Section 5

Trustees are not, apart from the S. L. Act, justified in investing trust money in the purchase of real estate, unless specially authorised so to do by the instrument creating the trust (r); nor will the Court compel them to exercise a mere discretionary power of so investing (s); but, where the power is so worded as to be equivalent to a trust to invest upon a specified request being made, they are bound to act upon lit, though the result may be - as in the case of a purchase of leaseholds - to benefit the requisitionist at the expense of other beneficiaries (t), and though the trustees so purchasing are bound, as between themselves and the vendor, to enter into the ordinary covenants to pay the rent and perform the covenants in the lease. Of course trustees empowered to invest in the purchase of real estate could not, as a general rule ,(u), safely buy leaseholds, unless the power expressly authorised this particular mode of investment. (The power given to trustees to invest in real securities applies only to investments by way of security, and, of course, does not authorise a purchase of land.

Investment in land.

(o) Arnold v. Garner, (1847) 2 Ph. 231; 16 L. J. Ch. 329.

(p) See Re Doody, 1893, 1 Ch. 129; 62 L. J. Ch. 14; Eyre v. Wynn-mackenzie, 1894, 1 Ch. 218; 63 L. J. Ch. 239; and sup. p. 79, n. (m)

(q) Lewin, 13th ed. p. 459.

(r) Earl of Winchelsea v. Norcliffe, (1686) 1 Vera. 435.

(s) Lee v. Young, (1843) 2 Y. & C. C. 0. 532; 12 L. J. Ch. 478; Gisborne v. G., (1877) 2 A. C. 300; 46 L. J. Ch. 557; Marquis Camden v. Murray, (1880) 16 Ch. D. 161; 50 L. J. Ch. 282; Tempest v. Lord Camoys, (1882) 21 Ch. D. 571; 51 L. J. Ch. 785.

(t) Beauclerk v. Ashburnham, (1845) 8 Beav. 322; 14 L. J. Ch. 241; Cadogan v. Lord Essex, (1854) 2 Dr. 227; 23 L. J. Ch. 487.

(u) But see, as to renewable Irish leaseholds, Macleod v. Annesley, (1853) 16 Beav. 600; 22 L. J. Ch. 633. See also s. 73 (1) (xi) of the S. L. Act, 1925.

A trust to invest in the purchase of land to be settled to the same uses as the settled land, did not authorise an expenditure upon improvements except in cases where the improvement was the erection of buildings (x). But now under the S. L. Act, 1925, s. 81, money liable to be laid out in the purchase of land is applicable at the option of the tenant for life as capital money arising under the Act; and under s. 73 (1), capital money arising under the Act may be expended on any of the improvements specified in the Act.

Improvements.

Under S. L. Act, 1925.

Where trustees under a will are directed to invest in the purchase of land "with all convenient speed," twelve months from the testator's death will be deemed a reasonable time within which to make the investment (y).

Time for investment.

Where trustees are empowered to choose between several specified modes of investment, the Court will not interfere with an exercise of their discretion, upon the ground that the result may be to vary the relative rights of their beneficiaries ,(z).

Exercise of discretion not interfered with.

Where stock is sold for the purpose of investing the proceeds in land, the tenant for life is not usually entitled to an allowance in the nature of an apportionment of the current half-year's dividend, though under special circumstances such an allowance has been made (a). If, however, a dividend has been declared before the sale, the purchasemoney having been increased by the amount of the dividend, such amount belongs to the tenant for life (b).

Sale of stock cum div.

(x) Dunne v. D., (1855) 7 D. M. & G. 207; Brake v. Trefusis, (1875) 10 Ch. 364; Donaldson v. D., (1876) 3 Ch. D. 743; 23 L. J. Oh. 788; Vine v. Raleigh, 1891, 2 Ch. 13; 60 L. J. Ch. 675.

(y) Parry v. Warrington, (1820) 6 Mad. 155; Underhill, 8th ed. p. 248.

(z) See Minet v. Leman, (1855) 7 D. M. & G. 340, 351; 24 L. J. Ch. 545; Lewin, 13th ed. p. 392 et seq.

(a) Lord Londesborough v. Somerville, (1854) 19 Beav. 295; 23 L.j. Ch. 646; Bulkeley v. Stephens, 1896, 2 Ch. 241; 65 L. J. Ch. 597.

Formerly, trustees could not, unless specially authorised so to do, safely purchase subject to special conditions restrictive of a purchaser's prima facie right to a marketable title or the usual evidence of title; nor accept a title not strictly marketable; but such purchases were constantly sanctioned by the Court (e), and trustees who have done of their own discretion that which the Court, if applied to, would itself have sanctioned, would, no doubt, be protected.

How far bound to require a marketable title.

By s. 8 (3) of the T. Act, 1925, a trustee is not to be chargeable with breach of trust only upon the ground that in effecting the purchase or in lending money upon (the security of any property, he has accepted a shorter 'title than that which a purchaser, in the absence of special contract, is entitled to require, if in the Court's opinion the title accepted is such as a person acting with prudence would have accepted. And by s. 182 (1) of the L. P. Act, 1925, protection is given to solicitors and trustees who adopt the provisions and stipulations of the Act, it being provided (inter alia) that the stipulations implied in any instrument or made applicable to any contract by the Act, are to be deemed proper.

S. 8 (3) of T. Act, 1925.

S. 182 (1) of L. P. Act, 1825.

(b) Be Sir Robert Peel's S. E., 1910, 1 Ch. 389, 401.

(c) See Re Sheffield & R. R. Co., (1853) 1 Sm. & G. Appendix IV.; Ex p. Lowe, (1852) 19 L. T. O. S. 310; Meyrick v. Laws, (1864) 34 Beav. 58.

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