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LA302 - Milroy v Lord - Judgment


(1862) 4 De G.F. & G. 264: ER 45 Ch 1185

Knight Bruce, LJ

This is an appeal by the Defendant Mr. Otto, the personal representative of Mr. Medley (the testator in the cause), against the decree in this suit pronounced by one of the learned Vice-Chancellor on the 8th of March last; a decree declaring and establishing against Mr. Otto, as Mr. Medley’s executor, a title in the Plaintiff to an interest in fifty shares in the Bank of Louisiana, and to an interest also in thirteen shares in the North American Fire Insurance Company. It is insisted by Mr. Otto that neither of the Plaintiffs had or has any interest recognizable by a court of Justice in either set of shares or any part of them. The state of circumstances in which we find one set of shares is not exactly the same as that in which the other is placed.

First, then, with regard to the bank shares. They are claimed by the Plaintiffs under and by force of the instrument of the 2nd April 1852, executed by Mr. Medley and the Defendant Mr. Lord, which, set forth in the bill, is mentioned also in the decree. They stood in Mr. Medley’s name before and at the time of his execution of that instrument, and continued so to stand until his death. He was during the whole time, and when he died, the legal proprietor of them, and unless so far, if at all, as the beneficial title was affected by that instrument, the absolute proprietor of them likewise. He might, however, have affected the legal title. It was in his power to make a transfer of the shares so as to confer the legal proprietorship on another person or other persons. But, as I have said, no such thing was done. The instrument, however, of the 2nd April 1852, was not founded on valuable consideration. It was merely gratuitous and voluntary, and the principal question for our decision is, whether in such a state of things it is the duty of this Court to enforce it specifically against Mr. Medley’s executor, either on the ground that by it Mr. Medley constituted himself a trustee of the shares for the purposes mentioned concerning them in the instrument, or on the ground of contract, or otherwise. It seems plain enough that the law of Louisiana, if applicable to the case, does no assist the Plaintiffs, and that the laws and rules governing the Courts at New York, where the instrument appears to have been executed, are, for any purpose now material, substantially the same as the laws and rules governing the Courts here. I am of opinion that according to our law the instrument of the 2nd April 1852 was not sufficient to constitute and did not constitute Mr. Medley a trustee of the bank shares (and in saying this I do not forget the design appearing on the face of it that Mr. Lord should become a trustee under it for the purposes which it mentions), nor do I think that, voluntary as the instrument was, it contained a contract specifically enforceable against Mr. Medley or his estate. The transaction or intended transaction left by him imperfect and incomplete he might have perfected and completed by a transfer. And thinking the Plaintiff’s case not helped by any of the circumstances stated respectively in the two answers of Mr. Lord, or by any of the authorities mentioned in the report by Messrs. De Gex, Macnaghten & Gordon of the cause of Kekewich v Manning (decided some years ago in this Court), or by that decision, I find myself, though almost or altogether with regret, unable to agree with the decree as to the bank shares, and I believe my learned brother’s view to be in effect so far the same as mind. But though not satisfied that the instrument, if a deed, contained a covenant on Mr. Medley’s part, I do not wish to prevent or prejudice any action which the Plaintiffs may wish to bring in their own names or the name of Mr. Lord against Mr. Otto. Then with respect to the fire insurance shares. As to these I have some doubt, a doubt immaterial, because, as it has been very agreeable to me to find, my learned brother is as to them of opinion with the decree in favour of the Plaintiffs. That being so, I have not the least object to the addition in the Plaintiff’s favour as to the certificates of the fire insurance shares which my learned brother proposes and will state. The circumstances are such that we need not, I think, alter, and I am not for altering what the decree has done as to the costs of the suit, although in the opinion of both of us the Plaintiffs’ case partially fails, and though I doubt, as I have said, with regard to the fire insurance shares. And I am for dealing with the costs of the appeal in the same way.

Turner, LJ

Under the circumstances of this case it would be difficult not to feel a strong disposition to give effect to this settlement to the fullest extent, and certain I have spared no pains to find the means of doing so, consistently with what I apprehend to be the law of the Court; but, after full and anxious consideration,. I find myself unable to do so. I take the law of this Court to be well settled, that, in order to render a voluntary settlement valid and effectual, the settler must have done everything which, according to the nature of the property and render the settlement binding upon him. He may of course do this by actually transferring the property to the persons for whom he intended to provide, and the provision will then be effectual, and it will be equally effectual if he transfers the property to a trustee for the purposes; and if the property be personal, the trust may, as I apprehend, be declared either in writing or by parole; but, in order to render the settlement binding, one or other of these modes must, as I understand the law of this Court, be resorted to, for there is no equity in this Court to perfect an imperfect gift. The cases I think go further to this extent, that if the settlement is intended to be effectuated by one of the modes to which I have referred, the Court will not give effect to it by applying another of those modes. If it is intended to take effect by transfer, the Court will not hold the intended transfer to operate as a declaration of trust, for then every imperfect instrument would be made effectual by being converted into a perfect trust, These are the principles by which, as I conceive, this case must be tried.

Applying, then, these principles to the case, there is not here any transfer either of the one class of shares or of the other to the objects of the settlement, and the question therefore must be, whether a valid and effectual trust in favour of these objects was created in the Defendant Samuel Lord or in the settlor himself as to all or any of these shares. Now it is plain that it was not the purpose of this settlement, or the intention of the settlor, to constitute himself a trustee of the bank shares. The intention was that the trust should be vested in the Defendant Samuel Lord, and I think therefore that we should not be justified in holding that by the settlement, or by any parole declaration made by the settlor, he himself became a trustee of these shares for the purpose of the settlement. By doing so we should be converting the settlement or the parol declaration to a purpose wholly different from that which was intended to be effected by it, and, as I have said, creating a perfect trust out of an imperfect transaction.

His Honour the Vice-Chancellor seems to have considered that the case of Ex parte Pye (18 Ves. 140) warranted the conclusion that the settlor himself became a trustee by virtue of the power of attorney which he had given t the Defendant Samuel Lord; but in Ex parte Pye the power of attorney was given by the settlor for the express purpose of enabling the annuity to be transferred to the object of the settlor’s bounty. The settlor had, it appears, already directed the annuity to be purchased for the benefit of that object, and had ever paid over the money for the purpose of its being applied to the purchase of the annuity; and then when the annuity was, from the necessity of the case, purchased in the settlor’s name, all that possibly could be wanted was to shew that the original purpose was not changed, and that the annuity, though purchased in the settlor’s name was still intended for the benefit of the same object of the settlor’s bounty, and the power of attorney proved beyond all doubt that this was the case. These facts appear to me wholly to distinguish this case from Ex parte Pye. In my opinion, therefore, this decree cannot be supported, upon the authority of Ex parte Pye; and there does not appear to me to be any sufficient ground to warrant us in holding that the settlor himself became a trustee of these bank shares for the purposes of this settlement.

The more difficult question is, whether the Defendant Samuel Lord did not become a trustee of these shares? Upon this question I have felt considerable doubt; but in the result, I have come to the conclusion that no perfect trust was ever created in him.. The shares, it is clear, were never legally vested in him; and the only ground on which he can be held to have become a trustee of them is, that he held a power of attorney under which he might have transferred them into his own name; but he held that power of attorney as the agent of the settlor, and if he had been sued by the Plaintiffs as trustee of the settlement for an account under the trust, and to compel him to transfer the shares into his own name as trustee, I think he might well have said - These shares are not vested in me; I have no power over them except as the agent of the settlor, and without his express directions I cannot be justified in making the proposed transfer, in converting an intended into an actual settlement. A Court of Equity could not, I think, decree the agent of the settlor to make the transfer, unless it could decree the settlor himself to do so, and it is plain that no such decree could have been made against the settlor. In my opinion, therefore, this decree cannot be maintained as to the fifty Louisiana Bank shares.

As to the thirteen North American Fire Insurance shares, the case seems to me to stand upon a different footing, Although the Plaintiffs’ case fails as to the capital of the bank shares, there can, I think, be no doubt that the settlor made a perfect gift to Mrs. Milroy, then Miss Dudgeon, of the dividends upon theses shares, so far as they were handed over or treated by him as belonging to her, and these insurance shares were purchased with dividends which were so handed over or treated. It seems to me, upon the evidence, that these shares were purchased with the money of Mrs. Milroy, then Dudgeon, and that the purchase having been made in Thos. Medley’s name, there would be a resulting trust for Miss Dudgeon. I think, therefore, that as to these shares the decree is right, the value of the shares being, as I presume, under 200, so that the case does not fall within the ordinary rule of the Court as to the wife’s equity for a settlement.

The case being thus disposed of as to the title to the shares, I see no ground for the claim to compensation raised by this bill. The certificates for the shares would follow the legal title, and as to the fifty bank shares would therefore belong to the Defendant J. A. Otto, and as to the thirteen insurance shares the Plaintiffs recovering those shares must recover the certificates also; but this not being provided by the decree, a direction for the delivery of these certificates should, I think, be added.

Upon the hearing of this appeal it was contended for the Plaintiffs, that so far as they might fail in recovering any of the shares in question they were entitled to recover the value of them against the estate of Thos. Medley. I am not sure that this point can properly be considered to be open upon these pleadings, but whether it be so or not, I agree with my learned brother that the Plaintiffs’ claim in this respect cannot be maintained. There is no express covenant in the settlement, and whatever might be done as to implying a covenant to do no act in derogation of the settlement, it would, I think, be going too far to imply a covenant to perfect it. If there be a breach of any implied covenant by the delivery of the certificates to the Defendant J. A. Otto, the Plaintiffs’ remedy sounds in damages, and they may pursue that remedy at law; for which purpose, if the Plaintiffs desire it, there may be inserted in the decree a direction that they are at liberty to use the name of the Defendant Lord, of course upon the usual terms of indemnifying him. I have not adverted to the point which was raised as to this case being governed by the Spanish law, for I think that if that law was more favourable to the Plaintiffs, the onus was upon them to allege and prove it. As to the costs of the suit, my learned brother being of opinion that they ought to be paid out of the settlor’s estate, I do not dissent. The decree must be altered accordingly as to the several points to which I have referred.



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