McCormick v Grogan (1869) LR 4 HL 82

Facts

  • John Grogan, the testator, left his estate to James McCormick by will.
  • Prior to his death, Grogan informed McCormick that he wished the estate to benefit certain individuals, but these intentions were not set out in the will.
  • After Grogan's death, McCormick declined to follow these instructions, asserting entitlement to the estate absolutely.
  • The matter concerned whether Grogan's oral communication to McCormick was sufficient to create a legally enforceable trust.

Issues

  1. Whether an oral communication by the testator to the beneficiary can create a legally enforceable secret trust.
  2. Whether the evidence of the testator’s intention and the beneficiary’s acceptance imposed a binding obligation in equity.
  3. Whether enforcement of a secret trust conflicts with statutory formalities required by the Wills Act 1837.

Decision

  • The House of Lords held that a secret trust was valid in these circumstances.
  • The Court found that the testator’s clear intention, communicated to the trustee before death, and the trustee’s acceptance of the obligation were sufficient for enforcement.
  • McCormick was determined to be bound in equity to hold the estate for the benefit of those intended by Grogan.

Legal Principles

  • A secret trust does not require formal documentation in the will if the testator’s intention, communication, and trustee’s acceptance are present.
  • Secret trusts are enforced by equity to prevent fraud and to avoid beneficiaries taking property contrary to the testator’s wishes.
  • The existence of a secret trust is proven by evidence of intention, communication (oral or written, before death), and acceptance (express or implied) by the trustee.
  • The equitable maxim that “equity will not permit a statute to be used as an instrument of fraud” underpins the enforcement of secret trusts, despite statutory requirements.

Conclusion

McCormick v Grogan (1869) LR 4 HL 82 confirmed the validity of secret trusts in English law, establishing that clear intention, communication during the testator’s lifetime, and acceptance by the trustee are essential, with the doctrine serving to prevent fraud even where testamentary formalities are not fully satisfied.

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