3 & 4 Will. 4, v. Williams (36 Ch. D. 573); Watkins v. Barnard (1897, 2 Q. B. 521); c. 104. Hasluck v. Clark (1899, 1 Q. B. 699).

Executor may prefer creditors.

(9) Retainer by executor. Origin of doctrine.

By whom right exercisable.

Against whom.

Out of what property.

The power to make an order is discretionary (Higgs v. Weaver, 29 Ch. D. 236). As to an executor's right of retainer being exercisable after such an order, see Re Rhoades (1899, 2 Q. B. 347).

Before judgment in an administration action an executor or administrator may prefer one creditor to another of equal degree (Vane v. Rigden, 5 Ch. 669; Maltby v. Russell, 2 Sim. & Stu. 227; see Re Hankey, CunliffeSmith v. Hankey, 1899, 1 Ch. 541; Re Orsmond, 58 L. T. 24); even though the debt be barred by statute (Stahlschmidt v. Lett, 1 Sm. & G. 415); and even though the representative have notice of the commencement of an administration action (European Society v. Radcliffe, 7 Ch. D. 733). In the last-mentioned case it was said by Jessel, M. R., that to prevent preferential payments a creditor commencing an administration action should, on issuing a writ, apply for a receiver; but this was disapproved by the Court of Appeal in Phillips v. Jones (28 Sol. J. 360). And it has been held that a receiver will not be appointed except where a case is shown of assets being wasted (Harris v. Harris, 56 L. T. 507; Re Wells, Moloney v. Brooke, 45 Ch. D. 575).

An executor's right of retaining out of a testator's assets a debt owing to himself by the testator was the exercise by the executor in his own favour of the right of preference (Talbot v. Frere, 9 Ch. D. 571; see Re Hankey, 1899, 1 Ch. 543). It was a right against legal assets, and "was given for this reason. When the creditor was also executor he could not sue himself. Any other creditor by suing the executor might get priority by judgment obtained; and the executor not being able to sue himself was allowed, as against other creditors, to retain" (Re Illidge, Davidson v. Illidge, 27 Ch. Div. 481; see Re Baker, Nicholls v. Baker, 44 Ch. Div. 273). The right might be exercised by the executor of an executor if the right was claimed during the lifetime of the latter (Wilson v. Coxwell, 23 Ch. D. 764), but only out of assets which came to the hands of the latter or were paid into court in his lifetime (Re Compton, Norton v. Compton, 30 Ch. D. 15). The right might also formerly be exercised by an administrator (Re May, Crawford v. May, 45 Ch. D. 499). But see now the form of administration bond (Practice Note, 1899, W. N. 262; see Davies v. Parry, 1899, 1 Ch. 602; Re Belham, Richardes v. Yates, 1901, 2 Ch. 52).

An executor's retainer is not affected by Administration of Estates Act, 1869, s. 1 (Crowder v. Stewart, 16 Ch. D. 368); but can be exercised only as against creditors in equal degree (Wilson v. Coxwell, 23 Ch. D. 764; Re Jones, Calver v. Laxton, 31 Ch. D. 440; Re Briggs, Earp v. Briggs, 1894, W. N. 162; Re Orsmond, 58 L. T. 24; see Talbot v. Frere, 9 Ch. D. 568; Re Allen, Adcock v. Evans, 1896, 2 Ch. 345; Laver v. Botham, 1895, 1 Q. B. 59). But a retainer made without notice of a debt of higher degree will be good (Re Fludyer, Wingfield v. Erskine, 1898, 2 Ch. 562).

An executor cannot retain out of equitable assets (Re Poole, Thompson v. Bennett, 6 Ch. D. 739; Walters v. Walters, 18 Ch. D. 182). So real estate made assets under Administration of Estates Act, 1833, being equitable assets, an executor had no right of retainer out of it (Walters v. Walters, 18 Ch. D. 182; Davidson v. Illidge, 27 Ch. Div. 478). Real estate being now legal assets under the Land Transfer Act, 1897 (post, p. 418), it would seem that the right of retainer would apply. An executor cannot retain out of assets got in by a receiver (Re Jones, Calver v. Laxton, 31 Ch. D. 440); but where the executor had paid a debt out of assets in his hands under an order of court made "without prejudice to any question of retainer," he was allowed to retain out of assets subsequently got in by the receiver (Re Lance, Sharp v. Rebbeck, 1900, W. N. 29); and he may retain out of assets got in by himself and handed over to a receiver (Re Harrison, Latimer v. Harrison, 32 Ch. D. 395; Re Giles, Jones v. Pennefather, 1896, 1 Ch. 956); and also (where the estate is being administered in bankruptcy) out of assets got in by himself and paid over to the trustee in ignorance of the right (Re Rhoades, 1899, 2 Q. B. 347). He can also

c. 104.

retain out of assets paid into court by him either actually or in substance 3 & 4 Will. 4, (Richmond v. White, 12 Ch. Div. 361; Re Giles, sup. ; Re Langley, Johnson v. Langley, 68 L. J. Ch. 361); but he cannot retain out of a fund transferred from the credit of another suit to the credit of the administration action (Pulman v. Meadows, 1901, 1 Ch. 233). The court has refused to pay funds out of court to an executor to enable him to retain his debt (Trevor v. Hutchins, 1896, 1 Ch. 844). When the executor's debt exceeds the value of the assets he may retain the assets in specie (Re Gilbert, 1898, 1 Q. B. 282).

An executor can retain in respect of a debt due to himself jointly with In respect of others (Crowder v. Stewart, 16 Ĉh. D. 368; Re Hubback, International Co. what debts. v. Hawes, 29 Ch. Div. 935; Re Bolton, 1892, W. N. 114), or due to himself as trustee (International Co. v. Hawes, sup.); and in such a case is bound to retain if the c. q. t. require it (Sander v. Heathfield, 19 Eq. 21); but he cannot retain a debt to which he is entitled as c. q. t., the right to sue for which is vested in trustees (Re Dunning, 54 L. J. Ch. 900; Re Hayward, Tweedie v. Hayward, 1901, 1 Ch. 221; overruling Loomes v. Stotherd, 1 S. & S. 461). A person to whom administration is granted durante minoritate, or to the use of a lunatic, may retain for their benefit (Franks v. Cooper, 4 Ves. 763); but where the grant was made to the manager of a bank who were creditors (but not expressed to be made for the use of the bank), he could not retain the bank's debt (Re Richards, Lawson v. Hervey, 1901, 2 Ch. 399). The right may be exercised in respect of the right of indemnity as surety for the testator (Re Giles, Jones v. Pennefather, 1896, 1 Ch. 956), or in respect of claims for damages for breach of pecuniary contracts (Re Compton, Norton v. Compton, 30 Ch. D. 15; see Re Allen, Adcock v. Evans, 1896, 2 Ch. 345). In the case of a debt payable in the form of an annuity where the estate was insolvent, an administratrix was allowed to retain arrears, but not the value of her future annuity (Re Beeman, Fowler v. James, 1896, 1 Ch. 48). The right can be exercised by an administratrix in respect of moneys advanced out of her separate estate to her deceased husband for his business (Re May, Crawford v. May, 45 Ch. D. 499). An executor may retain a debt notwithstanding that the amount has not been ascertained (Morris v. Morris, 10 Ch. 68); and in respect of a debt barred by the Statute of Limitations (Beswick v. Orpen, 16 Ch. Div. 207; see Re Rownson, Field v. White, 29 Ch. Div. 359), but not one barred by the Statute of Frauds (Re Rownson, sup.).

The right need not be asserted before occasion arises (Re Rhoades, 1899, Effect of pro2 Q. B. 347). It may be exercised after a decree in an administration ceedings on action (Re Barrett, Whitaker v. Barrett, 43 Ch. D. 70; Davies v. Parry, right. 1899, 1 Ch. 602), and after certificate under an administration decree (Re Giles, Jones v. Pennefather, 1896, 1 Ch. 956). The right is not waived by the executor commencing an administration action on behalf of himself and all other creditors, and submitting to account (Ex p. Campbell, Campbell v. Campbell, 16 Ch. D. 198). The court will not interfere with the retainer by appointing a receiver (Re Wells, Molony v. Brooke, 45 Ch. D. 569). The right of retainer is not affected by the Jud. Act, 1875, s. 10 (ante, p. 407); nor (so far as regards assets got in by the executor) by the transfer of the administration to bankruptcy under sect. 125 of the Bankruptcy Act, 1883 (Re Rhoades, 1899, 2 Q. B. 347).

It was said before the Land Transfer Act, 1897, that an heir-at-law or By heir-atdevisee, where the estate was not charged with debts, might retain a law. debt to which he was entitled by specialty in which the heirs were bound, but not a simple contract debt (Re Illidge, Davidson v. Illidge, 27 Ch. Div. 478). Consider now the effect of the L. T. Act, 1897 (post, p. 417).

(10

As regards the application in payment of the debts of a person domi- Administraciled in one country of assets belonging to him situate in another, it has tion of assets been laid down that the proper order and priority of distribution of assets in one country is always a matter for the lex fori, and the country where the distribution where owner takes place always claims to itself the right to regulate the course of dis- domiciled in tribution (Thurburn v. Steward, L. R. 3 P. C. 513; see Re Doetsch, Matheson v. Ludwig, 1896, 2 Ch. 836). Personal assets for the purpose of

another.

c. 104.

3 & 4 Will. 4, administration as distinguished from distribution among successors are governed by the law, not of their owner's domicil, but of their locality (Blackwood v. Reg., 8 App. Cas. 93; Commissioners of Stamps v. Hope, 1891, A. C. 476; Henty v. Reg., 1896, App. Cas. 567, overruling on this point Wilson v. Dunsany, 18 Beav. 293). Compare in the case of real assets Harrison v. Harrison, 8 Ch. 342; Re Hewit, Lawson v. Duncan, 1891, 3 Ch. 568. In the case of a debt contracted abroad by a domiciled Englishman, the lex loci contractus does not entitle the creditor to prior payment out of equitable assets administered here (Pardo v. Binghẩm, 6 Eq. 485). An executor who has taken out probate in one country must not remit assets situate there to another country, in order to give a priority which would not exist in the first country (Cook v. Gregson, 2 Drew. 286; see Re Klæbe, Kannreuther v. Geiselbrecht, 28 Ch. D. 179). In the administration of the English estate of a deceased domiciled abroad, foreign creditors are entitled to dividends pari passu with English creditors (Re Klæbe, Kannreuther v. Geiselbrecht, 28 Ch. D. 175).

(11) Copyholds heretofore

not liable to debts.

Copyholds were not within the statute 3 & 4 Will. & Mary, c. 14, nor the 47 Geo. 3, sess. 2, c. 74, nor the Debts Recovery Act, 1830, and consequently before this act were not liable to specialty debts, or debts of traders. Before this act, copyhold estates were not liable, either at law or in equity, to the debts of a testator any further than he charged them (Aldrich v. Cooper, 8 Ves. 393). But where a testator having both freehold and copyhold estates, charged all his real estates with the payment of his debts, if he had surrendered the copyhold to the use of his will, the freehold and copyhold would have been applied rateably; but if he had not surrendered the copyhold, it would not have been applied until the freehold was exhausted (Growcock v. Smith, 2 Cox, 397; Coombes v. Gibson, 1 Br. C. C. 273; Kentish v. Kentish, 2 Br. C. C. 257). But equity would, before the statute 55 Geo. 3, c. 192, supply a surrender to the use of a will where a manifest intent to charge copyholds with debts appeared in the will (Drake v. Robinson, 1 P. Wms. 443; Bateman v. Bateman, 1 Atk. 421). As to copyholds being charged by a will, see Noel v. Weston (2 Ves. & Bea. 269); Godolphin v. Penneck (2 Ves. Sen. 271); Doe v. Ludlam (7 Bing. 275); Ronalds v. Feltham (T. & R. 418). Where one party had a charge on freehold and copyhold estate, and another party on the freehold estate only, it was held, that the latter was entitled to require that the former should be satisfied out of the copyhold estate so far as it would extend (Tidd v. Lister, 10 Hare, 157).

Formerly copyholds were not liable to an extent (Park. R. 195; Drury v. Man, 1 Atk. 96); and neither the Crown nor the subject was allowed to take copyhold tenements held in fee or for lives in execution (Aldrich v. Cooper, 8 Ves. 394); yet it was said that leases for years of copyhold tenements, granted by virtue of a licence from the lord, might be taken in execution, that being a common law interest (3 Prest. Abstr. 351). Sect. 11 of the Judgments Act, 1838, rendered copyholds liable to be taken in execution. Before that act they could not be taken in execution upon a judgment (Cannon v. Pack, Vin. Abr. Copyhold (O. e), pl. 6; 2 Eq. Cas. Abr. 226, pl. 6); nor be seized upon an outlawry, because it would have been prejudicial to the lord of the manor (R. v. Budd, Park. R. 190). But it seems that they may be sequestered (Dunkley v. Scribnor, 2 Madd. 443; Carmarthen v. Hawson, 3 Swanst. 294); although the sequestration will not be revived against the heir of the party who was sequestered (Whitehead v. Harrison, 1 Barn. K. B. 431); and they are within the rules as to marshalling assets (Aldrich v. Cooper, 8 Ves. 388; 2 Pow. on Mort. 263, n.). But a trust of copyholds, which descended according to the rules of the common law, was assets in the hands of the heir of the cestui que trust, as the customary descent is in that case broken (Kelly v. Kelly, 2 Éq. Cas. Abr. 509, pl. 4).

.

V. THE LAW OF PROPERTY AMENDMENT ACT, 1859. 22 & 23 VICT. c. 35, ss. 14-18, AND 23.

[13th August, 1859.]

raise money

press power

14. Where by any will which shall come into operation after 22 & 23 Vict. the passing of this act the testator shall have charged his real c. 35, s. 14. estate or any specific portion thereof with the payment of his Devisee in debts, or with the payment of any legacy or other specific sum trust may of money, and shall have devised the estate so charged to any by sale, nottrustee or trustees for the whole of his estate or interest therein, withstanding and shall not have made any express provision for the raising of want of exsuch debt, legacy or sum of money out of such estate, it shall be in the will. lawful for the said devisee or devisees in trust, notwithstanding any trusts actually declared by the testator, to raise such debts, legacy or money as aforesaid, by a sale and absolute disposition by public auction or private contract of the said hereditaments or any part thereof, or by a mortgage of the same, or partly in one mode and partly in the other, and any deed or deeds of mortgage so executed may reserve such rate of interest and fix such period or periods of repayment as the person or persons executing the same shall think proper.

The other sections of this act will be found under different heads in this work (see ante, p. 377, and post).

Having regard to the provisions of the Land Transfer Act, 1897 (post), it will not be necessary in the case of persons dying after 1897 to have recourse to these sections, except in case of copyholds (see L. T. Act, 1897, s. 1 (4), post, p. 417).

(1) What amounts to a Charge of Debts or Legacies on Real Estate

...411.

(2) Effect of Charge of Debts before the Act...413.

(3) Cases under the Act...414.

(4) Effect of Lapse of Time on Executor's Power...414.

(5) Power to Mortgage...414.

(1)

On the question, what amounts to a charge of debts upon real estate, Charge of a mere authority to trustees to pay claims on the estate is not such a debts on real charge (Re Head's Trustees, 45 Ch. D. 310). A general direction, however, estate. in a will to pay debts, charges them ordinarily on all the testator's real estate (Graves v. Graves, 8 Sim. 55; Cook v. Dawson, 29 B. 126; Corser v. Cartwright, L. R. 7 H. L. 735; Re Adams and Perry, 1899, 1 Ch. 554); unless a contrary intention appears in the will (Thomas v. Britnell, 2 Ves. Sen. 313; see Re Butler, Le Bas v. Herbert, 1894, 3 Ch. 258). Such contrary intention may appear (1) by reason of there being a specific charge of debts on part of the real estate (Palmer v. Graves, 1 Keen, 545; Corser v. Cartwright, sup.), in which case the words must be clear (Taylor v. Taylor, 6 Sim. 246; Jones v. Williams, 1 Coll. 156; see Wrigley v. Sykes, 21 Beav. 337; Marshall v. Gingell, 21 Ch. D. 790); or (2) by reason of the direction being a direction to executors to pay, in which case the presumed intention is that the debts are to be paid only out of the property which passes to the executors as such (Wasse v. Heslington, 3 M. & K. 495; Bailey v. Bailey, 12 Ch. D. 272). Where, however, in addition to the direction to the executors to pay debts the will contains a devise of real estate to them, such real estate may be

22 & 23 Vict. c. 35, s. 14.

Charge of legacies on real estate.

charged, whether under the devise they take beneficially for life or otherwise (Henvell v. Whitaker, 3 Russ. 343; Finch v. Hattersley, ib. 345), or merely on trust (Hartland v. Murrell, 27 Beav. 204; Re TanquerayWillaume, 20 Ch. Div. 465; Re Brooke, Brooke v. Brooke, 1894, 1 Ch. 43; Re Stokes, Parsons v. Miller, 67 L. T. 223; see De Burgh Lawson v. De Burgh Lawson, 41 Ch. D. 568, the will of a married woman in exercise of a power). But it is a question of intention (Bailey v. Bailey, 12 Ch. D. 272; Wasse v. Heslington, 3 M. & K. 495). And such real estate will not be charged, either where the executors take unequal benefits (Harris v. Watkins, Kay, 438; see Re Tanqueray-Willaume, 20 Ch. Div. 465), or where the devise is to one executor only (Warren v. Davis, 2 M. & K. 49; see Marshall v. Gingell, 21 Ch. D. 790). Real estates made assets by means of such a charge are equitable assets (Silke v. Prime, 1 Br. C. C. 138; Shiphard v. Lutwidge, 8 Ves. 26); as to equitable assets, see ante, p. 401. With regard to legacies, where there is only a general gift of them, they are not charged on the testator's real estate (Kightley v. Kightley, 2 Ves. Jun. 328). To charge them a clear intention must be shown (Bench v. Biles, 4 Mad. 188); clearer, it would seem, than in the case of debts (Kightley v. Kightley, sup.). Where there is a direction that the real estate be sold, the proceeds to form part of the personal estate, the realty is charged (Bright v. Larcher, 3 De G. & J. 148; Field v. Peckett, 29 B. 568). A direction to the executor to pay legacies would seem to charge real estate devised to him (Alcock v. Sparhawk, 2 Vern. 228; Elliot v. Handcock, ib. 143; Cross v. Kennington, 9 Beav. 150); but a direction to executors to realise for the payment of legacies such part of the testator's estate as they thought right, did not charge the real estate (Re Cameron, Nixon v. Cameron, 26 Ch. D. 19). A general charge of legacies on the real estate did not charge specifically devised realty (Spong v. Spong, 3 Bli. N. S. 84; Conron v. Conron, 7 H. L. C. 168); except where the legacies were coupled with debts (Maskell v. Farrington, 3 D. J. & S. 338; see Mannox v. Greener, 14 Eq. 456); or where the specific devises comprised the whole of the testator's real estate (Bank of Ireland v. McCarthy, 1898, A. C. 181). Where legacies are charged on the real estate if the personal estate be deficient, see as to the time when the deficiency is to be ascertained, Richardson v. Horton, 13 Eq. 121, and cases there referred to; McCarthy v. McCartie, 1897, 1 I. R. 86.

Where a will gives legacies generally, and also gives the residue of the real and personal estate in one mass, the result is to charge the legacies upon the residuary real estate (Greville v. Browne, 7 H. L. C. 689; Re Bellis, 5 Ch. D. 504; Re Dyson and Fowke, 1896, 2 Ch. 720; Re Adams and Perry, 1899, 1 Ch. 554). The rule applies where the gift is of all real and personal estate "not otherwise disposed of" (Re Bawden, National Provincial Bank of England v. Cresswell, 1894, 1 Ch. 693; see Re Smith, Smith v. Smith, 1899, 1 Ch. 369); and whether the legacies are given before or after the gift of residue (Elliott v. Dearsley, 16 Ch. D. 327); and is not affected by a direction that debts and legacies are to be paid by the executors (Re Brooke, Brooke v. Rooke, 3 Ch. D. 630). As to its application in the case of property subject to a special power of appointment, see Gainsford v. Dunn (17 Eq. 405). The rule applies even where the will contains a specific devise of real estate by means of which the word "residue" might have been explained (Francis v. Clemow. Kay, 435); but in such case the specifically devised estate is not charged (see Bray v. Stephens, 12 Ch. D. 169). Where, after bequeathing legacies, a testator devised his real estate in B. and the residue of his real and personal estate, the legacies were charged on the real estate in B. as well as the testator's other real estate (Bray v. Stephens, 12 Ch. D. 162; not following Castle v. Gillett, 16 Eq. 530). But where, after bequeathing legacies, a testator devised all his real estate and bequeathed the residue of his personal estate, the rule in Greville v. Browne did not apply (Wells v. Rowe, 40 L. T. 715; 48 L. J. Ch. 476). When the rule applies the legacies are payable primarily out of the personalty, unless the testator directs payment out of a mixed fund arising from the conversion of the real and personal estates; in which case they are payable rateably out of the realty and personalty (Re