c. 104.

specialties (Payne v. Mortimer, 4 De G. & J. 447). In the case of 3 & 4 Will. 4, insolvent estates administered in Chancery, the rule in bankruptcy as to the payment of such bonds is not imported by Jud. Act, 1875, s. 10 (Ex p. Pottinger, 8 Ch. Div. 621; Re Maggi, Winehouse v. Winehouse, 20 Ch. D. 545; Re Williams, Jones v. Williams, 36 Ch. D. 573).

In the case of persons dying on or after the 1st January, 1870, it is now 32 & 33 Vict. enacted, that no debt or liability of such person shall be entitled to any c. 46. priority or preference by reason merely that the same is secured by or arises under a bond, deed, or other instrument under seal, or is otherwise made or constituted a specialty debt; but all the creditors of such person, as well specialty as simple contract, shall be treated as standing in equal degree, and be paid accordingly out of the assets of such deceased person, whether such assets are legal or equitable, any statute or other law to the contrary notwithstanding. But this provision is not to prejudice or affect any lien, charge, or other security which any creditor may hold or be entitled to for the payment of his debt (32 & 33 Vict. c. 46, s. 1).

It has been further enacted that in the administration by the court of Jud. Act, the assets of any person who may die after 1st November, 1875 (see 1875, s. 10. Sherwin v. Selkirk, 12 Ch. D. 73), and whose estate may prove to be insufficient for the payment in full of his debts and liabilities, the same rules shall be observed as to the respective rights of secured and unsecured creditors, and as to the debts and liabilities provable, and as to the valuation of annuities and future and contingent liabilities respectively as may be in force for the time being under the law of bankruptcy with respect to the estates of persons adjudged bankrupt (38 & 39 Vict. c. 77, s. 10).

The last-mentioned section has not imported into the administration in Chancery of insolvent estates of deceased persons the rules of bankruptcy as to the payment of debts pari passu (Re Maggi, Winehouse v. Winehouse, 20 Ch. D. 545; Re Williams, Jones v. Williams, 36 Ch. D. 573). The 125th section of the Bankruptcy Act, 1883, however, gives power to transfer the administration of an insolvent's estate to bankruptcy. power is discretionary (Higgs v. Weaver, 29 Ch. D. 236). In bankruptcy sect. 40 of the Bankruptcy Act, 1883, would take away the statutory priority of a savings-bank against the estate of its deceased officer (Jones v. Williams, sup.)

The

Before judgment in an administration action an executor or adminis- Executor may trator may prefer one creditor to another of equal degree (Vane v. Rigden, prefer cre5 Ch. 669; Maltby v. Russell, 2 Sim. & Stu. 227), even though the debt be ditors. barred by statute (Stahlschmidt v. Lett, 1 Sm. & G. 415), and even though the representative have notice of the commencement of an administration action (European Society v. Radcliffe, 7 Ch. D. 733). In the last-mentioned case it was said by Jessel, M. R., that to prevent preferential payments a creditor commencing an administration action should, on issuing a writ, apply for a receiver, but this was disapproved by the Court of Appeal in Phillips v. Jones (28 Sol. J. 360). And it has been held that a receiver will not be appointed except where a case is shown of assets being wasted (Harris v. Harris, 56 L. T. 507; Re Wells, Moloney v. Brooke, 45 Ch. D. 575).

An executor's right of retaining out of a testator's assets a debt owing Retainer by to himself by a testator was a right against legal assets, and "was given executor. for this reason. When the creditor was also executor he could not sue Origin of himself. Any other creditor by suing the executor might get priority by doctrine. judgment obtained; and the executor not being able to sue himself was allowed, as against other creditors, to retain" (Davidson v. Illidge, 27 Ch. Div. 481; see Re Baker, Nicholls v. Baker, 44 `Ch. Div. 273). The right may be exercised by an administrator (Re May, Crawford v. May, 45 Ch. D. 499).

An executor cannot retain out of equitable assets (Thompson v. Bennett, Operation. 6 Ch. D. 739; Walters v. Walters, 18 Ch. D. 182). So assets under 3 & 4 Will. 4, c. 104, being equitable assets, an executor has no right of retainer

Retainer by executor.

3 & 4 Will. 4, in respect of them (Walters v. Walters, 18 Ch. D. 182; Davidson v. Illidge, c. 104. 27 Ch. Div. 478). As to executor's retainer generally, it has been held that it is not affected by 32 & 33 Vict. c. 46, s. 1 (Crowder v. Stewart, 16 Ch. D. 368), but can be exercised only as against creditors in equal degree as before the act (Wilson v. Caxwell, 23 Ch. D. 764; Re Jones, Calver v. Laxton, 31 Ch. D. 440; see Talbot v. Frere, 9 Ch. D. 568). An executor is not in respect of his retainer a secured creditor within the Jud. Act, 1875, s. 10 (Lee v. Nuttall, 12 Ch. D. 61). An executor cannot retain out of assets got in by a receiver (Re Jones, Calver v. Laxton, 31 Ch. D. 440), but can, out of assets got in by himself and handed over to a receiver (Latimer v. Harrison, 32 Ch. D. 395), and also out of assets paid into court by him, either actually or in substance (Richmond v. White, 12 Ch. Div. 361). An executor can retain in respect of a debt due to himself jointly with others (Crowder v. Stewart, 16 Ch. D. 368; International Co. v. Hawes, 29 Ch. Div. 935; Re Bolton, 1892, W. N. 114), or due to him as trustee (International Co. v. Hawes, sup.), or as cestui que trust (Loomes v. Stotherd, 1 S. & S. 461), and notwithstanding that the amount has not been ascertained (Morris v. Morris, 10 Ch. 68); and in respect of a debt barred by the Statute of Limitations (Beswick v. Orpen, 16 Ch. D. 207; see Field v. White, 29 Ch. Div. 359), but not one barred by the Statute of Frauds (Field v. White, sup.) The right is not waived by the executor commencing an administrative action on behalf of himself and all other creditors, and submitting to account (Campbell v. Campbell, 16 Ch. D. 198). The executors of an executor can exercise his right of retainer, if he has claimed it during his lifetime (Wilson v. Caxwell, 23 Ch. D. 764), but only out of assets which came to his hands or were paid into court during his life-time (Re Compton, Norton v. Compton, 30 Ch. D. 15). The right can be exercised by an administratrix in respect of moneys advanced out of her separate estate to her deceased husband for his business (Re May, Crawford v. May, 45 Ch. D. 499). The court will not interfere with the retainer by appointing a receiver (Re Wells, Moloney v. Brooke, 45 Ch. D. 569). See further, as to executor's retainer, Williams on Executors, p. 1043, 8th ed.

By heir-atlaw.

Simple contract debts.

Payments on behalf of lunatics.

Nature of debt created

It seems that, notwithstanding 32 & 33 Vict. c. 46, an heir-at-law or devisee, where the estate is not charged with debts, may retain a debt to which he is entitled by specialty in which the heirs are bound (Davidson v. Illidge, 27 Ch. Div. 478).

Debts by simple contract are such, where the contract upon which the obligation arises is neither ascertained by matter of record, nor yet by deed or special instrument, but by oral evidence, the most simple of any; or by notes unsealed, which are capable of a more easy proof, and (therefore only) better than a verbal promise (2 Bl. Comm. 465). A foreign judgment constitutes but a simple contract debt (Wilson v. Dunsany, 18 Beav. 293). So the right to indemnity of a surety for a specialty debt, who has not paid (Ferguson v. Gibson, 14 Eq. 379). So damages awarded in an arbitration for breach of an agreement to lease a mine (Talbot v. Shrewsbury, 16 Eq. 26).

In the case of necessaries supplied to a lunatic, the law implies an obligation on the part of the lunatic, under which the amount of such necessaries may become payable as a debt out of his real or personal assets (Re Rhodes, Rhodes v. Rhodes, 44 Ch. Div. 94; Wentworth v. Tubb, 1 Y. & Coll. C. C. 171; see Manby v. Scott, 1 Sid. 112; Baxter v. Earl Portsmouth, 7 D. & R. 614; 5 B. & C. 170; Brown v. Joddrell, 3 C. & P. 30; M. & M. 105; Dane v. Kirkwall, 8 C. & P. 679; see Shelford on Lunatics, 462-465, 2nd ed.; Pope on Lunacy, 257, 2nd ed.) And a trustee will be allowed such payments in account (Nelson v. Duncombe, 9 Beav. 211). Necessaries include costs of proceedings in lunacy (Stedman v. Hart, Kay, 607; Jones v. Noyes, 7 W. R. 21; Williams v. Wentworth, 5 Beav. 325).

A trustee, who has committed a breach of trust by misapplying the trust fund, is considered only as a simple contract debtor to his cestui que by breach of trust (Vernon v. Vawdry, 2 Atk. 119; Cox v. Bateman, 2 Ves. sen. 19; see Perry v. Phelips, 4 Ves. 116). But an acknowledgment by a trustee under

trust.

c. 104.

his hand and seal, that he alone had received the whole trust money for 3 & 4 Will. 4, the purposes of the trust (Gifford v. Manley, Cas. temp. Talbot, 109; see Kay, 725), or any general words amounting to a covenant on his part, will make him a debtor by specialty (Montford v. Cadogan, 19 Ves. 638; Wood v. Hardisty, 2 Coll. 542). And the words " covenant or agree," are not necessary in a trust deed to constitute a specialty contract: a declaration by the trustee that he will stand possessed on certain trusts, &c., is sufficient (Richardson v. Jenkins, 1 Drew. 477). A trustee, however, under a deed, the terms of which would amount to the creation of a contract, is not a specialty debtor if he has not executed the deed, although he has acted under it (Richardson v. Jenkins, 1 Drew. 477). And even where the trustee has executed the deed, the court will not raise a covenant without necessity (Adey v. Arnold, 2 D. M. & G. 437). In every case the question is: Was it intended that the trustee should give a covenant for payment of the money? (Isaacson v. Harwood, 3 Ch. 228). The mere assignment of the trust property will not create a specialty debt (Adey v. Arnold, 2 D. M. & G. 432; Wynch v. Grant, 2 Drew, 312); nor a recital of an agreement to become trustee (Wynch v. Grant, ubi sup.); nor a declaration by the trustee that he accepts the office (Holland v. Holland, 4 Ch. 449).

As to specialty debts generally, see 2 Wms. Exors. 1014 et seq., 8th ed. Specialty To make a debt a specialty it must be enforceable at law. There is no debts. specialty in equity (Holland v. Holland, 4 Ch. 455). Specialty debts have been held to have been created by a covenant in a marriage settlement to settle money (Eyre v. Monro, 3 K. & J. 305); by a covenant to execute a lease (Kidd v. Boone, 12 Eq. 89); and by a covenant for further assurance (Re Dickson, ib. 154). In general, an acknowledgment of a debt by an instrument under seal will amount to a covenant to pay and creates a specialty (Saunders v. Milsome, 2 Eq. 573), but not where the acknowledgment is made for a collateral purpose (Jackson v. N. E. R., 7 Ch. D. 573, 583; Isaacson v. Harwood, 3 Ch. 225; Marryat v. Marryat, 28 Beav. 224).

All moneys payable in pursuance of the regulations of a company formed under Companies Act, 1862, by a member to the company are specialty debts (Companies Act, 1862, s. 16); and where a company is being wound up under that act, the liability of a contributory to pay calls made since the winding up is a specialty binding the heirs (see sect. 75; Buck v. Robson, 10 Eq. 629), even where the company is not registered under that act (Re Muggeridge, Muggeridge v. Sharp, 10 Eq. 443).

Copyholds were not within the statute 3 & 4 Will. & Mary, c. 14, nor Copyholds the 47 Geo. 3, sess. 2, c. 74, nor the 11 Geo. 4 & 1 Will. 4, c. 47, and con- heretofore sequently before this act were not liable to specialty debts, or debts of not liable to traders. Before this act, copyhold estates were not liable, either at law or debts. in equity, to the debts of a testator any further than he charged them (Aldrich v. Cooper, 8 Ves. 393). But where a testator having both freehold and copyhold estates, charged all his real estates with the payment of his debts, if he had surrendered the copyhold to the use of his will, the freehold and copyhold would have been applied rateably; but if he had not surrendered the copyhold, it would not have been applied until the freehold was exhausted (Growcock v. Smith, 2 Cox, 397; Coombes v. Gibson, 1 Br. C. C. 273; Kentish v. Kentish, 2 Br. C. C. 257). But equity would, before the statute 55 Geo. 3, c. 192, supply a surrender to the use of a will where a manifest intent to charge copyholds with debts appeared in the will (Drake v. Robinson, 1 P. Wms. 443; Bateman v. Bateman, 1 Atk. 421). As to copyholds being charged by a will, see Noel v. Weston (2 Ves. & Bea. 269); Godolphin v. Penneck (2 Ves. Sen. 271); Doe v. Ludlam (7 Bing. 275); Ronalds v. Feltham (T. & R. 418). Where one party had a charge on freehold and copyhold estate, and another party on the freehold estate only, it was held, that the latter was entitled to require that the former should be satisfied out of the copyhold estate so far as it would extend (Tidd v. Lister, 10 Hare, 157).

Formerly copyholds were not liable to an extent (Park. R. 195; Drury v. Man, 1 Atk. 96); and neither the crown nor the subject was allowed to

S.

CC

3 & 4 Will. 4, take copyhold tenements held in fee or for lives in execution (8 Ves. 394), c. 104. yet it was said that leases for years of copyhold tenements, granted by virtue of a licence from the lord, may be taken in execution, that being a common law interest (3 Prest. Abstr. 351). Before the stat. 1 & 2 Vict. c. 110 (post), copyhold lands could not be taken in execution upon a judgment (Cannon v. Pack, Vin. Abr. Copyhold (O. e), pl. 6; 2 Eq. Cas. Abr. 226, pl. 6); nor be seized upon an outlawry, because it would have been prejudicial to the lord of the manor (R. v. Budd, Park. R. 190). But it seems that they may be sequestered (Dunkley v. Scribnor, 2 Madd. 443; Carmarthen v. Hawson, 3 Swanst. 294); although the sequestration will not be revived against the heir of the party who was sequestered (Whitehead v. Harrison, 1 Barn. K. B. 431); and they are within the rules as to marshalling assets (Aldrich v. Cooper, 8 Ves. 388; 2 Pow. on Mort. 263, n). But a trust of copyholds, which descended according to the rules of the common law, was assets in the hands of the heir of the cestui que trust, as the customary descent is in that case broken (Kelly v. Kelly, 2 Eq. Cas. Abr. 509, pl. 4).

Copyholds now liable

to be taken in execution.

By stat. 1 & 2 Vict. c. 110, s. 11 (post), all real estates, including lands and hereditaments of copyhold or customary tenure, of which the person against whom execution is sued, was seised at the time of entering up such judgment, or at any time afterwards, or over which he had alone a power, may be taken in execution; but the person taking such lands in execution, is liable to the performance of the services due to the lord of

manor.

22 & 23 Vict.

Devisee in

trust may

raise money

by sale, not

DEVISE OF REAL ESTATES CHARGED WITH

DEBTS.

22 & 23 VICTORIÆ, CAP. 35, SECTS. 14—18, and 23. An Act to further amend the Law of Property and to relieve Trustees. [13th August, 1859 (a).]

14. Where by any will which shall come into operation after c. 35, s. 14. 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 withstanding trustee or trustees for the whole of his estate or interest therein, want of ex. and shall not have made any express provision for the raising of press power in the will. 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 (b).

(a) The other sections of this act will be found under different heads in this work (See ante, p. 355, and post).

22 & 23 Vict.

c. 35, s. 14.

debts on real

(b) On the question, what amounts to a charge of debts upon real estate, a mere authority to trustees to pay claims on the estate is not such a charge (Re Head's Trustees, 45 Ch. D. 310). A general direction, however, in a will to pay debts, charges them ordinarily on all the testa- Charge of tor's real estate (Graves v. Graves, 8 Sim. 55; Cook v. Dawson, 29 B. 126; estate. Corser v. Cartwright, L. R. 7 H. L. 735); unless a contrary intention appears in the will (Thomas v. Britnell, 2 Ves. Sen. 313). Such contrary intention may appear (1) by reason of there being a specific charge of debts on part of the real estate (Palmer v. Graves, 1 Keen, 545; Corser v. Cartwright, sup.), in which case the words must be clear (Taylor v. Taylor, 6 Sim. 246; Jones v. Williams, 1 Coll. 156; see Wrigley v. Sykes, 21 Beay. 337; Marshall v. Gingell, 21 Ch. D. 790); or (2) by reason of the direction being a direction to executors to pay, in which case the presumed intention is that the debts are to be paid only out of the property which passes to the executors as such (Wasse v. Heslington, 3 M. & K. 495; Bailey v. Bailey, 12 Ch. D. 272). Where, however, in addition to the direction to the executors to pay debts the will contains a devise of real estate to them, such real estate may be charged, whether under the devise they take beneficially for life or otherwise (Henvell v. Whitaker, 3 Russ. 343; Finch v. Hattersley, ib. 345), or merely on trust (Hartland v. Murrell, 27 Beav. 204; Re Tanqueray-Willaume, 20 Ch. Div. 465, see De Burgh Lawson v. De Burgh Lawson, 41 Ch. D. 568, the will of a married woman in exercise of a power). But it is a question of intention (Bailey v. Bailey, 12 Ch. D. 272; Wasse v. Heslington, 3 M. & K. 495). And such real estate will not be charged, either where the executors take unequal benefits (Harris v. Watkins, Kay, 438; see Re Tanqueray-Willaume, 20 Ch. Div. 465); or where the devise is to one executor only (Warren v. Davis, 2 M. & K. 49; see Marshall v. Gingell, 21 Ch. D. 790). Real estates made assets by means of such a charge are equitable assets (Silke v. Prime, 1 Br. C. C. 138; Shiphard v. Lutwidge, 8 Ves. 26); as to equitable assets, see ante, p. 337.

With regard to legacies, where there is only a general gift of them, they Charge of are not charged on the testator's real estate (Kightley v. Kightley, 2 Ves. legacies on Jun. 328). To charge them a clear intention must be shown (Bench v. real estate. Biles, 4 Mad. 188); clearer, it would seem, than in the case of debts. (Kightley v. Kightley, sup.) Where there is a direction that the real? estate be sold, the proceeds to form part of the personal estate, the realty is charged (Bright v. Larcher, 3 De G. & J. 148; Field v. Peckett, 29 B. 568). A direction to the executor to pay legacies would seem to charge real estate devised to him (Alcock v. Sparhawk, 2 Vern. 228; Elliot v. Handcock, ib. 143; Cross v. Kennington, 9 Beav. 150); but a direction to executors to realise for the payment of legacies such part of the testator's estate as they thought right, did not charge the real estate (Re Cameron Nixon v. Cameron, 26 Ch. D. 19). A general charge of legacies on the real estate will not charge specifically devised realty (Spong v. Spong, 3 Bli. N. S. 84; Conron v. Conron, 7 H. L. C. 168), unless the legacies are coupled with debts (Maskell v. Farrington, 3 D. J. & S. 338).

Where a will gives legacies generally, and also gives the residue of the real and personal estate in one mass, the result is to make the residue a mixed fund, and to charge the legacies rateably upon the mixed fund (Greville v. Browne, 7 H. L. C. 689; Re Bellis, 5 Ch. D. 504). The rule applies whether the legacies are given before or after the gift of residue (Elliott v. Dearsley, 16 Ch. D. 327); and is not affected by a direction that debts and legacies are to be paid by the executors (Re Brooke, Brooke v. Rooke, 3 Ch. D. 630). As to its application in the case of property subject to a special power of appointment, see Gainsford v. Dunn (17 Eq. 405). The rule applies even where the will contains a specific devise of real estate by means of which the word "residue" might have been explained (Francis v. Clemow, Kay, 435); but in such case, the specifically devised estate is not charged (See Bray v. Stephens, 12 Ch. D. 169). Where, after bequeathing legacies, a testator devised his real estate in B. and the residue of his real and personal estate, the legacies were charged on the real estate in B. as