Supreme Court of Canada
Miller v. Duggan (1892) 21 SCR 33
Date: 1892-04-04
William Miller and Robert Miller (Plaintiffs)
Appellants
And
Johanna Duggan, Patrick M. Duggan, and Charles Cogswell (Defendants)
Respondents
1891: May 5; 1892: April 4.
Present:—Sir W. J. Ritchie C.J., and Strong, Fournier, Taschereau and Patterson JJ.
ON APPEAL FROM THE SUPREME COURT OF NOVA SCOTIA.
Registry Act—R. S. N. S. 5th ser. c. 84 s. 21—Registered judgment—Priority—Mortgage—Rectification of mistake.
By R. S. N. S. 5th ser. c. 84, s. 21, a registered judgment binds the lands of the judgment debtor, whether acquired before or after such registry, as effectually as a mortgage; and deeds or mortgages of such lands, duly executed but not registered, are void against the judgment creditor who first registers his judgment.
A mortgage of land was made, by mistake and inadvertence, for one-sixth of the mortgagor's interest instead of the whole. The mortgage was foreclosed and the land sold. Before the foreclosure judgment was registered against the mortgagor and two years after an execution was issued and an attempt made to levy on the five-sixths of the land not included in said mortgage. In an action for rectification of the mortgage and an injunction to restrain the judgment creditor from so levying.
Held,—affirming the judgment of the court below, Strong and Patterson JJ. dissenting, that as to the said five-sixths of the land the plaintiff had only an unregistered agreement for a mortgage which, by the statute, was void as against the registered judgment of the creditor. Grindley v. Blakie (19 N. S. Rep. 27), approved and followed.
Appeal from a decision of the Supreme Court of Nova Scotia affirming the judgment at the trial in favour of the defendant.
On the 1st day of September, 1878, the respondent, Johanna Duggan, executed to the appellants two mortgages to secure the sum of $20,000, which was then due and owing by her to them. The time for payment
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was extended by the mortgage and the rate of interest was reduced.
One of the properties which the said Johanna Duggan had agreed to so mortgage had been conveyed to her late husband, through whom she claimed, by four different deeds. Three of these deeds conveyed each a one undivided sixth interest in that lot of land, and the fourth deed conveyed a one-half interest. The conveyancer who prepared the mortgages had before him one of the deeds which conveyed a one-sixth interest in this lot. By mistake and from inadvertence a one-sixth interest in that lot instead of the entire interest therein was described in and conveyed by the mortgage. Neither Johanna Duggan nor the appellants knew of the mistake until after the mortgage had been foreclosed in 1887.
On the 3rd day of December, 1887, the property was sold under foreclosure, and by sheriff's deed bearing that date the lands and premises covered by the mortgages were conveyed to the appellants. On the 27th September, 1887, the respondent, Charles Cogswell, recovered judgment upon a mortgage bond against Johanna Duggan, and the said judgment was on the same day duly recorded in the office of the registry of deeds at Halifax. On the 3rd of July, 1889, the said Charles Cogswell caused to be issued out of the Supreme Court upon the said judgment a writ of execution, whereby the sheriff was commanded to levy on the real property of the said defendant, Johanna Duggan. Under the said execution and the instructions thereon endorsed the sheriff of the County of Halifax attempted to levy upon five undivided sixth parts of the lot already mentioned. On the 3rd of July, 1839, the said sheriff, by the direction of the said respondent Charles Cogswell, advertised the said five undivided sixth parts for sale at public auction.
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Thereupon this action was brought to have the mortgage rectified, and to restrain the said Charles Cogswell from levying upon or selling the said undivided sixth parts.
The Chief Justice, before whom the action was tried, gave judgment in favour of the defendants upon the ground that the defendant, Charles Cogswell, had by the registry of his judgment acquired a legal lien upon these lands at the date of such registry.
The plaintiffs appealed and the appeal was heard before the Chief Justice, Mr. Justice Weatherbe and Mr. Justice Townshend. Mr. Justice Townshend delivered a judgment dismissing the appeal, which was concurred in by the Chief Justice. Mr. Justice Weatherbe delivered a dissenting judgment.
From this judgment of the Supreme Court of Nova Scotia the present appeal is taken.
Borden Q.C. for the appellants referred to Eyre v. McDowell; Kinderley v. Jervis; Barrow v. Barrow; Murray v. Parker; In re Boulter; Kerr on Frauds.
Ross Q.C. for the respondents relied on Grindley v. Blakie and Ross v. Hunter.
Sir W. J. RITCHIE C.J.—The statute upon which this case depends is chapter 84 of the Revised Statutes of Nova Scotia, 5th series, the material sections of which are the following:—
By section 8 of the said act it is enacted as follows:
All deeds, judgments and attachments affecting lands shall be registered in the office of the county or district in which the lands lie.
Section 18 of said act enacts as follows:
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Deeds or mortgages of lands, duly executed but not registered, shall be void against any subsequent purchaser or mortgagee for valuable consideration who shall first register his deed or mortgage of such lands.
Section 21 of said act enacts as follows:
A judgment, duly recovered and docketed, shall bind the lands of the party against whom the judgment shall have passed, from and after the registry thereof in the county or district wherein the lands are situate, as effectually as a mortgage, whether such lands shall have been acquired before or after the registering of such judgment; and deeds or mortgages of such lands, duly executed but not registered, shall be void against the judgment creditor who shall first register his judgment.
If a mortgage of these five undivided sixth parts of this land had been actually given, but not registered, can it be contended that the registered judgment would not cut out such unregistered mortgage? That it would is abundantly clear from the express words of chapter 84, section 21, which I have just read. If so, in what better position is a party who has no mortgage but merely an unregistered agreement to give a mortgage, than a party with an actual unregistered mortgage? In this last case Mrs. Duggan was at the time of the registration of this judgment at law the legal owner of these five-sixths; in the former she had parted with both the legal and equitable estate. The statute has declared the deed void against the judgment creditor. Does not the voiding of the deed, as against the judgment creditor, leave the property in the judgment debtor as if the deed had never been made? The difference between the English and Irish statutes and the statute of Nova Scotia is most material, as the former do not declare the deed void as the latter does. I cannot conceive how the court could have held differently from what they did in Grindley v. Blakie which
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decision they have followed in this case, unless they read out of the statute the 22nd section of ch. 79 R. S. 4th series, under which the question in that case arose.
It seems to me to be reducing the Registry statute to an absurdity to say the legislature could have intended that a mortgage, duly executed but not recorded, should be void as against a judgment creditor whose judgment is duly recorded, and that a mere parol agreement not recorded to give a mortgage should have priority over the duly recorded judgment, thereby giving greater effect to a mere parol unrecorded promise to give a mortgage than to the unrecorded mortgage itself: such a result the legislature could, in my opinion, never have contemplated.
Under these circumstances I think the judgment of the Supreme Court of Nova Scotia quite right and this appeal should be dismissed.
STRONG J.—The facts of this case are few and simple and are not seriously in dispute. The single question which has been argued before this court is one relating to the proper legal construction of the 21st section of the Nova Scotia Registry Act, chapter 84 of the Revised Statutes of Nova Scotia (5th series).
On the 1st of September, 1878, the respondent Johanna Duggan executed in favour of the appellants two mortgages to secure the sum of $20,000, the amount of a debt then due by her to them. These mortgages were so executed in pursuance of an agreement contained in a letter dated the 8th of July, 1878, written by Johanna Duggan to one of the appellants. The original letter has been lost, or destroyed, but it was satisfactorily proved by secondary evidence consisting of an examined copy of the letter. A proper foundation for the reception of this secondary evidence was established
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By proof of searches for the original letter. In this letter Mrs. Duggan wrote as follows:—
In order to set your mind at rest I will give you a mortgage on my property at Mount Pleasant for £3,000, the property is worth £10,000, and a mortgage on my town property that I occupy for £2,000.
The Mount Pleasant property referred to in the letter and which Mrs. Duggan agreed to mortgage had been conveyed to her late husband, whose devisee she was, by four different purchase deeds. One of these deeds conveyed a one-half undivided interest in the property, and the other three deeds conveyed each a one-sixth undivided interest in the same parcel of land. The conveyancer who prepared the mortgages having these deeds before him by mistake and inadvertence took the description contained in the mortgage deed from one of the conveyances of a one-sixth undivided interest, instead of comprising the whole property in the mortgage as it was agreed by the letter referred to, and as it was the intention of all parties, should have been done. This mistake is clearly proved by indisputable evidence. It is proved hot only by the letter referred to, but also by the testimony of Mrs. Duggan herself and by Mr. Justice Ritchie, who at the time of the execution of the mortgages was practising at the bar and as a solicitor, and who acted in the transaction as the solicitor of the appellants; by Mr. Justice Meagher who was also then in practice and who acted in the matter as the solicitor for the mortgagor, Mrs. Duggan; and by Mr. John Doull, who was the agent at Halifax of the appellants, a mercantile firm whose principal business establishment was in England. It is further proved that neither Mrs. Duggan nor the appellants discovered the mistake until some time after the mortgage had been foreclosed in 1887.
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On the 3rd December, 1887, the property was sold according to the practice prevailing in Nova Scotia by the sheriff under a foreclosure degree and was purchased by the appellants, and by the sheriff's deed bearing that date all the mortgagor's right, title and interest in the lands and premises comprised in the mortgages were conveyed by the sheriff to the appellants. This sale did not produce enough to satisfy the mortgages upon which a considerable balance still remains due.
On the 27th September, 1887, the respondent Charles Cogswell recovered a judgment upon a mortgage bond against Johanna Duggan, which judgment was upon the same day duly registered in the office of the registry of deeds at Halifax. On the 3rd of July, 1889, the respondent Cogswell caused a writ of execution to be issued upon his judgment whereby the sheriff was commanded to levy upon the real property of the respondent Johanna Duggan. Under this execution, and pursuant to the instructions of the execution creditor thereon indorsed, the sheriff of Halifax attempted to levy on the five undivided sixth parts of the Mount Pleasant property which had as before mentioned been intended to have been included in the mortgage to the appellants, but which had been inadvertently omitted therefrom by the error of the conveyancer. On the 3rd July, 1889, the sheriff, by the direction of the respondent Charles Cogswell advertised these five undivided sixth parts, upon which he had been directed to levy, for sale under Cogswell's execution. Thereupon, and on the 5th of August, 1889, the present action was brought for the purpose of having the mortgage deed rectified and for an injunction restraining the respondent Cogswell from proceeding to sell under his execution.
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The respondent Cogswell by his answer put the appellants to proof of their case, and pleaded the Statute of Frauds.
The respondent Johanna Duggan, and the respondent Patrick. Duggan who claimed as her assignee under a deed of assignment for the benefit of creditors, did not dispute the appellants' allegations and set up no defence to the action.
The cause was tried before the Chief Justice who gave judgment dismissing the action.
From this judgment the plaintiffs appealed to the Supreme Court of Nova Scotia in banc. This appeal was dismissed, a majority of the court, composed of the Chief Justice and Mr. Justice Townshend, giving judgment for the respondent, whilst the third judge, Mr. Justice Weatherbe, was of opinion that the plaintiffs were entitled to relief, and therefore dissented from the judgment of the court.
From this judgment of the Supreme Court of Nova Scotia the present appeal has been taken.
There can be no doubt that as between the appellants and Johanna Duggan, the mortgagor, the appellants would have been entitled to the relief prayed; the proof of the mistake did not depend on mere oral evidence but was clearly established by the informal agreement to give the mortgage contained in the letter of the 8th of July, 1878, written by Mrs. Duggan to the appellants, which was supplemented by the oral evidence of Mrs. Duggan, and also by that of Mr. Justice Ritchie, Mr. Justice Meagher and Mr. Doull, showing how the mistake occurred. The contention of the respondent Cogswell is that the appellants are not entitled to enforce this equity against him, claiming as he does as an execution creditor under an execution issued upon a judgment, which had been duly registered pursuant to the 21st section of chapter 84 Revised
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Statutes of Nova Scotia (5th series). In other words that this equity, even though it may have been an equity clearly enforceable against Mrs. Duggan, was cut out and annulled by the force of the registry law.
The statutory enactments material to be considered and upon which the decision of the appeal must depend are the following. Section 21 of the Revised Statutes chapter 84, (5th series) enacts that:—
A judgment duly recovered and docketed shall bind the lands of the party against whom the judgment shall have passed from and after the registry thereof in the county or district wherein the lands are situate as effectually as a mortgage, whether such lands shall have been acquired before or after the registering of such judgment; and deeds or mortgages of such lands, duly executed but not registered, shall be void against the judgment creditor who shall first register his judgment.
Section 1 of chapter 124 of the same series, entitled "of the sale of lands under execution" provides that:
Any judgment recovered in the Supreme or County Courts, any final decree of the Supreme Court, in any matter or suit requiring payment of money by either party, shall bind the real estate of the debtor from the time said judgment or decree shall be recorded in the books of registry for the county or district wherein such real estate is situate, and the release from a judgment or decree of part of any lands or hereditaments charged therewith, shall not affect the validity of the judgment or decree as to the lands or hereditaments remaining unreleased, or as to any other property not specifically released, without prejudice nevertheless to the rights of all persons interested in the lands, hereditaments or property remaining unreleased, and not concurring in or confirming the release, provided that no lands shall be levied upon until one year after the registry of the judgment or decree as aforesaid.
Section 6 of the same act is as follows:—
A judgment recorded shall bind the interest of any party or corporation benefically interested in lands held in trust for him or for said corporation, and the same may be taken in execution for the payment of his debts, or the debts of said corporation, in the same manner as if the said party or corporation were seized or possessed of such lands.
Section 12 provides for the sale by the sheriff of lands seized under execution, and section 13 requires
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the sheriff first to sell such portion of the lands seized as the execution creditor may require him to sell. Section 14 of the same act enacts that:
The sheriff shall deliver to the purchaser, or his agent or nominee, a deed of such lands, which shall be sufficient to convey to the purchaser all the interest of the execution debtor in the lands therein described, whether situate in his bailiwick or in an adjacent county, as hereinafter mentioned, subject to prior incumbrances.
The court below have held that the appellants' equity to have their mortgage reformed as claimed in the action so as to make it comprise the whole of the Mount Pleasant property which Johanna Duggan agreed to mortgage to them instead of a mere undivided one sixth part was cut out and avoided by the registry of the respondent's judgment by force of that part of section 21 of chapter 84 which says that "deeds or mortgages of such lands duly executed but not registered shall be void against the judgment creditor who shall first render his judgment."
In so deciding the Supreme Court of Nova Scotia followed its previous decision in the case of Grindley v. Blakie, in which case Mr. Justice Weatherbe also dissented from the judgment of the court. In an unreported case of Miller v. McKeen the same question arose. That case was heard before Sir John Thompson, then a judge of the Supreme Court of Nova Scotia. In this case of Miller v. McKeen the facts were as follow:
Lands purchased with partnership monies and for partnership purposes had been conveyed by a deed made to one partner only. Judgment was afterwards recovered against him but not against the other partner. The partnership was dissolved and was wound up in a suit brought for that purpose. It was contended that the entire interest in these lands was bound by the
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registration of the judgment, and that the individual creditors of the judgment debtor were entitled to the entire proceeds of those lands which had been sold under an order of the court, all persons interested being parties to the suit. Mr. Justice Thompson in giving judgment used the following language:
Finally, I have to deal with the contention that the attachment and judgment creditors are entitled to liens on all lands standing in the name of George McKeen, irrespective of the rights of plaintiff, or of the partnership creditors, by virtue of sec. 22 of ch. 79 R. S., 4th series, "Of the registry of deeds and encumbrances affecting lands." That section reads: "A judgment duly recovered and docketed shall bind the lands of the party against whom judgment shall have passed, from and after the registry thereof * * * as effectually as a mortgage," &c., &c. My reading of this section is that the judgment creditor can only take the interest which the judgment debtor had. The lands which the judgment binds are lands of and belonging to the judgment debtor, and the judgment is to bind as effectually as a mortgage which the debtor might have a right to make. I cannot treat the judgment as being as effectual as a mortgage made in fraudulent disregard of the rights of others in the lands, and taken by a mortgagee without notice. I cannot suppose that the legislature meant to take away the rights of those who are not parties to the judgment or to confer on the creditor, by the involuntary lien, a larger right than he could get by any voluntary lien which the debtor could lawfully give.
I am of opinion that the appeal should be allowed, for reasons the same as those which are given in the judgments of Mr. Justice Weatherbe in the present case and in Grindley v. Blakie, and by Mr. Justice Thompson in Miller v. McKeen.
It has always been considered that a judgment creditor stands in a different and less advantageous position than a purchaser acquiring title without notice of the prior equitable interest of a third party. In England judgments were originally not a specific lien on the lands of the debtor at all, but bound them for the purpose of an elegit under the Statute of Westminster. Subsequently under the statute of 4 & 5 W. & M. ch. 20,
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it was required in order to have even this effect of binding lands as regards subsequent purchasers that the judgment should be docketed. Whilst this was the state of the law it was held that the elegit creditor could only take subject to the outstanding equities of third persons which had been acquired anterior to the docketing of the judgment. In Benham v. Keane.
Wood V.C. says:—
The first thing to be considered is the exact extent of the rights of a judgment creditor irrespective of the Act 1 and 2 Vic., ch. 110. In order to give him any right against land, the primary requisite is that the land sought to be affected should be the property of the debtor, and accordingly one of the earliest questions which arose was, what was the position of a judgment creditor with respect to lands which the debtor had alienated by a contract effectual in equity, but not perfected at law? As to this it was settled by an early decision, Finch v. The Earl of Winchelsea (1), that the judgment creditor takes nothing. The court will restrain proceedings against the legal ownership at the suit of the person who is entitled in equity under the contract. In the view of a court of equity the judgment creditor has no interest in the land so situated.
Then by the 13th section of 1 & 2 Vic., c. 110 (English) a statute now repealed, a judgment creditor in England was for the first time placed in a position to acquire a specific lien by registering his judgment in the Court of Common Pleas. The statute provided that such registration should operate as a charge on all lands over which the judgment debtor should at the time of entering up judgment or afterwards have any disposing power which he might without the consent of any other person exercise for his own benefit. In cases which arose under this enactment it was contended that this provision gave a judgment creditor who had registered his judgment priority over equitable interests and charges, created or arising prior to
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his judgment, of which he had no notice. In the case of Whitworth v. Gaugain, heard before Sir James Wigram, V.C., and subsequently before Lord Cottenham on appeal, this question of priority arose between an equitable mortgagee by deposit of title deeds and a subsequent registered judgment creditor. It was held, however, by both those eminent judges, that under the statute, as before, the charge of the judgment creditor was to be subordinated to all equities to which the land was subject in the hands of the judgment debtor at the date of the registration, and that the absence of notice was immaterial. In Beavcn v. Lord Oxford, the decision in Whitworth v. Gaugain was approved and followed. Kinderley v. Jervis was a decision to the same effect, and in Benham v. Keane already referred to Whitworth v. Gaugain (1) was recognized as correctly expounding the law. In Eyre v. McDowell an Irish appeal in the House of Lords heard before Lords Cranworth and Wensleydale, a case which is, in my opinion, a governing authority on the present question, and to which I shall have occasion to refer later on, this general principle that a judgment creditor is entitled to avail himself for the purpose of satisfying his debt of just what his debtor owns, subject to all equitable claims of third persons and no more, was recognized and acted on, and, indeed, formed the foundation of the judgment, and in this case both Lord Cranworth and Lord Wensleydale point out in strong language the fairness and justice of such a state of the law, and the grossly inequitable consequences which would follow if a judgment creditor were to be put on the same footing as a purchaser. Further this principle
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has not been confined in its applications to questions of priority arising between judgment creditors and prior equitable charge holders and claimants under elegits or registered judgments, but when lands are sold under writs of fieri facias, as is the practice in all the provinces of the Dominion in which English law prevails it has been held by the Privy Council that the sheriff can only sell and give a title to a purchaser subject to such prior equities as the land was bound by in the hands of the debtor. Wickham v. The New Brunswick Railway Co.. Again in the case of sales under execution of chattel interest the law is the same. Langton v. Horton. As regards the course of decision in the Province of Ontario the same doctrine has always been acted upon. As far back as 1853 in a case of McMaster v. Phipps arising upon a statute which was a verbatim reproduction of the English act 1 & 2 Vic., c. 110, sec 13, and which much resembled the present in the circumstances which gave rise to it, two of three judges before whom the cause was heard adopted this ground as one of the bases of their decision. It is true that in Watts v. Porter in which the question for decision was as to the relative priorities of an equitable chargee of stock and a judgment creditor, the Court of Queen's Bench decided the other way, but Mr. Justice Erle dissented, founding his judgment on Whitworth v. Gaugain and other kindred cases, and this dissenting judgment is said in Beavan v. Lord Oxford to have proceeded on a correct view of the law. These authorities then are quite conclusive as to what the state of the law was when the enactment now embodied in sec. 21 of ch. 84 was passed. The foundation
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of the principle on which the rule of law established by these cases proceeds is most forcibly pointed out in the cases before quoted, and is one which must commend itself to any one who reflects a little on the different positions of a purchaser or incumbrancer for valuable consideration and a judgment creditor. The first has contracted for a particular interest in the land; a judgment creditor originally placed his reliance on the personal credit and solvency of his debtor and his right against the land is not founded on any contract but is only part of his remedy. It may here be said that even as regards purchasers, those who have contracted not for the land itself but only for such right, title and interest as their grantor might have, are not, under the registry laws, entitled to priority over purchasers claiming under antecedent unregistered deeds. For this proposition that where a deed purports to convey only the interest of the grantor, in other words is a mere quit claim deed, registration of it will not cut out a prior unregistered deed and postpone the grantee claiming under it many decided cases, of which I refer to a few, may be cited. Goff v. Lister; Bethune v. Caulcutt; Graham v. Chalmers; Rice v. O'Connor; Farrow v. Rees; and Jones v. Williams are all authorities to this effect. One of the points decided in Benham v. Keane already referred to, well illustrates the position of a judgment creditor as distinguished from a purchaser; in that case one of the questions which arose was a contest for priority between two judgment creditors who had registered their judgments under the Middlesex Registry Act. The creditor who was second in order of date on the registry claimed priority over
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the first registered judgment on the ground that the creditor under the latter had notice of his judgment. It was held that, as regards a judgment creditor, notice to him of a prior judgment or conveyance was immaterial. It must therefore follow, if the judgment under appeal is to be maintained, that a registered judgment creditor will be actually in a better position than a purchaser or incumbrancer for value, inasmuch as the latter would undoubtedly be postponed if it were proved that he had had notice of a prior mortgage or conveyance.
Such being the state of the law prior to the enactment we have to construe, and the rational ground on which the decisions establishing it proceeded, it is proper in proceeding to construe the enactment under which the respondent claims to have priority over the appellants' equity to consider what was the object the legislature had in view in providing, as it has done by section 21 of chapter 84, for the registration of judgments. It must be apparent that the only objects which, consistently with the general policy of the registry laws and with the rights of purchasers as distinguished from those of judgment creditors, the legislature could have had in view was the protection and security of purchasers under execution sales by enabling them to ascertain from the registry what incumbrances by way of judgment the lands were charged with, and possibly also the protection of judgment creditors not against prior purchasers, but against fraudulent conveyances intervening subsequent to their judgments and before execution. It never could have been intended to put judgment creditors on the same footing as purchasers unless we are to ascribe to the legislature the design of arbitrarily doing away with the distinction which, as justice and reason require, should always be made between a purchaser
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or mortgagee who contracts to get the land itself and a mere creditor who allows the debtor to become liable to him, trusting to his personal credit, or in other words to what the debtor may voluntarily pay him, or to what, if forced to have recourse to his legal remedy, he may be able to get out of the debtor's exigible property. That I am fully justified in making these observations I shall show hereafter by some quotations from the opinion of Lord Cranworth in the case of Eyre v. McDowell.
In this case of Eyre v. McDowell (1), which arose under the Irish Registry Laws, a judgment creditor who had registered his judgment claimed priority over a prior unregistered charge created by an instrument which was clearly within the registry laws and ought as against a purchaser to have been registered. This claim of priority was based on the statute 13 & 14 Vic. ch. 29 (Ireland) ss. 6 and 7.
The material effect of section 6, as stated in the opinions of Lords Cranworth and Wensleydale in Eyre v. McDowell (1) from which I transcribe it, was as follows:
Where any judgment shall be entered up or decree or order shall be made after the passing of the act and the creditor shall know or believe that the debtor is seized or possessed of any lands, or has a disposing power over any lands, it shall be lawful for him to make and file in the court in which the judgment has been entered up, or the decree or order has been made, an affidavit stating among other things the name of himself and the name of his judgment debtor, the amount of the sum recovered and the particulars of the lands of which the debtor is seized or possessed and to register such affidavit in the office for the registry of deeds by depositing there an office copy of the affidavit which shall be entered in the book and indexes of the office as if it were the memorial of a deed.
And the clause goes on to provide that for the purpose of such entries the judgment creditor shall be deemed the grantee, the judgment debtor the grantor and the amount of the debt the consideration. By section 7 it
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was enacted that the registration shall operate to transfer to and vest in the creditor "all the lands mentioned in the affidavit for all the estate which the debtor had therein, subject, however, to redemption on the payment of the amount of the judgment debt, and that the creditor shall in respect of such lands have all such rights as if an effectual conveyance to him of all such estate and interest had been made, executed and registered at the time of registering the affidavit." Section 5 of the Irish Registry Act is in the judgments in Eyre v. McDowell epitomised as follows:—
Deeds unregistered shall be deemed to be fraudulent and void not only against registered deeds, but also as against creditors by judgment claiming against the party so registering.
This section 5 of the Irish Act is rather clumsily expressed and a hasty and superficial reading of it might convey the impression that unregistered conveyances were thereby avoided as against judgment creditors of the grantor, as it is contended here section 21 of chap. 84 has avoided them, but on an attentive consideration of its terms it will appear clearly enough that what was meant was only that which Lord Cranworth, in the summary of it which he gave in his judgment, and which I have just extracted, says was its effect, namely, that an unregistered deed should be void not only against a grantee claiming under a subsequent registered conveyance but also against the judgment creditors of such grantee. The words "lands contained or expressed in such memorial registered as aforesaid," show this to be the proper construction, the only memorial registered being that of the subsequent deed. At all events the very fact of the controversy which the House of Lords was called upon to decide in Eyre v. McDowell (2) having arisen implies that this was the proper construction of the 5th section of the
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6th Anne, since there would otherwise have been no necessity for the judgment creditor to resort to the later statute in order to support his claim to priority.
Then under section 7 of 13 & 14 Vic. cap. 29, the registry of the affidavit operating to transfer to and vest in the judgment creditor all the lands mentioned in the affidavit registered for all the estate which the debtor had therein, and it being declared thereby that the judgment creditor should have in respect of such lands the same rights as if an effectual conveyance to him of all such estate and interest had been made, executed and registered at the time of registering the affidavit, this enactment, taken in conjunction with the prior statute, (the General Registry Act, of the 6th Anne cap. 2, sec. 5,) by which the rights of a purchaser registering a conveyance subsequent in date to a prior unregistered conveyance by the same grantor are declared to be that he shall have priority over such antecedent unregistered deed, and that it shall be avoided in his favour, we have presented by these Irish enactments, the construction of which was in question in Eyre v. McDowell, exactly the same question which is presented in the present case in which we are called on to construe the Nova Scotia Act, cap. 84, sec. 21. The two enactments are equivalent in their terms unless, indeed, it may be said that the Irish statutes were stronger in favour of the contention of the judgment creditor than the Nova Scotia statute since the former clearly pointed out in the 5th section of the earlier act that the unregistered deeds to be avoided were deeds prior in date, whilst the Nova Scotia act leaves it doubtful whether by the words, "deeds or mortgages duly executed but not registered" prior or only subsequent deeds and mortgages were intended to be referred to.
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In Eyre v. McDowell the Irish Court of Appeals had held the judgment creditor entitled to priority, thus overruling a prior decision of the same court in a former case of McAuley v. Clarendon.
Now I would call attention to a general observation with which Lord Cranworth prefaces his speech in Eyre v. McDowell (1); he says:
It it hardly possible to suppose that the legislature could have intended so to alter the relative positions of debtor and creditor as to enable the latter to satisfy himself out of property in which the former had no disposing power. If for any reason such a change had been contemplated we should surely have had some recital indicating an intention to make such an unusual deviation from principle.
Again in McAuley v. Clarendon (2), in the Irish Court of Appeals, Lord Justice Blackburn, whose judgment was in all respects approved by the House of Lords, had expressed the same opinion in even more forcible language. The Lord Justice there, after adverting to the principle that the judgment creditor was in justice and equity and according to the authorities prior to the statute entitled to make available for his satisfaction only the beneficial interests of his debtor, thus proceeds:
This is all plain according to the settled principles of equity and being so it is sought to be subverted by an Act of Parliament under whose provisions the judgment is registered. If such were the effects of that act I have no hesitation in saying that never was there any enactment so essentially unjust or subversive of the established rules of law and the rights of parties.
And we find Lord Wensleydale, of whom it may be said (as many of his decisions indicate) that no judge in modern times was more inclined to a strict and literal construction of acts of parliament, calling indeed the rule of strict construction, "the golden rule," joining in these denunciations of a construction which would put a judgment creditor on an equal footing
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with a purchaser. The actual ratio decidendi in Eyre v. McDowell, is thus tersely put by Lord Cranworth:—
These enactments [referring to sections 5 and 8 of the 6 Anne ch. 2] will be found not to affect the question in dispute. By the joint operation of this act and the act 13 & 14 Vic. ch. 29 the registered affidavit gives to the judgment creditor priority over all prior unregistered deeds. Be it so. It gives him, however, only the same priority as he would have had if the debtor had executed to him a mortgage of the lands enumerated in the affidavit, i.e., a mortgage of such interest as was enjoyed by the debtor beneficially, such interest as might have been taken in execution; the debtors' interest in the lands after satisfying the equitable claims of the unregistered mortgage. The registration of the affidavit gives to the respondent a right against all persons claiming subsequently to the registration; and by the effect of the 8th section against all voluntary settlements executed subsequently to the date of the judgment or order.
I am of opinion that this decision exactly applies to the enactment which is involved in the present case. In the first place what is it that section 21 says shall be bound by the judgment when registered? It is "the lands of the party against whom the judgment shall have passed." This, interpreted according to the general law and in the light of the numerous judicial decisions before referred to, can only mean the beneficial interest of the debtor in those lands subject to all outstanding interests, charges or liens whether constituted by instruments susceptible of registration or not. This would sufficiently appear from the clause itself construed in the way I have just mentioned, but it is further borne out by the context of the Revised Statutes contained in other chapters in pari materiâ. For what purpose are the lands to be so bound? Clearly for the purpose of the execution to be issued
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on the judgment. Lands in Nova Scotia are not extended under a writ of elegit but for the purposes of satisfying a judgment are sold by the sheriff under a writ of fieri facias pursuant to a statute which applies to all the colonies. Then in chap. 124 of the same series (5th) of the revised statutes which is entitled "of the sale of lands under execution," we find contained in sections 1 and 6 (which I have set out in extenso in the early part of this judgment) provisions material to the present question. Section 1 declares that the lands to be bound shall be the real estate of the debtor, and section 6 shows that what is to be bound by a registered judgment in the case of lands to which the judgment debtor's title is equitable is his beneficial interest. Then section 14 of the same chapter provides that the sheriff having sold the lands
shall deliver to the purchaser, or his agent or nominee, a deed of such lands which shall be sufficient to convey to the purchaser all the interest of the execution debtor in the lands therein described.
And section 15 declares that:
The sheriff's deed shall be presumptive evidence of the execution debtor's title having been thereby conveyed to the purchaser.
Now even without the high authority of the decision in Eyre v. McDowell, and without going beyond the statute book of Nova Scotia, it must surely be apparent from these enactments that there could have been no object in providing that the judgment should bind anything more than the judgment creditor would have had a right to have sold by the sheriff under execution, and what the sheriff may so sell, it is clearly enacted, shall be only the interest of the execution debtor. These enactments seems to me to make the case one much stronger in favour of the appellant than was the case of Eyre v. McDowell (2).
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If it be said in answer to this that the effect of a mortgage attributed by section 21 to a registered judgment was not merely to bind the lands for the purpose of legal execution, but also to give the creditor a right to equitable execution and therefore the equitable charge might be larger than the legal charge for the purpose of legal execution, a twofold reply may be given to such arguments.
First inasmuch as by section 124 the sheriff can sell equitable interests there would be no necessity to resort to equitable execution, and indeed the very first allegation of a bill in equity for such relief, that the plaintiff could not have execution at law, would, having regard to section 124, be untrue.
Next, if a court of equity should have jurisdiction, and if that jurisdiction were to be invoked for the purpose of having the charge of the judgment raised by a sale of the lands bound by it, the inquiry would still be the same. What lands were bound by that charge? The answer to this question would clearly be that which courts of equity have so often given in such cases, only the debtor's beneficial interest.
It is said, however, that the last paragraph of section 21, "And deeds or mortgages of such lands duly executed but not registered shall be void against the judgment creditor, who shall first register his judgment," enlarges the effect of the former part of the section, and gives the same effect to a recorded judgment as regards prior unregistered deeds and mortgages as is attributed by section 18 to the registration of a purchaser's conveyance. I am clearly of opinion that this construction is inadmissible. As I have already pointed out these words are not so strong as were the conjoined provisions of the two statutes under consideration in Eyre v. McDowell. The words are not "prior deeds and mortgages of such lands," but deeds
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and mortgages generally, which is quite consistent with an intention on the part of the legislature to avoid only subsequent deeds and mortgages, a construction which would have the effect of showing clearly that conveyances or mortgages intermediate between the registry of the judgment and the sale under execution should be void. Without this declaration the provision that the lands should be bound would probably have been sufficient for the purpose, but still the legislature may have deemed it better to give a clear expression to this consequence, which would, as I have said, have probably followed without more by the enactment that the lands should be bound by the registry.
The decided cases and the principles established by those authorities already fully referred to require the adoption of this construction, and, as was held by Mr. Justice Thompson in his judgment in the case of Miller v. McKeene, I consider it inevitable, even if we should confine ourselves to section 21 alone interpreting it in the light of the general law and the principles of justice, and with a due regard to that which is manifestly the general policy of all registry laws.
There is, however, what I must repeat appears to me a conclusive argument in favour of this view, deducible from the provisions relating to the sale by the sheriff and the restricted effect of his deed to pass only the debtor's beneficial interest.
It is further said, however, that the words "but not registered" in section 21 show that what was meant was to avoid deeds and mortgages executed anterior to the registry of the judgment and preclude the construction I have just indicated restricting these words to instruments which might be executed subsequent to the registry.
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I cannot think there is any force in this; at most the restriction to unregistered deeds gives rise to an inference or implication, or I might rather say to speculation, as to the intention of the legislature in thus confining the avoidance to unregistered deeds, but I think this wholly insufficient to overcome the arguments in favour of the construction I adopt, and here again, I say, that the difficulties to be overcome in Eyre v. McDowell were far greater than any which are created here by this specification of unregistered deeds. The word "prior" is in no sense the correlative of the word "unregistered" so as to require us to supply it, and I can find no warrant, either in authority or principle, for interpolating the words "former" or "prior" or "antecedent" or some equivalent expression before the words deeds or mortgages merely from the use of this word "unregistered" when all reason, justice and authority require me to read the same words as limited in their application to instruments subsequently executed.
I admit that I can assign no rational meaning to a distinction between subsequent deeds which are unregistered and those which might happen to be registered, and that such a distinction appears to me to be purely arbitrary, but this consideration is quite insufficient to authorize a re-modelling of the statute by the introduction of words not expressed in it, and that in the very teeth of what, upon every just and reasonable presumption, we must conclude to have been the intention of the legislature.
For these reasons I come to the same conclusions as those which were arrived at by Mr. Justice Weatherbe in the present case and by the same learned judge in Grindley v. Blakie. and by Mr. Justice Thompson in Miller v. McKeen.
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It is right that I should notice another argument advanced on behalf of the appellants and state the reason why it does not appear to me to be admissible.
It was said that the appellants' equity to have their mortgage deed reformed by the insertion of the omitted parcels is one not within the registry laws at all, in other words that it was an equity insusceptible of registration, and therefore one which it must be presumed the statute was intended to apply to, and consequently one not liable to be avoided by the registration of a subsequent deed.
I concede that this argument ought to prevail in a case like Miller v. McKeen where there was a mere equity not arising directly from any written instrument which might have been registered. The authorities on this head are conclusive in a case properly arising within the principle. Sumpter v. Cooper; Re Burke's Estate; McMaster v. Phipps. But in a case like the present where the letter by which Mrs. Duggan agreed to give the mortgage was a writing which might have been registered, and which, however informal, was in equity equivalent to a mortgage, I cannot agree that such an argument should prevail.
On the whole, on the ground first stated, I am of opinion that the appeal should be allowed with costs and a judgment entered in the Supreme Court of Nova Scotia directing that the appellants' mortgage be reformed as claimed by them.
FOURNIER J.—was of opinion, for the reasons given by the Chief Justice, that the appeal should be dismissed.
TASCHEREAU J.—concurred in the appeal being dismissed.
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PATTERSON J.—Mrs. Duggan owed money to the appellant. On the 8th of July, 1878, she wrote to him proposing to give him a mortgage on her property at Mount Pleasant for £3,000 and a mortgage on other property for £2,000. The mortgage was made on the 1st of September, 1878, but although the solicitor who prepared it understood that all Mrs. Duggan's property was to be covered, a mistake was made in describing a part of the Mount Pleasant property, by which it happened that one undivided sixth part of one parcel, in place of the entirety, was conveyed. It need scarcely be said that although the mortgagee failed to get by virtue of the deed the legal estate in the omitted five-sixths of the piece of land he became equitably entitled to the whole, and that as to that parcel, as well as to the other mortgaged lands, the title of Mrs. Duggan was in equity reduced to the equity of redemption.
That was the state of the affair on the 27th of September, 1887, when the respondent, Dr. Cogswell, recovered a judgment against Mrs. Duggan and registered it. The mortgage had, of course, been registered.
Under his judgment Dr. Cogswell was undeniably entitled to take in execution, by whatever process was appropriate, all the interest of Mrs. Duggan in the Mount Pleasant property and the other mortgaged property—that is to say her equity of redemption, for she had not at that date been foreclosed. But he insists that the effect of the registry law is to enable him to take also the legal estate which, nine years before the recovery of his judgment, had been in equity charged with the debt but had been by an oversight omitted from the mortgage deed.
For this he relies on a clause in the Registry Act which says that:—
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A judgment duly recovered and docketed shall bind the lands of the party against whom the judgment shall have passed, from and after registry thereof in the county or district wherein the lands are situate, as effectually as a mortgage, whether such lands shall have been acquired before or after the registering of such judgment; and deeds or mortgages of such lands, duly executed but not registered, shall be void against the judgment creditor who shall first register his judgment.
That clause contains two enactments; let us look at them separately.
If Dr. Cogswell's judgment had happened to be against Mr. Miller instead of Mrs. Duggan he could have enforced it against Mr. Miller's interest in the Mount Pleasant property, which would have appeared, by proof of what has now been proved, to be the whole value of the property subject nominally to an equity of redemption, but only nominally because the property was not worth the amount of the mortgage. The lands of Mrs. Duggan included only this nominal equity of redemption and that was all that, as against her, the first part of the clause had to operate on.
Then we pass to the second enactment. "Deeds and mortgages of such lands—" What lands? "The lands of the party against whom the judgment shall have passed"—the lands that are bound as effectually as if, at the time of the registration of the judgment, the judgment debtor had made a mortgage of them. Not a mortgage to a purchaser for value without notice of the equity of Mr. Miller; nothing like that is said or implied; but a mortgage of the interest the mortgagor had power to convey, and which, if she had made a mortgage to the debtor, we must assume to be all that she would have professed to convey. "Deeds and mortgages of such lands, duly executed but not registered, shall be void against the judgment creditor who shall first register his judgment." That is not a very intelligible sentence even at first sight, and when we come to see, as
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we have seen, what is meant by "such lands," the perspicuity is not thereby increased. We cannot hold the meaning to be that a man who has in good faith, and violating no rule of law or morals, bought a piece of land is to have his title divested or charged with another man's debt merely because the judgment creditor happens to get to the registry office before him without reading into the enactment something that is not found there. We need not complicate the question of construction by any of the considerations of equity which affect the titles of Mrs. Duggan or Mr. Miller. The contention is that an out and out sale of land leaves that land liable, if the deed is not registered, to be bound as the land of the person who has ceased to own it. It is impossible so to read the first enactment of the clause, and therefore that land cannot be "such land" under the second enactment. The necessity for finding a meaning for everything in an act of parliament is not absolute. The general rule is to find a meaning if possible, and further, that when one of two meanings would lead to an injustice which the legislature would seem not to have intended we should choose the other. An illustration of this rule is found in the case of Ex parte Wicks, where the Chief Judge in Bankruptcy adopted one meaning, a literal one, of a statutory provision, and the Court of Appeal adopted a different one, Brett L.J., observing "I think we have no right to reduce an act of parliament to a wicked absurdity."
In the court below the effect of the enactment under consideration has been discussed from opposite points of view by Mr. Justice Townshend and Mr. Justice Weatherbe. I agree with the latter learned judge in the result of his reasoning and probably in the reasoning itself, though I am not quite sure that I would put it in precisely the same way. We must
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bear in mind that we are dealing not with a bankruptcy law, under which transactions are sometimes avoided for reasons of policy connected with the equal distribution of a bankrupt estate among the creditors, but with a registry law the object of which is to afford to persons dealing with lands information as to the state of the title to the particular soil they are purchasing or taking as security. A judgment creditor is not a purchaser and he gets security, by virtue of this statute and of another which regulates the sale of lands under execution, upon the lands of his debtor, not upon any land or any interest in land that his debtor has parted with before the registration of the judgment. At least that is all he gets unless this second enactment gives him more. An earlier section of the registry act declares that "deeds or mortgages of lands duly executed but not registered shall be void against any subsequent purchaser or mortgagee for valuable consideration who shall first register his deed." It is to be noted that the effect now claimed for the registration of the judgment might have been appropriately provided for by inserting two or three words in this section, making the unregistered instrument void against any judgment creditor, or subsequent purchaser or mortgagee who should register his judgment or deed. That, however, was not said nor, as I should infer, was it intended. What was done was to frame this second enactment of the clause we are considering in terms generally similar to those of the earlier section, but with the important difference that it relates expressly to deeds of "such lands," or of the lands just declared to be bound by the judgment, viz., the lands that belong to the judgment debtor. Now what does it say of deeds of those lands which were still the property of the judgment debtor though liable to be taken in execution? It explains what is
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meant by being bound by the judgment. The owner may deal with them but they may be followed by the execution. Deeds of them shall be void against the creditor who first, that is before the sale of them, registered his judgment. The obvious argument in reply to this is that first here does not mean before the conveyance but before the registration of it? If that is meant it is not so expressed as to exclude the other construction. "Shall first register" is, both in this and in the earlier clause to which I have adverted, a very loose expression. We understand the earlier section, in spite of its looseness, to mean that a subsequent registered deed is to prevail against a prior unregistered one, because we are aided by the policy of the registry law. The known object of registration is carried out by that understanding. But when it is sought to charge one man's property with the debt of another and to make it liable to be taken in execution for that debt, no principle of bankruptcy law intervening, we ought not so to construe the statute unless compelled to do so by the clear force of its language.
It will be said that by referring the word "first" to the making of a deed and not to the registration of it we silence the words "but not registered." Perhaps we do; but if those words are to be heard they should give no uncertain sound. If we let them speak, and read the enactment as declaring that a judgment shall prevail against an unregistered deed of land provided the judgment was registered before the deed was made, we give effect to every word of the sentence. An unexpected result that might follow would be that by registration before the land was seized in execution the deed would regain its priority, because a judgment prevails only by means of the execution, and to be void against a judgment practically means to be voidable by seizure of the land in execution. I do not suppose
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the legislature meant to say that the deed should be void against the execution only in the event of its being allowed to remain unregistered until the land was seized, and I do not advocate the adoption of that rendering as giving the true effect of the statute. I merely point to it as more consistent with the language as we find it, and as a construction that would do less injustice than the other reading which requires us to supply by intendment what the enactment falls short of expressing. I am inclined to think that the confusion may have arisen from following too literally the wording of the earlier section by using the words "duly executed but not registered," which, unprecise as they are in the one clause, seem out of place in the other.
On these grounds, and for the reasons fully given in the judgment of Mr. Justice Weatherbe, I think we ought to adopt his conclusions rather than the view acted on by the learned Chief Justice at the trial and ably supported in the judgment of Mr. Justice Townshend, and should allow the appeal.
Appeal dismissed with costs.
Solicitors for appellants: Borden, Ritchie, Parker & Chisholm.
Solicitors for respondents: Gray & Mac Donald.
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