3 & 4 Will. 4, c. 27, s. 42.

(5) ON LEGACIES.

Express trusts.

Acknowledg

ments.

Possession of prior incumbrancer.

Disabilities.

(e) Arrears of interest on legacies can only be recovered for six years, calculated from the filing of the bill. (Hughes v. Williams, Mac. & G. 683; Chappell v. Rees, 1 D., M. & G. 393; Re Walker, L. R., 7 Ch. 120.) As to interest on legacies, see 2 Wms. Exors. 1319; Lord v. Lord, L. R., 2 Ch. 782; Re Richards, L. R., 8 Eq. 119.

(p) It was formerly decided in Ireland, that no more than six years' arrears of interest of money charged upon lands could be recovered, although the deed creating the charge vested the lands in trustees to secure it. (Burne v. Robinson, 1 Dr. & Walsh, 688; see also Knox v. Kelly, 6 Ir. Eq. R. 279.) But it is now settled that where there is an express trust, sect. 25 applies and the claim is not barred by sect. 42. So held in the case of annuities secured on realty (Ward v. Arch, 12 Sim. 472; Mansfield v. Ogle, 24 L. J., Ch. 700; Cox v. Dolman, 2 D., M. & G. 592; Snow v. Booth, 8 D., M. & G. 69; Lewis v. Duncombe, 29 Beav. 175; Knight v. Bowyer, 2 De G. & J. 421); in the case of an annuity payable out of personalty (Playfair v. Cooper, 17 Beav. 187); in the case of a mortgage secured by a term in a trustee (Shaw v. Johnson, 1 Dr. & Sm. 412); in the case of a simple contract debt charged by will on real estate (Blower v. Blower, 7 W. R. 101); and in the case of interest on a legacy directed to be raised by a sale of realty. (Gough v. Bult, 16 Sim. 323; Kellett v. Kellett, I. R., 5 Eq. 298.) See the note to sect. 25, ante, p. 201, and also the cases as to express trusts quoted under sect. 40, ante, p. 236, et seq.

(q) See the cases as to acknowledgments under this section given ante, p. 246. In Bolding v. Lane (1 De G., J. & S. 122), Lord Westbury said that the words in this section, "by whom the same was payable," do not denote merely the persons who are legally bound by contract to pay the interest, but all the persons against whom the payment of such arrears might be enforced.

(r) The exception in this clause of the act is, where a man has an estate and there are several incumbrances on it, and one of the incumbrancers enters into possession, there another creditor shall not be prejudiced by that possession, if he come for relief within a year after the prior creditor has been removed from the possession. If a prior mortgagee or other incumbrancer is in possession, the right of the subsequent creditor to recover interest during the full period of such possession, although that period may exceed six years, is saved, provided he is so vigilant as to come within one year after the determination of that possession. A judgment creditor who has the first security upon the estate, and gets into possession, is a prior incumbrancer in possession within this proviso. (Henry v. Smith, 2 Dru. & War. 390.) The prior incumbrance referred to in this exception is one which affects the estate or interest upon which the subsequent incumbrance is also a charge. (Vincent v. Going, 1 J. & Lat. 697). A. being entitled to a mortgage on certain lands vested in a trustee for him, agrees that a subsequent annuity creditor should have precedence over his debt, and joins in a demise of the lands to a trustee for the annuitant, but his trustee who had the legal estate did not join in the demise. A. remains in possession until the death of the grantor of the annuity. It was held, that the annuitant was not debarred from recovering more than six years' arrears, as the annuitant fell strictly within the literal terms of the exception in this section. (Drought v. Jones, 2 Ir. Eq. R. 303, "a doubtful authority;" Sugd. R. P. Stat. 146, n.) See also Montgomery v. Southwell, 2 Con. & Law. 263.

The nature and object of this exception is explained by Lord Westbury in Chinnery v. Erans, 11 H. L. Ca. 115. There a mortgage having been created of certain estates, the mortgagor subsequently sold the equity of redemption and assigned some outstanding charges to a trustee for the purchaser, and the purchaser entered into possession. It was held that the land was not in the possession of a bona fide incumbrancer prior to the mortgage within this exception, and that the mortgagee could not recover more than six years' arrears of interest.

It will be observed that the 42nd section contains no exception in favour of persons under disabilities; and if the act be construed literally, infants and lunatics, and other persons under disabilities, will only be enabled

to recover six years' interest. It has been observed by Lord St. Leonards, "that even as to legacies charged upon real estates, there is no saving as to arrears of interest for infancy, or the like. In the case of younger children's portions, although by way of legacy, the interest is often allowed to remain in arrear for several years, for the accommodation of the head of the family; and the statute will, unless it be modified, often bar a just claim unnecessarily, and ultimately injure the person whom it was intended to benefit; and whether a legacy be payable out of real or personal estate, of course interest upon it, where it carries interest, ought not to be barred during the infancy of the legatee." (Sugd. V. & P. 638, 11th ed.)

3 & 4 Will. 4,

c. 27, s. 42.

A suit for the recovery of mesne rents and profits in equity, is not a suit ACCOUNT OF for the recovery of arrears of rent within sect. 42. (Per Turner, L. J., RENTS IN EQUITY. Hicks v. Sallitt, 3 D., M. & G. 816.) On the question how far the account

is to be carried back in such suits, the following distinctions have been laid

down. In cases of express trusts, the Statutes of Limitation afford no de- 1. From accruer fence, and an account will be directed from the accruer of the plaintiff's of plaintiff's title. title. (Sturgis v. Morse, 3 De G. & J. 1; Wright v. Chard, 4 Drew. 673; Mathew v. Brise, 14 Beav. 341.) Where there is no express trust, but 2. For six years. the person in possession has had notice of the plaintiff's title, it was formerly held, that as at law more than six years' mesne profits could not be recovered, so in equity the account would not be carried back beyond six years from the filing of the bill (Reade v. Reade, 5 Ves. 744; Harmood v. Oglander, 6 Ves. 215); and in Hicks v. Sallitt (3 D., M. & G. 782), where the defendant was a purchaser for value, with notice of the plaintiff's title, Turner, L. J., thought that the statute 21 Jac. 1, c. 16, might be applicable, by analogy to the action of account at law. But," where there 3. From filing of is no trust, no fraud, no infancy, no suppression, where, in short, there is a bill. mere bona fide adverse possession, it is not according to the course of the court to carry back the account of rents beyond the filing of the bill." (Per Turner, L. J., Hicks v. Sallitt, 3 D., M. & G. 782, where Lord Cranworth refers to the older cases) and Wood, V.-C., laid down in Thomas v. Thomas (2 K. & J. 79), that in an adverse suit in the nature of an ejectment suit, the account is directed only from the filing of the bill. (See also Penny v. Allen, 7 D., M. & G. 409; Morgan v. Morgan, L. R., 10 Eq. 99.)

Where the plaintiff has been under the disability of infancy during the Infancy of plainpossession of the defendant, the latter is regarded as a bailiff for the former, tiff. and an account will be directed during the period of infancy. (Blomfield v. Eyre, 8 Beav. 250; Nanney v. Williams, 22 Beav. 452; Schroder v. Schroder, Kay, 591; Pascoe v. Swan, 27 Beav. 508; Pelly v. Bascombe, 4 Giff. 390.) But the bill must be filed within six years after the plaintiff comes of age. (Lockey v. Lockey, 1 Eq. Ca. Abr. 304, pl. 10.) It has been laid down in Ireland, that a person entering on the estate of an infant, whether the infant has been actually in possession or not, will be fixed with a fiduciary position towards the defendant, (1) when he is the infant's natural guardian; (2) when he is so connected by relationship or otherwise with the infant as to impose upon him a duty to protect, or at least not to prejudice, the infant's rights; (3) when he takes possession with knowledge or express notice of the infant's rights. (Quinton v. Frith, I. R., 2 Eq. 396.)

Where the plaintiff has been guilty of laches an account will only be Laches. directed from the filing of the bill. (Dormer v. Fortescue, 3 Atk. 130; Pettinard v. Prescot, 7 Ves. 541; Pickett v. Loggan, 14 Ves. 215; Schroder v. Schroder, Kay, 591.) The right to an account, even in the case of mines, may be lost by laches. (Parrott v. Palmer, 3 Myl. & K. 632.) A party's right to an account may also be restricted in consequence of laches in not finding out a mistake earlier by the means which were in his power. (Denys v. Shuckburgh, 4 Y. & Coll. 42).

There is no fixed limit of time in directing an account against the trustee In case of chariof a charity. The result of the authorities is, that in each case the court ties.

is bound by the particular circumstances. (Att.-Gen. v. The Mayor of Exeter, Jac. 448.) An account against a corporation for a breach of trust in receiving charity funds was not confined either to the filing of the

3 & 4 Will. 4, information, nor to six years before that time. (Att.-Gen. v. Brewers' c. 27, s. 42. Company, 1 Mer. 495; Att.-Gen. v. Corporation of Stafford, 1 Russ. 547.) And an account of the rents and profits of a charity estate was decreed for a period of 200 years against the corporation, who, by their answer, admitted the receipt, and stated that they had from time to time debited themselves in their books with the amount. (Att.-Gen. v. Mayor of Exeter, Jac. 443; 2 Russ. 362; 3 Russ. 395; Att.-Gen. v. Caius College, 2 Keen, 110; Att.-Gen. v. Pretyman, 4 Beav. 462.) When the Court of Chancery limits an account of the rents and profits of charity estates to the time of filing the information, or to six years before that date, it does not act with reference to the Statute of Limitations. The court proceeds upon the principle that it will not deal harshly with men, who, meaning to discharge their duty faithfully, have nevertheless mistaken it. (Att-Gen. v. Mayor of Exeter, 2 Russ. 367). If there be a fair and honest intention on the part of those who have the management of a charity, it is not the practice of the court, though that rule should be founded in mistake, to hold trustees responsible for acts so done, or to call back money which they have so paid. (Att.- Gen. v. The Dean and Canons of Christchurch, 2 Russ. 324.) The principles upon which the court acts in taking an account against corporations who are trustees of charities, and have misapplied the funds, are discussed in Att.-Gen. v. Mayor, &c. of Newbury, 3 Myl. & Keen, 647. (See Shelford on Mortmain and Charities, pp. 455-467, and Att.-Gen. v. Davis, 18 W. R. 1132.)

INTEREST ON
DEBTS GENE-
RALLY.

Interest on debts
at common law.

ss. 28-30.

At common law it was the general rule that interest was not payable on any debts, unless expressly agreed on, or unless a promise could be implied from the usage of trade or other circumstances, or unless the debt were secured by a bill of exchange or promissory note. (Higgins v. Sargent, 2 B. & Cr. 348; Chitty on Contracts, 8th ed., p. 595; and see Rhodes v. 3 & 4 Will. 4, c. 42, Rhodes, Johns. 653.) Now, however, by 3 & 4 Will. 4, c. 42, it is enacted (sect. 28), that upon all debts or sums certain, payable at a certain time or otherwise, the jury, on the trial of any issue, or on any inquisition of damages, may, if they shall think fit, allow interest to the creditor at a rate not exceeding the current rate of interest from the time when such debts or sums certain were payable, if such debts or sums be payable by virtue of some written instrument at a certain time; or if payable otherwise, then from the time when demand of payment shall have been made in writing, so as such demandant shall give notice to the debtor that interest will be claimed from the date of such demand until the time of payment; provided that the interest shall be payable in all cases in which it is now payable by law. (See Ram on Assets, 560-576.) Sect. 29. The jury, on the trial of any issue, or on any inquisition of damages, may, if they shall think fit, give damages in the nature of interest, over and above the value of the goods at the time of the conversion or seizure, in all actions of trover or trespass de bonis asportatis, and over and above the money recoverable in all actions of policies of assurance made after the passing (14th August, 1833) of this act. Sect. 30. If any person shall sue out any writ of error upon any judgment whatsoever given in any court in any action personal, and the court of error shall give judgment for the defendant thereon, then interest shall be allowed by the court of error for such time as execution has been delayed by such writ of error for the delaying thereof. (3 & 4 Vict. c. 105, sects. 53-55, Ireland.)

Cases at law on sect. 28.

Interest cannot properly be allowed under 3 & 4 Will. 4, c. 42, s. 28, where the sums are not payable by virtue of any written instrument at a certain time, nor when a demand of payment in writing within the meaning of the act has not been made. (Harper v. Williams, 4 Q. B. 219.) As to this section, see also Attwood v. Taylor, 1 M. & Gr. 279; Beaumont v. Greathead, 2 C. B. 494. An attorney may give notice that he will claim interest on his bill of costs delivered to his client from the date of the notice. (Berrington v. Phillips, 1 M. & W. 48.) Before action the plaintiff by letter to the defendant demanded re-payment of the whole of the deposits which he had paid on shares in a company which afterwards proved an abortive undertaking, adding that he should expect to be paid 57. per cent. interest from a time specified which was prior to the date of

the letter. Held, a sufficient demand of payment within this section. (Lord Londesborough v. Mowatt, 4 El. & Bl. 1.) A written application for a loan till a fixed day is not an instrument by virtue of which money is payable within this section, although the loan is made on the terms of the application. (Taylor v. Holt, 3 H. & C. 452; 13 W. R. 78). And see the cases in equity, post.

3 & 4 Will. 4,

c. 27, s. 42.

As to the allowance of interest in proceedings in error, see Garland v. Cases on sect. 30. Carlisle, 5 Cl. & F. 355; Langridge v. Levy, 4 M. & W. 337; Hooper v. Lane, 6 H. L. 443; Tyne Improvement Commissioners v. General Steam Navigation Co., 15 W. R. 875; Rodger v. The Comptoir D'Escompte de Paris, L. R., 3 P. C. 465; Reg. Gen., Q. B., C. P., and Ex., T. T., 16 Vict. r. 26, and T. T. 1867.

in equity.

c. 42, s. 28.

In equity, interest was more frequently allowed. (See the earlier cases Interest on debts collected, C. P. Coop. 209-250, n.) The stat. 3 & 4 Will. 4, c. 42, being a remedial act, a court of equity will adopt many of its provisions, changing 3 & 4 Will. 4, its formal language, and adapting it to the practice of the court. (Hyde v. Price, 8 Sim. 578.) It has since been held, that the act 3 & 4 Will. 4, c. 42, s. 28, giving power to juries to allow interest if they think fit, has not altered the rules by which the discretion of the Court of Chancery is guided. (Re Powell's Trust, 10 Hare, 134. See Booth v. Leicester, 3 My. & Cr. 459; Martyn v. Blake, 3 Dru. & War. 125; Earl of Mansfield v. Ogle, 4 De G. & J. 38; Spartali v. Constantinidi, 20 W. R. 823.)

Interest at 47. per cent. will be allowed on the amount of a demand for Cases in equity on work and labour in an administration suit from the time when the demand for sect. 28. interest was made, under 3 & 4 Will. 4, c. 42, s. 28. (Mildmay v. Methuen,

3 Drew. 91.) Where notice had been given by the plaintiffs to the defendants, that interest would be claimed under this section, and the defendants had prevented the plaintiffs from recovering the interest at law by paying the money into court: it was held, under the circumstances of the case, that the court had jurisdiction to order payment of interest. (Hull and Selby R. Co. v. N. E. R. Co., 5 D., M. & G. 872.)

Interest is payable under 3 & 4 Will. 4, c. 42, s. 28, where a sum being payable at a certain time, a dispute which is settled by the court arises as to

the amount payable. (Mackintosh v. G. W. R. Co., 4 Giff. 683.) A Interest on calls. notice of a call on a contributory under a voluntary winding-up under the supervision of the court, which stated that if the call was not paid at the time appointed, interest would be charged thereon at the rate of 57. per cent., was held to be sufficient within this section so as to charge interest. (Re Overend, Gurney & Co., Ex parte Lintott, L. R., 4 Eq. 184; Barrow's case, L. R., 3 Ch. 784. See also Stocken's case, L. R., 3 Ch. 412.) As to the interest which will be allowed on debts proved in a winding-up, On debts proved in a winding-up. see Re Herefordshire Banking Co., L. R., 4 Eq. 250; Re East of England Banking Co., L. R., 4 Ch. 14; Warrant Finance Co.'s case, ib. 643; Hughes' Claim, L. R., 13 Eq. 633.

As to the computation of interest between banker and customer, see Between banker Crosskill v. Bower, 32 Beav. 86; Williamson v. Williamson, L. R., 7 Eq. and customer; 542; between trustee and cestui que trust (Jones v. Foxall, 15 Beav. 392; trustee and cestui Penny v. Avison, 3 Jur., N. S. 62); and between principal and agent que trust; (Turner v. Burkinshaw, L. R., 2 Ch. 488; Burdick v. Garrick, L. R., 5 Ch. principal and 233). There is no general rule as to the rate of interest the court will agent. allow on repayment of money expressed to be the consideration for an ab- On securities. solute assignment, which is treated only as a security for such consideration money (Re Unsworth's Trust, 2 Dr. & Sm. 337), where 57. per cent. was allowed. Interest at the rate of 47. per cent. was allowed on a simple contract debt secured by deposit of title deeds, where there had been no stipulation as to interest. (Re Kerr's Policy, L. R., 8 Eq. 331.) As to interest on charges, see Lippard v. Ricketts, L. R., 14 Eq. 291; and on mortgages, Thompson v. Drew, 20 Beav. 49; Ashwell v. Staunton, 30 Beav. 52. Where unconscionable bargains have been entered into with money lenders, the court will only allow the sums actually advanced to be recovered together with interest at 57. per cent. (Miller v. Cook, L. R., 10 Eq. 641; Tyler v. Yates, L. R., 6 Ch. 665; Aylesford v. Morris, 21 W. R. 188.)

Where an annuity is in arrcar "the established rule of the court (which, Arrears of an

S.

S

nuity.

however, is only general and not inflexible) is, that interest cannot be recovered on the arrears.' (Per Sugden, C., in Martyn v. Blake, 3 Dru. & War. 125, adopted by Turner, L. J., in Earl of Mansfield v. Ogle, 4 De G. & J. 41; and Lord Chelmsford in Blogg v. Johnson, L. R., 2 Ch. 228.) See the cases collected, Daniell, Ch. Pr. 1105. As to interest on arrears of salary, see Rishton v. Grissell, L. R., 10 Eq. 393. Interest was allowed at 57. per cent. where default had been made in the performance of a covenant to pay money. (Knapp v. Burnaby, 9 W. R. 765.) It is the general rule both at law (Brangwin v. Parrot, 2 W. Bl. 1190; White v. Sealey, 1 Dougl. 49), and in equity, to consider the penalty of the bond as the limit of the debt or damages which can be recovered. But there are exceptions to this rule. See the earlier cases collected in C. P. Coop. 209-230; and see Clarke v. Lord Abingdon, 17 Ves. 106; Hughes v. Wynne, 1 Myl. & K. 20; Walter v. Meredith, 3 Y. & Coll. 264; and Mathews v. Keble, L. R., 3 Ch. 691, where the interest allowed, together with the principal, exceeded the penalty.

As to deducting income tax on payments in respect of interest, see Crane v. Kilpin, L. R., 6 Eq. 33. And as to calculation of interest and apportionment in questions between a tenant for life and remainderman, see Re Grabowski's Settlement, L. R., 6 Eq. 12; Cox v. Cox, L. R., 8 Eq. 343; Maclaren v. Stainton, L. R., 11 Eq. 382.

Where a decree or order is made directing an account of the debts of a deceased person, unless otherwise ordered, interest shall be computed on such debts, as to such of them as carry interest, after the rate they respectively carry, and as to all others after the rate of 47. per cent. from the date of the decree or order. (Cons. Ord. XLII., rule 9.) A creditor, whose debt does not carry interest, who comes in and establishes the same before the judge in chambers under a decree or order of the court or of the judge in chambers, shall be entitled to interest upon his debt at the rate of 41. per cent. from the date of the decree or order, out of any assets which may remain after satisfying the costs of the suit, the debts established and the interest of such debts as by law carry interest. (Cons. Ord. XLII., rule 10. See the cases quoted in Morgan, 612; Daniell, Ch. Pr. 1103-1106.) On the subject of interest generally, see Fisher's Digest, tit. Interest of Money; 2 Stark. on Ev. 575-579, 3rd ed.

III. OF THE LIMITATION OF ACTIONS ON SPECIALTIES,

3 & 4 WILL. 4, c. 42, ss. 3–7.

3. That all actions of debt for rent upon an indenture of demise, all actions of covenant or debt upon any bond or other specialty, and all actions of debt or scire facias upon any recognizance, and also all actions of debt upon any award where the submission is not by specialty, or for any fine due in respect of any copyhold estates, or for an escape, or for money levied on any fieri facias, and all actions for penalties, damages or sums of money given to the party grieved, by any statute now or hereafter to be in force, that shall be sued or brought at any time after the end of the present session of parliament, shall be commenced and sued within the time and limitation hereinafter expressed, and not after; that is to say, the said actions of debt for rent upon any indenture of demise, or covenant, or debt upon any bond or other specialty, actions of debt or scire facias upon recognizance, within ten years after the end of this present session, or within twenty years after the cause of such actions or suits, but not after; the said actions by the party grieved, one year after the end of this present session, or within two years after the cause of such actions or suits, but not after;