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.
Amendment Act, 1867.
The Real Estate Charges Act, 1877, s. 1, extends the Acts of 1854 and 1867 to a testator or intestate dying seised or possessed of, or entitled to, any land or other hereditaments of whatever tenure (l) which shall, at his death, be charged with the payment of any money by way of mortgage, or any other equitable charge (m), including any lien for unpaid purchase-money (n), and provides that the devisee or legatee or heir shall not be entitled to have such sum or sums discharged or satisfied out of any other estate of the testator or intestate, unless (in the case of a testator) he shall, within the meaning of the said Acts, have signified a contrary intention ; and that such contrary intention shall not be deemed to be signified by a charge, or direction for payment, of debts upon or out of the residuary real and personal or residuary real estate (o).
Amending Act, 1877.
(g) Lewis v. Z., (1871) 13 Eq. 218 ; 41 L.J. Ch. 195.
(h) S. 1 ; Re Rossiter, (1879) 13 Ch. D. 355 ; 49 L. J. Ch. 36 ; see Rv Nevill, sup.
(i) S. 2. This section seems to be retrospective ; but not to apply to the case of lands purchased by an intestate.
Warding v. H., (1872) 13 Eq. 493; 41 L. J. Ch. 523; sec also Dowdall v. McCartan, (1880) 5 L. It. Ir. 313.
(/) This includes leaseholds, Re Kershaw, (1888) 37 Ch. D. 674; 57 L. J. Ch. 599.
(m) See Re Anthony, 1892, 1 Ch. 450, 457; 61 L. J. Ch. 434; this includes land delivered under a writ of elegit to testator's judgment creditor. Land made security for a debt by any instrument giving the chargee an equitable interest in the land creates an equitable charge within the meaning of the Act ; Re Sharland, (1896) 74 L. T. 664.
A bequest of legacies followed by a bequest of residue of realty and personalty charges the legacies on the realty, but leaves them primarily payable out of the personalty, unless there is a direction that they shall be paid out of the mixed fund, in which case they are payable rateably out of the realty and personalty (p).
It is unfortunate that the exception of the expression of a contrary intention should have been limited by the Act to the case of a testator, the draftsman apparently forgetting that such intention might be expressed by deed or other document, as well as by will (q).
Criticism of terms of Act.
The Act of 1867 does not meet the case of a testator directing his debts to be paid out of his residuary real and personal estate; and it is suggested that in such a case the specific devisee of an estate subject to a mortgage would be entitled to have it exonerated; but in one case, V.-C. Malins appears to have been of the contrary opinion, though it was not necessary to decide the point (r). In a later case where part of a mortgaged estate was devised to A. for life, and the rest to B., who was residuary devisee, in fee, and there was a charge of debts on the residuary real estate, in the event of the personal estate proving deficient, it was held by Jessel, M. R., that the life estate of A. was not exonerated, but was proportionately liable to keep down the interest on the mortgage (s), and where the testator made a mixed fund and directed payment out of it of his debts, it was held that no intention was shown to exclude the Acts (().
Law prior to
(n) See Re Kidd, 1894, 3 Ch. 558 ; 63 L. J. Ch. 855, where the devisees of land included in a building agreement were held not entitled to have a sum payable in respect of further leases, under an option contained in the agreement and exercised by the testator, paid out of the personal estate.
(o) See Re Nevill, (1890) 59 L. J. Ch. 511.
(p) Re Boards, 1895, 1 Ch. 499 ; 64 L. J. Ch. 305.
(q) See per Kay, J., in Re Coclcroft, (1883) 24 Ch. D. 94, 100; 52 L. J. Ch. 811.
(r) Lewis v. I., (1871) 13 Eq. 218 ; 41 L. J. Ch. 195.
Conveyance of equitable estate, why requisite.
If a sale made in good faith and an absolute conveyance are accompanied by a power reserved to the vendor to repurchase the property, this will not turn the transaction into a mortgage, if such does not appear to have been the intention of the parties. Thus, where A. sold a life estate to B., and there was a contemporaneous deed giving to A., who paid all the costs of the transaction, the right of re-purchase at the price paid, and B. entered into possession, and, after keeping up an insurance on A.'s life, had a surplus income from the property of about 6/. per cent, on his purchase-money, it was held that the transaction was a sale, and not a mortgage; and that A. was not entitled to an account of the rents and profits received by B. (x). Nor does the circumstance that the parties already stand in the relation of mortgagor and mortgagee preclude the former from making an absolute sale to the latter of the equity of redemption, coupled with a right of re-purchase (y). The best general test of the intention of the parties in these cases seems to be the existence or non-existence of a power in the original purchaser to recover the sum named as the price for such re-purchase; if there is no such power there is no mortgage (z). A right of re-purchase must, as we have already observed (a), be exercised in its literal terms (b) ; and be promptly enforced (c).
Conveyance with power of re-purchase, when not a mortgage.
(s) Saekville v. Smyth, (1873) 17 Eq. 153 : 43 L. J. Ch. 494 ; Han-ninyton v. True, (1886) 33 Ch. D. 195 ; 55 L. J. Ch. 914; ef. Brownson v. Lawrance, (1868) 6 Eq. 1 ; 37 L.J. Ch. 351, which can no longer be considered good law.
(0 Elliott v. Dearsley, (1880) 16 Ch. D. 322 ; Re Boards, 1895, 1 Ch. 499 ; 64 L. J. Ch. 305.
(u) See Tosher v. Small, (1837) 3 M. & C. at p. 70 ; 7 L. J. N. S.
Ch. 19, per Lord Cottenham ; sup. p. 288.
(x) Alderson v. White, (1858) 2 D. & J. 97. The decision was rested on the true ground, viz., the intention of the parties as appearing on the face of the instruments ; but query whether the transaction was not intended and treated as a mortgage ; see also Secretary of State for India v. British Empire Co., (1892) 67 L. T. 435.
It has been held, that a lessee can recover damages against the lessor for injury which, after the execution of the lease, is sustained by the property, through the prior negligent construction by the lessor of a sewer upon adjoining property retained by him (d) : and the same right would seem to exist in case of a sale.
Purchaser's remedy for injury to property through prior act of vendor.
If a vendor sell a shop with his name carved thereon and takes no covenant from the purchaser to alter the building in that respect, he has, it seems, no means of enforcing the purchaser to alter it, even though its remaining expose him to some liability (e).
Injury to vendor from particular circumstances of state of property sold.
(y) Gossip v. Wright, (1863) 9 Jur. N. S. 592 ; 32 L. J. Ch. 648 ; Ensworth v. Griffiths, (1706) 5 Br. P. C. 184.
(z) See Perry v. Meddoweroft, (1841) 4 Beav. at p. 203; Williams v. Owen, (1840) 5 M. & C. 303 ; Venter v. Winstanley, (1805) 2 Sch. & L. 393 ; Neal v. Morris, (1818) Beat. 597 ; but see Fee v. Cobine, (1847) 11 Ir. Eq. R. 406; Ogden v. Battams, (1855) 1 Jur. N. S. 791 ; see also Coote on Mortgages, 7th ed. p. 22 et seq.
(a) Sup. p. 272.
(b) Barrell v. Sabine, (1684) 1 Vem. 268 ; Ensworth v. Griffiths, (1706) 5
Br.P.C. 184; Davis v. Thomas, (1831) 1 R. & M. 506 ; 9 L. J. (O. S.) Ch. 232 ; Joy v. Birch, (1836) 4 C. & F. at pp. 57, 89. See Peggy. Wisden, (1852) 16 Beav. 239 ; Brooke v. Garrod, (1857) 2 D. & J. at p. 82 ; 27 L. J. Ch. 226; and ef. Ward v. Wolverhampton Waterworks Co., (1871) 13 Eq. 243 ; 41 L. J. Ch. 308.
(c) See Chesterman v. Mann, (1851) 9 Ha. 206.
(d) Alston v. Grant, (1851) 3 E. & B. 128 ; 23 L. J. Q. B. 163.
(e) Townsend v. Jarman, 1900, 2 Ch. 698, 705 ; 69 L. J. Ch. 823.