COUNCIL: Sargant, for the Attorney-General.

Hon. E. C. Macnaghten, K.C., and Heckscher, for the next of kin.

 

SOLICITORS: Treasury Solicitor; Charles Sawbridge & Son.

 

JUDGE: Swinfen Eady J.

 

DATES: 1910 April 20, 21; June 4.

 

 

Conflict of Laws – Mortmain – Testator domiciled in England – Residuary Bequest to Charity – Colonial Mortgages – Applicability of Colonial Mortmain Law – Movables or Immovables – English Law, including Mortmain Act, 1736 (9 Geo. 2, c. 36), adopted in Colony.

 

English law would treat English land mortgages as immovables, so that a bequest of English mortgages to charity would be governed by the local mortmain law of England, whatever be the domicil of the testator.

 

The general English law, including the Mortmain Act, 1736, and the decisions thereon as to the invalidity of local bequests of local mortgages or other impure personalty to charity having been adopted locally in Ontario:-

 

Held, that a bequest of freehold mortgages in Ontario to charity by a testator domiciled in England and dying on February 22, 1888, when the adopted Mortmain Act, 1736, was locally in force in Ontario, being a bequest of an interest in land forbidden by the local law, was invalid.

 

Freke v. Lord Carbery, (1873) L. R. 16 Eq. 461, and Duncan v. Lawson, (1889) 41 Ch. D. 394, 396, extended.

 

Canterbury Corporation v. Wyburn, [1895] A. C. 89, 96, applied.

 

SUMMONS to vary Master’s certificate.

 

By his will, dated June 25, 1878, a testator gave his personal and real property to his wife for life, and on her death he gave one third of it in charity.

 

The testator died on February 22, 1888, domiciled in England.

 

The wife died on December 4, 1906.

 

On May 29, 1907, a summons was issued to determine (inter alia) whether the gift was a good charitable gift, and, if so, whether it way void to any and what extent under the Mortmain Act, 1736 (9 Geo. 2, c. 36), which was in force at the testator’s death.(1)

 

(1) The statutory short title of the 9 Geo. 2, c. 36, is “The Charitable Used Act, 1735.” Vide Short Titles Act, 1896 (59 & 60 Vict. c. 14). But as it only received the Royal assent on May 20, 1736 (House of Lords Journals, vol. 24, p. 681b), and came into operation on June 24, 1736, the popular title seems more accurate. [*334]

 

By an order of June 3, 1908, it was determined that the bequest of the one third share created a valid charitable trust so far as regarded such portion of that share as consisted of pure personalty, and an inquiry was directed as to what part of that share was at the testator’s death attributable to pure personalty and what to impure personalty.

 

By his certificate, dated March 23, 1910, the Master certified (inter alia) that $16,340 invested on five legal mortgages of freehold land in the city of Toronto, in the Province of Ontario, Canada, and worth 3348l. at the testator’s death, was attributable to impure personalty.

 

On March 30, 1910, the Attorney-General issued a summons to vary this finding, and to have it determined that the mortgage moneys were pure personalty within the English Mortmain Act, 1736.

 

It was established by the evidence of Canadian counsel that the laws of England, including the Mortmain Act, 1736, and the decisions thereon were introduced into Upper Canada in 1792 by the 32 Geo. 3, c. 1, which provided that “in all matters of controversy relative to property and civil rights resort should be had to the laws of England as the rule for the decision of the same,” so that in matters not depending on provincial statutes or peculiar conditions or circumstances to which the common law or imperial statutes could not be applied the law of England was resorted to when any controversy arose. At the time of the testator’s death the mortmain laws of England and Upper Canada were identical. Each law had a purely local operation, and by each law local mortgages were impure personalty, and bequests thereof to charity by persons domiciled in the locality invalid. The personal representative could assign or release a mortgage on payment. No case had arisen in which the Ontario Courts had had to determine whether, if a testator domiciled in England bequeathed mortgages of freehold land in Ontario to a charity in England, the Ontario Courts would hold that the provincial statute applied to that bequest, but if a decision were called for in Ontario, it would be based upon what would be decided on the same point in England.

 

The mortgages contained covenants to pay the money secured. [*335]

 

Sargant, for the Attorney-General. The bequest of the Ontario mortgages is valid. That depends on three propositions of law.

 

First, the validity or invalidity of a testamentary disposition of movables depends on the law of the testator’s domicil. In Canterbury Corporation v. Wyburn (1) a domiciled Victorian who died on June 13, 1891, bequeathed money to an English corporation for the purchase of English land for charity. The gift, being good by the law of the domicil, was good in England, though of course the assurance would have to follow the English mortmain law when the land was purchased. The same gift by a domiciled Englishman would have been void under the Mortmain and Charitable Uses Act, 1888 (51 & 52 Vict. c. 42), which was then in force. That Act, however, merely consolidated the previous Acts, and the decision would have been the same under the Mortmain Act, 1736.

 

Secondly, the English mortmain law is purely local and does not extend to gifts of foreign land or money savouring of foreign land: Attorney-General v. Stewart (2); Beaumont v. Oliveira. (3) The common form of inquiry as to impure personalty is limited to personalty connected with land “in England and Wales”: Seton on Judgments, 6th ed. p. 1334. It has never been extended to foreign land. The law of Ontario is equally local.

 

Thirdly, the Ontario mortgages are movables, so that the law of domicil applies. Whether they are movables or immovables is strictly a question of Ontario law: Freke v. Lord Carbery (4); but the Canadian Courts would follow our law on the point, and the question may be determined by considering whether a testator domiciled in Ontario could bequeath English mortgages to charity. If movables, the gift would be valid by Ontario law, which is purely local. If immovables, the English law would apply and the gift would be bad. The question therefore is, are English mortgages movables or immovables? Now in England a mortgage is simply a debt, with a collateral security on land. The collateral security no doubt makes the debt

 

(1) [1895] A. C. 89, 96.

 

(2) (1817) 2 Mer. 143.

 

(3) (1869) L. R. 4 Ch. 309.

 

(4) L. R. 16 Eq. 461, 467. [*336]

 

impure personalty, but it does not make it land or immovable. Before the Naturalization Act, 1870 (33 & 34 Vict. c. 14), an alien could not hold or devise English land, but surely he could hold and bequeath an English mortgage.

 

For the purpose of probate duty a mortgage debt is situate where the specialty is, not where the land is: Stamps Commissioner v. Hope (1); and for the purpose of the Finance Act, 1894 (57 & 58 Vict. c. 30), foreign mortgages are movables: Lawson v. Inland Revenue Commissioners. (2)

 

Hon. E. C. Macnaghten, K.C., and Heckscher, for the next of kin. In Canterbury Corporation v. Wyburn (3) there was a bequest of money. The law of the domicil applied, and the English law did not operate till the land was bought.

 

Here there is a bequest of mortgages, which are really immovables, and the Canadian law applies. We do not suggest that there is any difference between the English and Canadian law on the point, and we admit that the question is the same as the question whether a foreigner can bequeath an English mortgage to charity. This we contend he cannot do, on the ground that a mortgage is immovable. The following are instances of immovables:– Scottish heritable bonds: Jerningham v. Herbert (4); In re Fitzgerald (5); leaseholds: Freke v. Lord Carbery (6); Duncan v. Lawson (7); rent-charges for lives: Chatfield v. Berchtoldt (8); title deeds: Dicey on the Conflict of Laws, 2nd ed. p. 497. A mortgage must surely come within the same category. It is really an interest in land within the Mortmain Act, 1736: Attorney-General v. Meyrick (9); In re Watts. (10) The debt is so inseparably connected with the land that the mortgagee cannot enforce it unless he has the land to reconvey. The mortgagee’s interest is an asset in the jurisdiction where the land is situate: Walsh v. Reg. (11) The text-writers treat mortgages as immovables. Dicey on the Conflict of Laws, 2nd ed. p. 76, says “Immovable property includes all rights over things

 

(1) [1891] A. C. 476.

 

(2) [1896] W. N. 145; [1896] 2 I. R. 418.

 

(3) [1895] A. C. 89, 96.

 

(4) (1828) 4 Russ. 388.

 

(5) [1904] 1 Ch. 573.

 

(6) L. R. 16 Eq. 461, 467.

 

(7) 41 Ch. D. 394, 396.

 

(8) (1872) L. R. 7 Ch. 192.

 

(9) (1750) 2 Ves. Sen. 44, 47.

 

(10) (1885) 29 Ch. D. 947.

 

(11) [1894] A. C. 144. [*337]

 

which cannot be moved, whatever be the nature of such rights or interests.” Story on the Conflict of Laws, 8th ed. p. 629, s. 447, specifically includes mortgages in his enumeration of immovables. See also Westlake’s Private International Law, 4th ed. ss. 156 to 165.

 

W. M. Cann, for the executor. In Bent v. Young (1) Shadwell V.-C. expressed (obiter) an opinion that on an English bill for redeeming a foreign mortgage the lex situs would be applied in taking the account against a transferee, who by the lex situs could only hold the mortgage as security for the amount paid on the transfer.

 

Sargant in reply. In Jerningham v. Herbert (2) it was held that an English will did not pass a Scottish heritable bond, because in substance it was Scottish land. But if an English mortgage is land, it follows that before the Wills Act, 1837 (1 Vict. c. 26), a will bequeathing an English mortgage would have required three witnesses, and that a French or Scottish holograph will at the present day would not pass an English mortgage. This cannot be so. The broad question is whether mortgages are movables or immovables. The solution of this problem will determine whether the law of domicil or the local law applies. Then and not till then will the local question of mortmain arise. In other words, the local mortmain laws ought not to be looked at until the principal question is determined. This was really the ratio decidendi of Canterbury Corporation v. Wyburn. (3) If the law of domicil applies the gift is good, and the realization of the security is a mere matter of procedure. The personal remedy will probably be sufficient.

 

Cur. adv. vult.

        

 

June 4. SWINFEN EADY J. This is a summons by the Attorney-General to vary the Master’s certificate. The Master has certified that $16,340 invested on mortgage of freehold properties in Canada (the value of the mortgages on February 22, 1888, the date of the testator’s death, being 3348l.) was attributable to impure personalty, and the summons seeks to vary

 

(1) (1838) 9 Sim. 180, 190.

 

(2) 4 Russ. 388.

 

(3) [1895] A. C. 89, 96. [*338]

 

this finding and to have it determined that the mortgage debts in question are pure personalty. The testator gave his residuary estate to his wife for life, and on her death he gave one third part of it in charity. The testator’s widow died on December 4, 1906. By an order of June 3, 1908, it was determined that the bequest of the one third share created a valid charitable trust so far as regards such portion of the share as consisted of pure personalty, and an inquiry on the subject was directed, and it is in answer to that inquiry that the Master has certified that the mortgages in question are impure personalty. The testator was domiciled in England. The mortgages in question are five in number, all legal mortgages of freehold land in the city of Toronto, in the Province of Ontario, Canada.

 

It is not disputed that the law of Ontario at the time of the testator’s death was identical with the law of England with regard to gifts by will of land, and interests in and charges upon land, to charitable uses – the Legislature of Upper Canada having practically by reference put the provisions of the Mortmain Act, 1736, into force in Upper Canada and not having repealed the same at the testator’s death, and the decisions arising under it in Ontario being based upon the decisions under it in England. At the time of the testator’s death the law of Ontario followed the law of England and treated mortgages of freehold property as impure personalty. The statute in force in England at the testator’s death was the Mortmain Act, 1736.

 

At the date of the testator’s death a bequest by a domiciled Englishman of a mortgage debt charged on land in England to a charity would have been invalid; and it is conceded that at the same date a bequest by a person domiciled in Ontario of a mortgage debt charged on land in Ontario would have been invalid. But it is contended that the result of the rule – that in administering personal estate the Court applies the law of the domicil of the testator – is to allow an English testator to bequeath to charity Ontario mortgages and to allow a testator domiciled in Ontario to bequeath in charity English mortgages, seeing that the Statute of Mortmain has only local application and that a mortgage of land abroad cannot be “impure personalty” according to the law of England. [*339]

 

In the argument before me the question whether by the law of England a domiciled Englishman could bequeath to a charity mortgages of freehold land in Ontario has been treated as the same question as whether by the law of Ontario a person domiciled in Ontario could bequeath mortgages on freehold land in England. Indeed, the latter question as to the law of Ontario was put to Mr. Armour, one of the Canadian counsel, for his opinion, asking him what the law of Ontario was on that point, and his answer was that the point had not yet arisen in Canada, but that when the English law had been settled the Canadian Court would adopt the law so laid down. The law would be the same as in England.

 

It is beyond doubt that a person domiciled abroad could not devise freehold land in England to a charity. In such a case the lex situs governs, and the devise was forbidden by the Mortmain Act, 1736: see Duncan v. Lawson. (1)

 

Again, where a person domiciled in Victoria gave by will a sum of money to an English corporation, to be invested in land in England for charitable purposes, it was held that the gift was governed wholly by the law of Victoria, and being valid by that law the executors were bound to pay the money to the English corporation: Canterbury Corporation v. Wyburn. (2) Such a gift by a person domiciled here would have been invalid under the Mortmain and Charitable Uses Act, 1888.

 

In that case Lord Hobhouse, in delivering the opinion of the Board, said: “The Attorney-General stated broadly that the prohibitions of the Statutes of Mortmain are an integral part of the English law of real property. So they are; but the question is how far they operate. The suggestion is that they operate to invalidate gifts of money coupled with an obligation to lay them out in land, if they have their origin in a will, though a perfectly valid will. Their Lordships cannot find such a prohibition in the Act. They have reached the conclusion that this will is not invalidated by sub-s. 1. At what point, then, of the transactions does the English law come in? Not between the Victorian testator and his Victorian executor. In their Lordships’ view the English law will operate whenever a purchase of land for the

 

(1) 41 Ch. D. 394, 396.

 

(2) [1895] A. C. 89, 96. [*340]

 

charitable uses is effected, but no earlier. The assurance of that land must be made in accordance with the provisions of the Act. Anybody may give money for such a purpose in the permitted mode. The testator might himself have bought land in Canterbury and have devoted it to charitable uses quite lawfully. What he might do himself he might do through trustees, by giving money to trustees for the purpose of acquiring land in a lawful way. Is there anything to prevent him from ordering his executors to do the same thing? The answer is that his will is not affected by English law. It is a valid will binding on his executors; and a Victorian Court of Justice should direct them to perform their obligation.”

 

The Mortmain Act, 1736, took away the right to devise land in England for charitable purposes. It applied to land of any tenure, freehold, copyhold, or leasehold. It cannot be doubted that a bequest of a leasehold interest in English land by a domiciled foreigner to a charity, although personal estate, would be invalid: see Freke v. Lord Carbery (1); Duncan v. Lawson. (2)

 

By s. 3 of the Act all gifts and assurances of land, or of any estate or interest therein, or of any charge or incumbrance affecting lands, are void unless made in the manner directed.

 

Since the section extends to a devise in fee, and to a bequest of a leasehold interest, by a person domiciled abroad, why should it not also extend to a bequest of a mortgage on land? Such a bequest passes a title to the land itself, subject only to such equitable right of redemption as may be subsisting. Subject to this right, the mortgagee is entitled to enter into occupation of the mortgaged land, or if let to receive the rents and profits. In some cases the mortgage debt may be insufficiently secured and the right to redeem of no value. Moreover, the mortgagee has a right to foreclose, and may have a time fixed within which the mortgagor must redeem, if at all. In default of redemption within the time limited the right to redeem is lost. The mortgagee then owns the land freed from any right to redeem.

 

Having regard to the nature of the interest of a mortgagee of land in the subject-matter of the mortgage, I am of opinion that the prohibition against devising any interest in land, or in any

 

(1) L. R. 16 Eq. 461.

 

(2) 41 Ch. D. 394, 396. [*341]

 

charge or incumbrance affecting lands, is binding on persons not domiciled here, so as to prevent such persons devising mortgages in fee upon land in England. In my opinion a bequest of a mortgage in fee on English land by a person domiciled abroad to a charity is invalidated by the Mortmain Act, 1736. It is a disposition of land in England, although the mortgage may be subject to redemption. It is directly within “the mischief which the Legislature desired to abate: the increase of land held in mortmain by gifts which may for brevity, and somewhat loosely, be termed death-bed gifts”: Canterbury Corporation v. Wyburn. (1)

 

The law which renders such a disposition invalid is English law; and that law governs, because the disposition is of land in England. Land is immovable; the rule mobilia sequuntur personam has no application to interests in land; and dispositions of land, although held by way of mortgage, are for the purpose of excluding this rule as much interests in land as where the land is held for life or years.

 

In Story on the Conflict of Laws, ch. 10, s. 447, 8th ed. p. 629, it is thus stated: “What are to be deemed immovables. Here, as we have already seen, not only lands and houses, but servitudes and easements, and other charges on lands, as mortgages and rents, and trust estates, are deemed to be, in the sense of law, immovables, and governed by the lex rei sitū.” These “may be deemed universally to partake of the nature of immovables, or (as the common law phrase is) to savor of the realty.” And Westlake’s Private International Law, 4th ed. s. 160, is to the same effect.

 

The bequest of a term of years in land for the purpose of raising a sum of money, or the bequest of a sum of money charged on land with powers of raising the same, is as much a bequest of an interest in land as a bequest of an absolute term of years. Upon this point no valid distinction can be drawn between the creation of a term by the testator for the purpose of raising money and the bequest of a term for the same purpose already created and subsisting in the testator. Both are equally within the mischief of the Mortmain Act, 1736.

 

Following the opinion of Mr. Armour, that if a decision were

 

(1) [1895] A. C. 94.

 

[*342] called for in Ontario it would be based upon what would be decided on the same point in England, I am of opinion that a bequest by a person domiciled here of mortgages in fee on land in Ontario to a charity is invalid. It is a disposition by will of an interest in land in Ontario forbidden by the law of that province. The Master has arrived at the proper conclusion, and the summons to vary the certificate is dismissed.