that an unlimited power to charge land authorizes a disposition of the land in trust for sale, and an appointment of the proceeds of sale: Long v. Long, 5 Ves. 445. And conversely, a power to appoint lands will be well executed by an appointment to an object of the power of a gross sum charged on the land: Roberts v. Dixall, 2 Eq. Ca. Abr. 668, pl. 19. See also Palmer v. Wheeler, 2 Ball & Beat. 18; Trollope v. Linton, 1 Sim. & St. 477. Frauds on Powers.]-In some cases it may be necessary for the draftsman to consider whether a proposed appointment will not be a fraud on a power. It is a well-established principle that the donee of a power must execute it in good faith for the purposes of the power, and for the benefit of the objects of the power, otherwise the appointment will be liable to be set aside as fraudulent and void. And this will be the case whether or not there is an arrangement with the appointee, or whether the appointor contemplates a benefit to himself, or whether he is endeavouring to carry out the real intention of the appointor not expressed in the power. Frauds on Powers. FRAUD ON pointee. It has been repeatedly held that an appointment Arrangement to an object of a power, upon a secret understand with aping that the appointee shall make a disposition for the benefit of the appointor, or of a stranger, is void as being a fraud upon the power: Daubeny v. Cockburn, 1 Mer. 626, and numerous other cases cited infra. But it is not necessary, in order to give the Court jurisdiction to set aside an appointment on the ground of fraud, that the appointee should be aware of the intention of the donee to evade the terms of the power: Wellesley v. Mornington, 2 K. & J. 143. So in Re Marsden's Trusts, 4 Drew. 594, the donee of a power over a fund, the income of which she received for life, by deed appointed the whole fund to a child an object of the power, subject to her own life interest, with the intention, which was not communicated to the appointee until after the donee's death, that the appointee should thereout make a provision for the benefit of the donee's husband, the Frauds on Jointure. Aleyn v. father of the appointee, it was held that the appointment was absolutely void. The leading case on the subject of frauds on powers is Aleyn v. Belchier, 1 Eden, 132; in that case a power of jointuring was executed in favour of the donee's wife, but with an agreement that the wife should receive only a part as an annuity for her own benefit, and that the residue should be applied in payment of the donee's debts; it was held that the appointment was void, except as regards the annuity. Lord Keeper Henley said: "No point is better established than that a person having a power must execute it bona fide for the end designed, otherwise it is corrupt and void. The power here was intended for a jointure, and not to pay the husband's debts." And see Duke of PortLane v. Page. land v. Topham, 11 H. L. Ca. 32, infra. In Lane v. Page, Amb. 233, a husband executed a power of jointuring in favour of his wife, on an understanding that she should apply part of the jointure for her own benefit, and the remainder in discharge of the appointor's debts, and subject thereto, to herself for life; it was held that the appointment was fraudulent, but ought nevertheless to be upheld to the extent of the part appointed unconditionally for the wife's benefit. Lord Hardwicke said: "Fraud will affect only so far as it extends; and this Court will not say that participes criminis shall have no benefit in any part." And his lordship seems to have thought that this principle would extend to appointments under powers of appointing portions. But in the case of Daubeny v. Cockburn, 1 Mer. 626, personalty was settled in trust for such one or more of his children as A. should appoint: A. appointed to one child exclusively, upon a secret understanding that the child should reassign a part of the fund to a stranger; it was held that the appointment was void in toto. So in Salmon v. Gibbs, 3 De G. & Sm. 343, the donee of a power to appoint among her children, to whom the fund was limited in default of appointment, having only two daughters, appointed nearly the whole of the fund to one of them, who was unmarried, on the understanding, but without Portions. Salmon v. Powers. any positive agreement, that the appointee would Frauds on resettle one moiety on trusts for the separate use of the other daughter, who was married, and after her death, on trusts for her children. A resettlement was accordingly made, without the privity of the married daughter, who did not hear of the transaction until several years afterwards; it was held by Knight Bruce, V.-C., on the suit of the husband, that the appointment was invalid. See also Carew v. Richards, 1 De G., F. & J.548; Agassiz v. Squire, 18 Beav. 431; S. C., 23 L. J., N. S. 985; Birley v. Birley, 25 Beav. 299. benefit of the This principle will apply a fortiori where the Where the object of the appointor in making the appointment, appointor is or the understanding upon which the appointment contemplated. is made, contemplates the benefit of the appointor. In Lord Hinchinbroke v. Seymour, 1 Bro. C. C. 395, the donee of a power to charge portions at such times as he should direct, exercised the power by appointing a portion to a daughter aged fourteen years; she shortly afterwards died, and the father claimed the portion as her administrator; it was held that the appointment could not be upheld. See also Keily v. Keily, 4 Drew. & W. 38; Beere v. Hoffmister, 23 Beav. 101. So, where the appointee has agreed that the fund appointed shall be transferred to the appointor, in exchange for other property; Askham v. Barker, 12 Beav. 499; or where the appointee has agreed to pay the appointor's debts; Farmer v. Martin, 2 Sim. 502; Palmer v. Wheeler, 2 Ball & Be. 18; or where the appointment was made in payment of a debt due to the appointee by the appointor: Reid v. Reid, 25 Beav. 469. See also Beddoes v. Pugh, 26 Beav. 407; Jackson v. Jackson, 7 Cl. & Fin. 977. And in Arnold v. Hardwick, 7 Sim. 343, Sir L. Shadwell, V.-C., held that where the donee of a power appointed the fund to one of the objects of the power, under an understanding that the latter should lend the fund to the former, although on good security, the appointment was bad. See, however, Roach v. Trood, 3 Ch. D. 429, where the Court of Appeal upheld an absolute appointment in favour of a son, who was an object of the power, the effect Frauds on Arrangement for benefit of all objects. Appointment and contemporaneous settlement. of which in connection with other transactions was to benefit not only the object, but also other persons including the appointor himself; the circumstances of this case, were distinguished in the judgment of the Court from those in Re Marsden's Trusts, ubi supra, and other cases in which appointments have been set aside on the ground of fraudulent or corrupt intention. Where a tenant for life with power to appoint portions for younger children exercised the power in favour of his daughters then of very tender age, directing the portions to vest immediately, but to be payable subject to his life interest at twenty-one years or marriage, it was held by the Court of Appeal (reversing the decision of Kay, J., reported 19 Ch. D. 492), that the fact that upon the death of one of the daughters the appointor took her share as next of kin was not sufficient to invalidate the appointment as being a fraud on the power: Henty v. Wrey, 21 Ch. D. 332. See also Shirley v. Fisher, 47 L. T. 109. The general rule laid down in Daubeny v. Cockburn, 1 Mer. 626, that an appointment made partly with a fraudulent intention is wholly vitiated by the fraud, has in some cases been held not to apply where the proper part of the appointment can be distinguished from the improper part: Carver v. Richards, 1 De G., F. & J. 548. See also Ranking v. Barnes, 12 W. R. 565; Sadler v. Pratt, 5 Sim. 632. Moreover, where a family arrangement is proposed to be carried out for the benefit of all the objects of the power, they are at liberty to contract with each other to give to the appointor some advantage which he otherwise could not have had, without invalidating the appointment. See Davis v. Uphill, 1 Swanst. 129; Wright v. Goff, 22 Beav. 207; Rhodes v. Cook, 2 Sim. & St. 488; Skelton v. Flanagan, 1 Ir. Eq. R. 362. See also Re Huish's Charity, L. R., 10 Eq. 5; Cooper v. Cooper, L. R., 5 Ch. 203; Roach v. Trood, 3 Ch. D. 429. An appointment to an object of the power, and a contemporaneous settlement of the fund by the appointee, is valid even though the appointor may Powers. be aware that the settlement will contain limitations Frauds on in favour of persons not objects of the power: Thompson v. Simpson, 1 Dr. & W. at p. 487. But the appointment must not be in pursuance of an agreement or understanding that the fund shall be settled: Pryor v. Pryor, 2 De G., J. & S. 205; Birley v. Birley, 25 Beav. 299. The rule as to setting aside fraudulent appoint- Lee v. Fernie. ments extends, not only to cases where the appointor and appointee stand to each other in the relation of husband and wife or parent and child, but to all cases; and applies even to cases where the power was created by a voluntary settlement of the appointor himself. So, in Lee v. Fernie, 1 Beav. 483, where a person desirous of benefiting the descendants of A. by a voluntary settlement, reserved to himself the power of appointing amongst certain persons named, being the only descendants of A. of whose existence he was then aware; he afterwards discovered the existence of other descendants of A., and to remedy the omission to provide for them he appointed a part of the fund to an object of the power upon his executing bonds to pay over the amount to the persons newly discovered. Lord Langdale, M. R., said: "It certainly seems a hard thing that he, the author of this gift, and owner of the property could not do this; but he had declared a trust; he had said that the property should belong to certain persons, that the power he had reserved should be exercised for the benefit of certain persons only; and I quite agree with those who advised him that it was not competent for him, of his own authority, to alter the destination of his property." Duke of Port An important illustration of the principle now Topham v. under discussion is afforded by the leading case of land. Topham v. Duke of Portland, which repeatedly came before the Courts in consequence of successive attempts by the donee of a power to execute it with the indirect object, not of benefiting either himself or other persons strangers to the power, but of carrying out certain wishes of the settlor, communicated to the appointor, but not expressed in the instrument 3 D B.-VOL. I. |