covenant will operate as an auxiliary security only, and the land CHAP. XL. must bear the onus: or, if a person having an estate in lands concur in a mortgage with some other party having also an estate in the same lands, for the purpose of raising a sum of money for the benefit of the latter, he is merely a surety, and may require to have his estate exonerated out of the assets of the other party; and it is said, if he enter into no covenant, that he will not be personally liable to the mortgagee either by way of specialty or simple contract (o). But if he entered into a covenant with the mortgagee, and the estate of the other party was insufficient to meet the debt, it was a question whether his estate in the land or his personalty was the primary fund. A charge of the debt by the will of the surety upon his own estate would not seem to have altered the nature of the debt. But in a case where A. had mortgaged property by way of collateral security for a debt of two of his sons, which was secured also by a mortgage of property belonging to them, and a bond of indemnity had been given by the latter to the former, and A. afterwards devised the property so mortgaged to one of the two sons, and gave the rest of his real and personal estate to trustees on trust to convert into money and pay debts, and particularly the sums which might become payable out of the property so devised to his son, and after payment of certain legacies, then to divide the residue among his three sons in certain proportions, Vice-Chancellor Knight-Bruce held that the testator had taken the debt on himself, and that it was a gift to his two sons (p). On the principle of suretyship rest the cases in which it has been decided that if in a settlement of real estate a settlor covenant for payment of children's portions or widow's jointure (1), or if a person make a voluntary gift by way of charge, and covenant for payment of the money (»), the land must be the primary fund for payment. So, if tenant for life, with power of charging real estate, made a charge with a covenant for payment, his personal estate (0) Lloyd v. Thursby, 2 Cru. Dig. 4th ed. p. 124. (p) Musket v. Cliffe, 2 De G. & S. 243. (a) Lanoy v. Duke of Athol, 2 Atk. 414; Edwards v. Freeman, 2 P. Wms. 438; Coventry v. Coventry, 2 P. Wms. (r) Wilson v. Darlington, 2 P. Wms. CHAP. XL. Husband and wife. Mortgage of personalty. was not primarily liable to exonerate the land (s). And this rule was applied to a case where a feme covert, having a life estate with power of charging, and with ultimate remainder to herself in fee, charged the estate under her power and covenanted for payment, and then, by the death of her husband and the failure of the intermediate limitations, became absolute owner of the fee, which descended on her heir (†). If a husband and wife concur in mortgaging the estate of the latter for the benefit of the former, the wife is regarded as a surety, and as between her real and personal representatives the principles applicable generally to cases of suretyship apply. But in mortgages of this kind a distinct question arises as to the right of the wife during her life and of her heir or devisees after her death to have the mortgaged property indemnified by the husband, who is the principal debtor. This question has been already considered in a previous Chapter (u). iv.-Exoneration of Personalty specifically mortgaged out of the General Assets. As regards mortgages and pledges of personalty (including leaseholds, prior to the passing of the statute 40 & 41 Vict. c. 34 (x)), the general rule of law was that the general assets of a deceased mortgagor or pledgor were primarily liable to satisfy the debt in exoneration of the particular property comprised in the mortgage or pledge, which was regarded merely as a collateral security for the debt (y). And in one case it was held that a specific legatee of stock, for the sale of part of which a power of attorney was, after the date of the will, executed by the testator to parties, who honoured his bills, but did not sell the stock till after his death, was in the position of a legatee of mortgaged property, and, therefore, entitled to throw the debt upon the general estate. So in Blount v. Hipkins (z), a legatee of railway shares, to which the testator was an original subscriber, was held to have a right to be indemnified against future calls out of the testator's personal estate (2); and the same rule was followed in another case under similar circumstances, (8) Exp. Earl Digby, Jac. 235, 238. seg. (u) See Chap. XX., ante, pp. 351 et (r) See post, p. 769. (y) Knight v. Davis, 3 My. & K. (z) 7 Sim. 43, 51; Day v. Day, 1 Dr. & S. 261; Re Box's Trust, 3 N. R. 65; Clive v. Clive, Kay, 600; Barry v. Harding, 1 J. & L. 490; Moffett v. Bates, 3 Sm. & G. 468. But see Armstrong v. Burnet, 20 Bear. 424. and was also applied to a legacy of railway shares to which the testator had not originally subscribed, but which he had purchased from an original subscriber before the Railway Act passed, on the ground that there was an implied contract to indemnify the vendor of the shares against the future calls (a). CHAP. XL. fund after In a bequest of money, after payment of debts, to A., and of Bequest of all other property to B., the money was held to be the primary payment fund (b). As Locke King's Act and the amending Acts apply only to real estate and chattels real, if a testator mortgages or pledges chattels personal, they must still be redeemed for a specific legatee at the expense of the general assets (c). of debts. SECTION II. ALTERATION OF THE LAW BY LOCKE KING'S ACT AND THE AMENDING ACTS. Act. i. Mortgage Debt primarily payable out of mortgaged Lands. Locke King's By sect. 1 of the statute commonly known as Locke King's Act (d), it is enacted as follows: Heir or devisee not to claim pay. ment of mort "When any person shall, after the 31st day of December, 1854, die seised of or entitled to any estate or interest in any land or other hereditaments which shall at the time of his death be charged with the payment of any sum or sums of money by way of mortgage, gage out of and such person shall not, by his will or deed or other document, personal have signified any contrary or other intention, the heir or devisee assets. to whom such land or hereditaments shall descend or be devised shall not be entitled to have the mortgage debt discharged or satisfied out of the personal estate or any other real estate of such person, but the lands or hereditaments so charged shall as between the different persons claiming through or under the deceased person be primarily liable to the payment of all mortgage debts with which the same shall be charged, every part thereof according to its value bearing a proportionate part of the mortgage debts charged on the whole thereof. Provided always, that nothing herein contained shall affect or diminish any right of the mort (a) Jacques v. Chambers, 16 L. J. Ch. 243. (b) Vernon v. Earl Manners, 31 Beav. 623. (c) Lewis v. Lewis, L. R. 13 Eq. 226; Bothamley v. Sherson, L. R. 20 Eq. 314. (d) 17 & 18 Vict. c. 113. CHAP. XL. Act not to affect rights under wills, &c., made before 1st Jan., 1855. Extent of Act. Mortgage by deposit of deeds. Act applies only to specific charges. Trusts for conversion. gagee on such lands or hereditaments to obtain full payment or satisfaction of his mortgage debt either out of the personal estate of the person so dying as aforesaid or otherwise. Provided also, that nothing herein contained shall affect the rights of any person claiming under or by virtue of any will, deed, or document already made or to be made before the 1st day of January, 1855." It will be observed that this Act applies only to mortgages of land or other hereditaments; it applies to copyholds (e); but was held not to apply to leaseholds (f); but leaseholds have been included within its operation by the statute hereafter referred to (g). Mortgages of personalty other than leaseholds are still subject to the former law, so that the legatee of the particular mortgaged property is entitled to have it exonerated out of the general assets (h). The word "mortgage" only is used in the Act, and this expression has been held to include an equitable mortgage by deposit of deeds with or without a memorandum (i), and though the deposit be expressly "by way of collateral security for money lent on a promissory note "(k). But the expression included only specific charges (7), and accordingly the Act was held not to apply to a general charge by will on real estate (m); and this decision does not appear to be affected by the amending Acts. So, also, land devised upon trust for conversion where the legatee took the interest as money, not as land, is not within Vendor's lien. Locke King's Act ("); nor was the lien of a vendor for unpaid purchase-money (0). Questions arising under the Act. Numerous questions also arose, some of which occasioned conflict of judicial opinion, as to what was a sufficient indication of "contrary intention" so as to exclude the operation of the Act, and, in particular, as to whether a general direction for payment of debts out of the personal estate was sufficient for that purpose (p). (e) Piper v. Piper, 1 J. & H. 91. (h) See ante, pp. 753 et seq. (i) Pembrooke v. Friend, 1 J. & H. 132; Coleby v. Coleby, L. R. 2 Eq. 803. (k) Ibid. And see Davis v. Davis, W. N. (1876) 242. Moreover, contrary intention so as to exclude the operation of this Act was held to be sufficiently indicated by a gift of residue of real and personal estate (2), or of personal estate (") upon trust for, or charged with the payment of the testator's debts, without express mention of mortgage debts. In order to solve these difficulties, two Acts were successively passed by the legislature, by the first (s) of which it is enacted as follows: CHAP. XL. Sect. 1. "In the construction of a will of any person who may In construing die after the 31st day of December, 1867, a general direction that wills, general direction for the debts, or that all the debts, of the testator (t) shall be paid payment of out of his personal estate shall not be deemed to be a declaration debts out of of an intention contrary to or other than the rule established by personalty not the said Act (u), unless such contrary or other intention shall be to include further declared by words expressly or by necessary implication mortgage referring to all or some of the testator's debts or debt charged by intention way of mortgage on any part of his real estate." debts, unless expressly Sect. 2. "In the construction of the said Act and of this Act the implied. word 'mortgage' shall be deemed to extend to any lien for unpaid Interpretapurchase-money upon any lands or hereditaments purchased by a tion of word testator "(x). The second of the amending Acts (y), above referred to, enacts as follows: "mortgage." of Acts in lands of any tenure. schedule to Sect. 1. "The Acts (z) mentioned in the schedule hereto shall, as Application to any testator or intestate dying after the 31st day of December, 1877, be held to extend to a testator or intestate dying seised or possessed of or entitled to any land or other hereditaments of whatever tenure which shall at the time of his death be charged with the payment of any sum or sums of money by way of mortgage or any other equitable charge, including any lien for unpaid purchasemoney; and the devisee or legatee or heir shall not be entitled to have such sum or sums discharged or satisfied out of any other estate of the testator or intestate, unless (in the case of a testator) he shall, within the meaning of the said Acts, have signified a contrary intention; and such contrary intention shall not be deemed to be signified by a charge of or a direction for payment of debts upon or out of residuary real or personal estate or residuary real estate." (q) Stone v. Parker, 1 Dr. & Sm. 212; Allen v. Allen, 30 Beav. 395; Newman v. Wilson, 31 Beav. 33; Re Nevill, Robinson v. Nevill, W. N. (1890) 125. (r) Smith v. Smith, 3 Giff. 263; Mellish v. Vallins, 2 J. & H. 194; Eno v. Tatham, 3 De G. J. & S. 451; Moore v. Moore, 1 De G. J. & S. 602, overruling Rowson v. Harrison, 31 Beav. 207. (s) 30 & 31 Vict. c. 69. VOL. 1.-R. 99 (u) 17 & 18 Vict. c. 113, sup. () As to vendor's lien, see Re Cockroft, Broadbent v. Groves, 24 Ch. D. 94. (y) 40 & 41 Vict. c. 34. (2) 17 & 18 Vict. c. 113, and 30 & 31 Vict. c. 69, sup. 3 D |