England and Wales High Court (Chancery Division) Decisions

At the COURT OF APPEAL IN CHANCERY

		2, 3, 4 June, 26 July 1862

This was an appeal by the Defendant Otto, the personal representative of Medley, from a decree of Vice-Chancellor Stuart.

The bill was filed by Andrew Row McTaggart Milroy and Eleanor Rainey his wife, formerly E. R. Dudgeon, for the purpose of having new trustees appointed of a voluntary settlement made by the late Thomas Medley, and for recovering fifty shares of the Bank of Louisiana which formed the subject of the settlement, and thirteen North American Fire Insurance shares which were purchased with the income of the bank shares, together with the dividends upon all the above-mentioned shares so far as they had not been paid over to the Plaintiffs or one of them; and the bill also prayed that the Defendant Samuel Lord, the trustee named in the settlement, might be decreed to make compensation to the Plaintiffs and other the parties entitled under the settlement in respect of his having given up the certificates for the shares to the Defendant Otto, the executor of Thomas Medley.

The settlement in question was made by a deed-poll dated the 2d April 1852, which was as follows:.

"Know all men by these presents, that I, Thomas Medley, of the City of New Orleans, on account of the love and affection I have for my niece Eleanor Rainey Dudgeon, daughter of Daniel Dudgeon of England, and in consideration of one dollar to me in hand paid, have conveyed, transferred, set over and delivered, and by these presents do convey, transfer, set over and deliver, unto Samuel Lord of the city and county of New York fifty shares of the capital stock of the Bank of Louisiana now standing in my name in the books of the said bank, together with the certificate or script thereof numbered 3457 and dated the 6th March 1852, under the corporate seal of the said bank, signed by W. W. Montgomery, president, and attested by R. M. Davis, cashier, and the dividends and profits thereof, to have and to hold to the said Samuel Lord and his legal representatives upon the trusts and conditions following, to wit, in trust to collect and receive the dividends and profits of the said stock and apply them to the use and benefit of the said Eleanor Rainey Dudgeon if I be living until the time of the marriage of the said Eleanor, and upon the further trust in case I die before the marriage of the said Eleanor leaving her surviving me, then to transfer the said shares of stock or the proceeds thereof to the said Eleanor for her own use and benefit; and upon the further trust in case the said Eleanor should during my lifetime marry with my previous consent and approbation, then to apply the said dividends and profits to the use of the said Eleanor for life, and after her death to convey and transfer the said stocks or the proceeds thereof to her issue if she leave any her surviving, and in default of such issue to convey and transfer the said stock or its proceeds to my next of kin; and upon the further trust if the said Eleanor shall have died before me without having married, or shall during my lifetime marry without my consent, then to reconvey and retransfer the said stock or its proceeds to me; and upon the further trust, on my direction at any time during my lifetime, or in his discretion after my death, to convert the said stock into money by sale thereof, and after such conversion to invest the proceeds thereof in his discretion in other stocks or upon a bond or mortgage at interest, to be held on the like trusts and subject to the like powers of conversion as the stock hereby transferred, and the dividends and profits thereof, reserving to myself the power at any time in writing by will or otherwise to direct and compel the said Samuel Lord to transfer the said stock or the proceeds thereof to the said Eleanor for her own use and benefit absolutely, and also reserving to myself the power in case of the death of the said Samuel Lord before me of appointing another or other trustee or trustees in his place and stead. And I the said Samuel Lord do consent and agree to accept this transfer, and I hereby covenant and agree to and with the said Thomas Medley and the said Eleanor Rainey Dudgeon severally and respectively and their several and respective legal representatives that I will observe, perform, fulfil and keep the trusts and conditions hereinbefore declared."

This deed-poll was under the hand and seal both of Thomas Medley and of the Defendant Samuel Lord. At the time of the execution of the deed-poll Samuel Lord held a power of attorney from Thomas Medley, whereby Medley empowered him "to take possession, charge and control of all his goods, chattels, books of account, evidences of debt, choses in action and claims of every kind, to buy and to sell, and to transfer the stock of any incorporated company now belonging to him, or which might thereafter belong to him, and to collect and receive the dividends," and gave him general authority to act on his behalf. Soon after the execution of the deed-poll Thomas Medley delivered to the Defendant Lord the script for 162 shares which he then held in the Bank of Louisiana, including the script for the fifty shares comprised in the deed of settlement. About the same time Medley gave to the Defendant Lord a further power of attorney authorizing him to receive the dividends then due and payable and which might thereafter become due and payable on all or any shares of the capital stock of the Bank of Louisiana then standing or which might thereafter be placed in his name in the books of the said Bank of Louisiana, and to give receipts, discharges and acquittances for the same, with power to the said attorney to substitute an attorney or attorneys under him for all or any of the purposes aforesaid, and to do all lawful acts requisite for effecting the premises.

According to the constitution of the Bank of Louisiana the shares in the bank were transferable in the books of the company, and all transfers were to be made by the proprietor or his lawful attorney, the certificates of stock being surrendered at the time the transfer was made; but it was to be collected from the evidence in the cause, that where a transfer was made by power of attorney the power of attorney had to be left with the bank. No transfer was ever made into the name of the Defendant Lord of the fifty shares comprised in the settlement; but the dividends upon the shares appeared to have been received by Lord, and remitted by him to the Plaintiff Mrs. Milroy, then Eleanor Rainey Dudgeon, sometimes directly and sometimes through the medium of the settlor, by whom they were paid over to her, except as to one dividend which appeared not to have been so paid over. The thirteen North American Fire Insurance shares were purchased, as it appeared, on the suggestion of Thomas Medley, out of the dividends of the bank shares and a bonus declared by the bank upon their shares, and the dividends upon the fire insurance shares were as it appeared paid to Mrs. Milroy, then Eleanor Rainey Dudgeon, along with the dividends upon the bank shares, but these insurance shares were purchased in the name of Thomas Medley.

In the year 1855 the Plaintiffs intermarried with the consent and approbation of Thomas Medley. In the month of November in that year Thomas Medley died, having by his will bequeathed to the Plaintiff E. R. Milroy a legacy of £4000, and appointed the Defendant J. A. Otto to be his executor, who duly proved his will. After his death the Defendant Lord delivered to Otto the certificates both for the fifty Louisiana Bank shares and for the thirteen North American Fire Insurance shares. The Plaintiff E. R. Milroy was the niece of Thomas Medley. She was educated at his expense, and lived with him after she was grown up until the summer of the year 1852, in the spring of which year he married the daughter of the Defendant Samuel Lord. The settlement which the bill sought to enforce was made in consequence of that marriage and of the Plaintiff E. R. Milroy then ceasing to live with the settlor, and as a provision for her, and she was told by Thomas Medley that he had made the settlement on that account and for that purpose.

Vice-Chancellor Stuart, at the hearing of the cause and of a petition presented in it and under the Trustee Act, made a decree declaring that the fifty shares in the Bank of Louisiana were bound by the trusts declared by the deed-poll of the 2d April 1852, and that the thirteen shares in the North American Fire Insurance Company, in the bill mentioned, belonged to the Plaintiffs in right of the Plaintiff Eleanor Rainey Milroy, the same having been purchased before her marriage with monies belonging to her. The decree proceeded to appoint a new trustee, and to order the Defendant Otto, an executor of the will of the settlor, to transfer the fifty shares in the Bank of Louisiana into the joint names of Lord and the new trustee, to be held by them upon the trusts of the said deed-poll, and also to transfer the thirteen shares in the North American Fire Insurance Company into the name of the Plaintiff Andrew Row McTaggart Milroy for his own use. It was further ordered that the amount of the dividends accrued since the decease of Medley upon the fifty shares in the Bank of Louisiana up to the time of the transfer should be paid by Otto to Lord and the new trustee, to be also held by them upon the trusts of the deed-poll, and that the amount of the dividends accrued since the decease of Medley upon the thirteen shares should be paid to the Plaintiff Andrew Row McTaggart Milroy for his own use. The costs of the suit were ordered out of Medley's estate.

The Defendant Otto appealed from this decree.

Mr. Craig and Mr. Charles Hall, for the Plaintiffs, in support of the decree. The. settlement must be regulated not by the law of Louisiana, but by that of New York, where it was made and was to be carried into execution; Addison on Contracts (page1034); Guepratte v. Young (4 De G. & Sm. 217, 228). The law of New York is the same as our own on this subject; Story, Eq. Jur. (sects. 433, 706a, 787, 793a, 973, 987, 1040, 6th edit.). What took place amounted to a good declaration of trust. All was done that the settlor could do; Ex parte Pye (18 Yes. 140); Fortescue v. Barnett (3 M. & K. 36); Edwards v. Jones (1 M. & C. 226); Blakely v. Brady (2 Dru. & Walsh, 311); McFadden v. Jenkyns (1 Hare, 458; 1 Phill. 153); Parnell v. Hingston (3 Sm. & Giff. 337); Kekewich v. Manning (1 De G. M. & G. 176). If not, we have a remedy against the settlor's assets, for he was bound not to do anything in derogation of his own deed; Williamson v. Codrington (1 Vez. sen. 511); Deering v. Farrington (6 Vin. Ab. 380, pl. 20, Cov. C.); Ward v. Audland (16 M. & W. 862); Aulton v. Atkins (18 C. B. 249); Parnell v. Hingston (3 Sm. & Giff. 337, 345); Dillon v. Coppin (4 M. & C. 647, 671); Saltern v. Melhuish (1 Amb. 247). The settlor must, have supposed that Lord would transfer the shares under the power of attorney, and this is enough to constitute a trust. It was a breach of trust to deliver up the certificates of the shares, and we are entitled at all events to relief as to them; Barton v. Gainer (3 H. & N. 387).

Mr. Cotton (Mr. Bacon with him), for the Appellant. There is nothing but an incomplete gift, which, being voluntary, the Court will not complete. There was, neither effectual assignment nor declaration of trust. In Kekewich v. Manning, Blakely v. Brady and Fortescue v. Barnett, the assignments were held complete, because the settlor had made them as complete as he could, here the settlor might have transferred the shares. An incomplete assignment is not a declaration of trust, and the delivery of the certificates does not help the case; Dillon v. Coppin (4 M. & C. 647, 669); Searle v. Law (15 Sim. 95); Bridge v. Bridge (16 Beav. 315); Woodford v. Charnley (28 Beav. 96). The cases of Airey v. Hall (3 Sm. & Giff. 315) and Parnell v. Hingston (3 Sm. & Giff. 337) are against the current of authority. The remedy against the assets is not open on these pleadings, if there were any, but there is not, for there is no covenant as there was in the cases where such a remedy has been given. What the Plaintiffs ask is, that the Court should imply a covenant for further assurance.

Mr. Malins and Mr. Kekewich, for Lord.

Mr. Craig, in reply, referred to Donaldson v. Donaldson (Kay, 711).

Judgment reserved.

July 26. THE LORD JUSTICE KNIGHT BRUCE. This is an appeal by the Defendant Mr. Otto, the personal representative of Mr. Medley (the testator in the cause), against the decree in this suit pronounced by one of the learned Vice-Chancellors on the 8th of March last; a decree declaring and establishing against Mr. Otto, as Mr. Medley's executor, a title in the Plaintiff to an interest in fifty shares in the Bank of Louisiana, and to an interest also in thirteen shares in the North American Fire Insurance Company. It is insisted by Mr. Otto that neither of the Plaintiffs had or has any interest recognizable by a Court of Justice in either set of shares or any part of them. The state of circumstances in which we find one set of shares is not exactly the same as that in which the other is placed.

First, then, with regard to the bank shares. They are claimed by the Plaintiffs under and by force of the instrument of the 2d April 1852, executed by Mr. Medley and the Defendant Mr. Lord, which, set forth in the bill, is mentioned also in the decree. They stood in Mr. Medley's name before and at the time of his execution of that instrument, and continued so to stand until his death. He was during the whole time, and when he died, the legal proprietor of them, and unless so far, if at all, as the beneficial title was affected by that instrument, the absolute proprietor of them beneficially likewise. He might, however, have affected the legal title. It was in his power to make a transfer of the shares so as to confer the legal proprietorship on another person or other persons. But, as I have said, no such thing was done. The instrument, however, of the 2d April 1852, was not founded on valuable consideration. It was merely gratuitous and voluntary, and the principal question "for our decision is, whether in such a state of things it is the duty of this Court to enforce it specifically against Mr. Medley's executor, either on the ground that by it Mr. Medley constituted himself a trustee of the shares for the purposes mentioned concerning them in the instrument, or on the ground of contract, or otherwise. It seems plain enough that the law of Louisiana, if applicable to the case, does not assist the Plaintiffs, and that the laws and rules governing the Courts at New York, where the instrument appears to have been executed, are, for any purpose now material, substantially the same as the laws and rules governing the Courts here. I am of opinion that according to our law the instrument of the 2d April 1852 was not sufficient to constitute and did not constitute Mr. Medley a trustee of the bank shares (and in saying this I do not forget the design appearing on the face of it that Mr. Lord should become a trustee under it for the purposes which it mentions), nor do I think that, voluntary as the instrument was, it contained a contract specifically enforceable against Mr. Medley, or his estate. The transaction or intended transaction left by him imperfect and incomplete he might have perfected and completed by a transfer. And thinking the Plaintiffs' case not helped by any of the circumstances stated respectively in the two answers of Mr. Lord, or by any of the authorities mentioned in the report by Messrs. De Gex, Macnaghten & Gordon of the cause of Kekewich v. Manning (decided some years ago in this Court), or by that decision, I find myself, though almost or altogether with regret, unable to agree with the decree as to the bank shares, and I believe my learned brother's view to -be in effect so far the same as mine. But though not satisfied that the instrument, if a deed, contained a covenant on Mr. Medley's part, I do not wish to prevent or prejudice any action which the Plaintiffs may wish to bring in their own names or the name of Mr. Lord against Mr. Otto. Then with respect to the fire insurance shares. As to these I have some doubt, a doubt immaterial, because, as it has been very agreeable to me to find, my learned brother is as to them of opinion with the decree in favour of the Plaintiffs. That being so, I have not the least objection to the addition in the Plaintiffs' favour as to the certificates of the fire insurance shares which my learned brother proposes and will state. The circumstances are such that we need not, I think, alter, and I am not for altering what the decree has done as to the costs of the suit, although in the opinion of both of us the Plaintiffs' case partially fails, and though I doubt, as I have said, with regard to the fire insurance shares. And I am for dealing with the costs of the appeal in the same way.

THE LORD JUSTICE TURNER, after stating the facts of the case nearly in the same terms as above, proceeded as follows:

Under the circumstances of this case it would be difficult not to feel a strong disposition to give effect to this settlement to the fullest extent, and certainly I have spared no pains to find the means of doing so, consistently with what I apprehend to be the law of the Court; but, after full and anxious consideration, I find myself unable to do so. I take the law of this Court to be well settled, that, in order to render a voluntary settlement valid and effectual, the settler must have done everything which, according to the nature of the property comprised in the settlement, was necessary to be done in order to transfer the property and render the settlement binding upon him. He may of course do this by actually transferring the property to the persons for whom he intends to provide, and the provision will then be effectual, and it will be equally effectual if he transfers the property to a trustee for the purposes of the settlement, or declares that he himself holds it in trust for those purposes; and if the property be personal, the trust may, as I apprehend, be declared either in writing or by parol; but, in order to render the settlement binding, one or other of these modes must, as I understand the law of this Court, be resorted to, for there is no equity in this Court to perfect an imperfect gift. The cases I think go further to this extent, that if the settlement is intended to be effectuated by one of the modes to which I have referred, the Court will not give effect to it by applying another of those modes. If it is intended to take effect by transfer, the Court will not hold the intended transfer to operate as a declaration of trust, for then every imperfect instrument would be made effectual by being converted into a perfect trust. These are the principles by which, as I conceive, this case must be tried.

Applying, then, these principles to the case, there is not here any transfer either of the one class of shares or of the other to the objects of the settlement, and the question therefore must be, whether a valid and effectual trust in favour of those objects was created in the Defendant Samuel Lord or in the settlor himself as to all or any of these shares. Now it is plain that it was not the purpose of this settlement, or the intention of the settler, to constitute himself a trustee of the bank shares. The intention was that the trust should be vested in the Defendant Samuel Lord, and I think therefore that we should not be justified in holding that by the settlement, or by any parol declaration made by the settlor, he himself became a trustee of these shares for the purposes of the settlement. By doing so we should be converting the settlement or the parol declaration to a purpose wholly different from that which was intended to be effected by it, and, as I have said, creating a perfect trust out of an imperfect transaction.

His Honour the Vice-Chancellor seems to have considered that the case Ex parte Pye (18 Ves. 140) warranted the conclusion that the settlor himself became a trustee by virtue of the power of attorney which he had given to the Defendant Samuel Lord; but in Ex parte Pye the power of attorney was given by the settlor for the express purpose of enabling the annuity to be transferred to the object of the settlor's bounty. The settlor had, it appears, already directed the annuity to be purchased for the benefit of that object, and had even paid over the money for the purpose of its being applied to the purchase of the annuity; and then when the annuity was, from the necessity of the case, purchased in the settlor's name, all that possibly could be wanted was to show that the original purpose was not changed, and that the annuity, though purchased in the settlor's name was still intended for the benefit of the same object of the settlor's bounty, and the power of attorney proved beyond all doubt that this was the case. These facts appear to me wholly to distinguish this case from the case of Ex parte Pye. In my opinion, therefore, this decree cannot be supported upon the authority of Ex parte Pye; and there does not appear to me to be any sufficient ground to warrant us in holding that the settlor himself became a trustee of these bank shares for the purposes of this settlement.

The more difficult question is, whether the Defendant Samuel Lord did not become a trustee of these shares? Upon this question I have felt considerable doubt; but in the result, I have come to the conclusion that no perfect trust was ever created in him. The shares, it is clear, were never legally vested in him; and the only ground on which he can be held to have become a trustee of them is, that he held a power of attorney under which he might have transferred them into his own name; but he held that power of attorney as the agent of the settlor; and if he had been sued by the Plaintiffs as trustee of the settlement for an account under the trust, and to compel him to transfer the shares into his own name as trustee, I think he might well have said: These shares are not vested in me; I have no power over them except as the agent of the settlor, and without his express directions I cannot be justified in making the proposed transfer, in converting an intended into an actual settlement. A Court of Equity could not, I think, decree the agent of the settlor to make the transfer, unless it could decree the settlor himself to do so, and it is plain that no such decree could have been made against the settlor. In my opinion, therefore, this decree cannot be maintained as to the fifty Louisiana Bank shares.

As to the thirteen North American Fire Insurance shares, the case seems to me to stand upon a different footing. Although the Plaintiffs' case fails as to the capital of the bank shares, there can, I think, be no doubt that the settlor made a perfect gift to Mrs. Milroy, then Miss Dudgeon, of the dividends upon these shares, so far as they were handed over or treated by him as belonging to her, and these insurance shares were purchased with dividends which were so handed over or treated. It seems to me, upon the evidence, that these shares were purchased with the money of Mrs. Milroy, then Miss Dudgeon, and that the purchase having been made in Thos. Medley's name, there would be a resulting trust for Miss Dudgeon. I think, therefore, that as to these shares the decree is right, the value of the shares being, as I presume, under £200, so that the case does not fall within the ordinary rule of the Court as to the wife's equity for a settlement.

The case being thus disposed of as to the title to the shares, I see no ground for the claim to compensation raised by this bill. The certificates for the shares would follow the legal title, and as to the fifty bank shares would therefore belong to the Defendant J. A. Otto, and as to the thirteen insurance shares the Plaintiffs recovering those shares must recover the certificates also; but this not being provided for by the decree, a direction for the delivery of these certificates should, I think, be added.

Upon the hearing of this appeal it was contended for the Plaintiffs, that so far as they might fail in recovering any of the shares in question they were entitled to recover the value of them against the estate of Thos. Medley. I am not sure that this point can properly be considered to be open upon these pleadings, but whether it be so or not, I agree with my learned brother that the Plaintiffs' claim in this respect cannot be maintained. There is no express covenant in the settlement, and whatever might be done as to implying a covenant to do no act in derogation of the settlement, it would, I think, be going too far to imply a covenant to perfect it. If there be a breach of any implied covenant by the delivery of the certificates to the Defendant J. A. Otto, the Plaintiffs' remedy sounds in damages, and they may pursue that remedy at law; for which purpose, if the Plaintiffs desire it, there may be inserted in the decree a direction that they be at liberty to use the name of the Defendant Lord, of course upon the usual terms of indemnifying him. I have not adverted to the point which was raised as to this case being governed by the Spanish law, for I think that if that law was more favourable to the Plaintiffs, the onus was upon them to allege and prove it. As to the costs of the suit, my learned brother being of opinion that they ought to be paid out of the settlor's estate, I do not dissent. The decree must be altered accordingly as to the several points to which I have referred.