VOL. IV.] AND PEIVY COUNCIL.

823

[HOUSE OF LOBDS.]

THE LORD PROVOST, MAGISTRATES,) H.L.(So.)

AND TOWN COUNCIL OP EDINBURGH J A p p E L L A N T S J 1879

THE LORD ADVOCATE (ex parte AS TO ) **v*£

M'LAKEN) JRESPONDENT. —

Immixing of Charity Funds—Increase of Value of Joint Estate—Proportionate

Division of Profits ordered.

In 1695 a truster settled, in connection with Trinity Hospital, Edinburgh

—a charity for the support of indigent and sick persons—a sum of money
secured on bonds. The interest in perpetuity was to be employed in the
maintenance in the hospital of twelve poor persons; the preference to be
given (1) to those of the truster's kindred; (2) to those of his name; and (3)
if these did not apply then to indigent persons generally. He appointed as
the patrons the lord provost and town council of Edinburgh, and the ministers
of the burgh present and to come. The lord provost, magistrates and town
council were governors of the hospital, and got control of the fund in 1700,
and administered it as if part of the general charity funds of the hospital,
mixing the interest with the general income of the hospital, and from the
mixed income defrayed the expenses which they incurred for the whole
charity, without making any distinction in the accounts.
The bonds of the settled sum were paid up in 1744 and 1753, and were
subsequently, with other charity moneys lent to the city of Edinburgh; and
on them a great loss occurred.
Other funds of the hospital had been invested in land in 1734, and that
land had increased greatly in value. The ministers of the burgh never
took any part in the administration of the fund. In a question whether
the settled fund, on being ordered to be separated, was to participate in
the present increased value of lands purchased since 1700; and whether the
ministers had now a right to be joined in the administration:—
Held, affirming the decision of the Court below, that (1) the fund had
been so inextricably mixed with the general charity funds, that it must be
taken to have participated proportionally in the increased value of the
hospital funds, and that in valuing the aggregate funds all lands purchased
since 1700 must be valued and taken into account; (2) that notwithstanding
the length of time during which a contrary practice had prevailed, the
ministers should be joint administrators.

APPEAL from the Court of Session, Scotland, against parts of

two interlocutors.
Trinity Hospital, Edinburgh, was originally a charitable founda­
tion in connection with Trinity College Church of that city. It
VOL. IV. 3 3 L
824 HOUSE OF, LORDS [VOL. IV.

H. L. (So.) was founded in the fifteenth century by Mary of Oueldres, widow

1879 of James II. of Scotland ; but after the Eeformation it was recon-
^ ^ structed. The Appellants, the lord provost, magistrates, and
PBOVOST, &O., t o w r i council of Edinburgh, were its administrators. The object
v. of the charity was the support of indigent and sick persons,
ADVOCATE, formerly called bedesmen. Besides its original endowments, it
. received, at various times, numerous separate mortifications ; most
of which were destined for the benefit of the poor of the hospital
generally; but some were bequeathed for the benefit of a limited
class, or were affected by other special provisions.
In a suit at the instance of certain beneficiaries for the proper
administration of its funds, the hospital has frequently been the
subject of judicial proceedings (1), and the Court of Session has
had to decide upon many questions; but the points involved in
this appeal relate solely to the administration of one of the above-
mentioned special funds, known as the Alexander Mortification.
The mortification is contained in two writings, a principal deed
and an eik (2); both dated the 23rd of October, 1695. In the
principal deed Mr. James Alexander, the truster, on the narrative
that certain debts secured on bonds were due to him by the Earl
of Annandale and Sir James Johnstone of Westerhall disponed
" t o , and in favour of Trinity Hospital." The deed, so far as
material, then continues:
And to the poor thereof,'after specified, and t'o John Miller, present threasurer
and succeeding threasurers thereof, for the use and behove and to the effect after
specified ALL and HAILL the soume of fourtie thousand merks Scots, the yearly
interest to be employed towards accommodating and intertaining twelve indigent
personnes, viz., eight men and four women . . . qualified and applying in the
manner after mentioned . . . who have been of good reputation, and have not
fallen into decay through their own vice or prodigality, to be received into the
said hospital!, . . . and to be accommodate and intertained therein at the<rate
and expense of the other persones who are or shall be received in and entertained
upon-the former mortificatione belonging to the said hospitall, which at present
is estimat to one hundered and twentie punds, and the superplus of the annual-
rent, . . . which, at sex for the hundered, . . . extends to two hundered and
fourtie merks yearlie, . . . to be equallie divyded amongst the said twelve
indigent persones, being twenty merks money foresaid, to ilk ane of them

(1) (1864) 4 Macq. 603 ; Court Sess. Law Eep. (1866), vol. iii. p. 84.
Cas. 2nd Series, vol. xxii. p. 1222 ; and (2) BAn additional enumeration of
(1869) Law Eep. 1 H. L., Sc. 427; sums given.
Scot. Jur. vol. xxxix., p. 65; Scot.
VOL. IV.] AND PEIVT COUNCIL. 825

yearlie . . . by and attour the ordinairie allowance of the other persones in the H. L. (So.)
said hospitall, the saids indigent persons being always subject to the laws of the .„_.
said hospitall. *-w
LOBD
The deed then continues : PKOVOST, &C.
OF EDINBUBGH
And in caise by the frugull and verteous manadgement of the said hospitall v.
the expense and charge of accommodating and intertaining the saids twelve per- LOUD
sons in maner forsaid shall not extend to and exhaust the haill annualrent yearlie
of the said principal soume, then, and in that caise, I doe heirby destinat and
appoynt the superplus thereof to be imployed yearlie and joyned to the said
stock, and the annualrent of the new stock to be imployed for intertaining of
more of the like indigent persones at the rate aforsaid, so far as the samen will
reach.
The qualification is thus expressed:
First, those of my own kindred, friends and relatives upon father or mother
side : Secondlie, those of my own surname of Alexander, who shall apply for the
benefits thereof within the space of three score days nixt after any vaccancies
shall occure, and that whither they be burgesses of Edinburgh or not; and
failzeing these, of such indigent persones qualified in manner forsaid, as the saids
patrons underwritten shall think fitt. . . . And the ease and benefite of the said
vaccancies is hereby appoynted to run up and be added to the said stock, except
the necessarie expenses of the burialls of the said persones by whose decease the
said vaccancies occurs. And which modification a'wryn I doe heirby appoynt to
take effect by the said patrons receiving in and admitting of the said indigent
persone3 within the space of six months at farthest nixt after my decease.

The deed then proceeds to dispone in favour of the hospital,

and indigent persons foresaid:
Threasurer of the said hospitall, and his successors in the said office of
threasurer and patrons after specified, feoffees of trust and administrators for the
use and behove of the said hospitall and indigent persones forsaid, All and Haill
the principal sums and securities held for the same.

Then comes a provision that,

How often the sums mortified, or any part thereof, shall bo uplifted be the
threasurer of the hospitall and patrons forsaid; they shall be bund and obleidged
of new againe to secure, wair, bestow, and' imploy the same upon sufficient and
well holdine land, or olherfgood and sufficient securitie for annualrent, payable
to the said threasurer of the said hospitall and patrons, thereof and their suc­
cessors, . . . for the use and behove of the said hospitall and indigent persones
forsaid. . . . And with this express provisione, . . . that the saids twelve indi­
gent persones, and such as may be added, . . . shall be intertained upon tho
annualrent of the said soume of fourtie thousand merks forsaid, and new stock, in
caise the samen shall be augmented," " and that it shall noways be in the power
of the said threasurer, &c, to apply any part of the principal sum . . . or
augmented stock . . . for the maintenance of the said twelve indigent persones,
but that the same shall remain entcir, unbroken upon, or medled with, nor
3 3 L 2
826 HOUSE OF LOBDS . [VOL. IT.

H. L. (So.) applyed to any other use, but to remain as a perpetuallie mortified stock to the
.g„q use and behove forsaid in all generationes to come.

Lcmr> The patrons of the mortification are thus appointed, and put
u n d e r the
O^EZBOTGH inspection of the Court of Session :—
Loito ^^ ^ ' &°°^ an<^ e ff ec tiall performance, manadgement, and right appli-
or t i e

ADVOOATE. cat'ne of this my grant and mortificat'ne, witt ye me to have nominat and
—— appoynted, lykeas I, the sd. Mr. James Alexander, be thir presents nominate,
appoynt, and earnestlio requist the Bight Honorall. the Lord Provost, and bailzies
and counsell of Edinburgh, and yr. successors in office, for the communitie yrof,
and ministers of the said burgh, present and to come, to be the sole and undoubted
patrons of this my grant and mortificat'ne: And farder, I heirby nominate,
appoynt, and earnestlie intreat the Eight Honorall. the Lords of Councell' and
Sessione, for the time being, to take the inspectione and oversight of this my
grant and mortificat'ne, that the samen be punctuallie and exactlie keeped,
observed, and fulfilled be the sds. patrons and theasurer of the sd. hospitall for
the time being, according to the tenor of this my present gift and mortificat'ne in
all poynts, &c.
Mr. James Alexander died in 1696.
In 1869 the Court of Session, carrying out a judgment of this-
House dated 1864, remitted to Mr. Macplierson, Professor of
Scots Law in the University of Edinburgh, to inquire as to the-
property and administration of the Trinity Hospital, aDd to report
a scheme for the future administration of the funds of the charity,
" having reference to the terms of the charters, grants, and morti­
fications " in its favour.
■ In accordance with this remit, elaborate reports aud relative
appendices were from time to time prepared by Mr. Macpherson.
The material points of these reports, as far as regards this present
case, were as follows:—
The funds of the hospital from the earliest period were lent by the magis­
trates as governors of the hospital to the magistrates as representing the- burglk.
And at the date of the City Agreement Act (1835) £4500 were due, which
resulted in a loss to the charity of £1489.18s.
The funds were also invested in land. Since 1700 there was purchased the-
Dean estate (1739), which, under the name of Blinhbonny and Dean Park, has
greatly increased in value owing to its being a capital building site. .There was-
also purchased in 1795 five additional acres at Coatfield, and in 1828 other
trifling purchases of land. . ..
"The Alexander trust estate amounted to 40,850 merks (Scots), lent to the-
Earl of Annandale and Johnstone of Weslerhall; they were paid up respectively
in 1743-4 and 1753."
" The amount received in sterling money from the Earl of Annandale was
£1900, and from Johnstone of Westerhall £544 13s." After these sums were paid
VOL. IV.] AND PRIVY COUNCIL. 827

wp, the whole, except about £100, was lent at various times to the city at 4 per H. I*. (So.)
cent, interest. " Thus the Alexander fund supplied more than half of the £4500 .„_„
on which occurred the loss of £1489." *—/~
" The first impression of the reporter was that the Alexander deed of mortifi- LORD
cation created a separate trust, and that the fund must necessarily be kept separate 0F^DiNBunaH
in order to carry out the purposes of the trust. But he found, after examining t>.
the accounts, that after the first few entries there is no reference to the name of TJOBD
A D V O O A.TF*
Alexander; and the interest of the bonds were treated as part of the general '
income of the hospital charity."
" It does not seem to follow from the case of Cuthill v. Burns (1) that, because
the money can be traced, it must be treated as ear-marked, and kept separate.
He thinks the governors did not understand themselves to be so dealing with it,
unless possibly at the date of their minute in 1838." How completely they
Tegarded the trust as merged in the general charity is illustrated by the way in
which, when they came to settle the price of the Dean estate, purchased in 1739
(1734), they directed Westerhall's.bond, along with others, to be called up to meet
the expenses of improvement on the estate; but the treasurer did not act on the
■directions, and the money remained in Westerhall's hands until 1753.
" The investments actually made were not made in terms different from those
applicable to the other funds of the hospital, or indicating that they were to be
kept separate for the Alexander mortification." They were not, as directed by the
deed of foundation, taken "payable to the treasurer of the said hospital and
patrons thereof." The inference is that the governors never intended to keep the
Alexander funds separate from the rest of the hospital property.
There is every reason to suppose that the full number of twelve indigent
•persons were on the roll in 1700; but there soon occurred vacancies. From a
list made up it appeared that from 1739 to 1802 seven is the general number of
inmates on the fund.
On the vacancies admitted on the face of the minutes between 1745-1750,
there ought to have been in 1750 an accumulation of upwards of £300 without
charging interest. For the first eleven years after 1802 there was under expen­
diture, over expenditure then continued till 1831, From 1832 to 1861 there
never has been spent as much as the interest at 5 per cent, of the original
capital, taking that as £2270. If the accumulations are to bear compound in­
terest there are but ten years of the present century in which the whole interest
has been expended, and the whole accumulations with compound interest would
amount to £8000, which sum does not include the original capital. Even taking
the account from 1832, the savings without interest amount to £813 2s. 6(2., and
with compound interest to £2350.
" It does not appear that the ministers ever claimed, or even as a body heard,
that there had been conferred upon them a special interest in this fund." But
from 1720 to 1738 the affairs were managed by a committee on which there was
always two of the city clergy, who might have had access to the trust deed if
they had chosen. The committee was abolished in 1738, and since then none of
the ministers have ever acted. - ••
The reporter suggested that the Alexander fund should bo
(1) Court Sess. Cas. 2nd Series, vol. xxiv. p. 849.
S28 HOUSE OP LOEDS [VOL. IV.

H. L. (So.) separated from the General Hospital charity, and administered as

1879 a separate trust.
j^ D The Appellants objected to the proposed rectification of the
PEOVOST, &O., hospital accounts.
They submitted that the presumption was
v. that the ministers had declined this trust; but at all events
ADVOCATE, that, having regard to the length of time they had exercised the
patronage, they ought now to be deemed to be the sole lawfully
constituted administrators:
And, secondly, that the Alexander fund ought to be merged in,
rather than separated from, the General Hospital fund. The
minister of the city lodged a claim to participate in the exercise
of the patronage. The First Division, on the 20th of July, 1875,
pronounced the following interlocutor:
Find that the funds mortified by Master James Alexander, in the year 1695,
have been hitherto held, administered, and applied by the Petitioners, in the same
way as 'he funds belonging to the Trinity Hospital, and have been immixed
with, and dealt with as part of, the funds of the said hospital; Find that, in
terms of the said James Alexander's mortification, the funds mortified by him
fall to be held and administered by the lord provost, magistrates, and council of
the city of Edinburgh, and the ministers of the said city, present and to come,
and to be applied, in the first place, in relief of poor persons of the founder's kin­
dred ; in the second place, in relief of poor persons of the name of Alexander ;
and lastly, in relief of other poor persons, all as directed by his deed of mortifica­
tion, dated the 23rd of October, 1695 : Find that for this purpose it is necessary
to ascertain the present amount of the capital of the said funds mortified by the
said James Alexander, and to sot apart the same, to be administered and applied
as aforesaid: Find that, in the year 1700, the said funds amounted in all to
£2270, and that the said funds to that amount have been immixed as aforesaid
with the funds and property of the Trinity Hospital, from an early period down
to the present time, and must be held to have participated proportionately with
the said funds and property in the increase of value of the aggregate funds and
property, between the year 1700 and the year 1873: Remit of new to Professor
Macpherson to ascertain the value of the whole funds and property of the said
hospital as in the year 1700, drawing back to the said date the value of all addi­
tional gifts and legacies received by the hospital after the year 1700, on such
terms as may seem reasonable, also to ascertain and fix the amount or value of
the whole aggregate funds and property as in the year 1873, and to report what
is the present amount of the said Alexander fund, taken in the same proportion
to the present value of the whole aggregate funds as the sum of £2270 bears to
the value of the whole hospital funds and property in 1700, ascertained as afore­
said Quoad [ultra approve of the recommendations of the reporter, and
remit to him of new to prepare a scheme for the administration of the Trinity
Hospital and its funds and estate, and also a separate scheme for the administra­
tion of the Alexander mortification, &c.
VOL. IV.] AND PEIVT COUNCIL. 829

Subsequently the Court of Session further considered the mode H. t,. (So.)
in which the principle of accounting, which had been determined 1879
upon by the above interlocutor, should be carried out. And on j * ^
the 19th of March, 1878, they pronounced an interlocutor allowing PROVOST, &O->
. , . , ' . . OFEDINBUBGH
certain deductions, but finding, inter alia, that all lands purchased v.
between 1700 and 1873 should be included in the valuation ADVOCATE.
of the aggregate hospital property. The result of the two
interlocutors worked out in figures would be that the Alexander
mortiGcation is entitled to be credited with a capital sum of
£30,537 19s. 10<Z. out of the aggregate funds.
Against these decisions the lord provost, magistrates, and town
council of Edinburgh, appealed to this House.
Mr. E. E. Kay, Q.C., and Mr. M'Laren (of the Scotch Bar), for
the Appellants, contended that the finding of the Court below had
no foundation in fact. The main increase in the hospital funds had
arisen from the purchase of the lands known as Blinhbonny and
Beans Park in 1734; but at that date the Alexander fund was
wholly invested in the original securities, and were so until 1744;
this fact alone took away the basis of the judgment below, namely,
that the funds were immixed since 1700. Certainly after 1744
and 1753, when the capital sums of the Alexander fund were paid
up, they were mixed with other moneys and lent to the city, but
the identical sums forming the Alexander fund had always been
traceable, and not one farthing of them had ever been laid out on
the purchase of land. The terms of the trust were that the
interest—failing the preferred classes—was to be applied for the
benefit of indigent persons generally, but that was also the object
' of the Trinity Hospital charity; therefore there would have been
no advantage in keeping a separate account of disbursements,, so
long as none of the preferred classes were refused admittance; and
of that there was no evidence. Finally they submitted that the
funds had not been improperly mixed, and the Alexander fund
ought not to participate in the present value of lands which in fact
belonged exclusively to Trinity Hospital.
The ministers of the burgh had lost all right to jointly ad­
minister the fund, by long contrary usage. They relied on Baird
v. Magistrates of Dundee ( I ) ; Leslie v. Blaeh (2); also cited
(1) Court Sess. Cas. 3rd Series, vol. i. (H.L.) p. 6, and 2nd Series, vol. xxiv. at p. 447.
(2) 9 June, 1814; Fac. Coll. vol. xvii. p. 641.
830 HOUSE OP LOEDS [VOL. IV.

H. L. (So.) Magistrates of Aberdeen v. University of Aberdeen (1); Attorney-

1879 General v. Dean of Christ Church (2) ; Attorney-General v. Caius
LORD College (3) ; Attorney-General v. Drapers' Company (4); Attorney-
PROTOST, &C, Qeneral y. Corporation of Exeter v(5); Lewin on Trusts, 5th ed.
OF EDINBURGH -1 ^ '
«. pp. 645, 647, 648.
LORD
ADVOCATE.
— The Lord Advocate (Eight Hon. W. Watson), and Mr. B. Nicol-
son (of the Scotch Bar), were heard in support of the decision of
the Court of Session. They intervened by virtue of the Trust
(Scotland) Act, 1867, s. 16, and maintained that, ever since the
Appellants had obtained possession of the Alexander mortifica­
tion, they had acted when investing as if doing so for the benefit
of the whole aggregate funds. For more than 150 years they
had dealt with the fund as part of the aggregate charity funds ;
and on no principle of law or equity could they now say that the
Alexander fund was severally administered. The fact that this
fund was locked up in bonds at the date of the purchase of Blink-
bonny and Dean Park, did not avail the Appellants; it was not
necessary that the bonds should be reduced to money in order to
participate in the advantage of the purchase.

Mr. Kay, Q.C., in reply.

The Law Peers having taken time to consider their judgment

delivered the following opinions :—
LOBD BLACKBUKN : —

' My Lords, the town council of Edinburgh were the adminis­

trators of Trinity Hospital, and as such held considerable funds
before the year 1696. In that year Mr. James Alexander died,
having previously made a mortification to the lord provost and
town council of Edinburgh and their successors in office and the
ministers of the said borough present and to come. The ministers
at that time did not take any steps to assert their right to join in
administering this mortification. The council got possession of
the funds, and from the time they did so down to the making of
the interlocutors appealed against, administered those funds as if
(1) 2 App. Cas. 544; affirming Court (3) 2 Keene, 150.
Sess. 4th Series, vol. iii. p. 1087. (4) 4 Beav. 67; 12 L. J. (Ch.) 421;
(2) Jac. Bep. 474. and 6 Beav. at pp. 386, 390.
• (5) 2 Euss. at p. 54.'
VOL. IV.] AND PBIVY COUNCIL. 831

they had been mortified to them as administrators of the funds of H. L. (So.)

Trinity Hospital. 1879
In a suit for the proper administration of the funds of Trinity LORD
Hospital the Court of Session had to decide a great many ques-' ^.B2p0ST'&™
tions. Two, and two only of their decisions are now by this v.
appeal brought before this House:—1. The Court of Session de- ADVOCATE.
cided that the funds of the Alexander mortification ought to have Loid Blackburn.
been from the beginning administered by the council and the
ministers, and not by the council alone, and that, notwithstanding
the length of time during which a contrary practice had pre­
vailed, they could not sanction it in future; and that the funds of
that mortification must be in future administered, in terms of the
mortifier's trust, by the council and the ministers. This was the
first decision appealed against. I think noDe of your Lordships
who heard the argument doubted that the Court of Session could
not have decided otherwise, and the counsel for the Appellants
were not able to urge anything substantial against this decision.
But then, having determined that the Alexander fund was to be
administered separately in future, there arose a question what was
the fund which was to be so administered. I do not think that I
can state the point more briefly than is done by the Lord Pre­
sident. He says:
The funds left by Mr. Alexander were invested in particular securities, and
those securities were not called up or changed until about the middle of the last
century, and we have distinct evidence of what the amount of the fund was at
that time. Now, if we proceeded upon the principle of a strict accounting against
the magistrates here as trustees, of course the way of bringing out the balance
would be to charge them with this capital, as at the date when we find it in their
hands, and then charge them with the income as it accrued, and let them dis­
charge themselves the best way they could. But it rather appears to me that, in
a case of this kind, and looking to the nature of the trust and the way in which
it was necessarily administered, that would be too strict a principle of accounting,
and while I think it is our undoubted duty to separate this Alexander fund, and
secure that it shall be administered as a separate trust in all time coming, we may
deal with bygones in a way more favourable for the administrators of Trinity
Hospital. The income of the fund has apparently been spent, and it has not been
spent, so far as we can see, upon purposes alien to the intentions and wishes of
the founder. His wishes and intentions have ODly been to a certain extent dis­
regarded, that is to say, the fund has not been in the right hands of adminis­
tration, and there has not been in the selection of the objects of the bounty that
order of preference which he desired. But still the fair result of the evidence
appears to be that, at all events for a very long period, the income of the Alex-
832 HOUSE OF LOEDS [VOL. IV.

H. L. (Sc.) ander fund was bestowed upon poor and indigent persons of the kind generally
-jj^n here contemplated. It was employed, along with the income of the other funds
>^v~ of the hospital generally, for such purposes; and therefore I cannot see that
LORD there can he, especially against a shifting body of trustees like the magistrates
OF EDINBURGH an<^ ' o w n council of Edinburgh, any responsibility for the expenditure of that
v. income. It is not alleged that they appropriated this fund to their own purposes
LOUD a s individuals, or that they appropriated it to the uses of the corporation of the
' city of Edinburgh. If that had been so, it would have raised a question of a
Lord Blackburn, very different kind. But that does not appear to have been so, and therefore I
incline to the opinion that, in so far as regards'the past income of this fund, there
is no room for any accounting at all.
But then the next question comes to be—How are we to ascertain what sum
now in the hands of those trustees will adequately and fairly represent the capital
of the Alexander fund ? Now that is a question of some difficulty, but at the
same time I think it admits of a solution.' We know that the Alexander fund
was invested upon two bonds, as it was originally settled by the donor himself—
the one upon the Annandale estates for £1725 17s. 8^d., and the other upon the
Westerhall estates for £544 13s. of sterling money; for I am speaking now of the
amount as converted into sterling money and actually paid np in the course of
last century. These two sums amount together to £2270. Now the mortification
was in the year 169,5, and it may certainly be assumed, without any great stretch,
that that money came into the hands of the hospital trustees by the beginning
of the last century, say in the year 1700. Therefore they were possessed in 1700
of this capital sum as representing the Alexander mortification. They were at
the same time possessed of a very considerable estate belonging to the hospital,
and it is not at all difficult to ascertain what the amount of that estate was. In
that way we discover what was tho relative or comparative value of those two
estates in the year 1700. But it is very apparent upon the face of the report
before us, and the abundant information which we have on the subject, that this
joint mixed estate, consisting to a large extent of the funds and estate of the
hospital proper, but also to a more limited extent of Alexander's fund, has largely
increased in amount and value between the year 1700 and the present day. Now
it seems to me that this estate so jointly administered having greatly increased in
value between those two dates, the Alexander fund must be entitled to participate
in that prosperity. Thus, supposing that in 1700 the estate of the hospital
. proper amounted to £10,000 in value, and the Alexander fund to £2000 in value,
making together £12,000, but that at the present day the joint estate, as it
appears in the hands of tho administrators, amounts to £50,000 in value, then
that £50,000 must be apportioned between the same funds in the same proportion
that they bore to each other in the year 1700; that is, as 10 to 2. I am taking
the figures I have mentioned as entirely suppositious, not supposing they represent
the entire value by any means. On the contrary, the value as we see is very
much greater. Now there may be some little difficulty in adjusting the precise
way in which this result is to be brought about.

He then proceeds to give various directions as to what was to

he done in ascertaining the amount, which I need not further
notice.
VOL. IV.] AND PEIVY COUNCIL. 833

No other way was suggested at the bar in which the fund, if H. L. (So.)
the two were inextricably mixed up, could be apportioned except 1879
that of taking the proportion which the two funds bore to each LORD
other, and dividing the mixed fund in that proportion; and 1 1 PE°V0S,r> &<?.,
cannot myself see any other way. But it was argued that the two v-
funds were not inextricably mixed up. And the point which the ADVOCATE.
Appellants' counsel made was fairly raised by the facts as to the LoTd Blackburn.
purchase of the Dean estate. It appears that the town council
in 1734 purchased this estate for £3675. In course of time that
estate has become part of the town of Edinburgh, and is now worth
a very large sum of money, and this has been a very profitable
investment. At dates subsequent to 1734, they invested funds in
city bonds, and, the city having become insolvent and compounded
with its creditors, this has been a losing investment.
The decision of the Court of Session is that the investments are
to be taken as made for the mixed funds, and that on the figures
supposed by the Lord President the Alexander fund is entitled to
two-twelfths of the profit made by the profitable investment in the
Dean estate, and is to bear two-twelfths of the loss on the unprofit­
able investments in city bonds. And the result of that will be
that in administering the Alexander fund the administrators will
have the management of a very considerably larger sum than what
the testator Alexander had and mortified in 1695. The contention
of the Appellants is that the investment in the Dean estate is
to be considered as made exclusively for the benefit of Trinity
Hospital, and that the Alexander fund will have no share in the
profitable investment, but will have to bear a share of the loss on
the subsequent investments, so that the fund now to be adminis­
tered as the Alexander fund will be less than what the mortifier
left in 1695. This is a result which does not at the first view
seem so fair and just as that produced by the decision of the Court
of Session.
In order to understand the grounds on which their argument is
based it is necessary to examine what the facts were.
The testator Alexander left in 1696 the funds available for his
mortification invested in two bonds. The administrators of Trinity
Hospital, by usurpation, became possessed of the control of both
those bonds before 1734, and they in fact received the interest on
834 ■ HOUSE OF LOBDS [VOL. IV.

H. L. (So.) those bonds and mixed the interest thus received with the revenue
1879 which they received from the property of Trinity Hospital, and
LORD from that mixed revenue defrayed the expenses which they incurred
or e wn
OT^DMBOBGH *" *^ ° l e charity, without making any distinction whatever as
*• to whether those expenses were incurred for objects proper under
ADVOCATE, the terms of the Alexander mortification or for purposes proper
Lord Blackburn, under the Trinity Hospital charity only. This is clearly proved by
~~~" the account for the year 1722, which was in process, though not
printed, and which was produced at the bar during the argument.
No doubt this was wrong; but, as pointed out by the President in
the passage I have read, these purposes were not alien to each
other, and, though wrong, this was not a wrong like what it would
have been if they had appropriated it to their own purposes. But
though they treated the funds as one the two bonds remained in
in specie just as Alexander left them, not called up.
When the council were completing the purchase of the Bean
estate in 1739, they gave directions to their treasurer to pay for
improvements upon it, and for that purpose to uplift some secu­
rities, including the bond over Westerhall for £544 13s., which was
one of the bonds left by Alexander. Nothing could more clearly
prove that in making the investment the council were (as far as
intention went) intending to make an investment for the behoof
of the whole mixed fund, which they, improperly it is true,
treated as one fund. But the treasurer did not follow these in­
structions. In his account, after shewing what the whole dis­
bursements in paying for the Dean estate and improvements on
it had been, and that there remained a balance of £465 18s. 5d.
unpaid, he adds this:—
£. s. d.
"Tho the accomptant was authorised by the council to uplift
£544 13s. st. contd. in Sr. James Johnston's hereble bond to the
hospital to replace the above charge which, as it was well
secured, and the interest duly paid, he judged it more for the
interest of the hospital to uplift only the sura due by Mr. John
and Mr. Charles Cockburn, their bond being £200 stg., and the
meantime to advance the rest himself, .. .. .. .. 200 0 0
" Balance due to him on acct. of the inclosing .. ..265 18 5 "

Consequently the two bonds remained in specie not called up

for some years later. The argument founded on this was, that as
VOL. IY.] AND PEIVY COUNCIL. 835

the bonds remained in specie and earmarked as it were, and as it H. L. (So.)

appeared that the estate of Dean was in fact paid for out of funds 1879
originally belonging to Trinity Hospital and uplifted for that L OBD
PB VOST
purpose,
r r
it followed as a matter of law that, whatever the council ° > &<>•>
' ' OF EDINBURGH
intended, the funds must be followed, and that the Dean estate »•
belonged exclusively to Trinity Hospital. According to this ADVOCATE.
reasoning, if the treasurer had obeyed his instructions the Alexander Lord Blackbum
fund would have been entitled to share in the Dean estate in the
proportion which £544 13s. bore to the whole cost. As he did
not they are to have no share in it.
This makes the question depend entirely on an accident, and is
not a satisfactory result, still if the law was settled that it was so
we must follow it. But I do not think there is any case, either
in England or Scotland, in which such a question has been
raised.
No doubt when the question has been whether those who repre­
sented the trust could claim property on the ground that it was
procured by trust funds which they had a right to follow, the
identity of the fund is all important. But such a case as the
present as to an investment has never, that I can find, been raised.
;. In Pennell v. Duffell (1) it might have been raised, but those
entitled to the different estates which then were proved to be
jointly entitled to the fund very sensibly settled the proportions in
which they were entitled without going to law about it.
Being therefore, as I think it is, a new question, it must be
settled on principles of justice. Speaking for myself alone, I
should have had great difficulty in deciding this case if it had
come before me as sitting in the Court of Session. I doubt whether
1 should have had acuteness enough to discover the mode in which
the Court of Session have solved the difficulty. But they have
solved it in a way perfectly consistent with justice and good sense,
and not inconsistent with any technical rule of law, and no other
solution has been suggested which would be so satisfactory. I
certainly, therefore, am not prepared to advise your Lordships to
reverse the judgment below, especially seeing that I am not pre­
pared to advise your Lordships to adopt any other rule.
I move, therefore, that the interlocutors below should be affirmed,
and the appeal dismissed with costs.
(1) 4 De G. M. & G. 372.
836 HOUSE OF LOEDS [VOL. IV.

H. L. (So.) LOKD HATHERLEY :—

Jjjj^j My Lords, I have had the advantage of seeing in print the
LORD opinion of the noble and learned Lord who has just addressed your
PltOVOST &C. .

OF EDINBUEGH Lordships, and I have nothing to add to the statement of facts

L"jD therein contained.
ADVOCATE. It appears that the first unfortunate step which was taken in
this matter, erroneously, although no doubt in perfect good faith,
was the exclusion of the ministers who were particularly pointed
out in Alexander's mortification to be joint trustees with the cor­
poration of Edinburgh of the fund that he left for the purposes,
under certain limitations, of Trinity Hospital. The ministers
being shut out from it, the fund was administered entirely by the
provost and council of Edinburgh. This circumstance, no doubt,
led to the confusion which afterwards took place in the accounts.
The provost and council of Edinburgh were properly trustees of
Trinity Hospital, and they had several other mortifications also
which were made over to them for Trinity Hospital; and this
Alexander mortification appears in a sense to have been one also
for the benefit of Trinity Hospital, or rather for the benefit of the
persons who were to be received therein, that being a charity. I t
was limited, however, in its operation by certain rules with refer­
ence to the kindred of the founder. He was particularly anxious
that those kindred should be admitted to it, and that until they
failed, the fund should be used for that purpose. However the'
provost and council of Edinburgh placed all those funds which
they held in any way for the benefit of Trinity Hospital in one
common stock, as it were, and kept one common book of accounts
with relation to them.
I asked once or twice during the argument whether there was
any separate account kept anywhere of the Alexander mortifica­
tion, and was answered that the report of Mr. Maepherson was in
this respect perfectly correct; that the funds of the Alexander
mortification had been " immixed " with the other funds held by
the corporation in trust for the hospital. The consequence of that
was that all the funds, including the Alexander mortification, have
been dealt with as one common fund to be administered, as the
provost and council might think proper, for the benefit of the
hospital. This is not a case, as was remarked in the Court below,
and as has been remarked again just now by my noble and learned
VOL. IV.] AND PEIVY COUNCIL. 887

friend, in which any improper motives have actuated the corpora- H. L. (So.)
tion, that is to say, the provost and council of Edinburgh, as trus- 1879
tees. They no doubt thought that they were performing their LORD
P V
duty in doing that which they did; but at the same time the ^ ° S T , &C,
consequence has been unfortunate, because it has become neces- v.
sary to separate these funds which are held on separate and dis- ADVOCATE.
tinct trusts; and, it being necessary to separate them, the question LonHfatheriey.
is how is that to be done now, when, according to the report of '
the referee, Mr. Maepherson, the funds have become inextricably
immixed ? My Lords, a very hard struggle was made, by Mr.
Kay I think, upon that part of the case, namely, with reference to
the funds being capable of being still pointed out as separate and
distinct. Now up to a certain time there was truth in this. The
corporation became masters of the fund, as it is stated, about the
year 1700. As far as appears from the report or the evidence
they were at that time masters of the fund, which consisted of
two heritable debts due from the Annandale estates and another
estate connected with them, the separate sums amounting together
to the sum which was mentioned in my noble and learned friend's
statement. Those debts were not gathered in until certainly
after the year 1734 or 1735, in fact not until after 1740, and
the purchase of the Bean estate was made at a period anterior
to their being so called in, but the interest on those bonds was
received and was credited to the common fund before that time.
We have had an opportunity of seeing the accounts for one year,
and it appears that the payments were made entirely in a mixed
and unseparated form, indifferently from the interest of one fund
or the other, or from the interest of one or of all the funds which
were held by the provost and council of Edinburgh. My 'Lords,
that being the case, it became impossible from that time to sepa­
rate the interest, as Mr. Maepherson tells us, and of course we
looked to the counsel for the Appellants to make out if they could
that Mr. Maepherson was wrong iu that respect, and that the inte­
rest could in fact be separated. No attempt, however, has really
been made, or if it has been made it has not been successful, to
shew that the interest of these funds was at any time kept sepa­
rate and distinct. In due time afterwards the capital was gathered
in, and what became of it ? It may partly be traced to the debts
which pressed upon the corporation I apprehend, and it. may
838 ! HOUSE OF LORDS [VOL. IV.

H. L. (Sc.) partly be traced for a certain time to certain other payments; but
1879 after a time the funds became so inextricably immixed that there
LOBD is no mode of separating them.
The
OTEDHBIMB Appellants say> " A t all events, t h e corporation did not
, «■ take t h e funds of the Alexander mortification for t h e purchase of
r
LOBD
ADVOCATE, the Dean estate, which is a source of profit to the corporation,
Lord Hatheriey. they did not use them for the investment in this Dean estate,
" which has turned out well for those who engaged in it, and we
must keep these funds entirely separate from that advantageous
purchase, inasmuch as we can shew you that the identical funds
which might be followed out as being what you were entitled to,
could not possibly have been laid out in the purchase of the Dean
estate. In the events which have happened it would certainly be
very much worse for them if they were taken to be left in the
general body of the fund, and so lost. What the Court seems to
have regarded the corporation as having done may be described
t h u s ; if I may use an expression which bears more analogy to
this than any other expression one could use, a sort of partnership
was formed by these trustees between the various trust funds
which they held. ' They considered that they were justified in
acting in the manner they did for .the benefit of the hospital.
They said, We will carry all these into one joint stock concern
for better and for worse; and accordingly, although there have
been some alternations, the investment which was made by these
trustees, improperly constituted in a sense, but still trustees of
this particular fund, has turned out to be a beneficial investment. ■
Now, my Lords, I apprehend that what the Court below has
done is only that which is commonly done in this country with
reference to partnerships. The question came more frequently
before our Courts at one time than it does now, because the prin­
ciple is better understood. At one time—a long time ago—if a
partner died leaving assets in the partnership, and the other
members remaining in the partnership after his death carried on
the business with his assets, there was felt to be a difficulty in
coming to any arrangement as to what would be the correct mode
of dealing with that fund. I t was a recognised rule at all times
that a cestui que trust, whose property has been improperly dealt
with, has the choice of accepting the dealing with his property or
repudiating i t ; that is, either of taking all the profit (he would
VOL. IV.] AND PEIVY COUNCIL. 829

not choose it, of course, if there had been loss) resulting from the H L (SC)
dealing with his property, or requiring the payment back of his J879
money with such interest as the Court thought right under the T^
circumstances. There was found to be a difficulty about applying PKOVOST, &O.,
that to partnerships for some little time, but the principles of „.
partnerships were discussed in the cases of Brown v. Be Tastet (1), ADVOCATE
and in the case of Wedderburn v. Wedderburn (2). When the T "—
• ' _ Lord Hatherley.
principles were discussed in those cases it was said that the dif-
ficulty having arisen in this way, inasmuch as something must
be allowed for labour and attention and activity in the business,
such remuneration, for instance, as the managing partner or a
person somewhat in that position might be entitled to—the Court
did not see its way to direct a simple account of the profits with­
out more. However, in those cases it came to be settled at last
that the proper course is to allow an account of all profit made
since the death of the partner, and to give his estate a share of
that profit according to the capital on the one side, and to debit
his estate on the other side with "just allowances," which of
course includes everything which the Court might think just and
proper. The principle was that the trust money having been
used in the partnership concern, and profits having resulted from
that use of trust money, no attempt should be made to separate
all the different funds out of which money might have been paid
but the share of profits upon the trust money so used was to be
ascertained according to the capital employed.
That, my Lords, is exactly what has been done here. I t is a
kind of partnership concern which has been carried on by the
provost and council with their various trust funds. The whole of
the trust has made a profit, that profit the Court below has held
ought to accrue for the benefit of that charity the funds of which
came into the hands of these trustees about the year 1700, as far
as can be made out upon the evidence, as well as of the other trust
funds held by the same trustees. That is the principle upon which
the Court has directed that the apportionment should be made.
Now, my Lords, in the case of a partnership, supposing it were
necessary to lay out any money for the purpose of increasing the
business during the time when the business was carried on with
(1) Jac 284. (2) 2 Keen's Rep. 722, affi. 4 Mylne & Craig, 41.
VOL. IV. 3 3M
840 HOUSE OF LOEDS [VOL. IV.

H. L. (So.) the aid of the deceased partner's assets in conjunction with other
1879 assets of the partnership, supposing it was necessary for the
LORD erection of a new building—take a brewery, for example, or the
e ma e
OPEDINBTJRQH ^ — * ° ^ payments, and profits were so earned, the Court
«■ would not be very strict to inquire out of which particular fund
ADVOCATE, the money which was laid out arose, because when funds are
Lord Hatheriey. employed jointly in this way -you can hardly say that payments
■ are made out of one fund rather than out of another fund. Here,
' curiously enough, there is a strong illustration of that in the entry
which has been read by my noble and learned friend near me,
from which it appears that it was actually intended at one time to
apply these very funds to the particular purchase which was made
of the Dean estate. But really, that does not in substance make
a difference if the whole concern has been carried on in a joint
and mixed manner, if the whole funds have been invested for the
purposes of the whole concern, if I may so term it. Believing, as
the corporation did, that the whole was one concern, it was upon
the faith and confidence of their having certain assets in hand, of
which the heritable bonds in question formed part, that they made
the purchase which otherwise they would not have ventured to
make for the benefit of the trust; any more than, if it had been
an actual partnership, the partners would have ventured to make
such a purchase for the benefit of the partnership unless they
had funds in hand.
Now, my Lords, from about the year 1700 the provost and
council have had these £2000 odd of the Alexander mortification,
and the interest upon it was at first very punctually paid, as the
entry which has been read shews, although afterwards the state of
things was different. The question arises after a long series of
years in which this mistake has been made, for a mistake it has
been held by the Court below to be, and that can hardly be
disputed. The result of this long mistake is that happily, as
things have turned out, the whole concern of this trust administered
as one concern has been fortunate, the Alexander mortification
partook in a speculation for which the funds of the concern were
used, and it has been held by the Court below to be entitled to an
equitable share of the profits so realized; that is what it comes to.
I have taken the Dean estate as the principal instance, because
that appears to be the principal instance of profit; but that is not
VOL. IV.] AND PRIVY COUNCIL. 841

the only instance, or the only instance of profit, it is a salient H. L. (So.)

instance. A cestui que trust has a right, when his fund has been 1879
dealt with in an illegitimate manner as regards the true legal LORD
construction of the bequest, to say at his option whether he will JJ^EDMBUBGH
have a decree for the restoration of the fund with or without "•
LORD
interest in the meantime, or whether he will take the result of ADVOCATE.
the employment of that fund when it has been employed together Lord Hatheriey
with other funds in a payment resulting in an acquisition of profits
by taking a share of those profits. The remedy is given to him in
either case on account of the impossibility, when funds have been
mixed, of attributing to each a particular property, and ear­
marking it as belonging to the one rather than the other. And
although you may say at such and such a time the Dean estate in
particular could not have been bought with this particular fund,
because these bonds were not then gathered in and collected, still
the interest had been gathered in, and the interest had been applied,
as Mr. Macpherson says, in ease of the other funds to some extent.
He says they were sometimes in excess, and sometimes in defi­
ciency ; at all events, at certain times they were in excess. It
was one common fund, and the cestui que trust does not now ask
to have his part of that fund followed and pursued, and to have
his trust moneys divided from the rest, but he asks what common
justice seems to require, namely, that he should have a right to
participate in that which has followed from the use of his money
together with the other moneys, taking his share out of that joint and
common stock. I think the cestui que trust has a right to do that.
My Lords, I will only add to what my noble and learned friend
has said that in this decision I think we are in no way departing
from, on the contrary, it approves itself to my mind as a way of
carrying into full effect, the rule which is common in cases of this
kind, namely, that a cestui que trust whose funds have been dealt
with without his consent has a right to take the result of that
dealing in the manner most favourable to himself. I think,
therefore, my Lords, that the order suggested by my noble and
learned friend is the correct order for us to make.

LOED GORDON:—

My Lords, in regard to the first question raised under this

appeal, viz., whether the ministers of Edinburgh are entitled
 0

842 HOUSE OF LOEDS [VOL. IV.

H. L. (So.) to participate in the administration of the Alexander mortification,

1879 I entertain no doubt at all. The terms of the deed of mortification
LoRD are quite distinct and unambiguous. It'nominates and appoints
e
O^EDINBTOGH ^ " -^'ght Honourable the Lord Provost and bailies and council
«• of Edinburgh, and their successors in office, for the community
ADVOCATE, thereof, and ministers of the said burgh, present and to come, to
Lord Gordon. b e the sole and undoubted patrons" of the mortification. The
ministers of the burgh " present and to come," are appointed,
equally with the lord provost, bailies, and council, and their
successors in office, patrons of the mortification, and I entertain
no doubt that the ministers were entitled from the institution of
the mortification to participate in its administration.
But it is said that, as the ministers have not taken part in the
administration of the mortification from its institution in or prior
to the year 1700, they have now lost their right to participate in
the management. I think this is a mistake. I agree with the
Lord President that " t h e circumstance that the ministers of
Edinburgh have never claimed to be conjoined in this administra­
tion. is of no consequence. No persons of an official character can
give away the rights of their successors in office under a trust of
this kind, and therefore the trust must be constituted and adminis-
• tered now as provided by the truster in his deed of mortification."
I think that the cases of Baird and Others v. The Magistrates of
Dundee (1) and Leslie v. Black (2), which were relied on by the
Appellants, are inapplicable to the circumstances of the present
case. In Baird v. The Magistrates of Dundee, the mortification
was in favour of the provost and bailies of Dundee, but from the
institution of the trust in 1845 the affairs of the mortification
were managed, not by the provost and bailies alone, but by the
provost, bailies, and town council. And it was decided by this
House in 1863, when the question was raised, "that, having
regard to the length of time during which the provost, bailies, and
town council of Dundee per se administered the charity, they ought
to be considered as the lawful trustees of the interest represented
by Johnstone's legacy." The case of Leslie v. Black did not
come to your Lordships' House. But the point decided by that
case was that where a minister and members of a kirk session

(1) Ct. Sess. Gas. 3rd Series, vol. i. (H.L.), p. 6; 2nd Series, vol. xxiv. p. 447.
(2) 9_June, 1814, Fac, Coll. vol. xvii. p. 641.
VOL. IV.] AND PRIVY COUNCIL. 843

who were appointed, along with others, as patrons of a mortifica- H. L. (S&.

tion had, for more than a century, voted collectively as one person 1870
in the administration of the trust affairs, they were not entitled to LORD
vote per capita, but must continue to vote as they had formerly 0^ J^WBUBOI'I
done. In both of these cases the question was in regard to the »•
intention of the testator, and the usage was only important as ADVOOATK.
shewing the contemporaneous interpretation put on the terms of Lorn Gordon.
the deed of mortification accepted and acted on for long periods of
time. But there is nothing in these cases to indicate that in a case
such as the present, where there is a clear and distinct nomination
of certain official persons to act as patrons, the failure for a length
of time of these officials to perform their functions would deprive
their successors of the rights so distinctly conferred upon them.
The remaining part of the case in regard to the mixing of the
funds of the Alexander mortification with those of the Trinity
Hospital and the proper mode of the separation of these funds is
attended with more difficulty. But on a careful consideration of
the whole matter I have come to be of opinion that the result
arrived at by the Court of Session is right. I have had an oppor­
tunity of perusing and considering the judgment which has just
been delivered by my noble and learned friend Lord Blackburn ;
and as his Lordship has gone fully into that part of the case, and
as I concur in the views which he has expressed, I shall not detain
the House by entering on details.
I am of opinion on the whole matter that the judgments of the
Court below are right, and that they should be affirmed.
Interlocutors appealed against, affirmed; and
the appeal dismissed with costs.
Lords' Journal, 21st Jaly, 1879.

Agents for Appellants : J. & J. Graham.

Agent for Respondent: T. B. Simson (Crown Agent).

END OF VOL. IV.

VOL. IV. 3 3 N