subsists. The necessity of independent advice would seem to follow, such advice being treated as determining for the time the relation of solicitor and client. Lord ELDON, however, upheld a gift where there was no independent advice (k). Both ROMILLY, M.R., in a case between doctor and patient (1) and a case between solicitor and client (m), and TURNER, L.J., in a case between parent and child, treat the presumption as one which might be rebutted in other ways than by showing that independent advice had been given to the donor (n). The stricter view is supported by dicta of KINDERSLEY, V.-C., in Tomson v. Judge (o), and of STUART, V.-C., in In re Holmes' Estate (p), and in Morgan v. Minett (q), MALINS, V.-C., held that a solicitor could not receive a gift unless the client had independent professional advice.

(k) Harris v. Tremenheere (1808), 15 Ves. 34.

(1) Blackie v. Clark (1852), 15 B. 595, 602.

(m) Walker v. Smith (1861), 29 B. 394, 398.

(n) Wright v. Vanderplank (1856), 8 D. M. & G. 133, 146.
(0) (1855), 3 Drew. 306.

(p) (1861), 3 Giff. 337.
(9) (1877), 6 Ch. D. 638.

CHAPTER XXI.

CONFLICT OF INTEREST AND DUTY.

vents conflict

THE jurisdiction in equity, as has already been pointed Court preout (a), is not exclusively directed to repairing the effect of between wrongful acts and replacing parties wronged in their original interest and duty. position. Courts of equity in some branches of their jurisdiction are guided by another principle, namely, the desire to prevent a person from burdening his conscience by the acquisition of property to which in conscience he has no right. No branch of the jurisdiction illustrates this principle more clearly than the branch with which this chapter deals. "No one," said Lord CRANWORTH (b), "having duties to discharge of a fiduciary nature shall be allowed to enter into engagements in which he has, or can have, a personal interest conflicting, or which possibly may conflict, with the interests of those whom he is bound to protect." "It is an inflexible rule of a court of equity," said Lord HERSCHELL (c), "that a person in a fiduciary position . . is not, unless otherwise expressly provided, entitled to make a profit; he is not allowed to put himself in a position where his interest and duty conflict." The rule, he continues, is based on the consideration that, human nature being what it is, there is danger, in such circumstances, of the person holding a fiduciary position being swayed by interest rather than by duty, and thus prejudicing those whom he was bound to protect." His lordship was satisfied that the rule "might be departed from in many cases, without any breach of morality, without any wrong being inflicted, and without any consciousness of wrong-doing." The rule which forbids anyone to put himself in a position where his interest can conflict with his duty is a rule of public policy, and it has been applied in many cases where

(a) P. 51.

(b) Aberdeen Rail. Co. v. Blaikie Bros. (1854), 1 Macq. 461, p. 471. (c) Bray v. Ford, [1896] A. C. 44, p. 51.

Illustrations

of the principle.

there is no evidence that the party owing the duty has in fact subordinated it to his interest. "The safest rule," said Lord ELDON (d), "is that a transaction, which under circumstances should not be permitted, shall not take effect upon the general principle; as, if ever permitted, the inquiry into the truth of the circumstances may fail in a great proportion of cases."

The rule has been applied under very varying circumstances. (a.) If A. is a trustee for sale of property which belongs beneficially to B., the court imposes on A. an absolute disqualification to purchase. The same man cannot be both seller and buyer. (b.) If A. is not trustee for sale of B.'s property, but is employed to conduct the sale on B.'s behalf, or to advise B. in the matter of an intended sale, A. is under a duty in the one case to get for B. the best price which can be got, and in the other to give B. disinterested advice; and if A. purchases the property, and wishes to maintain the purchase, the onus lies on A. to show that he fulfilled in every particular the duty cast upon him. (c.) If A. is employed by B. to purchase property of a certain kind, and A., while that employment subsists, purchases property of the required kind, which he afterwards sells to B. at a higher price without disclosing the profit that he is making, A. cannot be heard to say that the original purchase by him was not made on B.'s behalf. The subsequent sale to B. is, therefore, a sale of property which already belongs to B., and B. can make A. account for the difference between the price which he gave and the price which he got. (d.) If A. is employed by B. to purchase property, and A., while the employment subsists, receives a commission from the vendor of the property without B.'s knowledge and consent, B. can recover the commission from A. The court is entitled to assume that the commission was an inducement to A. to neglect his duty, and A. cannot be heard to say that instead of cheating his employer he cheated the man who bribed him. (e.) If A. is executor of a will, A. owes a duty to the beneficiaries

(d) Ex parte Bennett (1805), 10 Ves. 381, p. 400.

to superintend the conduct and to moderate the demands of all those who render services in connexion with the executorship, and A. would be tempted to neglect that duty if he could employ himself to render such services for hire. Hence, if A. is a solicitor as well as executor, and acts professionally in winding up the testator's estate, he cannot make the usual professional charges except where the will gives him express power to do so. (f.) It is the duty of a professional adviser not merely to give honest but to give competent advice. If, therefore, a professional adviser obtains a benefit by failing to give competent advice, he cannot retain the benefit. Thus, the attorney and heir-atlaw of A. advised him to levy a fine of all his estate, although it was only necessary to levy a fine of part. The fine operated, as the law then stood, as a revocation of A.'s will, under which he devised the whole estate to B. The House of Lords held that A. was trustee of the estate for B. (e). "It is too dangerous to the interests of mankind," said Lord ELDON (ƒ), “that those who are bound to advise, and who being bound to advise ought to be able to give sound and sufficient advice-it is too dangerous to allow that they shall ever take advantage of their own ignorance, of their own professional ignorance, to the prejudice of others." (g.) Where a person in whom a fiduciary power is vested abstains from exercising that power because it is against his interest to do so, the court will place him in the same position as if the power had been exercised. The power of making calls on shares which is vested in the directors of a company is a fiduciary power, to be exercised for the benefit of the company at large. If directors, therefore, abstain from making a call when it ought to have been made in order to get rid of their shares and escape liability, transfers made with that purpose will be treated as void (g).

There are two other principles which are really corol- Subordinate laries from the principle that the court will prevent, so far principles.

(e) Bulkley v. Wilford (1834), 2 Cl. & F. 102. See Stokes v. Prance,

[1898] 1 Ch. 212, p. 224.

(f) Bulkley v. Wilford, supra, p. 177. See also pp. 181, 183.

(g) Gilbert's Case (1870), 5 Ch. 559. See also Alexander v. Automatic Telephone Co., [1900] 2 Ch. 56.

Benefits derived from ostensible ownership must be given up to true owner.

as it can, a conflict of interest and duty. (1.) No one who is the ostensible owner of property in which others are beneficially interested is allowed to derive any exclusive benefit for himself by virtue of his ostensible ownership. (2.) A person standing in a fiduciary position to another, who in the course and by virtue of his fiduciary position has acquired information respecting the affairs of that other, is bound not to use that information to the detriment of the person at whose expense he has obtained it.

It is convenient to classify the cases which illustrate these principles according as they occur in suits to recover specific property, in suits for rescission, and in suits for an

account.

SUITS TO RECOVER SPECIFIC PROPERTY.

"Wherever a trustee," said Lord CAIRNS (h), "being the ostensible owner of property, acquires any benefit as the owner of that property, that benefit cannot be retained by himself, but must be surrendered for the advantage of those who are beneficially interested." There are many cases, apart from cases of strict trust, where the legal interest of a person in property is larger than his beneficial interest, e.g., mortgagee, surviving partner. There are also cases where a person is lawfully in possession of property without having the whole interest in the property, e.g., tenant for life. In both these cases the person who has the absolute legal interest or the possession may, by virtue of that interest or possession, obtain an advantage which, on equitable grounds, ought to enure for the benefit of the persons who between them exhaust the whole beneficial interest in proportion to their respective shares therein. It was formerly the custom of many large landowners (especially colleges and ecclesiastical bodies) to grant leases in consideration of a fine at a rent much below the rackrent, and to renew these leases on the same terms from time to time, as a rule before they had run out. The

(h) Aberdeen Town Council v. Aberdeen University (1877), 2 App. Cas. 544, p. 549.