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Verbal instructions that are then attested and complied with by the named trustees before the death of a testator, fall neatly between the rules of wills and probate and the equitable field of trust law. On this occasion, the wish of a dying man was such that a large sum of money was to be held upon trust for a party outside of his marriage while unknown to his widow.
Having long agonised over his duty to make provisions for a mother and a child borne out of wedlock, it was decided by the testator to set aside several thousand pounds, in the wish that five of his closest friends would act as trustees, with the express purpose of investing the funds for the benefit of the two named parties, until such time that the trustees elected to provide them with two thirds of the initial sum, before placing the remaining third back into the residuary estate of his final will.
Upon his death, his widow discovered the bequest, and looked to dismiss its validity upon grounds of fraud and contradiction to the terms of the will where his widow and their son were to benefit from his entire estate. As was common to domestic legislation, s.9 of the Wills Act 1837 read that no will (or codicil) shall be valid unless set in writing and signed by the testator in accordance with statute. On this occasion, the instructions given by the deceased were initially verbal, and only put to writing by means of a memorandum drafted by his solicitor, who himself signed as a trustee and submitted it in support of the codicil. Using the terms contained within the 1837 Act, it was argued that while the trust memorandum was written, the execution of the codicil was oral, and therefore fell outside the powers granted beneficiaries unless it was in effect, designed to stand for the sole benefit of the widow through the residual estate; in which case the trustees would be acting in fraud should they look to enforce the terms of the codicil.
While decided twice in favour of the trustees, it was put before the House of Lords, where the rules of equity were scrutinised in conjunction with proven case law. Having examined the principle that ‘equity will not permit statute to be used as a cloak for fraud’, it was found that where a testator propounds a desire to execute a trust, and then proceeds to provide explicit instruction as to its use, any argument that seeks to undermine the intentions of that person through the use of legislation, must then find themselves party to fraud, if they would instead stand to benefit from the funds expressly requested for the enjoyment of another.
In circumstances such as these, it was historically preferred that equity imputes the same responsibility as that agreed to by the original trustee, so that they would then act under the same instructions, as to permit the objective of the deceased to be realised. This transference effectively circumvents the fraud and makes right, that which is prima facie claimed wrong.
Resting upon this proven application of jurisprudence, the presiding Lords established that far from looking to dissect the flaws proposed by the appellants, it was clear that any conflict arising from a lack of signatory validation, was insufficient when looking to overrule the will of the testator against a trust that by all accounts, left no illusions as to its purpose and means of delivery.
“There can be no reasonable doubt about the accuracy of the memorandum, and none about its efficacy if it can be admitted in evidence.”
“The necessary elements, on which the question turns, are intention, communication, and acquiescence. The testator intends his absolute gift to be employed as he and not as the donee desires…”
“For the prevention of fraud equity fastens on the conscience of the legatee a trust, a trust, that is, which otherwise would be inoperative ; in other words it makes him do what the will in itself has nothing to do with…”
“Why should equity forbid an honest trustee to give effect to his promise, made to a deceased testator, and compel him to pay another legatee, about whom it is quite certain that the testator did not mean to make him the object of this bounty?”
“[E]quity would not set up the statute for itself to prevent the devisee from doing what it would have itself compelled him to do…”
“The frame of s. 9 of the Wills Act seems to me to carry on its face, that the legislation did not purport to interfere with the exercise of a general equitable jurisdiction, even in connection with secret dispositions of a testator, except in so far as reinforcement of the formalities required for a valid will might indirectly limit it.”
“It is communication of the purpose to the legatee, coupled with acquiescence or promise on his part, that removes the matter from the provision of the Wills Act and brings it within the law of trusts…”
“[W]hat is enforced is not a trust imposed by the will, but one arising from the acceptance by the legatee of a trust, communicated to him by the testator, on the faith of which acceptance the will was made or left unrevoked, as the case might be.”
“It is the fact of the acceptance of the personal obligation which is the essential feature, and the rest of the evidence is merely for the purpose of ascertaining the nature of that obligation.”
“[I]f it would be a fraud on the part of the legatees to refuse to carry out the trust, the residuary legatees cannot take advantage of and thus make themselves parties to such fraud.”