Trust – Personal Liability of Trustees – Application by Trustees of Capital of One Trust to Restore that of Another where Income of Both Applicable to Same Purpose.
James Ewart by his will appointed funds to be employed in founding a ragged school. John Ewart subsequently died, and left pounds 7000 to the trustees of James for the same object, but with power, if they considered that the funds of James were sufficient for the ragged school, to apply part, not exceeding pounds 500, of the pounds 7000 in building and fitting up adjoining it a school for the middle classes, and to apply the interest ‘of all or any part of the balance of the said sum of pounds 7000 in the maintenance and support of said last mentioned school.’ Thereafter Agnes Ewart died leaving money to be paid over to the trustees of James on trust for the maintenance and support of the ragged school, and with power, if the funds of it were sufficient, to apply the interest of the whole or part of the funds in the maintenance and support of John’s higher class school.
Before the death of Agnes the trustees had erected a higher class school adjoining the ragged school, as directed in John’s settlement, but pounds 500 being quite insufficient to build it, had spent more than that sum in building it, and had also spent more than the income in administration and maintenance of it, and when the money of Agnes was paid over to them, they, on the ground that the trusts were substantially the same, applied it in replacing the debit which had thus arisen on John’s trust. An action was brought against them as trustees of Agnes by persons interested in the schools to have the money taken from the trust of Agnes replaced and separately invested.
Held (aff. Second Division) (1) that the trustees being gratuitous charitable trustees acting in the bona fide endeavour to execute the trust, and not having diverted the funds from the trust objects, but only at most erred as to the way of carrying them out, were not personally liable to make good money they had so applied; but (2) ( alt. Second Division) that it was competent in the action, though brought against them as trustees of Agnes, to inquire also into the administration of John’s trust, and case remitted for inquiry as to whether, if at all, the encroachments in question ought to be replaced by the future revenue of the school.
Judges:
Lord Chancellor Hersehell, Lords Watson, Blackburn, Fitzgerald, and Ashbourne
Citations:
[1886] UKHL 822, 23 SLR 822
Links:
Jurisdiction:
Scotland
Trusts
Updated: 03 July 2022; Ref: scu.637733