Losses were sustained by a trust-estate owing to part of the funds having been lent to a harbour trust upon an assignment of their revenues and property. By Act of Parliament passed shortly before this investment was made it was provided that assignments for money borrowed before the passing of the Act and in force at that date should have priority over assignments for money borrowed after the passing of the Act. The investment had been submitted by the law-agent of the trust along with another for the consideration of the trustees, and while expressing his preference for the other he stated his opinion that the harbour trust investment was ‘perfectly safe.’ One of the trustees was found liable to make good the loss, upon the ground that although the investment was one of a class in which the trustees under the trust-deed were entitled to invest the funds of the trust, it was not in the circumstances sufficient in point of value to make it a reasonably prudent investment for trust funds. He brought an action of relief against the law-agent of the trust. The Court found in fact that the investment had been made, not upon the recommendation or advice of the law-agent, but as the result of independent inquiries made by one of the trustees. Held that the law-agent was entitled to absolvitor.
Opinion ( per the Lord President) that while the law-agent of a trust by submitting an investment to the trustees in effect represents that the investment is of a kind or class upon which they have power to place the trust-funds, and will be liable if loss results from the trustees having acted upon this implied representation, it is not the duty of the law-agent in respect of his appointment as law-agent to the trust, and without any express employment or instructions, to make inquiries as to the sufficiency in point of value of a proposed investment, and that consequently, even if it is not proved that the trustees proceeded upon their own inquiries in making an investment, the law-agent will not be liable unless it is proved that he was employed to advise the trustees as to the sufficiency of the security, and that the trustees acted upon his advice.
References: [1900] SLR 38 – 343
Links: Bailii
Judges: Lord Kyllachy, Ordinary
Jurisdiction: Scotland
Last Update: 23 September 2020; Ref: scu.611715
