Beveridge's Trustees v. Beveridge [1908] ScotLR 585 (17 March 1908)

Beveridge's Trustees v. Beveridge [1908] ScotLR 585 (17 March 1908)

The trustees' investment in stock at a price above redemption value was ultra vires under sec. 44(2) of the 1891 Act, as there was no authority in the trust deed and the fiar did not consent. The arrangement with the liferenter and the guarantee did not cure the breach or limit the fiar's claim. The guarantee by the liferenter was construed as covering only the premium, not the entire loss. Trustees are liable to make good the full loss to the trust estate.

Citation
[1908] ScotLR 585
Parties
First Party (trustee): Erskine Beveridge (sole surviving trustee of James Adamson Beveridge); Second Parties (representatives of Deceased Trustee): Executors of the deceased James Beveridge; Third Parties (representatives of Liferenter): Trustees of Robert Methven Heron; Fourth Party (residuary Legatee/fiar): Elizabeth Mary Beveridge (Mrs Beveridge)
Jurisdiction
Scotland
Judgment Date
17 March 1908
Procedural Posture
Special Case (court of Session, Inner House, Second Division) / Judgment on Liability of Trustees and Construction of Guarantee
Outcome
Trustees held jointly and severally liable to make good the full difference between the redemption value and the amount realised; guarantee by liferenter limited to premium only.
Legal Topics
Ultra Vires Investment, Trustee Liability, Construction of Guarantee, Successive Interests in Trust, Statutory Investment Powers
Trusts and Estates Trustee Law Ultra Vires Investment Trustee Liability Construction of Guarantee Successive Interests in Trust Statutory Investment Powers

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Parties

Erskine Beveridge (sole surviving trustee of James Adamson Beveridge)

First Party (trustee)

Executors of the deceased James Beveridge

Second Parties (representatives of Deceased Trustee)

Trustees of Robert Methven Heron

Third Parties (representatives of Liferenter)

Elizabeth Mary Beveridge (Mrs Beveridge)

Fourth Party (residuary Legatee/fiar)

Procedural Posture

Special Case (court of Session, Inner House, Second Division) / Judgment on Liability of Trustees and Construction of Guarantee

Legal Issues

  1. 1 Whether trustees are personally liable for the full loss on an ultra vires investment in breach of statutory prohibition under Local Authorities Loans (Scotland) Act 1891, sec. 44(2)
  2. 2 Whether the guarantee by the liferenter covers only the premium or the entire loss on the investment

Ratio Decidendi

The trustees' investment in stock at a price above redemption value was ultra vires under sec. 44(2) of the 1891 Act, as there was no authority in the trust deed and the fiar did not consent. The arrangement with the liferenter and the guarantee did not cure the breach or limit the fiar's claim. The guarantee by the liferenter was construed as covering only the premium, not the entire loss. Trustees are liable to make good the full loss to the trust estate.

Court Disposition

Trustees held jointly and severally liable to make good the full difference between the redemption value and the amount realised; guarantee by liferenter limited to premium only.

Orders

  • Trustees to restore to the trust estate the full loss on the investment.
  • Guarantee by liferenter applies only to the premium paid, not to the entire loss.