Collinson v Lister
| Jurisdiction | England & Wales |
| Judgment Date | 03 December 1855 |
| Date | 03 December 1855 |
| Court | High Court of Chancery |
English Reports Citation: 44 E.R. 247
BEFORE THE LORDS JUSTICES.
S. C. 20 Beav. 356; 25 L. J. Ch. 38; 2 Jur. N. S. 75; 4 W. r. 133.
[634] collinson v. lister. Before the Lords Justices. Nov.[25, 26, Dec. 3, 1855. [S. C. 20 Beav. 356; 25 L. J. Ch. 38; 2 Jur. N. S. 75; 4 W. R. 133.] If a lender of money to an executor has, at the time of the loan and before parting with the money, notice that the executor in borrowing commits a breach of trust and intends to misapply the money, he acquires no better title against the estate than the executor himself. Where a local agent of a banking company in that character advances money of the company by way of loan, and the borrower, to the agent's knowledge, is obtaining the money for the sole purpose of misapplying it, the company acquires no better title than the agent would have had had the case been his own, or than the borrower. An executor borrowed money from a banking company of which he was the local agent, for the purpose of making a further advance to a mortgagor of a ship, on the security of which the testatrix had lent money, on the pretence that such further advance was made to pay off a prior charge, but really to assist the mortgagor, and the security proved ultimately wholly insufficient. Held, that the company had no claim upon the testatrix's assets, and that a mortgage of the ship made by the executor to the company to secure their advance was invalid. This was an appeal from the decision of the Master of the Rolls, reported in the 20th Volume of Mr. Beavan's Reports (page 356), where the facts are fully stated. The following is a short outline of them. The Appellant Lister was the executor of a Mrs. Hardisty, who had advanced 1500 to a Mr. Fletcher on a mortgage of a steam vessel called the Toward [635] Castle. Some time after the advance was made, the Defendant Lister, who was then acting as the testatrix's agent, permitted the machinery to be removed from that vessel to another, called the Engineer, which was, in consideration of such permission, agreed to be mortgaged to her. After her decease, the Defendant Lister, who was also the local agent of a branch of the York City and County Bank, advanced out of the monies of the bank sums amounting to 1620 to Mr. Fletcher, assuming to borrow the money as executor of Mrs. Hardisty for the ostensible purpose of enabling Mr. Fletcher to pay off or settle a paramount charge on the Engineer for repairs, and thereby improving the testatrix's security. In the opinion, however, of their Lordships on the evidence, this was not a bond fide transaction, but was intended merely 248 COLLINSON V. LISTER 7 DE 0. M. & 0. 638. to serve Mr. Fletcher. On the directors of the banking company adverting to the loan, they required security for it; and Lister, as executor, mortgaged the Engineer to them, with a power of sale. Under this power the company had sold the vessel for 1150, and received the purchase-money. The Plaintiffs, who were residuary legatees under Mrs. Harclisty's will, then instituted the present suit, seeking administration accounts against Lister, and praying that the company might account for all monies received by them on account of the sale of the vessel. The Master of the Rolls directed the bank to pay into Court the money in their hands arising from the sale of the ship, and directed an account against the Defendant Lister, in which he was disallowed the sums borrowed from the bank. From this decree the Defendants appealed. Mr. Roupell and Mr. Amphlett, for the Plaintiff. [636] Mr. Follett and Mr. Robson, for the Appellant Lister. Mr. R. Palmer and Mr. Hobhouse, for the banking company. The arguments were similar to those addressed to the Court below; and in addition to the authorities there cited, Duncan v. Tindall (13 C. B. 258), Penne.lt v. De/ell (4 Da G. M. & G. 372) were referred to. Judgment reserved. Dec. 3. the lord justice knight bruce. This appeal is from the decree in a cause exhibiting too much unscrupulous conduct to be observed without regret and something more. The decree-at once by relieving the small estate of Mrs. Hardisty, the testatrix in the cause, from two sums of 300 and 1320, sought to be charged against it as alleged to have been after her death applied for its benefit by her executor and obtained for the purpose by him from the funds of a banking company in Yorkshire, and by restoring also to it a sum of 1150 abstracted from it by the executor and the company-has given that estate a chance of escape from annihilation to which the Defendants, consisting of the executor and certain ministers of the banking company, who here represent that establishment, object. The first question is, whether as to these three sums the company have a better right or firmer standing ground than their dismissed officer and present ally Mr. Francis Lister, the executor, possesses-a question, I think, to be answered certainly in the negative. There have been instances, no doubt, in which a dishonest executor, by borrowing money in that character, has [637] been able to make the lender effectually a creditor on the estate of the deceased. But if at the time of a loan to an executor as executor, and before parting with the money, the lender has notice that the borrower in borrowing acts improperly, commits a breach of trust, and intends to misapply the money, the lender acquires no better title against the estate than the executor himself has, and must stand or fall with him. This rests not only on the plainest principles of justice, but on the direct authority of Lord Eldon, nor on his great authority alone. And if a banking company has what is called a branch bank managed or superintended by a local agent who in that character advances money of the banking company by way of loan, knowing at the time facts which render the loan an improper transaction, and would prevent the agent from sustaining it were the transaction and the money his own-as in the instance of a trustee borrowing money in that character, who by the very act of so borrowing commits a breach of trust, having sought and obtained the money for the sole purpose of misapplying it, and the circumstances being all known at the time to the agent lending-I apprehend it to be clear, that the banking company acquire no better title than the agent would have done had the case been his own, or than the trustee. But here, if the York City and County Bank were lenders to Mrs. Hardisty's executor, the executor borrowing, and their agent lending, was one and the same person. Mr. Lister helped himself first, and then immediately his confederate, Mr. Fletcher, to the 300 and the 1320. This was done before the month of June, 1851, nor has the security under which the banking company claim the 1150, a security given not before [638] January 1852, any other foundation than those advances of 300 and 1320 made so many months previously. They are the 1620 mentioned in the security, and by them are intended the two sums mentioned also in that instrument, and in the deed bearing the date of the preceding April, which it 7 MB O. M. ft 8. m. COLLIN8ON V. LISTEB 249 recites. For all the purposes of this suit, therefore, so far as the 300, the 1320 and the 1150 are concerned, Mr. Lister is the banking company and the banking company are Mr. Lister. It then becomes material -to determine what were the nature and character of the acts and conduct of Mr. Lister with respect to the removal of the machinery of the ship Toward Castle, which, with the machinery, was made a security to the testatrix by the deed of March 1850, for the money (1500 or not much less) that mainly I am convinced, through his instrumentality, she had been led into lending with Mr. Fletcher; and with respect also to the ship Engineer, and especially to the heavy and rash and almost unaccountable expenditure upon that vessel appearing to have taken place in one or both of the years 1850 and 1851. And I may, in the first place, notice the very slight regard to correctness of statement which some at least of the documents in evidence, that were professionally prepared, exhibit; a bad habit, to say the least; nor do I confine the remark to the simulated purchase from Mr. Lister by Mr. Pennell, who seems to have been another of the bank auxiliaries. I must next say that, after having considered, not only all the documents, but all the undisputed facts before the Court, the manner in which they respectively affect Mr. Lister, and the degree of weight properly attributable to [639] the statements on oath made by him as a Defendant and as a witness, the circumstance that Mrs. Hardisty was an executing party to the deed of March 1850, the security on the Toward Castle, though not in the deed of October 1850, the security on the Orion, the whole of the evidence, and the observation that Mr. England says no more than he does say, I am unable to represent myself as persuaded, nor can I think the Defendants entitled to ask the Court to believe, that Mrs. Hardisty agreed or consented to relinquish her security on the Toward Castle, or on the machinery on board of that vessel or agreed or consented to the removal of the machinery from the vessel, or agreed or consented to accept a security on the Orion and the Engineer, or either of those ships. But it is clear that the removal, and the works preparatory to the removal of the machinery from the Toward Castle, were with the knowledge and consent of Mr. Lister, who professed to act, in that respect at least, as the testatrix's agent in her lifetime. And it must from the materials before us be also taken that he was at the time of her death aware of the contents of her will, and immediately afterwards accepted the executorship, with full knowledge at the time of all circumstances then existing which it was material for her estate that he should know concerning the ships and machinery in question. There is not, however, I think, any...
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