Aldritt v MacOnchy and Others

• Jurisdiction: Ireland
• Judge: Ross, J.
• Judgment Date: 17 December 1906
• Court: Court of Appeal (Ireland)
• Docket Number: (1904. No. 1010.)
• Date: 17 December 1906

Aldritt

and

Maconchy and Others (1).

Appeal.

(1904. No. 1010.)

CASES

DETERMINED BY

THE CHANCERY DIVISION

OF

THE HIGH COURT OF JUSTICE IN IRELAND,

AND BY

THE IRISH LAND COMMISSION,

AND ON APPEAL THEREFROM IN

THE COURT OF APPEAL.

1908.

Mortgage — Fraud — Constructive notice — Independent solicitor — Purchase for value.

Held, by the Court of Appeal, affirming the judgment of Ross, J., that the deeds of 1892 and 1896 were fraudulent, and should be set aside; and that the Bank were not purchasers without notice.

Held, varying the judgment of Ross, J., that the mortgage of 17th April, 1884, should stand to the extent of any advances bona fide made.

Appeal by the National Bank (Limited) from so much of the judgment of Ross, J., dated the 29th March, 1906, as set aside certain securities held by the Bank, so far as they purported to convey any interest in the lands of Denis James Henry Coates, deceased, in the pleadings mentioned. The case is reported in the Court below in [1906] 1 I. R. 416, where the pleadings are given and the facts material to the present report are stated in the judgment of Ross, J. The instruments with which the present appeal was conversant were:—

17th April, 1884, mortgage, Coates to Fleetwood Rynd.

22nd September, 1892, conveyance, Coates to Fleetwood Rynd.

21st August, 1896, mortgage, Rynd and Coates to National Bank.

The deed of 22nd September, 1892, recited that the lands thereinafter conveyed were subject to a mortgage for £3000 to Thomas Storey, dated 9th June, 1883; to £781 balance due on foot of a mortgage for £1000 to Eliza Wallis and others, dated 16th April, 1884; and to the said mortgage of 17th April, 1884, to Fleetwood Rynd, which was described as a security for such sums of money, not exceeding £1000, as Rynd should advance to Coates as the land agent and manager of Coates; and to the mortgage to Izod and R. F. Rynd, of 20th March, 1886, for £500; that £1000 was due to Fleetwood Rynd on foot of the mortgage of the 17th April, 1884; and that, in addition thereto, Coates was indebted to Fleetwood Rynd in the sum of £653 8s. 4d. on foot of accounts stated and settled. The deed then proceeded: “And whereas it has been agreed by and between the parties hereto, that the said Denis James Henry Coates shall grant and convey unto the said Fleetwood Rynd all the estate of the said Denis James Henry Coates in the lands firstly and secondly hereinafter conveyed and described, in consideration of the said Fleetwood Rynd releasing the said Denis James Henry Coates from all moneys now due, or to become due, for principal or interest on foot of, or secured by, the said indenture of mortgage bearing date the 17th April, 1884, or the covenants contained therein; and also releasing the said Denis James Henry Coates from the said further sum of £653 8s. 4d.; and upon the said Fleetwood Rynd securing and limiting to the said Denis James Henry Coates an annuity or yearly rentcharge of £200, payable as hereinafter provided, and entering into the covenants, and otherwise upon the terms and in the manner, hereinafter contained and expressed.” Then followed the grant of the lands to Rynd, in consideration of the release of said respective sums, and in consideration of the annuity or yearly rentcharge of £200, subject to the mortgages of 9th June, 1883, 16th April, 1884, 17th April, 1884, and 20th March, 1886, to the use that Denis J. H. Coates should during his life receive and take the annuity or yearly rentcharge of £200 to be issuing out of the lands, payable quarterly, and subject thereto, to the use of Fleetwood Rynd, his heirs, and assigns. Fleetwood Rynd released Coates from all sums due on foot of the mortgage of the 17th April, 1884, and from the covenants therein, and from all sums due on the settled accounts Covenants were entered into by Rynd to pay the annuity, to keep the dwellinghouse of Staplestown in repair, and to permit Coates to occupy same for his life, free from rent, rates, and taxes: “Provided always, and it is hereby agreed and declared, that nothing herein contained shall be deemed to be, or shall operate as, a merger or extinction of the said mortgage of the 17th April, 1884, or as prejudicing in any way the security thereby created as against the hereditaments and premises hereby granted and conveyed.”

The mortgage to the Bank, 21st August, 1896, Fleetwood Rynd, called the “mortgagor,” of the first part, Coates of the second part, and the Bank of the third part, recited that the mortgagor had been accommodated by the Bank, and was desirous of being further accommodated. It recited the mortgage of 17th April, 1884, and the conveyance of 22nd September, 1892, subject inter alia to the said mortgage, and the proviso that it should not merge nor be extinguished, nor be prejudiced as a security against the said hereditaments; that the Bank had required a legal mortgage of the lands, and that Coates had agreed to join for the purpose of postponing his annuity and all or any claim he might have on the lands, hereditaments, and premises or any part thereof. The mortgagor assigned to the Bank the principal sum of £1000, “now due and owing to the mortgagor upon the security of the said mortgage, and the benefit of all securities for the same,” to hold subject to redemption. The mortgagor and Coates then demised the lands to the Bank, for 1000 years, from the date of the deed, subject to redemption. The proviso for redemption was on payment to the Bank, by the mortgagor, on demand of all sums due and owing by the mortgagor to the Bank at the time of the demand pursuant to his covenant thereinbefore contained, i. e. “the balance which on any account or accounts between the said mortgagor and the said Bank, either alone or jointly with any other person or persons, now is or shall for the time being be due or owing by the said mortgagor to the said Bank, for or on foot of bills of exchange, promissory notes, loans, credits, or advances, interest, commission, discount, or otherwise howsoever, and whether the said mortgagor shall be liable therefor as principal or surety,” with interest at 6 per cent., or the current rate at the Dublin office, where exceeding 6 per cent. The operation of section 20 of the Conveyancing Act, 1881, was excluded. And the deed was to be a continuing security to the Bank as well for money due on current securities as for money actually payable.

Extracts from the correspondence leading up to the deeds of 22nd September, 1892, and 21st August, 1896, and from the oral evidence at the trial, are given in the judgment of the Lord Chancellor.

On the evidence as to the mental capacity of Coates, the Court held, agreeing with the conclusion arrived at by Ross, J., that there was no evidence showing that from 1884 to 1897 Coates was an idiot or incapable of executing deeds.

A., who, from his boyhood, was a person of dull intelligence, indolent habits, and, in manhood, led a secluded and inexpensive life (but as to whom the Court held that, during the period when the impeached transactions took place, there was no evidence showing him to be an idiot, or incapable of executing deeds), came into possession, in 1880, of an unincumbered estate, yielding a profit rent of about £630. F., who had been agent to A.'s father, was continued in that capacity by A. In the year 1884 the property was subject to admittedly valid mortgages for £3000 and £781. By indenture of the 17th April, 1884, A. mortgaged all his property to F. to secure advances to be made by F. as his land agent or manager up to £1000. By deed of conveyance, dated the 22nd September, 1892, reciting the preceding mortgages, and that £1000 was due to F. on his mortgage, besides £653 alleged to be due on foot of accounts stated and settled between A. and F., A., in consideration of the release by F. of all his claims, in pursuance of a recited agreement to that effect, conveyed all his property to F., and in further consideration of an annuity of £200 for his life, charged on the property, and the use for his life of the dwellinghouse on part of it, which F. covenanted to keep in repair; but the deed contained a proviso that the mortgage of the 17th April, 1884, was to remain existing. A. afterwards became surety for F. on bills and notes to the N. Bank, constituting about one-sixth of F.'s indebtedness to the Bank. F., representing that the Bank was pressing for payment, induced A. to agree to postpone his rentcharge to his own liability to the Bank. But by deed of mortgage to the Bank, dated 21st August, 1896, reciting the previous mortgages, and that F.'s mortgage of the 17th April, 1884, was subsisting, and £1000 due thereon, A. being made a party to the deed, F. assigned to the Bank his mortgage for the full sum of £1000, and A. and F. mortgaged all the property to the Bank by demise for the purpose of postponing all A.'s rights and claims, not merely to his own liability as F.'s surety, but to all F.'s liabilities on his account with the Bank, for which the mortgage was at the Bank's pleasure to be a continuing security. A. had the benefit, in connexion with the transaction of 1892, of the advice of an eminent firm of Dublin

solicitors, who, however, did not apparently fathom F.'s capacity for fraud, or A.'s ineptitude to resist it:—

Ronan, K.C., Right Hon.J. H. Campbell, K.C., Herbert Wilson, K.C., and A. C. Meredith, K.C., for the appellants.

Serjeant O'Connor, K.C., Samuels, K.C., and J. Craig Davidson, for the respondent.

The Lord Chancellor:—

The plaintiff in this action, who is the heiress-at-law and personal representative of Denis James Henry Coates, seeks to have set aside a number of deeds executed by Denis James Henry Coates in his lifetime. They include a disentailing deed dated 6th May, 1869, a deed dated 9th June, 1883, called during the argument the Storey mortgage for £3000, which is now vested in the defendants, Jobson and Montgomery and Chaytor, and a mortgage for £1000, dated...