Overriding power of court.

Effect of administration

action upon trustees' powers.

it shall not be obligatory on the court or judge to pronounce or make a judgment or order, whether on summons or otherwise, for the administration of any trust or of the estate of any deceased person, if the questions between the parties can be properly determined without such judgment or order.

As a general rule, the court will not permit trustees to perform acts with reference to the trust estate which are not authorised by the terms of the instrument creating the trust. But where an emergency arises in the management of a trust estate for which no provision is made by the instrument creating the trust, and which renders it highly desirable for the benefit of the estate, and in the interests of all the cestuis que trust that certain acts should be done by the trustees which, under the trust, they have no power to do, the court, in a proper case, has jurisdiction to sanction on behalf of all concerned the performance of such acts by the trustees (x).

The institution of an administration action does not of itself interfere in any way with the administration of the trusts by the trustee (y). Order 55, rule 12, provides that the issue of a summons under rule 3 shall not interfere with or control any power or discretion vested in any executor, administrator or trustee, except so far as such interference or control may necessarily be involved in the particular relief sought. A judgment for administration does not take away the discretions vested in a trustee, but they can only be exercised under the supervision, and with the sanction of the court (z). Thus, even where trustees have an undisputed power to make a purchase or mortgage, a reference will be made to chambers to ascertain the propriety of the purchase or mortgage which is intended to be made (a). And the court will direct the trustees to exercise a power of management, where it forms part of a

(x) In re New, [1901] 2 Ch. 534.

(y) Cafe v. Bent (1843), 3 Ha. 245; Sillibourne v. Newport (1855), 1 Kay & J. 602.

(2) Bethell v. Abrahams (1873), 17 Eq. 24; Minors v. Battison (1876), 1 App. Cas. 428, p. 438.

(a) Bethell v. Abrahams, supra.

general trust for management which the court is carrying out (b). After a judgment a trustee can still exercise the power of appointing new trustees, but the sanction of the court must be obtained to the appointment. If the court disapproves of his choice, he may be directed to nominate someone else. If he repeatedly nominated improper persons, that would amount to a refusal to exercise the power, and the court could then appoint (c). Where a general administration is asked for, but the court only makes an order directing special inquiries, the powers of a trustee are not limited by the order except so far as they come in conflict with the inquiries directed. Thus, where an inquiry is directed what proceedings should be taken for the appointment of new trustees, a trustee who wishes to exercise his power of appointment should submit the name of his proposed appointee to the chief clerk in chambers (d).

(b) Tempest v. Lord Camoys (1868), 21 Ch. D. 576 n.

(c) Webb v. Lord Shaftesbury (1802). 7 Ves. 480; In re Gadd (1883), 23 Ch. D. 134; In re Norris (1884), 27 Ch. D. 333; Tempest v. Lord Camoys (1888), 58 L. T. 221.

(d) In re Hall (1885), 54 L. J. Ch. 527.

Who are cestuis que trust under a trust.

Rule in
Dearle v.
Hall.

CHAPTER IX.

THE CESTUI QUE TRUST: HIS RIGHTS AND

REMEDIES.

CESTUIS QUE TRUST under a trust consist of (1) all persons
taking directly under the trust, and (2) all persons taking
by transfer, whether voluntary or for value, from a cestui
que trust.
A transfer may produce a different effect (i.) as
between the transferor and transferee, (ii.) as between suc-
cessive transferees, and (iii.) as between the transferee and
the trustee.

(i.) The conditions have already been pointed out (a) which are required to make the transfer of an equitable interest complete as between transferor and transferee.

(ii.) Where a cestui que trust of land makes successive conveyances of his equitable interest, the priority of the grantees, as between themselves, is determined primâ facie by the order in time of their creation. But where a cestui que trust of pure personal estate makes successive assignments, either absolutely or by way of mortgage, of his equitable interest, a later assignee gains priority over an earlier assignee, if he had no notice of the earlier assignment when his own was created, by giving prior notice to the trustees in whom the property is vested (b). This is known as the rule in Dearle v. Hall (c). This rule does not apply to land or to chattels real. It is confined to assignments of choses in action or of such interests in real estate as can only reach the hands of the beneficiary or assignor in the shape of money. It extends to real estate given on trust for sale and division among several persons or to portions raisable out of real estate by sale or mortgage, even though the assign

(a) P. 128, ante.

(b) Dearle v. Hall (1823), 3 Russ. 1; In re Holmes (1885), 29 Ch. D. 786; Ward v. Duncombe, [1893] A. C. 369.

(c) Supra.

ment takes place before the time has arrived for selling the land or raising the portions (d). Where a fund is in court a stop order is equivalent to notice, and notice to the trustees of the fund has no effect (e). The trustees to whom notice of an assignment should be given are the trustees whose duty it will be to pay over the fund to the assignor. Thus, if a share in a fund in court has been settled, notice of an assignment of the interest of a person claiming under the settlement should be given to the trustees of the settlement, and a stop order will have no effect (f). The question whether a trustee has notice of an assignment of the trust fund is a question of fact. It is not necessary that the assignee should himself give direct and distinct notice. An incumbrancer who alleges that a trustee has notice of his incumbrance must prove, according to Lord CAIRNS (g), “that the mind of the trustee has in some way been brought to an intelligent apprehension of the nature of the incumbrance which has come upon the property, so that a reasonable man or an ordinary man of business would act upon the information, and would regulate his conduct by it in the execution of the trust." Notice given to the solicitor of trustees is not effectual unless he is authorised by them, expressly or by implication, to receive notices (h). Where there are several trustees, notice to one is as effectual for the purpose of getting priority as if it had been given to all (2). It is immaterial that the trustee acquired notice by being himself the assignee (k), or that the trustee to whom notice is given is husband of the assignor (); but where a trustee is himself the assignor and assigns to a stranger, notice to be effectual must be given to one of his co-trustees (m).

(d) Lee v. Howlett (1856), 2 Kay & J. 531; Re Hughes' Trusts (1864), 2 H. & M. 89; In re Wyatt, [1892] 1 Ch. 188; Lloyd's Bank v. Pearson, [1901] 1 Ch. 865.

(e) Mutual Life Assurance Society v. Langley (1886), 32 Ch. D. 460. (f) Stephens v. Green, [1895] 2 Ch. 148.

(g) Lloyd v. Banks (1868), L. R. 3 Ch. 488, p. 490.

(h) Saffron Walden Building Society v. Rayner (1880), 14 Ch. D. 406.

(i) Smith v. Smith (1833), 2 C. & M. 231; Willes v. Greenhill (1861), 4 D. F. & J. 147.

(k) Willes v. Greenhill (No. 1), (1860), 29 B. 376.

(1) Willes v. Greenhill (No. 2), (1861), 29 B. 387; 4 D. F. & J. 147. (m) Browne v. Savage (1859), 4 Drew. 635; Lloyd's Bank v. Pearson, [1901] 1 Ch. 865.

It cannot even now be regarded as settled how long the prophylactic effect of notice lasts. Lord MACNAGHTEN seems to have been of opinion that notice once properly given would be valid for all time, and would not become inoperative by reason of a change of trustees (n). The decided cases do not go so far as this. Where A. gives notice of an assignment to X., who is trustee of a fund together with Y., and B., while X. is still a trustee, gives notice of an assignment to X. and Y. or to Y., A. does not lose his priority over B. by reason of X.'s death, although Y. has no notice of A.'s incumbrance (o). Moreover, an assignee who gives notice to all the trustees in existence at the date of his assignment is entitled to priority over a Asubsequent assignee who has taken his assignment after the death or retirement of all these trustees, and who gives notice of his assignment to the new trustees (p). But it has been held, that where A. gives notice of an assignment to X., who is trustee of a fund together with Y., and after X. has ceased to be trustee, B. gives notice of an assignment to Y., who knows nothing of A.'s assignment, B. has priority over A. (q). The rule in Dearle v. Hall rests upon no principle; and it is therefore useless to consider which of these cases are consistent with principle. If the object of the rule had been to protect assignees against the suppression of earlier assignments, it would have been necessary to hold, first, that notice to be effectual must be given to all the existing trustees; and, secondly, that trustees are bound to keep a record of notices received, and that their successors are bound to obtain possession of the record; but neither of these rules is law.

(iii.) A trustee is entitled to assume that the persons who are at one time his cestuis que trust remain his cestuis que trust until he is informed to the contrary. He is, therefore, justified in paying the income of the trust property, or, if

(n) Ward v. Duncombe, supra, p. 394.

() Ward v. Duncombe, supra.

(p) In re Wasdale, [1899] 1 Ch. 163.

Timson v. Ramsbottom (1836), 2 Keen, 35.