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.
Purchase of equity of redemption, whether real or personal estate liable to mortgage debt(r).
(r) And see further these and other cases discussed in 2 Jarm. 5th ed. p. 1442 et seq.
(s) Tweddell v. T., (1786) 2 Br. C. C. 101, 152 ; Evelyn v. E., (1731) 2 P. W. at p. 664 ; Butler v. B., (1800) 5 Ves. 534 ; Barham v. Earl of Thanet, (1834) 3M. & K. 607, 624 ; 3 L. J. N. S. Ch. 228 ; Barry y. Harding, (1844) 1 J. & L. 475, 485 ; see, too, Bond v. England, (1855) 2 K. & J. 44 ; 24 L. J. Ch. 671 ; Bagot v. B., (1864) 10 Jur. N. S. 1169.
(t) Forrester v. Leigh, (1753) Amb. at p. 173; Butler v. B., sup.; He Errington, 1894, 1 Q. B. 11.
(u) Duke of Ancaster y. Mayer, (1785) 1 Br. C. C. 454 : 1 Wh. &
T. L. C. 7th ed. 1; Hamilton v. Worley, (1793) 2 Yes. 62 ; Butler v. B., sup.
(x) Woods v. Huntingford, (1796) 3 Ves. 128; Lord Oxford v. lady Rodney, (1807) 14 Ves. 417 ; Waring v. Ward, (1802) 7 Ves. 332 ; but in these cases there were strong circumstances showing the intention of the purchaser to make the debt his own.
(y) And see Coote on Mortgages, 7th ed. p. 781.
(z) Parsons v. Freeman, (1751) Amb. 115; 2 P. W. 664, n. ; Belvedere v. Rochfort, (1772) 5 Br. P. C. 299 ; Copey. C, (1707) 2 Salk. 449.
(a) Barry v. Harding, (1844) 1 J. & L. 475, 485.
It is clear, however, that a sum borrowed in order to complete the contract, even for paying off existing charges, and secured by a contemporaneous mortgage of the estate, is prima facie payable primarily out of the personalty (b) : and the same rule prevails when the consideration is an annuity, secured by a charge on the estate and by the purchaser's covenant (c).
Where part of purchase-money is borrowed and secured by mortgage of the estate.
The general rule, as above stated, in respect to mortgage debts, was altered by the Real Estate Charges Act, 1854, which provides that in the case of any person dying after 1854, seised of or entitled to any land or hereditaments, which at the time of his death are subject to the payment of any sum or sums of money by way of mortgage, and who shall not by his will, or by deed or other instrument, have expressed any contrary or other intention, the heir or devisee shall, as between the different persons claiming through the deceased, be primarily liable to the payment of the mortgage debt: but this provision is not to affect or diminish the rights of the mortgagee ; nor the rights of any person claiming under a will, deed, or document, prior to 1855.
Real Estate Charges Act, 1854 (Locke King's Act).
In order to bring a case within the Act, the charge must be for a specified sum, and on a specified estate ; a mere general charge by a testator on real estate in aid of his personalty is insufficient (d). But it applies to cases of contribution : so that where different parts of the mortgaged property are given to different devisees (c), or where freeholds and leaseholds have been mortgaged together and the heir and administrator became entitled on an intestacy (f), they must all bear their rateable proportion of the mortgage debt.
Cases within the Act.
(b) Waring v. Ward, (1802 7 Ves. 332.
(c) Yonge v. Funt, (1855) 24 L. J. Ch,. 643 :Re Muffett, (1888) 39 Ch. D. 534 ; 57 L. J. Ch. 1017; Re Harrison, (1889) 43 Ch. D. 55 ; 59 L. J. Ch.
(d) Hepworth v. Hill, (1862) 30 Beav. 47G; 31 L. J. Ch. 569.
(e) Re Neumareh, (1878) 9 Ch. D. 12 : 48 L. J. Ch. 28.
(f) Evant v. Wyatt, (1862) 31
The Act has been held to apply to the case of an equitable charge by deposit of title deeds with (g) or without (h) memorandum of charge ; and this decision does not appear to have been rested on the ground of there being an undertaking to execute a legal mortgage (i) ; so that, in principle, it would seem to apply to every case of equitable charge, though not strictly a mortgage. But a vendor's lien for unpaid purchase-money was held not to be a sum charged by way of mortgage within the Act, so as to entitle the heir or devisee to have it satisfied out of the personal estate (k). The Act applies to copyholds (/), but not to leaseholds (m); and where real and personal estate are comprised in the same mortgage, the mortgage debt must be borne rateably by the real and personal estate subject thereto (n). The Act does not apply to the case of a charge created by a partner on his separate realty to secure a partnership debt, when at his death the partnership assets are sufficient to answer all the partnership debts (o).
Charge to secure partnership debt.
The Act provides that every part of the mortgaged land, according to its value, shall bear a proportionate part of the mortgage debts charged upon the whole; but, of course, this does not throw the primary liability on a security which is merely collateral, i.e., secondary, or one which is not to be resorted to until the primary security is exhausted (p).
As between different devisees of separate estates, the incumbrances must prima facie be discharged out of the estates which are respectively liable. If, however, there is a collective devise of lands of whatever tenure, then, in exoneration of the personal estate, those lands collectively must bear the aggregate burden of charges which is placed upon them, though individually some may be unincumbered (q).
Where the estate is a collateral security.
(g) Pembrooke v. Friend, (1860) 1 J. & H. 132 ; 2 L. T. 742 ; Coleby v. C, (1866) 2 Eq. 803.
(h) Davis v. D., (1876) W. N. 242.
(i) In Coleby v. C. there was such an undertaking ; but this does not appear to have been the case in Pembrooke v. Friend.
(k) Hood v. H, (1857) 26 L. J. Ch. 616 ; 3 Jur. N. S. 684 ; Barnwell v. Iremonger, (1860) 1 Dr. & S. 255 ; but see Lord Lilford v. Poicys-Keck, (1865) 1 Eq. 347 ; 35 L. J. Ch. 302 ; and see now the Act of 1867, inf. p. 831.
(I) Piper v. P., (1860) 1 J. & H. 91 ; 29 L. J. Ch. 719.