1840. Attorney General v. Kerr.

[*427] of the rent reserved is less a *badge of fraud than it would be in almost any other instance."

Mr. K. Parker, for Osborn.

Mr. Tinney and Mr. Hardy, for the present corporation of Northampton, contended that if the leases were to be set aside, they must be cancelled in toto, without leaving the covenants of the corporation in force for the benefit of the lessee, Attorney General v. Morgan ;(a) and further, that the present corporation was not in the position of their predecessors to the extent of rendering them liable for the breaches of trust of the old corporation, and that the liability for any defaults of the former corporation, did not attach as a lien on the corporate property. They cited the Attorney General v. The Corporation of Exeter,(b) Attorney General v. The Corporation of East Retford.(c)

Mr. Bethell and Mr. Whitworth, for the new trustees of the charity, who had been brought before the court by supplemental bill.

Mr. Pemberton in reply:-If the leases have merged in the void conveyance, the onus is on the defendants to show an equity to re-establish them.

THE MASTER OF THE ROLLS-With respect to the conveyance of the fee, and notwithstanding the evidence which has been gone into, it appears

to me, and it seems to have been felt by those who have so ably ar[*428] gued this case, that it would be "utterly irreconcileable with every

principle on which charity property can be advantageously dealt with to allow such a transaction as this to stand. It has been truly said, that when a considerable benefit would be gained to a charity, the Court itself would order an alienation of charity property ;[1] and from this it is argued that on clear and decided evidence of its being manifestly for the benefit of the charity, a trustee might be justified in doing that which under similar circumstances the court itself would do; such cases have certainly from time to time been put, but this is not one of such cases. I apprehend that there

(b) 3 Russ. 395.

(c) 2 Myl. & K.39, and 3 Myl. & Cr. 484.

(a) 2 Russ. 306. [1] But this should only be allowed under very special circumstances. Attorney General v. Mayor, &c., of Newark-upon-Trent, 1 Hare, 395. In that case, Wigram, V. C., said: "It was said in argument, that the court had clearly power to direct the sale of the lands of a charity. I do not doubt the existence of this power in the court.-The question is not upon the existence of the power, but whether the court would be right in exercising such a power.-Now the only case which I have known in my own practice, where this was actually done, was that of the Attorney General v. Nethercoat, [not reported.] There the court ordered the charity estate at South Molton, or a great part of it, to be sold, and the consequence was, that fourteen cottages were sold in fourteen lots. The same number of abstracts were delivered to the purchasers, and the expense of the sale nearly swallowed up the purchase money. I am informed that the charity has wholly disappeared. The lands have passed into the hands of the purchasers, and the money is gone. That case is, at least, a caution against selling charity lands under the notion of benefitting the charity, except under very special circumstances." As to cases in which a sale, or what is equivalent, long leases, have been or may be sustained, see ibid. 401, 402, 403.

1840.-Attorney General v. Kerr.

can be no doubt whatever in any ordinary mind, that the last transaction here complained of must be set aside.

That being so, then arises the question, whether the former transactions ought to be sustained. As to granting leases of charity property, it is certainly a strong proposition to lay down, that the trustees of a charity have the same powers which a prudent owner has with respect to his own property: there may perhaps be dicta which go almost to that extent, but I apprehend that much more is expected from trustees acting for a permanent charity, than can be expected from the ordinary prudence of a man in dealings between himself and other persons. A man acting for himself may indulge his own caprices, and consider what is convenient or agreeable to himself, as well as what is strictly prudent, and his prudential motives cannot afterwards be separated from the others which may have governed him. Trustees of a charity within the limits of their authority, whatever they may be, should be guided only by a desire to promote the lasting interest of the charity.[1]

Without entering into the question upon whom the onus of proof lies in such a case as this, I must say, that on looking into these transactions, and having regard to *their nature, and the evidence as to the [*429] state and value of the property at the time, I am not satisfied that the lease of 1769 was an imprudent transaction, and therefore I do not think that I can set it aside.

With respect to the lease of 1784, looking again at the evidence of the value so long ago as the year 1763, at the length of the lease then subsisting and unexpired, and considering that it could not by possibility be prudent or advantageous to the charity, to add to that long reversionary term of sixty-two years and three quarters already existing, a further reversionary term of thirtynine years, and having regard to the covenant contained in that lease, I do not think that it is a lease which can be sustained. I must set aside the conveyance of 1791, and the lease of 1784, but not disturb the lease of 1769.

[2] Lord Brougham uses language somewhat less stern than the above. He says, (The Attorney General v. Mayor, c., of Newbury, 3 Myl. & K, 647,650,651, “ It is unquestionable, that where trustees of a charity have, through real mistake, and without any corrupt motive, misapplied the funds under their care, their conduct will be considered with a lenient disposition, if not in a favorable light; and that they will not be visited as if they had knowingly and wilfully divested the fund from its proper uses. This has often been laid down in the cases before the court.-The circumstance of the trustees being a corporate body, should certainly rather increase the disposition towards a lenient construction of their proceedings; and, although in contemplation of law, the identity of the body is preserved through ages, yet misdeeds alleged to have been committed long ago are only to be visited upon those of the present generation, when there exists no doubt of the misfeasance. In point of law, the body is precisely one and the same; but no strictness of legal principle can prevent us from at least exacting very clear proof of a case, when in point of fact, parties between whom there subsists but a slender kind of privity, are made answerable for each other's acts. On the other hand, we must be careful not to admit any relaxation of principle which would open the door to boundless abuse, and especially in bodies from their very nature so prone to all kinds of negligence and misconduct. Such a door would assuredly be flung open were the court to hold that nothing short of corruption could fix a corporation with the consequences of acts done in old time," &c.

1840.-Attorney General v. Kerr.

The charity having equity, must on its part do equity,[3] and the question is, what ought to be done with regard to the very great and valuable expenditure which has been made? If it has been made with reference only to the enjoyment under the existing lease of 1769, nothing will be due; but if it has been made, not only with reference to the beneficial enjoyment under the first lease, but in consequence of the extension of the lease in 1784, then I think, it would be no more than just and reasonable towards the estate of Dr. Kerr, that some compensation should be made to him in that respect. Some inquiry must be had for the purpose of ascertaining (if it be susceptible of ascertainment) what, if anything, has been laid out with reference to the extended enjoyment which Dr. Kerr was led by the corporation to suppose he was entitled to, and which he would not otherwise have laid out; but no ornamental expenditure can be allowed.[4]

[3] There are many cases in which this court will not interfere with a right which the possession of a legal title gives, although the effect be directly opposed to its own principles as administered between parties having equitable interests only, such is in cases of subsequent incumbrancers without notice gaining a preference over a prior incumbrance by procuring the legal estate. It is to be regretted, that the rights of property should thus depend upon accident and be decided upon, not according to any merits, but upon grounds purely technical, this, however, has arisen from the jurisdiction of law and equity being separate, and from the rules of equity, (better adopted than the simplicity of the common law to the complicated transactions of the present state of society,) though applied to subjects without its own exclusive jurisdiction, not having, in many cases, been extended to control matters properly subject to the jurisdiction of the courts of common law. Hence arises the extensive and beneficial rule of this court, that he who asks for equity must do equity, that is, this court refuses its aid to give to the plaintiff what the law would give him, if the courts of common law had jurisdiction to enforce it, without imposing upon him conditions which the court considers he ought to comply with, although the subject of the conditions should be one, which this court would not otherwise enforce." Lord Cottenham, Sturgis v. Champneys, 5 Myl. & Cr. 101. And see Buchanan v. Upshaw, 1 Howard, 84. Clark v. Flint, 22 Pick. 241. Bright v. Boyd, 1 Story's Rep. 494, 495. See also next note.

[4] Vide Trevelyan v. White, 1 Beav. 588. Green v. Winter, 1 Johus. Ch. Rep. 27. The question whether a bona fide purchaser, who has made improvements upon land from which he is afterwards evicted, could proceed actively, to obtain compensation for those improvements, was considered by Mr. J. Story, without however distinctly deciding the point, in Bright v. Boyd, 1 Story's Rep. 478. He says, (p. 495,) "It appears to me, speaking with all deference to other opinions, that the denial of all compensation to such a bona fide purchaser, in such a case, where he has manifestly added to the permanent value of an estate by his meliorations and improvements without the slightest suspicion of any infirmity in his own title, is contrary to the first principles of equity. Take the case of a vacant lot in a city, where a hona fide purchaser builds a house thereon, enhancing the value of the estate to ten times the original value of the land, under a title perfectly apparent and complete; is it reasonable or just, that in such a case, the true owner should recover and possess the whole, without any compensation whatever to the bona fide purchaser? To me it seems manifestly unjust and inequitable, thus to appropriate to one man the property and money of another, who is in no default. The argument, I am aware, is, that the moment the house is built, it belongs to the owner of the land by mere operation of law; and that he may certainly possess and enjoy his own. But this is merely stating the technical rule of law, by which the true owner seeks to hold what, in a just sense, he never had the slightest title to, that is, the house. It is not answering the objection; but merely and dryly stating, that the law so holds. But then, admitting this to be so, does it not afford a strong ground why equity should interpose, and grant relief?—I have ventured to suggest, that the claim of the bona fide purchaser,

1840. Attorney General v. Kerr.

I cannot give the corporation any costs. I consider it to be a continuing corporation: though it is very *common to designate the cor- [*430] poration in its old state, and its new state, as the old corporation and

the new corporation, yet for the purposes here in question there is no distinction between them. It is the same corporation under a new government. The act of this corporation having rendered these proceedings necessary, I cannot give them their costs.[5]

under such circumstances, is founded in equity. I think it is founded in the highest equity; and in this view of the matter, I am supported by the positive dictates of the Roman law, &c." Where a party seeks to enforce a right, which he can only obtain through the intervention of a Court of Equity, the court grants him relief upon the terms it chooses to impose; but very different considerations arise where one party seeks to deprive another of rights and privileges with which the law has invested him. So, speaking to this very point, the claim of an evicted purchaser for compensation for improvements, Walworth, Ch. says; "This principle of natural equity [i. e. the right to compensation] is constantly acted upon in this court where the legal title is in the person who has made the improvements in good faith, and where the equitable title is in another who is obliged to resort to this court for relief. The court in such cases acts upon the principle that the party who comes here as a complainant, to ask equity, must himself be willing to do what is equitable. I have not, however, been able to find any case, either in this country, or in England, wherein the Court of Chancery has assumed jurisdiction to give relief to a complainant, who has made improvements upon land, the legal title to which was in the defendant, where there has been neither fraud or acquiescence, on the part of the latter, after he had knowledge of his legal rights. I do not, therefore, feel myself authorized to introduce a new principle into the law of this court, without the sanction of the legislature, which principle, in its application to future cases, might be productive of more injury than benefit." Putnam v. Ritchie, 6 Paige, 404, 405. The reader is left to determine between the opinions, somewhat discordant, of two of our most learned judges,-the latter, however, being a res judicata. Although the strict rule maintained by the Chancellor of New York may, in many instances, work extreme hardship, yet in the main, it seems most conducive to public convenience. It may well be, that the rightful owner would be deterred from asserting his claims, in consequence of the obligation to pay for costly erections on his land; besides, it is the duty of the purchaser thoroughly to investigate the title he receives; and he has a right to secure himself by proper covenants from his grantor. Mr. Chancellor Kent, ably sustains the view of the subject taken by his successor. 2 Kent's Com. 334-338.

[5] “It is of no consequence that the individuals now sustaining the corporate character enjoying the immunities, and exercising the functions of the corporation, are wholly different from those who did the wrong, or who permitted the neglect, and are only connected with them through the medium of a common municipal character. This is the condition inseparably annexed to their corporate character; and the individuality of the body politic, with all its incidents, is thus maintained as perfectly in the system of jurisprudence, as the indentity of the natu. ral body is preserved entire in the system of the world." Lord Brougham; The Attorney General v The Mayor &c. of Newbury, 3 Myl. & K. 654. See further as to the alienation of charity lands, and the rights and liabilities of trustees, 3 Russ. 397, n. 1. 1 Russ. & M. 751, n. 1. 2 Keen, 168, n. 1. Attorney General v. Brettingham, 3 Beav. 91.

A trustee who was directed by the will of the testator to invest the residue in consols, and to aecumulate the dividends, invested it on mortgage of real estate: he was held liable to make good the amount of stock which would have been purchased in consols, together with the amount of accumulation which would have been produced by a proper investment of the dividends of such stock.

A trustee guilty of a breach of trust, allowed the general costs of an administration suit as between solicitor and client, but was ordered to pay so much as had been occasioned by his breach of

trust.

Property was directed to be accumulated for such children as A., B., and C. should leave at their deaths; with power to the trustee to apply such part of the income, as in his judgment might be proper, for their education and maintenance during their minority, and for their future advancement in life. Held, as to a daughter of C., that the power for maintenance did not cease on her marriage, but that it ceased on her attaining twenty-one and as to the power of advancement that it continued, notwithstanding she had attained twenty-one and had married, and notwithstanding the period for accumulation limited by the Thellusson act bad expired.

THE testator Thomas Webb by his will, dated in 1805, after certain devises and bequests, gave and devised all his freehold and personal estate, and the sum of 70001. stock in the 3 per cent. consolidated annuities, to the defendant Thomas Fooks upon trust, with all convenient speed, to sell his estates, and after payment of his debts, funeral expenses, and legacies, in trust to place and invest all the residue in the name of Thomas Fooks in 3 per cent. consoliated annuities, in addition to the said stock of 7000l. already there, and the testator directed that Thomas Fooks should from time to time re

ceive the interest or dividends arising from the whole of such funded [*431] *property, and after paying and discharging the several annuities

thereinbefore bequeathed, invest, and place the residue of such dividends and interests in the name of the said Thomas Fooks in the said 3 per cent. annuities in augmentation as well of the said stock of 70001. already there, as of the addition or accumulation from time to time to be made thereto, by and out of the said trust estate, which the testator directed should continue to be increased in such manner, and remain vested in 'I'homas Fooks, in trust for and for the only benefit of such child or children as his nephews and niece Walter, Thomas, and Dorothy should leave at the time of their respective deceases, and to be paid and divided as follows, that is to say, onethird part thereof to the child or children of the said Walter Pride, and if but one child only, then the whole to such only child, but if more than one, then unto all such children in equal proportions, and the two remaining third parts thereof to the child or children of the said Thomas and Dorothy in like manner; and in case either of his nephews and niece should happen to die without leaving any children or a child lawfully begotten, then he directed that such third part should go and be paid to the children or child of the other or others leaving children or a child in equal proportions, if more than one. And in case all his said nephews and niece should happen to die without leaving