A THIRD PARTY.

New Zealand Times, Volume XXXVI, Issue 8179, 22 July 1912, Page 4

A THIRD PARTY.

LIABILITY At LAW BASED ON CONSCIENCE BATHER THAN CONTRACT. In tlie Supreme Court on Saturday Iris Honor Mr Justice Cooper delivered reserved judgment on a Palmerston. Nortli civil action, Mrs Bolstadt against J. P. ‘Falconer and P. B. Biggs (third party). 'I ho plaintiff had secured a judgment against the defendant Falconer for balance upon a mortgage by him to her of a leasehold interest tof which he was assignee), and a collateral mortgage of stock. The further hearing of the »c tion resolved itself into a claim by the defendant against Biggs, the third party, Siggs and the defendant having entered into an agreement whereby Siggs agreed to purchase the leasehold from Falconer. Falconer claimed to recover from Siggsi the amount which ho was liable to pay to the plaintiff. It was agreed that the court should determine \the liability of Siggs os if ho was defendant in an action'brought against him by Falconer. In the course of the judgment, his Honor emphasised that the liability of the purchaser of an equity of redemption to indemnify the vendor from liability under the mortgage was an equitable doctrine and rested upon conscience rather than upon contract. In the present case it would be most inequitable it Siggs, who had resold the property to a person of straw, was to escape his liability in respect to the mortgage upon iho property, while Falconer waa to remain, liable for Siggs’ mortgage on the property which Falconer had taken in exchange. The relationship created between the parties raised in equity a mutual obligation on each party bo indemnify the one the other against liability on the respective mortgage existing on each exchanged property. The fact that Falconer, at Siggs’ request, transferred the property to a Mre Bell did not affect the matter. The obligation on, Siggs’ part to indemnify Falconer against' liability On' the mortgage to Mrs Bolstadt arose in conscience rather than in contract, although it was necessary to; look to the contract of purchase to ascertain whether, in the circumstances of the case, it was the intention of the -parties that this conscientious obligation existed. Siggs,' therefore, being liable in equity to Indemnify Falconer against liability on the, mortgage, waa liable in law to pay to him the money which in tills action his Honor had held that Falconer was liable to pay to the mortgagee. And as the parties had consented to treat the claim made by Falconer against Siggs as if it was one made in an action brought by Falconer against Siggs, judgment was given against Siggs for that amount with costs on the lower scale.