1838.-Eland v. Eland. ecuted a further charge upon the property for securing that sum; and reciting the legacy to Mary, and that by her death Nicholas Blanshard, in right of his wife, became entitled to one-third of her legacy of 5007; and also reciting that, on the day of the date of the said indenture of the 27th day of April, 1831, Thomas Eland had paid unto Nicholas Blanshard, 1667. 13s. 4d., so due to Margaret Blanshard, and that Nicholas Blanshard had agreed [*239] to release and discharge the real estate of the *testator Thomas Eland, therein before mentioned and described, from payment of 1667. 13s. 4d., it was witnessed that Nicholas Blanshard released the property from the 1667. 13s. 4d. By a similar deed, dated the 27th of April, 1832, Thomas Eland executed a further charge to Mrs. Crooke for the sum of 1507.; and Abraham Eland, who had attained twenty-one, released the property from his 1667. 13s. 4d., being one-third of Mary's legacy, to which he had become entitled. The legacy of 2000l. to which the plaintiff, Abraham Eland, was entitled, being unpaid, he filed this bill to compel payment. By the original decree it was referred to the Master to take the usual accounts. The Master reported that, as to the personal estate of the testator, "it being alleged on the part of the defendant, Thomas Eland, that he was utterly incapable of making out such accounts, the several other parties had waived the taking such accounts;" and he found that the only creditor of the deceased was Robert Eland, for a debt due on bond and for interest, which amounted to 5697. 6s.; and he found that the legacy of 2000l. was due to Abraham Eland, with interest, amounting together to 23201. 18s. 4d.; and he found that the annuity to the widow commenced in March, 1831; and he found that the testator's property had sold for 50501. The real estate was insufficient to pay the debt and legacies of the testator, and the mortgages. [*240] *Mr. Temple and Mr. Roupell, for the plaintiff, the legatee, contended that the mortgagees took the estate expressly subject to the legacies, and that the amount thus reserved was payable to the legatees in priority to the creditors, or if not, then that the mortgagees took the real estate subject to the debts also. They argued, that as to Mrs. Crooke, the contract between her and the executor was, that the mortgagee, Mrs. Crooke, should take as her security, the interest in the estate which might remain after satisfaction of the legacies charged upon it; and as to Mrs. Seaman, that she took with notice of and subject to the prior incumbrance; that she was therefore entitled to so much as remained after the prior mortgage had been satisfied, or, in other words, took subject to the legacies; that the amount of the legacies thus having priority over all the mortgages, was payable to the legatees, whose specific rights had been reserved by the stipulation of the deeds, and that the creditors of the testator were not entitled thereto. 1838.-Eland v. Eland. They admitted the rule to be, that where there is a charge of debts, the generality of the trust relieves a party from the necessity of seeing to the application of the purchase money; but they contended, that a purchaser or mortgagee, in order to bring himself within the rule, must show that the trustee was selling the estate in that character, and not as owner-that he was carrying the trusts of the will into execution, and not dealing with the estate for his own benefit. In Watkins v. Cheek, (a) a purchaser was held bound to see to the application of the purchase money, although there was a general charge of debts, because the deed *showed that the money advanced to [*241] Cheek "was a mere personal loan to him, having no color of connection with the charges on the testator's estate;" so here, the recital in the first deed is, "that Thomas Eland had occasion to borrow 1000l." &c. showing that he was dealing as the owner for his own benefit, and not in the performance of the trusts of the will; that this was one of the grounds of the decision of the Vice-Chancellor in Johnson v. Kennett, (b) and which did not appear to have been interfered with by Lord Lyndhurst on the reversal.(c) Mr. Sutton Sharpe, for the widow, contended that she had a right to elect between the annuity and her dower. Mr. Richards, for Mrs. Crooke, the mortgagee, contended that she had priority both over the debts and the legacies, or, at all events, over the debts; that the effect of the transactions was not such as to deprive her of the acknowledged rule, "that where debts are charged generally, or where debts and legacies are charged generally, the purchasers of the real estate are not bound to see to the application of the purchase money." Johnson v. Kennett ;(d) that the money had been paid into the only hand competent to receive and to distribute it; that there was no evidence that the money was not raised for the purpose of paying the debts, or that it was not so applied; and that the mortgagee was therefore protected against any claim, on the part of the creditors at least. As regarded the legatees, he contended that, by the terms of the deed, the mortgagee did not, as was supposed, take subject to the legacies and that the covenant against all incumbrances, except *the legacies had not the effect of postponing the security to the [*242] legacies. That Watkins v. Cheek did not apply, being a case where two parties concurred in committing a breach of trust. Mr. Purvis, for Mrs. Seaman, in addition to the arguments offered on the part of the other mortgagee, contended that their cases differed, for that the mortgage deed of Mrs. Seaman contained no such exception as to the legacies as was contained in the mortgage to Mrs. Crooke; and that the notice of (a) 2 Sim. & Stu. 199. (b) 6 Simons, 390. (c) 3 Mylne & K. 624. (d) 3 Mylne & K. 630. 1838.-Eland v. Eland. Mrs. Crooke's charge contained in Mrs. Seaman's deed did not operate so as to postpone Mrs. Seaman to the legatees ;(a) Wyatt v. Barwell. (b) Mr. Pemberton, for the creditor:-The parties have waived the accounts of the personal estate; it must therefore be assumed that it was sufficient to pay the creditors; as to the general rule, as to seeing to the application of the purchase money, there is no doubt; if money is taken up by the trustee for his own purposes, the mortgagee or purchaser takes subject to the charges. Here, the mortgagees have expressly taken subject to the legacies; they must therefore have known that the money was not raised for the purpose of paying the debts; for then they would have taken, not subject to, but in priority of the legacies. This, with the recital as to the loan, shows that the devisee raised the money for his own purposes, and not for the pay[*243] ment of the *testator's debts; the mortgagee therefore took subject to the trusts of the will, and became bound to see to the application of the mortgage money. The claims of the legatees to be paid in priority to the creditors cannot be maintained, for they were no parties to the contracts reserving the legacies; when the amount comes into the hands of the executor it constitutes part of the testator's assets and must be dealt with by him in the usual course of administration the testator's debts must in that case be first satisfied, before the legatees are entitled to any thing. Mr. Lowndes, for Thomas Eland. Mr. Temple, in reply. July 12. THE MASTER OF THE ROLLS:-The general rule on which the court acts in cases of this kind, has been very accurately stated at the bar; but this case must be decided on the peculiar facts and circumstances, which are different from those which occurred in the cases cited. By the will of this testator, he subjected all his estates to the payment of his debts, he gave certain legacies, and then, subject to the legacies, he gave the real estate to Thomas Eland. Thomas Eland was trustee and executor of the will, and is a devisee of this estate, and, no doubt, he was the person by whom the assets of the testator ought to have been applied in satisfaction of all the debts and legacies. And if he had sold the estate in the [*244] ordinary way, and received the purchase *money, even if he had misapplied that purchase money, his vendees would not have been bound to see to the application of it, and would have held the estate notwithstanding that the debts and legacies had not been paid.[1] But he does not [1] When a vendee, or other person, paying money to one acting in a fiduciary capacity, is bound to see the due application of it, see this case, on appeal, 4 Myl. & Cr. 420. Wormley v. Wormley, 8 Wheat. 421. Bull v. Harris, 4 Myl. & Cr. 266, 267. Wood v. White, id. 482. 1838.-Eland v. Eland. do that, what he does is to raise from Mrs. Crooke 1000l. [His Lordship stated the deeds of 5th and 6th of April, 1826.] Her security, as it appears to me on the construction of these deeds, consisted of the estate, less the amount of the charges referred to., [His Lordship stated the subsequent securities to Mrs. Crooke.] I should say, even if the words of the deed did not necessarily induce this construction, that the transactions which took place, show to demonstration, that this lady never imagined she had a security on anything, except only on the surplus after satisfaction of the charges. In other words, she took the estate, subject to the satisfaction of the amount of those charges; and it appears that two of the charges now remain, namely, the legacy of 2000l. to the plaintiff, and the annuity of 801., which belongs to the widow, and which are both expressly stated in the deed. With regard to the other mortgage which was made to Mrs. Seaman, dated the 9th of May, 1826, being about a month after the first deed was executed to Mrs. Crooke, it appears that Mrs. Seaman, who was a second mortgagee, had clearly notice of the first mortgage, because it was recited in her deed ;[1] and I can hardly imagine that a second mortgagee upon an estate, with full notice of the first mortgage, could be considered in any other light than as a mortgagee of the equity of redemption, which remained in the mortgagor after the execution of the first mortgage. I do not see how it is possible to put it further; Mrs. Seaman had notice of the prior deed-she had the means of knowing what was the value of "the equity of redemp- [*245] tion-and she must be taken to have known it; and the security which she then took, was the equity of redemption vested in the mortgagor after the execution of the first mortgage. I, therefore, think Mrs. Seaman must be considered to have taken her security, subject to these charges. The next is a question of considerable importance to the parties. It appears the debts have not been paid: there is at least a bond debt, to the amount of 5001. and upwards, which has not been paid. The question which arises is hardly this, whether the creditor unpaid is to remain unpaid, there being assets for the payment? but the question would seem to be, whether the amount of the unpaid charges, or that part of the estate which has been reserved by the mortgagor, ought to be considered as general assets, in which case the creditor would have to be paid out of the sum: or whether the amount of the debt is to be added, as against the mortgagees, to the amount of those reserved charges: that would seem to be the question. Now, I confess, I do not think it follows, that because the legatees may have remained unpaid at the time the mortgage was executed, it must therefore be inferred that the money Sutherland v. Brush, 7 Johns. Ch. Rep. 21. Field v. Schieffelin, id. 153. [1] A general recital in a deed that there were mortgages on the estate, was ties claiming under the deed, with notice of a mortgage not specified therein. 4 Beav. 18. Page v. Adam, 4 1 Keen, 578, n. 1. held to affect parFarrow v. Rees, 1838.-Eland v. Eland. was raised merely for the personal benefit of the mortgagor, and not for the purpose of paying the debts which were owing by the testator. I cannot comprehend why Thomas Eland, the devisee, supposing himself to be possessed of an estate which was sufficient to pay both the debts which were payable immediately and the legacies which were payable at a future time, might not reasonably and properly have said, I will raise money to pay the debts now, and leave the legacies, which are payable hereafter, as charges on the estate. In that case the mortgagee would not have been obliged [*246] to *see to the application of the money. I am, therefore, very much disposed to think that I must look at the amount of the charges as general assets, that the creditors must be paid out of those charges, and that the remainder of those charges will belong to the legatees in priority to the mortgagee. If anything should ultimately remain, the mortgagee will obtain payment out of that. That seems to me the most reasonable construction I can give to the instruments, considering in that way, that the mortgagees properly paid the money to the trustees and executor, and that the security which they took, was the estate less the charges. July 20. The case came on again, when Mr. Sutton Sharpe contended that the widow's annuity had priority of the plaintiff's legacy, she being a purchaser in consideration of her dower. He argued as follows: That in order to exclude a wife from dower, by election, it must be shown that the testator meant to exclude her from it.(a) That the effect of putting a wife to her election, was to decide that the testator had given the benefit conferred by his will in bar of dower. And where a bequest is made by a testator to his wife in lieu of dower, her election to accept the legacy placed her in the situation of a purchaser of what was given to her by the will; and she would then be entitled to [*247] a preference in payment over the other legacies; *Burridge v. Bradyl,(b) Blower v. Morret,(c) Davenhill v. Fletcher, (d) Heath v. Dendy.(e) That if the widow was not entitled to a priority, she was not to be held bound by her election, as she was not bound by an election made under a mistaken notion of the claim against her; Wake v. Wake,(g) Kidney v. Coussmaker,(h) Edwards v. Morgan.(i) THE MASTER OF THE ROLLS (after reserving the question of election, and stating that he still considered that the security taken by the mortgagee was the value of the estate, minus the amount of the legacies, proceeded.) The controversy is first between the plaintiff, and unpaid legatee of 20007., and the mortgagee; the mortgagee insisting that, notwithstanding the words of the (a) 2 Roper on Legacies, 540; and see Roadley v. Dixon, 3 Russ. 192. (c) 2 Ves. sen. 420. (d) Ambler, 244. (i) M'Clell. 548. [200, n. 1.} (e) 1 Russ. 543. |