Bernal v. Marquis of Donegal and Others [1815] UKHL 3_Dow_133

UKHL
Bernal v. Marquis of Donegal and Others
[1815] UKHL 3_Dow_133
REPORTS OF APPEAL CASES IN THE HOUSE OF LORDS, During the Session , 1814—15. 55 Geo . III.IRELAND.APPEAL FROM THE COURT OF CHANCERY.

No. 10

Bernal Appellant v. Marquis of Donegal and Others Respondents

March 28 , July 29 , 1814 .— April 14 , July 7 , 1815 .EXPECTANT HEIR. — CONSENT ORDERS. — PRACTICE.a. A. an expectant heir being indebted tob. B. his friend and father-in-law, and B. being indebted to C., A. gives C: post-obit bonds in discharge of his debt to B., andc. C. gives B. credit in account for half the amount of the bonds. After the death of A.'s father, when the bonds had become payable, A. and B. by deeds deliberately executed acknowledge the fairness of the transaction. A. then files a bill against C. and B. to set the bonds aside on the ground of imposition and want of consideration; and afterwards dismisses his bill as against B. and examines him as a witness; so that no relief could be had by any party against B. in that cause. Held by the Lords, reversing a decree of the Irish Chancery, that under these circumstances of acknowledgment, dismissal, and examination of B. as a witness, A. had debarred himself from impeaching the consideration for the bonds, and that he could not impeach the securities for fraud or imposition: but that, from the confidential situation of B. with regard to A., and the knowledge which C. had of all their transactions, the bonds ought not to be available as post-obit bonds, but only for the sums actually allowed by C. as the consideration for them, with interest from their dates.Marquis of Donegal's bill, filed June, 1803.Post-obit bonds given by the Marquis to Bernal, in consideration of certain other bonds, which, as the bill alleged, were worth nothing.The proceedings in this cause commenced by a bill filed by the Respondent, the Marquis of Donegal, against the Appellant Bernal, and against Edward May, to set aside certain securities granted by the Marquis to Bernal, on the ground of want of consideration. The amount of the case stated in

Page: 134 ↓

Bernal's answer.That the post-obit bonds were given in consideration of sums allowed in account to May, to whom the Marquis was indebted in the amount.Trust deed of Feb. 1796, between May and the Marquis, in which the fairness of Bernal's debt was acknowledged.Trust deed of 1799.Undertaking, March, 1800.Deed, Oct. 18. 1800.Bernal's statement in his answer placed the matter in a new light. He stated that he had been first employed in 1791 as agent in London for May, who then resided at York, to pay and receive

Page: 135 ↓

Page: 136 ↓

July, 1804. Amended bill.Bernal's answer.The bill was then amended, and further stated that Bernal was proceeding at law on a 60,000 l . bond procured from the Marquis without consideration and by fraud, and prayed to have it cancelled, and for an injunction. In the answer to this, various transactions between the parties were set forth, the effect of which was to show that the bond was given further to secure Bernal, both as to the former and future advances for May and the Marquis; and it was further stated that this bond, as well as the deed of October, 1800, had been deliberately considered by the Marquis and his legal advisers before the execution. The answer also stated a deed August 27, 1795, between the

Page: 137 ↓

Jan. 1804. Cross bill by Bernal.The Appellant then filed a cross bill, to which the Marquis, May, the trustees under the deed of 1799, and Mr. Const, who had some concern in it, were made parties; praying that the trusts of the deed of February, 1796, conveying the estates to May for payment of the Marquis's debts might be carried into effect, and Bernal declared an incumbrancer, &c. To this the Marquis and May put in answers, stating in substance as in the Marquis's bill, and the other parties did not appear.Order by consent July 18, 1805.The Court was afterwards moved on the part of the Marquis to continue the injunction in the first cause till the hearing; and at the same time on the part of Bernal in the cross cause, that the Marquis might give security to abide the decree in the first cause, &c. or that the injunction might be dis solved. Upon the hearing of these motions, the Court made an order of July 18, 1805, entitled in both causes, by which the injunction was continued, “the said Edward May, the Marquis of Donegal, and J. Bernal, respectively consenting in open Court that the accounts therein directed should be forthwith taken.” The order then went on to direct, “that the Marquis should give security in 20,000 l . to abide the result of the accounts; and that an account should be taken of all dealings and transactions between May and Bernal, between May and the Marquis, and between

Page: 138 ↓

Master's report, Feb. 17, 1806, on the order of reference by consent.Under the order by consent, the Master made a report upon the facts as appearing on the evidence for Bernal, the other parties not having examined any witnesses, and stated that after the draft of his report had been made up, and notice given of a day for signing it, the Marquis on that day applied for leave to examine witnesses and adduce further evidence, but that he, the Master, had refused, on the authority of Thomson v. Lamb , 7 Ves. 587.Order, March 1, 1806, discharging the order by consent, &c.The Marquis then moved, as Bernal had proceeded at law to stay proceedings on this report on affidavits, that he had not been able to procure his evidence in time for it; and Bernal at the same time moved, among other things, that the causes might be set down to be heard on the Master's report, under the consent order of July 18, 1805: whereupon the Court, by order in both causes dated March 1, 1806, dissolved the injunctions obtained in the original cause, and discharged the order by consent of July 18, 1805, and the Master's report under it, &c.The Marquis then had his bill dismissed as far as respected May, who had never answered it, and then examined May and other witnesses in chief for the hearing, and cross-examined Bernal's witnesses who had been previously examined.

Page: 139 ↓

Cross cause.Cross cause irregularly brought on for hearing.By an order or decree made in the cross cause dated March 14, 1805, the bill had been ordered to be taken as confessed as against the Defendants who refused to appear; and it was ordered that the Marquis should carry into effect the trust deed of February, 1796; and that an account should be taken, and the sums which should be found due to the Appellant should be charged on the estates of the Marquis, &c. As the order of July 18, 1805, included every thing, Bernal did not proceed upon this order in the cross cause. This cross cause, however, was brought on for hearing (it did not appear how) along with the first cause, on June 9, 1807.Decree in the first cause, June 9, 1807.On that day the Court decreed in the first cause, that the post-obit bonds and bond for 40,000 l. were obtained by fraud and imposition on the Marquis, then an expectant heir; that the bond for 60,000 l . was also obtained by fraud and imposition on the Marquis; and that these several bonds and judgments should stand only as a security for what should appear to be really due from the Marquis to the Appellant; that the other deeds were fraudulent and void; and that the Master should take an account of all dealings and transactions between the Marquis and Bernal, and of the money received by the Marquis from Bernal himself, or advanced by Bernal to May, or any other person, for the Marquis's use; and which actually came to the Marquis's hands, &c. ”Cross bill dismissed.On the same day, in the cross cause, the bill was ordered to be dismissed with costs, as to

Page: 140 ↓

From the order of March 1, 1806, setting aside the consent order, and from the decree and order of June 9, 1807, Bernal appealed.Appeal. March 28, 1814.Northcote v. Northcote , Colles, P. C. 287.—2 Eq. Ab. 279.Sir S. Romilly (for Appellant) argued that the Court had no authority to set aside the consent order of the 18th July, 1805: 1st, because it ought to be considered as a decretal order; and a decree could not be set aside on motion or petition, but on re-hearing or by bill of review: 2d, because a consent order could not be set aside except by consent. Northcote v. Northcote , H. 1702, Vin. Abr. 398.— Harrison v. Rumsay , 2 Ves. 488, 9.— Wall v. Bulkely , 1 Bro. C. C. 484., and other later cases might be mentioned. The Marquis was not entitled to have a reference back again to the Master. Could any instance be produced of a party being allowed to keep back his own witnesses, waiting to see the evidence on the other side, and then producing his own? No error was pointed out in the report, nor was the application for leave to except, but to be permitted to produce new evidence. The decree of 1807 was besides objectionable, in as much (among other reasons) as it directed the accounts to be taken on a most unjust principle—Bernal being to be allowed only such sums as he could prove to have actually come into the hands of the Marquis.Mr. Hart on the same side stated, as a farther authority in support of the inflexibility of a consent order, the case of Noel v. Godfrey , at the Rolls, 27th April, 1812, But even on the merits, which

Page: 141 ↓

Mr. Leach (for the Respondents). The merits appeared to be abandoned, and the case was put on the want of authority in the Court to alter the order of 18th July, 1805; but an interlocutory order might be altered by an interlocutory order; and as to the point of consent, it was not an order by consent, or if it had been so, the Appellant must be held by his subsequent acts to have consented to the discharge. The report did not accomplish the object of the Court, the Master not having inquired at all; and he, Leach, was informed that in Ireland exceptions did not lie to a report on an interlocutory order, and that the way was to move to discharge it.Lord Eldon , (C.) They will contend that the Court had no authority to introduce the words “and which came to the hands of the Marquis,” unless under special circumstances, and that here there was no evidence to warrant so unusual a direction. In many cases it may be right, but it must be founded on evidence. The Appellant says there is no such evidence, and in the case of a decree so special the Respondents must show the grounds of it. Now where is that evidence?Mr. Wetherell followed on the same side, and argued the cause with reference both to the consent order and the merits.July 29, 1814.Judgment.Wharton v. May , 5 Ves. 27.Nature of the original bill.Lord Eldon , (C.) I certainly have peculiar satisfaction, and I am sure it must afford satisfaction

Page: 142 ↓

Page: 143 ↓

Nature of the answer.The Appellant put in his answer to this original bill, and he admitted that he had obtained these four post-obit bonds of the Marquis; but he said it was by no means true that the consideration for them was these bonds of Wharton; for that May was very largely indebted to him, Bernal, and that

Page: 144 ↓

Page: 145 ↓

Cross cause.Bernal then filed a cross bill, for the purpose of establishing his securities, &c., and to this suit he made the Marquis, May, the trustees under the trust deed of 1799, and Mr. F. Const, a gentleman of considerable reputation at the bar here—in short, all necessary persons—parties. The Marquis put in an answer to this bill, in which he again suggested, that the consideration of the securities he had given was of the nature he had stated in his bill. May likewise put in a short answer amounting to little; but which was meant certainly to confirm the representation made by the Marquis as to the consideration. My noble friend ( Redesdale ) puts me in mind of what is a very material circumstance, that it is not stated any where in these pleadings that any assignments were ever made of these bonds of Wharton, and one can hardly suppose that, if they had been the real foundation of this transaction, assignments would not have been made of them for obvious reasons.Order by consent, July 18, 1805.May having put in an answer to this bill of Bernal's, but no answer to that of the Marquis of Donegal, an order was made in both causes on the 18th July, 1805, and I shall read that order to your Lordships, putting you in mind that it is the order which has been so often spoken of as an order

Page: 146 ↓

Your Lordships will observe that, if this had been proceeded in, the truth of the case as between all these parties, and as between each class of them, and every two of them, in every way of classing them, would have been made to appear: and if it turned out that Bernal had given releases of debts which May substantially and truly owed to him in consideration of the Marquis's giving him his bonds, then it would be most obvious and just that, if May was placed in a situation in which he should have the benefit of those releases, Bernal should have his money; and that Bernal was not to be sent out of doors, making a present to May of all that May was indebted to him, and not leaving any demand either upon May or upon the Marquis.An order by consent cannot be got rid of but by consent.But a party to such order taking proceedings inconsistent with it has waved his right to insist on the rule.It has been stated very truly that an order by consent cannot be got rid of but by consent; but where any proceedings are taken, in a cause by a party, if those proceedings are not consistent with the execution of that order to which-he alleges all parties have consented, he has waved the right to insist upon the rule, that an order made by consent cannot be got rid of but by consent. And I apprehend that the Lord Chancellor of Ireland discharged

Page: 147 ↓

A party cannot proceed at law and upon an account in equity relative to the same matter, but must make his election.Lord Redesdale . The ground was this. Bernal represented that the conditions on the part of the Marquis and on the part of May, upon which that consent was given, not having been complied with, he ought to be at liberty to proceed at law, and to take out execution for the money which he had a right to levy. It was impossible to suffer him to take out execution at law and to proceed upon the account in equity; because, if he elected to proceed on the account in equity, the injunction must be continued of course. When therefore he insisted upon the right to take what he could at law, he necessarily abandoned his right to proceed in equity. And as he insisted upon that which, the Marquis not having given the security, he had a right to, the necessary consequence was that the whole order was to be set aside. But this having arisen in consequence of the default of the Marquis to give the proper security, the whole expense of the proceeding was thrown upon the Marquis, who was directed to pay all the costs which had been incurred under that order by consent; because the order failed in consequence of the Marquis not having given that security.

Lord Eldon , (C.) Your Lordships will accordingly

Page: 148 ↓

Then there was a report made by the Master which I do not state to your Lordships; and motions were made on the one hand to stay the proceedings; and counter-motions made on the other side, which produced an order to which it is necessary to call your Lordships' attention. It is dated the 1st March, 1806, and is the order first complained of; and it is in these words: (reads the order dissolving the injunction obtained in the first cause, setting aside the consent order and report, and ordering the Marquis of Donegal to pay the costs, &c.)This order having been made, your Lordships will permit me just shortly to observe, that it restored the two causes to this state. It restored the Marquis of Donegal's cause to a state in which he was Plaintiff, and Bernal and May were Defendants, May having put in no answer. It restored the cross cause to a state in which Bernal was Plaintiff, and

Page: 149 ↓

Irregularity in hearing the cross cause.They then proceeded in the cross cause, according to the course of their practice in Ireland, taking the bill as confessed against these other defendants, and so on; till at length the cross cause comes on to be heard I cannot very well tell how. My noble friend says, perfectly irregularly. It is enough for me to say I cannot find out how it came on.Lord Redesdale . It is stated that no proceeding was taken in it by Bernal after the order of March 14, 1805, and therefore it could never have come on

Page: 150 ↓

The consequence of the dismissal of the bill as against May, and his examination as a witness.The Marquis bound to make good to Bernal whatever Bernal might be entitled to as against May.Lord Eldon , (C.) I should have no difficulty in the world, if this were a cause in the Court of Chancery in England, to have said that it came on as it ought not to have done: but the practice in these Irish causes is so different, that I rather choose to state my ignorance than to apply to an Irish Chancery cause those decisive assertions which would better become me in an English cause, the form of which I am better acquainted with. But here I should mention to your Lordships a circumstance of a very singular kind; that the Marquis not only dismisses his bill as to May, but examines May as a witness forsooth to support him in his suit. Now there is nothing better established than this, that if you choose to examine a defendant as a witness you cannot have any decree against him. If May had remained a party to the cause, the examining May as a witness would have been clearly on the part of the Marquis saying this, “I can have no decree against May.” It would be saying, also, “I cannot give you, May, the benefit of any decree I obtain against Bernal.” But it would be saying a great deal more still; for if the real equity of the case were that the releases and discharges given to May should not stand as against Bernal, but that May should pay to Bernal what he was indebted to him, and that he should take these pieces of paper, the post-obit bonds; if Lord Donegal has, by examining him as a witness, put the case into such circumstances that no relief can

Page: 151 ↓

Expectant heirs. Courts of Equity protect them in their contracts, as they do those who act from distress or ignorance; and the burden of proving the transaction fair is thrown upon those dealing with them.Decree of 1807 unfounded.Upon what ground the decree made in this cause proceeds I am totally at a loss to state to your Lordships. I agree in the principle as to expectant heirs, that Courts of Equity throw around them a security against the effects of their own contracts, which security no other person but those acting from distress or ignorance receive; and when persons deal with expectant heirs, there is thrown upon them the onus of proving the transaction a fair transaction. But we are not to carry the principle to the extent of saying that an expectant heir may take out of any man's pocket any thing he pleases, and never replace it; and it will not do setting up by a bill, unless you prove it, that you received as a consideration bonds of which you can make nothing. If you can make out that case in fact, you make out a case entitling you to substantial relief. But if the Marquis of Donegal thought proper to relieve May,

Page: 152 ↓

No evidence to support the special terms of the decree.The decree declares, “that the four several post-obit bonds, amounting together to the sum of 46,500 l ., and also the bond for 40,000 l ., and also the warrants of attorney to enter judgment on the same, were obtained by fraud and imposition practised upon the Marquis of Donegal, then an expectant heir; and that the bond of 60,000 l . was obtained by fraud and imposition on the Marquis; and that the several bonds and judgments should stand as a security only for the sums which, on the accounts directed, should appear to be really due from the Marquis of Donegal to Bernal.” Why so? The case made out on the part of Bernal never was this, that the Marquis of Donegal himself was his debtor, but that the Marquis of Donegal was debtor to May; that May was indebted to him; that they shifted the relation of debtor and creditor:
“And that the deeds of August 27, 1795, and October 18, 1800, were fraudulent and void as against the Marquis of Donegal.”
Why are these deeds fraudulent and void? Upon what evidence? If the bonds and judgments though obtained by fraud and imposition were still to stand as securities for what was really due in that way of taking the accounts, why are they not directed so to stand as a security? Then there was to be “an

Page: 153 ↓

Page: 154 ↓

Cross cause. Bill ought not to have been dismissed.The principle of protecting expectant heirs in their dealings does not extend to the avoiding of their engagements deliberately entered into, so as not to oblige them to refund what was actually advanced to them.Then as to the cross cause, to be sure one should have thought it impossible to dismiss the bill. If the Marquis of Donegal had a right to have a decree directing all these accounts, cutting down these securities, ordering some of them to stand as a security for the just balance, but totally destroying others of them; if Bernal filed his bill to have an account taken upon the plan and the principles upon which he said the account ought to be taken, in order to do justice, surely the Court ought to make a decree in his cause, to give him at least that benefit which, as a defendant in the Marquis's cause, they did give him; and more especially as in the other cause the Marquis had not brought before the Court his friend May, in whom estates were vested for the payment of the Marquis's debts, and these among the rest as far as they could be demanded. The Marquis had not brought the Trustees before the Court; and therefore in that cause in which they were made parties, unless the Court went the length of declaring that these reiterated securities were one

Page: 155 ↓

Page: 156 ↓

Page: 157 ↓

Point of Practice. April 14, 1815.It appeared that some errors had crept into the judgment of the House as first drawn up, and upon petition by the Marquis to have the mistakes rectified, and the statement of his agent at the bar that counsel had some additional reasons to urge, the parties were permitted to bring one counsel on each side, the Lord Chancellor observing that this was not meant as a rehearing, but simply to correct the mistakes which had been made in drawing up the judgment. On the 14th April, 1815, Mr. Leach appeared for the Respondents, and Sir S. Romilly for the Appellant. Mr. Leach stated that he had not before gone into the merits, as he understood that the counsel on the other side rested their case on the want of authority in the Court to discharge the consent order; and he was proceeding to argue the case on the general merits, when Sir S. Romilly interrupted him, observing that it was at any rate incompetent now to go into the general merits, but that in point of fact the merits had been before fully argued on both sides.Lord Eldon , (C.) This now becomes a very important point with a view to the practice of the House, and the matter must stand over till we consider of it. I apprehend the contents of the printed cases are to be considered a judicial representation as much as the speeches of counsel.No rehearing in the House of Lords.Lord Redesdale . The papers at least went into the merits, but at any rate the House is not to have

Page: 158 ↓

Counsel were ordered to withdraw, and were no more heard in the case. On the 7th July the House ordered the proper alterations to be made. The corrected judgment is as follows.Judgment of the House of Lords, July 7, 1815.Order, March, 1806, affirmed .Decree, 1807, in the first cause reversed .
“It is ordered and adjudged, &c. that the order of the 1st March, 1806, complained of in the said respective appeals be, and the same is hereby affirmed. And it is further ordered and adjudged that the decree of 9th June, 1807, complained of in the said first-mentioned appeal be, and the same is hereby, reversed . And it is hereby declared that the Respondent, the Marquis of Donegal, by the indenture of the 18th October, 1800, having acknowledged that the several post-obit bonds of the 8th June, 1795, for 24,000 l .; of the 20th June, 1795, for 12,000 l . and 500 l .; and of 6th July, 1795, for 10,000 l .; had been given in consideration of the sums of 12,000 l ., 6,000 l ., 250 l ., and 5,000 l ., advanced, lent, and paid, by the Appellant to the said Respondent, or for his use, and at his direction and request: and it also appearing that the said Respondent's bond of the 18th October was defeasible on payment by the said Respondent to the Appellant of several sums advanced and to be advanced by the Appellant to or for the use of the said Edward May in manner therein mentioned, and such costs, charges, damages, and expenses, as therein mentioned: and it appearing by the evidence in the cause that the drafts of the said deed and bond of the 18th October, 1800, were taken by the said

Page: 159 ↓

Page: 160 ↓

The decree of dismissal in the cross cause was reversed .Solicitors: Agent for Appellant, Cole.Agent for Respondents, Lyon.