Re Greer, Deceased; Greer v Greer

• Jurisdiction: Ireland
• Judge: Barton, J.
• Judgment Date: 25 July 1906
• Court: Chancery Division (Ireland)
• Docket Number: (1902. No. 140.)
• Date: 25 July 1906

In re Greer,

Deceased;

Greer

and

Greer.

Barton, J.

(1902. No. 140.)

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.

1907.

Priorities — Prior legal mortgage — Subsequent equitable mortgage by deposit of title-deeds — Fraud or gross negligence — Burden of proof — Registration — Non-registrable security.

Held, that the mere fact of non-possession of the deeds by the prior legal mortgagee, and possession of them by the subsequent equitable mortgagee, where there was no evidence or circumstance pointing to fraud or negligence on the part of the prior legal mortgagee, or connecting him with the fraud of the mortgagor, was not, under the circumstances of the case, sufficient to displace the priority of the prior legal mortgagee.

Held, further, that the registration of the prior legal mortgage did not, per se, affect the priorities, because the equitable mortgage was a non-registrable security.

Quære: Whether the fact that the prior mortgagee had duly registered his mortgage could have any relevance upon the issues of fraud and negligence in connexion with the non-possession of title-deeds.

Allocation.

On the allocation schedule there appeared an item of £261 10s. 6d., the amount due for principal and interest on foot of a legal mortgage, dated 11th January, 1884, made by Thomas Fergus Greer to William Barcroft, and after it an item of £149 18s. l1d., the amount due on foot of an equitable mortgage by deposit of title-deeds, made on 27th March, 1901, by the said Thomas Fergus Greer to the Belfast Banking Company, Limited, Dungannon. The estate was insolvent, and the claim of the Bank, if postponed to that of the legal mortgagee, would not be fully met. The legal mortgage to Mr. Barcroft had been duly registered in the Registry of Deeds, and interest had been regularly paid on it, but the Bank had no notice of it at the date of the equitable deposit, or when making their advances. The Bank now applied to have the allocation schedule amended by giving their equitable deposit priority over the legal mortgage. The deeds deposited were two fee-farm grants, both dated 5th August, 1868, and made to Thomas Fergus Greer; and Mr. Greer, shortly before depositing them with the Bank, informed Mr. Henry Robinson, manager of the Bank's Dungannon branch, that the estate to which the deeds related was unincumbered. There was no evidence available as to the circumstances under which the deeds came to be in the possession of the mortgagor. There was no evidence to show whether they had ever been in the possession of the first mortgagee; or, if so, under what circumstances they had left his possession. There was no suggestion that any evidence was obtainable or was being withheld. The prior legal mortgagee was dead. The prior legal mortgage had been subsisting for more than twenty years, with interest regularly paid on it. No application was made to the Court for an inquiry at Chambers.

Chaytor, K.C., for the Belfast Banking Company:—

There has been gross negligence on the part of the mortgagee, Mr. Barcroft, in permitting the mortgagor to retain the title-deeds. By his negligence he has enabled the fraud to be committed, and he should, for that reason, be postponed to those who advanced money on the security of the title-deeds: Kerr on Fraud, 3rd ed., p. 120; Oliver v. Hinton (1); Clarke v. Palmer (2); Lloyd's Banking Company v. Jones (3); Bernard v. Drought (4); Burke's Estate (5); Roche's Estate (6).

Samuel L. Brown, K.C., for the personal representative of Mr.Barcroft, the legal mortgagee:—

The authorities show that in order to displace the prior mortgagee there must be fraud or gross negligence. The negligence, if any, has been not on the part of Mr. Barcroft, but on the part of the Bank in not making search in the Registry of Deeds, where the mortgage was registered. The omission by Mr. Barcroft to obtain or retain possession of the deeds was in itself not fraud or gross negligence so as to deprive him of his priority, and there is no evidence that he was responsible for the deception practised on the Bank. The fee-farm grants were not title-deeds at all, being on the face of them stated to be in lieu of leases for lives renewable for ever. They conferred no title on the grantee which he had not before the grant. The Bank should therefore have investigated Mr. Greer's title, and should have obtained possession of the other documents of title before making advances. But not having done so, their equity was no better than Mr. Barcroft's and the legal mortgage should, therefore, not be postponed. Registration is a material fact when fraud is imputed: per Christian, L.J., and Lords Cairns, Hatherley, and Selborne in Agra Bank v. Barry (1).

In an administration suit there appeared on the allocation schedule an item due for principal and interest to a legal mortgagee, under a registered legal mortgage, dated 1884; and after it an item due to a Banking Company, on foot of an equitable mortgage, by deposit of title-deeds made by the original mortgagor in 1901. The estate was insolvent, and there was not sufficient money in Court to pay both mortgages in full. Evidence was given by the Bank manager that the mortgagor, when depositing the deeds in 1901, represented that the estate was unencumbered. There was no evidence or circumstance pointing to any fraud or negligence on the part of the prior legal mortgagee, or connecting him with the fraud of the mortgagor; and the legal mortgage was otherwise unimpeached. Interest had been regularly paid on it since 1884. The legal mortgagee was dead, and no explanation was available as to the circumstances under which the title-deeds had been in the possession of the mortgagor at the date of the second mortgage. No application was made to the Court for an inquiry at Chambers; and it was not suggested that any relevant evidence was...