The only issue of the marriage had died without acquiring any interest in the trust funds, so that, *subject to the very remote contingency of issue of the marriage being born, Mr. and Mrs. Fuller were the only persons interested in the trust funds, but the interest of Mrs. Fuller therein was reversionary. The defendant Knight, by his answer, submitted, that it was his duty to receive the rents of the leasehold property and the interest of the settlement funds, and to apply the same towards replacing and making good the 15,5177. Consols lent to the defendant Charles Fuller, the tenant for life, on the security of the leaseholds, which had become an insufficient security; and he submitted, that it was his duty, as trustee of the said settlement, or at least, so far as he was trustee for the said Jane Fuller, to enforce his said claim against the plaintiffs, as well as against Charles Fuller, notwithstanding he might have joined and concurred, as a creditor of the said Charles Fuller, in the deed of 1816; for the defendant was advised, that his joining therein as such creditor could not exonerate or preclude him from performing his duty as a trustee of the settlement of 1795. Mr. Kindersley and Mr. Wood for the plaintiffs: The defendant, Mr. Knight, having concurred in the creditors' deed and accepted the benefit of the trusts, has contracted for the application of the rents and profits in the manner thereby pointed out. He cannot, for the purpose of relieving himself from the responsibility he has incurred, insist on the application of the income in any other way, until the other creditors have been. fully paid. The husband and wife being of advanced age, and there being no issue, and no persons interested in the fund except themselves, there is not the remotest chance *of the trustees being exposed to any liability in respect of the breach of trust. Both husband and wife are desirous that the former application of the income should be continued. Mr. G. Turner and Mr. Shapter for the defendant Knight: This Court will not permit trustees to do an act which would be a breach of trust: Mortlock v. Buller (1). So it will not order a trustee to abstain from an act which would repair a breach of trust already committed; it will not sanction an arrangement by which a trustee lessens the security of his cestui que trust. Here the interest of the tenant for life is primarily liable to replace the stock, and the cestui que trust will be left to the personal responsibility of the (1) 7R. R. 417 (10 Ves. 292), and Wood v. Richardson, 55 R. R. 38 (4 Beav. 74). FULLER v. KNIGHT. [ *208 ] FULLER v. KNIGHT. [ *209 ] trustees, if this Court should prevent the defendant's replacing the fund by means of the life estate. The wife has but a reversionary interest in a chose in action. She is therefore incapable of binding it; and notwithstanding any act she may now do, she might the next day file a bill against the trustee for the restitution of the fund. There is no estoppel in such a case as this: Fairtitle v. Gilbert (1). Mr. Hoare for Mrs. Fuller supported the plaintiffs' case. Mr. Kindersley, in reply. THE MASTER OF THE ROLLS: In this case, the circumstances and the relief sought are very peculiar. The bill asks that the indenture of *1816 may be executed, and that the income of the trust property may be applied under the trusts of that deed. The defendant Knight, against whom this prayer is directed, insists, that he has a right to apply that income towards the reparation of the breach of trust, in which he was led to join at the request of the defendant Mr. Fuller. The facts are shortly these: Mr. Knight and other persons were trustees of the marriage settlement of Mr. and Mrs. C. Fuller of two sums of 20,000l. and 16,000l. stock. The settlement contained a power to sell the stock and lay out the money in the purchase of freehold estates. Unfortunately, in the year 1805, the sum of 15,5177. stock was sold out, and produced a sum of 9,000l., which, instead of being properly laid out on freeholds, was lent to Charles Fuller on the security of his leasehold estates. It is not denied that this was a breach of trust, and that the persons beneficially interested in this sum had a right to call on the trustees, at any time, to make good the amount of stock sold out. Knight is the surviving trustee of the settlement, and he is subject to the liability. Under the circumstances which have taken place, Mrs. Fuller, the cestui que trust, having a reversionary interest in this property, an interest which she is incapable of dealing with, and cannot deprive herself of, has a power to enforce the right of having the breach of trust remedied according to the rules of this Court, and this has been the state of things since 1805. In 1816, Charles Fuller, the tenant for life of the property, being (1) 1 R. R. 455 (2 T. R. 171). |