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[CHAN

Gardner and OTHERS V. THE LONDON, CHATHAM, AND DOVER RAILWAY CO. made at chambers, in the suits of "Gardner (No. 1)" its resale, but the same moneys are in return and of "Drawbridge," by which the V. C. ordered that subjected to this trust, that they are to be applied all moneys payable to the company, in respect of for the purposes of the special Act, that is, for the sales of their surplus lands, be paid to the receivers purposes of the undertaking; that these moneys, under the orders of the 12th and 17th of July; 4, an therefore, become and form a part of the underoriginal motion in the suit of "Gardner (No. 2)," ask-taking, and therefore of their security, and ought ing for the appointment of a receiver of the " Victoria Station Fund," and of the tolls and other sums of money arising in respect of the "City Lines Undertaking," including rents and sale proceeds of superfluous lands, and all the property belonging to or connected with the "Victoria Station Fund," and the "City Lines Undertaking" and 5, an appeal motion by the plts. in the suit of the "Imperial Mercantile Credit Association (Limited)," renewing an application, refused by the V. C., for a receiver of the rents and profits of certain surplus lands of the company, and that the purchasers of such surplus lands may pay their purchase-moneys into court. I will postpone for the present any observation as to this fifth motion; and, as to the fourth motion I may observe that no objection is made to a receiver of the "Victoria Station Fund," and an order for a receiver of that fund will be made in the usual manner.

to be preserved and applied for them by this court. It is necessary to observe carefully to what length this argument must go. A railway is made and maintained by means of its capital, by means of its borrowed money, of its land, of its proceeds of sale of surplus land, of its permanent way, of its rolling stock. All of these may be said in a sense to be connected with, to be parts of, to make up the undertaking. If a mortgage of the undertaking carries in specie the sale moneys of surplus lands, it must equally, and on the same principle, carry in specie the ordinary land of the company, the capital, the permanent way, the rolling-stock-nay, even the very money itself lent on the mortgage. The assignment made by the mortgage debentures is immediate, and is to continue for three years at the least. If the debenture-holders are right in their argument, they became immediate assignees in specie of all the ingredients which I have enumeThe main question, however, argued before us on rated as going to make up the undertaking, and they the first four motions was, whether a receiver should might, from the first, have asserted their rights as be appointed of the rents and of the sale proceeds of mortgagees by taking and impounding not merely surplus lands; or, in other words, whether the the proceeds of surplus lands, but the capital, the mortgage debentures of Gardner and Drawbridge cash balances, the rolling-stock, and even their own affected those rents and proceeds in such a manner money advanced. Now it is beyond question that as to entitle them to payment out of that specific the great object which Parliament has in view, when fund through the medium of a receiver. In con- it grants to a railway company its compulsory and sidering this question it is necessary to look, in the extraordinary powers over private property, is to first place, at the form of the debentures. [His secure in return to the public the making and mainLordship here stated the words of the de- taining of a great and complete means of public bentures, and proceeded thus]:-We have next communication; and yet, according to the necessary to aseertain the true character of surplus or consequence of the plt.'s argument, the moment the superfluous land held by a railway company. Sur-company borrowed money on debentures, it would plus land may arise in one of two ways: it may be depend on the will or caprice of the debenture-holder land originally taken by the railway company in the whether the railway was made at all. I may belief and expectation that it would be required for further observe that in any sense in which their line, or for the stations and works connected the sale moneys of surplus lands can be conwith it; or (and this is the origin of by far the sidered part of or moneys arising from the undergreater quantity of surplus land) it may be land taking, calls made and paid subsequent to the which the owner, under the provisions of the Lands debenture must be equally a part of or moneys arising Clauses Consolidation Act, has forced the company from the undertaking. And yet the 38th section of to buy, in order that he may not have a severed part the Companies Clauses Act 1845, and the form of of a tenement or field left on his hands. In either the mortgage in the schedule, clearly assume that case the company is obliged to resell the land within under the words of debentures, such as those now a limited time, applying the proceeds to the purposes before us, future calls would not pass; and the 43rd of their Act, on pain of the land revesting in the section provides that even when future calls are original owner, who, if the land be not in a town, is expressly included, the company may (unless the to have the first option of repurchase. It is obvious contrary is provided) receive the calls and apply from this that the surplus land is, in truth, the them to the purposes of the company. The argurepresentative and equivalent of a certain portionment, again, of the debenture-holders goes, in fact, of the capital provided by the company for the to claim for them the same position, as if, under the execution of their works, which has, not for pur- term "undertaking," they were mortgagees of the poses of profit, but for the protection of landowners, whole property and effects of the company, and, been temporarily diverted and invested in land to indeed, the prayer in the bill of "Gardner (No. 2)" be again resold, and which is to return to the capital uses the words "property belonging to or connected of the company when the object for which it has with the undertaking." Now there is nothing in been diverted has been accomplished. And, as the Compames Clauses Consolidation Act 1845 to regards the interim rents, if any, of surplus lands, prevent the company borrowing both on land and they would appear to be in the same position as the mortgage; and the 44th section provides that the income arising from capital provided by the com- bondholders "shall be entitled to be paid out of the pany and temporarily invested in any other manner tolls or other property or effects of the company;" until needed. The argument by which the debenture- words which in Russell v. East Anglian Railway holders maintained their right to a receiver of the Company, 3 Mac. & Gor. were held to mean that proceeds of the surplus lands was in substance this: the bondholders might obtain a judgment, which, They say they are mortgagees of the undertaking, under sect. 36, would be executed against the and of the tolls and sums of money arising out of property or effects of the company. But, according it, or by virtue of the Act authorising it; that all to the plt.'s view, the whole of the property and the land taken by the company under its Parlia- effects of the company, being all parts of the undermentary powers goes in the first instance to form taking, would be assigned and mortgaged by the a part of the undertaking; that as soon as any debentures, and thus the right apparently given to land becomes surplus land it becomes subject at the bondholder and judgment-creditor would be the same time to the Parliamentary provision for merely illusory. It is, perhaps, unnecessary to

CHAN.] GARDNER AND OTHERS v. THE LONDON, CHATHAM, AND DOVER RAILWAY CO. [CHAN. pursue further the consequences of the plt.'s argu- | admitting that paying debentures is a purpose of ment. But it must be evident that, if that argu- the special Act, there are many other purposes, and ment be correct, very grave differences of opinion the directors, and not the debenture-holders, must, and of interest might arise among the debenture- in my opinion, be the judges to which of several holders. Some might desire to arrest the con- purposes the moneys are to be applied. Whether tinuance of the undertaking and to obtain repayment if a company, after mortgaging the undertaking, out of the capital or other moneys provided for the were to apply their capital or other moneys which works; while others might consider that their most ought to go into and improve the undertaking, hopeful chance of repayment would be by the to purposes wholly foreign to the undertaking, expenditure of these moneys so as to earn tolls and they could be controlled by debenture-holders, is a profits; and it would be difficult in such a case to question which may at some time have to be consee any common interest in the body of debenture- sidered, but which does not arise in the present holders such as would enable one to maintain a suit case. The observations which I have made show on behalf of all. that, in my opinion, no distinction should be made between the sale moneys and the interim rents of surplus land. The order of the 20th Nov., directing the sale moneys of surplus lands to be paid to the receiver, ought, in my opinion, to be discharged.

As to the orders of the 12th and 17th July, and the motion before us in the suit "Gardner (No. 2)," there ought, in my opinion, to be an order for receivers of the tolls and sums of money arising from the various undertakings mentioned in the two suits of Gardner and in the suit of Drawbridge, following the words of the securities. This would ordinarily be sufficient, but, as the question of the sale moneys of surplus lands has been raised and argued, I think that in each order it should be added, "This order is not to extend to any rents or sale moneys arising from surplus lands of the company." The costs, both in the court below and before us, as to these orders, ought, in my opinion, to be costs in the respective causes.

Although I have arrived at the opinion which I have expressed without hesitation, I cannot avoid feeling regret that securities, such as railway debentures, upon which so many millions of money have been invested, should have been left at their creation in a state to admit of so much argument as that which has taken place in this case, and that their legal operation and extent should come to be defined, not at the time when they have been given as security, but after difficulties have arisen in their repayment.

As regards the effect of the word "undertaking," in these securities, we gain but little information from the definition given in the Acts of Parliament. In the two public Acts, the Companies Clauses and the Lands Clauses, the "undertaking" is defined to be the "undertaking or works by the special Act | authorised to be executed;" and in the private Acts the object appears to be not so much to describe what is included in the word "undertaking," as to divide by metes and bounds or otherwise the various undertakings of the company from each other. The object and intention of Parliament, however, in the case of each of these various undertakings was clearly to create a railway, which was then to be made and maintained, by which tolls and profits were to be earned, which was to be worked and managed by a company according to certain rules of management, and under a certain responsibility. The whole of this, when in operation is the work contemplated by the Legislature, and it is to this that, in my opinion, the name of "undertaking" is given. Moneys are provided for and various ingredients go to make up the undertaking; but the term "undertaking" is the proper style, not for the ingredients, but for the completed work; and it is from the completed work that any return of moneys or earnings can arise. It is in this sense, in my opinion, that the "undertaking" is made the subject of a mortgage. Whatever may be the liability to which any of the property or effects connected with it may be subjected through the legal effect of It only remains to consider the case of the Ima judgment recovered against it, the undertaking, so perial Mercantile Credit Association. This comfar as these contracts of mortgage are concerned, is, pany claims under Messrs. Peto, Betts, and Crampin my opinion, made over as a thing completed: as ton, and are transferees of their rights (whatever a going concern, with internal and Parliamentary they may be) against the proceeds of certain surplus powers of management not to be interfered with ; as land of the London, Chatham, and Dover Railway a fruit-bearing tree, the produce of which is the Company mentioned in their bill. The allegations fund dedicated by the contract to secure and are that a sum of 135,000l. was due from the railto pay the debt. The living and going con- way to Peto and Co. as contractors for executing cern thus created by the Legislature must not, works, and that the directors of the railway comunder a contract pledging it as security, be pany gave to Peto and Co. a charge for this sum on destroyed, broken up, or annihilated. The tolls the sale moneys arising from these particular lands. and sums of money ejusdem generis-that is to say, Prima facie evidence of the debt is given, and the the earnings of the undertaking-must be made resolution of the directors admitting the debt and available to satisfy the mortgage; but, in my giving the charge are verified, and the company at opinion, the mortgagees cannot under their mort- the bar have admitted the claim, desiring, however, gages, or as mortgagees, by seizing, or calling on not to be taken as acknowledging the specific amount this court to seize, the capital, or the lands, or the of the debt of Peto and Co. It cannot, in my proceeds of sales of land, or the stock of the under- opinion, be doubted but that the company, owing a taking, either prevent its completion, or reduce it sum to their contractors for works done, might have into its original elements when it has been com- paid this sum out of those surplus sale moneys (the pleted. I ought not to omit to notice a point much claim of debenture-holders being out of the way); pressed by Mr. Martineau in his very clear and and, if so, they might equally, as I think, have given useful argument-namely, that inasmuch as by the contractors a charge upon the sale moneys for sect. 127 of the Lands Clauses Act, the sale moneys the amount. There ought, I think, to be an order in of surplus lands are to be applied to the purposes the suit of the Imperial Mercantile Credit Associaof the special Act, and as the payment of overduetion for a receiver of these particular sale moneys; debentures ought to be taken to be the first duty of a company, therefore the debenture-holders have a right to sustain a suit for this application of the sale moneys in payment of the debentures. There is no doubt that if the company were to use these sale moneys in paying debentures they would be acting in accordance with their powers; but even

and as it is desired to save the expense of a receiver's salary, some officer of the company may, perhaps, act without salary, or the purchasers may have liberty to pay their purchase- moneys into court direct. This order is, of course, merely interiocutory, and subject to reconsideration at the hearing; and if, as was suggested at the bar, the dealings

CHAN.]

between the company and its contractors should be taken as requiring further investigation, there will, no doubt, be found fitting means of doing this before the cause is disposed of. The costs of this motion, also, both before the V. C. and here, ought, I think, to be costs in the cause.

Lord Justice TURNER said:-My learned brother has been kind enough to give me the opportunity of seeing and considering his judgment in these cases. I have carefully read and fully considered it, and I entirely agree both in the conclusions at which he has arrived, and in the reasons on which they are founded. I adopt, therefore, what has been said by my learned brother, and shall merely add such few further observations as have occurred to me in support of the view which he has taken.

GARDNER AND OTHERS v. THE LONDON, CHATHAM, AND DOVER RAILWAY Co. [CHAN.
to the meaning of the word "tolls;" but it was
insisted, in the course of the argument before us,
that all moneys, of whatever character or descrip-
tion, ought to be taken as falling within the descrip-
tion contained in this debenture of sums of money
arising upon or out of the undertaking by virtue of
the Acts. But it is to be observed that both the
Acts referred to by this debenture and the Railway
Clauses Act contair provisions under which sums
of money not measured by the tolls may be taken
by the company; and it would, I think, be a very
strained interpretation of the Act to construe the
words "sums of money as extending to moneys
derived from sources different from tolls, with which
these words are so immediately and closely con-
nected. The reasonable construction of these words,
taking them with the context, seems to me to be,
to limit them to sums of money ejusdem generis as
the tolls. Lastly, the debenture assigns to Gardner
all the estate, right, title, and interest of the com-
pany in the same. But these words are merely
referential, and cannot alter the construction of
what has gone before. They cannot, I think, be
construed to extend the operation of the deben-
ture. My opinion is, that upon the true
construction of this debenture, it proceeds upon
the footing of the railway being treated as a
continuing and going concern, and that it operates
only to charge the railway, and the works connected
with it, and the tolls and sums of money of the like
nature arising from it, in favour of the debenture
creditor. Had it been intended to go further, and
to charge the capital of the railway company, and
the surplus lands, as it was contended before us that
it does, there can be no doubt that apt words could
have been found for that purpose; and I think that
such words would have been inserted in the instru-
ment. It may be asked why "the undertaking
was assigned by the debenture, if the security was
to be limited to the fruits of the undertaking
only. This; question admits, I think, of a very
ready answer. The assignment of the undertaking
was necessary for the protection of the debenture-
creditors against other claimants upon the property
of the company. Mr. Martineau, in his very able
argument, not less able because it was concise,
raised a very ingenious point upon the exception of
future calls in the form of mortgage given by the
Companies Clauses Act, which, he said, indicated
that past calls must be considered to have been in-
cluded in the mortgage. But this argument is, I
think, more specious than sound. The Legislature
may have considered that the past calls would have
been exhausted before the mortgage was made. At
all events I think the argument is too refined to
affect the construction of the debentures.

The questions we have to determine in these cases depend not upon any rights which the plts. Gardner and Drawbridge have, or may have, merely as creditors of this company, but upon the rights which they have under the debentures on which their claims in these suits are founded; and the nature and extent of these rights must, of course, depend upon the construction and effect of their debentures. I will first consider the debenture on which the first suit of the plt. Gardner proceeds. This debenture first assigns to the plt. Gardner the general undertaking of the company as defined by the London, Chatham, and Dover Railway (Various Powers) Act 1861, and this general undertaking is thus defined by this Act: "The undertaking of the company as authorised by the East Kent Railway Act 1853, and the East Kent Railway (Extension to Dover) Act 1855, and the western extension if, and when, merged in that undertaking." This definition must, as it seems to me, be read into the debenture, and then we must look to the Acts referred to in order to see what were the undertakings authorised by these Acts. The East Kent Railway Act, in sect. 1, after mentioning the railways proposed to be made, speaks of those railways as the proposed undertaking, and, by sect. 3, gives power to make the railways, with all proper works and conveniences connected therewith; and the East Kent Railway Company (Extension to Dover) Act 1855, by sect. 1, after mentioning the railways to be made under that Act, recites that the East Kent Railway Company are willing to undertake the extension of their authorised line, and, by sect. 4, gives power to make and maintain the railway, with all proper stations, works, and conveniences connected therewith, and, by sect. 47, enacts that the railway and works by the Act authorised shall be and be deemed to be part of the undertaking of the East Kent Railway Company. Looking to these Acts it cannot, I think, be doubted that what was intended to be assigned by this part of the debenture was the railways, and the works connected therewith, to be made under these Acts. It is true that these Acts, either by provisions which they contain, or by those which are contained in the general Acts incorporated in them, give powers to raise money and to purchase lands, and, in some cases, more lands than might be required for the railway; in which cases the Acts provide for the sale of the surplus lands, or for their being restored to the original proprietors. But these powers and provisions cannot, I think, be considered to constitute any part of the undertaking referred to in the debenture. They are no more than the means to the end; and it is to the end, and not to the means by which it is to be accomplished, that this debenture must, I think, be considered to point. The debenture then proceeds to assign to Gardner all the tolls and sums of money arising upon or out of the said undertaking, by virtue of the several Acts relating thereto. No doubt could, of course, be suggested as

Upon the whole, for the reasons which I have given, as well as for those which have been assigned by my learned brother, my opinion is that the plt. Gardner is entitled by this debenture only to a charge on the railway and works connected therewith, and the tolls and sums of money of the like nature arising therefrom, and has no claim upon the surplus lands, or the moneys which may arise from the sale of them. What his rights may be as a creditor, independently of the charge created by the debenture, is a question into which I do not enter. The other debentures on which these suits are founded do not vary in substance from the one on which I have commented, and the observations which I have made apply to these other debentures also.

I have nothing to add to what my learned brother has said as to the case of the Imperial Mercantile Credit Association. It may be right that, in order to avoid any unnecessary alarm as to the safety of investments which have been made upon railway debentures, I should add that I see no reason to

HUMPHREYS v. HUMPHREYS.

Solicitors for Messrs. Gardner and Drawbridge, residue ought to be allowed to accumulate for the Walker and Martineau.

Solicitors for Peto and Co., Maynard, Son, and tion. No distinction could be drawn between real Co.

[V.C. S.

The

accretion, and must therefore go with it. principle running through the cases referred to is, that no interest goes with a legacy if it is given at a certain future time. In the present case, however, the legacies are given at once, and vest immediately, and it is only in a subsequent part of the will that the testator, apparently by an afterthought, adds that they are not to be paid until after the death of his father and mother. There will be a declaration that the testator's mother is entitled to an annuity of 701. for life; his wife to the residuary estate for life; the legatees named in the will to interest to accrue due on their legacies, and that the legacies and annuities are to be appropriated. There will be liberty to the legatees to apply for payment of their annuities.

Solicitors for the plt., Clowes and Hickley, for L. W. Jarvis, King's Lynn, Norfolk.

Solicitors for the widow, Walters, Young, and Walters.

Thursday, Jan. 24.
FORD V. OLden.

Mortgage--Conveyance of equity of redemption to mortgagee Bankruptcy of mortgagor Claim of creditors-Conveyance set aside.

A mortgagor, when in pecuniary difficulties, conveyed, for less than its value, his equity of redemption to the mortgagee, and subsequently, on his own petition, became bankrupt :

Held, on a suit instituted by the bankrupt's creditors, that the conveyance must be set aside.

This suit was instituted for the purpose of setting aside a deed whereby a mortgagor had conveyed his right to the equity of redemption in certain premises to the mortgagee.

edition of that work, p. 497, there will be found a proposition which would appear to cover the present case. It is this: "In such cases it is probable that the person whose non-existence is made the contingency on which the devise over is to fall into possession is placed in this position for the purpose of taking the property in the first instance; and this probability is, of course, greatly strengthened if the devisee is the person on whom the law, in the absence of disposition, would cast the property. Hence it has become a settled distinction that a devise to the testator's heirs after the death of A. will confer on A. an estate for life by implication; but that under a devise to B., a stranger, after the death of A., no estate will arise to A. by implication." My own impression on the question is, that where on the words of a will a probability arises, raising an implication, which there is nothing to rebut, the court will give effect to it. It so happens that, in most of the cases reported on this subject, additional circumstances have occurred to justify the inference as to the probability; in Roe v. Somerset (sup.), and Bird v. Hunsden (sup.), however, this is not so. The principle established by these cases amounts to this: if a testator uses language which shows a probability that he has a particular intention, the court will give effect to that intention, provided there is nothing to rebut it. No doubt it has been said by some of the judges in the other cases referred to, that unless a probability be fortified by some other probability, the court would not be justified in giving effect to it; but in the two cases I have mentioned the question has been decided in a different way, and I do not think I should be justified, on the mere dicta of certain judges, in overruling the law thus laid down. Apart from this, however, we have, in the present case, the additional circumstance, that until the death of the testator's wife, the persons entitled to the residuary estate cannot be ascertained. The The conveyance in question was dated 4th May case then comes to this: first, the testator has given 1864, and the evidence showed that at that time the directions that his property is not to be divided mortgagor was in a state of pecuniary embarrassamong the residuary legatees until after the deathment, and that the price he received for his equity of his wife; secondly, he has named a class of of redemption was considerably less than its real persons who are not to take until that event hap- value. pens; and thirdly, it cannot be ascertained who those persons actually will be until the death of the wife. This is a stronger case than any of those which have been referred to, containing the dicta of certain judges. So that, independently of the cases of Roe v. Somerset and Bird v. Hunsden, I consider that I should not be warranted in deciding against the claim of the testator's widow to the life-estate of the residue. As to the other question, I think it is relieved from difficulty not only by the testator's words, but also by the wellknown doctrines of law. The testator gives many legacies, and there is no doubt that all the persons to whom these legacies are given must take vested interests unless there is something in the will to rebut that presumption. The words are these, "I wish all the legacies to be paid duty free after the death of my dear father and mother." This amounts only to a postponement of the time of payment; the gift itself is immediate and vested. It has been contended, as against the claims of the legatees, that the testator has not disposed of the interest during the lives of his father and mother. Now interest is an accretion to the property from which it arises. In the administration of an estate every legatee has a right to have his legacy set apart. On what principle, then, can the testator's widow claim the interest in the present case? There would be just as much right to the interest of a legacy given to an infant with payment postponed until he attained twenty-one years. The interest is an integral part of the principal, of which it is an

On the 8th June 1864 the mortgagor, on his own petition, was adjudicated a bankrupt.

The bill was filed by the creditor's assignee of the mortgagor against the mortgagee, and it prayed, inter alia, for a declaration that the deed was fraudulent and void as against the plt. and the other creditors of the bankrupt, and that it might be delivered up and cancelled. That an account might be taken of the rents and profits of the several hereditaments and premises comprised in the deed, received by or for the deft., or which but for his wilful default might or ought to have been received, and that the plt. might be declared entitled to credit on account for what might be found due from the deft. on taking such account. That a receiver might be appointed, and that the deft. might be restrained from selling any part of the said premises, and pay the costs.

Bacon, Q. C. and Cracknall for the plt.

Dickinson, Q. C. and Beck for the deft.

The VICE-CHANCELLOR.-It has been laid down by Mr. Coventry, in Powell on Mortgages, that a mortgagee is at liberty to purchase the equity of redemption from a mortgagor, but that is not the law of this court. The court always looks with jealousy at transactions of this description, and where it finds, as in the present instance, that the mortgagee has obtained from the mortgagor, when in pecuniary difficulties, a conveyance of the equity of redemption at a price considerably less than its worth, it certainly would not be justified in sanc