ELLIS v. KERR. [1909 E. 559.] Contract-Parties-Covenant by Covenantor with himself and others—Joint By a marriage settlement W. W. K. assigned to the trustees a policy Rose v. Poulton, (1831) 2 B. & Ad. 822, explained. By a marriage settlement of June 21, 1898, made between Walter William Kerr of the first part, Evelyn Mary Ellis, spinster, of the second part, Sir A. E. A. Ellis of the third part, the Honourable Lady M. F. Ellis, of the fourth part, T. D. Butler and C. J. Kerr of the fifth part, and the said T. D. Butler, C. J. Kerr, and W. H. Chetwynd "(which three last-named persons are hereinafter called the trustees)" of the sixth part, W. W. Kerr assigned to the trustees a policy of assurance on his own life for the sum of 15,000l. effected with the Alliance Assurance Company subject to an annual premium of 305l. 12s. 6d., and the said sum of 15,000l. thereby assured and all other moneys to become payable thereunder by way of bonus or otherwise; and it was declared that the trustees and the survivors or survivor of them and the executors and administrators of such survivor, their or his assigns, or other the WARRING- 1910 Feb. 15. WARRING 1910 ELLIS v KERR trustees or trustee for the time being of the settlement (thereinafter called the trustees or trustee) should stand possessed of the net moneys to arise from the policy upon the trusts therein mentioned. The settlement contained the following covenant on which the question now in dispute arose: "And the said W. W. Kerr T. D. Butler and C. J. Kerr do and each of them doth hereby covenant with the trustees that he the said W. W. Kerr if the said intended marriage shall be solemnized will not by any act or omission cause or allow the policy hereby assigned or any policy substituted therefor as hereinafter provided to become void or voidable and that they the said W. W. Kerr T. D. Butler and C. J. Kerr or some or one of them their or some or one of their heirs executors or administrators will during the life of the said W. W. Kerr from time to time duly pay all money payable for keeping on foot the said policy or any policy substituted as aforesaid or for restoring the same respectively if and when voidable And if any such policy shall become void will effect on the life of the said W. W. Kerr a new substituted policy or policies with such office and in such names or name as the trustees or trustee shall direct and for an amount equal to the sum which would have been payable under the void policy if it had not become void and the said W. W. Kerr had then died And will deliver and if necessary also assign every such substituted policy and deliver the receipt for every such payment to the trustees or trustee And the said W. W. Kerr T. D. Butler and C. J. Kerr and each of them their and each of their heirs executors or administrators will not do or suffer any act or thing by means whereof the trustees or trustee may be prevented from receiving any money assured by any policy whether original or substituted subject to the trusts of these presents." The marriage was solemnized on June 22, 1898. In 1899 the policy was allowed to lapse, and in substitution for it W. W. Kerr effected in the names of T. D. Butler, C. J. Kerr, and W. H. Chetwynd as trustees of the settlement a policy on his own life for 15,000l. dated February 20, 1899, and subject to half-yearly premiums of 148l. 4s. 5d. each. By a deed of December 14, 1906, the Honourable E. H. Ellis was appointed a trustee of the settlement in the place of W. H. Chetwynd, who TON J. retired; and the policy and the right to enforce the covenant WARRINGwere vested in T. D. Butler, C. J. Kerr, and E. H. Ellis as trustees of the settlement, and as joint tenants, for the purposes and upon the trusts thereof. W. W. Kerr made default in payment of the premiums on the policy and was adjudicated a bankrupt. From 1904 to 1908 the premiums were paid by T. D. Butler and C. J. Kerr personally, but they refused to make any further payments, and E. H. Ellis brought this action against W. W. Kerr, T. D. Butler, and C. J. Kerr for a declaration that the defendants were jointly and severally liable to pay the premiums, and for an order on them to pay those which fell due in August, 1908, and February, 1909, with interest and the fines for non-payment thereof. By their defences T. D. Butler and C. J. Kerr alleged that they had been induced to enter into the covenant, if at all, by misrepresentation. They gave notice of trial of a question of law under Rules of the Supreme Court, Order xxv., r. 2, asking for a declaration that the alleged covenant sued on was void and created no cause of action so far as regarded them by reason of their being named therein both as covenantors and covenantees, and that the action might be dismissed with costs or all further proceedings therein be stayed. Upjohn, K.C., and Sylvain Mayer, for the defendants Butler and C. J. Kerr. The covenant is void inasmuch as the same persons are both covenantors and covenantees. There is nothing to divide it and make it a covenant with any of the trustees separately. This is simply an action on the covenant and it ought to be dismissed; but that will not prevent the plaintiff from taking proceedings for making the defendants liable on other grounds. A man cannot covenant or contract with himself, and an action on such a contract could not formerly have been maintained in a Court of law: De Tastet v. Shaw (1); Faulkner v. Lowe. (2) A man cannot sue himself, and the rule is the same in Courts of Equity: Boyce v. Edbrooke. (3) The circumstance that other persons are joint contractors is immaterial: (1) 1 B. & Al. 664. (2) (1848) 2 Ex. 595. (3) [1903] 1 Ch. 836. 1910 ELLIS v. KERR. WARRING Moffat v. Van v. Turton (3); TON J. 1910 -A ELLIS V. KERR. Millingen (1); Mainwaring v. Newman (2); Neale Teague v. Hubbard. (4) This is not like cases in which the Court allows one of several trustees to bring an action and make the other trustees defendants so that they may be bound by the order, as in Luke v. South Kensington Hotel Co. (5) It is a question not of form, but of substance; not of the failure of a trustee, whereupon the Court may intervene, but the failure of the trust property itself. This covenant never could have been enforced; therefore the property never existed, and the Court cannot be asked to protect it. H. Terrell, K.C., and W. M. Cann, for the plaintiff in the action. It is true that at law a man cannot be both plaintiff and defendant and that an action will not lie on a contract in which the same person is covenantor and covenantee; but that is a mere matter of form; the covenant exists although it cannot be sued on: Rose v. Poulton. (6) No doubt the covenant in that case was joint and several, but it was treated as a joint covenant, and the decision shews that the legal defect is one of form. Then equity steps in to assist the covenantees who are trustees and to prevent a defect of form from destroying the trust estate. Such a covenant is available in equity: Bosanquet v. Wray. (7) There appears to be no case in which the legal defect has actually been held to be a ground for allowing a man to sue in equity; but all the cases proceed on the basis that the debt remains and there is a right to sue in equity though not at law: Piercy v. Fynney. (8) One of two joint promisees can maintain an action on the contract, making the other joint promisee a co-defendant if, after tender of an indemnity against costs, he refuses to be joined as a co-plaintiff: Cullen v. Knowles. (9) That is allowed in order to bind him by the judgment and because it cannot be done at law. One of several trustees can do the same thing: Luke v. South Kensington Hotel Co. (5) In the present case if the Court appointed new trustees of the settlement they could sue on the (1) (1754) 2 Bos. & P. 124, note (c). (3) (1827) 4 Bing. 149. (4) (1828) 8 B. & C. 345. (5) (1879) 11 Ch. D. 121. (6) 2 B. & Ad. 822, 829, 830. (9) [1898] 2 Q. B. 380. TON J. 1910 covenant even at law. The property secured by the covenant is WARRINGtrust property subject to the settlement. It is a chose in action of which the trustees of the settlement are trustees; and it ought not to be lost to the cestuis que trust because as a matter of form they cannot sue at law. The Court of Chancery never allows trust property to fail. Upjohn, K.C., in reply. This is not a matter of form but of substance. The covenant is void ab initio; consequently there never was any trust property to which any right of action could attach. In every case in which Courts of Equity have interfered there has been some equitable right outside and beyond the alleged covenant. In Rose v. Poulton (1) the covenant was joint and several and the action was brought on the several covenant, so that case has no application here. Bosanquet v. Wray (2) is in our favour. In Cullen v. Knowles (3) and Luke v. South Kensington Hotel Co. (4) there were good contracts to start with. If Courts of Equity always interfered to remedy such defects as these Boyce v. Edbrooke (5) must have been decided the other way. WARRINGTON J. stated the facts, and continued:-On the part of the plaintiff it is admitted that at law, before the fusion of law and equity by the Judicature Act, such an action as this could not have been maintained; but he says the objection to that action would have been a merely formal objection, and the person who was thereby prevented from suing at law might have sued-and he must say this-in the same form of action in a Court of Equity. Now I want to guard myself, and counsel for the applicants have guarded themselves, against being supposed to say that a decision in favour of the applicants in this case, though it would put an end to the present action, which is merely an action on the covenant, would entirely conclude the question whether in some other form of proceedings these two defendants may or may not be liable to somebody. The only question that I am asked to determine is whether they are liable ELLIS v. KERR. (1) 2 B. & Ad. 822. (3) [1898] 2 Q. B. 380. (5) [1903] 1 Ch. 836. |