Whitworth v Gaugain
| Jurisdiction | England & Wales |
| Judgment Date | 01 January 1846 |
| Date | 01 January 1846 |
| Court | High Court of Chancery |
English Reports Citation: 41 E.R. 809
HIGH COURT OF CHANCERY
S. C. 3 Hare, 416; Cr. & Ph. 325; 10 L. J. Ch. (N. S.), 317; 15 L. J. Ch. 433. See In re Blakely Ordnance Co., 1876, 46 L. J. Ch. 371; Badeley v. Consolidated Bank, 1886, 34 Ch. D. 546; In re Bell, 1886, 54 L. T. 371.
[728] whitwobth v. gaugain. June 3, Dec. 1846. [S. C. 3 Hare, 416 ; Cr. & Ph. 325; 10 L. J. Ch. (N. S.), 317 ; 15 L. J. Ch. 433. See In re Blakely Ordnance Co., 1876, 46 L. J. Ch. 371; BadeUy v. Consolidated Bank, 1886, 34 Ch. D. 546 ; In re Bell, 1886, 54 L. T. 371.] Notwithstanding the stat. 1 & 2 Viet. c. 110, which gives to a judgment the effect of an equitable charge upon the land of the debtor, an equitable mortgagee retains his right in equity to enforce his security against the title of a creditor under a subsequent judgment, although the latter may have acquired the legal seisin and possession of the land under an elegit without notice of the mortgage. This was an appeal by the Defendants from a decree of Vice-Chancellor Wigram in a suit by an equitable mortgagee against two judgment creditors of the mortgagor, who had obtained possession of the mortgaged estate under elegits. The details of the case are fully stated in Cr. & Phill. 325 and 3 Hare, 416. The principal authorities relied upon in the argument will be found in the Lord Chancellor's judgment. The other authorities mentioned in Mr. Hare's report were also referred to. C. XXI.-26* 810 WHITWORTH V. GAUGAIN 1 PH. 729. Mr. Eomilly and Mr. Whitworth appeared in support of the decree. Mr. Walker, Mr. Russell and Mr. Terrell, for the Appellants. the lord chancellor. This is an appeal from a decree of Vice-Chancellor Wigram. The only question is whether the equitable mortgagee in this case is entitled to priority over the elegits and judgments. The equitable mortgage was created by the deposit of title-deeds, accompanied by a memorandum stating that they were deposited to secure the repayment of money lent, and containing an engagement to execute, if required, a legal mortgage of the premises. The judgments were obtained several months after the date of the deposit. Elegits were sued out, and the sheriff delivered legal seisin of the premises. [729] Upon this the tenants attorned. The Defendants had no notice of the equitable mortgage. The bill prayed, among other things, that the Plaintiffs might be declared to have an equitable mortgage upon the premises, and to be entitled to priority over the eleyits-&\\ \ judgments. By the equitable mortgage the Plaintiffs acquired a special lien upon the property : they might, through the medium of this Court, have compelled a sale of it for the payment of their debt, or they might, by virtue of the engagement for that purpose, have obliged their mortgagor to convert the equitable into a legal mortgage. The Plaintiffs had thus an interest in the premises to the amount of their debt, and just as strong an interest, to use the words of L. C. B. Richards, in Casbe-rd v. Ttte AUorney-General(6 Price, 411), as if a mortgage had been executed. What, then, in this case would be the effect of the judgments and the elegits ? It will be proper to consider the question, first, as it would have stood if the recent Act, 1 & 2 Viet, c, 110, had not been passed, and, secondly, with reference to the provisions of that statute. A judgment has relation to the time when it is entered up. It will not affect any bond fide conveyance made for value before that time, for it only attaches upon that which is then, or afterwards becomes, the property of the debtor. But the rule is not confined to that which was his property at law. If it is charged in equity before the 3ntry of the judgment, the judgment will not affect such charge. [730] It can only attach upon the interest which remains in the debtor, viz., the legal estate subject to the equitable charge. Upon a judgment obtained against a mere trustee a Court of Equity would never permit the trust property to be applied in satisfaction of the judgment; and for the same reason, if the property is subject to a trust short of its full value, the judgment can only in equity affect that which remains after the trust is satisfied, for this alone is the property of the debtor. In the case put by the Vice-Chancel lor of an estate charged with the payment of debts or legacies, the creditor of the owner of the estate so charged would not be allowed to sweep away the whole property, and defeat the claims of the creditors and legatees. Many other similar cases might be stated shewing that, as well in the instance not merely of express trusts, but of trusts in the view of a Court of Equity, the judgment creditor can take only what remains in the trustee after satisfying the trusts with which the property is charged. No substantial distinction can be drawn between eases of this nature and that of an equitable mortgagee whose interest in the property is recognised in a Court of Equity, and is as complete and as sacred as that of the mortgagor. The case of Burgh v. Frauds (3 Swanst. 536, n.) was that of a mortgage in fee, without livery. The mortgagor died. Judgments were obtained against the heir upon the bond debts of the father. Upon a bill filed by the mortgagee, it was decreed that " the heir should make a conveyance to the mortgagee, and that he should hold till redemption discharged of the judgments." Lord Nottingham held " the heir to be a trustee of the land descended charged with the equity of the mortgage." The equitable mortgage in that case was preferred to the judgments. So in the Forum Romanum (p. 228), it is [731] said that, " if A. takes a mortgage by a defective conveyance, and B. afterwards obtains judgment upon a bond debt against the mortgagor, and so extends the mortgaged lands, there a Court of Equity will relieve A. and oblige B. to supply the defect in the mortgage. For in this case B. was only a bond creditor, and his original security was only in personam, and therefore when he betters his security by a judgment in rem, yet this shall only be a lien upon the land, as it was in possession of the mortgagor or his heir, and that is subject to a mortgage defective at law, but which was good in equity." In the case of Finch v. The :l PH. 732. VVHITVVOHTH r. GAUUAIN 811 Earl of Winchelsea (1 P. Wms. 277), it was said that "if one contracted to buy an -estate and paid his purchase-money, and afterwards the person who agreed to sell acknowledged a judgment or statute to a third person who had no notice, yet the judgment should not in equity affect the estate, because, from the time of the articles ,and payment of the money, the person agreeing to sell would be only a trustee for the intended purchaser;" which was admitted and affirmed by the Lord Chancellor. If such, then, be the effect of the judgment, how does the elegit operate 1 By stat. 13 Ed. 1, c. 18, "when a debt is recovered, the sheriff shall at the election of the Plaintiff deliver to him all the chattels of the debtor, and a moiety of his land, until the debt be levied by a reasonable extent." The land of which a moiety is to be delivered is the land that is bound by the judgment. The judgment and the writ .are in this respect co-extensive. If this is so in law, it is equally so in equity. The equitable interests which prevail against the judgment prevail equally against the writ. The land taken will, in the hands of the judgment creditor, be liable to all of ,[732] the equities, to which it was subject in the hands of the debtor, as were not bound by the judgment. It would be of no avail to protect equitable interests .against a judgment, if they were not also protected against the execution founded upon the judgment. In the case of Cadmd v. The AttornKy-Genmil (6 Price, 411), an equitable mortgage was allowed to prevail against an extent at the suit of the Crown. It is true that in that case the Crown was not in possession of the legal estate, .and the Chief Baron Richards considered that if the legal estate had been in the Crown there would have been a difficulty in doing justice to the Plaintiff, because there are no equities against the Crown. But it is, I think, clear, from the course of the learned Judge's observations, that where the difficulty did not exist, that is, in a case between subject and subject, the possession of the legal estate would, in his judgment, have made no difference, and that the execution creditor would have held the estate subject to the equity, and as a trustee for the equitable mortgagee. In Prior v. Pen/prase (4 Price, 99), which was the case of a defective conveyance upon .a sale by the ancestor of the Defendant, a bill was filed against the heir and another to supply the defect, and to restrain a creditor who had obtained judgment after the sale from suing out an ekgit. The creditor demurred to the bill, but the demurrer was overruled by the Court. In the passage from the Forum Romanum, to which [ have already referred, and where it is said that the Court would give relief, the case put is that of a judgment followed by an execution under which the lands had been -actually extended. In these cases the execution creditor, although he obtains the legal estate, holds it subject to all such equities as are not affected by the judgment. [733] The same rule holds in the case of an extent against the goods of a debtor to the Crown ; and equitable interests in those goods are respected. Many instances are referred to by Patteson J. in delivering his opinion in the House of Lords in the case of Giles v. Graver (6 Bligh, N. S. 292). "It is conceded," he says, "that the Crown cannot avoid an equitable mortgage, or the lieu of a factor, or of a wharfinger, or a bond fide assignment in trust for the benefit of creditors, or any other similar .assignment or charge, because they are created when the debtor has legal authority and power to create them, and they attach upon the goods before the...
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