This section is from the book "Dart's Treatise On The Law And Practice Relating To Vendors And Purchasers Of Real Estate", by J. Henry Dart . Also available from Amazon: A treatise on the law and practice relating to vendors and purchasers of real estate.
Subject to express stipulation, fiduciary vendors must show a marketable title - that is, a title which may be forced on an unwilling purchaser (q) - and are in all respects liable to a purchaser as if they were absolute and beneficial owners (r); except that, ordinarily, they only enter into the covenant against incumbrances implied by their conveying as trustees (s). Their liability extends to costs in an action for specific performance (t); they have, however, a general right, except in cases of neglect (u) or misbehaviour, to recover such costs from the estate of their beneficiaries (x).
General liability; as to covenants, and costs.
(o) Ord v. Noel, (1820) 5 Mad. 440. See above, p. 65; and see the T. Act, 1925, ss. 12 and 13, and the L. P. Act, 1925, s. 106 (3).
(p) Palairet v. Carew, (1863) 32 Beav. at p. 568; 32 L. J. Ch. 508.
(q) See Pyrke v. Waddingham, (1852) 10 Ha. at p. 8; and see comments on this case in Mullings v. Trinder, (1870) 10 Eq. 449; 39 L. J. Ch. 833; Hamilton v. Buckmaster, (1866) 3 Eq. 323; 36 L. J. Ch. 58.
(r) Sug. 14th ed. 69; White v. Foljambe, (1805) 11 Ves. at p. 343; M'donald v. Hanson, (1806) 12 Ves. 277.
(s) Worley v. Frampton, (1846) 5 Ha. 560; 16 L. J. Ch. 102. Joint tenants - who, as such, are, by s. 36 (1) of the L. P. Act, 1925, trustees for sale - generally convey as beneficial owners. See General Conditions (1926), issued by the Law Society, No. 26 (2).
(t) Edwards v. Harvey, (1810) G. Coop. 40; Hill v. Magan, (1818) 2 Moll. 460.
(u) See Peers v. Ceeley, (1852) 15 Beav. 209.
(x) See s. 30 (2) of the T. Act, 1925.
If one of two partners become bankrupt, the solvent partner, in winding up the affairs of the partnership, has a right to sell the partnership property to pay the partnership debts (y). But this power is an authority personal to him in his capacity of partner, which he may exercise in that capacity, but cannot transfer to another (z). So, on the death of a partner, in the absence of any special provision to the contrary in the articles, the surviving partner seems to be able to sell, and to make a good title to the real estate of the firm (a); but it is expedient that the conveyance to the partners should be framed so as to prevent the concurrence of the beneficiaries being required.
Sale by solvent or surviving partner on bankruptcy or death of co-partner.
It is only upon strong grounds, and where irreparable injury is likely to be sustained by the parties interested, or a clear breach of trust is about to be committed, that ,the Court will, by injunction, stop an intended sale by fiduciary vendors (b).
Injunction to restrain sale by.
If a person, either rightfully or wrongfully, assumes to act as a trustee for sale, and in that character signs a receipt for purchase-money, he will be answerable for it, whether he receives it, or allows it to be received by a stranger (c).
Trustee, acting as such, without authority.
A mortgagee who sells under a power of sale, and improperly retains the surplus purchase-money uninvested, is chargeable with simple interest (d) on such surplus, but not if he retains it in consequence only of disputes between subsequent incumbrancers (e). The safest course to adopt in such a case would be to pay the money into Court under the T. Act, 1925, s. 63. And a mortgagee, who sells with notice (f) of subsequent incumbrances, is liable to the later mortgagees if he allows the surplus purchase-money to get into the hands of the mortgagor (g).
Mortgagee holding surplus purchase-money.
(y) Fox v. Banbury, (1776) Cowp. 445.
(z) Fraser v. Kershaw, (1856) 2 K. & J. 501; 25 L. J. Ch. 445.
(a) Partnership Act, 1890, s. 20 (2); and see the L. P. Act, 1925, s. 36, as amended by the L. P. (Amend.) Act, 1926.
(b) See Ex p. Montgomery. (1823) 1 Gl. & J. 338; Marshall v. Sladden, (1849) 7 Ha. 428; Kershaw v. Kalow, (1855) 1 Jur. N. S. 974; Dance v. Goldingham, (1873) 8 Ch. 902; 42 L. J. Ch. 777.
(c) Rackham v. Siddall, (1849) 1 M. & G. 607; Pearce v. P., (1856) 22 Beav. 248; 25 L. J. Ch. 893; Hennessey v. Bray, (1863) 33 Beav. 96.
(d) Charles v. Jones, (1887) 35 Ch. D. 544; Eley v. Read, (1897) 76 L. T. 39.
(e) Matthison v. Clark, (1855) 4 W. R. 30; 25 L. J. Ch. 29.
Trustees for sale will be allowed in their accounts any sums which, in the exercise in good faith of their discretion, and acting under competent advice, they may have paid in order to effect a sale, e.g. in satisfaction of a doubtful claim (h).
Trustees clearing title.
A trustee for sale, being a solicitor, or even one of several trustees professionally employed by his co-trustees (i), cannot, nor can the firm of which he is a partner, unless expressly authorised by the trust instrument (k), charge his beneficiaries with any costs other than costs out of pocket; and the same rule applies as against auctioneers (l); and a mortgagee,(m) was formerly considered for this purpose to be a trustee for the mortgagor within the stringency of the rule (n). But an auctioneer or a broker, who is a mortgagee, may, it appears, deduct his commission if he sells under the direction of the Court (o), and the partner of a solicitor mortgagee acting for him might, it seems, apart from the Mortgagees' Legal Costs Act, 1895, receive remuneration (p). A trustee may, before he accepts the trust, stipulate for a remuneration for hie services; but there must be no undue pressure on his part, and any bargain of this sort is discouraged by the Court (q).
Profit from trust.
(f) See as to notice, ss. 197 and 198 of the L. P. Act 1925, and ss. 5, 7, 9 and 13 of the L. C. Act, 1925.
(g) West London Bank v. Reliance Society, (1885) 29 Ch. D. 954; 54 L. J. Ch. 1081.
(h) Forshaw v. Higginson, (1857) 8 D. M. & G. 827; 26 L. J. Ch. 342; and see the T. Act, 1925, ss. 15 and 30.
(i) Broughton v. B., (1855) 5 D. M. & G. 160; 25 L. J. Ch. 250; Lewin, 13th ed. 257; Be Doody, 1893, 1 Ch. at p. 134; 62 L. J. Ch. 14.
(k) See Clarkson v. Robinson, 1900, 2 Ch. 722; 69 L. J. Ch. 859, as to the construction of a power to charge all usual professional or other charges; Re Fish, 1893, 2 Ch. 413.
(l) Douglas v. Archbutt, (1858) 2 D. & J. 148; 27 L. J. Ch. 271.
(m) See now, as to costs of solicitor mortgagees, the Mortgagees' Legal Costs Act, 1895; and as to the construction of the Act, Day v. Kelland, 1900, 2 Ch. 745; 70 L. J. Ch. 3. A solicitor who negotiates a loan on a mortgage to himself is entitled to the scale fee: Re Norris, 1902, 1 Ch. 741; 71 L. J. Ch. 187.
(n) Matthison v. Clarice, (1854) 3 Dr. 3; 24 L. J. Ch. 202; Kirkman v. Booth, (1848) 11 Beav. 273; 18 L. J. Ch. 25; Re Doody, 1893, 1 Ch. 129; 62 L. J. Ch. 14; Eyre v. Wynn-mackenzie, 1894, 1 Ch. 218; 63 L. J. Ch. 239.