principle, show a course of action on the part of the Legislature in harmony with the ordinary prepossessions of settlors; and it must be considered that any future alteration in this respect is more likely to result in increased latitude than in any return to former restrictions. The rule previous to the recent Acts was, that in the absence of any direction as to investment, it was the duty of trustees to lay out all monies which came to their hands in the £3 per cent. Bank Annuities, in which, as the safest and most permanent fund, the Court of Chancery is in the practice of laying out the monies of suitors (p). And if they laid it out in any other fund they would probably have been held liable for any loss occasioned by the fall or insecurity of the fund (q). It has been considered that trustees were bound to invest in the in 1841) the entire fund was already invested, and there was no power to vary investments, a conversion into any of the statutory securities could not be made. (p) Ex parte Champion, cited 3 Bro. C. C. 434; and see per Sir William Grant, M. R., in Holland v. Hughes, 16 Ves. 114; and per Lord Justice Turner in Baud v. Fardell, 7 De G. M. & G. 633. *(q) Hancom v.Allen, 2 Dick. 498. It is said, however, that this case is wrongly reported, and is not an authority for Former rule as to investment by trustees in special powers. the absence of not so holding trustees responsible if Over-payments to tenant for life. three per cent. consolidated annuities, but this at least did not hold where the terms of their trust made it more convenient to invest in the three per cent. reduced annuities (r). It is not altogether clear that it was a breach of trust to invest on mortgage in the absence of an express authority (s), but a strong inclination of opinion against the power trustees so to invest was expressed by Lord Justice Turner in the recent case of Raby v. Ridehalgh (t), and it would have been most imprudent to make in that case refused to require the tenant for life to refund the over-payment voluntarily made to her during a number of years. There is an obvious distinction between the circumstances in that case and in Livesey v. Livesey, 3 Russ. 287, where over-payments made by mistake to an annuitant, were considered as made on account of his annuity, and allowed to be deducted from the growing payments. See, also, as to recovering over-payments from a tenant for life, Mills v. Mills, 7 Sim. 501, 509; Lichfield v. Baker, 13 Beav. 447; Hood v. Clapham, 19 Beav. 90; Baynard v. Woolley, 20 Beav. 583; Davies v. Hodgson, 25 Beav. 177, 190; Griffiths v. Porter, id. 236; Barratt v. Wyatt, 30 Beav. 442; and as to overpayment to a married woman of restrained from anticipation, Moore v. Moore, 1 Col. 54, 58. (r) Caldecott v. Caldecott, 4 Madd. 189. Mr. Lewin in his work on Trusts (5th ed. p. 256, note (g)), remarks, in reference to the new three per cent. annuities (formerly 31 per cent.), that they are specially exempt from further reduction until 1874, which the three per cent. Consols are not, but that the latter are protected by a legislative provision requiring a year's notice to be given before redemption. (s) Brown v. Litton, 1 P. Wms. 141; Knight v. Earl of Plymouth, 1 Dick. 126; Pocock v. Reddington, 5 Ves. 800; Norbury v. Norbury, 4 Madd. 191; Poore v. Hawkes, cited id.; Widdowson v. Duck, 2 Mer. 494. (t) 7 De G. M. & G. 104, 108. such an investment unless authorised by the terms of the trust (u). tees authorised the funds, or on Government If the trust contained the usual power for the Power of trustrustees to invest in the public funds or upon to invest in Government securities, they were not precluded from investing in any Government security other than the three per cents. This point, though as *(u) It is not to be inferred from the statement in the text that in the absence of directions as to investment, trustees were bound in all cases to convert a fund in any other state of investment in order to invest the produce in the three per cents. This depended on the terms of the trust and the nature of the property. Thus, the Court would not permit a real security to be called in without an inquiry whether it would be for the benefit of the persons interested (per Lord Eldon, C., in Howe v. Lord Dartmouth, 7 Ves. 150); and trustees were entitled to protection in the exercise of a similar discretion. (See Robinson v. Robinson, 1 De G. M. & G. 247.) Where trusts were declared of a specific fund, even though it were of a perishable nature, and there was a power of varying investments, it might be a legitimate inference that the securities. constructive conversion. power was given to the trustees* Actual and with a view to the security of the property, and not with a view to vary or affect the relative rights of legatees in succession (Lord v. Godfrey, 4 Madd. 455; and see Wilday v. Sandys, L. R. 7 Eq. 455). The question of the propriety of actual conversion is not identical with that. whether, from the nature of the trust, the income of property retained in its actual state of investment, and which in that state produces a higher income than it would do if converted, shall, for the benefit of persons entitled in remainder, be considered as partly of the nature of capital, as in Gibson v. Bott, 7 Ves. 89, and other cases. In principle, the distinction is between investments authorised by and for the purposes of the trust, and investments which, though not authorised, it is impracticable, or would be imprudent, sumed to be the doctrine of the Court (x) and apparently clear on principle, does not seem to have formed the subject of actual adjudication previously to the recent case of Baud v. Fardell (y), in which a decision of the Master of the Rolls, affirming the liability of an executrix, who was also tenant for life, under a will directing the residuary estate to be sold and the proceeds invested in Government or other good security, for not converting into Consols a sum of Navy five per cents. forming part actually to convert. See per Parker, V. C., in Meyer v. Simonsen, 5 De G. & Sm. 723, 726. In Stroud v. Gwyer, 28 Beav. 130, it was sought, on the principle of the cases cited in this note, and of Dimes v. Scott, 4 Russ. 195, to treat as capital the excess of income derived from leaving money belonging to a testator's estate in the business in which he had been a partner, beyond the time for which he had authorised it to be left; and it was also sought to charge the traders (who had notice of the breach of trust) with a share of profits, irrespectively of their contract with the executors. As to the first point, the Master of the Rolls considered the case as being one of unauthorised loan by the executors, and refused to apply to that case the principle which, in Dimes v. Scott, had been applied to the retainer of the testator's own investments; and as to the second point, the serious consequences of acceding to the view contended for were shown, amounting to this, that where money is invested on a deposit account in a joint stock bank, the bankers having notice that it is a trust fund, the cestuis que trust would be entitled to an account of their profits; and the argument tending to this result was rejected. (x) See per Alderson, B., in Angell v. Dawson, 3 Y. & C. (Ex. Ca.) 316. (y) Reported on appeal, 7 De G. M. & G. 628. of the residuary estate, was reversed by the Court of Appeal. ment in exche In Ex parte Chaplin (2), upon a petition under As to investan Act (1 & 2 Vict. c. 117) authorising the invest- quer bills. ment of deposits subscribed for Parliamentary undertakings in the three per cents., "or any Government security or securities," the Court of Exchequer, on the ground, probably, that the statute contemplated a permanent, not a fluctuating investment (a), refused to authorise an investment in Exchequer bills; but in Ex parte the South Eastern Railway Company (b), upon an application under the same Act, on which Ex parte Chaplin was cited, the Vice-Chancellor of England made an order for investment in Exchequer bills, observing that the Court was in the habit of making such orders every day. Where the trust was for investment in "the public or Government stocks or funds of Great Britain," it was held improper to invest in Exchequer bills, which are clearly not within that description (c); but under a trust to invest in the funds or on real security, a temporary investment in Exchequer bills is admissible (independently of the General Order of 1st February, 1861, in which they are expressly named (d)), and, indeed, is the proper (2) 3 Y. & C. (Ex. Ca.) 397. (a) See per Lord Justice Turner in Baud v. Fardell, 7 De G. M. & G. 633. (b) 9 Jur. 650. (c) Knott v. Cottee, 16 Beav. 77. (d) See Matthews v. Brise, 6 Beav. 239, 244, where a trustee having power to invest in the "Parliamentary stocks or public funds of Great Britain," or on real security, was held to be justified in laying out |