15. Care required from trustee
A truste is bound to deal with the trust-property as carefully as a man of ordinary prudence would deal with such property if it were his own; and, in the absence of a contract to the contrary, a trustee so dealing is not responsible-for the loss, destruction or deterioration of the trust-property.
(a) A, living in Calcutta, is a trustee for B, living in Bombay. A remits trust-funds to B by bills drawn by a person of undoubted credit in favour of die trustee as such, and payable at Bombay. The bills are dishonoured. A is not bound to make good the loss.
(b) A, a trustee of leasehold property, directs the tenant to pay the rents on account of the trust to a banker B, then in credit. The rents are accordingly paid to B, and A leaves the money with B, and A leaves the money with B, only till wanted. Before the money is drawn out. B becomes insolvent. A, having had not reason to believe that B was in insolvent circumstances, is not bound to make good the loss.
(c) A, a trustee of two debts for B, releases one and compounds the other, in good faith and reasonably believing that it is for B’s interest to do so. A is not bound to make good any loss caused thereby to B.
(d) A, a trustee directed to sell the trust-property by auction, sells the same but does not advertise the sale and otherwise fail in reasonable dilligence in inviting competition. A is bound to make good the loss caused thereby to the beneficiary.
(e) A, a trustee for B, in execution of his trust, sells the trust-property, but for want of the due diligence on his part fails to receive part of the purchase-money. A is bound to make good the loss thereby caused to B.
(f) A, a trustee for B of a policy of insurance, has funds in hand for payment of the premiums. A neglects to pay the premiums, and the policy is consequently forfeiled. A is bound to make good the loss to B.
(g) A bequeaths certain moneys to B and C as trustees, and authorizes them to continue trust-moneys upon the personal security of a certain firm in which A had himself invested them. A dies, and a change takes place in the firm. B and C must not permit the moneys to remain upon tile personal security of tile new firm.
(h) A, a trustee for B, allows tile trust to be executed soley by his co-trustee, C. C misapplies the trust-property. A is personally answerable to the loss resulting to B.