[COURT OF APPEAL]

In re BLOW.

GOVERNORS OF ST. BARTHOLOMEW'S HOSPITAL v. CAMBDEN.

[1911 B. 3854]

Administration - Creditor's Action - Common Account - Liability under Covenants in Lease - Executors of Lessee's Deceased Executor - Devastavit - Distribution among Beneficiaries of Lessee's Residue more than Six Years before Action - Action to recover Money - Statute of Limitations - Trustee Act, 1888 (51 & 52 Vict. c. 59), s. 1, sub-s. 3; s. 8, sub-s. 1 (a) and (b).

The lessee under certain leases from the plaintiffs died in January, 1902, having specifically bequeathed the leaseholds to his wife for life and after her death to his children. In October, 1902, his executors distributed the entire residue without making any provision against their liability under the covenants in the leases otherwise than by taking an indemnity from the beneficiaries. In 1906 one of the executors died. After 1909 the rent under the leases fell into arrear. In 1911 the plaintiffs commenced a creditor's administration action against the surviving executor and the beneficiaries, to which action the executors of the deceased executor were subsequently added as defendants for the purpose of taking the estate accounts and charging the estate of the deceased executor with all sums received by him:-

Held by the Court of Appeal (Cozens-Hardy M.R. and Swinfen Eady L.J., Phillimore L.J. dissenting), that, as against the executors of the deceased executor, the action, although in form a common creditor's administration action, was in reality an action the whole object of which was to recover money within the meaning of s. 8, sub-s. 1 (b), of the Trustee Act, 1888, and that under the provisions thereof the lapse of time afforded these defendants a good defence.

Decision of Warrington J. [1913] 1 Ch. 358, reversed.

How v. Earl Winterton [1896] 2 Ch. 626, applied.

Per Swinfen Eady L.J.: An executor can plead the Trustee Act,

1888, against a creditor in like manner as an express trustee can plead it against his cestui que trust.

The principle stated in In re Marsden (1884) 26 Ch. D. 783, and In re Hyatt (1888) 38 Ch. D. 609, that an executor cannot set up his own devastavit in order to obtain the benefit of the Statute of Limitations, has been altered by the Trustee Act, 1888.

Per Phillimore L.J. (dissenting): The lapse of time which under s. 8, sub-s. 1 (b), the executors of the deceased executor were entitled to plead in bar, being such only as they could have pleaded in an action for money had and received, ran from the time when the creditors could have first sued, and as the plaintiffs' right of action first accrued after 1909 when the rent fell into arrear, the plea of lapse of time did not afford these defendants a good defence.

APPEAL from a decision of Warrington J. (1)

The testator, Samuel Blow, was the lessee under seven leases from the plaintiffs of certain houses for a term of forty-two years from March, 1885, at rents amounting in all to 2000l. per annum. Each lease contained a covenant for payment of the rent.

The testator died on January 8, 1902, and his will and codicil were proved in February, 1902, by his executors, William Cambden and Frederick Dawkins. The houses in question were specifically bequeathed to the testator's wife for life (the executorS paying the ground rent and the cost of repairs out of the income of the houses) and after her death to his children. The residue was bequeathed to his wife and children in certain shares.

In October, 1902, the executors distributed the estate amongst the beneficiaries, taking from them an indemnity in respect of the covenants and liabilities under the leases, but not otherwise providing for satisfaction of those claims. At that date and until 1908 the rack rents of the property were more than sufficient to provide for the rent due to the plaintiffs, and the rent was in fact paid until 1908, and further payments were made under stress of proceedings in 1909.

Frederick Dawkins died in September, 1906, and his executors were Sarah Ann Dawkins, A. A. Whitehead, and W. S. Lane.

The rent under the leases having again fallen into arrear, the plaintiffs, in November, 1911, commenced this action against William Cambden, the surviving executor, and the beneficiaries for administration of the estate of the testator and asking that

(1) [1913] 1 Ch. 358.

"so far as may be necessary to satisfy all claims of the plaintiffs the defendant William Cambden may be declared and made liable for having distributed among the other defendants portions of the testator's estate, and that he may be required to enforce his rights of indemnity against them, and that they may be ordered to refund the amounts received by them," and for incidental relief.

Pleadings were delivered, and at the trial on July 11, 1912, Warrington J. pronounced judgment for accounts and inquiries in the form usual in actions by unpaid creditors where the estate or part of it has been paid to beneficiaries. It was then pointed out that to make the account complete the representatives of Frederick Dawkins ought to be parties. This view was accepted, and on July 31, 1912, the writ was amended by adding A. A. Whitehead and W. S. Lane as defendants, Sarah Ann Dawkins being already a defendant as a beneficiary. They duly appeared and delivered a defence, and at the trial Warrington J. granted a decree under which the estate of Frederick Dawkins would be made liable for money paid over by W. Cambden and F. Dawkins in 1902 to the beneficiaries, being of opinion that s. 8 of the Trustee Act, 1888, afforded Dawkins' executors no defence to the action.

From this decision Dawkins' executors appealed.

Clauson, K.C., J. M. Gover, and H. S. Howard, for the appellants. The appellants are protected by s. 8 of the Trustee Act, 1888. (1) At common law an action for devastavit is barred

(1) Trustee Act, 1888, s. 8, sub-s. 1, provides: "In any action or other proceeding against a trustee or any person claiming through him, except where the claim is founded upon any fraud or fraudulent breach of trust to which the trustee was party or privy, or is to recover trust property, or the proceeds thereof still retained by the trustee, or previously received by the trustee and converted to his use, the following provisions shall apply:-

after the lapse of six years by the Limitation Act, 1623 (21 Jac. 1, c. 16), and since the Act of 1888 the liability of an executor in respect of moneys honestly paid away by him is barred at the expiry of six years from the date of the payment, whatever be the form of the proceedings by which it is sought to enforce the liability: dictum of Fletcher Moulton L.J. in Lacons v. Warmoll. (1)

It is admitted that the representatives of Frederick Dawkins must account for everything that came to his hands or which they have received within six years of the issue of the writ in this action, but nothing has been so received.

So far as the plaintiffs' claim is for a devastavit their remedy is barred both at law and in equity by the Statute of Limitations. Whatever the practice may have been before the statute of James I. with regard to turning a judgment de bonis testatoris to a judgment de bonis propriis, at any rate after that statute, before an executor could be made liable for the debt de bonis propriis there must have been an action suggesting a devastavit: Ward v. Thomas (2); and, that being so, the question of a devastavit must have arisen during the course of the proceedings on which it was possible to set up the Statute of Limitations. The old practice is fully discussed in Williams on Executors, 10th ed. p. 1598, and in the note to Wheatley v. Lane. (3) Lacons v. Warmoll (1) is a distinct authority shewing that at law an executor could set up a devastavit committed six years before.

(b) is brought to recover money or other property, and is one to which no existing statute of limitations applies, the trustee or person claiming through him shall be entitled to the benefit of and be at liberty to plead the lapse of time as a bar to such action or other proceeding in the like manner and to the like extent as if the claim had been against him in an action of debt for money had and received, but so nevertheless that the statute shall run against a married woman entitled in possession for her separate use, whether with or without a restraint upon anticipation, but shall not begin to run against any beneficiary unless and until the interest of such beneficiary shall be an interest in possession."

(1) [1907] 2 K. B. 350, 364.

(2) (1833) 2 Dowl. 87.

(3) (1669) 1 Saund. 216, 219.

In equity also the remedy for devastavit was barred by the Statute of Limitations: Thorne v. Kerr (1); In re Gale. (2)

In administration, however, an executor could not formerly have set up his own wrong by pleading a devastavit committed more than six years before and he was treated as if the assets were still in his hands: In re Marsden (3); In re Hyatt. (4)

[COZENS-HARDY M.R. referred to In re Kay. (5)]

But the Trustee Act, 1888, has altered the previous law and enables an executor, or his personal representatives, to plead the lapse of six years as a good defence to an action on an honest though mistaken distribution or payment. Sect. 1, sub-s. 3, provides that the term "trustee" shall be deemed to include an executor, and s. 8, sub-s. 1 (a) and (b), enables him to set up the defence of the Statute of Limitations. Thus the appellants are entitled to the same protection as if the action had been brought against them at law - In re Croyden (6) - and may plead that the plaintiffs' claim is barred by the Statute of Limitations.

The appellants come within both paragraphs (a) and (b) of sub-s. 1 of s. 8 of the Trustee Act, 1888. If at law there had been no statute which would have assisted the appellants, then there might have been some difficulty in saying that they came within paragraph (a), but we submit that the Court ought to look and see what would have been the proper statute applicable if an action on a devastavit had been brought. The appellants also come within paragraph (b). In an action by beneficiaries trustees have by virtue of paragraph (b) set up the lapse of time successfully - How v. Earl Winterton (7); In re Croyden (6) - and the case of creditors is a fortiori. Although in form this is an action for administration the whole object of it is to recover money, and it comes within the scope of paragraph (b) and entitles the appellants to plead the lapse of time as a bar.

The account as against the appellants should be limited to six years before the amendment of the writ.

(1) (1855) 2 K. & J. 54.

(2) (1883) 22 Ch. D. 820.

(3) 26 Ch. D. 783.

(4) 38 Ch. D. 609.

(5) [1897] 2 Ch. 518.

(6) (1911) 55 Sol. J. 632.

(7) [1896] 2 Ch. 626.

There is the further question whether the appellants are not entitled to relief under s. 3 of the Judicial Trustees Act, 1896 (59 & 60 Vict. c. 35).

[COZENS-HARDY M.R. That question had better stand over for the present. Warrington J. did not deal with it on the hearing in the Court below.]

Cave, K.C., and E. Beaumont, for the respondents, the plaintiffs in the action. The executors knew the risk they were running in distributing the residue in 1902. Down to 1908 there had been no default in payment of rent, and therefore the plaintiffs could not have sued before they did, nor could they have brought an action for administration to have a part of the assets impounded to answer contingent breaches of covenant: King v. Malcott. (1) But, nevertheless, if the appellants are right, they can escape liability now by saying that six years before the action was commenced they had wasted the assets. That would work a gross injustice. Delay is the gist of the defence of the Statute of Limitations, but there can be no delay in suing when the debt is not yet due.

The order sought is for a common account in an administration action and it is proper and right to make the personal representatives of a deceased executor parties to the action. If a deceased executor has received money, then his representatives may be joined as accounting parties: Holland v. Prior (2); and in In re Charlton (3) this Court recently made a similar order, and there were no special circumstances in that case. The appellants could and ought to be brought before the Court in these proceedings, and they are brought here for that reason only, and not for the purpose of charging a devastavit against them. The plaintiffs claim a common account and do not rely on or claim a devastavit at all, and that keeps the case outside the Trustee Act, 1888, altogether. That being so, In re Marsden (4) and In re Hyatt (5) are conclusive in the plaintiffs' favour. In Lacons v. Warmoll (6) Buckley L.J. said that in administration a man cannot set up his own wrong in improperly

(1) (1852) 9 Hare, 692.

(2) (1834) 1 My & K. 237.

(3) Unreported.

(4) 26 Ch. D. 783.

(5) 38 Ch. D. 609.

(6) [1907] 2 K. B. 350.

dealing with assets, and that so far as he is not able to discharge himself the assets must be treated as still in his hands.

This action does not come within s. 8 of the Trustee Act, 1888. Paragraph (a) of s. 8, sub-s. 1, has no application because there is no statute which could have been pleaded if the defendants had not been trustees; there is no statute applicable to an administration action. Paragraph (b) of the same subsection also has no application, because this is an action not by a beneficiary to recover money but by a creditor for administration. If that paragraph does apply, it only gives liberty to plead lapse of time from the date when the right of action accrued; it does not say that the action shall be barred. The plaintiffs are not prejudiced by the lapse of time, because they could not have sued before they did, for no cause of action arose before rent became due: In re Hargreaves (1); and the words of the paragraph "as if the claim had been against him in an action of debt for money had and received" shew that there could be no action until there was a debt.

In How v. Earl Winterton (2), which was a beneficiary's action, the annuitant could have sued before he did. In In re Croyden (3) it was decided that so far as the action was for breach of trust it was barred, but so far as it was an action for administration it was not out of time, and an order for administration was made. That was an action by a beneficiary who had been a beneficiary for the full period of six years, and that distinguishes that case from this. [They also referred to Midgley v. Midgley (4), Lynar v. Mills (5), Dodson v. Sammell (6), and In re Nixon. (7)]

Clauson, K.C., in reply.

J. G. Wood, for the defendant Cambden, and Wright Taylor,for other parties.

Nov. 20. COZENS-HARDY M.R. The testator, Samuel Blow, was the lessee under seven leases from St. Bartholomew's Hospital

(1) (1890) 44 Ch. D. 236.

(2) [1896] 2 Ch. 626.

(3) 55 Sol. J. 632.

(4) [1893] 3 Ch. 282.

(5) (1805) 2 Sch. & Lef. 338

(6) (1861) 1 Dr. & Sm. 575.

(7) [1904] 1 Ch. 638.

of certain houses for a term of forty-two years from March, 1885, at rents amounting in all to 2000l. a year. He died on January 8, 1902, and his will and codicils were proved on February 27, 1902, by Cambden and Dawkins. Dawkins died on September 7, 1906. In 1902 Dawkins and Cambden distributed the estate between the legatees under the will, taking from them an indemnity in respect of the covenants and liabilities under the leases. At that date, and until 1908, the property leased produced sufficient to provide for the rent due to St. Bartholomew's Hospital. The lessors in 1908 commenced an action against Cambden as assignee of the terms of years and as the surviving executor of the testator, in which action he recovered judgment.

The present action was commenced against Cambden and the beneficiaries and sought, amongst other things, to obtain from the beneficiaries the moneys received by them from the executors in 1902. In July, 1912, the writ was amended by adding the executors of Dawkins as co-defendants and asking relief against his estate, and Warrington J. has granted a decree under which the estate of Dawkins will be made liable for money paid over by Cambden and Dawkins in 1902 to the beneficiaries. The present appeal is by Dawkins' executors, who rely upon s. 8 of the Trustee Act, 1888, as a defence. It is admitted that there was no fraud or fraudulent breach of trust and that there was no trust property, or the proceeds thereof, still retained by the trustees or previously received by them and converted to their own uses. In other words the present case is not within the exceptions in s. 8.

There is no contractual liability between the plaintiffs and the executors of Dawkins. The terms are not vested in them. I assume that their testator was guilty of a devastavit in 1902, although I am not satisfied that the Court would not, if the direction of the Court had been sought at the time, have sanctioned what was done. But it is plain that such an action is barred by the lapse of six years after the tort was committed. Before the Judicature Act this applied to a suit in equity as well as to an action at law: see Thorne v. Kerr. (1) If, therefore, the plaintiffs are suing on the ground of devastavit they must fail.

(1) 2 K. & J. 54.

It is, however, urged on behalf of the plaintiffs that the executors of Dawkins were proper parties, if not necessary parties, to the administration action, and that in such action they must account from the testator's death, and that they cannot be allowed to discharge themselves by reason of their testator's wrongful act in distributing the estate in 1902, and the plaintiffs further say that the present action is not one which falls within s. 8, it not being brought by a beneficiary or to recover money, but is merely a common creditor's administration action, and further that the lessors could not have maintained any action before 1908, and that they therefore ought not to be prejudiced by the lapse of more than six years. I am unable to assent to these arguments on the part of the respondents. The language of s. 8 is perfectly general and it would be wrong to limit it to an action by a beneficiary as distinguished from a creditor. An executor is a trustee within the definition clause in the Act, and he stands in a fiduciary relation towards creditors. I think the case falls within sub-s. (b), the necessary effect of which often is to enable a trustee to take advantage of his own breach of trust. For instance, if a trustee invests 1000l. on improper securities and the money is lost, I think it is clear that after the lapse of six years the statute might be pleaded as a defence to an action brought by a person (not being a reversioner) seeking only relief in respect of that breach of trust and payment by the trustee into Court or otherwise of the money lost. It cannot in my opinion make any difference if the action takes the form of a general administration suit in which a common account is directed. In such a case the statute equally protects the trustee when the account is taken. Any other view would render the beneficial provision of the Act to a large extent inoperative. The judgment of Kekewich J. in How v. Earl Winterton (1) states the point very forcibly: "Mr. Micklem urges that the result is that a trustee against whom an account has been ordered to be taken may go into chambers and say, 'True, I had the money: true, I spent it in an improper manner and it ought to be here available for you, and it is by my own default that it is not forthcoming; but, as

(1) [1896] 2 Ch. 626, 633.

that happened six years ago, you cannot claim it' - that is to say, he may claim to set up the statute in order to shield himself from the consequence of his own wrongdoing, speaking of it, of course, as a legal act and not as a moral wrong. That seems to me to be precisely what the statute says he may do. Although some one may be debarred from a righteous remedy, and although some one may go scot-free where strict justice would require him to pay money that he owes, still, on the whole, it is for the benefit of the public that actions against trustees for innocent breaches of trust should be put an end to. That is the principle, as it seems to me. I cannot see that it is right to stop short of applying that principle here merely because this is an action for account and not an action simply to recover a certain sum of money. Therefore, an account must be taken, with a special direction to the chief clerk that, as to any moneys proved to have been parted with before six years from the issue of the writ, the statute will be applicable." The decision in the Court of Appeal takes precisely the same view and the form of judgment (1) proceeds on that footing. The form of the order was as follows: "And the defendant by his counsel admitting that on the 9th August 1889" - six years before the issue of the writ - "there were moneys in his hands liable to the trust for accumulation by the will of the testatrix directed, this Court doth order that the following account be taken, that is to say:- - An account of the moneys in the hands of the defendant on the 9th August 1889, liable to the trusts for accumulation under the will of the testatrix Mary Rabett, and of the rents and profits of the testatrix's estate subsequently received by him in respect of the said term of fourteen years; but in ascertaining the actual amounts of the moneys in the hands of the defendant on the date aforesaid, any payments made before that date are to be allowed to the defendant."

In my opinion the decree of Warrington J., so far as it affects the executors of Dawkins, must be reversed and the action dismissed against them with costs. If the plaintiffs desire, at their risk as to costs, to take an account limited to six years before the amendment of the writ, they can do so, but I do not understand

(1) How v. Earl Winterton (No. 2), (1897) 79 L. T. 344, 346.

that there is any suggestion that one penny has been received either by Dawkins or the appellants as executors since July, 1906.

Various points have been raised in argument with which I do not think it necessary to deal. I think it sufficient to dispose of the appeal on the ground which I have stated.

I desire to add that it may often be desirable to direct a full account to be taken in order to ascertain whether the case falls within the exceptions in s. 8 and to reserve the question as to s. 8 until further consideration. But in the present case the facts are not in dispute, and it would be wrong not to decide the point of law at the present stage, and indeed the parties have not disputed this.

The appeal must be allowed with costs.

SWINFEN EADY L.J. It is conceded that the only cause of action which the plaintiffs have at law against the executors of Frederick Dawkins, who are the defendants appealing, is for a devastavit by Frederick Dawkins in the year 1902, and that the remedy is barred at law by the Statute of Limitations, the writ herein having been amended by joining Dawkins' executors on July 31, 1912. So far as the plaintiffs' claim is for a devastavit the remedy is also barred in equity. In Thorne v. Kerr (1) the plaintiff, who was a bond creditor of the original testator, sought to make the real estate of Lady Antrim, who was a deceased executrix of an executor, liable for the debt. Wood V.-C. said: "The bond is what leads up to the remedy, but the real foundation of the suit is the devastavit, as to which the remedy is barred by the lapse of six years, this Court following in that respect the analogy of the Courts of law."

This, however, does not dispose of the case. The plaintiffs are creditors of Samuel Blow, the testator, and it is not disputed that William Cambden, the surviving executor, is liable to them upon the covenants for payment of rent contained in the leases. As such creditors they claim to administer the estate of the testator, and contend that, in taking the estate accounts under the direction of the Court, the estate of Frederick Dawkins, deceased, must be charged with all sums received by him, and can only be

(1) 2 K. & J. 54, 63, 64.

allowed proper payments - that his executors cannot claim, as a payment which he ought to be allowed, any sum not paid away in a due course of administration - that he cannot set up his own wrongful payment, and then gay that as it occurred more than six years before suit he is under no liability for it. The result of this would be the disallowance of all sums paid to beneficiaries, although honestly and bona fide paid away more than six years before this action.

It has been decided that in an action by a beneficiary under a will the trustee can plead the Trustee Act, 1888, and this will afford him a defence against liability to a beneficiary in possession for breaches of trust committed more than six years before writ. In re Swain (1); In re Page (2); How v. Earl Winterton. (3) The last was a decision of the Court of Appeal affirming a judgment of Kekewich J. That learned judge had put the point in this way: "Mr. Micklem urges that the result is that a trustee against whom an account has been ordered to be taken may go into chambers and say, 'True, I had the money: true, I spent it in an improper manner and it ought to be here available for you, and it is by my own default that it is not forthcoming; but, as that happened six years ago, you cannot claim it' - that is to say, he may claim to set up the statute in order to shield himself from the consequence of his own wrongdoing, speaking of it, of course, as a legal act and not as a moral wrong. That seems to me to be precisely what the statute says he may do. Although some one may be debarred from a righteous remedy, and although some one may go scot-free where strict justice would require him to pay money that he owes, still, on the whole, it is for the benefit of the public that actions against trustees for innocent breaches of trust should be put an end to. That is the principle, as it seems to me. I cannot see that it is right to stop short of applying that principle here merely because this is an action for account and not an action simply to recover a certain sum of money." This view was adopted by the Court of Appeal, though they varied the form of the judgment. In the Court below, an account was directed, with a special direction to the chief clerk that as to

(1) [1891] 3 Ch. 233.

(2) [1893] 1 Ch. 304.

(3) [1896] 2 Ch. 626, 633.

any moneys proved to have been parted with before six years from the issue of the writ the statute would be applicable. The Court of Appeal, however, refused to direct an account, which might involve the disallowance of any payment, which the defendant could not justify against the plaintiff. The account was limited to six years before writ with an inquiry what sum the defendant had in his hands at the commencement of the period. As to the ultimate form of the order see How v. Earl Winterton (No. 2). (1)

It is urged that the same rule ought not to be applied when it is a creditor and not a beneficiary under a trust who is suing, and in the Court below the present case was distinguished by Warrington J. from In re Croyden (2), decided by Eve J., by stating "That was a beneficiaries' action to which very different considerations apply." It must, however, be borne in mind that an executor is personally liable in equity for all breaches of the ordinary trusts which in Courts of Equity are considered to arise from his office. "A devastavit or waste in an executor or administrator is when he doth misemploy the estate of the deceased, and misdemean himself in the managing thereof, against the trust reposed in him": Sheppard's Touchstone, p. 485.

In my opinion, an executor can plead the Trustee Act, 1888, against a creditor, in like manner as an express trustee can plead it against his cestui que trust. I quite fail to see how a creditor can have any better right against an executor than a cestui que trust has against a trustee. In re Marsden (3) and In re Hyatt (4) were decided before the Trustee Act, 1888.

Then it was said that the present action is not to recover money, but was brought to obtain administration, in the course of which money might be payable to the plaintiffs, and Warrington J. took the view that this action is not on the true construction of the Act of 1888 what is meant by an action to recover money. I am unable to adopt this view. In my judgment it is an action to recover money. The whole object of the action is to recover money - the rent due to the plaintiffs - and administration is

(1) 79 L. T. 344, 346.

(2) (1908) 125 L. T. Jour. 282, and on further consideration, 55 Sol. J. 632.

(3) 26 Ch. D. 783.

(4) 38 Ch. D. 609.

merely the form of the remedy. In How v. Earl Winterton (1) Rigby L.J. said: "The only thing is, you might say, this is not an action to recover money. But I do not think that means money as belonging to the person. It is, in substance, an action to make the trustee pay money, and to pay money into a fund as against which the applicant has a claim." The present is a much stronger case on that point, as it does not even appear that there is any other creditor. The whole object of this action is to make the defendants pay money to the plaintiffs.

It was further contended that a creditor is a beneficiary within s. 8, sub-s. 1 (b), and that as time does not run against a beneficiary unless and until his interest is an interest in possession, the six years ought only to run against the plaintiffs from the date when each payment of rent accrues payable under the leases. In my opinion a creditor is not a beneficiary within s. 8, sub-s. 1 (b).

An executor is not an express trustee for residuary legatees or next of kin, and certainly not for creditors. In Dacre v. Patrickson (2) Kindersley V.-C. said: "Strictly speaking, a trustee cannot have a trust imposed upon him virtute officii as executor. If a trust is imposed upon him, it is in another character, viz., that of trustee, whose duty it is to carry out the trust. Qua executor, he cannot have a trust imposed upon him by the will. The only trust of which he is capable as executor is the trust created by the law for the next of kin" - that is to say, trustee by implication of law. See also In re Lacy (3), before Stirling J.

Even in the case of a beneficiary, time runs from the date when his interest becomes an interest in possession, as distinguished from an interest in remainder, and not from the time when some sum may become actually payable to him. Thus in How v. Earl Winterton (4) the statute ran from the expiration of the term, as from which date the plaintiff's annuity accrued and began to run, and not from the date when the first instalment of the annuity would become payable, which was six months after the expiration of the term.

(1) [1896] 2 Ch. 626, 642.

(2) (1860) 1 Dr. & Sm. 182, 185.

(3) [1899] 2 Ch. 149.

(4) [1896] 2 Ch. 626.

The intention of the statute was to give a trustee the benefit of the lapse of time when, although he might have done something legally or technically wrong, he had done nothing morally wrong or dishonest.

It was urged that if the plaintiffs were barred in the present case, the result would be that a creditor might be barred by lapse of time anterior to the date when he could commence proceedings, and that however diligent he could not help being shut out of all remedy by the statute. The answer is that as regards any claim founded on the devastavit he is properly barred in equity as well as at law. As regards his debt against the legal personal representative liable to him, he is not barred, and moreover can follow the assets into the hands of a legatee. In March v. Russell (1) Lord Cottenham said: "Formerly, when legacies were paid, it seems to have been the practice to oblige the legatee to give security to refund, in case any other debts were discovered. That practice has been discontinued, but the legatee's liability to refund remains. The creditor has not the same security for the refunding as when the legatee was obliged to give security for that purpose, but he has the personal liability of the legatee."

This is perfectly just. The lessor has not any right to have assets set aside to meet any future contingent liability under the lease: King v. Malcott. (2) The lessor had originally merely a right to bring a personal action against the testator, and it would be giving him more than his due, if a portion of the testator's estate were set apart as security for his claim.

Where an executor has taken proper measures to ascertain all claims on the estate, and satisfied all which exist, by paying over the balance to the residuary legatees he has merely done out of Court what the Court would order him to do in an administration action.

In Lacons v. Warmoll (3) Fletcher Moulton L.J. thus expressed himself: "As at present advised, I am of opinion that (at all events since the passing of the Trustee Act, 1888) the liability of an executor in respect of moneys honestly paid away by him, as in this

(1) (1837) 3 My. & Cr. 31, 41.

(2) 9 Hare, 692.

(3) [1907] 2 K. B. 350, 364.

case, is barred at the expiry of six years from the date of the payment, whatever be the form of the proceedings by which it is sought to enforce the liability." I am of the same opinion. In my judgment the appeal of Dawkins' executors should be allowed.

PHILLIMORE L.J. This action is brought to enforce a creditor's claim against the estate of Samuel Blow, deceased, the defendants being the surviving executor and the executors of a deceased executor and other parties not now necessary to be considered.

The plaintiffs are the Lord Mayor and Commonalty and the citizens of the City of London suing as Governors of St. Bartholomew's Hospital on behalf of themselves and all other creditors.

Their claim arises in this way. Samuel Blow was at the date of his death a lessee from St. Bartholomew's Hospital under seven indentures of lease at rents in the aggregate apparently amounting to 2000l. per annum. At the time of his death and for a considerable time afterwards the rents which he and his estate got from under-tenants were sufficient to pay the head rents, but latterly they have been insufficient, and the rent due to the plaintiffs has been in arrear since 1909.

Samuel Blow by his will appointed as his executor the defendant William Cambden and by a codicil one Frederick Dawkins. These two proved the will after the testator's death in January, 1902.

Dawkins died on September 7, 1906, having made the defendants Sarah Ann Dawkins, Ambrose Augustus Whitehead, and William Stewart Lane his executors, and they proved his will.

In these circumstances the action is brought, as I have said, against Cambden, the surviving executor, and the executors of Dawkins. Such an action is rightly constituted: see Holland v. Prior. (1) Relief can prima facie be obtained in such an action from the surviving executor and the executors of the deceased executor in respect of assets come to the hands of the original executors and not paid away in due course of administration.

(1) 1 My. & K. 237.

The cases of Holland v. Prior (1) and Thorne v. Kerr (2) establish this, and indeed the point is not contested.

The defence of the executors of Dawkins, against whom Warrington J. has given judgment and who are the present appellants, arises out of a particular incident in the disposal of Samuel Blow's estate.

In October, 1902, the executors distributed the estate among the beneficiaries, taking from them an indemnity, but making no other provision for any of their testator's debts or liabilities; and the executors of Dawkins insist that this being so they are only liable for the assets, if any, of the testator Blow, which have been in Dawkins' or their hands within six years from the date of the action, and as the action was as against them begun on July 31, 1912, this would protect them in respect of any date before July 31, 1906. As there is little question that no beneficial assets have been in their hands or were in the hands of Dawkins after the distribution in October, 1902, the claim against their testator Dawkins or themselves is valueless.

This defence is rested upon the provisions of s. 8 of the Trustee Act, 1888. It is said that these defendants are within its provisions, as by s. 1 "the expression 'trustee' shall be deemed to include an executor" and they are not within the exceptions, and so can rely upon the defences given by this section.

Sub-s. 1 of s. 8 is divided into two paragraphs. Paragraph (a) is as follows: "All rights and privileges conferred by any statute of limitations shall be enjoyed in the like manner and to the like extent as they would have been enjoyed in such action or other proceeding if the trustee or person claiming through him had not been a trustee or person claiming through him." We are, I believe, all agreed that this paragraph does not apply. There were no rights or privileges conferred by a statute of limitations which could have been enjoyed by these defendants if their executor had not been an executor. If he had not been an executor there would be no right of action and no question of a statute of limitations.

I now come to paragraph (b): "If the action or other

(1) 1 My. & K. 237.

(2) 2 K. & J. 54.

proceeding is brought to recover money or other property, and is one to which no existing statute of limitations applies, the trustee or person claiming through him shall be entitled to the benefit of and be at liberty to plead the lapse of time as a bar to such action or other proceeding in the like manner and to the like extent as if the claim had been against him in an action of debt for money had and received ...." This, it is suggested, is intended to protect the trustee against the form of proceeding in Holland v. Prior (1) and the decisions in In re Marsden (2) and In re Hyatt (3); and the case of How v. Earl Winterton (4) is relied upon.

Let me go back upon the words "a trustee is to be at liberty to plead the lapse of time as a bar .... in the like manner and to the like extent as if the claim had been against him in an action of debt for money had and received." Rigby L.J. in How v. Earl Winterton (4) points out how the analogy works.

When does time begin to run in an action for money had and received? From the time when the money has been had and received to the plaintiff's use, so that the plaintiff could sue for and recover it. The statute runs because the plaintiff could sue. The section we are considering puts a trustee in the same position as a recipient of money belonging to another. The lapse of time which the trustee is entitled to plead in bar runs from the date when the beneficiary could have first sued him. Where the beneficiary has two remedies, accruing at different dates, it may be a question whether the lapse of time from the date when the earlier remedy could have been used could be pleaded in bar of the later remedy. It is pretty clear that at any rate there were cases before the statute of 1888 in which the form of procedure made all the difference as to whether the Statute of Limitations could or could not be pleaded in an action of law, or to a suit in equity in cases where a Court of Equity "would follow in that respect the analogy of Courts of law."

Let me first consider what is the form of procedure at law in an action against an executor for the debt of his testator. If the debt be an admitted one the executor can only plead plene

(1) 1 My. & K. 237.

(2) 26 Ch. D. 783.

(3) 38 Ch. D. 609.

(4) [1896] 2 Ch. 626.

administravit or plene administravit praeter. And supposing him not so to plead or to have judgment against him upon his plea, execution follows de bonis testatoris. If he have in fact wasted the assets so that this execution is fruitless he can then be charged in two or three alternative modes of procedure and execution can be obtained against him de bonis propriis. In one of the forms of procedure the sheriff returns, or a suggestion is made of, a devastavit. It is not, however, the executor who can set up a devastavit and say that this devastavit happened more than six years ago and so plead the Statute of Limitations. He cannot so plead his own wrong. The judgment of the Court is conclusive that there are, or are to be deemed to be, assets of the testator in his possession, and if they are not to be found, he has made away with them; when, it does not matter - possibly the day before, possibly many years ago - the judgment creditor need state no date, all he says is "You ought to have the testator's goods in your hands."

In some cases it may be convenient for a creditor to pass by all those preliminary steps, and if he knows that the executor has wasted his testator's goods and has no assets of the testator in his hands, and if speed is - as it is so often - of importance, he may bring an action alleging a devastavit as a tort and recover as damages the equivalent to his debt. Also at one period in our law there seems to have been certain advantages in the way of costs in such a proceeding. Again, this is the only form of remedy at law available to a creditor against the representatives of a pre-deceasing executor. If, however, the creditor bring such an action when the tort was committed more than six years before action, the Statute of Limitations will bar him. Similarly if he rely upon a devastavit in a suit in equity, the Court of Equity will apply the Statute of Limitations: Thorne v. Kerr (1), already cited. But if he chose to sue for an account a Court of Equity would not allow the executor to set up his own devastavit and then plead or rely upon the statute; so Chitty J. decided in In re Hyatt. (2)

The appellants' counsel relied on Lacons v. Warmoll. (3) It

(1) 2 K. & J. 54.

(2) 38 Ch. D. 609.

(3) [1907] 2 K. B. 350.

was a curious case and shews the disadvantage of trying a claim of importance without pleadings; but I do not think it assists them. The county court judge gave a judgment which the Divisional Court construed as a judgment de bonis testatoris followed by the appropriate remedies in case there should be a return of nulla bona, all packed into one judgment or order. So construing it, the Divisional Court rightly held that there was no statute of limitations applicable. The Court of Appeal construed it as a judgment appropriate to an action of devastavit. So construing it, they necessarily applied the Statute of Limitations, Buckley L.J. pointing out that the plaintiffs could not have a judgment for administration of the testator's estate because they had not made all the executors parties.

I now come to How v. Earl Winterton. (1) There the plaintiff, an annuitant whose annuity first accrued in May, 1889 (fourteen years after the death of the testator), was paid till November, 1894, and brought her action in August, 1895. There had in fact been continuous breaches of trust during the fourteen years in not accumulating the rents of the estate so as to make a fund for her, and while the defendant, the trustee under the will, admitted that he had certain assets in his hands within the last six years for which he must account, as to the moneys previously lost he pleaded the Act of 1888, and it was held that his defence was good. After reading and re-reading that case, I have not been able to gather whether the plaintiff framed her action upon a series of positive breaches of trust upon which she relied - a form of pleading analogous to an action of devastavit - or whether she simply sought for an account and administration. In the former view the case decides very little. In the latter view it decides that the lapse of time accrues from the date when the beneficiary could have used the earliest remedy open to him or her. In either view it is not this case. A beneficiary can sue from the moment the breach of trust is committed. He can restrain it and compel the trustees to replace the misappropriated funds. A creditor whose debt has not accrued has no such remedies, whether he be a landlord: King v. Malcott (2); an

(1) [1896] 2 Ch. 626.

(2) 9 Hare, 692.

annuitant by deed: In re Hargreaves (1); or, possibly, a company whose shares are not fully paid up: In re King. (2) His time has not begun to run. In How v. Earl Winterton (3) Lindley L.J. seems to point this out pretty clearly when he speaks of each failure of the defendant to invest as he should have done as a breach of trust, and each breach of trust as "giving her a fresh cause of action." The phrase is his, not mine, and it shews the way in which he was looking at the case. This must have been the view taken by Warrington J., to whose notice this authority was brought.

I ought, before concluding, to refer to the decision of Eve J. in In re Croyden. (4) The reports are short and it is difficult to ascertain that there was any clear principle decided, or any argument raising the point. The case may, if it does contain any principle, be distinguished, as Warrington J. distinguished it, as the case of a claim by a beneficiary. If it be otherwise, and I am to choose between the decisions of two learned judges, I prefer that of Warrington J.

On the whole I am of opinion that this appeal should be dismissed.

Solicitors: Taylor & Bryden and Carter & Carter; Wilde, Moore, Wigston & Co.; E. V. Huxtable; Mills, Curry & Gaskell.

R. M.

(1) 44 Ch. D. 236.

(2) [1907] 1 Ch. 72.

(3) [1896] 2 Ch. 626, 637.

(4) 125 L. T. Jour. 282; 55 Sol. J. 632.