National Bank Ltd, v Keegan

• Jurisdiction: Ireland
• Judgment Date: 07 April 1931
• Date: 07 April 1931
• Docket Number: (1927. No. 3878.)
• Court: Supreme Court (Irish Free State)

Supreme Court.

(1927. No. 3878.)

National Bank v. Keegan.

THE NATIONAL BANK, Limited

Plaintiffs

and

CHRISTOPHER BERNARD KEEGAN

Defendant.

Agreement - Construction - Owner of house giving relative exclusive use of two rooms for life, with fuel, support, and, maintenance, free of charge - Effect of agreement - Equitable life estate in the two rooms - Whether equitable charge on the premises for fuel, support, and maintenance - Agreement not registered - Subsequent equitable mortgage of premises by owner - Mortgagee's claim to priority - Application of maxim, "Qui prior est tempore potior est jure,"

Memorandum from the Examiner to obtain the decision of the Judge.

The plaintiffs, the National Bank, Limited, instituted a mortgage suit by summary summons, issued on the 27th January, 1927, to enforce an equitable mortgage by deposit of title deeds made by Christopher Bernard Keegan, the defendant, with them to secure all moneys then due, or thereafter to become due by him to them. The primary decree in the suit was made on the 24th May, 1928. The decree stated the amount then due to be £619 4s. 3d. for principal and £104 4s. 8d. for interest. The usual order for sale in default of payment was made, and the usual accounts and inquiries were directed, and referred to the Examiner. In Chambers a claim was made by Mary Keegan, an aunt of the defendant, to be entitled to an equitable interest and charge in priority to the plaintiffs' mortgage. At the request of the plaintiffs the Examiner put the case in the Judge's list on a memorandum to obtain a decision of the Judge disallowing the said claim of Mary Keegan. The further facts are set out in the judgment of Johnston J.

The agreement made between the defendant and the said Mary Keegan, referred to in the judgment, was as follows:—

"Memorandum of agreement made this 27th day of September, 1915, between Christopher Keegan, of Newtown, Moate, County Westmeath, of the one part, and Miss Mary Keegan, of Newtown, Moate, aforesaid, of the other part.

The said Christopher Keegan hereby agrees to give his aunt, Mary Keegan, during her life the exclusive use of the drawingroom and bedroom over same, with fuel and suitable support and maintenance, in the dwelling-house at Newtown, Moate, County Westmeath, free of charge, the consideration for same being natural love and affection and services rendered by Mary Keegan to Christopher Keegan. And Christopher Keegan hereby agrees with Mary Keegan to execute a deed whenever called upon to carry out and give effect to the foregoing contract.

"Dated 27th September, 1915.

"Christopher Keegan.

"Signed in presence of

"P. J. Gaynor."

The order of Johnston J. declared that under and by virtue of the said agreement Mary Keegan was entitled to an equitable estate for life in the two specified rooms, and that the said equitable estate for life was not subject to the bank's equitable mortgage; and the order further declared that Mary Keegan was entitled to a charge upon the lands and premises for fuel and suitable support and maintenance in the said dwelling-house in priority to the bank's equitable mortgage.

The plaintiffs appealed to the Supreme Court (1).

By a memorandum of agreement, made in 1915, between C.K. and his aunt, M.K., C.K. agreed to give M.K. "during her life the exclusive use of the drawing room and bedroom over same, with fuel and suitable support and maintenance," in a certain dwelling-house, "free of charge, the consideration for same being natural love and affection and services rendered"by M.K. to C.K.; and C.K. thereby agreed with M.K. "to execute a deed whenever called upon to carry out and give effect to the foregoing contract."No deed was ever executed pursuant to the said agreement. The agreement was not registered in the Registry of Deeds. M.K. went into exclusive occupation of the two rooms, and so continued, and was supplied with fuel and maintenance. The rest of the house was in the occupation of C.K., who held the premises under a fee-farm grant. In 1921 C.K. deposited the title deeds of the premises with a bank by way of equitable mortgage to secure the payment of present and future advances. In 1927 C.K. being indebted be the bank for a large sum, the bank issued a summary summons to enforce the mortgage against C.K. M.K. claimed to be entitled under the agreement to an equitable life interest in the two rooms, and also to a charge on the whole of the premises in her favour for fuel and suitable support and maintenance during her life, and that the bank's equitable mortgage was puisne to her life interest and charge. She stated in an affidavit that on the faith of the agreement, and on the security of the rights thereby conferred on her, she had from time to time made advances to C.K. of sums amounting to £252. The manager of the bank stated in an affidavit that at the date of the deposit the bank had no knowledge of any claim by M.K. against the premises.

Held by the Supreme Court (Kennedy C.J. and FitzGibbon J.; Murnaghan J. dissenting), affirming Johnston J., that M.K. was entitled to an equitable life estate in the twa rooms, which interest was not subject to the bank's equitable mortgage

Held also by the Supreme Court (Kennedy C.J. and FitzGibbon J.; Murnaghan J. dissenting), reversing Johnston J., that M.K. was not entitled to a charge upon the premises for fuel and support and maintenance.

Held by Murnaghan J., that the memorandum of agreement created an equitable charge upon the premises both for residence and support, and did not amount to an assignment, and that such equitable right was not subject to the bank's equitable mortgage.

Cur. adv. vult.

Johnston J. :—

In this case, which comes before me on a memorandum of the Examiner, I have to decide a question of priority as between what has been called a right of residence in the mortgaged premises —a house in the town of Moate—enjoyed by one, Miss Mary Keegan, who is an aunt of the mortgagor, and an equitable mortgage in favour of the plaintiffs created by deposit of title deeds.

The facts are few and simple. On September 27th, 1915, the defendant executed a memorandum of agreement in favour of his aunt in the following terms:—"The said Christopher Keegan hereby agrees to give his aunt, Mary Keegan, during her life the exclusive use of the drawingroom and bedroom over same, with fuel and suitable support and maintenance in the dwellinghouse at Newtown, Moate, County Westmeath, free of charge, the consideration for same being natural love and affection and services rendered by Mary Keegan to Christopher Keegan. And Christopher Keegan hereby agrees with Mary Keegan to execute a deed whenever called upon to carry out and give effect to the foregoing contract." Under, and by virtue of, this agreement Mary Keegan has since the date thereof resided in, and exclusively occupied, the two rooms in question, and has been supplied with fuel and maintenance. She states that on the faith of that agreement, and the security of the rights so conferred on her, she advanced various moneys to the defendant, amounting to £252.

The premises are held under a fee-farm grant, dated March 26th, 1862, and on August 2nd, 1921, the defendant deposited with the plaintiffs the title deeds of the premises by way of equitable mortgage to secure the payment of present and future advances. There was then due to the bank by the defendant the sum of £1,211, which at the date of the summary summons had been reduced to the sum of £723. It was stated in an affidavit by the plaintiffs' manager in Moate that at the date of the deposit the bank had no knowledge of any claim by Mary Keegan against the premises.

When the matter came to be argued before me in the first instance it was assumed by both sides that the right of Mary Keegan under the agreement of 1915 was a mere equitable charge or incumbrance, and nothing more. It was argued on her behalf that, as between the two equitable interests, the maxim Qui prior est tempore potior est jure prevailed, and that her charge had priority over that of the plaintiffs. The bank, on the other hand, whilst conceding the general applicability of this maxim, alleged that Miss Keegan had been guilty of negligent conduct (a) in allowing the title deeds to remain in the hands of the defendant, and (b) in not registering the document of 1915 as a charge against the premises, and that, on the authority ofRice v. Rice(1), she had disentitled herself to rely on her priority. It occurred to me, however, that the interest created by the agreement with Mary Keegan amounted to something more than a mere charge, and this further question has been argued before me to-day.

It is well settled that a general right of residence and support in a house or upon a farm does not amount to an estate in the land, but is a mere charge in the nature of an annuity upon the premises in respect of which it exists, and when it becomes necessary to sell such property a Court of Equity has power and authority to ascertain the value of such charge, so that the purchaser may get the property discharged from the burden. This was decided in the case of Kelaghan v. Daly(2),and, later and more authoritatively, in In re Shanahan(3).

The people of Ireland have always had a very keen, not to say punctilious, regard for family obligations and ties, and it is well known...