Brace v. the Duchess of Marlborough (1) down to Finch v. Shaw (2) and Rooper v. Harrison, the rule has always been that which was laid down by Lord Justice Wood in the last of these cases and in Stackhouse v. Lady Jersey, namely, that as between equitable incumbrancers, relief will be given to the incumbrancer prior in point of date, unless he has lost his priority by some act or neglect of his; and that relief will not be refused as against a subsequent incumbrancer on the sole ground of his being a purchaser for value without notice, unless he has the legal estate or the best right to call for it.

This being so, what I have to consider first is, whether there is anything in this case to postpone the priority of the plaintiff's mortgage, and I am of opinion that there is not; for, in point of fact, no negligence as to the deeds is proved. The allegation in the answer is, that either John Thorpe or George Thorpe handed over the deeds, George Thorpe being one of the trustees, and therefore one of the persons who had a perfect right to the custody of the deeds; and though it was argued that the mere custody of the deeds was enough to give the defendants priority, I am of opinion that this is not so. Nor can I take Layard v. Maud to be an authority for such a proposition. It appears that in that case there was conduct amounting to acquiescence in what was done on the part of the first mortgagee, and the decision was founded on Roberts v. Croft (3), which is one among the several authorities for the proposition, that the mere possession of the title-deeds by a second mortgagee, though a purchaser for value without notice, will not give him priority. There must be some act or default on the part of the first mortgagee to have this effect. Nothing of this description is proved in this case. I have, therefore, no difficulty in going the length of declaring the plaintiff's priority, and, regard being had to the nature of the security and the 48th section of 15 & 16 Vict. c. 86, in directing a sale. But whether I can or cannot deprive the subsequent

(1) 2 P. Wms. 491.

(2) 19 Beav. 500: affirmed by the House of Lords, 26 Law J. Rep. (N.s.) Chanc. 65.

(3) 2 De Gex & J. 1 ; s. c. 27 Law J. Rep. (N.S.) Chanc. 220.

mortgagee of the custody of the deeds, is a different, and, regard being had to the authorities, a difficult question. The point was discussed by Lord Cottenham in the case of Frazer v. Jones (4). In the result he found it unnecessary to decide the question. The Lord Justice Wood also discussed the question in Stackhouse v. Lady Jersey, but he also found it unnecessary to come to a decision on the point. In this case the defendants claim to be interested in a moiety of the property only, admitting that some one else is interested in the other moiety. At the instance of the persons interested in the other moiety, they may be compelled to produce, though not to part with, the deeds relative to the entirety. I, therefore, can order a sale and a production of the deeds; and, of course, attested copies can be taken. The right to retain the deeds, therefore, is not of much pecuniary value. At the same time, I am bound to give my opinion on it. If the question had been res integra I should not hesitate, and I infer that neither Lord Cottenham nor the Lord Justice Wood would have hesitated as to the conclusion to be come to on the subject. Unfortunately, however, it is not res integra. In Head v. Egerton (5) Lord Hardwicke's opinion, though he refers in some measure to the conduct of the first mortgagee, appears to be against ordering a delivery up of the deeds. Wallwyn v. Lee (6), a decision of Lord Eldon's, is direct on the point, and has been so treated by Lord St. Leonards in Joyce v. De Moleyns. Therefore, considering myself bound by these authorities, I shall not make any decree depriving the defendants Alfred John Pogson and Harriet his wife, of the possession of the deeds. Beyond this I do not consider my hands tied, and the order I shall make is a declaration, first, that the charge vested in the plaintiffs and their trustees is the first charge on the entirety of the property in the pleadings mentioned, and that they, by force of that charge, have a right to have the legal estate conveyed as they may direct, and to have what is due for principal, interest and costs, raised

(4) 5 Hare, 475, before V. C. Wigram: s. c. on appeal, 17 Law J. Rep. (N.s.) Chanc. 353. (5) 3 P. Wms. 280. (6) 9 Ves. 24.

by a sale of the property. I shall, then, order an immediate sale of the property, with liberty to apply for directions as to the parties who are to join in the conveyance, and as to the proceeds to arise from the sale. I shall also order the defendants Alfred John Pogson and Harriet his wife to produce, for the purposes of the sale, all deeds or muniments of title in their or either of their possession or power, relating to the entirety of the property; and there will be, besides, an account of what is due to the plaintiff for principal, interest and costs, and I shall appoint a receiver. But Alfred John Pogson and Harriet his wife will not be required to hand over the titledeeds to him. There will probably be no surplus after paying the first charge; if there is, it can be dealt with subsequently to the sale.

It was suggested in the course of the argument, that the plaintiff's trustees were the only proper parties to be plaintiffs. I am not of this opinion. The costs of the two last-named defendants, who are trustees, must, in point of fact, be taxed and paid. with the plaintiff's costs. The suit is really a suit for carrying into effect the settlement of May, 1813, and the defendants are all necessary parties for that purpose, though not entitled to costs as against the person interested in the prior charge.

The decree must be without prejudice to such proceedings, if any, as may be taken at law in respect of the deeds, or any of them, against Alfred John Pogson and his wife.

Dec. 19, 22.-The cause was spoken to on the minutes on these days. By the draft decree it was directed that "for the purposes of the sale the defendants Alfred John Pogson and Harriet his wife do produce all deeds and documents in their custody or power relating to the said hereditaments as the Judge shall direct."

The plaintiff now moved to insert also in the decree a clause ordering the defendants Holdsworth and Hodgkinson and the defendant Colton to deliver upon oath to the plaintiff Fowler all deeds and documents in their or either of their possession or power relating to the property comprised in the indenture of settlement of the 25th of April, 1825.

GIFFARD, V.C. said there could be no doubt that the clause which the plaintiff proposed to insert was not one which the ordinary forms of the Court could justify. The form would be, after striking out the clause proposed by the plaintiff, to order that the defendants Alfred John Pogson and Harriet his wife were not to deliver over the deeds and writings in their custody or power, but that they were to produce them for the purposes of sale; that all other parties were to produce the deeds in their custody or power for the purposes of sale; and that as to the delivery up of the last-mentioned deeds, the purchaser was to be at liberty to apply in chambers as he might be advised; and his Honour said that upon such an application he would not hesitate to order the last-mentioned deeds to be delivered up to the purchaser.

Solicitors-Messsrs. Rogerson & Ford, agents for Messrs. W. & E. B. Howlett, Kirton-in-Lindsey, for plaintiffs; Messrs. Coverdale & Co., agents for Messrs. Hett, Freers & Hett, Brigg, for defendants.

Companies' Act, 1862, s. 75.-Call-Debenture.

After a resolution to wind up a company voluntarily has been made, a debenture issued by the company and in the hands of a shareholder can only be assigned subject to future calls.

A resolution was passed to wind up the China Steam - Ship Company voluntarily, which was confirmed on the 19th of December, 1866. Lowe was a shareholder in respect of sixty shares; he was also the holder of fifteen debentures issued to him by the company; he assigned the debentures for value to Mackenzie, and notice was given to the company on the 1st of March, 1867, of the assignment. A call was made payable on the 1st of July, 1867. On the 8th of August, 1868, an order was made to continue the winding-up under

the supervision of the Court, and another call was made payable on the 1st of February, 1868. Mackenzie was allowed to prove the amount due on the debentures, subject to the calls due on Mackenzie's shares. This was a summons to vary the certificate by allowing him to prove in full.

Mr. Jessel and Mr. F. J. Turner, for Mackenzie, did not dispute that debentures were assignable only subject to the equities between the assignor and the company at the date of the assignment; but said that here the equity could not accrue till the call was made.

Mr. Roxburgh and Mr. Wickens, for the official liquidator, said that, by section 75. of the Companies' Act, 1862, a call made in a winding-up related back to the time the person liable to pay it became a shareholder; that is to say, it was in the nature of debitum in præsenti solvendum in futuro. In In re the Rhos Hall Iron Company, ex parte the Birmingham Bank (1), July 16th, 1868, in this branch of the Court. Apart from statutory provision, as the calls were made in a winding-up, they must be the result of liabilities of the company incurred previously to the notice of assignment, and ought not to be affected by it.

Mr. Jessel replied.-Even at law a debt accrued due since the assignment on a contract made previously could not be set off against the debenture

Watson v. the Mid Wales Railway

Company, 36 Law J. Rep. (N.S.) C.P. 285; s. c. Law Rep. 2 C.P. 593. The act had not and could not make the call payable before it was made. The divi

(1) In re the Rhos Hall Iron Company, ex parte the Birmingham Bank was a case similar to this, except that the assignment was made and an entry of the same made in the books of the Rhos Hall Iron Company before it was wound up; but it was argued solely on the question whether the form of the debentures, which were made payable to "transferees," was such as to bring it within the decision of In re the General Estates Company, ex parte the City Bank, Law Rep. Chanc. 758, or that of In re the Natal Investment Company, 37 Law J. Rep. (N.S.) Chanc. 362; s. c. Law Rep. 3 Chanc. 355. The Master of the Rolls thought it within the latter decision, and therefore assignable only subject to the equities.

dends due to a creditor who happened to be a shareholder were not stayed to meet future calls

In re Overend, Gurney & Co., ex parte Grissell, 35 Law J. Rep. (N.S.) Chanc. 752; s. c. Law Rep. 1 Ch. 528; and so he would not be prevented from dealing with his debt while no calls were actually due; otherwise, he would practically be paying in advance. In the latter case, in construing section 75, Lord Chelmsford said: "Until the call is made, there is nothing more than a liability to contribute. This, indeed, creates a debt; but the debt does not accrue due till a call is made." The principle of equity regulating the assignment of a chose in action was, that the assignee took the whole benefit provided everything had been done which could be done to perfect the assignment, subject, nevertheless, to any debt due from the assignor to the debtor, of the existence of which he could inform himself; but here there was no debt in existence, -the call might never have been wanted. A debt due, not payable, was a contradiction in terms: though no doubt there might be some collateral reason for not enforcing a debt, such as a covenant not to sue till a certain time. However, the certainty of having to pay a sum of money at a future day was very different from a mere liability or chance; and, in any case, the Court would hesitate to extend the harsh rule of equity which tended to defeat the object for which debentures were created.

The MASTER OF THE ROLLS (Jan. 27) said: The only question which arose on this summons was whether a certain debt due on debentures could be proved in full, or should be set off against a call. There was no doubt it could be proved in a way; the question was whether it could be set off. After stating the facts, the Master of the Rolls continued: As to the nature of the debentures, it was admitted that they are assignable only subject to equities; that is to say, the equities subsisting at the date of the assignment. The only question then was, whether the call was a debt due at the time of assignment; if so, the debenture debt was subject to the call; according to the ordinary course of law this was not the case, and it must have been made so by

CA

act of parliament. After reading the 75th section of the Companies' Act, 1862, he said: It created a debt which was debitum in præsenti solvendum in futuro. He thought the object of the legislature was to prevent the happening of what was argued would be the case here. Where the assignment took place before the winding-up, the section did not come into operation. He did not think any of the cases cited had any bearing on the subject, except In re the Rhos Hall Iron Company, ex parte the Birmingham Bank, a decision of his own which he did not feel bound by; but there was no decision against it, and on the construction of the act he thought the call related back to the time of the commencement of the windingup. The 75th section seemed to have been introduced to meet the very thing which had here occurred, -to prevent persons avoiding the payment of calls while they had claims against the company which they could assign away. The proof must therefore be reduced to the extent of the amount due on the call.

Solicitors-Mr. Reginald H. Wilkins, for Mr. Mackenzie; Messrs. Mackenzie & Co., for official liquidator.

STUART, V.C. Nov. 19. LORDS JUSTICES. Jan. 11.

In re THE COMPANIES'
АСТ, 1862.

In re THE ACCIDENTAL

AND MARINE INSUR-
ANCE CORPORATION.

(Ex parte BRIDGER AND
TWO OTHERS.)

Winding-up of Company-Transfer of Shares-Forfeiture of Shares-Past Member -Contributory-Extent of Liability.

In January, 1866, A. transferred the shares which he held in the above-named company to B, and in the month of February, 1866, the transfer was duly registered, nothing being then due upon the shares in respect of calls. Two calls were afterwards made upon B. in respect of the shares. Neither of those calls was paid; and on the 3rd of October, 1866, the shares were declared forfeited for nonpayment of the calls. On the 24th of October, 1866, an order was made for the voluntary winding-up of the company, which was afterwards continued under the supervision of the NEW SERIES, 38.-CHANC.

Court. A.'s name was placed on the list of contributories of the company as a past member of it. Upon a summons to remove his name from the list,-Held, that he was properly placed on the list as a past member of the company; but the question whether his liability could be extended to the full amount unpaid on his shares, including calls after forfeiture, was not determined; and the summons was dismissed with costs.

This matter came on, upon three adjourned summonses, on behalf of a Mr. Bridger and two other gentlemen of the names of Tyler and Lowe, for orders directing that their names, which had been placed on the list of contributories of the abovenamed company as past members of it, might be taken off such list, and that their costs might be paid by the company.

Mr. Bridger's case was taken first.

The facts of that case were these: The company was duly incorporated and registered in July, 1865, as a company limited by shares, with a capital of 2,000,000, divided into 80,000 shares of 251. each. Mr. Bridger held five shares in the company. In August, 1865, he contracted to sell them to a Mr. Ball. On the 27th of January, 1866, the shares were duly transferred by Mr. Bridger to Mr. Ball, and on the 15th of February, 1866, that transfer was registered. Two calls were afterwards made upon Mr. Ball in respect of the five shares, the second call being made on the 19th of July, 1866. Neither of those calls was paid. On the 3rd of October, 1866, the shares were, in pursuance of a resolution of the company directors for the non-payment of the calls. to that effect, duly declared forfeited by the On the 24th of October, 1866, an order. was made for the voluntary winding-up of the company. That order was afterwards confirmed, and the voluntary winding-up was directed to be carried on under the supervision of this Court. In the settlement of the list of the contributories the name of Mr. Bridger was placed on the list as a pas member of the company; and from tha ruling he applied to the Court by way of appeal (1).

(1) By the Companies' Act, 1862, section 38, it is enacted as follows:

"In the event of a company formed under this act being wound up, every present and past mem2 D

By the articles of association of the company it was, among other things, provided as follows:

"XXVII.-Forfeiture of Shares.

"154. After forty-two days non-payment of any call in respect of any share the directors may declare the share forfeited for the benefit of the company.

"157. The forfeiture of a share shall involve the extinction at the time of the forfeiture of all interest in, and all claims and demands against the company in respect to the share, and all other rights incident to the share (except only such of those rights as by these presents are expressly saved).

"158. The forfeiture of a share shall be subject and without prejudice to all claims. and demands of the company for calls in arrear thereon (if any) and interest on the arrears, and all other claims and demands of the company against the holder of the share when it was forfeited, and to the rights of the company to sue in respect thereof.

ber of such company shall be liable to contribute to the assets of the company to an amount sutfi cient for payment of the debts and liabilities of the company, and the costs, charges, and expenses of the winding-up, and for the payment of such sums as may be required for the adjustment of the rights of the contributories amongst themselves, with the qualifications following; (that is to say,)

"(1.) No past member shall be liable to contribute to the assets of the company if he has ceased to be a member for a period of one year or upwards prior to the commencement of the winding-up.

46

(2.) No past member shall be liable to contribute in respect of any debt or liability of the company contracted after the time at which he ceased to be a member.

'(3.) No past member shall be liable to contribute to the assets of the company unless it appears to the Court that the existing members are unable to satisfy the contributions required to be made by them in pursuance of this act.

"(4.) In the case of a company limited by shares, no contribution shall be required from any member exceeding the amount, if any, unpaid on the shares in respect of which he is liable as a present or past member."

And by section 74. as follows :

"The term 'contributory' shall mean every person liable to contribute to the assets of a company under this act, in the event of the same being wound up; it shall also, in all proceedings for determining the persons who are to be deemed contributories, and in all proceedings prior to the final determination of such persons, include any person alleged to be a contributory."

"159. But the company shall not sue unless they, at such time and in such manner as they think reasonable, first ascertain that the forfeited share and the net proceeds thereof are less in value than the amount of their claim, and shall then sue only for the balance unsatisfied by the net proceeds.

"160. Provided that the forfeiture of any share may, at any time within twelve months after the forfeiture thereof is declared, be remitted by the directors, at their discretion, on payment by the defaulter of all sums due from him to the company, and all expenses occasioned by the non-payment thereof, and on such other terms as the directors deem reasonable, but the remission shall not be claimable as a matter of right.

"161. The forfeiture of a share shall not prejudice the right to any dividend or dividends already declared thereon.

"162. The sales and other dispositions of forfeited shares may be made by the directors at such times and on such conditions as they think fit.

"XXVIII.-Forfeited and Purchased

Shares.

"164. Shares forfeited or purchased for the benefit of the company may, at the discretion of the directors, be sold or disposed of by them, or be absolutely extinguished, as they deem most advantageous for the company.

"165. Shares so forfeited or purchased shall, until sold or disposed of or extinguished, form part of the reserved fund, and the dividends declared thereon shall be carried to the reserved fund."

Mr. Bridger had paid to the company all that was due from him to them in respect of the shares at the time of the transfer; but it appeared that the existing members of the company would not ultimately be able to satisfy in full the contributions required to be made by them in pursuance of the

act.

Under those circumstances, the question was, whether the transfer of Mr. Bridger's five shares to Mr. Ball, and the registration of the transfer, followed by the forfeiture of the transferred shares, released Mr. Bridger from his liability as a past membe of the company?