Scottish Court of Session Decisions

(This case is a sequel to the case of Alexander v. Johnstone, March 3, 1899, 1 F. 639, ante, vol. 36, p. 453.)

By his trust-disposition and settlement the late Mr Charles Alexander, who died on 3rd September 1879, conveyed his whole estate, heritable and moveable, to James Johnstone, Hunterheck, Moffat, and Peter Inglis, farmer, East Pilton, as trustees for the purpose, inter alia, of paying to his widow such sums as they should think proper for her maintenance and for bringing up her children. The trustees were appointed executors. They were authorised to invest the trust-estate “upon good heritable property in Scotland,… or upon any of the Government stocks of Great Britain or the United Kingdom, or on debenture bonds of any municipal or parliamentary trust in Scotland.”

At a meeting held on September 8, 1879, the trustees and executors accepted office.

From the minute of this meeting it appeared that there were present thereat the two trustees and “also Robert Thorburn, writer, Peebles, agent for the deceased that the documents of value found in the repositories of the deceased were placed in the hands of Mr Thorburn; that “Mr Thorburn was instructed to have the deceased's personal effects valued forthwith for Government duty by Mr Cairns, licensed appraiser, Peebles; to advertise for claims against the deceased in the Scotsman and Courant newspapers and the Peeblesshire Herald and Advertiser; to have the trust-disposition and settlement by deceased placed on record; and to have a title made up to the deceased's estate forthwith;” and that “Mr James Johnstone was appointed factor and manager to the trust, with power to open an account with the Bank of Scotland, Peebles, and to

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overdraw the same if necessary to the extent of £300 sterling.”

The trustees gave up an inventory of the trust estate and obtained confirmation thereto. They arranged with the landlord for the renunciation of the lease of the farm of Easter Knowe, of which Mr Charles Alexander had been the tenant, and sold the whole stock, crop, &c. The trustestate was practically ingathered and ready for investment on 8th June 1880, the net amount of it being £2718, 15s. 8d.

On 28th May 1880, in anticipation of the money being immediately ready for investment, the pursuer wrote to the defender:—“Mr Inglis and I will be glad to come through as soon as you have matters ready for us, as we would like the money invested as soon as possible.” The following day the defender's clerk replied—“With reference to the investment of the money, now that Whitsunday is past, it will be somewhat difficult to get a satisfactory security, as all these matters are arranged at the terms of Whitsunday and Martinmas, but Mr Thorburn directs me to say that he will do his best to get the money put up with as little delay as possible.” On 13th September the defender wrote to the pursuer—“I have been making enquiries regarding a suitable investment for £2000 of this trust's funds, and the best terms I can get for the money at Martinmas are as follows:—On debenture bond by the Caledonian Railway Co. for 4 years, 3 3 4 per cent. On debenture bond of the Greenock Harbour Trust for 7 years at 4 per cent. I made enquiry at the other leading railway companies and at several first-class parliamentary trusts, but found they were not open to borrow at Martinmas. Looking to the undoubted security of the Caledonian Railway, I feel disposed to recommend the trustees to lend the money to them, notwithstanding that they are 1 4 per cent. below the Greenock Harbour Trust. The Greenock Harbour Trust I deem perfectly save, and have a large sum lent to them for various clients, but the Caledonian Railway Co. is exceptionally good, and hence my recommending it in preference to the other, the difference in rate being so small. Will you kindly consult with your co-trustee and advise me of the decision you arrive at?” The pursuer on behalf of himself and his co-trustee replied to the defender on 30th September 1880—” I had your letter anent the investing of the E. Knowe trust funds. Of course we have every wish to do the thing safely, but at the same time are anxious, if it were possible, that the investment could be got to give 4 p. c. in return. I hold debenture stock of Glasgow and South-Western, which yields 4 p.c., but probably that may not be had now.” The defender replied to the pursuer on 1st October 1880—“I have your favour of the 30th ulto. It would be quite possible to get debenture stock in any of the leading railways yielding 4 per cent., but then you have to pay a premium of from £6 to £7 per £100 for it, and as no one could guarantee that you would get the same premium when you sold the stock, the capital might thus come to be infringed upon. It is, no doubt, very desirable to get a return of 4 per cent., and I think you might do worse than take the Greenock Harbour Trust bonds, which yield that rate. Of course I cannot guarantee that you will now get these bonds or the Caledonian Railway ones, as some time has elapsed since I wrote you, but I have little doubt but that we could if the matter was settled without delay. One recommendation I may mention which the Caledonian Railway bonds have, is that the company will take the money for a shorter period, viz., four years, at the end of which time we may get very much better terms, and probably you will keep that circumstance in view in deciding the question.”

On 12th October 1880 the trustees held a meeting, at which the following resolution, as appearing in the minute of meeting, was passed:—“The trustees having taken into consideration the propriety of investing £2000 of the funds under their management, and being thoroughly satisfied from inquiries made by them of the sufficiency of the Greenock Harbour Trust, resolved to lend that sum to them on debenture bond for seven years, from Martinmas first, at 4 per cent., or for such shorter period as the agent may be able to arrange with the Trust.”

On 16th October 1880 the trustees lent £2000 of the trust funds to the Greenock Harbour Trust upon the security of the rates, duties, revenues, and properties of that trust, and they received in return an assignment in statutory form, dated 19th November 1880, whereby, in virtue of the Greenock Port and Harbour Acts 1866, 1867, and 1872, the Greenock Harbour Trustees bound themselves to repay the sum of £2000 on 11th November 1887, and in security assigned “all and sundry the rates, duties, and other revenues of the Trust, and the works and property of the Trust, payable or belonging to the Trust.”

The Greenock Harbour Act 1880 (43 and 44 Vict. cap. clxx.), which came into force upon 12th August of that year, by section 66 authorised the Harbour Trustees to borrow, on the security of the rates and duties, and other revenues of the Trust, any sum which together with the sum already authorised to be borrowed before the passing of that Act should not exceed £1,300,000. The amount actually borrowed prior to the Act was £878,000. It appeared from the Act that the additional amount authorised therein to be borrowed was for the construction of a new wet dock.

Section 72 of the Act provided that “all assignments for money borrowed by the trustees before the passing of this Act in force at the passing of this Act shall, during their respective continuance, and subject to the provisions of the Acts under which the same were respectively granted, have priority over any assignments for money borrowed by them after the passing of this Act.”

The Greenock Harbour Trust was announced to be insolvent on 11th May 1887.

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Questions having arisen as to the priority of the various assignments which had been granted by the Harbour Trustees, a special case was presented in which judgment was delivered on 27th January 1888, with the result that the assignments were classified in thefollowingorder—(1st) assignments under the Act of 1842, (2nd) assignments under the Act of 1866, (3rd) assignments under the Act of 1872 granted prior to the passing of the Act of 1880, (4th) assignments under the Act of 1872 granted after the passing of the Act of 1880 and under the Acts of 1880 and 1884. Thereafter, in terms of the Greenock Harbour Act 1888, which provided for the issue of preferable or A debenture stock to the holders of bonds issued prior to the passing of the Act of 1880, and of deferred or B debenture stock to the holders of bonds issued after that date, the trustees received in exchange for the original assignment a certificate for £2000 B debenture stock of the Greenock Harbour Trust. The market value of that amount of the said stock in 1898 was about £750.

Mr Inglis died in 1896 leaving no estate.

In these circumstances Mrs Alexander, the truster's widow, and her three daughters on 30th December 1897 raised an action against James Johnstone and against Mr Inglis' representatives, who did not appear, to compel them to make good the loss arising from the investment of the trust funds with the Greenock Harbour Trust.

The Lord Ordinary ( Kyllachy) after a proof, on 25th May 1898, found that the loan in question was not justified, and that the defender and the representatives of his co-trustee were liable conjunctly and severally to make good the loss which had thereby accrued or might accrue to the trust-estate.

The defender reclaimed, and the First Division, on 3rd March 1899, adhered to the interlocutor of the Lord Ordinary. The decision is reported ut supra.

Thereafter the Lord Ordinary pronounced decree for payment of £2000 and arrears of interest against James Johnstone.

In 1899 Mr Johnstone raised the present action against Mr Thorburn for payment of four sums, amounting in all to £2842, 5s. 2d., the two first being the amounts which he had paid back to the trust-estate in terms of the foregoing interlocutor, and the two last being the expenses of the action.

The pursuer averred that he had been unable to recover anything in relief from the estate of his co-trustee owing to the latter's insolvency.

He averred further—“(Cond. 4) The whole trust-estate being as above mentioned realised, or in course of realisation, the defender was applied to by the trustees, who were both farmers aud without skill and experience in the investing of trust funds, to advise them in the selection of an investment or investments for the trust moneys, and he did so advise them, and in relation to said selection acted not merely as a conveyancer but as their financial adviser.… (Cond. 5) Relying on the defender's recommendation, and assuming, as they were entitled in the absence of any information or warning from him to the contrary to assume, that money advanced by them to the Greenock Harbour Trustees on the bonds of the trust would rank pari passu with the existing indebtedness of the trust, and that no statutory preference had been or was about to be created in favour of existing bonds over those to be subsequently issued, the pursuer and his cotrustee, the late Peter Inglis, at a meeting held on 12th October 1880 in the defender's office, at which the defender was present, resolved to lend £2000 to the Greenock Harbour Trust for seven years at 4 per cent., or for such shorter period as the defender could arrange. Prior to said meeting the said Peter Inglis had, on behalf of himself and the pursuer, and in reliance that the bonds of the Greenock Harbour Trust proposed to them by the defender for investment were first bonds of that corporation, made general inquiries regarding the Greenock Harbour Trust bonds and had communicated the favourable result of these inquiries to the pursuer. At said meeting the defender repeated the assurances of his letters above referred to, and neither informed the pursuer and his cotrustee of the fact that a month or two previously a further statute had been passed, greatly affecting the position of the trust, and increasing the borrowing powers of the trustees, nor that that statute conferred a preference on all existing bonds over any subsequently issued, whether issued under the authority of the prior Acts or under that of the newly-passed Act of 1880. (Cond. 11) The defender knew that the Greenock Harbour Trust was constituted under various Acts of Parliament, and that the borrowing powers of the trust were regulated under these Acts; and in the summer of 1880 he knew or ought to have known that the Greenock Harbour Trustees were applying to Parliament for extended borrowing powers, in order to make a much larger dock than they had contemplated under the 1872 Act. It was the duty of the defender, as law-agent advising the pursuer and Mr Inglis, to have ascertained what were the provisions of that Act, and also of the prior Acts under which the borrowing of the Harbour Trust took place.… The defender also did not know the financial position of the Harbour Trust and had not examined the accounts of the Trust. His confident opinion of the Harbour Trust security was entirely founded on repute and on reports obtained from friends in Greenock. The defender was bound to take all reasonable care to ascertain the sufficiency of the security which he represented as ‘perfectly safe,’ and he was guilty of fault and gross negligence and breach of duty in making the said representation and not ascertaining and communicating to his clients the facts above stated. It was the defender's duty when carrying through the transaction at Martinmas 1880 to see that they got a first security, and not to take on behalf of his clients, in place of a first class

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security, a fourth security postponed to the sum of £873,000 of prior debt.”

The pursuer pleaded—“(1) The pursuer having suffered loss through the fault, negligence, and breach of duty of the defender, as his agent and adviser, to the extent sued for in the conclusions of the summons, the defender is liable to repay these sums to the pursuer as concluded for.”

The defender averred—…“The trustees' minutes and the bond are referred to for their terms. Quoadultra denied. Explained that the investment in question was selected by the trustees, as the result of inquiries made by themselves and particularly by the late Mr Inglis. The defender was not asked or employed by the trustees to make any inquiries regarding the bonds in question, or to report upon them as securities, and he was in no way responsible for the decision to which the trustees came. The bonds were in good repute as investments at the time, and were within the investing powers of the trustees. The defender merely brought the bonds, along with the Caledonian Railway bonds, under the trustees' notice. As above explained, the trustees made their own inquiries, and made up their own minds regarding the investment without consulting the defender. At the meeting of 12th October 1880 Mr Inglis himself stated that he had made special inquiries both in Edinburgh and Glasgow as to the sufficiency of the harbour bonds, and was thoroughly satisfied of the safety of investing in them. The defender did not at said meeting repeat anything formerly said by him in his letters regarding the investment except that, after Mr Inglis had made the statement above mentioned, he again recommended the railway bonds as being undoubted securities. The proposal to endeavour to arrange for a shorter period than seven years was made by the trustees in consequence of a suggestion by the defender that the seven years term was too long.”

The Lord Ordinary ( Kyllachy) allowed a proof, the import of which sufficiently appears in the opinion of the Lord President ( infra).

On 30th April 1900 the Lord Ordinary pronounced the following interlocutor:—“Decerns against the defender to make payment to the pursuer of (1) the sum of £2000, and (2) the sum of £198, 16s. 6d., making together the sum of £2198, 16s. 6d., in full of the conclusions of the summons, the said defender on making payment of said sum receiving in exchange at his own expense an assignation or transfer of the £2000 B Debenture Stock of the Greenock Harbour Trust at present held by the pursuer, with all right, title, and interest which the pursuer at present has in the said debenture stock, and with any interest due and to become due thereon: Finds the pursuer entitled to expenses,” &c.

Opinion.—“This case is the sequel of an action which was lately before the Court, and in which certain trustees were held liable to make good to their beneficiaries the loss arising upon an investment in the bonds of the Greenock Harbour. The pursuer—the survivor of the trustees, who as it happens has had to bear the whole loss—now brings the present action to obtain relief by way of damages from the solicitor to the trust, on whose advice the investment was, it is said, made, and who carried through the transaction; and the ground of the demand is that the solicitor failed in his duty, and is liable to his employers on the head of professional negligence.

It must be assumed in this action that the trustees were responsible to the beneficiaries, notwithstanding the advice which they obtained. It was not pleaded in the former action that the matter was one which they were entitled to delegate, and accordingly that point was not decided. But whether they could or could not have successfully defended themselves on that ground, it is not, I apprehend, doubtful that if they prove as against their solicitor a case of professional negligence of which the bad investment was the result, they (or the pursuer as now sole surviving trustee) have a good action against the solicitor on the contract of employment.

There can be no doubt that the investment was an improper investment of trust funds. It has been decided finally in this Court that it was grossly imprudent; and it is, I think, important to notice wherein its imprudence was held to consist. Speaking generally, it came to this, that the investment was a. speculative investment, depending as it appeared on the success or failure of a certain commercial enterprise—an enterprise which was in course of being initiated, and which had not been in any degree tested by results. It therefore belonged to a class which (whether prudent or imprudent for a man risking his own money, and setting the chance of gain against the chance of loss) was, as established by repeated decisions of the Courts, grossly imprudent for a trustee; as indeed it would in general be for any person who, although dealing with his own funds, was making a provision for the future of others.

It has also, I think, to be kept in view that the vice of the investment arose by virtue substantially of the operation of certain Acts of Parliament, by which the affairs of the Greenock Harbour Trust were regulated, and particularly of an Act passed in the month of August 1880, shortly before the date when the investment was made. That Act—the bill for which was before Parliament when the trustees and the defender had first occasion to consider the matter—provided (upon its just construction) that all bonds issued after its date should be postponed in priority to all bonds previously issued. It also provided for the application of the money borrowed to the construction of a new dock—known as the James Watt Dock—which it was hoped would divert a certain class of traffic from Glasgow to Greenock, and thereby augmentlargelytherevenueoftheGreenock Harbour. The result of course was that to anyone proposing after August 1880 to

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invest in the bonds of that harbour, the question of safety or risk was one of considerable complexity, involving for its proper appreciation points of construction of Acts of Parliament, as well as points of accounting arising on the published accounts of the Harbour Trust.

In these circumstances the questions now for decision appear to be these—(1) Did the defender bring the investment in question before the trustees as a safe and proper investment of trust funds; (2) did he do so after due inquiry and in the exercise of a due and careful judgment; (3) did he act in the matter on his professional responsibility; and (4) did the pursuer and his co-trustee act on his (the defender's) advice, and did they make the investment relying upon and induced by it.

On the first two of those questions, controversy is hardly possible. The facts sufficiently appear from the correspondenee, and from the quite candid testimony of the defender himself. There was it appears in the summer of 1880 a sum of £2000, forming the bulk of the trust estate, for the investment of which the defender was asked to arrange. He wrote in reply that it would be somewhat difficult at the time to get a satisfactory security, but that he would do his best to get the money put up with as little delay as possible. After some months he again wrote stating that he had been making inquiries regarding a suitable investment and had found two, viz., debentures of the Caledonian Railway and bonds of the Greenock Harbour, and that while disposed to recommend the first of these as preferable, he deemed both investments perfectly safe. He went on to ask the pursuer to consult with his co-trustee and to advise him as to their decision; and in a subsequent letter, in reply to one from the pursuer pointing out that the trustees while wishing to do the thing safely, desired, if possible, a 4 per cent. return, he finally stated that it was no doubt very desirable to get a return of 4 per cent.; and that he thought that the trustees might do worse than take the Greenock Harbour bonds, which yielded that rate. Such was his advice given as the result of inquiries which he had made. There can be no doubt as to its import. It was an unequivocal recommendation of the Greenock Harbour bonds as perfectly safe.

Neither is there any doubt that as it now appears the advice was bad advice, and also, I am afraid, advice given rashly, upon mere general repute, and without investigation such as might have been easily made into the actual merits of the security. That is really implied in the recent judgment by which the pursuer has been held liable to the beneficiaries; and the only point specially to be noted is that the defender quite frankly states that although he knew when he was first consulted that the Bill for the Act of 1880 was before Parliament, and knew when his recommendation was made that it had passed in the interval, he did not refer to the Act or take any steps to ascertain the bearing of its provisions.

The controversy is therefore really limited to the last two questions, which, as I have said, are involved; and the first of these is, Whether and how far the defender in this matter acted in his professional character, and on his professional responsibility?

Now, it is not, I understand, disputed that the defender was the solicitor to the trust, and as such occupied a perfectly understood position, combining the functions of law-agent and clerk or factor. Accordingly, it is not, I suppose, doubtful that if the investment had been beyond the trustees' powers, or if the bond had been granted outwith the Harbour Trustees' powers, the defender would have been responsible as for a failure of professional duty. For he was not, it will be observed, acting gratuitously or otherwise than in ordinary course,—it being a mere accident that his remuneration was in the shape of an ad valorem fee or commission, which as generally happens was paid by the borrowers. So far, I apprehend, there can be little doubt. But the contention which the defender makes is of this kind. He says that the vice of the security being simply in its insufficiency, he was no more an expert in that matter than the trustees themselves,—that he was therefore acting, and necessarily acting, outside the scope of his professional employment,—and that his advice (unfortunate perhaps, but quite honest) was given really on the same footing as if he had been merely the trustees' banker, or some friendly adviser. He puts the case of an ordinary heritable security, where the solicitor, having investigated the title and put before his client the rental of the estate, and a note of the prior bonds and public burdens, may or may not express an opinion on the sufficiency of the margin, but if he does so incurs no responsibility—at all events if the opinion is honest.

Now, I am not prepared to admit that even on mere questions of value—questions of the sufficiency of margin—it can at all be affirmed generally that the responsibility of the solicitor is thus limited. He may of course decline to say anything except on matters of law; although I should think that course would be unusual; or he may express an opinion incidentally, or in such a way as to make it plain that he is speaking merely from general knowledge; and all that may not count. But if, being consulted as to the sufficiency of a security, or if, on his own motion, or by request, he submits a security or a choice of securities for the consideration of his clients, it is, I apprehend, his professional duty (to use the words of Lord Rutherfurd Clark in the case of Stirling v. Mackenzie, Gardner, and Alexander, 14 R. 170) ‘to take all reasonable care in seeing to the sufficiency of the security which he recommends.’ As

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put by Lord President Robertson in the case of Cleland v. Brownlie, Watson, and Beckett, 20 R. 152, ‘If besides introducing an investment as worthy of consideration an agent expresses a favourable opinion of it, he will be liable if the opinion was either not honest or given when he had no adequate information entitling him to give an opinion at all.’ It may be that no case has yet occurred in which this kind of liability has been enforced. But there is no case in which it has been negatived; and I doubt much whether if the question arose purely, the solicitor's responsibility could well be put much lower than I have now put it.

It is not, however, in my opinion necessary to the decision of the present case to lay down any general doctrine. There are at least two elements in the present case which make it, in my opinion, special. In the first place, the sufficiency of the security offered by the Greenock Harbour bonds depended, and necessarily so, upon the provisions of the Harbour Acts, read of course in connection with the Harbour accounts. Now that was, I think, a matter much more in the province of the solicitor to the trust than of the trustees themselves. If they had formally remitted to the defender to examine the Harbour Acts and to inquire into the position of the Harbour Trust, there could not, I should think, be much doubt that, if he had reported favourably, he would have failed in his professional duty. But if that be so, I do not at present see why it should make any difference that, without being specially asked to inquire and report, he accepted the duty of making inquiries, and as the result of those inquiries recommended this security as perfectly safe.

In the next place, however, it does not seem quite correct to describe the vice of the present investment as arising merely on the question of sufficiency—that is to say, the question of value. The vice mainly was that it belonged to a class which on the principles of trust law, as laid down by the Courts, was an improper investment of trust funds—that is to say, it was, whatever its merits otherwise, a speculative investment depending on the success of an enterprise which, however promising, was as yet untried. Now, it seems to me that, in the lowest view of the solicitor's duty, he should have warned his clients against such an investment.

It remains, however, to consider the defender's second point, viz., that whatever was his original responsibility, he was relieved of it by the trustees undertaking to make inquiries for themselves, and by their (as he says) making the investment really as the result of their own inquiries. And it is here, as it seems to me, that the difficulty of the case, if there be difficulty, really lies. For, however bad the advice given was, the pursuer requires to show that he and his co-trustee acted on it. And it is undoubtedly true (1) that the deceased trustee Mr Inglis did himself make inquiries of some sort, although there is no evidence as to what they were; and (2) that the minute of the trustees of 12th October 1880 is thus expressed—‘The trustees having taken into consideration the propriety of investing £2000 of the funds under their management, and being thoroughly satisfied from inquiries made by them of the sufficiency of the Greenock Harbour Trust, resolved to lend that sum to them on debenture bond for seven years from Martinmas first at 4 per cent., or for such shorter period as the agent may be able to arrange with the Trust.’

I had at first, I own, an impression that these facts formed a serious obstacle to the pursuer's claim. But further consideration has led me to a different conclusion. The important point is, I think, this—It cannot, as it seems to me, be assumed that the inquiries made by Mr Inglis, the deceased trustee, whatever they were, were made otherwise than on the footing that the proposed investment was at all events ‘safe’—safe, that is to say, according to the standard of safety applicable to trust investments. He had certainly been so advised, and there is no proof and no presumption that he ignored that advice and did not rely on it. The likelihood, I should think, is that having two investments put before him as both perfectly safe, he did really no more than decide between the two. But apart from that, one thing at least seems certain, viz., that Mr Inglis did not have his attention directed, nor is there any reason to think that he applied his mind to the really salient question, viz., whether the Greenock Harbour bonds were as matters stood a proper investment for trust funds. As it happens, we do not know what inquiries he made or what elements he considered. But assuming even that he made the most thorough examination, and ascertained all the facts as we know them, it may yet well be that having in view the defender's advice, and taking from his own inquiries a hopeful view of the prospects of the James Watt Dock, he so reached a conclusion favourable to the security. Now, as against that he should, in my opinion, have been warned. He should have been told that investments of that character—investments depending on the success or failure of commercial enterprises—were not open to trustees. In point of fact, however, he was not so warned. On the contrary he was told by the solicitor to the trust that the proposed investment was perfectly safe. I cannot in these circumstances hold that for the vice of the investment he was alone responsible.

The pursuer is therefore, in my opinion, entitled to recover from the defender the sums concluded for in the summons other than the two sums of expenses of process. As to these, I do not see my way to holding that they were the direct and natural result of the defender's negligence, more especially as no formal intimation of the former action and the proposed claim of relief was made to the defender. The pursuer will, however, have the expenses of this action, and he will of course be bound,

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offered in the summons, to transfer to the defender the Harbour bond for what it is worth.”

The defender reclaimed, and argued—(1) The investment was made by the trustees not on the advice of the defender but as the result of the independent inquiries made by Mr Inglis. That was clear from the minute of the meeting of 12th October 1880, which showed that they had considered the propriety of the investment apart altogether from the defender's advice. Accordingly, even if the defender had originally advised the investment, seeing that the trustees had taken on themselves to make inquiries and had acted in consequence of them, they had no recourse against the defender— Raes v. Meek, August 8, 1889, 16 R. (H.L.) 31; July 19, 1888, 15 R. 1033, at 1049 and 1051. But apart from this point, there had been no employment of the defender to make special inquiries as to the investment, but merely an expression of opinion by him when the securities were submitted to him, and accordingly no liability could attach to him— Cleland v. Brownlie, Watson, & Beckett, November 30, 1892, 20 R. 152, at 164; Stirling v. Mackenzie Gardner, & Alexander, December 7, 1886, 14 R. 170; Learoyd v. Whiteley, 1887, 12 A.C. 727. The duty of considering the sufficiency of an investment was primarily on the trustees, and must not be delegated by them, and the facts and circumstances must be very strong to counteract that presumption. Here it had in fact been decided in Alexander v. Johnston, March 3, 1899, 1 F. 639, that the trustees alone were guilty of personal negligence. (2) Nor was the defender rendered liable for neglect as regards the completion of the security. All the cases on which the pursuer relied in this branch of his argument related to heritable bonds. The failure to search for encumbrances, &c., in those cases which rendered the agents liable had no analogy to the defenders' conduct here. There was no defect in title which it was his duty to point out to the trustees. The security if it had been sufficient was an admissible investment under the terms of the trust. The sole question was that of sufficiency. That was a question for the consideration of the trustees themselves, and in this case it had in fact been determined by them for themselves.

Argued for the respondent—There were two stages in the process of investing money, viz. (1) the selection, and (2) the completion of the investment, and the agent in a case such as this had responsibilities at both these stages. With regard to the first, it was true that in the ordinary case an agent, by his employment as an agent merely, incurred no responsibility for the sufficiency of an investment. But he might undertake such a responsibility, or by his actings put himself in the same position as if he had undertaken it. The latter was the case here, for the defender by his recommendations had held himself out as having made due inquiries as to the financial sufficiency of the investment. Booking to the nature of his employment as the agent for the trust generally, and to the fact that the trustees were not experienced men of business, the latter were entitled to rely, and did in fact rely, upon the inquiries made by the defender— Raes v. Meek, supra, 15 R., at 1051 and 1059; Ronaldson v. Drummond & Reid, June 7, 1881, 8 R. 767, at 778–9; Cleland v. Brownlie, Watson, & Beckett, November 30, 1892, 20 R. 152. The defender had not obtained information justifying his recommendation, and accordingly he must abide the consequences. If that were so, nothing that followed on his letter would relieve him from responsibility. The meaning of the minute of 12th October was somewhat obscure, but evidently the inquiries made by Mr Inglis, whatever they were, were made in reliance on the defender's opinion that the investment was safe. Probably, having two investments before him which, relying upon the defender, he believed to be safe, he did nothing more than decide between them. Mr Inglis should certainly have been told by the defender that the investment was of a speculative nature, and not a fit one for trustees— Blyth v. Fladgate, &c. [1891] 1 Ch 337, at 360. (2) When the matter reached the second stage, viz., that of completing the investment, the defender had failed in his duty, and accordingly he was liable on that ground. It was his duty to obtain a first security instead of a fourth. If he had made proper inquiry he would have seen that all the bonds granted prior to the Greenock Harbour Act of 1880 would have priority over this security— Fearn & Gordon v. Craig, February 2, 1893, 20 R. 352; Campbell v. Clason, December 20, 1838, 1 D. 270; May 30, 1843, 5 D. 1081; Graham v. Hunter's Trustees, March 4, 1831, 9 S. 543; Haldane v. Donaldson, March 3, 1836, 14 S. 610; Struthers v. Lang, February 2, 1826, 4 S. 418.

At advising—