160 CHANCEEY DIVISION.

[1901]

FARWELL
j
satisfy the Statute of Frauds. Even if the recital had been of
an agreement in writing, it would have been open to the
1901
trustee in bankruptcy to adduce evidence to shew that it was
HOLLAND,
In re. untrue, and, if it were untrue, it would be fraudulent within
GBEGG Martin B.'s judgment cited above. It has not been argued
v.
HOLLAND. that the deed of October 25, 1897, has any independent validity
or effect, and the other points made on this deed and otherwise
in the case, do not arise in the view that I take of the matter.
I therefore hold that the official receiver, on taking out
letters of administration to the wife's estate, is entitled to the
fund. The costs of all parties will come out of the fund.
Solicitors : Henry Clifton Lambert ; Van Sandau dt Go. ;
Tarry, Sherlock dc King.
G. B. A.

FARWELL POWELL v. BEODHUBST.

,r.
1901 [1900 P. 1900.] •
May 7,13. Mortgage,—Joint Account—Payment to One Mortgagee—Partnership—Separate
Debt—Payment to Firm.

Where mortgagees have advanced money on a joint account, payment to

one of them during the others' lifetime, though a good discharge of the
debt at law, only discharges the security to the extent of the payee's
beneficial interest (if any), even though the payee ultimately becomes the
survivor in the joint account.
Matson v. Dennis, (1864) 4 D. J . & S., 345, followed.
Steeds v. Steeds, (1889) 22 Q. B. D. 537, explained.
Payment to a firm of a separate debt due to a partner will not support
a plea of payment to that partner in the absence of evidence, express or
implied, that he has authorized the firm to receive it.

WITNESS ACTION.
By an indenture dated March 1, 1872, the defendant mort-
gaged real estate at Worksop to Barnett and Birch to secure
60001. and interest, the 6000Z. being expressed to be advanced
out of moneys belonging to the mortgagees on a joint account,
and the defendant covenanting to repay the money on
September 1, 1872.
In 1875 1000Z., part of the 6000Z., was paid to the firm of
2 Ch. CHANCEEY DIVISION. 161
Ingram, Harrison & Ingram, solicitors, and duly applied in FAKWELL
part discharge of the mortgage debt.
Birch survived Barnett, and died on April 8, 1878, having ^~
devised his mortgage estates to his executor. POWELL
By an indenture dated September 1, 1878, Birch's executor BEODHURST.
transferred the mortgage debt and security to Cartmell Harrison
and James Crofts Ingram, two of the partners in the firm, in
consideration of 5000L paid by them out of moneys expressed
to belong to them on a joint account.
I n 1886 the defendant paid another 1000L to the firm, which
was duly applied in part discharge of the mortgage debt.
By an indenture dated August 19, 1890, Cartmell Harrison
and James Crofts Ingram transferred the mortgage debt and
securities to Francis Baron de Paravicini and James Ingram,
another partner in the firm, as joint tenants, in consideration of
4000Z. paid by the transferees.
These transferees were trustees of a settlement, but of this
fact the defendant had no notice.
I n 1892 the defendant sent another 1000Z. to the firm, which
was acknowledged by Cartmell Harrison as received in part
discharge of the mortgage debt,, and the interest, which was
throughout paid to the firm, was thenceforth paid on 3000L
only. This sum of 1000Z. was paid into the banking account
of the firm, and credited by the firm to the defendant, but it
was not in fact applied in discharge of the mortgage, and the
firm still continued to account to the beneficiaries under
the settlement for interest on 4000L
On September 26, 1897, Francis Baron de Paravicini died.
On December 25, 1897, James Ingram died, and on May 1,
1900, his executors transferred the mortgage debt and security
to the plaintiffs, the new trustees of the settlement.
The plaintiffs, who alleged that 4000Z. was still due on the
covenant and security, claimed an account of what was due
under the covenant, and an order for payment, and an account
of what was due under the mortgage, and foreclosure.
The defendant admitted that 3000Z. was due, denied his
liability to pay any more, and claimed to redeem on that
footing.
VOL. IE. 1901. M 1
162 OHANCEHY: DIVISION. t!901]

FAEWELL It appeared that James Ingram, who was taken ill at

the end of 1891, had not come to the office at all in 1892,
^v^, and, though he came for a few days in 1893 and 1894, he
POWELL n e v e r attended personally to any business after 1891. Neither
BiiODiiunsT. he nor his co-trustee had expressly authorized the firm to
receive the 1000/!. paid in 1892, and it was very possible that
neither of them knew of the payment.
As the onus of substantiating the part payment lay on the
defendant, his case was opened first.
Upjohn, K.C., and George Cave, for the defendant. The
payment to the firm was a payment to the partner, James
Ingram, as having means of knowledge that the money had
been paid into the firm's account, he could have been sued for
money had and received : Blair v. Bromley (1) ; Marsh v.
Keating (2); Bhodes v. Monies (3); Jacobs v. Morris. (4)
The usual joint account clause being read into the transfer
of August 19, 1890, by virtue of s. 61 of the Conveyancing
Act, 1881, James Ingram's receipt acquired validity on his
surviving his co-mortgagee, as he was then in a position to
ratify it, or to give a new valid receipt. Even if this is
not so, the receipt actually given was at all events good as
against James Ingram's apparent moiety of the debt, which
exceeded 1000Z.
Payment of a debt to a joint creditor was a good discharge
as to the whole at common law : Wallace v. Kelsall (5), even
in the case of trustees: Husband v. Davis (6); but since the
Judicature Act, 1873 (36 & 37 Vict c. 66), s. 25, sub-s. 11
providing that the rules of equity shall prevail, the debt is
presumed to be held in common according to the equitable rule
in Petty v. Styward (7), Bigden v. Vallier (8), and Morley v.
Bird (9); and payment to one creditor is a good discharge to
the extent of his apparent share : Steeds v. Steeds (10), unless
(1) (1846) 5 Hare, 542; (1847) 2 (5) (1840) 7 M. & W. 264.
Ph. 354. (6) (1851) 10 C. B. 645. '
(2) (1834) 1 Bing. N. C. 198; 37 (7) (1631) 1 Eq. C. Ab. 290.
E. R. 75. (8) (1751) 2 Ves. Sen. 252, 258.
(3) [1895] 1 Ch. 236. (9) (1798) 3 Ves. 628, 631; 4
(4) [1901] 1 Ch. 261. R. R. 106.
(10) 22 Q. B. D. 537, 541.
2 Ch. CHANCERY DIVISION. 163

the debtor has notice of a trust: Webb v. Ledsam. (1) The FARWELL
plaintiffs, who stand in the shoes of James Ingram, could
not, therefore, recover more than 3000Z. on the covenant, and
are not entitled to hold their security for any greater amount. POWELL
Butcher, K.C., and H. E. Wright, for the plaintiffs. The BRODHURST.
payment to the firm was not a valid payment of the separate
debt due to James Ingram, unless he had given the firm autho-
rity to receive it on his behalf. No'such authority ought to
be implied in this case, as it would have been a breach of
trust. The fact that James Ingram might have been liable
with his other partners to account for the money is immaterial.
There was no discharge of the separate debt. Assuming,
however, that the payment was a payment to James Ingram,
the defendant got no discharge for it. A joint mortgagee
cannot give a valid receipt as to one moiety any more than a
joint stockholder can transfer a moiety: Barton v. North
Staffordshire By. Go. (2) •; Sloman v. Bank of England. (3)
H e could at most bind his actual beneficial interest, which in
the present case was nil. Sect. 61 of the Conveyancing Act,
1881, does not enable a joint mortgagee to give a valid receipt
during the lifetime of his co-mortgagee; and the fact that the
payee happens to become the survivor in the joint account does
not render the prior receipt valid.
Even if the debt is discharged at law, the estate is not dis-
charged in equity; and the defendant can only redeem on the
footing that 4000Z. is due for principal: Matson v. Dennis. (4)
Upjohn, K.C., in reply. I n Matson v. Dennis (4), which was
a vendor and purchaser case, the point as to survivorship did
not arise, as it was possible on the evidence that the unpaid
co-mortgagee was still alive, in which case the purchaser was
no doubt entitled to his concurrence in the conveyance. The
statement of Knight Bruce L . J . that " t h e whole 3000Z. was
not shewn to be discharged " implies that it was discharged as
regards the share of the paid co-mortgagee.

Cur. adv. vult.

(1) (1855) 1 K . & J . 385. (3) (1845) 14 Sim. 475.

(2) (1888) 38 Ch. D. 458, 465. " (4) 4 D. J. & S. 345, 350.
Jf 2 1
164 CHANCERY DIVISION. [1901]
FAKWELL May 13. FARWELL J. The plaintiffs stand in the same
position as James Ingram, and the action must be regarded as
w-v-, an action by him. There are two questions involved—(1.) the
POWELL liability under the covenant, which is a question of common law,
BRODHURST. and (2.) the liability in the foreclosure action, which is a question
of equity. In my opinion, the old rule of common law, that
payment to one of two joint creditors is a good discharge of the
joint debt, still remains good. There was no possible conflict
of any equitable rule with this, because no bill would lie in
Chancery to recover a mere money demand. Equity, no
doubt, had to deal with debts in the administration of the
estates of deceased persons and in the liquidation of companies,
but in determining whether claims for debts had been dis-
charged or not equity followed the law, and indeed in cases of
difficulty before the Chancery Procedure Act, 1852 (15 & 16 Vict.
c. 86), ss. 61, 62, sent cases for the opinion of the common law
Courts. There is nothing inconsistent with this in Steeds v.
Steeds. (1) The question there was whether it was so clear
that the debt claimed was joint that the defence should be
struck out, and it was held that there was a conflict between
law and equity as to the presumption to be drawn from the
existence of a security to two without words of severance, and
that the rule of equity as to such presumption now prevails.
But this was a conflict of presumptions—whether there was
or was not a joint tenancy, and had no relation to the legal
consequences flowing from the existence of an admitted joint
tenancy. In the present case both sides agree that this is a
joint debt, and, having regard to the words of the covenant
and the 61st section of the Conveyancing Act, 1881, I take
this to be correct.
But the joint debt in this case was not paid to either of
the joint creditors, but to the firm of which one of them
was a member. Now, payment of a private debt due to a
member of a firm to the firm of which the creditor is a
member will not, in my opinion, support a plea of payment in
the absence of evidence, express or implied, that the creditor
has authorized the receipt of the money by the firm as his
(1) 22 Q. B. D. 537.
2Ch. CHANCEEY DIVISION. 165
agents. The mere fact that the person who has made the FAEWELL
payment would have a good cause of action against the firm
to recover the money if the sum is not accepted in payment —^
Po ELL
does not make it payment. The defendants to such an action ^
must be all the partners, and there is no set-off either in law or BRODHUKST.
in equity of the private debt of one defendant against the joint
debt of the firm (see Lindley on Partnership, 5th ed. p. 292 (4),
and cases cited there). It is, no doubt, generally true that a
man may do by his agent anything that he can do himself, and
I will assume that a joint creditor may effectually receive pay-
ment of a joint debt by his agent; and, in an ordinary case, I
should infer agency from the receipt and expenditure of the
money.by the firm, and its entry in the firm's books; but there
is great difficulty in coming to such a conclusion in the present
case. If James Ingram did in fact authorize the firm to receive
this money, he was guilty of a breach of trust; and the Court
never infers that a man is guilty of a wrongful act unless the
inference is irresistible. In the present case it is apparent from
the admitted facts relating to James Ingram that he took very
little part in the business of the firm after 1891. It is quite
possible that he knew nothing whatever of the receipt of this
money, and, although he would be liable jointly with his
partners to refund it because he had had the benefit of it, as he
must be taken to have known, it does not necessarily follow
that he authorized the receipt. I do not think that I am
bound, or indeed ought, to convict him of such a breach of
trust. I do not, however, propose to rest my judgment solely
on this ground.
The real contest between the parties has been as to the
extent to which the property is charged. The plaintiffs argued
that, even assuming that the 1000L has been paid off, so that
3000Z. only could be recovered under the covenant at law,
nevertheless the defendant can only redeem on payment of
the full 4000Z. The defendant argued that the mortgage is
merely a security for the debt covenanted to be paid, and that
if, and so far as, the debt is gone, the mortgage must be
diminished to the same extent, and, indeed, Stuart V.-C.
decided the case of Matson v. Dennis (1) on this very ground.
(1) (1864) 12 W. B. 596.
166 CHANCEET DIVISION. [1901]

PARWELL That was an objection to title between vendor and purchaser,

and the Vice-Chancellor said that the purchaser was entitled to
J^ evidence that the joint debt was properly discharged; that a
POWELL joint debt was properly discharged by payment to one joint
BHODUURST. creditor; that at law the receipt by one joint creditor was an
extinction of the debt; and that no law was applicable but
that of debtor and creditor; and he ordered the purchaser
to pay his purchase-money into court, with costs. But his
judgment did not meet with approval in the Court of Appeal.
I have referred to the Vice-Chancellor's judgment because
it shews that the very point now argued was raised and
decided. Knight Bruce L . J . says (1) : " The question is,
whether when an equitable charge is vested in two persons—
and as I will assume as joint tenants—the money can be
paid to one without any special authority from the other so
as to discharge the estate. I am not speaking of an action.
I am speaking of discharging an equitable burden upon-'an
estate, and so discharging the estate. I n my judgment, and
in the absence of special circumstances such as are not shewn
to exist in the present case, that cannot be done. The pur-
chaser is entitled to have it taken here, that Mr. M'Leay
was alive at the time, and that some money has, without any
consent on his part, been paid to the other joint tenant or
tenant in common. That, I repeat, in my judgment, does not
discharge the estate in equity.. Especially in the case of vendor
and purchaser I think the purchaser has a right to say that
the whole 30002. was not shewn to be discharged, but that it is
consistent with the evidence to suppose that it may be still
an available charge in equity." Turner L . J . shortly referred
to the facts and concurred, adding that that part of the order
under appeal which directed the payment of the purchase-money
into court was right, and ought to stand, because the title was
good and the question raised only one of conveyance. An
order was made accordingly, by which the purchase-money
was to be brought into court. No costs were given on either
side, but the costs of the plaintiffs in the suit were directed to
be costs in the cause. The reasoning of the Court of Appeal
is directly contrary to the reasoning of Stuart V.-C. in the
(1) 4 D. J. & S. 350.
2 Ch. CHANCEKT DIVISION. 167

Court below. It was urged that this amounts only to an PAEWELL

expression of opinion that the purchaser was entitled for his
protection to have the concurrence of a possible claimant, but J^,
I cannot regard it as confined to this, and I am, of course, POWELL
bound by the decision, and not the less because it coincides BKODHURST.
with my own opinion and the general practice of conveyancers,
for, if the defendant is right, the joint account clause ought
never to be inserted where the mortgage money is held on
trust, and the existence of the trust ought always to be
disclosed—a course which would revolutionize a settled and
convenient practice of many years' standing.
The fallacy of the defendant's argument consists in the
assumption that the question whether the money covenanted
to be paid is recoverable at law is the only relevant con-
sideration in foreclosure or redemption proceedings and in
a disregard of the principles of equity that underlie fore-
closure and redemption. The mortgagee's estate is absolute
at law on breach of the covenant to pay on the appointed day,
but the Court interferes for the benefit of the mortgagor on
the terms that he does equity. The mere payment of the
principal and interest legally recoverable is not necessarily
sufficient. For example, money laid out in permanent improve-
ments may have to be paid, although there is no covenant
under which it could be recovered at law, and in a mortgage
of a reversionary interest in land, where time runs from the
falling into possession of such interest, foreclosure will be
granted although the remedy on the covenant is statute-barred
—Hugill v. Wilkinson (1)—and arrears of interest for more
than six years may be retained in an action to-redeem a mort-
gage of a reversion—Dingle v. Coppen (2)—and the mortgagee's
right to tack and consolidate depends on the same principle.
If a mortgagor chooses to pay otherwise than in strict accord-
ance with the terms of his contract he does so at his own risk.
The proviso for redemption in a mortgage to several is never
expressed to take effect on payment to the mortgagees or either
of them, but to the mortgagees or the survivor of them; and
if a mortgagor pays to one, although such payment may be
(1) (1888) 38 Ch. D. 480. (2) [1899] 1 Ch. 726.
168 CHANCEEY DIVISION. [1901]
FARWELL a good discharge in law, yet the matter is at large when he
comes into equity, and the Court takes into consideration all
v-vw the facts of the case, and ascertains whether the payee was
OWELL b ene ncially entitled to the whole or to a part only, or whether
BEODHUBST. be W as a trustee with the other mortgagee, and treats the
payment as good in whole, or in part, or altogether bad accord-
ingly. It is not a question of fixing the mortgagor with notice
of a trust, but it is the inquiry that the Court makes to satisfy
itself that it is just and equitable under all the circumstances
to deprive the mortgagee of his legal title to the property com-
prised in the mortgage. This is an answer to the argument
of the defendant—that James Ingram was the actual survivor,
and therefore could have received the money and given a valid
receipt at a later date. The mortgagor did not, in fact, pay
to the survivor, but to one of two. He can rely only on the
receipt as at the time when it was given, and he has only
himself to thank because he chose to pay otherwise than in
accordance with the contract. Indeed, on his own evidence
he trusted to the firm of Ingram, Harrison & Ingram to do
what was right with the money, and to indorse a receipt for
the 1000Z. on the mortgage. The judgment will be in the
usual form settled in Farrer v. Lacy, Hartland & Co. (1), the
principal sum due being 4000Z., not 3000Z.

Solicitors: Bowman & Curtis Hayward ; George Guy Vertue,

for Hodding dt Co., Worksop, Notts.
. (1) (1885) 31 Oh. D. 42, 51.
G. K. A.