own protection to take a particular step of this nature, does assume a very responsible duty; and where a person is induced to execute such a deed, it must, in order to support the deed, be shewn that the nature of the deed was thoroughly understood by the person executing it. But the cases have not gone further. Some cases, however, have attempted to lay down what ought to be in such an instrument. It has, for instance, been almost laid down in Coutts v. Acworth (1), that where there is no power of revocation the deed will be set aside; and Wollaston v. Tribe (2) and Everitt v. Everitt (3) have been relied on as favouring the same view. But whether there should be a power of revocation or not must depend upon the circumstances; and it cannot be laid down as a general rule that such a deed would be voidable unless it contained a power of revocation. [His Lordship then commented on the facts as shewing that this young man was of extravagant and improvident habits, and that the trustee and the solicitor thought it advisable that some of the property should be settled, so that he should not be left destitute, and that there should be some provision for any wife and children he might have. As to the limitations over, it seemed that he was illegitimate, and, therefore, unless there was a limitation over, the money would go to the Crown. As to there being no power given to him to appoint in default of issue, that might have invalidated the deed; but that was proved to have been clearly explained to and approved of by him.] Those who induce a young man of this description to execute such a deed are bound to shew either that the deed is in all respects proper, or, if the deed contains anything out of the way, that he understood and approved of it. It was objected that he was deprived of all power over the investments, but I think, under the circumstances, that was not unreasonable, as he was exceedingly indiscreet. Another objection was, that the money had never been in his own hands, which was said to render the case analogous to Prideaux v. Lonsdale (4). But this only shews the inutility of referring to other cases, for here he clearly knew that he had power to receive this and the other money. L. C. 1871 PHILLIPS v. MULLINGS. L. C. 1871 PHILLIPS v. MULLINGS. Another objection was, that he had not the power of appointing new trustees, but that does not seem to call for special remark. As to a power of revocation, it seems to me that if such a power had been inserted, the young man's money would merely have been wasted, and that no one but the solicitor would have derived any benefit from the deed; for of what advantage would it be to place the money in this way out of the young man's control, and then give him power to destroy the limitations whenever he pleased? All that the law requires in a deed of this description is that it should be effective, and should not contain any extraordinary clauses, unless those clauses are shewn plainly and distinctly to have been brought to the notice of the settlor, and to have been understood by him. It is not necessary to shew that the usual clauses inserted by conveyancers were explained; but any unusual clauses must be shewn to have been brought to his notice, explained and understood. I agree with the Vice-Chancellor that this deed must stand, and the appeal will be dismissed with costs. Solicitor for the Plaintiff: Mr. O. Richards. Solicitors for the Defendants: Mr. W. H. Herbert; Mr. J. H. Kays. A testatrix, knowing that her husband was bankrupt, gave by her will a life annuity to her husband, subject to a proviso that if he should become bankrupt or should assign the annuity, then it should cease, and subject to a further proviso, that it should be lawful for the trustees of her will at any time to refuse payment of the annuity, which in that case was to go over:Held (reversing the decision of James, V.C.), that the existing bankruptcy operated as a forfeiture of the annuity, notwithstanding the words of futurity in the will and the discretion given to the trustees. H. C. T. GRAHAM was, in May, 1861, upon his own Petition, duly made a bankrupt in Scotland, and a sequestration of his estate was awarded according to Scotch law, and a trustee was elected and declared under the sequestration. In May, 1863, Mrs. Graham, the wife of H. C. T. Graham, being aware of the sequestration, and having a power of appointment over certain funds, subject to the life interest therein of her mother Mrs. Payne, by her will appointed the funds to trustees on trust to pay her debts and certain legacies; and the will contained the following clauses : 1. "And upon further trust that my said trustees shall, out of the income of the said trust premises, or if that shall be insufficient, then out of the principal thereof, pay to my husband an annuity of £100 during his life (but subject to the provisoes with respect to the said annuity hereinafter contained), the said annuity to be paid by equal half-yearly payments, the first of such payments to be made at the expiration of six calendar months after the decease of the survivor of me and my said mother." 2. "Provided always, and I do hereby declare, that if my said husband shall become bankrupt or shall assign, charge, or incumber, or attempt or affect to assign, charge, or incumber the said annuity of £100, or do or suffer any act whereby the same or any part thereof would, if belonging absolutely to him, become vested in any other person or persons, then and in such case the said annuity shall not be payable, or shall cease to be payable, as the case may require, in the same manner as if my husband were dead." 3. "Provided also, and I hereby further declare, that it shall be lawful for my said trustees or trustee, if they or he shall in their or his absolute discretion think fit, and without assigning any reason for so doing, at any time or times to refuse or discontinue the payment to my said husband of the said annuity of £100, or any part thereof, during the whole or any portion of his life; and in such case the said annuity, or such payment or payments thereof as my said trustees or trustee shall refuse to make to my said husband as aforesaid, shall sink into the income of the said trust premises for the benefit of the person or persons for the time being entitled to such income; it being my wish and intention that the payment of the said annuity to my said husband shall be according to the discretion of my said trustees or trustee in all respects." L. C. 1871 TRAPPES v. MEREDITH. L. C. 1871 TRAPPES v. MEREDITH, By a codicil the annuity was increased to £150. Mrs. Graham died in June, 1864, and Mrs. Payne, the tenant for life of the trust funds, died in April, 1868. On the 29th of August, 1868, Mr. Graham obtained his discharge under the sequestration, without the consent of the creditors, and without making any composition with them, and without disclosing to the trustee or to the Court the existence of Mrs. Graham's will. On the 10th of February, 1869, the trustee under the sequestration was discharged. None of these proceedings would, according to Scotch law, divest out of the trustee any property which had become vested in him. A suit was instituted for the administration of the funds which were subject to the will of Mrs. Graham, and the Vice-Chancellor James held that an English bankruptcy, to which Mr. Graham had afterwards become subject, did not operate as a forfeiture of the annuity under the will, inasmuch as the first payment had not accrued until after the bankruptcy was annulled: See Trappes v. Meredith (1). At a further hearing, the question as to the effect of the Scotch sequestration was argued, and the Vice-Chancellor James held that the sequestration did not operate as a forfeiture, and that the annuity remained subject to the discretion of the trustees under the will (2). The trustees elected to pay the annuity to Mr. Graham, and did make one payment accordingly. The persons interested in remainder appealed. The appeal came on to be heard on the 30th of January, 1871, when the Lord Chancellor directed it to stand over for further evidence as to the Scotch law, and he finally, on the 1st of March, 1871, ordered a special case to be directed to the Court of Session in Scotland, with questions for the opinion of the Scotch Judges as to the effect of the sequestration. The case was argued before the Lords of the First Division in Scotland, and they, on the 3rd of November, 1871, made answer to the questions. Their answers appeared to be: 1. That the annuity would, under the 1st clause, without the other clauses, have vested in the trustee, and not have been divested by the discharge of the bankrupt without the assent of his creditors. 2. That the 2nd (2) Law Rep. 10 Eq. 604. (1) Law Rep. 9 Eq. 229. clause operated as a forfeiture. 3. That the 3rd clause, taken by itself, would not create a forfeiture, but would leave the trustee under the sequestration to take only tantum et tale, or, in other words, so much as the trustees under the will might choose to leave in the husband. The appeal now came on again for hearing. Mr. De Gex, Q.C., Mr. Fry, Q.C., and Mr. Pontifex, for the Appellants: The 2nd clause is valid, and has created a forfeiture: Webb v. Grace (1). There is a gift until bankruptcy or death; and the testatrix meant that if her husband was at the time of her death capable of taking the annuity, he should take it; if not, it should not go to him. Clauses 1 and 3 contemplate one set of events, and clauses 1 and 2 contemplate another set of events; and it is that latter set which have happened: White v. Chitty (2). Mr. Kay, Q.C., and Mr. Bradford, for Mr. Graham :— The testatrix clearly intended to make the exercise of discretion by the trustees preliminary to anything being vested in the bankrupt or his assignees. She knew that her husband was bankrupt, and made this provision accordingly. It is clear that she did not intend the 2nd clause to include the existing bankruptcy, as if so, the gift would be useless. Mr. Bristowe, Q.C., and Mr. C. Barber, for the trustees. Mr. Willcock, Q.C., and Mr. Townsend, for other parties. Mr. De Gex, in reply. LORD HATHERLEY, L.C., having stated the facts of the case, and what he considered to be the opinion of the Scotch Judges, which was as above mentioned, continued : Now that being so, the question arises whether this case falls within the principle of Manning v. Chambers (3), decided by the Lord Justice Knight Bruce, and Seymour v. Lucas (4), decided by (1) 2 Ph. 701. (2) Law Rep. 1 Eq. 372.: (3) 1 De G. & Sm. 282, (4) 1 Dr. & Sm. 177. L. C. 1871 TRAPPES V. MEREDITH. |