Browne v Ryan

JurisdictionIreland
Judgment Date23 November 1900
Date23 November 1901
CourtCourt of Appeal (Ireland)
Browne
and
Ryan (1).

Q. B. Div.

Appeal.

CASES

DETERMINED BY

THE QUEEN'S BENCH DIVISION

OF

THE HIGH COURT OF JUSTICE IN IRELAND,

AND ON APPEAL THEREFROM IN

THE COURT OF APPEAL,

AND BY

THE COURT FOR CROWN CASES RESERVED.

1901.

Mortgage — Collateral agreement — Once a mortgage always a mortgage — Clog on equity of redemption — Independent deed binding mortgagor to sell lands and give sale thereof to mortgagee, an auctioneer, and to pay a commission on the proceeds of sale, if sold by another.

Where land has been mortgaged as a security for money, when the money is paid off, the land and its owner in the use of it, must be as free as if it had never been mortgaged, and provisions in the mortgage deed, or collateral thereto, inconsistent with this right, cannot be enforced.

The defendant mortgaged his land to the plaintiff to secure a loan of £200 and interest thereon. The money was raised by the mortgagee by depositing the mortgage as security with a bank. As part of the same transaction the defendant agreed by an independent deed to sell his land within twelve months, and to give the sale thereof to the plaintiff, who was an auctioneer, and that if the said lands were sold otherwise than through the plaintiff he would pay the plaintiff five per cent. on the purchase money. The defendant subsequently sold the lands through another auctioneer for £1250:—

Held, by the Queen's Bench Division (Andrews, J., diss.), that the plaintiff was entitled to recover £62 10s. on the agreement.

Held, by the Court of A ppeal (reversing the decision of the Queen's Bench Division), that the collateral advantage stipulated for by the mortgagee in the independent deed placed such a fetter on the equity of redemption that it vitiated the agreement.

New Trial Motion.

The writ of summons was endorsed with a claim “for £62 10s. money payable by the defendant to the plaintiff under a deed made on June 21,1898, between the plaintiff and defendant, whereby it was agreed that the sale of certain lands therein particularised belonging to the defendant should be given to the plaintiff, the said lands to he put up for sale by public auction within twelve months from the date of the said deed, and the defendant to pay the plaintiff the usual commission of £5 per cent. upon the amount of the purchase-money; and in the event of the said lands being sold

otherwise than through the agency of the plaintiff, to pay to the plaintiff £5 per cent. on the amount of the purchase-money. The said lands were sold on September 22, 1898, for the sum of £1250, the commission on which at £5 per cent. is the said sum of £62 10s.

The defence stated that the deed of June 21, 1898, formed part of one transaction with a deed of mortgage of the lands, the sale of which was referred to, and that the terms thereof were contrary to the policy of the law and void, and that it was unfair and unreasonable. The defence also alleged that the defendant had no independent advice. At the trial, which took place before the Lord Chief Baron, it was proved that the defendant applied to the plaintiff for a loan of £200, and that for the purpose of raising this sum the defendant gave to the plaintiff a mortgage of the lands of Curragh Feakle in the statutory form, dated June 16, 1898. This mortgage was deposited with the Bank by Browne, and the Bank on the security of this equitable deposit advanced to Browne the sum of £200, which he lent to Ryan. Subsequently, on June 21, 1898, the deed containing the agreement sued upon in this action was executed. It was in the following terms:— “Agreement made this 21st day of June, 1898, between Patrick Ryan of Ryaninch, in the county of Tipperary, farmer, of the one part, and John Browne of Mount Pellier, in the county of Limerick, auctioneer, of the other part, Witnesseth: that Whereas the said Patrick Ryan is about selling the lands of Curragh Feakle, in the county of Clare; And Whereas the said John Browne has advanced the sum of £200 on the security of the said lands to the said Patrick Ryan, He the said Patrick Ryan agrees to give the sale of the said lands to the said John Browne, said lands to be put up for sale by public auction within 12 months from the date hereof, and to pay to the said John Browne the usual commission of £5 per cent. on the amount of the purchase-money, and in the event of the said lands being sold otherwise than through the agency of the said John Browne, to pay unto the said John Browne £5 per cent. on the amount of such purchase-money. In Witness,” &c.

It was admitted at the trial that the consideration for the agreement sued on was the same £200 as is mentioned in the mortgage of June 16, 1898; and it was proved that the mortgage and the deed now sued on formed part of one transaction; that the mortgage was signed on June 16, and finally delivered then; that the money was got from the Bank on June 21, and on the same day, and after the agreement was signed, it was given to the defendant, The lands were sold to a purchaser named Purcell by the defendant for £1250 through another auctioneer, and the £200 borrowed from Browne was repaid, and by deed dated 19th November, 1898, Browne reconveyed the lands discharged from all claims under the deed of mortgage. The conveyance to Purcell was dated August 24, 1899. The oral evidence at the trial will be found fully stated in the judgment of Mr. Justice Kenny, infra, p. 656.

The Lord Chief Baron was of opinion that the defendant thoroughly understood that he contracted to give the sale of the lands to the plaintiff, and that if he sold through another he was to pay the plaintiff £5 per cent, on the purchase-money, but the learned Judge held that the transaction was in its essence a mortgage, and that the sale of the lands was to be for the benefit of the mortgagee inter alios, and that the defendant was entitled to redeem his obligation under the covenant to sell, as well as to redeem the lands; and further that if the plaintiff was not entitled to insist upon a sale, he could not be entitled to fees as on a sale, and consequently the learned Judge held that the covenant to pay the £62 10s. was in the nature of a clog upon the equity of redemption, and not such a collateral advantage as could be bargained for by a mortgagee. The Lord Chief Baron, therefore, found a verdict for the defendant and entered judgment for him.

The plaintiff moved for an order that the verdict and judgment should be set aside, and judgment entered for the plaintiff for £62 10s., or for a new trial.

Cur. adv. vult.

Matthew J. Bourke, Q.C., and P. Kelly, in support of the application.

Wylie, Q.C., and P. Law Smith, for the defendant.

Kenny, J.:—

This case has been argued before us at considerable length, and the authorities dealing with the subject of fettering, or as it is sometimes called “clogging,” the equity of redemption of a mortgage have been elaborately discussed. The facts of the case are of the simplest character. In June, 1898, the defendant required a sum of £200, and he went to the plaintiff, who is an auctioneer, with the view of getting him either to lend him the amount, or to assist him in procuring it. The latter method was adopted. The plaintiff and defendant obtained the amount from a local Bank on the plaintiff's security, accompanied by the equitable deposit of a formal deed of mortgage of the lands which had been executed by the defendant to the plaintiff for the express purpose of facilitating the arrangement with the Bank. That mortgage on the face of it purports to be made in consideration of £200 advanced by the plaintiff to the defendant—the grant of the lands is to the plaintiff—and it is expressed to be for the purpose of securing payment on the 16th December then next of the said sum of £200, with interest at £7 per cent., reducible to £6 per cent. Cotemporaneously with the obtaining of the loan from the Bank an agreement dated the 21st June, 1898, which is sued on in this action, was executed by the defendant. [His Lordship read the agreement, as set out ante, p. 654.]

The oral evidence as to the transaction was given by Mr. Coffey, the solicitor who acted for both parties, and by the defendant himself. It appears from that evidence that the arrangement was that, in consideration of the plaintiff procuring the advance from the Bank, the defendant was to give him the sale of the lands, and pay him the usual commission of £5 per cent., the defendant to be bound to sell the place within a year, and if sold otherwise than through the plaintiff, to pay the plaintiff £5 per cent, on whatever purchase-money would be realised by the sale; that the mortgage and the agreement were to carry out the same transaction, and that actually at the time of entering into the agreement with the plaintiff, the defendant had agreed to sell the farm to a Mr. Purcell, through the agency of Mr. Fitt, another auctioneer, but had never communicated that circumstance to the solicitor, Mr. Coffey. The defendant having further stated that it was the sale to Purcell that was ultimately carried out, we asked to see copies of any documents relating to the agreement with and the sale to Purcell, and we have been furnished with three. The first is dated the 22nd September, 1898, and is an agreement for sale signed by the defendant and Purcell for £1250, and £31 5s. auctioneer's fees. The second, which is stated to be supplemental to the mortgage, is dated 19th November, 1898, and is a reconveyance from the plaintiff to the defendant, on payment of all principal money and interest due under the mortgage, and is expressly made “discharged from all principal money and interest secured by and from all claims and demands under the said indenture of mortgage.” The third is a conveyance dated the 24th August, 1899, of the lands by the defendant to Purcell. I am unable to reconcile the date of the written agreement of the 22nd September, 1898, with the defendant's statement that in June...

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