[COURT OF APPEAL]

LOW v. BOUVERIE.

[1889 L. 1623.]

Mortgage - Life Interest - Trustee - Prior Incumbrances - Notice - Inquiry by Mortgagor - Fraud - Misrepresentation - Mistake - Liability of Trustee - Duty of Trustee - Contract - Warranty - Estoppel.

Although it is the duty of a trustee to give his cestui que trust, on demand, information with respect to the dealings with and position of the trust fund, it is no part of his duty to assist his cestui que trust in selling or incumbering his beneficial interest by telling him what incumbrances he, the cestui que trust, has created, nor which of his incumbrancers have given notice of their respective charges; and it follows that the trustee is under no obligation to answer the inquiries of a stranger about to deal with the cestui que trust.

If the trustee takes upon himself to answer the inquiries of a stranger about to deal with the cestui que trust, he is not under any legal obligation to do more than to give honest answers to the best of his actual knowledge and belief: he is not bound to make inquiries himself. Provided he answers honestly, he incurs no liability to the inquirer, unless he binds himself by a statement amounting to a warranty, or so expresses himself as to be estopped from afterwards denying the truth of what he has said.

A statement to operate as an estoppel must be clear and unambiguous.

The doctrine of Derry v. Peek (1) - that a person is not liable for a false representation upon the faith of which another person acts, even though carelessly made, provided he made it in the honest belief that it was true - does not apply where there is a legal obligation on the part of one person towards another to give him correct information; as, for instance, where the law of warranties or of estoppel is applicable.

Having regard to Derry v. Peek, Burrowes v. Lock (2) can now only be supported on the ground of estoppel.

Slim v. Croucher (3) cannot be supported on the ground either of warranty or of estoppel, and is therefore inconsistent with and is overruled by Derry v. Peek.

Per Lindley, L.J.:- An incumbrancer of a trust fund who first gives notice to any of the trustees obtains priority over any prior incumbrancer who has given no notice to any of them; but notice to one does not affect the other trustees so as to make them liable for what they may do in ignorance of the notice to their co-trustee.

The doctrine of estoppel as applicable to innocent misrepresentations, discussed and explained.

B., being entitled under a settlement to a life interest in a trust fund,

(1) 14 App. Cas. 337.

(2) 10 Ves. 470.

(3) 1 D. F. & J. 518.

applied to the Plaintiff for a loan on the security of such life interest, at the same time referring the Plaintiff to the Defendant, one of the trustees of the settlement, for information as to his, B.'s, means and position. The Plaintiff thereupon wrote to the Defendant inquiring what the trust fund consisted of, and whether B.'s life interest was subject to any incumbrances, but not stating that B. had applied for an advance. The Defendant replied that the life interest was subject to certain incumbrances, mentioning them, but did not say there were no others. The Plaintiff then made an advance to B. on the security of a mortgage by B. of his life interest. Subsequently the Plaintiff discovered that the life interest was subject to several incumbrances prior to his own, besides those the Defendant had mentioned, but the existence of which, as was admitted by the Plaintiff, the Defendant had forgotten when replying to the Plaintiff's inquiries, though he had had notice of them. The Plaintiff's security being insufficient, he brought an action against the Defendant to have him declared liable for the amount due on the security, alleging that the advance to B. was made upon the faith of the Defendant's written representations:-

Held, that the Defendant was not liable either on the ground of fraud, breach of duty, warranty, or estoppel.

Decision of North, J., reversed.

IN January, 1888, Vice-Admiral F. W. P. Bouverie, who under the trusts of his marriage settlement, dated the 1st of September, 1845, was entitled for his life to the income of a sum of £5523 6s. 3d. Metropolitan 3½ per Cent. Stock, applied to a firm of solicitors who were in the habit of acting on behalf of the Plaintiff, Robert Low, in all loan transactions, to make him, Vice-Admiral Bouverie, an advance on the security of his life interest, and of certain policies of assurance on his life. The Defendant, Henry Hales Pleydell Bouverie, a banker, was one of the trustees of the settlement. In consequence of this application the Plaintiff's solicitors, on the 22nd of February, 1888, wrote on his behalf the following letter to the Defendant:-

"Dear Sir, - We are doing business with Vice-Admiral Bouverie, and he says you will give us information as to his means and position. He says he is entitled to a life interest in some funds held in trust, under a settlement dated the 1st of September, 1845, of which you are trustee. Will you kindly tell us what those funds are, and whether Vice-Admiral Bouverie is still entitled to the full benefit of his life interest therein. We understand he has not in any way mortgaged or parted with such life interest. Is this so? Your early reply will oblige."

On the 23rd of February, 1888, the Defendant replied as follows:-

"Gentlemen, - In reply to your letter of 22nd inst. I beg to inform you that Vice-Admiral Bouverie has a life interest in £5523 6s. 3d. Metropolitan 3½ Stock, but the same life interest is charged with the payment of the premiums on two life policies, one of which amounts to £35 17s., and the other is extinct. Also it is charged with payment of interest for money already advanced to him to the extent of £34 per annum."

On the 25th of February, 1888, the Defendant wrote again to the Plaintiff's solicitors as follows:-

"Gentlemen, - In furtherance of my letter to you of a day or two since, I beg to state that I hold a policy of insurance on Admiral Bouverie's life in the Mutual Life Assurance Society for £300, as security for the money advanced to him, for which the £34 mentioned to you is the annual charge of interest."

On the same day the Plaintiff's solicitors had written to the Defendant as follows:-

"Dear Sir, - Will you kindly inform us whether you hold any mortgage or know of any incumbrance upon Vice-Admiral Bouverie's life interest in the funds mentioned in your letter of the 23rd inst., or on his life interest under his marriage settlement. By so doing you will much oblige."

On the 27th of February, 1888, the Defendant replied to the last letter as follows:-

"Sirs, - I don't see how I can explain myself more clearly than I did the other day in my letter to you. I hold no mortgage from Admiral Bouverie for the charge of interest on money advanced to him; but this charge of interest is in the ordinary course of business; but the two policies of insurance, whose premiums now amount to £35, are mortgaged to his trustees."

The Plaintiff thereupon, without any further inquiry, agreed to advance £600 to Vice-Admiral Bouverie on the security of a mortgage of his life interest and two policies of assurance on his

life. The advance was accordingly made, and a mortgage was executed on the 1st of March, 1888, of which notice was duly given to the Defendant.

Towards the close of the year 1888, Vice-Admiral Bouveriewas in pecuniary difficulties, and at present he was an undischarged bankrupt and residing out of the jurisdiction.

The interest on the Plaintiff's mortgage being in arrear, he, through his solicitors, in April, 1889, requested the Defendant to pay to him in future the balance of Vice-Admiral Bouverie'slife income, after satisfying the charges mentioned in the Defendant's letters. A correspondence then ensued between the Plaintiff's and the Defendant's solicitors, from which the Plaintiff for the first time became aware that at the date of his mortgage Vice-Admiral Bouverie's life interest was already subject to no less than six prior mortgages, including a mortgage to secure the premiums on the policies mentioned in the Defendant's letter of the 23rd of February, 1888, two of the mortgages being to the trustees of the settlement of the 1st of September, 1845. It appeared, however, that, at the time he was corresponding with the Plaintiff's solicitors as above-mentioned, the Defendant had forgotten the existence of these prior mortgages, though he had had notice of them in the sense that they were recited in a deed of the 15th of February, 1885, by which he was appointed trustee of the settlement of the 1st of September, 1845.

The amounts secured by the six prior mortgages exceeded the capital value of the life interest and policies comprised in the Plaintiff's mortgage, and the interest payable on those six mortgages more than exhausted the income payable in respect of the life interest. To preserve his security the Plaintiff paid the premiums on the policies mortgaged to him.

Under these circumstances, there being due to him, besides the principal mortgage debt of £600, a sum due for interest, premiums, and costs, the Plaintiff brought this action, claiming a declaration that the Defendant was liable to pay to him the total amount due under his mortgage, and payment accordingly.

In his statement of claim the Plaintiff alleged that the Defendant, when he wrote his letters of the 23rd and 27th of

February, 1888, knew that the information contained in them was sought from him as trustee of the settlement with the object of being communicated to some person who at that time contemplated lending money to Vice-Admiral Bouverie on the security of his life interest and policies; also, that the contents of those letters having been communicated to the Plaintiff, he, relying thereon, made the advance of £600 on the security of the mortgage of the 1st of March, 1888.

In his statement of defence the Defendant denied that he knew the information contained in his letters was sought from him as trustee with the view to a loan to any person; that, although the Plaintiff's solicitors spoke of "doing business" with Vice-Admiral Bouverie, they never gave him, the Defendant, any intimation that a loan to the Vice-Admiral was in contemplation; that the statements in both his - the Defendant's - letters were correct; that he owed no duty and was under no obligation to the Plaintiff or his solicitors to give any more definite or detailed answers to the questions put to him; that he never in fact answered the question which related to the knowledge of incumbrances, and that, if the Plaintiff desired to make him responsible for the information contained in his letters, the Plaintiff ought to have called his attention to the omission, and to have stated specifically the purpose for which the information, was requested. The Defendant admitted that he had had notice of the six prior mortgages, but alleged that, when he replied to the letters of the Plaintiff's solicitors, he did not recollect those mortgages, or that he had ever had notice of them. He accordingly submitted that, under the circumstances, the Plaintiff was not entitled to the relief claimed.

Issue having been joined, the parties signed admissions, by which the existence of the six prior mortgages was admitted; and it was also admitted on the part of the Plaintiff that the Defendant had had notice of them, but that at the time he wrote the letters above mentioned he did not recollect that he had received such notice, or that he was otherwise aware of those prior mortgages being in existence.

The action came on for trial before Mr. Justice North on the 29th of January, 1891.

Everitt, Q.C., and Charles Church, for the Plaintiff:-

Though the Defendant had forgotten the existence of the other charges on the life interest of which he had received notice, he is bound to make good the loss which the Plaintiff has sustained by that which was in fact an erroneous statement: Burrowes v. Lock (1); Slim v. Croucher (2). The decision of the House of Lords in Derry v. Peek (3) does not apply. Lord Herschell(4) expressly states that Burrowes v. Lock is unaffected by the decision, and the other learned Lords assented to this view. And in Brownlie v. Campbell (5), Lord Selborne(6) also pointed out this distinction. Peek v. Gurney (7), and Arkwright v. Newbold (8), apply.

Cozens-Hardy, Q.C., and Morshead, for the Defendant:-

To hold the Defendant liable in such a case as the present would be to go far beyond Burrowes v. Lock and Slim v. Croucher. The Defendant stated the truth, and he omitted to answer the latter part of the question put to him. He cannot be made liable for his omission: Stephens v. Venables (9).

The reference was made to the Defendant really in his character of banker, not in that of trustee.

NORTH, J.:-

The point here is a very short one, and I think the case is very clear. The Defendant was one of the two trustees of a settlement, under which Vice-Admiral Bouverie was entitled to a life interest. Vice-Admiral Bouverie was negotiating with the Plaintiff, through his solicitors, for an advance of money to be made to him on the security of his life interest. Before deciding whether an advance should be made it was necessary to know what was the position of Vice-Admiral Bouverie with regard to the life interest which was proposed as security, and the Plaintiff's solicitors thereupon wrote this letter.

(1) 10 Ves. 470.

(2) 1 D. F. & J. 518.

(3) 14 App. Cas. 337.

(4) Ibid. 360.

(5) 5 App. Cas. 925.

(6) Ibid. 935.

(7) Law Rep. 6 H. L. 377.

(8) 17 Ch. D. 301.

(9) 31 Beav. 124.

[His Lordship read the above letter of the 22nd of February, 1888.]

I do not think that any intelligent man could doubt for a moment what the true meaning of that letter was. The proposed mortgagee of the interest of the cestui que trust writes to the trustee for information as to the position of the funds in which his cestui que trust was interested. It is said that the Defendant was merely told that the solicitors were "doing business with the cestui que trust"; but it is clear that the business was one of a pecuniary character, for it is plain that they were thinking of making an advance to him, and wanted to know what prior incumbrances there were upon his interest, and when they say at the end of the letter, "we understand he has not in any way mortgaged or parted with such life interest. Is this so?" no intelligent man, much less an intelligent banker, could have had any doubt what was meant by it.

[His Lordship read the Defendant's reply of the 23rd of February.]

That is a very clear and distinct answer to that part of the letter which asks whether Vice-Admiral Bouverie has in any way mortgaged or parted with his life interest, meaning of course to any one. Well, that letter was followed up by a further explanation from the Defendant, given no doubt after making inquiry and obtaining some further information.

[His Lordship read the Defendant's letter of the 25th of February.]

That letter was crossed by a letter of the Plaintiff's solicitors, dated the same day, which was answered by the Defendant's letter of the 27th of February.

[His Lordship read both the letters, and continued:-]

Therefore, in reply to the question, whether the Defendant held any mortgage, or knew of any incumbrance to any one else, on the Admiral's life interest, the Defendant said, "I cannot give you any answer except what I have already told you." In point of fact, at that time the Defendant knew of six other mortgages already made by Vice-Admiral Bouverie upon his life interest. When I say he knew of them, I do not forget that it is said (and I accept that as true) that, although he had had notice of them,

he had forgotten their existence when he wrote that letter, which, I have no doubt, was written bon‰ fide. But the result was this, that a representation was made by a person who had had notice of prior mortgages, and who ought to have known of their existence, that in fact there were no mortgages or incumbrances on the life interest, except what he had already mentioned. That statement was, unfortunately, untrue, although by reason of the Defendant's forgetfulness he did not know that it was untrue at the time when he made it. I think it is clearly settled by authority that, when a trustee is applied to for information with regard to incumbrances on his trust fund, and he gives a distinct answer that there is nothing of the sort, the fact that he has forgotten the existence of an incumbrance is no excuse for him whatever. Burrowes v. Lock (1) and Slim v. Croucher (2) are clear upon this point. In Burrowes v. Lock the person held liable was a trustee. in Slim v. Croucher the person held liable was not a trustee; he was a lessor, who, it having been stated by one Hudson, an intending borrower, that he had agreed to grant a lease to Hudson, was asked by the plaintiff, the intending lender, whether he would grant a lease according to his agreement, and his answer was: "I am quite agreeable to grant a peppercorn lease of ground on which four houses are erected, situate at Bromley, to Mr. Hudson." He had in fact already granted a lease of the property to Hudson, which Hudson had assigned for value, and he did not mention this lease. His answer, beyond all question, amounted to a statement that he was in a position to grant a lease, and that he had not already granted a lease of the property. The present case is, in my opinion, a much stronger one, for the Defendant's letter clearly contained a misrepresentation (though an unintentional one) with respect to a matter within his knowledge, when he knew that the person to whom the information was given was about to act on the communication made by him, and he is responsible, therefore, for his statement turning out to be incorrect. The Defendant is, therefore, liable for the loss which the Plaintiff has sustained by reason of his misrepresentation, although in fact

(1) 10 Ves. 470.

(2) 1 D. F. & J. 518.

the misrepresentation was made through forgetfulness on the part of the Defendant.

Then arises the question, For what amount is the Defendant liable? Clearly for the whole amount advanced by the Plaintiff, because it has turned out that the previous charges were such as entirely to exhaust the value of the life interest of Vice-Admiral Bouverie. The whole amount advanced by the Plaintiff was lost, and the Defendant is liable for the £600 advanced, and for the interest which ought to have been received by the Plaintiff on the mortgage, but which has been lost by reason of the advance having been made on a worthless security; and, in my opinion, the Defendant is also liable for the premiums which the Plaintiff has paid upon the policies.

On looking at Slim v. Croucher (1) and Burrowes v. Lock (2), it is clear that an action of this sort, whether brought at Law or in Equity, is an action for damages, and the question is, what damage the Plaintiff has sustained by the representation, having regard to this, that it must be only such damage as must be reasonably taken to have been in the contemplation of the parties at the time when the representation was made. I hold, upon the construction of the letters, that the Defendant was told that the Plaintiff was about to advance money on the security of the life interest. He must have known very well, that an advance upon the security of a life interest is always collaterally secured by a policy or policies of insurance, and in fact he mentioned, in answer to the questions put to him, that a previous advance was secured by policies of insurance in respect of which premiums were paid. The Plaintiff was about to advance money on a mortgage of the life interest, and the Defendant must have known that in such a case the Plaintiff would have to pay the usual premiums on a policy of insurance, and that the amount of the premiums which he would have to pay would be part of the damage which the Plaintiff would be entitled to recover in an action for misrepresentation. The amount of the premiums which the Plaintiff has paid up to the present time is shewn to be £228 18s. 11d.; and, therefore, I must hold the Defendant

(1) 1 D. F. & J. 518.

(2) 10 Ves. 470.

liable for the £228 18s. 11d. paid for premiums, and interest thereon.

I shall give both parties liberty to apply, because in case the money should not be paid by the Defendant before the next premium becomes due, and the Plaintiff has to pay that premium, he will be entitled to add the amount to the damages. On the other hand, if the Defendant pays the amount of the damages, he will be entitled to stand in the place of the Plaintiff, and to have the benefit of the policy for the amount which he pays.

W. L. C.

From this decision the Defendant appealed.

The appeal was heard on the 1st and 2nd of May, 1891.

Rigby, Q.C., Cozens-Hardy, Q.C., and Morshead, for the Appellant:-

If it was the Appellant's duty to give full and accurate information to the Plaintiff, we admit that he did not discharge that duty; but we say that he was under no legal obligation to give it. He was not bound to give any information at all to a person who was a stranger to the trust. He made no negative statement; he did not say that the incumbrances he mentioned were the only ones. He answered the inquiry honestly, to the best of his recollection, it not being present to his mind that he had received notice of other incumbrances. Even if he had said there were no others, he would not be liable unless he made the statement dishonestly. The Plaintiff relies on Burrowes v. Lock (1). It is difficult to see how that case can stand with Derry v. Peek (2); but at all events in the former case there was a distinct positive misrepresentation; here there was no misrepresentation at all - there was only a statement which was perfectly true. Slim v. Croucher (3), relied on by Mr. Justice North, was not the case of a trustee, but of a landowner agreeing to grant a lease when he had in fact granted one already, so that the lease which he afterwards granted was worthless. Unless that case can be supported on the ground of warranty, it is

(1) 10 Ves. 470.

(2) 14 App. Cas. 337.

(3) 1 D. F. & J. 518.

inconsistent with Derry v. Peek (1), for there was no element of dishonesty in the transaction. In Re Ward (2) the position of the solicitor made it his duty to make correct statements, and the case stands on quite a different footing. Where there is no duty to get and communicate correct information there must be something amounting to fraud to give a right to relief: Derry v. Peek; Brownlie v. Campbell (3).

Everitt, Q.C., and Charles Church, for the Plaintiff:-

In Derry v. Peek the House of Lords did not intend to interfere with the settled course of decisions in Equity. The Courts of Equity had laid down that a trustee was subject to an obligation expressed in Browne v. Savage (4), where it is said that persons proposing to advance money on the security of trust property have no means of ascertaining whether there are prior charges but by applying to the trustees, "who must, for their own security, give correct information, when inquiry is made of them, whether they have had notice of any prior assignments affecting their trust property." Here the Defendant, having once elected to answer certain inquiries, was bound to give full information; if he did not recollect whether there were other incumbrances or not, he was bound to say so. His only partially answering the inquiries was equivalent, in Equity, to misleading, and so involved him in liability. Brownlie v. Campbell (5) was a case of vendor and purchaser, and has no application to a case like the present, which, as pointed out in that case(6), is really covered by Burrowes v. Lock (7) and Slim v. Croucher (8). "The mere fact of forgetfulness by a man who has known a certain fact, who is asked whether that fact has happened or not, and says positively that it did or did not, cannot possibly be an excuse"; by saying that the fact was not so, he takes upon himself the responsibility of a positive statement: Brownlie v. Campbell (9), where it is pointed out(10) that in Burrowes v. Lock the answer of the trustee to the intending

(1) 14 App. Cas. 337.

(2) 31 Beav. 1.

(3) 5 App. Cas. 925, 950.

(4) 4 Drew. 635, 639.

(5) 5 App. Cas. 925.

(6) 5 App. Cas. 935, 936, 953.

(7) 10 Ves. 470.

(8) 1 D. F. & J. 518.

(9) 5 App. Cas. 936.

(10) Ibid. 953.

lender, that there was no incumbrance, amounted to a warranty or contract that there was none.

[LINDLEY, L.J.:- Burrowes v. Lock (1) can only stand consistently with Derry v. Peek (2) on the ground of estoppel. I cannot see how it can do so except on that principle.]

[KAY, L.J., upon the point of estoppel, mentioned In re Bahia and San Francisco Railway Company (3).]

It is an established principle of Equity that a case in which a person stands in the position of trustee must be distinguished from the class of cases of which In re Bahia and San Francisco Railway Company is an example. Supposing a trustee, having had notice of a charge upon a trust fund, nevertheless paid the fund over to some one else, he would be liable to the person entitled to the charge, even though, as here, his excuse was that he had forgotten all about it. So a trustee, having had notice of assignment of a life interest in the trust fund to certain persons, is in the position of trustee for those persons.

[LINDLEY, L.J.:- This seems to be a case of estoppel or nothing.]

We contend that the Defendant must be treated as having taken upon himself the responsibility of a positive statement, upon the faith of which he knew the Plaintiff was going to deal for valuable consideration: Brownlie v. Campbell (4).

[KAY, L.J.:- In Freeman v. Cooke (5), Baron Parke, referring to the rule laid down in Pickard v. Sears (6), says: "By the term 'wilfully,' however, in that rule, we must understand, if not that the party represents that to be true which he knows to be untrue, at least, that he means his representation to be acted upon, and that it is acted upon accordingly; and if, whatever a man's real intention may be, he so conducts himself that a reasonable man would take the representation to be true, and believe that it was meant that he should act upon it, and did act upon it as true, the party making the representation would be equally precluded from contesting its truth; and conduct, by

(1) 10 Ves. 470.

(2) 14 App. Cas. 337.

(3) Law Rep. 3 Q. B. 584.

(4) 5 App. Cas. 936.

(5) 2 Ex. 654, 663.

(6) 6 Ad. & E. 469, 474.

negligence or omission, where there is a duty cast upon a person, by usage of trade or otherwise, to disclose the truth, may often have the same effect."]

That is so, and upon that doctrine we rely; and there are several other authorities to the same effect, such as Carr v. London and North-Western, Railway Company (1) and York Tramways Company v. Willows (2). If a man chooses to answer inquiries at all he must do so fully, and not lull the other party into the belief that his inquiries have been answered. A partial and fragmentary statement of fact, so that the withholding of that which is not stated makes that which is stated absolutely false, is sufficient ground for an action for misrepresentation: Peek v. Gurney (3). As was said in Burrowes v. Lock (4), it was at least gross negligence on the part of this Defendant to take upon himself to aver positively and distinctly, or lead the Plaintiff to believe, that there were no charges or incumbrances beyond those already stated, without taking the trouble to recollect whether the fact was so or not.

[LINDLEY, L.J. (having sent for the Registrar's book containing a copy of the pleadings and decree in Burrowes v. Lock (5)):-

(1) Law Rep. 10 C. P. 307, 316-7.

(2) 8 Q. B. D. 685, 699.

(3) Law Rep. 6 H. L. 377, 403.

(4) 10 Ves. 470, 476.

(5) The following is a report of the facts, pleadings, and decree in Burrowes v. Lock, taken from the records of the case in Chancery Orders (Reg. Lib. 1804, A, p. 342):-

BURROWES v. LOCK.

Thomas Cartwright, who died in 1787, by his will, made in 1778, gave his residuary estate to his executors, the defendant, James Lock, and two other persons, upon trust for his, the testator's, children equally. Part of the residuary estate consisted of a debt of £2600 due from Lord Dillonto the testator. The testator left nine children surviving him. The defendant Edward Cartwright, as one of such children, was entitled to £288 17s. 9d., being his one-ninth of the £2600. By a deed of the 21st of November, 1801, Edward Cartwright, in consideration of £132, assigned his £288 17s. 9d. to the plaintiff, who thereupon gave James Lock notice of the assignment. On the 20th of November, 1802, the £2600 was paid to Lock as the then surviving executor of the will; and he, having paid eight-ninths of it to the brothers and sisters of Edward Cartwright, retained the latter's one-ninth - i.e., £288 17s. 9d. On the plaintiff applying to Lock for payment of that sum, the defendant, James Cartwright, a brother of Edward Cartwright, set up a claim to 10 per cent. of it, under what appeared to be a deed of family arrangement, dated in 1790, whereby, amongst other things, it was agreed that Edward

The report of Burrowes v. Lock (1) is not quite intelligible, for it leaves out the prayer and the decree. When the prayer and decree are looked at it becomes intelligible enough.]

Cartwright's share of the £2600 should be subject to a deduction of 10 per cent. in favour of James Cartwright.

The bill of complaint, having stated the particulars of the assignment of the 21st of November, 1801, proceeded as follows:-

"The plaintiff charges that, prior to the time of making the said assignment, application was made on the part of the plaintiff unto the defendant Lock, to know whether the defendant Edward Cartwright was absolutely entitled to the said one-ninth part of the said debt; and the defendants respectively, and particularly the defendant Lock, prior to the plaintiff's said purchase and assignment, did give the plaintiff an answer in the affirmative; and particularly the defendant Lock, prior to the said transaction, and in November, 1801, did write a letter to the plaintiff, to the effect following, viz.: 'Sir - William Edward Cartwright is entitled to his share of money secured by debentures on Lord Dillon's estate, when sold to pay them off, which he can dispose of to any one. - I am, &c., Jas. Lock;' and, upon the faith of the said letter from the defendant Lock, the plaintiff actually purchased the defendant Edward Cartwright's said one-ninth share of the said debt, without knowing that the other defendant, James Cartwright, had any right or deduction whatsoever out of the same; for, although the defendants respectively, and particularly the defendant Lock, before and at the time of the plaintiff's purchasing the defendant Edward Cartwright's said share in the said debt, had been apprised and did suspect that the defendant James Cartwright had a claim of a deduction of 10 per cent. out of the said defendant Edward Cartwright's said share, and had some notice relating thereto, yet they did not disclose the same to the plaintiff or give him the least notice thereof; and the plaintiff charges that he did bon‰ fide pay the whole of the consideration money expressed in the said deed of assignment for the purchase of his one-ninth part of the said debt; and the plaintiff charges that the said deed of assignment is a valid deed on the part of the plaintiff; and in case the defendant James Cartwright is entitled to have any deduction out of the said share so assigned to the plaintiff as aforesaid, then the said defendants, and particularly the defendant Edward Cartwrightin the first instance, and in case of his default then the defendant Lock, ought to make good the same, and therefore that the said defendants might answer the several matters aforesaid; and that the said defendant James Lock might be decreed to pay and satisfy to the said plaintiff the said sum of £288 17s. 9d., being the one-ninth part or share of the said sum of £2600 so purchased by and assigned to the plaintiff as aforesaid, together with interest and costs; and in case the defendant James Cartwright was entitled to and should be paid anything from and out of the said debt or money so assigned to the plaintiff as aforesaid, then that

(1) 10 Ves. 470.

Mere forgetfulness on the part of a person making a representation to another person is sufficient to entitle the latter to relief: Slim v. Croucher (1).

the defendants, and particularly the defendant Edward Cartwright in the first place, and, in default of payment by him, then that the defendant Lock might answer and make good the same with interest unto the plaintiff; and for relief in the scope of the said plaintiff's bill."

The defendant Edward Cartwright, by his answer, submitted that, under the circumstances therein mentioned, the plaintiff ought not to be allowed to have the benefit of the assignment of the 21st of November, 1801, or to receive payment of Edward Cartwright'sshare of the £2600. The defendant, James Lock, by his answer, admitted having had notice from the plaintiff of the assignment of the 21st of November, 1801, and said he apprehended that the £288 17s. 9d. was subject to a deduction of 10 per cent. to James Cartwright. He submitted that, James Cartwright having made the claim, he, Lock, could not, as trustee, with safety to himself, pay over Edward Cartwright's share of the £2600 to the plaintiff, but expressed his willingness to act as the Court should think proper. The plaintiff's bill having been amended, the defendant Edward Cartwright put in an answer to it, admitting that James Cartwright claimed the 10 per cent.; and he stated that he believed that the plaintiff, previous to his purchase, did inquire of Lock as to whether he, Edward Cartwright, was absolutely entitled to his one-ninth, and that lock wrote the letter above mentioned, though he, Edward Cartwright, did not know whether the plaintiff purchased the share without knowing that James Cartwrightclaimed any deduction out of it; but if the plaintiff did purchase without knowledge of the claim, he, Edward Cartwright, denied that the same was wilfully suppressed by him from the plaintiff; and he believed that, had the plaintiff asked Lock whether there was any incumbrance affecting his (Edward Cartwright's) share, which inquiry was not made, Lock would have given him every information; and that he, Edward Cartwright, did not think of mentioning it as it would naturally be discovered on an investigation of the title. The defendant James Lock, by his answer to the amended bill, admitted the plaintiff having made the inquiry of him, and that he did write the letter; he alleged, however, that he did not recollect ever having said that Edward Cartwrightcould dispose of his share free from any deduction, or that any such question was ever asked of him, but that the inquiry was whether Edward Cartwrightcould sell his share, to which his (Lock's) answer was that he could, and this, he submitted, was the import of his letter; and he altogether denied any wilful suppression, saying that, had the plaintiff asked him whether there was any incumbrance affecting Edward Cartwright's share, he would not have hesitated giving him any information in his power. He admitted having, before the plaintiff's purchase, heard of James Cartwright's claim, but alleged that, it being a matter in which

(1) 1 D. F. & J. 518.

[BOWEN, L.J.:- If the law, at the time that case was decided, was as it seems to have been - according to Stranks v. St. John (1) - that an agreement to grant a lease must be treated as an agreement to grant a good lease, then there was in that case a good promise, on which an action at law could be maintained.]

Lord Campbell in that case followed Burrowes v. Lock (2), which he considered was "a sound decision."

[LINDLEY, L.J.:- At that time opinion seems to have been fluctuating as to whether Courts of Law and Courts of Equity had a common jurisdiction in that class of cases. In the present case, if the Defendant's letters amount to a representation that the property is free from incumbrances, then it is a case of estoppel. But supposing the true interpretation of the letters is, "so far as I know there is no charge," is there estoppel then?]

Two of the prior charges were charges to the trustees of the settlement, one of whom was the Defendant himself, so that as to those two charges, at all events, there was distinct misrepresentation. The deed under which he became a trustee actually recited

he himself was not interested, he gave himself no concern about it, nor did it enter his mind during any of the times he saw the plaintiff or when he wrote the letter. He admitted that he did not disclose the matter to the plaintiff before the purchase, but said this was entirely accidental, and he submitted to act as the Court should direct. The defendant James Cartwrightalso put in an answer, claiming to be paid the 10 per cent. out of Edward Cartwright's share, and that his interest in such share could not be affected by any transaction that might have taken place between Edward Cartwright and the plaintiff.

The case having been argued and the letter from Lock to the plaintiff produced and put in evidence, a decree was pronounced, "that the defendant James Lock do pay to the plaintiff the sum of £288 17s. 9d., being one ninth part or share of the sum of £2600 purchased by the plaintiff of the defendant Edward Cartwright and assigned to him by the indenture of the 21st day of November, 1801, subject to a deduction of £10 per cent. to the defendant James Cartwright; and it is ordered that the defendants Edward Cartwright and James Lock do jointly pay to the plaintiff the £10 per cent. hereinbefore directed to be deducted out of the said £288 17s. 9d.; and it is ordered that the plaintiff do pay unto the defendant James Cartwright his costs of this suit to be taxed," &c., and that "the costs which the plaintiff shall so pay unto the said James Cartwrightbe repaid to him by the defendant James Lock; and, as between the plaintiff and the said defendants, James Lock and Edward Cartwright, no costs on either side:" liberty to apply.

(1) Law Rep. 2 C. P. 376.

(2) 10 Ves. 470.

the prior charges. The natural conclusion which the Plaintiff's solicitor would draw from reading the Defendant's reply of the 27th of February to the letter of the 25th of February would be that there was no charge beyond what was mentioned in that letter.

[KAY, L.J.:- Fraud is admittedly out of the case. Does the Defendant, in his letter of the 27th of February, mean to say, "There are no charges but those I have mentioned" - in which case he might be estopped? Or does he not mean to say merely, "So far as I know, there is no other charge"? If he means the latter, is he estopped?]

Equivocal expressions must be regarded in the same way as equivocal conduct. The opening words of the Defendant's letter of the 27th of February import a positive statement constituting upon the facts and the authorities a misrepresentation.

[KAY, L.J.:- The authorities you rely upon seem rather to apply to a case where a man makes a dishonest statement. If he makes an honest statement, is he estopped?]

An ambiguous statement must be construed strictly against the person making it.

[KAY, L.J.:- In General Finance, Mortgage and Discount Company v. Liberator Permanent Benefit Building Society (1) Sir George Jessel said that a statement, to operate as an estoppel, must be distinct and precise. What do you say is a statement sufficient to constitute an estoppel?]

A statement which it is possible to construe in two ways; and such a statement we have here.

[BOWEN, L.J.:- It seems evident from the letter of the Plaintiff's solicitors of the 25th of February, that at that time, at all events, the Defendant's previous letter had not produced on their minds the impression that there was no other charge.]

The Defendant's reply of the 27th was certainly calculated to produce that impression, and we have the fact that without making any further inquiry the Plaintiff agreed to make the loan. What was more likely to lull the Plaintiff into security

(1) 10 Ch. D. 15.

than to say, "I do not see how I can explain myself more clearly than I did the other day in my letter to you"?

Rigby, in reply.

1891. June 11. LINDLEY, L.J. (after stating the facts and reading the correspondence, continued):-

This appeal raises several extremely important questions. First, it is necessary to consider what are the duties of trustees towards persons about to deal with their cestuis que trust, and who, before dealing with them, make inquiries of their trustees as to any assignments or incumbrances known to them.

In Browne v. Savage (1), Vice-Chancellor Kindersley said that trustees "must, for their own security, give correct information, when inquiry is made of them, whether they have had notice of any prior assignments affecting their trust property." Mr. Lewin, in his well-known work (Lewin on Trusts(2)), refers to that case as an authority for the proposition that trustees are bound to answer such inquiries. But when this opinion is examined it can scarcely be supported, and if such a doctrine were logically carried out it would impose very serious duties upon trustees. The duty of a trustee is properly to preserve the trust fund, to pay the income and the corpus to those who are entitled to them respectively, and to give all his cestuis que trust, on demand, information with respect to the mode in which the trust fund has been dealt with, and where it is. But it is no part of the duty of a trustee to tell his cestui que trust what incumbrances the latter has created, nor which of his incumbrancers have given notice of their respective charges. It is no part of the duty of a trustee to assist his cestui que trust in selling or mortgaging his beneficial interest and in squandering or anticipating his fortune; and it is clear that a person who proposes to buy or lend money on it has no greater rights than the cestui que trusthimself. There is no trust or other relation between a trustee and a stranger about to deal with a cestui que trust, and although probably such a person in making inquiries may be regarded as authorized by the cestui que trust to make them, this view of the

(1) 4 Drew. 635, 639.

(2) 8th Ed. p. 704.

stranger's position will not give him a right to information which the cestui que trust himself is not entitled to demand. The trustee, therefore, is, in my opinion, under no obligation to answer such an inquiry. He can refer the person making it to the cestui que trust himself.

I will next take the case of a trustee who answers the inquiry. What in this case is the extent of his obligation? Is he bound to find out the facts - bound to make inquiries of his co-trustees, or of the solicitor to the trust? Or is his obligation limited to giving such information as he himself can give without inquiry or research? I am not aware of any principle or authority which imposes upon him any obligation to do more than give an honest answer to the inquiry - that is to say, to do more than answer to the best of his actual knowledge and belief. He may, no doubt, undertake a greater responsibility; he may bind himself by a warranty, or he may so express himself as to be estopped from afterwards denying the truth of what he said; but unless he does one or the other, I do not know on what principle consistent with Derry v. Peek (1) he can, if he answer honestly, expose himself to liability. I say, "consistent with Derry v. Peek," because, until that case was decided, it was generally supposed to be settled in Equity that liability was incurred by a person who carelessly, although honestly, made a false representation to another about to deal in a matter of business upon the faith of such representation: Burrowes v. Lock (2); Slim v. Croucher (3). This general proposition is, however, quite inconsistent with Derry v. Peek. I do not, however, understand Derry v. Peek to apply where there is a legal obligation on the part of the defendant towards the plaintiff to give him correct information. If such an obligation exists, an action for damages will, I apprehend, lie for its non-performance, even in the absence of fraud: see per Lord Denman in Barley v. Walford (4). It is for this reason that I have examined the obligation of trustees to answer inquiries made by persons about to deal with their cestuis que trust. There is no equitable, as distinguished from legal, obligation to answer such inquiries, and if a trustee gives an

(1) 14 App. Cas. 337.

(2) 10 Ves. 470.

(3) 1 D. F. & J. 518, 525.

(4) 9 Q. B. 197, 208.

honest answer he discharges the only obligation which he is under.

Again, Derry v. Peek (1) does not in any way affect the law relating to warranties, unless it be by negativing the notion that promoters who issue a prospectus impliedly warrant the truth of the statements contained in it. Nor does Derry v. Peek in any way affect the law relating to estoppel where such law is applicable. But estoppel is not a cause of action - it is a rule of evidence which precludes a person from denying the truth of some statement previously made by himself. Lord Herschell, in his judgment in Derry v. Peek, did not profess to overrule Burrowes v. Lock (2) and Slim v. Croucher (3), and it was strenuously contended that those cases were still law, and that they governed the present case. It becomes necessary, therefore, to examine those cases with care.

Burrowes v. Lock, as appears from the Registrar's book, was a suit by the assignee of one of several residuary legatees for his share of the residue of a testator's estate. The amount of the residue was not in controversy, and a general administration decree was not sought. The defendants to the suit were the plaintiff's assignor and the trustee of his share of the residue. The trustee had (as appears from the report in Vesey) informed the plaintiff that this share was unincumbered, whereas, in fact, it was not. The decree was, in effect, that the trustee should pay the full amount of the share to the plaintiff without deducting the incumbrance. The trustee, even if he acted honestly, which is, perhaps, questionable, was clearly estopped from denying that the share was unincumbered. This decision was in 1805, more than thirty years before Pickard v. Sears (4), and at a time when the doctrine of estoppel was less accurately defined than it has since become. Regarded as a decision on the ground of estoppel, Burrowes v. Lock appears to me not only to have been quite right, but to remain wholly untouched by Derry v. Peek. Lord Blackburn seems to have thought that the representation in Burrowes v. Lock was scarcely distinguishable from a warranty: Brownlie v. Campbell (5); and if this be the proper view to take

(1) 14 App. Cas. 337.

(2) 10 Ves. 470.

(3) 1 D. F. & J. 518.

(4) 6 Ad. & E. 474.

(5) 5 App. Cas. 953.

of it, Burrowes v. Lock (1) can stand on that ground, although I confess my own inability to sustain it on the ground of warranty.

Slim v. Croucher (2), in which Burrowes v. Lock was recognised and extended, cannot, in my opinion, be supported on the ground of estoppel. Slim v. Croucher was a suit in equity to recover money advanced on a lease granted by the defendant to the borrower, and which the defendant had told the plaintiff would be granted. The lease proved to be invalid. Unless the defendant's statement amounted to a warranty that the lease when granted would be valid, I do not myself see how to avoid the conclusion that Slim v. Croucher is inconsistent with, and therefore overruled by, Derry v. Peek (3). Lord Herschell, in his judgment, did not himself examine these cases, but intimated that the two might stand together upon the grounds explained by Lord Selborne in Brownlie v. Campbell (4). I am not, however, myself able to reconcile those grounds with the decision in Derry v. Peek. Slim v. Croucher evidently proceeded upon the notion, sanctioned by the high authority of Lord Campbell, that in that case an action for damages might have been maintained at law upon the defendant's representation, and that in such a case the Court of Chancery had a concurrent jurisdiction with the Courts of Common Law. There would be no such jurisdiction in the case of a warranty. Slim v. Croucher was not decided, nor did Lord Selborne approve it, on any such ground.

The only conclusion I can arrive at is, that whilst Burrowes v. Lock can be supported and taken as a guide on the ground of estoppel or possibly fraud, Slim v. Croucher cannot any longer be regarded as having been rightly decided, fraud having been negatived. As pointed out by Lord Blackburn in Brownlie v. Campbell (5), the line between fraud and warranty is often very narrow, and the same observation is true of the line between warranty and estoppel. Narrow, however, as the line often is, the three words denote fundamentally different legal conceptions which must not be confounded.

Reverting now to the grounds of liability on which this action may be supported, it is obvious that as regards warranty, the

(1) 10 Ves. 470.

(2) 1 D. F. & J. 518.

(3) 14 App. Cas. 337.

(4) 5 App. Cas. 936.

(5) 5 App. Cas. 953.

Plaintiff and the Defendant were not contracting parties. There was no intention to contract, nor was there any consideration which is essential for the purpose of treating what the Defendant said as a promise or a warranty. As regards estoppel, if the Defendant had said that there were no incumbrances on Admiral Bouverie's life interest except those mentioned by the Defendant in his letters, the case would be clearly one of estoppel; it would be undistinguishable from Burrowes v. Lock (1); and the Plaintiff would be entitled to relief, not to damages for a misrepresentation, but to an order on the Defendant as trustee for the Plaintiff to pay to him the Admiral's life interest in the fund in question, subject only to the incumbrances disclosed by the Defendant. This is not the relief sought by the Plaintiff, nor is it the relief given to him by the Court below, but it is relief to which he would be entitled on the ground of estoppel. But the difficulty of affording the Plaintiff relief on this ground arises from the ambiguity of the Defendant's letters. They are quite consistent with the view that the incumbrances mentioned by the Defendant were all he knew of or remembered. A statement, however, to that effect would not estop him from shewing that there were others which he did not know of or did not remember. But then it is said that he ought to have known of them and remembered them, as notice of them had been given to him; and it is admitted that if he had looked into the deeds and documents relating to the trust, he would have found that there were other incumbrances besides those which he did in fact know of and did accordingly mention. Knowledge and means of knowledge are very different things; and if a person truly says he only knows or remembers so and so, is it right to treat him as saying that he knows more, even if it is his duty to inform himself accurately before he speaks? I do not think that so to hold would be consistent with Derry v. Peek (2). To treat him in the case supposed as saying more than he did, would be to resuscitate the doctrine condemned in Derry v. Peek, and to hold him liable in damages for a negligent misrepresentation.

But then it is said that the Defendant's language was such as

(1) 10 Ves. 470.

(2) 14 App. Cas. 337.

to be calculated to mislead, and as in fact to mislead, the Plaintiff's solicitors, who applied to the Defendant for information; and reliance is placed on the judgment of Baron Parke in Freeman v. Cooke (1), and of the present Master of the Rolls in Carr v. London and, North-Western Railway Company (2). But the answer to this argument is, that the Plaintiff too hastily inferred from the Defendant's letters that there were no other incumbrances besides those which he mentioned. He never said this in terms; I cannot think he meant to be so understood; and although the Plaintiff's solicitors may have so understood him, I do not think they had more reason to be satisfied with his last letter than with his first, which they saw was too loosely expressed to justify them in acting upon it. It must be remembered that in this case the Defendant was not the only trustee, and it does not appear that the Plaintiff's advisers applied to the other trustee. It is often said that notice to one trustee is notice to all: Browne v. Savage (3); but this is one of those misleading generalities against which it is necessary to be on one's guard. An incumbrancer of a trust fund who first gives notice to any of its trustees obtains priority over any prior incumbrancer who has given no notice to any of them; but notice to one does not affect the other trustees so as to make them liable for what they may do in ignorance of the notice to their co-trustee. There is no law which precludes them from saying they do not know what he knows; and notice given to one who dies or retires without communicating it to his co-trustee cannot, I apprehend, render them liable for not giving effect to a notice of which they know absolutely nothing: see on this subject, Phipps v. Lovegrove (4). The doctrine of implied notice cannot create an estoppel in such a case any more than it can create a personal liability.

Fraud, breach of duty, warranty, estoppel, being therefore all negatived in the present case, no ground remains on which this action can be supported.

The appeal, therefore, must be allowed, with costs here and below.

(1) 2 Ex. 654.

(2) Law Rep. 10 C. P. 307.

(3) 4 Drew. 635.

(4) Law Rep. 16 Eq. 80.

BOWEN, L.J.:-

I am of the same opinion, and I only add one or two words because, substantially, I agree with all that my Brother the Lord Justice has said.

As to Derry v. Peek (1), I think, as we have already had reason more than once to explain, it decides two things, and two things only. First, the point of Common Law required no elaboration, namely, the point that an action for deceit or fraud, properly so-called, would only lie at law for a fraudulent misrepresentation - a fraudulent allegation that a fact existed which did not exist, in the truth of which representation the person making it had no genuine or honest belief. That was the rule at Common Law.

But Derry v. Peek decides, secondly, that in cases such as those of which that case was an instance, there is no duty enforceable at law to be careful in the representation which is made. Negligent misrepresentation does not certainly amount to deceit, and negligent misrepresentation can only amount to a cause of action if there exist a duty to be careful - not to give information except after careful inquiry. In Derry v. Peek, the House of Lords considered that the circumstances raised no such duty. It is hardly necessary to point out that, if the duty is assumed to exist, there must be a remedy for its non-performance, and that therefore the doctrine that negligent misrepresentation affords no cause of action is confined to cases in which there is no duty, such as the law recognises, to be careful. But Derry v. Peek leaves, as my Brother the Lord Justice has said, altogether untouched, first of all the case of warranty, which we need not consider; and secondly, cases of estoppel. But we must be guarded in the way in which we understand the remedy where there is an estoppel. Estoppel is only a rule of evidence; you cannot found an action upon estoppel. Estoppel is only important as being one step in the progress towards relief on the hypothesis that the defendant is estopped from denying the truth of something which he has said. An illustration of a case of that kind of estoppel filling up the gap in the evidence which, when so filled up, would produce this right to relief, is found in the case of In re Bahia and San Francisco Railway Company (2).

(1) 14 App. Cas. 337.

(2) Law Rep. 3 Q. B. 584.

Burrowes v. Lock (1) was a case of estoppel. As soon as we looked at the record it so appeared. It was a case where there was a right to relief on the hypothesis that the defendant was precluded from denying the truth of a particular fact.

Slim v. Croucher (2) was supposed by the Court which decided it to be on all-fours with Burrowes v. Locks; and so it would have been, I think, if an action for specific performance could have been brought in Slim v. Croucher. I confess that I agree with my learned Brother in failure to discover how an action for specific performance could have laid in that case. If it could have laid, then I think the decision in Slim v. Croucher would have been justified, because it seems to me that a person who alleges that he has undertaken to grant a lease really alleges that he has undertaken to grant a valid lease.

Therefore, we come to the conclusion in this case, that in order to entitle the Plaintiff to relief, we must find here such an estoppel as would justify a claim for relief based upon the hypothesis that the Defendant is precluded from denying the truth of the fact which he is supposed to have asserted. Now, an estoppel, that is to say, the language upon which the estoppel is founded, must be precise and unambiguous. That does not necessarily mean that the language must be such that it cannot possibly be open to different constructions, but that it must be such as will be reasonably understood in a particular sense by the person to whom it is addressed. Now, after a careful consideration of these letters, I have come to the conclusion that the Defendant did not make any clear statement of the character which the Plaintiff alleges. I think that his language would be reasonably understood as conveying an intimation of the state of his belief, without an assertion that the fact was so apart from the limitation of his own knowledge; and therefore that no relief here can be granted.

The appeal, therefore, in my opinion, must succeed.

KAY, L.J.:-

In the discussion in this case, the question was raised whether Courts of Equity have been in the habit of exercising a more

(1) 10 Ves. 470.

(2) 1 D. F. & J. 518.

extensive jurisdiction than Courts of Law in cases of innocent misrepresentation.

The Plaintiff, being about to deal with an equitable tenant for life under a settlement by lending him money upon the security of his life interest, caused inquiries to be made of the Defendant, who is one of the trustees of that settlement, whether the life estate was incumbered. If the Defendant had given a positive answer that it was not incumbered, and the intending lender, relying upon that assurance, had proceeded to lend money upon a mortgage of the life interest, and had afterwards taken proceedings against the trustee to realize his security, there seems to be no doubt that the trustee could not defend himself by saying that the life estate had been previously assigned, but that when he made the statement he had forgotten that fact. Also, where there is conscious deceit, there is no doubt Equity would give relief.

In 1699, in Draper v. Borlace (1), one who had encouraged another to lend money on mortgage, concealing a prior charge of his own, was postponed.

In 1801, in Evans v. Bicknell (2), Lord Eldon said(3): "It is a very old head of Equity, that if a representation is made to another person, going to deal in a matter of interest upon the faith of that representation, the former shall make that representation good, if he knows it to be false."

Knowledge of the falsehood, of course, makes the misrepresentation fraudulent, and in cases of fraud Courts of Equity have always exercised a wide jurisdiction.

The facts in Evans v. Bicknell were that one Stansell, having a life interest in certain real estate in remainder after the death of his wife, with a possible reversion in fee in default of children, obtained the title-deeds from Bicknell, one of the trustees, and, concealing the settlement, mortgaged the estate in fee to the plaintiff, who filed the bill against the trustee, alleging that he had delivered the deeds to Stansell for the purpose of enabling him to make the mortgage. Lord Eldon said(4): "The question then is, supposing the husband's interest insufficient to satisfy

(1) 2 Vern. 369.

(2) 6 Ves. 174.

(3) 6 Ves. 183.

(4) Ibid. 182.

the mortgage, whether there is a personal demand against Bicknell upon the circumstances of his conduct; and whether, if there is, it can be enforced in a Court of Equity." Relief was refused because the evidence of fraud was not sufficient.

In 1805, in Burrowes v. Lock (1), a trustee was held liable to the plaintiff who had bought the interest of a cestui que trust, relying upon the statement of the trustee that the cestui, que trustwas entitled to the fund, the trustee having forgotten that he had received notice of a first incumbrance. The language of Sir William Grant seems to make it doubtful whether he entirely believed that the trustee had forgotten - if he had not, of course, his statement would be fraudulent.

But it is quite plain that fraud is not necessary in all cases as a ground for this relief.

In 1682, in Hobbs v. Norton (2), relief was given against the owner of land who answered an inquiry as to an annuity, supposed to be charged upon the land, that he believed it was so charged, and encouraged the applicant to proceed in his purchase of the annuity. The landowner was compelled to pay the annuity, though he had since discovered that he was entitled to the land free from any such charge.

In 1690, in Hunsden v. Cheyney (3), a mother, who was entitled to a term of years in land which was limited to her in tail, stood by while her son negotiated a marriage upon the footing that he was entitled to the term upon her death, and engaged to settle such reversion on the issue of the marriage. On the suit of a child of that marriage she was compelled to make the settlement good, though it was insisted that she was not guilty of any fraud or ill practice, but was ignorant that as tenant in tail she could dispose of the term.

In each of these cases the plaintiff relied either upon the fraud of the defendant or upon his being estopped from defending himself by denying the truth of his own statement.

In Slim v. Croucher (4), where a person, being asked to lend upon the security of a lease which the borrower represented that he was entitled to have granted to him, applied to the lessor

(1) 10 Ves. 470.

(2) 1 Vern. 136.

(3) 2 Vern. 149.

(4) 1 D. F. & J. 518.

and received from him an assurance that he was agreeable to grant a peppercorn lease of the property in question to the borrower. In fact, he had already granted the lease and the borrower had mortgaged it; but the lessor had forgotten the previous grant. The money having been advanced on the faith of this statement, the Court of Appeal, consisting of Lord Campbell, L.C., and Knight Bruce and Turner, L.JJ., directed the lessor to repay the money advanced, with interest and costs of suit, recognising in distinct terms that there was no moral fraud on the part of the lessor.

That case carries the doctrine as far as any that can be cited, because at that time Courts of Equity were not accustomed to give relief by way of damages in cases which did not involve actual fraud. Lord Campbell said, however, that it belonged to a class of cases over which Courts of Law and Courts of Equity had a common jurisdiction; and the relief was granted on the authority of the dicta of Lord Eldon in Evans v. Bicknell (1), and upon the ground that the plaintiff was to be placed as far as possible in the position he was in before the representation was made. According to the recent decision in the House of Lords in Derry v. Peek (2), an action of deceit could not have been maintained under such circumstances, because there was not actual fraud. The doctrine of estoppel seems scarcely applicable. The representation relied on in Slim v. Croucher (3) was more like a contract or promise than the statement of an existing fact. The lessor said he was agreeable to grant the lease. But as the money was not advanced at the lessor's request, there seems to have been no consideration to support a contract. However, the language used by the lessor involved a representation that he was in a position to grant the lease, and this may have been the misrepresentation relied on. If the mortgagee could sue the landlord to compel him to grant the lease or, in the alternative, for damages, and the landlord were estopped from denying his ability to make the grant, he might be treated as contumaciously refusing to do so, and in this way perhaps the decision might be justified. But this would be an action for specific performance

(1) 6 Ves. 174.

(2) 14 App. Cas. 337.

(3) 1 D. F. & J. 518.

of a contract, and I do not see how it could be maintained. Lord Justice Turner says distinctly that enforcing a personal demand against the Defendant under such circumstances is an old jurisdiction of the Court of Equity, and refers to Lord Eldon'slanguage in Evans v. Bicknell (1), which, however, as I have pointed out, was a case of fraud. Lord Campbell evidently felt the difficulty, for in his judgment he seems to distinguish the case from an action for damages, because there could be no question about the amount to be recovered.

In Piggott v. Stratton (2), a vendor induced a man to buy land for building by a statement that he was lessee of the adjoining land, and could not, owing to the terms of his lease, build upon it so as to obstruct the sea-view from the land he was selling. After the plaintiff had built, the vendor surrendered his lease and took a new one not containing any restriction against obstructing the view, and then commenced to build so as to obstruct the view from the plaintiff's houses. It was held by the same Court that decided Slim v. Croucher (3) that the vendor must be restrained from so doing, Lord Campbell, C.J., sustaining the injunction expressly on the ground of estoppel. "I apprehend," he says(4) "that the injunction is to be supported on the well-established doctrine, that if A. deliberately makes an assertion to B., intending it to be acted upon by B., and it is acted upon by B., A. is estopped from saying that it was not true. If it turns out to be false, A. is answerable for the damage which may have accrued to B. from having acted upon it, and B. is entitled, in respect of anything done in the belief that it was true, to object to any denial of its truth by A. This doctrine is to be found in Pickard v. Sears (5), and a series of subsequent decisions."

Lord Campbell's language in both these cases, but more especially in the former, might be read as intimating an opinion that an action at law would lie for an innocent misrepresentation of fact upon which another person acted. But Piggott v. Stratton was an obvious case of estoppel.

(1) 6 Ves. 182.

(2) 1 D. F. & J. 33.

(3) 1 D. F. & J. 518.

(4) Ibid. 49.

(5) 6 Ad. & E. 469.

It has been recognised since Freeman v. Cooke (1) that a statement made by a man with the intention that it should be acted upon, and which is acted upon accordingly, is binding upon him, so that he is precluded from contesting its truth although it was not fraudulently made, and this has been followed in numerous instances. The doctrine was stated by Lord Blackburnin the House of Lords, in the well-known case of Burkinshaw v. Nicolls (2) in these words: "When a person makes to another the representation 'I take upon myself to say such and such things do exist, and you may act upon the basis that they do exist,' and the other man does really act upon that basis, it seems to me it is of the very essence of justice that, between those two parties, their rights should be regulated, not by the real state of the facts, but by that conventional state of facts which the two parties agree to make the basis of their action."

Certificates in that case had been issued by a joint stock company for shares which the certificates stated had been fully paid up, and the company were held to be estopped from denying that they were paid up, as against a purchaser of those shares for value without notice. The same doctrine was applied in In re Bahia and San Francisco Railway Company (3) and in Hart v. Frontino and Bolivia South American Gold Mining Company (4), where no kind of fraud was imputed to the companies.

The result of the authorities seems to be as follows:-

1. There has been from ancient time a jurisdiction in Courts of Equity in certain cases to enforce a personal demand against one who made an untrue representation upon which he knew that the person to whom it was made intended to act, if such person did act upon the faith of it and suffered loss by so acting.

2. This was readily done where the representation was fraudulently made, in which case an action of deceit would lie at law.

3. Relief will also be given at Law and in Equity, even though the representation was innocently made without fraud, in all cases where the suit will be effective if the defendant is estopped from denying the truth of his representation.

(1) 2 Ex. 654.

(2) 3 App. Cas. 1004, 1026.

(3) Law Rep. 3 Q. B. 584.

(4) Ibid. 5 Ex. 111.

4. Where there is no estoppel, an innocent misrepresentation will not support an action at law for damages occasioned thereby.

5. Estoppel is effective where an action must succeed or fail if the defendant or plaintiff is prevented from disputing a particular fact alleged: for example, if an assign of A. sues A.'s trustee to recover the fund assigned, and the trustee is prevented from denying its existence in his hands; or at law, if the assign of a debt should sue the alleged debtor and he was prevented from denying that the debt was due. Or, in the converse case, an estoppel may be a defence; as if a joint stock company were to sue a shareholder for calls and they were estopped from denying that the shares were paid up, their action would fail.

It is obvious that this rule does not apply to an action for deceit. In such an action the plaintiff relies, not on the truth of the statement, but upon its falsehood; and he is bound to prove, not only that the representation was untrue, but also that it was made fraudulently. Derry v. Peek (1) very well illustrates the difference. It was an action by a person who had been induced to take shares in a joint stock company by an untrue statement in a prospectus. The action was not against the company, but against the directors who had issued the prospectus. The representation was not fraudulently made. Preventing the defendants from denying the truth of their representation would not enable the plaintiff to succeed in such an action; so that the plaintiff could not rely on estoppel. That could only be if the defence had been that the statement was inaccurate, and the defendants were estopped from denying the accuracy of their own statement. The plaintiff's case was not that the statement must be treated as accurate: on that supposition he could not have had any relief against the defendants. The plaintiff sued the defendants upon the ground that the statement was false, and false to their knowledge - that is, fraudulent; and the defence that prevailed was that, if it was inaccurate, it was not fraudulent.

6. I am not satisfied that relief in the nature of a personal demand against the defendant has been given in Equity in cases

(1) 14 App. Cas. 337.

which did not involve fraud or to which this doctrine of estoppel would not apply. Slim v. Croucher (1) is the only instance I know of; and, as Lord Campbell said that there might be relief at law in that case, he probably considered, either that it was a case of estoppel, or that an action of deceit would lie - which latter view is not consistent with Derry v. Peek (2).

In the present case the doctrine of estoppel would enable the Plaintiff to succeed if the facts warrant the application of it. But in order to create an estoppel, the statement by which the Defendant is held bound must be clear and unambiguous. This is an ancient rule as to estoppel by statements in a deed, as appears from Rolle's Abr.: "Estoppel" ((P) pl. 1 and 7), and was acted on by Lord Cairns in Heath v. Crealock (3). In General Finance, Mortgage, and Discount Company v. Liberator Permanent Benefit Building Society (4), Sir G. Jessel followed the last case, and intimated that, in his opinion, the doctrine ought not to be extended, there being no reason for preferring one innocent purchaser to another. That certainty of statement is also required to maintain an estoppel upon a statement not by deed, appears from Freeman v. Cooke (5), where relief was refused upon the ground that no reasonable man would have acted on the faith of the statements made if they were taken altogether.

Whether this suit be treated as in Equity or at Law, the essence of the Plaintiff's case must be that he was misled by the statement. The Court must be satisfied of this. If there was fraud, and the statement was intended to mislead, its ambiguity would not be a defence; but where no fraud is alleged, it is essential to shew that the statement was of such a nature that it would have misled any reasonable man, and that the Plaintiff was in fact misled by it.

One peculiarity of the present case is that there is no evidence. The cause is tried upon admissions by both sides. Consequently we have no statement by the Plaintiff or by his professional advisers, who were the real actors in the negotiations, as to what meaning they attributed to the letters on which they now rely

(1) 1 D. F. & J. 518.

(2) 14 App. Cas. 337.

(3) Law Rep. 10 Ch. 22.

(4) 10 Ch. D. 15; 27 W. R. 210.

(5) 2 Ex. 654.

as a misrepresentation; nor is there any statement or admission as to the extent of the reliance which they placed upon the alleged misrepresentation. The Court has to determine what the representation amounted to, and how far it influenced the Plaintiff's conduct. The Plaintiff did not personally interfere in the negotiations. His solicitors having been applied to by Vice-Admiral Bouverie, the equitable tenant for life, for a loan upon the security of his life interest, and having, as appears from the first letter, been assured by him that he had not mortgaged or in any way parted with such life interest, wrote the letters which have already been read by Lord Justice Lindley.

It was pointed out by Lord Justice Bowen in the argument, that the last letter but one demonstrated that the writers, the Plaintiff's solicitors, considered they had not obtained at that, time a satisfactory answer to the question stated in it. The reply was on the 27th of February. Without further inquiry the Plaintiff lent money to Vice-Admiral Bouverie upon the security of a mortgage of his life interest, and the Plaintiff admits that the Defendant did not, at the time of his correspondence, recollect that he had received, as he now admits was the fact, notice of, or that he was otherwise aware of, the existence of previous mortgages on the life estate. It appears that nothing can be recovered from the tenant for life, who is an undischarged bankrupt, and is out of the jurisdiction.

Now, what is the true inference from these facts? Did this correspondence amount to a statement by the Defendant that there were no other incumbrances upon the life estate than those mentioned in his letters? Or was the true meaning that those were all that he knew of or remembered at the time?

It is said that we should adopt the former view, because otherwise it is not probable that the money would have been advanced; but I am not convinced of that.

The Plaintiff's solicitor had the assurance of Vice-Admiral Bouverie that he had not incumbered, and they might well have been satisfied with the statement of the trustee in addition that he did not know of any incumbrance. Such a statement made in good faith, if accurate, would not render the Defendant liable.

I am strongly disinclined, in a case which is free from any

suspicion of fraud, to hold a person in the position of this Defendant liable upon a statement which is not clear and unambiguous. I cannot believe that solicitors receiving such letters as those written by this Defendant could possibly read them as a positive assurance that there were no other incumbrances. I think that the only fair meaning which they could attribute to the statements of the Defendant was that the charges he mentioned were all that he was aware of at the time he was writing.

For this reason, I think that the appeal should be allowed and the action dismissed.

Solicitors: Pearce-Jones & Co.; Tylee & Co.

G. I. F. C.