Todd v Studholme
| Jurisdiction | England & Wales |
| Judgment Date | 01 January 1857 |
| Date | 01 January 1857 |
| Court | High Court of Chancery |
English Reports Citation: 69 E.R. 1132
HIGH COURT OF CHANCERY
S. C. 26 L. J. Ch. 271; 5 W. R. 277. See In re Dangar's Trusts, 1889, 41 Ch. D. 188; Marsh v. Joseph [1897], 1 Ch. 249.
Administration. Creditors' Suit. Funds in Court, Distribution by Mistake. Mortgagee. Creditors. Liability to refund. Purchaser Paying Money into Court. Title - Deeds. Solicitor and Client. Costs.
[324] todd v. studholme. Jan. 23, 30, 1857. [S. C. 26 L. J. Ch. 271; 5 W. E. 277. See In re Hangar's Trusts, 1889, 41 Ch. D. 188; Marsh v. Joseph [1897], 1 Ch. 249.] Administration. Creditors' Suit. Funds in Court, Distribution by Mistake,. Mortgagee.. Creditors. Liability to refund. Purchaser paying Money into Court. Title-Deeds. Solicitor and Client. Costs. "Where a fund, paid into Court in a creditors' suit, has been distributed by mistake among specialty and simple contract creditors to the exclusion of a mortgagee, this. 3K.&J.325. TODD V. STUDHQLME 1133 Court holds such creditors liable to repay, not in solido but pro ratdj and no creditor will be fixed with liability in respect of the rateable part which the mortgagee may fail to recover from a creditor who, since sharing in the fund, has become insolvent, or cannot now be found. Pursuant to a decree in a creditors' suit real estate was sold and the purchase-money paid into Court. In consideration of such payment, a mortgagee, who was not a party to the suit, but whose mortgage was noticed in the conditions of sale, executed the conveyance, but the fund was distributed among the other creditors without any payment being made to the mortgagee. Held, upon bill filed by his personal representative, that the latter was entitled to . recover as follows:- (1) From the Defendants who had been paid simple contract debts the several sums paid to them, the total amount of such sums being less than the Plaintiffs claim. (2) From the only specialty creditor so much as might be necessary to satisfy what might remain due to the Plaintiff for principal moneys and interest, after deducting the total amount of the moneys paid to the simple contract creditors, whether parties to this suit or not. (3) And from the solicitors of the Plaintiff in the creditors' suit whatever might be necessary to make good any deficiency arising by reason of some of the creditors becoming insolvent, or of others not being to be found, or the like: it being the duty of such solicitors to see that the purchase-money paid into Court was properly applied. Held, also, that the purchasers, upon payment of the purchase-money into Court, had discharged the only condition incumbent upon them, and were relieved from all responsibility as to its application. But the purchaser of the largest lot, having allowed the title-deeds to remain with the mortgagee, the bill, as against him, was dismissed without costs. Held, further, that, although, under the circumstances, the mortgagee's solicitor was chargeable, as between his client and himself, with gross negligence in not placing a stop-order on the fund in the original suit, his duties were dehors that suit, in which the primary duty lay with the solicitors of the Plaintiff, who had the distribution of the fund, and that in this suit he could not be made responsible. Principles by which the Court is guided in giving directions as to costs in a suit of this nature. In the year 1846 Robert Hodgson filed a bill on behalf of himself and all other creditors of John Hodgson deceased, against Joseph Hodgson and others, praying for the administration of the real and personal estate of the deceased. The cause was heard by Vice-Chancellor Kindersley in August 1846, and the common administration decree [325] was made, directing a sale of the real estate of the deceased and payment of the purchase-money into Court, in the usual form. And the real estate was sold in lots accordingly. Part of the real estate of the deceased, being that comprised in Lots 3, 4 and 5, was subject to a mortgage by way of transfer to one Robert Todd for securing £1000 and interest. The mortgage was mentioned in the conditions of sale, which also stipulated that the title-deeds retained by the transferee would be delivered over to the purchaser of Lot 3. Todd took no part in the suit or in the sale of the property, but he was made a conveying party to the three deeds of conveyance of Lots 3, 4 and 5, in consideration of the purchase-money being paid into Court. Those deeds were brought to him upon his deathbed by his solicitor, [326] John Tiffin, of the firm of Studholme & Tiffin, who was also concerned for the purchasers, and were executed by him within a few hours of his death. Todd died on the 27th of June 1851, having by his will appointed his widow, Mary Todd, his sole executrix. The cause of Hodgson v. Hodgson came on to be heard on further directions on the 13th of March 1852; and, in pursuance of an order therein made by Vice-Chancellor Kindersley, the sum of £1964, 6s. 9d., being the balance of the fund in Court after payment of costs, was distributed as follows :-£1337, 16s. 2d. was paid to the Defen- 1134 TOOT* V. STUDHOLME SK.&J. 327. dant, Studholme, as the personal representative of Tiffin, in full discharge of a bond debt secured to him in trust for other parties; and the residue was apportioned among the several simple contract creditors. This distribution took place without any payment having been made on account of the principal money and interest secured to Robert Todd by his mortgage. Mary Todd, immediately upon discovering what had occurred, addressed a circular-letter to the simple contract creditors, calling upon them for repayment, and threatening proceedings in Chancery in the event of their refusal. Some complied and paid sums to a small amount, but others having refused, she now filed her bill against all the creditors who had so refused payment, against Studholme, as the partner and personal representative of Robert Tiffin, who had obtained letters of administration to his estate from the Consistory Court of Carlisle, against Robert Hodgson, the Plaintiff in the suit of Hodgson v. Hodgson, against the Messrs. Gregg who had acted as solicitors of the Plaintiff in that suit, and against the purchasers of Lots 3, 4 and 5, seeking repayment of her [327] mortgage-money and interest by all or any of the Defendants, as the Court might think her entitled. Mr. Rolt, Q.C., and Mr. Bagshawe, jun., for the Plaintiff, contended that she was entitled to this relief against all the Defendants: Against Studholme as the partner, and against him and Robert Tiffin as the personal representatives of John Tiffin, deceased, inasmuch as the conduct of the latter in parting with the deeds of conveyance while the mortgage money remained unpaid, and in allowing the order for the distribution of the fund in Court to be made without notice to the Plaintiff, was either wilfully fraudulent or so grossly negligent as in the estimation of the Court to amount to fraud; and, as regarded Studholme, was a breach of the duty owed by himself and his partner as the Plaintiff's solicitors. Against the Greggs, inasmuch as their conduct in causing the funds to be distributed in violation of the Plaintiff's rights, of which...
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