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Equity - From: 1900 To: 1929

This page lists 60 cases, and was prepared on 21 May 2019.


 
 Heynes v Dixon; 1900 - [1900] 2 Ch 561
 
Re Cronmire, ex parte Cronmire [1901] 1 KB 480
1901
CA
Rigby LJ
Equity
At the husband's request his wife deposited with his bankers the title deeds of her property as security for advances to be made to him. Before he became bankrupt the debt was paid off by her. Held: The court acknowledged the entitlement of a wife, whose property has been charged to secure her husband's debts, to prove in his bankruptcy in respect of the indemnity which he owes her, provided that she had entrusted the property to her husband in the sense of 'handing it over to him to deal with it as he might think fit'."
Rigby LJ said that "there was no question of a loan by the wife to the husband, or of intrusting her property to him - that is, handing it over to him to deal with it as he might think fit".
1 Citers


 
Taylor v London and County Banking Co [1901] 2 Ch 231
1901
CA
Stirling LJ, Fry LJ
Equity
A mere volunteer was postponed to a subsequent equitable claimant for value without notice.
Stirling LJ said: "The ground of postponement relied on in this case is that the prior equitable claimants allowed Tasker to remain in possession of the title-deeds, including the mortgages to himself. There are undoubtedly cases (as, for example, Waldron v Sloper (1852)1 Drew. 193 and Farrand v Yorkshire Banking Co 40 Ch D 182), where an equitable mortgagee who has allowed his mortgagor to retain or regain possession of the title-deeds has been postponed to a subsequent equitable incumbrancer who has obtained possession of the deeds. But where the relation between the equitable incumbrancer and the person in possession of the title-deeds is not merely that of mortgagee and mortgagor, but is of a fiduciary nature (as, for example, that of cestui que trust and trustee, or client and solicitor), there is a great body of authority to show that the equitable incumbrancer is not to be deprived of his priority by reason of the improper acts of the person entrusted with the deeds, so long, at all events, as the incumbrancer has no ground to suppose that there has been any want of good faith on the part of the custodian of the deeds.
The leading authorities on this point appear to be Cory v Eyre (1863)1 DJ and s149, Shropshire Union Railways and Canal Co. v Reg. (1875) LR 7 HL 496, and In re Vemon, Ewens and Co (1886) 33 Ch D 402, before the Court of Appeal."
Fry LJ said: "A distinction is to be drawn between two sets of circumstances, which at first sight look very similar. One class is where a mortgagee knows that the mortgagor has not fulfilled his obligations, and yet does nothing. The other is where the mortgagee does not know that the mortgagor has failed to fulfil his obligations, but knows only that there are obligations which he may in the future fail to fulfil, and yet takes no precautions against the consequences of his doing so. Instances of the first class are cases where the mortgagee, knowing that the mortgagor has the title deeds, neither receives them nor demands them from the mortgagor, or where the mortgagor has received them from the mortgagee for a particular purpose and does not return them when he ought to do. Layard v Maud Law Rep 4 Eq 397 is a case of this class. There was an agreement which bound the mortgagor to execute a mortgage and hand over the deeds in six months, and the mortgagee allowed eighteen months to elapse after the expiration of that period without making any inquiry. There was, therefore, to the knowledge of the mortgagee a default by the mortgagor in fulfilling his obligations.
The other class of cases is where the mortgagee has taken no precautions against future default by the mortgagor, no default having yet to the knowledge of the mortgagee taken place. I know of no decided case in which the mortgagee has been postponed on the ground that he did not take precautions against a future fraud by the mortgagor; and I do not know of any general rule whi
1 Citers


 
Browne v Ryan [1901] 2 IR 653
1901


International, Equity
(Ireland - Court of Appeal) A farmer mortgaged his holding to secure £200 and interest; and, as part of the mortgage transaction, it was stipulated that the mortgagor should sell his holding within twelve months, employ the mortgagee as the auctioneer at a certain commission, and pay him the like commission if the conduct of the sale was given to any one else. Held: The stipulation had no effect after redemption.
1 Citers


 
Noakes and Co Ltd v Rice [1902] AC 24; [1901] UKHL 3
17 Dec 1901
HL
Earl of Halsbury LC, Lord MacNaghten, Lord Lindley
Equity, Land
A mortgage of a leasehold public house contained a covenant with the mortgagee, a brewery, that the mortgagor and his successors in title would not, during the continuance of the leasehold term and whether or not any money should be owing on the security of the mortgage, sell malt liquor in the public house other that that purchased from the brewery. Held: The covenant was not enforceable after redemption of the charge.
Lord MacNaghten said of the rule preventing a clog on the equity of redemption of a mortgage: "Redemption is of the very nature and essence of a mortgage, as mortgages are regarded in equity. It is inherent in the thing itself. And it is, I think, as firmly settled now as it ever was in former times that equity will not permit any device or contrivance designed or calculated to prevent or impede redemption. It follows as a necessary consequence that, when the money secured by a mortgage of land is paid off, the land itself and the owner of the land in the use and enjoyment of it must be as free and unfettered to all intents and purposes as if the land had never been made the subject of the security."
Lord Lindley said: "My Lords, I agree in thinking that the covenant contained in this mortgage, and by which the mortgagees have attempted to convert the house mortgaged from a free public-house into a tied public-house even after redemption, is invalid. I see no answer to the objection taken to it that upon payment off of the mortgage money the mortgagor cannot get back what he mortgaged, namely, a free public-house."
1 Citers

[ Bailii ]
 
Deverges v Sandeman Clark and Co [1902] 1 Ch 579
1902

Lord Justice Vaughan Williams, Lord Justice Stirling and Lord Justice Cozens-Hardy
Equity
It is an incident of a mortgage of chattels and choses in action that the mortgagee has a power of sale exercisable if the defendant fails to pay the monies due on the day fixed for payment or where no day is fixed after a proper demand and notice has been given and a reasonable time has elapsed. However: "Now the defendants, being mortgagees, have in equity, notwithstanding their title to the shares, no estate sufficient to enable them to sell, and thus exclude the mortgagor from his equitable right to redeem unless there is either an express or an implied power of sale in the mortgage." There are circumstances in which a power of sale will be implied at common law into a mortgage. A pledgee also has an implied right of sale at common law upon the default of the pledgor.
1 Citers



 
 Reeve v Lisle and others; HL 1902 - [1902] AC 461
 
Reeve v Lisle and others [1902] 1 Ch 53
1902
CA
Vaughan Williams LJ
Equity, Contract
The parties had entered into a series of agreements for loans, and partnerships. The defendants resisted a request by the plaintiff to be allowed, under the agreement, into partnership on a failure to repay the loan. Held: The appeal succeeded. The agreements were separate, and there could be no objection that one constituted a clog on the equity of redemption.
Vaughan Williams explained: "I do not understand the defendant's counsel to dispute that it is competent for a mortgagee to enter into an agreement to purchase from the mortgagor his equity of redemption. The only objection to such an agreement is, that it must not be part and parcel of the original loan or mortgage bargain. The mortgagee cannot, at the moment when he is lending his money and taking his security, enter into an agreement the effect of which would be that the mortgagor would have no equity of redemption. But there is nothing to prevent that being done which in substance and fact is subsequent to and independent of the original bargain."
1 Citers



 
 Bankes v Jarvis; 1903 - [1903] 1 KB 549
 
In re Ellenborough, Towry Law v Burne [1903] 1 Ch 697
1903
ChD
Buckley J
Equity
The court declined to give effect to a voluntary disposition of a mere expectancy. Buckley J said: 'It cannot be and is not disputed that if the deed had been for value the trustees could have enforced it. If value be given, it is immaterial what is the form of assurance by which the disposition is made, or whether the subject of the disposition is capable of being thereby disposed of or not. An assignment for value binds the conscience of the assignor. A court of Equity as against him will compel him to do that which ex hypothesi he has not effectually done.'
1 Cites

1 Citers



 
 Bourne v Swan and Edgar Ltd; 1903 - [1903] 1 Ch 211
 
Osborne v Bradley [1903] 2 Ch 446
1903
ChD
Farwell J
Land, Equity
The plaintiff had sold land to the purchaser, subject to covenants restricting the development on the land to private dwellings and prohibiting manufacture, trade or business on the land. The purchaser built two houses and subsequently sold the land and houses to the defendant, subject to the covenants. The defendant lodged plans with the local council to convert the houses into shops.The plaintiff brought an action on a covenant against the purchaser of land subject to a negative covenant. The question arose as to whether the purchaser was liable to the owner of the land who had the benefit of the covenant. This depended on whether or not the covenant was entered into as part of a building scheme. The covenant contained a provision under which the original vendor reserved the right to vary or waive the conditions with regard to unsold lots. Held: The evidence did not establish that the land was part of a building scheme when sold. As to the provision relating to waiver, Farwell J said: "The mere fact that the vendor has reserved to himself the right to vary the conditions as regards unsold property might not by itself be sufficient to prevent the existence of a scheme in respect of the plots sold before that period." Farwell J did not hold that such a provision was invalid.
A failure by the convenantee to pursue breaches of covenant which were minor or insignificant would not be considered by the court as amounting to acquiescence in ordinary circumstances.
1 Citers


 
In Re Oatway; Hertslet v Oatway [1903] 2 Ch 356
1903
ChD
Joyce J
Equity
A trustee put trust money into his bank account and then used some of the funds from that bank account to buy shares. The rest of the money in the account was dissipated, and the shares were worth less than the trust money which had been misappropriated. Held: The trustee was not entitled to claim that it was the trust money which had dissipated and that the investment was made from the trustee's own money. The investment was presumed to have been made with the trust's money, meaning the trust could claim a proprietary interest in the shares irrespective of the order of withdrawals. For the purposes of the equitable remedy of tracing, if A is able to trace his property into the hands of B then he is entitled to its return.
1 Citers



 
 Bradley v Carritt; HL 11-May-1903 - [1903] UKHL 1; [1903] AC 253
 
William Brandt's Sons and Co v Dunlop Rubber Co [1905] AC 454
1905
HL
Lord Lindley, Lord Macnaghten
Equity, Litigation Practice
The court was asked whether instructions given by the bank's customer to purchasers of rubber to make payment to its bank directly, amounted to an equitable assignment of debts, so that the bank could sue for their recovery. The bank sued the purchasers directly without joining its customer, the assignor. Held: Though the assignor was not a party, there had been an equitable assignment. An equitable assignment of a chose in action requires no more than an expression of intention to assign, coupled with notice to the debtor, to impose on the latter an obligation to pay the assignee.
Lord Macnaghten said that an equitable assignment need not take any particular form and continued: "It may be addressed to the debtor. It may be couched in the language of command. It may be a courteous request. It may assume the form of mere permission. The language is immaterial if the meaning is plain. All that is necessary is that the debtor should be given to understand that the debt has been made over by the creditor to some third person. If the debtor ignores such a notice, he does so at his peril. If the assignment be for valuable consideration and communicated to the third person, it cannot be revoked by the creditor or safely disregarded by the debtor."
No action should be dismissed for want of parties: "Strictly speaking, [the sellers], or their trustee in bankruptcy, should have been brought before the Court. But no action is now dismissed for want of parties, and the trustee in bankruptcy had really no interest in the matter. At your Lordships' bar the Dunlops disclaimed any wish to have him present, and in both Courts below they claimed to retain for their own use any balance that might remain after satisfying Brandts."
1 Citers


 
Berwick and Co v Price [1905] 1 Ch 632
1905


Equity
A court of equity may enquire into the state of mind of a purchaser to see if he bought in good faith.
1 Citers


 
In re Roberts [1905] 1 Ch 704
1905


Equity
A compromise made under a mistake of law can be set aside.
1 Citers


 
Challoner v Robinson [1908] 1 Ch 49
1908


Equity
A landlord entitled to distrain for rent, could seize all goods and chattels found on the tenant's premises whether they were the property of the tenant or a stranger.
1 Citers


 
Lady Hood of Avalon v Mackinnon [1909] 1 Ch 476
1909

Eve J
Trusts, Equity
Lady Hood made an appointment in favour of her elder daughter, in order to place her in the same position as her younger daughter to whom she had already made large appointments. But in doing so she (and her solicitor) had forgotten that she had, several years before, made a large appointment to the elder daughter on her marriage. Held: the appointment to the elder daughter would be rescinded because Lady Hood, intending only to bring about equality between her daughters, was labouring under a mistake, since the effect of the appointment "was to bring about that which Lady Hood never intended and never contemplated."
1 Citers


 
Baker v Courage and Co [1910] 1 KB 56
1910

Hamilton J
Equity
The plaintiff had owned a public house. On selling the leasehold to the defendants brewers, they had overpaid him by £1,000. He deposited a sum at interest with the defendants. When he came to withdraw the last of the deposit (by coincidence £1,000) the defendants discovered their earlier mistake and refused to return the money. When sued they pleaded set-off and made a counterclaim, both of which the plaintiff opposed as statute-barred. Held: A claim in restitution for a payment made under a mistake of law arises at the date of the payment. There was no requirement for a demand where the claim is for repayment of moneys paid under a mistake common to both parties (as opposed to a unilateral mistake).
Hamilton J discussed the judgments of Barons Martin and Bramwell saying: "in that case at the time the first instalment of the money was paid neither the plaintiff nor the defendant made any mistake. The mistake was made by the two valuers who were subsequently employed to value the farm which was the subject- matter of the sale. It was not until the plaintiff afterwards consulted a third valuer on his negotiating for the resale of the property that he discovered that the former valuers had included in their valuation certain items which they ought not to have included, and after this he paid over the balance of the money to the defendant at a time when he knew of the valuers' mistake but the defendant did not. It was under those circumstances that Martin and Bramwell BB held that there was no duty on the defendant to repay the excess valuation until after notice of the mistake, which was not his mistake and of which he was unaware. I think it is clear that they so decided without reference to a case in which not only the party paying paid under a mistake, but also the party receiving the money was under a mistake at the time when he received it. In my opinion, therefore, the case of Freeman v Jefferies does not support the contention of the defendants."
1 Cites

1 Citers



 
 Butler v Rice; 1910 - [1910] Ch 277

 
 Stubbs v Slater; 1910 - [1910] 1 Ch 632
 
Lovell and Christmas Ltd v Wall (1911) 104 LT 85
1911
CA
Sir Herbert Cozens-Hardy MR, Buckley LJ
Contract, Equity
Sir Herbert Cozens-Hardy MR said that rectification “may be regarded as a branch of the doctrine of specific performance".
Buckley LJ said: "For rectification it is not enough to set about to find what one or even both of the parties to the contract intended. What you have to find out is what intention was communicated by one side to the other, and with what common intention and common agreement they made their bargain."
1 Citers


 
Hall v Hall [1911] 1 Ch 487
1911
ChD
Warrington J
Equity
An equity of exoneration in favour of a wife arises 'at the time she charges her estate'. The doctrine of exoneration is based on an inference in each case from all the facts of that particular case. Where one co-habitee joins in granting a charge over the jointly-owned property to secure a loan to the other co-habitee, there is a presumption that the former is entitled to exoneration. Tthis is an evidential presumption, capable of rebuttal by evidence from which an actual or inferred contrary intention can be drawn. It is "a prima facie inference". In my view, it is no different from the position of any surety. The evidence may show an actual or inferred intention on the part of the surety and principal debtor that the surety would have no, or only limited, rights against the principal debtor. But, in the absence of such evidence, there is a presumption that the parties would intend the natural result that, as between them, the principal debtor was to bear responsibility for the debt.
Commenting on Paget, Warrington J said that the MR: "intended the two parts of his judgment to stand together - that if the facts are those which he stated in the early part of his judgment there is a prima facie inference to be drawn from those facts, but not a legal presumption in the strict sense, in favour of the wife, and, unlike the case of a legal presumption, you are entitled to go into all the facts of the case to see whether there is or is not that prima facie inference.":
1 Cites

1 Citers


 
Manks v Whiteley [1911] 2 Ch 448
1911

Parker J
Equity

1 Citers



 
 Kerrison v Glyn, Mills, Currie and Co; HL 1912 - (1912) 81 LJKB 465

 
 Thomas A Edison Ltd v Bock; 1912 - (1912) 15 CLR 679
 
Fairclough v The Swan Brewery Company Ltd [1912] UKPC 1; [1912] AC 565
17 May 1912
PC

Commonwealth, Equity

1 Cites

[ Bailii ]

 
 Pullan v Coe; ChD 1913 - [1913] 1 Ch 9
 
Gee v Liddell [1913] 2 Ch 62
1913
ChD
Warrington J
Land, Equity
A co-mortgagor has an "interest in [and] a charge upon the estate of the principal debtor". An equity of exoneration was applied as between brothers.
An equity of exoneration operates in the nature of "a charge upon the estate of the principal debtor by way of indemnity for the purpose of enforcing against that estate the right which [the beneficiary] has, as between [the beneficiary] and the principal debtor, to have that estate resorted to first for the payment of the debt"
1 Citers



 
 Sandeman and Sons v Tyzack and Branfoot Steamship Co Ltd; HL 1913 - [1913] AC 680

 
 McHugh v Union Bank of Canada; PC 1913 - [1913] AC 299
 
Kilmer v The British Columbia Orchard Lands Limited [1913] UKPC 10
26 Feb 1913
PC
Lord Moulton
Contract, Equity
British Columbia
1 Cites

1 Citers

[ Bailii ]
 
G and C Kreglinger v The New Patagonian Meat and Cold Storage Company [1914] AC 25; [1913] UKHL 1
20 Nov 1913
HL
Viscount Haldane, Lord Parker
Constitutional, Contract, Equity
The appellant woolbrokers had lent the respondent £10,000 with a floating charge over its undertaking. The loan agreement provided that, for five years, the appellants would have first refusal over all sheepskins sold by the company. The company paid off the loan, but the appellants claimed that they were entitled to continue to exercise their right of first refusal. Held: The right of first refusal not part of the mortgage transaction; but was a collateral contract entered into as a condition of the company obtaining the loan. The appellants could therefore entitled to enforce it. Whilst courts are loathe to interfere with freedom of contract, they will intervene where evidence showed that terms imposed by a mortgagee are unconscientious. To do so, the courts will consider both the form and substance of the transaction.
Lord Parker of Waddington discussed the survival of the rule against a clog on an equity of redemption, saying that it was not objectionable for a mortgage to confer a collateral advantage upon a mortgagee: "The last of the usury laws was repealed in 1854, and thenceforward there was, in my opinion, no intelligent reason why mortgages to secure loans should be on any different footing from other mortgages. In particular, there was no reason why the old rule against a mortgagee being able to stipulate for a collateral advantage should be maintained in any form or with any modification. Borrowers of money were fully protected from oppression by the pains always taken by the Court of Chancery to see that the bargain between borrower and lender was not unconscionable. Unfortunately, at the time when the last of the usury laws was repealed, the origin of the rule appears to have been more or less forgotten, and the cases decided since such repeal exhibit an extraordinary diversity of judicial opinion on the subject. It is little wonder that, with the existence in the authorities of so many contradictory theories, persons desiring to repudiate a fair and reasonable bargain have attempted to obtain the assistance of the Court in that behalf. My Lords, to one who, like myself, has always admired the way in which the Court of Chancery succeeded in supplementing our common law system in accordance with the exigencies of a growing civilization, it is satisfactory to find, as I have found on analysing the cases in question, that no such attempt has yet been successful. In every case in which a stipulation by a mortgagee for a collateral advantage has, since the repeal of the usury laws, been held invalid, the stipulation has been open to objection, either (1) because it was unconscionable, or (2) because it was in the nature of a penal clause clogging the equity arising on failure to exercise a contractual right to redeem, or (3) because it was in the nature of a condition repugnant as well to the contractual as to the equitable right." and
"The nature of the equitable right [to redeem] is so well known that, upon a mortgage in the usual form to secure a money payment on a certain day, it must be taken to be a term of the real bargain between the parties that the property shall remain redeemable in equity after failure to exercise the contractual right. Any fetter or clog imposed by the instrument of mortgage on this equitable right may properly be regarded as a repugnant condition and as such invalid. There are, however, repugnant conditions which cannot be regarded as mere penalties intended to deter the exercise of the equitable right which arises when the time for the exercise of the contractual right has gone by, but which are repugnant to the contractual right itself. A condition to the effect that if the contractual right is not exercised by the time specified the mortgagee shall have the option of purchasing the mortgaged property may properly be regarded as a penal clause. It is repugnant only to the equity and not to the contractual right itself. But a condition that the mortgagee is to have such an option for a period which begins before the time for the exercise of the equitable right has arrived, or which reserves to the mortgagee any interest in the property after the exercise of the contractual right, is inconsistent not only with the equity but with the contractual right itself, and might, I think, be held invalid for repugnancy even in a Court of Law."
As to the doctrine of precedent: "To follow previous authorities, so far as they lay down principles, is essential if the law is to be preserved from becoming unsettled and vague. In this respect previous decisions of a court of co-ordinate jurisdiction are more binding in a system of jurisprudence such as ours than in systems where the paramount authority is that of a code. When a previous case has not laid down any principle, but has merely decided that a particular set of facts illustrates an existing rule, there are few more fertile sources of fallacy than to search in it for what is simply resemblances in circumstances, and to erect a previous decision into a governing precedent merely on this account. To look for anything except the principle established or recognized by previous decisions is really to weaken and not to strengthen the importance of precedent. The consideration of cases which turn on particular facts may often be useful for edification, but it can rarely yield authoritative guidance." The evolving nature of the equitable jurisdiction is 'to mould the rules which they apply in accordance with the exigencies at the time'.
Lord Parker explained the decision in Bradley v Carritt: "The real question, in my opinion, was whether it [the clause in question] was inconsistent with or repugnant to the contractual right of the mortgagee [quaere, mortgagor] to have his property restored unfettered if he paid the money secured with interest as provided in the agreement, and the consequential equitable right to have the property so restored if he paid his money with interest and costs at any time. On this point there was room for a difference of opinion . . There is really no difficulty in the decision itself. It is merely to the effect that the case was within the principles of Noakes v Rice. Lords Macnaghten, Davey, and Robertson all thought that if the stipulations in question were binding after redemption the mortgagor would not get back his property intact; in other words, that the stipulation was repugnant both to the contractual right and the equity."
Lord Mersey agreeing, said that the equitable doctrine prohibiting the imposition of a clog on the mortgagor's right to redeem is "like an unruly dog, which, if not securely chained to its own kennel, is prone to wander into places where it ought not to be".
Viscount Haldane, Lord Chancellor, said: "the other and wider principle remains unshaken, that it is the essence of a mortgage that in the eye of a Court of Equity it should be a mere security for money, and that no bargain can be validly made which will prevent the mortgagor from redeeming on payment of what is due, including principal, interest and costs. He may stipulate that he will not pay off his debt, and so redeem the mortgage, for a fixed period. But whenever the right to redeem arises out of the doctrine of equity, he is precluded from fettering it. This principle has become an integral part of our system of jurisprudence and must be faithfully adhered to."
The issue for decision was: "What was the true character of the transaction? Did the appellants make a bargain such that the right to redeem was cut down, or did they simply stipulate for a collateral undertaking, outside and clear of the mortgage, which would give them an exclusive option of purchase of the sheepskins of the respondents. The question is in my opinion not whether the two contracts were made at the same moment and evidenced by the same instrument, but whether they were in substance a single and undivided contract or two distinct contracts." The agreement for a right to purchase the respondent's sheepskins was a collateral bargain "the entering into which was a preliminary and separable condition of the loan".
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[ Bailii ]
 
Whiteley v Delaney [1913] UKHL 855; 51 SLR 855
9 Dec 1913
HL
Lord Chancellor (Viscount Haldane), Lords Kinnear, Dunedin, and Atkinson
Land, Equity
A. mortgaged property in Yorkshire to B. in order to secure a loan of pounds 300. He subsequently granted a second mortgage to the respondent C, and both mortgages were recorded under the Yorkshire Registries Acts. In order to provide the money to pay off C, A's daughter D undertook to buy the property if she could find someone to advance pounds 300 to pay off B, and she instructed E, a solicitor, to this effect. E, ignorant of the existence of C's mortgage, arranged for F lending the pounds 300 on mortgage, paid off B, and obtained from him the title-deeds, and prepared three dispositions of the property-( a) B to A, (b) A to D, (c) D to F-in security. C sued F, D, and A to have it declared that in virtue of deed (a) his mortgage had priority over F's.
Held that F was equitable transferee of B's first mortgage, and entitled to priority over C.
[ Bailii ]
 
Whiteley v Delaney [1914] AC 132; 83 LJ Ch 349; 110 LT 434; 58 Sol Jo 218
1914
HL
Viscount Haldane LC
Land, Equity
A farm in Yorkshire had been charged by O first to A and then to the plaintiff, and the charges registered under the Yorkshire Registry Acts. An attempt was made to sell of part of the land by o to his daughter to repay some of the money. She sought, through her solicitor W, a contributor to repay the first loan. Parties were unaware of the first charge. Completion and registration took place. A was repaid by the contributor who now said that instead of the charge being discharged, he now stood in A's stead with a first mortgage. Held: He was not entitled to priority. There had been a common mistake, induced by O, and the deeds as framed, and with his involvement, did not represent the intentions of the parties. The question of merger must, therefore, be decided according to the doctrines of equity, and the principle by which the Court of Equity is guided is the intention.
A purchaser from a mortgagor and a first mortgagee can always, if he chooses, keep the first mortgage alive and so protect himself against subsequent incumbrances and whether or not he had notice.
1 Citers


 
Sinclair v Brougham [1914] AC 398; [1914-15] All ER 622
1914
HL
Viscount Haldane
Insolvency, Equity, Trusts
An insolvent building society had, outside its powers, run a banking business. The House considered the competing claims of the unadvanced shareholders of the building society's intra vires business, members of the society who had not been granted mortgages, and the depositors of its ultra vires banking business. The claims of all other creditors had, by agreement, been met. It was accepted that contracts entered into for the purposes of that ultra vires business, which by the time of bankruptcy had become the society's predominant business, were, so far as the society was concerned, void. The issue was the significance of that fact for the priority of claims of the shareholders and the depositors to the funds held by the Liquidators. In the High Court and the Court of Appeal the unadvanced shareholders prevailed: the depositors' contracts were held void, and therefore would only be honoured to the extent that all prior valid claims had been met. Held: The competing claims for priority of both the unadvanced shareholders and the depositors were declined. The available funds were to be shared pro rata, an outcome that had not been considered until raised by Viscount Haldane during argument.
Viscount Haldane approached the question by assuming that specific tracing was not possible and, on that basis, concluding that pro rata sharing was the way to apportion the monies: "The depositors can, in my opinion, only claim the depreciated assets which represent their money, and nothing more. It follows that the principle to be adopted in the distribution must be apportionment on the footing that depreciation and loss are to be borne pro rata. I am, of course, assuming in saying this that specific tracing is not now possible.
What is there must be apportioned accordingly among those whose money it represents, and the question of how the apportionment should be made is one of fact. In the present case the working out of a proper apportionment based on the principle of tracing not only would involve immense labour but would be unlikely to end in any reliable result. The records necessary for tracing the dealings with the funds do not exist. We have therefore, treating the question as one of presumption of fact, to give such a direction to the liquidator as is calculated to bring about a result consistent with the principles already laid down.
1 Citers



 
 Nocton v Lord Ashburton; HL 1914 - [1914] AC 932
 
Dublin City Distillery (Great Brunswick Street, Dublin) Limited and Another v Doherty [1914] AC 823; 111 LT 8
1914
HL
Lord Parker of Waddington
Equity, Company, Insolvency
D had advanced monies to a distillery company on the security of manufactured whisky stored in a warehouse. On the occasion of each advance, the company delivered to D an invoice and a warrant which described the particulars of the whisky and stated that it was deliverable to D or his assigns. Held: A person against whom the unauthorised liquidator is litigating may not object to such lack of authorisation, for it is a matter between the liquidator and the creditors. Lord Parker stated: "in my opinion s.151 of the Companies (Consolidation) Act, 1908, which enables a liquidator in the case of a winding-up in Ireland to bring or defend legal proceedings with the sanction of the Court, was not intended to confer, and does not confer, on third parties any right to object to proceedings brought by a liquidator in the name of the company, on the ground that no such sanction has been obtained."
Delivery of the subject property is absolutely necessary to complete a pledge, although the transfer of possession may be actual or constructive: "There are, however, cases in which possession may pass to the pledgee without actual delivery, for example, whenever there is some agreement between the parties the effect of which is to change the possession of the pledger from a possession on his own account as owner into a possession as bailee for the pledgee: see Meyerstein v. Barber.(1) Such an agreement operates as a delivery of the goods to the pledgee and a redelivery of the goods by the pledgee to the pledger as bailee for the purposes mentioned in the agreement. A mere book entry cannot, however, have this effect . ."
The terms of the warrant were ambiguous. Lor Parker said that if the true meaning of the warrant was that it was intended to be an acknowledgement by the distillery company that it held the goods referred to as bailee for D or his assigns by indorsement: "it is sufficient to change the nature of the company's possession, operating as an actual delivery of the goods to [D], and a redelivery of the same goods by him to the company to hold as bailee for him. Under these circumstances, on the hypothesis that the company was in actual possession, [D] obtained a good pledge at common law."
Companies (Consolidation) Act 1908
1 Citers



 
 In re Lind; Industrials Finance Syndicate Ltd v Lind; CA 1915 - [1915] 2 Ch 345

 
 Hurst v Picture Theatres Ltd; CA 1915 - [1915] 1 KB 1
 
Steedman v William R Drinkle and Another [1915] UKPC 71; [1916] AC 275
21 Dec 1915
PC
Viscount Haldane
Commonwealth, Land, Equity
(Saskatchewan) Land in Canada was purchased under an agreement, where the price was to be paid by one initial payment and annual instalments. If the purchaser was to default on any payment, the vendor was free to cancel the agreement and to retain, as liquidated damages, the payments already made. It was also provided that time was to be considered as of the essence of the contract. The first deferred payment was not made on the due date. The vendor gave notice cancelling the agreement. Three weeks after the due date the purchaser tendered the amount due, which was refused. He thereupon brought an action claiming specific performance and relief from forfeiture of the amount already paid. Held: The Board upheld the decision of the Canadian Court, that the stipulation as to the retention of the sums already paid was a penalty. But the Board declined to grant specific performance.
Viscount Haldane said:
"Courts of Equity, which look at the substance as distinguished from the letter of agreements, no doubt exercise an extensive jurisdiction which enables them to decree specific performance where justice requires it, even though literal terms as to stipulation as to time have not been observed. But they never exercise this jurisdiction where the parties have expressly intimated in their agreement that it is not to apply by providing that time is to be of the essence of the bargain".
And "As to the relief from forfeiture, their Lordships think that the Supreme Court was right in holding, for the reasons assigned in the former decision of this Board, that the stipulation in question was one for a penalty, against which relief should be given on proper terms. But as regards specific performance they are of opinion that the Supreme Court was wrong in reversing the judgment of Newlands J. Courts of Equity, which look at the substance as distinguished from the letter of agreements, no doubt exercise an extensive jurisdiction which enables them to decree specific performance in cases where justice requires it, even though literal terms of stipulations as to time have not been observed. But they never exercise this jurisdiction where the parties have expressly intimated in their agreement that it is not to apply by providing that time is to be of the essence of their bargain. If, indeed, the parties, having originally so provided, have expressly or by implication waived the provision made, the jurisdiction will again attach."
[ Bailii ]
 
Jones v De Marchant (1916) 28 DLR 561
1916


Equity, Commonwealth
A husband wrongfully used 18 beaver skins belonging to his wife together with four skins of his own, to have a fur coat made up which he then gave to his mistress. The wife was held entitled to recover the coat. The mistress knew nothing of the true ownership of the skins, but her innocence was held to be immaterial. She was a gratuitous donee and could stand in no better position than the husband. The coat was a new asset manufactured from the skins and not merely the product of intermingling them. The problem could not be solved by a sale of the coat in order to reduce the disputed property to a divisible fund, since (as we shall see) the realisation of an asset does not affect its ownership. It would hardly have been appropriate to require the two ladies to share the coat between them. Accordingly it was an all or nothing case in which the ownership of the coat must be assigned to one or other of the parties. The determinative factor was that the mixing was the act of the wrongdoer through whom the mistress acquired the coat otherwise than for value.
1 Citers



 
 Taylor v Davies; PC 19-Dec-1919 - [1920] AC 636; [1857] EngR 521; (1857) 11 Moo PC 151; (1857) 14 ER 652; [1919] UKPC 136; [1857] UKPC 15
 
Brown v Gregson [1920] AC 860
1920
HL
Viscount Haldane
Equity
Viscount Haldane explained the doctrine of election: "The doctrine of election . . is a principle which the Courts apply in the exercise of an equitable jurisdiction enabling them to secure a just distribution in substantial accordance with the general scheme of the instrument. It is not merely the language used to which the Court looks. A testator may, for instance, have obviously failed to realise that any question could arise. But the Court will none the less hold that a beneficiary who is given a share under the will in assets, the total amount of which depends on the inclusion of property belonging to the beneficiary himself which the testator has ineffectively sought to include, ought not to be allowed to have a share in the assets effectively disposed of, excepting on terms. He must co-operate to the extent requisite to provide the amount necessary for the division prescribed by the will, either by bringing in his own property, erroneously contemplated by the testator as forming part of the assets, or by submitting to a diminution of the share to which he is prima facie entitled, to an extent equivalent to the value of his own property if withheld by him from the common stock."
1 Citers



 
 Burchell v Thompson; CA 1920 - [1920] 2 KB 80; (1920) LJKB 533; (1920) 122 LT 758; (1920) 38 TLR 257; (1920) 64 Sol Jo 68; [1920] BandCR 7
 
Banque Belge pour L'Atranger v Hambrouck [1921] 1 KB 321
1921

Bankes LJ, Atkin LJ
Equity
Money was stolen by a thief. He then paid it by way of a gift into the bank account of the woman with whom he was living. The victim claimed its return from the woman and her bankers. £315 of the balance in her account represented part of the stolen money. She argued that, having no notice of the theft, she obtained a good title to it because it was a gift to her from the thief and the fact that she had paid the money into her banking account prevented any following of the money and that an action for money received would therefore not lie. Held: The victim was entitled to the £315. The woman, as a donee, had been unjustly enriched by the receipt of money stolen from the victim and retained £315, part of that money. She was bound to reimburse the victim. The trust could be followed into the bank account and it ordered return of the £315.
Bankes LJ said: "To accept either of the two contentions with which I have been so far dealing would be to assent to the proposition that a thief who has stolen money, and who from fear of detection hands that money to a beggar who happens to pass, gives a title to the money to the beggar as against the true owner - a proposition which is obviously impossible of acceptance."
Atkin LJ said: "as the money paid into the bank can be identified as the product of the original money, the plaintiffs have the common law right to claim it, and can sue for money had and received."
1 Citers


 
Macedo v Stroud [1922] 2 AC 330
1922
PC

Commonwealth, Land, Equity, Registered Land
(Trinidad) The donor purported to give real property (in part) by memorandum which was not registered. Under the law of Trinidad the transfer did not pass any estate or interest in the land. The donor delivered the instrument to his solicitor telling him to keep the document and not to register it. The document accordingly remained in the solicitor’s custody unregistered until the death of the donor, who during his life continued to receive the rents. The judge found that the instrument was intended to operate as an immediate and unconditional gift to the donee. Held: The memorandum not having been registered nor delivered to the donee for that purpose there was an imperfect gift of the properties with which it dealt to which equity could not give effect: "The memorandum of transfer was never made the subject of registration, nor did the donor present it, or hand it to the transferee, for that purpose. It therefore, having regard to the terms of the ordinance, transferred no estate or interest either at law or in equity. At the most it amounted to an incomplete instrument which was not binding for want of consideration. Had it been in terms a declaration of trust, a Court of equity might have compelled the trustee to carry out the trust, which would have been binding on him, even if voluntary. But it does not purport to be a declaration of trust, or anything else than in inchoate transfer. As such, and as it is voluntary, it is no more than an imperfect gift of which a Court of equity will not compel perfection."
1 Cites

1 Citers



 
 Burroughs v Abbott; 1922 - [1922] Ch 86; [1922] 1 Ch 86
 
Cantiere San Rocco Sa v Clyde Shipbuilding and Engineering Co [1922] ScotCS CSIH - 3; 1922 SC 723; 1922 SLT 477
20 Jul 1922
SCS
Lord Dunedin
Scotland, Contract, Equity
The pursuers maintained that, in consequence of the contract having become incapable of fulfilment, they were entitled to recover the money paid by them to the defenders in terms of the contract. The defenders contended that rights acquired under the contract cannot be disturbed by the termination of the contract owing to a cause for which neither is responsible, and that they were therefore entitled to retain the payment made to them. Held: A buyer was entitled to repetition of the instalment of the price that was paid on signature of the contract as, owing to the war, further performance of the contract had become impossible. Lord Dunedin said that the remedy for frustration of the contract was given "not under the contract or because of breach of the contract inferring damages, but in respect of the equitable (of course I am not using the words in the technical English sense) doctrine of condictio causa data causa non secuta."
1 Citers

[ Bailii ]
 
Chambers v Randell [1923] 1 Ch 149
1923

Sargant J
Land, Equity
Where there is no express annexation of the benefit of a covenant the Court will usually regard the covenant as imposed simply to protect the covenantee while he or she holds the land, or to enable the covenantee to dispose of the land, together with an express assignment of the benefit of the covenant, more advantageously. Sargant J said that the principle: "is that the equitable doctrine enabling restrictive covenants to be enforced against assigns with notice ought not to be extended in derogation of the ordinary rights at common law of purchasers, and that it ought to be applied only where it is sought to enforce the covenant in connection with the enjoyment of land that the covenant was intended to protect."
Conveyancing Act 1881
1 Citers


 
Rhodes v Macalister (1923) 29 Com Cas 19
1923
CA
Bankes, Scrutton, Atkin LJJ
Agency, Equity
The plaintiff agent acted to find a seller of mineral rights for the defendant principal. He told his principal that the properties could be purchased for from £8,000 to £10,000. If the agent could find a seller at below £9,000, then, the defendant agreed, the plaintiff could have the difference between the actual price and £9,000. The agent found a seller at £6,625 and claimed the difference, viz. £2,375. But secretly the agent had also negotiated with the seller, at a time when they made the contract with the buyer, to be paid a commission on the sale. Lush J had found for the defendant. Held: The agent's claim failed. It made no difference to the agent's position that no damage was caused to his principal, or that the principal may be advantaged by the agent's breach of duty in accepting the secret commission.
Bankes LJ said: "There seems to be an idea prevalent that a person who is acting agent or servant of another is committing no wrong to his employer in taking a commission or bribe from the other side, provided that in his opinion his employer or principal does not have to pay more than if the bribe were not given. There cannot be a greater misconception of what the law is, or what the duty of a servant or agent towards his master or principal in reference to such maters is, and I do not think the rule can too often be repeated or its application more frequently insisted upon. . . what was [the agent's] position and what was his duty. Of course, as long as he was acting for the vendors of these properties only he was perfectly entitled to suggest to them that they should fix a price which would include a commission to himself, and he would be perfectly justified in receiving that commission or putting forward the price to an intending purchaser as the only price which he could persuade the vendors to give, so long as that was his real opinion. But the moment he accepted the position of agent for the intending purchasers his entire position in law changed. He could no longer consistently with his duty, unless he disclosed the facts, act as agent for the vendors to procure purchasers with the result of some commission or payment to himself. He could not retain that position consistently with his duty to the purchasers of obtaining these properties at as low a price as he possibly could. . . the moment he accepted the position of agent to procure these properties as cheap as possible for the intending purchasers his interest and duty conflicted, and he could no longer act honestly towards the intending purchasers without disclosing to them that in that figure of £8,000 to £10,000 which he had mentioned as the probable price of these properties he had included a figure which he intended should cover a commission to himself."
Scrutton LJ said: "I agree with the judgment that has just been delivered and I only propose to re-state it in my own words because I think it is of very great importance that the principle upon which we are acting should be thoroughly understood, and from Mr Vachell's argument it is not thoroughly understood by commercial men, especially in that part of the country from which his clients appear to come . . The law I take to be this: that an agent must not take remuneration from the other side without both disclosure to and consent from his principal. If he does take such remuneration he acts so adversely to this employer that he forfeits all remuneration from the employer, although the employer takes the benefit and has not suffered a loss by it. . . I hope it is thoroughly understood in London; and if it is not thoroughly understood in the Forest of Dean, then the sooner it is understood there the better for commercial honesty." and
"But I decide it on the broad principle that whether it causes damage or not, when you are employed by one man for payment to negotiate with another man, to take payment from that other man without disclosing it to your employer is a dishonest act. It does not matter that the employer takes the benefit of his contract with the vendor; that has no effect whatever on the contract with the agent, and it does not matter that damage is not shown. The result may actually be that the employer makes money out of the fact that the agent has taken commission.
In this case, therefore, it appears that as one of the two joint agents has, in breach of his duty, taken commission from the other side, he forfeits, and they both forfeit, all right to remuneration from their employer. The more that principle is enforced the better for the honesty of commercial transactions. I have only repeated what my Lord has said because it cannot be repeated too often to commercial men – that in matters of agency they must act with strict honesty."
Atkin LJ said: "This is a class of case where the Courts always have maintained, and do maintain, and I trust always will maintain, a very high standard of conduct on the part of agents. It is a standard of conduct which I am afraid sometimes conflicts with the standard of conduct adopted for themselves by commercial men - not by honourable men in commerce, but by a great many men engaged in mercantile transactions. I entirely agree with what has been said as to the importance of repeating and letting it be known as widely as possible what the standard of conduct expected of an agent is at law. . . Now that is not an impossible standard of attainment. It is laid down by the law and it is in respect of a practical matter. The remedy is a very simple one and it is well within the compass of any ordinary business man. The complete remedy is disclosure, and if an agent wishes to receive any kind of remuneration from the other side and wishes to test whether it is honest or not, he has simply to disclose the matter to his own employer and rest upon the consequences of that. If his employer consents to it, then he has performed everything that is required of an upright and responsible agent."
1 Cites

1 Citers



 
 In re Eyre-Williams; 1923 - [1923] 2 Ch 533

 
 National Provincial and Union Bank of England v Charnley; 1924 - [1924] 1 KB 431

 
 Bank of Victoria Ltd v Mueller; 1925 - [1925] VLR 642

 
 R E Jones Ltd v Waring and Gillow Ltd; HL 1926 - [1926] AC 670
 
Palmer v Carey [1926] AC 703
1926
PC
Lord Wrenbury
Equity, Insolvency
A lender financed a trader in goods, on the basis the proceeds of sale of the goods be paid into an account in the name of the lender, and that the lender recoup himself on a monthly basis in respect of sums advanced, with the balance being released to the trader subject to a right for the lender to retain a sum representing an agreed share of the trader's profit. The trader subsequently became bankrupt. At the date of the bankruptcy, a substantial sum was owing to the lender in respect of sums advanced. The lender claimed security over goods and proceeds of sale in the hands of the trader. Held: The lender had no such security: "The law as to equitable assignment, as stated by Lord Truro in Rodick v. Gandell, is this: 'The extent of the principle to be deduced is that an agreement between a debtor and a creditor that the debt owing shall be paid out of a specific fund coming to the debtor, or an order given by a debtor to his creditor upon a person owing money or holding funds belonging to the giver of the order, directing such person to pay such funds to the creditor, will create a valid equitable charge upon such fund, in other words, will operate as an equitable assignment of the debts or fund to which the order refers. An agreement for valuable consideration that a fund shall be applied in a particular way may found an injunction to restrain its application in another way. But if there be nothing more, such a stipulation will not amount to an equitable assignment. It is necessary to find, further, that an obligation has been imposed in favour of the creditor to pay the debt out of the fund. This is but an instance of the familiar doctrine of equity that a contract for valuable consideration to transfer or charge a subject matter passes a beneficial interest by way of property in that subject matter if the contract is one of which a Court of equity will decree specific performance."
1 Citers



 
 CB Liggett (Liverpool) Limited v Barclays Bank Limited; 1928 - [1928] 1 KB 48
 
Meinhard v Salmon (1928) 164 NE 545
1928

Cardozo J
Equity
(New York Court of Appeals) Cardozo J said: "Equity refuses to confine within the bounds of classified transactions its precept of a loyalty that is undivided and unselfish" and '[a] constructive trust is, then, the remedial device through which preference of self is made subordinate to loyalty to others.'
1 Citers



 
 Weld v Petre; 1929 - [1929] 1 Ch 33
 
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