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.
If a cheque is given for. the purchase-money, and, by reason of an unintentional non-compliance with the Stamp Act, is so drawn that no action could be maintained upon it, and the bankers upon whom it is drawn fail before payment, or if (supposing it to be valid and to be presented within a reasonable time) the bankers, upon receiving it with instructions to transmit the amount to London, on the same day, and before the usual hour for closing business, stop payment, the loss falls on the purchaser (x). So, if presentation of the cheque be delayed at his request, and the bank fail in the interval (y). The vendor may, of course, decline to take a cheque (z). A mutual agent, upon whom a bill of exchange is, according to the contract, drawn by the purchaser in favour of the vendor, cannot, without the consent of the latter, enter the same to his credit before it arrives at maturity; so that if the agent fail in the interval, the loss falls on the purchaser, though the bill has been so entered, and might have been drawn against by the vendor (a).
Payment of purchase-money by cheque.
(r) Wrout v. Dawes, (1858) 25 Beav. 369; Coupe v. Collyer, (1890) 62 L. T. 927; and see London Freehold, etc. Co. v. Baron Sufield, sup.
(s) Parnther v. Gaitskell, (1811) 13 Ea. 432; Cotman v. Orton, (1841) 5 Jur. 142; Hughes v. Morris, (1852) 9 Ha. 646; 2 D. M. & G. 349; 21 L. J. Ch. 761. See as to the power of trustees or of a personal representative to accept money before it is payable, s. 15 (a) of the T. Act, 1925.
(t) Sweeting v. Pearce, (1859) 7 C. B. N. S. 449, 485; (1861) 9 ib. 534; Pearson v. Scott, (1878) 9 Ch. D. 198; 47 L. J. Ch. 705; Coupe v. Collyer, sup.
(u) Pape v. Westacott, 1894, 1 Q. B. 272; Blumberg v. Life Interests, etc. Corp., 1897, 1 Ch. 171; 1898, 1 Oh. 27; Johnston v. Boyes, 1899, 2 Ch. 73. Cf. Bridges v. Garrett, (1870) L. R. 5 C. P. 451.
(x) Bond v. Warden, (1845) 1 Coll. 583; 14 L. J. Ch. 155; Lord Ward v. Oxford, etc. B. Co., (1852) 2 D. M. & G. 750; 22 L. J. Ch. 905; the Court will not compel the delivery up of a void cheque, Carrington v. Pell, (1849) 3 De G. & S. 512.
The rule in Equity is that one of several joint vendors cannot give a discharge for the purchase-money. Thus, where an equitable charge was vested in two persons as joint tenants, and one only without the express authority of the other signed a receipt for the whole mortgage debt, the land was not effectually discharged, and the title could not be forced on an unwilling purchaser (b), even though the party giving the receipt ultimately became the survivor in the joint account (c). Now by s. 36 (1) of the L. P. Act, 1925, where a legal estate (not being settled land) is beneficially limited to or held in trust for any persons as joint tenants, the same is to be held on trust for sale, in like manner as if the persons beneficially entitled were tenants in common (d), but not so as to sever their joint tenancy in Equity. And since the 1st January, 1926, a sole trustee is unable (except in the case of a trust corporation) to give a valid receipt for the proceeds of sale arising under a trust for sale of land (dd).
Where the conveyance is executed under a power of attorney, unless declared to be irrevocable under the L. P. Act, 1925 (e), the proper course seems to be to let the purchase-money be invested in the names of trustees, at the expense and risk of the vendor, unless and until satisfactory evidence (e.g., a statutory declaration under the L. P. Act, 1925, s. 124) is adduced of the validity of the power at the date of the execution of the conveyance.
Sale under power of attorney.
(y) Lord Ward v. Oxford, etc. R. Co., sup. (z) Clarke v. King, (1826) 2 C. & P. 286. (a) Maxwell v. Deare, (1853) 1 C. L. R. 776.
(b) Matson v. Dennis, (1864) 4 D. J. & S. 345; Powell v. Brodhurst, 1901, 2 Ch. 160; 70 L. J. Ch. 587.
(c) Powell v. Brodhurst, sup.
(d) See s. 34, and 1st Sch. Part IV.
(dd) L. P. Act, 1925, s. 27 (2), as amended by the Act of 1926; and see S. L. Act, 1925, s. 94 (1); T. Act, 1925, s. 14 (2).
(e) Ss. 126 and 127, taking the place of as. 8 and 9 of the Conv. Act, 1881.
Under the Bkcy. Act, 1914, s. 55, it is the duty of the trustee to sell the bankrupt's property, and he is competent to give receipts for the purchase-money.
On sale in bankruptcy.
When A., in ignorance of the purchaser being an uncertificated bankrupt, advanced part of the purchase-money, and paid it direct to the vendor, and the conveyance was handed over to him immediately after its execution, he was held to have a valid lien upon the property; though the purchaser at the same time signed a memorandum stating that he had deposited the deed with A. as a security for the advance (f). But a purchaser, who has contracted with a person who before conveyance becomes bankrupt, to buy property, and after the date of the bankruptcy in good faith pays him the purchase-money, is not protected, and will have to pay the purchase-money over again to the trustee, though he had no notice of the adjudication when he paid his money to the bankrupt vendor (g).
Lien of third party advancing part of the purchase -money, as against purchaser's assignees in bankruptcy.
Under s. 63 of the T. Act, 1925 (h), trustees, or a majority of them, can pay money or securities into the High Court (i) to be dealt with, subject to rules of Court, according to the orders of the Court, and the receipt or certificate of the proper officer will be a sufficient discharge to them., So, where there are conflicting claims to the proceeds of sale, the amount can, by arrangement, be paid to trustees, in trust for the rightful owners: the right to be ascertained, if necessary, by means of a payment into Court, and a summons or petition for payment out. An incumbrance may be disposed of on a sale by paying into Court the amount of the incumbrance together with a margin of 10 per cent, under s. 50 of the L. P. Act, 1925 (k).