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Glyn & Co., with a letter begging them to pay the amount to his credit at a bank at Alnwick. On the 31st of May Messrs. Glyn & Co. remitted the £900 pursuant to these instructions, and advice of such remittance was received at Alnwick on the morning of the 1st of June.

[659] At about one o'clock on that day the testator died insolvent. Subsequently, Thomas Leithead paid £200, part of the £900, to Harley Robert Johnston, who had no notice of the gift previously to the testator's death. This was a creditors' suit against the estate of John Forster, the testator.

Mr. Willcock, Q.C., and Mr. Harrison, for the Plaintiff. The gift of the £200 to Thomas Leithead for H. R. Johnston was a donatio mortis causa, for it was given obviously for testamentary purposes, and "in the extremity of sickness, and in contemplation of death," as the bond was given in Gardner v. Parker (3 Madd. 184).

A donatio mortis causâ is liable to the debts of the donor; Smith v. Casen, cited in Drury v. Smith (1 P. Wms. 406, n.). [THE VICE-CHANCELLOR. I think that is so settled now.] This was not a good trust for H. R. Johnston, for it was not communicated to him; and there is nothing in the transaction which necessarily implies that the donor, intending only a benefit to take effect after his death, meant to place this property out of his control in his lifetime: Hughes v. Stubbs (1 Hare, 476). [THE VICE-CHANCELLOR. In that case the benefit intended was not only to take effect after the donor's death, but also "in connexion with her will;" and it could only be determined by the amount of the legacy referred to, which she might revoke altogether. Has it ever been held that notice to the cestui que trust is necessary?] Mr. C. M. Roupell, for other parties.

Mr. Dickinson, for H. R. Johnston. This was a good trust. A man may make verbally a binding voluntary [660] declaration of trust of personal property in his own hands. So, if he make an assignment of the property to a third party upon a verbal trust, provided the assignment is legally perfected: but if such an assignment be so far imperfect that either party is obliged to seek the assistance of the Court of Chancery to perfect the trust, as where the subject is not legally assignable, a consideration must be shewn: Ward v. Audland (8 Beav. 201). Here the assignment was perfect, and the trustee received the money, and therefore the gift inter vivos was complete, and notice to the cestui que trust was not necessary. [The Vice-Chancellor referred to Moore v. Darton (20 L. J. (N. S.) Chanc. 626; 4 De G. & S. 517).]

It is impossible to consider this to be a donatio mortis causâ; for there is nothing whatever to raise a presumption that it was only to take effect on the death of the donor; but it was payable on demand in his lifetime: Tate v. Hilbert (2 Ves. jun. 111). The testator executed his codicil on the same day, and might have given it by such codicil, if that had been his intention. Moreover, part of the £900 was given in payment of a debt to the donee, and therefore was not revocable; and then the circumstance which distinguishes this from other cases is the written memorandum disposing of the money, from which alone the intention is to be gathered: Edwards v. Jones (1 My. & Cr. 235); and there is nothing in this memorandum from which it can be inferred that a donatio mortis causâ was intended.

Mr. Willcock, Q.C., in reply.

THE VICE-CHANCELLOR Sir W. PAGE WOOD. Subject to the question whether this was a donatio [661] mortis causâ, which I will presently consider, I think that, consistently with the authorities, a good trust was created for the Defendant, Harley Robert Johnston.

The case of Moore v. Darton (20 L. J. (N. S.) Chanc. 626; since reported, 4 De G. & S. 517) was this. There was a receipt for £100 by William Moore, who was in a similar position to that of Thomas Leithead in this case, which was thus expressed: "Received 22d of October 1843, of Miss Darton, for the use of Ann Dye, £100, to be paid to her at Miss Darton's decease; but the interest, at £4 per cent., to be paid to Miss Darton, £100." The Vice-Chancellor there said, "Although this was not signed by the giver of the money, yet it is probable that, she having so intended the transaction, and having received the document, there would have been considered a sufficient assent on her part to it. The matter, however, does not rest there, for she afterwards signed it, the words being, 'I approve the above, Betty Darton.' The consequence is that Mr. Moore, having received this money, became trustee of it for

the use of Miss Darton for life, and subject to her life interest for the use of Ann Dye, whom I think entitled accordingly."

In this case Leithead received the cheque, and also a memorandum on the same sheet of paper in the handwriting of the testator, on which was written "Harley Robert Johnston, £200;" and I think that, under these circumstances, a trust was created of £200 for Harley Robert Johnston by virtue of that memorandum.

The question of donatio mortis causâ is involved in this matter, because I must regard the whole transaction to see whether the donor intended merely to make Leithead his agent to pay the £200 to Johnston after his death.

[662] No doubt the fact of the donor being on his deathbed and treating part of the money as an executorship fund are circumstances in favour of this argument; but then he was indebted to Leithead in the sum of £200, which he devoted part of the money to pay; and a donatio mortis causâ can only be established by a necessary implication, or an expressed intention that the gift should not take effect except in the event of the death of the donor. In this case, if he had recovered, he could not have revoked the gift of the £200 to Leithead; for I must assume that the donor intended to pay the debt which he owed to Leithead immediately, and not to make it dependent on his death, and, if so, I do not see how the circumstance of his treating part of the money as an executorship fund could compel me to infer that he intended the gift to Harley Robert Johnston to be a donatio mortis causâ any more than the payment to Leithead himself.

I am therefore of opinion that, when this money was paid to the account of Leithead, he became a trustee of £200 of it for Harley Robert Johnston.

[663] AVERY v. LANGFORD. July 1, 1854.

[S. C. 23 L. J. Ch. 837; 18 Jur. 905; 2 W. R. 615. See South Wales Railway Company v. Wythes, 1854, 5 De G. M. & G. 889; 43 E. R. 1116. Perls v. Saalfield [1892], 2 Ch. 153.]

Restraint of Trade. "Trading Establishment." Specific Performance.

Upon the sale of the business of a general merchant in a country place, the vendor agreed to give a bond for a sum of £1600 as liquidated damages, if he should be thereafter concerned in any "trading establishment" within a neighbouring district, comprising a considerable section of the county of Cornwall: Held, that this was not too general a restraint of trade; and specific performance of the agreement was decreed at the suit of the vendor.

In constructing the condition of such a bond, a Court of law would take into consideration the surrounding circumstances at the time of executing the bond, and would consider the words "trading establishment" to mean an establishment for any trade likely to interfere with the goodwill, which was the subject of the sale.

In 1852 the Plaintiff, Avery, was a general merchant, residing at Boscastle in Cornwall, and trading in coals, timber, building materials, lime, corn, malt, manure and other articles of general merchandise; and the Defendant, Langford, was also a general merchant at Boscastle; and litigation having arisen between them as to the boundary between certain lands belonging to the Plaintiff and Defendant, it was compromised, upon the terms contained in a written agreement entered into between them in March 1852, which were in effect, that the Plaintiff should purchase of the Defendant, for the sum of £1600, all the Defendant's lands at Boscastle within certain limits, free from incumbrances: "Mr. Langford to enter into a bond conditioned to pay as liquidated damages to Mr. Avery the sum of £2000 if he, the said Langford, be, after the 29th day of September next, concerned in any trading establishment within the district comprised between Morwenstow and New Quay, and Launceston and Bodmin."

This was a suit by Avery for specific performance of this agreement.

Mr. W. M. James, Q.C., and Mr. Karslake, for the Plaintiff.

Mr. Rolt, Q.C., and Mr. G. M. Giffard, for the Defendant. This condition is void, because it is a general restraint of trading, and would prevent the Defendant from carrying on even the trade of a haberdasher, chemist, or a cattle or horse-dealer, or, in fact, any trade within the Bankrupt [664] Laws, the only limits being as to the space and time within which the restriction is to operate. And such a general prohibition is an injury to the public, and is a larger restriction than was reasonably required for the protection of the Plaintiff. In Horner v. Graves (7 Bing. 735) Lord Chief Justice Tindal thus lays down the rule:-"The question is whether this is a reasonable restraint of trade. And we do not see how a better test can be applied to the question, whether reasonable or not, than by considering whether the restraint is such only as to afford a fair protection to the interests of the party in favour of whom it is given, and not so large as to interfere with the interests of the public. Whatever restraint is larger than the necessary protection of the party can be of no benefit to either; it can only be oppressive, and, if oppressive, it is in the eye of the law unreasonable. Whatever is injurious to the interests of the public is void on the grounds of public policy:" Ward v. Byrne (5 M. & W. 548), Mallan v. May (11 M. & W. 653).

The reply was not heard.

THE VICE-CHANCELLOR Sir W. PAGE WOOD. In the absence of any distinct authority, I do not think that I can hold that the restriction contained in this agree ment is too wide to be supported. In addition to the judgment read by Mr. Giffard, Lord Chief Justice Tindal laid down the doctrine in similar terms in the case of Hitchcock v. Coker (6 Ad. & E. 454), where he said: "We agree in the general principle adopted by the Court that, where the restraint of a party from carrying on a trade is larger and wider than the protection of the party with whom the contract is made can possibly require, such restraint must be [665] considered as unreasonable in law, and the contract which would enforce it must be therefore void."

The difficulty is in the application of that principle to this case. The question there was as to the space within which such a restriction would be good, and the time of its duration. With respect to the latter it has been held that a trade is a thing saleable; and that the restriction for the term of a life, though not the life of the original vendor, is not an unreasonable condition. The terms here are that the vendor should not be concerned in any trading establishment within a certain district. I think there can be no dispute that the district specified in this case is not more extensive than was necessary to support the goodwill of the trade which was purchased. The chief question is upon the words "trading establishment," the subject of this agreement. It seems to me to be right that the Plaintiff should be protected against the Defendant's setting up in trade as a haberdasher, or dealing in almost any article you could name within this district; for the business sold is that of a general merchant, and everyone knows that in a country place that comprehends almost every kind of trade. It was suggested that the Plaintiff would not trade as a chemist, for example; but it is by no means certain that he might not find it convenient to sell drugs. The occupations of a cattle-dealer or horse-dealer certainly would not probably be carried on by a general merchant; but a Court of law in an action upon the bond would take into consideration, in construing the words "trading establishment," the object of the bond, and the surrounding circumstances at the time of its execution; and the reasonable construction of the words "trading establishment" in this case, according to popular usage, would by no means necessarily include all the various trades subject to the Bankrupt Laws. In fact, that was the fallacy of the Defendant's argument. It [666] was contended that, if he carried on any trade within this district in respect of which he might be made a bankrupt, that would be an infringement of the condition of the bond: but I think that a Court of law would not hold such a bond to be invalid because the terms of the condition were too large, but would construe that condition with respect to the nature of the trading establishment which was the subject of the sale, and would take it to mean that the Defendant was not to set up within this district any trading establishment which would interfere with that of the Plaintiff.

Specific performance, with costs; the form of the bond to be settled in Chambers if the parties differ.

NOTE. The validity of the restraint in these cases depends very much upon the nature of the trade, which may require a larger or smaller district to carry it on, according to circumstances.

The restriction as to place, therefore, having reference to the nature of the trade, is the most important consideration. The duration in time of the restraint seems not to be of so much consequence. Most commonly, it is during the life of the covenanting party; but in Archer v. Marsh (6 Ad. & El. 959), a restriction expressly extended to all time seems to have been supported.

The following short summary of the decisions on this question, since 1711, arranged in chronological order, may be of use:

[667] In this division the restriction was held to be good :

:

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1806. Gale v. Reed, 8 Rope-maker. Lifetime of Covenant to employ only East, 79.

vendor.

the purchasers of the business to make cordage for the vendor.

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In this division the restriction was held to be good—continued:—

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1847. Pemberton

toy man,
and

hair

merchant.

V.

Maker and Lifetime of Within one mile of for-
seller of vendor.
mer place of business.

ginger beer

Vaughan, 10 Q. B. 87.

[668]

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and Lifetime spirit mer- vendor. chant.

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premises sold.

of Within the three counties of Carnarvon, Anglesey and Merioneth.

of

covenantor.

In London, or in the counties of Middlesex or Surrey, or within 150 miles of the General Post Office; in Dublin or Edinburgh, or within fifty miles from either of them.

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