POWERS OF TRUSTEES.

New Zealand Herald, Volume LIII, Issue 16231, 17 May 1916, Page 5

POWERS OF TRUSTEES.

THE RIGHT TO MORTGAGE.

LEGAL POSITION DEFINED.

"Is there any power implied in law by •which the trustees of the will of a deceased person may raise money upon the security of the property comprising the trust estate to enable them to carrv on the business of the testator?" was" the subject of a declaratory judgment given by His Honor Mr. Justice Cooper, at the Supreme Court yesterday. The question was submitted to the Court under an originating summons by Hammond and Miller, executors of the -will of the late Hdnry Miller, gum merchant, of Fort Street. The defendants, Browne and others, beneficiaries under the will, were not represented by counsel, but filed consents "Submitting to the judgment of the Court.

The testator died on April 18, 1915, and the business of a gum merchant was then being carried on by him under the style of Henry Miller and Company. In the last balance-sheet prepared by him the assets were stated to be: —Land and building* £6000; stock iu hand, £3157 13s 2d; and cash in hand, £24 10s lOd. He had an arrangement with his bankers to overdraw his account to the extent of £3000. As security he" gave to the bank a mortgage over the land and buildings mentioned in the balance-sheet, and also over 4000 shares in the National Trading Company of New Zealand. The trustees have been carrying on the business of the testator since his death and desire to continue to do so. For this purpose they wished to mortgage the land and buildings and the 4000 snares in the National Trading Companv to the extent of £3000. The value of the National Trading Company's shares was £4000. ! His Honor said that no exoress power to mortgage was contained in the will, and the power given to the trustees to carry on the business was a discretionary power and was 1 not an absolute direction. m "It is, in my opinion," said His Honor, settled law that where executors are directed by a testator to carry on his business after his death there is an implied power in the executors or trustees to employ in the business the assets used in the business by the testator, but that they cannot employ mortgage, or charge any other assets of the testator, unless express power to do so is contained in the will. _ In my opinion, the plaintiffs have an implied power to mortgage the business premises, but I do not think that the implied power extends to the 4000 shares in the National Trading Co. The answer to the question is, therefore, that the plaintiffs have an implied power to mortgage the business premises and to give a charge upon any .gum which may be in their hands or under their control, and upon any book debts due to the business, but not to mortgage or charge any of the assets of the testator apart from the assets of the business."

The judgment concluded : " I am asked to authorise, the plaintiffs to mortgage for the purposes of the business the 4000 shares in the National Trading Company. I cannot accede to this request. The Fort Street property is worth £6000. The plaintiffs desire only to raise a sum. of £3000, and there should be no difficulty in obtaining this on the security of that property. But, even assuming that the Court has power under the Trustee Act to authorise a mortgage of the 4000 shares, this power should not, in my opinion, be exercised."

Mr. W. P. En dean appeared for the trustees.