1839.-Brooks v. Stuart.

v. Griffith,(a) Maddox v. Jackson,(b) Haywood v. Ovey, (c) Lee v. Lockhart.(d)

[*518]

*Mr. Russell, in reply. The remedy against the surety was not reserved by the deed, and if so, then by releasing the principal debtor, the creditor has precluded himself from proceeding against the surety; Ex parte Glendinning, (e) As between plaintiff and Agar there is a release, and the plaintiff cannot aver that it was a release reserving his right against Stuart. Lawson v. Right.(g)

THE MASTER OF THE ROLLS:-This is a demurrer, for want of equity and also for want of parties, to a bill which prays [his Lordship read the prayer.] It appears that Stuart and Agar were jointly and severally liable on this promissory note. In June, 1827, Agar seems to have been in embarrassed circumstances, and by a deed dated 5th June, 1837, he conveyed all his property to trustees for the benefit of his creditors; and there was a provision, that in case there should remain any surplus of the said moneys and effects after payment of all costs and distributions as therein mentioned, then the same should be paid to Agar, his executors, administrators and assigns; and the creditors did absolutely remise, release, &c., Agar, his executors, &c., and his future lands, goods, &c., as well their and each of their respective debts, as also all and all manner of action and actions, suit and suits, &c., on account thereof." In this state of things the creditor was willing and desirous to go in under the deed, but he was aware he could not do this without peril to his rights against Stuart, and therefore he applied for his consent, expressing his willingness to execute the deed if Stuart would consent; after some negotiation an interview took place, when Stuart said it

"was a bad job, and wished him (the manager) to execute the as[*519] signment, receive the dividend, and he would pay the difference."

His Lordship stated the subsequent transactions.] Upon this an action was brought, and it appears that by the mode in which that action was carried on, the surety was held to be released, and it is said that he is released in equity. This is a joint and several promissory note, and the defendant being merely surety, the creditor could not deal with the principal debtor without the consent of the surety; but how is it here? the creditor applies to the surety for his consent, and he says, "Do you receive the dividends, and I will pay the difference;" so that after having prevailed on the creditor to do this, he turns round and says, "Now that you have done this, for my convenience, I am exonerated altogether." All this is stated on the bill, though it is not distinctly alleged as matter of fraud; but is it honest, after prevailing on the creditor to sign this deed, to say, I am now exonerated? On the other hand the plaintiff's claim is not quite honest, for the defendant promises to pay the difference, yet the demand in this bill is for the whole amount of the note. I have looked through the bill for an explanation on

(a) 2 P. Wms. 313.
(d) 3 Myl. & Cr. 302.

(b) 3 A1k. 406.
(e) Buck. 517.

(c) 6 Mad 113. (g) 1 Cox, 275.

1838.-Codrington v. Johnstone

this point, but do not find any. I should certainly hesitate much, before I allowed the demurrer for want of equity. With respect to the other point, conceiving that it is not perfectly clear that Agar may not be liable to contribute something to Stuart, it does appear to me that Agar is a necessary party. I must allow the demurrer for want of parties, and give the plaintiff leave to amend by adding parties.

Demurrer allowed for want of parties.

*CODRINGTON v. JOHNSTONE.

[*520]

1838: November 6.

At the instance of a mortgagee of a West India estate, a receiver and manager had been appointed:
Held that he was not entitled to the produce of crops severed and shipped to the consignee of the
mortgagor prior to the appointment, although there had been no conversion prior to that time.
A receiver when appointed by the court, is entitled to receive rents then in arrear.

THE plaintiff, Sir Christopher Bethell Codrington, was entitled to a very old mortgage on a West India estate belonging to the defendant, Sir Frederick Johnstone. On the 6th of August, 1838, an order was made by which it was referred to the Master, "to appoint one or more person or persons in the Island of Grenada, to manage the estate comprised in the mortgage in the pleadings, and to receive the rents, profits and proceeds thereof, with a direction to remit the same to a proper person in London, to be approved of by the Master for that purpose;" with the usual directions as to passing accounts and payment of the balances into court: and it was ordered that Sir Frederick Johnstone and Mr. Ure should deliver up possession of the plantation, &c., to the manager.

The plaintiff now presented a petition which stated that certain proceeds of the plantation were lately in the course of consignment to Messrs. Ellice & Kinnear, who had been hitherto thè consignees of the proceeds thereof, and that the proceeds so consigned were now in the hands of the said Messrs. Ellice & Kinnear to be disposed of by them; that after payment of the charges in respect thereof, there was remaining a considerable surplus of the moneys to arise from the sales of such proceeds; that the petitioner was advised that such surplus ought not to be paid to the defendants Sir Frederick Johnstone and Mr. Ure, but ought to be paid into court, and appropriated, together with the clear proceeds of the future consignments [521] from the said plantation, for the security of the petitioner, as mortgagee thereof.

The petition prayed that Messrs. Ellice & Kinnear might be ordered to pay into court "the clear surplus, after payment of the charges aforesaid, of the proceeds to arise from the sale of the proceeds of the plantation consigned to them, the amount to be verified by affidavit; and for an injunction to restrain Sir Frederick Johnstone and Mr. Ure from receiving the money to arise from the sale of the said proceeds, or any part thereof.

1839.-Codrington v. Johnstone.

From the affidavit filed on behalf of Messrs. Ellice & Kinnear it appeared, that they had, for some time past, acted as consignees of the produce of the plantation, and had made advances for the stores necessary for the estate, which had been shipped from this country; and that they had taken up bills for the island supplies, and had from time to time made advances to Sir F. Johnstone. That such several advances had been made on the faith of the produce of the plantation being remitted to them, and that such produce had accordingly been remitted to them, and they had sold and disposed thereof, and had credited the estate with the proceeds, and debited the same with the various advances made by them. That on the 1st of January, 1838, a sum of 54007. was due to them in respect of such advances after giving credit for the proceeds of the produce, since which time they had made various payments and advances amounting to 13971., part of which had been advanced for the purposes of the present crop, and without which the crop could not have been got in and remitted to this country.

[*522]

*That on the 7th of June, the 17th of July, the 1st of August and the 7th of September respectively, they had received bills of lading of the produce shipped, all of which were written and sent by the agent before the order for a receiver of the 6th of August.

Mr. Pemberton and Mr. Wilbraham, in support of the petition, contended, that though a mortgagee out of possession was not entitled, as against the mortgagor, to an account of by-gone rents, yet, that immediately on his giving notice or taking possession, he was entitled to receive not only the future rents, but also those in arrear; so where a receiver was appointed over an estate, he was entitled to receive all the unpaid rents and all the unconverted produce; that in this case, therefore, the receiver was entitled to so much of the sugars, &c., as had not been converted and was in in transitu at the time of making the order of the 6th of August; they contended, that the mere remittance of the produce to an agent of the mortgagor did not interfere with the legal right of the mortgagee to receive it.

Mr. Tinney and Mr. Koe, for the defendants. The crops were severed prior to the order for a receiver, and have been received by the agent of the mortgagor, which is the same as if the mortgagor himself had received them. Lord Eldon lays it down distinctly, "that a mortgagee never can in this court make the mortgagor account for rents for the time past." Ex parte Wilson (a) The consignee, therefore, is entitled to retain the produce on the faith of which he has made advances.

Mr. Richards, for Messrs. Ellice & Kinnear, contended, in addition to the above argument, that as they were not parties to the suit, the [523] court had no jurisdiction on *petition to take from them the produce separated from the estate prior to the order of the 6th of August. Mr. Pemberton, in reply. A receiver having been appointed, the court has

(a) 2 Ves. & B. 252.

1838.-Codrington v. Johnstone.

jurisdiction to prevent any party from interfering with the full performance. of his duties. The question is, whether the moneys to be received from the sale of the produce of this estate do not stand in the same situation as unreceived rents. If a receiver had been appointed of an estate in England, he would have undoubtedly been entitled to demand all the rents then unreceived. The estate was the estate of the mortgagee, and the moment he gave notice, he was entitled to the whole rents or produce. The question in Er parte Wilson(a) was, whether the mortgagor had received the rents for the mortgagee: here there is no such question, for the rent is in the hands of a third party. Suppose rent were payable in kind, and were stopped in its passage to the mortgagor, would not the mortgagee after notice, or the receiver in the cause, be entitled to claim it? Here it is clear that the rent or produce has never reached the pocket of the mortgagor, but is stopped by an adverse claim for a lien, as to which the right of the mortgagee is par

amount.

THE MASTER OF THE ROLLS [after stating the order of the 6th of August for a manager and consignee and the prayer of the petition.]

The "clear surplus" which is asked to be paid into court is the clear surplus which was grown, and as it is said, severed, previous to the date of the order, for a manager; but though grown and severed previous to the date of the order, it does not appear to have been converted before [*524] that time; but the bills of lading, as I collect from the affidavit, had been signed previous to the 6th of August.

The question is, whether under an order for a manager, with a direction for him to receive and remit the rents and produce, that produce is comprised which had already been severed and sent away to the person appointed consignee by the mortgagor, but which had not, at the time of making the order, been received by the consignee or mortgagor. Nothing is now more clear than that a mortgagee is not, as against the mortgagor, entitled to an account of by-gone rents;[1] and it is also clear that a receiver, when appointed by this court, is entitled to all the rents then in arrear, and the present case is said to be like the case to which I last alluded, and Messrs. Ellice & Kinnear are likened to the tenants of the estate, but I have great difficulty in perceiving the analogy. Here the mortgagor was in possession of a West

(a) 2 Ves. & B. 252.

[1] Where the mortgagee has neglected to take a specific pledge of the rents and profits of the mortgaged premises, for the security of his debt, before it becomes due, he has no equitable right to the rents and profits in the mean time; and in case of the death of the mortgagor, his judgment creditors are entitled to a preference in payment out of such rents and profits. Bank of Ogdensburgh v. Arnold, 5 Paige, 38. Nor has he any legal or equitable right to compel a junior mortgagee in possession, or an owner of the equity of redemption, who is not personally liable to pay the prior mortgage, to refund any part of the rents and profits which were received by such junior mortgagee, or owner, before such prior mortgagee attempted to acquire a specific lien upon the rents and profits of the mortgaged premises by the appointment of a receiver. Howell v. Ripley, 10 Paige, 43.

1839. Darke v. Martyn.

India estate, had the full control and management of it, and was dealing with it as his own at the time the order was made; he had severed the produce and sent it to his consignees in England, subject to their claim for advances. made for the purposes of the estate, and also to other claims which he had created by contract with them, he having received advances of money from the consignees, on the understanding that they should repay themselves out of the consignments. It is clear that their right could not extend further than the right of Sir Frederick Johnstone, and that when his right was intercepted by the mortgagee, their right became intercepted also; but under the circumstances stated, I do not think I can make any order on this petition. It must therefore be dismissed, and with costs as against Messrs. Ellice & Kinnear.

A testator died in March, 1823, and in January, 1824, and January, 1825, the executors and trustees deposited part of the assets in the hands of bankers, on their notes carrying interest; the bankers failed in November, 1825, and no necessity having been shown for such deposit, the trustees were held personally responsible for the loss.

THE infant plaintiffs, were entitled to the residuary estate of the testator, who died in March, 1823. Shortly after the testator's death, his will was proved by the defendant, Mr. Martyn, and the testator's widow, who had been appointed "executors in trust to direct the due execution thereof."

The executor and executrix opened an account, as executors of the testator, with Messrs. Elford & Co., who were country bankers, and in the months of January, 1824, and January, 1825, respectively, they paid into the bank two sums of 9561. and 2091., part of the testator's assets, and took two bankers' notes, carrying interest, for the amount. These sums were lent distinct from other moneys paid in by them to the bankers, and did not form part of the general account current.

Messrs. Elford & Co., became bankrupts in November, 1825, and the two sums of 9561. and 2091. became thereby lost. The bill, amongst other breaches of trust sought to charge Mr. Martyn, personally, and the estate of the executrix with the loss of these two sums.

The answer did not suggest any reason or necessity for depositing these sums with the bankers in the manner stated.

Mr. Pemberton and Mr. Stratton, for the plaintiffs, contended that [*526] the executors were liable to make good *the loss of the fund which had been improperly invested on personal security.

Mr. Kindersley, and Mr. Wright, for the representative defendant Martyn: