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his whole estate. The income of the special fund fell short of the annuity. In these circumstances it was held (1) that from the capital of the settlor's estate the special fund must be augmented by such an amount as would

he bequeathed his whole estate, heritable and moveable, to his mother in liferent and to a cousin in fee. In the will there was no specification of particular properties, and the lands of X were not referred to. In these circumstances the admission already mentioned pro-make the income of the augmented fund equal ceeded on the view that, as Mrs Wallnutt to the annuity payable to the Countess, and already had, under her marriage contract, a (2) that the settlor's executors must realise his specific liferent of the lands of X, it was not reversionary interest in that fund, expectant legally possible for her to take any further on the death of the Countess, in order that she benefit in those lands under her son's will by should, as testamentary life tenant, receive virtue of the universal liferent of his estate for the remainder of her life the income to be thereby conferred on her. This question must derived from the investment of the price. have been closely considered, for the contrary Stewart v. Stewart's Trs., 1898, 36 S.L.R. 625. view would, as we understand it, have been This is the only known Scottish decision conclusive against the Crown on the question directly in point. It was a decision by Lord of what was the "" first succession under Kincairney, who marshalled the English Major Wallnutt's will. The case proceeded authorities and such Scottish dicta or indicaon the assumption that the cousin's succession tions of authority as exist on the subject, to the fee was the first succession, and the and added: "I am not aware that there is whole contest was whether it " arose " in 1900 either principle or practice with us which on the death of the testator, which was the date can be said to be opposed to the rule thus of the cousin's "entitlement," or not until established in England." Stewart's case, as 1910 when Mrs Wallnutt the liferentrix died, Lord Kincairney noted, very closely resembled which was the date of the cousin's coming Harrington v. Atherton in its circumstances. into possession. This whole discussion would Mr James Stewart at his death owned only have been obviated if it had been considered one asset, namely, a vested reversionary right that Mrs Wallnutt took a benefit under her to the estate of his brother John, which estate son's will, for that would then have been the under John's will was burdened with an annuity first succession, and if it had any legal existence of £250 to Mr James Stewart's widow, and it of course arose on the testator's death in that annuity exhausted the income of Mr 1900, and therefore before the Finance (1909-10) John Stewart's estate. Under Mr and Mrs Act, 1910. James Stewart's marriage contract Mr James Stewart had provided to his widow a liferent of his whole estate. The following quotation from Lord Kincairney's opinion shews the position, and is otherwise helpful: pursuer " (Mrs James Stewart) "claims (1) the annuity of £250 out of the income and capital of John's estate, and (2) the liferent of James' interest in John's estate. It seems a questionable and rather startling claim at first sight, but after consideration of the English authorities which were quoted in support of it I have come to think that it is founded on equity"; and the pursuer's double liferent claim was sustained by his lordship. The decision fell to be worked out by (1) Mr John Stewart's testamentary trustees continuing to hold his estate and paying to Mrs James Stewart the annuity of £250; and (2) Mr James Stewart's marriage trustees selling Mr James Stewart's vested reversionary right in his brother's estate, holding the price as being the capital of Mr James Stewart's whole estate as at the date of his death, and paying to Mrs James Stewart the income of the investment of that price in implement of her marriage contract liferent.

There may have been indications of intention or other specialties sufficient to put this case in a peculiar position, but it has certainly been understood up till now that the general rule is that the mere fact that A already possesses under an existing title a liferent interest or an annuity or other interest, which exhausts the income of a particular estate or fund, is not of itself a reason why B, or even A, may not take, under a different title, what may, in a popular though inaccurate sense, be described as a second concurrent liferent in the same estate or fund. The illustrations in reported cases are mostly to be found in England, but authority to the same effect is not lacking in Scotland. Again, there is no intention on the present occasion to discuss the whole conception and situation, and it may suffice to mention briefly two English cases and one Scottish case. Countess of Harrington v. Sir W. Atherton, [1862] 2 De Gex, Jones & Smith, 352. The Countess had a right under her marriage settlement to an annuity from a particular fund, and in the event of the income being insufficient the settlor covenanted to augment the capital of that fund so that the income should be equal to the annuity. Then by his will he bequeathed to the Countess a life interest in


Rowlls v. Bebb, [1900] 2 Ch. 107. The testator bequeathed to his sister a life interest

in his estate. His estate embraced or consisted of a reversionary interest expectant on the death of the sister herself, she being already entitled to a life interest in the fund on a separate title. The sister claimed that she had two separate cumulative titles and rights, namely (1) the prior life interest in the fund entirely apart from her brother's will, and (2) the life interest under the brother's will, which must be given effect to by his executors selling his reversionary interest in the fund expectant on her own death, holding the price as the capital of his estate, and paying to her the income to be derived from the price; and this double claim by the sister was sustained.

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And again, in Darling v. Darling, 10th March 1889, XXV. Rettie 747 at p. 750: "I wish, however, to add that I should be

sorry if our judgment on this point were misconstrued as giving any sanction to the idea that it was not the duty of the committee, as it is certainly the duty of a body of trustees, to adopt adequate means for convening all the members, especially persons who are likely to be dissentients from the prevailing policy, or the policy of the promoters of the meeting. It seems to me that the case of Wyse is a very important one, as shewing that no action ought to be taken by a mere majority of trustees acting at their own hand without consultation with the minority, or the persons who are expected to form the minority. The duty of trustees and of the committee is to act collectively, and to adopt the proper and necessary means of promoting

collective and unanimous action, which is by conference and reasoning." And again at p. 751: "It was indispensable that those trustees who were members of the committee should be apprised of the meeting, and that their presence should be procured by those who were resolved to take action against them.' Both these cases appear to warrant the limited application which the Bank of England place on the Trust Act.-Yours faithfully,

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of a majority of the trustees is effective without | DECISIONS IN THE ENGLISH COURTS. reference to their co-trustees.

In this connection there are two opinions of the Lord President of the First Division of the Court of Session, which do not seem to have since been adversely commented upon. In Wyse against Abbott, 19th July 1881, VIII. Rettie 983 at p. 984:

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Precious v. Reedie.


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TERMINATION OF NOTICE.-The appellant was the tenant of a shop in Commercial Street, Scarborough, on a monthly tenancy, beginning on the first of the month. On 5th September 1923 he received from his landlord a notice, dated 1st September 1923, in the following terms: "I hereby give you one month's notice to quit 5 Commercial Street as I require the house for occupation. The County Court judge held that this notice was good for the end of the next ensuing month of the tenancy, viz. 31st October 1923. Their viz. 31st October 1923. Held that in a monthly tenancy the notice must correspond in length with the period of the tenancy, and must terminate on the day of the month on which the tenancy began, and that, accordingly, in the present case a proper notice to quit had not been given.-K.B. Div. (Bailhache and Sankey JJ.).-14th April 1924.

No two trustees can do a trust act without consultation with their co-trustee. It is of the essence of the duty of a body of trustees that they should meet and exchange views on the trust affairs. The trustees were bound to see that Mr Wyse had notice of their intention to nominate co-trustees, and an opportunity of stating his views. Their excuse was that he had been disagreeable, and had refused to sign a deed of transfer. That rendered it more imperative that he should have an opportunity of stating his views. The omission of notice, and the want of consultation, are enough to make the appointment illegal."

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Agents are now familiar with the working of the Act, and the redemption of casualties payable in respect of feudal subjects and of those held under the burden of ground annuals is proceeding apace. On the expiry of the said period of fifteen years all casualties and claims for compensation will be held to be extinguished and discharged, and if superiors desire to preserve their rights as regards feus, etc., which have not been dealt with, the following points must be kept in view, viz. :

1. Notice in terms of the Act must be given to the feuars and others. 2. Judicial proceedings for the recovery or redemption of any casualties, or the fixing or recovering of compensation therefor, must be instituted prior to the expiry of the said period.

3. A notice of such proceedings in the form provided by the Act or in similar form must be registered in the Register of Inhibitions and Adjudications in the course of the year immediately following the expiry of the said period.

If these points are observed, a further period of five years is allowed within which to carry out the purpose of the Act.

The penultimate section reads as follows: "XXIII. Acts of Sederunt.-If it shall appear to the Court of Session that there exist any rights of the nature sub

stantially of casualties which are not comprised within the scope of this Act, it shall be competent for the Court, by Act of Sederunt, to provide for the redemption and extinction of such rights on terms seeming to the Court to be just and equitable on the analogy of the provisions of this Act, and such Act of Sederunt shall have the same force and effect as if it were embodied in this Act."

Where landlords had no desire to grant feus of portions of their estates it was their custom to grant leases for periods of 999 and, in addition, for payment of a year's years for payment of a certain tack-duty, tack-duty for the first year's possession of every legal heir and one year's real value of the subjects for the first year's possession of every assignee. Indeed, the clauses in long leases were adapted from those appearing in feu-charters or feu-contracts, and long leases are substantially feus.

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The pecuniary obligations of the tenant, apart from the yearly tack-duty, seem to be "rights of the nature substantially of casualties referred to in section 23 of the Act, and for which the landlord should receive compensation. The question accordingly arises whether the profession should not now seek the Act of Sederunt contemplated by the section referred to in order that landlords may not run the risk of losing compensation on the redemption of such rights.

On the one hand, it may be argued that if the Act does not in precise terms deal with the redemption and extinction of "rights of the nature substantially of casualties "payable in respect of leasehold subjects, and no Act of Sederunt is obtained, then the terms of the lease will merely continue in operation, and the pecuniary stipulations therein will continue to receive effect until the Court of Session provides for the redemption of such rights by Act of Sederunt. On the other hand, as such Act of Sederunt is to have the same force and effect as if it were embodied in the Feudal Casualties Act, and as all casualties and claims for compensation under the Feudal Casualties Act will be held to be extinguished and discharged on 1st January 1930 (unless superiors prior thereto take the steps which have been Act of Sederunt is obtained before 1st January adverted to), it may be contended that if no 1930 all rights of the nature substantially of

casualties will also be held to be then extinguished and discharged.

Whichever contention may be the proper interpretation of section 23, it would certainly seem, having in view that the trend of the times


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their acquittal on the merits, and, in the meantime, the answer is in the affirmative. That decision is based on the following grounds: that the indemnity is assumed to be one of the terms upon which the auditors were employed and gave their services; that the auditors' breaches of duty did not amount to wilful neglect or default; that what they did or omitted to do was in good faith, induced by a mistaken belief as to what their duty was;

PROFESSIONAL MEN AND INDEMNITY that section 215 of the Act does not override


This subject is brought into prominence by that part of the decision in the City Equitable case which gives exoneration to the company's auditors. The decision is based entirely on the indemnity clause in the articles of association. The clause is too long to quote, but it contains the following:

The directors, auditors, secretary, and other officers for the time being of the company shall be indemnified out of the assets of the company from and against all actions, charges, losses, damages, and expenses which they shall or may incur or sustain by reason of any act done or omitted in or about the execution of their duty or supposed duty in their respective offices, except such, if any, as they shall incur or sustain by or through their own wilful neglect or default.

the specific indemnity in the articles of association, and that such an indemnity is not illegal either under statute or at common law.

On the present occasion the intention is not to discuss the general policy of wide indemnities in favour of directors and managingdirectors of companies and debenture trustees. These are all paid officials, and, except the managing-director, their means of knowledge are somewhat limited. There will be general agreement that it would never do to give them an indemnity against anything which is of such a character as to infer liability under criminal law. We are not aware that that has ever been attempted, and, if it were attempted, it would no doubt be ineffectual. But short of that, it is very arguable whether such officers ought not to have the widest possible protection.

The position of professional men employed It will be observed that this clause refers to as such is, however, very different. In the "auditors "" ; describes them as officers of the case of companies this applies to members of company; assumes that they have incurred different professions, including accountants, liability in the execution of their duties; and, whether acting as auditors or otherwise, nevertheless, or rather because of that liability, surveyors, and solicitors. In the City Equitcontracts to give them indemnity out of the able case the specific indemnity expressly funds of the company. In this particular embraced auditors, and that is common enough. case the judge held that the auditors had In comments in the public press on that case committed breaches of duty and were negligent it has been assumed, or inferred, that it is not in specific respects, notwithstanding that, unusual to have solicitors of companies prospeaking generally, his lordship was satisfied tected in like manner, either by express referthat they had displayed great skill, care, and ence in the clause, or as being covered under industry. But for the indemnity clause they "other officers." This last would surely never would accordingly have been dealt with under hold, for it is difficult to see how a solicitor of section 215 of the Companies Act, 1908, and a company, or different solicitors acting for the amount of their liability would have been the same company, could pass muster as assessed, and an order for payment would have "officers." It is unusual and improper to been made against them. That section does have solicitors employed except by, and during not specifically refer to auditors, the words the pleasure of, the directors. Nor is the being director, manager, liquidator, or any present writer aware that there is any general officer of the company." There are authorities practice of specifying solicitors in those indemto the effect that the auditor is an officer of nity clauses. If there is, it certainly appears the company, though that may be open to to be most objectionable. It does not seem challenge in a higher court. That question, possible to suggest any reason why the solicitors however, would affect procedure only, and at of, say, a property-owning company should be most would mean that the auditor must be protected any more than the various tradesmen reached by other machinery than a summary employed by the company, through its directors, application under section 215. The sub- to erect and repair the buildings. Auditors are, stantial question was whether the indemnity | no doubt, so far in a different position in respect clause in the articles of association, expressly that they are not appointed by the directors referring to auditors, was sufficient to lead to and are not dismissible by the directors; but


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even in their case, and even assuming that they are correctly described as officers of the company, they are employed in their strictly professional capacity, and there is absolutely no difference in the character of the services which they render to a business before it is an incorporated company and the services which they render after that formal change takes place. Besides, in the case of auditors, the stock exchange may have something to say. For these reasons we gravely question the propriety of any rule which recognises, as valid, indemnities of this kind in favour of professional men employed as such. Indeed, the position is paradoxical. In the case of an ordinary partnership there is no reason why the partners should not make, in advance, such special arrangement as they please by way of indemnity to professional employees, but, in point of fact, such a thing is unheard of in partnership cases. It comes into vogue only in the case of companies, when different considerations make it distinctly obnoxious.

There are two further considerations, one of finance and the other of legal technicality. It is said, forsooth, that the indemnity is a term of the employment of the professional men, but we do not believe that it will be seriously stated that, in fixing an auditor's remuneration, the existence or non-existence, or the greater or lesser scope, of an indemnity clause has ever been weighed, or has ever made a difference of one guinea in the audit fee; or that in the alleged cases of solicitors' indemnity the existence of the indemnity has ever been allowed to curtail any full and proper scale charge. Then it does occur to one as rather surprising that, especially in England, employees, or at least employees who are not officers," are allowed to found upon a clause in the articles of association to which, in their capacity of employees, they are certainly not parties, and in which they are not even named. But even in Scotland we shall not believe till we see it that such a clause, referring to, say, employees of all sorts," would ever protect a plumber, and we are by no means sure that a law agent would find himself in any better case. The extreme of absurdity would be reached when, on ex post facto information, the indemnity was pleaded by an employee, whether professional, commercial, or industrial, to whom the existence of any indemnity clause was unknown when he accepted instructions and did the work.


In this matter of the propriety of indemnities the distinction above suggested between directors on the one hand, and professional employees on the other hand, is more or less reproduced in the case of ordinary testamentary and family trusts, substituting trustees for

directors. The claim of the trustees to full indemnity is all the stronger in respect that they are unpaid. The common feeling and the general experience have been that indemnity clauses inserted in wills and marriage contracts fail of effect because of the limited language employed, and it seems regrettable that those clauses should not be framed on bolder and more thorough-going lines, for which, indeed, published forms are available to hand. But we are in the judgment of our readers when we say that no one ever heard of those clauses being expressed to cover the professional employees of the trustees. It would hardly be human nature to find a solicitor inserting an indemnity in favour of any professional employees without including himself, and any attempt to include himself and his professional successors would be viewed with the utmost disfavour, certainly on the Bench, and we believe also in the profession. It would probably fail of legal effect if for no other reason than that it would probably be held that there was a burden on the solicitor to prove that he had specially drawn the attention of the testator or settlor to the language of the clause and had fully explained its effect. But there is one respect in which indemnities are regularly made or at least expressed to cover factors and law agents, and that is in the ordinary clauses of exoneration and relief or indemnity contained in deeds of discharge when winding up trust estates. By those clauses, according to use and wont form, the beneficiaries are made to discharge and indemnify, not only the trustees, but also the factors and law agents in the trust, though we cannot say that we ever saw those clauses extended to auditors or other professional employees. A reference to books of English styles has failed to show any corresponding practice on the other side of the Border. It is difficult to state the legal basis on which the beneficiaries can be compelled to extend those legal clauses beyond the trustees themselves. The beneficiaries are dealing only with the trustees, and not with the solicitors, and throughout the period of the trust administration there never has been any legal relationship between the beneficiaries and the solicitors. The demand for a discharge and indemnity in favour of the solicitors can, therefore, be made only by the trustees, and it appears clear that they have neither title nor interest to make that demand. Indeed, one would have been disposed to think that it might be better to let sleeping dogs lie, for, if the legal position has to be brutally stated, it would appear to be very much the other way about, and that liabilities, if any, known or unknown, incurred by the solicitors are assets of the trust estate, vested in the trustees, and of

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