CHAP. XXXIII. be set aside after considerable lapse of time if it appears that the influence induced by the relationship has continued directly or indirectly (t). Unconscion- Independent advice. Unconscion able mortgage may be valid if parties are strangers. Indirect exercise of undue influence. Where a confidential relation is proved to have existed between the parties, the dealings between them may be set aside on the ground of undue influence, even though at the time of such dealings the actual relation between them had come to an end (u). And where a confidential relation is proved, it seems that the Court will presume its continuance unless it is clearly shown to have ceased (x). The onus in all these cases is on the purchaser or mortgagee to show that the grantor had proper independent professional advice, and was not misled by any contrivance or false recital or suggestion (y). But where the father's solicitor professed to act on behalf of the children, the mortgagee was not fixed with notice of undue influence (z). Independent professional advice is not necessary when the fiduciary relation has completely ceased to exist (a). It has been held, in the case of a voluntary gift (b), and it is conceived that the same principle would apply to a mortgage the terms of which are exorbitant, that the Court will not set aside the transaction where the parties are strangers, not standing in any confidential relation to each other, unless undue influence, misrepresentation, or other actual fraud is shown, and in such cases the burden of proving undue influence or fraud lies on the person seeking to avoid the transaction (c). But a security for a debt or advance is liable to be set aside on the ground of undue influence, where such influence is exercised not directly by a stranger who advances the money, but through the debtor or borrower, between whom and the person giving the security a confidential relation subsists. So where a son, who had recently come of age, at his father's instigation, and without independent professional advice, joined with his father in a mortgage to secure debts due from the father, it was (t) Aylward v. Kearney, 2 Ba. & Be. 463; Hatch v. Hatch, 9 Ves. 292. (u) Hylton v. Hylton, 2 Ves. Sen. 547; Maitland v. Irving, 15 Sim. 437. (x) See Rhodes v. Bate, L. R. 1 Ch. A. 252. (") Baker v. Bradley, 7 De G. M. & G. 597. (z) Bainbrigge v. Browne, 18 Ch. D. 188. See O'Rorke v. Bolingbroke, 2 App. Cas. 814. (a) Mitchell v. Homfray, 8 Q. B. D. 587, C. A., commenting on Rhodes v. Bate, L. R. 1 Ch. A. 252. (b) Villers v. Beaumont, 1 Vern. 100. (c) Hunter v. Atkins, 3 My. & K. 113; Toker v. Toker, 31 Beav. 629; Armstrong v. Armstrong, Ir. R. 8 Eq. 1. held that the mortgage was void as obtained by undue in- CHAP. XXXIII, fluence (d). So securities given by a niece for debts due from her uncle, who had been her guardian, were set aside (e). So, also, where a debtor induced a lady, to whom he was engaged to be married, to give a security for his debt (f). mortgage An assignee for value of a security, with notice that it was Assignee of obtained by undue influence, will be in no better position than obtained by the original mortgagee (g). But a security, though originally undue inso obtained, will not be set aside as against a bonâ fide assignee without notice (h). fluence. into mort gage. In cases of undue influence generally, where the transaction Sale turned takes the form of a sale, the conveyance will be directed to stand as a security for the amount actually found due, with interest on the footing of a mortgage (i), and, it is said, even with costs (/), but the costs are in the discretion of the Court (7); and in case of refusal on tender of a proper sum, the mortgagee will be fixed with costs (m), as also where there has been fraud, or misrepresentation, or other misconduct (n), in which case the security will be set aside unconditionally. But in general the defendant will be put in the same position as if the transaction had not taken place (o). The plaintiff in such a suit will be made to pay the costs occasioned by charges of fraud which he does not substantiate (p). ii.-Mortgages to Solicitors by their Clients.-The question of undue influence has frequently been raised in cases of securities given to solicitors to secure advances made by them to their clients. Formerly a mortgage by his client to a solicitor for costs due and to become due was restricted to those actually due (q); but (d) Baker v. Bradley, 7 De G. M. & G. 597; Berdoe v. Dawson, 34 Beav. 603; Espey v. Lake, 10 Hare, 260; Savery v. King, 5 H. L. C. 627. (e) Archer v. Hudson, 7 Beav. 551; Maitland v. Irving, 15 Sim. 437. (f) Corbett v. Brock, 20 Beav. 524. (g) Bainbrigge v. Browne, 18 Ch. D. 188, 197. (h) Blackie v. Clark, 15 Beav. 595. (k) Sug. V. & P. (14th ed.) p. 286. 265. VOL. I.-R. (m) Tottenham v. Emmet, 11 L. T. N. S. 404; S. C., 12 L. T. N. S. 838; Nevill v. Snelling, 15 Ch. D. 679. (n) Kay v. Smith, 7 H. L. C. 750; Thomas v. Lloyd, 3 Jur. N. S. 288; Tottenham v. Green, 32 L. J. Ch. 201. (0) Savery v. King, 5 H. L. 627. (p) Edwards v. Burt, 2 De G. M. & G. 65; St. Albyn v. Harding, 27 Beav. 11; Foster v. Roberts, 29 Beav. 471. (g) Williams v. Piggott, Jac. 598; Pitcher v. Rigby, 9 Pri. 79; Re Moss, 17 Beav. 346. And see Re Foster, 6 Jur. N. S. 687, L.JJ. See as to accounts between solicitor-mortgagees and client-mortgagors, post, p. 1143. R R Former rule as to secu rities for costs. CHAP. XXXIII. there was no objection to a security given to a solicitor for a debt really due, or for a reasonable reward for services rendered (). Nor was it unfair for a solicitor to stipulate, on procuring money for his client on mortgage, that the security should cover the balance which should be found due to him on a settlement of accounts (). And with respect to the rule as to future costs, a distinction was drawn as to those cases where the client, being a trustee, stipulated that the attorney should not make demand upon him personally, and agreed with him that, when funds were in hand, he should be paid thereout such claim as he might have a right to make (s). Present rule. Security on subjectmatter of suit. But now a solicitor may take security for his future costs, charges, and disbursements to be ascertained by taxation, or otherwise (f), which may now include profit costs of, and incident to the mortgage (u). Charges made by a solicitor, though secured by mortgage, have long been open to taxation (x). And a mortgagor may, under 6 & 7 Vict. c. 73, obtain an order for taxation at any time before payment, or, under special circumstances, even after payment (y); but, under such circumstances, a strong case must be made against the solicitor (≈). A solicitor who has a mortgage for his costs may commence an action of foreclosure without having first had his bill of costs taxed, notwithstanding sect. 37 of the Act (a). A solicitor cannot enforce a charge on his client's estate pending the taxation of the costs (b). A security given by a client to his solicitor upon the subjectmatter of the suit is valid, as it is likely to be beneficial to the client (c). A sale, however, by the client to his solicitor of such subjectmatter is void for champerty or maintenance (d), and will only stand as a security for the money actually advanced (e). (r) Cheslyn v. Dalby, 2 Y. & C. Exch. 170; Blagrave v. Routh, 3 Jur. N. S. 399, L.JJ.; Pearson v. Benson, 28 Beav. 598. (8) Per Wigram, V.-C., in Parsons v. Spooner, 5 Ha. 111. (t) 33 Vict. c. 28, s. 16; 44 & 45 Vict. c. 44, s. 5. (u) 58 & 59 Vict. c. 25, post, p. 1194. (x) Walmsley v. Booth, 2 Atk. 27; Newman v. Payne, 4 Bro. C. C. 350; Morgan v. Lewes, 4 Dow, 29. (y) Re Carew, 8 Beav. 150. See Re Sutton, 11 Q. B. D. 377. () Horlock v. Smith, 2 My. & Cr. 510. See Waters v. Taylor, 2 My. & Cr. 526; Wragge v. Denham, 2 Y. & C. Exch. 117. (a) Thomas v. Cross, 10 Jur. N. S. 1163. (b) Waugh v. Waddell, 16 Bear. 521. (c) Anderson v. Radcliffe, E. B. & E. 816; Wood v. Downes, 18 Ves. 120. (d) Simpson v. Lamb, 7 E. & B. 84. (e) Wood v. Downes, sup. See Lewis v. Hillman, 3 H. L. C. 607; James v. Kerr, 40 Ch. D. 449. clients re All securities from clients to their solicitors, and, in fact, all CHAP. XXXIII. their dealings, are regarded with jealousy, as the relation be- Dealings with tween them gives such room for the exercise of undue influence, garded with and may be so easily abused that they are not allowed to deal jealousy. upon the same footing as other persons (f). In all such dealings the solicitor must show that he has taken no advantage, but has given his client every information, advice, and protection as if the client had been dealing with a stranger, and in default thereof a purchase will be treated as a security for the amount actually due (g). aside after The transaction will be set aside after many years, and after Dealings set the deaths of the parties, if the facts have been concealed or lapse of time. misrepresented so as not to have been known to the client (h). Though lapse of time always forms an ingredient in these cases, less weight will be attached to it, whilst the relation between the parties still continues (i). visions not The rules in regard to securities by clients are strict; the debt Unusual prosecured must, before the statute, have been actually due, and the allowed. onus of ascertaining the amount falls on the solicitor. There must be no unusual provisions in the security which will prejudice the client (k); and if any advantage is given to the solicitor as interest upon costs, full information must have been furnished to the client of his rights (). redemption. If any unreasonable postponement of the time for redemption Proviso for is inserted, the mortgagor will have the same rights as in an ordinary mortgage (k), and especially so if there has been any concealment or misrepresentation (m). Where a mortgage by a client to his solicitor contained a Power of sale. power of sale to be exercised, although there was no default, and without the attention of the client being especially called to it, a sale was set aside, and the solicitor was fixed with the damages (f) Walmsley v. Booth, 2 Atk. 27. (g) Cane v. Allen, 2 Dow, 289; Gibson v. Jeyes, 6 Ves. 266; Welles v. Middleton, 1 Cox, 112; Holman v. Loynes, 4 De G. M. & G. 270; Tomson v. Judge, 3 Drew. 306; Higgins v. Joyce, 2 J. & L. 282; Gibbs v. Daniel, 4 Giff. 1. (h) Charter v. Trevelyan, 11 Cl. & F. 714; Ward v. Sharp, 32 W. R. 584; W. N. (1881) 5. 96. See Lyddon v. Moss, 4 De G. & J. (k) Cowdry v. Day, 1 Giff. 316; (1) Lyddon v. Moss, 4 De G. & J. 104. (m) Cowdry v. Day, sup. ; Dunstan v. Paterson, 11 Jur. 96; Thomas v. Lloyd, 3 Jur. N. S. 288. (i) Gresley v. Mousley, 4 De G. & J. CHAP. XXXIII. and costs, the damages including the difference between solicitor and client and party and party costs (n). Obligation of solicitor to trustee of bankrupt client. Severance of relation of solicitor and client. Security for gift to solicitor void. Grounds for setting aside mortgages of reversions. Where, however, a client owed a sum to his solicitor, and, being pressed for payment, executed a charge to secure the debt containing a power for the solicitor to sell the property without notice if the money was not paid by a specified day, it was held that this was not an ordinary mortgage transaction, but an arrangement for giving time to the debtor, and accordingly, that a sale under the power could not be impeached, though the debtor had no independent advice, and it did not appear that the unusual form of the power was explained to him (0). The obligation of a solicitor in dealings with his client extends to cases where the solicitor of a bankrupt is dealing with the trustee in the client's bankruptcy (p). A solicitor whose fiduciary relation towards his client has been put an end to is free from all obligations incident to the relation in subsequent dealings with his former client (q). A gift or security for a gift to a solicitor by his client pending the relation is absolutely void (r), and no such gift can be supported unless the relation between the parties had been finally severed (s). iii.-Dealings with Reversionary Interests.-The Court, for the protection of expectant heirs, frequently grants relief against dealings with reversionary interests and expectancies, and the like, on the ground of fraud, and, in such cases, inadequacy of consideration is still a material element in raising a presumption of fraud. Unconscionable bargains with young men will be set aside, though they have mere expectations from their relations, where the bargains are not understood by the borrower (†). But, though youth is treated as an important circumstance, relief may, in a proper case, be granted against an unconscionable bargain, though the mortgagor was a person of mature age (u), and, in such a case, a mortgage of an expectant or reversionary interest is liable to be set aside if its terms are unreasonable, (n) Cockburn v. Edwards, 18 Ch. D. 449, C. A.; Cradock v. Rogers, 56 L. J. Ch. 968. (0) Pooley's Trustee v. Whetham, 33 Ch. D. 111, C. A. (p) Luddy's Trustee v. Peard, 33 Ch. D. 500. (q) Boswell v. Coaks, 23 Ch. D. 302. (r) Newman v. Payne, 4 Bro. C. C. 350. (s) Morgan v. Minett, 6 Ch. D. 638. (t) Nevill v. Snelling, 15 Ch. D. 679. See Readdy v. Prendergast, 56 L. T. 790. (u) Earl of Portmore v. Taylor, 4 Sim. 182; Davis v. Duke of Marlborough, 2 Swanst. 139 at p. 143. |