writing, reconvey the said lands to the company, its successors or assigns, for a consideration of 100 pounds. Powell sold the lands to Gomm in 1865 and the latter was in possession in 1880 when the company gave notice of its & desire to repurchase the property. It was shown that Gomm had full notice of the provisions of the deed of 1865 when al. purchasing the property.
Locke J. Kay J., who tried the action, rejected the argument of the defendant that the covenant created an estate or interest in land in the railway company and was, therefore, unenforceable as being contrary to the rules against perpetuities. He held that Gomm was bound by the covenant in the deed on the authority of Tulk v. Moxhay.'
The appeal to the Court of Appeal was heard by a Court consisting of Sir George Jessel, M.R., Sir James Hannen and Lindley L.
Master of the Rolls which is relied upon for the proposition that an option to purchase land creates an equitable interest or estate in the optionee reads:
If then the rule as to remoteness applies to a covenant of this nature, this covenant clearly is bad as extending beyond the period allowed by the rule. Whether the rule applies or not depends upon this as it appears to me, does or does not the covenant give an interest in the land? If it is a bare or mere personal contract it is of course not obnoxious to the rule, but in that case it is impossible to see how the present
Appellant can be bound. He did not enter into the contract, but is only a purchaser from Powell who did. If it is a mere personal contract it cannot be enforced against the assignee. Therefore the company must admit that it somehow binds the land. But if it binds the land it creates an equitable interest in the land. The right to call for a conveyance of the land is an equitable interest or equitable estate. In the ordinary case of a contract for purchase there is no doubt about this, and an option for repurchase is not different in its nature. A person exercising the option has to do two things, he has to give notice of his intention to purchase, and to pay the purchase-money; but as far as the man who is liable to convey is concerned, his estate or interest is taken away from him without his consent, and the right to take it away being vested in another, the covenant giving the option must give that other an interest in the land.
In that case the option gave to the railway company the right to require a conveyance to itself and its assigns upon the terms stated, and this was held to give to it an equitable interest in the land. The present agreement, as it reads and as it was understood by the prospectors as
1 (1848), 2 Ph. 774, E.R. 1143.
shown by their evidence, contemplated that the mineral claims should be conveyed not to Harquail or his principal but to a new company to be formed in which they would hold ten per cent. of the stock. Harquail, as is stated in his evidence, understood that the transfers of the mineral claims which were to be deposited in the bank would be in blank, the reason for this being, no doubt, that the new LckeJ. company was not then in existence and its name had not been determined. The name of the transferee would be inserted if the terms of the proposed option were complied with by the optionee and the completed transfers delivered to the new company. The judgment at the trial which directed the deposit of the transfers in blank so interpreted the agreement between the parties and that, in this respect, it properly construed the document is not questioned by anyone. The agreement did not provide and none of the parties to it contemplated that, upon making the payments specified in the option, Harquail or his principal would acquire any interest or estate in the claims. What they were to acquire was the majority share interest in the company which would be the owner of the claims. It was not, in my opinion, an option to purchase at all but an option upon the acceptance of which, by compliance with its terms, the optionee would become entitled to require delivery of the transfers to the new company. The fact that the agreement drawn by Harquail, a layman, reads "an option to purchase" does not relieve us of the duty of determining the true nature of the document.
In Gomm's case the covenant which was held not to bind the defendant required him to reconvey the land to the railway company on its demand, and this appears to have been the basis for the finding that it gave to the optionee an equitable estate or interest in it. The phrase reading "The right to call for a conveyance of the land is an equitable interest or equitable estate" in the judgment of Sir George Jessel must be construed in the light of the facts of the case, and thus as meaning a right to call for a conveyance of the legal title to the optionee. Sir James Hannen said in part (p. 586):
and this, I consider, is to be construed in the like manner. Here there is no such covenant.
It is altogether too easy a generality to say that an option vests in the optionee an equitable interest in the land in respect of which the option is granted. If it be assumed that
Gomm's case was rightly decided, its application depends, of necessity, upon the nature of the right given to the et al. optionee and that he may acquire upon its exercise.
I must confess my inability to understand how an option agreement which, when exercised, would not entitle the optionee to any estate, legal or equitable, in the mineral claims can be said to vest any equitable interest or estate in him prior to the exercise.
The argument based upon Gomm's case proceeds upon the assumption that the optionee, as of the time of the execution of the option, acquired, in the language of Regulation 9(1), "some right or interest" in the mineral claims.
Since neither Harquail or the appellant had at that time a prospector's, developer's or miner's licence, the contention is that the transaction was prohibited by the regulation which, by virtue of the statute, has the force of law.
The interests of the prospectors in the claims upon which they had made entries which had been recorded are chattel interests, as declared by Regulation 38. Such a chattel interest is assignable at common law and Regulation 9(1), to the extent that it prohibits a transfer to a person not a licensee, is in derogation of common law rights. It is thus to be construed strictly (Maxwell, 10th ed., 292).
As I have pointed out, however, the option in question does not provide that the optionors will transfer the claims or any interest in them to the optionee, but rather, upon the exercise of the option, to a company to be formed. It is not to be assumed that that company would not obtain the required licence to enable it to accept a conveyance when the necessity arose. The regulation does not say that a person who has made and recorded an entry in a mineral claim may not lawfully agree with anyone to transfer such claim at some future date to a third person other than the optionee or to a company to be thereafter formed. We are asked to read into this regulation a prohibition which it does not contain, a course for which there is no warrant. In my opinion, the regulation as it reads does not affect the rights .' of the appellant under this agreement.
Unless regulation 9(1) is to be construed as rendering unenforceable a covenant to convey a mineral claim at some et al.
future time to a company to be thereafter incorporated, the J. decision in Gomm's case has no bearing on the matter to be decided. Whether that case should be followed in this country has not been considered by this Court. Apart from the fact that it was referred to with approval in Davidson v. Norstrant', in a dissenting judgment of Duff J. (as he then was), the case does not appear to have been mentioned in this Court. In that case, however, the option entitled the optionee to a conveyance to himself or his nominee of a half interest in the land, his rights in that respect being similar to those of the London and South Eastern Railway Company. The case was not referred to by the other members of the Court.
Apart from the difference in the nature of the rights given by the option, the facts in the present case differ from those in Gomm's case in another material particular. Here the ownership of the mineral claims has at all times remained in the prospectors. The 12 claims transferred by mistake to the respondent company have at all times been held by it as bare trustee for the prospectors. The respondent company was a necessary party to the action only for the purpose of obtaining a direction for a reconveyance of these claims to the prospectors, a declaration that the company had no interest in the claims, and to recover any damages caused by its interference with the appellant's contractual rights.
The facts of the present case are in this respect similar to those considered by the Court of Appeal in South Eastern Railway v. Associated Portland Cement Manufacturers . In that case the railway company had obtained a conveyance of a strip of land from a landowner which reserved to himself, his heirs and assigns the right to make a tunnel at his or their expense under the property conveyed. The defendants were the assignees of the landowner and, when they commenced the excavation of a tunnel, the railway company brought an action for an injunction, contending that as the time within which the tunnel might be constructed was unlimited the covenant offended against the al rule against perpetuities. The railway company relied upon
Lok J. the judgment in Gomm's case and it was held by Swinfen
- Eady J. at the trial and by the unanimous judgment of the
Court of Appeal that the case had no application. The defendants had succeeded to the rights of the landowner and, as expressed in the head note, it was held that as against the original covenantors, the railway company, the provision in the agreement as to the tunnel was a personal contract and was not obnoxious to the rule against perpetuities.
Swinfen Eady J., referring to Gomm's case, said in part
(p. 25):
The same difference in the facts was pointed out in the judgments of Cozens-Hardy M.R. and by Fletcher-Moulton
L.J. Farwell L.J. referred to the judgment of the House of
Lords in Witham v. Vane, the only report of which appears to be in Challis's Real Property, 3rd ed., p. 440, and said
(p. 33):
In my opinion, the right of the optionee in the present case, as above stated, is a personal right enforceable in a
Court of equity by a decree of specific performance. The covenant related to land, as did the covenant in Witham v. Vane and the Associated Portland Cement case, and was enforceable as between the contracting parties.