Welsh v. Popham

sanctionner un droit qui est 6tabli dans l'intdrt mime de 1'enfant. Son droit A lui consiste A 6tre 61ev4; or, pour qu'il puisse faut qu'il soit sous ]a garde de son phre.

a

J.-The only question requiring discussion is that arising out of the claim of the appellant based upon s. 54 (1) of The Land Titles Act, c. 133, R.S.A. 1922. The facts can be stated in a sentence or two. The appellant held a mortgage (executed in May, 1918) to secure a loan of $1,600 on certain Alberta lands, the property of one Henderson. In October, 1919, the respondent took from Henderson a transfer under The Land Titles Act of the same lands. This transfer was duly registered, and the respondent became the registered owner of the land, subject to the appellant's mortgage.

The transfer was in fact taken as security for moneys owing by Henderson to the respondent, the terms of the arrangement, with the exception of the amount of the indebtedness, being stated in a memorandum of agreement of November, 1919, which is in evidence.

The ground on which the appellant, who was plaintiff in the action, bases his claim is, that by force of s. 54 (1) of The Land Titles Act, the respondent, being a transferee of the mortgaged lands, subject to the mortgage, is under an obligation, both to the mortgagee and to Henderson, to pay off the mortgage; and the point to be decided is whether, in the circumstances of this case, such is the effect of s. 54 (1).

By the agreement of November, 1919, it is stipulated that on payment by Henderson to the respondent of the amount in which Henderson was thus indebted to him together with interest at a specified rate, the respondent should retransfer to Henderson a title to the land in fee simple, subject to existing encumbrances or "other encumbrances of equal amount."

In the meantime the respondent was to have the right to sell the land, accounting to Henderson for the surplus, after repayment of debt, interest and costs. The land has proved to be valueless, and, in the circumstances of this case, if the proposition upon which the appellant bases his appeal be accepted, it must follow that the respondent is obliged to pay the appellant's mortgage debt, and that he is entitled to no indemnity from Henderson, because, by the terms of s. 54 (1), if that enactment is operative, the respondent is under an obligation to indemnify Henderson in respect of this very mortgage. This result follows, according to the appellant's contention, notwithstanding the fact that by the terms of the written agreement of November, as already mentioned, the sole obligation of the respondent, which arises only on payment of Henderson's debt to him, is to transfer the land to Henderson, subject to existing encumbrances.

By s. 139, c. 24, of the Statutes of Alberta, (now s. 179, R.S.A. 1922), it is provided:- By virtue of this section (apart altogether from other sources of jurisdiction) the Supreme Court of Alberta has jurisdiction to give effect to the understanding between Henderson and the respondent evidenced by the agreement of November, 1919, and to the equitable rights arising from that understanding. Subject to any modification of those rights effected by s. 54 (1), the respondent, as between himself and Henderson, must be treated as a mortgagee of the land which was the subject of the arrangement, and their rights, inter se, must be determined on that footing. The existence of a right of indemnity, inhering in the mortgagor, as against the mortgagee in respect of the prior mortgage would, of course, be incompatible with a proper recognition of these rights, besides being inconsistent with the express stipulation of the agreement of November.

Coming now to s. 54 (1), if that section stood alone, there could be no difficulty in giving effect to the agreement of November as modifying any implied covenant arising from the statute. But by s. 55, and it is argued that this provision, if operative at all, must operate as declaring exclusively the procedure by which the implication arising under the earlier section can be displaced.

Section 55 is, however, a section which applies not only to the covenant implied by force of s. 54 (1), but to every covenant and every power implied in any instrument by virtue of any provision of the Act; and it is by no means clear that, by rejecting the contention advanced by the appellant, one would be depriving it of all effect. Mor&over, these sections, 54 and 55, must be read with s. 179formerly s. 139, quoted above-and, so far as possible, effect be given to all of them. Interpreting ss. 54 and 55 in light of s. 179, their ex facie meaning on any reading of the words appears to be subject, at least, to this qualification, that they must not be construed or applied in such a way as to disable the court from giving effect to the terms of any agreement, constituting a "disposition" of the land within the meaning of s. 179, entered into either contemporaneously with, or subsequently to, the execution of the transfer. Where there is, as in this case, an express agreement in writing creating equitable rights equivalent, as between the parties, to an equity of redemption, the application of s. 179 presents no difficulty whatever; nor would there appear to be any difficulty in applying that section in any case in which, by proper and sufficient evidence, it was shown that the transferee had accepted the transfer and the title conveyed by it under any arrangement vesting in the transferor equitable rights in the lan I and incompatible in its nature or in its terms with the implication declared by s. 54.

In the circumstances of this case, therefore, s. 54. (1) did not create any covenant for indemnity in favour of the transferor; and since the terms of that section leave no doubt that the transferee's obligation to the mortgagee is only to arise in circumstances in which the transferee is, by virtue of the statute, under an obligation to indemnify the transferor, it follows that the appellant must fail. This view is in harmony with the course of decision in Alberta and Saskatchewan. Short v. Graham (1); Evans et al v. Ashcroft and The British Canadian Trust Company (2); Great West Lumber Company v. Murrin & Gray (3); Montreal Trust Company v. Boggs and Beresford (4) ; Dominion of Canada Investment and Debenture Co. v. Carstens (5); in re Macdonald Estate (6).

Two of the learned judges in the court below have taken the-view that the transfer ought to be rectified by inserting in it an express declaration negativing any implication under s. 54.

If a covenant of indemnity in the terms of that section had appeared in the transfer, there could have been no difficulty in rectifying the instrument to bring it into accord with the common intention of the parties as established by the agreement of November; and a decree for rectification would, if necessary, appear to be a proper decree in this case.

In the view already expressed, however, that, in the circumstances, s. 54 (1) is inoperative, rectification is unnecessary.

The appeal should be dismissed with costs.

Appeal dismissed with costs.