DELEGATION OF DISCRETIONARY

POWERS BY A TRUSTEE.

I.

A trustee can not delegate to a co-trustee, or a stranger, any power to which is attached the exercise of discretion.

It is an elementary principle of the law relating to trusts, that where the administration of the trust is vested in several trustees, they all form but one collective trustee, and, therefore, must execute the duties of the office in their joint capacity. It is true, that it is not unusual to hear one of several trustees called the acting trustee, but the court knows no such distinction; all who accept the trust are acting trustees, and if any one refuse to join, it is not competent for the others to proceed, but the administration of the estate in that case must devolve upon the court.1

And since the law is so imperative in forcing co-trustees to join in every act, in order to render it valid, it would seem necessary, to explain this, to assume that every trustee is always supposed to be selected by the settler for some personal reason of confidence or trust. The question then has often arisen, whether a trustee can delegate any of his powers to act, either to a co-trustee or a stranger. The maxim of the law on this subject is, Delegatus non potest delegare, and consequently, it would seem that a trustee can not delegate any of his powers to any one else. It has, however, been frequently asserted, that this maxim, like all such very general propositions of law, has been much abused, and is subject to exceptions; and one of these exceptions is, that a trustee can delegate some of his powers to act to his attorney. It has been said by a very eminent

1 Lewin on Trusts, p. 298; Hill on Trustees, p. 805, and see authorities there cited. See, also, the cases of Crewe v. Dicken, 4 Ves. 98 (1798), followed by Nicholson v. Wordsworth, 2 Levanst. 370 (1818), holding that where one of two trustees had once acted, but had afterwards released and conveyed all his interest to the other, yet both would have to join In the receipt of the purchase-money to discharge the purchaser's liability to see to its application; see also Sugden on Vendors and Purchasers, Vol. 3, p. 173; also cases in 1 Amer. Lead. Cases (1871). in note to Hunt v. Rousmanier, p. 713; also Vandever's Appeal, 8 W. & S. (Pa.) 405; Sinclair v. Jackson, 8 Cow. 544; Hood v. Law, 3 Blatch. C. C. 471; Chapin v. First University Society, 8 Gray (Mass.) 583; Holcomb v. Idem, 3 Stock (N. J.) 285.

American lawyer,2 in one of his opinions, that the general position that a grantee or devisee of an estate in fee simple in trust, and with a power of sale, can not both sell and convey by attorney, is not to be found stated in any book or by any writer of authority, and that the general principle should be the other way, inasmuch as such a trustee has the whole legal estate in him, and is competent by the common law both to sell and convey his estate by attorney, which are legal acts. There is no doubt of the correctness of these propositions of law, nor of their soundness; but the existence of such an exception to the maxim of delegatus non potest delegare, suggests the inquiry of, how far can one, possessed of such delegated powers as a trustee, delegate them in turn to another.

It is undoubtedly true, that a merely ministerial duty or office may be delegated by a trustee, when it requires absolutely no greater degree of discretion than what is attendant upon the execution of any purely ministerial act; but it is more doubtful whether any power, involving the exercise of discretion, can be delegated by one trustee to a co-trustee or stranger. This question has frequently been agitated, and we think the rule deducible from the cases is, that no power, to which is attached the exercise of discretion, can be delegated by a trustee either to a co-trustee, or to a stranger.

his estate in court

ney,

In Combe's Case,3 "it was agreed by all the judges in their several arguments, that a copy-holder may surrender * by attor and it will more clearly appear, if the reason of such things, which a man may do by attorney, be well considered. And, therefore, if a man hath a bare authority, accompanied with a trust, as executors have to sell lands, they can not sell by attorney; but if a man hath an absolute authority as owner of the land, there he may do it by attorney, as cestui que use may

before the statute of 27 Henry 8,

and, therefore, if A be a tenant for life, with remainder in tail [power coupled with an interest], and A hath power to make leases for twenty-one years, rendering rent, etc., he can not make a lease by letter of attor

2 Mr. Horace Binney in his opinion in the Bing ham Estate.

39 Reports, 75 b. (1812).

4

ney by force of his power, because he hath but a particular power, which is personal to him; and so it was resolved in the case of Lady Gresham at the Assizes in Suffolk in Lent, 24 Eliz., by Wray and Anderson, Chief Justices of Assize there." In Wilson v. Denison, [naked power], one of the questions as to the legality of the presentation to a benefice, was whether the trustee could vote by proxy. Lord Chancellor Eldon said: "There is a discretion to be used by the trustees in electing a proper person to officiate as minister; and it is a personal trust in them, and no instance can be produced where, in a personal trust, a proxy is allowed. If the election had been regular, a proxy by way of letter of attorney, had been good, to sign the presentation; but as to the election, the trustees could not delegate their power. I think the proxy, being made to vote for a particular person, makes it worse, for it is clear that the trustee determined his choice for private reasons at home, not at the public meeting on a general inquiry into a general inquiry into the abilities and qualities of the candidates, and the arguments and reasons of the other trustees; and it is much easier to prevail on any person at home, on any private application, than at a general meeting, where the whole conduct of the candidate is discussed."

In Hawkins v. Kemp,5 [power coupled with an interest] the settlor in a marriage settlement, being a tenant in tail, settled the same to himself for life and to the children of the marriage in strict settlement, with a proviso that it should be lawful for him, by deed or settlement in writing, attested by three witnesses, and to be enrolled with the consent in writing of certain trustees, to revoke the old, and declare new uses. The court held that a deed of revocation executed by him and all the trustees in person, except one, and the consent of that one being given by means of a general power of attorney being made by him to the settlor, by virtue of which the settlor executed the deed for and in the name of such trustee, is bad, though properly attested and enrolled. In this case it was contended that the power extended to the assent of the surviving trustee, but the court intimated so decided

41 Ambler, 86 (1749). 53 East, 410 (1803).

The

an opinion, against this view, that the argument was finally abandoned. In Heger v. Deaves, [naked power] Chancellor Kent said: "The master being sick did not attend the sale, but deputed a competent agent, who attended and sold the land. objections to the fairness and regularity of the sale are denied and completely removed, except the objection that the sale was not made by a master who was present. The statute says that all sales of mortgaged premises under decree shall be made by a master, and I do not think it the subject of a special deputation. If he had been

present, and had employed an auctioneer or crier, it would still have been his sale, and the parties would have had all the benefits of his superintendence and judgment. But to allow such a sale as this to stand, would open the door to very lax and dangerous. practice." Again, in Tainter v. Clark,7 [naked power] C, by his last will, gave to his wife the interest and income of $1,000 during her life. After making other bequests and devises, he devised and bequeathed the residue of his property, real and personal, to his daughter and her children, and to his grandson, in equal shares, subject to the rights and discretions heretofore given by the I will to the executor. He then appointed T his sole executor, and authorized him to sell and convey such of his property as would, in T's judgment, best promote the interest of all concerned, to raise the $1,000, for the use of his wife and daughter, and to pay his debts. T declined to act as executor, and D was appointed to act as administrator with the will annexed. D, under his appointment as administrator, and by no other authority, sold and conveyed C's real estate, for the purpose of raising the money to pay C's debts and the legacies given by the will. It was held that the trust reposed in T was a personal one, and that D had no authority to sell the testator's real estate, and that the sale and conveyance were void as against the testator's heirs. Wilde, J., said: "All the authorities agree, that if a power is given, indicating personal confidence, it must be confined to the individual, or individuals, to whom it is given, and will not, except by ex

62 Johns. Ch. 154 (1816).. 7 13 Metc. 226 (1847).

8

press words, pass to others than the trustees originally named, though they may, by legal transmission, sustain the same character; so it was decided in Cole v. Wade, and in many other cases." And in Sinclair v. Jackson,9 [power coupled with an interest] M C, who died, seized of the premises in fee, by will devised them to B M and C, his wife, and to E M as joint tenants in fee in trust, to receive the rents and profits and pay them to F B C during his life, and after X's death, to convey the premises to his lawful issue. After the death of the testatrix, the three trustees executed a power of attorney to F B C, cestui que trust, empowering him to grant leases for any term not exceeding twen ty-one years, and to take the rents to his own

use.

Afterwards, two of the trustees (E M not joining) gave F B C another power, authorizing him to lease. He acted as attorney of the two trustees, and made leases which were declared void by the court. The question, whether trustees could act by attorney in executing leases, was not necessary to decide the case. The Chancellor said, in reference to that point:10 "The better opinion is, that they, the trustees, might act by attorney, provided they restricted him to the conditions prescribed by the order, and left him the executory act alone of executing a lease for them in conformity with the order." The court held the leases to be void, because they were made out in the names of two trustees only. "It is a settled rule, that when a trust or authority is delegated for mere private purposes, the concurrence of all who are intrusted with the power is necessary to its due execution. They have no separate interests of their own on which the separate deed can operate, unless specially authorized to act separately by the instrument creating the trust, they can make no disposition of the trust estate vested in them, otherwise than by their joint deed." And the same principles were laid down in Hawley v. Jaines. 12 [Power

and

coupled with an interest.] The testator, there, devised real estate to his trustees, with power to sell. The real estate was in New

8 16 Ves. 27.

8 Cowen, 575 (1826).

10 Sinclair v. Jackson, 8 Cow. 581.

11 See Sinclair v. Jackson, 8 Cow. 583. 12 5 Paige, 687, (1835).

York and in Illinois. The trustees filed a bill praying to have their duties and powers defined by the court; among other things, that, "as the testator was entitled to various parcels of real estate, situated in various counties in this State (New York), and to a large quantity of real estate in Illinois, it would be reasonable and necessary that the trustees have liberty to sell such real estate, through the instrumentality of an agent or attorney, and with the sanction of this court."-Per WALWORTH, Ch. "A trustee who has only a delegated discretionary power, can not give a general authority to another to execute the same, unless he is specially authorized so to do by the deed or will creating such power. A general authority to an agent to sell and convey lands belonging to the estate, or to contract absolutely for the sale of such lands, can not therefore be given by the trustees. * The better course in a case of this kind is, therefore, to entrust the agent with a discretionary power to contract, subject to the ratification of the trustees, upon his report of the facts, and that they should themselves execute the conveyance, when the terms of the sale have been complied with, and transmit it, properly acknowledged, to the agent to be delivered to the purchaser."

It has been more than once contended, that there is a distinction to be made between those cases, where a power, coupled with an interest, is given to the trustee, and those, where only a naked power is bestowed by the settlor; and it has been asserted that in the former case, the discretionary powers of the trustee, may be exercised by an attorney; and that this is not so, only when the power is naked, or is given on purely personal grounds, This distinction, however, can not be supported either by the English or American

authorities.

In Bulteel v. Abinger,13 [power coupled with an interest] A, by his will, gave his estate of Bagshot, for life, to his wife. His will contained a power for the tenant, for life, to sell the estate with the consent of the three trustees. In 1835 the estate was conveyed in fee to the trustees. A bid being made for the estate by the son of Lord Abinger, one of the trustees, the latter wrote to one of his cotrustees, "he (Lord Abinger's son) will

13 6 Jurist, 410 (1842).

have no assistance from me in the matter. Nor shall I take any interest directly or indirectly in it. Indeed, I think I ought not to give any opinion on it, and shall decline doing so." The two co-trustees of Lord Abinger subsequently contracted to sell the estate to the plaintiff, Mr. Bulteel, for a fixed sum. Lord Abinger's son then wrote to his father that he would have paid a higher price than that offered by the plaintiff. Lord Abinger refusing to confirm the contract for sale by his two co-trustees, an action for specific performance was brought by the plaintiff against all the trustees, on the ground, among others, that Lord Abinger had delegated his authority to his co-trustees, and that they therefore might act for all three. Sir James Wigram said: "If the other trustees had made a contract with Lord Abinger's son to sell the estate for £25,000, whilst the plaintiff was willing to give £26,000, and Lord Abinger, knowing that, had attempted to confirm the sale, equity would have compelled him to rescind the transaction as against his son, and he would, therefore, be equally bound to rescind it as against the plaintiff.

*

Even with that protection (i. e., the protection which competition would insure at an auction), his Lordship said he thought that Lord Abinger could not lawfully delegate to his co-trustees an authority to sell the estate to his son, without reserving to himself a veto upon the contract." In Budd v. Hiler, 14 [power coupled with an interest] Chief Justice Green said: "A trustee duly appointed, either under a power or by the court, and in whom the legal estate in the trust property has bas been vested, stands in the same situation and is invested with the same powers and privileges with reference to the trust estate, as if he had been originally appointed a trustee, with the single exception of confidential or discretionary powers conferred on the original trustee." Here it was held that a trustee appointed by the Orphan's Court in the place of one that had died, may maintain an action for money had and received against a person who has money in his hands which justly belongs to the trust estate, although the money was received before the appointment of the trustee. In Belote v. White, 15 [power coupled with an

14 3 Dutcher, 43 (1858).

15 2 Head. (Tenn.), 710 (1859).

interest] the testator bequeathed certain real and personal estate to three trustees, to be held by them in trust for the use and benefit of his daughter B and her children, etc.; and the said trustees, or any two of them, or the survivor, were vested with power to sell and convey any part or all of the property for the use and benefit of said daughter and her children, to vest and revest the proceeds, and to manage the whole in any manner they might think promotive of the interest of the beneficiaries. And at the death of the daughter B, the whole of said property was to be equally divided between all of her living children, and the heirs of such as may have died.

In the division of the real estate of the testator, the tract of land in controversy fell to B and her children. A trustee was appointed by the decree of the Chancery Court, in place of those appointed by the will, who sold and conveyed the tract of land in 1847. Wright, J., said: "Though the trusts in this will for B and her children were imperative and well defined, and such as a court of chancery might execute, yet the power of sale conferred upon the trustees was, in our opinion, discretionary, and a thing entirely of personal trust and confidence in the three trustees, or any two of them, or the survivor, and could be executed by no one else. It could not be devolved upon others, either by deed or will, or other act of the trustees, or be executed by their heirs or personal representatives, because the will did not so provide. Nor could a court of chancery have forced the trustees to execute it, or execute it itself, by its clerk or master, or otherwise; nor could a trustee appointed by the court do so; but upon the death, or refusal to act, of the trustees, the power became extinct and gone. How could a court of chancery here substitute the master or another trustee for the three original trustees? It was not imperative that a sale should be made. The testator intended that Mrs. B and her children should have the benefit of the judgment of their trustees, or some two of them, or the survivor, as to the necessity and propriety of a sale. But how could Talbott's [the substituted trustee's] judgment be their judgment? We think, therefore, that the sale by him as against the plaintiff was unauthorized, and so void."16 So in Saun

16 See, also, Hill on Trustees, Ed. 1846, §§ 472-3; 483-4; 495; Cole v. Wade, 16 Ves. 28; Coxe v. Day, 13

ders v. Weber, 17 [power coupled with an interest] there was an action for a perpetual injunction to restrain the execution of a writ of restitution issued upon a judgment in forcible entry and detainer entered in favor of the appellants, against Saunders, the husband of the respondent, for certain lots situated in the City of Sacramento. Plaintiff claimed the lots in question as her separate property, and derived title among conveyances, by virtue of a deed from B J B and H H, assignees and trustees of one Simmons, executed by one N, their attorney in fact. Said Rhodes, C. J.: "The deed of trust executed by Berger Simmons to Billings, Bolton and Halleck, as trustees, empowered them to sell and dispose of the lands mentioned in the deed, either at public or private sale, for such prices and on such terms and conditions, and either for cash or upon credit, as, in their judgment, may appear best or most for the interest of the parties concerned, and convert the same into money. The powers thus conferred are, to a material extent, discretionary. The trustees are required to sell the property and convert it into money; but in respect to the mode, terms and conditions of the sale, the execution of the powers requires the exercise of judgment and discretion on their part. The rule is as well settled as any one in equity jurisprudence, that a discretionary power can not be delegated to a stranger by assignment. The deed of trust does not authorize the trustees to delegate their powers." Sprague, J., concurred, and Hawley v. James, 18 Berger v. Duff 19; Sugden on Powers; Alexander v. Alexander,20 Story on Agency,21 were cited with approval. And finally, in Hunt v. Douglass,22 [naked power] A delivered a horse to B for B to use, with the power of sale. soon changed the horse with C for another horse; and C agreed that he would pay to A $15 as the difference between them, and the horse which C received was to remain the property of A until the $15 was paid; but B, at the same time, told C that he might trade

B

away the horse, provided he kept the security good. C, accordingly, changed horses three several times, and the horse which he obtained upon the third exchange, was attached by the defendant as the property of C. It did not appear that A had ratified the act of C in exchanging for that horse, and it was held that therefore the property in the horse had not vested in A, although the $15 remained unpaid at the time of the attachment, and that the horse was subject to attachment by the creditors of C. Bennett, J., said: "The question in this case is, had the property in the horse now in dispute, vested in the plaintiff at the time of the attachment? The case shows that Hunt had the bailment of the first horse to use, clothed with a power of sale. This, of course, was a personal trust, and the bailee had no authority to delegate this trust to another. The maxim is, delegata potestas non potest delegari."

We have only cited a few cases to illustrate the principle last stated in this article; that there is no distinction with regard to the power of a trustee to delegate his discretionary powers, to be made between those cases where there is given the trustee a naked power, and where he has a power coupled with an interest. Such an important principle as this would have received more attention and a greater array of authorities would have been cited to support it, did not all the cases that we have criticised at length, fully demonstrate the fallacy of any such distinction. And to bring this principle more prominently before the reader's mind, each case has been analyzed and the facts briefly stated. ARTHUR BIDDLE.

AGREEMENTS TO COMPROMISE PROSECU

TIONS.

I.

"No principle is better settled than that no action can be maintained on a contract, the consideration of which is either wicked in itself or prohibited by law," as Marshall, C. J., emphatically declared in Armstrong v. Toler (11 Wheat. 271); but, few principles have given rise to so much difficulty in application, or to so many nice distinctions. Public policy, upon which this principle so largely depends, is in itself uncertain and fluctuating; and, as has been pointedly said, it is an unruly horse, which once astride, yon know