Cameron v. Harper, (1892) 21 SCR 273

Supreme Court of Canada

Cameron v. Harper, (1892) 21 S.C.R. 273

Date: 1892-06-28

John Cameron and others (Defendants) Appellants;

and

Thaddeus Harper and others Defendants;

and

Ezekiel Harper (Plaintiff) Respondent.

1891: November 18; 1892: June 28

Present: Sir W. J. Ritchie C.J. and Strong, Taschereau, Gwynne and Patterson JJ.

On Appeal from the Supreme Court of British Columbia.

Executor—Action against—Legacy—Trust—Claim on assets—Charge on realty.

T. H. and his brother were partners in business and the latter having died T. H. became by will his executor and residuary legatee. A legacy was left by the will to E. H., part of which was paid and judgment recovered against the executor for the balance. T. H. having encumbered both his own share of the partnership property and that devised to him one of his creditors, and a mortgagee of the property, obtained judgment against him and procured the appointment of receivers of his estate. E. H. then brought an action to have it declared that his judgment for the balance of his legacy was a charge upon the moneys in the receivers' hands in priority to the personal creditors of T. H.

Held, affirming the judgment of the court below, that it having been established that the moneys held by the receivers were personal assets of the testator, or the proceeds thereof, E. H. was entitled to priority of payment though his judgment was registered after those of the other creditors.

Held also, that the legacy of E. H. was a charge upon the realty of the testator the residuary devise being of "the balance and remainder of the property and of any estate " of the testator, and either of the words " property " and " estate " being sufficient to pass realty. This charge upon realty operated against the mortgagees who were shown to have had notice of the will.

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APPEAL from a decision of the Supreme Court of British Columbia reversing the judgment at the trial in favour of the respondent.

This was an action brought to have a judgment of the plaintiff against the defendant Thaddeus Harper, executor of the estate of one Jerome Harper, declared a charge upon the assets of said estate in priority to the mortgages and judgments of the other defendants. The circumstances which gave rise to the action were as follows:—

In 1871 and for many years previously Jerome and Thaddeus Harper, two brothers, had carried on in British Columbia, and also in the neighbouring States and Territories, the business of stock-raising, and had accumulated the ownership of much land, cattle and horses, and some plant and machinery. The land in British Columbia was all registered in the sole name of Jerome but the whole property, land and stock live and dead, was owned in equal shares by the two brothers in partnership ; and they were reputed to be wealthy, worth $300,000 in British Columbia. The value of the personal estate at the time of Jerome's death exceeded $80,000.

In November, 1874, Jerome died. By his will he appointed the defendant, Thaddeus, sole executor, and after bequeathing several legacies, among them $10,000 to the plaintiff Ezekiel, another brother, he gave the residue of all his estate, real and personal, to the defendant, Thaddeus, for his own benefit. Thaddeus entered into possession of the whole property and has ever since dealt with it as being entirely his own. In or about the year 1875 he paid the plaintiff $5,000 on account of his legacy of $10,000, and has paid, or promised to pay, interest on the balance ever since. Ezekiel frequently asked Thaddeus for payment of the balance of the legacy but never took any steps to en

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force payment until December, 1888, when he commenced an action in which, Thaddeus admitting the amount, he obtained a judgment on the 24th January, 1889, for $6,865, legacy, interest and costs.

During the 14 or 15 years since the testator's death during which Thaddeus had, as has been said, dealt with the whole partnership property, his own original share as well as that which he derived from Jerome's will, he had very heavily encumbered the whole. He had between March, 1885, and March, 1888, created five mortgages aggregating $141,750 of principal moneys on which there was a large arrear of interest, and was indebted to other creditors as well. Among other speculations Thaddeus purchased a mine from one John Cameron for $50,000, for which sum he gave his own promissory notes. He became involved in financial difficulties and on the 10th day of December, 1888, Cameron recovered a judgment on his notes for the sum of $50,029.00. The mortgagees and other creditors of Thaddeus also sued and recovered judgments against him.

On the 19th day of December, 1888, Cameron obtained the appointment of the receivers J. C. Prevost and H. S. Mason. They took possession of the estate and subsequently it was sold for $225,000 to John Galpin who insisted, however, that the mortgages on the real estate should be paid off by him, and only paid over to the receivers the balance after payment of the mortgages.

When it was discovered that there would be a deficiency of assets to pay all the creditors of Thaddeus the present action was commenced, in which it was prayed that the Ezekiel's claim might be declared a charge on the fund in the hands of the receivers prior to the claim of the personal creditors of Thaddeus, and for an injunction to prevent the receivers from distributing the fund without payment of Ezekiel's claim.

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The action was tried before the Chief Justice who gave judgment for the defendants, dismissing the action with costs. The plaintiff thereupon appealed to the full court where the decision of the Chief Justice was reversed and judgment was given against the present appellants. From that order the present appeal is brought to this court.

Christopher Robinson Q.C. for the appellant cited In re Jane Davis[1] ; Kitchen v. Ibbetson[2] ; Culhane v. Stuart[3].

S. H. Blake Q.C. for the respondent referred to Wedderburn v. Wedderburn[4] ; Pennell v. Deffell[5] ; Harford v. Lloyd[6] ; In re Hallett's Estate[7].

The judgment of the court was delivered by:—

STRONG J.—This action was instituted by the respondent Ezekiel Harper to obtain payment of the residue remaining unpaid of a legacy of $10,000 bequeathed to him by the will of of his brother Jerome Harper. The defendants were Thaddeus Harper, the executor of the testator, and certain judgment creditors of the executor who have recovered judgment against him, de bonis propriis, in respect of personal demands and not for any debts or liabilities of the testator. These judgment creditors having obtained the appointment of receivers and these receivers having got into their hands moneys which the respondent alleges formed part of, or were derived from, the assets of the testator Jerome, the respondent seeks to have these assets applied in payment of his legacy, there being no debts or other legacies of the testator remaining unpaid. The judgment appealed against directs the payment

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of the unpaid balance of the legacy out of these moneys, as claimed by the respondent.

Assuming that these moneys were, in fact, assets of the testator, or the proceeds of such assets, I can see no possible objection to the respondent's demand. The appellants are personal judgment creditors of the executor, and as such have no right whatever to the testator's assets so long as any of his pecuniary legatees remain unpaid. If all the legacies had been paid off then, inasmuch as the executor is also the residuary legatee, any assets remaining would no doubt be exigible by the creditors of the residuary legatee ; but these creditors can have no possible right to have these assets applied in satisfaction of their debts to the prejudice of a legatee of the testator.

To admit the contrary of such a proposition would be to sanction the application of one man's property to the payment of another man's debts. Judgment creditors are only entitled to have applied to the satisfaction of their judgments such property as the debtor has a beneficial interest in, and they are not entitled to enforce their claims against property or assets which their debtor holds as an actual or constructive trustee for another.

The court below find that one-half of the sum of $45,497.50 in the receivers' hands belongs to the estate of Jerome Harper, the testator, and they direct that out of this moiety the amount of the judgment recovered by the plaintiff for the unpaid residue of the legacy, together with interest and costs, should be paid. Assuming that there are assets in the receivers' hands to the amount mentioned this judgment must surely be unimpeachable. That there are moneys in the receivers' hands which properly belong to the estate of Jerome is a fact which I consider concluded by the finding of

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the court below, the evidence of Thaddeus, the executor, being quite sufficient to warrant in this respect the judgment appealed against.

There is a further ground upon which the judgment might be sustained. The legacy bequeathed to the respondent was charged upon the testator's realty. There can be no doubt upon this head. The testator having first given several legacies, including that mentioned to his brother Ezekiel, gives and devises to his brother Thaddeus Harper, the executor, all " the balance and remainder of the property and of any estate " of which the testator might die the owner. The words "property" and "estate" are of course both sufficient to pass realty. Then it is established by Greville v. Browne[8], a decision of the highest authority, that where there is no specific devise of real estate, and a pecuniary legacy is given without any words making it an express charge upon the real estate, and the will contains a subsequent gift of the residue of the realty, there is by implication a charge of the legacy on the real estate.

This being so, and the evidence establishing that the testator's share of the realty has been sold by the receivers and the proceeds applied to the payment of the judgment creditors of the executor, including amongst others the present appellants, the respondent would, to the extent to which the appellants' judgments have been satisfied by a misapplication of real assets in the hands of the receivers to his prejudice, be entitled to stand in the appellants' place against moneys now remaining in the hands of the receivers applicable to the payment of the judgment creditors, even though not assets of the testator. This, however, would involve an account, which, under the judgment appealed against, proceeding as it does upon the

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ground that the assets remaining in the receivers' hands are personal assets of the testator, is not required.

As regards the real assets, if it were necessary to resort to the principle of subrogation which I have just referred to, it would be no answer to such a proceeding to say that the judgment creditors were also mortgagees of the executor Thaddeus.

Granting that they were mortgagees of Thaddeus; the executor and residuary legatee and devisee, they must be held to have had notice of the will and the charge thereby created for, even assuming in their favour that the will was never properly registered, as to which I find some obscurity in the evidence, yet Mr. Maine, through whose agency the mortgages were obtained, expressly admits in his evidence that he saw and examined the will before taking the mortgages ; so that he must be taken to have had express notice of the charge of the legacy on the real estate.

This action being brought to enforce the judgment recovered by the respondent in 1889 for the unpaid balance of the legacy the statute of limitations can, of course, be no defence to it.

I do not very well understand why the judgment creditors other than the appellants who were originally made parties to the action were dismissed. It would certainly seem that if their judgments were still in any part unsatisfied, they were interested in maintaining their right to be paid in preference to the respondent, out of moneys in the hands of the receivers, who were appointed at their instances as well as at the instance of the appellants. They have not, however, appealed, and in default of any appeal by them I am of opinion that we ought not to interfere with the judgment on this ground.

The appeal should be dismissed with costs.

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GWYNNE J.—I will not dissent, though I should have preferred to see the mortgagees before the court.

Appeal dismissed with costs.

Solicitor for appellants: Charles Wilson.

Solicitor for respondent: Ernest J. Bodwell.