Attorney-General v Aspinall [1835-42] All ER Rep 525
LORD COTTENHAM LC: .... If the property in question be subject to any public trust, and if the appropriation complained of be not consistent with such trust, but for purposes foreign to it, and if there be not, in the Municipal Corporation Act, 1835, any provision taking from the court its ordinary jurisdiction in such cases, then it will follow that the Attorney-General has, under the circumstances stated, a right to file the information, and to pray that the fund may be recalled, secured, and applied for the public, or in other words, charitable purposes, to which it is by the Act devoted.
I will consider these three questions in their order. (i) First, then is the property in question, according to the statement in the information, subject to any trust? It is immaterial to consider what was the power of the corporation over this and their other property, before the passing of the Municipal Corporation Act. That Act passed on 9 Sept 1835, and the new officers were to come into office on November 9 in that year, but, by an Order in Council, that time was enlarged to December 26 following. By s 1 of the Act, all laws, statutes, and usages, charters, grants, and letters patent inconsistent with, or contrary to the provisions of the Act, are repealed and annulled. The power of the corporation, as it existed prior to the passing of the Act, depended upon the law and usage then in force. So far, therefore, as such law and usage authorised an exercise of such power inconsistent with or contrary to the provisions of the Act, it was, from the time of passing that Act, annulled. Section 92 directs that after the election of a treasurer, which was to take place on November 9, though afterwards postponed by Order in Council till December 26, all the income of all the property belonging or payable to any of the corporations named in schedules A and B, that is, so belonging or payable when the Act passed, was to be paid to the treasurer, and the fund so created, subject to the payment of the debts owing by the corporation at the time when the Act passed, or of so much as the council, that is, the new council, should think it expedient to redeem, and to the interest of such debt, was to be applied in payment of the salaries of certain officers, expenses of borough elections, expenses of borough sessions and prosecutions, gaols, and corporate buildings, police, and all other expenses incident to carrying the Act into effect, and in case the borough fund should be more than sufficient for those purposes, then the surplus was to be applied, under the direction of the council, that is, of the new council, for the public benefit of the inhabitants and improvement of the borough. The reduction or remission of any tolls or dues charged with or subject to the payment of any debts, is then prohibited, so long as such debt remains unpaid unless a majority of the creditors shall consent; and in case the borough fund shall not be sufficient for all the purposes enumerated, a power is given to the council to raise the deficiency by a borough rate, in the nature of a country rate. It is to be observed upon this section that no power is given to touch the principal of any part of the corporate property. The income alone constitutes the borough fund. The whole of the income is, in the first place, subjected to the payment of the corporation debts, and afterwards to other purposes, all of them of a public nature, and in which the inhabitants at large have a direct interest, not only as entitled to participate in the benefit to arise from the execution of such purposes, but because the deficiency is to be raised upon them by a rate.
Section 94 restrains the new council from selling, mortgaging, or alienating any lands, tenements, or hereditaments of the corporation, except in cases of contracts made before June 5, and from leasing the same, except upon certain prescribed terms, without the consent of the Lords of the Treasury. This clause not only regulated, for the future, the power of the corporation over its lands, tenements, and hereditaments, but invalidated any contracts inconsistent with such regulations, made after June 5. This could only be done by a distinct enactment, for, whatever might be the effect in equity of the provisions of the Act upon any contracts of the corporation, entered into after the Act passed and before the election of the new officers, nothing but a distinct enactment could affect the power exercised by the corporation prior to the passing of the Act. This and ss 95 and 96 are confined to lands, tenements, and hereditaments, and there does not appear to be any provision respecting an appropriation of other property of the corporation made prior to the passing of the Act, except those contained in s 97. That section is most important to be considered upon two grounds - first, with reference to the evidence which it affords of the intention of the legislature as to such appropriations of other property, besides lands, tenements, and hereditaments, and, secondly, with reference to the question raised for the defendants that the jurisdiction of this court is ousted by reason of that clause having provided another remedy for the cause of complaint raised by this information. I propose at present to consider only the first of these points.
As it was thought right that the new council should have a power of calling in question acts relative to the corporate property carried into effect before the period of their election, it was absolutely necessary to give them a distinct legislative authority for this purpose, because, in the first place, there would otherwise be no means of impeaching any acts of the corporation done prior to the passing of the Act of Parliament, however improper; and, secondly, because, the identity of the corporation continuing, notwithstanding the alterations effected by the Act, any such attempt on the part of the new council would be an attempt by the corporation to impeach its own act. Some such provision was, therefore, absolutely necessary, and the obvious intention of that clause was to subject to revision all acts of the corporation after June 5, effecting any disposition of the corporate property, and for that purpose (confining myself to the words which can alone be thought applicable to the present case) s 97 makes it lawful for the council to call in question all divisions and appropriations of the moneys, goods, and valuable securities, or any part of the real or personal estate, of which, on or before June 5, the body corporate was possessed, made between June 5 and the declaration of the election, and for that purpose, if it should appear to the council that such division or appropriation was collusively made, for no consideration, or for an inadequate consideration, to institute the proceedings prescribed. The duty imposed upon the jury is to ascertain the value of the "premises," and the "consideration" given for the appropriation thereof; and it is enacted that if the jury shall find that no consideration, or a consideration less than that which they shall find to be the value which ought to have been given had been collusively given, or contracted to be given, by the terms of the appropriation, the party to such appropriation was to have the option of restoring the premises and received back his consideration, or of making up the consideration to what the jury might find ought of right to have been given. There is some obscurity in part of this clause. The expressions used in the directions as to summoning the jury, are, it was contended, to be confined to lands, tenements, and hereditaments. Upon that I give no opinion, but supposing them to apply to appropriations of the personal, as well as of the real property of the corporation, the intention to be inferred from the whole clause obviously is to secure the corporations, and, therefore, the public, from all appropriations of property after June 5, made collusively for less than the full value, the word "collusively" not being used in a bad sense, but certainly including the case of persons taking part of the corporation property for their own benefit with a knowledge of the circumstances of the property, and of the question which would arise as to the right of the corporation to make such alienation.
In my opinion, s 92 did not require the aid of the others, and particularly of s 97, but, taking them all together, I cannot doubt that a clear trust was created by this Act for public, and, therefore, in the legal sense of the term charitable, purposes, of all the property belonging to the corporation at the time of the passing of the Act, and that the corporation in its former state, holding, as it did, the corporate property until the election of the new council and treasurer, were in the situation of trustees for these purposes, subject to the restrictions specifically imposed by the Act, and subject to the general obligations and duties of persons in whom such property is vested. That the application of the income of the property to the particular purposes specified in the Act was not to commence till a future time, namely, the election of the council and the appointment of a treasurer, cannot affect the question. If the income of a fund be devoted to a trust from a particular day not yet arrived, the party in whom such fund is vested is bound to hold and manage it so as to have the fund applicable to such purposes at that time, whatever may become of the intermediate profits. Upon the first point, therefore, I am clearly of opinion that from the time when the Municipal Corporation Act passed, the corporate property was trust property, and, upon this point, I have the satisfaction of thinking that no material difference exists between my opinion and that of the Master of the Rolls, for in the notes of his judgment I find it stated that be expressed such to be his view of this part of the case.
(ii) Assuming, therefore, that the corporation property was, on 21 December 1835, trust property, vested for the time in the corporation as it then existed, by reason of the postponement of the time for the election of the council and the appointment of a treasurer, but awaiting the arrival of that time in order to be applicable to the several public purposes prescribed by the Act, the second question is whether the transaction relative to the 105,000 pounds, as stated in the supplemental information, was consistent with the existence of such a trust, or conformable to the provisions of the Act.
In the first place, it consisted, in part, of a mortgage of the property of the corporation, which the new council are by s 94 prohibited from making, but, principally, it was an appropriation of a portion of the income of the corporate property for purposes, which, however laudable in themselves and beneficial to the interests of the inhabitants, cannot, according to the statements in the information, be said to be consistent with the trusts to which the property was by the Act devoted, or conformable to the provisions of the Act. Of the amount of the income of the corporate property, or of the debt due by the corporation, or of the amount of the several payments by the Act directed to be paid out of the income, the information does not state anything, but the debt is stated to be large, and, by the Act, the whole of the income is made primarily liable to pay the interest of the debt, and, at the discretion of the new council, to the payment of the principal, and, next, in making the several other payments directed. Whether there will be any surplus of such income, is not stated, and that, probably, must depend upon the discretion to be exercised by the new council as to the payment of the principal of the debt out of the income of the property - a discretion which, by the appropriation in question, is taken away to the extent of the interest of the 105,000 pounds. Again, although there is no statement that there will not be any surplus income after payment of the prescribed expenses, yet there is no statement that there will be any such surplus, and the whole income being primarily liable to those payments, the inhabitants, and the Attorney-General on their behalf, may justly complain of a diversion of any part of the income, while those objects remain unprovided for. A trustee cannot justify an application of part of a trust fund to other purposes by suggesting that enough will remain of the fund to answer the purposes of the trust.
The appropriation in question has not been defended upon the ground of its being an appropriation for a full consideration under s 97. The appropriations referred to by that section seem to be dispositions for which an equivalent in money or other property was, or was pretended, to be received by the corporation, and not appropriations the consideration for which were services or benefits to the public. But, even if that were so, the services or benefits reserved by the arrangement with the clergy could not be supported upon this ground, as the new provisions exceed what they could claim without it, and, although the individual ministers give up the right to receive certain stipends raisable by rates, the sums so given up are not of equal amount to the sums secured by the arrangement, and the amount of rates so given up is not receivable by the corporation in lieu of the interest of the 105,000 pounds appropriated in exchange for them, nor are they, it is alleged, payable by the same persons who will have to pay the borough rate, in case of a deficiency of the borough fund.
A case may certainly be supposed of the income of the corporate property being so large that, after providing for the payment of the interest of the debt due by the corporation, and so much, if any, of the principal as the council may think it advisable to pay, and after supplying means of defraying the expenses of all the other services directed by s 92 to be provided for, a surplus would remain, applicable, under the provisions of that section, for the public benefit of the inhabitants and improvement of the borough. Under such circumstances the appropriation in question might be the most proper. But at whose discretion, and under whose direction, was this application of the surplus to be so made? Not of the corporation, as it existed before the election of the council and before each surplus could be ascertained, but of the new council and after the existence of a surplus should have been proved by all the prior objects having been previously provided for. It must also be observed, that the only payments to be made, out of the income of the borough fund, to the ministers of any church or chapel are, by s 68, such as shall have been paid for seven years before 5 June 1835. Such is the limit of the trust for this purpose, declared by the Act. It cannot be consistent with such declaration of trust to appropriate for the ministers, not only what they had received for seven years before 5 June 1835, but also the amount of income which had commenced within that period. So, by s 139, all advowsons and church property belonging to the corporation are directed to be sold, and the proceeds invested, and the income paid to the treasurer, as part of the borough fund. How inconsistent with the object and spirit of that clause is the appropriation of corporate property, not in the purchase, of advowsons, which might be received back upon the sale as directed, but in adding to the provision for the ministers of the churches, when the money so expended, though the value of the advowsons might be in some degree increased, could not, upon the sale, be in any considerable degree received back. Yet this was one of the grounds upon which the transaction was defended at the Bar. It was stated to be merely an application of one part of the property in augmentation of another part. Upon the second head, therefore, I am also of opinion that the facts stated upon the information constitute a case which entitles the Attorney-General, on behalf of the inhabitants, to demand the interference of this court, unless its jurisdiction be taken away by the Act of Parliament.
(iii) Upon this third point, I am happy to find the Master of the Rolls concurring in the opinion I have formed, and stating that the jurisdiction of this court is not excluded by s 97 if a proper case for relief be made. The argument in support of the proposition, that the jurisdiction of this court is taken away rests entirely upon s 97 which, in the cases there specified, authorises and enables the new council to institute certain proceedings and to submit the matter in dispute to a jury. It is argued that this clause gives a new right and prescribes the remedy; that the right exists only in the remedy; and that no other course of proceeding but that prescribed can be resorted to. This may be true, as to transactions between June 5 and Sept 9, the day when the Act passed, because, at that time, there was no trust. But, if it be true, as seems to be universally admitted, that from the passing of the Act, a trust existed, such trust had all its legal consequences, and the cestuis qua trust were entitled to all their legal remedies. The argument assumes that the machinery provided by s 97 applies to the case in question, and is not confined to alienations of lands, tenements, and hereditaments for valuable consideration, for, if it be so confined, then the whole foundation of the argument fails. Supposing, however, that the new council had, under this clause, the power of bringing the case in question before a jury, it would be indeed a new remedy, but the right cannot be said to consist in the remedy, inasmuch as the creation of the trust of itself subjected the property to all the other remedies applicable to trusts, and, if s 97 had not been in the Act at all, the jurisdiction of the court could not have been disputed - a circumstance which proves that the right does not exist only in the remedy, but that the remedy, if applicable to this case, is afforded merely as another and additional means of enforcing the right.
The jurisdiction of this court. cannot be taken away by another jurisdiction having cognisance given to it of the same matter. Beckford v Hood (1) was well cited in support of this proposition. It was there decided that the penalties given for the infringement of a copyright do not deprive the party entitled to the copyright of the ordinary remedies for an infringement of his right, although the same Act which gave the right gave also another remedy. Besides, in this case, the remedy is not given to the same person; and the argument of the defendants is that a summary remedy given to the council is to deprive the inhabitants and the Attorney-General, on their behalf, of a title to assert their rights, and secure their interests, by information. Upon this third point, therefore, I am of opinion that the jurisdiction of this court attached upon the property in question the moment it became trust property, and that there is nothing in the Act to deprive this court of such its jurisdiction.
Then it is said, assuming that the property is subject to a public trust, and that this court has jurisdiction, there is not, upon the face of the supplemental information, such a case stated as makes it proper for the court to interfere. I have already considered this part of the case in observing upon the second point, but I again advert to it for the purpose of making some observations upon the points urged in argument in support of the proposition. It has been said that the corporate property became affected by a trust to some extent only; and that this trust was not intended, under all circumstances whatever, to prevent the old governing body from alienating or appropriating the property, the income of which, if the property was not alienated or appropriated, would have to form part of the borough fund; and that they were not precluded from a fair application of the corporate property for the benefit of the inhabitants; and that it did not appear that the appropriation in question was not an application of that description.
I cannot adopt this construction of the Act, or follow this reasoning. The trusts, if created and declared by the Act, are distinctly specified, and, if so, it is contrary to the very nature of a trust that, unless specifically given, any right to defeat the trust should exist in the party who happens to be the depository of the trust property. That would be the rule by which the control of his legal powers by this court would be regulated. What other rule or limit can be adopted? If the old governing body had the right of alienating or appropriating property which would otherwise become subject to the trust, why may they not so alienate or appropriate the whole of it? If they might, at their discretion, reduce the trust fund, why might they not destroy it? That the new governing body could not so deal with the trust property is admitted. Can it then be supposed that the legislature intended that the old governing body, of which it evinces so much jealousy, should have a power which it denied to the new governing body of its own creation? In the hands of the new council the capital was to be unalienable and the whole income subject to certain public trusts, but until such council can be appointed, the capital necessarily remains in the legal possession of the old governing body. Could it have been intended that, during the interval, the old governing body should have the right to alienate the capital and thereby defeat the trusts of its future income? Were they not trustees, during the interval, for the trusts declared by the Act? If all the income of a specified capital be, by any will or deed, directed after a certain day or a certain event to be applied to certain trusts, whether of a public or private nature, would not this court protect that capital in whosesoever's hands it might be vested, and whatever might become of the intermediate interest? The creation of the future trust of itself restricts the exercise of any former power, inconsistent with the security of the fund or performance of the trust, unless the Act itself permits the exercise of it.
It is said that s 97 impliedly gives such permission, inasmuch as it assumes that the old governing body may sell or appropriate, for a full valuable consideration. This clause has unfortunately mixed up, in one enactment, 'two periods, the circumstances of which are essentially different, namely, the period between June 5 and the day of the passing of the Act - an interval during which the power of the old governing body was absolute, and, therefore, required an enactment to correct any abuse of it committed in contemplation of the Act then in progress and the period between the passing of the Act and the election of the council and appointment of the treasurer, during which, the trust having been created, no such absolute power existed, but a summary remedy against any improper act was desirable.
For the purpose of my present consideration, however, it is sufficient to observe that the transaction stated in this information, if within the remedy provided by that clause at all, is not one intended to be protected by it, inasmuch as it cannot be said, according to the facts stated, to be an appropriation for a full consideration, and, if that clause gave to the old governing body any power of alienation or appropriation after the Act passed, such power must be limited to cases in which the full value was received in return, in money or property, so as to leave, therefore, the same amount applicable to the purposes of the trusts. To say that the old governing body were not precluded from a fair application of the corporate property for the benefit of the inhabitants, and that it did not appear that the appropriation in question was not an application of that description, appears to me to be the same proposition in other terms. If the old corporation were bound by the trust, they had no right to exercise that discretion, and I have before observed that, by the terms of the Act of Parliament, such discretion applied only to the surplus after all the specified trusts were provided for, and was given to the new council only, and that it was not, in any case, to apply to any part of the capital of the corporate property, but to the surplus of the annual income only, after providing for all the specified purposes.
Another reason why it is said that this court ought not to exercise its jurisdiction is drawn from the remedy, given by s 97 to the new council against the acts of the old governing body, and the power given to the Crown, by an Order in Council, to order that such acts shall not be called in question under the provisions of the Municipal Corporation Act. This argument assumes that the case stated in the information is within s 97, and, admitting that the jurisdiction of this court is not taken away by the provisions of that section, it proceeds upon the ground that the remedy provided by that section ought to have been resorted to. To this it appears to me to be a sufficient answer to say that the party who alone could exercise the power given by that section and the party filing this information are not the same, and that I can see no principle upon which r could deny to anyone a right of suing to which he would otherwise be entitled, because another party, over whom he has no control, declines to prosecute a mode of proceeding open to him alone, and which I may think preferable. I must observe, also, that the power of the Crown in Council to protect acts of the old governing body from being questioned is confined in terms to their being called in question under the provisions of the Act. Not only does the section not protect them from being called in question in any other manner, but the words "under the provisions of this Act," twice repeated, lead strongly to the conclusion, that they were introduced with the design of guarding against any inference that any other proceedings were to be affected by the Order in Council. The Order in Council is not to give validity to the act complained of, but only to protect it from being called in question by the summary process given by the same section.
I quite agree with the Master of the Rolls that s 97 does not take away the jurisdiction of this court, but I cannot think that the giving this summary remedy to another body, which refuses to exercise it, ought to induce this court to refuse to exercise such jurisdiction - I say to a body which refuses to exercise it, because such is the statement in the information which I must take for the present purpose to be true. The charge in the supplemental information is that the new council
"have been advised and admit that the appropriation is invalid, and that they are desirous that the 105,000 pounds should be repaid by the trustees thereof, and that they have applied to them to repay the same, but refuse to take any further steps to procure the repayment thereof without the direction and sanction of the court."
It has been said that the fair inference from the language of this charge is that the town council approve of the appropriation. I cannot so understand it, nor do I feel at liberty, upon a demurrer, to assume that such is the case, against the plain language of the charge. Supposing, however, that the fact were so, and were so charged, I cannot think that such opinion or such conduct of the town council would deprive the Attorney-General of the right to file this information, according to the facts stated in it. If there be a clear surplus of the borough fund, constituted as by the Act it is of the income only of the corporate property, an appropriation of such surplus for the purposes intended to be effected by the transaction in question may be the most beneficial application of it for the benefit of the inhabitants, and, therefore, the most proper to be adopted. But such is not the case stated in this information; and, beyond the power of applying such surplus, the town council itself has no power or discretion given to it. The approbation of the town council, therefore, if given, and if alleged, could not sanction the transaction stated in the information.
I have considered this case with the greatest care and attention. This, the amount of the property at stake, and the opinion expressed by the Master of the Rolls upon those parts of the case which led to his decision, though he agrees with me in the most important points, demanded of me. I purposely avoid giving any opinion upon the transaction, beyond the statement upon the supplemental information. But upon that statement, find with reference to the provisions of the Municipal Corporation Act, I cannot come to the conclusion that the case is one in which this court ought to refuse to entertain its admitted jurisdiction. I am, therefore, of opinion that the demurrer ought to have been overruled.