Colyer v Finch
| Jurisdiction | England & Wales |
| Judgment Date | 24 July 1856 |
| Date | 24 July 1856 |
| Court | House of Lords |
English Reports Citation: 10 E.R. 1159
House of Lords
Mews' Dig. vi. 1273, 1282, 1565; ix. 1584; x. 1597; xiv. 1353; xv. 1667. S.C. 26 LJ.Ch. 65; 3 Jur. N.S. 25; and, in Ch., sub nom. Finch v. Shaw, 19 Beav. 500; 18 Jur. 935. Considered in Thorpe v. Holdsworth, 1868, L.K. 7 Eq. 146; Hunter v. Walters, 1870, L.R. 11 Eq. 314; Dixon v. Muckleston, 18 U, L.R. 8 Ch. 161; Corser v. Cartwright, 1873-75, L.R. 8 Ch. 975; L.R. 7 H.L. 736; Northern Counties of England Fire Insurance Co. v. Whipp, 1884, 26 Ch.D. 491; Manners v. Mew, 1885, 29 Ch.D. 728; Taylor v. Russell, 1890, 59 L.J.Ch. 760.
Mortgage Notice - Priority - Postponement, Fraud, or Negligence - Sale for Payment of Debts and Legacies.
THOMAS COLYER,-Appellant; EDWAKD FINCH,-Respondent [July 15, 17, 18, 24, 1856]. [Mews' Dig. vi. 1273, 1282, 1565; ix. 1584; x. 1597; xiv. 1353; xv. 1667. S.C. 26 LJ.Ch. 65; 3 Jur. N.S. 25; and, in Ch., sub nom. Finch v. Shaw, 19 Beav. 500; 18 Jur. 935. Considered in Thorpe v. Holdsworih, 1868, L.K. 7 Eq. 146 ; Huntir v. Walters, 1870, L.R. 11 Eq. 314; Dixon v. Muckleston, 18 U, L.R. 8 Ch. 161; dorser v. Cartwright, 1873-75, L.R. 8 Ch. 975; L.R. 7 H.L. 736; Northern Counties of England Fire Insurance Co. v. Whipp, 1884, 26 Ch.D. 491; Manners v. Mew, 1885, 29 Ch.D. 728; Taylor v. Russell, 1890, 59 L.J.Ch. 760.] Mortgage Notice-Priority-Postponement, Fraud, or Negligence-Sale for Payment of Debts and Legacies. A court of equity does not restrict the protection it will afford a purchaser for valuable consideration without notice, to a case in which he has got the legal estate. Where there is a general charge of debts, but no legal estate is given, the executors may have implied authority to convey the legal estate in order to raise the money to satisfy the charge; but where there is a devise of the legal estate to a particular person, and the estate is charged with payment of debts or legacies, the money must be raised through the instrumentality of the devisee, and he is the only person that can make a legal title. Semble, that where a devisee of a real estate charged with payment of debts sells the real estate, the purchaser is not bound to inquire (unless special circumstances call for such an inquiry), whether the money is applied in the payment of debts, or whether the sale was intended for that purpose. A first mortgagee having the legal title is not to be postponed to a second, merely 1159 V H.L.C., 9M COLYEE V. PINCH [1856] because he has not possessed himself of the title-deeds of the estate: he can only be postponed where he has been guilty of fraud or gross negligence. [906] If an estate is given to a devisee charged with the payment of legacies, and he mortgages the estate to one person and afterwards sells it to another, the purchaser will stand in the place of the legatees, but will do so bound in equity to make good the mortgage debt. The Rev. J. Kenward Shaw Brooke, by his will, dated 24 August 1839, devised all his estates (of which he was seised under a will dated in 1789), unto Robert William Shaw, and his heirs, to the use of such persons as; the testator's nephew, Sir J. Kenward Shaw, should by deed, etc., appoint, and until such appointment, and in default thereof, to the use of the said Sir J. K. Shaw for life, remainder to Sir J. K. Shaw, his heirs, etc., for ever; and Robert W. Shaw and Sir J. K. Shaw were appointed executors. The testator died in December 1840, and in February 1841 the executors proved the will. The property in question was at that time subject to an annual rent charge, created in April 1822, for the sum of 200, payable to Frances Ann Shaw for life, which rent-charge was secured by a term of 100 years. It was also subject to three several legacies of 2000 each, payable, with interest at 4 per cent., at the expiration of 12 calendar months from the death of Dame Theodosia Margaret Shaw, widow. Sir J. K. Shaw in July 1842 borrowed from the 'Respondent a sum of 3500, which was secured by a mortgage on certain of the devised lands, etc., being two farms called Hook's Hill and Weavers, situated at Southfleet, in Kent. By indenture, dated 7 July 1842, made between Sir J. K. Shaw of the one part, and the Respondent of the other part, the will of the Rev. J. K S. Brooke was recited, together with his death, the probate of the will, the seisin of Sir J. K. Shaw under it, the agreement for the loan, etc., and io was witnessed that, in consideration of the sum of 3500 by the Respondent paid to him, Sir J. K. Shaw, he, in execution of the power [907] given him by the will, appointed the hereditaments therein named, etc., to' the uses thereinafter expressed, and that for the considerations aforesaid Sir J. K. Shaw by the said indenture, made in pursuance of the Act of the 4 Viet. c. 21, for rendering a release effectual for the conveyance of freehold estates, did grant, etc., the two farms called Hook's Place and Weaver's, in Southfleet, in the county of Kent, then in the occupation of Thomas Wells, to secure repayment of the said 3500, with interest at five per cent. This indenture was prepared by Mr. John Hayward, who was at that time a solicitor in considerable practice at Dartford, and was the solicitor for Sir J. K. Shaw, and who in this transaction acted likewise as the solicitor for the Respondent. On the Respondent paying over the 3500 he received from J. Hayward the mortgage deed, the will of 1789, the will of 1839, and some other papers which J. Hayward represented as constituting a perfect security for the loan. In fact, however, though Sir J. K. Shaw was really entitled to both moieties of the estate, and had always been in possession of them, the papers delivered showed only a title to one moiety. There were deeds of 1750 and 1789, which made the title to the whole complete, but which were never delivered to the Respondent. The interest on this mortgage was regularly paid through the hands of J, Hayward up to the 7th of January 1849. In 1846 J. Hayward, still acting as the solicitor for Sir J. K. Shaw, obtained from the Appellant a loan of money on the deposit of the title deeds then in Shaw's possession, one of which was the deed of 1789, which, with the will of 1789, would have made the title complete. Lady Theodosia died in October 1847, and in 1848 the three legacies of 2000 each, charged on the property (of which the farms at Southfleet formed part), became payable. Other loans were obtained by Sir J. K. Shaw, [908] and in all the transactions relating to them John Hayward acted as his solicitor. Among these was a loan made to Sir J. K. Shaw by Mr. William Webb Hayward, a trustee for a person named Cooper, and thereupon an indenture, dated 20 May 1848, was executed by Sir J. K. Shaw, by which the premises at Southfleet, and others not comprised in the Plaintiff's mortgage, were conveyed to W. W. Hayward, with, a power of sale, for the purpose of paying the three legacies of 2000, and for the other purposes mentioned in the said indenture. The loan made by the Appellant was paid off, and he delivered up to W. W. Hayward the deeds which had been deposited with him. 1160 COLYER V. FINCH [1856] V H.L.C., 909 On the 16th of February 1849 W. W. Hay ward put up for sale by auction the hereditaments comprised in the last-mentioned indenture, and the first lot contained the lands of Hook's and Weaver's farms, which lot realized the sum of 8200, and the others made up therewith the sum of 13,670, or more than double the amount required to pay the legacies, with the interest due thereon. The Lot 1 was at first bought by the Respondent's present solicitor, without his being aware of the existence of the mortgage of the 7th July 1842, but it was subsequently resold, and Mr. Wells, the tenant of the farms, became the purchaser, and had since transferred his rights as such to the Appellant. Mr. R. Shaw (since deceased) and Sir J. K. Shaw, as executors of the will of 1839, and Sir J. K. Shaw, in his own right, joined in executing the conveyance upon the sale. In June 1852 the Respondent filed his bill against Sir J. K. Shaw (then and now out of the jurisdiction), and against the Appellant, which set forth the above facts, denied that he had knowingly or wilfully left the title deeds in the hands of J. Hay-ward, and alleged that he [909] had taken what he believed to' be a valid and complete security for his advance. The prayer of the bill was, that an account might be taken, that the Defendants might be ordered to pay what should be found due, or that the Appellant might be foreclosed, or might be prevented from setting up in any action at law at the suit of the Respondent, the term of 100 years created in April 1822. The Appellant put in his answer, and insisted that the Respondent did know, or but for gross negligence might have known, all the various dealings which took place with the premises between the date of the Respondent's alleged security and the completion of the sale to the Respondent. He denied that J. Hayward acted as his solicitor, but admitted that that person had prepared the deeds. In September 1852, Thomas Colyer, having put in his. answer to Finch's bill, filed a cross bill against Finch, by which he prayed that Finch's mortgage might be declared invalid, or if not invalid, that it was not entitled to priority over his (T. Colyer's) purchase, and that Finch might be ordered to convey to him, or might be restrained from taking any proceedings at law against him, to obtain possession of the said farms and premises. Finch put in his: answer, and the causes went to issue, when evidence was given of the facts above stated; and with reference to the mode in which the mortgage transaction took place, the Respondent stated in his affidavit as follows : " I directed Hayward to prepare a proper mortgage deed, and he did thereupon prepare the indenture, dated 7 July 1842, marked A. About the latter end of the month of June, or the...
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