Trustee of New, Prance & Garrard v Hunting
| Jurisdiction | England & Wales |
| Year | 1897 |
| Date | 1897 |
| Court | Queen's Bench Division |
Bankruptcy - Voluntary Conveyance to make good Breaches of Trust - Revocable Mandate - Fraudulent Preference - Evidence - Notes of Bankrupt's Public Examination -
P. two days before his bankruptcy executed a deed whereby he conveyed a freehold estate, of which he was the owner, to H. upon trust to raise thereout by sale or mortgage 4200l., and therewith to make good divers breaches of trust which he had committed in respect of certain scheduled trust estates of which he was sole trustee or joint trustee. By the deed P. charged the property conveyed with the payment of the 4200l., and conferred on H. a power to appoint new trustees. The deed was made without any pressure and was not communicated to any of the beneficaries:—
Held, that the deed was not a revocable mandate, but created the relation of trustee and cestui que trust as between H. and the beneficiaries under the trust estates and was irrevocable:
Held, also, that the trust estates were not creditors of P. within the meaning of s. 48 of the Bankruptcy Act, 1883, and therefore that the deed was not a fraudulent preference under that section.
Ex parte Taylor, (
When a bankrupt is a party to an action, not in his individual interest, but in a representative capacity, the notes of his public examination cannot be read as evidence against him.
Observations on the mode of applying the words “with a view to prefer” in s. 48.
THIS was an action which raised the question whether a deed executed by the bankrupt Prance was void as against his trustee in bankruptcy.
Messrs. New, Prance & Garrard were a firm of solicitors practising at Evesham, in the county of Worcester. In November, 1893, New, the senior partner, died insolvent, and the business of the firm was carried on by Prance & Garrard, the surviving partners, until March 31, 1894, when a receiving order was made against them on their own petition, and they were subsequently adjudicated bankrupts. Their trustee in bankruptcy also became, under an administration in bankruptcy pursuant to s. 125 of the Bankruptcy Act, 1883, and s. 21 of the
The firm had to their own knowledge been hopelessly insolvent for some years.
On March 29, 1894, Prance executed a deed whereby he conveyed a freehold property, known as the Longdon Hill estate, of which he was the owner in fee, to the defendant Hunting upon trust to raise thereout by sale or mortgage the sum of 4200l., and therewith to make good divers breaches of trust which Prance, either as sole trustee or joint trustee, had committed in respect of eight scheduled trust estates. And by the same deed Prance charged the Longdon Hill estate with the payment of the said sum of 4200l. thereby directed to be raised; provided that if the moneys ultimately required for the rectification of and completely satisfying the said breaches of trust should be less than the said sum of 4200l., then that the difference or surplus should be held in trust for and should be paid over to Prance; and further, that if, when the whole of the payments intended to be thereby secured should have been made and perfected, any parts of the hereditaments thereby conveyed should remain in Hunting unsold, then he should forthwith, upon completion of the trusts, reconvey such unsold hereditaments unto Prance. The deed also conferred upon Hunting, his executors and administrators, a power to appoint new trustees for the purpose of carrying into effect the trusts of the deed.
The draft of this deed was prepared by Prance as early as April, 1892, and the recitals (so far as material) then ran as follows:—
“And whereas the said C. C. Prance is the active trustee in the trusts mentioned in the first column of the schedule hereunder written and on the happening from time to time of the payment off of the securities on which the trust funds thereof have been invested he has allowed the same to be paid into the general banking account of the said firm of New, Prance & Garrard pending their reinvestment on other securities with the result that as to the sums mentioned in the second column of the first part of the said schedule hereto there are at the present time no securities appropriated for the same and as to the trusts mentioned in the second column of the second part of the said schedule the trust funds have been invested in securities yet by reason of the agricultural depression and the depreciation of land since the investment was made it is estimated that such securities are deficient in value to the amount mentioned in the second column of the second part of the said schedule. And whereas the said C. C. Prance for the better satisfaction of his co-trustees and the beneficiaries of the said trust estates respectively has consented and agreed to execute these presents. Now this indenture witnesseth that in pursuance of the said agreement and in order to effectuate the same he the said C. C. Prance as beneficial owner doth hereby convey,” &c.
The draft remained in this form until a few days before the bankruptcy, when Prance went to Birmingham and had a conference with counsel, and then the above recitals were altered to run as follows:—
“And whereas the said C. C. Prance is a trustee in the trust estates mentioned in the schedule hereunder written and on the happening from time to time of the payment off of the securities on which the moneys of such trust estates have been invested he has allowed such moneys to be paid into the general banking account of the said firm of New, Prance & Garrard pending their intended reinvestment on other mortgage securities with the result that in some instances there are at present no securities at all appropriated for the same and in other instances although the trust funds are invested on securities yet by reason of the agricultural depression and the depreciation of land since the investments were made or from death of the mortgagor or from other causes it is estimated that such securities are deficient in value and will not produce the amounts nominally secured thereby. And whereas it is apprehended that such dealing with the said trust funds has been a breach of trust or breaches of trust for which the said C. C. Prance is personally responsible to the several cestui que trustent. And whereas the said C. C. Prance to rectify such breaches of trust as far as may be and thereby to shield and exonerate himself as far as possible from liability to the proceedings he is now or may at any time hereafter be exposed to by reason of such breaches of trust is desirous of executing these presents. Now this indenture...
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