Judgment of the Court
JUSTICE.-This appeal from judgment of the Court of Appeal reversing a judgment the Chief Justice of the Queen's Bench Division upon a demarrer to the statement of claim. The pleadings and the nature of the question which has arisen upon the sufficiency of the statement of claim appear from the judgments delivered in the Court of Appeal and by p'
&o Chief Justice Armour and need not be repeated. This case differs from the former case of Burns v. Davidson (1) in this respect; that was an action to have the conveyance of these same lands and the mortgage given for the purchase money declared fraudulent and void, whilst in the present case the respondents Pavey and Company (the plaintiffs below) do not attack the sale of the lands but in the 12th paragraph of the statement of claim allege
This (giving the plaintiffs the benefit of the modern rule by which pleadings are now construed favourably to the pleader and not as formerly contra proferenten) I can only read as an allegation that the mortgage transaction, assuming the sale to be not impeached, was fraudulent as having been made upon a secret trust for the benefit of the debtor tending to hinder and defeat creditors.
So far as the lands are concerned, the validity or invalidity of this transaction must depend on the lex rei sitae-the law of the state of Oregon-and there is no allegation that according to that law a constructive trust by operation of law would arise by reason of the intent to hinder and delay creditors or that even an express trust must necessarily enure to the benefit of or be available for the satisfaction of creditors. It may be that a mortgagee's interest according to the law of Oregon is not exigible.
Up to 1837, according to English law such an interest was not at common law, nor until the passing of statutes of comparatively modern date, available to satisfy creditors by means of either legal or equitable execution. Then we cannot presume that the law of Oregon corresponds with the Chief present state of our own statutory law.
It appears to me therefore that there is in principle the same objection to giving relief in a case of this kind as that which prevailed in the former action, although it may not be so strikingly apparent.
If it were possible to separate the debt from the security--the foreign lands-as the learned counsel for the respondent contended should be done, the case might admit of different considerations, but the second paragraph of the plaintiffs' claim for relief very clearly seeks .a declaration of trust not of the debt alone but of the security, that is of the foreign lands so far as they are a security, as well as the debt. This claim for relief is in these words :
The word " mortgage " here signifies not merely the debt-indeed the plaintiffs themselves distinguish it from the debt-but the security for the debt -the lands.
Further, it is not at all clear that even if all that was asked had been a mere attachment of the debt such relief could be given, inasmuch as in that case the mortgagor could not be compelled to pay the debt without having the lands reconveyed to him and this would involve an administration of the law of Oregon by the courts here as the sufficiency of such a reconveyance would depend altogether on that law.
See Hope v. Carnegie (1).
Whatever it may be in form this action is in subsance an attempt to get satisfaction by way of equitable execution of a debt out of a mortgagee's interest in foreign lands. *It therefore only differs from the cases of Burns v. Davidson Henderson v. Bank of Hanilton in this, that those were cases in which it was sought to make available for the satisfaction of creditors the interest of an absolute owner instead of as here the limited interest of a mortgagee in such lands. I think therefore that the passage from Lord Selborne's judgment in Harrison v. Harrison which is quoted by the Chancellor in Burns v. Davidson is equally applicable to the present case.
Then whether the allegation of a " trust " of the purchase money secured by the mortgage which the plaintiffs allege is to be considered as an averment a trust arising by operation of law consequent upon the illegality of the transaction or as an allegation of a conventional express trust, in either case the question would depend on the lez rei sitae, and from this alone it follows that the forum of the situs is the proper forum.
In this last aspect of the case Re Hawthorne. Graham v. Massey (4) and Norris v. Chambres appear to me to be authorities.
The appeal must be allowed, and the judgment Chief Justice Armour allowing the demurrer must be restored with costs to the appellants in this court and in the Court of Appeal.
Appeal allowed with costs.