BACON ፖ. CLARK.

[ *296 ]

gives the usual directions to enforce the payment of it. The question upon the appeal is, whether W. Fairlie's estate is liable to the payment of this sum.

W. Fairlie was a trustee under a deed of settlement of the 12th of August, 1806. It appears, from the recitals in that deed, that John Fergusson Bacon, who was then at Calcutta, and had certain property there, which he was desirous of selling, discharged of his wife's dower, procured her to levy a fine for that purpose; and, as a compensation to her, agreed with W. Fairlie as her trustee, that he would forthwith, or as soon as conveniently might be, raise a sum of 10,000l., and settle the same upon her and the issue of the marriage, and that, in order to raise that sum, he had agreed to appoint the property of which the fine had been so levied, to W. Fairlie, in trust to sell, as after directed, and to execute a bond to him in 160,000 sicca rupees, for making good any deficiency, and to secure to Mrs. Bacon and the issue of the marriage the net and clear sum of 10,000. The deed then proceeded to appoint and convey the premises to W. Fairlie in fee, upon trust to sell the same as soon as conveniently might be, for the purpose of raising the said sum of 10,000l., or so much as the premises would produce, with the usual powers to give receipts for the purchase money: and it was provided that as soon as W. Fairlie, his heirs, executors, administrators, or assigns, should have realised the net and clear sum of 10,000l. by means of the sale of the premises or by means of the bond, and should, at the request and direction of Mr. and Mrs. Bacon, in writing under their hands or the hand of the survivor for that purpose being to him first made, have remitted the same to England to Henry Slade, John Davis, and John Slade, or the survivor of them, or the executors or administrators of such survivor, in the best, and, as to him, his heirs, executors, administrators, and assigns should seem the most eligible manner, then and immediately after, he, W. Fairlie, his heirs, executors, and administrators should stand discharged of the trusts, and should not be answerable for the payment of the bill or bills in or on which the same should be remitted, or for any loss or misapplication or non-application of the said sum of 10,000l. further than for his or their wilful

default or neglect. And it was declared that Henry Slade, John Davis, and John Slade, when they should have received the 10,000l., should, with all convenient speed, invest the same in Government or real security, upon trust for Mrs. Bacon for life, with remainder upon trust for their children, equally, at twenty-one, or marriage of daughters. And it was declared that W. Fairlie should, until the sale be seised of the premises, and after the sale, and until the money to arise from the sale should be remitted as aforesaid, should stand interested in the proceeds upon the same trusts, and for the same intents and purposes as before expressed and declared of and concerning the 10,000l. so to be remitted to the trustees.

In execution of these trusts, W. Fairlie sold the property in the year 1811, though the purchase of the whole was not completed until the year 1813, and the proceeds amounted to above 145,000 sicca rupees, which much exceeded the value of the 10,000l., the rate of exchange being admitted to have been at that time at 2s. 6d. the sicca rupee. In 1825 W. Fairlie died, and the defendants, David Clark, John Innes, and James Fairlie, are his executors. In the year 1827 John Fergusson Bacon, the settlor and tenant for life, died. The plaintiffs are the only children of the marriage. The 10,000l. never was remitted to Henry Slade, John Davis, and John Slade, and the plaintiffs therefore call upon the executors of William Fairlie to pay the 10.0007.

Such is the prima facie case of the plaintiffs, which, if the defendants cannot show good ground for the discharge of the estate of William Fairlie from this liability, undoubtedly entitles them to the decree which has been pronounced.

The circumstances upon which the defence is founded are the following: That W. Fairlie was a partner in the house of Fairlie, Fergusson, & Co., of Calcutta, which firm were the agents at Calcutta of Mr. Bacon: that W. Fairlie was himself in England at the time of the sale; and that, upon the completion of the sale, in the year 1813, a sum of 80,000 sicca rupees, being then of the value of 10,000l., was, by the direction of W. Fairlie, set apart by Fairlie, Fergusson, & Co., out of the proceeds of the sale received by them, and carried to an account

BACON

V.

CLARK.

[ *297 ]

BACON

v.

CLARK.

[ *298 ]

of W. Fairlie and Hugh Reid, trustees of the settlement: that the 80,000 sicca rupees continued on that account in 1818, when W. Fairlie retired from the firm, and until 1826, when, at the request of Mr. Bacon, Messrs. Fergusson & Co. invested it in a note of the East India Company, of 80,000 sicca rupees, in the names of the partners in the house of Fergusson & Co., and not of the trustees of the 10,000l.: that, in 1832, Mrs. Bacon having called upon the executors of W. Fairlie to procure a remittance to this country of the 10,000l., they directed the house of Fergusson & Co. to do so, in bills payable to Henry Slade and John Slade, the surviving trustees: that the house of Fergusson & *Co. thereupon sold the note of the East India Company, and drew a bill (1) upon the firm, in London, of Fairlie, Clark, Innes, & Co., payable to the executors of W. Fairlie; but, before the bill arrived, the drawees, Fairlie, Clark, Innes, & Co., had stopped payment, and Fergusson & Co., the drawers, also failed (2), so that nothing has been received from that bill. These facts are all stated in parts of the answer read by the plaintiffs; and there was also read a letter from W. Fairlie, to Fairlie, Fergusson, & Co., dated the 20th of May, 1812, directing them to transfer a sum equal to 10,000l. into the name of the trustee of the settlement, being himself (3), and to hold the residue to answer Mr. Bacon's drafts.

Upon this state of facts, three points were made for the defendants: 1. That no breach of trust had been committed by W. Fairlie. 2. If there had, that it was cured by the purchase of the East India Company's note. 3. That the rights of the plaintiffs were limited to such an amount of pounds sterling as the 80,000 sicca rupees, set apart in 1813, are now equal to, and that they are not entitled to demand the whole 10,000l.

The first point does not appear to me to be very important, because, whether a breach of trust was committed or not, as W. Fairlie received the proceeds of the property out of which the

(1) This bill was for 7,9797. 18. 9d. being the value of 80,000 sicca rupees, according to the then rate of exchange (1s. 11d.), and certain interest.

(2) Before the bill became due.

66

(3) The expression in the letter was, Let the transfer of the 10,000l. be made in the name of the trustees for the settlement; I believe Captain Reid and myself.”

10,000l. was to be paid, his estate must remain liable to pay what is due in respect of that sum, unless payment or a sufficient excuse for non-payment can be shown; but I have not any doubt of a breach of trust having been committed. W. Fairlie, who was solely entitled to receive the proceeds of the sale, and out of them to appropriate the 10,000l., permits, in the year 1813, the house in which he was a partner to receive the money, and to hold it till his death in 1825, and even after he quitted the firm in 1818. Either this was his possession, in which case what happened to that firm is immaterial; or it was a lending the trust money to this company, without security, which would clearly be a breach of trust. It was said that he could not remit the trust money without the direction of Mr. and Mrs. Bacon; but it is to be observed that, by the deed, he had no right to appropriate the 10,000l., and to separate it from the rest of the proceeds of the sale, except for the purpose of remitting it to the trustees; for until that was done, he was to hold the proceeds subject to the same trusts as were declared of the 10,000l.; that is, the whole proceeds were to be liable to the payment of the 10,000l. until it was actually remitted. This, if acted upon, would have insured the direction to remit from Mr. Bacon. The payment to Fairlie, Fergusson, & Co., or permitting them to receive and retain the proceeds of the sale; the appropriation of the 10,000l. by them under the direction of W. Fairlie; the payment of the interest to Mr. Bacon, and the payment to him of the residue of the proceeds, were all in direct violation of W. Fairlie's duty as trustee, and each constituted a breach of trust; and this view of the trusts of the deed at once disposes of the point that the plaintiffs' title is not to 10,000l., but to the proceeds of 80,000 sicca rupees so appropriated. It is quite clear to me that the whole proceeds of the estate were to be liable to realise the 10,000%. when it should be remitted, and, consequently, that the plaintiffs are entitled to have that sum realised in this country at this time.

But then it is said that the purchase of the note of the East India Company cured all former omissions or breaches of trust, because, when that took place, the fund was in a proper state

BACON ľ.

of investment.

('LARK.

[*301]

Whether such a mode of investment would, under any circumstances, be a discharge, need not be considered; because if W. Fairlie was, at the time of his death, personally liable to realise the 10,000l. in this country, as I think he certainly was, his estate must remain liable to that debt, unless his representatives can show payment or something equivalent to it. How then can an act of the house of Fergusson & Co., acting under the direction of Mr. Bacon after W. Fairlie's death, which did not lead to any payment of this debt, operate as a discharge of his estate from this debt? The security was taken by Fergusson & Co., who were strangers to the trust, in their own names; and they sold the security, and received the proceeds. Similar observations apply to the bill drawn by Fergusson & Co. upon Fairlie, Clark, Innes, & Co., in London.

The deed undoubtedly intended to protect the trustee, W. Fairlie, if, acting to the best of his judgment, he had purchased a bill of good credit upon England for the purpose of remitting the 10,000l.; but the bill in question was not drawn by him or by his representatives, and could not, at the time, have been a bill entitled to any credit, and it was not a bill purchased with the trust fund, but a mode adopted by the debtor for payment, which failed, and which therefore left the debt as before. W. Fairlie, in violation of his duty as trustee, and in breach of his trust, permitted the trust fund to remain in the hands of private traders, Messrs. Fergusson & Co., and in their hands it has been lost; their buying and afterwards selling the East India Company's bill, and their bill drawn upon the London house, which was never paid, *are transactions from which the estate of W. Fairlie can derive no protection. Had those transactions operated to reproduce the trust fund, they would, pro tanto, have released his estate, by satisfying the demand upon it; but, as they were wholly unprofitable for that purpose, that liability remains unaffected by them.

I have, therefore, no hesitation in

Affirming the Vice-Chancellor's decree with costs.