CLAIM FOR A LEGACY.

OF IMPORTANCE TO TRUSTEES

In the Supreme Court en Thursday Mr Justice Cooper gave judgment in the l ease Cmling v. Duncan and Reid, a claim for JBIOOj the amount of legacy under the will of John Jefferis, of Keg Swamp.' Mt H. Gifford Mooro (of Palnierston North), with Mr A. A. Finch, appeared for the plaintiff, Hester Hall Culling, wife of Clement Georgo Culling, of Pohaugina (Wellington); Mr J. MacGregor for the defendants, John Duncan, of Waikouaiti, farmer, and Donald Reid, of Taieri, farmer.

In his judgment, his Honor first set out at considerable lergth the facts as stated at the tn«tl. The defendants, he said, did not take any steps in the administration of the estate beyond obtaining probate, and the inventory of account, athough adopted by them, was prepared by Mr John Hyde Harris, and the affidavit verifying the accounts was sworn by them under the advice of Mr Harris. So far as the personal e&tat-e of the testator was concerned, the defendants must be held to have admitted that the personal estate of the testator vested in them and Mrs Jefferis as executors and executrix of his will was of the value of £998 3s, and that the debts of the testator (other than the mortgage debt) and the funeral expenses and expenses of obtaining probate amounted in all to the sum of £329 2s 6d, and that, therefore, the net balance of the personal estate was £669 0s 6d. and moie than sufficient to satisfy the legacies payable under tha wiil. "In my opinion," continued his Honor, " they are estopped by their affidavit and accounts from denying that there did not come to their hands as executors the personal estate referred to in their affidavit and statement of accounts. These accounts not only admit that personal assets to the net value of £669 0s 6d had corns to the hands of the executors and executrix, but contain the further statement that of this amount (£100), the amount of the. legacy bequeathed to the plaintiff (then Hester Hall Culling) was ' retained in trust.' Tim admission by the executrix and executors is, in my opinion, equivalent to a declaration that they held this sum of £100 in trust for'ttre plaintiff, and, therefore, from tho time thi3 account waa filed they became exore3a trustees for •the plaintiff of this legacy of £100. There ate numerous cases in which executors have been held to have altered their etatus as executors and to have becomo express trustees foT the legatee." After making reference to numerous cases Ins Honor proceede3r The facts other than those already stated are .tliit, uDon tiie death oi Mr Jefferis, ami

before probate of his will was applied for, a, meeting took place at the testator's house. There were pre&ent, according to Roland Jefferis, Mr Jefferis, the defendant Duncan, Mt Webb (the husband of one of the legatees), John Jefferis (a son of the deceased), Roland Jefferis, and Mr Culling (tho plaintiff's father). The plaintiff was then an infant about 12 years old. The will was read, and a discussion took place in reference to the legacies. Mrs Jefferis stated that the estate was in debt, and that it was impossible to pay the legacies. Mr Culling stated that Mrs Jefferis need not mind, that ah© would never be asked to pay the legacies and that they would never trouble her, and this met with assent of all who were present. Mr Duncan's recollection is that mo&t of the legatees were present, and that sympathy was expressed by them with Mrs Jefferis, and that they were agreeable to let the estatw remain and be worked by Roland Jefferis to see how the legacies could be met. Mis Jefferis had no other means of livelihood ths.n the income of the testator's farm, and this could only be obtained by working it as a going concern. Beyond applying for probate the defendants- took no part in the management of the est-a/te or of the realisation of any of the personal property, but allowed Roland Jefferis to receive and ue& the personal property in working tho estate. The personalty consisted of crops, a small flock of sheep, cattle, farming implements, and household furniture. The whole of it was used by Roland Jefferis, and realised from time to time. No part of the proceeds, in fact, reached the hands of the defendants. Roland Jefferis himself paid the unsecured- debts of the- deceased, and paid three of the legatees, Walter Hall Jefferis, Mrs Webb, and Lucy Young, Elizabeth Jefferis having died unmarried. Walter Hall Jefferis was paid hi 3 legacy about the end of 1875, Ann Webb in August, 1876, and Lucy Young at the end of 1878. The plaintiff attained her majority in 1884, and shortly afterwards, in company with her father, saw Mr Donald Reid, mn., who, although a solicitor, was then engaged in his father's office. She has given no particulars of what then took place bejond stating that she applied for her legacy, but " got no satisfaction." She also saw Mrs Jeffsris, who told her that Roland Jefferia wou'.d pay the legacy. She appears <o have done nothing hirther in tho matter until Juue 28, 1889, when she signed the following document- — '" I hereby acknowledge that if Roland Jefferis gives his promissory note for one hundred pounds, payable in 12 months, I will not meantime claim any interest, and will receive the moneys (£100) in full discharge of the legacy left me in my grandfather's will.— Hester H. Culling Hillgrove, June 28, 1889. P.S. — Of course, if from any cause the money was not paid when P. note became due it wou'.d carry interest from the due date." This document is in the handwriting of Donald Reid, jun., and was forwarded by him to the plaintiff and returned by post by her to him. A promissory note for £100 was given to her by Roland Jefferis, pursuant to the terms of this document, and was renewed in June, 1690, and again in June, 1891,- for the amount with £8 per cent, interest. The statement of claim contains a claim against Rolbnd Jefferis for the amount of the promissory note and interest thereon from the 12tb June, 1889. but before the cas? came to tiial the plaintiff elected not lo proceed with this causo of action. Paragiaphs 7, 8, 9, and 10 of the statement of claim refer to this promissory note in the following terms — "After eho came of age the plaintiff was referred for payment of her legacy to the defendant Roland Jefferis. who is p. sok of the testator, and une'e of the plaintiff. Tho plaintiff app led to the said Roland Jefferis ?or the amount Jue to her, who handed to her a piomi«sory note for £100, dated the 12th June, 1889, but which promissory note was not paid at maturity. The said Roland Jefferis gave to the plaintiff certain other promissory notes — viz., one dated 15th June, 1890, for £106, due in 12 months, and also one dated loth June, 1891, for £108 due in 12 months, but none of such promissory notes were ever paid, or any part of same. The defendant Roland Jefferis has also since the said promissory notes were given made many promises to pay the amount of the said legacy, but has not pajd the same or any part thereof." According to Roland J^fferis, Mr "Reid, jun., requested- him to give this promissory not-©, and he states that he thought that he made the request on behalf of Donald Reid, sen. The renewa's were sent to the plaintiff by Roland Jefferis himself. In August, 1892, Roland Jefferis received a letter from the plaintiff, in_ which she states- — "You will, doubtless, be~ surprised to receive a letter from me; but it is now two months since your P.N. camo due, and, not having heard from you, I thought I would write and ask you what you intended to do, as I have already three of your P.N.s, and before I left home you said you would be ah\e to pay part, if not all, next year— that was last year. Could you manage to pay some of it now, and send P.N. for the remainder? I would not ask you, but we have been rather unfortunate since we came to Palmerston North, as 1 daresay you have heard how Clement lost his money." Roland Jefferis states that ho has no recollection of answering this letter in writing, but that shortly after its receipt the plainiff visited his place, and he told her that he was not able to meet the bill, and that it was no use giving another one,

as he had no prospect of being able to pay it. Shortly before this the mortgagee sold the farm through the registrar of the Supreme Court, and it was bought by Mra Roland Jefferis's friends for her for the sum of £810, the amount of mortgage moneys, outstanding interest, and costs. Shortly after the visit of the plaintiff, Roland Jefferis, became insolvent, although not bankrupt, and compromised with his creditors, and the whole of the testator had by this time disappeared, having been used by Roland Jefferis partly in paying the testator's debts, partly in paying the legacies to the three legatees, and partly in paying Roland Jefferis's own liabilities incurred subsequent to* his father's death in connection with the working of the farm. The plaintiff did not move in the* matter again until the 29th October, 1894, when ehe wrote to Mr Duncan a letter (exhibit • A), in which the stated : " You ars, I believe, trustee iv my grandfather's will, the late John Jefferia. Of course, you know I have not received my share, £100. As I am in great need of this money, I would be glad if you will see to this matter for me. I may say I wrote to R. Jefferis about this affair some time ago, but ?o far with no good result. I have also three promissory notes of his from 1889 until 1892, and this time last year I received a- letter from i him saying he would do what he could for rue after harvest. Aa I have heard nothing since, there is no, use writing to him any more. I am sorry to have to trouble you, but I trust you will be able to sec' to this matter " She received an answer frpin Mr Duncan in due course, but this letter ha 3 been lost, and no copy has been kept; the gist of "it was that he would see that the money was paid. The plaintiff's father died in 1891, and her grandmother (Mrs Jefferis) the executrix, died in 1895. The plaintiff had no further communication with the defendants until the 30th September, 1905, when she wrote to Mr Duncan, and further correspondence took place between her solicitors and the defendants and hereejf and Mr Duncan, to which I will refer later on. Upon these facts one of the gronds of defence is that the plaintiff has precluded herself by her conduct from taking the present proceedings. The principle upon which a litigant is barred from enforcing a right, because he has

" acquiesced " in a certain course of conduct on the part of the other litigant party has been very clearly stated by the Court of Appeal in De Busche v. Alt (8 eh. D. 286, p. 314). " The term " acquiescence ' is one which was said by Lord Cottenham, in Duke of L«eds v. Earl Amherst (2 Ph. 117. 113), ought not to be used ; in other words, it doea not accurately express any known legal defence, but, if used at all, it must have attached to it a very different signification, according to whether the acquiescence alleged occurs while the act acquiesced in is in progress, or only after it has been completed. If a person having a right, and seeing another person about to commit, or in the course of commitlng an act infringing upon that right, stands by in such a. manner as really to induce tho person committing the act, and who might otherwise have abstained from it, to believe that ho assents to its being done, he cannot afterwards be heard to complain of the act. This, as Lord Cottenham said in the case already cited, k the proper sense of the term ' acquiescence,' and in that sense may be defined as quiescence under such circumstances as that Msent may be reasonably inferred from it, and ia no more than an instance of the law of estoppel by words or conduct But when onco the act is completed without any knowledge or assent upon the part of the person whoee right is infringed, the matter is to be 'determined on very different legal considerations. A right of action has then vested in him, which", at all events, as a. general rule, cannot be divested without accord and satisfaction, or realise under seal. Mere submission to the injury for any time short of the period limited by statute for the enforcement of the right of action cannot take away such right, although under the name of laches it may afford a ground for refusing relief under some particular circumstances; and it is clear thui even an express promise by the person injured that he would not take legal proceedings to redress the injury done to him could not by itself constitute a bar to such proceedings for the promise would be without consideration, and therefore not binding." Now, in the present case, the plaintiff was only 12 years old when her grandfather died. The defendants had from the time of his death allowed Roland Jefferis to take possession of the personal estate of tho testator, and long before the plaintiff, became of age the estate had been disposed of and the proceeds applied in payment of the debts of the testator, tho legacies to those who were of age, and </he working expenses of the farm. She was incapable of acquiescing in this course of conduct, and her father, who, it is suggested, approved of the manner In which the estate was administered, had no legal authority to act for her, and could not bind her by any acquiescence on his part. Nor can it be said that she has since she became of age ratified the arrangement upon which on this ground of defence the defendants rely. The promissory note taken 'by her from, her uncle, and the document signed by her in 1889, were prepared at the instance of Donald Reid-, jus., who was, according to the only evidence adduced, acting for the defendants, and neither for Roland Jefferis or for the plaintiff. A right of action lo recover the legacy had before this vested in her, the executors having not only assented to the legacy. but dpclared that they held it in trust for her, and the acceptance

of tho promissory "nofe, to part of which hts ever been paid, d-d ct-, aud could not,, amount to accord . tisfaction or divest ' this right of actk, '•or can it be said; that the position - las defendants was altered by her conduct. Long before the pro« - missory note had been received Roland ■ Jefferis had become unable to pay the amount of the legacy. His evidence on this point , is that after the payment of Lucy Young's legacy in 1878 the position became worse than * before: fresh debts had. accumulated, he had to borrow money to pay past debts, and the '. personal estate which, according to him, was of a realisable value tinder £600 had been disposed of from time to time to enable him. - to raise the £500 — the amount of the thies legacie-3 paid by him. The value of the real property had depreciated, and tha * equity of redemption was of merely nominal value. The plaintiff made no representation to the defendants that she would not taks proceedings against them if the promissory note was not paid, and, in fact, m 1894 she wrote to Mr Duncan a letter which clearly intimated that she looked to the .defendants . for payment. In my opinion, the plaintiff is not precluded either by acquiesfience or laches from bringing this suite. The remain- - ing question is whether the defendants are ' entitled to tho protection of section 13 of v " The Trustee Act, 1891." .That section en- ' titled a trustee who ha* committed.* breach ■ of trust -to rely on anv 1 statute of limita- * tions as fully as anybody may do who is; not ~ a trusted, provided his conduct-has been /free '. from any taint of fraud, and provided' he has not derived, and is not in a position to derive, any personal benefit from the transaction impeached, as a breach of trust. The section states three grounds, the proof of any one of which disentitles a trustee to the protection of the statute — (1) .Fraud ox ' fraudulent breach of tri^st to which the trustee was party or privy; (2) tho receipt of the trustee of the trust fund and its conversion to his use; and (3) that he still retains the trust funds. In the present case the defendants have as trustees of the plaintiff's legacy been guilty of a breach of trust. It was their duty to preserve the fund, and they have allowed, in breach of their duty, the fund to be dealt with and lost by Roland Jefferis; but there is not the slighest ground" to suggest that they in, doing so were guilty of or privy to fraud or a, fraudulent breach: of trust. They have been guilty of negligence in their office as administrators of the testator's estate, and in their capacity of trustees for the plaintiff; but this negligence consisted merely in allowing Roland 'Jefieris, in what at the time of the testator's death, were exceptional circumstances, to take possession of the estate and to continue to carry it on. Probably had the personal estate been at once realised there would have been sufficient funds to pay all the legatees, and the widow would have been homeless. It was because this result would have happened thafc Mr Duncan assented to tho suggestion made at the time the will was read, and it was no doubt in the belief that this course was tho best way to administer the estate, that both M* Duncan and Mr Reid were content to leave tho matter entirely in the hands of Roland Jefferis; but this conduct of th« „ defendants can in no sense bo termed fraud . or a, fraudulent breach of trust. Nor can it be said that they have converted the- plain--tiff's legacy to their use. They have, in fact, never received any part of th» personal estate although in law it vested in them ; and it is clear that they have not in any way derived any personal benefit from the transaction, impeached. Can it, then, bo said that they "still retain" the trust fund? Our act of 1891 is founded upon the English act of 1888. and section 13 is a. transcript of section 8 of the act of 1888. Iv Thome v. Heard (1894. I Ch. 599) and on appeal (1895. A.C. 495) it was held that the terms " still retains" used in these section® is confined, to cases in which at the date of the writ the trustee still retains — that is, Eas in his- hands on under his control— tha trust property, or the proceeds thereof, sought to be recovered. It was contended by counsel for the plaintiff oih two grounds that tho defendants " still retain" this fund. First, that as it was retained by them in trust in the year 1878, the position of the fund now is the same as ft was then, and that the estoppel continues \ second, that Roland Jefferis was their agent, and as the fund came into his hands, it must be held that it is still in the hands of the defendants. When the accounts were filed in September, 1878, tho inference is that there still existed assets, which, had tho personal estate been realised, there might have resulted in a sufficient fund being obtained to satisfy this legacy. The legacy to Mrs Young, amounting to £200, was paid! at the end of 1878, and therefore presumably after the accounts were filed, and Roland. Jefferis was able for some years after thia until some time towards th© years 188$ or 1890 to carry on the business the testator was engaged in at the time of his death; for it was not until 1891 that the mortgage* called up his mortgage and sold the farmv and it was shortly after this that Rolana Jefferis compromised with his creditors^ But whether this was or was »ofc tho truf position of matters, the indisputable facts' are that for many years before this actiori was commenced the easels of the testator's estate had disappeared. Nor. in mv oninioni ran it be said that because they had reached the hands of Roland Jefferis and been used by him, that any part of them is still con?

ftructively in the hancls of the defendants. Roland Jefferis was, no doubt, the defendants.' agent in the working of the estate and the realisation and disposition of the assets, and this has resulted in a breach of trust by the defendants; but although this was tho position of Roland Jefferis, it does not follow that any one of the exceptions stated in section 13 have been proved. Roland Jefferis Las committed no fraud to which the defendants were privy, nor can it be said that his conduct can in any other way be considered fraudulent. He did the best he could

with an estate which ought 'to have been forthwith wound -up, -under a, mistaken idea 'that it was in the best interests of those immediately concerned to continue it, and in doing co the estate was lost. He cannot have been said to have converted it in such

a way as to satisfy the exception that it was converted to the trustees' use. xie realised . the' assets and- used the proceeds in paying .some of the legacies, all the debts of the testator, and some of the liabilities incurred by him in carrying on the form; but even if this iiad been directly done- by the defendants, such a course could not in my opinion be said to, have been a conversion s of the trust property to their own use. The conversion referred, to in the section is the personal .appropriation for Ma- own benefit of the 'trust fund, by- a defaulting, trustees, and nothing like that lifts happened in the ■(present caee. A trustees may no doubt .be liable to make good trust money oe if it lyrexp still in his hands, and yet he may not, in fact, have it. But, in construing section 13, the court has to ascertain whether, in fact, .the trust property eought to be recovered is " still retained" by the trustees. That question ought to be answered in the affirmative if they or any agent for them have it, bo that they can get but in the negative if it has been lost, whether by negligence or otherwise. (Lindley, L.J., in Thorn v. Heard, on p. 606.) Money in the hands of an agent from whom it could be recovered by the trustees would be moneys ".■till retained" by the trustees, for, as was said by Kay, L.J., in Thorne v. Heard, it could not be the intention of the statute that the trustee might bar the cestui que trust and then recover the money from his own agent and keep it. But here the money is not, in fact, in the possession of either Jefferis or the trustees. Any right of action which the defendants may have had against Jefferis, if. indeed, they ever had any, has long sinco been barred by the statute of" limitations, and the trust fund claimed by the plaintiff has long since been irretrievably lost. In my opinion, therefore, the defendants «re entitled to the protection of " The Trustee Act, 1891." It has, however, been contended that so far as Mr Duncan is concerned, the case is taken out of the statute

by written admissions of liability, from which a promise to pay can be inferred, mode eince September, 1905. The correspondence referred to commenced on the 30th September, 1905, by a letter from Mr Finch to Mr Duncan. This letter contains "no demand upon Mr - Duncan for payment, but «fter-aetting out the . conditions of the will." and that a fufile apph- - cation for payment of the legacy had been nude to Roland Xeffcria, concludes:— " Under tße *ill it is is the executors who are liable. and I therefore now write to yon as executor, add sh-fcll be obliged if yon will be good enough to let me know why the legacy baa siot been paid in accordance with the will." Mr Duncan did not reply to Mr Pinch, but on it* 10th October wrote as follows to the plaintiff: — "Dear Mrs Culling, — I received a. letter from your solicitor in which he stafco3 that he wrote to your uncle Roland about payment of the legacy from your grandfather's will, and that your uncle says that he i» not in a. position to do anything at present. I have had a talk with your uncle, *nd feel confident- that he cannot do Anything, and, owing to fickness in his family, has as much as he con struggle along with. I should very much like if this could be settled without ■bringing Mr Reid, who ia my co-trustee in tho matter, and, though I am not flush of funds, I will send you a bank draft for £50 if you con see your way to give the trustees — Mr Reid and myself — a ful! clearance. I should like to hear from you at once, as I am far from well, *nd very little worries me at present. — Yours very sincerely, John Duncan." On the Slst October Mr Finch wrote to Mr Duncan requiring a reply to his letter of the 80th September, and on the 6th November Mr Duncan replied, stating . — " This business, Deing purely a family matter, and I being one of the trustees, it was out of no disrespect ti> you, Mr Finch, that I wrote to Mrs Culling to explain matters. I have had a letter from ter, and one from Mr Moore, « solicitor, and 'trust io come to some settlement goon. — Yours sincerely, r John Duncan." On the Ist November. Mr Duncan had written again to the plaintiff (acknowledging receipt of «. letter from her declining the offer made in his letter of 10th October. In this tetter he set out very fully the- history of Roland Jefleris's connection with the estate. He regretted that she plaintiff nad declined the offer of .£SO, and " soared ber wbetlier she- would be willing to accept a compromise', stating that tlte offer of £50 was " m*de you purely -on my own account, and the amount offered -was my own " money, as I am anxious to get this' matter settled." The letter has the following concluding paragraph: — "I wonld ask you to reconsider the matter I cannot pay any more myself. Uncle is not in a position «t present "to do anything. If you still insist upon full - payment nothxa*. can be done at present, but

should you think favourably of it, and state tha very lowest you will take, I would take some further trouble to try and get it." On the 10th November he wrote to Moore and Beal. the plaintiffs solicitors, a letter containing these passages : — " We thought it was settled years ago when she took his (Roland Jefferis) bill for the amount, and since then she offered to compromise and take so much. I have promised myself to pay her so much, as he cannot do "anything in the matter. Pleaae to see my letter to her, *nd you will see the real state of matters. After seeing my letter to her, I thing you should advise her to accept a compromise, as I do not see what else can be done. Let me know what you can do in the business, as I am very anxious to have it settled." Mt Donald Reid also wrote to Messrs Moore and Beal on the 17th November, stating. as faT as he knew, the history of the matter and that he would resist any claim made against him. There are no expressions in this letter which can be at all used as an admission of liability or a promise to pay. In order to take a case out of the statute of limitations the writing relied on as an acknowledgment must either amount to an express promise to pay or an unconditional acknowledgment of -the debt from wfaicb. such an express promise may be implied. I have carefully considered these letters, and in. my opinion, reading them eitker together or separately, they do not contain any acknowledgment of a debt being due- to the plaintiff or any terms from w-hich an express promise to pay any debt can be inferred. The letter of the 10th October contains no acknowledgment of a debt nor a promise to pay, but merely an offer to pay £50 on condition that a full clearance is granted to the trustees. This condition was not accepted. The letter to Mr Finch contains only the expression " I trust to come to some settlement soon." This is neither an acknowledgment nor a promise (Hart v. Prenderg&st, 14 M. and W., 741). The letter to the plain■tiff of the 6th November contains no acknowledgment of any debt nor any promise to pay, but merely expressions of willingness to compromise if terms of compromise could be arrived at. The letter of Moore and Beal of the 10th November must be read with -the letter to which it refers — the prior letter to the plaintiff ; and it does not, in my opinion, cairy the matter any further. In none of these lettexa can there be gathered any acknowledgment that the writer owes the amount of the legacy or any part of it to the plaintiff or any express promise to pay it. The utmost that can be inferred from them is regret on the paTt of Mr Duncan that the plaintiff has not received her legacy, and a desire on his part to help her to the extent of £50 or some other sum less than the amount of her claim on condition that she would accept such sum in satisfaction of her claims against Roland Jefferis, Jefferis's estate, and the trustees. There are very numerous decided ca^es on what is a sufficient acknowledgment to take a ca39 out of the statute, and it is difficult to reconcile some of the decisions. The cases on each side of the line are tabulated under the head " sufficient ' and " insufficient acknowledgment " in pages 69 to 92 of Darty and Boaanquets work on " Statutes of Limrtatiou" (second edition) In my opinion these letters fall within the class of oases in which the acknowledgment has been he'd to have been insufficient, either beoause the promise expressed or implied is tnado upon an unaccepted condition, or because the terms of tho writing do not amount to an admission of a debt or liability. The prayer for judgmeut in this case is sgainst the defendants as executors. The caee has been trpated throughout, and the cause of action alleged in the statement of cla-im is against tiiem personally as trustees. I was asked at the trial to amend the prayer by addincr a. claim against then* personally. This amendment it is clear I ought to make under rule 263 for the- purpose of determining the reo.l controversy between the parties to the action, and I allow it accordingly. The plaintiff cannot succeed against the defendants as executors as her right of action for tho legacy against them as auch is barred by statute 3 and 4 (Will. IV, c. 27). and this sta'ute running from 1684, when the disability of infancy ceased, she cannot succeed against them personally, aa her right of action, founded on a breach of trust, is barred by the provisions of "The Trustee Act. 1883. Amendment Act. 1891." the breach of trust having taken place and eke fc.aving been fully aware of the nrrumstances as far back as tho year 189 i. if not ag early as the year 1889. Judgment for the defendants, and tile amount claimed being over £100 and 31 years' interest at 8 per cent., and therefore over th© sum of £"200, with costs on the middle scale.

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