wards became a bankrupt) to the plaintiff, as a security for a sum of money lent to the bankrupt, the pledgee filed a bill for a sale of the estate. The assignees contended that the claim was against the law of the land, for that it would be charging land without writing, which is against the fourth clause of the Statute of Frauds. Lord Loughborough, Lord Commissioner, said that it was a delivery of the title to the plaintiff for a valuable consideration, and that the Court had nothing to do but to supply the legal formalities; and Ashurst, Lord Commissioner, that it was open to explanation upon what terms the lease was delivered. An issue was directed to try whether the lease was deposited as a security for the sum advanced by the plaintiff to the bankrupt, and the jury found that it was. In a marginal note the reporter adds that he was informed that the cause came on afterwards before Lord Thurlow on the equity reserved, when his lordship ordered that the lease should be sold and the plaintiff paid his money. The doctrine of equitable mortgage by deposit of titledeeds was much disapproved of by Lord Eldon ; (a) but the case of Russel v. Russel(b) has been uniformly followed, and considered to be of binding authority. (c) In Lacon v. Allen, (d) Kindersley, V.C., said: "Now, since the case of Russel v. Russel, this is well established, that, supposing A, owing money to B, deposits the title-deeds of his estates with B for the purpose (a) See Ex parte Coming, 9 Ves. 117; Ex parte Haigh, 11 Ves. 403; Ex parte Hooper, 1 Mer. 9; Ex parte Whitbread, 1 Rose 299. (b) 1 Bro. C. C. 269. of a (c) See cases above cited and Ex parte Wetherell, 11 Ves. 401; Ex parte Mountfort, 14 Ves. 606; Ex parte Kensington, 2 V. & B. 79; 2 Rose 138. (d) 3 Drew. 582. CHAP. III. Sect. V. CHAP. III. security, even without any writing, it is a good equitable mortgage; it gives B a lien; and notwithstanding the expressions of regret of Lord Eldon that the law should be so, even in his time we find him saying he could not disturb it; since that time it has been acted upon over and over again. That doctrine cannot now, then, be disturbed."(a) Special agreement not necessary. What interest passes. The mere fact of deeds being deposited with the intention to create a security is sufficient; it is not necessary that there should have been a special agreement to mortgage, the deposit creates a presumption that such was the intention of the parties, (b) at least as against strangers, in cases where the possession of the title-deeds can be accounted for in no other manner except from their having been deposited by way of equitable mortgage, or the holder being otherwise a stranger to the title and to the deeds.(c) In Ex parte Moss, Re Davies, (d) an equitable mortgagee, by deposit of shares in a public company without a written memorandum, was held to be entitled to his costs on evidence of a custom not to give a written memorandum. The deposit of title-deeds primâ facie creates an equitable mortgage upon the whole property comprised in them.(e) The depositee is only entitled to the de (a) And see National Bank of Australasia v. Cherry, L. R. 3 P. C. C. 299. (b) Featherstone v. Fenwick, 1 Bro. C. C. 269 n.; Hurford v. Carpenter, ib.; Richards V. Borrett, 3 Esp. 102; Ex parte Kensington, 2 V. & B. 83; 2 Rose, 138; Hankey v. Vernon, 2 Cox, 12; Ex parte Mountfort, 14 Ves. 606; Ex parte Wright, 19 Ves. 258. (c) Bozon v. Williams, 3 Y. & J. 150. (d) 3 De G. & Sm. 599. (e) Ashton v. Dalton, 2 Coll. 565. Sect. V. positor's interest in the property, and therefore an equi- CHAP. III. table mortgagee from a vendee who has not paid the purchase-money, can only sell the depositor's interest unless the vendee consents. (a) The charge will extend to an interest accruing after the date of the deposit; as by the discharge of an incumbrance, (b) or by a partition.(c) Where the unexpired term in a lease and the goodwill of a business established in it, were sold in a creditor's suit, with the consent of a person with whom the lease had been deposited as a security, and brought a price less than the amount of his debt, it was held that the equitable mortgagee was entitled to the whole of the purchase-money, whether arising from the value of the goodwill, or from the value of the lease independently of the goodwill. (d) of extent of The intention to give a general charge upon all the Explanation property comprised in the deeds deposited, may be ex- charge. plained when the memorandum is defective, by other written memoranda of the agreement.(e) An equitable mortgage may be created by the deposit of a copy of court rolls, (f) or by the deposit of a contract for a sale of land.(g) (a) Ex parte Wright, Re Watts, 3 M. & A. 49; and see Ex parte Smith, Re Hildyard, 2 M. D. & De G. 587. (b) Ex parte Bisdee, Re Baker, 1 M. D. & De G. 333. (c) Ex parte Farley, Re New, 1 M. D. and De G. 683. (d) Chissum v. Dewes, 5 Russ, 29. (e) Ex parte Glyn, Re Medley, 1 M. D. & De G. 29; Ex parte Loyd, Re Ogden, 1 M. & (f) Winter v. Lord Anson, 3 (g) The Unity Joint Stock Deposit of copies of court rolls. Contract for sale. M CHAP. III. Deposit of shares in joint-stock company. Notice to company. In the case of shares in a company, the instrument creating the company usually contains provisions for the transfer of the shares in a particular form. But notwithstanding such provisions, and the provisions in various Acts(a) that no notice of any trust, express, implied, or constructive, shall be entered on the register, it is now settled that an equitable mortgage may be created by the deposit of share certificates in a joint-stock company, such as an insurance,(b) mining, (c) merchant shipping, (d) railway, (e) or dock company. (f) The object of the prohibition is simply that the title of the shareholders in the books of the company shall be kept wholly unincumbered and unaffected by any notice of equitable dealings.(g) But as the shares are still, in the case of traders, in the possession, order, and disposition of the mortgagor, notice of the deposit must be given by the mortgagee to (a) Companies Clauses Consolidation Act, 1845; 8 & 9 Vict. c. 16, s. 20; Joint-Stock Companies Act, 1856; 19 & 20 Vict. c. 47, s. 19; Companies Act, 1862, 25 & 26 Vict. c. 89, s: 30. (b) Ex parte Masterman, In Re Litt, 2 M. & A. 209; Ex parte Littledale, Re Pearse, 6 D. M. G. 714. (c) Ex parte Richardson, In Re Richardson, M. & C. 43. (d) Ex parte Pooley, In Re Atkinson, 2 M. D. & De G. 505. (e) Ex parte Harrison, Re Medley, 3 M. & A. 506; Ex parte Dobson, Re Boult, 2 M. D. & De G. 685. (f) Ex parte Littledale, Re Pearse, 6 D. M. G. 714. (g) Ex parte Stewart, In Re Shelley, 11 Jur. (N. S.) 25; 34 L.J. Bkcy. 6; 13 W. R. 356; and see Binney v. Ince Hall Coal Co. 35 L. J. Ch. 363, overruling a doubt raised in Ex parte Boulton, In Re Sketchley, 1 De G. & J.163, as to whether an equitable mortgage valid against assig. nees in bankruptcy of the mortgagor could be made of railway shares, having regard to the Companies Clauses Consolidation Act, 1845, s. 20. the company, in order to take the property out of the order and disposition of the mortgagor; otherwise the shares will, in case of his bankruptcy, pass to his assignees.(a) CHAP. III. Sect. V. insurance. An equitable mortgage may also be created by the Policy of deposit of a policy of insurance. (b) company. Formerly it was necessary to give the company notice Notice to of the deposit, in order to take the policy out of the reputed ownership and disposition of the debtor in case he became bankrupt or insolvent. (c) But since the Bankruptcy Act, 1869, (d) this is not necessary, as policies of insurance are choses in action, and not within the doctrine of reputed ownership.(e) Where, by the law of a foreign country, no lien or equitable mortgage is created by the deposit of deeds, the mortgage will, if the parties are resident in this country, be enforced to this extent, that, if the property comes into the hands of assignees, they will be compelled to pay the debt out of the proceeds of the sale of the property.(ƒ) Where an agreement to deposit deeds of a house in Shanghai was begun in Prussia, but concluded in Eng (a) Ex parte Lancaster Canal Co., In Re Dilworth, 1 D. & C. 411; Ex parte Boulton, In Re Sketchley, 1 De G. & J. 163; Ex parte Stevens, In Re Stevens, 4 D. & C. 117; Ex parte Pooley, In Re Atkinson, 2 M. D. & De G. 505; Union Bank of Manchester, In Re Jackson, L. R. 12 Eq. 354. (b) Ferris v. Mullins, 2 Sm. & Giff. 378. Sketchley, 1 De G. & J. 163; 3 (d) 32 & 33 Vict. c. 71, s. 15, (e) Edwards v. Martin, L. R. 1 Eq. 121; Green v. Ingram, L. R. 2 C. P. 525; Re Webb's Policy, L. R. 2 Eq. 456; In Re Russell's Policy Trusts, L. R. 15 Eq. 26; Alletson v. Chichester, L. R. 10 C. P. 328. (f) Ex parte Pollard, In Re (c) Ex parte Boulton, Re Courtney, Mon. & C. 239. Deeds relating to property abroad. |