SUPREME COURT

Taranaki Daily News, Volume LIV, Issue 81, 26 September 1911, Page 3

SUPREME COURT

TWO LAM; .SALE I)[SI'I"I.T.S,

■H'DCMENT DELH'ERKI).

In the SuprcT!,- Court yesterday, in chambers, hits. Honor Mr. Justice' Sim delivered judgment in two of the eases heard at last week's sittings of the Supreme Court. MORTON v. iiLKXNT.ttHASSKTT. In this case Ceorge Morton sued Wenuerhassett and Son v of Kltham. for ti'iO. the amount of deposit paid on the sale of a farm to defendants as stakeholders. Mr. A. 11. Johnstone appeared for the i plaintiff and Mr. J. K. Wilson for the dct'endants.

His Honor sail! that on Mav 10, 10)0. the plaintiff, (ieorgi, Morton.* agreed in writing with Reginald Heppell "to purchase front the latter a farm in the Huiroa survey district [or the sum of .€3420 12s fid. A sum of _£-m Wil s paid; hy .Morton as ;i deposit when the agreement was signed bv tlie parties. Morton was always roady'and willing to carry out the agreement, hut Heppell refused to carry it out, ami the transaction was not completed. The sale was ■ arranged tliroug.li the agency of the dej fondants; -and the deposit of iliyl) was paid to them. Morton alleged that it was paid to them as stakeholders for both parties, and he claimed to recover from them". The defendants denied that they received it ; . s stakeholders. They said that it was paid to them as agent's for Heppell, and that they had accounted to him for it. It was clear from the decision in the case of Ellis v. (ioulton (.181)3) 12 B. 351), that this deposit could only he recovered from the defendants if it were paid to them in pursuance of , an agreement between the parties that ,'the defendants should hold it as agents .for both vendor and purchaser. If it were paid to them in pursuance of such an agreement then they became stakeholders and were liable' in the circumstances to refund it to Morton or his assignee. The question to be determined., then, was whether the deposit Were paid to the defendants, to be held by them as agents for both parties, or .is agent for the vendor only.- It was clear, in his Honor's opinion, that the deposit was intended to be held hv them as agents for both parties. Al'though Heppell was present when the chcoues were handed over, they were handed to the defendant, Leonard Blennerhassett, I They were both made payable to the order of the defendants.-ami were retained, by them. When Morton objected to pay so large a sum as;a deposit,' Leonard Blennerhassett .told him that the defendants were financing Heppell, and wanted to have the money in hand to enable them to finance I'lim'. On Morton asking if his deposit would be safe he was assured by Leonard Blennerhassett that it would be safe, as Heppell would : not handle the money. Ifeppell's evidence was that. Leonard nioniierhassett told him he had arranged with Morton to pay £&)0 as a deposit which was to be paid into tlie defendant's trust account, and an advance made by them against it for the purpose of completing Heppell's title to the farm.' "rt is plain from this evidence,'" continued his Honor, "that the deposit-was not to be disposed' of as Heppell might direct, as would have been the case if the defendant held it merely as his agents, anil that it was held by them as agents for both parties. They are stakeholders, therefore, and are liable now to refund the deposit. The deposit having been duly assigned t« ! the plaintiff, Herbert llalli'well, judgment ■should he in his favor. Judgment accord. ' ingly for £2->O. Morton, the original plaintiff, was not entitled In recover the deposit himself, and Mr. Halliwell was joined-as a plaintiff only at the hearing. I think that in the,*.- circumstances the plaintiff should not be allowed any costs."

KUCHT v. AUNuLD. Joseph Henry Wight v. Charles Arnold and Lucy Hannah Arnold. Mr. Ilulchison for plaintiff, and Mr. Uutchen for defendant.

This was an action to recover damages for the breach or an contract, for the Mile of land. On the *>ml day of August, 11)10, the plaintiff agreed in writing with the defendants to purchase from them a farm at Taruru'.angi containing 148% acres, subject to all incumbrances (hereon. The price was ,£2!)70. and the implements and stock and machinery on the farm were included in (he sale. Fifty pounds was to be paid as a deposit oil or before August >:>. lull). -,\ further sum of £2,-)() was to be paid mi the completion, of the purchase, which was to take place on or before September 1. M>ll>. when possession was to be given. The balance of the purchase money was to remain on mortgage for live years at o per cent, intent. The agreement contained the following provision with regard to the title to part of the farm:— "Forty acres of the above laud is deficient of a title, but is guaranteed by .1. D. Mdieth. solicitor, of Wanganui- to the value of .€f>oo, to procure a title free of expense to the purchaser." The position of the title to the farm was that one of the sections included therein, containing 80 acres, had been Conveyed by the original grantee thereof from the Crown to John Mynolt and Alexander McMillan, as tenants in common. The defendants had acquired Mvnott's undivided moiety of the section, but the title to the other moiety of it was still vested in McMillan. Mr. Mcßcth had agreed in writing with the defendants to indemnify them against any loss or damage, they might sustain .'in consequence of this defect in the title. He also undertook to endeavor to procure a land transfer title. It appeared that the. District Land Registrar had taken the view that the prescriptive title to the land could not be acquired before the year 1!)](>. It was clear to his Honor that the agreement signed by Mcßctli did not contain any guarantee such as that described in the agreement witii the plaintiff. All that he undertook to do was to indemnify the defendants against, any loss they might sustain bv reason of the defective title, and also to endeavor to obtain at hi- own expense a title to the land under the Land Transfer Act. lie did not guarantee in any way the issue of Midi a title. If the defendants did not sell the farm, then so long as they remained in undisturbed possession they ci'iM have no further claim against MciVlh. If tln- defendants sold the farm the benefit ( ,f .\| t .. r.eth's agreement eonhi not he assigned to the purchaser, >,, as 1,. make it an indemnity again-t any loss the purchaser might, sustain iiv reason of the defective title. In his Honor's opinion the defendants wen- not entitled, under their contract with the plaintiff, to insist, on his accepting the title thev had to tin- farm., and they were not' in a position to carry out 'their contract at the time it, was made. I'pon this objection to the title being raised be 'the plaintiffs solicitor it was agreed' ihal acting for all parties, he should arrange if possible, with Mcl'.eth to give smh further undertaking with rcga'rd to the title as would be accepted by the |dainlill' as satisfactory. After .sunic negotiations such an undertaking was arri-uged for.-and a draft deed of covenant v.as prepared and settled, but was never completed. In the meantime, and pending these negotiations, the'plaintiff paid t.hedeposit, and on September I he was let-l into possession of the farm bv the defendants. After Melfeth had 'agreed to give a fresh undertaking a question arose between the parties as to (he mort-

gages on the farm. One of tliese was f to the Government Advances to Set-' r tiers' Department. One was due on December ]!>, 191.", and tlie third was due, as to £l5O, on December Ml, 1010, and as to £3OO on Deeemlier 31, 1012. The plaintiff claimed that the defendants were hound to have the time for payment of the principal sums secured by the last two mentioned mortgages extended to September 1, 1915, and the interest reduced on one mortgage, but this claim was not justified by the agreement between the parties. The plaintiff was bound to take the farm subject to all the existing mortgages, and the mortgage to be given by him was to be only for the balance of the purchase money after deducting the cash payments and the amount of the existing mortgage's. Tlie defendants refused to comply with the jilaintiff's demand, and on January 24,' 19,]], their solicitor wrote to the plaintiff'* solicitor declining to arrange for the extension of the existing mortgages. The letter continued as follows: '•.My clients are prepared to complete subject to tliese encumbrances, and in accordance with the draft conveyance and transfer submitted by you as "approved by me on their behalf. -jThey will also assign to Mr. Slight the benefit of their contract with Mr.' Mcßeth. Since last writing to you I have been supplied with a copy of the existing contract with Mr. Mclieth, which is a sufficient compliance I with the terms of the ontrat of sale between my clients and Mr. Slight, hut of course the benefit of the fresh, contract which you have prepared will be assigned, if. completed by you. I have to advise you that if your client refuses to complete immediately in accordance with the offer of my clients his refusal' will be considered a breach of contract,/' A reply was sent to this on January.2o, and on January 28 defendant's solicitor i wrote to the plaintiff's solicitor in these terms: "I am now instructed to inform! you that as Mr. Slight declines to com-1 plete on the terms of the contract of! sale the contract is rescinded." Plaintiff contended that defendants were not justified in rescinding the contract as they did, ami lie claimed damages for breach of contract. The question to be' determined was whether in the circumI stances the defendants were justified in ) rescinding the contract. In his.Honor's | opinion they were not. Before they were entitled to call upon the plaintiff' to carry out tlie contract they should have placed themselves in a position to carry out the contract on their part, oitlicr by completing their title to the farin or by J getting the deed of covenant executed by I Mr. Mcßeth in the form in which the plaintiff had agreed to accept it. ', If they had done that, and afterwards had given the plaintiff a reasonable opportunity of completing the contract, and he had refused to do so, they would then have been entitled to rescind the contract. The performance by the vendor of his obligation to show a good title, in accordance with the terms of the contact, was a condition precedent to the purchaser's liability under tlie contract. His Honor held that the plaintiff was entitled to recover hjs deposit with interest tlierebii. liiulalso the expenses of investigating the title, but he was not entitled to the expenses of preparing the transfer and conveyance, or to any allow-] mice in respect of his claim for many laid out in repairs; or to any allowance in respect of his claim for improve'-. roents made while in possession of the property. The total amount which he was entitled'to was .£«] IDs, being the deposit (.{•.">(>). one year's interest (.€2 10s) and £9 9s for expenses of investigating' the title. The only witnesses whAse expenses were allowed were the plaintiff and Howater.