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BCL Law Notes Restitution of Unjust Enrichment BCL Notes

In Re Hallet’s Estate Notes

Updated In Re Hallet’s Estate Notes

Restitution of Unjust Enrichment BCL Notes

Restitution of Unjust Enrichment BCL

Approximately 620 pages

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In Re Hallet’s Estate

Facts

By the marriage settlement of Henry Hughes Hallett , made in 1847, a sum of 2300 was settled for the benefit of Hallett , his wife and his children. Several changes were made in the investment of this fund, and the trustees had allowed the fund to come into the hands of Hallett.

Hallett held a considerable number of Russian bonds, and in the opinion of the Court it was proved that he had in 1877 allotted Russian bonds of the nominal amount of 1554 and 1036, making together 2590, as representing the trust funds under the settlement. The bonds for 1554 he retained in his own hands; and his son, shortly before his death, found them and delivered them to the trustees of the settlement by whom they were sold. The bonds for 1036 were deposited by Hallett with his bankers.

As to a claim by Mrs. Cotterill . Henry Hughes Hallett had for many years been employed by Mrs. Cotterill as her solicitor; and she had been in the habit of depositing with him securities for money, and in the opinion of the Court it was proved that he had bought or appropriated and did in 1877 hold for her Russian bonds of 450 and 2242, nominal amount.

In November, 1877, Hallett , without any authority from the trustees or from Mrs. Cotterill , directed his bankers, Messrs. Twining , to sell, and they accordingly sold, one of the sets of bonds representing the trust fund and both sets of Mrs. Cotterill's bonds. This sum was deposited into Hallet’s personal bank account.

Hallett had before his death drawn out different sums for his own purposes, so that the balance to his credit at the time of his death (if nothing more had been paid in by him after the 14th of November) would have been 1708 16s. He had, however, paid in other sums, so that he had at the time of his death, which was in February, 1878, a balance at his bankers of 3029 15s. 1d.

The trustees of the settlement applied by summons in the action for payment of 770 10s. 5d. out of the 2600, and for a declaration that the produce of the sale of the bonds for 1554 belonged to them. Mrs. Cotterill applied for payment of the 1708 16s. balance.

Issues

Two issues arose for consideration from these facts:

  1. Whether the client could trace the money she paid into the Hallet’s bank account despite the fact that the money had been mixed with his other sums?

  2. Whether the money subsequently paid out by Hallet from the bank account must be considered his own money or money from the sale of bonds belonging to his client?

Holding

Could the money be traced to the bank despite mixing?

Jessel MR

Following the trust money to a debtor (here the bank)

If the bailee sells the goods bailed, the bailor can in Equity follow the proceeds, and can follow the proceeds wherever they can be distinguished, either being actually kept separate, or being mixed up with other moneys. I have only to advert to one other point, and that is this—supposing, instead of being invested in the purchase of land or goods, the moneys were simply mixed with other moneys of the trustee, using the term again in its full sense as including every person in a fiduciary relation, does it make any difference according to the modern doctrine of Equity? I say none. It would be very remarkable if it were to do so. Supposing the trust money was 1000 sovereigns, and the trustee put them into a bag, and by mistake, or accident, or otherwise, dropped a sovereign of his own into the bag. Could anybody suppose that a Judge in Equity would find any difficulty in saying that the cestui que trust has a right to take 1000 sovereigns out of that bag? I do not like to call it a charge of 1000 sovereigns on the 1001 sovereigns, but that is the effect of it. I have no doubt of it. It would make no difference if, instead of one sovereign, it was another 1000 sovereigns; but if instead of putting it into his bag, or after putting it into his bag, he carries the bag to his bankers, what then? According to law, the bankers are his debtors for the total amount; but if you lend the trust money to a third person, you can follow it. If in the case supposed the trustee had lent the 1000 to a man without security, you could follow the debt, and take it from the debtor.

Mixing is not a defence in Equity –distinguishing Taylor v. Plumer

Now comes the point, “and the right only ceases when the means of ascertainment fail.” That is correct. Now there comes a point which is not correct, but which I am afraid only ceases to be correct because Lord Ellenborough's knowledge of the rules of Equity was not quite commensurate with his knowledge of the rules of Common Law, “which is the case when the subject is turned into money, and mixed and confounded in a general mass of the same description.” He was not aware of the rule of Equity which gave you a charge—that if you lent 1000 of your own and 1000 trust money on a bond for 2000, or on a mortgage for 2000, or on a promissory note for 2000, Equity could follow it, and create a charge; but he gives that, not as law—the law is that it only fails when the means of ascertainment fail—he gives it as a...

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