1872 v. ADAMS. OF THE INTER NATIONAL LIFE SOCIETY. V.-C. M. standing the provision for limited liability, and Lord Denman, in an elaborate judgment, gave a decision that as the parties had LETHBRIDGE entered into a contract for limited liability, the Court would not permit them, in defiance of their own contract, to take out Ex parte execution against an individual shareholder to enforce payment of LIQUIDATOR anything beyond the subscribed capital. Durham's Case (1) was in the same Athenæum Life Assurance Society (2), and there the ASSURANCE same point was carefully considered by the present Lord Chancellor, and it was held that the terms of the policy precluded the assured from any remedy at law against an individual shareholder, and that even if upon the company's deed of settlement the policy was in that respect less favourable to the assured than the deed required, if that were the case that circumstance could not be insisted on for the benefit of the assured, his rights being defined by the contract into which he had entered, and that assuming the mention in the policy of the capital stock of £100,000 to be equivalent to a representation that the society's capital actually amounted to that sum, and to be a fraud on the part of the directors, the capital subscribed for at the date of the policy not exceeding £44,000, that circumstance would not entitle the assured to have execution against an individual shareholder. That part of the case disposes of much of the argument which I heard. There is not a single case at law or in equity that gives the faintest semblance of authority to the claim set up in this summons. The cases at law and in equity are uniform, that wherever under a policy of assurance there is a contract that the assured are to look to the assets and property of the company only, they are to look to the individual only to the extent of the calls on his shares, and that there is no power either in a Court of Law to take out execution beyond the amount of the call, nor in equity to enforce a liability beyond that amount. All such attempts have hitherto signally failed; and I think I should be most unwarranted, on an application by an official liquidator, not instigated or requested by a single policy-holder to enter into this litigation, to make a decision in contradiction to that long series of well-settled authorities, which are, moreover, in my judgment, rightly decided. (1) 4 K. & J. 517. (2) Joh. 80. V.-C. M. 1872 LETHBRIDGE V. ADAMS. Ex parte OF THE INTER- LIFE Those who enter into contracts for limited liability cannot turn their contracts into unlimited liability unless they shew fraud or something entitling them to go out of their contracts. Many further topics have been urged. It has been said in particular that the directors when they lost one-fourth of the capital ought to have wound up the business. Probably that is correct, and the directors may be responsible. Some idea was suggested at one period of the winding-up of endeavouring to establish that ASSURANCE case against them. It may have been exceedingly reprehensible for the directors to have continued the business; but on such a summons as this, when I have not the facts before me, it is impossible for me to enter into considerations of that kind. I can only look at this as a claim, and finding that £20 per share has been paid by this estate, hold that there is no further liability to the policy-holders. It was then arranged that £1400, or £7 per share, should be retained to provide for the costs of the winding-up, and the costs of the application were ordered to be paid out of the estate of the society. Solicitors: Mr. John Tucker; Messrs. Hird & Son. SOCIETY. CRUIKSHANK v. DUFFIN. [1870 C. 188.] Mortgage by an Executor to a Building Society-Sale under Power. An executor effected a mortgage of leasehold property, for executorship purposes, with a power of sale, to a building society, to secure the repayment of the money advanced, as well as all fines, premiums, and interest on certain advanced shares in the society, taken by the executor for the purpose of obtaining the loan : Held, upon bill filed by the society against a purchaser under the power of sale, for specific performance, that the executor might legally effect a mortgage with power of sale and with the incidents of a building society mortgage on advanced shares. THIS bill was filed by the trustees of the Temperance Permanent V.-C. M. 1872 Feb. 13, 14. V.-C. M. 1872 of an agreement, signed by the Defendant, for the purchase of certain leasehold houses, which were sold by auction, by the direcCRUIKSHANK tion of the building society, on the 14th of April, 1870, and were then purchased by the Defendant for the sum of £515. v. The Defendant was willing to complete his purchase if the Court should be of opinion that the title was good. The property in question was sold, under a power of sale contained in a mortgage to the society, by Joseph Amos, dated the 28th of January, 1869. This deed recited a lease of the premises to one Jacob Amos, and the will of Jacob Amos appointing Joseph Amos and J. Dawes his executors, and the death of the testator and the proof of the will by Joseph Amos alone; and that the mortgagor, being desirous of borrowing £450 for the purposes of the executorship, had applied to the directors of the society to lend him that sum in respect of fifteen advanced shares in the society for the term of twelve years, and had proposed to assure the premises to the trustees to secure the repayment of such sum, in accordance with the rules of the society, and had also offered to pay a premium for such advance, which, being calculated according to such rules, amounted, for the said term of twelve years, to the sum of £47 5s., and, according to such rules, was to be added to and treated as part of the principal sum so advanced; and thereby Joseph Amos covenanted to repay the money so advanced, with premium and interest thereon, by monthly instalments of £4 13s. 5d. per month, extending over a term of twelve years; and the mortgage incorporated the rules of the society, whereby the mortgage could be redeemed at any time on payment of the balance of the principal due, with interest thereon, and all fines due in respect of these shares, and all moneys due or to become due from the mortgagor in respect of any other shares in the society, and of the current year's premium on the shares held in the society. Jacob Amos, the testator, in his lifetime had executed securities to the trustees of another society called the Southwark Building Society, and these securities had either been discharged by him in his lifetime or by his executor after his decease. Joseph Amos, as such executor, had, very shortly after the death of Jacob Amos, executed other securities over two of the houses now forming part V.-C. M. 1872 บ. of the property in favour of the Southwark Building Society, to secure advances made to him, and it was for the purpose of paying off such securities, and for the payment of the testator's debts and CRUIKSHANK funeral and testamentary expenses, and to enable him, as executor, to do certain repairs to the houses in pursuance of covenants in the leases thereof, that he obtained this money from the Temperance Building Society. Joseph Amos was not only executor of Jacob Amos, but he was also tenant for life, under the testator's will, of a portion of these houses, and the consent of the other tenant for life was obtained to his borrowing the money from the Temperance Society. Mr. Cotton, Q.C., and Mr. Osler, for the Plaintiffs: This is a case of a novel description, being a mortgage by an executor to a building society, and although such a mortgage may never before have been questioned in this Court, it is not an unusual occurrence, and there can be no more objection to it than to an ordinary mortgage. It was at one time held that an executor had no right to give a mortgage with a power of sale; this was decided in Sanders v. Richards (1); but that case was overruled by the Master of the Rolls in Russell v. Plaice (2), which was followed by the Lords Justices in Earl Vane v. Rigden (3), and by this Court in In re Chawner's Will (4). It may now be considered as settled law that an executor may give a power of sale. This is also consistent with the requirements of modern practice, since it is found that money cannot be obtained on mortgage without such power of sale. The only difficulty, therefore, is the fact that this mortgage is made to a building society, and by the rules and constitutions of the society the person to whom the money is lent becomes liable for the payments which he himself is bound to make to the society on his own account. This objection has, in fact, no validity, because the executor is merely covenanting to pay, in the shape of premiums and fines to the society, what he would be bound to pay to an ordinary mortgagee; and if he undertakes to pay personally these premiums and fines, it is only an increase of liability on his part which he had a right to incur if he pleased. The executor (1) 2 Coll. 569. (3) Law Rep. 5 Ch. 663. DUFFIN. V.-C. M. 1872 CRUIKSHANK v. DUFFIN. It was necessary was justified in raising money by these means. Mr. Glasse, Q.C., and Mr. Lindley, Q.C., for the Defendant : The first objection raised to the completion of this purchase is, that the mortgage by Joseph Amos to the building society was not such a security as, in his character of executor, he was justified in giving. It was made for securing payment of certain annual sums payable by him in respect of shares held by him in the society. The mortgage therefore amounts to a forfeiture by Joseph Amos of his interest under his father's will in the two houses. It is stated that he required the money for the purpose of effecting certain repairs to the buildings, and this is not legitimately an executorship purpose. Joseph Amos was only tenant for life of the property, and this fact was known to the building society. As such tenant for life he was bound himself to do a portion of the repairs. Then the mortgage is not made for the purpose of securing a specific sum advanced to the executor, but for securing the repayment during a period of twelve years of the monthly subscriptions and fines payable in respect of fifteen shares held by him in the society; and even assuming that he had occasion to borrow money for the purpose of his executorship, he was not justified in making the property a security for payment of monthly subscriptions and fines which he, and not the testator, was liable to pay. This is simply a breach of trust, and the case cannot be affected by the authorities cited. Sanders v. Richards (1) has not been overruled in this respect, that in the absence of the party beneficially interested in the property, the Court will not force upon a purchaser a title derived under a power of sale given by an executor; and in Webb v. Kirby (2), where there was a sale of leaseholds by order of an executor, and where the property was in fact sold by the adminis(1) 2 Coll. 568. (2) 7 D. M. & G. 376. |