Uses and effects of trusts

Question 1

Gillespie v City of Glasgow Bank

Answer 1

1. “If the two take a fund or an estate with a fiduciary obligation to manage it for somebody else, the nature of the case require that is should be jointly. They cannot take it pro indiviso, each have a portion of it, and yet manage the whole as one body for the benefit of those who are beneficially interested …” (per Lord Blackburn)

Question 2

Gordon’s Trs v Eglinton

Answer 2

1. “There is no such thing as a separate but pro indiviso right to a third in each trustee. Each has the full title along with the other two; and if they die, his title carries the whole right, to the exclusion of any others. If one dies, the title in his as trustee becomes extinct: it is absorbed by the title subsisting in the other two. He is blotted out of the title, and the infeftment of the other two is as good and perfect as if he never had been in the title” (per LJC (Hope))

Question 3

Heritable Reversionary Co Ltd v Millar

Answer 3

1. Mr Smith was the manager of the appellant company
2. He purchased certain heritable subjects on behalf of the appellants
3. He executed a declaration of trust, but this was not recorded in the Register of Sasines
4. Mr Smith went bankrupt and his estates were sequestrated under the Bankruptcy (Scotland) Act 1856
5. The insolvency practitioner claimed the subjects as part of the bankrupt’s estate for the benefit of creditors
6. The appellants argued that the subject did not form part of the bankrupt’s estate
7. The court agreed with this argument

Question 4

Lumsden v Buchanan

Answer 4

1. “By the law of England, as by the law of Scotland, trustees in dealing with third persons may so contract as to exempt themselves from personal responsibility, and to confine those with whom they are dealing to such relief as they can obtain from the trust-funds; whether this is the true effect of any contract into which they are entering, must in every case be a question of construction … He (the trustee) is dealing with property over which he has complete dominion, and is understood to be contracting as absolutely as if he were dealing on his account. If he means to limit his liability by the amount of the trust funds, he must do this by making express provision for the purpose … The true question to be resolved in every case is, whether the circumstances do fairly shew that the contracting parties were dealing only as trustees, and were not intending to incur liability beyond the amount of the trust-funds” (per Lord Cranworth)