Philip Gilligan and Michael Nugent v The National Bank Ltd

• Jurisdiction: Ireland
• Judgment Date: 04 February 1901
• Docket Number: (1900. No. 4900.)
• Date: 04 February 1901
• Court: Queen's Bench Division (Ireland)

Philip Gilligan and Michael Nugent

and

The National Bank, Limited (1).

Q. B. Div.

(1900. No. 4900.)

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.

Title-deeds — Equitable deposit — Contract — Injury to the deeds — Negligence — Right to damages pending redemption — Conveyancing Act, 1881, sect. 16, sub-sect. 1.

G. deposited the title deeds of his premises with the bank by way of equitable mortgage, to secure advances made to him from time to time. While so deposited, the deeds were greatly damaged by the flooding, on the occasion of an exceptional rain-fall, of the basement of the bank premises in which they were stored, and by reason of their injured condition, G. was obliged to abandon a contemplated sale of the premises. Without offering to redeem, G. commenced an action for damages against the bank for negligence in the care and custody of the deeds.

Held, that until redemption, G. had no right of action for damages against the bank.

There is no implied covenant on the part of a mortgagee to take reasonable care of the title-deeds during the continuance of the security.

The nature of an equitable mortgage by deposit of title-deeds considered.

Per Barton, J.: Brown v. Sewell(11 Ha. 49) and other cases, in which indemnity and compensation have been decreed to mortgagors for loss of title-deeds by mortgagees, are not founded on the hypothesis of an implied covenant by the mortgagee to take care of the deeds, but are referable to the ancient' jurisdiction of Courts of Equity to give relief in cases of Accident.

This was action by Philip Gilligan against the National Bank, Limited, for negligence in the care and custody of certain title deeds. The co-plaintiff Michael Nugent was joined as surviving trustee of Philip Gilligan's marriage settlement, dated the 14th October, 1873.

Philip Gilligan was the owner of premises in Middle Abbey-street, Dublin, to which a seven-day license was attached. In order to secure advances, which at the time of the action amounted to £1700, he had deposited his title-deeds with the National Bank. Owing to the death of his wife, and his own illness, it became desirable in the spring of 1900 to sell the premises, and

accordingly his solicitor prepared conditions of sale, and fixed the 6th April, 1900, for the auction. On the 8th March, 1900, the solicitor informed the bank that he required to see the title-deeds. The bank made no difficulty in complying with this request, and the title-deeds were sent to him a few days later in a brown paper parcel. When they arrived some of them were so damaged by water as to be partly illegible, and the parchments of which they were composed were so stuck together that they could not be opened. The paper deeds amongst the number were not damaged to the same extent. In consequence of the condition of the deeds the solicitor could not prepare the title. It was then ascertained by the plaintiff that the cause of the injury to the deeds was the flooding of the basement in which they lay on the night of the 5th August, or morning of the 6th August, 1899, when there was a violent thunderstorm and abnormal rainfall. According to statistics kept at the Botanic Gardens, Glasnevin, the rainfall on the occasion had only been exceeded on three occasions since 1869. Gilligan's deeds had been kept on the lowest tray in a safe near the bullion room, this safe having a number of perforations for the purpose of ventilation. On the night of the storm dark muddy water rose in the chamber to a height of 18 inches and covered Gilligan's deeds. The 6th August was Sunday, and the following day was Bank Holiday, and as the various persons who had the keys leading to the strong room did not come together until Tuesday, the deeds lay submerged until then. Precautions were taken on the Tuesday to have the deeds dried as soon as possible, and after fourteen days they were put back into the safe, which was stated to be the only place on the bank's premises in which they would be safe from fire. Information as to what had happened was sent round to all persons whose deeds were deposited for safe keeping, but not to those whose deeds were deposited on equitable mortgages. The deeds of a building society, injured on the same occasion, were, on receipt of this notice, sent by the owners to Mr. Tucker of the Public Record Office, who successfully treated them. Mr. Tucker, examined as an expert, gave it as his opinion that he could have done the same with Gilligan's deeds if they had been given to him in time. It was stated that the bank's own deeds were on the night of the flood in the same strong room, but it did not appear upon what tray they were placed. The district in which the bank is situated was stated to be subject to flooding, rendering special precautions necessary. The bank claimed that they had taken special precautions. The place was flooded in 1891, after which the bank put in a tidal valve which was the most effective appliance that could be used for the purpose, but which, it was admitted, might be put out of order in exceptional circumstances. The basements of many of the adjoining buildings were flooded on the same night.

The value of the premises was about £6300, and it was stated that part of the money for the purchase of public-houses at high figures was usually borrowed from a bank or some other source on the security of the title-deeds. The non-production of the title-deeds on the occasion of such a sale would necessarily affect the amount of the purchase-money, the depreciation being estimated by one witness at £500. The cost of obtaining a declaration of title was variously estimated by plaintiffs' and defendants' witnesses at from £350 to £200, and it was said by the latter that registration under the local Registration of Title Act might be obtained for £35, allowing from £5 to £10 for the extra expense occasioned by the condition of the deeds.

The charges affecting the premises were set out in the following order:—(1) Nugent, as trustee of the marriage settlement, secured by a term of years, £500; (2) the Bank, £1700; (3) the Dolphin Hotel, £788 10s.; (4) Nugent, in his private capacity, £3031. Total, £6019 10s.

The action was tried before the Lord Chief Baron and a city special jury on the 6th, 7th, and 8th November, 1900. The defendants asked for a direction on the grounds (1) that there was no evidence of negligence causing the flood; (2) that there was no evidence of injury from the same cause; and (3) that the plaintiff had failed to prove damage. The Lord Chief Baron refused to direct.

The following were the questions left to the jury and their answers:—

1. Were the defendants negligent in storing the plaintiff's deeds in the lower shelf in the safe in question in the manner in which they stored?—Yes.

2. If so, did the plaintiffs thereby sustain damage, and if so, to what amount?—£350.

On the assumption that the defendants were not negligent in storing the deeds, answer the following questions:—

3. Were the deeds left in the safe for an unreasonable time after the defendants were aware of the flood, and if so, were the defendants negligent in leaving them there for such unreasonable time, and if so, did the plaintiffs thereby sustain damage, and if so, to what amount?

4. Were the defendants negligent in the treatment of the deeds after they were taken out of the safe, and if so, did the plaintiffs thereby sustain damage, and if so to what amount?

5. Were the defendants negligent in omitting to give the plaintiffs within a reasonable time notice of the injury to the deeds, and if so, did the plaintiffs thereby sustain damage, and if so, to what amount?

6. If you find damages on Nos. 3, 4, and 5, state whether what you assess on same, one sum or cumulative sums.

The latter questions were not answered, it being unnecessary as indicated by the Lord Chief Baron, in view of the findings on Nos. 1 and 2.

The Lord Chief Baron gave judgment for the plaintiffs for £350 with costs.

The defendants now moved that this verdict and judgment should be set aside, and that a verdict should be entered for them dismissing the plaintiff's action with costs on the ground of non-direction of the learned Judge in not having directed a verdict for the defendants on the ground that there was no evidence to go to the jury, and that there was no evidence to support the findings of the jury to question No. 1 left to them by the learned Judge, or in the alternative for a new trial on the ground that the findings of the jury upon the questions left to them by the learned Judge were against the evidence and the weight of evidence, and that there was no evidence to support the finding of the jury on the questions left to them by the learned Judge, and that the damages awarded by the jury were excessive, or for such other order as to the Court should seem right.

Campbell, Q.C. (with him Matheson, Q.C., and Herbert Wilson), for the defendants:—

For the first time as far as we can find a person who had deposited title-deeds with a bank, not for safe custody but as security for the advance of a substantial sum of money, has been allowed to sustain a common law action against that bank for negligent custody of those deeds, without any suggestion or offer to redeem or to pay off the charge. At the present moment the entire sum of £1700 is due to the bank. The plaintiff has not any interest in those deeds, even reversionary, and it was in order to get rid of that difficulty that they joined Nugent as trustee of the marriage settlement of Gilligan. We raised the point at the trial, that, as Nugent's charge was only for £500, he was absolutely secure. In reply to that objection, the Lord Chief Baron pointed out that Nugent was also a tail incumbrancer, and in that capacity he could sustain an action. If that be so every puisne incumbrancer...