CHAP. XXIII. General rule. Charge prima facie created by direction to pay debts out of rents, &c. Effect of creating a trust to raise money. Where charge corpus, a provision for abatement in case the rents are insufficient to pay the annuities in full does not exonerate the corpus (n). Whether an annuity is charged on a life estate, or only on the income of the tenant for life as and when actually received, depends on the context of the will (o). iv.-Direction to raise Money out of Rents and Profits.-Lord Hardwicke, in Green v. Belchier (p), said that "in general, where money is directed to be raised by rents and profits, unless there are other words to restrain the meaning, and to confine it to the receipt of the rents and profits as they accrue, the Court, in order to obtain the end which the party intended by raising the money, has, by a liberal construction of these words, taken them to amount to a direction to sell.” A direction in a will to pay debts or legacies out of rents and profits primâ facie creates a charge on the corpus authorizing money to be raised for payment of the debts by sale or mortgage (9). Where a trust is created for the purpose of raising money out of rents and profits, if the trusts of the will require that a gross sum should at once be raised, the money will be raiseable out of the corpus of the estate itself by sale or mortgage (r). In Baines v. Dixon (s), estates were devised to trustees and their heirs upon trust for payment of the testator's funeral expenses, debts, and legacies, as far as his personal estate should be deficient, and for raising maintenance, &c., for his children; and to convey to his eldest son, at twenty-three; and he directed the legacies to be paid after his debts were satisfied, as the rents should advance the same. Lord Hardwicke, on appeal, directed the debts to be raised by sale, and the legacies to be paid out of the annual profits. Where a charge is on a settled estate, the Court, in deteris on settled mining whether the charge will be raised by sale or mortgage, will give greater weight to the wishes of the persons whose lands. (n) Pearson v. Helliwell, L. R. 18 (0) Mackie v. Mackie, 5 Ha. 70. (a) Metcalfe v. Hutchinson, 1 Ch. D. 591. (r) Bootle v. Blundell, 1 Mer. 232; Wilson v. Halliley, 1 R. & My. 590; Lord Londesborough v. Somerville, 19 Beav. 295; Metcalfe v. Hutchinson, 1 Ch. D. 521; Balfour v. Cooper, 23 Ch. D. 472. (s) 1 Ves. Sen. 41. See Lingard v. Earl of Derby, 1 Bro. C. C. 311. interests in the estate are immediate than to the wishes of the CHAP. XXIII. persons whose interests are more remote (†). In Cooke v. Parsons (u), Lord Nottingham thought that a Cases where direction in a will for payment of debts out of the "rents" the rule does not apply. (without saying "profits ") was not sufficient whereon to ground a sale. And where a trust was created for payment of debts "by perception of rents and profits, or by leasing, or by mortgaging" to raise sufficient money for the payment of debts, it was held not to authorize a sale; if there had been a trust of the rents and profits, the term might have been sold (x). It may, apparently, be inferred that if "mortgaging" had not been expressly authorized, the words "perception of the rents and profits" would not have been held to authorize a mortgage. So, where money is to be raised "by and out of the rents and profits and by leasing for three lives or twenty-one years," or out of the rents and profits or by sale of a moiety of the land," or "by rents and other ways and means, except a sale," or generally, where an authority is superadded less extensive than that of selling or mortgaging, the literal meaning of the words will be followed (y). Again, it was held that a sale was not authorized where a testator, having given the rents of certain lands to his executors in trust therewith to raise and pay his debts, devised all his lands, subject to an annuity, to his sons, directing that they should not enter on the rents until all the debts should be paid (z). where remainderman life. Though the Court will generally, in favour of creditors, Distinction. consider a devise in trust for payment of debts out of rents and profits to be equivalent to a devise of the estate itself, so as to is tenant for authorize a sale or mortgage thereof, where the remainderman is tenant in fee or in tail, and therefore liable to pay the debts, yet the case is different where the remainderman is tenant for life only; for then the question arises whether he is to pay the interest of the charge only, or whether he shall also pay the capital. This is strictly a question of intention to be collected from the language of the will with reference to the provisions (t) Metcalfe v. Hutchinson, 1 Ch. D. 591. (u) Prec. Ch. 184. And see Sir John Talbot v. Duke of Shrewsbury, Gilb. Rep. Eq. 89. (x) Ridout v. Earl of Plymouth, 2 Atk. 105. (y) Ivy v. Gilbert, 2 P. Wms. 13; Mills v. Banks, 3 P. Wms. 1; Hall v. Carter, 2 Atk. 358; Bennett v. Wyndham, 23 Beav. 521. (z) Small v. Wing, 5 Bro. P. C. 66. And see Harper v. Munday, 7 De G. M. & G. 369. CHAP. XXIII. contained in it (a). When the direction is alternative, as to raise money by sale or mortgage, or by perception of rents and profits, the meaning of the more general words will not be restricted (b). Lord St. Leonards' Act. Devisee in trust may raise money by sale, notwithstanding want of express power in the will. Powers given by last section extended to survivor's devisees, &c. Executors to have power of raising v.-Mortgages of Realty by Executors and Trustees under Lord St. Leonards' Act.-By the Law of Property Amendment Act, 1859 (c), commonly known as Lord St. Leonards' Act, which was passed on the 13th of August, 1859, it is enacted as follows: Sect. 14. "Where, by any will which shall come into operation after the passing of this Act, the testator shall have charged his real estate, or any specific portion thereof, with the payment of his debts, or with the payment of any legacy or other specific sum of money; and shall have devised the estate so charged to any trustee or trustees for the whole of his estate or interest therein, and shall not have made any express provision for the raising of such debt, legacy, or sum of money out of such estate, it shall be lawful for the said devisee or devisees in trust, notwithstanding any trusts actually declared by the testator, to raise such debts, legacy, or money as aforesaid, by a sale and absolute disposition by public auction, or private contract, of the said hereditaments or any part thereof, or by a mortgage of the same, or partly in one mode and partly in the other, and any deed or deeds of mortgage so executed may reserve such rate of interest, and fix such period or periods of repayment, as the person or persons executing the same shall think proper." Sect. 15. "The powers conferred by the last section shall extend to all and every person or persons in whom the estate devised shall, for the time being, be vested by survivorship, descent, or devise, or to any person or persons, who may be appointed under any power in the will or by the Court of Chancery (d) to succeed to the trusteeship vested in such devisee or devisees in trust as aforesaid." Sect. 16. "If any testator, who shall have created such a charge as is described in the fourteenth section, shall not have devised the hereditaments charged as aforesaid, in such terms as that his whole where there is estate and interest therein shall become vested in any trustee or money, &c. no sufficient devise. trustees, the executor or executors for the time being named in such will (if any) shall have the same or the like power of raising the said moneys, as is hereinbefore vested in the devisee or devisees in trust of the said hereditaments; and such power shall from time to time devolve to and become vested in the person or persons (if any) in whom the executorship shall, for the time being, be vested; but (a) Heneage v. Lord Andover, 3 Y. & J. 260. See also Wilson v. Hallily, 1 R. & My. 590; Playters v. Abbot, 2 My. & K. 97. (b) Greaves v. Mattison, Sir T. Jones, 201; Gerrard v. Gerrard, 2 Vern. 458; Sandys v. Sandys, 1 P. Wms. 707; Goodall v. Rivers, Mosley, 395; Hebblethwaite v. Cartwright, Forr. 30; Hall v. Carter, 2 Atk. 355. (c) 22 & 23 Vict. c. 35. (d) Now the Chancery Division of the High Court. any sale or mortgage under this Act shall operate only on the estate and interest, whether legal or equitable, of the testator, and shall not render it unnecessary to get in any outstanding subsisting legal estate." CHAP. XXIII. Sect. 17. "Purchasers or mortgagees shall not be bound to inquire Purchasers, &c. not bound whether the powers conferred by ss. 14, 15, and 16 of this Act, or to inquire as either of them, shall have been duly and correctly exercised by the to powers. person or persons acting in virtue thereof.” sales, &c., nor Sect. 18. "The provisions contained in ss. 14, 15, and 16, shall not Sects. 14, 15, in any way prejudice or affect any sale or mortgage already made or and 16 not to hereafter to be made, under or in pursuance of any will coming into affect certain operation before the passing of this Act; but the validity of any to extend to such sale or mortgage shall be ascertained and determined in all devises in fee respects as if this Act had not passed; and the said several sections or in tail. shall not extend to a devise to any person or persons in fee, or in tail, or for the testator's whole estate and interest charged with debts, or legacies; nor shall they affect the power of any such devisee or devisees to sell or mortgage, as he or they may by law now do." money, Sect. 23. "The bona fide payment to, and the receipt of any person Receipt for to whom any purchase or mortgage money shall be payable upon poney, &c. to purchaseany express or implied trust, shall effectually discharge the person relieve from paying the same from seeing to the application, or being answer- obligation able for the misapplication thereof, unless the contrary shall be to see to the expressly declared by the instrument creating the trust or security." application The effect of the statute may be shortly stated thus:1. If a testator charges his real estate with debts, and devises all his estate therein to trustees, the trustees can give a title and receipt for the purchase-money (e). 2. The power extends to the trustees for the time being, however appointed (ƒ). 3. If a testator charges his real estate with debts, and does. not devise all his estate therein to trustees, the executor can, except in cases falling within s. 18, give such title and receipt (g). 4. A mortgagee advancing money to an executor or trustee, where the will contains a charge of debts, &c., on realty, is not, as a general rule, bound to see to the application of the money advanced (h). thereof. Effect of the statute. tors could Under the old law, prior to Lord St. Leonards' Act, in order When executo enable the executors of a will to raise money by sale or mortgage mortgage of their testator's realty, it must have been given to land under them, either expressly or by necessary implication, by being made to pass through their hands in the execution of their (e) Sect. 14. (f) Sect. 15. VOL. I.-R. (g) Sect. 16. E E former law. CHAP. XXIII. office, by an express or implied charge for payment of debts or legacies (i). Effect of Lord St. Leonards' Act where there is a devise to trustees. The fact of there being a charge of debts on real estate devised to trustees did not enlarge their estate into a fee simple, so as to enable them to sell (). But where the trustees were also executors, they were held to have the legal estate in fee, with power to sell for payment of debts (7). It is also clear that a charge of debts enabled the trustees and the executor together to sell or mortgage (m). And these cases were considered to involve the decision that it was the executor who was to sell, and not the devisee (n). Where there was a charge of debts on real estate, which was devised to one for life, with contingent remainders over, a power of sale in the executor was implied (0). The whole doctrine was founded upon the principle of carrying out most conveniently the intention of the testator. A charge of debts implies a power of sale or mortgage in someone, and the donee of the power is to be ascertained from the whole will (p). Where there is a charge of debts or legacies express or implied, by sects. 14 and 15 of Lord St. Leonards' Act, if the will devises the testator's realty to trustees, then, in the absence of contrary intention expressed by the will, the trustees for the time being of the will have power to sell or mortgage the realty for payment of debts or legacies. Where, upon the construction of a will, it seemed doubtful whether the testator intended to vest his realty in his trustees, or to make them mere releases to the use of the beneficiaries, it was held that a direction to pay debts was sufficient to show that the intention was to devise the realty to the trustees in fee in trust for the beneficiaries (2). Where the widow of a deceased partner, who was sole trustee and executrix of his will, concurred with the surviving partner (i) Bentham v. Wiltshire, 4 Madd. 44. See Curtis v. Fullbrook, 8 Ha. 25, 278; Haydon v. Wood, 8 Ha. 279. See Pitt v. Pelham, 1 Ch. Ca. 176; Patton v. Randall, 1 J. & W. 189; Carvill v. Carvill, 2 Rep. in Ch. 301. (k) Kenrick v. Lord Beauclerk, 3 B. & P. 175; Doe v. Ewart, 7 A. & E. 636, 668; Dean v. Mellor, 5 T. R. 558. (1) Creaton v. Creaton, 3 Sm. & G. 286; Spence v. Spence, 12 C. B. N. S. 199; Marshall v. Gingell, 21 Ch. D. 790. (m) Shaw v. Borrer, 1 Keen, 559; Ball v. Harris, 8 Sim. 485; 4 My. & Cr. 264. See Re Jones, Dutton v. Brookfield, W. N. (1889) 176. (n) Gosling v. Carter, 1 Coll. 644, 649, 652. (0) Robinson v. Lowater, 5 De G. M. & G. 272. (p) Eidsforth v. Armstead, 2 K. & J. 333. (1) Re Brooke, Brooke v. Brooke, (1894) 1 Ch. 43. See also Hawkins on Wills, 151, 152. |