MULLAVEY v. HARRISON. 1905. October 13. Locke King's Act, 17 and 18 Vic., c. 113-Conveyancing and Law of Property Act, 1898 (No. 17) s. 109-Mortgage of freeholds-Contemporaneous personal security for same debt-Devise of realty-Bequest of personalty-Incidence of C.J. in Eq. mortgage debt-Primary or secondary liability—Administration. Where both real and personal estate are comprised in the same mortgage the mortgage debt must, as between the devisee of the realty and the legatee of the personalty, in the absence of evidence that the land was intended to be the primary security for the amount advanced, be borne rateably by the real and personal estate subject thereto. Locke King's Act, now s. 109 of the Conveyancing and Law of Property Act, 1898, does not make mortgaged lands primarily liable for the mortgage debt to the exoneration of personal property subject to the same mortgage, even when the security over the personalty is a mere equitable mortgage by deposit. Mortgage-Existence of mortgage-Procedure-Originating summons- Equity Act, 1901 (No. 24), Sch. IV. Rule 4-Practice. The Court of Equity will on an originating summons enquire into the existence of a mortgage in a case where the evidence on that question is uncontradicted, even although the rights of infants are concerned and the question is one which would be more properly determined on oral evidence if the accuracy of the evidence were impugned. On the 21st April, 1898, Peter Mullavey, to secure the repayment of 1650l., mortgaged certain real property, known as Waterfield's Farm, to one John Daly, and also lodged with him by way of security a fixed deposit receipt for 550l. representing that sum on deposit in the Bank of Australasia at Albury. Peter Mullavey died on the 12th September, 1903, having by his will given his real and personal property to different persons. This was an originating summons taken out by the executors for the determination (inter alia) of the incidence of the mortgage debt. The affidavit of the executors stated that so far as they could discover the fixed deposit receipt had on maturity been returned to the testator by Daly for the purpose of having the accrued interest added to it and for renewal, and that the substituted fixed deposit receipt had by inadvertence not been handed to the mortgagee, but was found among the testator's 1905. papers at his death, and its proceeds had been invested by the MULLAVEY executors. v. HARRISON. There was no evidence to show that as between the mortgagor and mortgagee either property had been regarded as the primary security for the mortgage debt. Leverrier, for the plaintiffs. The first point for consideration is whether the security for Daly's debt at the testator's death comprised the fixed deposit receipt. He referred to the evidence on the point. Loxton, for infant beneficiaries. I suggest that this question of fact should not be heard on originating summons: Canonba Rabbit Board v. Goldsbrough, Mort & Co. Ltd. (5 S.R. 1). Facts must be proved against infants, and although they are not in a position to adduce evidence on the point the Court may prefer to have the matter heard on oral evidence. A. H. SIMPSON, C.J. in Eq. On the question of fact, there being no evidence to the contrary, and the defendants not having thrown any doubt on the plaintiffs' evidence nor given notice that they wish to cross-examine the witnesses, I must hold that the security comprised both the fixed deposit and the realty. There is no suggestion that the plaintiffs' evidence is not true. Can I say there is a difficult or disputed question of fact when there is not a scintilla of evidence that the facts may be otherwise than as stated by the plaintiffs. I think I ought to deal with the matter now, and not put the parties to the expense of a suit on the bare suggestion that on cross-examination the facts might turn out to be different. On the facts, therefore, I hold that John Daly at the death of the testator held as security for an advance of 1650l. (a) a mortgage over the property known as Waterfield's Farm, and (b) an equitable mortgage by deposit of the fixed deposit receipt for 550l. Leverrier, for the plaintiffs. The next question is whether the mortgage over Waterfield's Farm was the security primarily liable for the debt, or whether as between the respective beneficiaries the debt must be apportioned rateably between the farm and the fixed deposit. He referred to Trestrail v. Mason (7 Ch. D. 655); Early v. Early (16 Ch. D. 214, note); In re Athill (16 Canaway, for a residuary legatee. I submit that the mortgage on the realty is the primary security. Locke King's Act, in this State section 109 of the Conveyancing and Law of Property Act, 1898, makes mortgaged realty the primary security unless on the construction of the mortgage deed the Court can hold it was neither primary nor secondary, but equilateral. The cases already referred to are all distinguishable, and have no bearing on a case where the mortgage of a personalty was merely an equitable mortgage by deposit, they all depend on the construction of the particular mortgage instrument. Another element in this case is the greater facility of realising the real security; the inference is that the fixed deposit was merely given as collateral or secondary security for the purpose of affording a certain margin of safety. Maughan, for another beneficiary in the same interest. The only covenant to repay is contained in the mortgage of the realty, that is a formal promise under seal. The Court should have regard to the respective natures of the property, and from the facts should draw the inference that the mortgage of the realty was intended to be the primary security; we admit that the onus of establishing the testator's intention lies on us. He referred to Bute (Marquis of) v. Cunynghame (2 Russ. 275); Lipscomb v. Lipscomb (L.R. 7 Eq. 501); De Rochefort v. Dawes (L.R. 12 Eq. 540); In re Dunlop; Dunlop v. Dunlop (21 Ch. D. 583). Loxton, for an infant beneficiary, adopted that argument. Weigall, for the devisee of Waterfield's Farm, was not heard. A. H. SIMPSON, C.J. in Eq. This question is whether the mortgage in favour of John Daly is, as between the respective beneficiaries under the will of the testator, primarily charged on the property known as Waterfield's Farm, or whether it is charged rateably on that property and the fixed deposit or the investments now representing the latter. This is almost entirely 1905. MULLAVEY V. HARRISON. บ. HARRISON. C.J. in Eq. a question of fact. 1905. The first argument put forward by Mr. MULLAVEY Canaway rested on the construction of Locke King's Act. I do not think that Locke King's Act, which is now in this State section 109 of the Conveyancing and Law of Property Act, 1898, touches the point. That statute was passed for a different purpose altogether, and was intended to deal only with the question whether a mortgage debt should be paid out of the property subject to the mortgage or out of the personal property of the testator not subject to the mortgage debt. The question therefore, to my mind, is unaffected by Locke King's Act, and that this is so is borne out by Lipscomb v. Lipscomb (L.R. 7 Eq. 501); Stringer v. Harper (26 Beav. 33); and Trestrail v. Mason (7 Ch. D. 655). That being so one must ascertain whether the testator has sufficiently indicated his intention to throw the debt on to one of the properties to the exoneration of the other. As Jessell, M.R., in In re Athill (16 Ch. D. 211 at 220) said: "Unless there is something to show that the mortgage debt is to be paid primarily out of one of the two properties, the conclusion follows that they are to contribute rateably; and the real question we have to decide is whether there is anything in the deeds themselves, or in the nature of the transaction coupled with the contents of the deeds, to show that the mortgage debt was intended to be thrown on one of the two properties to the exoneration of the other." I take it that one must see that there was something in the nature of or equivalent to a bargain at the time of the loan or of the giving of the security that one property was to be regarded as primarily and the other only as secondarily liable. This is a mere question of fact and decided cases do not assist one on that point. No doubt Stringer v. Harper (26 Beav. 33) bears some resemblance to the present case; but that case is distinguishable on its facts. On the facts in the present case I can only say there is nothing to show that as between the parties to the transaction one of the mortgaged properties was intended to be primarily liable to the exoneration of the other. I therefore hold that as between the devisee and the legatees respectively the mortgage debt must be apportioned rateably between the two securities, that is between the property v. C.J. in Eq. known as Waterfield's Farm and the investments now represent- 1905. ing the fixed deposit, in the proportion of the respective values MULLAVEY of the former and the fixed deposit respectively. As the parties HARRISON. desire to avoid the expense of a reference to the Master to ascertain those values, and are willing that the values of the farm and the fixed deposit should be taken as 1750l. and 550l. respectively, I, on behalf of the infants, approve of the values. being respectively taken as at those amounts. Solicitors: Quinlan (for Emerson & Tietyens, Albury); Mackenzie & Mackenzie (for Nagle, Albury); Laurence & Macdonald (for J. Wilkinson, Albury). |