M'Carthy v M'Carthy (No 2)

JurisdictionIreland
JudgeM. R.
Judgment Date26 November 1903
CourtCourt of Appeal (Ireland)
Date26 November 1903
M'carthy
and
M'cartie (No. 2).

M. R.

Appeal.

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.

1904.

Mortgage — Marshalling — Legacies charged on lands — Mortgage of portion of lands charged — Covenant against incumbrances — Payment of legacies out of proceeds of sale of mortgaged lands.

A B devised Blackacre and White acre to C D, subject to legacies in favour of M N. CD mortgaged Whiteacre to a Bank to secure £7000. The mortgage contained a covenant against incumbrances. After C D's death, in an action to administer his real and personal estate, Whiteacre was sold, and the legacies were paid out of the proceeds of the sale, thereby nearly sweeping away the fund out of which the mortgage debt was payable. Blackacre was subsequently sold, and it was held by the Court of Appeal (reversing the decision of the Master of the Bolls) that the mortgagees were, under the doctrine of marshalling, entitled to resort to the fund produced by the sale of Blackacre for payment of the mortgage in priority to simple contract creditors of the deceased C D.

Quœre—Whether the other circumstances above stated, apart from the covenant against incumbrances contained in the mortgage, would have entitled the Bank to resort to the proceeds of the sale of the unmortgaged lands.

Motion by the Bank of Ireland for an order that the sum of £820 14s. 2d. and £15 17s. 3d. cash standing to the credit of this action and separate credit of moneys produced by the sales of the lands of Gortnacloghy, and of the houses 23 and 34 Northstreet, be paid to the Governor and Company of the Bank of Ireland on account of the moneys due to them, and for the costs of the motion.

Daniel m'carthy, by his will dated 26th July, 1859, reciting a power of appointment given him by his marriage settlement over a sum of £2000, exercised the same by appointing the said sum to his four younger children, Gerald, Kate, Margaret, and Louisa, the same to be paid to them respectively in equal shares and proportions upon them or each of them attaining the age of twenty-one years, or being females marrying under that age, and in the event of the death of any of the said younger children under the age of twenty-one, or being females under that age and unmarried, the testator appointed the share of child so dying amongst the survivors. The will then proceeded:—“I devise and bequeath unto my three daughters hereinbefore mentioned, in addition to the sums hereinbefore appointed to them, a further sum of £700 to be payable to each of them at the like rate of 5 per cent. per annum from the date of my decease, subject to the conditions, limitations, and remainders hereinbefore mentioned as to the said sum of £200 0, the said several sums of £700 to each of my said daughters, and interest thereon, to be paid and payable out of and charged and chargeable in the first place upon my chattel property, money, and effects; and if the same shall be insufficient, then the said several sums to be paid and payable out of and charged upon my real and personal estates.” The testator next devised his lands of Ardagh (which were real estate) to his younger son Gerald in feesimple, with a limitation over, in the event of his dying under twenty-one years of age or without issue, to the testator's eldest son Florence Daniel in fee-simple. By his will the testator further devised to his son Florence Daniel absolutely (amongst other property) certain leaseholds, including the lands of Gortnacloghy and the premises 33 and 34, North-street, Skibbereen.

By a codicil to this will the testator bequeathed to each of his three daughters, Kate, Margaret, and Louisa, in addition to the moneys already left them in the will, a further sum of £300; this total sum of £900 to be subject to the same conditions as the fortunes already left to them.

Daniel M'Carthy died on the 4th November, 1860, and his will and codicils (including that above-mentioned) were duly proved, 19th January, 1861.

Gerald M'Carthy attained his age of twenty-one years and entered into possession of the said lands of Ardagh, but died without issue on 10th March, 1875, whereupon Florence Daniel M'Carthy (the testator's eldest son) became entitled under the limitations in the will to the said lands.

By an indenture dated the 16th November, 1878, and made between Florence Daniel M'Carthy of the one part, and the Bank of Ireland of the other part, after reciting that Florence Daniel “M'Carthy was seized of an estate of inheritance in fee-simple in possession of the lands of Ardagh, subject only to a mortgage for the sum of £1500 created by an indenture dated 1st March, 1876, and made between Florence Daniel M'arthy of the one part, and Mary Kavauagh of the other part, but free from all other incumbrances, Florence Daniel Carthy mortgaged the said lands of Ardagh to the Bank to secure any sum due on his account current with them not exceeding £7000; and by the same indenture Florence Daniel M'Carthy covenanted for right to convey, subject to the said indenture of mortgage of 1st March, 1876, for quiet enjoyment by the Bank after default, subject only to the rights of persons claiming under the same indenture of mortgage free from incumbrances except the said mortgage, and for further assurance.

Florence Daniel M'Carthy died in 1879, and this action was shortly afterwards instituted to carry out the trusts of his will and to administer his estate.

Prior to the action the two legacies of £700 and £300 bequeathed by Daniel M'Carthy's will and codicil had been paid to Margaret M'Carthy, but the legacies to her sisters Kate and Louisa were not paid, though interest on the principal sums bequeathed to them was paid at the rate of 5 per cent per annum by Florence Daniel M'Carthy, with whom they resided. Kate M'Carthy died in 1889, having by will appointed her sister Louisa (who proved her will) sole legatee and executrix.

Under an order made in this action, dated 4th February, 1892, the lands of Ardagh were sold. They produced the sum of £3957 10s. 9d., out of which the sum of £1500 due on the mortgage of 1st March, 1876, was paid to Mary Kavanagh. Louisa M'Carthy then claimed to be paid out of the residue of the said purchase-money the legacies bequeathed by her father Daniel MUarthy to her and her sister Kate M'Carthy, on the ground that the said legacies were by the will of Daniel M'Carthy charged on the lands of Ardagh. This claim was held to be valid by an order made by the Master of the Rolls, 29th January, 1896, affirmed by the Court of Appeal, 23rd June, 1896, and by the House of Lords, 18th November, 1897 (1); and as the result of this decision the said

legacies were paid out of the residue of the said purchase-money, thus sweeping away nearly the entire proceeds of the lands included in the Bank's mortgage.

Pursuant to a further order made in this action on 10th June, 1902, the lands of Gortnacloghy and the houses 33 and 34, Northstreet, Skibbereen, were sold and realised a sum of money which was now represented by the sums of £820 14s. 2d. new Consols, and £15 17s. 3d. cash standing to the credit of the action, and separate credit described in the notice of motion. Against this fund the Bank now claimed to be entitled to stand in the place of the legatees, Kate M'Carthy and Louisa M'Carthy, to the extent of the moneys paid on foot of their legacies out of the purchase-money of the lands of Ardagh. The claim so made by the Bank was resisted by the creditors of Florence Daniel M'Carthy, whose interests were represented by the said Louisa M'Carthy pursuant to an order of the Master of the Rolls, whereby she, being one of such creditors, was appointed to represent the class.

T. Pakenham Law, and J. H. Shaw, for the Bank of Ireland, in support of the motion.

Matthew J. Bourke, K.C., and Patrick Fleming, contra.

The arguments of counsel will be found reported in the case on appeal, p. 113.

T. Pakenham Law, K.C., and J. H. Shaw, for the appellants:—

Matthew J. Bourke, K.C., and Patrick Fleming, for the respondent:—

The Master of the Bolls:—

This case comes before me on an application by the Bank of Ireland for an order “that the sum of £820 14s. 2d. stock, and £15 17s. 3d. cash standing to the credit of M'Carthy v. M'Cartie, and separate credit of moneys produced by sales of lands of Gortnacloghy, and of the houses 33 and 34, North-street, be paid to the Governor and Company of the Bank of Ireland on account of the moneys due to them, and for the costs of this motion.”

Under the will and a codicil of Daniel M'Carthy, the three legacies of £700 each, augmented by £300 each, and which I shall hereafter call legacies of £1000 each, were charged upon all hie real and personal estate, including Ardagh, which is real estate. By the same will Ardagh was devised to testator's son Gerald, with a limitation over in fee to Florence Daniel, in the event (which happened) of Gerald dying under twenty-one or without issue, under which limitation his title accrued, and not as heir. Daniel M'Carthy died in 1860. Gerald died in 1875. On the 16th November, 1878, Florence Daniel M'Carthy mortgaged Ardagh to the Bank of Ireland to secure £7000. That sum and considerably more is due to the Bank. Florence Daniel the mortgagor died in 1879, and this suit was brought to carry out the trusts of his will and administer his estate.

One of the legatees of Daniel M'Carthy for (as I shall call it) £1000 was paid off long since. The other two similar legacies, and also a mortgage for £1500 (prior to the mortgage to the Bank), have been paid off out of the proceeds of a sale of Ardagh ordered and carried out in this action; leaving the claim of the Bank so far unprovided for. The question whether, in the events which happened, Ardagh was charged with these legacies went to the House of Lords (Bank of Ireland v. M'Carthy (1)), and was decided in...

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