An Interesting Decision.

Southland Times, Issue 10243, 27 August 1889, Page 2

An Interesting Decision.

A case which gave rise to several im» portant legai questions was decided by Mr Justice Kay a few months ago. A young man named Janme, in eery puor c rcumatancas and preened by creditor-, was defendant in a probate action, in which be claimed a share of certain reaf estato. To enable him to conduct hi« defence, he borrowed money from a Mr Kerr, a solicitor, and as security executed a mortgage whereby he covenanted to employ as his solicitor in tbe action Mr Bridgford, a nominee of Kerr'a, and in tbe event of his being successful in ibe action, to pay Kerr the sum of L 225, " by way of bonus," within three month*, Kerr was to make such further advance* to Jamee as in his discretion be should think fit towards meeting any further necessities of James, or in or towards tbe costs and disbursementa of the action, or of prov* ing the claim of James to a share of tbe real estate, the title to which was in dispute, tbe said real estate being charged by the mortgage with the advances, interest, and the bonus. Kerr advanced L6O at the date of the deed, and L4O after wards. James was eventually successful in establishing bis claim, tbe case being carried to the House of Lords, and thereupon showed his gratitude by bringing an action against Kerr, asking that he mi^bt be allowed to redeem his mortgage on payment of only the LIOO aotualiy ad vanced and interest at 5 per cent. Jud^e Kay decided in the plaintiff's favour on three different grounds. Ho held, in the first place, that the agreement was tainted with champerty, became the stipulation that James was to only employ a solicitor named by the lender could only be for tbe better securing his share of the property to be gained, and because the d6ed olearly held out an expectation of the advance of money by the mortgagee for costs in tbe litigation— and that <( savoured" of main* tenance, if it were not actual maintenance. In the second place be held that tbe stipulation tor the bonus of L 225 was invalid according to the law of mortgage securities as administered by Courts of Equity, by which a stipulation in a mortgage for a collateral advantage to the mortgage is illegal, upon the principle that tbe Court will prevent any oppressive bargain or any advantage exacted from a man under grievous necessity and want of money from prevailing against him. And lastly, that plaintiff waß entitled to the relief he claimed on account of the position of poverty and necessity in which be was at the time be entered into the transaction when he was practically at the mercy of tbe lender whatever terms he chose to exact. The learned Judge Btated at tbe same time that he exonerated the lenders from any intention to defraud the plaintiff. He believed that they thought they were doing James a service upon terms which, considering the riatr, were not unfair ; bat that in spite of the abseuce of fraud the transaction wag one which a Court of Equity con d not uphold.— James v. Kerr. 40 CD., 449.