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 old rule that the purchase-money must be paid to the vendor personally or upon his written authority and that an indorsed receipt was not conclusive evidence of payment (g) was altered by the Conv. Act, 1881. And now, by s. 69 of the L. P. Act, 1925 (which replaces s. 56 of the Conv.
To whom and how purchase money should be paid.
(f) This provision is applied to transfers on sale of registered land by s. 38 (1) of the L. E. Act, 1925.
(g) Re Fryer, (1857) 3 K. & J. 317; Viney v. Chaplin, (1858) 2 D. & J. 468, 482; Ex p. Swinbanks, (1879) 11 Ch. D. 525.
Act, 1881), where a solicitor produces (h) a deed, having in the body thereof, or indorsed thereon, a receipt for consideration money or other consideration, the deed being executed or the indorsed receipt being signed by the person entitled to give a receipt for that consideration, the deed shall be sufficient authority to the person liable to pay or give the same for his paying or giving the same to the solicitor, without the solicitor producing any separate or other direction or authority in that behalf from the person who executed or signed the deed or receipt. A solicitor within the section appears to mean a solicitor acting for the party to whom the money is expressed to be paid (i). The vendor's solicitor is usually named in the conditions or agreement, but where not so named, it would seem that the purchaser or person paying the money, in the absence of anything to suggest the contrary, is bound to assume that the solicitor producing the deed is acting as solicitor for the person having power to give a discharge (k).
This enactment has been extended to cases where money is payable to trustees, it being provided by s. 23 (3) (a) of the T. Act, 1925 (which replaces and enlarges s. 17 of the T. Act, 1893), that, without prejudice to the general power of appointing agents (given by sub-ss. (1) and (2)), a trustee may appoint a solicitor to be his agent to receive and give a discharge for money receivable by the trustee under the trust, by permitting the solicitor to produce a deed having in the body thereof or endorsed thereon a receipt for such money, the deed being executed, or the endorsed receipt being signed, by the person entitled to give a receipt.
Where, on a sale by two trustees, a cheque for the proceeds was handed by one to the other, who misapplied it, both were held liable (l); but where a trustee obtains possession of the money by an act of dishonesty, and without the knowledge of his co-trustee, the latter is not liable for its misapplication (m). A receipt signed by one trustee on behalf of himself and his co-trustee, is not a sufficient discharge to the purchaser (n). Where trustees for sale employ one of their own number as their solicitor in the transaction, payment of the purchase-money to him will be considered as made in his capacity of trustee, and not as solicitor (o).
Liability of trustees inter se.
(h) See Day v. Woolwich, etc. Soc, (1888) 40 Ch. D. 491; 58 L. J. Ch. 280; Re Helling and Merton's Contract, 1893, 3 Oh. 269; King v. Smith, 1900, 2 Oh. p. 432.
(i) Day v. Woolwich, etc. Soc, sup.; He Hetling and Merton, 1893, 3 Oh. 269; 62 L. J. Oh. 783; and see King v. Smith, 1900, 2 Oh. 425; 69 L. J. Ch. 598.
(k) See King v. Smith, sup.
When an agent is empowered to receive the money, there must be a payment in good faith; for instance, it cannot be set off against a private debt due from him to the purchaser (p), unless the vendor, being indebted to the agent, has authorised him not merely to receive, but to pay himself out of it (q): and where the same solicitors acted for both parties, being authorised by the vendors to receive the purchase-money, and by the purchaser to apply for that purpose money of his which they had in their possession, and the agents in their accounts with their respective clients credited the vendors and debited the purchaser with the amount, the latter, on the bankruptcy of the solicitors, was still held liable to pay the purchase-money, the vendors not having sanctioned that particular mode of payment (r). So, if an agent is authorised to receive the money according to the contract, and it is paid to him in anticipation of the time therein named, the purchaser is liable for its due application (s). In short, an agent has prima facie authority to receive payment only in money; and it is not sufficient to write off the money against other money due from the agent, or otherwise set off in account merely (t). The agent is not entitled, as a rule, to accept a cheque in payment on behalf of his principal (u).
Payment to agents.
(l) Trutch v. Lamprell, (1855) 20 Beav. 116; and see Griffiths v. Porter, (1858) 25 Beav. 236; Rodbard v. Cooke, (1877) 25 W. R. 555: Robinson v. Harkin, 1896, 2 Ch. 415; 65 L. J. Ch. 773.
(m) Barnard v. Bagshaw, (1862) 3 D. J. & S. 355. See as to trustee being responsible for failure of the bank in which the purchase-money is temporarily invested, Wilks v. Groom, (1856) 3 Dr. 584; Cann v. C. (1884) 33 W. R. 40. See, however, now the T. Act, 1925, s. 11 (1); 2 Wolst. & Cherry, 11th ed. p. 361.
(n) Hall v. Franck, (1849) 11 Beav. 519; 18 L. J. Ch. 362; and see Heath v. Crealock, (1873) 18 Eq. 215; 10 Ch. 22; 44 L. J. Ch. 157.
(o) Re Fryer, (1857) 3 K. & J. 317; 26 L. J. Ch. 398; and see 2 Wolst. & Cherry, 11th ed. p. 380.
(p) Young v. White, (1844) 7 Beav. 506; 13 L. J. Ch. 419.
(q) Barker v. Greenwood, (1837) 2 Y. &; C. 414; 6 L. J. N. S. Ex. Eq. 54; Hanley v. Cassan, (1847) 11 Jur. 1088. As to how the loss of money by the fraud of a person acting as agent for both parties is to be borne, see Vandaleur v. Blagrave, (1843) 6 Beav. 565; on app. (1847) 11 Jur. 935; Young v. Guy, (1844) 8 Beav. 147; Hiorns v. Holtom, (1852) 16 Beav. 259; West v. Jones, (1851) 1 Si. N. S. 205; 20 L. J. Oh. 362; Griffin v. Clowes, (1855) 20 Beav. 61; London Freehold, etc. Co. v. Baron Suffield, 1897, 2 Ch. 608; 66 L. J. Ch. 790. As to the purchaser's liability for a fraudulent application of the purchase-money, to which his solicitor, acting also for the vendor, was privy, see Doe v. Martin, (1790) 4 T. R. 39, 66; see also Hicks v. Morant, (1829) 3 Y. & J. 286; Bowles v. Stewart, (1803) 1 Sch. & L. at p. 222.