[CHANCERY DIVISION]

MORLEY v. LOUGHNAN.

[1891 M. 2075.]

Undue Influence - Confidential Relationship Gift inter vivos - Setting aside.

L., a man of no means, and a member of a religious sect known as Exclusive Brethren, was employed as travelling companion to M., an epileptic subject of large fortune. While so employed he converted M. to his own religious views, and in consequence of such conversion M. left his home, and took up his residence with L., with whom he continued to reside in great seclusion for the last seven years of his life. During this period M., who was in a low and morbid condition, consulted L. on spiritual and temporal matters, allowed him to regulate his diet and his medicine, and placed nearly the whole of his fortune at his disposal. L. endeavoured to suppress all evidence of his monetary dealings with M. The aggregate amount obtained by L. from M. was £140,000:-

Held, that the money had been obtained by the actual exercise of undue influence under the guise of religion, and ought to be refunded.

Semble, the money could be recovered also on the ground of confidential relationship.

THIS action was brought by S. Hope Morley and Arnold Morley,as executors of the will of their brother, Henry H. Morley, to recover sums exceeding in the aggregate £140,000, given by the testator in his lifetime to the Defendant, William Haviland, Loughnan, on the ground that the money had been obtained by undue influence.

Loughnan, who was a married man with a young family, had no means of his own. He was at one time a curate of the Church of England, but in 1881 he gave up his curacy and joined the Plymouth Brotherhood. This religious sect was divided into two orders - open Brethren and close or exclusive Brethren. Loughnan belonged to the close order.

It was the custom of close or exclusive Brethren to isolate themselves from general society, and even to some extent from the members of the other division of the sect. They professed to give up the world and to devote their lives to the service of the Lord.

Henry Morley was the son of the late Samuel Morley, a member of the firm of Messrs. J. & R. Morley, warehousemen, and he

became entitled through his father to a fortune amounting to £170,000.

He was born prematurely in 1851; he was subject to epileptic fits; he was never at any time of his life physically or mentally strong; he was not, however, incapable of managing his own affairs. At the age of twelve he attended some revivalist services held in London by a Mr. Denham, who was a PlymouthBrother, and was much impressed by them, and eventually he became a member of the open order of that sect.

In consequence of the feeble state of his health his father sent him into the country to learn farming instead of training him for one of the learned professions, and in 1870 he bought an estate near Tonbridge, called Hall Place, and entrusted to his son the management of the farms in connection with the estate. In the winter of 1880-1881 Henry Morley went abroad for his health, and was accompanied by a Mr. Battersby, whom his father had engaged as travelling companion.

In November, 1881, Loughnan was introduced to Mr. Samuel Morley by his son-in-law, Mr. Washington, and was engaged by him to act as travelling companion to his son Henry for three months, at a salary of £100 and travelling expenses; and in January, 1882, he was retained to act as travelling companion when required at a salary of £400 a year.

On the 8th of May, 1882, Mr. Samuel Morley wrote to Loughnan:"We have had a pleasant happy visit from your patient, and feel that we owe much to your kind loving care of him. I am so thankful to think you are studying his case, and shall be glad to be helped by you in deciding his future."

In September, 1883, Henry Morley invited himself to stay with Loughnan, who was then living at Shoreham, and from that time until his death in 1891, except for occasional intervals, generally of short duration, when he was alone, and occasional visits to his relations, he continued to reside with the Loughnanfamily at various places, first at Shoreham, then at West Hamnear Basingstoke, and, finally, at Bowden Derra in Cornwall.

On the 11th of October, 1883, he wrote a letter to a Mr. Hurditch,with whom he was intimately acquainted, in which he announced his intention of finally leaving his home. The letter

began by lamenting that for many years he had lived out of communion with the Lord, and relating how the Lord had shewn him something of his miserable condition until, as he said, he got so low and dejected that he almost doubted his salvation. The letter then continued: "It was on Monday the 1st inst. that He gave me complete deliverance by first enabling me to look away to Him. I felt so happy; and then I prayed that at whatever cost he would restore my soul and give me to enjoy full communion with Himself. The answer came as plainly as though a man was speaking to me - yes, far plainer - I must give up all and that He would do it all for me. He has done this, and now Hall Place, with its costly expenditure, is no longer my home, for I seek but cannot find Jesus there."

After an ineffectual attempt on the part of Mr. Hurditch to induce his friend to alter his determination, he communicated what had taken place to Mr. Samuel Morley, who had an interview with Henry, which was equally ineffectual. After this interview Mr. Samuel Morley, on the 1st of November, 1883, wrote to Loughnan, expressing his sorrow at the change in his son's views, and suggesting that the change had been brought about by the influence of others, and he continued: "Henry told us that one of the first steps in the process by which he has arrived at the conviction that it is his duty to leave home and take up his abode under your roof was a remark you made during one of your early visits to Hall Place, 'Can there be Christ with all this?'"

The writer complained that the use of such words by Loughnanat that time was a departure from a solemn pledge which he had given to Mr. Washington prior to his engagement as companion, that he would not on any occasion make any reference with Henryto the peculiar views held by Christians known as exclusives, and he enclosed the sum of £40, the sum then due to Loughnanfor his services, and requested that all further intercourse might cease.

Loughnan replied on the 3rd of November to the effect that his only promise was to "avoid argument about any differences of opinion which might exist between (so-called) close and open Brethren." "But," he continued, "I remember very well adding,

that if your son was led into what I believed to be true, I should be very thankful."

Samuel Morley replied on the 8th of November that he was extremely dissatisfied with Loughnan's explanation; and on the 10th of November Loughnan wrote: "I can quite see from your point of view that my action must seem very bad; but it appears from what you say that both you and Mr. Washington were in some fear when the engagement between us was first contemplated that your son might be led to adopt the views held by those with whom I am in fellowship; while I, hearing what a bad state of health your son was in, only supposed that the avoiding of argument was on account of his condition." And he added, "He is older than I am, and has been in the narrow way longer than I, and is quite capable of holding his own in religious discussions." He admitted that he had made use of some such expression as that which was attributed to him, and that, on being pressed by Henry Morley, he had explained the grounds upon which exclusives gathered. In reference to Henry Morley'sdetermination to leave his family, he said: "I do not at all know that he will be led to make this house his home; but as long as he does so his health and happiness will be carefully looked to."

On the 5th of November, 1883, Henry Morley wrote a farewell letter to his uncle and aunt, Mr. and Mrs. John Morley, to whom he was particularly devoted. Notwithstanding that he had made up his mind to leave his home, he always remained on affectionate terms with the members of his family, although his religious views precluded him from mixing much in their society.

About this time he joined the close order of Plymouth Brethren and became a regular attendant at the religious meetings of that order. He also severed his connection with several charitable institutions in which he had formerly interested himself, on the ground, as he stated in one of his letters, that such institutions, being of man's origination, were not after the mind of God, and in several letters he expressed his gratification to the Almighty for having revealed to him the truth, and justified his refusal to hold fellowship with those who were not living in the truth. He also commenced to make large payments to Loughnan without demanding or receiving any account, and in fact from this time

forward he placed his banking account at Loughnan's disposal. Throughout the whole of this period he was in a low and morbid condition, and was subject to great mental depression induced by excessive doses of bromide, which he took as a remedy for epilepsy; he was frequently under medical treatment.

In May, 1884, he instructed his family solicitors, Messrs. Phelps, Sidgwick, & Biddle, to prepare a will under which the Loughnanfamily were to receive legacies amounting to £8000, and this will was executed in June, 1884. In July, 1885, he executed another will, by which the benefits to the Loughnan family were increased to £15,000.

Many of the events which occurred after this date were disputed by Loughnan; but the net result of the evidence is shortly as follows:-

While Henry Morley was living with the Loughnans at Shoreham,he became acquainted with a Mr. Dalby and his daughter, who were members of the same religious order as himself, and, as they became more intimate, he began to conceive an affection for the lady. In 1886 Loughnan frequently remonstrated with Miss Dalby on her growing influence over Henry Morley, and warned her that he had been forbidden by medical men to marry, and in the result she gave him her promise that she would not encourage Mr. Morley's attentions, and she never saw him again.

In September, 1886, Samuel Morley died, and Henry became entitled, under his father's will, to a very large fortune.

Although he had notice of his father's death he did not attend his funeral; but this was explained by Loughnan by the fact that at that time he was under treatment in a hydropathic establishment in the Riviera. After his father's death the amount which he drew from the business of Messrs. J. & R. Morley immediately began to increase. In 1884 and 1885 his drawings were under £3000 per annum; but in 1886 they amounted,to £6150.

In the spring of 1887 he moved with the Loughnan family to West Ham, near Basingstoke.

In April, 1887, he wrote to Mr. Sidgwick, with reference to some contemplated alteration of his will, a letter in which he complained of momentary attacks of loss of consciousness and

nearly total loss of memory, and inquired whether, in the event of his getting so much more under the power of the disease as to render it necessary that he should be placed under supervision, he could at once nominate a person whom he knew to be willing to undertake the charge, meaning Loughnan.

Eventually a codicil was prepared by Messrs. Patey & Warren, Loughnan's solicitors, and was executed in November, 1887. By this codicil Henry Morley bequeathed to Loughnanand his wife a life interest in a moiety of his patrimony.

The excessive amounts which he now began to draw from the business caused some inconvenience to his brothers, and on the 30th of June, 1887, they obtained from him an undertaking not to draw out more than £6000 in any one year. However, on the 15th of July, 1887, he drew out in one sum £12,000, which was paid straight into Loughnan's account at Coutts's, and was applied by him in the purchase of the house at West Ham which he had previously rented.

In March, 1888, Henry Morley gave instructions to Messrs. Patey & Warren to draw a new will. In a letter of the 25th of April, 1888, acknowledging the receipt of the draft will, he wrote: "As one or two clauses need slight alterations, about which I wish to consult Mr. Loughnan, who has gone to the South of France, I must await his return in about a fortnight."

This will was executed on the 27th of August, 1888. By it he bequeathed one moiety of his residuary estate in trust for Loughnan absolutely.

In May, 1888, his mother died, but he did not attend her funeral.

On the 19th of December, 1888, Loughnan wrote to one Bennett, a doctor, as to the mental condition of one of his brothers who was under Mr. Bennett's care: "He seemed to have started a fresh delusion, and asked me about my accounts. He appears to fancy I am in some degree dependent upon a man he knows of the name of Morley, who lives a good deal with me, and has woven some tangle out of our connection."

Early in 1889 Henry Morley stayed for some weeks at a hydrotherapeutic establishment at Bristol. Dr. Spoor, the resident physician who attended him, deposed that he was suffering from

religious depression, and that on one occasion he (Morley) told him that he relied upon Loughnan to manage his affairs, as his health was not sufficiently good to allow him to attend to them himself. Witness also deposed to a conversation he had had with Loughnan as to the nature of Henry Morley's complaint, in the course of which Loughnan said that he had studied his case very carefully, and thought he understood him thoroughly, and that Morley was often guided by his advice in preference to that of his medical attendant.

Loughnan was in the habit of giving directions as to what Henry Morley should eat; he also frequently visited his bedroom in the morning, and gave him medicine when he felt unwell.

In July, 1889, Loughnan sold the house at West Ham for £10,000 - a loss of £2000; and later in the same year he went with his family and Henry Morley to reside at Bowden Derra, a very secluded place, five miles from Launceston, in Cornwall

At Bowden Derra, Henry Morley saw no society at all outside the Loughnan circle with the exception of a few poor people whose wants he relieved.

In January, 1890, one Maxted, who had known Henry Morleybefore he went to reside with the Loughnans, wrote to him asking permission to renew the acquaintance. Maxted was a Plymouth Brother, though not a member of the close order of Brethren, and he had formerly been concerned in evangelizing work at Bowden Derra.

In reply to his letter Henry Morley wrote on the 22nd of April, in effect, that his religious views would prevent him from holding fellowship with him.

On the 20th of May, Maxted, who was then evangelizing in Devon and Cornwall, again requested a meeting. To this Morleyreplied on the 21st of May to the effect that he did not feel free to invite him to Bowden Derra, as he was staying with friends.

These two letters of the 22nd of April and the 21st of May were drafted by Loughnan.

Later in the same year Loughnan wrote a business letter for Morley, which the latter signed, relating to the sale of some shares in the National Liberal Club.

Loughnan, however, asserted in his evidence at the trial that

he never discussed business matters with Henry Morley, and that his conversations with him were confined to questions of religion.

In the summer of this year Henry Morley was particularly depressed about the state of his health, and in July he wrote to his uncle a very gloomy letter, in which he said, "It is not epilepsy I suffer from, but catalepsy."

On the 9th of September, 1890, Loughnan wrote to his bankers at Brighton: "Mr. Morley, who draws the cheques which I usually forward to you, complains to me that though he purposely makes them payable to bearer, they generally have my name on the back of them when they are returned to him. ... Would you kindly see that neither the enclosed draft, nor any other drawn by Mr. Morley and sent by me to your bank, has any name written upon it, as it might prove very inconvenient in arranging certain matters which we have in hand."

On the 8th of October Henry Morley drew from the business of Messrs. J. & R. Morley £10,000, which at once passed into Loughnan's account, and was sent by him to his bank at Brightonin a letter containing the following request: "Mr. Morley begs me to ask that no name or stamp should be placed on the cheque."

On the 8th of January, 1891, Henry Morley wrote to his brother Hope announcing his intention of drawing out from the business the bulk of his capital, which then amounted to £70,000. He said: "I have determined to withdraw the bulk of it (as and when most convenient to the firm) in order that during my lifetime I may enjoy the pleasure and privilege of helping in a substantial way such objects as I am led to consider need support, and thus in a feeble way be enabled to realize that I am doing the will of Him that loved me and gave Himself for me (Luke xviii. 29, 30). Neither my friend with whom I am living nor my relations have need of money, and I am therefore all the more happy in taking this step." Then, after stating that he intended to leave £20,000 in the business, he continued: "The rest I propose to lay out anonymously in various objects which I wish to help."

After a vain remonstrance from his brothers the money was paid by three cheques of £25,000, £15,000, and £10,000, received by Henry on the 16th, 23rd, and 24th of January. On the 15th

of January, Loughnan having left Bowden Derra for two or three days, Henry Morley gave instructions to Messrs. Patey & Warrenfor a new will, under which his residuary estate was to go to his brothers and sisters.

On the 16th of January he wrote to Maxted: "I am almost out of my mind, if not quite. I have no money now. The sad reason you will know in a few days. I hope I shall be forgiven for spending so much upon the workmen in Basingstoke two years ago. I cannot do it now. You will know all about it very soon. I am more to be pitied than you are." On the 17th of January Loughnan returned to Bowden Derra. On the 18th Henry Morley wrote a second letter to Maxted to the following effect: "I would ask you to burn the letter I sent you last week and forget it, as I wrote it amidst great confusion. I enclose you a cheque for £5. I am glad to say I have nothing sad to communicate. I cannot now upon reflection say I spent anywhere more than I should have done, except when I was in the world."

To this was added a postscript: "I may say I have spent nothing and done nothing in Launceston."

On the same day Loughnan wrote to Messrs. Patey & Warrena letter for Henry Morley, which was signed by the latter, as follows: "Do not act upon my letter of last week until you hear further," and on the following day Henry Morley wrote that he thought it better that the will should be prepared by his family solicitors. On the 20th of January £25,000 was paid to the credit of Loughnan's account, and on the 24th of January a second sum of £25,000 was paid in.

On the 30th of January Henry Morley executed his last will; which had been prepared by Messrs. Phelps, Sidgwick & Co.,whereby, with the exception of his papers and furniture at Bowden Derra, which he gave to Loughnan, he bequeathed the whole of his remaining property to his brothers and sisters.

On the 19th of February he wrote to his brother Hope that he was in a very weak state of health, and that the doctors threatened paralysis. He then said: "No more love and kindness could possibly have been shewn me by any one than I have experienced always from my dear friend, Mr. Loughnan, as well as from every member of his family." Then later on he said, "My chief

object in writing to you is to ask you to promise me that in the event of my becoming helpless in mind or body I shall not be removed from the care of my friend Loughnan. I know he will do all that is best for me, and he has kindly opened a joint banking account with me so as to meet any expenses arising from my illness, should I be unable to write."

On the 25th of February Henry Morley died by his own hand. During his lifetime be usually spoke and wrote in the highest terms of Loughnan's character, but from certain conversations which he had with a Miss Waterman, it appeared that towards the end of his life his views at times underwent a change, at any rate in Loughnan's absence. Miss Waterman was an old lady in feeble health, who had been befriended by the Loughnansat Shoreham, and had followed the Loughnan family to West Hamand Bowden Derra.

She deposed that in 1888 Henry Morley had a conversation with her about a Mrs. Tolfrey, whom he had assisted, in the course of which he said he was sorry not to be able to give her more, but he had only a few shillings in his pocket, and could not give her more without consulting Mr. Loughnan, and he had given his word not to give more than a few shillings without consulting him. He said he should like to give his money away himself, but he could not continue to live in the house if he continually objected to what they wished. She observed that Mr. Morley deferred much to Mr. Loughnan's views in almost everything, and this increased as time went on. In the summer of 1890 the deceased was gloomy; he said, "My money goes by thousands; I must take care I do not spend a pound more than I am obliged, because there is a large family - there are two or three or four families in one." This had reference to the fact that Loughnan sometimes invited his brothers and his brother-in-law and their families to stay with him.

Witness further deposed that in January, 1891, Henry Morleytold her, "They do not want me, he has told me to go as soon as I like." He said, "They have had a great deal more money from me than you know anything about - many thousands. There are three cheques that Mr. Loughnan urged me to tear out the counterfoils of, because he said they made him liable, if

they remained in the cheque-book." He said he had screened Loughnan many times from his (Morley's) brothers, but could not write to them now. "I am a miserable man; and unless I comply with all they want they make my life miserable." In another conversation in January or February, he said, "They have taken it all. I have never given it to them; they have taken it without my leave." He said that he meant to give some money to some other people whom he named, but could not because they had taken it. He said, "They are swindlers, it is swindling; they have left me with only £700 a year, and that is not enough to take me anywhere else. They have deceived me from the first." Witness further deposed that she went up to the house and saw Mr. Loughnan and his wife, and told them part of what the deceased told her, and, in particular, that he said that they had got his money, and he had only £700 a year left; that Mrs. Loughnan said, "Plenty, too, for him"; and Mr. Loughnan said, "He is very confused about it, a man who does not spend more than £100 a year." Then that the deceased afterwards told her, "It is all true that I have told you," and that on the last time she saw him on the Sunday before he died, he said, "I am so unhappy, they are not kind to me."

At the funeral Loughnan was questioned by Charles Morley, a brother of the deceased, and Mr. Phelps, as to the destination of the £50,000 which the deceased had withdrawn from the business in January. At first he said he was under a solemn promise to the deceased not to divulge the objects for which it was given, but he subsequently stated that he had received and invested it, and that it was given for the relief of the poor, and generally for that form of religious work in which he and the deceased were jointly interested. After some further pressure he admitted that the money had been invested for his private purposes, and offered to leave the matter in the hands of the family. He also made a similar statement to Miss Waterman as to the objects for which the money was given. At the trial Loughnan denied that he had ever made any such statements, and he swore that the £50,000 had been given to him for his private purposes in lieu of certain benefits which he was to have taken under the will of the deceased.

Among the papers of the deceased (which conveyed singularly little information as to his dealings with Loughnan) were found his diary, draft copies of the two letters written to Maxted on the 22nd of April and the 21st of May, 1890, several account-books with the leaves torn out, and a cheque-book with the counterfoils torn out. Certain cheque-books of Loughnan's were also produced in the same condition. One counterfoil, however, had been preserved, which recorded the fact that on the 16th of February, 1891, Loughnan had drawn a cheque for £50 for H. H. M. This corresponded with an entry in the diary, "Cheque £50 kindly given to me from common account." This was the account referred to in Henry Morley's last letter to his brother. There was also produced a formal receipt, bearing date the 13th of September, 1888, for £150 paid by Loughnan to Henry Morley as the price of certain bedroom and study furniture at West Ham which Morley had sold to Loughnan, with the view, as he explained in a letter to Messrs. Patey & Warren,of simplifying certain testamentary dispositions which he intended to make in Loughnan's favour. The receipt was in Loughnan's handwriting, and was signed by Henry Morley.

The only other document of importance was a pencil memorandum in Henry Morley's handwriting: "Letters to go through with W. L. before tearing up."

From investigations directed by the Plaintiffs, it appeared that in the last years of his life Henry Morley drew from the business the following amounts:- in 1883, £2965; in 1884, £2600; in 1885, £2710; in 1886, £6150; in 1887, £24,700; in 1888, £9950, in 1889, £18,500; in 1890, £15,000; in 1891, £50,000. He also derived about £10,000 from other sources; and £135,000 was actually shewn to have been paid to Loughnan.

Mr. Phelps repeatedly applied to Loughnan for information as to these payments, but Loughnan refused to furnish any information on the subject, for the reason, as alleged in one of his letters, that "all such transactions were purely personal and confidential," and, in particular, he declined to give the Plaintiffs any facilities for investigating his banking accounts, of which he kept several, until he received a letter from S. Hope Morley,intimating that, though he might have destroyed his bankers'

books, and the counterfoils of his cheque-books, there was no great difficulty in obtaining copies of them-from his bankers. He also attempted to prevent Miss Dalby and Miss Watermanfrom giving evidence at the trial.

The bulk of the money which Loughnan received from the deceased was applied by him partly in living at the rate of £5000 a year and partly in the purchase of investments for his own private use; but he also gave £10,000 to his brother Alfred, a similar sum to his brother Henry, and £4700 to his brother-in-law Sleeman, and he devoted some comparatively trifling sums to charity. At the commencement of this action about half of the money had disappeared.

The action was commenced against W. H. Loughnan on the 14th of July, 1891. The Plaintiffs claimed an account of the dealings between the deceased and the Defendant, and payment by the Defendant of all sums obtained by undue means; and, in addition, they claimed an injunction restraining the Defendant from dealing with the £50,000 or the investments representing the same, which they sought to have brought into Court; and, upon motion before Mr. Justice Stirling, an order was made in substantial accordance with the latter part of the claim under which the £50,000 was deposited in a bank till the trial.

Subsequently Alfred Loughnan, Henry Loughnan, and Sleemanwere made Defendants to the action for the purpose of making them liable to the extent to which they had benefited from the estate of the deceased.

At the trial, the action was compromised as against the Defendant Sleeman.

Sir C. Russell, A.G., and Sir J. Rigby, S.G. (Haldane, Q.C., Ingle Joyce, and Reginald Smith, with them), for the Plaintiffs:-

These gifts ought to be set aside on two grounds; first, because they were the result of influence expressly exercised by the donee; secondly, because the relations between the donor and donee were such as to raise a presumption of influence: Allcard v. Skinner (1). The mental and physical condition of the deceased though not amounting to incapacity, was such as to

(1) 36 Ch. D. 145.

render him peculiarly amenable to surrounding influences, and W. H. Loughnan, as his travelling companion, was in a position in which his influence might most easily be exercised. From the first, he stood in a position of confidential relationship to the deceased, and that relationship became closer as time went on, and the onus is on him to prove the righteousness of these transactions. The banking accounts of the deceased were practically dummy accounts existing for the purpose of being drawn upon by the principal Defendant for his private ends. Even apart from the existence of any confidential relation between the parties, the fact of a wealthy man divesting himself day by day of the greater part of his fortune in favour of a person with whom he resides, is, of itself, almost conclusive as to the exercise of influence. Res ipsa loquitur. But here, everything points to the existence of a confidential relation, and, so long as that relation exists, it is impossible for bounty to pass between the parties unless the donor has competent and independent advice, or, at any rate, unless he is in a position to avail himself of such advice. This principle is not affected by the age or capacity of the donor; it depends on public policy: Rhodes v. Bate (1); Dent v. Bennett (2); Lyon v. Rome (3); Mitchell v. Homfray (4).

Charles Gurdon, for the Defendants W. H., A., and H. Loughnan:-

The gifts were induced not by any undue influence, but by a legitimate affection. In all voluntary transactions, there is, in the first instance, an onus on the donee to prove that the donor understood the transaction, and in that sense it lies upon the donee to satisfy the Court as to the righteousness of the transaction; when that onus is discharged, the question arises, whether there exists a confidential relationship between the parties, and if that, is established, there is the further onus on the donee of shewing either that the donor had independent advice, or was so situated with regard to the donee, as to satisfy the Court that the gift was the intention of a voluntary mind. If no confidential relationship is established the burden of proving undue

(1) Law Rep. 1 Ch. 252.

(2) 4 My. & Cr. 269.

(3) Law Rep. 6 Eq. 655.

(4) 8 Q. B. D. 587.

influence is cast on the donor: Hoghton v. Hoghton (1); Hunter v. Atkins (2). In this case, it is not suggested that the donor did not know what he was doing. The only question is as to confidential relationship, and upon that question it has been laid down by Lord Brougham in Hunter v. Atkins, that the jealousy with which the Court watches transactions between persons who stand in some peculiar relationship to each other is diminished as the relationship becomes more vague and ill-defined. For instance, gifts to an attorney, agent, or steward, are viewed with more suspicion than gifts to a confidential adviser. There is not here any such relation between the parties as would prevent the donee from retaining the gifts: Taylor v. Johnston (3).

In Dent v. Bennett (4), the ground of the decision was that the transaction was not fully understood by the parties. In Lyon v. Home (5), it was held not only that a confidential relationship existed, but that it was procured by the fraud of the defendant. In Allcard v. Skinner (6), the donor was absolutely in the power of the lady superior of the sisterhood.

The benefits which the donee received in this case were in lieu of benefits which he was to have received under the will of the deceased, and it is not suggested that any of the wills could have been set aside, or that the deceased had not independent advice when he made them.

E. R. Simpson, for the Defendant Sleeman.

Sir C. Russell, in reply:-

The jurisdiction of the Court, according to the statement of Sir Samuel Romilly in Huguenin v. Baseley (7), which has been adopted by Lord Cottenham in Dent v. Bennett, and by other Judges, extends to all the varieties of relationship in which influence may by reason of that relation be exercised by one person over another.

As regards the wills of the deceased, the influence which is undue in the case of gifts inter vivos, is very different from that

(1) 15 Beav. 278.

(2) 3 My. & K. 113.

(3) 19 Ch. D. 603.

(4) 4 My. & Cr. 269.

(5) Law Rep. 6 Eq. 655.

(6) 36 Ch. D. 145.

(7) 14 Ves. 273; 2 W. & T. L. C. in Eq. 6th Ed. p. 597.

which is required to set aside a will: Parfitt v. Lawless (1) The evidence establishes that there was such confidential relationship between the parties as to create influence by the one over the other, and that not only influence but almost an ascendancy was exercised by the donee over the deceased.

1893. Jan. 27 WRIGHT, J.:-

In this case the general nature of the facts is this. The Defendant W. H. Loughnan (whom I shall call the Defendant) was a man of no means, and he belonged to a religious sect, one of whose main tenets is to give everything to the Lord. One of his first introductions to the deceased gentleman, Mr. Morley, is significant. Seeing Mr. Morley surrounded by wealth in his father's house, he said to him, "Can there be Christ, with all this?"

Mr. Loughnan was employed as a travelling companion to Mr. Morley, who was an epileptic subject of large fortune, and he converted Mr. Morley to that sect, received him into his own family, and in the course of six or seven years obtained from him most of his fortune, amounting to about £140,000, and applied it partly in living at the rate of £3000, £4000, or £5000 a year, partly in investments for himself, partly in distribution among his relatives, and a great part, probably half of the whole, has entirely disappeared.

The executors seek to set aside these gifts principally on the ground of undue influence; and it is proper and necessary to say that it was proper and necessary for them to sift this matter to the bottom. In doing so, I think they are actuated by no motives of personal interest whatever.

There is no doubt about the law, which is illustrated by numerous cases collected in White and Tudor's work under the leading case of Huguenin v. Baseley (2) and continuing down to the case of Allcard v. Skinner (3). That law is, that where large voluntary gifts are made and accepted inter vivos, the recipient may be called upon to shew that the donor had capacity and knowledge of what he was doing. In this case that capacity

(1) Law Rep. 2 P. & D. 462.

(2) 14 Ves. 273; 2 W. & T. L. C. in Eq. 6th Ed. p. 597.

(3) 36 Ch. D. 145.

and knowledge are not disputed. Proof may then be given against the recipient to shew that the donor's intention to give was produced by undue influence, and then the Courts of course set it aside, unless the transaction as a whole was a benefit to the donor.

Or the donor may shew that confidential relationship existed between the donor and the recipient, and then the law on grounds of public policy presumes that the gift, even though in fact freely made, was the effect of the influence induced by those relations, and the burthen lies on the recipient to shew that the donor had independent advice, or adopted the transaction after the influence was removed, or some equivalent circumstances.

Here the Plaintiffs take both grounds. They say there is actual proof of undue influence producing the gifts; secondly, they say there was confidential relationship within the meaning of that rule, and the donor had no independent advice, and there were no equivalent circumstances.

The peculiarity of this case is that it is not one of those ordinary confidential relationships such as solicitor and client, physician and patient, parent and child, or guardian and ward, or religious superior; but it is of a nature which I think is sufficient to bring it within the rule as laid down by Lord Eldon,adopting the argument of Sir Samuel Romilly in Huguenin v. Baseley (1), that the rule stands on a general principle applying to all the variety of relations by which dominion may be exercised by one person over another.

What I have to decide is, is there proof of undue influence which produced the gift? and if not, was the relation of that confidential kind which comes within the rule?

The case made by the Attorney-General, especially in his powerful reply, was of this kind. Mr. Morley was a man mentally and physically weak, though not incapable; a man impressionable and highly strung, morbidly religious from the age apparently of twelve years, easily influenced, yet wilful and obstinate; a man of no marked strength of character, or mental power. So that when he had reached the age of thirty, his father

(1) 14 Ves. 273.

thought it right to engage and pay travelling companions to take care of him.

One of these companions was the Defendant Loughnan, who was travelling with him in the year 1881, and, as the Attorney-General points out, there would be great probability and opportunity of influence of a stronger man, over a weaker, selected as a stronger man for the purpose, and paid to look after him, and, in truth, a kind of guardian, and so treated by the young man's father, who thanks Mr. Loughnan for his "kind and loving care" of his patient, and for "studying his case," and "will be glad to be helped by him in deciding his son's future."

During the continuance of that relation as between the father and Mr. Loughnan, Mr. Morley, the deceased, invited himself to stay with Mr. Loughnan in September, 1883, and Mr. Loughnaninformed his father that so long as Mr. Morley made Mr. Loughnan'shome his home, Mr. Morley's health and happiness would be carefully looked to. Shortly afterwards Mr. Morley wrote a sort of farewell letter to the world to his uncle and aunt, and from that time until his death in February, 1891, he was one of the family group of the Loughnans, seldom away, or only for a few weeks at a time at most, and practically confined to a very narrow circle, both socially and in matters of religion. There is no trace in all that time of his mixing in general society, and his seclusion was, in fact, such that he did not attend either his father's or his mother's funeral. It is only right to say that it is explained at the time of his father's funeral he was under treatment in a hydropathic establishment; but no such explanation is given with regard to his neglect of the respect due to his mother's memory. But those things are only material to shew what the seclusion was. As to what took place during those six or seven years there is little direct evidence, but we know certain things. We know that Mr. Morley almost immediately began to give large sums to Mr. Loughnan - £2500 the first year, £2700 the next, over £6000 the next, nearly £25,000 in the fourth year, nearly £10,000 in the fifth, £18,500 in the next year, and £65,000 in the last thirteen months, neither receiving nor demanding any account of these sums; and at the same time he was, till the close of the period, making a series of wills

progressively in the Defendant's favour. The very magnitude of these transactions seems, as the Attorney-General said, to raise a presumption of influence or infatuation. We know throughout that period that the deceased was in a low, feeble, and morbid condition, suffering from great depression produced by large and continued doses of bromide of potassium, trouble or loss of memory, and apprehensive at times of catalepsy, paralysis, and even on one occasion, of insanity.

There is abundant evidence that the deceased man when with the Defendant held the highest views of the Defendant's saintly character, and of the debt of gratitude he owed the Defendant, and, till near the end, placed unbounded confidence in the Defendant's religion and integrity, and trusted him to apply the wealth lavished upon him by the deceased to unselfish ends. There is evidence that when absent the fascination seemed to be partially removed, and, towards the end, was once or twice entirely gone, but it returned with his return to the Defendant's care, and I agree with the Attorney-General that that is a strong indication of personal ascendancy when in the presence of the Defendant.

There are some slight but accidental glimpses of the actual relations of the parties during these years. It is proved that in four instances, all of them in 1890, the deceased's letters were drafted by the Defendant, and signed by the deceased.

Now these four instances are very remarkable and very suggestive as regards the motive for the Defendant so interfering, if they are to be regarded as exceptional instances of letters being so drafted. If, on the other hand, they are to be regarded as not exceptional but indicating a general practice by the Defendant to draft the deceased's letters for him, I think it even more remarkable, because Mr. Morley was a man perfectly competent to write his own letters for himself on all subjects.

Further, the Defendant took upon himself, I think in 1886, to break off an incipient attachment between the deceased and Miss Dalby, whose story I implicitly believe. I think it was given with every indication of truthfulness, and in a manner which did her credit.

We know that Mr. Loughnan took upon himself the expenditure

of nearly the whole of Mr. Morley's money, even down to small sums for personal expenses. One of the wills could not be settled till Mr. Loughnan's return from abroad. The deceased's letters were to be gone through and torn up with him. He regulated his food and the medicine. He was accustomed to visit the deceased in his bedroom every morning, and the deceased told one of the doctors that he relied upon Mr. Loughnanto manage everything for him. It is evidence not of course of the fact against Mr. Loughnan, but of the state of mind of Mr. Morley in relation to it.

There is one remarkable piece of evidence which, if believed, goes far to shew that the deceased was in a condition of subjection to an influence against which he was unable to contend, but to the true nature of which his mind became at times so far alive as to shew that the subjection was not wholly voluntary. That was the evidence of Miss Waterman, a very elderly lady whose veracity I see no reason whatever to doubt, though I might hesitate to base a judgment entirely on her memory. The value of her evidence so far as belief is this, that she was the only person who from the outside world during all these years gained any admission to the interior of this family while the deceased was there.

[His Lordship then referred to the evidence as to the conversations of the deceased with Miss Waterman, which he read not as evidence of the facts against Loughnan, but as evidence of Mr. Morley's state of mind, and he continued:-]

There are other circumstances also which throw grave suspicion on the conduct and motive of the Defendant and his evidence. First, the absence of records relating to the pecuniary transactions. Hardly anything is produced. The only account-books, I think, or cheque-books produced, have the leaves relating to business transactions, or counterfoils relating to those transactions torn out, in strong contrast to two particular exceptions, where everything has been scrupulously preserved - the transactions in which the deceased might have found his own interest in preserving a record.

Then there is the extraordinary transaction in September, 1890, when large sums are being paid into the banks. Mr.

Loughnan made a request to the manager of one of the banks to take care that no marks or stamps should be placed on cheques paid into his account, by which the transaction might be traced, because it might prove inconvenient for some purpose which he did not explain, and, as the bank manager observed, that was a most unusual request.

Then I find, as a matter of fact, that the Defendant made attempts to prevent Miss Dalby and Miss Waterman from giving evidence. He refused information as to transactions with his banks to the executors, until it was pointed out to him that the information could be obtained without his consent. Several of his letters relating to the deceased man and his relations with him are of the most disingenuous kind. He denied the truth of the evidence of Miss Dalby and Miss Waterman, Mr. Charles Morley and Mr. Phelps, all of whom I fully believe to have been telling the truth in substance, and whatever comment may be made on the difficulty of remembering the exact terms of a conversation, I believe in substance everything they stated took place.

Under the circumstances, the Defendant cannot complain if the most unfavourable inferences are drawn, and I think I ought to draw them. I believe that the money which the executors seek to recover was obtained by the exercise and abuse of personal influence and ascendancy established and maintained for that very purpose, under a cover of religion and religious brotherhood. I believe the Defendant took possession, so to speak, of the whole life of the deceased, and the gifts were not the result of the deceased's own free will, but the effect of that influence and domination. It is, therefore, unnecessary to decide whether the relationship between Mr. Morley and Mr. Loughnanwas of that confidential fiduciary character which brings it within Lord Justice Bowen's view in Allcard v. Skinner (1) as a fetter on his conscience which requires a gift, even though freely made in fact, to be set aside on the ground of public policy, though I should have no doubt that the rule is wide enough to comprehend this case, and does comprehend it.

Then there is another ground on which the Plaintiffs are

(1) 36 Ch. D. 145.

entitled to succeed, as to the £50,000. We have a record of the views with which the deceased drew out this sum in the letter of the 8th of January, 1891. [His Lordship referred to the letter and continued:-]

Besides that, there is proof in the evidence of Mr. Charles Morley, Mr. Phelps, and Miss Waterman, of admissions made by the Defendant to the effect that the money was given - the evidence is in slightly varied terms - in substance for the furtherance of religious objects and religious works, and if the money was given in that way I think that Mr. Loughnan cannot repudiate the purpose for which it was given, and claim to take the benefit of it for his own private and selfish ends. There appears to be nothing that would constitute a trust in the strict sense of the word, and there is nothing beyond that letter of Mr. Morley's to shew the nature of the objects which he intended. Of course the executors are not in any way bound by the statements of Mr. Loughnan on the point. I mention this third ground, because I think it is an independent ground on which, in any case, the Plaintiffs would be entitled to recover the £50,000.

Then there remains the other consideration, and that is the case of the other Defendants. The Defendant, Charles Sleeman,is now gone from the case, but the other Defendants appear to be, in the language of Lord Eldon, in Huguenin v. Baseley, where he says(1): "I should regret, that any doubt could be entertained, whether it is not competent to a Court of Equity to take away from third persons the benefits, which they have derived from the fraud, imposition, or undue influence, of others," and he cites Lord Chief Justice Wilmot in the case of Bridgman v. Green: "There is no pretence that Green's brother, or his wife, was party to any imposition, or had any due or undue influence over the plaintiff; but does it follow from thence, that they must keep the money? No: whoever receives it, must take it tainted and infected with the undue influence and imposition of the person procuring the gift; his partitioning and cantoning it out amongst his relations and friends, will not purify the gift, and protect it against the equity of the person imposed upon. Let the hand

(1) 14 Ves. 289.

receiving it be ever so chaste, yet, if it comes through a polluted channel, the obligation of restitution will follow it."

For these reasons I think there must be judgment for the Plaintiffs.

Solicitors: Phelps, Sidgwick, & Biddle; Patey & Warren; Busk & Co., agents for Peter, Launceston.

H. B. H.