A bequeaths property to B and C and directs them to sell it and invest the proceeds for D. They sell,…
Section 26 states the general rule that one trustee is not liable for his co-trustee's breach, but its proviso makes him liable where he fails to enquire into the…
Choose your answer
A bequeaths property to B and C and directs them to sell it and invest the proceeds for D. They sell, and B receives and keeps the purchase-money. C pays no attention to the matter for two years and then calls on B to invest. B cannot do so, becomes insolvent, and the money is lost. Under the Indian Trusts Act, 1882, what is C's position?
Answer and explanation
Correct answer C
Section 26 states the general rule that one trustee is not liable for his co-trustee's breach, but its proviso makes him liable where he fails to enquire into the co-trustee's dealings or "allows him to retain it longer than the circumstances of the case reasonably require". C left the money with B for two years without enquiry, so under the illustration to section 26 "C may be compelled to make good the amount". C is liable for his own neglect, so it does not matter that the money never passed through his hands.