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Non-production of Title Deeds by Vendor after application for
them will not always affect a bona fide Purchaser with know-
ledge of an Equitable Charge if one exists.

AGRA BANK, Ltd. v. BARRY. [1874]
(L. R. 7 H. L. 135.)

In 1865, Greorge Richard Barry, being indebted to the Agra
Bank, handed them as security the title deeds of an estate in
Ireland. This equitable mortgage was not registered. Subse-
quently Gr. R. Barry was pressed by his wife to give her security
for money he owed to her. He subsequently consented, and in
1866 a solicitor was instructed to draw up a legal mortgage on
the same estate. The solicitor called upon Barry for the title
deeds, who gave as an excuse for their non-production the
explanation that the title deeds were at his house in Ireland,
and supplied the solicitor with a written summary of their
contents. The solicitor, being totally unaware of the previous
equitable mortgage, accordingly prepared the legal mortgage,
which was duly registered.

Held ^ that the explanation given by Barry for the non-
production of the title deeds was a very natural, plausible
and credible statement, and that in the circumstances, the
solicitor not having been guilty of wilful negligence, the legal
mortgage obtained priority over the equitable mortgage, and
was not postponed to it by reason of the solicitor having
acted improperly in preparing it without insisting on the
production of the deeds.



218 EQUITY.

Where a Person takes a Legal Estate in Property which was once
to his knowledge subject to an Equitable Charge, he takes it
subject thereto, even though he was induced by Fraud to
believe it had ceased.

JARED v. CLEMENTS. [1903]

(72 L. J. Ch. 291 ; (1903) 1 Oh. 428 ; 88 L. T. 97 ; 51 W. R. 401.)

A purchaser before completion had, through her solicitor,
actual notice of an equitable charge created by deposit of title
deeds which her solicitor required to be paid off. On comple-
tion, the vendor's solicitor produced the memorandum of deposit
with a forged receipt purporting to be signed by the owner of
the equitable charge, which, together with the title deeds, was
handed over to the purchaser, who by the conveyance from the
vendor acquired the legal estate. The owner of the equitable
charge had not been guilty of negligence.

Held, that the purchaser could not set up the legal estate
against the equitable charge, and must hold the property
subject to the equitable charge.



The Rule in Dearie v. Hall lays down that where a Person having
an Equitable Right to Property first assigns his rights to A.
and then to B., who has no notice of the prior assignment,
the one who first gives notice of the assignment to the Trustees
of the Legal Estate obtains priority.

MONTEFIORE v. GUEDALLA. [1903]
(72 L. J. Ch. 442 ; (1903) 2 Ch. 26 ; 88 L. T. 496.)

A Jewish lady who was entitled to a reversionary interest in
a fund in Court after the death of her mother, married a
Moorish Jew in Morocco, and signed a marriage contract under
which it was alleged that according to Jewish custom her



EQUITABLE RIGHTS. 219

children became entitled to the fund on her death to the exclu-
sion of the husband. The children obtained no stop order on
the fund. The wife died before her mother, and after her
death her husband, as her administrator, assigned the fund to
assignees, who obtained a stop order on the fund in Court with
notice of the marriage but without notice of the title of the
children. After the death of the wife's mother the assignees
claimed the fund.

Held, following the rule laid down in Dearie v. Hall,
that by obtaining a stop order on the fund from the lady's
legal personal representative, the assignees became entitled
to the fund in priority to the children.



Where several Persons have Equitable Charges and none of them
has the Legal Title, in the absence of Special Circumstances
they take Priority according to the date of the Charges, for
Qui prior est tempore potior est jure.

EE EICHAEDS, HUMBEE v. EICHAEDS. [1890]
(59 L. J. Ch. 728 ; 45 Ch. D. 589 ; 63 L. T. 451 ; 39 W. E. 186.)

W. A. Richards, a solicitor, in 1883 received money from a
client for the purpose of investment, and represented to him
that he had invested it upon the security of a particular mort-
gage. The mortgage, however, was one which Richards had
previously taken in his own name, and it was never afterwards
transferred to the client. He afterwards deposited the title
deeds of the mortgaged property with his bankers to secure his
overdrawn account, and paid interest on the mortgage to the
client down to the death of the latter in 1885, and subsequently
to his executors. Richards died in 1888, his account being-
overdrawn to an extent exceeding the value of the mortgaged
property, and the bank immediately gave notice of their claim
to the mortgagors. The bank had no notice of the client's



220 EQUITY.

claim at the date of the deposit, and their notice to the mort-
gagors was prior to any notice given by the client's executors.

Held, firsts that Richards ivas a trustee of the mortgage
for his client^ and that neither the client nor his executors
had been guilty of negligence so as to deprive them of their
priority ; and secondly, that the principle of Dearie v.
Hall (see p. 218) did not apply, and there/ore the bank
were not entitled to priori/// by virtue of having given notice
to the mortgagors before the executors.



The Rule in Howe v. Dartmouth lays down that where by Will
Personal Property of a Perishable Nature or not yielding
a Present Income is given to be enjoyed in succession, the
Property must be converted so as to give effect to the Will
of the Testator. A slight indication of a contrary intention
prevents the Rule applying.

MORGAN v. MORGAN. [1852]
(14 Beavan, 72.)

A testator died bequeathing all his personal property to his
wife for life and then to his children. Part of this property
consisted of long annuities and leaseholds.

Held) that they ought to be converted and the proceeds
invested in Consols, of which the widow was to have the
interest during her lifetime, for the rule in Howe v.
Dartmouth (Earl of), 7 Ves. 137, applies in order to give
effect to the wishes of the testator that the property shall be
enjoyed in succession.

Where, however, there is some indication that the property
is to be enjoyed in specie this rule does not apply, and a
slight indication of a contrary intention will prevent the



EQUITABLE RIGHTS. 221

rule applying. The mere absence of any direction to convert
is not, however, sufficient.



A Voluntary Settlement will be set aside under 13 Eliz. c. 5, at
the suit of any subsequent Creditor, if at the time of its
execution the Settlor was indebted, and the ultimate effect
is to delay payment of his Debt to a Creditor, however solvent
the Settlor may have been at the time, and however free from
any fraudulent intention the Settlement may have been.

FEEEMAN v. POPE. [1869]
(39 L. J. Ch. 689 ; L. B. 5 Ch. 538 ; 21 L. T. 816 ; 18 W. E. 906.)

A clergyman with an annual income of nearly 1,000/., made,
in 1863, a voluntary settlement in favour of his god-daughter,
and died in 1868 in insolvent circumstances, owing to his
bankers the balance of a debt which had been contracted prior
to the date of the settlement. A creditor, whose debt was con-
tracted subsequently to the settlement, applied to set aside the
settlement as fraudulent within 13 Eliz. c. 5.

Held, the settlement must be set aside, although, having
regard to the income and means of the settlor, the Court was
of opinion that in executing the settlement he had no inten-
tion whatever to cheat his creditors at that time.

The result of the authorities, decided upon the statute
13 Eliz. c. 5, is first, that where a debt contracted ante-
cedently to the settlement exists, a subsequent creditor has
the same rights as an antecedent creditor would have against
the settlor ; and secondly, that whether or not the settlor
had any intention to defraud his creditors, a creditor having
a debt existing at the date of the settlement has a right to
have the settlement set aside if the ultimate effect of it is to
delay or defraud him with regard to his debt.



222 EQUITY.

A Family Composition will be Upheld though based on Error
provided there is no Concealment of Material Information.

GOEDON v. GOEDON. [1816]
(3 Swanst. 400; 19 E E. 230.)

A dispute arose between two brothers as to which of them
was the heir of his father ; the younger son contended that his
brother was born before their parents were married. An agree-
ment was entered into for a division of the estates between the
two, but before this agreement was entered into the younger
brother found out that his brother was legitimate, as their
parents had married by a private ceremony before the birth of
the elder brother. He did not disclose this fact, and for nine-
teen years enjoyed his share of the estate. The legitimacy of
the elder having been established by a trial of the issue, the
elder brother sought to set this agreement aside.

Held, the agreement could not stand, for though a
family agreement entered into by bona fide mistake is
binding, even though it subsequently appears that neither
party had a good title to the property in question, yet
where either party has been misled by the concealment of
material information, the Court trill not sanction the
agreement.



Time is not of the Essence of a Contract in the absence of express
Stipulations between the Parties, or something in the nature
of the Property or the surrounding circumstances which
would render it inequitable for the Court to interfere with
the Legal Right.

TILLEY v. THOMAS. [1867]
(L. E. 3 Ch. 61 ; 17 L. T. 422 ; 16 W. E. 166.)

The plaintiff was the owner of certain premises at Fulham
which he agreed to sell to the defendant for 700/., " possession



EQUITABLE RIGHTS. 223

to be given on the 14th of January next." The plaintiff knew
that the defendant required immediate possession on that date
for residential purposes, and as he had been unable to clear up
his title, lie offered to give the defendant possession of the
premises on that date. The defendant, however, refused to
take possession, as he claimed to be entitled to possession under
a good title, and not to actual possession only on the 14th
January. The plaintiff subsequently produced a good title, and
brought this action for specific performance.

Held, the plaintiff was not entitled to specific perform-
ance, as time was in this case, to the knowledge of both
parties, of the essence of the contract.

The words in the memorandum, " possession to be given
on the Will of January next," meant possession with a
good title.

The Court will relieve against and enforce specific
performance, notwithstanding a failure to keep the dates
assigned by the contract, either for completion or for the
steps towards completion, if it can do justice between the
parties, and if there is nothing in the express stipulations
between the parties, the nature of the property, or the
surrounding circumstances which would make it inequitable
to interfere with and modify the legal right. This is what
is meant, and all that is meant, when it is said that in
equity time is not of the essence of the contract.



Where a Power is directed to be exercised by Deed, its exercise
by Will is valid, but the converse does not prevail.

BRUCE v. BRUCE. [1871]
(40 L. J. Ch. 141 ; L. R. 11 Eq. 371 ; 24 L. T. 212.)

The donee of a power to appoint by deed among the
children of her first marriage, who were entitled to the estate in



224 EQUITY.

equal shares in default of appointment, executed deeds which
she erroneously supposed to have extinguished that power and
conferred upon her an unlimited testamentary power. By her
will made during her second coverture, expressly in pursuance
of the testamentary power and of every other power enabling
her in that behalf, she appointed the estate to her eldest son,
charged with a sum of 3,000/. for the benefit in equal shares of
all her other children of both marriages.

Held, that the will operated as an exercise of the power
to appoint by deed among the children of the first marriage,
and that the eldest son was entitled to the estate, subject to
raising the sum of 3,000/. for the other two children of the
first marriage.

A will made by the donee of a special power to appoint
by deed, though it shows that the donee supposed the 'power
to have been extinguished and purports to be an execution
of an invalid power and of all other powers enabling it in
that behalf, and though it appoints to persons some of whom
are strangers to the power, is a defective execution which
Equity will aid in favour of a child otherwise provided for ',
and to the prejudice of other children entitled in default of
appointment.

Note. — The exercise by deed of a power directed to be exercised
by will is, however, invalid. Adney v. Field (1767), Amb. 654.



TRUSTS AND TRUSTEES. 225



TRUSTS AND TRUSTEES.



A purchase by a Trustee of Trust Property is bad, unless the
Trustee can prove that the Parties to the Conveyance to him
were at arms' length ; that the Cestuis que Trust had the
fullest information on all material facts, and adopted the
transaction.

WILLIAMS v. SCOTT. [1900]

(69 L. J. P. C. 77 ; (1900) A. C. 499 ; 82 L. T. 727 ; 49 W. R. 33.)

The plaintiff claimed the return of the deposit paid by him to
the defendant on a contract by the plaintiff to purchase and the
defendant to sell certain land near Sydney, on the ground that
the defendant could not give a good and sufficient title. The
defendant claimed specific performance of the contract of sale.

The plaintiff contended that the defendant's title was insuffi-
cient by reason of the fact that he had purchased the land from
a certain David Austin.

David Austin was one of the trustees of a will which devised
the land in question to the trustees in trust to sell the same.
The trustees agreed to sell the land to S. J. Bull at a certain
price, but this sale fell through ; and David Austin took the land
over himself and accepted a conveyance, and then sold the land
to the defendant.

Held, by the Privy Council, that the plaintiff ivas entitled
to a return of his deposit.

A trustee for sale of trust property cannot sell to himself.
If notwithstanding the form of the conveyance, the trustee
[or any person claiming under him) seeks to justify the
transaction as being really a purchase from the cestuis que
trust, it is important to remember upon whom the onus of
proof falls. It ought not to be assumed, in the absence of

j. Q



226 EQUITY.

evidence to the contrary, that the transaction was a proper
one, and that the cestuis que trust were informed of all
necessary matters. The burthen of proof that the trans-
action was a righteous one rests upon the trustee, ivho is bound
to produce clear affirmative proof that the parties ivere at
arms' length ; that the cestuis que trust had the fullest
information upon all material facts ; and that having this
information they agreed to and adopted what was done.



A Trustee must not make a Profit : if he does, he must hold it on
Trust for the Cestui que Trust.

KEECH v. SANDFOBD. [1726]
(Sel. Ca. Ch. 61.)

The lease of a certain market being about to expire, the
trustee of the infant lessee applied for a renewal of the lease,
which was refused by the landlord on the ground that the
infant could not make himself responsible on the covenants.
Thereupon the trustee got the landlord to grant him a lease.

Held, that the trustee was a constructive trustee of the
lease for the infant and must assign the same to the infant,
but was entitled to be indemnified from any covenants
contained in the lease.



A Trustee may only delegate in proper cases. A Trustee must
exercise that ordinary care and diligence which a competent
and prudent man of business would exercise in his own
affairs.
RE ue POTTIONIER, DENT v. de POTHONIEE. [1900]
(69 L. J. Ch. 773 ; (1900) 2 Ch. 529 ; 83 L. T. 220.)

This was a summons taken out by three of the trustees of the
will of C. S. de Pothonier for directions as to what provisions



TRUSTS AND TRUSTEES. 227

should be made by the trustees for the custody or control of
bonds and debentures payable to bearer, which they held upon
the trusts of his will, and for the custody and collection of the
coupons thereof.

Held, per Cozens- Hardy, J., trustees entitled to hold,
securities pat/able to bearer are entitled to leave such bonds
in the custody of the bank at which they keep the trust
account and alloiv the banker to cut off and collect the
coupons as they fall due, as this is part of the business of a
banker. It is not necessary in such a case to keep the
bonds in a box tvith separate keys for each trustee.

I think that the law does not impose upon trustees
anything more than the exercise of that ordinary care and
diligence which a competent and prudent man of business
would exercise in his own affairs.



A Trustee will not be allowed to hold Property conveyed to him
as a Trustee as Beneficial Owner on the ground that there
is no evidence of the Trust in writing as required by sect. 7
of the Statute of Frauds, for the Court will not allow a
Statute to be used as an Instrument of Fraud.

KOCHEFOUCAULD (DUCHESSE DE) v. BOUSTEAD.

[1897J
(66 L. J. Ch. 74; (1897) 1 Ch. 196 ; 75 L. T. 502 ; 45 W. E. 272.)

The plaintiff claimed a declaration against the defendant,
John Boustead, a Ceylon merchant, that the purchase by him in
1873 of certain coffee estates in Ceylon from the mortgagees
thereof had been made by the defendant as trustee for the
plaintiff, and she also asked for an account and payment of
the balance found due.

On May 27, 1873, the estates in question were, subject to two
mortgages, sold and conveyed to the defendant. In form the

q2



228 EQUITY.

conveyance was to him absolutely, but the estates were as a fact
conveyed to the defendant as a trustee for the plaintiff, subject,
however, to the repayment to the defendant of the amount
which he paid for the estates and of the expenses which he had
incurred in managing them. The estates were sold by the
defendant or his mortgagees many years before without the
knowledge of the plaintiff, who contended that the proceeds of
the sale were more than sufficient to repay to the defendant all
his advances, and that a considerable surplus remained, which
the defendant ought to have paid over.

The defendant relied, by way of defence, upon, inter alia, the
Statute of Frauds and the plaintiff's laches.

Held, the plaintiff' was entitled to what she claimed.

It is a fraud on the part of a person to whom land is
conveyed as a trustee, and who knows it to have been so
conveyed, to deny the trust and claim the land. Conse-
quently, notwithstanding the Statute of Frauds, it is
competent for a person claiming land conveyed to another to
prove by parol evidence that it was so conveyed on trust,
and that the grantee, knowing the facts, is denying the trust,
for it cannot now be questioned that the Statute of Frauds
does not prevent the proof of a fraud.

Where an express trust is established, mere lapse of time,
if not coupled with other circumstances rendering it unjust
to give relief, ivill not, apart from any Statute of Limita-
tions, bar the claim of a cestui que trust.



TRUSTS AND TRUSTEES. 229

Where a Trustee is appointed by Will to distribute the Estate
according to verbal directions, the Trust fails.

RE HETLBY, HETLEY v. HETLEY. [1902]
(71 L. J. Oh. 769; (1902) 2 Oh. 866; 87 L. T. 265 ; 51 W. R. 202.)

A testator after appointing his wife sole executrix and giving
her a life interest in his property, continued as follows : "I
desire and empower her by her will or in her lifetime to dispose
of my estate in accordance with my wishes verbally expressed
by me to her."

Held, that parol evidence was not admissible to explain
the testator's wishes, and the clause purporting to create a
power of disposition in the widow was void for uncertainty ',
and the result was that the property was undisposed of and
went as on an intestacy.

By the Wills Act, 1837, no will can be valid unless it
be in writing executed by the testator and attested as by the
statute provided. To define or supplement by parol evidence
that which on the face of the will is left undefined or
unexpressed, ivould be to make a material addition to the
written will, and is therefore not permissible.



A Devisee or Legatee who is not named in the Will as a Trustee,
and who accepts a particular Trust in the lifetime of the
Testator, holds the Property on the Trust disclosed by the
Testator. If the Trust is not disclosed by the Testator in his
lifetime, but the Legatee or Devisee knows that he is to hold
as Trustee, he holds as Trustee for the Next of Kin or Heir.

IN RE BOYES, BOYES v. CARRITT. [1884]
(53 L. J. Ch. 654 ; 26 Ch. D. 531 ; 50 L. T. 581 ; 32 W. R. 630.)

The testator, by his will, made shortly before going abroad,
gave all his property to Carritt, his sole executor, who was a



230 EQUITY.

solicitor and drew the will. In an action in the Probate
Division, Carritt admitted that he was only a trustee of the
property, and said that the intention of the testator was that he
should hold it upon certain trusts of which he would inform
him when hearrived abroad. No directions were given to Carritt
by the testator during his lifetime, but after his death two
letters were found among his papers addressed to Carritt and
naming Mrs. Brown as the person whom he wished to be the
object of his bounty.

Held, that Carritt was a trustee for the next of km, and
not for Airs. Brown, for a testator cannot, by imposing a
trust on his devisee or legatee, the ohfect of which he does
imt communicate to him, enable himself to evade the Statute
of Wills by declaring those objects in an unattested paper
found after his death.

In order to make such a trust binding, it is essential that
it should be communicated to the devisee or legatee during
the testators lifetime, and that he should accept that
particular trust.



An Absolute Gift followed by an expression of Desire creates no
Binding Trust.

IN RE OLDFIELD, OLDFIELD v. OLDFIELD. [1904]
(73 L. J. Ch. 433 ; (1904) 1 Ch. 549 ; 90 L. T. 392.)

The testatrix, by will, gave her property equally between her
two daughters for their own absolute use, and expressed her
" desire " that each of them should, during the lifetime of her
son, pay to him one-third of their respective incomes accruing
from the moneys and investments under her will.

Held, by the House of Lords, that the will created no
trust enforceable by the son.



TRUSTS AND TRUSTEES. 231

11 Wherever any person gives property and points out the
object of the property and the way in which it shall go ) that
does create a trust unless he shows clearly that his desire
expressed is to be controlled by the party y and that he shall
have an option to defeat UP



A Voluntary Assignment must be made either by a Complete and
Perfect Assignment or by a valid Declaration of Trust.

RICHAEDS v. DELBE1DG-E. [1874]
(43 L. J. Ch. 459 ; L. E. 18 Eq. 11 ; 22 W. E. 584.)

A person entitled to a leasehold mill with plant, machinery,
and stock-in-trade, endorsed on the lease a memorandum :
" This deed, and all thereto belonging, I give to Edward
Bennetts Richards from this time forth, with all the stock-in-
trade," and he signed the memorandum and handed the deed
to Richards' mother. After his death, Richards claimed the
mill and appurtenances, on the ground that the memorandum
amounted to a valid declaration of trust.

Field, that Richards was not entitled to the property.

A man may transfer his property tvithout value in two
ways — either by a complete and perfect conveyance to a
person beneficially or to someone in trust for that person ;
or by a valid declaration of trust constitute himself a trustee
for that person.

In this case the conveyance tvas imperfect, and there was
no declaration of trust , for words importing a present
intention to give cannot be held to amount to an intention to
retain as trustee.



232 EQUITY.

The positive duties of a Trustee are to properly preserve the Trust
Fund, to pay the Income and the Corpus to those entitled, and
to give all their Cestuis que Trust on demand information
with respect to the mode in which the Trustees have dealt
with the Fund. It is not part of their duty to answer
inquiries made by Persons about to deal with their Cestuis
que Trust.

LOW v. BOUVERIE. [1891]



Online LibraryPhilip Bertie PetridesStudent's cases : illustrative of all branches of the law → online text (page 18 of 29)