[COURT OF APPEAL]

In re DIPLOCK.

DIPLOCK v. WINTLE (AND ASSOCIATED ACTIONS).

Administration - Distribution under invalid charitable bequest - Mistake of law - Right of next-of-kin to recover in equity from charities wrongly paid - Difference between this equitable claim in personam and common law action for money had and received - Applicability of Statutes of Limitation - Claims in rem - Application of equitable doctrine of tracing.

C. D. by his will directed his executors to apply his residuary estate "for such charitable institutions or other charitable or benevolent object or objects in England" as they should in their absolute discretion think fit. The executors distributed a large part of the residue among one hundred and thirty-nine charities before the next-of-kin of the testator challenged the validity of the original bequest, which was held by the House of Lords to be invalid ( Chichester Diocesan Fund and Board of Finance (Inc.) v. Simpson [1944] A. C. 341).

The claims of the next-of-kin against the executors or their estates were compromised, with the approval of the court, but a number of actions continued against institutions which had participated in the distribution. In most cases, the cheque sent by or on behalf of the executors had been paid into the institution's general account. Some of such accounts were in credit, others were overdrawn and unsecured, a few were overdrawn and wholly or partly secured. In some cases payment was made to a special account: in a few cases it had been earmarked for a particular purpose. In some

instances the money was expended in altering or enlarging existing buildings on land owned by the charity. (The various cases are analysed in the judgment.)

The claims of the next-of-kin were of two main kinds: (a) claims "in personam" based on an alleged equity in an unpaid creditor, legatee or next-of-kin to recover from an overpaid beneficiary or (as here) stranger to the estate; (b) claims "in rem" based on the doctrine of tracing assets which are identifiable, either unmixed, or as part of a mixed fund in the hands of a volunteer who has wrongly received them.

Held, I. As to the claims "in personam":

(1.) Without attempting any exhaustive formulation of its nature applicable to every class of case, there was established the existence of such an equity as was claimed against a recipient who was paid more than he was entitled to receive at the date of the payment or who was not in fact entitled to any payment; and such equity might be available equally to an unpaid or underpaid creditor, legatee or next-of-kin.

(2.) The claim by a next-of-kin was not liable to be defeated merely (a) in the absence of administration by the court; or (b) because the mistake under which the original payment was made was one of law rather than fact (the equitable claim being on a different footing in this respect from the common law action for money had and received); or (c) because the original recipient turned out to have no title at all, and was a stranger to the estate. As regards the conscience of the recipient on which equity acts it may be, and in such a case as the present is, sufficient that he has received some share of the estate to which he is not entitled.

But (3.) Such a claim by an unpaid beneficiary is subject to the qualification that since the original wrong payment was due to the blunder of the personal representatives, the beneficiary's primary claim is against them, and the direct claim against those overpaid or wrongly paid must be limited to the amount irrecoverable for any reason from the party responsible. In the present case the amount recovered from the executors under the compromise must be apportioned among the charities in proportion to the grants they had received, so that the maximum recoverable from any individual charity by the next-of-kin would be rateably reduced.

(4.) The amount for which the defendants were liable under this head was to be reckoned without interest.

(5.) The period of limitation applicable was twelve years under s. 20 of the Limitation Act, 1939.

All reported authorities on this equitable doctrine from Nelthrop v. Hill (1669) 1 Ch. Cas. 135 and Noel v. Robinson (1682) 1 Vern. 90, to the present day, discussed and considered.

II. As to the claims "in rem":

The equitable right of tracing into a "mixed fund" is not confined to cases like Hallett's case (1880) 13 Ch. D. 696, where the right is asserted against the original "mixer" who was in a fiduciary relationship to the claimant. The case of Sinclair v. Brougham [1914] A. C. 398 decided that Hallett's case (supra),

was an illustration of a much wider principle, viz.: that one whose money has been mixed with that of another or others may trace his money into the mixed fund (or assets acquired therewith) though such fund (or assets) be held, and even though the mixing has been done, by an innocent volunteer, provided that (a) there was originally such a fiduciary or quasi-fiduciary relationship between the claimant and the recipient of his money as to give rise to an equitable proprietary interest in the claimant; (b) the claimant's money is fairly identifiable; and (c) the equitable remedy available, i.e., a charge on the mixed fund (or assets), does not work an injustice.

Thus:

(a) Where the defendant is in a fiduciary relation to the claimant, and has mixed the claimant's money with his own, the claimant takes priority. The same result follows if the defendant had notice that the money was in equity the claimant's.

(b) Where the contest is between two claimants to a mixed fund consisting of moneys belonging to both and therefore held on behalf of both, they share pari passu.

(c) Where the claimant's moneys are handed by way of transfer to a person who takes for value without notice of the claimant's equity, the claim (like all equitable claims in like circumstances) is extinguished.

(d) In the case of a volunteer who takes without notice (e.g., by way of gift from the fiduciary agent), if there is no question of mixing, he holds the money on behalf of the true owner, whose equitable right to the money still persists as against him.

(e) But if the volunteer innocently mixes the money with money of his own, or receives it mixed with his own money from a fiduciary agent, he must admit the claim of the true owner, but is not precluded from setting up his own claim in respect of the moneys which he has contributed to the mixed fund, the result being that they share pari passu, neither being entitled to priority.

In re Hallett's Estate (1880) 13 Ch. D. 696; In re Guardian Permanent Benefit Building Society (Crace-Calvert's Case) (1882) 23 Ch. D. 440; Sinclair v. Brougham [1914] A. C. 398 considered.

Applying these principles to the cases before the court, where there had been a mixing of trust money with charity money (or where it had been paid into a special account and remained unmixed) the next-of-kin were entitled to recover, pari passu with the charity in the case of mixed funds, (subject, as in the claims "in personam" to a rateable reduction in respect of the amounts recovered from the executors under the compromise). But where the moneys received by the charity had not been mixed with moneys of the charity but had been expended on the alteration or improvements of their own assets, as by erecting buildings on their own land, or in discharging debts of the charity secured or unsecured, the trust money could not be disentangled, the equitable remedy of a charge would work an injustice, and the claim of the next-of-kin was no longer available.

In working out the equity in a case where the trust money was

paid into an active bank account, prima facie the rule in Clayton's case (1816) 1 Mer. 572 was applicable.

Where a charity having received trust money attributed a specific asset of its own to the money it had received, the charity was prima facie bound by its own voluntary act.

APPEALS from Wynn-Parry J.(1).

The facts of these appeals are fully stated in the judgment of the court, and are therefore briefly summarized here.

By the will dated November 3, 1919, of Caleb Diplock, who died on March 23, 1936, his executors were directed to apply his residuary estate "for such charitable institution or institutions or other charitable or benevolent object or objects in England as my acting executors or executor may in their or his absolute discretion select and to be paid to or for such institutions and objects if more than one in such proportion as my executors or executor may think proper."

The will was proved on May 16, 1936, the residuary estate amounting to about 263,000l. In the next three years the executors paid out 203,067l. 10s. 0d. to 139 charitable institutions of their choice. Each payment was made by cheque, accompanied by a letter from the executors' solicitors, which while it did not follow exactly the terms of the will referred to the bequest to "charitable or benevolent objects," and announced the allocation of a named amount. There was no doubt that these payments were made by the executors and received by the charities in good faith, believing the testator's bequest to be valid and effectual.

But in 1939 certain persons claiming to be next-of-kin of the testator challenged the validity of the bequest, and on October 18, 1939, the executors' solicitors wrote to each of the participating institutions a "warning letter," informing them of the challenge and calling on them not to expend or deal with the distributed sums in their hands until they heard further.

In 1940 an action (referred to as "the main action") was started in which (ultimately) three of the forty-eight next-of-kin of the testator were plaintiffs, and the executors or their personal representatives, four of the participating charities, the Attorney-General, and one Conolly who was appointed judicial trustee of the estate, were defendants. An originating summons was issued, for the determination of the validity of the original bequest, and in 1944 the House of Lords held it to be wholly

(1) [1947] Ch. 716.

invalidated by the use of the disjunctive "or benevolent" (see Chichester Diocesan Fund and Board of Finance (Inc.) v. Simpson (1)). In 1944 an order was made in the main action approving a compromise of all claims of the next-of-kin against the executors or their estates.

On July 28, 1945, the three next-of-kin and the judicial trustee issued writs in a number of other actions (of which nine were before the court in these appeals) claiming relief against individual recipients of the distributed sums. The circumstances varied; in some cases the sum received was paid into a general account which might be (a) in credit, (b) overdrawn and unsecured, or (c) overdrawn and secured, partly or wholly. In other cases the money was paid into a special account, and in some cases the money had been used for a specific purpose such as the erection of a building, or the purchase of equipment.

The claims of the plaintiffs fell into two main categories:

(1.) claims "in personam" based on the alleged right of an unpaid or underpaid beneficiary, to recover money overpaid to another beneficiary or (as here) to a stranger to the estate;

(2.) claims "in rem," based on the right of "tracing" assets, where they or their proceeds could be identified in the hands of those who had wrongly received them.

Wynn-Parry J. wholly rejected the claims "in personam," and most of the claims "in rem," but allowed certain of the latter. The plaintiffs appealed against all his orders, except so far as they were in their favour.

Pascoe Hayward K.C., J. L. Arnold and Cockle for the plaintiffs.

J. N. Gray K.C. and Dunbar for the National Institute for the Deaf and Dr. Barnardo's Homes.

Gerald Upjohn K.C. and Dunbar for Prince of Wales' Hospital and Leaf Homoeopathic Hospital.

Pennycuick K.C. and J. F. Bowyer for St. George's Hospital.

Pennycuick K.C. and J. H. Stamp for Westminster Hospital, Queen Alexandra's Cottage Homes, Guy's Hospital and Heritage Craft Schools.

R. W. Goff for Royal Sailors' Orphan Girls' School.

John Monckton for the judicial trustee.

Danckwerts and D. H. McMullen for the Attorney-General.

(1) [1944] A. C. 341.

July 9, 1948. Owing to the length of the judgment of the court (LORD GREENE M.R., WROTTESLEY and EVERSHED L.JJ.) a summary only was given in court by LORD GREENE M.R., the text being duplicated and handed down to counsel and other persons requiring copies. The costs of thus reproducing the judgment were made costs in the cause.

The full text of the judgment is as follows:

These appeals, ten in number, which have been heard together, are from a reserved judgment of Wynn-Parry J. delivered on March 11, 1947, in those actions together with nine others (all of which were also tried by him together) and from orders made in the actions on April 1, 1947, following further discussion on that day before the learned judge, pursuant to his judgment.

It will be necessary at a later stage to refer in some detail to the facts of the several cases. At this stage it will be convenient and sufficient to refer in general terms to the circumstances, common to all of them, which have given rise to these actions; and to state briefly the nature of the claims made in the present appeals (which amount together to some 54,760l.) and to the effect of the orders appealed from.

The considerable litigation, of which these appeals form but a part, arises out of the will, dated November 3, 1919 and proved on May 16, 1936, of Caleb Diplock who died on March 23, 1936. By the terms of this will the testator's executors were directed to apply his residuary estate "for such charitable institution or institutions or other charitable or benevolent object or objects in England as my acting executors or executor may in their or his absolute discretion select and to be paid to or for such institutions and objects if more than one in such proportion as my executors or executor may think proper."

The total amount of the residuary estate proved, we were told, to be approximately 263,000l. But notwithstanding the size of the estate and the trap which, at least to a lawyer, might have been discerned in the testator's language, the executors proceeded without any application to the court, to distribute during the years 1936, 1937 and 1938 203,067l. 10s. 0d., among one hundred and thirty-nine charitable institutions of their choice. All payments were made by cheque and in each case a letter was sent to the recipient of the testator's money which emanated from an address in Eastbourne and had printed al the top left-hand

corner the words "Wintle & Hodgson, Solicitors." The letter was in the following form:

"Dear Sir,

"Estate of Caleb Diplock deceased.

"Grants to London & other charities.

"The above named deceased by his will bequeathed his residuary estate for distribution amongst such hospitals and institutions or other charitable or benevolent objects in England as his executors might in their absolute discretion select, and in such proportion as they might think proper

"The executors have decided to allocate a grant of £ (blank) to (blank)

"We have pleasure in enclosing you herewith a cheque for this amount

"We shall be obliged if you will sign and return us the enclosed form of receipt.

"yours faithfully,

"(sd) Wintle & Hodgson."

Nothing turns on the form of the enclosed receipt.

There is no doubt that when the executors made these distributions they bona fide believed that the testator's directions in regard to his residuary estate were valid and effectual. The letter quoted above did not, as will be observed, exactly transcribe the relevant part of the will, though its language did comprehend the ill-omened disjunctive - ".... charitable or benevolent objects ... - ." It is however also clear and conceded by the appellants that each of the respondents to these appeals accepted their respective cheques in the full faith and belief that the executors were properly entitled so to distribute the residuary estate.

In the year 1939 certain persons claiming to be next-of-kin of the testator, having learnt of the contents of his will, challenged the validity of the residuary bequest and intimated their challenge to the executors. Accordingly on October 18, 1939, the executors' solicitors wrote to each of the institutions who had participated in the distribution of Mr. Diplock's residuary estate (including the respondents to these appeals) informing them of the challenge and calling upon them not to deal with the distributed sums in their hands until they had further heard from the executors' solicitors. Whatever be the effect as regards notice of the formal letters which accompanied

the distribution, it is conceded by all the respondents that from the time of the receipt by them of the so-called "warning letter" of October 18, 1939, they must be treated as having had notice of the invalidity of the testator's residuary bequest, and that accordingly his residuary estate had from the date of his death properly been distributable among the persons entitled as his next-of-kin by virtue of the Administration of Estates Act, 1925.

On January 3, 1940, the writ was issued in the first of the actions (1940. - D. - No. 14.) the subject of these appeals. This action has been referred to as "the main action." Originally the sole plaintiff was John Henry Diplock, one of the claimants as next-of-kin. He died in 1940. As a result of amendments, the parties to this action (which was intituled "In the matter of the estate of Caleb Diplock deceased") later consisted of the following: as plaintiffs, three persons (in addition to J. H. Diplock) all of whom were subsequently found (by certificate made in the action), to be of the number of those (48 in all) entitled as next-of-kin to the residuary estate: and as defendants, the three surviving and proving executors, Messrs. Wintle, Handson (both of whom have died) and Thomas, one Johnson who with the defendant Thomas was trustee of a certain piece of land and a sum of consols formerly part of the residuary estate, St. George's Hospital and three other charitable institutions, H.M. Attorney-General, Mrs. Handson (the widow and personal representative of the defendant Handson) and one C. G. Conolly who had (by an order in the main action dated December 8, 1943) been appointed judicial trustee of the estate. Of these defendants only St. George's Hospital (against whom the plaintiff-appellants' claim is for the sum of 8,000l. received by it from the executors), the Attorney-General and Mr. Conolly are before this court.

The claim against St. George's Hospital was wholly rejected by Wynn-Parry J., who ordered the appellants to pay the hospital's costs of the action.

In all the other nine actions which are the subject of these appeals, the writs were issued on July 28, 1945. All were entitled "In the matter of the statutory trusts affecting the residuary estate of Caleb Diplock deceased by virtue of the Administration of Estates Act 1925." In each case there are four plaintiffs, namely, the three claimants as next-of-kin, who with J. H. Diplock are plaintiffs in the main action,

together with Mr. Conolly. In each there is but one defendant. The following catalogue of the actions (referred to by their respective appellations used in the appeals) identifies the several defendants and states the amounts of the respective claims and the effect of the relevant orders made in regard to them by the learned judge. In action I. E the plaintiff-appellants claimed the sum of 3,000l. paid by the executors to Dr. Barnardo's Homes. This action was dismissed with costs. In action I. F the plaintiff-appellants claimed from G. W. Lilburn, acting secretary of the National Institute for the Deaf, the sum of 1,500l. paid to that institution by the executors. This action was dismissed with costs. In action II. A the plaintiff-appellants claimed the sum of 1,000l. paid by the executors to the Prince of Wales' Hospital, Plymouth. This action was dismissed with costs. In action II. C the plaintiff-appellants claimed from Sir R. J. S. Dodd as chairman and E. Haigh as honorary secretary of the Leaf Homoeopathic Hospital the sum of 7,500l. paid by the executors to that hospital. In this case Wynn-Parry J. ordered the defendants to pay to the plaintiff Conolly (the judicial trustee) the agreed sum of 250l., rejected the rest of the claim and ordered the plaintiffs to pay one-half of the defendants' costs. In action III. C the plaintiff-appellants claimed from F. R. D'O. Monro the secretary of the Royal Sailors' Orphan Girls School and Home the sum of 2,000l. paid by the executors to that institution. This action was dismissed with costs. In action IV. A the plaintiff-appellants claimed from the President, Vice-Presidents, Treasurer and Governors of the Westminster Hospital the sum of 4,000l. paid to that hospital by the executors. This action was dismissed with costs. In action IV. B the plaintiff-appellants claimed from Colonel J. R. Warren the Chairman and two Deputy Chairmen of the Heritage Craft Schools the sum of 2,000l. paid by the executors to that institution. This action was dismissed with costs. In action IV. D the plaintiff-appellants claimed from J. C. Smith and others as the Committee of Management of Queen Alexandra Cottage Homes the sum of 4,760l. paid by the executors to that institution. In this case the learned judge ordered payment by the defendants to Mr. Conolly of the sum of 1,035l. 12s. 0d. (being the proceeds of redemption of a like nominal amount of 3 per cent. Local Loans purchased for the sum of 1,000l. part of the sum of 4,760l.) together with interest earned thereon from January 6, 1939, to the date

of payment: but he rejected the balance of the claim and ordered the plaintiffs to pay to the defendants five-sixths of their costs. Finally in action IV. E the plaintiff-appellants claimed the sum of 21,000l. paid by the executors to Guy's Hospital. In this case the learned judge ordered the defendants to pay to Mr. Conolly the sum of 5,052l. 19s. 0d. together with 70l. 6s. 3d. for interest. He rejected the rest of the plaintiffs' claim but held the plaintiffs entitled to recover three-fourths of their costs of the action less those costs relating to the application to speak to the minutes of the judgment the defendants' costs of that application to be paid by the plaintiffs with the usual provision for set-off.

Against all the orders thus briefly described (so far as they are not in their favour) the plaintiffs have appealed to this court. There are no cross-appeals.

When the main action was instituted, there had been no determination by the court on the question of the validity of the testator's residuary dispositions. But pursuant to a direction given by Bennett J. in the main action an originating summons was in the month of June, 1940, issued by the executors for the purpose of obtaining the court's determination whether or no those dispositions were valid. This summons (1940 - D. - 1041) came before Farwell J., who decided the question in favour of the validity of the bequest: but his decision was reversed by this court in 1941; and the House of Lords (Lord Wright dissentiente) in 1944 (sub. nom. Chichester Diocesan Fund and Board of Finance (Inc.) v. Simpson) (1) affirming the decision of the Court of Appeal finally held the dispositions to be wholly invalidated by the "or benevolent."

To complete this general statement of facts, reference must be made to an order made by Simonds J. (as he then was) in the main action on April 5, 1944, whereby certain terms of compromise were approved of all claims by the plaintiffs as next-of-kin of the testator against the estates of the two deceased executors, Messrs. Wintle and Handson, and also against the surviving executor Mr. Thomas, and against Mrs. Handson as personal representative of her late husband. The precise terms of the compromise are not material to be here set out but the learned judge ordered that such compromise should be binding on all the persons beneficially

(1) [1944] A. C. 341.

entitled to any property of the testator as to which he died intestate other than the then surviving plaintiffs (who were parties to the compromise): and he further ordered that all further proceedings should be stayed against the defendants Thomas and Mrs. Handson. It follows that, from the date of the order of April 5, 1944, no right remained in any person claiming as next-of-kin of the testator to claim against any of the executors of the testator or against any of the estates of any of the executors in respect of devastavit or other misapplication of the testator's residuary estate.

Against this general background of fact it is now possible to state the nature of the appellants' claims in these appeals. These claims fall broadly under two heads which have been compendiously described as claims in personam and claims in rem. The former (which, as will be seen, must be sub-divided) are personal claims which it is said the appellants are able to make in equity against each of the respondents. If it be held that, in accordance with this argument, there is a good foundation for such equitable claims, then further questions will arise whether and to what extent the Statutes of Limitation - particularly the Limitation Act of 1939 - directly or by analogy apply to defeat such claims: but save possibly for the bearing of the dates of the several payments ;md of certain other dates upon these statutory defences the special facts relating to the application by the several respondents of the sums respectively paid to them have no relevance to the claims in personam. In other words since it is conceded for the purposes of the appeals that all the respondents must be treated as solvent, they will each of them be bound, if the personal claims are made good on the part of all the next-of-kin, to repay or account for the full amount of the sums received by them (less a due proportion of what has already been recovered from the executors or their estates by virtue of the order of April 5, 1944), with or without interest, subject only to the defence of limitation.

It is to be noted that Wynn-Parry J. wholly rejected the claims of the appellants in personam. In so far as the learned judge ordered any of the respondents to pay any sum to the judicial trustee (as appears from the recital already made) those orders were based on the appellants' claims in rem.

The claims in rem rest upon the application of the principles alleged to underlie the well known case of In re Hallett (1)

(1) (1880) 13 Ch. D. 696.

explained and expanded (as it is said) in Sinclair v. Brougham (1) as to enable the appellants to "follow" or "trace" the moneys paid to the several respondents into the various assets held by such respondents wholly or partly attributable to those moneys. In considering these claims "in rem" (as distinct from the claims "in personam") it will be necessary to examine in detail the facts relating to the disposal by each of the respondents of the several sums paid to them by the executors. As regards these facts, there is, fortunately, no dispute: and in every case except the main action agreed statements of facts have been prepared for the use and convenience of the court.

We turn, however, first to the claims "in personam." Before analysing the nature of those claims it is convenient to deal with one general matter of defence raised by Mr. Neville Gray. It was said by him that the formulation of any equitable claim against any of the respondents must at least postulate that the consciences of the respondents must in some degree be affected by their retention of the moneys paid to them which should properly have been paid to the appellants and other next-of-kin of the testator. Mr. Gray sought to defeat these claims, as it were, in limine, by denying altogether the postulate: for, said he, notwithstanding the formal invalidity of the bequest, at least it must be taken that Mr. Caleb Diplock intended the respondents or similar institutions to enjoy the residuary estate in preference to his blood relations and it does not lie, accordingly, in the mouths of the next-of-kin to allege any unconscientiousness on the part of those whose claim is in accordance with the wishes that the testator had expressed, albeit ineffectually. This argument appears to us to be wholly untenable. It is in our opinion impossible to contend that a disposition which according to the general law of the land is held to be entirely invalid can yet confer upon those who, ex hypothesi, have improperly participated under the disposition, some moral or equitable right to retain what they have received against those whom the law declares to be properly entitled. We add also that in determining the difficult questions which the appeals have raised it is immaterial that the respondents are charitable institutions of the most deserving character. In considering the application of the principles of equity it does not seem to us that there is any different standard of conscientiousness for charitable or other corporations from that appropriate to an individual.

(1) [1914] A. C. 398.

As already indicated, the appellants' claims in personam must be sub-divided and fall under two quite distinct heads. First, it is argued that by the terms of the letters which accompanied all the executors' payments, the respondents were given notice of the invalidity of the trusts declared of the testator's residuary estate, or at least were put upon inquiry as regards their validity so that the respondents (who were in any event pure volunteers) were subjected to a constructive trust of the moneys they received in favour of the next-of-kin. Secondly, it is argued that apart from any notice which the respondents may have had of the true effect of the testator's will, they had in truth no right to receive any of the moneys paid to them and that in the circumstances of the case already set forth the unpaid next-of-kin have a direct claim, recognized and established by the courts of equity, to recover from the respondents the sums improperly paid to the respondents and properly belonging to the next-of-kin.

The first of these claims was not argued in the court below and has been somewhat faintly argued in this court. As already observed, the form of letter on which the respondents rely for this part of their case does not purport to quote and does not in fact accurately reflect the exact language of the will: but it does in its paraphrase retain the essential vice of the original in its use of the disjunctive formula "charitable or benevolent objects." It is conceded by the respondents that from the moment that they received, by the later letter of October 18, 1939, notification of the plaintiffs' challenge they must be taken to have been so affected with notice of the claim of the next-of-kin as to be accountable in respect of any balance of the sums originally paid to them which remained in their hands unexpended or undisposed of. It is said by the appellants that a corresponding liability attached to them from the moment of the original receipt by them of the sums paid by the executors since, even without any actual challenge, they cannot be heard to allege ignorance of the invalidity which, by the general law, attached to the words used in the letter no less than to the words used in the will: alternatively, that the respondents having received letters which purported to state the substance of the material part of the will and being volunteers and unable to plead lack of knowledge that the substance, so stated to them, was without legal effect, were put upon inquiry and, not having inquired,

took what they received subject to the risk of having to account and repay if it turned out that they had been improperly paid.

The argument has, it must be confessed, some attraction. For to the eye of the lawyer, particularly one made wise after the event of the decision of the House of Lords in Chichester Diocesan Fund and Board of Finance (Inc.) v. Simpson (1) it may seem plain enough that the executors had embarked upon an entirely irregular execution of their duties. But we have come to the conclusion that this branch of the appellants' claim ought not to succeed. As we have already stated each of the respondents in fact accepted the moneys paid to them in good faith and in the belief that they were properly entitled to receive what the executors handed to them. As a matter of general principle the appellants' argument would indeed lead to startling results. For if the respondents can be said to be put upon inquiry then they must have been under some duty to inquire. What, on the basis of this contention on the part of the appellants (which is, of course, wholly distinct from the other branch of their personal claim, later dealt with), would be the duty of one who is told by executors that he is a legatee under a testator's will and paid that which he is told he has been given? Must he call for and examine the will to satisfy himself of its validity? Must he inquire whether all claims ranking in priority to his own have been satisfied? In the present case it is to be noted that the letter which the respondents received came, on the face of it, from the executors' solicitors. Moreover, even though the language used in the letter might be said to convey to the tutored mind some suspicion of the validity of the disposition, it would not follow that such language though taken verbatim from the will would necessarily in its context result in invalidity. In our judgment persons in the position of the respondents, themselves unversed in the law, are entitled in such circumstances as existed in the present case to assume that the executors are properly administering their estate: and if, as is admitted in this case, they took the money bona fide believing themselves to be entitled to it, they should not have imposed upon them the heavy obligations of trusteeship. We do not think it necessary or desirable to attempt an exhaustive formulation of the law applicable as regards notice in case of payments to legatees save to say that every case of

(1) [1944] A. C. 341.

this kind will depend upon its own facts and that the principles applicable to such cases are not the same as the principles in regard to notice of defects in title applicable to transfers of land where regular machinery has long since been established for inquiry and investigation. For these reasons we reject this part of the appellants' claim.

But the second branch of the appellants' personal claim is one of far greater difficulty and complexity. It has involved considerable research into cases over a period of more than two hundred and fifty years and we have been much indebted to counsel for the help which their industry and argument have given to the court. It is to be noted that Wynn-Parry J. in the court below did not have the advantage, afforded to this court, of an examination of the cases prior to the year 1800.

It will be convenient at this stage not to attempt any formulation of the appellants' argument under this head beyond that already indicated, viz., that in the circumstances and having regard to the facts of the present case, the appellants have a direct claim in equity against the respondents to recover the sums improperly paid to the respondents, or to recover such proportion of such sums as may be required to make good to the appellants and the other persons entitled as next-of-kin, after bringing into account what has been recovered from the executors or their estates by virtue of the compromise order of April 5, 1944, what should have been received by them from the testators' residuary estate. According to the judgment of the learned judge the point was put before him in somewhat wider and more general terms(1). But however the proposition be restricted by reference to the particular facts of the case the reasoning of the learned judge in rejecting the proposition will, if well founded, be necessarily fatal to it. For after an examination of the various cases relied on before him beginning with Gillespie v. Alexander (2), in 1826 (the earlier seventeenth and eighteenth century cases, as we have already observed, not having been cited to him) the learned judge concluded that an unpaid beneficiary could only sue the wrongly paid recipient of the testator's money in equity in the same circumstances as those which would enable him in the name of or by joining the personal representative to sue at law, that is, when the wrong payment had been made under a mistake of fact.

(1) [1947] Ch. 716, 723.

(2) (1826) 3 Russ. 130.

"In my judgment" he said(1) "the authorities establish that so far as a mere money demand is concerned (and I am, as regards this part of the matter, dealing only with a money demand) where the executor or administrator has paid money or transferred property part of the estate of the deceased to a person not entitled thereto in such circumstances as not to make the recipient an express trustee, the only remedy open to the legatee or next-of-kin rightfully entitled against the recipient is either to pursue a common law claim for money had and received in the name of the executor or administrator, or to pursue in equity a claim analogous to the common law action for money had and received, in which it would be unnecessary to join the executor or administrator as plaintiff. In either case, however, as I have shown, it would be essential to demonstrate that the money was paid under a mistake of fact and not a mistake of law, a mistake in construing a will being regarded for this purpose as a mistake of law."

Now upon the question whether the mistake here made was one of fact or of law we think the learned judge was clearly right in deciding that it was the latter and we cannot usefully add anything to what fell from him upon that point. Equally we agree with him that as regards common law claims for money had and received the action will not lie where the money has been paid under a mistake of law. It may, we think, be taken to be clearly established that the common law claim is founded upon an implied promise to pay and that - whether by an application of the principle "ignorantia juris non excusat" or on other grounds - no such promise will be implied where the payment was made under mistake of the general law. It is no doubt true that for certain purposes (for example the purposes of the application of the Statutes of Limitation) the direct equitable claim by the unpaid beneficiary against the wrongly or overpaid recipient of part of the testator's estate - for it is conceded that in certain circumstances such direct claims will lie - has hitherto been regarded as analogous to the common law claim for money had and received. Both are, after all, money claims. But the common law claim, as may now be taken to be established, is in no sense derived from equity, but has a lineage altogether independent of it. And as the appellants forcibly pressed upon us in argument, in other respects there are marked and important

(1) [1947] Ch. 716, 742.

differences between the claim here put forward on the part of the appellants and a claim at common law for money had and received. In the latter the proper claimant is normally the person who originally made the payment or is that person's principal or representative: and the claim is made against him who received the money or his representative. It is indeed difficult to see how, save between the parties to the original transaction or between parties linked by a relationship such as that of principal and agent, any implied promise to repay could be imported. In the present case the payments were originally made by the executors and it is in our judgment impossible to say that in making the payments the executors were acting as agents or in any way on behalf of the next-of-kin, of whose rights and existence the executors were entirely ignorant Plainly, nothing that the next of kin have done can be said to have involved any ratification or acceptance on their part of the executors' acts. Further whatever may have been the nature of the mistakes made by the executors, the next-of-kin have never made any mistake at all whether of law or of fact.

For these reasons it seems to us that in approaching the question of the existence and characteristics of the direct equitable cause of action there is not, unless the authorities otherwise establish, any necessity in logic for regarding the claim as being clothed, as it were, with all the attributes or limitations appropriate to the common law action for money had and received. Nor, on similar grounds, does it appear that there is any conflict involved between law and equity. Equity here, as in other places, comes in, as Maitland has observed, "not to destroy the common law but to fulfil it." Since (for so runs the appellants' argument) the common law can only recognize the two parties to the transaction, payer and payee, or at most third parties asserting the rights of one or other of them, the common law does not, to borrow again from the language of Maitland "comprehend the whole truth." For the payers in the present case (namely the executors) were handling not their own money but the money of others who had a proprietary interest unknown to and unrecognized by the executors and who, from the moment when they became aware of their own rights and the transactions of the executors, immediately challenged and repudiated what the executors had done.

Nevertheless, if the claim in equity exists it must be shown

to have an ancestry founded in history and in the practice and precedents of the courts administering equity jurisdiction. It is not sufficient that because we may think that the "justice" of the present case requires it, we should invent such a jurisdiction for the first time.

It becomes therefore necessary to examine carefully the numerous decided cases from the days of Lord Keeper Bridgman and Lord Keeper Finch (afterwards Lord Chancellor Nottingham) and to see what principle has been established by them. As we have already observed, that such a jurisdiction does exist in some circumstances and in some cases is clearly established and indeed conceded. But it is said on the part of the respondents that the jurisdiction is subject to the limiting principle that equity acts upon the conscience of the defendant which is affected where (and only where) the defendant has the necessary knowledge or the necessary knowledge can be imputed to him: that the necessary knowledge can be imputed in cases of the administration of an estate from the fact that in all of them the recipient of the money knows or ought to know that he takes it under a title which is in its very nature defeasible in favour of other interested persons. Thus, according to the respondents' argument, every beneficiary takes subject to the rights of creditors; every residuary legatee takes subject to the rights of pecuniary legatees and other residuary legatees; and a next-of-kin takes subject to the rights of other relatives of equal or nearer degree. But it is contended that the present case is outside the ambit of the jurisdiction on the ground that the respondents (who were paid on the footing of their being entitled as residuary legatees) cannot in their assumed capacity as residuary legatees be said to have taken subject to the rights of the next-of-kin. It would appear therefore to follow from the respondents' argument that the equity will apply and fasten, as it were, upon the conscience of a recipient who has some legitimate interest in or right to the estate in question (however remote) but will have no application to and will not affect the conscience of one who, as it later turns out, had no interest in and was a stranger to the estate some part of which was nevertheless paid to him. There may be thought to be some lack of logic in such a result; and the formulation of the respondents' case differs widely, it is plain, from the conclusion on this part of the case of the learned judge. The question remains - what do the authorities establish?

Reference to the text-books has not proved of very great assistance. The matter is however dealt with at some length in Roper on Legacies (4th ed., 1847), vol. I., chap. VII., s. III. Under the general title "Of the Refunding of Legacies" it is stated as follows:-

"In the last section was considered the right of legatees to follow the assets in the possession of strangers under titles derived from the executor by sales or pledges. It remains to consider the rights of executors, creditors, and unsatisfied legatees, to call back parts of the estate, which have been overpaid to one or more of the legatees, by reason of a defect of assets."

There follow then two sub-sections, the first dealing with the executor's right to oblige a legatee to refund, the second dealing with the equity of creditors to oblige legatees to refund. The third sub-section may be quoted more fully:-

"With respect to the equity of one legatee to make another refund, it may be stated as a general rule, that an unsatisfied legatee cannot maintain a suit against another who has been paid by the executor; because the remedy in the first instance, is against the executor; who, by discharging one legacy, has admitted assets for the payment of all.

"But an exception to this rule occurs, when the executor is in insolvent circumstances; for since the unsatisfied legatee can have no redress against him, he would be without a remedy, unless permitted to call upon the other legatee to refund.

"Still this permission is qualified, and subject to the following distinctions.

"If the assets be originally sufficient to satisfy all the legacies, and one of the legatees procure from the executor, either by or without suit, payment of his legacy; and then the executor wastes the estate, so as to render it deficient to discharge the remaining bequests, those legatees cannot oblige the satisfied legatee to refund: first, because the payment was not a devastavit in the executor and secondly, because the legatee is protected by the principle, that vigilantibus non dormientibus jura subveniunt. But -

"If the assets be originally deficient to answer all the legacies, and a legatee receive from the executor his legacy in full; in that case, as the payment was a devastavit by the executor, and it is a rule in equity, that upon a deficiency, of assets, all general legatees shall proportionally abate,

the court will entertain a suit by the unsatisfied legatees, to compel the one so paid, to refund.

The distinctions upon the present subject are thus stated by Sir Joseph Jekyll .... 'That as all legatees are, upon a deficiency of assets, to be paid in proportion, so, if the executor paid one of them, the rest should make him refund in proportion; and if one of the legatees obtained a decree for his legacy, and was paid, and afterwards a deficiency happened, the legatee who recovered should refund notwithstanding, in imitation of the spiritual court, where a legatee recovering his legacy was made to give security to refund in proportion. But that if the executor had at first enough to pay all the legacies, and afterwards by his wasting the assets occasioned the deficiency; the legatee, who had recovered his legacy, should not be compelled to refund, but should retain the advantage of his legal diligence, which the other legatees neglected, in not bringing their bill in time, before the devastavit of the executor; whereas, if they had commenced their suit before the commission of the waste, they might have obtained the same success'."

Many of the early cases to which we shall presently refer are cited in support of the passages quoted from Roper. It will be observed that there is no suggestion in the text of any such underlying principle as that contended for by the respondents nor any suggestion that the action - by analogy to the common law action for money had and received or otherwise - will lie only where the mistake made is a mistake of fact. The limitation, according to Roper, in the case of an unpaid legatee is the absence or exhaustion of any remedy against the executor or administrator.

On the other hand there is in Roper no reference, in terms, to a claim by a next-of-kin against other wrongly paid or overpaid next-of-kin or legatees; nor (oddly enough) is there any reference to the important case of David v. Frowd (1), which had been before Sir John Leach in 1833. That case is together with a modern decision of this court in Mohan v. Broughton (2), cited in the notes to Seton on Judgments and Orders, 7th ed., vol. II., p. 1595, in support of the proposition "Though the estate has been distributed among those found to be next-of-kin they are liable in general to refund to the real next-of-kin .... and an action may be brought by such real next-of-kin for the purpose."

(1) (1833) 1 My. & K. 200.

(2) [1900] P. 56.

The earliest cases cited to us in which there is found any reference to the right of an unpaid creditor or legatee to go direct against a legatee already paid were three cases all reported in the first volume of Cases in Chancery; they are Nelthrop v. Hill (1) before Lord Keeper Bridgman, Windham J. and Turner B., Grove v. Banson (2) in the same year before Lord Keeper Bridgman and Wyld J., and Chamberlain v. Chamberlain (3) before Lord Keeper Finch. It is not necessary to refer further to these three cases. All were cited to Nottingham L.C. in the case of Noel v. Robinson (4). This case may be regarded as having laid the foundation for the later exercise of the equity jurisdiction for which the historical justification was the rivalry in regard to the administration of the estate of deceased persons between the courts of Chancery and the spiritual courts. According to Sir William Holdsworth (vol. VI. of the History of English Law at p. 652), the Chancery court "had practically taken over the jurisdiction of the ecclesiastical courts over suits for legacies and suits for the distribution of residue. In theory it is true the jurisdiction of the ecclesiastical courts over these matters lasted till 1857; but it was generally ignored by the court of Chancery, on the grounds .... that the ecclesiastical courts could not do complete justice in these cases - they could not give any indemnity to an executor paying a legacy under an order of the court, they could not order the legatees to refund if other debts subsequently appeared ...": and he cites Noel v. Robinson (4) in support. In the ecclesiastical court it was the practice that ".... to guard himself against latent debts the executor is entitled to demand security of the legatee before paying his legacy to refund in case the amount is required in discharge of" debts. (See Coote: Ecclesiastical Court Practice (1847), p. 641.) But at least from the time of Noel v. Robinson (4) it appears that the court of Chancery resorted to no such practice: and the reason, we think, was that, in the case supposed, the creditor would be treated as entitled to claim a refund direct from the legatee.

Having regard to its importance as a starting point and as showing the reason and justification for the jurisdiction, it is desirable to refer somewhat fully to the case of Noel v. Robinson (4). The plaintiffs in the case were specific legatees of

(1) (1669) 1 Ch. Cas. 135.

(2) Ibid. 148.

(3) (1675) 1 Ch. Cas. 256.

(4) (1682) 1 Vern. 90.

a moiety of the testator's American plantation. The defendant Robinson was the testator's executor who after granting a lease of the plantation had later sold it to the second defendant Faulconer. The plaintiffs alleged that Robinson by granting the lease must be taken to have assented to the specific bequest: and their claim against both defendants was for the property and for an account. Robinson by his answer denied that he had assented to the bequest and said that the sale to Faulconer was required to pay the testator's debts, the deficiency of the estate having arisen since the date of the lease as a result of adverse trading conditions. He further said that even if the lease must be taken as an assent, nevertheless he (Robinson) having in fact paid the testator's debts could stand in the shoes of the creditors and claim in effect a refund from the legatees.

The Lord Chancellor after referring to the practice of the spiritual court in regard to the giving of security proceeded ".... but in this court though there be no provision made for refunding, yet the common justice of this court will compel a legatee to refund. It is certain that a creditor shall compel the legatee to refund and so shall one legatee compel the other where the assets become deficient. But whether the executor himself, after he has once voluntarily assented unto a legacy, shall compel the legatee to refund is causa prim¾ impressionis: and it must be allowed that there is a great difference between a voluntary assent and where the executor was compelled to assent ...." According to the report in Vernon the plaintiffs' bill was dismissed: but as pointed out in the notes in the English Reports(1) the decree was in fact in the plaintiffs' favour.

The next case is Anonymous (2), briefly reported. It was a claim by a creditor of A. against the executor of A.'s executor and legatees under the will of A.'s executor. It was decreed that the legatees should refund.

Next is Newman v. Barton (3), which also appears to have been a case of a claim by an unpaid creditor against a legatee. It was, however, observed by the court: "A creditor shall follow the assets in equity into whosesoever hands they may come. But where the executor had voluntarily paid the full legacy and afterwards assets proved deficient to pay the other legacies" - by which we understand to be meant that the assets were not deficient when the legacy was paid -

(1) 23 E. R. 334, 336.

(2) (1682) 1 Vern. 162.

(3) (1690) 2 Vern. 205.

".... neither the executor nor any of the other legatees should compel him to refund: but if the payment had not been voluntary, but he had recovered his legacy by decree, then he should have refunded."

If we have rightly interpreted the observations of the court in the last case they indicate a qualification to the unpaid legatee's right to sue, which is not be to found in the report of Lord Nottingham's judgment in Noel v. Robinson (1), namely that, at least where the original payment was made voluntarily, there is no right of recovery unless there was originally a deficiency of assets. The foundation for the qualification is that in the absence of an original deficiency the first paid legatee got no more than what he was properly entitled to receive: and so, it may be added, there was nothing in respect of which equity could affect his conscience.

The point is brought out more clearly in the judgment (cited by Roper in the passage we have quoted above) of Sir J. Jekyll M.R. in the first of the eighteenth-century cases, the Anonymous case(2). It was there laid down that a legatee paid in full was bound to refund to other legatees, whether the original payment had been made voluntarily or under compulsion, provided that there was an original deficiency of assets: but that where the deficiency arose from later waste by the executor then on the principle of "vigilantibus non dormientibus succurrit lex" there would be no right to a refund. It is further to be noted that the right to claim a refund was stated by Sir J. Jekyll to be "in imitation of the spiritual court" - a reference to the practice already mentioned of requiring security before payment of a legacy.

The point is still further expanded in the case of Orr v. Kaines (3). That was in fact a case of a claim by unpaid legatees against a solvent executor: but in the course of his judgment Sir J. Strange M.R. observed that the voluntary payment (in full) of a legacy by an executor amounts to an admission by him of assets sufficient for all so that he will be compelled, if solvent, to pay all other legacies in full, whatever the state of the assets. But if the executor is insolvent then because "there is no other way" the unpaid or underpaid legatees can directly compel the fully paid legatee to refund. It is however stated in a note in the English Reports(4) (correctly, having regard to the previous decisions) that the

(1) 1 Vern. 90.

(2) (1718) 1 P. Wms. 495.

(3) (1750) 2 Ves. Sen. 194.

(4) 28 E. R. 125.

direct claim against the legatee is inapplicable where the deficiency arises after the payment to him, i.e., by reason of subsequent waste by the executor.

The second part of Sir J. Strange's judgment marks a second step in the development of the equitable jurisdiction since Noel v. Robinson (1) - the appearance of a condition to the legatee's right to claim direct against the legatee that there should be "no other way" whereby the wrong to the former can be remedied - "because" as observed by Roper in the passage we have already quoted "the remedy is in the first instance against the executor."

The last of the eighteenth-century cases is Walcott v. Hall (2), cited in the note in the English Reports to the Anonymous case in 1 P. Wms. That was a case where the executor having paid all the legacies save one for 50l. which he retained for an infant, subsequently was made bankrupt. It was held, following the reasoning of the three previous decisions, that in the circumstances the fully paid legatees never having received more than they had been properly entitled to receive there was no room for any claim in equity against them for a refund.

Before dealing with the later cases which were cited to the learned judge below it may be convenient to make some observations on the effect of the authorities to which we have referred from Noel v. Robinson (1) in 1682 to Walcott v. Hall (2), First it is in our judgment impossible to find in any of them any trace of such an underlying principle or ratio decidendi as that contended for by the respondents in this court. It is no doubt true that an equitable claim predicates that the conscience of the defendant must be affected. But we have failed to observe any justification, in the judgments cited, for the suggestion that the state of the defendant's conscience depends upon his knowledge or assumed knowledge that his title to the money paid to him may or may not be defeasible in favour of other interested persons. The test as regards conscience seems rather to be whether at the time when the payment was made the legatee received anything more than, at the time, he was properly entitled to receive.

Second, there is equally in our judgment no trace of any such limitation to the right of action as Wynn-Parry J. thought to be discernible from the later cases, namely, that there must be

(1) 1 Vern. 90.

(2) (1788) 29 E. R. 167 (n); 2 Br. C. C. 305.

or have been administration of the estate by the court, and that the mistake made by the executor in paying the first legatee in full must be a mistake of fact. As regards the latter, it is no doubt true that so far as can be gathered from the reports, the overpayments that had been made arose from nothing more than a miscalculation of the assets available and might therefore fairly be regarded as due to mistakes of fact. But so far from suggesting that the nature of the mistake made was a relevant consideration, the reports do not for the most part even indicate how it came about that the payments were made in fact. As regards the suggested qualification that there was or had been an administration by the court of the estate of the testator, the reports of the cited cases seem to us wholly to negative any such requirement. There are frequent references to the effect of payment by the executor voluntarily, that is, in the absence of any decree sanctioning or ordering the payment. It is nowhere suggested that the right of the unpaid legatee to claim from the fully or overpaid legatee depends upon there being or having been an administration of the estate by the court.

Thirdly, it is in our view of the first importance to bear in mind the circumstances in which the equitable cause of action arose and the reason for which it came into existence, namely, the aim and desire of the chancery court, in the course of its struggle with the spiritual court, to provide some means of relief which would render unnecessary and take the place of the requirement of the spiritual court for the giving of security by the first paid legatee.

On the other hand it is, finally, to be noted that, so far, no case had arisen in which the plaintiffs were not legatees under a will but next-of-kin either claiming to share in the distribution with other next-of-kin or claiming to be entitled to the estate against other persons in whose favour distribution had been made as the persons supposedly entitled under the terms of a will or under an intestacy.

We come now to the cases cited by Wynn-Parry J. in the court below. Of the first five, namely, Gillespie v. Alexander (1); Greig v. Somerville (2); David v. Frowd (3); Sawyer v. Birchmore (4) and Thomas v. Griffiths (5), the learned judge observed that in each case there was or had been an

(1) 3 Russ. 130.

(2) (1830) 1 Russ. & My. 338.

(3) 1 My. & K. 200.

(4) (1836) 1 Keen, 391.

(5) (1860) 2 Giff. 504.

administration action. "An analysis of these cases" he said(1) discloses two points of significance. In the first place, the distribution had in each case been made pursuant to an order of the court in an administration action and in the second place the mistake, pursuant to which in each case the money had been paid, was a mistake of fact."

As we have already stated, in the light of the earlier decisions, the fact of there being or having been an administration suit and a distribution pursuant to an order of the court cannot be regarded as a condition of, or even as a material consideration for, the existence or exercise of the jurisdiction: and the same appears hardly less true of the character of the mistake made. On that ground no doubt the answer of the respondents to this part of the appellants' claim has in this court, as already noticed, been put upon a different and more elaborate basis.

Of the five cases referred to, the first two and the last were cases of claims by creditors, and the same is true of another case cited to us, Davies v. Nicolson (2) which came before Knight-Bruce and Turner L.JJ. There can however be no doubt, in our judgment, that whether the claimant be a creditor or a beneficiary the cause of action both in its history and its essential character is the same.

We now come to the important case of David v. Frowd (3). It is true, as stated by the learned judge, that there had in that case been an administration by the court of the estate of the deceased, one David Williams, and that the estate had been distributed pursuant to an order of the court amongst the persons who had been found by certificate of the master to be entitled as the next-of-kin. But there is nothing in the judgment of Sir John Leach which gives any support to the view that these were material circumstances to the plaintiff's right of action. Nor is there anything in the judgment to indicate that the learned Master of the Rolls regarded it as relevant that the assumed error made - though made not by the personal representatives making the payment but by the master in his certificate - was one of fact, namely, as regards the identity of the next-of-kin.

But the main significance of the case for present purposes lies in this: that the claim of the plaintiff was that she was the sole next-of-kin and in that capacity entitled to recover back from those who had received the estate the whole of what they

(1) [1947] Ch. 716, 731.

(2) (1858) 2 De G. & J. 693.

(3) 1 My. & K. 200.

had been paid - and, on the basis of the validity of the plaintiff's claim, wrongly paid. It should be stated that the intestate's personal representatives were included among the defendants in the action but it is plain on an examination of the pleadings (which we obtained from the Public Record Office) that they were joined as recipients of part of the estate in their capacity as supposed members of the class of next-of-kin. Indeed, having regard to the administration decree and the orders made thereunder the personal representatives as such were obviously immune from attack.

For the purposes of the hearing before Sir John Leach it was agreed at the Bar that the title of the plaintiff as sole next of-kin should be admitted. On that footing the question for the court was whether she was precluded by the administration decree from making her claim. That question the Master of the Rolls answered in the negative. By his order he referred it to the master to inquire whether the plaintiff was sole next-of-kin or one of the next-of-kin: and he added a declaration "that if the plaintiff be established as the sole next-of-kin of the intestate, the defendants are bound to refund to the plaintiff the several sums which they have received under the order of the court" in the administration action.

Having regard to the importance of the case we caused the records to be searched with a view to discovering what was the exact order made and what was the outcome of the order. No trace of the formal order could be discovered and (whether the matter was afterwards settled or for other reasons) no record was found of any later order or proceeding.

However that may be, David v. Frowd (1) was, on the proved or assumed facts of the case and having regard to the declaration made, a case in which the defendants were held liable to refund not merely so as to let in some person found to be entitled to participate with them in the distribution, but to the full extent of what they had received and on the basis, accordingly, that they had in truth from the start been total strangers to the estate, without any title to what had been paid to them. Mr. Pascoe Hayward placed, naturally, great reliance upon the case providing, as it does, at least a close analogy to the present. And upon the face of it the principle sought to be formulated by the respondents (which we have earlier quoted) cannot be satisfactorily applied: for it cannot, as it seems to us, be seriously contended that the defendants,

(1) 1 My. & K. 200.

when they received their payments pursuant to the court's order following the master's certificate, must have known or be taken to have known that their title was wholly defeasible in favour of some other outside party so as to render their consciences susceptible to be acted upon by equity: or if such knowledge can be imputed to them, then one may ask why should there not equally have been imputed to the respondents in the present case knowledge that their title as residuary legatees was liable to be defeated in favour of one who successfully challenged the validity of the residuary bequest itself?

It was therefore not surprising that the respondents sought to explain away the case by suggesting, for example, that it should be regarded as specially dependent upon its own facts or that Sir John Leach applied to it per incuriam (as Mr. Neville Gray argued) the principle of the earlier cases. In our view all these attempts fail. An examination of the judgment makes it, we think, clear that the learned Master of the Rolls, alter argument upon the point, deliberately treated as applicable the principles of the earlier cases: and though David v. Frowd (1) has since been frequently cited, no doubt has ever been cast upon its correctness or upon the appropriateness of its place in the chain of decisions from Noel v. Robinson (2) onwards. "It is argued" said Sir John Leach after a full reference to the case of Gillespie v. Alexander (3) "that there is a distinction between a creditor and a person claiming as next-of-kin, because a creditor, it is said, has a legal title; the right being equal, there is no distinction in a court of equity between a legal and equitable title. It is not however accurate to say that a creditor continues to have a legal title after the fund has been administered in this court; he has, under such circumstances, lost that title by the administration of the court and his only remedy is in a court of equity." There then follows the passage quoted in his judgment by Wynn-Parry J.(4). So far as concerns the conscience of the recipient wrongly paid, the passage seems to us to support the view that that fact of itself - the fact that he has received something to which in truth he was never entitled - may well sufficiently affect his conscience for the purposes of the jurisdiction of the court of equity. "A party claiming under such circumstances has no great reason to complain that he is called upon to replace what he

(1) 1 My. & K. 200.

(2) 1 Vern. 90.

(3) 3 Russ. 130.

(4) [1947] Ch. 716, 731.

has received against his right; complaints of hardship come with little force from the party who seeks to support a wrong."

It is convenient to refer next to the case of Mohan v. Broughton - (1) a case not referred to in the argument before us but cited with David v. Frowd (2) in support of the note in Seton which we have earlier quoted. That was a case in which the plaintiff sought, on the footing that she was one of the next-of-kin of an intestate, to revoke letters of administration previously granted to another. The matter came originally before the court of first instance upon an application by the defendant to stay the proceedings under the court's inherent jurisdiction. In the Court of Appeal, by consent, every question of substance was agreed to be tried on the assumption that the plaintiff's title was established. Reference was made in the argument to David v. Frowd (2) and also to Sawyer v. Birchmore (3) one of the five cases cited to Wynn-Parry J. previously mentioned and also a case of a claim by a next-of-kin though only for a partial refund so as to allow the claimant to participate with those already paid. Lindley M.R. in his judgment (with which Vaughan Williams and Romer L.JJ. agreed) said "Now, what is it that this lady wants? She does not want to revoke the letters of administration for nothing .... she says that in an administration action which was commenced some few years ago the estate of the intestate had been distributed amongst the wrong persons .... Therefore she wants this revocation for the purpose of asserting her right. In other words she wants to follow the assets into the hands of the persons who have got them. I do not myself see any difficulty in her commencing an action for that purpose in the Chancery Division ...." The learned Master of the Rolls spoke of "following the assets" but in the light of the argument and the reference to David v. Frowd (2) and Sawyer v. Birchmore (3) it is, in our view, clear that he had in mind the exercise of the equitable jurisdiction which those cases illustrated.

Two more cases directly bearing on this part of the case may usefully be referred to before we come to the case of In re Rivers (4). They are Fenwick v. Clarke (5) and Peterson v. Peterson (6). Neither appears to have been cited in the court below. In Fenwick v. Clarke (5) a claim by an unpaid

(1) [1900] P. 56.

(2) 1 My. & K. 200.

(3) 1 Keen, 391.

(4) [1920] 1 Ch. 320.

(5) (1862) 4 De G. F. & J. 240.

(6) (1866) L. R. 3 Eq. 111.

legatee to recover from legatees who had been paid in full came before Knight-Bruce and Turner L.JJ. The claim failed on the ground that there had been at the time of the payment tother defendants a sufficiency of assets. Walcott v. Hall (1) was cited and followed: and in the course of his judgment Turner L.J. quoted and approved part of the passage in Roper on Legacies which is cited earlier in his judgment (at p. 459).

"If the assets be originally sufficient to satisfy all the legacies, and one of the legatees procure from the executor, either by or without suit, payment of his legacy; and then the executor wastes the estate, so as to render it deficient to discharge the remaining bequests, those legatees cannot oblige the satisfied legatee to refund: First, because the payment was not a devastavit in the executor; and secondly, because the legatee is protected by the principle, that vigilantibus non dormientibus jura subveniunt."

The first paragraph of the headnote in Peterson v. Peterson (2) is as follows: "Where one of several residuary legatees or next-of-kin has received his share of the estate of a testator or an intestate, the others cannot call upon him to refund, if the estate is subsequently wasted: secus if the wasting has taken place before such share was received."

The claim in the case was by a next-of-kin of an intestate against other next-of-kin and was dismissed because the plaintiff failed to satisfy the court that there had been an insufficiency of assets when the defendants were paid. It is to be noted that (as appears from the recited facts) the administrator had been made bankrupt.

Many of the earlier cases were reviewed in the course of the argument - Anon. (3), Walcott v. Hall (1), Orr v. Kaines (4 ), David v. Frowd (5) and Sawyer v. Birchmore (6). At p. 114 of the report, Lord Romilly M.R. said:

"The rule is, that if one of the residuary legatees has received only his share, the subsequent wasting of the assets by the executor will not entitle the other residuary legatees to call upon him to refund; and there is obvious good sense in that rule; for, if the executor renders his accounts to a residuary legatee, and pays him his share, what right or business has the residuary legatee further to interfere in the matter of the administration of the estate? He cannot file a bill for the

(1) 2 Br. C. C. 305.

(2) L. R. 3 Eq. 111.

(3) 1 P. Wms. 495.

(4) 2 Ves. Sen. 194.

(5) 1 My. & K. 200.

(6) 1 Keen. 391.

administration of it, and, were he to do so, he would probably have to pay the costs. If so, why is he to suffer for the laches and neglect of the other residuary legatees, who have not required the executor to account to them, or to pay over the balance in his hands, or due from him? The case, however, is materially altered if the executor has dissipated a portion of the assets before any residuary legatees call upon him to account; and, it would seem, the rule ought to be that what is available at that time should be equally divisible among the whole of the residuary legatees; but, where one residuary legatee calls upon another to refund, upon the ground of being overpaid, then, in my opinion, the burden of proof lies upon the person requiring the money to be refunded to show that the payment was made in excess."

We come accordingly to the last of the long line of cases - In re Rivers (1), before Eve J. The importance of the case lies plainly in its modernity and in the fact that its decision followed chronologically certain other cases - particularly Hilliard v. Fulford (2), In re Robinson (3) and In re Hatch (4) - to which we presently refer and which in the view of Wynn-Parry J. tended to negative the existence to-day in such a case as the present of the equitable right of action contended for by the appellants. Having regard to the significance of the case we were supplied by the appellants with copies from the Public Record Office of the pleadings and the order made by Eve J. in the action.

The plaintiff in the action claimed to be entitled to a share in a reversionary legacy of 200l. payable under the will of William Rivers on the death of the plaintiff's mother which occurred in 1917. The defendants were the personal representatives of one of the residuary legatees under the will. They admitted assets for the purposes of the action. The testator had died in the year 1863. A grant of letters of administration with the will annexed was made to the life tenant of residue who died in 1885. An administration action had been instituted in the year 1868 and in the course of that action an order was made for the carrying over of a sum of 266l. 13s. 4d. 3 per cent. annuities to a separate account entitled "The Annuity Account" of the plaintiff's mother. It had no doubt been the intention of the testator that the fund retained to answer the annuity given to the lady - which was in amount 8l. per annum - should, on her death, provide the legacy of

(1) [1920] 1 Ch. 320.

(2) (1876) 4 Ch. D. 389.

(3) [1911] 1 Ch. 502.

(4) [1919] 1 Ch. 351.

200l. bequeathed in that event to the plaintiff and her brothers and sisters. But as appears from the statement of claim no provision was in fact made in the administration action for the reversionary legacy - the relevant order providing that, on the death of the plaintiff's mother, the fund of annuities carried over to the separate account should fall into and become part of the testator's general residue.

In the event, the proceeds of the sale in 1917 of the 266l. 13s. 4d. annuities after providing for certain duties and costs fell far short of 200l. The whole of the rest of the estate had been distributed. In these circumstances, the plaintiff claimed direct against the defendants, as overpaid residuary legatees, the difference between what she had in fact received and what she should have received, namely 19l. 10s. 1d.: and the order of Eve J. was, simpliciter, an order for payment of that sum by the defendants to the plaintiffs.

On the face of it the case appears entirely in line with those we have cited. But Wynn-Parry J. did not so interpret it. "In my judgment," he said(1) "the case, when examined, does not help the plaintiffs. It is, I think, a simple example of a person receiving a payment otherwise than in due course of administration and being compelled to submit to an adjustment. It was for that reason, I think, that counsel for the defendants in that case was constrained to admit that he could not rely on the Statutes of Limitation. So regarded, the case falls within, and is but a further illustration of the principle emerging from, the five cases to which I have referred I would add that, in so far as it may be necessary to do so, I take the view that in this case a mistake of fact was involved."

With all respect to the learned judge we do not think that so limited an interpretation can fairly be put upon the case. Having regard particularly to the nature of the argument and the citation of authorities to the judge, including Anon (2), Walcott v. Hall (3), Gillespie v. Alexander (4) 1v, David v. Frowd (5), Sawyer v. Birchmore (6), Fenwick v. Clarke (7) and Peterson v. Peterson (8), we do not think it open to doubt that Eve J. purported to exercise the equitable jurisdiction to order an overpaid beneficiary to refund direct to an underpaid

(1) [1947] Ch. 716, 736.

(2) 1 P. Wms. 495.

(3) 2 Bro. C. C. 305.

(4) 3 Russ. 130.

(5) 1 My. & K. 200.

(6) 1 Keen. 391.

(7) 4 De G. F. & J. 240.

(8) L. R. 3 Eq. 111.

beneficiary and that there was no question of making an adjustment in due course of administration. As regards the Statutes of Limitation it would appear to have been a sufficient answer to any defence under the statutes that the plaintiff's cause of action did not arise until her mother's death in 1917. It is to be noted that the plaintiff appears to have recovered the full amount of her deficit from the defendants though, as pleaded by them, they in fact represented one only of the residuary legatees.

The case of In re Rivers (1) is the last of the direct authorities, the last of a long line of cases which appear to us to illustrate a coherent and continuous development of an equitable jurisdiction of which the foundation was firmly laid by Lord Nottingham in the year 1682 in the course of, and as a move, as it were, in the struggle between the court of equity and the spiritual court. It has been necessary to examine the cases in no little detail in order that the shape of the development may be traced. But before stating the conclusions we draw, it is necessary to refer to certain other cases cited before Wynn-Parry J. These cases have at best an indirect bearing upon the main point and save that In re Rivers (1) was cited in the last of them the authorities directly relevant to the main point were not cited. Appeal was, however, made by both appellants and respondents to passages in the judgments and the learned judge relied upon them - or at least on certain of them - as "militating against the existence of the principle" for which the appellants contended. We are in this respect unable to share the learned judge's view.

The first of these cases is Rogers v. Ingham (2). The appellants had relied on certain statements in the judgments particularly of Mellish L.J. and Baggallay J.A. in support generally of their contention that it was no answer to the appellants that the mistake which had been made was one of law not of fact. We agree with the learned judge in thinking that the appellants can derive little or no help from the case, which arose out of the circumstance that the trustee of a certain will had with the full knowledge and indeed, at the time, the assent of the plaintiff made certain payments to the defendant to which, on the true construction of the will, the defendant had not been entitled. In these circumstances the court held that the plaintiff must be treated as having herself, though by the hands of the trustees, made the payment; and

(1) [1920] 1 Ch. 320.

(2) (1876) 3 Ch. D. 351.

consequently as being in no different position from that of trustees making a payment under a mistake as to the legal position.

It is convenient to refer next to In re Robinson (1) before Warrington J. In that case a grant of annuities having been made by King Charles II the persons entitled in the year 1886 purported to execute a disentailing assurance. The trustees had from 1886 to 1900 paid the annuities to the person entitled on the basis of the validity of this assurance. The court having held (in other proceedings) that the attempt to disentail was ineffectual under the general law, the plaintiff in 1911 sought to recover from the defendant what had been wrongly paid from 1886 to 1900. At an early stage in the argument the learned judge asked what statute of limitation was applicable to the case and Mr. Cave K.C. for the defendant is reported to have answered that the claim being one for money had and received the relevant statute was that of James I. Thenceforward the case appears to have proceeded entirely on the basis of its being one for money had and received and the learned judge held on that footing that the claim was barred under the Act of 1623. As we have stated, no reference was at any stage made to the Noel v. Robinson (2) line of cases and the plaintiff's counsel did not attempt to contend that the plaintiff's right of action lay in equity on the authority of those cases, as distinct from the claim at common law. We agree with Wynn-Parry J. in thinking that the case does not assist the appellants. We do not think that it assists the respondents either.

Hilliard v. Fulford (3) was somewhat strongly relied upon by the learned judge. In that case the executor-trustees of a will, erroneously construing its effect, treated the testator's residue (amounting to 3,750l.) as divisible into fifths. Four of the shares they had paid out. The fifth sum of 750l. had been paid into court on behalf of an infant. In the subsequent proceedings, the plaintiff had established, first, that on the true construction of the will he was entitled to participate with the other five residuary legatees, i.e., that the residue had been divisible into sixths and not fifths: and second that the trustees had improperly spent out of residue 1,095l. on repairs to certain real property and were accountable to residue accordingly for that sum - in other words that the true residue

(1) [1911] 1 Ch. 502.

(2) 1 Vern. 90.

(3) 4 Ch. D. 389, 394.

consisted not of 3,750l. divisible into five shares of 750l. but of 4,845l. divisible into six shares of 807l. 10s. 0d. The question, and the sole question, before Jessel M.R. on the application which forms the subject of the report was how in the circumstances, certain costs which the trustees had been ordered to pay and the trustees' own costs, charges and expenses should be borne. It is true that certain observations of the Master of the Rolls quoted by Wynn-Parry J. appear, on the face of them, to be of more general import - "of course you cannot make those other residuary legatees pay back anything. There is no pretence for saying that they can be compelled to come in and contribute." But it is in fact quite clear not only from the last sentence in the report before the judgment and the second sentence of the judgment but also from the order made which is set out in the end of the report that the sole question was that of costs. In order to give effect to the Master of the Rolls' decision the executor-trustees were to be put in the position as if no distribution had been made that is, as though they still retained in their hands the whole residue of 4,845l. From that notional sum the costs were to be deducted and then the amount of the sixth shares ascertained. To the extent that the shares of the residuary legatees who had been paid worked out at a figure below 750l. the executor-trustees as the parties responsible for the blunders were made, in effect, to pay the difference out of their own pockets. As clearly appears when the matter is translated into figures no question whatever arose of any claim by the plaintiff or the infant defendant to obtain a refund from the other four residuary legatees. They each in the end all received their full shares and if the other legatees were left in the position of having had more than their full shares, they retained the surplus at the expense of the executors. Had the question of a refund to the plaintiff or the infant defendant arisen the Noel v. Robinson (1) cases (which were irrelevant and not mentioned) would no doubt had been referred to.

The second case relied upon by Wynn-Parry J. was In re Hatch (2), before Sargant J. There, following a decree for judicial separation, a husband had entered into a covenant to pay his wife a certain annual sum. After his death his estate (subject to the covenant) became divisible among his children, one of whom died having appointed his mother (the wife) as his personal representative and universal legatee. The

(1) 1 Vern. 90.

(2) 4 Ch. D. 389, 394.

husband during his life and his executors after his death having wrongly paid to the wife her annuity without deduction for income tax it was sought in administration proceedings relating to the husband's estate to make the wife recoup out of her share in the estate (derived from the deceased child) the overpayments she had received as a creditor. Sargant J. rejected the claim on the ground that the overpayments having been made under a mistake of law, they never were a "debt" due from the wife so that there was nothing properly liable to be recouped. He went indeed somewhat further. "Assume," he said "... that by a mistake of law the annuitant as a creditor had been paid too little so that the residuary legatee had been paid too much would it be open to the annuitant to stop the distribution of the estate until the sums by which the residuary legatees had been overpaid had been deducted? To ask that question, is in my opinion, to answer it." It is unnecessary in the present case for us to express any view on the correctness of the decision in In re Hatch (1). It is sufficient to observe that once again no reference was made to any of the Noel v. Robinson (2) authorities and that had such reference been made it is at least possible that some of Sargant J.'s observations would have been subject to qualification. In our view the case cannot in the circumstances be regarded as any authority against the existence of the principle of equity jurisdiction for which the appellants contend.

There remain the two recent cases, somewhat similar in character, of In re Mason (3) (before Romer J.) and In re Blake (4) (before Maugham J.). Both cases were petitions of right against the Crown presented by persons claiming as next-of-kin of intestates, in effect, to recover moneys received many years previously by the Crown on the footing of the intestates having left no next-of-kin. It will be necessary to refer again to these cases or at least to In re Blake (4) in regard to the question of the application to the present case of the relevant Statutes of Limitation. But the sole question determined in both cases, material for present purposes, was whether the claims were barred by the application of the statute 21 Jac. 1, c. 16.

In Mason's case(5) the intestate Maria L'Epine, had died

(1) [1919] 1 Ch. 351, 356.

(2) 1 Vern. 90.

(3) [1928] Ch. 385; in C. A. [1929] 1 Ch. 1.

(4) [1932] 1 Ch. 54.

(5) [1928] Ch. 385, 391-2; in C. A. [1929] 1 Ch. 1.

as long ago as 1798: and for the purpose of his judgment Romer J. assumed that moneys which in fact belonged to her next-of-kin represented by the plaintiff had been wrongly paid over by the administrators to King George III. "It is in other words" said the learned judge "a claim by a cestui que trust to recover from a third party money which his trustee has by mistake paid to that third party. Such a claim is one for money had and received .... it may be a matter of some doubt whether, in strictness, the cestui que trust in such a case could maintain an action against the third party for money had and received, though he could at all events maintain a suit in equity for it, making the trustee a party. But in such a suit the cestui que trust would have no better right than the trustee would have in an action brought by himself and, if the claim of the trustee would be barred in an action at law by any Statute of Limitation the claim of the cestui que trust, so far as it was one for money had and received, would be equally barred." And on that ground the learned judge held the plaintiff's action to be barred.

Now again, there was no reference whatever made to the Noel v. Robinson (1) line of cases. Had there been we do not think Romer J. would or could have used exactly the language that he did. We do not intend to cast any doubt upon the correctness of Romer J.'s decision - and it would not indeed be open to us so to do, for the decision was affirmed in this court. But it is we think not accurate to say - particularly in the light of the Noel v. Robinson (1) cases - that the claim of the plaintiff was an action for money had and received. As we have earlier pointed out there are essential differences between the common law action and the equitable action which is the subject of the present case. And we note that in the Court of Appeal in In re Mason (2) more guarded language was used, e.g., by Lawrence L.J. who said" .... the proceedings are (in effect) proceedings for money had and received ...." Though therefore In re Mason (2) is undoubtedly an authority binding on this Court for the application at that date to such a case as was there considered of the statute of James I., we cannot regard it as an authority for the view that an action in equity by an unpaid next-of-kin to recover direct from an overpaid or wrongly paid recipient of an intestate's estate will be liable to be defeated, like an

(1) 1 Vern. 90.

(2) [1929] 1 Ch. 1, 12.

action at common law for money had and received, unless the payment wrongly made was under a mistake of fact.

In our judgment the result of In re Blake (1) is the same. In In re Blake (1) Eve J.'s decision in In re Rivers (2) was cited-though none of the earlier cases on which In re Rivers (2) was founded. But - whether having regard to the citation of In re Rivers (2) or otherwise - Maugham J. expressed himself in more precise language (if we may venture to say so) than had been used in In re Mason (3) and clearly intimated his appreciation of the existence of an equitable cause of action to recover money wrongly paid away by an executor or administrator, distinct in character from the common law action for money had and received. The relevant passages from Maugham J.'s judgment are cited by Wynn-Parry J.(4), and we need not repeat them It is true that Maugham J. did not in terms refer to an equitable claim independent of a mistake of fact or of any mistake: but the mistake which had been or was assumed to have been made in In re Blake (1) was a mistake of fact and no further consideration of the attributes or qualifications of the equitable cause of action was necessary for the decision in the case.

What then is the conclusion to be drawn on this part of the appellants' claim from what we fear has been a long citation of the authorities? It is not, we think, necessary or desirable that we should attempt any exhaustive formulation of the nature of the equity invoked which will be applicable to every class of case. But it seems to us, first, to be established and that the equity may be available equally to an unpaid or underpaid creditor, legatee, or next-of-kin. Second, it seems to us that a claim by a next-of-kin will not be liable to be defeated merely (a) in the absence of administration by the court: or (b) because the mistake under which the original payment was made was one of law rather than fact; or (c) because the original recipient, as things turn out, had no title at all and was a stranger to the estate; though the effect of the refund in the last case will be to dispossess the original recipient altogether rather than to produce equality between him and the claimant and other persons having a like title to that of the recipient. In our judgment there is no authority either in logic or in the decided cases for such limitations to the equitable right of action. In our judgment also there is

(1) [1932] 1 Ch. 54.

(2) [1920] 1 Ch. 320.

(3) [1929] 1 Ch 1, 12.

(4) [1947] Ch. 716, 741, 742.

no justification for such limitations to be found in the circumstances which gave rise to the equity. And as regards the conscience of the defendant upon which in this as in other jurisdictions equity is said to act, it is prima facie at least a sufficient circumstance that the defendant, as events have proved, has received some share of the estate to which he was not entitled. "A party" said Sir John Leach in David v. Frowd (1) "claiming under such circumstances has no great reason to complain that he is called upon to replace what he has received against his right."

On the other hand, to such a claim by an unpaid beneficiary, there is, in our judgment, at least in circumstances such as the present, one important qualification. Since the original wrong payment was attributable to the blunder of the personal representatives, the right of the unpaid beneficiary is in the first instance against the wrongdoing executor or administrator: and the beneficiary's direct claim in equity against those overpaid or wrongly paid should be limited to the amount which he cannot recover from the party responsible. In some cases the amount will be the whole amount of the payment wrongly made, e.g., where the executor or administractor is shown to be wholly without assets or is protected from attack by having acted under an order of the court.

Authority for this qualification is to be found in the judgment of Sir J. Strange in the case of Orr v. Kaines (2), where he observed that, if the executor is insolvent, an unpaid legatee is admitted to claim direct from the wrongly paid recipient because "there is no other way." See also the note to Hodges v. Waddington (3), "the principal case went upon the insolvency of the executor." It is true that no direct authority for the qualification is to be found in any of the other decided cases; but in none of those cases where the direct claim was allowed, did it appear in fact that there was an executor or administrator against whom a claim might have been made or successfully made. Roper in the passage which we have cited from his text book treats the qualification as established by the authority of Orr v. Kaines (2): where the unpaid legatee "can have no redress against" the personal representative the direct claim is justified since otherwise "he would be without a remedy." In our judgment the absence or exhaustion of the beneficiary's right to go against

(1) 1 My. & K. 200, 211.

(2) 2 Ves. Sen. 194.

(3) (1684) 2 Ventris. 360.

the wrongdoing executor or administrator ought properly to be regarded as the justification for calling upon equity to come to the aid of the law by providing a remedy which would otherwise be denied to the party who has been deprived of that which justly is his.

In the present case the order of April, 1944, put an end, on the terms recited in the order, to any claim which any of the next-of-kin of Caleb Diplock might otherwise have had against his executors or their estates or any of them. Though we have not been told of the exact circumstance in which that order came to be made, it must, in our view, be assumed that the compromise sanctioned by the order represented a fair estimation of what might have been recovered from the executors or their estates in the course of proceedings brought against them. And it must also in our judgment necessarily be assumed that in no circumstances could the full total of the sums wrongly paid away - which amounted to over 200,000l. - have been recovered from the executors or their estates.

We have not been informed of the exact sum recovered under the compromise(1). But it follows in our judgment that the sum recovered ought to be credited rateably to all the one hundred and thirty-nine charities so that the maximum amount which in equity can be recovered by the next-of-kin from any respondent is thus limited to the same,e proportion of the sum paid to that respondent as the balance of the total sum paid away by the executors to the one hundred and thirty-nine charities less the total amount recovered from the executors and their estates bears to the total sum paid away. For example, if the amount so recovered is one-fourth of the total sum paid away, then the maximum liability of any respondent to refund direct to the next-of-kin would be three-fourths of that which such respondent received.

It is to be noted that the writ in the main action (against St. George's Hospital and others) was issued in January, 1940 - more than four years before the date of the compromise order. It does not, however, follow, in our judgment, that at the date of the issue of the writ the plaintiffs had no cause of action in equity for recoupment. The point has an important bearing on the further question of the application of the relevant Statutes of Limitation. If our view is right, the beneficiary's

(1) Reporter's Note. - During argument on the form of the orders, the amount was mentioned as 15,000l., and this sum is mentioned in one of the minor amendments then made by the court.

cause of action does not or does not necessarily arise for the first time after exhaustion of any remedy he may have against the personal representative If it did only so arise for the first time the overpaid recipient might have the possibility of such proceedings hanging over him for a very great length of time and the commencement of the running of the Statutes of Limitation might be similarly postponed. In our judgment the cause of action is for recoupment of such amounts as are in fact irrecoverable from the party primarily responsible - viz., the personal representative - and it will be sufficient in any case at the trial to show that at the date of the writ the whole of the sums wrongly paid away were not recoverable from the personal representative. In the present case the extent of the executors' contribution has been determined: and there is therefore no difficulty in fixing the amounts which, if they are otherwise liable, the respondents must refund. In cases where the total recoverable from the personal representative has not been finally determined at the date of the trial of the action against the recipient, any order would have to make appropriate provision for the plaintiff duly prosecuting his claim against the personal representative and bringing into account all sums then or thereafter recovered from him.

It is also to be noted that in the main action the plaintiffs were J. H. Diplock (who died in 1940) and three other members of the class of next-of-kin: and in the other nine actions the plaintiffs are those three other individuals plus Mr. Conolly. We understand that there has been some collaboration both among the forty-eight persons who together constitute the whole class of next-of-kin on the one side and between the one hundred and thirty-nine charities to whom the 200,000l.-odd of residue was wrongly paid on the other, with a view to limiting the litigation between them. It does not, however, appear that in any of the actions the plaintiffs have sued in representative capacities, though in the main action (alone of all of them), the plaintiffs have asked for a representation order and in all the actions the relief sought includes general administration or execution of the trusts. It is further to be observed that in all the actions the prayer under this branch of the claim is for payment of the sums received by the defendants to the judicial trustee - in no case do the plaintiffs ask for payment direct to themselves of what is alleged to be due to them. We have in mind also that Mr. Pascoe Hayward in regard to the question of limitation conceded that, even if the plaintiff sued in a

representative capacity, it would not follow that the claim of some of the class represented were not barred if in fact those persons had been aware of their rights for the requisite period of time. And we further have in mind that the present appeals relate to ten actions only of a total of one hundred and twenty-two commenced at one time or another, of which twenty were brought to trial.

It may become necessary to discuss with counsel the proper extent and form of relief on the basis of this judgment.

But we notice that in those of the learned judge's orders which required payment by any of the respondents, such respondents were directed to pay the sums ordered to Mr. Conolly the judicial trustee - for the purpose of being administered by him, as we assume, on behalf of the whole class of next-of-kin generally. No suggestion was made before us that, assuming liability under this head of the appellants' argument on the part of any respondent, this form of order was not in the circumstances correct, i.e., it was not suggested that the liability of any respondent should be limited by reference to the individual interest of any next-of-kin or by reference to the proportion which the sum originally paid to that respondent bore to the total amount wrongly distributed. Subject to discussion on the precise form of order, it appears to us in the light of the submissions made to this court that each respondent should be ordered to repay to the judicial trustee the sums originally paid over to that respondent but subject to the limitation already mentioned that the sum of 15,000l. recovered by or on behalf of the next-of-kin by virtue of the compromise order of April, 1944, should be treated as having been credited rateably to and among all the one hundred and thirty-nine charities (including the respondents) in proportion to the original sums paid over to them. Any sums in fact recovered from any of the charities other than the respondents would, on the other hand, not have to be credited rateably to and among all the charities. There is, of course, the further limitation that no member of the class of next-of-kin can be entitled to recover more than the sum which he would have received, had the estate been properly administered. But it seems clear that this further limitation can have no practical significance.

We should add that, as already indicated, in our judgment the respondents are liable under this head of their claim for the principal claimed only and not for any

interest. This last result appears to follow from the case of Gittins v. Steele (1) cited in Roper (loc. cit.) at p. 461, where the language of Lord Eldon in the case is cited: "If a legacy has been erroneously paid to a legatee, who has no farther property in the estate, in recalling that payment, I apprehend that the rule of the court is, not to charge interest; but if the legatee is entitled to another fund making interest in the hands of the court, justice must be done out of his share."

We turn accordingly to the defence of limitation. Upon this question we have not the advantage of Wynn-Parry J.'s judgment since, upon the view he took, the question of limitation did not arise.

It will be convenient to recall one or two material facts and to add to them a few more. Caleb Diplock died on March 23, 1936. The several payments to the respondents to these appeals were made at various dates from November 28, 1936, to March 10, 1938. On the view that we take, however, these dates of payment are not material. The main action was instituted on January 3, 1940, and it seems clear therefore that on no view can the defence of limitation be available to St. George's Hospital. The remaining nine actions were instituted on July 28, 1945. It has, however, been admitted for the purpose of the appeals that these actions should be treated as having been initiated at an earlier date, namely, March 22, 1945: so that if the proper period of limitation be six years (as the respondents contend) time would not in any case have begun to run effectively in the respondents' favour later than March 22, 1939. It has also been conceded for the purposes of these appeals that of the three next-of-kin who are plaintiffs in all the actions, one, Cornelius Simpson, was aware of the death of Mr. Diplock early in 1939, but that the other two did not become aware of the death until after March 22, 1939. If therefore the date on which the claimant discovered or ought with reasonable diligence to have discovered the mistake made by the executors is the material date for determining when the period of limitation began to run, it is obvious that, in the case of the latter two plaintiffs, their claim prima facie cannot be barred: for unless it can be shown that there was some lack of reasonable diligence they cannot have discovered the mistake made before they knew that Mr. Diplock was dead. In the case of the plaintiff Cornelius Simpson the

(1) (1818) 1 Swanst. 200.

matter may be otherwise, though it cannot of course be assumed that knowledge of Mr. Diplock's death involved any knowledge of the terms of his will or of the executors' mistake.

It is admitted on both sides that the only statute now applicable is the Limitation Act, 1939, which came into operation on July 1, 1940: for by the effect of s. 34, sub-s. 4 and the schedule to that Act, all relevant subsisting statutory provisions for limitation were repealed, including ss. 3, 4 and 7 of the Act of 1623, the Real Property Limitation Acts of 1833 and 1874 and the Trustee Act, 1888. On the basis therefore that the defence of limitation must rest on the application, direct or by analogy, of the Act of 1939, the two questions to be answered are, first, what (if any) is the relevant period and second (in so far as necessary) from what date does the period begin to run?

Mr. Pascoe Hayward submitted that the answer to the first question is twelve years. Having regard to the dates it is plain that, if twelve years is the appropriate period, the second question need not be considered. The period of twelve years will carry the time back from March 22, 1945, to a date long before Mr. Diplock's death.

Mr. Pascoe Hayward founded his contention on the terms of s. 20 of the Act which, he says, is the section by its language applicable to the present case.

Section 20 is as follows:-

"Subject to the provisions of sub-s. 1 of the last foregoing section" (which excepts from any period of limitation an action by a beneficiary against a trustee where the trustee has been party to fraud or to recover trust property in the trustee's hands or converted by him to his use) "no action in respect of any claim to the personal estate of a deceased person or to any share or interest in such estate, whether under a will or on intestacy, shall be brought after the expiration of twelve years from the date when the right to recover the share or interest accrued, and no action to recover arrears of interest in respect of any legacy or damages in respect of such arrears, shall be brought after the expiration of six years from the date on which the interest became due."

Mr. Pascoe Hayward contended that, according to the ordinary acceptation of the language used, this branch of the appellants' claim is "an action in respect of" a "claim to .... a share or interest in" the personal estate of a deceased person.

Mr. Upjohn, on behalf of the respondents, has argued that upon its proper construction the section relates only to claims of the character mentioned against a personal representative: and bearing in mind that the Act is in its heading described as "an Act to consolidate with amendments certain enactments relating to the limitation of action" he prayed in aid (as he was entitled to do) 'he terms of the consolidated statutes, as interpreted by the courts. Indeed, both Mr. Upjohn and Mr. Pascoe Hayward invoked the language of the earlier Acts in support of their arguments; and it is therefore necessary to make some reference to them.

As regards actions by legatees (which had been held to include residuary legatees) to obtain payment of their legacies or shares of residue, the period of limitation had been fixed by the Real Property Limitation Act, 1874 (s. 8) as twelve years "after a present right to receive the same shall have accrued to some person capable of giving a discharge ...." - the period of twelve years having been substituted for twenty years prescribed by s. 40 of the Real Property Limitation Act of 1833. Neither the 1833 nor the 1874 provision was expressly confined to actions against the personal representative: but the formula used in both was "no action to recover a legacy ....": and having regard to the formula, it appears (and it was not, as we understood, disputed) that the two sections related only to actions to "recover" from the estate: that is, in effect, to actions against personal representatives (see e.g., In re Johnson (1), per Chitty J.)

It having been held that the Act of 1833 did not cover claims upon an intestacy by a next-of-kin, the gap was filled by s. 13 of the Law of Property Amendment Act, 1860, which fixed the relevant period at twenty years - the same as the period then applicable in the case of a legacy. The formula used in the Act of 1860 followed that of the Act of 1833" .... no suit to recover the personal estate or any share of the personal estate of any person dying intestate ...." to which in this case were added the words "possessed by the legal personal representative of such intestate." The terminus from which the period began to run was the same as that applicable to a claim for a legacy.

The Act of 1874 (which reduced the statutory period from twenty to twelve years in the case of a legacy) left untouched the period applicable to a claim by a next-of-kin.

(1) (1885) 29 Ch. D. 964, 971.

Prior to the coming into operation of the Property Legislation of 1925 the position, therefore, as regards claims by unpaid next-of-kin under an intestacy was as follows: if the claim was against the personal representative the relevant period of limitation was twenty years from the accrual of a present right to receive the share claimed by some person capable of giving a discharge. But if the claim was a claim in equity direct against some third party wrongly paid or overpaid - that is a David v. Frowd (1) form of action - neither the Act of 1860 nor any other Statute of Limitation had any direct application. In such case the statute of James I. was applied, treating the action as analogous in this respect to a common law action for money had and received. That this was so is illustrated by the decision of Maugham J. in 1932 in In re Blake (2) to which we have already referred. In that case, the material facts of which have already been stated the third party sued was the Crown. The liability at the Crown in such proceedings and the application by analogy of the statute of 1623 arose from s. 3 of the Intestates Estates Act, 1884. That section provided (inter alia) that a petition of right should not be presented "in respect of the personal estate of any deceased person or any part or share thereof .... except within the same time and subject to the same rules of law and equity in and subject to which" a like proceeding might be instituted against a subject. Maugham J. accordingly held that, applying the period of limitation which would have been appropriate in the case of a similar claim against the subject, the claim had become barred six years after the date of the payment. (See also In re Mason (3) cited above). In the course of his judgment Maugham J. pointed out that having regard to the nature of the cause of action the relevant section of the Intestates Estates Act, 1884, was s. 3 and not s. 2. The latter section provided that where the administration of the personal estate of any deceased person had been granted to a nominee of the Crown, any proceeding against that nominee "for the recovery of the personal estate of such deceased person or any share thereof" should "be of the same character and .. subject to the same rules of law and equity (including the rules of limitation under the Statutes of Limitation ....)" as if the administration had been granted to the nominee as one of the next-of-kin. As observed by Maugham J., therefore,

(1) 1 My. & K. 200.

(2) [1932] 1 Ch. 54.

(3) [1929] 1 Ch. 1.

had the action been one brought against a nominee of the Crown in his capacity of personal representative the effect of s. 2 of the Act of 1884 would - or would but for the Law of Property (Amendment) Act, 1924 - have been to make applicable the twenty-year period prescribed by s. 13 of the Law of Property Amendment Act, 1860. But (as the learned judge pointed out) one of the effects of the property legislation of 1925 had been the repeal by s. 10 and sch. X of the Law of Property (Amendment) Act, 1924, of s. 13 of the Act of 1860 without (apparently, per incuriam) any reservation of the cases of persons dying before the coming into operation on January 1, 1926, of the Property Acts of 1925. In the case of persons dying on or after January 1, 1926, the effect of s. 46 of the Administration of Estates Act, 1925 (which made the administrator of an intestate a trustee for the next-of-kin) would appear to have been to make applicable the provisions of s. 8 of the Trustee Act, 1888, to claims by the next-ot-kin against the administrator. It should be added the-t another effect of the property legislation of 1925 was (by virtue of s. 56, and Part I. of sch. II to the Administration of Estates Act, 1925) to repeal ss. 2 and 3 of the Intestates Estates Act, 1884, in the case of deaths occurring on or after January 1, 1926. Those sections were, however, reproduced and extended to real estate also - by sub-ss. 1 and 2 of s. 30 of the Administration of Estates Act, 1925, which, so far as material to the present appeals, made use of the same wording, quoted above, as that used in s. 2 ("for the recovery of") and s. 3 ("in respect of") of the Act of 1884.

The position therefore immediately prior to the coming into operation of the Limitation Act, 1939, as regards claims by unpaid next-of-kin, was substantially the same as that which obtained prier to the coming into operation of the property legislation of 1925 - the provision of s. 30 of the Administration of Estates Act, 1925, in the case of persons dying after the coming into operation of that Act, having replaced, as regards proceedings against the Crown, the similar provisions of ss. 2 and 3 of the Intestates Estates Act, 1884 - save that as regards claims by the next-of-kin of a person dying on or after January 1, 1926, against his personal representative the relevant period of limitation would (apparently) have been that governed by s. 8 of the Trustee Act, 1888 - that is, save in the excepted cases of fraud, etc., prima facie six years from the accrual of the cause of action.

Mr. Pascoe Hayward, in support of his argument for the application to the present case of s. 20 of the Act of 1939, relied strongly on the contrast in the language used, on the one hand, in s. 2 of the Intestates Estates Act, 1884, and s. 30, sub-s. 1, of the Administration of Estates Act, 1925, in reference to actions "for the recovery of" the personal estate of an intestate; and, on the other, the language used in s. 3 of the Act of 1884 and s. 30, sub-s. 2, of the Administration of Estates Act, 1925, in reference to actions "in respect of" the personal estate of an intestate. The first formula is (he says), that appropriate to claims against the personal representative and, accordingly, follows the formula found in the Acts of 1833, 1860 and 1874 in reference to actions "to recover" a legacy or a share of residue. The second is that appropriate to a David v. Frowd (1) type of action. By its use, therefore, of the second formula - ".... no action in respect of any claim to the personal estate ...." section 20 of the Act of 1939 must (according to Mr. Pascoe Hayward) necessarily be taken to apply, if not to apply primarily, to an action of the character here in question. Having regard to the repeal of the Acts of 1833 and 1874, it seems to us plain that s. 20 of the Act of 1939 must apply to claims by an unpaid beneficiary against the executor or administrator - in other words to claims by a beneficiary "to recover" his legacy or share. On the other hand we cannot see that according to ordinary usage of the English language, the section does not equally apply to a claim by an unpaid beneficiary direct against one overpaid or wrongly paid. In our judgment Mr. Pascoe Hayward is right in saying that such an action is fairly and properly described as an action "in respect of" a claim to the personal estate of a deceased person or to a share therein. The examination we have made into the previous history of the legislation does not in our judgment provide any valid reason for rejecting this interpretation of the language. On the contrary, the references on which Mr. Pascoe Hayward relies seem to us strongly to support it. It is a well-established canon of the construction of Acts of Parliament (and particularly of consolidating statutes) that phrases used therein which have been the subject of judicial interpretation are used in the sense in which they have been so interpreted. It seems to us, therefore, particularly in the light of Maugham J.'s decision in In re Blake (2) that the adoption in s. 20 of the formula "in respect of" by way of

(1) 1 My. & K. 200.

(2) [1932] 1 Ch. 54.

contrast to the formula "for the recovery of" which had appeared in the Acts of 1833, 1860 and 1874, and also in s. 2 of the Act of 1884 and s. 30, sub-s. 1, of the Administration of Estates Act, 1925, must have been deliberate; and that it is impossible to resist the conclusion that by its use Par iament intended to bring within the ambit of s. 20 of the Act of 1939 claims of the David v. Frowd (1) type as well as claims directly against a personal representative. It is true that if our construction is right there is some awkwardness as regards the date from which, in the case of a David v. Frowd (1) claim, the period of limitation begins to run; for that date must be "the date when the right to recover the share or interest accrued," that is, the same date as that from which the statute runs in the case of a claim against a personal representative, and without regard to the time when the moneys belonging to the claimant were in fact wrongly paid to the recipient. But in our view the awkwardness (if such it be) is insufficient to override the effect which we think must be given to the earlier part of the section.

It is also true that, if this interpretation is correct, the effect of the new Act will have been to increase the statutory period applicable to causes of actions of the kind here in question. Such a result no doubt appears contrary to the general trend of the legislation of the last hundred years. But the question depends upon the language Parliament has thought fit to use: and there is at least substantial ground for supposing that the increase was not accidental. Section 33 (a), the saving section, provides that nothing in the Act is to enable an action to be brought which was barred before the commencement of the Act by an enactment repealed by the Act. An example of such a case might well be provided by a claim on the part of a next-of-kin against an administrator. According to the respondents' own argument (with which we agree) such a claim would now by virtue of s. 20 be subject to the limitation period of twelve years from the accrual of the right to receive the share of the estate. Before the coming into operation of the Act of 1939 such a claim would have been liable to be barred in six years by virtue of the repealed provisions of s. 8 of the Trustee Act, 1888. Again, in the case of an action at common law for repayment of money paid under a mistake of fact, time formerly ran from the date of payment. Section 26 of the Act of 1939 postpones the commencement of the running of time until the

(1) 1 My. & K. 200.

mistake is, or with reasonable diligence should be, discovered.

Further, it does not seem to us surprising or unreasonable that the period of limitation applicable to a claim by a beneficiary against a personal representative should be the same as that applicable to a claim by him direct against one overpaid or wrongly paid out of an estate.

We therefore conclude that the period of limitation applicable to this branch of the appellants' claim is by virtue of s. 20 of the Act of 1939 twelve years from the date when their rights accrued with the result that the defences of limitation necessarily fail.

We add, however, that, if we are wrong in this view, it is by no means clear that the respondents are substantially in any better position. If s. 20 of the Act does not apply, then it is conceded that there is no section of the Act which expressly does apply to the case. In that event Mr. Upjohn relies on sub-ss. 1 (a) and 7 of s. 2 of the Act. So far as material those sections are as follows:-

Sub-s. 1: "The following actions shall not be brought after the expiration of six years from the date on which the cause of action accrued, that is to say:-

(a) actions founded on simple contract ...." Sub-s. 7: "This section shall not apply to any claim for .... equitable relief except in so far as any provision thereof may be applied by the court by analogy in like manner as the corresponding enactment repealed by the Act has heretofore been applied."

Mr. Upjohn says that the effect of these two sub-sections is to preserve and perpetuate, as it were, the analogous application to causes of action of this character of the repealed statute of James I. We assume in Mr. Upjohn's favour that the words "action founded on simple contract" must be taken to cover actions for money had and received, formerly actions on the case, and, as such, covered in express terms by the Statute of James 1. The assumption must we think be made though the words used cannot be regarded as felicitous. Even so, however, we are unable to agree with Mr. Upjohn that the language of sub-s. 7 is sufficient, as regards what we have called David v. Frowd (1) claims, to override what we have felt compelled to conclude is the natural and inevitable meaning of the express terms of s. 20. It is to be noted that the opening words of sub-s. 7 are negative in form - "This section shall not apply to

(1) 1 My. &. K. 200.

any claim .... for equitable relief." The sub-section proceeds ".... except in so far as any provision thereof may be applied by the Court by analogy," etc. In our view the effect of this somewhat diffident language must be to limit the analogous (in the present case the doubly analogous) application of s. 2 of the Act to claims of a kind for which no express provision is to be found elsewhere in the statute.

Assuming, however, that, contrary to our view, s. 2 of the Act does apply, by analogy, to the present case, what is the result? We have already given our reasons for thinking, on Mr. Upjohn's hypothesis, that the "accrual of the cause of action" cannot be postponed until the right of the next-of-kin against the executors and their estates have been exhausted. But the provisions (inter alia) of s. 2 are, by s. 1, expressed to be subject to the provisions of part II of the Act which provide for the extension of the periods of limitation in the case of .... mistake" - that is subject to the provisions of s. 26 of the Act. By that section where (by para. (c)) "the action is for relief from the consequences of a mistake," the period of limitation "shall not begin to run until the plaintiff has discovered or could with reasonable diligence have discovered ...." the mistake.

In order to avoid any difficulty created for him by s. 26, Mr. Upjohn discerns in the hands of the appellants on this part of their case a double-edged sword: for he says that it is an essential part of their main argument that the appellants themselves made no mistake and are not in any way prejudiced or affected by the mistake of the executors. But in truth this dangerous weapon is in our view in the respondents' hands. For if they seek to bring the case, for the purposes of the defence of limitation, within s. 2 of the Act and to rely upon the reasoning in In re Blake (1), they must do so by averring that the cause of action is analogous to the common law action for money had and received. And if they assert the analogy, they must take it with its attributes and consequences. Beyond doubt, it would appear that in the case of an action at common law to recover money paid under a mistake of fact, s. 26 would now operate to postpone the running of time. It is true that no such action would lie where the mistake is one of law: but for reasons which we have already given we do not accept the respondents' contention that the "analogous" claim in equity will also lie

(1) [1932] 1 Ch. 54.

only where the mistake made was one of fact. In our judgment, therefore, assuming the analogy (as it must be assumed if s. 2 is to apply at all) the action is one for the recovery of money paid away by mistake - albeit by the mistake of other persons and by a mistake of law - and in our judgment, on this assumption, is an action for relief from the consequences of mistake no less than would be an action at common law to recover money paid away under a mistake of fact.

If, therefore, contrary to our view, s. 2 is applicable (subject to s. 26) the proper order would be to direct an inquiry to ascertain when each of the appellant next-of-kin - and each of the remaining next-of-kin, if the appeals are to enure for their benefit - discovered or ought with reasonable diligence to have discovered the mistake. As we have already stated it would appear almost certain, as regards two of the appellant next-of-kin and not improbable as regards the third, that the relevant dates would be found to be after March 22, 1939; and we cannot help thinking it likely that similar answers would be given in regard to the other beneficiaries. The result would therefore not, as it seems to us, be likely to be of assistance to the respondents. In our judgment, however, the answer to the defences of limitation is that by virtue of s. 20 of the Act the relevant period is twelve years. That answer is fatal to the defences.

If the views we have expressed on the validity of the claims in personam, on the defence of the Statute of Limitations, and on the orders to which the appellants are entitled, are correct, the appellants have said that they do not need to rely upon their alternative claims in rem. It might therefore be thought to be strictly unnecessary for us to express any views in regard to those claims. But the claims - including particularly the very difficult question of the effect of the case of Sinclair v. Brougham (1) have been the subject of elaborate arguments before us and they are fully dealt with by Wynn-Parry J. in his careful judgment. With much of that part of the learned judge's judgment (as later appears) we agree, though we venture to differ from him in certain important respects.

We also bear in mind that though they have all been heard together there are before us ten appeals and it was clear from the arguments that, having regard to the special facts relating to each respondent, the success or partial success of the

(1) [1914] A. C. 398.

appellants' claims in rem against one respondent would by no means necessarily involve a corresponding success against all or any of the others. It appears to us, therefore, that our views in regard to these claims, as they might affect each respondent, would be a material consideration affecting any application by any respondent for leave to appeal to the House of Lords. Further if on any such appeal it were held that we were wrong in our conclusions either upon the substance of the personal claims or upon the defence of limitation or upon the orders to which the appellants are entitled, the appellants would certainly seek to rely upon their proprietary claims either in substitution for or as supplementary to their personal claims.

In all the circumstances therefore of this remarkable case it has not seemed to us that it would in any case be satisfactory for us to express no view on the claims in rem. We think too that such a course would lack proper respect to the learned judge's judgment and the arguments of counsel.

There is, moreover, one point in regard to which, as it seems to us, success by the appellants on their personal claims would not, or would not necessarily, exhaust their rights. We have already stated our view that upon their personal claims the appellants are not entitled to any interest. The same may not however be true as regards the claims in rem, at least where the appellants are able to "trace" their proprietary interest into some specific investment. It is to be noted that in two out of the three cases in which Wynn-Parry J. ordered payment to the judicial trustee (namely in action IV. D against the Committee of Management of Queen Alexandra Cottage Homes and in action IV. E against Guy's Hospital) those orders included payments in respect of interest. As we have already stated there is no cross-appeal by the respondents concerned in either of those cases.

Prima facie, therefore, it appears to us that where the appellants can make good their claim in rem against any respondent and can also in the circumstances make good a claim for interest (including the two cases in which orders to that effect have been made by the learned judge) the appellants would be entitled to recover upon their claim in rem (so far as it went) together with interest and to limit their recovery upon their personal claim to the balance of the principal sum paid to the respondent less the principal amount recovered upon their claim in rem.

We think it right therefore to state fully our own conclusions

on this branch of the case and our reasons for them. It will be seen that the only claims which in our view can be supported on the basis of the so-called equitable doctrine of tracing are of a strictly limited character.

We shall endeavour to explain our views as to the basis on which the doctrine must now be taken to rest. In this connexion we regard the case of Sinclair v. Brougham (1) as of fundamental importance. That decision, in our view, did not so much extend as explain the doctrine of Hallett's case(2), which now must be regarded not, so to speak, as a genus but as a species in a genus where equity works on the same basic principles but selects what on the particular case is the equitable method of applying them in practice It will be found that our views as to the meaning and effect of the speeches in Sinclair v. Brougham (1) differ from those expressed by Wynn-Parry J. We should, however, be lacking in candour rather than showing respect if we refrained from saying that we find the opinions in Sinclair v. Brougham (1) in many respects not only difficult to follow but difficult to reconcile with one another.

Before passing to a consideration of the case of Sinclair v. Brougham (1) we may usefully make some observations of our own as to the distinction between the attitude of the com mon law and that of equity to these questions.

The common law approached them in a strictly materialistic way. It could only appreciate what might almost be called the "physical" identity of one thing with another. It could treat a person's money as identifiable so long as it had not become mixed with other money. It could treat as identifiable with the money other kinds of property acquired by means of it, provided that there was no admixture of other money. It is noticeable that in this latter case the common law did not base itself on any known theory of tracing such as that adopted in equity. It proceeded on the basis that the unauthorized act of purchasing was one capable of ratification by the owner of the money (see per Lord Parker in Sinclair v. Brougham (3).) Certain words of Lord Haldane in Sinclair v. Brougham (1) may appear to suggest a further limitation, i.e., that "money" as we have used that word was not regarded at common law as identifiable once it had been paid into a banking account(4). We do not, however, think it necessary to discuss this point at

(1) [1914] A. C. 398.

(2) 13 Ch. D. 696.

(3) [1914] A. C. 398, 441.

(4) Ibid. 419.

length. We agree with the comments of Wynn-Parry J. upon it(1) and those of Atkin L.J. (as he then was) in Banque Belge v. Hambrouck (2). If it is possible to identify a principal's money with an asset purchased exclusively by means of it we see no reason for drawing a distinction between a chose in action such as a banker's debt to his customer and any other asset. If the principal can ratify the acquisition of the one, we see no reason for supposing that he cannot ratify the acquisition of the other.

We may mention three several matters which we think are helpful in understanding the limitation of the common law doctrine and the reasons why equity was able to take a more liberal view They are as follows:

(1.) The common law did not recognize equitable claims to property, whether money or any other form of property. Sovereigns in A's pocket either belonged in law to A or they belonged in law to B. The idea that they could belong in law to A and that they should nevertheless be treated as belonging to B was entirely foreign to the common law. This is the reason why the common law doctrine finds its typical exemplification in cases of principal and agent. If B, a principal, hands cash to A, his agent, in order that it may be applied in a particular manner, the cash, in the eyes of the common law, remains the property of B. If, therefore, A, instead of applying it in the authorized manner, buries it in a sack in his garden or uses it for an unauthorized purchase, B can, in the former case, recover the cash as being still his own property and, in the latter case, affirm the purchase of something bought with his money by his agent. If, however, the relationship of A and B was not one which left the property in the cash in B but merely constituted a relationship of debtor and creditor between them, there could, of course, have been no remedy at law under this head, since the property in the cash would have passed out of B into A.

(2.) The narrowness of the limits with in which the common law operated may be linked with the limited nature of the remedies available to it. Specific relief as distinct from damages (the normal remedy at common law) was confined to a very limited range of claims as compared with the extensive uses of specific relief developed by equity. In particular, the device of a declaration of charge was unknown to the common law and it

(1) [1947] Ch. 716, 745-6.

(2) [1921] 1 K. B. 321, 335.

was the availability of that device which enabled equity to give effect to its wider conception of equitable rights.

(3.) It was the materialistic approach of the common law coupled with and encouraged by the limited range of remedies available to it that prevented the common law from identifying money in a mixed fund. Once the money of B became mixed with the money of A its identification in a physical sense became impossible, owing to the fact of mixture there could be no question of ratification of an unauthorized act; and the only remedy of B, if any, lay in a claim for damages.

Equity adopted a more metaphysical approach. It found no difficulty in regarding a composite fund as an amalgam constituted by the mixture of two or more funds each of which could be regarded as having, for certain purposes, a continued separate existence. Putting it in another way, equity regarded the amalgam as capable, in proper circumstances, of being resolved into its component parts.

Adapting, for the sake of contrast, the phraseology which we have used in relation to the common law, it was the metaphysical approach of equity coupled with and encouraged by the far-reaching remedy of a declaration of charge that enabled equity to identify money in a mixed fund. Equity, so to speak, is able to draw up a balance sheet on the right-hand side of which appears the composite fund and on its left-hand side the two or more funds of which it is to be deemed to be made up.

Regarded as a pure piece of machinery for the purpose of tracing money into a mixed fund or into property acquired by means of a mixed fund, a declaration of charge might be thought to be a suitable means of dealing with any case where one person has, without legal title, acquired some benefit by the use of the money of another - in other words, any case of what is often called "unjust enrichment." The opinion of Lord Dunedin in Sinclair v. Brougham (1) appears to us to come very nearly to this, for he appears to treat the equitable remedy as applicable in any case where a superfluity, expressed or capable of being expressed in terms of money, is found to exist. Such a view would dispense with the necessity of establishing as a starting point the existence of a fiduciary or quasi-fiduciary relationship or of a continuing right of property recognized in equity. We may say at once that, apart from the possible case of Lord Dunedin's speech, we cannot find that any principle

(1) [1914] A. C. 398.

so wide in its operation is to be found enunciated in English law. The conditions which must exist before the equitable form of relief becomes available will be considered later in this judgment. But one truism may be stated here in order to get it out of the way. The equitable form of relief whether it takes the form of an order to restore an unmixed sum of money (or property acquired by means of such a sum) or a declaration of charge upon a mixed fund (or upon property acquired by means of such a fund) is, of course, personal in the sense that its efficacy is founded upon the jurisdiction of equity to enforce its rules by acting upon the individual. But it is not personal in the sense that the person against whom an order of this nature is sought can be made personally liable to repay the amount claimed to have belonged to the claimant. The equitable remedies pre-suppose the continued existence of the money either as a separate fund or as part of a mixed fund or as latent in property acquired by means of such a fund. If, on the facts of any individual case, such continued existence is not established, equity is as helpless as the common law itself. If the fund, mixed or unmixed, is spent upon a dinner, equity, which dealt only in specific relief and not in damages, could do nothing. If the case was one which at common law involved breach of contract the common law could, of course, award damages but specific relief would be out of the question. It is, therefore, a necessary matter for consideration in each case where it is sought to trace money in equity, whether it has such a continued existence, actual or notional, as will enable equity to grant specific relief.

To turn to another preliminary matter: We do not think that confusion can be avoided unless the meaning of the word "money" as used in connexion with this class of question is kept in mind. It is tempting to use the illustration of sovereigns in a bag or, to use an expression of Lord Dunedin's, a strong box. But this must not blind us to the fact that such an illustration has little or no likeness to actual facts in present day conditions. We can explain what we mean by a reference to the present cases. The plaintiffs claim that "money" forming part of the residuary estate of the testator and, therefore, divisible among his next-of-kin, has been improperly paid to a charity. This "money" when "paid" was in the form of a cheque on the executorship account, i.e., a negotiable instrument. This negotiable instrument at the moment preceding its delivery to the charity belonged to the residuary

estate of the testator and any of the next-of-kin, if he had known of the situation, could have secured an injunction restraining the executors from delivering it to the charity. As in that event the cheque would never have been presented for payment, the "money" representing the relevant portion of the residuary estate would have remained in its existing state, i.e., as part of the chose in action constituted by the banker's debt to the executors in respect of the executorship account.

The charity accepted the cheque; and on the assumption that it was not a purchaser for value and is not to be charged with such notice as to make it a constructive trustee, it accepted the cheque as a volunteer. The first stage, therefore, was that the charity had in its possession a negotiable instrument which in origin belonged to the residuary estate and in which the next-of-kin were, in the eyes of equity, interested.

If the next-of-kin had been in a position to interfere at that stage they could, in our view, clearly (and the contrary was not argued) have recovered the cheque from the charity whom, as a volunteer, equity would have compelled to recognize the equitable interest of the next-of-kin in it. But the cheque was in fact paid into a banking account in the name of the charity. The next-of-kin claim to follow their "money." What really happened was that when the cheque was cleared, a credit was passed by the paying bank to the collecting bank for the benefit of the charity who thus, without handling any "money" in the sense of cash, became possessed of "money" in the sense of credit in its banking account, i.e., a chose in action. Now, if the "money" in the form of the cheque was "paid in" to a separate account so that the "money" in the form of a chose in action which resulted from the operation remained "unmixed" (i.e., was identifiable as a chose in action having a separate existence) it is not disputed that the "money" will be specifically recoverable from the charity. It is not suggested in that case that the title to the "money" of the charity as a volunteer can defeat the claim of the next-of-kin to recover it for the benefit of the estate. The appropriate equitable relief would be by way of specific order for restoration of what, in the eyes of equity, never ceased to belong in equity to the estate; the reason, of course, being that the charity, which took the cheque not as a purchaser for value without notice but merely as a volunteer, could not set up a title adverse to the estate in respect of "money" (i.e., on those facts a separate and identifiable chose in action) obtained by means of "money" in the

form of a cheque, i.e., an order by the executors on their bankers to transfer from "money" belonging to the estate in the form of a chose in action an aliquot sum of "money" in the form of a credit in favour of the charity, as payee of the cheque, in its account with its bankers.

When the various senses in which the word "money" is used are appreciated, the conceptions of "purchaser for value without notice" and of "volunteer" which are common currency in the language of equity, do not appear inappropriate, as they might perhaps have done (at any rate at first sight) in the case of current coins which pass by delivery: and one of the apparent difficulties in the way of tracing, identifying and locating "money" does, we think, disappear.

The first question which appears to us to fall for decision on this part of the present appeals may, we think, be thus formulated: Did the power of equity to treat Diplock "money" as recoverable from the charity, which undoubtedly existed down to the moment when the cheque was paid by the bank on which it was drawn, cease the moment that the "money" by the process of "mixture" came to be represented by an accretion to or an enlargement of the chose in action consisting of a debt already owing to the charity by its own bankers? Wynn-Parry J., in effect, decided that it did. His reason for taking this view, shortly stated, was as follows: The principle applicable was to be extracted from the decision in Hallett's case(1) and that principle was in no way extended by the decision in Sinclair v. Brougham (2). The principle can operate only in cases where the mixing takes place in breach of a trust, actual or constructive, or in breach of some other fiduciary relationship and in proceedings against the trustee or fiduciary agent: here the mixing was not of this character, since it was effected by an innocent volunteer: there is no ground on which, according to principle, the conscience of such a volunteer can be held in equity to be precluded from setting up a title adverse to the claim: in every case, therefore, where a "mixture" has been carried out by the charity, the claim, whether it be against a mixed monetary fund or against investments made by means of such a mixed fund, must fail in limine.

Now we may say at once that this view of the inability of equity to deal with the case of the volunteer appears to us, with

(1) 13 Ch. D. 696.

(2) [1914] A. C. 398.

all respect to Wynn-Parry J., to be in confiict with the principles expounded, particularly by Lord Parker, in Sinclair v. Brougham (1). If Lord Parker means what we think he meant, and if what he said is to be accepted as a correct statement of the law, Mr. Pennycuick, who argued this part of the case on behalf of the charities, admittedly felt great difficulty in supporting this part of the reasoning of the learned judge. We shall deal further with Lord Parker's observations on this topic when we come to them in our examination of Sinclair v. Brougham (1). But here we may conveniently summarize what we consider to be the effect of them as follows: Where an innocent volunteer (as distinct from a purchaser for value without notice) mixes "money" of his own with "money" which in equity belongs to another person, or is found in possession of such a mixture, although that other person cannot claim a charge on the mass superior to the claim of the volunteer he is entitled, nevertheless, to a charge ranking pari passu with the claim of the volunteer. And Lord Parker's reasons for taking this view appear to have been on the following lines: Equity regards the rights of the equitable owner as being "in effect rights of property" though not recognized as such by the common law. Just as a volunteer is not allowed by equity in the case, e.g., of a conveyance of the legal estate in land, to set up his legal title adversely to the claim of a person having an equitable interest in the land, so in the case of a mixed fund of money the volunteer must give such recognition as equity considers him in conscience (as a volunteer) bound to give to the interest of the equitable owner of the money which has been mixed with the volunteer's own. But this burden on the conscience of the volunteer is not such as to compel him to treat the claim of the equitable owner as paramount. That would be to treat the volunteer as strictly as if he himself stood in a fiduciary relationship to the equitable owner which ex hypothesi he does not. The volunteer is under no greater duty of conscience to recognize the interest of the equitable owner than that which lies upon a person having an equitable interest in one of two trust funds of "money" which have become mixed towards the equitable owner of the other. Such a person is not in conscience bound to give precedence to the equitable owner of the other of the two funds.

We may enlarge upon the implications which apear to us to be contained in Lord Parker's reasoning. First of all, it appears to us to be wrong to treat the principle which underlies

(1) [1914] A. C. 398.

Hallett's case(1) as coming into operation only where the person who does the mixing is not only in a fiduciary position but is also a party to the tracing action. If he is a party to the action he is, of course, precluded from setting up a case inconsistent with the obligations of his fiduciary position. But supposing that he is not a party? The result cannot surely depend on what equity would or would not have allowed him to say if he had been a party. Suppose that the sole trustee of (say) five separate trusts draws 100l. out of each of the trust banking accounts, pays the resulting 500l. into an account which he opens in his own name, draws a cheque for 500l. on that account and gives it as a present to his son. A claim by the five sets of beneficiaries to follow the money of their respective trusts would be a claim against the son. He would stand in no fiduciary relationship to any of them. We recoil from the conclusion that all five beneficiaries would be dismissed empty handed by a court of equity and the son left to enjoy what in equity was originally their money. Yet that is the conclusion to which the reasoning of the learned judge would lead us. Lord Parker's reasoning, on the other hand, seems to us to lead to the conclusion that each set of beneficiaries could set up its equitable interest which would prevail against the bare legal title of the son as a volunteer and that they would be entitled to share pari passu in so much of the fund or its proceeds as remained identifiable.

An even more striking example was admitted by Mr. Pennycuick to be the result of his argument, and he vigoruosly maintained that it followed inevitably from the principles of equity involved. If a fiduciary agent takes cash belonging to his principal and gives it to his son, who takes it innocently, then so long as the son keeps it unmixed with other cash in one trouser pocket, the principal can follow it and claim it back. Once, however, the son, being under no fiduciary duty to the principal, transfers it to his other trouser pocket in which there are reposing a coin or two of his own of the same denomination, the son, by a sort of process of accretion, acquires an indefeasible title to what the moment before the transfer he could not have claimed as his own. This result appears to us to stultify the beneficent powers of equity to protect and enforce what it recognizes as equitable rights of property which subsist until they are destroyed by the operation of a purchase for value without notice.

(1) 13 Ch. D. 696.

The error into which, we respectfully suggest, the learned judge has fallen is in thinking that what, in Hallett's case(1) was only the method (there appropriate) of bringing a much wider-based principle of equity into operation - viz., the method by which a fiduciary agent, who has himself wrongfully mixed the funds, is prohibited from asserting a breach of his duty - is an element which must necessarily be present before equity can afford protection to the equitable rights which it has brought into existence. We are not prepared to see the arm of equity thus shortened.

It is now time to examine in some detail the case of Sinclair v. Brougham (2). Before us it was argued, on behalf of the respondents, that the principle on which it was decided was not that applied in Hallett's case(1) but a different one altogether, invented with a view to solving a particular problem. We do not agree. The principle, in our view, was clearly the same; but in its application to new facts fresh light was thrown upon it, and it was shown to have a much wider scope than a narrow reading of Hallett's case(1) itself would suggest.

We have examined with care not only the opinions themselves but the printed cases and the arguments of counsel as well as the judgments of the majority and of Fletcher Moulton L.J. in the Court of Appeal. It is in the context of this material that the speeches must be interpreted.

The contest in Sinclair v. Brougham (2) was between shareholders and depositors in respect of a miscellaneous mass of assets distributable by the liquidator in the winding up of a building society. The deposits had been made, and the assets were used, in connexion with a banking business carried on in the name of the society but beyond its powers. Each of the two classes claimed priority over the other. Until the case reached the House of Lords the possibility that they might rank pari passu does not appear to have been considered. The majority of the Court of Appeal, affirming Neville J., gave the shareholders priority over the depositors. Fletcher Moulton L.J. would have given the depositors priority over the shareholders. The House of Lords held that both views were wrong and that on the principle on which Hallett's case(1) was founded, the two classes shared rateably. In one respect, no doubt, this application of the principle is an extension of it since, although the right of individuals to trace their own money (if they could) was preserved in the order of

(1) 13 Ch. D. 696.

(2) [1914] A. C. 398.

the House, the order provided for tracing the aggregate contributions of the two classes as classes. Hallett's case(1) was, of course, based on the right of an individual to follow what he could in equity identify as his own money. The extension of the principle in Sinclair v. Brougham (2) was the obvious and, indeed, on the facts, the only practical method of securing a just distribution of the assets. The importance of the point must not, however, be overlooked in considering the arguments and the speeches.

Apparently it had not occurred to any of the judges in the lower courts or to any of the eminent counsel who signed the cases or argued in the House of Lords that Hallett's case(1) had anything to do with such a case as Sinclair v. Brougham (2). There is not a mention of it in any of the judgments below or in either of the printed cases or in argument in the House of Lords until Lord Haldane L.C.(3) suggested that the principle of Hallett's case(1) might apply. The point thus offered was accepted by counsel, who proceeded to base arguments upon it. Mr. Cave and Mr. Tomlin (as they then were), submitted on behalf of the depositors that Hallett's case(1) was really based, "not upon trusteeship in the narrow sense, but upon ownership" and argued that if the property of B is found in the hands of A, prima facie, A "is in a wide sense in a fiduciary relationship towards B. because equity affects his conscience with regard to that particular property." This proposition, as stated, was not accepted by the House. From it counsel deduced the consequence that the depositors were entitled to priority in respect of the moneys which they had deposited. This argument was, of course, quite different from the other two arguments adduced on behalf of the depositors, viz., that based on money had and received and that based on the principles enunciated by Fletcher Moulton L.J. in his dissenting judgment.

Mr. Upjohn and Mr. Younger (as he then was) for the B. shareholders agreed(3) that (subject to a qualification not material on the facts) "money paid under an ultra vires contract does not become the property of the society but remains the property of the payer, and so long as he can identify it he may trace it through any number of changes and claim it on the footing that it is and always has been his property." But a claim based on property was, they said

(1) 13 Ch. D. 696.

(2) [1914] A. C. 398.

(3) Ibid. 404, 406, 407.