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Colonial Cases

Frazer v. Burgess, 1860

[land law]


Frazer v. Burgess

Judicial Committee of the Privy Council
7 February 1860
Source: The Times, 8 February, 1860

THE JUDICIAL COMMITTEE OF THE PRIVY COUNCIL.
Feb. 7.
(Before Lord Kingsdown, Lord Justice Knight Bruce, Lord Justice Turner, Sir J. T. Coleridge, and Sir L. Peel.)
  The only appeal heard was one from the Court of Encumbered Estates in the West Indies, in the case of Frazer, appellant, and Burgess, respondent. The question argued was the claim of the appellant to have a lien on the purchase money of an estate in the island of St. Vincent. The sitting was occupied with the addresses of counsel, and judgment was reserved.

The Times, 2 April, 1860
THE JUDICIAL COMMITTEE OF THE PRIVY COUNCIL.
March 29.
(Present - Lord Kingsdown, Lord Justice Turner, and Sir E. Ryan.)
FRASER v. BURGESS.
  This was an appeal from the Court of Commissioners for the sale of Encumbered Estates in the West Indies, and came before their lordships on a joint case of the appellant and respondent. The question raised by the appeal was whether an order of the Chief Commissioner disallowing the claim of the appellant to have a lien on the purchase money of the Arnos Estate, in the island of St. Vincent, ought to be reversed or varied.
  The facts of the case are shortly as follows:-
  In 1823 Samuel Greathead was tenant in fee simple of an undivided moiety of the estate, subject to a charge of 600 l. a year by way of jointure to his wife, who survived him. He was tenant in tail of the other undivided moiety. He died in 1823, leaving two sons and two daughters, and having made a will by which he charged the entirety of his estate with 24,000 l. as portions for the younger children, and, subject thereto, devised the whole estate to his eldest son or such other son as should first attain the age of 21 years, and the heirs of his body.
  His two sons, Samuel and John, were appointed trustees of his estates and the execution of his will.   On the death of his father, Samuel, the eldest son, became tenant in tail of one moiety of the estate, subject to the charge created by his father's will, and to the jointure of Mrs. Greathead, and tenant in tail of the other moiety free from any charges, except as a case of election might be raised against his equity.
  In 1843 Samuel Greathead, the son, suffered a recovery, and barred the entail of both moieties of the estate. In 1833 a suit was instituted against him and the other members of his family by his brother John, for carrying into execution the trusts of his father's will, and putting Samuel to his election whether he would take under or against the will, and the bill prayed for the appointment of a manager.  Samuel elected to take under the will, and a decree was made establishing the will and directing the trusts to be performed, and declaring that the entirety of the estate was liable in equity to the charges of the will, subject, as to one moiety, to the first charge of the widow's jointure. An arrangement was made between Samuel Greathead and the parties, whereby he was permitted to continue in possession of the estate.
  In 1843 he mortgaged the plantation to Messrs. Davis and Boddington, Mr. W. G. M. Grant being at the time in possession of the estate as manager appointed by a power of attorney, executed by Samuel Greathead in 1839. The produce of the estate was received by the mortgagees from the date of their mortgage, and supplies for the plantation were sent out by them. The course of dealing seems to have been that the necessary supplies were ordered by Grant, and he drew bills for the amount on S. Greathead, who accepted them, and sent them to Davis and Boddington to be taken up and paid when due out of the proceeds of the estate consigned to them. Grant, as manager on the island made advances out of his own funds for the expenses of the plantation, and in 184t5 a large balance was due to him. In that year Davis and Boddington declined to make further advances, and two bills drawn by Grant were returned to him dishonoured.
  In consequence of S. Greathead having refused to be at the expense of sending out the necessary supplies to the estate, communications took place between Grant and John Greathead, one of the encumbrancers, acting on behalf of all, with a view to provide for the continued working of the plantation, and for the satisfaction of the debt due to Grant, and for his relief from the liability to which he was subject in respect of the dishonoured bills. In this state of matters John Greathead filed his supplemental bill in the Court of Chancery against all parties interested, praying to have the benefit of the former suit and proceedings, to have what was due from the encumbrances raised, and for the appointment of a manager and consignee. Grant continued in the management of the estate as before, and corresponded with the plaintiff in the suit regarding it.
  On the 29th of June, 1846, an order was made by the Court of Chancery directing transfer of the mortgage of Messrs. Davis and Boddington to a Mr. Tippler, who had consented to pay it off, and appointing him consignee of the estate, Mr. Grant being continued manager in the island. The arrangement with Tippler was not effected, and the order was not carried into execution. S. Greathead died in 1847 intestate as to his real estate in the West Indies, which descended to his eldest son, W. S. Greathead. Mr. Grant continued in the management of the estate until his death in 1849, at which time there was a balance of upwards of 1,900 l. The appellant is Grant's executor.
  Under an order of the court below the Arnos Vale estate was sold at the instance of the encumbrancers, and produce 10,000l., which was insufficient to pay all the charges and encumbrances on the estate, and the appellant claimed to have the sum due to Grant paid out of the proceeds in preference to the encumbrancers.  The Chief Commissioner decided against him, and from that decision the present appeal was brought.
  The case was heard by their Lordships some time ago, when Mr. Selwyn, Q.C., and Mr. Westlake appeared for the appellant; and Mr. R. Palmer, Q.C., and Mr. Humphreys for the respondents.
  Lord Kingsdown now delivered their Lordships' judgment, and, having gone over the facts of the cased, said:- We will consider the case first, as it stands upon principle, without reference to the authorities. Mr. Grant was originally merely the agent and attorney of S. Greathead, the son, the owner of the estate, subject to the charges. As such agent or attorney he stood in no relation whatever to the encumbrancers; he was subject to no control on their part, and liable to no responsibilities to them for the management, on the one hand; and, on the other, he could have no claim upon them or any advances which he might make, or bill which he might draw in the discharge of the duties of his office. As against them he could stand in no better situation than his principal.
  The owner of the estate continuing in possession could have no claim upon the encumbrancers for any loss which he might incur in the cultivation of it. He might throw up the estate, if it was not equal to the charges, and leave the encumbrancers to sell it, if it could be sold, or to take the risk of management; but if he chose to continue in possession he must hold the possession, with the risks which belonged to it. The encumbrancers taking possession could not come on the owner for bygone profits, nor could he call upon them to contribute to past losses. The decree of 1th of December, 1833, does not seem to have wrought any material change in the position of the parties. The encumbrancers were entitled (their charges being in arrear) to have a manager and receiver appointed; but they waived that right, and permitted Samuel Greathead to remain in possession upon certain terms specified in the order. As those terms were not complied with, Samuel Greathead remained in possession of the estate, in the same character in which he had previously held it, - viz., as owner in fee, subject to the charges.
  There seems to be no principle for holding as a general proposition that the agent employed in the management of an estate in the West Indies by the owner of the estate, subject to charges upon it, can without more have a lien on the inheritance of the estate for the advances which he has made for its cultivation, not only against his employer, but against those whose title is prior to that of his employer, and who have had nothing whatever to do with the expenditure. When a trustee in possession of the plantation, managing it in behalf of all parties, and employs a manager for the purpose, the expenses and proper advances of the manager for the benefit of the estate are the expenses and advances of the trustee, who is entitled to be reimbursed out of the estate, and if the manager was as standing in the place of the trustee who employed him.
  Again, when the Court of Chancery takes possession of the estate by the appointment of a manager and receiver, it is by its officers in possession on behalf of and for the benefit of all persons interested, parties to the suit, and its officers stand in at least as favourable a position as the officers appointed by trustees, and are entitled to at least as favourable a position as the officers appointed by trustees, and are entitled to at least as extensive remedy against the estate.
  When the authorities are examined, the question in what cases, and against what parties, and to what extent, a consignee is entitled to a lien on the corpus of the estate seems left in some degree of uncertainty.  It is laid down by Vice-Chancellor Shadwell, in the case of "Farquarson v. Balfour," (8 Sim., 211), that "when a balance is found due to a consignee of a final settlement of accounts he cannot be discharged until that balance is paid, and that, if payment cannot be made without interfering with the inheritance or corpus of the estate, the Court would be justified in resorting to it for the purpose of doing justice to the consignee." But great doubt was thrown on this doctrine by Vice-Chancellor Knight Bruce, in the subsequent case of "Shaw v. Simpson," (1 Yo. and Coll., N.S. , 735), in which "Farquarson v. Balfour,"  was cited.   In the subsequent case of "Morrison v. Morrison," (2, Smale & Giff. 564), Vice-Chancellor Stuart was of opinion that in a suit instituted for the administration of a testator's estate a consignee appointed by the Court was entitled to a lien on the corpus of a West Indian plantation for the balance due to him not only against persons claiming under the testator and parties to the suit, but also against a mortgagee whose encumbrance was a charge on the plantation prior to the interest of the testator himself, and who was not a party to the suit.
  The ground of this opinion is that the mortgagee having permitted the Court to take possession in behalf of those claiming under the mortgagor, without bringing forward his claim, and taking possession himself, as he might have done, must be considered to have acquiesced in and recognized such possession, and to be bound by the result.  This case was taken on appeal to the Lords Justices, who affirmed the order, but upon different grounds from this in which it had been pronounced, and their decision cannot be considered as affecting the general question as to the lien of a consignee of a West Indian estate on the corpus of the estate, - a question which Lord Justice Turner stated that he had never been able to make up his mind.  To this extent, however, the cases all agree, that when the Court of Chancery has taken possession of a West Indian estate by a manager and consignee it will, as against all parties for whose benefit the possession has been held, refuse to permit its officers to be discharged until the amount due to them has been paid.
  But the cases seem to go further, and to establish that where the possession has been held by the attorney and manager of the
mortgagor. Yet if the mortgagees have so recognized the possession of the manager that he can be considered as acting in their behalf and for their benefit the same consequences must follow as regards their interests, as if he had been appointed under the authority of the Court. In the case of "Scott v. Nesbitt," (14 Ves., 43), which is the foundation of the subsequent authorities, Nesbitt and Co. were not consignees under the order of the Court, when their debt was contracted, not did Franks fill that character at the time when he paid the balance due to them. In that case it was laid down by Lord Eldon that a West Indian estate was not to be treated as an ordinary landed estate in England, but was rather to be regarded as a trading concern, like a mine or alum works, in which one tenant in common managing the concern on behalf of the others for what might be due in respect of the expenses incurred in carrying on the office.
  But one of the grounds on which he allowed the payment made by Frank s to the former
consignees, not only as against creditors of the estate claiming a charge under his will, but as against a mortgagee (who seems to have appeared by counsel, though the particulars of his mortgage are not stated, was this - that those who could claim under the will could not enjoy any advantage from the property without the employment of consignee; that if the actual state of things had been laid before the Court, it would have appointed a consignee and in that case would not have taken the possession from him, unless his demand was paid; that the creditors, the tenants for life, and all parties interested in the estate stood by and permitted  the consignments from time to time, whether under due authority or not, to be sent to the home of  Nesbitt and Co.; and that there was an equity on the part of those who were called upon in respect of their personal liability to insist that the Court ought to reimburse them the expenses which would have been allowed if the Court had put the estate in the hands of a consignee and manager . The report of "Scott v. Nesbitt" seems to be very imperfect, and it is not easy to collect from it with accuracy the
principles which were laid down by the great judge who decided it. It is very difficult to understand what difference there can be between the case of a manager and that of a consignee of a West Indian estate with respect to the right of lien. Both are equally necessary to carry on the trade - for as such it seems to be regarded; and in the case of "Scott v. Smith," before the Privy Council on May 13, 1829, referred to by Mr. Burge in his 3d volume, p. 357, the question arose in the case of a manager.  The appellant, being in advance for the management of a plantation, applied by petition to have what was due to him as such manager paid out of the first moneys to come to the hands of the receiver, insisting that he had been in the management with the assent of the respondents, and had made his advances on the faith of being paid by them. He also claimed commissions on his transactions.
  The Chancellor of Jamaica made an order limiting the demand of the appellant to the expenses incurred by him in respect of the crop of which the new manager would reap the benefit. Against this order Scott appealed to Her Majesty in Council; and his first reason was "because the respondents trusted the appellant, and authorized him to consider himself as their agent in the management of the plantation, giving directions through their attorney with respect to the working expenses, and directing him to consign to them the whole produce, out of which such contingent expenses would otherwise have been paid." The respondents by their reasons insisted "that the appellant, being in possession of the mortgaged premises as the attorney, not of the respondents, who are mortgagees, but of the mortgagor, Peter Reddin, could have no right to charge them or the proceeds of the mortgaged property with the amount of any expenses which he had incurred, unless the respondents had given him authority to incur the same on the credit of themselves or of the mortgaged premises, which they denied that they had done." With respect to the commissions, they insisted "that such claim was sustainable only against Peter Reddin deceased, whose attorney he was, and not against the respondents, whose attorney he was not."  The respondents' reasons are signed by Mr. Burge, and it is probable, therefore, that he was counsel at the bearing, and that the points which he refers to the case as deciding were laid down by the Court in giving judgment.  The order, though it does not establish them in terms, is quite consistent with such a hypothesis. The minute is in the handwriting of Vice-Chancellor Shadwell, and alters the decision of the Court below by directing "a general account of all the payments made by the appellant while he was in possession and management of the plantation under the power of attorney granted by Reddin, and of what such costs, claims, and demands consist particularly." It dismisses the appeal as regards commission, and reserves further directions.
  In applying the principles furnished by the authority to the case before us, the claim of Grant to be considered as having been in possession on behalf of the encumbrancers, and under the sanction of the Court, seems very strong. He had become manager, no doubt, originally, as in the case of "Scott v. Smith," under a power of attorney, executed by the owner, subject to the charge. But his continuance in that character had not only been acquiesced in by the encumbrancers, but had been insisted on by them as the condition on which the owner should be permitted to remain in possession. The Court had sanctioned this arrangement, and had abstained on that ground from appointing a manager and consignee. The case, therefore, in this respect seems stronger than either "Scott v. Nisbett" or "Scot v. Smith."
  The question whether the Court, at the instance of a consignee, would order the balance due to him to be raised by sale of mortgage of the estate, when a sale or mortgage is not required for any other purposes, does not in this case arise. The rule that the lien exists as against the income of the estate has been extended to the case where a portion of the state has been converted into money by the Legislature, substituting for the slaves on the estate the compensation money awarded in respect of the compulsory emancipation. The same principle seems properly applicable to a case like the present, where the encumbrancers, by procuring the sale of the estate, have put a stop to the profits on which the manager would have a lien. The trade, if that analogy be adopted, has in effect been sold, and the proceeds of the sale are subject to the claims of those who would have had a demand on the profits while it remained unsold.
  On the whole, after a painful examination of the evidence, and a full consideration of the case, their Lordships have come to the conclusion that Mr. Grant must be considered to have been in the management of this estate on behalf of all parties interested, and under the authority of the Court of Chancery; and that the proceeds arising from the sale being now to be distributed according to the rights of the several parties having claims upon it, the appellant, as the executor of Mr. Grant, is entitled to be paid what is due to him in respect of its management, in priority to the claims of the persons having charges under the will.  Their Lordships, therefore, are of opinion that the order appealed from must be reversed; that the amount due to Grant's estate for principal and interest must be ascertained, and that the costs of the appellant of making his claim, and of this appeal, must be added to the amount, and paid out of the funds in court, and the respondents be allowed to add the costs to their security.

Published by Centre for Comparative Law, History and Governance at Macquarie Law School