the title-deeds or other satisfactory evidence, that his VII. OF THE LIABILITY OF PERSONS PAYING MONEY TRUSTS. persons paying money to trus tees to see its application. As the "trust of land is considered in a court of Liability of equity as the land itself, and a declaration of the trust as a disposition of the lands," persons paying to the trustees the purchase or mortgage-money arising from lands directed to be mortgaged or sold, with notice of the trust, are in some cases made answerable in those courts, for the proper application of it. But it also appears to be equally a settled rule, that if lands be conveyed, devised, or appointed to be sold or disposed of, for the payment of debts generally, without the debts being in any manner specifically mentioned, whether the trust be effected through the medium of a direct conveyance to trustees to pay debts, or by way of charge, or of power, the purchaser or mortgagee is not bound to see to the application of the money; for the lands are discharged on payment of the money into the hand * See Pow. Mortg. 405.. Per Lord Mansfield, in Burgess v. Wheat. Sed vid. Pow. Mort. 326. h 1 Ves. 173; Smith v. Guyon, 1 Bro. 186; Williamson v. Curtis, 3 Bro. 96. the law appoints to receive it, and the persons beneficially interested in it must, if there be any default in the applicacation, take their remedy against the persons receiving the money. Thus, in the case of Elliot v. Merryman', his Honor declared the general rule to be, that if a trust directed that land should be sold for the payment of debts, generally, the purchaser was not bound to see the money was rightly applied. But, on the other hand, if the trust described" that lands should be sold" for the payment of certain debts, mentioning inparticular to whom those debts were owing, the purchaser was bound to see that the money was applied for the payment of those debts. The case then under consideration, did not, indeed, fall within either of those rules; because, there, lands were not given to be sold for the payment of debts, but were only charged with such payment (1). But his Honor was of opinion, that that circumstance made no difference: for if such a distinction was to be made, the consequence would be, that whenever lands were charged with the payment of debts generally, they could never be discharged of the trust, without a suit in that court, which would be extremely inconvenient. Nor had any instance been produced to show, that in any other respect, the charging lands with the payment of debts, differed from the directing them to be sold for such purpose, and therefore there was no reason that there should be a difference established in this respect. And the only objection that seemed to be of weight, with regard to this matter, was, that where lands were appointed to be sold for the payment of debts generally, the trust might be said to be performed as soon as i Barnard. 78, 1734... (1) See Newman v. Johnson, 1 Vern. 45, where the will was "My debts and legacies being first deducted, I devise all my estate, both real and personal, to I. S;" and held by the Lord Chancellor, that this should amount to a devise to sell for payment of his debts. the lands were sold; but where they were only charged with the payment of debts, it might be said that the trust was not performed till those debts were discharged, and so far indeed it was true, that where lands were charged with the payment of annuities, those lands would be charged in the hands of the purchaser, " because it was the very purpose of making the lands a fund for that payment, that it should be a constant and subsisting fund;" but where lands were not burdened with such a subsisting charge, the purchaser ought not to be bound to look to the application of the money, and that seemed to be the true distinction. And in Smith v. Guyon*, and Rogers v. Skillicorne', it was said by Lord Chancellor Thurlow, that where the estate is to be sold, and a specific sum, as 57. to be paid to A. the purchaser must see to the application; but where it is to be sold generally, he is not. The rule, however, seems to admit of some distinctions; as, where it would operate to give an unjust preference to any particular creditor. Thus, where a father devised lands to his son, subject to the payment of debts, and a question arose, whether a creditor, to whom the son had mortgaged these lands, should retain them by way of security for his old debt, as well as for the money lately advanced. Lord Hardwicke, whilst he admitted the general rule above stated, where there was no schedule of the debts, yet said the rule was never carried so far as to put it in the power of the devisee in trust, or the heir at law, who, in the Court of Chancery, is considered as a trustee, to favour one creditor, which would be the consequence if this was allowed. And his Lordship allowed the mortgagee the principal and interest of the money he advanced to the son, but said, as to his old debt, he could not be put in a better condition, but must come in pari k 1 Bro. Rep. Chan. 186; and see also Tenant v. Jackson and Cotton v. Everall, 2 Bro. Cha. Rep. Append. 1 Amb. 188. TRUSTS. TRUSTS. passu with the rest of the creditors". And his Lordship distinguished this case from that of an executor, who, having power to administer the assets, and having the legal estate in him, may sell a term, and the vendee retain it, and this even to satisfy a debt of his own: but that was owing to the legal power of the executor over the assets, upon which the court would not break in. And his Lordship moreover said, that it had never been held, that if a devisee in trust mortgaged to a creditor of his own, for satisfaction or security of that debt, such mortgagee, having notice of the trust, should retain the estate against the creditors under the trust; or if he mortgaged, with notice, by way of securing the debt of the testator, it altered not the case; for the estate was a security in the hands of the trustee before, and it only operated to change the course, which the court would not suffer the trustee to do, considering it as a fraud to give the preference to one creditor, which neither the law nor that Court would allow. Another exception to the rule appears to be, where the trustee or heir, or person to sell or dispose, is called upon in a court of equity to execute the trust; for, per Camden, Chancellor, the creditors have a right to call on the heir, or devisee, to execute the trust; and though this court has established it as a rule, that where the charge is general, the purchaser is not bound to see to the application of the purchase-money; yet if the trustee is called upon in this court, it takes the execution of the trust out of the hands of the trustee to be executed by the court, And where the court has attached its jurisdiction, it would be inconvenient to permit a sale, but by the court. And though a general charge does not make a purchaser, before the suit, see to the application of the money, yet after a suit commenced, I should hold him bound to it; and I mlthel v. Beane, 1 Ves. 216, 1748. n Walker v. Smallwood, Amb. 676. hold it as a general rule, that an alienation pending a suit is void"." But where the lands are devised or appointed for the payment of debts generally, the rule, that a purchaser shall not see to the application of his purchase-money, will not be diverted by the estate being charged with the payment of particular legacies. For, per Lord Hardwicke P, the subjecting the estate to the payment of legacies will not make the purchaser answerable for the disposition of the money, because the legacies cannot be paid without the debts, and these are not specified (1). And so, in a very late case, it was held, that where debts and legacies are charged on lands, the purchaser holds free from the claims of the legatees; for not being bound to see to the discharge of debts, he cannot be obliged to see to the discharge of legacies, which cannot be paid till after debts. The rule does not, however, apply, where money is raised under the sanction of an act of parliament, by mortgage for a particular and express purpose, in which case it seems incumbent on the person advancing it, to see it applied to that specific purpose, as the land will be liable to no more than what is actually employed according to the trusts of the act'. So, if money be advanced on sale, or mortgage, under a decree of the Court of Chancery, for that purpose, and be thereby directed to be applied for payment of debts, and a report be made ascertaining the debts, the purchaser or • Co. Lit. 290, b. xii. P Rogers v. Skillicorne, Amb. 188. Job v. Abbot, cited by Mr. Butler in his note on Co. Lit. 290, 14th edit.; and Bee Benyon v. Gibbs, there also cited; where it is said, (1) But the above general rule has an exception where there is a collusion between the trustee and the executor. 2 Vern. 616. TRUSTS. |