A WARNING TO TRUSTEES.

Press, Volume XVIII, Issue 2664, 13 November 1871, Page 3

A WARNING TO TRUSTEES.

[From the Ecoiiomist.'] The case of Sutton v. Wilders, which has recently been decided by the Master of the Rolls, is a very serious warning as to the consequences to trustees of a very moderate amount of negligence, or even of the loss of the trust property through pure misfortune. The suit was to make the trustees personally liable for a loss o f £3000, which had been sustained upon a trust fund of £0500, through the fraud of the solicitor whom the trustees had employed. The solicitor in 1842. when the transaction by which the loss occurred was entered into, was a gentleman of high reputation at Derby, and he found for them what he represented to be an unexceptionable security at 4£ per cent. A mortgage was accordingly executed, and the solicitor paid the interest, saying that he had bought the equity of redemption. When he died in 1853, however, it appeared that he had suppressed a settlement of the mortgaged property so that loss occurred, for which the cestuique trust now sought to make the trustees liable. Aud the Master of the Eolls has held them liable, not only upon the special facts of the case, such as that the trustee had employed the solicitors of the mortgagor, or that they had suspected something wrong, but upon more general grounds, which appear most alarming. The solicitor, he said, was the agent of the trustees for whom they were responsible; and though an exception was made in the case of a banker with whom trustees kept money for a reasonable time, yet "if a trustee entrust the money to a servant who robs him, the trustee is liable. If he employs a solicitor who neglects his duty, the trustee is liable." The common sense rule in such matters ought to be that a trustee who displays the reasonable vigilance of people in their private business should be exempt from any personal consequences ; but by this rule trustees will be responsible for losses which not even the most vigilant can avoid in their own affairs. This is not very encouraging to trustees. We doubt even if one of the special circumstances referred to by the Master of the Rolls ought to make any difference, since it would not occur to the ordinary man to distrust his own solicitor because he was thr solicitor for the other side; but in the absence of other circumstances, to make a trustee personally liable for the neglect of a solicitor whom he has been careful to select, is in fact most gross injustice. Another declaration of the jtfaster of the Eolls is equally alarming : —" If it be said that the loss was occasioned by forgery, and that no precaution could have prevented it, I have already held (Eaves v. Hickson, 30 Beav. 136) that when a forgery is committed upon any person the loss must fall on him, whether he be the principal or the trustee." ( The trustee might with as much justice be made liable for loss by an earthquake. He acts purely for the benefit of the cestuiqye tryst as their agent, and to make an unavoidable loss all upon him personally is simply to impose heavy fines upon those who accept so thankless an office.