1833. Ex parte of BELL. mortgagee may safely purchase, it ought to be understood that nothing which now falls from the Court is intended to shake that opinion. But, on the other hand, In the matter there certainly is a practice that mortgagees should procure an order to bid; and I would not, incidentally, on a petition of this sort, make any order, or deliver any judgment, to interfere one way or the other with such practice, which no doubt is a prudent one. The circumstances of this case are not such as to authorize the Court to set aside the sale; and we only declare such to be our opinion when we declare that this petition must be dismissed. Costs reserved. Parties to endeavour to settle them out of Court (a) (a) In a note to 1 Madd. 148. is the following: "The reporter has a short note of a case in Hilary term 1806, in which it was decided, that under an order in bankruptcy for the sale of a mortgaged estate, the mortgagee may become the purchaser, and come in, under the commission, for so much of the mortgage money as was not raised by the sale." The next case is ex parte Marsh, 1 Madd. 148. A.D. 1815. There Mr. Cooke stated that there was no express decision that a mortgagee cannot purchase the mortgaged estate*; but some doubts having been expressed, it was thought prudent to apply for the present order. In causes such an o.der has frequently been made, as was the case in the estate called Cannons, purchased by your Honour; and there seems to be no reason why such an application should not be made in bankruptcy. Mr. Agar, for the assignees, did not object. And the Vice Chancellor said, There can be no objection to this person being a bidder. It is for the interest of the estate that there should be as many bidders as possible. Petition granted. Costs out of the estate. The next case is ex parte Du Cane, Buck, 18. A.D. 1816. It was contended, on behalf of the petition, by Mr. Hart, that orders of the nature prayed were made every day, as they were manifestly for the benefit of the bankrupt's estate, and prevented the property from being sold at an undervalue. Mr. Roots opposed Ex parte DAVIS.-In the matter of HAGLEY. A MORTGAGEE with a power of sale had himself put up the premises for sale under the power, and now applied to the Court for leave to bid. Mr. Richards for the petitioner. Mr. Stewart for the assignees. the petition, on the ground that the Court would not suffer a party who was, in fact, the vendor of the property, to become the purchaser, because, as such, he would have an interest in depreciating its value. The Vice Chancellor said, In all these cases, where it is necessary to apply to the Court for leave to become a purchaser, there must be a possibility of some conflicting interest, otherwise the application would be unnecessary. And the order was made. In this case the Vice Chancellor appears to have been of opinion, that the order was only necessary when there was a possibility of some conflicting in terest. The next case is ex parte Hammond, Buck, 464,A.D. 1820, where the Vice Chancellor said, he doubted the necessity of presenting petitions in cases of this nature; for, as it was always competent to a mortgagee to purchase from the mortgagor the equity of redemption, it did not appear to him that the bankruptcy made any difference in this respect. Mr. Preston, as amicus curia, stated the general understanding of the profession to be, that it was necessary for the mortgagee to apply to the Court for liberty to bid at the sale. And the cases of ex parte Du Cane and ex parte Marsh having been mentioned, the order was made as prayed, the petitioner paying the costs of the application, and the assignees consenting. Ex parte Hodson, 1 Gl. & J. 12. A.D. 1821. The Vice Chancellor said, The mortgagee might bid if the sale were before the commissioners, and conducted by the assignees. In ex parte Robinson, Mont. & Mac. 261. A.D. 1829, the Vice Chancellor said, I am informed that the ordinary practice at the bankrupt office is to draw up the order, directing the costs to be paid by the mortgagee, who applies to the Court for permission to bid; and I think this, which is the usual rule, the most proper one. Where the assignees consent, the costs of the petition for leave to bid may be paid out of C. R. Dec. 10, 1833. A mortgagee with a power of sale himself put up the premises for sale, and then applied for leave to bid: Held, he could not be permitted, unless he waived the power, and had the property sold under the order of the commissioners. 1833. Ex parte In the matter of HAGLEY. Per Curiam :— A mortgagee with a power of sale cannot be permitted to bid, unless he waives his power of sale, comes in under the fiat, and has the premises put up for sale under the order of the commissioners, when the assignees will have the conduct of the sale. Dismissed with costs. (a) the proceeds of sale. Ex parte Say & Mont. 364. S. C. 1 Dea. & Ch. 32. A.D. 1831. The general rule is, that where a mortgagee applies for leave to bid he must pay the costs of the petition, unless the assignees should consent otherwise. Ex parte Williams, 1 Dea. & Ch. 489. A.D. 1832. In Webb v. Rorke, 2 Sch. & Lef. 661, on a question whether a lease from a mortgagor to a mortgagee could stand, Lord Redesdale says (p. 673), Another objection was, that this decision may tend to impeach dealings between mortgagor and mortgagee for a sale of the equity of redemption. But to this a good answer was given at the bar. The cases are totally different; the parties stand in a different relation. If there be two persons ready to purchase, the mortgagee and another, the mortgagor stands equally between them; and if the mortgagee should refuse to convey to another person, the mortgagor can compel him, by applying the purchase money to pay off the mortgage. It can, therefore, only be for want of a better purchaser that the mortgagor can be compelled to sell to the mortgagee. But courts view transactions even of that sort between mortgagor and mortgagee with considerable jealousy, and will set aside sales of the equity of redemption where by the influence of his incumbrance the mortgagee has purchased for less than others would have given, and there were circumstances of misconduct in his obtaining the purchase. In er parte Hodson, 1 Gl. J. 12. A.D 1821, the mortgagee had a power of sale, but was allowed nevertheless to waive the power, and come in under the commission, and have his mortgage sold as usual; in which case he was allowed to bid. In ex parte Davis, ante p. 89, the Court refused a mortgagee, selling under a power of sale, leave to bid, unless he waived the power, and came in under the commission. (a) Ex parte Hodson, 1 Gl. & J. 12. supra in this page. Ex parte CLEGG.-In the matter of DOUGLASS. THE petition in this case stated that there were cross acceptances between the petitioners and the bankrupt, that the bankrupt's were dishonoured, and a fiat having issued against him, the petitioners refused to pay the bill which they had given the bankrupt, insisting on their right to set off, whereupon the assignees commenced an action against them on the bill. The prayer was, that the petitioners might be declared entitled to their set off, and the assignees restrained from proceeding in the action. Mr. Swanston and Mr. K. Parker for the petition were stopped by the Court. Mr. Twiss and Mr. Rogers for the respondents : The remedy in this case, if any, is by set off at law. Injunctions are only granted where there is an equitable defence, though not a legal one. (a) The only case in which such an injunction was ever granted is ex parte Minnett, 1 Rose, 395, the ground there being that the commissioners had actually found that a balance was due from the person bringing the action. THE CHIEF JUDGE:-There is no doubt that any party has a right to come into this Court for relief (a) Equity grants relief in all cases where there is an equitable but not a legal set off, James v. Kynnier, 5 Ves. 108. But it has been said, that there is not any difference in bankruptcy between a set off in law and in equity, 1833. Ex parte In the matter of DOUGLASS. against the assignees, in respect of all acts done by them as such. This is the ground of the interposition of the Court in the case of short bills. The question of costs should stand over, because it is possible to conceive that the conduct of the assignees in bringing this action has been so improper as to require that they should pay costs personally, though I do not pretend to anticipate such a result. The action must be stayed in the meanwhile. Sir John Cross: This is a petition to restrain the assignees from an improvident expenditure of the estate in pursuing an action, in a case where set off must succeed at law. I think the injunction ought to go. Sir George Rose: - I apprehend there can be no question but that these bills may be set off at law, and that the action must be stayed. The only question is, who is to pay the costs of this petition. In order to decide that, we must ascertain what were the motives of the assignees in bringing an action, when they might have called the petitioners before the commissioners, who would have taken the account, and have stated the balance, on whichsoever side it might be. We must, therefore, send this case to the commissioners, to pursue an inquiry relative to these questions. But nothing that can be supposed to arise in the course of such inquiry can prevent the injunction going in the mean time. Injunction to stay action granted. An inquiry to be prosecuted before the commissioners. Costs to stand over. |