Borell v Dann
| Jurisdiction | England & Wales |
| Judgment Date | 07 April 1843 |
| Date | 07 April 1843 |
| Court | High Court of Chancery |
English Reports Citation: 67 E.R. 181
HIGH COURT OF CHANCERY
[440] bohell v. dann. March 13, 14, 15, 18, 20, 21, 22, April 7, 1843. Under the statute 7 G-eo. 4, c. 57, all persons who are creditors of an insolvent debtor, at the time his petition for discharge is filed in the Court for the Eelief of Insolvent Debtors, are entitled, taking proper steps for that purpose, to participate in his estate, whether the same have or have not been inserted by the insolvent in his schedule. The purchaser of the estate of an insolvent debtor from his assignees, at a sale by auction, will not be affected by constructive notice of circumstances of negligence on the part of the assignees in conducting the sale-such circumstances being entirely collateral to any question of title. A sale of the estate of an insolvent debtor, made bond fide at a public auction, is not, after conveyance to the purchaser, necessarily voidable in equity, only because the purchaser, after the sale but before the conveyance, had notice of circumstances attending the conduct of the sale by the assignees, amounting to negligence on their part. The Plaintiff was tenant for life, unimpeachable for waste, of a manor and farm named Brigsley, in Lincolnshire, subject to a term of years for raising 500 apiece for such of the five children of J. Borell as should attain twenty-one, or, having been married, should die under that age. The Plaintiff, in 1831, raised sums of 1600 and 200 upon mortgage of his life interest in the Brigsley estate. In 1835 he effected an insurance on his life for the sum of 1600 with the Provident Institution, and assigned the policies to the mortgagees as a further security for the money due upon the mortgage. In April 1837 the Plaintiff was arrested for debt, and being in prison in the gaol of Hull, on the 30th of January 1838 signed his petition to the Court for the Eelief of. Insolvent Debtors for his discharge under the statute of the 7 G-eo. 4 (c. 57, s. 10), and executed the usual conveyance and assignment of his real and personal estate to the provisional assignee. The Defendants, W. Dann and T. Kennington, were after wards appointed assignees of the estate and effects of the insolvent, which were thereupon conveyed and assigned to them. [441] The assignees, having taken the preliminary steps required by the statute (sect. 20), advertised the sale of the Plaintiff's life interest in the Brigsley estate to take place at Great G-rimsby, on the 8th of May 1838, by auction. Shortly before the time of the intended sale the Plaintiff caused notices to be posted in the neighbourhood, to the effect that he had applied to the Court of Insolvency to suspend the sale, and that any persons becoming the purchasers would do so at their peril. The assignees in consequence of this notice postponed the sale. On the 16th of May the assignees, having found that the application of the Plaintiff to the Court had been refused, applied for permission to proceed to a sale without calling another meeting 182 BORELL V. -DANN 2 HARE, 442. of tbe creditors, but the Court was of opinion that all the steps preliminary to a sale under the Act should be again taken. This was accordingly done, and the sale was advertised for the 12th of July 1838, on which day it took place, and the Defendant, George Babb, solicitor, of Great Grimsby, being the highest bidder, became the purchaser of the Plaintiff's life interest in the Brigsley estate, at the sum of 940. On the 18th of August an application of the Plaintiff to stay the assignees from proceeding with the sale of the Plaintiffs life-estate was heard before the Court for the Belief of Insolvent Debtors, and was refused. Tbe assignees conveyed the estate to Babb, the purchaser, by indentures, dated the 31st of August and the 1st of September 1838. On the 13th of September the Plaintiff filed his bill against the assignees and Babb, the purchaser, praying the declaration of the Court that the said alleged price agreed to be given by Babb for the Plaintiffs life-estate [442] was grossly inadequate, and that the sale to Babb was fraudulent and void as against the Plaintiff, and that any conveyance of such life-estate, and any assignment of the said policy to Babb which might have been made or executed by the Defendants, the assignees, was and were respectively fraudulent and void, and ought to be set aside as against the Plaintiff; and that the life-estate and policy might be respectively decreed to be reconveyed and reassured to the Plaintiff, or for his benefit, by the Defendants and all other necessary parties, subject, to the said existing mortgage thereon created by the Plaintiff; the Plaintiff offering to pay to the Defendants or otherwise, as the Court might direct, the amount which might be necessary for payment of all the Plaintiff's debts under his insolvency, and all the costs and expenses, if any, remaining unpaid and necessarily and properly incurred by the Defendants, the assignees, in execution of their trust as such assignees ; and that, if necessary, an account of such debts and costs might be taken. Or, if the said sale and conveyance should not be decreed to be altogether set aside, then that the conveyance might be rectified in respect of the parcels improperly comprised therein and otherwise in the particulars thereinbefore stated, and as might be requisite and proper; and that the Defendants might make due payment and satisfaction in respect of the said matters. The Plaintiff rested his claim to relief upon the ground that the assignees, in their mode of conducting the sale, had been so negligent of their duty to the insolvent, .and had acted so improvidently as respected his interests, that their conduct amounted to a breach of trust; and that the purchaser was affected with notice of such alleged breach of trust to an extent which vitiated the sale. Various circumstances were relied upon as supporting these charges. The sale was said to [443] have been wholly unnecessary, inasmuch as Mr. Hughes, a clerk of the Plaintiff's attorney, attended on the morning and at the place of sale, and tendered to the assignees the sum of 528, 19s. 7d., being the amount of the debts in the Plaintiff's schedule, and a further sum for expenses, making up in the whole 550, tendering also at the same time a deed for the execution of the assignees. It was alleged, moreover, that the description of the life-estate offered for sale omitted several particulars which enhanced its value, namely, that the Plaintiff was tenant for life, unimpeachable of waste, and that he was entitled to^the manorial rights, and to certain fee-farm or quit rents; and that the policy of insurance ought to have been, but was not, included in the property sold. Not only, it was said, was the sale conducted in a depreciating manner, by introducing a stipulation that the vendors should not be required to do more than shew the conveyance of the estate to themselves from the provisional assignee-by not making known the conditions of sale until the morning of sale- and by reading in the. sale-room a letter, which stated that the life of the Plaintiff, from his intemperate habits, was not insurable; but that the estate was actually disparaged by misdescription : that the premium of 40, Is. 4d. per annum in respect of the policy of insurance was stated to be a charge upon the land, which was not true; and that the estate was also described as subject to the tithes and land tax, whereas the tithes and land tax were both borne by the tenant, to whom it was let at & net rent of 650 a year. It was contended that the result of the transaction was that the estate was sold at a price grossly inadequate, and not amounting to more than one and a half year's purchase. The assignees, by their answer and at the Bar, justified the sale of the estate, by 2HABE.4M. BOBJELL V. DANN 183 insisting that the tender of the amount of the scheduled debts and expenses was not [444] sufficient, as the amount of the debts was liable to be increased by the introduction of the claims of other creditors, and by additional claims of the creditors whose names were already in the schedule: that Mr. Acton, their solicitor, had proposed to Hughes that he should pay the amount of the scheduled debts, and give au undertaking to pay the deficiency and expenses, which, however, Hughes declined; and that, even if the tender had been sufficient in amount, the assignees were not bound therefore to stop the proceedings on the morning of sale, and immediately execute the deed which was tendered to them, the effect of which might require much consideration. They contended that there was no material omission in the particulars of sale: that the life-estate was not enchanced in value by being unimpeachable for waste, inasmuch as there were no mines on the property, and the Plaintiff had previously caused all the timber of any value to be felled : that the alleged quit rents, at the utmost, amounted to 4 or 5 a year, and to this the title of the Plaintiff w"as disputed, and was by no means clear, and to have included them in the particulars of sale might have embarrassed the vendors in making a title to the property; and that the manorial rights were of no more than nominal value. They denied that the mode of conducting the sale had been calculated to depreciate the property, or that they acted otherwise than properly therein. They said that it was unimportant whether the policy of insurance, being a collateral security to the mortgagees, was sold or reserved ; and that although the statement that the premium was a charge on the estate was erroneous, yet as it was necessary to keep the policy on foot to secure the mortgage debt, and, there being no other fund for that purpose, the effect was substantially the same as if it had constituted an actual charge. They insisted that no purchaser could have mistaken the meaning of the statement that the estate was subject to...
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