Smith v Bromley
| Jurisdiction | England & Wales |
| Judgment Date | 07 June 1859 |
| Date | 07 June 1859 |
| Court | High Court of Chancery |
English Reports Citation: 53 E.R. 1047
ROLLS COURT
S. C. 29 L. J. Ch. 18; 5 Jur. (N. S.) 833; 7 W. R. 557. On point as to costs, see Fry v. Lane, 1888, 40 Ch. D. 324.
[644] bromley v. smith. boustead v. bromley. smith v. bromley. May 2, 3, 5, 9, 30, June 4, 7, 1859. [S. C. 29 L. J. Ch. 18 ; 5 Jur. (N. S.) 833 ; 7 W. R. 557. On point as to costs, see Fry v. Lane, 1888, 40 Ch. D. 324.] The general rule is this :-Where a person deals with an expectant heir for his reversion, the burden of proof lies upon such person to prove the fairness of the transaction. The application of the rule is not prevented, (i.) by the fact that the transaction was a charge and not a sale ; nor (ii.) that the expectant heir was a person of mature age; nor (iii.) that he perfectly understood the nature and extent of the transaction ; nor (iv.) is it necessary for the heir to shew that he was in pecuniary distress at the time. An expectant heir mortgaged his reversionary estate, and, as a further security, he covenanted to keep up policies on his life, which, on his default, the mortgagees were empowered to do, and he covenanted to pay the amount and charged it on his reversion. On setting aside the transaction for inadequacy of consideration, the mortgagees were not allowed premiums paid by them under the security. A Plaintiff was outlawed pending the suit. Held, that it was irregular to make the Attorney-General a party in respect of the outlawry, unless a question was raised with regard to its validity or enforcement. A suit was instituted to set aside a charge on a reversion and a cross-suit to establish it. It being set aside for inadequacy of consideration merely, and a decree for redemption being made, the grantor was ordered to pay the costs of charges of fraud which had not been substantiated, but no costs were given as to the remainder of the first suit. The cross-suit was dismissed with costs. An expectant heir charged his reversion iu 1853, and afterwards, in 1855, to the same parties. The second transaction cancelled the first. The second being set aside by the Court: Held, that the first was not revived. A dealing by an expectant heir being set aside: Held, that he must bear the costs paid for the securities. The first of the above suits was instituted by Sir Henry Bromley, Bart., against incumbrancers, to set aside certain charges in his reversionary interest created by him in favor of the Defendants in 1853 and 1855. The two other suits were instituted by the incumbrancers to enforce their securities. The circumstances are stated in detail in the judgment of the Court, but the following is a short outline of the facts :-In 1853 Sir Henry Bromley was tenant for life in remainder of considerable estates, expectant on the death of his father Sir Robert Howe Bromley. The age of the Plaintiff was then thirty-eight, and of his father seventy-seven. 1048 BROMLEY V. SMITH 26 BEAV. 845. [645] In 1853 the Plaintiff, being in want of money, raised it on the security of his reversion, in the following circuitous mode. He granted an annuity of £450 during his life to Mr. Smith in consideration of £5000, out of which sum he purchased from the Albert Life Assurance Company £1765, an annuity of £450, payable for five years, if the Plaintiff and hia father should so long life. Mr. Smith's annuity was secured on the Plaintiff's reversion, and also by an assignment of the Albert annuity, and by a judgment. At the same time a similar transaction took place between the Plaintiff and Sir John Wilson. The annuity being £360, granted in consideration of £4000, out of which £1412 were paid by him to the Albert for a similar annuity of £300. Mutatis mutandis, the securities given were the same. In 1855 the Plaintiff required a further advance, whereupon, in consideration of an annuity of £763 during the Plaintiff's life, Mr. Smith advanced him £8000, out of which £5112, 10s. was paid back for the repurchase of the first annuity of £450, and £1372, 10s. was paid to the Albert Company for the purchase of an additional annuity of £450, in continuation of that already granted in 1853, and to continue during the joint lives of the Plaintiff and his father. The second annuity granted by the Plaintiff was secured in a similar manner to the first. At the same time (1855) Sir John Wilson, in consideration of an annuity of £858, payable during the Plaintiff's life, advanced the Plaintiff £9000, out of which £4090 waa repaid to Sir John for the redemption of his first annuity, and £1098 was paid the Albert for an annuity of £360, from the expiration of the former, and to last during the joint lives of the [646] Plaintiff and his father. Sir John Wilson's second annuity was secured as before. This would have left £811 of the two annuities to Mr. Smith and Sir John Wilson uncovered by the Albert; and to provide for the deficiency, that company undertook to pay this portion of the annuities (£811) in consideration of a sum of £151 paid down and a charge of £10,000 on the Plaintiff's reversionary estate, payable on the death of the Plaintiff or his father, and a policy on his own life. The Plaintiff accordingly charged his reversionary estate with the payment to the Albert of £10,000, and he covenanted with them, from time to time, duly and regularly to pay the premiums and expenses respectively payable in order to keep on foot the policies of insurance (to the extent of £10,000) on the Plaintiffs life. And also, in case default should be made in keeping on foot the policies of insurance, it should be lawful for, but not obligatory upon, the mortgagees, from time to time, to keep on foot the said policies of insurance. And that the Plaintiff would pay unto the mortgagees such sum or sums of money as they should pay or expend in keeping on foot such insurances as aforesaid, with interest for the same, at the rate of £6 per cent, per annum, from the respective times of paying or expending the same. And that the several powers, covenants, agreements and declarations thereinbefore contained for securing the principal sum of £10,000, and the interest thereof, should extend to the sums of money so to be paid by the said mortgagees in keeping on foot such insurances as aforesaid, and the interest thereof, and all costs occasioned by the non-payment thereof. The £10,000 was also secured by a judgment. [647] Sir Robert Howe Bromley died on the 8th of July 1857, and the Plaintiff then became entitled to the estates in possession for his life. The Plaintiff, in March 1858, instituted this suit against Mr. Smith, and against the executors of Sir John Wilson (deceased), the trustees of the Albert, and the manager and secretary, to set aside the securities of 1855 to Mr. Smith, Sir John Wilson and the Albert, upon repayment of the sums advanced. The Plaintiff, in substance, insisted that the securities had been obtained from him while under pecuniary pressure, that the consideration obtained by him for them was leas than the fair market value, and that they ought to be set aside, as securities on a reversionary life-estate of an expectant heir at an uncler-value. The bill contained charges of fraud and collusion, but from this the Court exonerated the Defendants. It appeared, however, that the parties were closely connected together in matters of business, and that these several matters substantially formed but one transaction. S6BBAV.64I. BROMLEY V. SMITH 1049 The Plaintiff was outlawed by one of the Defendants pending the proceedings, and the Attorney-General was made a Defendant, upon an objection by one of the Defendants that he was a necessary party to the suit. Mr. R. Palmer and Mr. Renshawe, for the Plaintiff. Sir R. Bethell, Mr. Follett and Mr. J. J. Jervis, for the directors of the Albert Assurance Office. Mr. Lloyd and Mr. Schomberg, for Mr. Smith. [648] Mr. Selwyn and Mr. W. [648] Mr. Selwyn and Mr. W. Morris, for the executors of Sir John Wilson. Mr. Wickens, for the Attorney-General. The following cases were cited:-Chesterfield v. Janssen (2 Ves. sen. 125; 1 Atk. 301); Cole, v. Gibbons (3 P. Wms. 290, 293); Gwynne v. Heaton (1 Bro. C. C. 1); Lawley v. Hooper (3 Atk. 278); Earl Portmore v. Taylor (4 Sim. 182); Dawx v. The Duke of Marlborough (Swan. 108, 139, 154); King v. Humid (2 Myl. & K. 456 ; 3 01. & Fin. 218); Newton v. Hunt (5 Sim. 511); The Earl of Aldbarough v. Trye (7 Cl. & Fin. 436); Walter v. Srailshaw (26 Beav. 161); Price v, Bernngton (3 Mac. & Gor. 486). May 30. the master of the rolls [Sir John Romilly]. There are, in this case, three suits, all of which depend on and arise out of the same facts which constitute the transaction between the Plaintiff and the Defendants. One suit is instituted by Sir Henry Bromley, to set aside some deeds executed by him, by which he encumbered his reversionary life-estate in a large property then in the possession of his father, Sir Robert Bromley, who has since departed this life. The two other suits are to enforce the securities then given. The decrees in these latter suits will lie a matter of course, if Sir Henry Bromley fail in his attempt to impeach these securities. It becomes material, therefore, in the first instance, to consider whether Sir Henry Bromley is entitled to any relief. By his bill he [649] prays :-1. " That the several indentures of the 13th day of April 1855, and the annuities of £763, and £858 thereby granted and secured as therein mentioned, and the indenture of mortgage of the 14th day of April 1855, may be set aside. And (the Plaintiff being willing, and hereby offering, to pay to such persons or person, and in such manner as this Court shall direct, the amount of all sums actually advanced to the Plaintiff by or on behalf of the Defendant Henry Porter Smith, Sir John Wilson and the Defendants Swynfen Jervis, and Henry Urmston Thomson, and theaaidSir William Henry Dillon, together with interest) that it may be declared, that the two several indentures of the...
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