Lysaght v. Edwards. [1875 L PDF

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ICLR: Chancery Division/1876/Volume 2/LYSAGHT v. EDWARDS. [1875 L. 20a.] - (1876) 2 Ch.D. 499 (1876) 2 Ch.D. 499

[CHANCERY DIVISION]

LYSAGHT v. EDWARDS. [1875 L. 20a.]

1876 March 17, 20.

Jessel, M.R. Vendor and Purchaser - Contract to sell Real Estate - Death of Vendor before Completion - General Devise of Real Estate upon Trust for Sale - Devise of Trust Estates. In 1874 the Plaintiffs entered into a contract for the purchase of real estate. After the title had been accepted, and before completion, the vendor died, having by his will (dated in 1873) given his personal estate to E., whom he appointed executor, and devised all his real estate to H. and M. upon trust for sale, and having also devised to H. alone all the real estate which at his death might be vested in him as trustee:Held, that the real estate contracted to be purchased by the Plaintiffs passed to H. under the devise of trust estates. Wall v. Bright (2) commented on and explained. On the 23rd of December, 1874, an agreement in writing was entered into between Samuel Bedford Edwards and the Plaintiffs, whereby S. B. Edwards agreed to sell, and the Plaintiffs agreed to purchase, at the price of £59,750, a mansion-house called The Bury, and certain messuages, farms, and lands (comprising in the whole 775A. 1R. 36P.), situate in the parish of Arlsey, in the

(1)

6 Rep. 16 b.

(2)

1 Jac. & W. 494.

(1876) 2 Ch.D. 499 Page 500 county of Bedford, partly freehold and partly copyhold. The agreement provided that the vendor should, before the completion of the purchase, procure the copyholds to be enfranchised; that £3000, part of the purchase-money, should be paid at once, and the residue on the 11th of October, 1875; and that on payment of the balance of the purchase-money the vendor should execute a proper conveyance.

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Part of the property which formed the subject of the contract consisted of a farm and lands called the Bury Farm. The deposit of £3000 was duly paid. An abstract of title was delivered, and, after requisitions had been made thereon, the title was accepted by the Plaintiffs on the 1st of May, 1875. S. B. Edwards died on the 12th of June, 1875, having made a will dated the 22nd of July, 1873, which, so far as material, was as follows:"I appoint my wife, Emily Clara Charlotte, sole executrix of this my will. I give to my wife all my personal property whatsoever and wheresoever. I bequeath to each of my trustees hereinafter named the legacy of £100. Also I bequeath the legacy of £2000 to my cousin, Elizabeth Barwick. I charge such part of my real estate as consists of my messuage, farms, and lands at Arlsey aforesaid, called the Bury Farm, in exoneration of my personal estate, with the payment of my debts and of the pecuniary legacies aforesaid, and subject to the trust hereinafter contained for sale of the same hereditaments, and to the power of postponing such sale. I direct the said debts and legacies to be raised under the statutory power for that purpose. I devise to my cousin, Egerton Hubbard, of Addington Manor, in the county of Buckingham, and my friend, Mr. William Muller, junior, of No. 4, St. Helen's Place, Bishopsgate Street, their heirs and assigns, all my real estate whatsoever and wheresoever of freehold tenure (except such hereditaments as are now vested in trustees for sale under and by virtue of a certain indenture of settlement dated the 30th day of March, 1830, and certain indentures indorsed thereon), and my beneficial interest in such excepted hereditaments. And I give and devise such part of my real estate as is of copyhold tenure to the use of such person or persons, and in such manner as the said Egerton Hubbard and William Muller, junior, or the

(1876) 2 Ch.D. 499 Page 501 survivor of them, or the executors or administrators of such survivor, or other the trustees or trustee for the time being of this my will shall, by any deed or deeds for the purpose of carrying into effect any sale which shall be made under the trust hereinafter declared, appoint. And I give to the said Egerton Hubbard and William Muller, junior, their executors and administrators, all net moneys and proceeds to arise by sale of the said freehold and copyhold hereditaments respectively vested and covenanted to be vested in trustees in that behalf under and by virtue of the said indentures upon the trusts hereinafter mentioned. And I declare that the said Egerton Hubbard and William Muller, junior, or the survivor of them, or the executors or administrators of such survivor, or other the trustees or trustee for the time being of this my will, hereinafter called my trustees or trustee, shall sell and convert into money the said real estate hereinbefore devised as soon as conveniently may be after my death (but subject to the proviso hereinafter contained in regard to the said sale), and shall, with and out of the moneys to arise by such sale as last aforesaid, and of the net moneys and proceeds to arise by sale under and by virtue of the said settlement, pay my funeral and testamentary expenses, my debts, and the pecuniary legacies aforesaid, and shall invest the residue of the said moneys in or upon some or one of the modes of investment prescribed by the power in that behalf hereinafter contained, and shall stand possessed of the said moneys and investments in trust for my wife durhng her life, and after her death" upon certain trusts therein mentioned. And the will then proceeded as follows: "Provided and I declare my said trustees or trustee shall be at liberty to postpone the sale of my real estate hereinbefore devised, or any part thereof, as they or he, on the request in writing of my wife, shall think fit; and during the suspense of such sale I empower ny said trustees or trustee to permit my wife to occupy my mansion and such of the land and grounds occupied therewith as she may require, so long as she shall think fit, and to let all such other parts of my real estate hereinbefore devised for the time being remaining unsold, by demising the same from year to year, or for any number of years not exceeding ten years, at rack or improved yearly rents, and on the usual conditions. And I direct

(1876) 2 Ch.D. 499 Page 502 my said trustees to apply such part of the said rents as may be necessary for the purpose in and about the repair of any part of my real estate, consisting of houses, buildings, and fences adjoining any part thereof, and insuring the same, or such of them as for the time being shall remain unsold, against loss or damage by fire. And I hereby declare that the rents of my real estate hereinbefore devised and for the time being remaining unsold, subject to such application thereof as hereinbefore mentioned, and after payment of interest on any moneys hereby authorized to be raised on mortgage, shall be paid and applied by my said trustees or trustee in the same manner as the income of the residue of net moneys and investments will be applicable when my real estate shall have been sold and invested. And I devise to the said Egerton Hubbard, his heirs and assigns, all real estate which at my death may be vested in me as trustee, subject to the trusts affecting the same."

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The enfranchisement of the copyholds comprised in the grant had not been completed at the death of S. B. Edwards, who was himself the tenant on the Court rolls. Upon the death of S. B. Edwards the question arose whether the concurrence of his heir-at-law or customary heir was necessary in order to give a complete uitde and conveyance to the Plaintiffs; and in order that it might be decided an action for specific performance was commenced by the Plaintiffs against Emily Clara Charlotte Edwards, Egerton Hubbard, and William Muller, and the question was then raised by a special case under the Rules of Court, 1875, Order XXXIV. rule 2. Cookson, Q.C., and Cozens-Hardy, for the Plaintiffs:A devise of trust estates does not pass estates in which the testator had a beneficial interest, or, at all events, of which he was merely a constructive trustee: Wall v. Bright (1); Purser v. Darby (2); In re Cuming (3). In such cases as the present, the heir-at-law cannot be treated as a trustee until a decree for specific performance has been obtained: In re Carpenter (4); Cresswell v. Haines (5); Goold v. Teague (6). This is the general understanding

(1)

1 Jac. & W. 494.

(2)

4 K. & J. 41.

(3)

Law Rep. 5 Ch. 72.

(4)

Kay, 418.

(5)

10 W. R. 121.

(6)

5 Jur. (N.S.) 116.

(1876) 2 Ch.D. 499 Page 503 of conveyancers: Davidson's Conveyancing(1); and it is borne out by Thirtle v. Vaughan (2); Martin v. Laverton (3). If the legal estate does not pass under the devise of trust estates, it cannot pass under the general devise contained in the will, which is a devise to trustees upon trust to sell in pursuance of directions thereinafter given, not to carry out a sale made by the testator. The trustees are not the legal personal representatives of the testator, and consequently cannot give a receipt for the purchase-money due from the Plaintiffs. Even if the trustees took the legal estate in the freeholds under the general devise, they have no legal estate in the copyholds, over which the testator gives them a mere power of appointment. Chitty, Q.C., and Kekewich, for the Defendants:-

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We say that the legal estate passed under the devise of trust estates. The most difficult portion of the case relates to the Bury Farm, and even as regards it we contend that it did not pass under the general devise upon trust for sale. The will must be read as if it had been executed immediately before the death of the testator. It contains no specific devise of Bury Farm, nor any specific description of real estate. The words, "subject to the trusts for sale hereinafter contained" must be read "subject to the trusts hereinafter contained so far as they affect the same." The question whether real estate contracted to be sold passes at law under a devise of trust estates depends on the question whether there was a binding contract for sale at the death of the testator. If there was a binding contract, the legal estate passes: Rose v. Watson (4); Shaw v. Foster (5). Here the title had been accepted in the testator's lifetime, and there can be no question that the contract was binding at his death. Cookson, in reply.

JESSEL, M.R. :This case is an illustration, if another illustration were wanting,

(1)

2nd Ed. vol. iv. p. 56.

(2)

2 W. R. 632; 24 L. T. (O.S.) 5.

(3)

Law Rep. 9 Eq. 563.

(4)

10 H. L. C. 672.

(5)

Law Rep. 5 H. L. 321.

(1876) 2 Ch.D. 499 Page 504 of the great difficulties which arise from deciding cases for the purpose of convenience, instead of allowing the Legislature to intervene for the purpose of correcting any defects in the law. Had it not been for the case of Wall v. Bright (1), I should not have thought the present special case arguable. As it is, I confess that I decide it with something like hesitation, not because I doubt at all as to the way in which it ought to be decided, but because I cannot help thinking that it is impossible for me at this distance of time to say that Wall v. Bright, as decided, is not law, and that I must consider what the effect of that case is, not merely having regard to the facts of it, but also having regard to the reasons given by the learned Judge who pronounced it, and to the effect which that case may have had upon subsequent titles, and the practice of conveyancers. Notwithstanding that, I cannot help considering this case in the first instance independently of that decision, and stating the conclusion I should have come to without that decision, and the reasons for it; and then I shall take into consideration the effect, if any, which that case ought to have upon my ultimate decision.

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In this particular case the testator made his will on the 22nd of July, 1873. He was at that time owner in fee of certain freehold estates, and he was also owner of certain copyhold estates. Among his estates was a farm called Bury Farm, partly freehold and partly copyhold. By his will he charges such part of his real estates as consisted of the Bury Farm, with debts and pecuniary legacies, and he proceeds: "Subject to the trusts hereinafter contained for sale of the same hereditaments, and to the power of postponing such sale, I direct the said debts and legacies to be raised under the statutory power for that purpose." Then he gives to two gentlemen, named Hubbard and Muller, all his real estate, with a certain exception, which it is not material to mention, and he devised all his copyhold estates to the use of such persons as they might appoint for the purpose of carrying into effect any sale which should be made under the trusts thereinafter declared, and then he gave them the net proceeds of the sale upon the trusts therein mentioned. There is, therefore, a gift of the freehold estate upon trust to sell, and of the copyhold to such uses

(1)

1 Jac. & W. 494.

(1876) 2 Ch.D. 499 Page 505 as they shall appoint for the purpose of effecting a sale. That is the conveyancer's form of the trust for sale of freehold and copyhold estates, the difference of form being merely to avoid the necessity of a double admission to the copyholds. The trustees are to convey the copyholds to the purchaser directly in order to avoid the expense of two fines. Then there is a power to postpone the sale; and, last of all, there is this devise: "And I devise to the said Egerton Hubbard, his heirs and assigns, all real estate which at my death may be vested in me as trustee subject to the trusts affecting the same." After the date of his will, he entered into a contract of sale dated the 23rd of December, 1874. It was an ordinary contract of sale. A deposit of £3000 was paid, and requisitions on the title were sent in in the usual way; but eventually the title was finally accepted by the Plaintiffs on the 1st of May, 1875. The testator, the vendor, died on the 12th of June, 1875; and, under those circumstances, the question which I have to decide is, there being a difficulty in finding the heir-at-law or customary heir of the testator, whether the trustees Hubbard and Muller, or the trustee Hubbard, takes the legal estate in the freehold and copyhold lands which have been sold. Now, the first question to be considered is, What is the meaning of the will itself? The new Wills Act says that unless a contrary intention appears by the will, the will is to speak from the death of the testator as to the real and personal estate comprised in it. In other words, in the absence of a contrary intention, you are to read a general gift of real estate as being equivalent to "all the real estate which I shall be entitled to at the time of my death" in the same way as you always read a general gift of personal estate. In this particular instance the testator has used these very words as regards trust estates: as to them he has only given those which at the time of his death may be vested in him as trustee. It appears to me that there is nothing in this will to exempt the real estate from the operation of the statute, and it must be read as a gift of all the real estate "to which I shall be entitled at the time of my death." No one can doubt for a moment that the after-acquired real estate would have passed under those words, and would have been subject to the trusts for sale. That being so, the next point I have to consider is, What is (1876) 2 Ch.D. 499 Page 506 the effect of the contract? It appears to me that the effect of a contract for sale has been settled for more than two centuries; certainly it was completely settled before the time of Lord Hardwicke, who speaks of the settled doctrine of the Court as to it. What is that doctrine? It is that the moment you have a valid contract for sale the vendor becomes in equity a trustee for the purchaser of the estate sold, and the beneficial ownership passes to the purchaser, the vendor having a right to the purchase-money, a charge or lien on the estate for the security of that purchase-money, and a right to retain possession of the estate until the

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purchase-money is paid, in the absence of express contract as to the time of delivering possession. In other words, the position of the vendor is something between what has been called a naked or bare trustee, or a mere trustee (that is, a person without beneficial interest), and a mortgagee who is not, in equity (any more than a vendor), the owner of the estate, but is, in certain events, entitled to what the unpaid vendor is, viz., possession of the estate and a charge upon the estate for his purchase-money. Their positions are analogous in another way. The unpaid mortgagee has a right to foreclose, that is to say, he has a right to say to the mortgagor, "Either pay me within a limited time, or you lose your estate," and in default of payment he becomes absolute owner of it. So, although there has been a valid contract of sale, the vendor has a similar right in a Court of Equity; he has a right to say to the purchaser, "Either pay me the purchase-money, or lose the estate." Such a decree has sometimes been called a decree for cancellation of the contract; time is given by a decree of the Court of Equity, or now by a judgment of the High Court of Justice; and if the time expires without the money being paid, the contract is cancelled by the decree or judgment of the Court, and the vendor becomes again the owner of the estate. But that, as it appears to me, is a totally different thing from the contract being cancelled because there was some equitable ground for setting it aside. If a valid contract is cancelled for non-payment of the purchase-money after the death of the vendor, the property will still in equity be treated as having been converted into personalty, because the contract was valid at his death; while in the other case there will not be conversion, because there never was (1876) 2 Ch.D. 499 Page 507 in equity a valid contract. Now, what is the meaning of the term "valid contract?" "Valid contract" means in every case a contract sufficient in form and in substance, so that there is no ground whatever for setting it aside as between the vendor and purchaser - a contract binding on both parties. As regards real estate, however, another element of validity is required. The vendor must be in a position to make a title according to the contract, and the contract will not be a valid contract unless he has either made out his title according to the contract or the purchaser has accepted the title, for however bad the title may be the purchaser has a right to accept it, and the moment he has accepted the title, the contract is fully binding upon the vendor. Consequently, if the title is accepted in the lifetime of the vendor, and there is no reason for setting aside the contract, then, although the purchase-money is unpaid, the contract is valid and binding; and being a valid contract, it has this remarkable effect, that it converts the estate, so to say, in equity; it makes the purchasemoney a part of the personal estate of the vendor, and it makes the land a part of the real estate of the vendee; and therefore all those cases on the doctrine of constructive conversion are founded simply on this, that a valid contract actually changes the ownership of the estate in equity. That being so, is the vendor less a trustee because he has the rights which I have mentioned? I do not see how it is possible to say so. If anything happens to the estate between the time of sale and the time of completion of the purchase it is at the risk of the purchaser. If it is a house that is sold, and the house is burnt down, the purchaser loses the house. He must insure it himself if he wants to provide against such an accident. If it is a garden, and a river overflow...