108 years, from the 29th of September, 1848, subject to a yearly rent of 121.

By indenture, dated the 18th of November, 1848, between Davis of the one part and the defendant of the other part, after reciting the indenture of lease of the 17th of October, 1848, Davis, in consideration of 4507. paid to him by the defendant, and in consideration that the defendant had agreed to advance to Davis the further sum of 100l., bargained, sold and demised the lands comprised in the indenture of lease to the defendant for all the residue then unexpired of the term, except the last five days, subject to a proviso for redemption on payment of the principal moneys intended to be thereby secured, and certain interest thereon. And it was by the indenture further provided that, "if default should be made in payment of the principal moneys intended to be thereby secured, or any part or parts thereof, or of the interest thereof, or of any part or parts thereof, contrary to the covenant therein before contained for payment of the same, then and in such case it should be lawful for the defendant, his executors, administrators or assigns, to sell and dispose of the messuage or tenement, land and premises therein before demised, or intended so to be, with their appurtenances, for all the remainder of the term thereby created, together or in parcels, and either by public sale or private contract, or partly by both, and as well before as after, and subject to any lease or letting which might have been granted or made of the premises respectively, under the power thereinbefore contained, for such price or prices as could reasonably be gotten for the same, and with, under and subject to such conditions and stipulations, as to title or otherwise, as the defendant, his executors, administrators or assigns, might deem expedient, with full power to buy in the same or any part or parts thereof respectively, and to abandon and vary the terms of any and every sale or agreement for or relating to the sale thereof, and to re-sell the premises so bought in, or as to which the contract should have been so abandoned, or any part or parts thereof, at any future auction or by private contract, with like powers from time to time of buying in, abandoning, varying and re-selling thereof,

and in such manner as he or they should think advisable, without being liable for any loss occasioned thereby, or to demise, lease or let the several premises, or any part or parts thereof, for such term of years, or from year to year, or otherwise, and either with or without taking any fine for the same, and upon such terms and in such manner as he or they should think proper; and also, if they should think fit, to receive and take the rents and profits of the premises until sold; and also to make, do, give and execute all acts, deeds, receipts, assignments and assurances requisite for carrying every such sale, lease or letting into execution, either with or without the concurrence of Davis, his executors, administrators or assigns;" and it was thereby agreed and declared that "the receipt or receipts in writing of Lumsden Mackeson, his executors, administrators or assigns, for any money to arise from the said sale or sales, lease or leases, or otherwise payable to him or them by virtue of those presents, should effectually discharge the person or persons to whom the same should be given from being answerable or accountable for the misapplication or non-application, or from being in anywise bound to see to the application of the money therein respectively mentioned to be received, or from being bound or concerned to inquire into the necessity or propriety of any sale or sales, lease or leases, disposition or dispositions, which might be made by virtue of those presents."

On the 22nd of December, 1848, Lumsden Mackeson advanced to Davis the sum of 76l. 178. 1d.; on the 30th of December, 1848, the further sum of 201.; and on the 23rd of January, 1849, the further sum of 31. 28. 11d.; making together the full further sum of 1007. agreed to be advanced by the defendant. Davis made default in payment of the said mortgage moneys and interest secured by the indenture of the 18th of November, 1848, and afterwards became bankrupt. The defendant, on the 3rd of April, 1851, offered the property comprised in the mortgage for sale by public auction; but there were no bidders. On the 12th of May, 1852, the defendant, by Edward Mackeson as his agent, entered into a contract with Henry Paine for the sale of the property for 550l., a copy of

which contract formed part of the case. (The contract simply stated that Paine had become purchaser of the property for 5501.)

At the date of this contract, there was due to the defendant a larger sum than 5501. for principal, interest and costs on his mortgage.

By indenture, dated the 15th of May, 1852, and made between the defendant of the first part, Edward Mackeson of the second part, and Henry Paine of the third part, after reciting, among other things, the indentures of the 17th of October, 1848, and the 18th of November, 1848, and that default had been made in the payment of the principal moneys and interest, and that the defendant, as mortgagee, and in pursuance of the power of sale in the indenture of the 18th of November, 1848, contracted and agreed with and to Paine for the absolute sale to him of the messuage or tenement, land and premises mentioned in the indenture, at or for the price of 550l., and that it had been agreed that the sum of 5007, portion of the purchase-money of 550, should remain on mortgage of the premises, and should be secured as and in manner hereafter mentioned,—it was witnessed that, in pursuance and performance of the agreement, and in consideration of the sum of 50. (portion of the purchase-money or sum of 5501. paid by Paine to the defendant), and also in consideration of the covenant thereinafter contained for payment of the sum of 500l., the residue of the purchase-money or sum of 550l., the defendant, in pursuance of the power or authority reposed in him by the indenture of the 18th of November, 1848, as such mortgagee as aforesaid, and of every other power and authority in anywise enabling him in that behalf, did, at the request of Paine, transfer and bargain, sell and assign unto Edward Mackeson the messuage and premises comprised in the lease of the 17th of October, 1848, as are comprised in and demised by the indenture of the 18th of November, 1848, with the appurtenances, to hold the messuage and premises therein before assigned, or intended so to be, subject to the rent, covenants, conditions and agreements reserved and contained in the indenture of the 17th of October, 1848, but freed and discharged

from all principal moneys and interest intended to be secured by the indenture of the 18th of November, 1848, unto Edward Mackeson, upon certain trusts for sale in case Paine should make default in payment of the sum of 500l. and interest; and it was thereby declared that Edward Mackeson should stand possessed of the proceeds of sale upon trust, in the first place, to pay the costs of the sale; and, in the next place, to pay, retain and satisfy the sum of 500l. and interest; and lastly, to pay, or cause to be paid, the residue of the moneys unto Paine, or other the person or persons for the time being entitled to the same, or as he or they should appoint; and it was thereby declared and agreed that, upon satisfaction of the trust, Edward Mackeson should assign the premises to Paine, and Paine thereby, amongst other things, covenanted for himself, his heirs, executors, administrators and assigns, that he, his executors, administrators and assigns, should and would well and truly pay, or cause to be paid unto the defendant, his executors, administrators or assigns, the principal sum of 500l. and interest for the same after the rate of 51. per cent. per annum in manner following: that was to say, 1007. part of the principal sum and interest for the whole thereof at the rate aforesaid, on the 15th of May, 1853, and the like sum of 1007., other part of the principal sum, on the 15th of May in each succeeding year, until the whole of the principal sum should be paid, with interest at the rate aforesaid for so much of the principal sum as should from time to time remain unpaid; and in default of payment, it should be lawful for Edward Mackeson, at the request of the defendant, to sell and dispose of the messuage or tenement and premises.

The draft of the indenture of the 15th of May, 1852, was perused by an independent solicitor on behalf of Paine, and he paid the 50%. mentioned in the deed on the execution of the deed. Paine was let into the possession of the premises, and he personally occupied them until some time after his bankruptcy hereinafter mentioned. During the time of his occupancy, Paine paid the ground-rent payable under the lease, and he also insured and repaired the premises. Paine paid the interest on

the sum of 500l. referred to in the assignment to him, and paid 2007. on account of the principal. This sum of 2007. was paid as follows: May 12th, 1852, 50%; June 20th, 1853, 50.; May 1st, 1854, 100. The defendant credited the whole sum of 550l. to Davis. As before stated, there was a much larger sum due to the defendant, and Davis was bankrupt. His estate paid no dividend and there were no assets. The defendant did not prove under Davis's estate for the balance due to him.

The defendant, on the 7th of July, 1854, advanced to Paine a further sum of 150l. on security of the property. On the occasion of the advance, a deed was executed, whereby Paine charged the premises with the payment of 150l. in addition to the 350%. due on the prior mortgage.

Paine made default in payment of the principal and interest secured by the indenture of the 7th of July, 1854, and afterwards became bankrupt.

In the month of December, 1859, the defendant agreed to sell the premises to Mr. Luke James Marshall for 425l.

By an indenture, dated the 14th of December, 1859, and made between Edward Mackeson of the first part, the defendant of the second part, and Marshall of the third part, and which indenture was duly executed by the defendant and all the parties thereto, after reciting amongst other things the indentures of the 17th of October, 1848, the 18th of November, 1848, the 15th of May, 1852, and the 7th of July, 1854, Edward Mackeson, for the considerations therein mentioned, at the request of the defendant, assigned and the defendant confirmed unto Luke James Marshall the premises comprised in and demised by the above-mentioned indenture of lease of the 17th of October, 1848, and assigned by the above-mentioned indenture of the 15th of May, 1852, to hold to Marshall, his executors, administrators and assigns, for the residue then to come of the term of 108 years, except the last five days thereof, subject as therein mentioned, and thereby they, Edward Mackeson and the defendant, entered into the usual covenant that they had done nothing to incumber the premises.

Marshall took possession of the premises pursuant to the last-mentioned deed, and in or about the month of September, 1863,

agreed to sell them to the plaintiff for 7001. By indenture, dated the 18th of September, 1863, and made between Luke James Marshall of the one part, and the plaintiff of the other part, which indenture was duly executed by all the parties thereto, Marshall, in consideration of 7007., assigned unto the plaintiff the premises demised by the lease, to hold to the plaintiff for the residue then to come of the term of 108 years, less the last five days, subject as therein mentioned.

On the execution of this deed the plaintiff paid to Marshall the purchase-money of 700., and was let into possession of the premises.

At the time of entering into the contract for purchase, and at the time of paying his purchase-money, the plaintiff had no personal knowledge of the contract of the 12th of May, 1852, nor of any of the facts mentioned in this case, except so far as such facts are disclosed by the several deeds. Messrs. Mackeson & Goldring acted as the solicitors of the defendant in all the transactions entered into by him with respect to the property as above set forth. They also acted as the solicitors of Marshall with respect to the property, and also to the plaintiff's solicitors in preparing the indenture of the 18th of September, 1863; and they were then aware of all the circumstances stated in the case, but did not communicate to the plaintiff the objection as the title, if any, created by the deed of the 15th of May, 1852. On the completion of the purchase from Marshall, all the original deeds set out in this case were delivered to the plaintiff, and they have ever since been, and are now in his possession, or in the possession of those claiming under him. The plaintiff has since the date of his purchase continued, and he is now, in the occupation of the premises. No application, process or proceeding of any kind has been taken or made by or on behalf of any person or persons whomsoever in any way to interfere with the beneficial occupation or enjoyment of the premises by the plaintiff; but upon the plaintiff's attempting to raise money upon the security of the premises, he was met by the objection that his title was bad for the reasons alleged in the declaration in this action.

It is agreed between the parties that the Court shall be at liberty to draw any

inferences and find any facts which, in the opinion of the Court, a jury ought to have drawn or found.

The demurrer to the first breach is to be argued at the same time as the special case.

The questions for the consideration of the Court are, first, is the plaintiff entitled to succeed on the first breach in the declaration? Secondly, is the plaintiff entitled to succeed on the second breach in the declaration?

If the Court shall be of opinion that the plaintiff is entitled to succeed on either breach, the third question for the opinion of the Court is, what is the proper measure of damages, and upon which of the items in the particulars of damage delivered in the action is the plaintiff entitled to recover? (1)

If the Court shall be of opinion that the plaintiff is entitled to succeed on either breach, the verdict for the plaintiff is to stand, but for such an amount of damages only as shall be agreed upon between the plaintiff and the defendant, or as shall be assessed (subject to the opinion to be expressed by the Court upon the third question above submitted) by the arbitrator. But if the Court shall be of opinion that the plaintiff is not entitled to succeed on either of the breaches alleged in the declaration, then the verdict for the plaintiff is to be set aside, and a verdict to be entered for the defendant.

Joshua Williams, of the Chancery bar (Beresford with him), for the plaintiff.There are two questions in this case: first, whether the power of sale in the mortgage-deed was properly executed by the sale in 1852; secondly, whether the defendant has committed a breach of his covenant against incumbrances in the deed of 1859. The first question is somewhat bare of authority; but looking at the jealous control which Courts of equity have always exercised over mortgage transactions, it is submitted that the power of sale ought to be strictly exercised, and that a sale which continues the mortgagee in the ownership of the property is not lawful. The obvious intention of the parties to the original mortgage was that there should be a power

(1) The decision of the Court rendered it unnecessary to argue this question as to the damages.

"In

of selling for ready money only, and that the property should not be employed for the purpose of fresh mortgages. Here the mortgagee has used the power for his own convenience, and although he, no doubt, meant to act legally he was guilty of what was in strictness a fraud on the power. It is the same as if he himself had bought back the property within a week, which would clearly have been illegal—Robertson v. Norris (2). Davey v. Durrant (3) may perhaps be relied upon by the other side. But this case is no direct authority, as is shewn by Sugden's Vendors and Purchasers, 14th edit. 66, where Lord St. Leonards says, Davey v. Durrant (3) it seems to have been considered that under such a power of sale a part of the purchase-money may be left on mortgage, but this point did not arise, as the mortgage was a distinct transaction, and the mortgagee who sold submitted to be charged with the whole of the purchase-money, and that one of the Lords Justices considered was the proper course." In Davey v. Durrant (3) the power of sale in the mortgage deed was to sell the premises either together or in parcels, and by public sale or private contract, without the consent of the mortgagor, for the best price in money that could be reasonably obtained for the same, and to buy in when offered for sale, and to make and execute all necessary contracts with and conveyances unto or according to the direction of the purchaser or purchasers of the same hereditaments and premises respectively. It appeared that the mortgagee in selling the property allowed part of the purchase-money to remain outstanding on a mortgage. Lord Justice Knight Bruce says, "It was said that the arrangement by which part of the purchase money was suffered to remain on a mortgage of the property sold was such as to reduce the price, and was otherwise unjustifiable. But that arrangement appears to me to have increased rather than diminished the price, if the price was at all affected by it. Nor can I say that it is beyond the right or authority of a mortgagee, with a power of sale, to effect a sale of which one of the terms shall be that even a considerable portion of the purchase-money

(2) 1 Giff. 421.

(3) 1 De Gex & J. 535; s. c. 26 Law J. Rep. (N.S.) Chanc. 830,

shall be allowed to remain on mortgage of the property, that mortgage being as between the seller and those entitled to the equity of redemption, at the seller's risk, that is, he charging himself with the whole amount of the purchase-money in account with them, as has been done in the present instance." But the judgment of Lord Justice Turner is to a different effect. His Lordship says, "The agreement was that the mortgagee would either allow this part of the purchasemoney to remain on mortgage or would procure the amount for the purchaser on mortgage; and it appears that the transaction was carried into effect by a mortgage being made by the defendant to a person who was believed on his part to have actually advanced the money. I doubt, therefore, whether this objection on the part of the plaintiff at all arises. But, supposing it to arise, I find on referring to the power of sale in the mortgage-deed that all arrangements made by the mortgagee are to be as binding as if the mortgagor had concurred, and I think, therefore, that this objection is wholly untenable." In the present case, the clause as to the receipt discharging the purchaser from seeing to the application of the purchase-money, shews that there could only be a sale for ready

Pulteney (5), Severn and Clerke's case (6), Calvert v. Sebright (7), Bac. Abr., tit. 'Covenant,' (a.), Sugden's Vendors and Purchasers, 14th edit. 603.

Mellish (Gray, and W. W. Mackeson, of the Chancery bar, with him), for the defendant. It is stated in the case as an admitted fact that there was a valid contract of sale. The power of sale in the mortgage-deed is not required for the purpose of making a good title at law to the property, but only for the purpose of barring the equity of redemption. This equity of redemption is barred as soon as there is a valid contract of sale, and it cannot matter how the conveyance is made. It is the settled practice in equity that in a suit for specific performance the mortgagor need not be made a party-see Corder v. Morgan (8). This shews that in equity the contract constitutes the sale, and it cannot concern the mortgagor how it is carried out. This Court will only consider the question whether the title is good or bad. After crediting the mortgagor with the whole amount of the purchase-money the mortgagee, in an action on the covenant, could not have resisted a plea of payment nor could he have proved on the mortgagor's estate in bankruptcy.

[LUSH, J.-And if the amount of the purchase-money had exceeded the principal which was due, the mortgagor could have sued in equity for the balance.]

Davey v. Durrant (3) is an authority in favour of the defendant. It is true that Turner, L.J. in that case refers to the clause by which arrangements by the mortgagee are to be as binding as if the mortgagor had concurred; but it does not follow that his decision turned upon that clause. Whether the purchase-money is paid down to the mortgagee or credited by him to the mortgagor cannot make a farthing's difference.

The COURT then called on the plaintiff's counsel to reply to the first point.

Joshua Williams, in reply.-It is admitted that there was a valid contract of sale, but though the parties agreed to sell according

(5) 2 Ves. 544. (6) 1 Leo. 122. (7) 15 Beav. 156. (8) 18 Ves. 344.