Lord Chancellor. 22 MAY, 1863. EQUITY. Re FLOOD and LOTT. Ex parte LUBBOCK. Bankruptcy-Equitable Mortgage-Order for Sale-Interest subsequent to Fiat-Joint and separate Security. the joint and separate notes, after deducting the value of the securities for the same at that time realised as next mentioned. Before the withdrawal of the claim against the joint estates, and the final entry of the proofs against the separate estates, the appellants petitioned the Vice-Chancellor Sir J. L. K. Bruce, setting An equitable mortgagee of joint property of a out on their petition the facts of the securities, and bankrupt firm who has obtained an order for sale of prayed a declaration that the petitioners were equitsuch security is not entitled to interest accrued subse-able mortgagee of the property deposited, and for quent to the fiat; although he has entered no proof against the joint estate, and has elected to prove against the separate estates only of the bankrupts. This was an appeal by a creditor who was also a mortgagee seeking under special circumstances to be allowed payment of interest accrued subsequent to the bankruptcy. The Commissioner had rejected the claim under the following circumstances: Messrs. Flood & Lott were adjudicated bankrupts on the 23rd of November, 1847. At the date of the bankruptcy they were indebted to the appellants Sir J. Lubbock and his partners in a sum of 7,1797. 18s. 6d., according to the finding of the Commissioner, which was not now disputed, and which sum was secured as follows: The appellants held, for 60007., two joint and several promissory notes of the bankrupts, each note being for a sum of 30007. For their general balance of account (up to the sum of 5000l. at least) an equitable mortgage by deposit of joint property of the firm. For the general balance without limit an equitable mortgage by deposit of the separate property of the bankrupt Flood. Among the property mortgaged in the first deposit were some mortgages belonging to the firm, and one of these was a mortgage to them of the property of one Mules, who was solicitor to the firm, and the title deeds of his property were, with his sanction, comprised in the security of the appellants, constituting thereby a charge in favour of the appellants over the whole estate in that property, as well over the original equity of redemption as over the mortgage charge. an account of principal and interest due on the securities, and for a sale, and that out of the proceeds of sale, and the rents and profits, the costs might be paid, and that the surplus might be applied in payment of the sum due to the petitioners, and subsequent interest, and, if it were insufficient for that purpose, that the petitioners might be allowed to prove against the joint estate or the separate estates, as they might be advised. On this petition an order was made on the 6th of August, 1849, directing an account of what was due for principal and interest on the securities, and ordering a sale of the mortgaged property, and payment out of the proceeds, of the costs and of what should be found due on the account to the petitioners, and directing the surplus, if any, to be paid over to the official assignee, and allowing the petitioners to go in and prove, if the sum realised were insufficient to pay the amount found due, and ordering the petition in other respects to stand over, with liberty to apply, but nothing was said in the order expressly as to subsequent interest. On the 13th of June, 1850, the Commissioner found the sum due on the securities at the date of the fiat as before-mentioned to be 7,1797. 18s. 6d., and subsequent interest to the 31st of May, 1850, 8347. 1s. 6d., and that the sum, viz., 8,0147., was down to the said 31st of May, 1850, due on the securities to the present appellants. After this order various payments were made on account of the proceeds of sale of the mortgaged estates by the official assignee to the appellants, amounting, down to the 15th of October, the date of the proof tendered against the separate estate of Mr. Flood, to the sum of 3,5007., and in consequence of these payments that proof was allowed only to the amount before Upon the bankruptcy, the appellants' firm entered a claim on the joint estate for more than the full sum, but their claim was ultimately withdrawn, and proofs were entered and allowed on each of the sepa-stated of 2,7081. 7s. 6d. rate estates, on that of Mr. Lott for the full sum of 60907. on the joint and separate notes, allowed 17th September, 1857, and on that of Mr. Flood for the suin of 2,7081. 7s. 6d., allowed 15th October, 1856, being the balance of the said sum of 60001. due on VOL. II. After the 15th of October, further sums were paid on account of the proceeds of sale of the mortgaged property, from time to time amounting in all to a sum of 2,354l. 16s. 3d., making the whole sum paid over on that account 5,8547. 16s. 3d. ; in addition to these I payments, the official assignee paid to the appellants residue of the petition with liberty to apply, including two sums of 8361. 10s. 4d. and 1697. 15s. 8d. of rents in such reservation the prayer for the payment of received of the mortgaged property; a sum of subsequent interest expressly contained in the petition. 1,354l. 3s. 9d., in respect of dividend on their proof It was never intended to conclude this question, and against Flood's estate; and a sum of 3877. 10s., in the question had not been treated as concluded, for respect of dividends on their proof against Lott's subsequent interest had in fact been computed under estate; making a total of 8,6021. 16s. 8d. it. Applying 1,0067. 6s., the sum received in respect of rents to keep down interest, subsequent to the fiat-(which, as it seemed, it had been decided that the appellants were entitled to do, though, as to this, there was some conflict, and no order was to be found on the file of proceedings)—this would leave a balance of 7,5967. 10s. applicable in reduction of the debt of 7,1797. 18s. 6d. and interest subsequent to the fiats, if payable, over and above the interest discharged by the sum of 1,0067. 6s.; but if such subsequent interest were not payable, then the account showed a payment of 4167. 11s. 6d. in excess of what was payable to the petitioners; from this some costs were to be deducted, leaving a sum of 2751. 2s. The assignees applied that this sum should be repaid to them, and that further dividends should be stayed on the proofs, and the commissioner made an order accordingly. From this order the present appeal was brought. Daniel, Q.C., and De Gex, on behalf of the appellants, argued that the ordinary rule allowed a creditor, proving against a separate estate, to retain any joint securities he might have, and that in this case it was as if the joint securities were securities given by a stranger to secure the debts of the firm. If that were so, the appellants were entitled to prove for the whole debt and yet retain their joint securities towards payment of the sum secured by them, viz., the whole debt, interest, and costs, as far as those securities would go, Bacon, Q. C., and Bevir, for the assignees, were not called on. THE LORD CHANCELLOR was of opinion that, in this case, as the facts stood, there was no room for doubt. Whatever might have been the rights of the appellants, in the absence of such an order as that of August, 1849, the question was determined by that order. The rule of the Court was, where there was an equitable mortgage, and the mortgagee presents a petition for a sale of the mortgaged property, and for leave to prove the residue of his debt, the mortgagee is not entitled to interest beyond the date of the fiat, and all orders of the Court were to be construed subject to the law of the Court established by its practice. Here was a petition by an equitable mortgagee for sale of his securities, including the joint securities, and an order upon that petition, directing a calculation of interest generally, directing payment of principal and interest found due by that calculation, and ordering payment of the residue over to the assignees for distribution; thus ignoring the prayer of the petitioners for payment of interest subsequent to the fiat, and making a disposition of the residue of the proceeds of the securities entirely inconsistent with that prayer, and refusing it thereby as effectually as if it were in express terms dismissed. That order must be construed by the prac tice and rule of the Court, and no special circumstances had been pressed on the Court to induce it in this case to depart from its ordinary rule; the direction to compute interest generally, would, therefore, à Ex parte Sheppard, 2 M. D. & D. 204; 1 Ph. 56; priori, mean interest down to the date of the fiat, and Ex parte Peacock, 2 G. & J. 27; and that they were entitled to allocate the dividends received on their proof to that part of their debt which was provable, allocating the securities to that part which could not be proved, that was to say to the interest accrued since the fiat. That the order of August, 1849, did not alter these rights or adjudicate on them. The petition on which that order was made was presented with the view to an election not then determined between the joint and the separate estates, and was an arrangement for the benefit of all parties. Such a petition was necessary in any case, whether proof were ultimately made against the joint or the separate estates; in the former case, the petition should be presented as to the joint securities; in the latter, as to the securities of Flood: the order was silent as to the date to which interest should be calculated, differing in that respect from the form of order given in 2 M. & Ayr., Appx. A., where such calculation is directed to the date of the fiat, and it reserved the of the form of the order bore out that construction. The claim of the parties appealing seemed to have been founded on the erroneous conduct of the Commissioner, subsequent to that order, in yielding to the pressure the present appellants, and calculating subsequent interest, a thing which it was beyond his jurisdiction or authority to do.* It had been contended that the order was made, subject to the right of election, and that there was a subsequent election to prove against the separate estates only; but the election only existed as to the right of proof, and a determination of that election in respect of the proof on the notes for 6000%, did not interfere in anywise with the order of August, 1849, in respect of the surplus proceeds of the securities, which should remain after payment of principal and interest down to the date of the fiat: this surplus was unequivocally ordered to be paid to the assignees for distribution. The appellants had, in fact, received the full sum of 60007. and the principal and interest down to the fiat due on the securities: their claim was there fore confined to interest on the sum of 1,7987. 18s. 6d., accrued since the fiat; that claim had already been determined by the order of August, 1849, and the appeal must therefore be dismissed. Note.The Commissioner, probably, calculated subsequent interest as against the subsequent rents and profits of the mortgaged estates, which were actually applied in keeping down that interest so far as they would go. See Ex parte Ramsbottom, 4 D. & C. 198; 2 M. & Ayr. 79; Ex parte Pollard, 1 M. D. & D. 284; Ex parte Lightfoot, 18 L. T. 54; Ex parte Penfold, 4 De G. & S. 282. The better rule of practice as to granting summonses or the examination of persons upon proceedings under a ded of arrangement, is not to issue such a summons exept on a primâ facie case made, suggesting some ground for examination of the party summoned; but if the Commissioner think right to entertain a summons issued without such a case made, the Court of Appeal will not interfere with his discretion. This was an appeal from an order of Mr. Commissioner Fane, granting a warrant for the imprisonment of the appellant, under the following circumstances:— A debtor had filed and registered a deed of arrangement with his creditors, and the appellant Lawrence was one of the trustees of the deed. An application was made by a creditor to the registrar for a summons to the appellant for the purpose of his being examined; but no affidavit, or other statement or complaint, was made as a ground for such application. The summons was granted, however, and on the appellant's appearing under it, the creditor desired that he should be sworn. He objected to be sworn; and, on his refusal, the Commissioner granted a warrant for his imprisonment, not to be executed until the time for appeal had expired. C. Swanston, for the appellant, argued, that the summons was irregular, that it was granted by the registrar when it should not have been granted except on application to the Commissioner, and that some case should have been made for the issue of the summons, and the Court should not and would not allow a fishing examination of the appellant without any complaint urged, or case made, showing that such examination was required. on. THE LORD CHANCELLOR said, that the trustee under a deed of arrangement stood in the same position as an assignee in bankruptcy, that the better rule of practice would be that a summons of this kind should not be granted wantonly; but that it should be granted by the Commissioner himself, and on a case made on prima facie evidence. It was, however, a matter im which the Commissioner's discretion ought not to be interfered with, and if an appeal were allowed in every case where the Commissioner thought he ought to entertain the matter of the summons, then there might be appeals without end. He should, therefore, dismiss the appeal with costs. The G. W. Company, being empowered to take shares. in the M. Company to the amount of 17,500l., took shares to the full amount in the names of nominees, The M. Company, who were registered as the holders. being subsequently empowered to extend their undertaking and create new shares, resolved at a general meeting to give the registered proprietors of original shares the option of subscribing for the new shares: in the proportion of their original shares. The G. W. Company having applied for and been refused an allotment of a rateable proportion of new shares under the resolution, filed a bill in conjunc tion with their nominees, the registered shareholders, to› enforce such allotment to them or their nominces. A demurrer having been allowed by the Vice-Chancellor, on the ground that it was ultra vires for the G. W. Company to take any new shares :— Held, upon appeal, that the question, whether the G. W. Company could, through their nominees, take the benefit of the new shares, ought not to be decided upon demurrer, and that the Court would not presume un intention on the part of the plaintiffs to exceed their powers, and the demurrer was overruled, with liberty for the defendants to raise the objection by answer. This was an appeal by the plaintiffs from the decision of Vice-Chancellor Wood allowing a general demurrer for want of equity. The case is reported 1 N. R. 551, where the facts are fully stated. Sir H. Cairns, Q.C., Giffard, Q.C., and G. L. Russell, for the appellants, contended that the Great Western Company had an implied power to take the new shares as a benefit incidental to the holding of the original shares the nominees, as registered pro Bagley, for the summoning creditor, was not called prietors, could claim an allotment under the resolution, and the respondents need not, and, under the circum Great Western Railway Company v. Rushout, 5 ing or referring to the items of which such results were De G. & S. 290; TURNER, L.J., concurred, and said, that the ViceChancellor had given too much weight to the fact of the claim having been made by the Great Western Company, and too little consideration to the way in which that claim might have been worked out. The nominees, being known to the respondents as the registered proprietors and as trustees for the Great Western Company, might be taken to have made the claim through their cestuis que trustent. The question, whether the Great Western Company might not through the medium of their nominees have the benefit of the resolution by an immediate sale of the shares or otherwise, could not be decided in the present state of the pleadings, and, though the respondents might hereafter succeed in rebutting the presumption, the Court would presume that the appellants intended not to exceed their powers, the bill being silent as to the manner in which they proposed to deal with the shares. The appellants must have liberty to amend their bill, and the costs in both Courts must be costs in the cause. composed, was not right in point of form. David McIntosh, the original plaintiff in this suit, was a railway contractor, who had entered into several with the defendants' railway, and the subject of the contracts for the making of certain works connected present suit. The bill was filed in the year 1847, and on the 30th May, 1855, the Vice-Chancellor Stuart ordered that the following inquiry be made :-"That is to say, an inquiry whether anything, and what, remains due to the plaintiff in respect of the works executed and the materials supplied, or otherwise, under the several contracts in the pleadings of this cause mentioned, having regard to the terms of the said contracts respectively, and the circumstances under which the plaintiff carried on and executed the said works." Accordingly, on the 19th February, 1863, the Chief Clerk made his certificate, which was as follows:"In pursuance of the directions given to me by the Vice-Chancellor, Sir John Stuart, I hereby certify the result of the inquiry which has been made in pursuance of the decree made in this cause dated the 30th May, 1855:-There is due to the plaintiff in respect of the works executed and the materials sup plied, or otherwise, under the subject contracts in the pleadings of this cause mentioned, having regard to the terms of the said contracts respectively, and to the circumstances under which the plaintiff carried on and executed the said works, the sum of 147,5987. 10s. 1d. The particulars of the said sum are set forth in the schedule hereto." The schedule accordingly set out the several lump sums found due on the seven contracts in question, but did not specify or refer to the particular items which composed such lump sums, or distinguish the items which had been allowed or disallowed. The defendant being dissatisfied with the result of the inquiry, on the 16th April, 1863, moved the ViceChancellor that the Chief Clerk's certificate might be discharged or varied, on the ground that it was irregular in form. The Vice-Chancellor refused this motion, and stated that the Chief Clerk had prepared his certificate in that particular form by his Honour's express directions, he being desirous of preventing the allowance or disallowance of particular items from being disputed by either party, in order to preclude the accounts being re-opened. A full report of this case on the hearing is given in 3 Sm. & G. 146; and on the motion, the subject of the present appeal, in 2 N. R. 11. Bacon, Q.C., Malins, Q.C., and T. Stevens, for the appellants, the railway company, contended that the certificate was irregular in form. Court, upon a motion to vary the certificate, and the Court found itself in a position, in which it could not ascertain what sum had been allowed to the tradesman, and which of the items in the tradesman's account had been allowed, and which disallowed, the Court, before it would proceed in the dark to adjudicate upon the rights of the tradesman, would send the matter back for further inquiry, in order to ascertain what were the items in the account which formed the question between the parties, and on which the Court was called upon to adjudicate. Undoubtedly the old practice of the Court was, in The Solicitor-General, Bazalgette, Q.C., and Millar, all cases of accounts against executors and trustees, to argued contrà. The following cases, &c., were cited on either side: require that the accounts should be contained in the schedule to the report. It was singular that there was a very old authority which he had met with on that point, in Dickens's Reports,* where the Master, in The Duke of Marlborough v. Strong, 1 Bro. P. C. taking an account against an executor and trustee, set 175; Kilbee v. Sneyd, 2 Moll. 186; out upon the report balances which he found due from the executor, and set out the items by which those Ranger v. Great Western Railway Company, 5 balances had been ascertained, in the form of a schedule H. of L. Ca. 72; Dick v. Milligan, 2 Ves. jun. 23; Falle v. Le Sueur, 12 Moore, 501; Paynter v. Houston, 3 Mer. 297; Cons. Ord. XXIII. rule 15; Cons. Ord. XXXV. rules 45, 46; to the report. That schedule, however, the Master did not append to the report itself, but entered in a book in his office, in the same mode as receiver's accounts were entered. The Clerk of the Reports, whose duty it was to file the report, refused to file it, upon the ground that the schedules were not Masters in Chancery Abolition Act (15 & 16 Vict. appended to the report. Upon the matter coming c. 80, s. 32). KNIGHT BRUCE, L.J., said, that it appeared to him that the appellants had, in the absence of any fault or negligence on their part, been left in ignorance as to the premises on which the Chief Clerk had formed an adverse opinion. The order, and the certificate appealed from, must, therefore, be discharged without prejudice. Costs, to be costs in the cause. TURNER, L.J., concurred, and said, that the question before the Court was, not whether the Chief Clerk was justified in finding so many lump sums to be due, but as to the mode in which the accounts should be taken in order to enable the Court to decide on the correctness of the conclusion arrived at by the Chief Clerk. It was argued, that there is now existing a course of practice applicable to these cases, and which ought to govern the present. For instance, in finding what may be due to a tradesman under a decree for the administration of a testator's estate, the Court will not take an account on the same principle as it takes the account in the case of a decree against an executor or trustee; but it will ascertain what, upon the result, may be the sum which is due to the tradesman. He desired to be understood as not intending, in any way, to alter any practice which existed in the Court upon that subject; but, on the other hand, he had no hesitation in stating his very clear opinion to be, that, if a case of that description were brought before the before the Court, the Chancellor said, "I have no doubt that it ought to be annexed by way of schedule, and filed; and that is what he ought to have done, and I shall expect the Master to do it." Part of the objection which the Clerk of the Reports took to filing the report in its then state, without the schedule, was the very objection urged at the bar in the present case; namely, that the exceptions to the report must be chiefly as to the items in the schedule. It appeared to him, therefore, that that case showed very clearly the course the Court ought to adopt, where an account had to be ascertained between parties. Then it was said that this case was not within the Orders cited; that those Orders applied only to cases of accounts against executors and trustees. But, supposing it to be so, if the case were not within those particular Orders, it was within no Orders at all, and must be governed by the general practice of the Court as it existed before the passing of the 15 & 16 Vict. e. 80; and, if so governed, then undoubtedly the report must be in such a shape as would enable the parties to take the judgment of the Court upon it, whether the conclusion arrived at was the correct one or not. Now, their Lordships had been asked to say what course ought to be pursued in the present case. All that he could say in the present state of the case was this, that the Chief Clerk must, by his certificate, inform the Court what sums he has allowed, and what sums he has disallowed; because, to enable the Court to determine anything whatever between these parties, it was |