The House of Lords maintained the strict rule that historically equity has imposed on a fiduciary. The solicitor to a family trust (S) and one Beneficiary (B)-there were several-went to the board meeting of a company in which the trust owned shares. stream
Judgement for the case Boardman v Phipps The solicitor to a family trust (S) and one Beneficiary (B)-there were several-went to the board meeting of a company in which the trust owned shares. "And it is a rule of universal application, that no one, having such duties to discharge, shall be allowed to enter into engagements in which he has, or can have, a personal interest conflicting, or which possibly may conflict, with the interests of those whom he is bound to protect. Access to content on Oxford Academic is often provided through institutional subscriptions and purchases. students are currently browsing our notes. Do not use an Oxford Academic personal account. CASE BRIEF TEMPLATE. Boardman v Phipps answers this question: in the affirmative. They suggested to a trustee (Mr Fox) that it would be desirable to acquire a majority shareholding, but Fox said it was completely out of the question for the trustees to do so. The majority of the House of Lords (Lords Cohen, Guest and Hodson) held that there was a possibility of a conflict of interest, because the solicitor and beneficiary might have come to Boardman for advice as to the purchases of the shares. Citation and Court [1967] 2 AC 46. Phipps v Boardman: HL 3 Nov 1966 A trustee has a duty to exploit any available opportunity for the trust. Boardman felt that by asset-stripping the company he could increase the value of the shares. However, the circumstances were quite different to those in Boardman v Phipps. Lord Cohen said the information is not truly property and it does not necessarily follow that, because an agent acquired information and opportunity while acting in a fiduciary capacity, he is accountable. Recent cases including Bhullar v Bhullar are discussed to illustrate the present approach of the courts to the recurring issues surrounding possible applications of the no-conflict rule. The House of Lords maintained the strict rule that historically equity has imposed on a fiduciary. Boardman was concerned about the accounts of the company, and thought that to protect the trust a majority shareholding is required. Part II describes the rationales for adopting each of the approaches to awarding allowances to dishonest fiduciaries. The majority agreed unanimously that liability to account for the profits made by virtue of a fiduciary relationship is strict and does not depend on fraud or absence of bona fides, and so Phipps and Boardman would have to account for their profits. Boardman v Phipps [1966] UKHL 2 is a landmark English trusts law case concerning the duty of loyalty and the duty to avoid conflicts of interest. Such persons will, however, be entitled to payment on a liberal scale for their work and skill. View the institutional accounts that are providing access. <>>>
The full text is available here: http://www.bailii.org/uk/cases/UKHL/1966/2.html, -- Download Boardman v Phipps [1967] 2 AC 46 as PDF --, Transvaal Lands Co v New Belgium (Transvaal) Lands & Development CO [1914] 2 Ch 488, http://www.bailii.org/uk/cases/UKHL/1966/2.html, Download Boardman v Phipps [1967] 2 AC 46 as PDF. This species of action is an action for restitution such as Lord Wright described in the Fibrosa case. 2.I or your money backCheck out our premium contract notes! A personal account can be used to get email alerts, save searches, purchase content, and activate subscriptions. For more information, visit http://journals.cambridge.org. It concludes that the conduct-based approach in Boardman v Phipps should be rejected, and that the unjust enrichment-based approach provided by Warman International Ltd v Dwyer should be Boardman v Phipps [1967] Where an individual is in the position of agent for trustees, any knowledge acquired in such a position is trust property. Following successful sign in, you will be returned to Oxford Academic. Therefore the agent must account to the trust for any profit made out of the position. Boardman v Phipps (1967) was an example of the application of strict liability. A breach of a fiduciary duty is of strict liability, regardless of their intention Boardman v Phipps 1967 1. They suggested to Mr Fox, a trustee, that it would be desirable to acquire a majority shareholding, but Fox disagreed. If the defendant has done valuable work in making the profit, then the court in its discretion may allow him a recompense. They were therefore liable for the profits earned. in. The beneficiary principle in the 21st century, Subscription prices and ordering for this journal, Purchasing options for books and journals across Oxford Academic, Receive exclusive offers and updates from Oxford Academic. endobj
Flower; Graeme Henderson). They realised together that they could turn the company around. %
Constructive trusts, unjust enrichment, tracing 2010 Cases, Written by Oxford & Cambridge prize-winning graduates, Includes copious academic commentary in summary form, Concise structure relating cases and statutes into an easy-to-remember whole. This is because there is no possibility the trustee would seek Boardman's advice to purchase the shares and at any rate Boardman could have declined to act if given such request. <>>>
[1] The trust assets include a 27% holding in a company (a textile company with factories in Coventry, Nuneaton and in Australia through a subsidiary). %
Published by Oxford University Press. On this Wikipedia the language links are at the top of the page across from the article title. Land law - Introduction to land law with description of its history, Introduction to Sports Massage and Soft Tissue Practices, Legal and Professional Aspects of Optometry (BIOL30231), Access to Health Professionals (4000773X), Business Data Analysis (BSS002-6/Ltn/SEM1), Introductory Chemistry (0FHH0023-0901-2018), Introduction toLegal Theory andJurisprudence, Introduction to English Language (EN1023), Cell Membranes - Lecture notes, lectures 1 - 24. See below. His lordship, with respect . This is because there is no possibility the trustee would seek Boardman's advice to purchase the shares and at any rate Boardman could have declined to act if given such request. Current issues of the journal are available at http://www.journals.cambridge.org/clj. in Aberdeen Railway v. Blaikie, 136 where he said: "And it is a rule of universal application, that no one, having such duties to discharge, shall be allowed to enter into engagements in which he has, or can have, a personal interest conflicting, or which possibly may conflict, with the interests of those whom he is bound to protect. Cambridge University Press is committed by its charter to disseminate knowledge as widely as possible across the globe. The only defence available to a person in such a fiduciary position is that he made the profits with the knowledge and assent of the trustees. Boardman and Phipps did not obtain the fully informed consent of all the beneficiaries. Copyright 2023 StudeerSnel B.V., Keizersgracht 424, 1016 GC Amsterdam, KVK: 56829787, BTW: NL852321363B01, co-appellant was another son of the testator, described as constructive trustees by virtue of a fiduciary relationship to the, B decided along with one of the trustees that the company was not doing well. The institutional subscription may not cover the content that you are trying to access. Did Boardman and Tom Phipps breach their duty to avoid a conflict of interest, despite the fact that the company made a profit and they had obtained (some) consent from the beneficiaries? To purchase short-term access, please sign in to your personal account above. Some societies use Oxford Academic personal accounts to provide access to their members. our website you agree to our privacy policy and terms. Fiduciary duty and the exploits of commercial enterprise often run counter to each other, while in this instance the opportunistic actions of a solicitor produces a profitable outcome for all involved, but not without a cost to the integrity of their working relationships. <>
S;70[`J)LQ,ecX_LK,*q3>~ B=eA* Abstract. It depends on the circumstances. 31334. criticism, see L.S. 25% off till end of Feb! Lord Upjohn also agreed with Lord Cohen that information is not property at all, although equity will restrain its transmission if it has been acquired by a breach of confidence. Boardman was concerned about the accounts of the company, and thought that to protect the trust a majority shareholding is required. However, they would be able to retain a generous remuneration for the services he performed. S;70[`J)LQ,ecX_LK,*q3>~ B=eA* The articles and case notes are designed to have the widest appeal to those interested in the law - whether as practitioners, students, teachers, judges or administrators - and to provide an opportunity for them to keep abreast of new ideas and the progress of legal reform. In the present case, as the purchase of the shares was entirely out of the question, Regal Hastings was said to be inapplicable. Lord Upjohn also agreed with Lord Cohen that information is not property at all, although equity will restrain its transmission if it has been acquired by a breach of confidence. The majority of the House of Lords (Lords Cohen, Guest and Hodson) held that there was a possibility of a conflict of interest, because the solicitor and beneficiary might have come to Boardman for advice as to the purchases of the shares. Applicant VEAL of 2002 v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCA 437. endobj
The company made a distribution of capital without reducing the values of the shares. Boardman v Phipps [1966] UKHL 2 is a landmark English trusts law case concerning the duty of loyalty and the duty to avoid conflicts of interest. Shibboleth / Open Athens technology is used to provide single sign-on between your institutions website and Oxford Academic. The Cambridge Law Journal Rix LJ in Foster v Bryant4 was similarly equivocal to Arden LJ about the inflexibility of the test in Boardman v Phipps. If you see Sign in through society site in the sign in pane within a journal: If you do not have a society account or have forgotten your username or password, please contact your society. Boardman v Phipps. Don't already have a personal account? With the knowledge of the trustees, Boardman and Phipps decided to purchase the shares themselves. John Phipps and another beneficiary, sued for their profits, alleging a conflict of interest by Boardman and Phipps. "It is perhaps stated most highly against trustees or directors in the celebrated speech of Lord Cranworth L.C. endobj
Boardman v Phipps (1967) Michael Bryan; 21. Boardman and Phipps would have to account for their profits, despite the fact they had best intentions and made the Lexter & Harris a profit. way. The case for tracing forward not backward through an overdraft. 3 0 obj
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UY Fe_go_eu6[xGLBdUS-?b\4?s=}GO0upAQ![*`E"~ He attended the annual general meeting of Lester & Harris Ltd, a company in which the trust had a substantial shareholding. However they were generously remunerated for their services to the trust. No positive wrongdoing is proved or alleged against the appellants but they cannot escape from the consequences of their acts involving liability to the respondent unless they can prove consent.: p. 112A, I have no hesitation in coming to the conclusion that the appellants hold the Lester & Harris shares as constructive trustees and are bound to account to the respondentIn the present case the knowledge and information obtained by Boardman was obtained in the course of the fiduciary position in which he had placed himself. It is not contended that the trustees had such knowledge or gave such consent. p. 117D G, The relevant rule for the decision of this case is the fundamental rule of equity that a person in a fiduciary capacity must not make a profit out of his trust which is part of the wider rule that a trustee must not place himself in a position where his duty and his interest may conflict.: p. 123C, Whether there is a possibility of conflict depends on whether the reasonable man looking at the relevant facts and circumstances of the particular case would think that there was a real sensible possibility of conflict: p. 124B, Note that in this case, not only did the principals, which are the trust beneficiaries, no lose anything, but they actually profited from the increase in value of shares held under the trust as a result of the actions of defendants thus it can be surmised that regardless of whether any wrongdoing or harm was caused to the principal, the fiduciary is liable for all profits acquired as a result of his position. The Trustee (T) refused to let them invest on behalf of the trust. Ought Boardman and Tom Phipps to be allowed remuneration for their work and skill in these negotiations? The other two members of the majority, Lord Hodson and Lord Guest, opined that information can constitute property in appropriate circumstances and in the current case, the confidential information acquired can be properly regarded as property of the trust. The trust assets include a 27% holding in a textile company called Lexter & Harris. He (and a beneficiary) purchased shares in a company in which the trust already had a substantial holding. The trust benefited by this distribution 47,000, while Boardman and Phipps made 75,000. His statement has . BOARDMAN v PHIPPS. The trust assets include a 27% holding in a textile company called Lexter & Harris. %PDF-1.5
Unit 11. It concludes that the conduct-based approach in Boardman v Phipps should be rejected, and that the unjust enrichment-based approach provided by Warman International Ltd v Dwyer should be For terms and use, please refer to our Terms and Conditions This authentication occurs automatically, and it is not possible to sign out of an IP authenticated account. Lecture notes, lectures 1-10 - Financial Maths for Actuarial Science, Lecture Notes - Psychology: Counseling Psychology Notes (Lecture 1), The effect of s78 Police and Criminal Evidence Act 1984 Essay, Critical Reflection on my Work Experience, 2019 MCQ 1 answers - Online Multiple Choice Questions, Caso Walmart vs Kmart - RESUMEN DEL TEMA DE LOGISTICA DE OPERACIONES - DSM-5, Syllabus in Social Science and Philosophy, ACCA FINANCIAL MANAGEMENT Pocket Notes 2021 22, Mischief Rule, Examples, Advantages, Disadvantages and rectification, Human Muscular Skeletal Systems. Lord Upjohn dissented, and held that Phipps and Boardman should not be liable because a reasonable man would not have thought there was any real sensible possibility of a conflict of interest. Lord Cohen (on a point with which Hodson and Cohen agreed): S had placed himself in a position of potential CoI, for example if the trustees asked his advice on the merits of buying more shares in the company. The plaintiff is ready to concede it, but in case the other beneficiaries are interested in the account, I think we should determine it on principle. The trust property included a substantial shareholding in a private company. Tom Boardman was a solicitor for a family trust. The majority disagreed about the nature and relevance of information used by Boardman and Phipps. Throughout this phase Proprietary relief in Boardman v Phipps 6 [1967] 2 AC 46 (HL) 73. Viscount Dilhorne. They realised together that they could turn the company around. Boardman v Phipps is a leading authority on the no-conflict rule. 399, 400 (PC). The other two members of the majority, Lord Hodson and Lord Guest, opined that information can constitute property in appropriate circumstances and in the current case, the confidential information acquired can be properly regarded as property of the trust. (Keech v Sandford 1726) - landlord would not grant new lease to beneficiary so trustee took in his own name. His Lordship distinguished Regal (Hastings) v Gulliver by restricting Regal Hastings to circumstances concerned with property of which the principals were contemplating a purchase. I think there should be a generous remuneration allowed to the agents. Boardman was a solicitor to trustees of a will trust. Study with Quizlet and memorize flashcards containing terms like Intro, Intro for fiduciaries, Boardman v Phipps (1967) and more. It publishes over 2,500 books a year for distribution in more than 200 countries. Lords Cohen, Guest and Hodson held that there was a possibility of a conflict of interest because the beneficiaries might have come to Boardman for advice as to the purchases of the shares. law since Boardman v Phipps. Boardman had concerns about the state of Lexter & Harris accounts and thought that, in order to protect the trust, a majority shareholding was required. WI[y*UBNJ5U,`5B1F
:IK6dtdj::yj Therefore S and B invested themselves and the company did very well, improving the value of the shares held by themselves individually and by the trust. Mr Boardman (the trust's solicitor) investigated the affairs of the company, initially on behalf of the trust, and gained useful information. National Provincial Bank Ltd v Ainsworth (1965) Alison Dunn; 20. Select your institution from the list provided, which will take you to your institution's website to sign in. Mr Tom Boardman was the solicitor of a family trust. For librarians and administrators, your personal account also provides access to institutional account management. With the full knowledge of the trustees, Boardman and Phipps purchased a majority stake of the shares themselves. He also obtained detailed trading accounts of the English and Australian arms of the business. Therefore, Boardman was speculating with trust property and should be liable. Cambridge Journals publishes over 250 peer-reviewed academic journals across a wide range of subject areas, in print and online. Register, Oxford University Press is a department of the University of Oxford. Boardman v Phipps [1967] 2 AC 46. by Will Chen; 2.I or your money back Check out our premium contract notes! my lords. 1 0 obj
HL (majority 3-2) held that S and B would hold their acquired shares as constructive trustees for the beneficiaries. The residuary estate included 8000 shares in J.ester & Harris Ltd., an underperforming private company with issued share capital of 3l),000 1 ordinary shares. Administrative Law. It furthers the University's objective of excellence in research, scholarship, and education by publishing worldwide, This PDF is available to Subscribers Only. The direct tyranny will come on by and by, after it shall have gratified the multitude with the spoil and ruin of the old institutions of the land.Samuel Taylor Coleridge (17721834), From scenes like these old Scotias grandeur springs,That makes her loved at home, revered abroad;Princes and lords are but the breath of kings,An honest mans the noblest work of God!Robert Burns (17591796), "It is perhaps stated most highly against trustees or directors in the celebrated speech of Lord Cranworth L.C. The trust benefited by this distribution 47,000, while Boardman and Phipps made 75,000. Become Premium to read the whole document. He said unequivocally that knowledge learnt by a trustee in the course of his duties is not property of the trust and may be used for his own benefit unless it is confidential information which is given to him (i) in circumstances which, regardless of his position as a trustee, would make it a breach of confidence to communicate it to anyone or (ii) in a fiduciary capacity. Choose this option to get remote access when outside your institution. The trustees were informed of these intentions. However, to do this he needed a majority shareholding in the company. You do not currently have access to this article. Boardman v Phipps (1967) was a classic illustration of the principles set out in Lord Russell's statement. Oxbridge Notes uses cookies for login, tax evidence, digital piracy prevention, business intelligence, and advertising purposes, as explained in our 4 0 obj
T he appellant B was a solicitor who acted as an advisor to the trustees. (eg- acting for multiple people) a. F5aE}*?fxl1oA+;{
S>"~qOf~AcW|g[ VFaxb'o Tns34}#rPDB Proprietary relief in Boardman v Phipps 3 the trustees, although Ethel, who suffered from senile dementia, took no active role in the trust affairs at the material time. The proposition of law involved in this case is that no person standing in a fiduciary position, when a demand is made upon him by the person to whom he stands in the fiduciary relationship to account for profits acquired by him by reason of his fiduciary position and by reason of the opportunity and the knowledge, or either, resulting from it, is entitled to defeat the claim upon any ground save that he made profits with the knowledge and assent of the other person.: The appellants obtained knowledge by reason of their fiduciary position and they cannot escape liability by saying that they were acting for themselves and not as agents of the trustees. Annetts v McCann (1990) 170 CLR 596. Case summary last updated at 24/02/2020 14:46 by the Penn v Lord Baltimore (1750) Paul Mitchell . This meant he had to account for all profits arising out the CoI, no matter how remote the probability was that this CoI would actually arise. endobj
For full access to this pdf, sign in to an existing account, or purchase an annual subscription. The gist of it is that the defendant has unjustly enriched himself, and it is against conscience that he should be allowed to keep the money. The Appellant Phipps was Chairman of this company and Mr. Boardman was one of its directors. WI[y*UBNJ5U,`5B1F
:IK6dtdj::yj In 1996 Mr Clarke settled 150,000 on trust to benefit various family members including his grandchildren, Brooke and Billy. Issues Did Boardman and Tom Phipps breach their duty to avoid a conflict of interest, despite the fact that the company made a profit and . 2 0 obj
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Here you will find options to view and activate subscriptions, manage institutional settings and access options, access usage statistics, and more. Tom Boardman was a solicitor for a family trust. The proceedings. strict liability of fiduciaries has been the subject of criticism on the grounds that it is unfair to penalise honest trustees in the same way as guilty trustees and that the strict rule may discourage people from accepting the post. 39^40. Is it a conflict? This is a Premium document. The majority disagreed about the nature and relevance of information used by Boardman and Phipps. ), Rang & Dale's Pharmacology (Humphrey P. Rang; James M. Ritter; Rod J. <>
Boardman v Phipps seems like a more onerous application of rule against an unauthorised profit than that in Regal Hastings, all that is apparently required for a fiduciary to be liable is that ' a reasonable man looking at the relevant facts would think there was a real possibility of . In the present case, as the purchase of the shares was entirely out of the question, Regal Hastings was said to be inapplicable. 2010-2023 Oxbridge Notes. A fiduciary shall not profit from his position, Appeal dismissed; the defendants were liable to account for the shares and profits to the trust beneficiaries, but the liberal allowance was maintained, A fiduciary agent has to account to for any profits acquired by reason of the his fiduciary position and the opportunity or knowledge resulting from it, even if the principals could not have made the profits themselves with such opportunity or knowledge, unless the principal has given his informed consent, The profits will be held on constructive trust for the principal by the fiduciary agent, but the board may make allowance to the fiduciary agent for expenditure and work expended to acquire the profit, The defendants, Boardman and another, were acting as solicitors to the trustees of a will trust, and therefore were fiduciaries but not trustees, The trustees were minority shareholders in a private company which was being inefficiently managed, Boardman and one of the beneficiaries under the trust, in good faith, personally financed the purchase of a controlling interest in the company, in order to reorganise it to the benefit of the trust holding, Both the personal and trust holdings increased in value as a result of the reorganisation; one of the other beneficiaries therefore sought an account of the personal profits made by the defendants, Wilberforce J, in the High Court, held that the defendants were liable to account for the profit less the money spent on realising that profit; but at the same time made a liberal allowance for the work put in to realise that profit, The defendants appealed to the Court of Appeal, who dismissed their appeal; they subsequently appealed to the House of Lords. Do not use an Oxford Academic personal account. Boardman v Phipps is a leading authority on the no-conflict rule. Lord Upjohn was in dissent in Boardman v. Phipps, but his dissent was "on the facts but not on the law": Queensland Mines Ltd. v. Hudson (1978) 52 A.L.J.R. endobj
By his Will dated the 23rd December, 1943, Mr. C. W. Phipps left an annuity to his widow and subject thereto 5/18ths of his estate to each of his sons and 3 /18ths to his daughter, Mrs. Noble. Facts: Boardman was solicitor of family trust, which included a 27% holding in a textile company. law since Boardman v Phipps. 'Rules of equity have to be applied to such a great diversity of circumstances that they can be stated only in the most general terms and applied with particular attention to the exact circumstances of each case. His Lordship regarded Boardman to be liable because he acquired the information in the course of the fiduciary relationship and because of the fiduciary relationship. Part II describes the rationales for adopting each of the approaches to awarding allowances to dishonest fiduciaries. O(Grx+Q_[%Dm%|(Dy m%Cn(Dy(o%~(Jg(Q[tJD|(R(GIAK(xRph1%Z'-Y!bO-FDY b<9hHJO-F?!b<98HO-F!b-f b. An important feature of the journal is the Case and Comment section, in which members of the Cambridge Law Faculty and other distinguished contributors analyse recent judicial decisions, new legislation and current law reform proposals. The majority agreed unanimously that liability to account for the profits made by virtue of a fiduciary relationship is strict and does not depend on fraud or absence of bona fides, and so Phipps and Boardman would have to account for their profits. In my view it means that the reasonable man looking at the relevant facts and circumstances of the particular case would think that there was a real sensible possibility of conflict; not that you could imagine some situation arising which might, in some conceivable possibility in events not contemplated as real sensible possibilities by any reasonable person, result in a conflict.". The Cambridge Law Journal publishes articles on all aspects of law. They wanted to invest and improve the company. Key Points. able to bring it back to profit, and the trust fund benefited. Boardman V Phipps - Judgment - House of Lords House of Lords The majority of the House of Lords (Lords Cohen, Guest and Hodson) held that there was a possibility of a conflict of interest, because the solicitor and beneficiary might have come to Boardman for advice as to the purchases of the shares. This article explores . But when, as in this case, the agents acted openly and above board, but mistakenly, then it would be only just that they should be allowed remuneration. The trust benefited by this distribution 47,000, while Boardman and Phipps made 75,000. <>/ExtGState<>/ProcSet[/PDF/Text/ImageB/ImageC/ImageI] >>/Annots[ 17 0 R 22 0 R 23 0 R 25 0 R 35 0 R 36 0 R 40 0 R 42 0 R] /MediaBox[ 0 0 594.96 842.04] /Contents 4 0 R/Group<>/Tabs/S/StructParents 0>>
His Lordship regarded Boardman to be liable because he acquired the information in the course of the fiduciary relationship and because of the fiduciary relationship. Wilberforce J held that Boardman was liable to pay for his breach of the duty of loyalty by not accounting to the company for that amount of money, but that he could be paid for his services. He and a beneficiary, Tom Phipps, went to a shareholders' general meeting of the company. Paragon Finance plc v DB Thakerar & Co (a . Pettitt v Pettitt (1970) and Gissing v Gissing (1971) John Mee; 22. S+QMS^ kUeH|8H4W,G*3R]wHgMY&,*Hu`IcFWB <>
If you believe you should have access to that content, please contact your librarian. Lord Denning MR, Russell LJ and Pearson LJ upheld Wilberforce J's decision and held that Boardman and Phipps had breached his duty of loyalty, which arose as they had become self-appointed agents representing the trust, by putting themselves in a conflict of interest. This article explores how the dissenting judgment of Lord Upjohn in Boardman v Phipps has been preferred by the lower courts and why the courts have adopted such a position. His daughter, Mrs Newman, was one of the trustees. If the agent has been guilty of any dishonesty or bad faith, or surreptitious dealing, he might not be allowed any remuneration or reward. Read more about this topic: Boardman V Phipps, Judgment, A severe though not unfriendly critic of our institutions said that the cure for admiring the House of Lords was to go and look at it.Walter Bagehot (18261877), The welcome house of him my dearest guest.Where ever, ever stay, and go not thence,Till natures sad decree shall call thee hence;Flesh of thy flesh, bone of thy bone,I here, thou there, yet both but one.Anne Bradstreet (c. 16121672), You see how this House of Commons has begun to verify all the ill prophecies that were made of itlow, vulgar, meddling with everything, assuming universal competency, and flattering every base passionand sneering at everything noble refined and truly national.
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