Economic Life Assurance Society v Usborne

• Jurisdiction: Ireland
• Judgment Date: 21 December 1899
• Date: 21 December 1900
• Docket Number: (1898. No. 274.)
• Court: Court of Appeal (Ireland)

USBORNE

and

THE LIMERICK MARKET TRUSTEES. (No. 2.)

(1898. No. 274.)

Chancery Division

Appeal.

Mortgage — Priority — Mortgage of tolls —— Interest of puisne mortgage taking priority over principal sum secured by earlier mortgage —— Merger — Rate of interest — Judgment — Covenant.

Arbuthnot v. BunsilallUNK 62 L. T. (N. S.) 234.

Bunsilall's CaseUNK 62 L. T. (N. S.) 234.

Clarke v. Lord Abingdon 17 Ves. 106.

European Central Railway CaseELR 4 Ch. D. 34

European Central Railway CompanyELR 4 Ch. D. 33.

Ex parte FewingsELR 25 Ch. D. 338.

Fewing's CaseELR 25 Ch. D. 338.

Florence v. JeningsENR 2 C. B. (N. S.) 454.

Lowry v. WilliamsIR [1895] 1 I. R. 274.

Popple v. SylvesterELR 22 Ch. D. 98.

The Agriculturist Cattle Insurance Company's CaseELR 4 Ch. D. 34, in note.

VOL. 1.] CHANCERY DIVISWN. 85 US BORNE v. THE LIMERICK MARKET TRUSTEES. M. R. (No. 2.) 1899. May 18. (1898. No. 274.) June 1, 6, 10. Appeal. Mortgage—Priority--Mortgage of tolls—Interest of prior and puisne mortgages Oct. 31. made a first charge by local Act— Interest of puisne mortgage taking Nov. 1, 20. priority over principal sum secured by earlier mortgage—Limerick Market Deo. 21. Acts, 1852, 1862, 1872 (15 Vict. c. civ., 25 Vict. c. =ill., 35 & 36 Vict. c. xcvi.)—Merger—Rate of interest—Judgment--Covenant. As an ordinary rule, when lands are pledged to secure a debt as a first charge, the owner of the mortgage is entitled to principal and interest out of the security as against the mortgagor and his assigns, and in priority to any claim by him or them. But where, by successive local Acts of Parliament, passed in the years 1852 and 1862, power to borrow money was given to trustees of a market upon the security of the tolls, and it was provided by the later Act that "the interest on the said sum of £30,000, authorized to be borrowed under the Act of 1852, and the interest on the sum of £10,000, authorized to be borrowed under this Act shall be a first charge on the tolls," it was held by the Court of Appeal, affirming the Master of the Rolls, that the interest secured by the puisne mortgages effected under the later Act took priority over the princiÂpal secured by the prior mortgages effected under the earlier Act. A mortgage deed contained a covenant by the mortgagors for payment of the principal sum on a day named, with interest in the meantime at £5 per cent. per annum, and also, if the principal sum should not be then paid, that so long as the same, or any part thereof, should remain unpaid, the mortÂgagors would pay interest half-yearly at the same rate for the said principal sum, or so much thereof as should, from time to time thereafter, remain unpaid. The mortgagors having made default the mortgagees recovered judgment against them for principal and interest on the covenant : Held, by the Court of Appeal (affirming the decision of the Master of the Rolls), that the covenant merged in the judgment, and that the mortgagees were, therefore, entitled only to £4 per cent. interest on the judgment debt, and not to £5 per cent. interest on the principal sum under the covenant. Popple v. Sylvester (22 Ch. D. 98), Ex parte Fewings (25 Ch. D. 338), and Lowry v. Williams ([1895] 1 I. R. 274), discussed and applied. Query : Whether, when a judgment is obtained for an amount of principal and arrears of interest, upon which interest at 4 per cent. would be more than the amount of the interest on the original principal debt at the contract rate, any excess can be recovered out of the security. 1900—Voa. I. 86 THE IRISH REPORTS. (1900. M. R. MOTION on behalf of the defendants, the Economic Life 1899. Assurance Society, for an order that the defendant, John USE ORNE Hardim an, the receiver in this action, should be directed to apply v. LIMERICK the income from time to time arising from the rents, tolls, rates, MARKET and customs of the Limerick Markets, after payment thereout of TRUSTEES. EE Limerick (No. 2.) the costs in the judgment in this action, dated the 27th July, 1898, mentioned, in discharge of the interest due and to accrue due on the £30,000 mortgage authorized by the Act of 1852, and given to the said Economic Life Assurance Society, and that after payment of the said interest the surplus income arising from the said rents, tolls, rates, and customs shall be applied by him from time to time in reduction of the said principal sum of £30,000 in priority to, and before any payment be made to, the puisne mortÂgagees of the said Limerick Markets under the Act of 1862 in the pleadings mentioned, and that if necessary the said judgment dated the 27th July, 1898, should be amended accordingly. On this motion coming on for hearing, liberty was given by the Court to the National Bank (who held a mortgage puisne to that of the Economic Life Assurance Society), without serving notice, to object to the certificate of the Chief Clerk, filed the 6th May, 1899, so far as it allowed interest at the rate of £5 per cent. per annum on the claim of the Economic Life Assurance Society from the 12th April, 1897, being the date of their judgment, recovered on the covenant in their said mortgage, in an action in the Queen's Bench Division. The motion and the objection were then heard together. The pleadings in the action have already been fully stated [1899] 1 I. R. pp. 230-234. By the judgment of the Court given upon the admission of facts by the defendants and upon the pleadings, it was ordered that the following accounts should be taken :—(a) an account of the tolls, etc., which had arisen since the 1st May, 1897, and by whom received, and how applied; (b) an account of all sums received by the Economic Life AssuÂrance Society, on account of such tolls since the 9th September, 1897 ; (c) an account of what was due to the plaintiff, and his co-mortgagee respectively: and it was ordered (1) that the respective priorities of the said several mortgages should be ascertained and declared: (2) that the Economic Life Assurance Society should Von.. I.] CHANCERY DIVISION. 87 account for the moneys received by them on account of tolls, etc., M. R. out of their due priority ; (3) that the income arising from the 1899. tolls, etc., should be applied in discharge of the interest, costs, and ITSBORNE principal moneys due to the said respective mortgagees, according I AMERICK MARKET to theirproper and respective priorities ; (4) that the defendant w 17STEES. John Hardiman, the receiver appointed in this action by an order (No. 2). dated the 14th June last do out of such tolls, etc., as may from time to time come to his hands applicable thereto, pay the interest on the several debentures in such priority and at such rate as may be so ascertained. The judgment then declared the plaintiff and the receiver entitled to their respective costs both of this action and of the action in the Queen's Bench Division, and directed the receiver to pay the said costs, and have credit for the same in passing his accounts. The Chief Clerk took the several accounts so directed, and by his certificate filed the 6th day of May, 1899, certified the several amounts due thereon respectively. By the same certificate he found that the mortgages issued under the Limerick Markets Act, 1852, set out in the first part of the schedule thereto, were in equal priority, and. took priority over the mortgages issued under the Limerick Markets Act of 1862, set out in the second part of the said schedule, which among themselves were in equal priority. The said accounts were taken, and the certificate framed upon the principle that the Economic Life Assurance Society were entitled to interest at the rate of £5 per cent. on the principal sum secured by their mortgage under the covenant therein, notwithstanding the judgment recovered by them in the Queen's Bench Division, on April 12,1898, for £19,443 7s. 9d. for principal and interest, with interest thereon at £4 per cent. per annum. The question of priority raised by the notice of motion and of the proper rate of interest raised by the objection to the Chief Clerk's certificate arose on the construction of the following sections of the Limerick Market Acts, 1852, 1862, and 1872, and on the frame of the mortgages granted thereunder by the trustees. The following are the material sections of the Limerick Market Act, 1852 (15 Viet. c. civ.) : SECT. 24.—" It shall be lawful for the trustees to borrow, at any rate of interest not exceeding five pounds for the hundred pounds by the year, on H2 THE IRISH REPORTS. [1900. mortgage of the lands, works, rents, and tolls, hereby authorized to be purÂchased, hired, appropriated or taken, or of any property which may be vested in the said trustees by virtue of this Act, any sum or sums of money not exceeding in the whole the sum of thirty thousand pounds, for the purposes of this Act, and from time to time to pay off and re-borrow the same, or any part thereof, but so that there shall not be due at any one time under the present power more than the said principal sum of thirty thousand pounds." SECT. 25.—" Every mortgage authorized to be made under the provisions of this Act shall be by deed under the common seal of the said trustees, duly stamped, and in which the consideration shall be truly stated, and may be respectively according to the forms in Schedule A, to this Act annexed, or according to the form in Schedule B, to ' the Commissioners Clauses Act, 1847,' annexed, or to the like effect respectively." SECT. 26.—" It shall be lawful for such mortgagees to enforce the payment of the arrears of principal and interest due on any such mortgages by the appointment of a receiver ; and in order to authorize the appointment of such receiver in the event of the principal moneys not being duly paid, the amount owing to the mortgagee by whom application for such receiver shall be made shall not be less in the whole than five hundred pounds." SECT. 27—" Any person entitled to...