THE CONVEYANCER is published monthly. Notice of non-receipt of any number must be given to the Publishers not later than the end of the month of issue. After the end of that month the Publishers accept no liability for non-delivery. COMMUNICATIONS respecting matters of an Editorial nature should be addressed to "The Editor of the Conveyancer," at 3, Chancery Lane, London, W.C.2. CONTRIBUTIONS or manuscript forwarded with a view to insertion in the publication must be sent at the risk of the sender, although every effort will be made to return drafts or unsuitable copy. SUBSCRIPTION RATES :-Annual Subscription (payable in advance), £1 10s., inclusive of Postage; Single Copies, 2s. 9d. (postage, 2d. extra). EDITORIAL AND PUBLISHING OFFICES:-3, Chancery Lane, London, W.C.2.

Notes of Recent Cases.

One of the articles of association (article 4) of a private company provided that, if a shareholder desired to withdraw from the company, he should offer his holding to the other shareholders, and in default of their purchasing he should be entitled to have the company wound up. The affairs of the company having reached a complete deadlock, one of the shareholders offered to sell his holding of shares to the others, but the offer was refused, and he thereupon presented a petition for the winding-up of the company by the Court. It was held that, although the provision in the articles respecting winding-up was not binding on the Court, it ought to be taken into consideration in determining whether it is "just and equitable," within the meaning of meaning of section 129 of the Companies (Consolidation) Act, 1908, that the Court should order the company to be wound up, and, having regard to the position of the company's affairs, a winding-up order was made. American Pioneer Leather Co., Ltd., In re (87 L. J. Ch. 493).

A children's hospital for surgical tuberculosis if properly equipped and well managed is not, per se, a noisy, noisome, or offensive business-Frost v. King Edward VII. Welsh &c. Association ([1918] 2 Ch. 180; 87 L. J. Ch. 561).

At the date of her will and death a testatrix was absolute owner of £111 stock in a certain undertaking, and had a general testamentary power over £550 of the same stock. By her will the testatrix bequeathed all the stock in this undertaking to a certain legatee, and all the residue of her personal estate, including any property over which she might have an absolute power of appointment, to trustees upon certain trusts. Sargant, J., held that the first bequest operated as an exercise of the general testamentary power over the £550 stock, being a "bequest of personal property described in a general manner within section 27 of the Wills Act, 1837, and that

F

NOTICE TO QUIT, DEFINITE OR CONDITIONAL. -Landlords gave to their tenant a proper and definite notice to quit at Michaelmas. This notice was inclosed in a covering letter from the agent, which said: "I am instructed ... to serve upon you the inclosed notice, which is intended to terminate your tenancy at Michaelmas unless they [the landlords] see sufficient reason in the meantime to change their opinion." It was held that the notice read with the covering letter was not a conditional notice and therefore invalid, but was a definite notice to terminate the tenancy at Michaelmas-Norfolk County Council v. Child ([1918] 2 K. B. 351).

Where an author has assigned a copyright so as to constitute the assignee the sole owner of the copyright and the assignee has covenanted to pay royalties, can the author sue a subsequent purchaser from the assignee for unpaid royalties? Such a purchaser would not be under any contractual liability to account for royalties to the author, and the original assignment did not make the royalties a charge on the copyright. The mere reservation of royalties does not reserve a vendor's lien for unpaid royalties, and if the original assignment did not provide that the royalties were to be paid as part of the purchase-money a vendor's lien for such royalties would not be thereby reserved, and the author would not be entitled to an account or payment. So held by McCardie, J., in Barker v. Stickney ([1918] 2 K. B. 357).

If in an action on a contract it is disclosed that the contract is illegal and void as contrary to public policy, it is the duty of the

Court to take the objection, although that defence may not have been pleaded-Montefiore v. Menday Motor Components Co., Ltd. (87 L. J. K. B. 907).

The rule that a landlord who has covenanted to repair is entitled to notice of defects does not apply where he retains possession and control of the premises to which his covenant relates-Melles & Co. v. Holme (87 L. J. K. B. 942).

PRACTICE.-On an appeal to the House of Lords, the judgments of the Court of Appeal and the material provisions of any Act of Parliament with which the appeal is concerned should be set out in the joint appendix, even though a full report of the case appeared in the Law Reports-Clawley v. Carlton Main Colliery Co., Ltd. (87 L. J. K. B. 920).

The case of North London and General Property Co. v. Moy, Ltd., noted on page 82 (Mag.) of Vol. 3, is now reported. See [1918] 2 K. B. 439.

A Mortgagee's Right to
Fixtures.

It is stated in the books as a general rule that, where there is a mortgage, any fixtures attached to the land or building mortgaged pass to the mortgagee without a right in the mortgagor to remove or sell them, unless such a right be given in express terms either by the mortgage itself or apart from it. And it is immaterial whether the mortgage be by a lessee or by an owner in fee. (Southport and West Lancashire Banking Co. v. Thompson, 37 Ch. D. 64.) The rule, which is old law and expressed in the maxim Quicquid plantatur solo, solo cedit, is still good law; but it has been stated by high authorities to have been much relaxed. A close examination of the subject would seem to make it more accurate to say that the rule still holds its own, but, in addition to and apart from it, several classes of cases have arisen to the facts of which the Courts have held the rule does not apply. This is not a merely meticulous refinement of terms. Much greater clearness, more accuracy of principle, simpler and more

scientific definition, and less confusion would, it is thought, ensue if, instead of proposing general rules and then cutting them down and besetting them with numerous glosses and exceptions, an attempt were made to extract and define as distinct rules the principles which in each particular case are found to apply. It is proposed, then, to set out the principles to be found in the cases and to digest them into so many rules which govern the subject in hand.

The first Rule: As between the mortgagor and his mortgagee, unless there is some express agreement to the contrary, all that is on the land or building mortgaged in the form of fixtures attached thereto passes under the mortgage to the mortgagee. (Meux v. Jacobs, L. R. 7 H. L. 481.)

This is the simple working rule and applies, be it clearly understood, only as between the mortgagor and his mortgagee. The reason of this rule is stated in Brooke's Abridgment "Property," 23, and reproduced in Bacon's Abridgment "Trespass," sec. 2: "If a piece of timber which was illegally taken from J. S. have been hewed, this action (viz. trespass) does not lie against J. S. for retaking it. But if a piece of timber which was illegally taken have been used in building or repairing, this, although it is known to be the piece which was taken, cannot be retaken, the nature of the timber being changed; for by annexing it to the freehold it is become real property" [the italics are ours].

The second Rule: A mortgagor has an implied authority or licence, while in possession, to remove or deal with fixtures attached to the mortgaged land or building in the ordinary course of his trade or business and as a legitimate act of that trade, but not otherwise. But the mortgagee's security must not be materially diminished, nor a breach of any express stipulation occasioned by such removal or dealing. (Gough v. Wood & Co., [1894] 1 Q. B. 713; Ellis v. Glover and Hobson, Lim., [1908] 1 K. B. 388.)

In Gough's Case, E. agreed with W. & Co. that they should supply him with a boiler for the purpose of his trade, to be paid for by

instalments and to remain the property of W. & Co. till all the instalments were paid, and further agreed that, in default of payment of any of the instalments, W. & Co. might enter and carry away the boiler. E. was tenant for a term of years of the land to which the boiler was to be fixed and, after the agreement referred to, he mortgaged his interest in the land to G., who had no notice of the agreement and allowed G. to remain in possession. Thereafter the boiler was affixed to the land. E. fell into Idefault and W. & Co. entered and carried the boiler away. The Court held that G., having allowed E. to remain in possession, must be taken to have acquiesced in his making the agreement for fixing and removing fixtures for the purposes of his trade, and that he could not claim the boiler as against W. & Co. But this rule must be carefully weighed. It applies only as between a mortgagee and a third party, and not as between a mortgagee and his mortgagor. Lord Justice Lindley makes this distinction clear in Gough's Case (supra). He says: "The cases of Mather v. Fraser (2 K. & J. 536), Climie v. Wood (L. R. 4 Ex. 328), Longbottom v. Berry (L. R. 5 Q. B. 123), and Holland v. Hodgson (L. R. 7 C. P. 328) shew beyond all doubt that if the apparatus in question had been the property of the mortgagor and he had fixed it, although only for the purposes of his trade, it would not have been removable by him as against his own mortgagee." Moreover, the rule rests solely on a legal presumption, on the licence or authority implied by the mortgagor being left in possession. Any act or fact which demonstrates that presumption or licence or authority as ended or revoked at once rebuts the rule and lets in another and third rule.

The third Rule: All licence or authority implied by the mortgagor remaining in possession, to remove or deal with trade fixtures ends as soon as the mortgagee enters into possession, and the mortgagee may then claim all such fixtures as he finds affixed to the land or building. (Reynolds v. Ashby & Son, Lim., [1904] A. Č. 466; Hobson v. Gorringe, [1897] 1 Ch. 182.) In Reynolds' Case (supra) Lord Lindley observes: "After the machines were fixed, and before the plaintiffs claimed them, the second mortgagee took possession; the plaintiffs' right to enter and remove the machines, resting as

it did on their contract with Holdway (the mortgagor), ceased to be exercisable. The plaintiffs have no greater rights against the defendants than they had against the second mortgagee, whose rights the defendants have acquired. The machines had ceased to be chattels belonging to the plaintiffs; they were not chattels wrongfully detained by the defendants. The machines had become fixtures which the plaintiffs were not entitled to remove from the possession of the mortgagees." Lord Parker (then Justice), in Re Samuel Allen & Sons ([1907] 1 Ch. 575; 76 L. J. Ch. 362), points out the distinction between the case of Gough and that of Hobson. The learned Lord says: "In Hobson v. Gorringe (supra) the circumstances were not the same as in Gough v. Wood & Co. (supra), because the mortgagee, who might otherwise have been held to have given an implied licence with regard to the chattels affixed, had actually entered into possession of the property before the chattels were removed from the freehold, and that entry into possession was held to be an implied revocation of an implied licence which the mortgagee could have given, so that the property then remained the property of the mortgagee and the hirer (the mortgagor) had no interest in it." The facts in Hobson's Case are for practical purposes the same as in Gough's, with, of course, the important exception of the mortgagee in the former case having taken possession while the fixture (an engine)

was still on the land. In neither case had the mortgagee notice of the hire-purchase agreement when he took his mortgage. As to whether notice would make any difference is still res integra, although the point is more or less affected by the dicta of Lord Justice A. L. Smith in Hobson's Case, and Lord Justice Romer in Reynolds v. Ashby (supra), and is discussed in Re Samuel Allen & Sons (supra) by Lord Parker. The better view seems to be that it would. But possession by the mortgagee will not always pass the fixtures, and this opens up a fourth rule.

The fourth Rule: Where a mortgagor in possession of the mortgaged property lets in a tenant and the tenant brings trade fixtures onto the property, such fixtures remain the property of the tenant and will not pass to the mortgagee, even if he

enters into possession of the mortgaged property. (Sanders v. Davis, [1884] 15 Q. B. D. 218; 54 L. J. Q. B. 576.)

Baron Pollock, in his judgment in Sanders' Case, says: . . . the plaintiff (the tenant) is entitled to judgment. Between the mortgagor and the mortgagee no doubt, unless there is some express reservation, all that is on the land fixed to the freehold passes under a mortgage of the freehold to the mortgagee. That was the only point decided in Meux v. Jacobs (supra). The question of the right of a tenant was not raised." And this, by the way, bears out our earlier remarks on what is called the general rule on the subject and shows it to be a Later, in the same case, Mr. Justice Manisty decision only on one aspect of the subject.

touches the crux of the fourth rule in these words: "The mortgagee . . . allowed the mortgagor to remain in possession and deal with the property. Now if the defendant (the mortgagee) plaintiff's tenant) and Hunt had brought trade had taken possession and let to Hunt (the fixtures onto the premises, he would have been entitled to remove them when his tenancy terminated.

I cannot see why a mortgagee should be in a better position in this respect when he permits the mortgagor to deal with the property and let in a tenant." On the question of taking possession, it should be carefully noted that the appointment of a receiver of the mortgaged property is not a taking of possession for the purposes of our present subject (Re Morrison, Jones and Taylor, Lim., [1914] 1 Ch. 50; Illingsworth v. Holdsworth, [1904] A. C., at p. 358). Lastly, comes a rule on the question of an equitable mortgage.

The fifth Rule: Where an equitable mortgage is taken subsequent to a hire agreement by the mortgagor for fixtures to be attached to the mortgaged property, the equitable mortgagee's rights to such fixtures are subject to the prior right of the owner or supplier of the fixtures. (Re Samuel Allen & Sons (supra); Re Morrison, Jones and Taylor, Lim. (supra).

Lord Parker, in Allen's Case, on this proposition remarks: "These (Hire Purchase) Agreements are very common and very useful, and of course it is open to a mortgagee to make what enquiries he likes as to whether there are

any agreements affecting the fixtures upon the property. If he does not do so and is a mere equitable mortgagee, in my opinion he must be held to take subject to those agreements; I think that those agreements, in the form which was adopted in this case, do create an equitable interest by which a subsequent purchaser who does not get the legal estate is bound and that, applying the ordinary principles of priorities, ... the interest of the hiring agreement takes precedence." The equities here being equal, it is merely an instance of the equitable maxim, Qui prior est tempore, potior est jure. Where the mortgagee has the legal estate then, the equities being equal, the law would prevail. But whether notice of a hire-purchase agreement of fixtures does affect a legal mortgage has not, as has been observed, been yet decided, though the dicta already noticed seem to indicate that it would.

Incurable Defects in Title.

Waiver of Objections to.

In prosecuting an enquiry as to title under a judgment in an action for specific performance of an open contract to purchase land, the vendor is not entitled to give evidence after judgment that the purchaser had knowledge, prior to the date of the contract, of any irremovable objections raised by him to the vendor's title to the property. When the House of Lords is discovered to have differed from the Court of Appeal in regard to so elementary a proposition of law, well may conveyancers confess to a feeling of surprise. And yet in the recent case of McGrory v. Alderdale Estate Company, Lim. ([1917] 1 Ch. 414; 86 L. J. Ch. 368), it appears that the Lord Chancellor (Lord Finlay) and Lords Haldane, Atkinson, Shaw, and Parmoor, when laying down the law as above stated, came to a diametrically opposite conclusion on that important question to that arrived at by Lord Cozens-Hardy, M.R., Lord Justice Warrington, and Mr. Justice A. T. Lawrence, in the Court of Appeal. Those learned Judges were of opinion that as the bargain for title was implied and not expressed-the contract being one that was open "-evidence ought to have been admitted at the time when the enquiry as to title took place to prove that, in

66

The House of Lords, in deciding against that judgment as to the rights of the parties, did not deny that, if the contract is open, the obligation which the law would impart into it to make a good title in every respect may be rebutted by proving that the purchaser entered into the contract with knowledge of certain defects in the title. For although a purchaser has the right to demand a full title, he may waive that right and be bound by his waiver. But it appeared to their Lordships, as the Lord Chancellor expressed it, that it was clear on principle that, where the vendor means to rely on such knowledge by the purchaser at the time of the contract between the parties, he must establish that at the hearing of the case. It is for the Court to decide what was the contract.

Grounds for the Difference of View.

As to the grounds for the difference in the view that was taken by the two tribunals, the Court of Appeal conceded this much concerning the waiver by a purchaser of his right to object to defects in title: Where the same was after the contract but before the hearing, it would have to be established at the hearing, and the decree should provide only for an enquiry into title as limited by the waiver. And inasmuch as the authorities settle that rule conclusively, it was but reasonable that the Court of Appeal should have accepted it in toto. The Lord Chancellor was content to cite Ogilvie v. Foljambe (3 Mer. 53), Curling v. Austin (2 D. & Sm. 129), McMurray v. Spicer (L. R. 5 Eq. 527), and Upperton v. Nickolson (L. R. 6 Ch. App. 436) as supporting the rule thus formulated.

A distinction was, however, drawn by the Court of Appeal between the waiver by a purchaser of his right to object to defects in title after the contract and before the hearing and his knowledge of such defects at the time of the contract, negativing what would otherwise be the implication of law as to the obligation to make a good title. There is, however, no trace to be found in any authority, said Lord Finlay, of any such distinction.