Re Tyler. ex parte Official Receiver

JurisdictionEngland & Wales
Judgment Date1907
Year1907
Date1907
CourtCourt of Appeal
[IN THE COURT OF APPEAL.] In re TYLER. Ex parte THE OFFICIAL RECEIVER. 1907 Feb. 21. VAUGHAN WILLIAMS, FARWELL and BUCKLEY L.JJ.

Bankruptcy - Mortgage of Life Policy - Voluntary Payment of Premiums by third Party - Death of Mortgagor - Repayment of Premiums to Volunteer out of Policy Moneys - Duty of Trustee.

The principle established by Ex parte James, (1874) L. R. 9 Ch. 609, that the Court of Chancery will not allow its officer, the trustee in bankruptcy, to retain moneys for distribution amongst the creditors, where it would be contrary to fair dealing to do so, is not confined to the case of money paid under a mistake of law, but is of general application.

The bankrupt having assigned a policy on his own life by way of mortgage to his bankers, requested his wife on the eve of his bankruptcy to pay the premiums and interest for him, and she, after paying one premium before the commencement of the bankruptcy, paid the premiums and interest during his bankruptcy until his death, when the policy moneys were received by the mortgagees, who retained thereout the amount due to them on their mortgage and paid the balance to the official receiver. The wife claimed to be repaid out of the balance the sums she had paid for premiums and interest. The official receiver had no previous knowledge that the wife had been making these payments, but it subsequently appeared that this fact had been disclosed by the bankrupt in his preliminary examination taken before a former official receiver. The official receiver moved for a declaration that he was entitled to retain the balance of the policy moneys as part of the bankrupt's estate:—

Held, even assuming that all the payments were made during the bankruptcy, that the Court ought not to allow the official receiver, having regard to the knowledge of his predecessor, to retain the policy moneys without repaying to the wife the sums she had paid for premiums and interest.

Decision of Bigham J. affirmed.

The principle of Ex parte James, L. R. 9 Ch. 609, applied.

APPEAL from a decision of Bigham J.

The agreed facts were as follows: On January 29, 1896, William Tyler committed an act of bankruptcy. On April 21, 1896, a petition was presented against him, in respect of which a receiving order was made on July 16, 1896, and he was duly adjudicated a bankrupt on August 27, 1896. Frederick W. Davis was appointed trustee on August 31, 1896, but he was subsequently released, and Egerton Spencer Grey, as official receiver, was now ex officio trustee of the bankrupt's property. At the commencement of the bankruptcy the bankrupt was entitled to two policies of assurance effected on his own life with the Guardian Assurance Company, one for the sum of 300l. at an annual premium of 9l. 19s. 3d., and another for the sum of 500l. at an annual premium of 16l. 12s. 1d. By a mortgage dated April 13, 1893, the bankrupt assigned these policies to Messrs. Child & Co., bankers, to secure an overdraft of 400l. The mortgage contained a covenant by the mortgagor to pay the premiums, and that if the mortgagor should at any time neglect or refuse to pay the premiums it should be lawful for the mortgagees to pay them, and that the mortgagor would on demand repay to the mortgagees all sums paid in that behalf, with interest thereon at 5 per cent. from the respective times of payment; and it was thereby declared and agreed that in the meantime the policies should stand charged with the payment of such sums with interest thereon.

Towards the end of the year 1895 the bankrupt became financially embarrassed, and he informed his wife that he was unable to continue the payment of the interest on the loan of 400l. and the premiums on the policies, and he accordingly requested his wife to make these payments for him in order to prevent the premiums being paid by the mortgagees or the policies being sold or lapsing, and he stated that if his wife was prepared to do this he would repay her the amount expended by her as soon as he got his financial affairs straight. In accordance with such request the bankrupt's wife instructed Messrs. Child & Co. to pay the interest due to themselves and the premiums due to the assurance company as and when they became due and to debit her account with them with such payments, and this they continued to do from the time when she gave them instructions, viz., in the month of December, 1895, until the death of the bankrupt in March, 1906. The total amount paid by the bankrupt's wife for premiums and interest on the loan was 481l. 14s. 2d. The moneys having become payable under the policies in consequence of the death of the bankrupt, the Guardian Assurance Company paid to Messrs. Child & Co. 936l. 10s., being the policy moneys and bonuses due under the two policies, and there remained in the hands of Messrs. Child & Co., after payment of the principal and interest of their loan and their solicitors' costs, the sum of 514l. 16s. 8d. This sum was in consequence of a notice served upon them paid to the official receiver. The widow claimed to be repaid out of the sum of 514l. 16s. 8d. the sum of 481l. 14s. 2d., being the amount paid by her for premiums and interest. It appeared from the bankrupt's statement of affairs that he was at the commencement of the bankruptcy entitled to the policies subject to the mortgage thereon in favour of Messrs. Child & Co. At the commencement of the bankruptcy the amount due to Messrs. Child & Co. on the security of the policies was in excess of the surrender value of the policies. The official receiver moved for a declaration that this sum of 514l. 16s. 8d. formed part of the property of the bankrupt divisible amongst his creditors.

Bigham J. held that, although the widow had no legal right, and probably also...

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34 cases
1 books & journal articles
  • Property of the Bankrupt
    • Canada
    • Irwin Books Bankruptcy and Insolvency Law. Second Edition Part One
    • 19 June 2015
    ...income is not distributed. See Gurniak , above note 226; Conforti (Re) , 2012 ONSC 2656. 243 (1874), LR 9 Ch App 609. 244 Re Tyler , [1907] 1 KB 865 . Property of the Bankr upt 127 Payments made on the basis of a mistake of law are now recoverable in an action for unjust enrichment. 245 How......

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