IMPORTANT JUDGMENTS.

New Zealand Herald, Volume XVII, Issue 5846, 12 August 1880, Page 3

IMPORTANT JUDGMENTS.

SUPREME COURT—In Baxco. ■Wednesday, August 11. [Berore Mr. Justice Bicbmond.] The ordinary weekly sitting was held this morning. His Honor took hia seat on the bench at 11 o'clock. Walker and Greenwood v. Johnston. —This case stood for judgment, subject to any observations that might be made by the defendant's counsel for the further information of the Court. The facts have been only recently published. The plaintiffs sold certain land to the defendant at Wangapoua, taking a mortgage deed and two short-dated bills (three months) for £200 and £325, but after the execution of the deed and the delivery o£ tho bills it was averred in the pleadings that tho plaintiffs had promised and agreed (parol) to renew the bills from time to time, the only couditien being that the total amount (£525) should be paid not later than the 9th of December, ISBO. The plaintiffs brought their action to recover the above sum. The declaration set out the mortgage deed and the bills ; the defendant after the general issue pleaded the parol agreement, the merger of the less into the higher security, thus removing the cause of action. The plaintiff* replied and the defendant demurred to the replication.—His Honor said: I did not call on Mr. Cooper to address the Court in reply in support of hi> contention at its last sitting ; but I have found more difficulty in the case than I expected. I shall therefore have to call upon Mr. Cooper upon the points which he proposed to argue. He may take to-day for addressing the Court, or next sitting, as he pleases. I may now intimate the question is one rather of procedure than of substance. I cannot satisfy myeelf that such an agreement as defendant pleaded is an answer to aa action on the bills in the same suit. Granting that the agreement to renew is valid, the difficulty is whether it should not be the grounds of a suit for damages or for relief in an equity suit. The point is a new oao. It has, I believe, been raised several times, in the American Courts, but has not been decided, so far as I know, in the English Courts—whether or not an unexecuted agreement to renew is an action (in bar) to the aotion on the bill, or whether it forms the basis of a suit for specific relief.—Mr. Cooper : I think that the case of YoUDg v. Austen contains the law.—His Honor : I do not see that it decides the question.—Mr. Cooper: In Maillard v. Page the whole of the agreement was conbidered. The question there was, whether it was necessary to tender the bill, or to ask plaintiff to renew.—Adjourned to next Court day. BRIOHAM V. CIIAMBEBS AND OTHERS.-— His Honor delivered judgment in this case, which has been three times argued upon demurrer, twice before the Court of Appeal. The facts are set forth as follow : In this case a demurrer to one of the original pleas, after having been allowed by Mr. Justice Gillies, was overruled by tho Court of Appeal, with leave to amend. The defendants availed themselves of this leave, and the case now comes before me upon a demurrer to tho amended plea. It appears by the declaration that Mrs. Brissenden, a married woman, was owner of a property, called in the pleadings her Bangiriri farm, the fee-simple of which was in some way settled or secured to her separate use. By deed, bearing date 13th April, 1876, Mrs. Brissenden, with her husband's concurrence, mortgaged this property to the New Zealand Insurance Company to seoure a loan of £2500, made by the company to Mrs. Brissenden, In the same year the company made a further advance to Mrs. Brissenden of £500. This additional sum was secured by two deeds, each bearing date ith September, 1576 ; the oue being a further | charge on the Bangiriii farm, the other a mortgage for £500, of lands described by the declaration as belonging to the plaintiff. These lands are afterwards referred to in the pleadings as the Epsom property. The mortgage of Epsom is partially set out in an appendix to the declaration. It describes the plaintiff as a trustee, and states that he is the solo trustee of the property. The trusts on which ho holds aro not disclosed ; but as he conve3'S with the cousent of the Brissendens, and they ratify and conlirm his conveyance, the inference is strong ou the face of the declaration that the Brissendcns aro persons beneficially interested in the property. However, the declaration in its allegations is silent as to any interest of the Biisseudens in the Epsom property, and the plaintiff's case, as 6tated, is exactly such as it would be if he were tho sole owner of tho Epsom property and had pledged it as a collateral security for the Biisseudens' debt to the extent of £500. The declaration next sets forth the transfer by the Now Zealand Insurance- Company to the defendant John Chambers, and to James Morton deceased, the testator of the other defendants, of the lnortgagts of iiaugiriri and Epsom, and the sale by Chambers aud Morton of both properties. These sales, and tho conveyances which give effect to them, purport to have been made under the power of sale vested in Chambers aud Morton as transferees of tho mortgagee. There is an averment that by these sales thero was raised a sum greatly in execes of the moneys secured by the mortgages. The declaration then prays an account of the proceeds of both properties, and also that it may be decreed that the Kangiriri property is the primary security for tho whole mortgage debt of £3000. One material fact, without the knowledge of which it is impossible to understand the true relation of the parties to this suit, is passed over in silence by the declaration. It appears by the amended plea that prior to the transfers of mortgage set forth ia the declaration, Mrs. Brisseuden had conveyed the equity of redemption in the Kangiriri property to Messrs. Chambers and Jl.orton, upon truats for the benefit of her creditors. Clearly this ought to have been stated in the declaration ; for the Court could not make a decree to charge the proceeds of the Kangiriri farm iu exoneration of the Epsom property in tho ats of the persons interested in the former fund. It docs not appear from any allegation iu tho declaration that the defendants themselves are, as in fact they are, the representatives of these persons. However, no objection has been taken on this ground, and the allegations of the plea supply the defect. The Court of Appeal hns decided that the declaration discloses a prima facie right in the plaintiff to the relief which he asks. Notwithstanding the indications on tho face of the mortgage deed of Epsom, which suggests that the Brissendens are interested in, or perhaps solely entitled to, that property, their Honors have proceeded on the ground that the plaintiff on tho face of the declaration is in the position of a surety for the Brissendens, who has pledged his own land as a collateral security for their debt. This makes his equity quite clear. The Honors say "It was suggested that the Brissendens were tho absolute beneficial owners of the Epsom property, but that does not appear." "The plaintiff alleges the property to have been his; the plea in effect admits it, and all]that appears is that he is trustee; but the trusts upon which he holds it aro undisclosed." The amended plea now meets tho plaintiff's case by alleging that he is a bare trustee of the Epsom property, and that ia fact Mr. and Mrs. Brieeenden aTe the absolute beneficial owners under a deed of settlement, dated 28th June, 1870, which the plea sets forth. If this oould be

made out, it might be an answer to the claim to have the whole £500 charged on Racgiriri. It ia therefore desirable to ascertain whether the effect of the settlement is what the defendants assert. The instrument is ioartificially drawn, and is in several particular! manifestly defective. The terms of the habendnm raise a question whether the plaintiff (who is the only acting trustee, the others having disclaimed) takee the legal fee, or only an estate for the life of Mrs. Brissenden. Considering, however, that the premises of the deed express a conveyance to the trustees, their heirs and assigns, and that the trusts are such as to require the fee, I am of opinion that the plaintiff's estate is not restricted to the lifetime of Mrs. Brisaenden. The first tiust is for Mrs. Briesenden for her separata use for life; and there is no restraint upon anticipation. Then some powers of leasing, and sale, and exohange, and also a power, with the consent of Mrs. Briesenden, of raisingmoney by mortgage, and a provision that money received for any sale or exchange, or raised by way of mortgage, shall be laid oat in the erection or repair of buildings npon the settled property, or in the purchase of other lands to be held upon the same trusts. At the end of the deed comes a declaration of trust in theje terms:— "And upon further trust that if the said Agnes Anna Briasenden shall die in the lifetime of the said Edwin Torrens Brissenden, then, after the death of the said Edwin Torrens Brissenden, upon and for such trusts, &c, as the said Anna Agnes Brissenden shall by her last will and testament in writing, or any codicil or codicils thereto, respectively, notwithstanding her coverture, direct or appoint, or so far as the same shall not extend, then to the use of the said Edwin Torrens Brissenden his heirs and assigns forever." Thero is no provision for the event of the wife surviving the husband ; but if it be the fact, as the deed recites, that the property was bought with trust money belonging to Mrs. Brissenden, there would be a resulting trust for her. Such being the terms of the settlement, I am of opinion that it does not vest the entire equitable fee, or a complete power of disposition over the equitable fee, in Mrs. Brissenden and her husband. Mrs. Brissenden has no power of disposing of the remainder in fee expectant on her own decease in the lifetime of her husband by deed or other instrument operating inter vivos. She has only a testamentary power of appointment in that event. It is settled law that a life estate with a f ower to appoint by will only, does not amount to an absolute intereet. Sockett v. Wray 4 Brown's C.C. 483, and Archibald v. Wright, 9 Simons 161, are direct authorities upon this point; which has been taken for granted in numerous cases. In the recent case of London Chartered Bank of Australia v. Lempriere L.E. 4 Pc. 572, where theinterest was held to be absolute, there was a power to appoint the funds iu question by deed as well as by will. So also was there in the still later case of Mayd v. Field, 3 Ch. Div. 587, before the Master of the Rolls. It is common in settlements to give the wife only a testamentary power of appointment over the corpus, in order to shelter her from marital influence, and to preserve the property from alienation during coverture. During the wife's lifetime, no irrevocable disposition can be made under such a settlement. Not having the power to make any present disposition of the corpus, she has ' had not the full ownership. On this ground I hold that Mra. Brissenden had not the absolute interest. It is aleo plain that Mr. Brissenden during Mrs. Brisseuden's lifetime could not dispose of a vested remainder in fee. Nor do I think that the husband and wife together could, by any device, destroy tho wife's testamentary power of appointment, and make themselves absolute masters of the property. Fortious modes of conveyance by tine and feoffnient are abolished. A deed under the Fines and Recoveries Abolition Act, purporting to convey the fee simplo, and acknowledged bv Mrs. Brissenden, would not have that effect. If the donee of a power, who has also an estate in default of appointment, convoys or changes that estate, he cannot afterwards, by an exercise of the power, defeat the interest which he himself has created. The power may by such aconveyauce be destroyed ; but here the limitation in default of appointment is not to Mr?. Brissenden but to her husband. Her conveyance, therefore, would be a simple nullity as regards tho remainder in fee expectant on her own decease. The full ownorship not being in Mr. and Mrs. Brissenden, or in cither of them, it follows that Mrs. Brissenden,s appointees by will must be considered as possible objects of the settlement. This wouid bo at once apparent if Mrs Briasenden's power, instead of beiug general, had been a power of selection amongst children or other specified objects. For tho present purpose the case is exactly the same as if her power had been so limited. Her appointees by will, if there should bo any snch—and the Court is bound to regard the possibility that there may be—will not take as transferees of a right of property once vested in Mrs. Brissenden, but an if they had been originally named as ceilui qua trusts. And as the Court is bound to regard the possibility that there may arise such objects of the settlement, so also is the trustee, the present plaintiff. And ho has rights corresponding with this duty. He is at once eutitled and required to do all that is necessary to protect the interests of thc3e possible objects of his trust. By concurring iu the mortgage of tho Epsom property, ha committed what must in strictness be regarded as a breach of trust. True, he had power, with Mre. Brisseudeu's consent, to mortgage ; but he allowed tho mouey to be misapplied. It may be, that Mrs. Briesenden's concurrence iu this breach of trust would debar any person claiming under her will from complaining of it. Still a breach of trust it was, aud the trustee is entitled to have it repaired ; and for this purpose to demand that the entire mortgage debt of £500 and interest, shall, if possible, be borne by the Rangariri property, or that it shall at least (is iu Lipscombo v. Lipscombe, L.U., 7, Eq., 501 ; and De Kochefort v. Dawes, id 12, Eq. 540) be apportioned between the two estates in the ratio of their value, after first deducting the prior charge on Rau<>iriri. On this ground (a narrow one, I admit) the present plaintiff has, in my judgment, a locus standi. Tho amended plea, by disclosing the settlement, does not cut away the ground upon which the Court of Appeal proceeded whon it allowed the former demurrer, for it still appears that others than the Brisaendens may have, under the trusts of the settlement, an interest in the settled property. As regards tho judgment of tho Court of Appeal, to which 1 was not a party, I may be permitted to say, in explanation of my present decision, that it appears to me to be founded upon an incontestable principle. Tho only reported cases in which, as between the two estates charged with the same mortgage debt, there has been a question which should bear the burden, have occurred whore the mortgagor was the original owner of both properties. The Marquis of Bute v. Conynghame, 2, Eoss, 275 ; and Stringer v. Harper, 2G, Bea. 33, are <U3es of this class. The Judges, by whom those case 3 were decided, were compelled to base their opiuion solely upon a consideration of the language of tho deeds, the order of time in which the charges were effected, and the presumable intention of tho mort_gagor, who alone was concerned iu the matter, as collected from these circumstances. But where the mortgagor is absolute owner of one only of the two estates, and he has provailed upon parties jointly 1 interested with himself in the Becond estate

to pledge that pro erty as a security for his debt, a new principle nonces into play, and it may be certainly inferred that these persons have against him the right:) of sureties. Such ie, I apprehend, the present case; although it must be confessed that the poesible interest of third persons in the Epsom property is not of a very substantial character. Curiomly enough, the plea itself furnishes a much stronger ground than I have yet adverted to for holding that the Rangiriri estate has been made the primary fund for payment of the whole of the £3000 and interest. By the creditors' deed, to which I have already adverted, which bears date 22nd December, 1876, the conveyance of the Rangiriri farm is expressly made subject to the payment of the two principal sums of £2500 and £500, and the iuterest thereof; and the first trust of the deed is to pay and discharge these sums—for which purpose the trustees are, as I construe the instrument, clearly empowered to sell the property. It was argued for the defendants that this mention of the two mortgage debts was only a necessary speciScation of incumbrances to which the property was actually subject, and that it ought not to be allowed any effect as a substantive charge of the Ransariri farm in exoneration of the Ep=om property. This argument might pass if the notice of the mortgages were confined to the habendum of the deed ; but the trust, which immediately follows the habendum, to pay the whole £3000 cannot be explained in this way. There is no word in the deed relating to the Kpsom property as jointly snbject to the charge of £500, and I regard the trust as an unequivocal indication of the intention of Mrs. Brissenden to exonerate that estate. Obviously it wa3 competent to her to make this a condition of the conveyance to Messrs. Chambers and Morton. The .only doubt I have is as to the right of the present plaintiff to take advantage of this provision of the creditors' deed in a suit in which Mr. and Mrs. Brissenden are not parties, and npou a declaration which far from founding auy claim upon the terms of the deed of 22nd December, 1876, does not even mention it in its allegations. Having this doubt upon my mind, it seems to me safer to found my judgment upon the right of the plaintiff, as trustee of the settlement, to require that the settled estate shall be treated as having been originally pledged, merely as a surety for the Rangariri farm. It appears to me evident that Messrs. Chambers and Morton mistook their rights when they sold the Epsom property—assuming, that is, that the Rangariri farm was of adequate value to discharge the whole mortgage debt of £3000 and interest. Dnder the creditors' deed their duty was to discharge the whole dobt by sale of the Rangiriri property. That done, they should have directed a reconvoyance of the Epsom property to the plaintiff upon the trusts of the settlement. If, indeed, Messrs. Chambers and Morton had been, as the declaration represents them to have been, mere transferees of the mortgages, they would hava been entitled to realise on either or both of these securities, in such order as they thought fit. There seems to be nothing in the deeds to restrain them from ao doing. But, being bound by the trusts of the deed of 22nd December, 1876, to raise the whole £3000 out of the Rangiriri farm, the Epsom property in their hands was discharged. It is a fallacy into which, as it seems to me, both sides in this controversy have fallen, to treat these gentlemen as mere transferees of the mortgages. The money which it is sought in this action to recover has, it appears, been distributed amongst creditors of Mrs. Brissenden, whose debts, as the defendants allege, are still unsatisfied. Mr. Justice Gillies, assuming that this is the fact, and surmisiug moreover that Mr. and Mrs. Brissonden are substantially owners of the Epsom property, has made some strong observations upon the uncouscientious character of the present demand, which he regards as one preferred upon behalf of the Kriasendeus. I think it enough for the present to say, that so far as yet appears, the demand is, in point of law, well founded. It is the duty of a judge to administer justice, but "justice according to law," a qualification which often makes a great difference. Mrs. Brissenden's unsatisfied creditors, if euch there be, may have their remedy by a proper proceeding against her separate estate us yet unassigned. The demurrer is allowed with costs.

The Bank op JS'kw South Wales v. The .Royal Insurance Company.—His Honor delivered judgment in thia case, argued ou demurrer, 2Sth ult. This is an actim ou a policy of fire insurance. The declaration sets out the policy, which describes the plaintiffs as mortgagees—that is to say, the word " mortgagees" is added after the name of the bank in the firat recital. The subject of insurance is a timber building, erected for a saw-mill, with the steam-engine and machinery contained therein, and is described as the "the property of Mr. 0. A. Harris, juu." The sum insured is £1350. The policy contains a clause expressing that "in every case the company will reserve to itself the right of reinstatement in preference to the payment of claims, if it shall judge the former course to be most expedient.' The declaration avers that at the time of insurance, and also at the timo of the loss thereinafter mentioned, tho property insured was of the value of £2850 ; and that the plaintiffs wero at the time of the aeiling of the policy, and thence until, and at the time of the loss, interested in the property to the full value thereof. The declaration then alleges the destruction of the property by fire whilst the policy was ill force, and that the defendants olected to reinstate. Then follows au averment that the defendants began to reinstate, but did not complete tho reinstatements, but refused, and still refuse, to reiustatc ; also, tho ordinary averment of the fulfilment by tho plaintiffs of conditions precedent necessary to entitle the plaintiff*) co maintain tkU action, with this added, that "nothiug has happened or been done to prevent them from maintaining the same." The declaration concludes, " whereby the plaintiffs have loat the value of the said property." The plaintiffs claim to recover £ - 2550 damages. To this declaration the defendants havo demurred ou the following grouuds :—l. That tlie declaration does not disclose any cauao of actiou in the plaintiffs, inasmuch as it does not allege that at tho time of tho said election being made, to wit, on the 17th day of January, 18S0, the plaintiff* had any insutable interest in the property covered by the said insurance; and without such interest the said election could not be held biuding on the defendant company. 2. That the plaintiffs being mortgagees of the said property, and tho said policy only covering their interest 0,3 such mortgagees, the said election could not bind the defendants to ieinetate without the consent >of the mortgagor, and such consent is not averred. 3. That the insurance effected by the said policy is not an insuranoe of the building per sc, but only of the mortgagees 1 security thereon; and it is not averred that at the time of the said election, or at the commencement of this action, th« plaintiffs continued damnified, and their security unsatisfied. In arguing the first objection, counsel tor the defendants admitted that the declaration, as regards the averments of insurable interest, ia in ordinary form. The declaration on a fire | iusurance policy in the firat volume of Chitty "On Pleading," p. 175, third edition, and that in Bullon and Leake, third edition, p. 191, contain no other averments. But it was contended that the election to reinstate operated as the substitution of a now contract dating from the notice

•— of election, and necessitated the addition of ■» fresh avarment o£ the continuance, until that date, of an iuaurablo interest in the plaintiffs. I intimated my dissent, in the first place, from this view of the effect of an election to restore, and I am still of opinion that it is fallacious. In Brown v. Royal Insurance Company—l, EIH3 and KUis, 853 —which wae a similar case to the present, Lord Campbell says :—" The case stands a3 if the policy had been simply to reinstate the premises in case of fire, because, where a contract provides for an election, the party making the election is in the same position as if he had originally contracted to do the act which he has elected to do." It was attempted to argue, on the language of this dictum, that Lord Campbell recognised the agreement to reinstate as one to do something not originally contracted for. The meaning of the Chief Justice is, however, exactly the contrary. The undertaking to reinstate is something to which, by the policy itself, the insurer is bound, not indeed absolutely, but in case he. shall prefer that mode of performance to the other nnde provided by the polioy. When, he makes his choice to perform in that way, the election relates back, and the case is the same as if he had originally contracted absolutely to reinstate. If you supply the word "simply," already once used by Lord Campbell, or tho word " absolutely," which has the same sense, after the words "had originally contracted," Lord Campbell's meaning, which was already clear, becomes unmistakable. In some of the American case;, as in Beals v. Haine Insurance Company, of which a short note may be found in tue fifth volume, page 112, of Mr. Bennett's "Fire Insurance Cases," inaccurate expressious seem to have been used to the effect that on election to restore the insurer ceases to be insurer, and becomes a party to a new contract. Such phrases must be understood with reference to the particular circumstances of the cases in which they are usel They cannot be con* sidered as authoritative expressions of legal doctrine, and it is useUss to cite them in opposition to what it a simple deduction from first principles. It is plain that the election of tho defendants affects only the mode of performance. There can be n j nrw contract, for the insured has done nothing to bind him to a new contract. Tho contract on which the defendants are liable is that effected by the policy. That is the only instrument which pledges the funds of the company. Therefore, in this respect, there is no peculiarity in the case which requires any special averment of a contiuuing interest in th 3 plaintiffs; aud the ordinary averment of the existence of an insurable interest up to and at the time of loss are suffi. cient in this as in other cases. There would be something like a solecism in averriug that the plaintiffs remain interested in property which has perished. There is a vested right of action at the time of lose, and it is not to be intended that anything lias happened to divest it, especially where, as in this declaration, there is an averment that nothing has happened or has been done to prevent the plaintiffs from maintaining the action. That the plaintiffs [are mortgagees (as I suppose 13 the tact) makes, in my opiuion, no difference, for reasons which I shall presently state. I observe that the present declaration is sub stantially identical in form with, the second count of the declaration in Brown v. Royal Ineurance Company (above citei), to which no objection was taken, and which is referred to as a precedent by Chitty. Tho second ground of demurrer assumes that it appears on the face of tho record that the plaintiffs are mortgagees. In my opinion this is not so. The language of the policy is that of the defendants ; and neither the description in the policy of tho plaiutiffs as mortgagees, nor the description of the property as belongiug to a third person, is enough to shew that the plaintiffs may not have some interest beyond that of mere incumbrancers. But suppose this point conceded to the defendants, I still think the objection is not maintainable. The declaration avers an election, and this must import a valid and binding election. If through want of title in the insured it is impossible to enter and reinstate, the insurers would not, I apprehend, be bouud by their election. The clause relating to reinstatement in such a case is inapplicable. It cannot bo supposed that there is any warranty on the part of the insured of a right of entry. 1 think that by the averments in the declaration the plaintiffs have sufficiently undertaken to prove that the defendants have made a binding election ; which would not be the ciso if any third person had rightfully prevented their entry, or had otherwise rightfully interfered to render performance impossible. The mortgagor's oonsent, if necoasary, is therefore implicitly alieged. Brown v. Koyal Insurance Company is not opposed to this vieiv of the matter. The Commissioners of Sewers, in that case, interfered to prevent the insurers from patching up a dangerous building, but the company might have rebuilt. As was pointed out by Crompton Hill, J.J., the action of the Commissioners did not render performauce impossible, but only more expensive. Tho third objection to the declaration, like the second, takes tor granted, I think improperly, that the plaintiffs appear, on the face of the declaration, to be mortgagees only. In other respects, it is but a repetition of the lirst ground of demurrer, and assumes that an express averment of the continuance of ineurable interest after the loss, and up to the time of action brought, is essential. I havo only to add to what I have already said, that in my opinion it is very doubtful whether an iusurance office can refuse to settle with mortgagees for a loss, on the ground that the mortgage money has been subsequently paid. What little authority there is in the English cases bearing on the question is, so far as I know, rather in favour of a negative answer to it. The American authorities appear to bo divided as to the principle which must govern decision on the point. The reasoning of the Supreme Court of Massachusetts, in King v. State Mutual Fire Insurance Company (3 Benuett, ISG) implies, that the insurers are not entitled to the benelit of a payment by the mortgagor of the mortgage debt after a loss incurred. This case is said to have been repeatedly followed in Massachusetts; see the Reporter's note, 3 Bennett, 196. On the other hand, Mathewson v. Western Company, 4 Bennett, 410 ; Ronora v. Lamar Fire lusurance Company, 5 Bennett, 245, and other cases, decide that the insurer is entitled to be subrogated to the rights of tho mortgagee. The question does not arise on this demurrer as it sufficiently appears tuat the plaintiffs continued to have an interest down to the time of action brought. The demurrer is overruled. The defendants can have leave to plead within 14 days on pay. meut of the costs of the demurrer—otherwise, judgment for the plaintiffs.

BANKRUPTCY. Re J. C. Bubleigii.—Mr. E. Cooper appeared for the debtor, who came up for hia discharge. Tlio provisions of the statute had bsea complied with, there was no opposition, and his Honor made the order in terms of the application. Re T. W. Brown.—The debtor came up for his discharge. There was no opposition, and the final order was made in terms of the application. This concluded the business.