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THORNE v. Caxx, H.L. Vaux (3), Lord Cranworth, L.C., said, "A mortgage to Forward an arrangement mortgagor cannot set up against his own was come to that the first mortgage of incumbrancer any other incumbrance 3001. should be transferred to Miss created by himself.” In the latter case Arnold, and that she should also have a it was held that a mortgagor by a pur- further charge of 7001., so that she bechase of the estate from the first mort- came mortgagee for 1,0001. It may be gagee selling under a power of sale could that as regards 7001, there was a priority not defeat the title of the second mort- on the part of Forward. But I do not gagee. There must be some clear indica- think that it will turn out that that is tion of intention, not present in this case, material so far as the question now to be in order to keep the mortgage alive.

determined is concerned. Afterwards [LORD MACNAGHTEN referred to David- there was a mortgage to Thorne, the apson's Conveyancing, vol. 2, pt. 1, p. 249, pellant's testator. The mortgage transand to Banks v. Whittall (4).]

actions appear to have been carried out In Parry v. Wright (5) a third incum- through the medium of Mr. Searle, a solibrancer paying off the first mortgage, but citor who acted for both sides, and he failing to keep it on foot for his protec- gave an undertaking to each of the morttion, was held not to be entitled to stand gagees by which he granted a mortgage in place of the first mortgagee against in effect, because he undertook either to the second. This decision of Sir John take a transfer of the mortgage or, at his Leach, V.C., was affirmed by Lord Lynd- option, to make good any deficiency which hurst. So in Brown v. Stead (6), a second might arise in the realisation thereof. mortgagee lost his priority in like circum- None of the parties could insist on his stances. There are here no such circum- taking a transfer, but if he did not take stances as existed in Adams v. Angell (7). a transfer they could each of them insist

[They also cited Mangles v. Dixon 18).] that if upon the realisation of the security

Haldane, Q.C., and F. Hoare Colt, for there was a deficiency he should make the respondent, were not heard.

good that deficiency. Piller, the mort

gagor, afterwards became bankrupt, and THE LORD CHANCELLOR (LORD HER- under his bankruptcy Searle bought the SCHELL).—This is an appeal from a judg- equity of redemption from the trustee in ment of the Court of Appeal, affirming a bankruptcy, and thus became the owner judgment of Mr. Justice Romer. The of the equity of redemption. Miss question was whether the respondents had Arnold desired to receive the mortgage made out a good title to sell. One objec- money, and to be no longer out of it. tion, and one only, to that title was taken Accordingly she entered into negotiation and argued before the Court of first with Mr. Searle with that object. Thereinstance ; and in this House I think it upon, he not having the money, or not is not open to your Lordships to consider being prepared to advance the money any other point but that single one so himself, went to the Devon and Cornwall taken.

Bank, with whom he had an account, and The property had originally belonged obtained 1,0001. from them on a special to a Mr. Piller. He mortgaged it in the .

advance, with a view of obtaining the first instance for the sum of 3001. He money to pay Miss Arnold. At that time then mortgaged it to a Mr. Forward for it would seem that he was in communicathe sum of 1501. Subsequently to that tion with a Mr. Cann with a view to his (3) 6 De Gex, M. & G. 638; 26 Law J. Rep.

taking the mortgage ; but at that time it Chanc. 128.

was a mere matter of negotiation, and no (4) 1 De Gex & Sm. 536 ; 17 Law J. Rep. absolute agreement had been come to on Chanc. 14 ; affirmed Ibid. 352.

the subject. But this is certain, that he (6) 1 Sim. & S. 369; affirmed 5 Russ. 144.

obtained 1,0001. from the bank, and that (6) 5 Sim. 535; 2 Law J. Rep. Chanc. 45. (7) 46 Law J. Rep. Chanc. 352 ; Law Rep.

it was the intention of himself and of the 5 Ch. D. 634.

bank that the bank should receive the (8) 3 H.L. Cas. 702, 737.

mortgage security which he was going to gage ?

THORNE v. Canx, H.L. discharge. I think that is perfectly clear existing at the time when the money was from the answers given by the bank paid to Miss Arnold and the instrument manager (and there is nothing in Mr. taken, that it was the intention of Mr. Searle's evidence inconsistent with it) and Searle to keep this security alive. It from the documents put in. The bank appears to me that such intention is indimanager says: “I knew nothing about cated in the form of the instrument taken. Miss Arnold or Mr. Cann, because fre- I cannot myself conceive when the owner quently he had got no client. I have had of the equity of redemption paid Miss many transactions with him. If a client Arnold, the mortgagee, what was the asked him to pay off a mortgage he would object of his taking to himself an assigncome to the bank, if he had not got any ment of the mortgage debt and all the other client ready, and we would wait benefits to arise in respect of it, if it was until he had one. Now what is the not to keep alive that security. meaning of that, but that they were ready Now, that having been the intention to find the money to pay off the mort- which I infer from the instrument itself

That is, they, advancing the and from the surrounding circumstances money, were to have the benefit of the

at the time, is that intention defeated by mortgage security. That obviously was some rule of law which prevents effect the intention of both Mr. Searle and the

being given to it ? Reliance has been bank. Under these circumstances he placed by the learned counsel for the apreceives the money from the bank and he pellant upon the case of Toulmin v. Steere pays Miss Arnold; he takes an instru- (1). Toulmin v. Steere (1) is a case which ment from her which I will call attention certainly has not met with universal to in a moment, and he deposits the deeds acceptance. It has been often commented with the bank. Some months or so after- upon and criticised adversely. It appears wards Mr. Cann advances 9001. and takes that an appeal was contemplated, although from Mr. Searle an assignment of the circumstances rendered it unnecessary, security.

and possibly the decision might be open Now the instrument executed by Miss to reconsideration in your Lordships' Arnold witnesses that “in consideration House. But it is not necessary to deterof the sum of 1,0001. this day paid to mine any such point on the present occathe said Jane Owen Arnold by the said sion, because if Toulmin v. Steere (1) be James Searle (the receipt whereof the accepted as good law, it does not, in my said J. O. Arnold doth hereby acknow- opinion, govern the present case. In ledge), she, the said J. O. Arnold, as Toulmin v. Steere (1) the owner of the mortgagee, doth hereby assign unto the equity of redemption (being so far in the said J. Searle, his executors and assigns, same position as Mr. Searle in the present both the said sum of 1,0001. now owing case) had purchased the property with to the said J. O. Arnold and the security the intention of paying off all the mortaforesaid, and all the interest henceforth

gages upon it; and when all the mortgages to accrue due for the sum, and the full had been paid off out of the purchasebenefit of the covenants entered into by money, as he thought, it was found that the said J. Piller in the said indentures, one mortgage had been omitted.

But so and all other securities for the same pre- far from the intention there being to keep mises and all the estate and interest of

any of the mortgages alive, the intention the said J. O. Arnold in the premises, and was to extinguish all the mortgages, and any part thereof.” That was the nature it was believed that this intention had of the instrument executed, and it pur- been successfully accomplished. If there ports, as will be seen, to assign the mort- remained a mortgage, it was not because gage debt and all the securities held in

there had been any intention to keep it respect thereof.

alive, nor was there any intention to keep Now I do not think, as I have already it alive afterwards when it was paid off said, that it can for a moment be doubted, and extinguished, as the intention had looking to the surrounding circumstances been to extinguish all the mortgages.



THORNE v. CANX, H.L. Now in the case of Adams v. Angell (7), which he acquired from Miss Arnold and as here, the equity of redemption had been subsequently transferred to the respondent. purchased from the trustee under a bank- I think that is a reasonable inference ruptcy. The question was whether the from the tenor of the documents by which mortgage security had been kept alive; these transactions were carried out, and and the principle laid down by the late the only inference consistent with the Master of the Rolls in giving his judg- circumstances attending their execution. ment is this : “ That in all these cases the That inference, in effect, is sufficient to question is one of intention; and louking dispose of this appeal. It seems clear, upon at the terms of the deed by the light of authority, that in such circumstances inthe surrounding circumstances, I am of tention must prevail, and that the case opinion that an intention was clearly does not fall within the rule laid down in shewn not to let in Newson” (the subse- Toulmin v. Steere (1). quent mortgagee in that case) “except on the terms of his paying Adams his prin- LORD MACNAGHTEN.—I do not think cipal, interest, and costs.” Adopting that there is any foundation for this appeal in principle, I say here, looking at the deed principle or authority. itself, which I think would have been The case of Toulmin v. Steere (1), which sufficient, where there is nothing point- was pressed into the service of the appeling to the contrary, I am of opinion that lant, has not, as it seems to me, any applithe intention was to keep the security cation to the present case. The facts in alive. It seems to me one method recog- the two cases are not the same; nor is nised by conveyancers, expressing such there, I think, any real resemblance bean intention-namely, when an assign- tween them. ment is taken of the mortgage security. In Toulmin v. Stoere (1) it was decided But if you are to look at the terms of the that a purchaser who took a conveyance deed together with the surrounding cir- purporting to be free from incumbrances cumstances at the time, so far from their could not set up a mortgage which had pointing the other way, they all, to my been paid off out of the purchase-money mind, point in the same direction, and against an incumbrance subsequent in indeed beyond any possibility of dispute date of which he had constructive notice. that that was the intention.

The authority of that case cannot nowaReliance has been placed by the appel- days be treated as going beyond the lant upon the documents, and among actual decision. Whether it would be them the undertakings to which I have regarded as a binding authority in a case referred given by Mr. Searle. I do not on all-fours with it, except in a Court of think they militate against the respon- first instance, is at least doubtful. It dent's case. It was said that they explained would not, I think, on the present occawhy it was that the transfer was taken sion, be proper to go beyond what has from Miss Arnold in that form. They do. been said in Stevens v. The Mid-Hants They shew that it was intended to be Railway Company (9) and Adams v. transfer of the mortgage-as excellent a Angell (7). But I may remind your Lordway of expressing the intention of the ships of an observation which was made by parties as can well be conceived.

Lord Justice James in the former case For these reasons I think the judgment which is not, I think, without application

I of the Court of Appeal is perfectly correct to the case now before your Lordships. and ought to be affirmed and the appeal “Of course, it is quite right,” said his dismissed with costs, and I move your Lordship, “that an intermediate incumLordships accordingly.

brancer should not be prejudiced by any

dealings between his debtor and another LORD WATSON.-I concur.

I am satis

incumbrancer. At the same time, it is field that it was the intention of James not for this Court to find some recondite Searle, the owner of the equity of re

(9) 42 Law J. Rep. Chanc. 694; Law Rep. demption, to keep on foot the mortgage 8 Ch. 1064.

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THORNE v. Cann, H.L. technical reason for giving a man a bene- Cann may be entitled, I think the decision fit at the expense of another man who was of Mr. Justice Romer, affirmed by the under no liability whatever to pay him.” Court of Appeal, is quite right, and I am

The material facts in this case are very of opinion that the appeal should be dissimple. When Searle agreed to buy the missed with costs. equity of redemption from Piller's trustee in bankruptcy, he became owner of the Solicitors_Mear & Fowler, agents for G. H. whole, subject to certain charges. The Thorne, Nottingham, for appellant: Torr, debts which these charges were intended Gribble, Oddie & Sinclair, agents for C. T. K. to secure were not his debts, nor was he

Roberts, Exeter, for respondent. personally liable to pay them. I do not

[Reported by J. Eyre Thompson, Esq., forget the undertakings which Searle had

Barrister-at-Law. given. But these undertakings did not make the debts his, or bind him to pay so that he could be constituted as a debtor. There was nothing inconsistent with

(IN THE CHANCERY DIVISION AND IN Searle's duty to Thorne in his performing

THE COURT OF APPEAL.] his undertaking to Miss Arnold.

KEKEWICH, J. Nothing, I think, is better settled than

1894, this—that when the owner of an estate

June 15, 16. pays charges on the estate which he is


LINDLEY, L.J. not personally liable to pay, the question Lopes, L.J. whether these charges are to be considered

DAVEY, L.J. as extinguished or as kept alive for his

Aug. 2. benefit is simply a question of intention. You may find intention in the deed, or

Principal and Surety--Contribution

Mercantile Law Amendment Act, 1856 (19 you may find it in the circumstances attending the transaction, or you may

& 20 Vict. c. 97), 8. 5. presume an intention from considering Where a principal creditor has proved whether it is or is not for his benefit that for the debt against the estate of one surety, the charge should be kept on foot. Here and has subsequently obtained payment of I think the intention appears plainly on the the debt in ful from the two remaining face of the deed by which Miss Arnold sureties, the latter are entitled to the benefit purported to transfer her mortgage. There of the proof for the whole amount of the is no release of the debt. Payment is not debt, subject to the qualification that they acknowledged simply; but the debt is as- cannot recover more than the just proporsigned—the mortgage is transferred. The tion puyable by the third surety. power of sale and other powers are kept Decision of KEKEWICH, J., affirmed. alive. To put it shortly, it is a transfer, and not a reconveyance. If it were necessary This was an application that the plainto look at the circumstances attending the tiffs, as creditors, might be declared entransaction, it seems to me that the deal- titled to prove against the estate of James ings with the bank and the negotiations Caley Parker under a deed whereby he with Cann, which began before Miss assigned his estate for the benefit of creArnold was paid, shew the intention ditors for the sum of 1,7531. 158. clearly enough. These dealings and trans- By a mortgage-deed made the 12th of actions would have been simply a fraud March, 1892, the parties of the second on the part of Searle if it had not been his part jointly and severally and any two, intention to keep the charge alive. More- three, four, or five of them covenanted as over, if it were necessary to consider the sureties for the Norwich and Norfolk point, it was plainly for the benefit of Investment Corporation, Limited (the Searle to keep Miss Arnold's mortgage on

principal debtors), to pay the mortgafoot.

gees (Messrs. Cozens-Hardy and Jewson) On these broad grounds, without con- 1,8531. 58. and interest, and certain costs sidering any special equity to which Mr. as therein mentioned. The parties of the


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IN RE PARKER, App. second part consisted of five persons might have a dividend on the full amount, namely, James Caley Parker, Robert provided such dividend did not (which Holmes, George Yallup, Luther Tall, and was the fact) exceed one-third of the total Richard Harry Court. There was a clause amount of proof, being the proportion in the deed making the sureties as between which, as between the sureties Parker, themselves and the mortgagees principal Yallup, and Court, Parker was liable to debtors.

pay. It was contended by the defendant Of the five sureties, Robert Holmes Hill

, the trustee, that the proof would became bankrupt, and nothing could be only lie for one-third of the total amount recovered from his estate. Luther Tall due under the mortgage, and a dividend became bankrupt, and only 101. 48. was was only payable on that one-third. The recovered from his estate by the mort. mortgagees did not claim a dividend on gagees in respect of the amount due to the 2501. costs above referred to, and it them, for which credit was duly given. was found that they had claimed interest Substantially, therefore, there were three up to Christmas, 1893, instead of up to sureties left to bear the liability in respect February, 1893, the date of the deed of of the mortgage debt, &c. On the 18th assignment, so that the sum claimed was of February, 1893, James Caley Parker reduced to 1,7531. 158. executed a deed of assignment whereby he assigned his estate to Samuel Gerard

E. A. Hadley, for the co-sureties.-- The Hill, as trustee, for the benefit of cre

surety who has paid more than his conditors.

tribution is entitled to use the proofs of The mortgagees sent in a claim to the

the original creditor-Ex parte Stokes (1). trustee under the deed of assignment for

T. B. Napier, for the trustee.—When the total amount of debt, interest, and

one surety has paid the whole of the debt costs due under the covenant, but there

he is entitled to a proportion only from was no formal admission of the claim, and

his co-surety-Ex parte Snowdon (2), nothing paid by the trustee in respect

Wolmerhausen v. Gullick (3), and In re thereof The mortgagors, the Norwich

Ennis ; Coles v. Peyton (4). Under secand Norfolk Investment Corporation, went

tion 5 of the Mercantile Law Amendment into voluntary liquidation. The mortga

Act, 1856 (5), no co-surety is entitled to regees called upon the remaining twosureties, (1) De Gex Rep. Bankr. 618. Yallup and Court, to pay a substantial (2) 50 Law J. Rep. Chanc. 540 ; Law Rep.

17 Ch. D. 44. sum in respect of the amount due under

(3) 62 Law J. Rep. Chanc. 773; Law Rep. the mortgage.

[1893] 2 Ch. 514. Court then paid to the mortgagees (4) 62 Law J. Rep. Chanc. 991; Law Rep. 2,1291. 18. 11d., being as to 1,7561. 118. Ild. [1893] 3 Ch. 238. principal and interest due under the (5) Mercantile Law Amendment Act, 1856,

s. 5: “Every person who, being surety for the mortgage, and as to 3421. 108. for estimated

debt or duty of another, or being liable with costs, 2501. of the costs being in respect another for any debt or duty, shall pay such of a collateral security. One half of this debt or perform such duty, shall be entitled to sum Yallup paid to his co-surety Court. have assigned to him or to a trustee for him By an indenture made the 13th of

every judgment, specialty, or other security

which shall be held by the creditor in respect April, 1894, the mortgagees transferred

of such debt or duty, whether such judgment, the securities and debt to Mary Ann specialty, or other security shall or shall not be Morgan and John William Jewson, the deemed at law to have been satisfied by the plaintiffs, as trustees for Court and Yallup. payment of the debt or performance of the Upon the payment off, the plaintiff's

duty; and such person shall be entitled to stand

in the place of the creditor and to use all his claimed against the defendant, as trustee remedies, and if need be and upon a proper inof James Caley Parker, to be entitled to demnity to use the name of the creditor in any the benefit of the proof or claim of the action or other proceeding at law or in equity, mortgagees against Parker's estate for the in order to obtain from the principal debtor or full amount of principal, interest, and costs

any co-surety, co-contractor, or co-debtor, as

the case may be, indemnification for the advances which had been properly payable under made and loss sustained by the person who the mortgage-deed, so that the plaintiffs shall have so paid such debt or performed such

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