In Re Gent and Eason's Contract

[1905] 1 Ch. 386
[1904 G. 2615.]

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(Judgment by: Farwell J (including background))

In Re Gent and Eason's Contract

Court:

Judge:
Farwell J

Subject References:
VENDOR AND PURCHASER
Title
Will
Investment Clause
Construction
Power to invest in the Purchase of Real Estate
Power to transpose and vary 'Securities'
Implied Power to resell purchased Real Estate

Case References:
In re Rayner, followed - [1904] 1 Ch. 177

Hearing date: 9 February 1905
Judgment date: 10 February 1905

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Judgment by:
Farwell J (including background)

A testator, who died in 1895, by his will devised and bequeathed his real estate and the residue of his personal estate upon trusts for his wife and children; and the testator, after giving his trustees a discretionary power of sale over his real estate, authorized them to invest any trust moneys in their hands

"in the purchase or upon mortgage of freehold or leasehold properties in England .... or in or upon the preferential stocks"

of certain railway companies,

"or in any other investment in or upon which trustees are authorized by law to invest trust funds, with full power to vary and transpose such securities for others of the description hereinbefore authorized."

The will contained no express trust or power for reconversion of purchased real estate. In 1896 the trustees out of trust moneys in their hands purchased real estate, and in 1903 contracted to resell the same. The purchaser objected that the trustees had no power under the will to resell the purchased real estate:-

Held, following In re Rayner, [1904] 1 Ch. 177, that the testator had used the word "securities" in its wider sense as a synonym for "investments"; and that the power to transpose and vary securities, so read, enabled the trustees to resell the purchased real estate and to give a good discharge for the purchase-money.

Adjourned Summons.

William Gent by his will dated February 15, 1893, after giving some specific and pecuniary legacies, devised and bequeathed all his real estate and the residue of his personal estate to W. H. Gent, H. Barker, and W. S. Cottrell upon trusts to pay certain specified annuities to his wife and daughters during their respective lives, and to pay the residue of the income of his residuary real and personal estate unto and equally between his said daughters. And after the death of his wife the testator directed his trustees to stand possessed of the sum of 6000l. for each of his daughters in manner therein mentioned, and to stand possessed of the remainder of his real and personal estate in trust for his sons and daughters in equal shares. And the will proceeded thus:

"I authorize and empower my said trustees or trustee to sell and absolutely dispose of all or any part of my real and personal estate of a saleable nature at such time or times and in such manner and form as they or he shall think beneficial. I authorize and empower my said trustees or trustee to lay out and invest the moneys coming to their or his hands under the trusts of this my will in the purchase or upon mortgage of freehold or leasehold properties in England or in or upon the Government stocks or funds or in or upon the debentures or preferential stock of the Great Western Railway Company the Midland Railway Company or the London and North Western Railway Company or in any other investment in or upon which trustees are for the time being authorized or empowered by law to invest trust funds with full power to vary and transpose such securities for other securities of any of the descriptions hereinbefore authorized."

And the testator appointed his trustees to be the executors of his will.

The testator died in June, 1895.

In September, 1896, the trustees,

"out of moneys coming to their hands under the trusts of the said will,"

purchased freehold ground-rents in London, and the same were conveyed to them in the usual way

"upon the trusts and subject to the powers and provisions upon and subject to which the same premises ought to be held by virtue of the said will of the said William Gent deceased."

In May, 1904, the testator's wife died; and in October, 1904, the trustees put up the freehold ground-rents (along with other property) for sale by public auction subject to printed conditions of sale, one of which (No. 12) stated:

"The vendors are selling as trustees of the will of the late William Gent, in consequence of the death of the testator's widow, and for the purpose of distributing his estate, and the beneficiaries under the said will shall not be required to concur in the sale, or to join in the conveyances to the respective purchasers."

The freehold-ground rents, which were lot 2 in the particulars, were not sold at the auction; but on November 15 the respondents, Messrs. Eason, entered into a written contract with the trustees to purchase lot 2, subject to the conditions of sale so far as the same were applicable to a sale by private treaty. On investigating the title the purchasers objected that the vendors had no power to sell real estate, purchased by them under the power in that behalf conferred on them by the will, and to give a good discharge for the purchase-money, and declined to complete without the concurrence of all the beneficiaries. The vendors insisting that they could sell under the power to vary and transpose securities, this summons was taken out by the purchasers under the Vendor and Purchaser Act, 1874, to determine the question.

H. Fellows, for the purchasers. If this will authorizes the vendors to sell this property, I am out of Court; but on the face of the will there is no power, express, implied, or constructive, that enables the vendors to resell purchased real estate. In the first place, there is no trust for conversion. The testator settles his real estate as real estate, and then gives his trustees a discretionary power of sale over his real estate. That power of course only applies to the real estate which the testator had at the time of his death. Then comes the investment clause, which authorizes the trustees to invest in the purchase of land or upon Government or railway stocks, or upon other investments allowed by law to trustees, with a power to vary and transpose such securities. Primafacie, "land" is not a "security" within the usual meaning of that word, and it is submitted that purchased land is not a "security" within the meaning of this will.

[FARWELL. J. The word "securities" is not a term of art. Has not this testator used it here as a synonym for "investments," which would include purchased land? - In re Rayner. ^[F1] ]

No question of conversion arose in that case, and the decision does not apply here. It would be carrying the doctrine of In re Rayner ^[F1] very far to hold that a power to vary securities includes a power to resell purchased real estate. There is here no trust or power to reconvert purchased real estate. There is, in fact, no conversion at all. The testator's real estate goes as real estate, and purchased real estate goes with it as real estate.

[FARWELL J. In Tait v. Lathbury ^[F2] it was held that a power to invest in real estate gave the trustees a power to resell purchased real estate.]

That case is clearly distinguishable. There was an express declaration that purchased land should be deemed personal estate for all purposes. There is no such declaration here.

[FARWELL J. referred to In re Garnett Orme and Hargreaves' Contract. ^[F3] ]

The decision there turned mainly on the Settled Land Act, 1882. It is not a very satisfactory case on the point now before the Court. Lastly, there is here no evidence of any necessity for the trustees to convert this real estate, and, on the whole, the title is too doubtful to force on a purchaser.

Upjohn, K.C., and S. B. L. Druce, for the vendors, were not called upon.

FARWELL J. The testator has authorized his trustees to lay out and invest the moneys coming to their hands under the trusts of his will in the purchase, or upon mortgage, of freehold or leasehold properties in England, or in or upon the Government stocks or funds, or in or upon debentures or preferential stock of the Great Western Railway Company, the Midland Railway Company, or the London and North Western Railway Company, or in or upon any other investments in or upon which trustees are for the time being authorized or empowered by law to invest trust funds, with full power to vary and transpose such securities for other securities of any of the descriptions hereinbefore authorized. Now the Court of Appeal in In re Rayner ^[F4] had to consider the meaning of the word "securities" in an investment clause in a will, and Romer L.J. says: ^[F5]

"The word is a flexible one, and I recognise that it is largely used in a wider or different sense, and in particular is widely used as a synonym for 'investments.'"

Now it is quite plain to my mind that in the present case the testator has used the word "securities" as a synonym for "investments"; he authorizes his trustees to invest in preferential stock of three railway companies and speaks of other trustee investments, and then authorizes the variation of such securities for any of the securities before authorized. Railway preference stocks are not "securities" in the strict sense, but he treats throughout "investment" and "security" as interchangeable terms. It is clear, therefore, reading the word "securities" as synonymous with "investments," that there is here a trust to invest moneys in the purchase or mortgage of land, or in or upon the preference stock of railway companies, or in or upon any other investments allowed by law to trustees, with a power to vary and transpose such investments for other investments of a like nature; and I have no doubt that, under this power to vary and transpose "such securities," i.e., "investments," the trustees are authorized to resell real estate that they have purchased as an investment. I do not share Mr. Fellows' horror as a conveyancer that the will has not the usual trust for reconversion of purchased real estate. It is only reasonable to suppose that a testator would not authorize his trustees to convert his own real estate as they thought fit if he did not at the same time give them a like power to turn back into personalty that which was made realty by their act under the investment clause. There will be a declaration that the trustees have power to sell the purchased freeholds and to give a good discharge for the purchase-money. The purchasers must pay the costs of this summons.

Solicitors for purchasers: Lattey & Hart.

Solicitors for vendors: Gamlen, Burdett & Gamlen, for Jobson & Marshall, Dudley.