1 & 2 Vict.

c. 110, s. 14.

What interest of judgment debtor can be charged.

Equitable debt cannot be charged.

made in the same way as if the same had been standing in the name of a trustee of the judgment debtor. (3 & 4 Vict. c. 82, s. 1, post.)

Orders have been made absolute which charged the contingent equitable interest of a judgment debtor in stock or shares. (Baker v. Tynte, 2 E. & E. 897; 29 L. J., Q. B. 233; Cragg v. Taylor (2), L. R., 2 Ex. 131.) But where a testatrix gave her estate and effects (which included stock and shares) to trustees on trust to pay debts and legacies, and as to the residue upon trust for the defendant and two others, and directed a conversion: it was held, that the defendant having no interest in the stock and shares, but only an interest in their produce, they could not be charged with his judgment debt. (Dixon v. Wrench, L. R., 4 Ex. 154.)

The defendant, a registered owner of shares in a joint stock company, deposited the certificate with E. as a security for money advanced. The defendant afterwards borrowed a further sum from an insurance office, and executed to C., one of his sureties on that occasion, with the consent of E., who was the other surety, a transfer of the shares, accompanied by a declaration of the terms of the transfer, and delivered both instruments to C. The money not having been paid to the insurance office, they claimed it from E. and C., when C. requested the insurance office to transfer the shares into his name, which they refused to do, on the ground that they had been previously served with a judge's order nisi to charge the shares: it was held, that the shares were properly charged as shares standing in the defendant's name in his own right, within the meaning of this section. (Fuller v. Earle, 7 Exch. 796; 21 L. J., Ex. 314.)

Certain stock, the subject-matter of a deed of settlement executed under the sanction of the Court of Chancery, having been charged by the order of a judge, under the 14th and 15th sections of this statute, the trustees moved to discharge the order, on the ground that the judgment debtor had forfeited all interest under the settlement, by taking the benefit of the provisions relating to insolvent debtors. The motion was opposed, upon a suggestion that the settlement was fraudulent and void as against creditors, and that a suit was pending in the Court of Chancery to avoid it. The court declined to interfere, even if they had jurisdiction, Tindal, C. J., observing, “If we were to entertain this motion, we should in effect be entering into a complicated chancery suit. Assuming, therefore, that we have jurisdiction, this is not a case in which it can be exercised." (Rogers v. Holloway, 6 Scott, N. R. 274; 5 Man. & G. 292.)

Where the plaintiff obtained a charging order on shares standing in the name of the defendant in a limited company formed under 25 & 26 Vict. c. 89, and the defendant applied that the order might be rescinded on the ground that the shares were held by him in trust for another, the court refused the application. (Cragg v. Taylor, L. R., 1 Ex. 148.)

But where an action was brought against a company for permitting the transfer of shares after notice of a charging order nisi, it was held, that a plea showing that the judgment debtor, in whose name the shares stood, had no beneficial interest in them, was a good equitable defence to the action. (Gill v. Continental Gas Co., L. R., 7 Ex. 332.)

of

Where a testator by his will directed that certain stock should stand in the names of his executors, and the dividends should be paid to G. C. during his life, and on his death to E. C., his widow, "she to lay it out for the good of his children:" and that when the youngest child should come age, the fund should be sold out and divided amongst the children. It was held, in an action in which E. C. (after the death of G. C.) was a defendant, that an order might be made, under the 14th and 15th sections of this act, for charging "so much of the dividends as were payable to E. C. for her own use and benefit." (Fowler v. Churchill, 11 Mees. & W. 57.)

Money deposited by the vendee of land in the hands of a third party, for the use of the defendant, cannot be attached under this section. (Robinson v. Pearce, 7 Dowl. 93; 2 Jur. 896.)

A judgment creditor cannot obtain a charging order in equity on an equitable debt by analogy to an attachment of a legal debt under the

garnishee clauses of the C. L. P. Act, 1854. (Horsley v. Cox, L. R., 4 Ch. 92.)

1 & 2 Vict.

c. 110, s. 14.

Charging orders giving effect to

common law

(7) Where the charging order is to give effect to the judgment of a court of common law, a common law judge at chambers, and not the court, has authority under this section to make the order. If he makes an absolute order, the court has jurisdiction to set it aside if wrongly made; but if he judgments. only makes an order nisi, the court has no authority to entertain the question, although the judge expresses his desire to refer it to the court. (Brown v. Bamford, 9 Mees. & W. 42; and see Graham v. Connell, 19 L. J., Ex. 361; Nicholls v. Rosewarne, 28 L. J., C. P. 273.) An application to enter on the judgment roll orders charging stock in execution under this section, for the purpose of having them reviewed by a court of error, was refused. (Newton v. Boodle, 6 C. B. 532; 18 L. J., C. P. 73.) It is no objection to an order nisi to charge stock pursuant to the 14th and 15th sections of this act, that it calls upon a judgment creditor to show cause on a day certain. (Robinson v. Burbidge, 9 C. B. 289.) Nor is it a good objection that such order purports to be made in pursuance of the 1 & 2 Vict. c. 110 alone, and not also of the 3 & 4 Vict. c. 82. A judgment was entered in the master's book, as in a cause of A. v. B., the plaintiff obtained an order to charge stock of the defendant standing in the name of the accountant-general, which order was entitled A. v. C. sued as B. A rule to rescind it having been obtained, on the ground that it did not follow the judgment in its title, the plaintiff produced the judgment paper, which was intituled in the same way as the order. It was held, that the order was properly intituled. It seems that such an order is in the nature of a writ of execution, and ought to follow the judgment in its title. The words "C. sued as" appear to have been interlined: it was held by Wilde, C. J., that such interlineation must be presumed to have been made before the judgment paper was sealed by the court. (Robinson v. Burbidge, 1 Prac. Rep. 94.) A charging order under this section will be made absolute, notwithstanding proceedings against the trustees of the fund by creditors, and there is no other fund for payment of costs. (Smith v. Youde, 2 F. & F. 376-Willes.)

Where a debtor on a common law judgment is entitled to funds in the Court of Chancery, an order charging such funds cannot be made by a judge of the Court of Chancery. The application should be made to one of the common law judges of the Superior Courts at Westminster. (Miles v. Presland, 2 Beav. 300; 4 M. & Cr. 431.)

Stock standing in the accountant-general's name to the separate account of a party against whom judgment at law has been recovered, may be charged under this statute; but the charging order must be made, not by a judge in equity, but by a judge at common law; and although such order, in terms, charges the stock, it affects only the interest of the debtor in the stock, and therefore does not interfere with the rights of prior incumbrancers. A court of equity will make a stop order as auxiliary to the charging order. A party intending to apply for a stop order must give notice of his application to all other persons having like orders on the funds. (Hulkes v. Day, 10 Sim. 41; Courtoy v. Vincent, 15 Beav. 486.) A judgment having been obtained against a party, to whom a sum standing to the credit of the cause had been ordered to be paid, the court, on the application of the judgment creditor, stayed the delivery to the debtor of the accountant-general's cheques. (Robinson v. Wood, 5 Beav. 388.)

Where a judgment creditor has got a charging order at law upon the interest of the judgment debtor in a fund in the Court of Chancery, the proper course is to apply for a stop order. (Re Nowell, 11 W. R. 896.) For form of stop order, see Seton, 952.

A judgment at law being given to be dealt with by a court of equity, it was held, that a charging order ought not to be obtained on such judgment without the leave of the Court of Equity. (Spence v. Briscoe, 26 Beav. 509.)

See, further, as to charging orders giving effect to judgments of common law courts, Chitty's Archbold, 543 et seq., 12th ed.

Where judgment debtor is entitled

to fund in the Court of

Chancery.

1 & 2 Vict. c. 110, s. 14.

Charging orders giving effect to decrees and orders in

Chancery.

Effect of charging order.

Charge operates from date of order nisi.

Where the charging order is to give effect to a decree or order of the Court of Chancery, the order can be made by a chancery judge. (Stanley v. Bond, 7 Beav. 386; Westby v. Westby, 5 De G. & Sm. 516; Wills v. Gibbs, 22 Beav. 204.) Courts of equity will carry into execution their orders for decrees and costs, by charging the government stock of the debtor under the provisions of this statute; and for that purpose it is not necessary to give further proof of application for payment than is contained in the notice of the intended application to make the order for the charge absolute. (Blake v. White, 3 Y. & Coll. 434; 3 Jurist, 749.) But the decree or order must be for the payment of money. A decree for payment of what shall be found due to the plaintiff upon an account directed by the decree, does not entitle him to a charging order. (Chadwick v. Holt, 8 De G., M. & G. 584; see the words of sect. 18, post.) The jurisdiction to make the order belongs to every judge of the Court of Chancery, and is not confined to this particular branch of the court, by which the order to pay the money is made, and it is sufficient to entitle the order in the matter of the acts. (Marquis of Hastings v. Beavan, 4 De G., F. & J. 316.)

As to the practice, on applying in chancery for a charging order, see Dan. Ch. Pr. 901, 5th ed.; and as to stop order, see ib. 902, 1543; Morgan, Ch. Acts and Orders, 506, 4th ed.; for forms of charging orders, see Seton, 954.

(m) After the order obtained by a judgment creditor, for charging the interest of his debtor in government stock standing in the name of trustees, has been made absolute under the 15th section of this statute, the Bank of England is still bound to pay the dividends to the trustees, being the legal hands to receive them; and the trustees are to apply the dividends according to the equitable interests of the partics. (Bristed v. Wilkins, 3 Hare, 235.)

A charging order under this section creates such an incumbrance as will determine a life interest limited to a person, until he executes some assignment or act whereby the interest may be encumbered. (Montefiore v. Behrens, L. R., 1 Eq. 171.)

A charging order, when made absolute, operates from the making of the order nisi. Where an order nisi had been made, and before it was made absolute, a decree was made for the administration of the judgment debtor's estate, the court refused the plaintiff's application for an injunction to restrain further proceedings by the judgment creditor. (Haly v. Barry, L. R., 3 Ch. 452.)

This section gives to a charging order absolute upon stock held in trust for the judgment creditor the same effect as a charge under his hand, and the object of the 15th section is only to prevent any new charge being effected after the charging order nisi has been obtained and before it is made absolute. When the charging order is made absolute, the 15th section has performed its functions; but if the judgment debtor had assigned the stock before the date of the order nisi, the assign might obtain a stop order before the order nisi was absolute, notwithstanding the 15th section, for the real charge under a charging order is only acquired when it is made absolute. If a person, having notice of a previous assignment of a trust fund, take an assignment to himself of the same fund, he cannot obtain priority over the previous assign, whether the trustee had notice or not, and therefore if a judgment creditor, at the time of making his charging order absolute, have similar notice, he is likewise unable to obtain priority. Where the fund is standing in the name of the accountant-general, the practice of the office is to enter a memorandum of every charging order left at the office, but such notice is not treated as any restraint nor as equivalent to a stop order. No entry is made of notice of any other assignment. The accountant-general is not a trustee of the funds committed to him, but merely the agent of the court. The trustees who have paid the funds into court are the trustees of it until the court has in some way dealt with it, and then the court becomes the trustee. Therefore, notice to the accountant-general of an assignment of funds in his hands is of no avail against a stop order afterwards obtained by a subsequent purchaser without notice. (Warburton v. Hill, Kay, 470.)

A testator left real and personal property to trustees to be sold and divided among children. One of the children, by assignment, for valuable consideration, created charges on his portion, and notice of each of these assignments was, immediately after its execution, given to the trustees of the will. A judgment was recovered against the assignor; a sale was ordered of the real estates, and the proceeds were vested in the Three per Cents. The judgment creditor obtained a charging order under this section upon the share of the assignor. The question then arose which should be preferred, the assignees or the judgment creditor: Vice-Chancellor Knight Bruce decided in favour of the assignees. They had perfected their equitable security long before the charging order, and a new charge then created by the debtor could not have affected their securities. If the parties had equal equities, priority of date was to determine the preference between them. (Brearcliff v. Dorrington, 4 De G. & S. 122.) In Dunster v. Lord Glengall (3 Ir. Ch. R. 47), the Master of the Rolls in Ireland decided that an equitable mortgagee by deposit of railway shares is entitled to priority over a prior judgment creditor, who, subsequently to the mortgage, has obtained an order charging the shares.

It was decided by Lord Campbell, C. J., Wightman, J., and Crompton, J., that the order of a judge, charging stock, standing in the name of a trustee in trust for the judgment debtor, with a judgment debt, gave priority to the judgment creditor over a prior mortgagee of such stock; the mortgagee not having given notice to the trustee of his mortgage, and the judgment creditor not having notice of the mortgage, and the stock still remaining in the name of the trustee. But Erle, J., was of opinion that a judgment creditor, with a charging order on stock, does not become entitled to it against a prior mortgagee, although he has given no notice of his mortgage to the trustee of the stock. (Watts v. Porter, 3 Ell. & Bl. 743.)

The opinion of Erle, J., has been followed in the Court of Chancery by Lord Cranworth, and L. J. Turner (Beavan v. Lord Oxford, 6 De G., M. & G. 492, 524, 532); by Sir J. Romilly (Kinderley v. Jervis, 22 Beav. 28); and Wood, V.-C., held that a judgment creditor must be postponed to a subsequent mortgagee of an equitable interest in stock, notwithstanding such creditor had, since the mortgage, but before notice thereof to the trustee of the fund, obtained a charging order. (Scott v. Lord Hastings, 4 K. & J. 633.) The opinion of Erle, J., in Watts v. Porter (sup.), has since been approved by the Court of Common Pleas (Pickering v. Ilfracombe R. Co., L. R., 3 C. P. 235), and by Bramwell, B., who considered the rule to which the cases point to be that the judgment creditor cannot by his charging order get any more than the debtor could honestly give him. (Gill v. Continental Gas Co., L. R., 7 Ex. 338.)

It has been held, in the Court of Common Pleas, that a prior equitable assignment of railway shares in the hands of a garnishee, is a bar to an attachment from the Mayor's Court, London, notwithstanding that no notice of such assignment has been given to the garnishee. It was said, that the opinion of the majority of the Court of Queen's Bench in Watts v. Porter (sup.) was no longer law. (Robinson v. Nesbitt, L. R., 3 C. P. 264.)

Where a fund in court had been recovered by the exertions of a solicitor, Effect as against he was held entitled (in respect of his lien for costs) to priority over a solicitor's lien. judgment creditor of his client, who had obtained both a charging order

and a stop order. (Haymes v. Cooper, 33 Beav. 431.)

(n) The proviso contained in this section does not prevent the creditor Final proviso. from obtaining the stop order to restrain the debtor from receiving dividends of stock accruing within the six months. (Watts v. Jefferyes, 3 Mac. & G. 372; 15 Jur. 783; 20 Law J., Chanc. 659.) The correct construction of the proviso is, that although no steps can be taken to enforce immediate payment of the debt by realizing the security, yet that the judgment creditor may in the meantime, by force of the order, prevent the security given him by the statute from being defeated or diminished pro tanto, by stopping payment to the debtor of part of his security. (Ib. See Bristed v. Wilkins, 3 Hare, 235.)

1 & 2 Vict. c. 110, s. 15.

Order of judge to be made in the first instance ex parte, and on notice to the bank or company to operate as a distringas.

Writ of distringas

to be issued from cery according to

Court of Chan

form in first schedule to act 5 Vict. c. 5.

OPERATION OF JUDGE's Orders.

15. And in order to prevent any person against whom judg ment shall have been obtained from transferring, receiving or disposing of any stock, funds, annuities or shares hereby authorized to be charged for the benefit of the judgment creditor under an order of a judge, be it further enacted, that every order of a judge charging any government stock, funds or annuities, or any stock or shares in any public company, under this act, shall be made in the first instance ex parte, and without any notice to the judgment debtor, and shall be an order to show cause only; and such order, if any government stock, funds or annuities standing in the name of the judgment debtor in his own right, or in the name of any person in trust for him, is to be affected by such order, shall restrain the governor and company of the Bank of England from permitting a transfer of such stock in the meantime, and until such order shall be made absolute or discharged; and if any stock or shares of or in any public company standing in the name of the judgment debtor in his own right, or in the name of any person in trust for him, is or are to be affected by any such order, shall in like manner restrain such public company from permitting a transfer thereof; and that if, after notice of such order to the person or persons to be restrained thereby, or in case of corporations to any authorized agent of such corporation, and before the same order shall be discharged or made absolute, such corporation, or person or persons, shall permit any such transfer to be made, then and in such case the corporation, or person or persons so permitting such transfer, shall be liable to the judgment creditor for the value or amount of the property so charged and so transferred, or such part thereof as may be sufficient to satisfy his judgment; and that no disposition of the judgment debtor in the meantime shall be valid or effectual as against the judgment creditor; and further, that unless the judgment debtor shall within a time to be mentioned in such order show to a judge of one of the said superior courts sufficient cause to the contrary, the said order shall, after proof of notice thereof to the judgment debtor, his attorney or agent, be made absolute: provided that any such judge shall, upon the application of the judgment debtor, or any person interested, have full power to discharge or vary such order, and to award such costs upon such application as he may think fit (o).

(0) See the note to preceding section.

The 5 Vict. c. 5, s. 5, enacts that, in the place and stead of the writ of distringas, as the same has been heretofore issued from the Court of Exchequer, a writ of distringas, in the form set out in the first schedule to that act, shall, on and after the 15th day of October, 1841, be issuable from the Court of Chancery, and shall be scaled at the subpoena office, and that the force and effect of such writ, and the practice under or relating to the same, shall be such as was then in force in the said Court of Exchequer provided, nevertheless, that such writ, and the practice under or relating to