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

Hosking and another v. Norton and another, executors of Terry 31 [1847] NSWSupC 31

succession, trusts

Supreme Court of New South Wales

Stephens C.J., Dickinson and Therry JJ, 7 April 1847

Source: Sydney Morning Herald, 8 April 1847, in Supreme Court Collection, Vol. 1, pp 103-105

BANCO SITTINGS

Before their Honors the three Judges,

HOSKING AND ANOTHER v NORTON AND ANOTHER, EXECUTORS OF TERRY.

Their HONORS pronounced judgment in this case separately as follows:-

Sir ALFRED STEPHEN, Chief Justice:-

This is a case in which there have been already two trials: and it were much to be desired, that further litigation could be avoided in it. I am satisfied, however, that as yet justice has not been done to these defendants; either in the popular sense, or according to the rules of law.

The matter is a very simple one. The defendants' testator gave a bond, many years ago, to the plaintiffs - conditioned to pay to them a certain annual sum, in trust for Elizabeth Terry, during her life. The action is brought to recover some years' arrears of that annuity. The defendants plead payment; that is, that they have paid the plaintiffs the annuity, up to the time of the action brought. The plaintiffs, the obligees of that bond, deny such payment, and that was the issue for trial. On the first occasion, the Jury intended to find a special verdict; but miscarried in that object. On the second they found for the plaintiffs; the learned Judge directing them to do so, if they should be of opinion that the payments made, or said so to have been, were to the plaintiff Hosking for his own use, and not for that of himself and co-obligee. It is the propriety of that direction, which is now in question.

Had the facts been shown at the second trial, which was before the Jury on the first, I should not have felt one moment's difficulty, in this matter But they were on the last occasion left so bare and indistinct, on one point, - that is to say, the particular mode of payment relied on, - that I have felt considerable embarrassment in determining, how far that matter was really now before us Inasmuch, however, as on the argument in banc, the circumstances were all alluded to, or taken for granted, no question being made about them on either side, I have arrived at the conclusion that I may, for the purposes of this judgment, take them to be as then stated. The new trial is indeed asked for, on a ground which might be disposed of, without minute inquiry into those circumstances. The other facts of the case are clear enough. The point is not, however, whether the Jury drew a right conclusion on the question left to them, from the facts; but whether that was the question which they should have been called on to decide.

Taking the evidence simply as it stood at the second trial, it appeared first that, although the plaintiffs are mere trustees, and consequently without any interest of their own, as obligees, either to promote or transfer, the action was not brought by them; nor, as might have been supposed, for the benefit of their creditors, or the creditors of Hosking, one of their trustees. A circumstance so extraordinary, it is obvious, cannot be accounted for by the fact, which was admitted, that both the plaintiffs have become insolvent; for their insolvency plainly did not, and could not affect their rights as such obligees. The explanation is easily given; but it is necessarily connected with the mode of payment already adverted to. Secondly, it appeared that these trustees, the plaintiffs on the record, had severally admitted the annuity to have been paid. One of them said, that he believed it was paid; the other, Mr. Hosking, said positively that it was so. He then stated the mode of payment; on which the whole of the difficulty in the case has been made. He said, that he received it by anticipation; that is to say, by a loan made to him by the defendants, to be liquidated by the annuity, from time to time, as it should fall due The defect in the evidence, (supplied for the purposes of the argument in banc,) was this - that there was nothing to explain, why or how he took on himself separately to make that arrangement. It is sufficient to say, however, that it was not imputed to Hosking (so far as I can collect,) that any fraud on his co-trustee, or on the annuitant, was thereby either intended or affected.

On this state of facts, - whether the explanation which might have been given, as to Hosking's particular position in the matter, was then in evidence or not, - I conceive that the only question for the jury was, whether such payment was or not made by the defendants, and received by the plaintiff, on account of the bond. Or, if it be thought too much to assume, that the transaction was a payment, (though what else it was, on the evidence, I cannot comprehend,) the question might have been left thus: Was the money advanced by the defendants, and accepted by Hosking, the obligee, with the design of thereby pro tanto liquidating the bond? On the evidence, as it strikes me, and especially in the absence of any imputation to fraud, there was no ground for the question, whether the payment was for Hosking's " own use." If it was made on account of the bond, or or with the intention that the money should go against the bond, it clearly appears to me, that it was a payment under that bond. If so, (in the absence of fraud, or the imputation of fraud,) whether it was "according to the condition" of the bond, would be a question quite immaterial.

In one sense, no payment of a bond by anticipation, can be according to the condition. But if, in this case, without any intent to injure the annuitant, (still more, if by arrangement with her, or for her benefit, of that of some one entitled to represent her,) an advance was made of the annuity, - by loan of the amount, or otherwise, - to one of the obligees, by the assent (or not in fraud) of the other, I am of opinion that the condition of the bond was satisfied. We will assume, that the obligee received this advance, in fact, for the use of some appointee, or vendee, (she not being restrained from either sale or appointment) of the annuitant. Could that be a reason, for treating the payment as no payment? Would It not clearly be, on the contrary, the very best reason why the defendants should have the benefit of the payment? Let us next suppose, that such vendee or appointee was, in fact, the obligee himself. Could that prejudice the defendants? Would the advance be less a payment, in the one case, than in the other? Now, the circumstances showing Hosking's position, were either in evidence, or they were not. If they were, then such exactly appeared to have been the position. He was her vendee. In other words, he was entitled to keep, in that character, what he received in another. That, surely could not form a ground, for a verdict against the parties paying. If, on the other hand, the matters referred to were not in evidence, I confess that (in the absence of the imputation of fraud, or of any pretence for such an imputation) I discover no foundation for an inquiry, whether he did or not receive the money to his own use. The case then stood nakedly, as a case of money obtained by one of two obligees, from the representatives of the obliger. In such a case, it appears to me that there was and is but one question. Had that payment in fact, on either side, reference to the bond? If, without fraud, there was the animus solvendi, as to that instrument, on the one side, and the animus recipiendi, as to the same, on the other, I think that the Jury should have been told to find for the defendants.

If there could be no such thing, by law, as the payment of a bond by anticipation, or if there were no distinct and direct authority for holding, that an arrangement of the kind entered into in this case, is in substance and effect a payment by anticipation, there might perhaps be some room for argument. But the case of Sturdy v. Arnaud, 3. T R. 599, of which the authority was recognized by this Court, in the judgment pronounced by us on the demurrer, (Res. Judg 1845, page 13) is quite decisive on these points. If it be said, that here the payment was to one of the obligees only, Wallace v. Kelsall, 7. M. and W. 272 is an authority equally conclusive; since it decides, that a payment bona fide (or in the absence of proof of mala fides, ) to one of two or more co-plaintiffs is, in effect, a payment to all. Then there is the case of Gibson v. Winter, 5B. and Ad. 102; which is an authority on two points - first, that a settlement in account with the party suing, though an agent only, is equivalent in that action to payment to the principal. In Alner v George , 1 Camp. 392, which was an action brought by trustees, for the benefit of creditors, in the insolvent's name, Lord Ellenborough held that a receipt under the plaintiff's hand was an answer to the action; and he would not receive evidence of its being a fraud on them.

It was contended, however by Mr. Windeyer and Mr. Michie, for the persons suing in this case, that our own decision on the demurrer, to which I have just referred, was an authority against the defendants; inasmuch as no more was proved in their favor, than was then admitted on the pleadings - which, at that time, the Court held to amount to no defence. The consideration of this point, then, becomes of some importance. Now, those pleadings disclose the real state of the facts; and we will see what they are, and what the judgment on them on that occasion amounts to. I shall take care, however, to clear away the confusion, which the recurrence of the same name, both as obligee and representative of the annuitant, tends to produce, by substituting a supposititious name, for that of the latter. It will then be seen, how little the decision relied on supports the conclusion drawn from it.

The bond was, to pay the plaintiffs; but, for the use of Elizabeth Terry. A payment to her, or her appointee, we held, would be no discharge of the bond; because, by the condition, the payment was reserved to the obligees. But the plea set up no payment to them, or either of them That is, to neither of them as obligee. The defendants alleged, that the annuitant assigned all her interest to one Williams; and that with him an arrangement was made by them, for an advance on loan, to be repaid by the annuity; by virtue of which arrangement, the amount of such loan not having been yet liquidated, the condition of the bond was satisfied. Thus had the arrangement been with the obligees, or had the payments been reserved to the annuitant, would have been good as a plea of payment. It would not have been, merely, an agreement for payment: but, as in fact and substance it was, it would have been in law, as expressly held in the case first cited, a payment. But a payment to Williams was, quoad this bond no payment. Such according to our judgment on the demurrer, was in effect the plea then pleaded: and no more. It was a plea, (se the Judgment, page 14,) relying on payments to neither of the obligees, but to an appointee of the cestui que trust only: and such a plea, we held, was good neither in substance nor in form. Substituting the name of Hosking, who happened to be one of those obligees, for the name of Williams, (the other obligee appearing, on the pleadings, to have been a stranger to the entire transaction,) did not then appear to us to mend the matter; nor does it to me now. Speaking for myself, I had not then under consideration, I believe, the decision in Wallace v. Kelsall But that case would only show, that payment to one obligee, as obligee, is good; not that a plea, setting up expressly a payment to one, in a distinct character, would be good; especially without the assent alleged of the obligee : since no assent in the latter could be implied, nor (as I conceive) would a payment to the former operate, intrinsically, to bind him, where there was no community of legal interest, to supply those consequences. So understanding our decision, I see no inconsistency between it and my present opinion. If the decision amounts to more, I should not hesitate to say that I cannot adhere to it. But the only part which, in my view of the case appears to support the verdict, is the concluding paragraph. This, strictly speaking, was no part of the judgment, but the mere suggestion of an inference from it. Giving it full effect, however, I do not see that it applies to a case, where not only does no one dispute it, but both the obligees, who are suing as such on the record, appear to have been assenting parties to the payments, and both acknowledge themselves as obligees to have so assented.

How the action can have been do far prosecuted, under such circumstances, I am at a loss to understand. But, be that as it may, the defence as it now stands is a very plain one. The defendants say that they have paid the plaintiffs, the obligees, by paying one of them, with the assent of the other, for the use of the annuitant, (or the person representing, and entitled to represent her.) in exact accordance with the bond. The plaintiffs admit this to be true; and, in point of fact, no question has been made about its truth. Neither does any one dispute that an advance of money on loan, by an obligor to an annuitant, to be repaid by the annuity, is in law and in fact a payment of that annuity. What the Statute of Frauds, or the Insolvent Act, could have to do with such a transaction, it really requires great ingenuity to imagine. But the creditors of Mr.Hosking, the party really entitled to the annuity by virtue of his purchase, claim to receive the arrears, which have thus been already once paid, on the ground (as I collect from the former pleadings,) that, the loan continuing as a debt, the payment of that debt by the annuity, - although at the same time specifically assigned as the fund for payment, - is voidable by the insolvency. On this futile and unfounded notion, they are making use of the plaintiffs in this suit, to compel a second payment. Had Williams, in fact, or any such third person, been the owner of the annuity, and Hosking been the recipient for his use, (to satisfy, in point of form, the condition of the bond,) the impracticability of such an attempt would have been manifest. And, because he who received, had also a right to retain the money, why should there be a different result? But, in such a case, an apparent complication is easily introduced; and a very plain matter becomes, by the skill of counsel, a case of doubt and entanglement. Were the parties seeking from this Court to avoid the purchase, as incompatible with the relation of the trustee and cestui que trust, I could understand the value to them of a direction, which seems to me to amount to this, - that the same hand cannot effectually receive, (though he be obligee, and though the money be received with intent to liquidate the bond,) if he receive in fact with the intention, in another character, to retain. But these parties by no means desire to avoid the purchase. They hold it to be good, and seek to take advantage of it. If, however, the purchase was good, how was Hosking to avail himself of it, on a transaction of payment in advance, but by the course pursued? If legal in Williams, or the annuitant herself, it would (the purchase being no longer in question,) be equally legal in him. The advance was secured as a loan, lest the annuity should fail before it reached the requisite amount for re-payment. How, then, was he to carry his arrangement into effect, but by these means? Surely, because he represented the annuitant, he was not the less himself. And it can hardly be thought necessary, that he should have procured his co-obligee, to undertake or become a party to the receipt, when his own powers and rights, as obligee, were at least equal. As annuitant, or representative of the annuitant, he could not (that is, could not effectually) receive. As obligee he could. The defendants pay him, for what purpose? If in liquidation of the bond, it seems to me, that then he necessarily received as obligee, and the bond was thereby liquidated.

Any other conclusion would, I conceive, amount to this: that the particular purchaser, or appointee, in this case, could not carry out his bargain, without depriving himself of his character of obligee altogether. Certainly, on the direction given at the trial, no other verdict could be given, than the one which was given; repudiating the payment. So that, merely because these defendants happened to deal with Hosking as the party beneficially interested, and therefore entitled absolutely to the money, they lose the protection given them by law, in paying it to one of the obligees;- although they clearly would have had that protection, had the same person been only an obligee but nothing more. Such a consequence appears to me to be against reason; and, therefore, clearly against law.

But there is yet another point of view, in which the case may be put. The direction to the Jury, it appears to me, would have been imperfect, even had the arrangement constituting the payment been with the annuitant herself. I see no reason, why the obligees could not have empowered her to receive payment on their behalf, or in their name. And I conceive clearly, that proof of such an authority, and of payment by the defendants to her accordingly, as the appointed agent of such obligees, would have been very sufficient evidence to a Jury in support of the plea here pleaded. Instead of this, the evidence is of a payment to her appointee; by the express authority of one, and the assent of the other of the obligees. I can recognize no substantial distinction between the two cases. In each, it seems to me that a Jury might regard, and ought to regard, the payment to the annuitant, (or to her appointee,) by authority of the obligees, as a payment to the obligees themselves. And so, the payment to Hosking, even as appointee, and for his individual use as appointee, being by the authority of the obligees, that is to say, his own and that of his co-obligee, should be regarded, (or, at least, may be regarded,) as a payment to the obligees, by reason of such authority.

Between this, and the opinion formed by me on the demurrer, if there be any inconsistency, I do not discover it. A plea of payment to the appointee, as appointee, I still think would be bad; though a plea of payment to Hosking, as obligee, might perhaps have been equivalent to a plea, alleging payment to both obligees But a plea of payment to Williams, the supposititious purchaser, would not have been good even in substance; for the reason given in our Judgment. And, for the same reason, we held that a plea was bad in substance, which relied on a payment to Hosking, the real purchaser. That decision may have been an erroneous one; and it is right to observe, that the point was not argued - for it was one taken by the Court. Whether the decision was correct or not, however, my present opinion is, I conceive, not at variance with it; and in this, I am permitted to say, that Mr. Justice a"Beckett, who was then a member of the Sydney Bench, concurs with me.

Mr. Justice DICKENSON. - I am of opinion that there ought not to be another trial of this cause; as I think the verdict was warranted by the evidence, that the evidence disclosed facts within the proposition of law I laid down to the Jury; - and that my direction was in substantial accordance with the judgment of the Court, upon the demurrer in this cause.

By reference to the printed Judgment, it appears to me that this point has been determined by us; "that a loan by the representatives of the obligor of a bond, conditioned for paying an annuity during one life by quarterly instalments, out of the obligor's assets, to one of two obligors, to be repaid during the life, by his appropriating portions of the advance toward payment of the instalments, as they respectively become due, is not in substance a payment to the obligees according to the condition of the bond, of the instalments which become due during the life specified." This decision appears to me equivalent to affirming "that a receipt of money from an obligor by one of two obligees, in advance, for his sole benefit, and not for himself and his co-obligee according to the mode specified in the condition of the bond, is not a payment in performance of that condition." The rule thus expressed is almost identical with my instruction to the Jury Then, the evidence was, that Hosking (by himself) received a loan in advance, and agreed to repay it to the bond debtors,by remitting their payment of the instalments, to an amount equal to that of the money lent himself. Hosking therefore received a loan of money for his own benefit, of which his co-obligee was to have no share; and the mode of payment was as unlike that specified in the condition of the bond as it well could be. With the greatest deference to the better judgment of His Honor the Chief Justice, I venture to suggest that his reasoning impeaches the judgment of the Court, more than it impugns my ruling at nisi prius . Should the judgment on the demurrer be appealed from, I feel confident that it would be affirmed. The payment was not made in the condition of the bond, and therefore the condition was not performed. Assuming that the transaction was equivalent to performance, by reason of the agreement, then I think both obligees should have been parties to it; and that at all events it should have been under seal. In addition to these, the reasons formerly assigned, I would suggest another. Had the agreement been made with both obligees and under seal, then, as it was not made certain by the contract, that any part of the loan would ever operate as a payment of any of the instalments, (as the life might obviously terminate before the first instalment became due), the subsequent appropriations would not aid the first uncertainty, and the whole transaction depending on the agreement would be void. Samford v. Cutcliffe, Yelv 124, cited in Selwyn's N.P. Covenant, Accord and Satisfaction, and in Com. Dig. Accord, (B. 3), Earle v. Peale, 10 Mod. 67.

The case of Wallace v. Kelsall , I think has no application to the question before us; this being a question as to whether a contract was performed: that, whether a cause of action for a broken contract had been discharged by satisfaction.

Mr. Justice T HERRY :- In dealing with this case, it appears to me, it may be discussed and disposed of without interfering with, or at all disturbing what was settled by the Court in the judgment on the demurrer. - Besides the plea mentioned in the judgment, which was held to be bad - the defendants pleaded another plea - "payment to the two obligees." All that the Court did, was (the former being demurred to) to hold the special plea of payment to a cestui que trust, or, Hosking as her appointee, to be bad - and the defendant went down to trial on the plea of performance. As for the purpose of the present argument, nothing turns on the first trial, it is unnecessary to advert to it; but on the second trial, the question left to the Jury on the plea of performance was, whether the payment was made to Hosking's own use, and in the event of the Jury being of opinion that it was so made, they were directed to find for the plaintiffs. The propriety of that direction is the point for determination to-day. It may be as well at the commencement to clear the case of two objections that were taken to the payment. First, that the payment was made to one of two obligees, and it was contended that this was not a payment of monies in the condition maintained. - 2ndly, that it was a payment made by anticipation, and not at the times, and in the manner stated in the bond. To the first of these objections the case of Kelsall, 7. Mees. & Welsby, p. 272, furnishes in my opinion a sufficient answer. That was an action by three plaintiffs for a joint demand in which the defendant pleaded an accord and satisfaction with one of the plaintiffs, and it there was held that the plea was good, without alleging any authority from the other two plaintiffs to make the settlement. The test which the Court there applied to determine the sufficiency and validity of the payment was whether the transaction was free from fraud, and whilst it intimated that if any question of fraud were to arise, it would do away with the transaction: yet, in the absence of fraud or the imputation of it (and both are absent here) it held that the payment was a good and sufficient one, and sustained the plea, though on the face of it, it did not appear that there was any consent of the other two plaintiffs to this mode of reducing the debt payable to the three jointly. As to the payment by anticipation, there is a passage in the judgment of the Court of King's Bench, in the case of Sturdy v. Arnand, 3 T R. 599, - a case cited and relied on in the judgment on the demurrer so exactly applicable to the present, that a short passage from it may not inappropriately be incorporated into a judgment in this case, "This is an action," said Lord Kenyon, "brought on a bond which was made for the securing the payment of an annuity at certain times in the year; and before the time of the first instalment the obliger lent to the obligee £200 ; in order to secure the repayment of which, he entered into this agreement, stated in the plea, by which he was authorized to retain the payments of the annuity from time to time, until the £200 and interest should be paid. But in answer to this, it is said that these payments did not become due until after the bankruptcy of the obligee, and that therefore they cannot be retained against his assignees. Now in justice and conscience it is impossible to raise any doubt - neither is there any doubt in point of law, for the condition of that bond has not been broken, and consequently no action can be maintained upon it. It cannot be said that the condition has been broken when it appears that payment has been made according to the terms of it. For though this is not a formal plea of solvit ad diem, yet it is equivalent to it. But it is said that this cannot be so considered, because the assignees had a right to those payments which became due after the bankruptcy, but they have only that property to which the bankrupt is entitled, and they must take it subject to his equity; and here those payments were anticipated;" and Mr. Justice Butler adds, "this case does not want the assistance of an Act of Parliament or a Court of Equity, for an obliger may plead payment before the day, as payment at the day, and payment before the day, would be evidence of such payment." As the authority of Sturdy v. Arnaud has been adopted by this Court in its judgment already in this very case, it appears that this judgment is a conclusive answer to the objection taken to payment by anticipation. It was next urged with great force and ingenuity on the part of the plaintiffs, that the Court in its judgment on demurrer held that the plea then under its consideration was bad - and that nothing more was proved at the trial than was admitted by the plea, which plea was held to be no answer to the action. This argument on reflection will, I apprehend, be found to be one more of apparent than real force, - the decision on the demurrer being that certain facts pleaded amounted to no defence. This was a decision with reference to the plea then under review of the Court, - and not a decision with reference to the plea of payment to the obligees, which the demurrer did not reach. Though the Court decided that the facts as pleaded in that special plea amounted to no defence, yet the effect of these facts becomes different when given under a plea of payment to the obligees. A plea of payment to Hosking, the appointee of Elizabeth Terry, the party equitably interested, was held to be bad; but apply, and if I may so speak, transfer the same facts to the plea of payment to the obligees, and the effect is quite altered. For instance, though the plea of payment to the appointee of Elizabeth Terry, by virtue of an arrangement with him, negativing the payment to both obligees, is bad in substance, yet the same facts, when it moreover appears that the assignee and obligee is one and the same person, and that the payment to him as obligee, is made without fraud, and without the dissent of his co-obligee, under a plea of payment to both, may make out the truth of that plea. Some confusion unavoidably arises from the double character of obligee and assignee, which Hosking fills in this transaction, but though he be the assignee, he is not on that account the less an obligee of the bond. In one sense, no doubt the receipt of the money by Hosking would be to his use as the assignee of the cestui que trust. It is a matter of accident, however, that he is the assignee. If it had been assigned to a stranger, or if not assigned at all, payment would still have to be made to Hosking as obligee, in the former case to the use of the vendee of Elizabeth Terry; or in the latter, to her own use. Whether the payment were to the use of Elizabeth Terry, - or a stranger assignee, - or himself as assignee, his position as obligee remains unaltered and the same. The question of appropriation then appeared to be immaterial - the true material and important question being, whether the payment was a payment to Hosking in discharge of the bond. In the absence then, of fraud, or the imputation of it - in the absence too, of the proof of any dissent on the aprt of Hosking's co-obligee - with great deference to the learned Judge who tried the case, it does appear to me that the determination of the question of whether the payment was made to Hosking's use or not was an erroneous direction, and that unaccompanied by the suggestion of such a consideration, the question for the decision of the Jury was, whether the payment to Hosking was a payment in discharge of the bond. There are some very peculiar features in the case which it is unnecessary to dwell upon; - of these the principle is, that the action is brought in the name of the obligees, by both of whom it is repudiated - and by both of whom the bond is believed to be satisfied. Although it may be a matter of some regret that this case should be sent to trial, yet it is better that it should be submitted to a third, or even a fourth investigation, than that a party should be required and called upon to pay twice a debt or demand which he has already paid once, if it should appear satisfactorily that the payment he thus once made was bona fide made, without collusion or the imputation of fraud of any kind; and moreover made to the party duly and legally entitled to receive it. Whilst I differ, with deference, from the learned Judge who tried the case, it is some satisfaction to me to learn from what has fallen from the Chief Justice as to the opinion of Mr. Justice a'Beckett, that if the Bench had been constituted and composed of the same members now that it consisted of when the first branch of the case was decided here, the judgment would be the same as that pronounced by the Court now.

Published by the Division of Law, Macquarie University