Connolly v The Munster Bank

• Jurisdiction: Ireland
• Judgment Date: 19 January 1887
• Date: 19 January 1887
• Docket Number: (1886. No. 7622.)
• Court: Chancery Division (Ireland)

CHANCERY DIVISION.

(1886. No. 7622.)

CONNOLLY

and

THE MUNSTER BANK.

Hill v. Simpson 7 Ves. 152.

Pannell v. HurleyENR 2 Coll. 241.

Bodenham v. HoskynsENR 2 De G. M. & G. 903.

Ex parte Kingston, Re Gross L. R. 6 Ch. Ap. 632.

Gray v. JohnstonELR L. R. 3 H. L. 1.

Manningford v. TolemanENR 1 Coll. 670.

Stackhouse v. Countess of JerseyENR 1 J. & H. 721.

Cory v. EyreENR 1 De G. J. & S. 149.

Pillgrem v. Pillgrem 18 Ch. Div. 93.

In re QuealeUNK 17 L. R. Ir. 361.

Doe v. ParrattENR 5 T. R. 652.

Michelmore v. Mudge 29 L. J. (N. S.) Ch. 609.

Jones v. Gibbons 9 Ves. 407.

Mangles v. DixonENR 3 H. L. C. 702.

Turton v. Benson 1 P. W. 493.

Montefiore v. BrownENR 7 H. L. C. 241.

West v. ReidUNK 2 Ha. 249.

Gray v. JohnstonELR L. R. 3 H. L. 1.

Jones v. SmithUNK 1 Ha. 43.

Pilcher v. RawlinsELR L. R. 6 Ch. App. 259.

Stanhope v. VerneyENR 2 Eden, 80.

Talbot v. Cody Ir. R. 10 Eq. 138.

Harman & Uxbridge & Rickmansworth Railway Company 24 Ch. Div. 720.

Phillips v. Phillips 31 L. J. (N. S.) Ch. 321.

Arnold v. RevoultENR 4 Moore, 66.

De Pothonier v. De MattosENR El. Bl. & El. 461.

M'Creery v. SearightUNK 5 L. R. Ir. 206, 641.

Robertson v. NorrisUNK 1 Ha. 43.

Keane v. RobartsENR 4 Madd. 332.

Jones v. Gibbons 9 Ves. 407.

Purdew v. JacksonENR 1 Russ. 1.

M'Creery v. Searight 5 L. R. I. 206, 211.

In re QuealeUNK 17 L. R. Ir. 361.

Executors Pledge of assets to secure personal debt Devastavit Notice Husband and wife Transfer of mortgage Absence of acknowledgment by married woman.

YoL, XIX.] CHANCERY DIVISION. 119 CONNOLLY v. THE MUNSTER BANK. v.- 1886. (1886. No. 7622.) Executors-Pledge of assets to secure personal debt-Devastavit-NoticeÂÂHusband and wife-Transfer of mortgage-Absence of acknowledgment by married woman. C. and wife were trustees and executors of the will of R., by which the testator devised and bequeathed all his real and personal estate to them in trust for Mrs. C. for life, for her separate use, and, after her decease, for her children. Part of the assets consisted of certain shares in the H. Bank, and shortly after the testator's death, C. and wife invested other portions of the assets upon two mortgages of fee-simple estate, which were made to them jointly ; but beyond showing that the money had been advanced on a joint acÂÂcount, did not disclose any trust. C. afterwards opened an account with the M. Bank, and, as security for overdrafts, deposited with them the Bank shares, and the mortgages, these latter being sub-mortgaged to the M. Bank by deed, which was not, however, acknowledged by Mrs. C. as a married woman. To reduce his overdraft C., at the suggestion of the manager of the M. Bank, authorized the Bank to sell the shares, and induced Mrs. C. to join in such sale. They were accordingly sold by the brokers of the Bank on account of C. and wife, " representatives of R.," and in the transfer deeds C. and wife were described as " executors of R." The M. Bank was also paid the moneys •due on foot of the mortgages, but not until after receiving express notice of the trusts affecting them. In a suit by C.'s children after his death : Held (1), that the Bank having received the proceeds of sale of the shares, with distinct notice that they constituted part of the testator's assets, even though unaware of the trusts of the will, could not retain the amount in liquiÂÂdation of C.'s personal indebtedness to themselves, and were accordingly bound to replace the same. (2) That the Bank, not having acquired the legal estate in the mortgaged premises, except for the life of C., in consequence of the want of acknowledgÂÂment by Mrs. C., they could only set up an equitable title to the mortgages, which, even assuming them to have originally been purchasers for value without notice, could not prevail against the earlier equity in the plainÂÂtiffs. VoL. XIX. 120 LAW REPORTS (IRELAND). [L. R. I. V.-C. ACTION by the children of Owen Connolly to have the 1886. personal estate of Patrick Rogers administered, and the trusts CONNOLLY of his will carried into execution under the direction of the v. MUNSTER Court, and that the defendant Agnes Connolly might be BANK. charged, as the Court might think proper, in respect of any devastavit or breach or breaches of trust to the commission of which she was party or privy. A declaration was also sought that the sale of twenty Hibernian Bank shares, and. application of the proceeds thereof, and of a sum of 920 17s. 4d., received on foot of certain mortgages by the defendants, the Munster Bank, to the payment of a debt due to them by Owen Connolly, was a breach of trust, and that the defendants Agnes Connolly and the Munster Bank were liable to make good to the trust estate the moneys reÂÂceived in respect of the Bank shares and the sum of 920 17s. 4d. The circumstances of the case material to this report are stated in the judgment of the Vice-Chancellor. Mr. S. Walker, Q. C., Mr. Madden, Q. C., and Mr. Ball, for the plaintiffs : This is a distinct application of trust moneys to secure a private debt. The shares remained in the name of Patrick Rogers until the transfer to the Bank. Hill v. Simpson (1) applies directly to this case, but the facts are stronger here. See Pannell v. Hurley (2), Bodenham v. Hoskyns (3), Ex parte Kingston, Re Gross (4). The Court has only to find three circumstances for the establishment of our case :-1st, knowledge that the property was assets ; 2ndly, intention to misapply ; and, 3rdly, some benefit arising to the Bank from the misapplication : Gray v. Johnston (5). As to the transfer of the mortgages, the notice which the Bank had, that the shares were assets, must be held to extend to the mortgages. Owen Connolly could not have given the Bank any higher title than his own : Manningford v. Toleman (6) ; Staekhouse v. Countess of Jersey (7) ; Cory v. Eyre (8) ; Pillgrem v. Pillgrem (9) ; In re (1) 7 Yes. 152. (2) 2 Coll. 241. (3) 2 De G. M. & G. 903. (4) L. R. 6 Ch. Ap. 632. (5) L. R. 3 H. L. 1. (6) 1 Coll. 670. (7) 1 J. & H. 721. (8) 1 De G. J. & S. 149. (9) 18 Ch. Div. 93. VOL. XIX.] CHANCERY DIVISION. Queale (1). The sub-mortgage deeds were not acknowledged by Mrs. Connolly, and therefore the Bank took subject to all equiÂÂties after Connolly's death : Coke, Litt. 187: Doe v. Parratt (2). " Representatives" means " personal representatives." The Bank were put upon inquiry. A mere equitable mortgage of trust funds does not bind the trust estate : Michelmore v. Mudge (3), The Bank had notice that the shares were assets, and before they obtained payment of the mortgages, which were on a joint account, they had notice of the mortgage debts being assets also : Jones v. Gibbons (4). The debt cannot be separated from the mortgage, and the deed, not having been acknowledged, the title is infirm : Mangles v. Dixon (5). The assignee of the husband stands in no better position than the husband: Turton v. Benson (6). The husband did not reduce the chose in action into possession, and his assignees did not do so until after they had full notice. The Bank were guilty of such culpable negligence in abstaining from inquiry that they are affected with notice. Mr. P. F. White, Q. C., Mr. Overend, Q. C., and Mr. Shiel, for the defendants the Munster Bank :- The plaintiffs have not discharged the onus of bringing home to the Bank constructive notice that...