This section is from the book "Dart's Treatise On The Law And Practice Relating To Vendors And Purchasers Of Real Estate", by J. Henry Dart . Also available from Amazon: A treatise on the law and practice relating to vendors and purchasers of real estate.
The deposit is not only a payment by anticipation of part of the purchase-money, but also an earnest of the performance of the contract (u); and the purchaser cannot elect to forfeit it and avoid the agreement (x).
Deposit is a part payment.
The deposit should not be paid to a mere agent for sale, without express authority from the vendor. If the authority be for the agent to receive it at a particular time, or in a particular manner, of course, it cannot be safely paid, except to, or by the direction of, the vendor, at any other time, or in any other manner (y); and the purchaser will not be liable for loss arising from his having followed any such special authority as to the mode of payment (z).
(o) Toulmin v. Millar, (1887) 58 L. T. 96; 12 A. C. 746; 57 L, J. Q. B. 301; Skinner v. Andrews, (1910) 26 T. L. R. 340; Knight, Frank and Rutley v. Gordon, (1923) 39 T. L. R. 399.
(p) Phosphate Sewage Co. v. Hartmont, (1876) 5 Ch. D. 394, 457; Bulfield v. Fournier, (1894) 11 T. L. R. 62 and 282; Hovenden v. Millhoff, (1900) 83 L. T. 41.
(q) Shipway v. Broadwood, 1899, 1 Q. B. 369; 63 L. J. Q. B. 360; and see Alexander v. Webber, 1922, 1 K. B. 642.
(r) Andrews v. Ramsay, 1903, 2 K. B. 635; 72 L. J. K. B. 865.
(s) Harrington v. Victoria Graving Dock Co., (1878) 3 Q. B. D. 549; 47 L. J. Q. B. 594; and see Grant v. Gold Exploration Syndicate, 1900, 1 Q. B. 233; 69 L. J. Q. B. 150.
(t) See the Prevention of Corruption Act, 1906, 6 Ed. VII. c. 34.
(u) Howe v. Smith, (1884) 27 Ch. D. 89; 53 L. J. Ch. D. 1055; Collins v. Stimson, (1883) 11 Q. B. D. 143; 52 L. J. Q. B. 440; Soper v. Arnold, (1889) 14 A. C. at p. 435; Hall v. Burnell, 1911, 2 Ch. 551. Cf. Chillingworth v. Esche, 1924, 1 Ch. 97; and Mayson. v. Clouet, 1924, A. C. 980.
(x) Crutchley v. Jemingham, (1817) 2 Mer. at p. 506; Palmer v. Temple, (1839) 9 A. & E. at p. 520; 8 L. J. N. S. Q. B. 179.
If the vendor's solicitor receives the deposit he holds it, in the absence of a stipulation to the contrary, as agent for the vendor, and not as stakeholder (a); unless the same solicitor is acting for both parties (b). And accordingly, where the deposit had been paid to the vendor's solicitor as agent for the vendor, and the sale went off through the vendor's want of title, it was held that the purchaser could not sue the solicitor to recover the deposit, payment to the solicitor having been equivalent to payment to the vendor (c).
Vendor's solicitor receives it as his agent, and not as stakeholder.
The deposit cannot safely be paid by the purchaser by being set off in account with the auctioneer or agent, except under the special circumstances of his being able to show the existence of a debt of equal amount due from the vendor to the auctioneer or agent, and that the latter was authorised by the vendor to retain the deposit on account of such debt (d). So if, instead of making a cash payment, the purchaser give a bill, payment of the bill when due is no defence to an action by the vendor, if the bill never came into his possession (e).
Not generally by settlement of accounts with agent; nor by the purchaser's bill.
(y) See Young v. Guy, (1844) 8 Beav. at p. 149.
(z) Warwicke v. Noakes, (1791) Peake, 67; Hawkins v. Rutt, ib. 248; Eyles v. Ellis, (1827) 4 Bing. 112; 5 L. J. (O. S.) C. P. 110; Sug. 14th ed. 49.
(a) Bamford v. Shuttleworth, (1840) 11 Ad. & El. 926; Edgell v. Bay, (1865) L. R. 1 C. P. 80; 35 L. J. C. P. 7; Ellis v. Goulton, 1893, 1 Q. B. 350; 62 L. J. Q. B. 232.
(b) Wiggins v. Lord, (1841) 4 Beav. 30; explained in Edgell v. Bay, (1865) L. R. 1 C. P. at p. 85; 35 L. J. C. P. 7.
(c) Ellis v. Goulton, sup.
(d) Barker v. Greenwood, (1836) 2 Y. & C. 414; Young v. White, (1844) 7 Beav. 506; 13 L. J. Ch. 418; Hanley v. Cassan, (1847) 11 Jur. 1088; Sweeting v. Pearce, (1861) 9 C. B. N. S. 534; 30 L. J. C. P. 109; Bridges v. Garrett, (1870) L. R. 5 C. P. 451; 39 L. J. C. P. 39.
If a cheque be given for the deposit, an action on the cheque may be resisted upon any ground which would have enabled the purchaser to recover at Law the deposit if actually paid (f).
Cheque for, when void.
If a purchaser becomes entitled to a return of his deposit, he can, in the absence of special agreement, claim the specific sum paid, and, except as against the stakeholder (g), interest thereon; and will not be prejudiced or benefited by any fall or rise in any securities in which it may have been invested (h); unless such investment were made with his assent (i), (which will not be assumed from his making no reply to notice of the investment (k)), or (in the case of an action being brought for specific performance), under the authority of the Court, in which cases the investment will be at his risk and for his benefit (l). The same rules apply to an investment of the purchase-money by the purchaser, pending discussions as to title, &c; and also apply conversely, for and against the vendor, in cases where, by the purchase being completed, he becomes entitled to the purchase-money (m).
Investment of, when binding on purchaser or vendor.
(e) Sykes v. Giles, (1839) 5 K 4 W. 645; 9 L. J. Ex. 106; Williams v. Evans, (1866) L. R. 1 Q. B. 352; 35 L. J. Q. B. 111; Pape v. Westaoott, 1894, 1 Q. B. 272.
(f) Mills v. Oddy, (1834) 6 C. & P. 728; 4 L. J. N. S. Ex. 168.
(g) Harington v. Boggart, (1830) 1 B. & Ad. 577; 9 L. J. (O. S.) K. B. 14; and see Lee v. Munn, (1817) 8 Taun. 45.
(h) Doyley v. Powis, (1786) 2 Br. C. C. 32; Poole v. Rudd. (1790) 3 ib. 49; Burroughes v. Browne, (1852) 9 Ha. 609; 22 L. J. Ch. 148; and see Powell v. P., (1875) 19 Eq. 422; 44 L. J. Ch. 311.
(i) See St. Paul v. Birmingham, etc. B. Co., (1853) 11 Ha. 305.
(k) See Roberts v. Massey, (1807) 13 Ves. 561; Ackland v. Cuming. (1816) 2 Madd. 28.
(l) See Poole v. Rudd, (1790) 3 Br. C. C. 50.
(m) See Burroughes v. Browne, (1852) 9 Ha. 609: 22 L. J. Ch. 148.