## Facts

- A lease of the profits of Romford market was held by a trustee for the benefit of an infant beneficiary.
- As the lease neared expiration, the trustee sought a renewal from the landlord expressly for the infant’s benefit.
- The landlord refused to renew the lease to the infant beneficiary.
- After that refusal, the landlord agreed to renew the lease to the trustee personally, and the trustee took the renewed lease in his own name.
- After reaching majority, the beneficiary sued in equity seeking an assignment of the renewed lease and an accounting of profits earned by the trustee under the renewal.

## Issues

1. Whether a trustee who obtains a renewal of a lease connected to trust property in the trustee’s own name must hold the renewed lease on trust for the beneficiary, even when the landlord refused to renew to the beneficiary.
2. Whether the trustee may retain the renewed lease absent proof of fraud or bad faith.

## Decision

- The court held that the renewed lease was held on trust for the beneficiary.
- The trustee was ordered to assign the renewed lease to the beneficiary.
- The trustee was ordered to account for profits made since the renewal.
- The trustee was entitled to indemnity against liabilities under the renewed lease’s covenants.

## Legal Principles

- A trustee may not profit from an opportunity that arises by reason of the trustee’s management of trust property; benefits obtained from such opportunities are held for the beneficiary.
- The rule is strict and applies even without fraud or bad faith; the focus is on preventing conflicts between the trustee’s duty and personal interest.
- Equity enforces loyalty through proprietary relief (treating the benefit as held in trust for the beneficiary) and through an accounting for profits.

## Conclusion

The court imposed a strict duty of loyalty: a trustee who takes a renewal tied to trust property in the trustee’s own name must hold it for the beneficiary and disgorge profits, notwithstanding the landlord’s refusal to renew directly to the beneficiary and the absence of fraud.


Keech v. Sandford, 25 Eng. Rep. 223 (Ch. 1726)