130 MARITIME LAW CASES

Ct. o f Ap p.] Bu r g i s a n d o t h e r s v. Co n s t a n t i n e. [ Ct. o f Ap p.

a fte r the firs t instalm ent had been paid they m ig h t be o u t of money i f the ship were sold or the vendors m ig h t sell i t to other purchasers at a p ro fit. This is n o t the law as was laid down by James and M ellish, L .J J . in E x p a rte B a r r e l l ; B e P a r n e ll (33 L . T. Rep. 115; L . Rep. 10 Ch.

512). In th a t case by a contract fo r the sale of land p a rt of the purchase money was to be paid im m ediately, and the residue on com pletion; but the purchaser, a fte r paying the firs t instalm ent, became bankrupt, and was unable to complete, and his trustee in bankruptcy afterwards brought an action to recover the instalm ent of the purchase money. James, L .J . there said : “ The trustee in th is case has no legal or equitable r ig h t to recover the deposit. The money was paid to the vendor as a guarantee th a t the contract should be per­

formed. The trustee refuses to perform the con­

tra ct, and then says, ‘ Give me back the deposit.’

There is no ground fo r such a claim.” M ellish, L .J . sa id : “ I t appears to me clear th a t, even where there is no clause in the contract as to the fo rfe itu re o f the deposit, i f the purchaser repu­

diates the contract he cannot have back the money, as the contract has gone off through his default.” A lth o u g h I sympathise w ith M r. Lush, I agree w ith the L o rd Chief Justice in th in k in g th a t th is appeal should be dismissed.

K e n n e d y, L .J .—A lth o u g h I th in k the m atter is n o t quite so clear as i t appears to the L o rd Chief Justice and to my brother Farwell, I agree th a t this appeal should be dismissed. The ques­

tion, which has received grave argum ent on the p a rt of M r. Lush, seems to be whether this is the kin d of action which can be enforced under the provisions of Order X IV ., r. 1, n o t because of the nature of the claim itself, b u t because the words

“ liquidated demand ” are said to cover this. A case only fa lls w ith in Order X IV ., r. 1, where the w r it is specially indorsed under Order I I I . , r. 6, and the w r it can only be specially indorsed under the la tte r rule in an action to recover a “ debt or liquidated demand in money ” arising (in t e r a lia ) upon a contract. H ad i t been a claim fo r pay­

m ent of the whole contract price of the steamer, and n o t fo r an instalm ent, there can be no doubt th a t i t would have come w ith in these words. I t is n o t easy to unravel the reasoning in the older cases and to distinguish i t fro m mere technicality, b u t there is good reason fo r saying th a t fo r the recovery o f certain classes of money demands you could n o t technically sue fo r the recovery of an instalm ent by itself, although i t was stipulated to be paid on a certain day, where i t formed only p a rt of a promise by the defendant to pay a larger sum in which i t was included. Here we have n o t to deal w ith a question depending on the fo rm o f the pleading whether in actions of debt or in d e b ita tu s a ssu m p sit. W e have to deal w ith pleading as i t now i s ; and I find n o th in g to show me th a t in applying Order X IV . I may n o t apply i t to a claim fo r an instal­

ment of a larger sum merely because the law laid down in the old cases goes to show th a t in an action of debt, s tric tly so called, you cannot sue in debt as d is tin c t from an action of in d e b ita tu s a s s u m p s it fo r an instalm ent. Had the m atter here rested on the construction of the contract 1 should have held th a t Order X IV . did n o t apply ; h u t I th in k i t is fa irly open to argum ent th a t this contract does fa ll w ith in the principle stated and illu stra te d in Bacon’s A bridgm ent, this being

a contract fo r one entire sum s p lit up in to several instalments. B u t assuming th a t where the whole sum is payable in instalments an action may be brought fo r any instalm ent, one must look a t the words of the rule to see whether the claim would be fo r a “ liquidated demand in money,” and thus fa ll w ith in Order I I I . , r. 6. In m y opinion i t does in substance fa ll w ith in th a t rule, and I do n o t find aoy rule of pleading which lays down th a t I am to apply reasoning depending on form and n o t on substance. One would have expected to find in sect. 49, sub-sect. 2, of the Sale of Goods A c t 1893 some lim ita tio n to the effect th a t i t was to apply only where the price was payable in one entire sum, b u t not where it was payable in instalments. On the whole I am of opinion th a t the words of Order X IV ., r. 1, which refer back to Order I I I . , r. 6, are to be construed as ex­

tending to the claim in this action. W ith all deference to the editors o f the A nnual Practice, i t seemB to me th a t they are n o t quite accurate in stating, as they do in the note to the la tte r rule, th a t the words t: debt or liquidated demand” only apply to an action o f debt in its most technical

^o rm ‘ A ppeal dism issed.

Solicitors fo r the appellants, A r m ita g e and C h a p p ie .

Solicitors fo r the respondents, B ly th , D u tto n , H a r tle y , and B ly t h .

F r id a y , M a y 29, 1908.

(Before S ir Go r e l l Ba r n e s, P., Mo u l t o n and

Fa r w e l l, L .J J .)

Bu r g i s a n d o t h e r s v. Co n s t a n t i n e, (a)

a p p e a l f r o m t h e k i n g’s b e n c h d i v i s i o n. S hares i n s h ip — T ra n s fe r by b e n e ficia l ow ners to

re g is te re d o w n e r o f s h ip as tru s te e — Shares re g is te re d i n nam e o f tru s te e — M o rtg a g e s o f shares by tru ste e i n breach o f tr u s t — F o r m o f m o rtg a g e sig n e d i n b la n k — Advance by m ortgagee w it h o u t n o tic e — N egligence — E s to p p e l—C on­

f l i c t i n g e q u itie s — M e rc h a n t S h ip p in g A c t 1894 (57 & 58 V ie t. c. 60), ss 24, 26, 31, 56', 57.

The p la in t if f s , owners o f shares i n a s h ip , tr a n s ­ f e r r e d th e m in to the n a m e o f the s e n io r p a r tn e r

o f a f ir m , w h ic h f i r m m an a g e d the s h ip ’s business as truste e f o r the p la in tiffs , the object o f the tr a n s fe r being to f a c ilit a t e the f o r m a t io n o f a co m p a n y w h ic h w as to purchase the ship.

U p o n the tr a n s fe r the s e n io r p a r tn e r was re g is ­ te re d i n the re g is te r o f s h ip p in g a t the p o r t to w h ic h the s h ip belonged as the o w n e r o f the shares. V a rio u s a tte m p ts were made to f o r m a co m p a n y, b u t w ith o u t success, a n d the above- m e n tio n e d shares were n o t reconveyed to the p la in t if f s . S u b se q u e ntly a son o f the s e n io r p a rtn e r , w ho h a d charge o f the f in a n c ia l a rra n g e ­

m ents o f the f ir m , o b ta in e d f o r the purposes o f the f i r m f r o m the d e fe n d a n t th ro u g h a n agent f o r the d e fe n d a n t a n d w ith o u t the know ledge o r a u t h o r it y o f the p la in t if f s a n advance o f m oney w h ic h w as in te n d e d to be secured by a m ortgage by the s e n io r p a r tn e r o f (in te r alia) the above- m e n tio n e d shares. H e o b ta in e d the la t t e r ’s s ig n a tu re '.to a p r in t e d f o r m w it h b la n k spaces w h ic h was th e n h a n de d to the d e fe n d a n t’s agent by w hom the do cu m e n t was su b se qu e n tly f ille d (®) Reported by Eo w a a ii .1. M, Oh a p i.i n, E sq ., B a rriste r-a t-L a w .

MARITIME LAW CASES.

u p as a m ortg a g e o f the shares to the d e fe n d a n t.

T h e d e fe n d a n t h a d no hnow ledge t h a t the s e n io r p a r t n e r was m e re ly a tru ste e o f the shares f o r the p la in tiffs . T he d e fe n d a n t then re g is te re d the d o c u m e n t as a m ortg a g e. U pon le a rn in g w h a t h a d been done the p la in t if f s c la im e d as a g a in s t the d e fe n d a n t a d e c la ra tio n th a t the m ortg a g e w as v o id a n d a n o rd e r t h a t the re g is te r s h o u ld be re c tifie d by e x p u n g in g f r o m i t the e n try o f the m ortg a g e.

H e ld , by the C o u rt o f A p p e a l (re v e rs in g the d e cisio n o f B ig h a m , J .), th a t a lth o u g h the p la in t if f s h a d a llo w e d the s e n io r p a r tn e r o f the f i r m to a p p e a r o n the re g is te r as le g a l o w n e r o f t h e ir shares the d e fe n d a n t was, u n d e r the circu m sta n ce s o f the case, n o t e n title d to a n e q u ita b le r ig h t as a g a in s t the p la in t if f s to a ch a rg e u p o n the shares as s e c u rity f o r the m oney a d va nce d by h im . R im m e r v. W ebster (86 L . T . B e p . 491; (1902)

2 Ch. 163) discussed.

Ap p e a l fro m the judgm ent o f Bigham , J. in an action trie d by him w ith o u t a ju ry .

The action was b rought by the p la in tiffs as beneficial owners o f twenty-one s ix ty -fo u rth shares in a ship called the G re ta H o lm e , claim ing (1) a declaration th a t a certain mortgage on twenty-seven s ix ty -fo u rth shares in th a t vessel, which appeared upon the register in favour of the defendant, should be declared to be void, and th a t the defendant was n o t e n title d to be registered as mortgagee of the shares ; (2) an order th a t the register should be rectified by the e n try o f the mortgage being expunged; and (3) delivery up o f the mortgage to be cancelled. The facts g iv in g rise to the action were as fo llo w s : I n 1897 there was a firm o f H in e Brothers, which consisted a t a ll m aterial tim es o f W ilfr id H ine and his nephew. The business was th a t of managing, amongst others, a line o f steamers called the H olm e L ine, o f which the G re ta H o lm e was one, and the head office of the firm was at M a ry p o rt; the firm had also an office in London which was under the control of A lfre d E rnest Hine, a son o f W ilfr id Hine, who was in the employment o f the firm , and had a u th o rity to sign the firm ’s name, and to whom, a t a ll m aterial times, the management o f the money matters o f the firm was le ft. The ships belonging to the Holm e L in e were owned by a num ber o f persons in the usual way, in s ix ty -fo u rth parts. From tim e to tim e the firm rendered accounts to, and distributed dividends among, those owners o f the shares. In 1897 W ilf r id Hine, the senior partner, conceived the idea o f tu rn in g his business, and the business o f the Holm e Line, in to a lim ite d company, fo r the purpose o f ta k in g over the Holm e L ine. Circulars were accordingly sent out by the firm to the shareholders in the different ships as to the proposed company, b u t n othing was done by H in e Brothers of any de­

fin ite character t i l l the end o f 1898, when a prospectus was prepared. I t was th o u g h t neces­

sary or desirable th a t the shareholders, who were a t th a t tim e on the register a t M aryport, in respect of th e ir holdings, should tra n sfe r these shares to W ilfr id H in e as trustee, so th a t he m ig h t be in a position to hand over the title to the Bhips to the company when formed. A ccord­

in g ly a circ u la r dated the 30th Nov. 1898, and signed by W ilf r id Hine, was sent o u t to the various shareholders, amongst others the p lain­

tiffs, inclosing a d ra ft prospectus of the proposed company, and a valuation o f the various steamers of the Holm e Line. The circular, a fte r stating th a t i t was proposed th a t the sum representing the value of the shares in the ships belonging to the persons to whom i t was sent should be satis­

fied as to 90 per cent, in fu lly paid ordinary shares, and as to 10 per cent, in fu lly paid preference shares in the proposed company, p ro­

ceeded as fo llo w s :

W i l l y o u please sign th e m em o ra n d u m a t fo o t he reo f, a n d also th e inoloeed b i ll o f sale, in exchange fo r w h ic h I u n d e rta k e to send you Bbare certific ate s fo r th e above shares in H in e B ro th e rs L im ite d w h en a llo tte d . A s tim e is v e r y im p o rta n t, I s h a ll be g lad i f y o u w i ll r e tu r n th e docu m ents to m e a t y o u r e a rlie s t convenience, a n d I h a v e no h e s ita tio n in say in g t h a t I consider th is a rra n g e m e n t w i ll be to y o u r in te re s t, a n d t h a t I am m a k in g no p ro fit o u t o f y o u r shares, b u t w i ll m e re ly ho ld y o u r in te r e s t in th e Bhip in tr u s t fo r y o u p e n d in g th e a llo tm e n t o f th e shares to w h ic h y o u a re e n title d .

In response to th a t circular, the p la in tiffs executed b ills o f sale o f th e ir shares in the G re ta H o lm e , and signed the inclosed memorandum, which was in the fo llo w in g terms :

I h e reb y agree to acc e p t th e te rm s o f y o u r le tte r of 3 0 th N o v . 1 8 9 8 , and send h e r e w ith a b ill o f sale on th e u n d e rs ta n d in g t h a t y o u h o ld m y in te re s t in th e ship G re ta H o lm e r e fe rre d to in tr u s t fo r m e as th e r e in set fo r th , a n d I h e reb y au th o rise you to e n te r in to a con­

t r a c t fo r sale to th e proposed com pany o f m y in te re s t in th e said ship.

A number o f shareholders, including the p la in ­ tiffs , having assented to the proposal, th e ir shares were transferred in to W ilfr id H in e ’s name. He was registered in respect o f them in the register a t the ship’s p o rt of registry, and thereby became the legal owner of the shares. He held them in tru s t to tra n sfe r them, in the event o f a company being formed, to th a t company as p a rt of its assets, and, i f the company was formed, each shareholder was to receive a specified interest in it.

D ifficulties arose in the fo rm a tio n o f the com­

pany, and n o thing was in fa c t ever done which resulted in its form ation.

From tim e to tim e letters passed between certain of the shareholders and H in e Brothers about the m atter, from which i t appeared th a t the o rig in a l idea as to what the company should be composed of had been somewhat modified, b u t towards the end of 1906 H in e Brothers stated th a t the p ro je ct fo r the fo rm a tio n o f a com­

pany had n o t been abandoned, and suggested th a t the shares should be allowed to rem ain as they were u n til the m atter was fin a lly disposed of. The p la in tiffs ’ shares in the G re ta H o lm e were accordingly allowed to rem ain as they were.

I n the early p a rt o f 1907 the firm of H ine Brothers got in to financial difficulties. A lfre d E rnest H ine then gave a mortgage to a M r. Con­

stant, which mortgage included twenty-seven shares in the G re ta H o lm e (the p la in tiffs ’ tw enty- one shares and six others). T h a t mortgage was given to M r. Constant by A lfre d E rnest H ine upon a fo rm which bore the signature of W ilfr id Hine.

I t was given in order to raise money fo r the firm , and the money was in fa c t raised exclusively fo r the purposes of the firm , and not fo r the private purposes of A lfre d E rnest H ine. I t was a m

ort-Ct. o f Ap p. ] Bu r g i s a n d o t h e r s v. Co n s t a n t i n e.

132 MARITIME LAW OASES.

gage th a t should n o t have been given, and when W ilf r id H ine was asked about i t he said th a t i t was tru e th a t the mortgage bore his signature, h u t th a t i t was n o t tru e th a t he knew anything about it.

B o th the fa th e r and son said th a t a fte r the fa th e r’s illness, which happened in 1905, i t had been the practice o f the father to sign blank form s of mortgage and leave them in the son’s possession, so th a t the son m ig h t, when need required, f ill them up. W ilfr id H in e said th a t one o f these form s m ust have been used by his eon unknown to h im to create the C onstant m o rt­

gage-I n 1907 money was again required fo r the purposes of the firm of H in e Brothers, and on the 9 th A p r il A lfre d E rnest H in e applied to a firm of John H olm an and Sons fo r an advance of 4000Z.

upon the security of the fre ig h t o f a vessel called the Is e l H olm e, and said th a t he was prepared to pledge th a t fre ig h t, and also twenty-seven shares m the G re ta H o lm e , w hich shares included the shares of which the p la in tiffs were the beneficial owners, by way o f collateral security fo r the advance. T his application having been com­

municated by John H olm an to the defendant, who had no notice of the p la in tiffs ’ interest in the shares, or th a t there was any irre g u la rity in the transaction, he agreed to make the advance upon the terms mentioned on the 10th A p ril. W hat took place was th is : A lfre d E rnest H ine, being anxious to obtain money, gave the charge upon the fre ig h t, and also asked John H olm an to fu rn is h him w ith a blank form of mortgage fo r his fa th e r to sign. T h a t fo rm he took away w ith him , and, having obtained his fa th e r’s signature to it, he took i t back to M r. H olm an’s office and le ft i t w ith M r. H olm an fo r him to f ill up the blank spaces w ith the particulars relating to the twenty-seven shares in the G re ta H o lm e . The am ount advanced by the defendant was received the same day. The security fo r the loan was perfected in M r. H olm an’s office a n d by M r.

H olm an him self, and he also drew the assign­

ment of the fre ig h t. On the same day the Con­

stant mortgage was discharged. The fre ig h t of the Is e l H o lm e , which had been pledged to the defendant, was received by A lfre d E rnest Hine, instead of being paid to the defendant, as i t ought to have been.

D ifficulties were raised, w ith the re su lt th a t on the 1st J u ly 1907 the defendant caused the m o rt­

gage to be registered in the shipping register.

I t was th a t registration which the p la in tiffs (who had only then become aware of w hat had been done w ith th e ir shares) sought to have can­

celled.

On these facts Bigham , J. held th a t M r. H olm an in draw ing the assignment of the fre ig h t and f i l l ­ in g up the blank form of mortgage did so as the agent on behalf of the defendant, and th a t the defendant m ust be taken to have had notice through his agent H olm an th a t a t the tim e when W ilf r id H in e ’s signature was appended to the document, i t was a blank form so th a t there could be no question of estoppel, and th a t the so-called mortgage n o t being the deed of W ilfr id H in e was a worthless document. He therefore made an order declaring th a t the alleged mortgage was bad, and th a t the e n try of i t must be expunged fro m the register. He fu rth e r held, on the a u th o rity of R im m e r v. W ebster (86 L . T. Rep.

[ Ct. o f Ap p.

491; (1902) 2 Ch. 163), th a t inasmuch as the p la in tiffs had intrusted W ilf r id H in e w ith a u th o rity to deal w ith the shares, although he had n o t dealt w ith them in the way the p la in tiffs intended, the defendant had obtained an equitable title to the shares which, although i t came in to existence long a fte r the equitable title o f the p la in tiffs, nevertheless took p rio rity , and he made a declaration th a t the defendant was n o t entitled to be registered in respect o f the shares in the G re ta H o lm e , b u t th a t he was e n titled to an equitable charge upon the shares as against the p la in tiffs to the extent o f any unpaid balance of the advance made by him . H e accordingly gave judgm ent, declaring the defendant to be e n title d to such a charge.

The p la in tiffs appealed against the last portion of the judgm ent.

J . A . H a m ilto n , K .C . (M a u r ic e H i l l w ith him) fo r the p la in tiffs .— The decision of Bigham J.

was wrong. I f the defendant had obtained a mortgage of the shares by b ill of sale under the provisions of the M erchant S hipping A c t 1894, he would have obtained a legal title to the shares which would have prevailed against the title of

was wrong. I f the defendant had obtained a mortgage of the shares by b ill of sale under the provisions of the M erchant S hipping A c t 1894, he would have obtained a legal title to the shares which would have prevailed against the title of