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.
Land purchased with trust money becomes impressed with trust. As to proof of application of money.
106, 178 ; and see Be Whitehouse, (1887) 37 Ch. D. 683; 57 L. J. Ch. 161.
(n) Including in the term, agents. Where a solicitor fraudulently purchased an estate in his own namo out of his client's moneys, the client was held to have a lien on the estate: Hopper v. Conyers, (1866) 2 Eq. 549 ; Middleton v. Pollock, (1876) 4 Ch. D. 49 ; 46 L. J. Ch. 39. For the purposes of the doctrine there is no "distinction between an express trustee, or an agent, or a bailee, or a collector of rents, or anybody else in a fiduciary position": Be "Hallett's Eat., (1880) 13 Ch. D. 606, 709 ; 49 L. J. Ch. 415; New Zealand Land Co. v. Watson, (1881) 7 Q. B. D. 374, 383; 50 L. J. Q. B. 433. And see Re Hallett & Co., 1894, 2 Q. B. 237 ;
63 L. J. Q. B. 573
(o) Price v, Blahemore, (1843) 6 Bear. 507; see E.cp. Chadwiek, (1851) 15 Jur. 597.
(p) Sug. 14thed. 919; Lench v.L., (1805) 10 Ves. 511, 519.
(q) Trench v. Harrison, (1849) 17 Si. Ill ; see, as to evidence of a contrary intention, Perry v. Phelips, (1810) 4 Ves. 108, 116 ; 17 Ves. 173 ; Lewis v. Madocks, (1810) 8 Ves. 150 ;
17 Ves. 48 ; Denton v. Davies, (1812)
18 Ves. 499, 502 ; Bennet v. Mayhew, cited 1 Br. C. C. 232 ; Mathias v. M., (1858) 3 Sm. & G. 552, and cases there cited ; Wadham v. Rigg, (1862) 10 W. R. 365 ; Williams v. Thomas, (1862) 8 Jur. N. S. 250; Lewin, 11th ed. 1129, 1130.
(r) Manning ford v. Toleman, (1845) 1 Col. 670, 674; 11 L. J. Ch. 160;
Under the Partnership Act, 1890, s. 13, if a partner who is also a trustee improperly employs trust property in the business of the partnership, no other partner is liable for the trust property to the persons beneficially interested therein, provided he has no notice of the breach of trust, and the section does not prevent the property being followed and recovered if still in the possession of the firm (t).
Purchase by partner who is a trustee.
So, where land is purchased with the savings of a married woman's separate estate, and is conveyed to the husband, the wife's right will be established in Equity, on its being shown that the land was intended to be her separate property (u); so, where the wife's separate estate was invested in bank shares in the joint names of her husband and herself, and the husband procured them to be sold, and, unknown to his wife, invested the produce in part-payment of the purchase-money of an estate which was conveyed to himself, the wife was held to have a lien upon the estate for the amount of the moneys so invested (a?) ; so, where a feme sole contracted to purchase, but the conveyance was, after her marriage, taken in her husband's name, it was held that the estate belonged to the wife, subject to a charge in the husband's favour for the portion of the purchase-money which he had contributed (y).
Purchase with wife's separate estate.
And generally as to following trust moneys, see Birt v. Burt, (1877) 11 Ch. D. 773, n. ; Re Halett's Est., (1880) 13 Ch. D. 696, 709 ; 49 L. J. Ch. 415; Gibert v. Gonard, (1885) 33 W. R. 302; 54 L. J. Ch. 439 ; Re Sallett & Co., 1894, 2 Q. B. 237; 63 L. J. Q. B. 573 ; Hancock v. Smith, (1889) 41 Ch. D. 456 ; 58 L. J. Ch. 725 ; Lewin, 11th ed. 1124 et seq.; 2 Wh. & Tud. L. C. 7th ed. at p. 833. (s) Re Pumfrey, (1882) 22 Ch. D. 255 ; 52 L. J. Ch. 228.
(t) See Lindley on Partnership, 6th ed. 175 et seq. ; Pollock on Partnership, 7th ed. 52.
(u) Darkin v. D., (1853) 17 Beav. 578 ; Merrier v. M., 1903, 2 Ch. 98 ; 72 L. J. Ch. 511, where property was purchased by husband out of income of wife's fund, they having a joint bank account.
(x) Scales v. Baker, (1859) 28 Beav. 91.
(y) Maddison v. Chapman, (1861) 1 J. & H. 470.
And where trust moneys are, in breach of trust, invested in the purchase of real estate, the cestuis que trust have the option of proceeding either for the money or the estate; or for a proportionate part of the estate, if the trust fund formed only a part of the consideration money (z) ; and a purchase of the fee simple by the executor of a mortgagee for a term of years has been considered to fall within the rule (a) ; so, where a trustee improperly advanced the trust funds to enable one of the cestuis que trust to purchase an estate, the other cestuis que trust were held entitled to a lien upon the estate for the moneys so advanced (It). The claim of the cestuis que trust will prevail against that of the lord of the fee claiming by escheat (c). But in order to follow trust money there must be specified property capable of being identified into which the money has been converted (d).
The distinction between the remedy of the cestuis que trust, where the purchase is clearly made with trust money, and their remedy where the trustee has mixed trust money with his own, must be carefully borne in mind. In the first case, the cestui que trust " has a right to elect either to take the property purchased, or to hold it as a security for the amount of the trust money laid out in the purchase, or, in other words, he is entitled at his election either to take the property, or to have a charge on it for the amount of the trust money. But, in the second case, the cestui que trust can no longer elect to take the property, because it is no longer bought with the trust money simply and purely, but with a mixed fund. He is, however, still entitled to a charge on the property purchased for the amount of the trust money laid out in the purchase, and that charge is quite independent of the fact of the amount laid out by the trustee " (e).
If purchase be breach of trust cestuis que trust can claim money or land.
(z) A.-G. v. Corp. of Newcastle, (1842) 5 Beav. 307 ; 12 C. & F. 402 ; Witet v. Gresham, (1854) 2 Dr. 258 ; Garner v. Moore, (1855) 3 Dr. 277; 24 L. J. Ch. G87 ; see sup. p. 630. As to merger of charges, as between the real and personal representatives of the incumbrancer, on his purchasing the estates, see Lewin, 11th ed. 914 et scq. ; and see sup. p. 952 et seq.