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.
Power to postpone sale.
Trustees of a mere power of sale (p), with the usual trusts for re-investment in real estate, ought not to sell except for some good reason (q); although the Court would not control a bond fide exercise of their discretion (r). Where a transaction, apparently a sale under the ordinary power, was in fact a mere contrivance to raise money for the purpose of its being advanced to the tenant for life, under a power of advancement in the settlement, it was set aside as a fraud upon the power of sale (s).
Trustees under power of sale.
(n) Biggs v. Peacock, (1882) 22 Ch. D. 284; 52 L. J. Ch, 1; Re Tweedie and Miles, (1884) 27 Ch. D. 315; 54 L. J. Ch. 71; Re Douglas and Powell's Contract, 1902, 2 Ch. 296, 313.
(o) Sub-s. (4). . .
(p) Sales by such trustees under the new law can only take place in rare cases. See above, p. 51, n. (a).
(q) See Mortlock v. Buller, (1804) 10 Ves. 309; Watts v. Girdlestone, (1843) 6 Beav. 188; 12 L. J. Ch. 363; Sug. 14th ed. 70.
(r) Sug. Pow. 8th ed. 601; Marshall v. Sladden, (1851) 4 De G. & S.
(s) Robinson v. Briggs, (1853) 1 S. & G. 188.
A sale by a trustee - under a power of sale as distinguished from a trust for sale - after a beneficiary who is sui juris has become absolutely entitled to the property, was prima facie invalid (t). Where the power of sale was confined to the continuance of the trust, it could not be exercised after the time when, but for the trustee's default, it ought to have been completed (u). And generally, where the limitations of the settlements were exhausted, the power of sale was extinguished (x). But where an estate was devised to trustees for different persons in specified shares, some of the beneficiaries being entitled absolutely, while the shares of others were settled upon trusts for their benefit, and the trustees had an unlimited power of sale over the whole estate, it was held that this power might be exercised so long as the trusts of any of the shares remained unperformed (y). The object of the power must in each case be considered, and if it may be reasonably inferred from the purpose or language of the instrument that the power was intended to remain exercisable, notwithstanding that the beneficiaries have become absolutely entitled, e.g., for the purpose of division, a sale after that event has happened may be supported (z).
Duration of power.
It is now settled that a power in a settlement to change the nature of the interests-limited is, notwithstanding the rule against perpetuities, valid, though there is no period prescribed within which the power is to be exercised (a).
(t) Jefferson v. Tyrer, (1845) 9 Jur. 1083; and see Lantsbery v. Collier, (1866) 2 K. & J. 709; 25 L. J. Ch. 672.
(u) Wood v. White, (1838) 2 Ke. 664, 669; 8 L. J. N. S. Ch. 209.
(x) Wolley v. Jenkins, (1856) 23 Beav. 53, 63; 26 L. J. Ch. 379.
(y) Taite v. Swinstead, (1859) 26 Beav. 525.
(z) Re Cotton's Trustees and the London School Board, (1882) 19 Ch. D. 624; 51 L. J. Ch. 514; Peters v. Lewes and East Grinstead R. Co., (1881) 18 Ch. D. 429, 435; 50 L. J. Ch. 172, 839; Re Lord Sudeley and Raines, 1894, 1 Ch. 334; 63 L. J. Ch. 194; Re Dyson and Fowke, 1896, 2 Ch. 720; 65 L. J. Ch. 791; Re Jump, 1903, 1 Ch. 129; 72 L. J. Ch. 16.
(a) Boyce v. Manning, (1832) 2 Cr. & J. 334; 1 L. J. N. S. Ex. 123; Biddle v. Perkins, (1829) 4 Si. 135; Waring v. Coventry, (1833) 1 Myl. & K. 249; Cole v. Sewell, (1843) 4 D. & War. 1; Wood v. White, (1839) 4 My. & C. 460; 7 L. J. St. S. Ch. 203; Slark v. Dakyns, (1874)
The old express power of sale and exchange may, it seems, be accelerated by the surrender of a prior interest, for this does not prejudice the estate of the remainderman, but only changes the nature of the property; but where powers of charging are limited to successive tenants for life when in possession, the power given to a tenant for life in remainder must await the regular determination of the previous limitations, and cannot be accelerated by the surrender of a prior life interest (b).
Acceleration by surrender of prior interest.
On the other hand, where a settlement of a reversion in terms authorised a sale at any time with the consent of the tenant for life under the settlement, it was held that the trustees might proceed to an immediate sale, though its effect would be, under the trusts declared of the purchase-money, to vary the rights of the beneficiaries by giving the tenant for life an immediate income (c).
Reversion may be sold to prejudice of remainderman under express power.
But trustees, in exercising discretionary powers of changing the nature of the trust estate, ought not to be influenced by any desire to benefit one beneficiary at the expense of another (d); and if one of several beneficiaries. e.g., a tenant for life, having an absolute irresponsible discretionary power of giving or withholding his consent to a sale by the trustees, become himself a trustee, he is thereby precluded from withholding or giving his consent to a sale, with a view more to his own interest than to that of the other beneficiaries (e).
Power to convert, etc. should be exercised for general benefit.
10 Ch. 35; 44 L. J. Ch. 205; Peters v. Lewes R. Co., (1881) 18 Ch. D. 429; 50 L. J. Oh. 172, 839; Re Lord Sudeley and Raines, 1894, 1 Ch. 334; 63 L. J. Oh. 194; 2 Prest. Abstr. 158; Sug. Pow. 8th ed. 848 et seq.; Lewis on Perp. c. 25, and Suppl.; 1 Jarm. 6th ed. 311.
(b) Truell v. Tysson, (1856) 21 Beav. 437; 25 L. J. Ch. 801; see as to deferred powers, Farwell, 3rd ed. 174 et seq.
(c) Clark v. Seymour, (1834) 7 Si. 67; and see Tasker v. Small, (1834) 6 Si. 625; 7 L. J. N. S. Oh. 19; Blackwood v. Borrowes, (1843) A D. & War. 441; Giles v. Homes, (1846) 15 Si. 359; Minet v. Leman. (1865) 7 D. M. & G. at p. 350; 24 L. J. Ch. 545; cf. Tewart v. Lawson, (1874) 18 Eq. 490; 43 L. J. Ch. 673.
(d) Raby v. Ridehalgh, (1855) 7 D. M. & G. 104; 24 L. J. Ch. 528; see Lewin, 13th ed. pp. 404, 443.
(e) Lord v. Wightwick, (1853) 4 D. M. & G. 803; 23 L. J. Ch. 235.
By s. 107 (1) of the S. L. Act, 1925 (f), it is provided that a tenant for life or statutory owner shall, in exercising any power under that Act, have regard to the interests of all parties entitled under the settlement, and shall, in relation to the exercise thereof, be deemed to be in the position and to have the duties of a trustee.
Tenant for life under S. L. Acts is a trustee.
A tenant for life selling under the Act must sell with the same fairness as if he were a trustee for himself and those entitled in remainder (g). Under s. 68 of the S. L. Act, 1925, which provides for dealings with the tenant for life, the tenant for life may himself become a purchaser or lessee; but in such a case the statutory power is exercisable by the trustees. "In the S. L. Act," said Lord Macnaghten in Bruce v. Marquess of Ailesbury (h), "the paramount object of the Legislature was the well-being of settled land"; and accordingly the interests of tenants on the estate must not be disregarded (h). If the tenant for life acts unjustly towards those whose interests he is bound to protect, the Court will interfere (i).
Trusts for sale are often exercisable only under certain specified conditions: when this is the case, and a sale is made in breach of a condition, the purchaser's safety 6eems to depend upon the following considerations, viz.: 1st, whether the condition is subsequent or precedent; and, 2ndlly whether it affects the title to the legal estate. If it affect merely the equitable title, an apt declaration in the instrument creating the trust will protect a purchaser against the non-performance of a precedent, and, a fortiori, of a subsequent condition; as in the case of the statutory power of sale given to mortgagees, which contains a precedent condition that certain notices shall have been given, and defaults made in payment, but relieves purchasers from liability for a breach of such condition. If, on the other hand, the exercise of a power is to affect the legal estate, it is essential that any conditions affecting its exercise should be duly complied with (k).
Conditional powers of and trusts for sale.
Subsequent and precedent condition.
(f) Substituted for s. 53 of the S. L. Act, 1882.
(g) Per Pearson, J., in Wheelwright v. Walker, (1883) 23 Ch. D. 752, 762; 52 L. J. Ch. 274.
(h) 1892, A. C. p. 365; Mundy and Roper's Contract, 1899, 1 Ch. 275, 288; Re Marshall's Settlement, 1905, 2 Ch. 325, 328.
(i) Hampden v. E. of Buckinghamshire, 1893, 2 Ch. 531; 62 L. J. Ch. 643; and cf. Re Hunt's Settled Estates, 1905, 2 Ch. 418; 1906, 2 Ch. 11; Re Charteris, 1917, L Ch. 377, 388; 1917, 2 Ch. 379.
Under s. 26 (1) of the L. P. Act, 1925, where the consent of more than two persons is made requisite to the execution of a trust for sale, then, in favour of a purchaser, the consent of any two of such persons is to be deemed sufficient. A purchaser from a mortgagee selling under the statutory power will not be protected if he has notice of an irregularity which cannot be waived (l). The L. P. Act, 1925, s. 199, contains restrictions on the doctrine of constructive notice.
Protection of purchaser from mortgagee.