Belchier v Parsons

That, in general, it is sufficient for a man to take the same care in the management of a trust, as he would in the management of his own affairs: that of the 1st sort was the case of two trustees who join in a receipt, one only actually receiving the money; the other in that case was never held responsible, because his joining was a necessary act; but in the case of executors it is otherwise, because it is not necessary for them to join, the receipt of one alone being a sufficient discharge. That of the second sort was the case where a trustee, &c. was robbed or the like; that being an accident which he could not foresee, or avoid, he was always exempted. That of the third sort were the following instances: in the case of my Lord Plymouth, Mr. Llewelyn, the receiver appointed of his estate during his infancy, having taken bills of exchange from one Mr. Winslow, a merchant in Worcester, [41] for about £800, those bills, when offered for acceptance, were refused, and protested, and Winslow becoming insolvent, the money was lost. The question was, whether Llewelyn should be answerable for it? And it appearing that Winslow was in good credit, and had the reputation of a man of fortune, and that Llewelyn had usually remitted the produce of my lord's estate through his hands, your Lordship held, that he ought not to bear the loss, (though that was the case of a receiver, who had a salary, and therefore might, with abundantly more reason, have been obliged to indemnify against accidental losses) for that some method must have been taken of remitting the money, and this was the properest, as well as the most usual method of doing it; and as the loss was such as he could not foresee, nor owing to any negligence of his, he ought not to make it good.

So in the case of Blew v. Marshall, before Lord Talbot in 1735, (which was the case of an administrator, who, in conformity to the rigid rules of the common law, is much more strictly dealt with than a trustee) a tenant being considerably in arrear, and absconding, so that there was very little probability of recovering that arrear, refusing also to give up the possession, and a good deal of difficulty being likely to occur in getting it; the administrator thought it more for the interest of the intestate's estate, to give up his demand for the arrears to obtain the possession; and accordingly on the tenant's giving up the possession, he released the arrears to him: and it becoming a question, whether or no he should be charged with those arrears; Lord Talbot thought, from the situation of the affair, that the step he had taken was a prudent one, and for the benefit of the estate, and therefore held he should not be liable. This case was cited to your Lordship in a case of Worthington v. Stamfellow, and you was pleased to say, you should have been of the same opinion.

If then in the case of a receiver, who is paid for his labour, and of an administrator, whose acts must conform to the severity of the common law, much more will that doctrine prevail in the present case, where Mrs. Parsons is a mere equitable trustee, acting for the benefit of creditors, without any expectation of gain, or reward to herself.

This case falls under all the before-mentioned heads of exemption: her employing somebody to sell was a necessary act: the insolvency of the person employed was an accident which she could not foresee, or prevent: the choice of this person, as he was a broker of credit, was prudent at the time, though it eventually turned out to be otherwise. Had she done an unusual act, it might have had a different construction, as was the case of Lord Litchfield and Sir John Williams, where the assignees employing the clerk of the commission to receive the debts of the bankrupt, that being unusual, the Court held they were answerable for him: but the employing a broker, in this case, appears from our evidence (which they have examined none to controvert) to be always customary; and where is the impropriety of it? We might, it is true, have employed an agent to receive the money; but why should not the broker be intrusted with the money as well as the goods, which he is always in possession of, to sort them, &c. before the sale? And surely had they been, in that case, embezzled, it would not have been pretended that we were liable to make them good; for his sorting, selling, &c. were necessary acts, and for the benefit of the creditors, which we, being unconversant in these affairs, could not have done ourselves. Were trustees, assignees, &c. who receive no advantage from their offices, to be held answerable for the acts of the people they employ, in cases where it is necessary they should employ somebody, and no imprudence is imputed to them in the choice, no one would be fool-hardy enough to undertake those offices.

This is not like the case that has been mentioned of a goldsmith's note, where, for the benefit of trade, that being looked upon as money, the drawer has been indemnified, if not offered the drawee in season. To manage a trust in the manner a man would manage his own affairs, is, in general, sufficient; but that is not to be understood that a trustee may act wildly, and arbitrarily, as a man may in his own affairs, but as a prudent man, it may be supposed, would do.

In case of necessary acts, or acts prudent at the time, trustees have been always indemnified. By necessary acts are meant two sorts of necessity, a legal necessity, and a moral necessity: a legal necessity is, where, as in the case which has been mentioned, two trustees join in a receipt, that, being legally necessary to discharge the debtor, shall not charge the parties, but the person actually receiving shall alone be answerable: in the case of executors it is otherwise, for payment to one executor is sufficient, one executor having an absolute power over the testator's estate, and being capable of releasing a debt, disposing of any part of the effects, assigning a leasehold estate, &c. and his act will bind the rest: whereas in the case of trustees they must join. A moral necessity is, as in the case of Lord Plymouth: the receiver's business was to receive the produce of my lord's estate, and remit it to London: for that purpose he must either have remitted it in the manner he did, or brought, or sent it to town in cash, in both of which there was some hazard: it is true, he might have come to town with it guarded; but since the increase of trade, and commerce, inland bills of exchange becoming more frequent, that has not been insisted on; and as the person through whose hands he remitted it was a person of reputation, and had usually conveyed it safe, the Court thought he ought not to be answerable for a loss which was no way to be imputed to him, notwithstanding he was a receiver, and had a salary, which, it was urged, implied an undertaking to indemnify, &c. In the present case the party being a trustee for the benefit of others, without any expectation of gain, or reward, is, to be sure, more to be favored, for that has always been considered as a material ingredient in questions of this kind. I remember a case of a similar nature of my Lord C. J. Eyre, who was guardian to Lord Shaftesbury, under the will of the late earl: he had appointed a steward of one of his lordship's estates in the north, who failed, with about £500 or £600 in arrear; and it becoming a question whether the Chief Justice should be answerable for it? I remember it was thought he ought not to be answerable, as it was impossible he could receive the rents of the several estates himself, and as the man had been employed by the late earl himself. I do not remember whether that case was ever before the Court, or not; but I know, the principal counsel were consulted in it, and that was their opinion.

Under the head of prudent acts, was the determination that has been mentioned of my Lord Talbot: and certainly it would be very unreasonable that a trustee should be a sufferer by any act apparently for the good of the persons entitled to the benefit of the trust: and this Court will be always cautious of establishing any rules that may deter people from undertaking offices of this nature, by subjecting them to the hazard of becoming considerable losers, without any possibility of gain.

Therefore let the exception be allowed.