No. CCCXI. Deed of Covenant to Indemnify a Purchaser against any Misapplication of Purchase-Money (1). THIS INDENTURE of in the parts, made the day of year of the reign, &c. and in the year COVENANTS. Indemnity (Application of money). (1) Where freehold lands are directed to be sold, and the monies arising from the sale are to be applied in payment of legacies or debts, purchasers, although justified at law in paying the purchase-money to the trustees, are nevertheless bounden in equity to see it applied according to the trusts, if they be not expressly relieved from that obligation by a clause declaring that the receipts of the trustees shall be a sufficient discharge, because taking the estate with notice of the trusts they become in contemplation of equity trustees for the due execution. But this general obligation of purchasers to see to the application of purchase-money must be understood with some restriction, and to extend to those cases only where the trusts are of such a defined and limited nature as to enable a purchaser to see to the application of the money, as if it be for the payment of legacies or of debts, which are scheduled or otherwise specified; Abbot v. Gibbs, 1 Eq. Ca. Ab. 358; Spalding v. Shalmer, 1 Vern. 301; Lloyd v. Baldwin, 1 Ves. 173; even though the estate be sold under a decree of the Court of Chancery; Lloyd v. Baldwin, 1 Ves. 173; or by virtue of any act of parliament; Cotterell v. Hampson, 2 Vern. 5; for where the trust is for the payment of debts generally, a purchaser is not bound to see the purchase-money applied, even though he have notice of the debt; because he cannot be expected to see to the due performance of a trust so unlimited and indefinite; Rogers v. Skillicorne, Amb. 188; Smith v. Guyen, 1 Brow. Ch. Ca. 186; Williamson v. Curtis, 3 ib. 96; Braybrooke v. Inskip, 8 Ves. 417; nor where the trust is for payment of debts generally and also of legacies, because the debts must be first paid; Jenkins v. Hiles, 6 Ves. 654; unless where the estate has been sold under a decree of the Court of Chancery, which reduces the debts to as great a certainty as if they had been scheduled; Lloyd v. Baldwin, 1 Ves. 173. The purchaser of leasehold estates, or other chattel or personal interests, is not however liable to see to the due application of the purchase-money, even though defined and limited trusts be declared of it, because these, however they may be bequeathed, are assets in the hands of the executors to be applied in a due course of administration, which is tantamount to a Purchaser, &c. liable to see to the application of the purchase money. COVENANTS. Indemnity (Application of money). Recital of will directing the estates to be sold. of our Lord 18 BETWEEN (the covenantors) of, &c. devisees in trust, named in the last will and testament of (the testator) of, &c. deceased of the one part, and (the purchaser) of, &c. of the other part. WHEREAS the said (testator), by his last will and testament in writing, bearing date the was in the year day of day of which and duly executed so as to pass real estates of inheritance, gave and devised all and singular his real and personal estates, of what nature or kind soever, unto the said (devisees), their heirs, executors, administrators and assigns, UPON TRUST to sell and dispose of the same, or so much and such part thereof as they should think fit, and to stand possessed of and interested in the monies to arise by such sale or sales, IN TRUST to pay, apply and dispose of the same in such manner and for such purposes as in the Sale by auction. said will is particularly mentioned. AND WHEREAS the said (devisees), in pursuance of the trusts in them reposed by the said will, put up the real estate of the said (testator) to sale by public auction, on or about the last past, at which sale the said (purchaser) became and was declared to be the highest bidder and purchaser thereof, at or for the price or sum of £ AND WHEREAS the said sum of £ hath been this day paid to the said (devisees), and by indentures of lease and release the lease bearing date the day next before the day of the date of the release, and the release bearing or intended to bear even date with these presents, and made or expressed to be made between the same persons as are parties to these presents, the said hereditaments and premises have been or are intended to be conveyed unto and to the use of the said (purchaser), his heirs and assigns, for ever. AND WHEREAS Some doubts having been entertained respecting the competency of the said (devisees) to give such an effectual discharge to the purchaser of the said hereditaments as to exonerate him from seeing to the application of the said purchase-money under the trusts of the said will, the said (purchaser) hath requested them to enter into such covenants for that purpose as hereinafter are expressed, Conveyance to purchaser. Doubts as to competency of trustees to give receipts. bequest for payment of debts generally. In cases where the purchaser is holden to be so liable, his safer and perhaps the only safe way of exonerating himself against the claim of the beneficial legatees, is to see the money so applied, and take discharges from such legatees. Where however the vendors are persons of acknowledged probity and responsibility, it is not uncommon for a purchaser to be satisfied with their covenant for that purpose, for which reason a form has been here given. COVENANTS. Indemnity (Application of money). WITNESS. The devisees covenant to apmoney as di ply the purchase rected by the will. which they have agreed to do. NOW THEREFORE THIS INDENTURE WITNESSETH, that in pursuance of the said agreement, and in consideration of the premises aforesaid, they the said (devisees) for themselves jointly (1) and severally, and for their several and respective heirs, executors and administrators, do and each of them DOTH Covenant, promise, declare and agree with and to the said (purchaser), his heirs and assigns, by these presents, in manner following, (that is to say) that they the said (devisees) or one of them, their or his heirs, executors or administrators, shall and will pay, apply and dispose of the said sum of £ , so paid to them by the said (purchaser) as aforesaid, in or towards payment of the several debts, legacies and other sum and sums of money bequeathed or directed to be paid in and by the said in part recited will of the said (testator) deceased, and in and for such other intents, purposes and ways and manner as in or by the said will are declared or expressed concerning the same; AND also shall and will at all times, And produce and from time to time, within the space of six years from the date receipts, &c. hereof, at the reasonable request of the said (purchaser), his heirs or assigns, state and set forth in writing, under his or their hand or respective hands, how in particular such purchase money shall have been paid, laid out, or applied, or disposed of, and produce and furnish attested copies of the releases, acquittances or other vouchers for the same, so as and to the end that it may fully appear whether and to what extent the said (purchaser), his heirs and assigns, and the said hereditaments and premises are or for the time being shall be actually freed and discharged from the said debts, legacies, and monies and the trusts of the said will. AND further, that they And indemnify purchaser. the said (devisees), or one of them, their or his heirs, executors or administrators, shall and will, from time to time, and at all times, for the space of twenty years next hereafter, at their or his own proper costs and expense, or the costs and expense of the estate and effects of the said (testator) deceased, protect, defend and effectually save harmless and keep indemnified, the said (purchaser), his heirs and assigns; and also the said hereditaments and premises so conveyed, or mentioned or intended to be conveyed to him and them as aforesaid, of, from and against all and every the same debts, legacies, monies and trusts; and also of, from and against all and all (1) It is not usual for trustees to covenant for each other; but it is Joint covenant reasonable that they should so covenant where they cannot apply the by trustees. money without each other's privity. COVENANTS. Indemnity (Application of money). manner of actions, suits, cause and causes of action and suit, process, and proceedings whatsoever at law or in equity, which now are, or is, or which at any time hereafter shall or may be had, instituted, or depending against them the said (devisees), or any or either of them, their or his heirs, executors, or administrators, or the said (purchaser), his heirs, executors, administrators, or assigns, for the said debts, legacies, monies, and trusts, or any of them, or any other matter or thing in any wise relating thereto, and of, from and against all loss, costs, charges, damages, and expenses to be by him or them sustained by reason or means thereof. IN WITNESS, &c. No. CCCXII. *A Deed of Covenant by a Vendor or other Grantor to Indemnify against supposed outstanding Mortgage Term or other Incumbrance. COVENANTS. Indemnity (mortgage term). Now WITNESS. Covenant to in Lord, 18 BETWEEN (covenantor) of, &c. of the one part, and demnify. |