In re Cotton.

Trusts in default of children.

Husband's property.

Wife's property.

of the expectant or presumptive share of the children of the marriage towards their maintenance and education. But all doubts upon this point have been set at rest, I trust, by the decision of the present Master of the Rolls in the case of In re Cotton (o). His lordship remarks: "The difficulty has arisen on the word 'entitled,' which is said to mean 'indefeasibly entitled;' and I agree that may be or become entitled' would have satisfied the conveyancers better. When property is held upon trust for an infant contingently on his attaining twenty-one, the infant is not entitled, strictly speaking, to the income any more than to the capital. If he attains that age he will get both." And his lordship was clearly of opinion that the trustees might apply for the maintenance of an infant a portion of the income of a fund settled upon trust for all the children of his father who should attain twenty-one. This is a liberal exposition of the Act, and carries out what was most probably the intention of those by whom it was framed. If the trust should be in favour of all the children on birth, with a divesting clause in the event of the death of sons under twentyone, or daughters under that age and without having been married, then there is no question that the Act would apply.

In case there should be no child of the marriage, or none who, being a son, should attain twenty-one, or, being a daughter, should attain that age or marry, the trust, if the property settled is the husband's, is usually for him, his executors, administrators and assigns absolutely. But, if the settled property proceeds from the wife, the ultimate trust is usually for herself, her executors, administrators and assigns absolutely, in case she shall survive her husband; but, if she should die in his

(0) L. R., 1 Ch. D. 232. See for a distinction, Re George, L. R., 5 Ch. D. 837.

wife's next of

lifetime, then it is usual to give her a power to appoint
the trust fund by will only, so as (a will being in its
nature revocable), to prevent her from making any
absolute appointment at the solicitation of the husband,
which possibly she might afterwards regret. And in
default of her making any appointment by will, it is
usual to settle personal estate or money arising, as in
the present case, from the sale of land, in trust for the Trust for
persons who, under the statute for the distribution of
the personal estate of intestates would be entitled
thereto, in case she had died possessed of the fund
intestate, and without having been married; such persons,
if more than one, to take as tenants in common in the
shares in which they would have taken under that
statute. This takes the property back to the wife's
next of kin in case she should die in her husband's life-
time without having made a will.

This, you will observe, is a very different thing from giving property for the separate use of a married woman absolutely, with a gift over to other persons in case she should die without having disposed of the same in her lifetime or by her will. Such a gift over, we have seen (p), is absolutely void, being incompatible with the devolution, which the law prescribes, of the property of intestates. But here she has merely an estate for her life; and, in default of issue of the marriage, a power to appoint by will, in case she dies in her husband's lifetime; then, in default of such appointment, it is quite within the power of the settlor to declare the trusts of the property in favour of her next of kin or of any person or persons whom he may think fit.

kin.

(p) Ante, pp. 136, 137.

settled moneys.

Consents required.

LECTURE XII.

Investment of THE next provision in the settlement, a provision sometimes inserted prior to the other trusts, is one for the investment of the money to arise from the sale of the lands, and for the alteration or variation of such investments. The investment, alteration, or variation is usually required to be made with the consent of the husband and wife during their joint lives, and of the survivor of them during his or her life, and, after the decease of the survivor, then at the discretion of the trustees or trustee for the time being of the settlement. The usual trusts for investment now inserted in settlements are much wider than was formerly the case. The old forms limited the investment to the parliamentary stocks or public funds, or government or real securities in England or Wales. But at the present day many other investments are frequently authorized; and one of the best forms of investment is that given by Mr. Davidson in the third volume of his Precedents in Conveyancing (a). This trust authorizes the investment of the moneys produced by the sale in the names or name, or under the legal control of, the trustees or trustee for the time being, in any of the public stocks or funds, or government securities of the United Kingdom or India, or any colony or dependency of the United Kingdom, or upon freehold, copyhold, leasehold or chattel real securities in England, Wales or Ireland, or in or upon the stocks, funds or shares, debentures, debenture stock, mortgages or securities of any corporation, company, or public body, municipal, commercial or

(a) Pages 546--550, 2nd ed.

otherwise, in the United Kingdom or India, or any colony or dependency of the United Kingdom, but not in any other mode of investment. This form gives quite as wide a scope for investment as can be thought judicious. In the absence of any express provision as to investment, in former days the 37. per cent. Consols were the only fund open to trustees for the investment of trust property; but, since that time, many changes have taken place; and money under the control of the Investments Court, and all other trust money, is now authorized to under the be invested without special authority in Bank stock, control of the East India stock, Exchequer bills, mortgage of freehold or copyhold estates in England or Wales, 37. per cent. Consols, 3. per cent. Reduced and New 31. per cent. Annuities, and in some other securities specially authorized by particular Acts.

of money

Court.

The old form of investment usual in Settlements was, as I have said, in the public funds of Great Britain, or at interest on government or real securities in England or Wales. Real securities are mortgages Real securiof freehold or copyhold estates. A mortgage of land ties. held for a long term of years, as 500 years or more, without rent and without impeachment of waste, is generally considered a real security (b); but a mortgage of leasehold estates held subject to rent and covenants would not be considered as a real security within the meaning of this trust (c). With regard to the investment by trustees of money on mortgage, the rule is, that it is not prudent to invest more than about two-thirds of the value of landed property, and not more than half of the value of house property; and no trustee should invest money on mortgage without satisfactory evidence of the sufficiency of the security in this respect. The mortgage ought never to be a second

second mort

Not on a (b) See Lewin on Trusts, 288, (c) Fuller v. Knight, 6 Beav. 209. gage. 289, 6th ed.

Exception.

mortgage. But a charge under the Improvement of Land Act, 1864 (d), is, by the 61st section of that Act, not to be deemed such an incumbrance as to preclude a trustee of money, with power to invest the same in the purchase of land or on mortgage, from investing it in a purchase or upon a mortgage of the land so charged, unless the terms of his trust or power expressly provide that the land to be so purchased or taken in mortgage be not subject to any prior charge. Such a provision is not usual; but, considering the amount of charges which may be made under this Act, it seems to me singular that it is not more frequently expressly provided in the terms of trust deeds, that the land on which the trust money may be lent by way of mortgage shall not be subject to any prior charge. The Act to further amend the law of property and to relieve trustees (e), provides(ƒ), that when a trustee, executor or administrator shall not, by some instruments creating his trust, be expressly forbidden to invest any trust fund on real securities in any part of the United Kingdom, or on the stock of the Bank of England or Ireland, or on East India stock, it shall be lawful for such trustee, executor or administrator, to invest such trust fund on such securities or stock; and he shall not be liable on that account as for a breach of trust; provided that such investment shall in other respects be reasonable and proper. This section, which was not originally retrospective, has been made so by statute 23 & 24 of the Queen, c. 38 (g). Although the 32nd section of the Act to further amend the law of property and to relieve trustees mentions any part of the United Mortgages in Kingdom, which of course includes Scotland, yet it is provided in the 33rd section of the same Act, that the Act shall not extend to Scotland. And I concur in the advice given by the late Mr. Lewin in his Treatise on

Scotland.