a thesis - Institute of Advanced Legal Studies

112 IMPLIED TRUSTS.
CHAPTER XVII.—AGENTS CONSTRUCTIVE TRUSTEES IN
CERTAIN CASES.
WHERE a person employed by a trustee as agent receives
trust property from the trustee, and knowingly deals
with it in a manner inconsistent with the trust, or knowingly
assists a trustee to commit a fraudulent breach of
trust, he is liable to make good to the beneficiaries any
loss sustained by them as a consequence of the breach of
trust as if he had been a trustee.
"It is . . . . clearly established," said Bacon, V.-C., in Lee v.
Sankey (1872, L. E,. 15 Eq. at p. 211), "that a person who receives
into his hands trust moneys, and who deals with them in a manner
inconsistent with the performance of trusts of which he is cognizant,
is personally liable for the consequences which may ensue upon his
so dealing."
More recently Lord Justice Kay has stated the rule thus: "A
stranger to the trust, who receives the trust money with notice of
the trust, or knowingly assists the actual trustee in a fraudulent
and dishonest disposition of the trust property, is a constructive
trustee." (Soar v. Ashwett, (1893) 2 Q. B. at p. 405.)
" On the other hand," Lord Selborne said, in Barnes v. Addy
(1874, L. R. 9 Ch. App. at p. 251), with the entire concurrence
of the other members of the Court of Appeal, " strangers are not
to be made constructive trustees merely because they act as agents
of trustees in transactions within their legal powers,—transactions,
perhaps, of which a court of equity may disapprove,—unless those
agents receive and become chargeable with some part of the trust
property, or unless they assist with knowledge in a dishonest and
fraudulent design on the part of the trustees." And this statement
of the law was adopted by A. L. Smith, L. J., in Mara v. Broicne
(1896, 1 Ch. 209).
" What is the general doctrine with reference to constructive
trustees of that kind?" said Stirling, J., in In re Blundell (1888,