M. R. 1870 In re HUISH'S CHARITY. the whole transaction taken together shews no such object, but only shews an intention to improve the whole subject-matter of the appointment for the benefit of all the objects of the power, then the exercise of the power is not fraudulent or void, although by the force of circumstances such improvement cannot be bestowed on the property which is the subject of the appointment without the appointor to some extent participating therein. I think that this is that case, and that a good title can be made, although the property is sold under the powers contained in the deed of October, 1856. Before going further I wish to know exactly what is the question which the parties desire to leave to me. Is the question whether a good title can be made; or is it whether the title is such that it ought to be forced on an unwilling purchaser? Mr. Badcock:-The trustees of the Charity are not unwilling purchasers, but are ready to accept the title if your Lordship is of opinion that they can safely do so. LORD ROMILLY, M.R.:-Then I shall read the rest of my judgment, which I have written very much in that view. I admit that the question is open to some argument, but, in my opinion, the doubt is not sufficient to cast discredit on the title, nor is it one sufficient to induce me to abstain from making a decree for specific performance against the purchaser, and consequently I must hold that the Charity must take the title. Solicitors: Messrs. Lewin & Co.; Messrs. Stephens & Langdale. In re JOINT STOCK DISCOUNT COMPANY. WARRANT FINANCE COMPANY'S CASE. (No. 2.) Proof in Winding-up-Proof against Two Estates-Interest-Delivery up of Securities. A secured creditor cannot be deprived of his security until he has been paid in full the principal, interest, and costs due thereon. A holder of bills of exchange drawn upon and accepted by company A. and indorsed by company B. proved the bills against both companies, which were in liquidation and received dividends from both estates. The liquidator of company A. applied for an order for delivery up of the bills on payment of a balance arrived at by treating all dividends paid by company A. as applied in reduction of principal, and those paid by company B. as applied first in payment of interest, and then, as to the surplus, in reduction of the principal: Held, that the balance was calculated on an erroneous principle, and that the creditor could not be required to deliver up the bills until he received his principal, interest, and costs in full. THIS was a summons by the official liquidator of the Joint Stock Discount Company, Limited, asking that the Warrant Finance Company, Limited, might be ordered, upon payment to them of the sum of £79 7s. 7d., to deliver up certain bills of exchange held by them. The bills of exchange in question were drawn upon and accepted by the Contract Corporation for sums amounting in the whole to £13,000, and were indorsed by the Joint Stock Discount Company. Both companies were in the course of being wound up, and the Warrant Finance Company proved against both estates for the amount of the bills. Previously to November, 1867, the Joint Stock Discount Company paid four dividends on their debts, amounting in the whole to 10s. in the pound, and in May, 1868, the same company paid a fifth dividend of 2s. in the pound. In the interval between November, 1867, and May, 1868, the Contract Corporation paid on their debts two dividends amounting together to 2s. 3d. in the pound. Both companies had since paid further dividends, and the Warrant Finance Company had, by means of such dividends, received 20s. in the pound on their debt; but they claimed to be M. R. 1870 March 12. M. R. 1870 WARRANT entitled to continue to receive dividends until they had been paid interest on their debts in addition to the principal, and it was decided by Lord Justice Giffard that such claim was well founded: Warrant Finance Company's Case (1). The balance of £79 7s. 7d., which the liquidator of the Joint Stock Discount Company now admitted to be due to the Warrant Finance Company, was arrived at in this way: The dividends paid previously to November, 1867, were all treated as applied in reduction of the principal debt; then the dividends paid by the Contract Corporation were treated as applied first in payment of interest, and then, as to the surplus, in payment of principal; then subsequent interest was calculated as on the principal thus reduced, and the subsequent dividends of the Joint Stock Discount Company were treated throughout as applied in payment of principal, and those of the Contract Corporation as applied first in payment of interest, calculated as already mentioned, and then in reduction of capital. The Warrant Finance Company contended that this balance was calculated altogether on an erroneous principle, and that the dividends of the Joint Stock Discount Company, like those of the Contract Corporation, ought to be treated as applied in payment of interest, and then, as to the surplus, only in reduction of principal; and they claimed payment of a much larger balance before giving up the bills. Mr. Jessel, Q.C., and Mr. Locock Webb, for the liquidator of the Joint Stock Discount Company : We admit that all sums received from the Contract Corporation are, as between us and the holders of the bills, to be treated as applied in the first place in payment of interest, and then in reduction of principal; but we say that sums paid by us are applicable only to payment of principal, and cannot be treated as applied in any other way. All that was decided by the Lord Justice in the former case (2) was, that the proof against the Contract Corporation was to be treated in the same way as a mortgage or other security for the payment of the debt; and, consequently, that payments made in respect of that proof were to be treated as applicable in payment of interest (2) Law Rep. 5 Ch. 86. (1) Law Rep. 5 Ch. 86. in the first place; but the principle of that decision does not extend to payments made by us. Suppose, for example, that £10,000 is due for principal, and £5000 for interest, and that a dividend of £3000 is received from the Contract Corporation, then we admit that that must be applied to reduce the interest to £2000. Then, suppose that afterwards we pay a dividend of £3000, we say that that must be applied in reducing the principal to £7000. Sir Richard Baggallay, Q.C., and Mr. Langley, for the Warrant Finance Company: In the Warrant Finance Company's Case (1) it was decided that dividends are only to be paid on what is due for principal and interest at the commencement of the winding-up, and that no creditor is to receive any subsequent interest until all the creditors have been paid 20s. in the pound. But in the Warrant Finance Company's Case (2) the Lord Justice says that that is simply a convenient rule for the administration of the assets in the winding-up, and is not meant to interfere with the rights of the creditors; consequently, no creditor can be required to part with any security which he may possess until he has been paid his principal, interest, and costs in full. But that is precisely what the liquidator of the Joint Stock Discount Company is here seeking to do. He makes out his balance by appropriating the dividends, amounting to 10s. in the pound, paid before November, 1867, to principal only; but that is an appropriation simply for the convenience of the Court, and not such as to deprive the creditor of his right to appropriate the payment in any way he thinks most beneficial, according to the principle laid down in Bower v. Marris (3). We contend that, before these bills are taken out of our hands, we must have paid to us a balance calculated on the principle of applying the first four dividends of the Joint Stock Discount Company in reduction, first of interest, and then of principal. Mr. Chitty, for the liquidator of the Contract Corporation, took no part in the argument. M. R. 1870 WARRANT CASE. (No. 2.) (1) Law Rep. 4 Ch. 643. (2) Law Rep. 5 Ch. 86. (3) Cr. & Ph. 351. M. R. 1870 WARRANT Mr. Jessel, in reply: In Bower v. Marris (1) there was no question of appropriation of payments such as there is here. All that was decided was that, COMPANY's as between the obligee on a bond and the solvent obligor, dividends received from the estate of the bankrupt co-obligor were applicable in reduction of interest; but nothing was decided as to the application of these dividends as between the obligee and the bankrupt obligor, which is the point in this case. CASE. (No. 2.) LORD ROMILLY, M.R. :— I am very clear as to the principle on which this case is to be decided. I treat the case as if there were no winding-up at all, and these sums had been paid simply on account. Then, when the Joint Stock Discount Company has paid what is due for principal, interest, and costs, and not till then, will that company be entitled to these securities. That I take to be what the Lord Justice decided in the former case, and it is unnecessary to go into any of those questions as to appropriation of payments, which are often extremely difficult. Therefore I am of opinion that the Joint Stock Discount Company cannot be entitled to the benefit of any remedy they may have on these bills against the Contract Corporation until the Warrant Finance Company has received principal, interest, and costs in full. Solicitors: Messrs. Lawrance, Plews, Boyer, & Baker; Messrs. Flux, Argles, & Rawlins; Messrs. Linklaters, Hackwood, & Addison. (1) Cr. & Ph. 351. |