Chap. XXIII. § 1 (ii). Notice that debts are unpaid. Notice that pose is not incident to the administration. In the absence of fraud or collusion, though a mortgage by an executor, who is also specific legatee of his legacy, to secure his own debt, is generally valid (u), yet if the mortgagee is at the time of making the advance aware that the testator's debts are unpaid, he will not be allowed to retain the mortgaged legacy as against the creditors (r). Again, the circumstances of the transaction may be such as intended pur- to affect a mortgagee of assets with notice that the money cannot be required for purposes properly incident to the administration of the estate. So, where an administratrix, twenty years after the intestate's death, mortgaged leaseholds of the intestate held under old leases, which were not produced, in order to raise money for repairing the property of which, being also one of the next of kin, she was in occupation; it was held that the lapse of time raised the presumption that there were no debts of the testator remaining unpaid, and that the onus of proving that the leases contained covenants by the lessee to repair was on the mortgagee, and that this not having been proved, the presumption was that the borrower required the money, not for purposes of administration, but for her own beneficial enjoyment of the property, and accordingly the charge was disallowed except to the extent of the share of the administratrix as next of kin (y). Notice of particular trust. Further, "personal estate may be clothed with such a particular trust that it is possible the Court, in some cases, may require a purchaser of it to see the money rightly applied ” (s). On this principle, where an administrator was empowered by the next of kin by a memorandum in writing to borrow on mortgage of certain leaseholds forming part of the intestate's estate such sums as he might require for certain purposes specified in the memorandum, and deposited the lease and memorandum as a security for a debt of his own; the depositee did not give notice of his charge to the next of kin, who, subsequently, on settlement of the accounts of the estate, withdrew the authority to borrow; the administrator then executed to the trustee a formal mortgage of the leaseholds; it was held that (u) Supra, p. 416. (x) Crane v. Drake, 2 Vern. 616. G. 634. But see Re Venn and Furze, (1894) 2 Ch. 101, post, p. 436. (2) Per Lord Kenyon, in Elliot v. Merriman, 2 Atk. 41. the mortgage did not create a valid charge on the shares of the next of kin (a). Chap. XXIII. If a particular fund is pointed out by the will for the pay- § 1 (ii). ment of debts, it may become necessary for a mortgagee to inquire if that fund has been exhausted. A mortgagee, even in the absence of fraud or notice that the money is to be improperly applied, may find his security prejudiced, unless he has been careful to protect himself by obtaining the legal estate in the mortgaged property against the prior equitable rights of those claiming under a will or intestacy. So, where an executor took, in his own name, a renewal of a lease belonging to his testator's estate, and deposited the renewed lease by way of equitable mortgage for money advanced to him for his own purposes by a person who did not know that the borrower was an executor, it was held that the lease being in equity a part of the testator's estate, and the conflict being between two equitable titles, the equity of the estate was prior to the equity of the mortgagee, and must prevail (b). Appropriation of particular fund to debts. Conflict of equities. followed. Where a mortgage by an executor or administrator is set Assets may be aside on the ground of fraud or negligence, a creditor, or a legatee, whether pecuniary, specific, or residuary, may follow the assets into the hands of the mortgagee (c). But relief will be refused if there is unreasonable delay in Delay. making a claim (d). iii. Subject-Matter and Form of Mortgage.-A mortgage of Subjects of personal property given by an executor or administrator may be mortgage. either of legal or equitable assets (e), or of mere choses in action (f). mortgage. The mortgage may be by actual assignment, or by deposit (g). Form of In dealing with the leaseholds of a testator or intestate, an executor or administrator may, in a proper case, grant an under-lease (h); and, accordingly, it would seem that he may (a) Jones v. Stohwasser, 16 Ch. D. 577. (b) Re Morgan, Pillgrem v. Pillgrem, 18 Ch. D. 92, C. A. See post, Chap. LV., Sect. III. (ii). (c) Hill v. Simpson, 7 Ves. 152; Wilson v. Moore, 1 My. & K. 337; Re Champion, (1893) 1 Ch. 101. Andrew v. Wrigley, 4 Bro. C. C. 125; (h) Oceanic Steam, &c. Co. v. Suther- (d) Elliott v. Merriman, 2 Atk. 41; Chap. XXIII. § 1 (iii). Executor or administrator may give give a mortgage by way of sub-demise. A dealing with one of several executors will be valid, for each is competent (i), and one executor may open a separate account with a banker on the executorial account, and validly pledge securities of the estate with him (k). An executor or administrator may properly give to a mortgagee a power of sale over the mortgaged property (1); such power of sale. powers are now implied by virtue of the statute (m) in every mortgage by deed, unless expressly excluded. Special covenants. An executor must not, however, clog the equity of redemption by the insertion in the deed of extraneous matters such as a consolidation clause, providing that he shall not be entitled to redeem without paying all moneys due to the mortgagee under every other mortgage made by him otherwise than as executor; and, if he do so, the estate will not be bound, and any liability in respect of such matters will fall on the executor personally (n). Charge of debts, &c. authorizes mortgage. Power of SECTION II. OF MORTGAGES OF REALTY BY EXECUTORS, ETC., FOR PURPOSES i.-Charge of Debts.-If a testator expressly or by implication charges his real estate with the payment of his debts or legacies, this will authorize a sale or mortgage of the real estate for that purpose. If, however, there is no such charge, real estate cannot, apart from the Land Transfer Act, 1897, be disposed of by the executors, or by the trustees of the will, unless expressly empowered to dispose of it (o). As regards cases where there is no express or implied charge mortgage for of debts upon the realty, by several statutes (p) the real estates of deceased persons have been rendered answerable in the hands of the heir or devisee for the payment of the debts of his ancestor or testator; and the Court may order the money payment of testator's debts. (i) Scott v. Tyler, 2 Dick. 725. (0) See post, p. 432. As to mortgages by trustees under express powers, see post, pp. 440 et seq. (p) 11 Geo. IV. & 1 Will. IV. c. 47; 3 & 4 Will. IV. c. 104. See also 32 & 33 Vict. c. 46; and 38 & 39 Vict. c. 77. Chap. XXIII. required for the payment of such debts to be raised by sale or mortgage. By the stat. 11 Geo. IV. & 1 Will. IV. c. 47, s. 12, where an estate settled by will upon a person or persons having §2 (i). a limited interest, and an order for sale or mortgage is made, such persons may be directed to convey, and such conveyance will effectually pass the fee simple; and by sect. 11 of the lastmentioned Act, where the heir or devisee is an infant, the Court may order an immediate sale and conveyance of the real estates for payment of the debts. And in case of settlement by will upon persons having a Settled lands. limited interest, a conveyance is to be directed for the payment of debts (q). Whether the Court had power under this Act to decree the Surplus debtor's estate to be mortgaged, instead of being sold for moneys. payment of debts, and to direct the infant heir or devisee to convey under sect. 11, was doubtful (r); but the doubt was removed by the later Act, 2 & 3 Vict. c. 60, which provided that the surplus of the moneys raised by sale or mortgage under 1 Will. IV. c. 47, should devolve in the same manner, and belong to the same persons as the lands would have done if not so sold or mortgaged. sions in a will amount to a charge of debts, &c. The power of mortgaging realty given to trustees and exe- What exprescutors by Lord St. Leonards' Act, to be presently considered, arises only where a testator has charged his realty with the payment of debts or legacies. Even under the old law, prior to the Act, the power of an executor to alienate his testator's realty for payment of debts, &c., depended on the question as to whether the will indicated an intention that the debts should be charged on the realty. The question whether the expressions of a particular will sufficiently indicate such an intention is often one of great difficulty, and has given rise to some conflict of judicial opinion (s); but the tendency of later decisions has been strongly in favour of implying the charge from general expressions. A general direction in a will that debts shall be paid, as a Effect of general direcgeneral rule charges them on all the testator's real estate (t), tion to pay (9) 11 Geo. IV. & 1 Will. IV. c. 47, 8. 12. And see 11 & 12 Vict. c. 87; Carson, R. P. Stat. p. 395. (r) Cf. Holme v. Williams, 8 Sim. 557; and Smethurst v. Longworth, 2 Keen, 603. (s) See the cases cited in Jarman on Wills (5th ed.), vol. ii. pp. 1390 et seq. (t) Shallcross v. Finden, 3 Ves. 737; Clifford v. Lewis, 6 Madd. 33; Ball v. Harris, 4 My. & Cr. 264; Shaw v. debts. Chap. XXIII. § 2 (i). What amounts to such a direction. Blended fund. Contrary intention. Devise to executor of realty charged with debts. unless a contrary intention appears in the will (u). But a mere authority to trustees, who were also executors, "to adjust and pay all claims" upon the testator's estate, was held not to charge the debts on the real estate (r). A direction to pay debts may be given by informal words, as by the expressions "my debts being satisfied, I give, &c.” (y), or "after payment of debts, I give, &c." (z). And a general devise and bequest of realty and leaseholds and all the residue of the testator's personal estate after payment of his debts, was held to charge the realty as well as the personalty (a). Indeed a charge of debts on realty may be implied though the will does not refer to debts, as when the will directs realty and personalty to be sold, without saying by whom, and the proceeds to be divided as a blended fund, then, inasmuch as the personalty is necessarily liable to the debts, a charge thereof will be implied so as to enable the executors to sell or mortgage the realty for payment of debts (b). But the general directions may be overruled by expressions of contrary intention contained in the will. So a direction that the executors shall pay the debts, raises a presumption that the testator intended that the debts shall be paid only out of the property which passes to the executor, and will accordingly exonerate the realty (c). The presumption, however, may be rebutted if there is a devise or appointment of real estate to the executors, whether beneficially (d), or in trust (e), and in such cases the real estate will be generally held to be charged accordingly so as to enable the executors to sell or mortgage it. A devisee, who is also an executor, having real estate charged with the payment of debts, (x) Re Head's Trustees and Macdonald, (y) Harris v. Ingledew, 3 P. Wms. 91. (b) Tylden v. Hyde, 2 S. & St. 238; (c) Wasse v. Heslington, 3 My. & K. 495; Cook v. Dawson, 29 Beav. 126; Re Bailey, Bailey v. Bailey, 12 Ch. D. 268, 272. (d) Henvellv. Whitaker, 3 Russ. 343; De Burgh Lawson v. De Burgh Lawson, 41 Ch. D. 568. It makes no difference if the devise is for life or in tail: Finch v. Hattersley, 3 Russ. 345, n.; Harris v. Watkins, Kay, 438; Cook v. Dawson, 29 Beav. 123. (e) Barker v. Duke of Devonshire, 3 Mer. 310; Dormay v. Borradaile, 10 Beav. 263; Hartland v. Murrell, 27 Beav. 204; Re Tanqueray- Willaume and Landau, 20 Ch. D. 465, C. A. |