reclaiming note against this interlocutor; and the Appellants did the same against that part of it which awarded expenses to Mr. Hunter's representatives. Upon this latter note the Lords of the First Division pronounced an interlocutor on the 30th of November 1837, recalling that part of the Lord Ordinary's interlocutor, and finding no expenses due to either party. On the same day their Lordships pronounced another interlocutor on the reclaiming note of Mr. Pringle's representatives, and thereby recalled so much of the Lord Ordinary's interlocutor as they reclaimed against, and assoilzied them from the conclusions of the libel, and decerned; but found no expenses due to either party (b). The Appellants in the original appeal submitted to the review of this House as well the Lord Ordinary's ing the allowance granted by the truster-he was the cashier, appointed by himself and his co-trustees, with an additional salary. It was his duty, and he had the power, to ascertain the state of the factor's accounts, and to restrict his balances within a reasonable amount. The cashier, whose province it was to collect and apply the trust-funds to the proper purposes of the trust, was bound to inquire, and to know how the factor's accounts stood. It is proved by the documents in process that he did know, and that the irregularity of the large balances retained by the factor was repeately noticed by the accountant. Mr. Pringle's case then is not merely that of a trustee relying on the circumstance of a factor being habit and repute responsible; for he as cashier had the means of knowing, and knew, that Molle was in the habitual violation of his duty as factor. Mr. Pringle having that information, neither required caution, nor communicated the matter to his co-trustee, Mr. Hunter, for the purpose of recalling the factory; but knowing, at the end of the year 1829, the large balance in the account of that year due by the factor, he allowed him to go on collecting the rents for the year 1830; thus increasing the balance to a great amount, if not to the sum concluded for. There is no reason to doubt that this conduct of Mr. Pringle proceeded from an ill-founded reliance on Molle's solvency, and from a reluctance to take strong measures against a person with whom he was on a footing of intimacy. The consequences of this mistaken confidence must be borne by him, and not by the trust estate." (b) 16 Dunl. B. & M. 161; and 10 Scot. jur. No. 8, p. 117. 1840. HOME v. PRINGLE and HUNTER. 1840. HOME v. PRINGLE and interlocutor as the two interlocutors of the First Division of the Court, in so far as they assoilzied the Respondents from the conclusions of the libel. The Respondents, both sets, severally appealed. against so much of the interlocutors as refused them their expenses. Sir Frederick Pollock and Mr. Knight Bruce, for the Appellants :-The appointment of Molle, one of the trustees, to the office of factor was unwarranted and illegal, and a violation of duty on the part of his co-trustees. To appoint a trustee to an office with a salary, in the management of the trust, especially where the truster has named a remuneration for the trustees' time and trouble, would not be for a moment permitted by the Courts of Equity in England: Robinson v. Pett (c); Ayliffe v. Murray (d); Brocksopp v. Barnes (e); Sheriff v. Axe (f). The law of Scotland does not differ in respect of breaches of trust from the law of England: York Buildings Company v. Mackenzie (g); Sym v. Charles (h); Moffatt v. Robertson (i); Ainslie v. Cheape (k); Blair v. Patterson (1). Those trustees, or their representatives, are responsible for all the losses the trust-estate may have sustained by their negligence: The Charitable Corporation v. Sutton (m). The claims of immunity in the trust-deed, relieving the trustees from liability for factors who "were habit and repute solvent at the time of their appointment," or for omissions, or intromissions, except for each trustee's own actual intromissions, do not apply to acts of the trustees which are not sanctioned by the (c) 3 P. Wms. 249. (d) 2 Atk. 58. (e) 5 Madd. 90. (g) 9 Fac. Coll. 13 Nov. 1795. (h) 8 Sh. & D. 741. trust-deed, but are beyond the powers conferred by it. It is said the law and practice in Scotland is very indulgent to trustees, but the only decided case that can be referred to as countenancing such an appointment as those of Molle and Pringle is that of Lady Montgomerie v. Wauchope (n); which, on being examined, will be found to have been a case of a special nature, and in which the question of the legality of appointing a trustee to the office of factor was not decided. It is not an available defence for the Respondents to say that the Appellants are barred from insisting now on any objection to the appointment of Molle to be factor, on the ground that Mr. Home did not make the objection at the time the appointment took place. This action was not brought, or the relief sought for Mr. Home's personal benefit, but for the benefit of the trust-estate, and all the persons interested in it; and, as against the judicial factor, the other party to the action, and who represents the trust-estate, no plea of personal objection to Mr. Home, on account of his acquiescence in the appointment, can be maintained. But even if it were competent to trustees in ordinary cases to appoint one of their number to the office of factor, in this case the terms of the trust-deed showed it to have been the truster's intention that the factors and other officers to be appointed by the trustees over the estate, were to be third parties, to whom the trustees were to be, as it were, adverse parties, exercising over them a jealous vigilance and check, by which the interests of the trust-estate were to be protected and saved from the risk of loss. They had "power to name and remove factors from time to (n) 13 Fac. Coll. 4 June 1822. 1840. HOME บ. PRINGLE and HUNTER. 1840. HOME v. PRINGLE and HUNTER. time," and they were "to settle accounts annually with the said factors." It was by them that the truster intended that the factor's accounts should be settled and audited. It was never intended by the truster that the factor, whom the trustees were to call to account in the manner prescribed by the trustdeed, should be one of themselves. By the appointment of Pringle to be cashier at the same time that Molle was appointed factor, a majority of the trustees was disqualified from exercising any check over the system by which those officers were to be kept to their duty. They neutralised any control by the remaining trustee. Had other persons been appointed to these offices they would be required to find security. It was impossible to maintain that Mr. Pringle was not responsible for the factor's defalcations; for, as cashier, he must have known, and it is evident from the correspondence that he did know, that large balances were retained and misapplied by the factor. Both Hunter and Pringle, as trustees, were liable for Molle's deficiencies as factor. They were bound to have an annual settlement and clearance of accounts with him. That was a condition annexed by the trust-deed to the power thereby conferred on them, of appointing factors. Hunter, as well as Pringle, was guilty of gross neglect of his duty in allowing the balances to accumulate in the hands of Molle, the factor, contrary to the explicit directions of the trust-deed. Hunter was liable for Molle's balance as factor, in respect that the trust-deed did not authorise the appointment of a cashier; that the appointing one was therefore a deviation from the arrangements of the trust-deed; that, assuming that it was the duty of the cashier to look after the factor, and regularly to collect the rents from him, a new system was introduced into the trust, and a different check placed upon the factor from that which was contemplated by the truster; that having adopted this course, it was incumbent on Hunter to take care that the system thus chalked out and established for the management of the trustaffairs, should be made to work, and that the check so introdaced upon the factor acted efficiently, and did not become worse than useless. While by the failure of the co-trustees and their cashier regularly to call Molle to account as factor, and by his supervening bankruptcy, the trust-estate has sustained great loss, Pringle and Hunter have been allowed to take credit in their trust-accounts for their allowances as trustees, and for the salaries of Pringle as cashier, and Molle as factor. Even although they must be found responsible for Molle's deficiencies, still looking to their neglect of duty, they are not entitled to any of the foresaid sums as credits in accounting for the trustfunds. As to the cross appeals presented by the representatives of Mr. Pringle and Mr. Hunter, they are incompetent, inasmuch as they are appeals solely on the question of costs, which are not entertained by any Court of Appeal. The Lord Advocate and Mr. Pemberton appeared for the representatives of Mr. Pringle. Sir William Follett and Mr. Buchanan, of the Scotch bar, appeared for the other Respondents. The Lord Advocate wished, before he opened the case of his clients, to be informed whether the House would hear the four counsel, two for each set of Respondents, or lay down a rule to hear fewer. The Lord Chancellor said, If their defences are the same, the rule of the House is to hear only one counsel for each party, or two for one party. 1840. HOME บ. PRINGLE and HUNTER. |