TRUSTEES AT VARIANCE.

New Zealand Herald, Volume LIX, Issue 18153, 27 July 1922, Page 9

TRUSTEES AT VARIANCE.

DISPOSAL OF A BUSINESS.

ITS VALIDITY QUESTIONED.

LONG LITIGATION INVOLVED.

A claim to set aside the sale in 1?04 of a business at Cambridge, in the estate of William Burns Souter, was brought in the Supreme Court yesterday, before Mr. Justice Stringer, by Arthur Langford Souter against Joseph William Souter and Edwin Neville Souter, both of Cambridge, merchants, and Maud Souter. wife of Neville Souter. The claim has alreadybeen the subject of much litigation, an interpretation of J. W. Souter's will being obtained in* 1915. after the defendants had taken the decision of the Supreme Court to the Appeal Court. Having obtained the interpretation, the plaintiff commenced proceedings in 1917 in the form of a petition, but this was abandoned. The present action was commenced in 1918. and in the meanwhile the death ol ? one ot the defendants, J. W. Sonter, has occurred. In the present action, Mr. Richmond appeared for the plaintiff, and Messrs. Meredith and Durham for the defendants. The plaintiff claimed in tho first place that the sa'e of the business to J. W, and E. N. Souter be set aside as being a sale by trustees to themselves and that they be*ordered to account for the profite of the business since the death of the testator in 1894, and for the proceeds of the realisation of such assets as were realised, and re-transfer to the estate such of the original assets as remained in the hands of the defendants at the* present time As an indication of the amount of the profits of the business, it was proposed to prove that from March. 1898 to June ido4. they amounted to not less than £20,000. Moreover, it was alleged that the business was continuously carried on from tho latter date for a long period of years. Alleged Grounds oi Action. The grounds on which it was claimed that the sale be set aside were that there ,r as a definite rule of law that sales by trustees to themselves were not only voidable but absolutely void; and even if it could be said that the beneficiaries concerned had agreed to the sale, there had not been that absolute and complete disclosure by the purchasers of a>l tho material facts that the law insists upon. On the contrary, the plaintiff alleged that the sale had been made at a gross undervalue, and that the plaintiff and other beneficiaries had no independent advice and were influenced by their trust in the trustees, J. W. and E. W. Souter. It was further alleged that no independent valuations of the assets had been obtained prior to the sale and no attempt to dispose of the business other than to the two trustees, who wore the only persons who cou'd be supposed to have a real understanding of the value of tho business unless expert advice had been advanced to the other trustees and beneficiaries. Alternatively to the claim to have the sale set aside, the plaintiff sought to have tho surviving trustee, K N. Souter, removed on the ground that he had not I properly carried'out the trust, and asked also that the trustees bo ordered to account for all the profits up to the sale in 1914 and for the proceeds of certain other assets which it was aTeged the defendants failed to account for. Case tor Plaintlfl Stated.

Mr. Richmond said the action concerned the estate of William Burns Souter, father of the plaintiff and the first two defendants, who died in August. 1894. The executors wore these three parties, together with the testator's widow, Sarah Honeywood Souter, and Nicholas Irwin Hunt, son-in-law of the deceased. The beneficiaries were the widow, who had a life interest in the estate, and tho testator's three sons and three daughters. One of tht« conditions of the will was that the trustees were to sell the business but mighty continue it "for a time." An important issue in tho caPO was the partial blindness of the plaintiff, on which expert evidence would he called. On the death of the testator, J. W. and E. N. Souter, who were then engaged in the business and who carried it on, took to themselves the entire charge an<L responsibility of trusteeship. Plaintiff was not oonsulted and was given no information as to books of account In 1895. at a meeting of trustees of which pontiff stated he had no notice, it was decided to carry cm the business. Tlie estate was sworn for probate at £6922 !4s lOd. but in 1898, the defendants stated that a verbal agreement was entered into for tlie sale to them of the business at £6251 9s 4d, which they declared to have been the book value of the business at that date. On dune 27, VKX) another meeting of trustees was called, and a formal agreement signed for the sale bv the trustees to two of their number, %. W. and E. N. Souter, of tho business for £6251. So for that sum the defendants got. asset* whose net value for probate was £6700. as well as a goodwill worth at least £3500 and profits for two and a-quarter years amounting to £7000. Allegations Regarding Sale. Later the defendants had legal advice that a sale by trustees to trustee* was void, continued counsel, and in 1904 they altered procedure and proceeded to sell the busings to Maud Souter, wife of Neville Souter. This agreement was sizned bv all the beneficiaries, although plaintiff 'stated he had no knowledge of such an agreement or its purport until to/H. when be discovered its existence. The sale price in the new agreement was again £6251. and for that mm tho defendants got in fact over £30,000. »n----fchsdinz assets, profits amounting to over ""0000. and a very valuable goodwill. This was the agreement whi'h it was asked should be set .-wide. The sale v> M»'«d Souter was admitted, but it was alWed it was made only by the trustees, J. W. and E. N. Souter, and that the propertv was almost immediately transferred ir, them at the same prioe. Tit« plaintiff declared that there was no such th'rif »■•■ on his part. It was for the defer!-* to prove that the piain- ; tiff knew what he was doincr and that !ho waived his rights. For I the 'stated it *a.« therefore | claimed that the sale in T-04 be set ! aside *n/l be declared fraudulent and '» | breach of trust

TV- evidence of the plaintiff on th« issue* raised by counsel occupied t-he remainder of '"''- dav's ritt-nsr. Tt is exTwy-ted thai the hearing will occupy the rVitirt f r 'r feerr or five day*