152 Short Notes of Cases: BEING A SELECTION OF ADJUDGED POINTS REPORTED SINCE 1ST FEBRUARY, 1857. POINTS DETERMINED IN THE COURT OF CHANCERY. Lord Chancellor and Master of the 5 Ir. Ch. Rep., Parts 7, 8, and 9. Rolls of Ireland } I.-POINTS DETERMINED IN THE COURT OF CHANCERY. 1. Administration of Assets-Lapsed Share devised to one of Several Tenants in Common, subject to Debts before Descended Estates. 2. Administration of Assets-Simple Contract Creditors of Ancestor entitled before Judgment Creditors of Heir. 3. Administration of Assets--Voluntary Promissory Note entitled to Priority over Legacies. 4. Admission of AssetsQualified by Subsequent Events. 5. Construction of Act of Parliament— Special Power in Act not repealed_by_General Terms in subsequent Act, 6. Equitable Mortgage-Deposit of Part only of the Title-Deeds. 7. Executor-Breach of Trust in not realizing Securities-Crystal Palace Shares -Period of Charging. 8. Fraudulent Settlement-13 Eliz. c. 5.-Subsequent Creditors. 9. Guardian and Ward-Religious Education of Ward -Intention of Father. 10. Limitations, Statute of-Mercantile Law Amendment Act, 19 and 20 Vict. c. 97, s. 14-Payment by Co-contractor, Executor of deceased Co-contractor, presumed to be made as Contractor, valid. 16. 18. not Executor. 11. Lunatic-Mortgage made by, to Bona fide Mortgage, 12. Mines-Working those of a Neighbour-Mode of directing an Account-Onus probandi. 13. Mortgagor and Mortgagee-Assignment of Mortgage-Costs. 14. Perpetuities-Rule against. 15. Partnership-Dissolution of-Concern not capable of being Worked profitably. Partnership Funds-Misapplication of-Application for New Act. 17. Purchaser for Value without Notice-Legal Ownership immaterial. Public Companies-Persons becoming Shareholders by False Representation, how far Liable for Debts of Company. 19. Settlement-Construction of word Unmarried "-Distinction in Cases of Wills. 20. Trustee and Cestui que Trust-How far Cestui que Trustee concurring in Breach of Trust Liable. 21. Trustee must not profit by Trust-Sale of Trusteeship. 22. Will-Bill to establish by a Devisee against Devisee under prior Will-Issue Devisavit vel. Non. 1. WOOD V. ORDISH. 3 Sm. and Giff., 125. Administration of Assets-Lapsed Share devised to one of Several Tenants in Common, subject to Debts before Descended Estates. Real estate was devised subject to the payment of debts to the testator's mother for life, with remainder to his three sisters as tenants in common, in fee. There was a lapse by the death of one of the sisters in the testator's life. It was held by Sir J. Stuart, V.C., that the lapsed share which descended to the heir-atlaw, was applicable to the payment of debts in the same order as the two shares the devisee of which took effect; that is to say, the whole three shares in the administration of assets were liable to be applied in the payment of debts, immediately after estates descending to the heir. 2. KINDERLEY V. JERVIS. 22 Beav., 1. Administration of Assets-Simple Contract Creditors of Ancestor entitled t priority over Judgment Creditors of Heir. In this case the intestate, Sir Sandford Graham, died on the 18th of September, 1852, indebted at the time of his death to various creditors by simple contract. The present baronet, his son and heir, had contracted debts, which were secured by judg ment entered up against him, previously to the decease of his father. And he had also contracted debts, secured by judgment, entered up against him, since his father's death. It was held by Sir John Romilly, M.R., First, that the heir took a beneficial interest in the descended assets of the ancestor, only to the extent that the same were not required for payment of the debts of the ancestor in a due course of administration. And secondly, that under the 13th section of the 1 & 2 Vict., c. 110, only the beneficial interest of the debtor was affected by a judgment entered up against him; and consequently that the judgment creditors of the heir had no lien upon, or interest in the descended real estate, beyond the surplus thereof not required for the payment of debts in a due course of administration. His Honour, in his elaborate judgment, which deserves a careful perusal, first notices the distinction between those cases on the construction of 3 and 4 Will. IV. c. 104, which decide that the real estate of a deceased person, not charged by will or devised for payment of all his debts, should be assets to be administered in equity for the payment of all his debts, whether due by specialty or by simple contract, and those which decide that a purchaser for value of the lands of a deceased debtor, might hold those lands against his creditors. "The distinction," said his Honour, "consists in this-it was not the object, nor is it the operation, of the statute of 3 and 4 Will. IV. c. 104, to make the simple contract debts of a deceased person in the nature of mortgages or specific charges on his real estate; but as the statute makes the land assets for the payment of his debts, these debts constitute a general charge upon them, but not so that a bona fide purchaser of the lands from the heir or devisee is bound to see to the application of the purchase-money, as he would be in the case of a particular mortgage on any portion of the lands themselves. The purchaser assumes, as in the case of the sale of personal assets, that the sale is required for the due administration of the estate and affairs of the deceased debtor, and is not bound to inquire further. The case would be varied in either case, if the purchaser had received direct knowledge that the sales were made for the purpose of defeating creditors, and had thereby become a participator in the fraud." With regard to the question, whether a judgment entered up against the heir or devisee constituted such an alienation by him of the lands descended or devised, as to enable the judgment creditor to take the lands in execution for the debt; or whether the judgment affected only the beneficial interest of the judgment debtor-a question depending upon the statute 1 and 12 Vict. c. 110, s. 13, his Honour observed-"It cannot, I think, have been the intention of the legislature to say, that the judgment creditor shall acquire a charge on lands which do not, in reality, belong to the judgment creditor, but over which, by operation of law, he has such a disposing power, that if he were fraudulently disposed he might sell them and put the money in his own pocket. Suppose the case of the conveyance of an estate to A and his heirs in consideration of £10,000, and a contemporaneous deed executed, by which A declares that the money was advanced by B for the purpose of the purchase, that B is the beneficial owner, and that he, A, holds the estate in trust for B. A, if fraudulently disposed, could sell that estate to a purchaser for value without notice, and might squander the purchasemoney, and yet the purchaser might hold the estate against B, of whose interest in it he had no knowledge or suspicion. Can it be said, in such a case, that the beneficial interest in the estate would be taken from B, and applied to pay A's judgment creditors? Or, in other words, that A's judgment creditors might take B's estate, because A had the power, which he did not exercise, of fraudulently parting with the estate, or obtaining the value of it for his own benefit. It seems to me impossible that the proposition so stated could be deliberately laid down in any court of justice. It would, in fact, enable the last surviving trustee of real estate, in all cases, by confessing judgments, to obtain the interest of the cestui que trust, whether the judgment creditor had or had not notice of the trust.” His Honour, after remarking upon the cases of Whitworth v. Gaugain (3 Hare, 416, 1 Ph. 728), Brearcliffe v. Dorrington (4 De Gex, Sm. 122, 124), and Dunster v. Lord Glengall (3 Ir. Ch. and C., and Rep. 56), which in principle agreed with his Honour's views, said he disapproved of the case of Watts v. Porter (3 Ell. and Bl., 743), decided by the Court of Queen's Bench, Erle J. dissentientete, which appears also to have been dissented from by the Court of Appeal in Chancery, in the case of Beavan v. Lord Oxford (2 Jur., N. S., 121); and he said, "that considering the difference of opinion between the judges themselves in Watts v. Porter, the conflicting character of that decision with the decisions I have already referred to, and the consequences to which it would lead, not the least serious of which is the blow it strikes at the foundation of morality, on which all laws are or ought to be based, it can hardly be expected to govern subsequent cases without further confirmation." 3. DAWSON V. KEARTON. 3 Sm. and Giff., 186. Administration of Assets-Voluntary Promissory Note, entitled to Priority over Legacies. It was held in this case by Sir John Stuart, V.C., that a voluntary promissory note in the administration of assets was payable before legatees, but not to the prejudice of creditors. "In the case of a bond," said his Honour," want of consideration is no objection at law. Yet this court, in an administration suit, treats a voluntary obligation, not according to its legal force as a specialty debt for valuable consideration, but as payable in priority to any legacy. "If a voluntary obligation, in the nature of a debt, is treated as payable in preference to legatees, who are also mere volunteers, without any thing of the nature of an obligation or debt binding the testator himself, the principle would seem to apply as much to a promissory note, by which the testator voluntarily bound himself, as to the voluntary obligation by bond. The volunteer claiming under an instrument by which the testator binds himself as a debtor, may reasonably be paid before the volunteer claiming merely by a testamentary gift. “The state of the assets here will, according to the certificate, only make the creditor on the note payable in preference to legatees, and not in preference to any other creditor." 4. PAYNE V. LITTLE. 22 Beav., 69. Admission of Assets—Qualified by subsequent Events. "The court undoubtedly holds executors to have made an admission of assets by reason of their payment of sums of money, as well as by an express admission in words. If an executor pays a simple contract debt, that no doubt is an admission that he has sufficient assets to pay the specialty debts. But every admission of assets made by an executor, whether it be made by his acts or by an express admission in words, must have reference to the circumstances which he was then acquainted with; and if the circumstances on which he built his admission fail him (which is an expression used by Sir John Strange, in Horseley v. Chaloner -2 Ves. Sen., 83), then the admission fails also, and he cannot be bound by an admission made under circumstances with which he was not acquainted. He might have known nothing whatever of a debt due by the testator; a liability might exist against the estate of the testator in respect of which a debt had not even arisen, as under a covenant entered into by the testator, where no breach might have taken place until long after his death; for instance, if the testator had become surety for another person for the performing the covenants in a lease, and the like. Under such circumstances, if a debt afterwards arose which the executor was not previously aware of, his admission of assets before that time cannot in any respect bind him, or amount to this declaration on his part: that whatever liability may hereafter arise against the testator's estate, and of which I now know nothing, I am content to be bound personally to pay every thing which was left by the testator's will."-Per Sir John Romilly, M.R. |