ROOKE v. DAWSON. and it appears to me that the trustees have acted quite rightly in what they have done. I must dismiss the action with costs. Solicitors-Rooke & Sons, for plaintiff; [Reported by F. Gould, Esq., STIRLING, J. In re MASON'S ORPHANAGE 1895. July 3, 4. Oct. 31. Vendor and Purchaser-Charity Lands -Deed of Foundation-Trustees of, with Power of Sale-Sale under Power-Consent of Charity Commissioners-" Scheme legally established" Charitable Trusts Act, 1853 (16 & 17 Vict. c. 137)—Charitable Trusts Amendment Act, 1855 (18 & 19 Vict. c. 124), 8. 29. AND THE LONDON AND "A scheme legally established" within the meaning of section 29 of the Charitable Trusts Act, 1855, means a document sanctioned by some properly constituted authority containing directions for the administration of a charity, and does not include the instrument of foundation of the charity. Consequently the trustees acting in the administration of the charity cannot sell the charity estates under a power of sale contained in the instrument of foundation, nor otherwise than under the authority of an Act of Parliament, or a Court, or with the approval of the Charity Commissioners. This was a summons under the Vendor and Purchaser Act, 1874, by the railway company, the purchasers of certain hereditaments under a contract with the trustees of the above charity, asking for a declaration that the above-mentioned trustees as vendors under the contract could not make a good title to sell and convey the said hereditaments to the ap plicants, and could not give them a go discharge for the purchase-money, witho obtaining the consent of the Charity Con missioners. By a deed dated the 29th of July, 186 and duly enrolled in Chancery and pe fected in accordance with the provision of the Act 9 Geo. 2. c. 36, and the su sequent Acts amending the same, S Josiah Mason conveyed certain freeho hereditaments near Birmingham to tru tees for charitable purposes. And it wa declared that the trustees, or any five them, might by any deed or deeds to b executed as therein mentioned, dispose and convey either by way of absolute sa or in exchange for other hereditaments i England or Wales, all or any part of th hereditaments thereby assured, with a exception not material to be mentioned and such trustees were empowered to giv receipts for the money produced by suc sale, or received for equality of exchange The trustees of the charity, acting unde this power, had agreed with the railwa company for the sale of the hereditament in question, which were part of the here ditaments subject to the power. Th purchasers took the objection that sec tion 29 of the Charitable Trusts Act, 185. (1), prevented the trustees from sellin without the consent of the Charity Com missioners; and insisted that such con sent should be obtained, or that the pur chase-money must be paid into Court in accordance with section 69 of the Land Clauses Consolidation Act, 1845. The vendors replied that they were no bound to take either course, their conten tion being that the deed of 1868 consti tuted "a scheme legally established ... (1) 18 & 19 Vict. c. 124, s. 29: "It shall not be lawful for the trustees or persons acting in the administration of any charity to make o grant, otherwise than with the express autho rity of Parliament, or of a Court or Judge of competent jurisdiction, or according to a scheme legally established, or with the ap proval of the board, any sale, mortgage, or charge of the charity estate, or any lease thereof in reversion after more than three years of any existing term, or for any term of life, or in consideration wholly or in part of any fine, or for any term of years exceeding twenty-one years." IN RE MASON'S ORPHANAGE. within the meaning of the Charitable Trusts Act, and they were trustees acting in the administration of the charity according to that scheme, and could therefore sell without the consent of the Charity Commissioners. That was the question to be determined upon the present sum mons. A. Underhill, for the summons.—The question is whether the words " a scheme legally established" in section 29 of the Act of 1855 can be held to include a deed of trust by which a charity was constituted. I submit that they can not, but must mean a scheme made with the approval of the Court or the Charity Commissioners. It is in that sense that the word is generally used-2 Seton on Decrees (5th ed.), p. 1085. The Act was passed to extend and amend the Charitable Trusts Act, 1853, the object of which was to put trustees of charities under some control, and to secure the due administration of charitable trusts under the supervision of the Commissioners. The Commissioners are, by section 9, empowered to enquire into the condition and management of charities, and by section 10 to require accounts and statements in relation to the property of the charity and the administration thereof; and under section 17 legal proceedings in relation to a charity cannot be taken without previous notice to the Commissioners, except by the Attorney-General. The word "scheme" occurs more than once in the Act of 1853-for example, in sections 8, 36, and 42, and in sections 54 to 60, but it has a technical meaning, and could not be taken as including the instrument of foundation of a charity. It must, I submit, be read in the same sense in section 29 of the Act of 1855. The words of the Act are explicit-no sale can be made except in the manner mentioned, or with the approval of the board. Those requirements have not, in this case, been complied with. Graham Hastings, Q.C., and M. Ingle Joyce, for the orphanage. Before the Charitable Trusts Acts charity property could be alienated, even in the absence of an express power, but the person who took VOL. 65.-CHANC. it took it subject to the obligation of shewing that the alienation was beneficial to the charity, and justified under the circumstances-Tudor's Charitable Trusts (3rd ed.), p. 251, The Attorney-General v. Warren (2), The Attorney-General v. The South Sea Company (3), and In re The Clergy Orphan Corporation (4). The Legislature did not, we submit, intend to take away from trustees the power of sale which they formerly had-The Governors of St. Thomas's Hospital v. The Charing Cross Railway Company (5). [STIRLING, J.-The difficulty as to trustees of charities selling could be got over by getting the consent of the Charity Commissioners under section 24 of the Act of 1853, but then there comes the provision in section 29 of the Act of 1855, which must have been put in for some further reason.] There were, no doubt, difficulties in carrying out sales of charity lands where there was no express power or trust for sale, but in the present case there is a power, and the section, we say, applies to such a case as that. The deed of foundation of the charity is a "scheme legally established" within the meaning of the section. Sections 54 to 60 of the Act of 1853 speak of "new schemes," which implies that the instrument formerly regulating the charity, which might have been a deed of trust, was also a scheme. The purchasers' contention is that the word "scheme" must have a technical meaning given to it, but the Court will be careful how it multiplies the technical meaning of words-Massy v. Rowen (6). In Webster's Dictionary a scheme is defined to be "a combination of things connected and adjusted by design; a system." The will of the founder as to the regulation of the charity, if expressed in proper language, is a scheme legally established. It is a scheme, and it is made legal by the enrolment of the deed. If the scheme IN RE MASON'S ORPHANAge. contains nothing improper, the Court will not interfere with it-In re The Campden Charities (7). Section 29 of the Act of 1855 refers back to section 24 of the Act of 1853, under which the Commissioners may authorise sales of charity lands; and under section 26 sales authorised by the Commissioners are to have the like effect and validity as if they had been authorised or directed by the express terms of the trust affecting the charity. The two Acts are to be read together, and it is clear that they recognise the validity of a sale under an express power. That seems to be recognised also in section 12 of the Charitable Trusts Act, 1869-1 Key and Elphinstone's Precedents in Conveyancing (4th ed.), p. 625, and In re The Charity for Poor Widows &c. and Skinner (8). [STIRLING, J.-Section 29 does not refer to a sale authorised by the trust deed of the charity. In the Act of 1853 66 scheme seems to be used in a technical sense.] It must depend on the substance, not the mere words used. It is equally a scheme whether the regulations of the charity are put into a deed or into a formal scheme settled by a Judge. The words of section 29 are not very clear, but they must, we submit, include regulations such as we have here. It does not say that the scheme must be one established by the Court. A. Underhill, in reply. The word "scheme" cannot be taken separately from "legally established," and in conjunction with those words it cannot include a trust. Even if used in a popular sense the words "scheme legally established" are not equivalent to validly declared." In the Imperial Dictionary "establish" has the meaning of "to institute and ratify; to enact or decree authoritatively and for permanence; to ordain." 66 'trust No doubt the trustees could sell under the Lands Clauses Act, but there would (7) 50 Law J. Rep. Chanc. 646; Law Rep. 18 Ch. D. 310. (8) 62 Law J. Rep. Chanc. 148; Law Rep. [1893] 1 Ch. 178. be a question whether they could gi valid receipt, and it would be exper to the company to pay the money Court. Both parties wish to avoid th Cur. adv. vu STIRLING, J. (on Oct. 31), stated facts, and continued: Usually, whe scheme is spoken of in connection wi charity, what is meant is not the ins ment of foundation, but a document s tioned by some properly constituted thority containing directions for administration of the charity. Previo to the passing of the Act of 1853 schemes were made by the Court Chancery only. They were made ma in three classes of cases-first, where directions contained in the instrumen foundation were ambiguous, imperfect otherwise insufficient; secondly, w the directions, though originally pre and complete, had become under alte circumstances unsuitable to carry out general intention of the founder; thirdly, where a scheme sanctioned by Court itself had in like manner bec unsuitable for that purpose. The Cha able Trusts Act of 1853 authorised making of schemes by other authori than the Court of Chancery, as, for stance, by the Court of Bankruptcy, the County Courts (section 32 of the of 1853). In the Act of 1853 the word "schem occurs in sections 8, 36, 42, 54 to (both inclusive), and in the Act of 188 occurs in section 39 as well as in sect 29; and in all these places it is used designate such an instrument as I ha just been describing. Prima facie, the fore, it may be expected to bear the sa meaning in section 29. Against this t arguments are used: first, it is said th sections 54 to 60 speak of new scher implying that the instrument which the time being governed the administ tion of the charity was an old schem that such instrument might be that foundation; and that consequently it to be inferred that such instrument w regarded by the framers of the Act as scheme. To my mind, the inference th IN RE MASON'S ORPHANAGE. sought to be drawn appears to be far from conclusive. Secondly, reliance is placed on the language of section 26 of the Act of 1853, which provides that leases, sales, and other transactions authorised by the Commissioners are to have the like effect and validity as if they had been authorised or directed by the express terms of the trusts affecting the charity; and it is said that those words imply that acts of the trustees authorised by the express terms of the trusts affecting the charity are valid. No doubt this was so in 1853, and would have continued to be so in the absence of any further enactment; but it seems to me that there would have been no inconsistency if the same Act of 1853 had by a subsequent section provided that leases, sales, and other transactions expressly authorised or directed should not be valid unless approved by the Commissioners; and a fortiori there seems to be no inconsistency between the enactment in section 29 of the Act of 1855, and that in section 26 of the Act of 1853. Moreover, this remark may be made: if the intention was that every sale, mortgage, or lease authorised or directed by the express terms of the trust should be valid without the approval of the Charity Commissioners, why was not that language used in section 29 of the Act of 1855, as it is in section 26 of the Act of 1853 ? Again, the use of the words "legally established" in connection with the word "scheme" seems to point to the intervention of some duly constituted legal authority, and in this sense the word "establishment" is used in section 42 of the Act of 1853. As a mere matter of verbal construction, therefore, I should come to the conclusion that the words "scheme legally established" did not include the instrument by which the charity was founded; but I think that it would be unsatisfactory to dispose of the case without considering what object was intended by the Legislature to be attained by the enactment contained in section 29. That section prohibits three classes of transactions -first, sales; secondly, mortgages and charges; and, thirdly, certain kinds of leases of charity estates; and it is desirable to see how the law stood with respect to such transactions prior to the passing of the first Act- that of 1853. At that time a sale, lease, or mortgage made in accordance with an express power was good. On this I may refer to the judgment of Lord Cranworth (then ViceChancellor) in The Attorney-General v. Hardy (9), where it was held that a trustee of a Wesleyan Chapel, under a deed which contained a power of raising money by mortgage, might become himself a mortgagee; and, if he did so become, might exercise all the rights of a mortgagee, although in opposition to the trusts. Even when no express power of sale existed, a sale of the charity estate might be made, provided it were in accordance with a provident administration of the estate for the benefit of the charity; but the purchaser took subject to the obligation of shewing that the sale was beneficial to the charity, and justified by the circumstances-The Attorney-General v. Warren (2) and In re The Clergy Orphan Corporation (4). The Court, although it had power to sanction the alienation of charity lands, exercised this power with great caution- -see The Attorney-General v. The Mayor of Newark (10). As regards leases it was laid down that where power was given to trustees of a charity to make leases generally they might (both at law and in equity) either take fines, or reserve rent, as was most beneficial to the charity. Leases might be made for long terms provided it were for the benefit of the charity-see The Attorney-General v. The South Sea Company (3); but here again the onus of proving that the transaction was beneficial lay on the lessee-The Attorney-General v. Pilgrim (11)—and it was laid down that prima facie the terms of a husbandry lease ought not to exceed twenty-one years, nor that of a building lease ninety-nine-The Attorney-General v. Owen (12) and The Attorney-General v. (9) 1 Sim. N.S. 338; 20 Law J. Rep. Chanc. 450. (10) 1 Hare, 395; 11 Law J. Rep. Chanc. 270. (11) 2 H. & T. 186. (12) 10 Ves. 555. IN RE MASON'S ORPHANAGE. Backhouse (13). Similar principles appear to have been applied to leases in reversion-The Attorney-General v. Kerr (14), where one of two such leases was upheld, and the other set aside. As regards leases for lives, however, they were held to be good, at all events if they were in accordance with the custom of the country, or a long-continued practiceThe Attorney-General v. Cross (15) and The Attorney-General v. Crcok (16); and in the former case so great a Judge as Sir W. Grant said that he was not aware of any principle or authority on which it could be held that such lease was, on the face of it, a breach of trust. This statement of the law appears to me to disclose two blots at least in charity administration. In the first place, it was obviously difficult in many cases for a trustee not acting under the direction of the Court to satisfy himself that the transaction in which he was engaging might not be afterwards held to be a breach of trust. Secondly, many transactions held by the Courts to be within the powers of trustees were, to say the least, of very doubtful expediency in the interest of the public. By sections 21 and 24 of the Act of 1853, the Legislature authorised the Charity Commissioners to sanction leases, mortgages, sales, and exchanges of charity lands, and thus enabled the trustees to obtain protection in a cheap mode, and without putting the charity estate, or themselves, to the expense of proceedings in Chancery. Thus the first of the two blots was removed; and the second was, I think, intended to be wiped out by section 29 of the Act of 1855. I think the view of the Legislature was that alienations of charity estates by way of sale or mortgage, or by lease in reversion, or for lives, or long terms, or in consideration of fines, gave rise to abuses which the law as it stood prior to 1855 did not adequately prevent, and that such transactions ought not to take place except by the direct authority of Parliament, or ne of with the sanction, direct or indirect, of Court or the Charity Commissioners, being authorities familiar with cha administration, and likely to be vigi against its abuses. Founders of char and their legal advisers are not sarily cognisant of what has been don past times, and may unwittingly in duce into the instruments of founda clauses which the experience Courts or the Charity Commissio would lead them to regard as his objectionable. I do not suggest fo moment that the present vendors done, or intend to do, anything w could possibly be treated as an abuse these powers; but if their contention well founded, it follows that the four of a charity might, by introducing propriate clauses into the foundation de effectually authorise his trustees to gr leases in reversion, or for lives or l terms, or in consideration of fines, wi out the sanction of the Charity Comm sioners. I do not think that this intended by the Legislature. Section 29 of the Act of 1855 prohib (amongst other things) sales except und certain circumstances. It is for the who claim that their case falls within c of the excepted cases to make it out; a upon a fair construction of the enactme I think that the present vendors fail to Solicitors-C. H. Mason; Burton, Yeates Hart, agents for Johnson, Barclay, Johnson Rogers, Birmingham. [Reported by A. J. Hall, Es Barrister at-Law. |