(although he had parted with the estate) by the terms of his covenant to make good to his lessor the damage which had arisen from the default of the defendants. And I take it to be a general proposition, applicable to such a case as this, that, where one man is compelled to pay damages by reason of the default of another, he is entitled to recover compensation from the person through whose default that damage is occasioned. The reason for this rule appears to be well stated in Mr. Leake's excellent work on contracts (8). Whether it be put upon the ground of an implied contract, or upon the ground of a legal obligation, appears to me to be a matter of indifference. The plaintiff has been compelled to pay in consequence of the default of the defendants, who were bound to repair while they were assignees of the term. I think, under those circumstances, the majority of the Court of Exchequer were right in holding the defendants liable to make good to the plaintiff the loss occasioned by their default.

WILLES, J.-I concur upon the ground that, where two parties have become bound, the one by contract and the other by estate, to perform the same covenant, the former is entitled to indemnity against the latter to the extent of his interest, although there is no immediate privity of contract between them; and I think that the defendants are liable in this action by reason of their having had the whole benefit for which the covenant was entered into by the plaintiff as lessee. The principle of the decision in Dering v. Earl of Winchilsea (4) appears to me to govern

the case.

BLACKBURN, J.-I am of the same opinion. I agree with the reasons given by the majority of the Court below, and I express my entire concurrence in what fell from Channell, B.

MELLOR, J., BRETT, J., and Grove, J., concurred.

Judgment affirmed.

Attorneys-H. D. Roberts, for appellants; Robinson & Preston, for respondent.

(8) At page 41.

[IN THE EXCHEQUER CHAMBER.] (Error from the Court of Exchequer.)

1872. Feb. 6.

}

DE LANCEY V. THE QUEEN.

Legacy Duty-36 Geo. 3. c. 52. s. 19— Money bequeathed to be laid out in Land.

A testator, who died in 1800, by his will directed a fund in Consols to be laid out in the purchase of land, and settled in succession on certain persons and their issue male, with remainder to his own right heirs. S. became entitled by inheritance to the fund, and on her death E. became entitled thereto as heir to S. The fund never was laid out in the purchase of land, nor in any way dealt with by S., or those from whom she inherited it:-Held, affirming the judgment below, that under the 36 Geo. 3. c. 52. s. 19, the rate of legacy duty payable by E. was the same as would have been payable on a legacy bequeathed to him by S.

Petition of right, alleging as followsJames de Lancey, who died in 1800, by his will bequeathed a certain fund in Consols to trustees upon trust to lay out the same and the interest thereupon in the purchase of lands, and directed the lands to be settled to the use of his eldest son, Charles Stephen, for life, with remainder to the first and other sons of Charles Stephen successively in tail male, and in default of issue to the testator's son, James, for life, with remainder to the first and other sons of James successively in tail male, and in default of such issue to the testator's own right heirs.

The fund was never laid out in lands. At the testator's death, his heir-at-law was his eldest son, Charles Stephen, who received the dividends during life, and died a bachelor and intestate in 1840. On the death of Charles Stephen, his brother and heir-at-law, James, received the dividends during life, and died a bachelor and intestate in 1857. On the death of James, his sister, Susan, was his heir-atlaw, and also heir-at-law to and only lineal descendant of the testator. She refused to receive either dividends or principal, and died a spinster and intestate in 1866. On her death, the suppliant, Edward Floyd De Lancey, a grand

son of the testator's brother, became heirat-law to Susan, Charles Stephen, James, and the testator respectively. Neither Charles Stephen, James, nor Susan did any act which had the effect of an election to take the fund as money or as land, or of constituting any of them a new root of descent with regard to the fund. The Court of Chancery, in administering the fund, directed that the principal and the dividends accrued since Susan's death be transferred (subject to duty) to the suppliant. The Commissioners of Inland Revenue assessed the suppliant to pay 6471. 128. 6d., being succession duty at 5 per cent., which the suppliant paid under protest. The Court of Exchequer held the assessment void, on the ground that the duty payable was legacy, not succession duty (1); and that decision was confirmed on appeal by the Exchequer Chamber (2).

The Commissioners made no further assessment, but refused to return to the suppliant the 647. 12s. 6d. The sup

pliant now claimed a return of that sum, or the balance after deducting duty at 2 per cent., admitting that he was liable to pay legacy duty at 2 per cent.

Plea that the duty payable was at the rate of 5 per cent., being the duty payable as on a legacy coming to the suppliant from Susan, and that the Commissioners retained the 6477. 12s. 6d. in satisfaction thereof; that that sum was paid by the Court of Chancery to the Commissioners, as the duty payable by the suppliant, but without adjudication by that Court as to the rate.

Demurrer to the plea, and joinder therein. The Court of Exchequer gave judgment for the Crown (3), and the suppliant brought error thereon.

Sir J. Karslake (Townsend with him), for the suppliant.-The rate of legacy duty depends on the construction of the words, "by virtue of any bequest thereof as such," in the proviso in 36 Geo. 3. c. 52. s. 19 (4). If those words mean

(1) 38 Law J. Rep. (N.S.) Exch 193. (2) 39 Law J. Rep. (N.s.) Exch. 76.

(3) 40 Law J. Rep. (N.s.) Exch, 198.

(4) 36 Geo. 3. c. 52. s. 19: "That any sum of NEW SERIES, 41.-EXCHEQ

that the duty is the same as it would be on a bequest from Susan, who died after 1805, the rate is 5 per cent.; but if as on a bequest from the testator, who died in 1800, then 24 per cent. (5). The proviso, we contend, means that the person who becomes entitled to an estate of inheritance in possession in the real estate to be purchased with the money, that is, the suppliant, shall pay the same duty as he would pay if he became entitled to the money as money by virtue of a bequest from the testator. No other testator, and no other will or bequest, is contemplated by the clause, and its sole purport and application is to the will which directs money to be laid out in real estate.

money or personal estate directed to be applied in the purchase of real estate, shall be charged with and pay duty as personal estate, unless the same shall be so given as to be enjoyed by different persons in succession, and then each person entitled thereto in succession shall pay duty for the same in the same manner as if the same had not been directed to be applied in the purchase of real estate before such duty accrued; but no duty shall accrue in respect thereof after the same shall have been actually applied in the purchase of real estate for so much thereof as shall have been so applied; provided, nevertheless, that in case before the same, or some part thereof, shall be actually so applied, any person or persons shall become entitled to an estate of inheritance in possession in the real estate to be purchased therewith, or with so much thereof as shall not have been applied in the purchase of real estate, the same duty which ought to be paid by such person or persons, if absolutely entitled there to as personal estate by virtue of any bequest thereof as such, shall be charged on such person or persons, and raised and paid out of the fund remaining to be applied in such purchase."

(5) The effect of 55 Geo. 3. c. 184. sch. p. 3. ss. 1 & 2, is that duty at 24 per cent. would be payable on a legacy bequeathed by the testator, who died in 1800, to the suppliant, the grandson of the testator's brother, and at 5 per cent. on a legacy bequeathed by Susan who died after 1805, to the suppliant, the grandson of the brother of Susan's father.

K

[BLACKBURN, J.-You read the statute as if it were 66 money directed to be applied by will." Would not the clause equally affect a settlement by deed? And if so, "any bequest" could only mean "any imaginary bequest."]

The testator was the last purchaser. Neither Charles, James, nor Susan, having done anything to alter its character, the property came under the will as money-land to the suppliant, who took it not as Susan's personal representative, but as heir to the testator, and in no other capacity. If Charles, James, or Susan, had elected to take it as money, or if Susan had bequeathed it, the suppliant would not have been entitled unless he were legatee. It is therefore by virtue of the will alone that he takes; the trusts of the will still operate; but for those trusts, and the rule of equity which regards as land money bequeathed to be laid out in land, the property would have gone elsewhere than to the suppliant. The Exchequer Chamber held that Susan took by virtue of the will, though not named therein; then why not also the suppliant? The point taken as to the set-off in the Court below is not insisted on here.

The Solicitor General (Sir G. Jessel), (C. Hutton with him), was not heard.

COCKBURN, C.J.-I think the true construction of this section is that put on it by the Court of Exchequer. The intention of the legislature seems very plain, and the proviso in question seems almost to have contemplated this very case.

The testator leaves money to be laid out in land, and creates estates tail, and failing these, gives the remainder to his own right heirs. The two sons, tenants in tail, die without leaving issue, and the absolute interest in the property goes to Susan. Now the suppliant is heir-at-law of Susan, and when the property reached her, the devise under the testator's will had already been exhausted, and the property was in her absolutely, in the character of a fee simple. The suppliant cannot be said to take under the testator's will, though he takes by virtue of that will in this sense; that he takes because that will has stamped the character of land on a property which, but for

that will, would not have had that character.

He takes from the person last seised as her heir. Where in such a case a person takes money directed to be laid out in real estate, but not so in fact laid out, the legislature meant that that person should be taxed as if he had taken the property by bequest from a person who could have bequeathed it to him, and as if it had been personalty. Susan was that person who could have bequeathed it to the suppliant, and she must be considered as having made an imaginary bequest to him.

In other words, the statute may be read as Grove, J., has suggested, thus: "Any person who shall become entitled to an estate of inheritance in possession in real estate to be purchased with money directed to be so applied, shall pay the same duty which ought to be paid by him if entitled thereto as personal estate by bequest."

WILLES, J.; BLACKBURN, J.; MELLOR, J.; BRETT, J.; and GROVE, J., concurred. Judgment affirmed.

goods before any act of bankruptcy, the execution creditor's claim to be paid out of the goods is not defeated by the debtor's subsequent bankruptcy, though the sheriff do not sell till after the adjudication. Such an execution does not require the protection of section 95, sub-section 3, which applies only where an act of bankruptcy has been committed prior to the seizure.

The SPECIAL CASE and the judgment of the Exchequer in favour of the defendant, the execution creditor, are reported 40 Law J. Rep. (N.S.) Exch. 146. The plaintiff, the trustee in bankruptcy, having brought error

Prentice (E. Thomas with him), for the plaintiff, admitted that the decision of the Lord Chancellor and the Lords Justices in Ex parte Rocke; In re Hall (1) was against him, but contended that that decision was wrong. He was thereupon stopped by Cockburn, C.J., who said that this Court (2) would not overrule that case, and further, that he agreed with the judgment of Martin, B., in the Court below.

Cohen, for the defendant, was not heard.
Judgment affirmed.

general manager of a bank without the knowledge or authority of the bank directors, concerted for their own purposes the following scheme, which the Court held to be entirely void for fraud, and not binding on B. Two accounts were opened with the bank in the respective names of the agent and the principal. The agent, on behalf of his principal, requested the bank to honour the agent's cheques, and guaranteed the repayment thereof, all moneys standing to the credit of the principal to be charged with such repayment. The agent paid to his principal's account 1,500l. belonging to the principal, and drew on his own account for a like sum, which he spent in promoting the scheme. He drew other cheques on his own account, and paid the proceeds to his principal's account as moneys belonging to the principal. Thus in the bank books the agent's account stood with a large debit, and the principal's account stood with an equal credit charged with the guarantie. The principal having brought an action against the bank to recover the whole amount standing to his credit :-Held, that he could recover 1,500l. thereof, his own money; but not the residue, which never had been his money.

This was an action brought by the official liquidator of the plaintiff company by order of the Court of Chancery, dated the 7th April, 1869, in the name of the company against the defendants, to recover the sum of 25,0451. 6s., principal and interest, received by the defendants for the use of the plaintiff's between the 23rd June and 12th September, 1867.

The defendants paid 6007. into Court, and pleaded as to the residue never indebted, payment, and a set-off of the sum of 24,5061. 8s. 4d. and interest for moneys paid at the plaintiffs' request, of which the plaintiffs guaranteed the repayment.

Issue having been joined on the pleas, an arbitrator by consent stated a special case for the opinion of the Court, who were to draw inferences of fact as a jury. The question for the Court was whether the plaintiff's could recover any and what part of the sum claimed in addition to the 6001.

The facts are sufficiently stated in the judgment and notes.

J. Brown (Holl with him), for the plaintiffs. The whole transaction between Stafford and the defendants was illegal, and ultra vires, and cannot bind the plaintiffs as a company. They are entitled to take advantage of the fact that the guarantie was a fraud, and can recover the whole amount-Gray v. Lewis (1). The plaintiffs' shareholders, including Stafford's allottees, are contributories under 25 & 26 Vict. c. 89. ss. 23, 38, and must have a remedy against some one. They cannot sue Stafford who is not a contributory. The defendants are estopped by their acts from denying that the money is the plaintiffs'-Burry v. Croskey (2). The knowledge of the defendants' manager is the knowledge of the defendants-Dresser v. Norwood (3); In re Carew's Estate Act (4); Barwick v. English Joint Stock Bank (5).

Pollock (R. G. Williams with him), for the defendants.-The transaction is entire and cannot be severed, and none of the money can be recovered - Brownrigg v. Rae (6). The bank directors are not bound by their manager's fraud. Brown replied.

Cur. adv. vult.

BRAMWELL, B. (on Jan. 20), delivered the judgment of himself, Channell, B., and Pigott, B.

It will be convenient to state the facts of this case to shew how we appreciate them. The plaintiff company is now in liquidation under a winding up order. It was formed, probably bona fide, for the purpose indicated by its name. It invited applications for shares, received some in the usual way, and allotted some shares on which deposits were paid (7), but not

(1) Law Rep. 8 Eq. 526.

(2) 2 Jo. & H. 2 4.

(3) 34 Law J. Rep. (N.s.) C.P. 43. (4) 31 Beav. 39.

(5) 36 Law J. Rep. (N.s.) Exch. 147. (6) 5 Exch. Rep. 489.

(7) The shares were 207. each. The deposits of 21. on each share had been paid only upon 2,324 shares, amounting to 4,6487. These were bonâ fide held by 75 persons, who all became shareholders

enough to enable it to procure a settling day for its shares on the Stock Exchange. This being thought desirable in order to make the public apply for or purchase shares, the following plan was resolved on (8). The directors of the plaintiff company, or some of them, Stafford, a promoter of the company, and Challis, the general manager of the defendants, agreed that an account should be opened in Stafford's name with the defendants; that another account should be opened with the defendants in the name of the plaintiffs; that the plaintiff's should guarantee to the defendants the repayment of any money with interest drawn by Stafford on the account in his name, and charge with such repayment any balance in their favour on the account in their name; that the defendants should have a bonus of 6007. for this; that Stafford should then get persons to apply for shares, which the directors of the plaintiff's should allot to them; that Stafford should draw on the account in his name with the defendants, and with the money thereby obtained pay into the plaintiffs' account with the defendants the requisite deposits on the allotments, taking blank transfers from the allottees or pretended allottees. Cha lis was to have a bribe of 1,000l., and there were to be various other persons rewarded. The object of this was that the defendant bank might certify to the committee of the Stock Exchange that the requisite amount of shares to get a settling day had been applied for and paid on.

This plan was carried into execution. The accounts were opened: that in the plaintiffs' name with a payment in of 1,5007. of the plaintiffs' money; that in Stafford's name with a loan or advance of 1,500l. from the defendants. Persons were procured by Stafford and one of plaintiffs' directors to apply, or pretend to apply, and to sign letters of application for shares. Shares were allotted by the directors of the plaintiffs, or some Stafford drew on of them, thereon.

long before June 1867, and were now subject to an uncalled liability of 18 per share, amounting to 41,8327.

(8) In June 1867.