Trust funds which were held in terms of an antenuptial marriage-contract were lent on the security of houses in the course of erection, and were lost through the insufficiency of the security. The marriage-contract empowered the trustees to lend on heritable securities or personal securities or obligations, and contained a clause which declared that the trustees should not be answerable ‘for errors, omissions, or neglect of diligence, nor for the insufficiency of securities, insolvency of debtors, or depreciation in the value of purchases.’ An action was raised by the beneficiaries who had a contingent right to the fee of the trust-estate, against the trustees and the law-agents in the trust, ‘conjunctly and severally, or severally, or in such other way or manner’ as should seem just, to restore the money to the trust. Defences were lodged for one of the trustees and for the law-agents.
Held (affirming the judgment of the First Division) that the action as against the law-agents fell to be dismissed, on the ground that these defenders would have been liable only if they had been employed to give advice to the appellants and neglected the duty of so doing; and further, that it did not appear from the evidence that the law-agents had been employed to advise the trustees as to the sufficiency of the security, or that the latter acted upon such advice.
Held (reversing the judgment of the First Division) that the trustee was liable, as it appeared from the evidence that he had failed to show the same degree of reasonable care that a man of ordinary prudence would exercise in the management of his own affairs.
Judges:
Lords Herschell, Watson, and Fitzgerald
Citations:
[1889] UKHL 8, 27 SLR 8
Links:
Jurisdiction:
Scotland
Trusts
Updated: 11 June 2022; Ref: scu.635176