The trustee, whether he be a trustee for sale or for other purposes cannot purchase the trust property; and the purchase by him jointly with another parson unconnected with the trust is liable to be set aside at the instance of the cestui que trust. Mutty Lall Mookerjee  2 I. If their Lordships of the Judicial Committee have laid down the law in that case as formulated by the learned Judge, his decision should be upheld But on a close examination of the case it would appear that their Lordships did not intend to lay down any such broad proposition. It is hardly necessary to remark that a ruling should be construed on the facts on which it is founded.
The House of Lakshmi Chatterjee By Helen Lavinia Underwood
Mutty hall Mookerjee  2 I. After his death a posthumous son was born of the name of Sreeman Chunder. One of the sons of Shambhdo Chunder, namely Harish Chunder, subsequently died leaving a will under which he appointed his eldest brother Juggut Chunder and second brother Mohesh Chunder as his executors.
Juggut did not join in obtaining probate and subsequently renounced executorship and Mohesh remained the sole executor under Harish Chunder's will. Juggut, the eldest son, as executor of his father's estate, brought a suit and obtained a decree against his father's brother for a sum of Rs. Thereafter Mohesh, as executor of Harish's estate sold to Juggut Chunder the one-sixth interest of Harish in the decretal amount for a sum of Rs. The purchase was made in the name of Juggut, but for the benefit of Juggut himself and Sreeman Chunder. But it was argued before their Lordships that as Sreeman Chunder was only a party to the purchase through Juggut the purchase by him was not affected by any defect in Juggut's title.
In dealing with this question their Lordships made the following observation: " But if Juggut Chunder, holding the decree in a fiduciary position, could not purchase it for- himself, could Sreeman Chunder employ Juggut Chunder, who held the decree in a fiduciary position, to purchase that decree for the benefit of himself and Sreeman Chunder jointly?
It appears to their Lordships that the same objection would apply to Juggut Chunder's purchasing for himself and Sreeman jointly as there would be to his purchasing for himself alone. One of the reasons for setting aside transactions such as this is that the purchaser is presumed from his position, to have better means than the vendor has of ascertaining the value of the property purchased. Well, then, if a person, knowing that another holds a fiducary position and has a better knowledge of the value than the vendor, employ; that person to purchase for him, and the trustee purchases secretly In his own name for the benefit of that other, it appears to their Lordships that the sale is equally invalid against the parson for whose benefit it is purchased by the trustee as it would be against the trustee him self; therefore it was not necessary in this suit to file a bill to set aside the sale merely a; to half the estate as against Juggut Chunder, and to allow it to stand for the benefit of Sreeman Chunder.
Upon this decision is based the statement of law laid down in Lewin's Law of Trust 12th Edition, p.
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It does not follow that, where purchase is made by a bona fide purchaser jointly with the trustee, the entire transaction should be set a side on the ground that a part of it is invalid. The learned advocate for the respondent has relied upon this case and several other oases, to which reference will shortly be made, for the broad proportion that, where a purchase is made by a trustee jointly with another person, the whole transaction should be set aside.
He has railed in support of his contention also upon the case of McPharson v. Watt  3 A. A cursory glance at the judgment of that case may appear to lend some support to the contention of the respondent. But a close examination will show that it did not lay down any such proposition. There were four houses belonging to two ladies. To a solicitor of the name of Mr. John Watt the ladies, through their brother expressed their desire to sell the houses.
The solicitor advised to them not to advertise the houses in question for sale promising that he would obtain a purchaser. A few days afterwards John Watt presented his brother, Dr. Watt, as a purchaser for a certain price. The purchase was found to have been nominally made by Dr.
Watt, but was really made by John Wattt himself. The House of Lords held that the purchase was bad and could not be enforced. It was argued at the bar that there was an arrangement between John Watt and his brother that of the four houses two would go to John Watt and two would remain the property of Dr. It was therefore urged that, so far as the two houses which were to remain the property of Dr.
Watt were concerned, the sale should be maintained. Lord Cairns, L. Watt by his brother in these words: " There are four houses to be sold: if you will buy two 1 will buy the other two and we will get them at such and such a price, so much for your two and so much for my two. Watt being beneficially interested in two of the houses he had not been interested in any one of them, and the person really interested in the whole had been John Watt, The only further observation I have to make is that even as to the two houses in which Dr.
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Watt is interested, it seems to me impossible that the sale can be supported; for the sale as between the vendor and the purchaser was one complete and entire sale; and even if you were to separate it into two parts, and to look at it as a sale first of two houses to John Watt and then of two to Dr.
Watt was the purchaser. If, therefore, the 'purchase is made by the trustee for himself and for another person in the name of the other the sale is not enforcible on the principle that the rule of law which declares a purchase by the trustee to be had applies with equal, if not greater, force to such a case. Reference in this connexion has also been made to the case of ex parte Forder  W. Eng That case has no bearing on the present question and only reiterates the principle that the purchase made by a trustee for himself and another in whom he is interested is as bad as if it was made for himself.
There the purchase was made in the name of the trustee's son who was a minor and a nephew of the trustee's partner in business. On these facts the Court held that the case fell within the principle of the cases which have decided that an assignee in bankruptcy cannot sell the bankrupt's estate to his partner in business or his solicitor. The sale would, therefore, be void as contrary to the principle of the law even independently of the fact that one of the purchasers was a minor and legally incapable of entering into a contract.
From tills case Lewin in his book on traits draws the following proposition. It was argued by the plaintiff that the sale was invalid as it was a sale by a mortgagee to himself under the guise of a limited company.
Lindley, L. There is no authority for saying so. To hold that it is would be to ignore the principle which lies at the root of the legal idea of a corporate body and that idea is that the corporate body is distinct from the persons composing it. A sale by a member of the corporation to the corporation itself is in every sense a sale valid in equity as well as at law. There is no authority for saying that such a sale is not warranted by an ordinary power of sale, and 'in our opinion such a sale is warranted by such a power and does not fall within the rule to which we have at present referred.
But although this is true, it is obvious that a sale by a person to an incorporated company of which he is a member may be invalid on various grounds although it may not be reached by the rule which prevents a man from selling to himself or to a trustee for himself. Such a sale may, for example, be fraudulent and at an under value or it may be made under circumstances which throw upon the purchasing company the burden of proving the validity of the transaction and the company may not be able to prove it.
Fraud in the present case is not now alleged; it was alleged in the Court below and was there clearly disproved. But for reasons which will appear presently the circumstances attending the sale were such as in our opinion throw upon the company the burden of sustaining the transaction.
No case has been cited which may have direct bearing upon the facts before us. In this case the debt was contracted before the trust was created. To recover that debt; a suit was brought and a decree was regularly obtained. The property was brought to sale in execution of that decree and purchased by the Defendant No.
With regard to the character of this purchase both the Courts agree in finding that the decree and the sale were not vitiated by fraud and were regular In all respects. That being so, the purchase by Defendant No. It is not a case in which the trustee was the seller. It is a case in which the property was sold through the intervention of the Court in public auction, although the trustee was one of the parties to the execution. So far as Defendant No. Reminder Successfully Set! Select a City Close.
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