Re Alison. Johnson v Mounsey
| Jurisdiction | England & Wales |
| Date | 1878 |
| Year | 1878 |
| Court | Court of Appeal |
Mortgage - Trust for Sale - Sale under Trust - Surplus Moneys - Mortgagee in Possession - Statute of Limitations (3 & 4 Will. 4, c. 27), ss. 25, 28.
A security for money lent was made in the form of a conveyance to the lender on trust to sell. He entered into possession and remained in possession for more than twenty years. His devisees in trust agreed to sell the mortgaged estate for a sum exceeding the amount then due for principal, interest, and costs, and conveyed it to the purchaser by a deed in which the trust for sale was recited: —
Held (by Malins, V.C., and by the Court of Appeal), that such a security is simply a mortgage; also that a mortgagee who has been in possession for more than twenty years may make a title and convey under his power of sale.
Held (by the Court of Appeal, reversing the decision of Malins, V.C.), that the devisees in trust could only convey as owners in fee, and that the mortgagors had no right to the surplus of the purchase-money.
BY an indenture of mortgage dated the 10th of October, 1827, Sophia Stringer Anne Stringer, and Phoebe Stringer, in consideration of £3000 paid to them, conveyed to Richard Alison and his heirs certain pieces of land in Liverpool “Upon trust that he the said Richard Alison, his heirs or assigns, shall or may so soon as he or they shall think fit, without the concurrence of or any further power or authority from the said Sophia Stringer, Anne Stringer and Phoebe Stringer, their or either of their heirs or assigns, than is hereby given, sell and dispose of, either by public auction or private contract, either together or in separate lots, or at one or at different times, as he or they shall think fit, all and singular the said pieces or parcels of land,” to any person or persons willing to purchase the same or to lend any sum of money thereupon; and it was declared that the said Richard Alison, his heirs, executors, administrators, and assigns, should apply and dispose of the money to be raised or arise by such sale or mortgage, in the first place in the payment of expenses and outgoings as therein mentioned, and in the next place should pay or retain the said sum of £3000 and interest thereon; and should pay or apply the residue or surplus (if any) of the money to arise by such sale or mortgage, or sales or mortgages, and reconvey and assure, at the request, costs, and expenses of the said Sophia Stringer, Anne Stringer and Phoebe Stringer, their or some or one of their heirs or assigns, such part or parts of the same pieces or parcels of land as should then remain unsold and undisposed of unto the said Sophia Stringer, Anne Stringer, and Phoebe Stringer, their heirs and assigns, or as they should lawfully direct or require. In 1828 further sum of £500 was advanced by Richard Alison, and was charged on the same pieces of land. The mortgagors afterwards made second mortgages of the same pieces of land to Esther Mills by way of security for £500.
In the year 1849 Richard Alison entered into possession of the mortgaged pieces of land, and he and his devisees continued in possession until the sale hereinafter mentioned. He died in August, 1874, having by his will devised his estate, including these lands, to E. Mounsey, W. W. Doke, and James Haughton (since deceased), on trust for two infants. He appointed his trustees executors of his will. and his estate was stated to exceed £400,000 in value.
In 1876 the trustees of the will agreed to sell these lands to the Corporation of Liverpool for £5450; and by an indenture dated the 20th of September, 1876, and made between Mounsey and Doke, the surviving trustees of Alison's will, of the one part, and the mayor, aldermen, and burgesses of Liverpool, of the other part, after reciting the mortgage deed of 1827, and the further charge of 1828, and the will and death of Alison, the indenture proceeded: “And whereas pursuant to the said powers for this purpose contained in the said indenture and in the said will, the said Edward Mounsey and W. W. Doke have agreed with the Corporation for the absolute sale to them of the hereditaments intended to be hereby granted and the inheritance thereof in fee simple in possession, free from incumbrances, at the price of £5450, Now this indenture witnesseth, that for effectuating the said sale, and in consideration of the sum of £5450 to the said E. Mounsey and W. W. Doke, paid by the Corporation …. They the said E. Mounsey and W. W. Doke do and each of them doth hereby grant and convey and assure unto the Corporation, their successors and assigns, all that, &c.” (giving a description of the lands conveyed, which were the same as those comprised in the deed of 1827), “to have and to hold the same unto and to the use of the Corporation absolutely discharged from the said mortgage debts. of £3000 and £500, and all interest for the same, and all claims and demands on account thereof.”
A suit had been instituted for the administration of the estate of R. Alison, and a claim was made by summons in the suit by the representatives of the second mortgagee and by the survivor of the mortgagors, to the surplus of the purchase-money in the hands of the trustees of Alison's will. It appeared that Alison bad always kept the accounts of this estate as a mortgagee in possession, and that the rents had nearly balanced the outgoings and interest, so that at the time of the sale a very small balance of interest was due to his representatives. It further appeared that a Mr. Douglas, who was the solicitor of the surviving Miss Stringer, had in the course of the negotiations preceding the sale to the corporation been consulted by Mounsey, who was an accountant and agent in partnership with one Lewis, as to the price to be asked, and other matters; and according to Douglas's statement he had been led to believe that he would be paid the surplus of the purchase-money.
The Chief Clerk of Vice-Chancellor Malins found that the second mortgagees and the surviving mortgagor were entitled to the surplus of the purchase-money.
The legatees under Alison's will took out a summons before Vice-Chancellor Malins to vary the Chief Clerk's certificate. The summons came on for hearing on the 1st of February, 1879.
Glasse, Q.C., Snow, and Oswald, for the legatees under Alison's will: —
The mortgagee had been in possession of the estate for much more than thirty years, and had become absolute owner under 3 & 4 Will. 4, c. 27, s. 28: Dawkins v. Lord PenrhynF2. His trustees sold as absolute owners, though in their conveyance they recited as the origin of their title the mortgage deed. That, however, was no acknowledgment to the mortgagor: Lucas v. DennisonF3; Batchelor v. MiddletonF4. The law is not now as it was when Trulock v. RobeyF5 was decided. No doubt this security was taken in the form of a trust, as was usual in the early part of the century, but that has been decided to make no difference: Locking v. ParkerF6. In 1875 the rights of the mortgagor were absolutely barred, and nothing since done has revived or could revive them. The vendors were merely trustees under Alison's will, and no declaration of theirs could take the money away from his estate.
Bristowe, Q.C., and Warmington, appeared for the trustees of Alison's will, and referred the Court to Richardson v. YoungeF7 as to the effect of an acknowledgment by one of two trustees.
Higgins, Q.C., and H. P. Lawrence, for the representatives of the second mortgagee and for the surviving mortgagor: —
Our first contention is that this security created an express trust for the mortgagors which is excepted and is not barred by the statute. Secondly: The second mortgagees are assignees of the surplus, and gave notice of their assignment. As to the first point, no doubt the mortgagors could not come here to redeem, as in the cases cited; but this is not a redemption, it is merely an application to the Court by a cestui que trust for money in Court. The latter part of the judgment in Locking v. Parker is entirely in favour of the mortgagors. So is the passage in the judgment of Vice-Chancellor Wood in Kirkwood v. ThompsonF8. The mortgagors could not force the mortgagee to sell, but the moment the power of sale is exercised the mortgagee becomes a trustee of the money for the mortgagors. The judgment of Lord Justice Mellish in Richardson v. YoungeF9 is entirely in our favour. There...
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