PART IV. Administration and Marshalling of Assets.]-The personalty is the primary fund for the payment of debts and legacies, and, in the administration of assets, courts of equity follow the same rules in regard to legal assets which are adopted by courts of law, and give the same priority to the different classes of creditors which is enjoyed at law; but in regard to equitable assets courts of equity, in the actual administration of them, adopt very different rules from those adopted in courts of law in the administration of legal assets. Thus, in equity, it is a general rule that equitable assets shall be distributed equally and pari passu, among all the creditors, without any reference to the priority or dignity of the debts, and if the fund falls short, all the creditors are required to abate in proportion. See now 32 & 33 Vict. c. 46, abolishing the distinction as to priority of payment between specialty and simple contract debts, ante, Vol. I. pp. 625, 626, note. In the sense of courts of equity, the marshalling of assets is such an arrangement of the different funds under administration as shall enable all the parties, having equities thereon, to receive their due proportions, notwithstanding any intervening interests, liens, or other claims of particular persons to prior satisfaction out of a portion of these funds. Thus, where there exist two or more funds, and there are several claimants against them, and at law one of the parties may resort to either fund for satisfaction, but the others can come upon one only, these courts of equity exercise the authority to marshall (as it is called) the funds, and by this means enable the parties whose remedy at law is confined to one fund only, to receive due satisfaction (Story's Equity Juris. § 553, 558). As to the payment of mortgage debts out of personalty, see 17 & 18 Vict. c. 113, and 30 & 31 Vict. c. 69. Suits by Legatees.]-Courts of equity exercise jurisdiction in regard to legacies, whether pecuniary or specific. No suit will lie at the common law to recover them unless the executor has assented thereto. In cases of specific legacies of goods and chattels, after the executor has assented thereto, the property vests immediately in the legatee, who may maintain an action at law for their recovery. The same rule has been attempted to be applied at law to cases of pecuniary legacies, where the executor had expressly assented thereto, and there are certainly decisions that, in the case of an express promise to pay a pecuniary legacy in consideration of assets, an action will lie; but these cases seem not to have been decided upon satisfactory principles, and have been doubted and disapproved (Story's Equity Juris. § 591). But whether a pecuniary legacy is recoverable at law or not, after an assent thereto by an executor, it is very certain that courts of equity now exercise a concurrent jurisdiction with all other courts in cases of legacies, whether the executor has assented thereto or not (Id.). Legatees are in general entitled to the same equities as creditors where the personal estate is exhausted by specialty creditors. They are therefore permitted to stand in the place of the specialty creditors against the real assets descended to the heir (Story's Equity Juris. § 565). The jurisdiction of the original County Court Act, 9 & 10 Vict. c. 96, s. 65, as enlarged by the 13 & 14 Vict. c. 61, s. 1, extended to the recovery of any demand not exceeding the sum of 50l., which is the amount or part of the amount of a distributive share under an intestacy, or of any legacy under a will. For legacies within this amount, proceedings may still be taken as heretofore. As to the practice and cases decided under this provision, see ante, Vol. I. p. 767. § 3.-JURISDICTION IN SUITS FOR THE EXECUTION OF TRUSTS. "All suits for the execution of trusts in which the trust estate or fund shall not exceed in amount or value the sum of five hundred · pounds" (u). What are technically called trusts, that is, estates vested in persons upon particular trusts and confidences, are wholly without any cognizance at the common law; and the abuses of such trusts and confidences are beyond the reach of any legal process. But they are cognizable in courts of equity; and hence they are called equitable estates; and an ample remedy is there given in favour of the cestuis que trust (the parties beneficially interested) for all wrongs and injuries, whether arising from negligence or positive misconduct (Story's Equity Juris. § 29). Independently of the cases obviously within this branch of jurisdiction, the power here conferred will be useful in a class of cases which have been held to be just without the jurisdiction of the county court conferred by the original act giving power to sue in the county court for small legacies. Thus, where a testator devised to his son certain freehold and leasehold estates and chattels, on condition of his son paying (inter alia) to his mother the sum of 4s. a week during her life, it was held, that the mother's claim was not a claim of a legacy within the provision referred to (Longbottom v. Longbottom, 22 L. J. (N. S.) Exch. 74). A testator bequeathed to the defendant 1007. in trust to pay that amount to the plaintiff on his attaining twenty-one years, and in the meantime to invest it and to pay the plaintiff the interest, with power to the defendant, whom he styled "trustee," to advance either the part or the whole for the education, &c. of the plaintiff, or otherwise for his benefit during his infancy. The plaintiff, on attaining his majority, sued the defendant in the county court for a balance of 50l. of the 100l., part having been applied pursuant to the terms of the will; it was held, that the county court had no (u) 28 & 29 Vict. c. 99, s. 1, sub-s. (2), ante, p. 3. PART IV. СНАР. І. CHAP. I. PART IV. jurisdiction under the original act, the 1007. not having been given as a legacy but by way of trust (Phillips v. Hewston, 25 L. J. (N. S.) Exch. 133, and see ante, Vol. I. p. 770). It is clear that the claimants in both the above cases would be entitled to relief in the county court under either the first or second sub-sections of sect. 1 of "The County Courts Act, 1865." It is to be observed that the county court jurisdiction extends to constructive or implied trusts as well as to express trusts (x). § 4.-JURISDICTION IN SUITS FOR FORECLOSURE OR Redemption, OR FOR ENFORCING ANY CHARGE OR LIEN. "All suits for foreclosure or redemption, or for enforcing any charge or lien, where the mortgage, charge or lien shall not exceed in amount the sum of five hundred pounds" (y). Rights of Mortgagors and Mortgagees.]-Although upon nonpayment of the mortgage debt at the time stipulated by the deed the property becomes forfeited and the estate absolutely vested in the mortgagee at the common law, the courts of equity interpose and consider the real value of the tenements compared with the sum borrowed; "and if the estate be of greater value than the sum lent thereon, they will allow the mortgagor at any reasonable time to recall or redeem his estate, paying to the mortgagee his principal, interest and expenses: for otherwise, in strictness of law, an estate worth 1,000l. might be forfeited for non-payment of 1007. or a less This reasonable advantage, allowed to mortgagors, is called the equity of redemption: and this enables a mortgagor to call on the mortgagee, who has possession of his estate, to deliver it back and account for the rents and profits received, on payment of his whole debt and interest (z). But, on the other hand, the mort sum. (x) Clayton v. Renton, Law Rep., 4 Eq. 158; 36 L. J. (N. S.) Ch. 428. (y) 28 & 29 Vict. c. 99, s. 1, sub-s. (3), ante, p. 3. Where a second mortgagce filed a plaint against the first mortgagee and a purchaser from him (after notice of the second mortgage and claim to redeem), and the mortgagor's representatives, praying that the sale might be declared invalid and set aside, and also praying for an order for redemption and foreclosure; it was held, that the suit was within the county court jurisdiction although the offer to redeem was disputed (and, therefore, not being an ordinary redemption suit), and although the suit prayed for the deed to be set aside. Powell v. Roberts, Law Rep. 9 Eq. 169; 39 L. J. (N. S.) Ch. 44. In holding that the county court had jurisdiction, it appears to have been on the ground that the prayer should not have been to set aside the deed, as it would not be proper in a suit of that kind, and that the decree was properly silent on the point. (z) "It is now firmly established that the mortgagor has an estate in the land in equity, in the nature of a trust estate, which may be granted, devised and entailed." Story's Equity Juris. § 1015. gagee may either compel the sale of the estate, in order to get the whole of his money immediately; or else call upon the mortgagor to redeem his estate presently, or in default thereof, to be for ever foreclosed from redeeming the same; that is, to lose his equity of redemption without possibility of recall" (2 Bla. Comm. 158, 159). If the mortgagor permits the mortgagee to hold possession of the mortgaged property for twenty years without accounting, or without admitting that he possesses a mortgage title only, the mortgagor loses his right of redemption, and the title of a mortgagee becomes as absolute in equity as it previously was in law. So with respect to a mortgagee: If he has suffered the mortgagor to remain in possession for twenty years after the breach of the condition without any payment of interest or any admission of the debt, or other duty, the right of foreclosure will generally be deemed to be barred and extinguished. However, in cases of this sort, as the bar is not positive, but is founded upon a presumption of payment, it is open to be rebutted by circumstances. (Story's Equity Juris. § 1028a, 10286, 8th edit.) As powers of sale are now generally inserted in mortgages, there will seldom be any necessity for resorting to the court to compel a sale in the case of express mortgages; but, on the other hand, in suits for foreclosure the court may direct a sale of the mortgaged property instead of a foreclosure on such terms as it may think fit (15 & 16 Vict. c. 86, s. 48); and in most cases, it is presumed, the judge of the county court would act on this power, unless indeed it were apparent that a sale would not realize more than the mortgage debt and costs. It may be observed here that by the statute 4 & 5 W. & M. c. 16 (still in force), if any person mortgages his estate and does not previously inform the mortgagee in writing of a prior mortgage, or of any judgment or incumbrance which he has voluntarily brought upon the estate, the mortgagee holds the estate as an absolute purchaser, free from the equity of redemption of the mortgagor. Equitable Mortgages.]—"Mortgages may not only be created by the express deeds and contracts of the parties, but they may also be implied in equity, from the nature of the transactions between the parties; and then they are termed equitable mortgages. Thus for instance, it is now settled in England, that if the debtor deposits his title deeds to an estate with a creditor, as security for an antecedent debt, or upon a fresh loan of money, it is a valid agreement for a mortgage between the parties, and is not within the operation of the Statute of Frauds” (a). This doctrine is not "ordinarily applied to enforce parol agreements to make a mortgage, or to make a deposit of title deeds for (a) Story's Equity Juris. § 1020. PART IV. CHAP. I. PART IV. СНАР. 1. such a purpose; but it is strictly confined to an actual immediate and bonâ fide deposit of the title deeds with the creditor, as a security, in order to create the lien" (b). An equitable mortgage will not, in general, avail against a subsequent mortgagee by deed without notice of the prior deposit of the title deeds. Still the second mortgagee may, by not inquiring from the mortgagor for the title deeds, be guilty of gross negligence, sufficient to invalidate his title; but it is otherwise if he has made such inquiry and a reasonable excuse was given for their nondelivery (c). Priority between actual Mortgagees.]-In the case of actual mortgage, the mere fact that a first mortgagee has left the title deeds in the possession of the mortgagor, without any attendant circumstances of fraud, will not be sufficient to postpone such first mortgagee to a second, who has taken the title deeds with his mortgage without any notice of the prior mortgage (d). "The Bankruptcy Act, 1869," reserves the remedies of mortgagees, and if a mortgagee desires to foreclose against a bankrupt, he can only get that by an equitable suit, but if he only desires a sale, he ought to proceed in the bankruptcy court, although he has the right to proceed in equity (e). As to the right and mode of redeeming in the case of ejectment by mortgagee against mortgagor, see County Court Rules, 1868, Rule 256, ante, Vol. I. pp. 410, 411 (ƒ). Where in a mortgagee's suit, the estate is sold under the direction of the court; and the purchase-money is insufficient to pay all the incumbrances, no puisne incumbrancer is entitled to his costs incident to the sale until the debts and costs of all prior incumbrances have been fully discharged (g). § 5.-JURISDICTION IN SUITS FOR SPECIFIC PERFORMANCE of, or FOR THE DELIVERING UP OR CANCELLING, ANY AGREEMENT FOR THE SALE OR PURCHASE OF PROPERTY. "The County Courts Act, 1865," under the fourth head in sect. 1, gave jurisdiction to the county courts in "all suits for (b) Story's Equity Juris. § 1020. (d) Story's Equity Juris. § 1020. H. L. Cas. 514; 34 L. J. (N. S.) Ch. 468. (e) White v. Simmons, 40 L. J. (N. S.) Ch. 689; see also The Metropolitan Bank v. Offord, 39 L. J. (N. S.) Ch. 820. (f) See also Bourton v. Williams, Law Rep. 9 Eq. 297; 39 L. J. (N. S.) Ch. 800. (g) Wonham v. Machin, Law Rep. 10 Eq. 447; 39 L. J. (N. S.) Ch. 789. |