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Decisions of the Superior Courts of New South Wales, 1788-1899

Doe dem. Maughan v. Turner [1847] NSWSupC 21

ejectment, Statute of Frauds, mortgage, estoppel

Supreme Court of New South Wales

Dickinson J., 1 December 1847

Source: Sydney Morning Herald, 2 December 1847, in Supreme Court Collection, Vol. 2, pp 29-31


His Honor Mr. Justice DICKINSON delivered the judgment of the Court in this case as follows:-

This was an ejectment for the recovery of 250 acres of land, situate at Maitland; the demise was stated in the declaration to have been the 1st December, 1840. At the trial, which took place before his Honor the Chief Justice on the 7th May last, a verdict by consent was delivered for the plaintiff, subject to the opinion of the Court, on the evidence laid before the Jury, and liberty was reserved to the Court to draw the same inferences from the evidence as the Jury might have deduced.

The evidence was this: a Crown grant, dated 21st June, 1833, to Maughan, (the lessor of the plaintiff) of 1230 acres of land; which included the premises sought to be recovered. Indenture of lease and release dated respectively 24th and 25th March, 1837; the parties to the former being Maughan and John Campbell, and those to the latter being the said Maughan and Campbell, and Edward Turner, of the 1st, 3rd, and 2nd parts, respectively. By the release, after reciting the grant to Maughan, and that Turner was desirous of purchasing the property for £7000, and that Maughan had agreed that £6000 should be secured on the premises, it was witnessed that in consideration of £1000 paid by Turner, and of £6000 to be paid by Turner, and to be secured as thereinafter mentioned, Maughan by Turner's direction and at his request released to Campbell in fee the said land to the use of Maughan for 500 years, and (subject thereto, and to the payment of the £6000 and interest as thereinafter provided) to the use of Turner and his heirs:---with a proviso, that upon due payment of the monies secured, the term of 500 years should cease, and should be surrendered to Turner at his expense. It was agreed that the sum of £6000 should be paid by certain instalments, the last of which was to be on the 25th March, 1847, and interest mean time on the 25th March in each year. There was a covenant by Turner, that upon default in payment of principal and interest, or any part thereof, at any time appointed for the same, it should be lawful for Maughan, during the continuance of the 500 years, to enter upon the premises; and there was after that a proviso, and Maughan consented, that (notwithstanding the term for 500 years) until such default should be made Turner should have quiet possession of the premises.

Upon the execution of this release Turner entered into the possession of the land which has ever since been occupied either by himself or his assignees of the same. On the 9th June, 1838, Turner executed a further charge on the land to Maughan for £1000, which was transferred to Dr. Mitchell by Maughan solely for the benefit of Turner, who paid it off on or before 18th December, 1840. After the execution of this further charge, Maughan went to England , and was there during the whole of the year 1840, and for some time before and after. On his leaving the colony he executed a sealed power of attorney, constituting John Campbell, Robert Campbell, the younger, and Charles Campbell, and each of them , his attorneys and attorney.

That power does not specifically notice Turner's charge or mortgage, or mention in any other way the debt due from him; but, in general terms, authorises those gentlemen and each of them, among other things, to execute for him conveyances, surrenders , releases, acquittances, or other effectual discharges, as should or might be needful and requisite, and also "to compromise and accept of part in lien of the whole when the latter could not be recovered , and to act therein as to them or either of them should appear expedient and proper."

Turner neglected to pay on 25th March, 1840, the interest which became due on that day. He paid it, however, in the subsequent June to Maughan's agents, Messrs. Campbell, who accepted it without objecting to the time of payment. After Turner had made the default before mentioned, he proposed to the Messrs. Campbell that he should pay off Dr. Mitchell, and that he should be allowed to sell 260 acres of the land purchased by him from Maughan, and that £5000 of the purchase money, which was then unpaid, should, instead of remaining with £8 per cent. interest on the whole land, be charged with £10 per cent. interest on the residue of it; i.e., the land remaining over and above the 260 acres which he wished to sell. Of this proposal Messrs. Campbell gave notice to Maughan, by a letter dated "Sydney, 20th June, 1840," and having subsequently acceded to it, they further informed Maughan of what they had done by a latter, dated "Sydney, 6th September, 1840."

On the 9th September, 1840, Turner obtained a re-transfer of the further charge from Dr. Mitchell, and subsequently sold the land to Messrs. Carr and Rogers, from whom Messrs. Campbell received the interest which became due in March, 1842. As Messrs. Carr and Rogers declined paying the £10 interest, instead of £8 per cent., according to Mr. Turner's proposal, the latter at the time of the sale to Carr and Rogers gave Messrs. Campbell (as an equivalent for the extra £2 per cent. according to his proposal to them) his six promissory notes for £100 each--- no one of which has ever been paid, as Turner became insolvent before the first of them became due.

Messrs. Campbell, by a letter sent to Maughan, and dated 23rd of January, 1841, informed him that Turner had sold the estate at a profit of £11,000 to Messrs. Carr and Rogers, who refused to pay the additional interest, and that Turner had given Messrs. Campbell his six promissory notes for £100 each in Maughan's favour for the last mentioned interest. This letter was acknowledged by one from Maughan, dated 15 th September, 1841, in which he said "he rejoiced to hear that Turner had sold the land so favourably," and made no complaint of the additional interest being secured by Turner's notes instead of one the remaining 1060 acres of land.

Mr. Maughan, by a letter dated London, 16th November, 1840, acknowledged the receipt of Messrs. Campbell's letter, dared 20th of June, 1840. This letter was addressed to the Messrs. Campbell jointly , and contained the following passage:-"Respecting Mr. Turner's application to sell a part of the estate, I should have no objection, provided the remainder be sufficient to cover my claim; but should Mr. Turner wish to dispose of the front part of the farm, I do consider it would lessen the value of what was remaining. Although land at present in that district is much increased in value, it may still from unforeseen causes be again reduced, as has been the case in the colonies before; for instance, your little farm at Norfolk's Plains, Van Diemen's Land, that had once been sold for £1000, and afterwards by you for £225; I regret that Mr. Turner did not name the part that he wished to dispose of, he states 260 acres in allotments, leaving 1060 acres; but the grant is only 1230 acres, although Mr. Peter's survey made 1321 acres. However, I do not see how this sale can possibly take place without Mr. Turner first discharging the whole mortgage, and afterwards you taking a new mortgage on part of the estate, or a Special Power of Attorney from me for that purpose, otherwise how can Mr. Turner give any title to the part he intends to sell, he having none himself until the mortgage is paid off, for the only deed of conveyance executed by me is the Mortgage Deed, which you and Mr. Norton held on Dr. Mitchell's, and my account, with the Deed of Grant, &c, this I think would be pointed out to Mr. Turner on application to Mr. Norton. The above are only my ideas of the matter, but whatever you have done I shall be perfectly satisfied with, knowing that it will be for the best. Of course, should any change take place, I should expect the same interest as is going on in the colony. Mr. Walter Scott, late of the Paterson , is here, and going out this next week in the shop Eliza Stewart, who will be the bearer of this letter. I have had some conversation with him on this subject, which he will have the goodness to explain to you more fully than I can in this letter my views on the matter. Should any arrangement take place, I shall expect (which I believe is customary) that none of the expenses of deeds, &c., be charged to me, and also, in discharging Dr. Mitchell's £1000, that the registering of the same (which must not be neglected), and all other expenses connected with it, also your commission for paying and receiving both principal and interest be paid by Mr. Turner as was agreed on, as it was entirely for the purpose of serving Mr. Turner that I made myself responsible without any advantage to myself."

By an indenture afterwards made on the 18th December, 1840, purporting to be between Maughan of the one part and Turner of the other part, and to be signed with the name and sealed with the seal of Maughan by his attorney Robert Campbell the younger, it was recited that Maughan surrendered to Turner the lease of 500 years in the last mentioned 260 acres. By letters sent from Maughan to Messrs. Campbell, on the respective dates of 21st June and 15th September, 1841, the former expressed satisfaction at the arrangement which the latter had made with Turner. In a letter sent from him on 16 th February, 1842, (although he thereby shows that he was then aware that Turner was unable to pay his debts,) he expressed no dissatisfaction at the arrangements made with him, but begs "that Messrs. Campbell would not allow any alterations for the future to be made in the securities, unless they saw that it would be absolutely beneficial to him; and legal documents at the time of the contract being made before the old ones were rendered void." But by subsequent letters he expressed both uneasiness and dissatisfaction.

The case was argued last term by the Solicitor-General, and Mr. Lowe for the defendant, and by Mr. Foster and Mr. Donnelly for the plaintiff. The defendant's counsel contended, that there was no default ;--- as that means something more than mere want of punctuality. That as the words in the last clause of the lease were affirmative, and not negative, and was moreover associated with Turner's covenant, that upon default Maughan should enter upon the premises, there was a redemise from Maughan to Turner for ten years, defeasible by entry for non-payment of principal or interest, more especially as the words "that Turner should hold until default," &c., did not amount to a conditional limitation, but a condition to defeat the redemise by non-payment and consequent entry. That if the non-payment of the interest on the 25th March, 1840, occasioned a forfeiture, it was waived by Messrs. Campbell receiving the interest in the subsequent June. That by the sealed power of attorney Messrs. Campbell were authorised to execute surrenders not only of the whole land on receiving the whole sum secured by it, but also a part of the land on receiving a part of the money lent, and that the words of the power "expedient and necessary" were not to be construed strictly. That although the day of the demise, as laid in the declaration, was the 1st of December, 1840, yet after that day, and before the service of the declaration on the defendant, viz., on the 18th of December, 1840, a surrender of the 260 acres was executed. That Maughan's letter of 16th November, 1840, and others of subsequent dates, amounted to an authority for the surrender (a subsequent ratification by parol being under the circumstances equivalent to a prior authority under seal) or such a recognition as estopped him from contesting the validity of the surrender. That if there was no authority to seal the surrender, the seal might be considered a nullity, and then the writing would be sufficient for the surrender of them of 500 years, and would be warranted by the subsequent ratification contained in the letters. That if there was not a demise for 10 years, as Maughan had recognised Turner's possession of the 260 acres, there had either been a tenancy at will created, to defeat which the plaintiff had proved no demand of possession, or a license from Maughan, of which no revocation had been established by the evidence. That the transaction effected by the lease and release was not strictly a mortgage, but a sale, and the purchaser left designedly in possession. They cited Doe d. Parsley v. Day, 2 Q.B.147; Doe d. Royland v. Lightfoot, 8 M. and W., 553; Doe v. Hales, 7 Bing, 322; Doe v. Thom, 4. Q.B. 615, 5. Bythewood's Conveyancing---Mortgage, 354, Co. Litt. 214, Doe dem. Fisher v. Giles, 2 Moore and Payne 74, and 5 Bingh., 421, Doe v. Cadwallader, 2 B. and Adol. 187, West v. Blakeney, 2 M. and G. 729, 1 Ch. Pl. Ejectment, and Adams on Ejectment (last edition) 172.

The Solicitor-General in reply urged that it was not necessary for him to contend that there had been a re-demise for 10 years. It was sufficiently clear that it was Maughan's intention that Turner should remain in quiet possession, and therefore that the latter had never been a trespasser. The non-payment of interest on 25th March, 1840, could not be considered as a default unless it was so treated by Maughan or his agent at that time. That the letter of 16th November, 1840, must have been put in course of transmission to Messrs. Campbell before the 18th of December following, at which date therefore there was an authority in existence from Maughan to make a surrender of that date---that as Maughan had received Turner's promissory notes for the increased interest, and had recognised the defendant's possession, and had received from Mr. Carr (Turner's vendee) the interest which became due in March, 1841, 1842, and 1843, he was estopped from contesting the efficacy of the surrender. He further cited Arnsby v. Woodward, 6 B. and C., 519, and Adams on Ejectment, 279.

We have considered this case, and are of opinion--- 1st, that the conjoint effect of the provision, that Maughan, in default of payment of either of the monies secured by the release should enter upon the premises, and that Turner should peaceably hold till such default, cannot be distinguished from that assigned to similar provisions in a mortgage deed by the Court of Common Pleas in Wilkinson v. Hall. There is in the release an affirmative covenant that Turner should possess the land for the certain time of ten years, with a collateral determination of that time in the event of Turner's default in payment of interest or a certain portion of the principal, and therefore we consider this case distinguishable from that of Doe dem. Parsley v. Day, 2, R.B., 147.

We are also of opinion, that Turner's want of punctuality in not paying the interest on 25th March, 1840, vested at that time a right of re-entry on the premises in Maughan. If the words of Turner's own covenant, "that if default shall be made in the payment of the said sum of £6000 and interest, or of any part of the same respectively, at or upon the days and times appointed for payment, it shall be lawful for Maughan quietly to enter into, and to hold the premises hereby granted," do not amount to the establishment of such a right upon the defendant in question, there can be no safety in committing to writing any contract however plain the language that may be used.

The next question is, whether that right of entry has been affected by the subsequent acceptance of the interest. As to this it may be assumed, that had the sum received from Turner in June, 1840, been rent, the forfeiture for the non-payment of the same in the preceding March, might have been waived; but as that sum was interest, er accede to the argument of the plaintiff's counsel, that the doctrine laid down on Arnsby v. Woodward, and other cases, had no application to the circumstances of this case. Rent, is an annual return made by the tenant in retribution for the land that passes. The lessor's title to the rent is founded upon the principle that the land demised is enjoyed by the tenant. See Cruise's Digest title "Rents." Rent must be reserved out of the profits of the land, and is not due till the tenant take the profits. Co. Litt. 142. Hence a landlord accepting money as rent at a particular time affirms that he is taking a compensation for land held under him, and is therefore estopped from saying that he from whom he accepted such rent was not at the time of payment the tenant of the land in respect of which it was paid. Interest on the other hand (see Powell on Mortgages citing Adam Smith) is the compensation which the borrower pays the lender of money for the profit which he has the opportunity of making by the use of it. Though the principal and interest may be secured by the mortgage of the land, the interest cannot be said to issue out of the land, and the mortgagee by accepting it in no manner affirms that when he does so the mortgagor holds the land as tenant to the mortgagee.

We are clearly of opinion that although the day of demise laid in the declaration is the 1st December, 1840, yet the defendant was entitled at the trial to avail himself of any defence which arose between that date and the time of the service of the declaration. The latter period was as against the defendant in the commencement of the action, and according to the decision of the Court in Doe v. Jackson , 1 B. and C. 448, 454, if Turner was lawfully in possession, then it was an answer to the action, whatever might be the date of the demise laid in the declaration.

The next question therefore is, whether the surrender of the 18th December, 1840, made before the service of the declaration was a defence to the action of ejectment. By an indorsement signed by Mr. J. Norton, and by a letter to Maughan from Messrs. Campbell dated 7th April, 1841, it appears that the surrender was made upon the supposition that it was authorised by the sealed power of attorney before mentioned. We are of opinion that the surrender was not authorised by that power, which only enabled the Messrs. Campbell or either of them "upon recovery of every or any surrenders, or other discharges, as should or might be requisite. (") The obvious construction of the words "every or any sum," is the whole of any such sum; and therefore, we think that the surrender which was authorised by the power, was only of such land as might be security for the whole. As to the agreement, that since by another clause in the power the attorneys were authorised to accept part of any debt, therefore the power should be construed as enabling Messrs. Campbell or either of them to surrender the whole land on receipt of the whole debt, and part of the land on receipt of a proportional part of the debt, we think there is no room for it. The only authority given by Maughan by the power, for the acceptance of part of any debt, is to receive such part in satisfaction for the whole.

We now come to the argument, that supposing the annexing the seal to the surrender to be a nullity, yet the instrument was, nevertheless, a good surrender by way of note in writing, so as to satisfy the Statute of Frauds, and was warranted by the letter of the 16th November, 1840. We have no difficulty in acceding to the proposition that a document is not the less a note in writing, within the meaning of the Statute of Frauds, because a seal is uselessly put upon it. And it is clear (1 Wm. Saund., 236 c.) that there may be a surrender of part of land demised; and that, at the common law, a surrender of an estate in possession in lands and tenements for any term of years might have been by parol without deed and without livery of seisin, though the particular estate was, as here, created by deed (1 Wm. Saund., 236), and that since the Statute of Frauds a note in writing is sufficient for the surrender of such an estate (1 Wm. Saund., 236 a.) Was the surrender then, by the deed of the 18th December, 1840, considered as a mere note in writing, authorised by Maughan? That document was in fact executed by Robert Campbell, junior, signing to it the name "John Thomas Maughan." Assuming as a fact, that the letter of 16th November, 1840, was then in such a state of transit to this colony that Maughan had, on the 18th December, 1840, no power of revoking it, and that had it been addressed to R. Campbell, junior, it would have authorised the surrender (though he was not aware of the existence of that letter and professed to act under the sealed power of attorney); we are, nevertheless, clearly of opinion that as the letter was addressed to the Messrs. Campbell conjunctively, it afforded no authority to Robert Campbell, the younger, alone to make the written surrender, (Story on Agency, 42, and the authorities there cited,) more especially as we perceive from his sealed power of attorney, that Maughan knew how to express the distinction between a power to the Messrs. Campbell, and an authority to the same persons or either of them . For the reason last mentioned, we think that the subsequent letters to Messrs. Campbell are no ratification of the surrender which was made by R. Campbell, the younger.

In addition to the preceding, which may be described as reasons based upon strict law and technicality, it is clear to us that Maughan never intended to authorise or ratify such a transaction as is suggested has really taken place, namely--- one by which, instead of holding 1320 acres in mortgage for securing to him his principal with £8 per cent. interest, he now holds 1060 acres as security for the same, with six promissory notes of Turner for £2 per cent. additional interest; and in consideration of such notes has surrendered up to Turner 260 acres of the land which he held in mortgage. The utmost he ever intended to sanction was a transaction based on Turner's proposal contained in his letter to Messrs. Campbell, dated May 30th, 1840. That is evidently the transaction to which he refers by his letter of the 16th November, 1840, viz.; that he should surrender to Turner 260 out of 1320 acres, over which he held a mortgage for certain principal and interest thereon, at £8 per cent. upon having the same principal with interest at £10 per cent. secured by mortgage upon the remaining 1060 acres. Turner having got what is set up as a surrender, sells the whole 1320 acres at a large profit, with Maughan's principal and original interest, secured on 1060 instead of 1320 acres,---gives Messrs. Campbell, behind Maughan's back, his promissory notes for the additional interest, from which Maughan derives no benefit whatever,---and is now said to be estopped, because he did not, by his letter of 15th September, 1841, (acknowledging the receipt of Messrs. Campbell's letter of 23rd January, 1841, which gives him the first information of the receipt of Turner's notes,) find fault with that mode of securing his extra interest. We are of opinion, however, that nothing that has been written, done, or omitted, by Maughan, since the 18th December, 1840, has induced any change in the position of Turner, or any one claiming under him; and, therefore, according to the principles and authorities mentioned in our recent judgment of Larkins v. Hunter, Maughan is not estopped from now contending that the surrender of 18th December, 1840, was invalid.

We are finally of opinion, that a complete right of entry vested in Maughan by the default on March 25th, 1840; that no demand of possession or notice was necessary, before the commencement of this suit; and that the plaintiff is therefore entitled to our judgment.

Published by the Division of Law, Macquarie University