[1923] 1 Ch. 192
[CHANCERY DIVISION]
In re BERCHTOLD.
BERCHTOLD v. CAPRON.
[1913. B. 2773.]
1922 Nov. 15, 16; Dec. 4.
RUSSELL J.
Conflict of Laws - Land devised on Trust for Sale - Movables or
Immovables - Devolution - Lex situs - Lex domicilii.
When a person domiciled in a foreign country dies intestate leaving an
interest in the proceeds of sale, of English freeholds which are
subject to a trust for sale but not yet sold, such an interest is an
immovable, and the succession thereto is governed by the lex situs.
ORIGINATING SUMMONS.
On April 2, 1906, Count Richard Berchtold died, being a person of
Hungarian nationality and domicil. He left a will (dated March 2,
1901) in English form dealing with his estate in England. By that will
he devised and bequeathed all his freehold estate in Birmingham and
all other his real estate and all his personal estate in the United
Kingdom (subject to the payment of his testamentary
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RUSSELL J.
expenses and debts in the United Kingdom) to his trustees, Frederick
William Capron and William Frederick Brabant, of London, upon trust
for sale and conversion. In the events which happened the trusts of
the proceeds and of the investments for the time being representing
the same were as follows: In trust during the life of his wife (who
died in 1913) to pay out of the income thereof the yearly sum of 500l.
to his wife, and to stand possessed of the residue of the said income
in trust for his son Count Nicholas, and, after the decease of his
wife to stand possessed of the capital and the income thereof in trust
for his said son. The will contained a power to postpone sale and
conversion for so long as the trustees should think fit, and a
declaration that the rents, profits, and income of such part of his
estate as should for the time being remain unsold and unconverted
should be paid to the persons to whom the income of the proceeds of
such sale and conversion would for the time being be payable under the
will if such sale and conversion had been actually made. Power was
given to the trustees to let or demise any property remaining unsold;
and the testator declared his wish to be that the property at
Birmingham should not be sold before the year 1920, but stated that he
did not intend by the expression of such wish to create any binding
trust or to prevent the free exercise by his trustees of their
discretion.
Apart from a small sum of money, which may be disregarded, the
testator's English estate consisted wholly of the freehold estate at
Birmingham, which was subject to a mortgage in favour of an insurance
company to receive a principal sum of about 43,000l. Count Richard
left him surviving his wife, his only son Count Nicholas, and an only
daughter Countess Szokolyi, who is a defendant to these proceedings.
=46rom the death of Count Richard during the remainder of the life of
Count Nicholas, the Birmingham freeholds remained unsold. The balance
of the rents remaining after payment of the mortgage interest was
remitted from time to time to Hungary. Count Nicholas died on July 9,
1911,
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intestate. He was of Hungarian nationality and domicil. He left him
surviving his widow the plaintiff and one child only, Count Antoine,
who was then an infant aged sixteen, having been born on April 25,
1895. On February 24, 1913, letters of administration to the estate of
Count Nicholas were granted by the Principal Probate Registry to the
defendant David Maun Linley as attorney for the plaintiff. The estate
of Count Nicholas in this country consisted of his beneficial interest
in the Birmingham freeholds, and the proceeds of sale thereof, under
the will of Count Richard, and a sum of some 760l., being rents from
that property. The sum of 760l. was exhausted in payment of estate
duty, the balance required for the payment of estate duty being raised
by means of a further mortgage of the Birmingham freeholds. On August
1, 1913, the present summons was issued raising a number of questions.
On February 19, 1914, Eve J. made an order disposing of many of the
questions raised. By that order the trustees of Count Richard's will
were ordered to retain unsold the Birmingham freeholds during the
minority of Count Antoine (who was a defendant to the summons) or
until further order, but without prejudice to any question as between
the plaintiff and the infant defendant, and, during such period of
retention, to pay the whole of the net rents and profits and
ac***ulations to the plaintiff, she there out suitably maintaining the
said infant. Question 2 of the summons was ordered to stand over. It
was as follows: "Whether the persons or person beneficially entitled
to the proceeds of sale of the said real estate (if sold) and to the
rents and profits thereof (until sale) are the persons or person who
would be entitled according to English law or the persons or person
who would be entitled according to the law of Hungary." In pursuance
of that order the surplus income of the Birmingham freeholds was paid
to the plaintiff down to the outbreak of war in August, 1914, since
when the surplus income had been held up. Count Antoine was killed in
action on October 23, 1915, under the age of twenty-one years. He was
of Hungarian nationality and domicil. He left a will (dated April 12,
1914) which has been declared by the
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Hungarian Courts to be invalid. He accordingly died intestate, leaving
his mother, the plaintiff, his sole next of kin. In pursuance of an
order dated July 19, 1920, and made in this action, a small ****tion of
the Birmingham freeholds was sold, and the net proceeds were applied
in reduction of the mortgage. Except for this sale, no part of the
Birmingham freeholds devised upon trust for sale by the will of Count
Richard has ever been sold. They are still unsold and remain subject
to the mortgage upon which principal moneys amounting to 42,846l. are
due. On January 19, 1921, letters of administration to the estate
within the United Kingdom of Count Antoine were granted by the
Principal Probate Registry to the Public Trustee. The summons of
August 1, 1913, was amended, (1.) by entitling it In the Matter of the
Estate of Count Antoine and asking for administration of that estate
so far as might be necessary, and, (2.) by adding as defendants the
Public Trustee and Countess Szokolyi. Question 2 now comes for
decision.
MacSwinney for the trustees.
Gover K.C. and Errington for the plaintiff. The question is whether
the interests taken in the Birmingham freeholds by Counts Nicholas and
Antoine under the will of the testator were immovable property or
movable property according to the laws of England. The devolution of
immovables is governed by the lex situs and that of movables by the
lex domicilii: Dicey on Conflict of Laws, 3rd ed., rr. 150, 151.
It is submitted that when land is devised on trust for sale the
proceeds of the sale are regarded as immovable. Immovable property
includes all rights over things which cannot be moved, whatever be the
nature of such rights or interests: In re Hoyles. (1)
When a person of foreign domicil dies intestate leaving English realty
which has been converted into personalty the succession thereto is
governed by the lex situs: Dicey on Conflict of Laws, 1st ed., p. 520,
Note 2; Westlake on Private International Law, 3rd ed., p. 189, r.
158. Where a testator,
(1) [1911] 1 Ch. 179, 183.
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of Irish domicil, left a leasehold house in England to trustees, upon
trust for sale, it was held that the leasehold was an immovable
governed by the lex situs, and that the proceeds of its sale followed
the law applicable to the leasehold itself: Freke v. Lord Carbery (1);
see, too, Duncan v. Lawson. (2) A rent charge on land in England is
deemed to be of the nature of the land itself - namely, immovable:
Chatfield v. Berchtold. (3) So, too, are Scotch heritable bonds; In re
Fitzgerald (4); and mortgage debts secured by land: In re Hoyles. (5)
Murray v. Champernowne (6), though not binding on this Court as it was
a decision of an Irish Court, is a direct decision in my favour. In
that case land was vested in trustees upon trust for sale, the trusts
of the proceeds being for such persons as M. should by his will
appoint. M. exercised the power in favour of his wife. Thirty-one
years later, the lands being still unsold, as in this case, on an
application to revoke probate of M.'s will, it was necessary to decide
whether the property subject to the power was movable or immovable
property, and the Court held that the property subject to the power
was immovable.
Under various statutes an interest in the proceeds of land subject to
a trust for sale has been held to be "an interest in land," or "a sum
of money payable out of land": see Briggs v. Chamberlain (7) and
Miller v. Collins (8) under the Act for the Abolition of Fines and
Recoveries, 1833, s. 77; Brook v. Badley (9) under the Mortmain Act,
1736, s. 3; Bowyer v. Woodman (10) and In re Fox (11) under the Real
Property Limitation Act, 1833, s. 42; and In re Thomas (12) under the
Dower Act, 1833, s. 9.
These illustrations under particular Acts show that, although for
purposes of devolution the law may recognize an interest in property
such as is in question here as a movable, yet
(1) (1873) L. R. 16 Eq. 461.
(2) (1889) 41 Ch. D. 394.
(3) (1872) L. R. 7 Ch. 192.
(4) [1904] 1 Ch. 573.
(5) [1911] 1 Ch. 179.
(6) [1901] 2 I. R. 232.
(7) (1853) 11 Hare, 69.
(8) [1896] 1 Ch. 573.
(9) (1868) L. R. 3 Ch. 672.
(10) (1867) L. R. 3 Eq. 313.
(11) [1913] 2 Ch. 75.
(12) (1886) 34 Ch. D. 166.
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for general purposes it is in the nature of an immovable. In some tax
cases the opposite view was taken. But although land notionally
converted into money may be subject to tax as personalty it is no
ground for saying that for purposes of international law it is not an
immovable: see Forbes v. Steven (1); In re Stokes (2); In re Piercy.
(3)
In these cir***stances it is submitted that this is a case where the
subject matter is an immovable governed by English law although
English law treats that subject matter as personalty.
Gurdon for the administrators of the estates of Counts Nicholas and
Antoine.
Clayton K.C. and A. Adams for the testator's daughter. In determining
whether property is movable or immovable you do not consider its
physical state but what it is in the eyes of the law. In the case of a
conflict of laws on the death of an intestate his immovables devolve
according to the lex situs, and his movables according to the lex
domicilii. The lex situs decides whether the property is movable or
immovable. The effect of a trust for conversion is that, equity
deeming that to be done which ought to be done, land directed to be
sold and turned into money is to be considered as money: Fletcher v.
Ashburner. (4) The direction to convert has in the eye of the law made
the land money. Money is a movable, and therefore such property
devolves according to the law of the intestate's domicil: see
Westlake's Private International Law, 6th ed., =A7 158, and In re Piercy
(3); Hanson's Death Duties, 6th ed., pp. 799 and 800; Attorney-General
v. Brunning (5); Attorney-General v. Lomas (6); In re Gunn. (7) Where
land in England is held upon trust for sale the right of the person
entitled to the proceeds is a right to sue the trustee in England and
compel him to carry out the trust. That is a right against the trustee
and not against the land. Such a right is a movable
(1) (1870) L. R. 10 Eq. 178.
(2) (1890) 62 L. T. 176.
(3) [1895] 1 Ch. 83.
(4) (1779) 1 Bro. C. C. 497.
(5) (1860) 8 H. L. C. 243.
(6) (1873) L. R. 9 Ex. 29.
(7) (1884) 9 P. D. 242.
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(Dicey's Conflict of Laws, 3rd ed., pp. 75, 76, 77), and is an
equitable chose in action: In re Smyth. (1) There is no decision in
these Courts to the contrary. Lease holds in their nature are
immovables which, according to English law, descend on intestacy
according to the Statute of Distribution. In Duncan v. Lawson (2) and
Pepin v. Bruy_re (3) there was no trust for sale and therefore no
right which was a movable. In Freke v. Lord Carbery (4) there was a
trust for sale, but no question arose as to whether the next of kin
entitled were entitled according to the law of England, or according
to the law of the domicil.
As regards freeholds on trust for sale the only decision is that in
Murray v. Champernowne (5), where the learned judge relied on the
opinion of Mr. Dicey, expressed in the first edition of his Conflict
of Laws but omitted in subsequent editions. That decision is not
binding on this Court and the correctness of it is doubtful:
Westlake's Private International Law, 6th ed., p. 209. In that case
the beneficial interest was disposed of by the will and no question
arose as to whether the heir at law or the next of kin took, nor,
whether, if the next of kin took, they took according to the law of
domicil or according to Irish law. A mortgage on freehold land differs
essentially from a share of the proceeds of the sale of land held upon
trust for sale. The mortgagee's debt is regarded as subordinate to his
remedy and can only be enforced by recourse to the land. For some
purposes such a mortgage is a movable: Lawson v. Inland Revenue
Commissioners (6); for other purposes it is an immovable: In re
Hoyles. (7) The cases cited on behalf of the plaintiff under the
Dower, Mortmain, Fines and Recoveries, and Real Property Limitation
Acts merely show that for certain purposes the proceeds of the sale of
land held upon trust for sale are interests in land, and do not touch
the question of whether they are movables or immovables. An interest
in the proceeds
(1) [1898] 1 Ch. 89.
(2) 41 Ch. D. 394.
(3) [1902] 1 Ch. 24.
(4) L. R. 16 Eq. 461.
(5) [1901] 2 I. R. 232.
(6) [1896] W. N. 145.
(7) [1911] 1 Ch. 179.
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of land devised on trust for sale is not an interest in land: Du
Hourmelin v. Sheldon. (1)
In Forbes v. Steven (2) the question was whether duty was payable on
the proceeds of sale of land in India which was partner****p property.
It was necessary to determine not only whether the proceeds were real
or personal property but also, as the land was in India, whether the
proceeds were an immovable, because then no duty would be payable,
whereas if it were a movable it would be subject to the law of domicil
and duty would be payable. The language of James V.-C. shows that
conversion took place not only for the purpose of distribution but for
all purposes, and that, as the interest of the testator in the
property was an interest in the proceeds of the conversion, it was
properly subject to duty in this country. That is, the interest was
held to be a movable subject to English law.
In re Stokes (3) in terms decided that an interest in partner****p
land, or in land agreed to be sold, was a movable: see Hanson's Death
Duties, 6th ed., p. 113. It is submitted that freehold land subject to
an imperative trust for sale is money, and money is a movable which
devolves, on the death of the owner, according to the law of his
domicil, in this case Hungarian law.
Cur. adv. vult.
Dec. 4. RUSSELL J. It is conceded that when a conflict of laws arises
on the death of an intestate, the devolution of his immovables is
governed by the lex situs; the devolution of his movables is governed
by the lex domicilii. It is further conceded that whether particular
property is a movable or an immovable is decided according to the lex
situs.
The questions which arise in the present case, arise in regard to (1.)
the interest owned by Count Nicholas at his death in respect of the
Birmingham freeholds which were subject to a trust for sale, and the
other provisions contained in Count Richard's will; and (2.) the
interest owned by
(1) (1837) 1 Beav. 79.
(2) L. R. 10 Eq. 178.
(3) 62 L. T. 176.
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Count Antoine at his death in respect of the same freeholds. If these
respective interests are immovable property according to the lex situs
(i.e., the law of England) the law applicable to their devolution will
be the law of England, and being, according to English law, personal
estate, they will devolve upon the persons entitled by English law to
the intestate's personal estate. The result of this solution would be
that the plaintiff would take one-third on the intestacy of Count
Nicholas as his widow, and the remaining two-thirds on the intestacy
of Count Antoine as his mother and sole next of kin. On the other
hand, if these respective interests are movable property according to
the lex situs, the law applicable to their devolution will be the lex
domicilii or law of Hungary. The result of this solution would be
that, subject to a usufruct in favour of the plaintiff as the widow of
Count Nicholas (as to the extent of which usufruct there is a
question) the whole devolves upon and belongs to the Countess Szokolyi
as the only sister of Count Nicholas, Count Antoine having died
intestate and without leaving him surviving any issue, or any brother
and sister, or any issue of a deceased brother or sister, or a father,
or any brother of his deceased father. It will thus be seen that the
primary question for decision can thus be framed. Were the interests
taken by Count Nicholas and Count Antoine under or by virtue of the
will of Count Richard, so far as regards the Birmingham freeholds
thereby devised upon trust for sale, immovable property or movable
property according to English law? The distinction between real estate
and personal estate under English law has nothing to do with the
question. The alternatives and the only alternatives for consideration
are immovable property or movable property. It is said that there is
no decision of the English Courts directly upon the point. There is a
decision on the exact point in the Irish Courts, which though entitled
to the highest respect, is not binding on me. I will first consider
the matter apart from that decision. Different cl***** of property
have come under the consideration of the Courts of this country and
have been held to be immovables. Leaseholds are immovables:
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Freke v. Lord Carbery (1), and Duncan v. Lawson. (2) A testatrix's
share of a rent charge issuing out of lands during the lives of
herself and two others and the life of the longest liver was held to
be an estate pur autre vie applicable by law as personal estate and
chargeable with duty as personal estate under the Legacy Duty Act,
1796; and was held not to be exempt from duty by reason of the foreign
domicil of the testatrix because the property was as much land as if
land to the annual value of the rent charge had been given, and was
accordingly immovable property: Chatfield v. Berchtoldt. (3) Scotch
heritable bonds are immovables: In re Fitzgerald. (4) A mortgage debt
secured by land is immovable property: In re Hoyles. (5) Numerous
authorities were cited for the purpose of showing that an interest in
the proceeds of sale of real estate subject to a trust for sale was
under different statutes treated as an interest in land. I will refer
to a few. Such an interest of a married woman was held to be an
interest in land which could pass by a fine, or by a deed having a
like effect, under the Act for the Abolition of Fines and Recoveries:
Briggs v. Chamberlain. (6) A sum, payable out of personalty and the
proceeds of sale of real estate devised by a testator on trust for
sale, was held incapable of being bequeathed by a testatrix for
charitable purposes, the real estate not having been sold nor the sum
raised. The sum was held to be an interest in land within s. 3 of the
Mortmain Act, 1736: Brook v. Badley. (7) The share of a married woman
in moneys arising from the proceeds of real estate devised upon trust
for sale was held to be an interest in land and within the words of s.
42 of the Real Property Limitation Act, 1833: "Any sum of money
charged upon or payable out of any land": Bowyer v. Woodman. (8) The
gift to a widow of a life interest in part of the proceeds of sale of
real and personal estate devised upon trust for sale was held to be a
gift of an interest in land
(1) L. R. 16 Eq. 461.
(2) 41 Ch. D. 394.
(3) L. R. 7 Ch. 192.
(4) [1904] 1 Ch. 573.
(5) [1911] 1 Ch. 179.
(6) 11 Hare, 69.
(7) L. R. 3 Ch. 672.
(8) L. R. 3 Eq. 313.
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within s. 9 of the Dower Act, 1833: In re Thomas. (1) These
authorities are only decisions that the property in question in each
case fell within the wording of the relevant statute, but they
certainly show that an interest in property such as I have to consider
in the present case is aptly described as being "an interest in land,"
or "a sum of money payable out of land."
Let me now consider what rights existed in Count Nicholas during his
lifetime and at his death in regard to the Birmingham freeholds by
virtue of the dispositions contained in the will of Count Richard.
Subject to his mother's 500l. a year, he was absolutely entitled to
the proceeds of sale if and when the sale took place. No sale in fact
took place; the property continued to be land, immovable property.
Subject to his mother's interest, Count Nicholas was entitled down to
his death to the rents and profits of that immovable. It is arguable
that under s. 63 of the Settled Land Act, 1882, he, or he and his
mother together, would be deemed to be tenant for life of the
Birmingham freeholds which would be deemed to be settled land, with
the result that the land might have been sold by the tenant for life,
or an order might have been made letting the tenant for life into
possession: In re Bagot's Settlement. (2) Further, subject to the
interest of the mother of Count Nicholas, the land was his in equity.
As Lord Cairns said in Brook v. Badley (3), the land was in the hands
of the trustees not for the benefit of those trustees but for the
benefit of those to whom the proceeds of sale of the land were to be
paid when the sale took place; the interest was an interest in land,
and it would be right to say in equity that the land did not belong to
the trustees but to those to whom the proceeds of sale were to be
paid. Equally applicable to Count Nicholas is the language used by
Cotton L.J. in Ashworth v. Munn (4), when, referring to Brook v.
Badley (3), he says: "Although what the testator could get is money
only, and although he leaves an interest which he can only get in the
shape of money, still it is an
(1) 34 Ch. D. 166.
(2) [1894] 1 Ch. 177.
(3) L. R. 3 Ch. 672.
(4) (1880) 15 Ch. D. 363, 374.
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interest in land, if at the time of his death what he devises is in
the shape, not of money realized, but of money which is to be produced
by the sale of land, he having an interest or charge upon the land
till that money is realized, and in a state to be paid to him as
money." As to Count Antoine, his position was the same as regards so
much of the benefit taken by Count Nicholas under Count Richard's will
as passed to Count Antoine upon the intestacy of Count Nicholas,
except that at the time of Count Antoine's death, the 500l. a year had
ceased to be payable owing to the previous death of Count Nicholas'
mother, and except as to the possible position under the Settled Land
Act, 1882. The rights and interests of Count Nicholas and Count
Antoine, under or by virtue of the will of Count Richard in relation
to the Birmingham freeholds and the proceeds of sale thereof being
such as I have described, are those rights and interests more properly
to be classified as immovable property, or as movable property? In my
opinion, they should be classified as immovable property equally with
the freehold land out of which the money is eventually to be paid.
That is the conclusion to which I have come independently of the Irish
decision to which I will now refer.
In Murray v. Champernowne (1) the facts were as follows: Real estate
in Ireland was vested in trustees upon trust for sale. The trusts of
the proceeds of sale (in the events which happened) were for such
persons as Alexander Murray, a domiciled Scotsman, should by deed or
will appoint. He died in 1865, having by a will made in 1862 given the
residue of his property to his wife, Eugenia Grace Murray, for life,
and appointed her his residuary legatee. It was held that the effect
of this will was to vest in Eugenia Grace Murray absolutely all the
property over which Alexander Murray had the before-mentioned power of
appointment. Alexander Murray died in 1865. Probate of this will in
common form was in 1866 granted by the Principal Probate Registry in
Dublin to the executor therein named. It subsequently transpired that
this will, though duly executed in accordance
(1) [1901] 2 I. R. 232, 236, 237.
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with the Wills Act, was invalid according to the law of Scotland.
Eugenia Grace Murray died in 1897, having by her will (which had been
proved in England and resealed in Ireland) given the residue of her
property real and personal to one Philip Murray whom she appointed her
executor. The action was brought to obtain revocation of the probate
granted in 1866. The real estate in Ireland, which was subject to the
trust for sale under the settlement, was in fact still unsold. The
probate was revoked, but the question arose whether, since the will
was duly executed in accordance with the Wills Act, there should not
be a decree for a limited grant; in other words, whether the will,
being valid according to the law of Ireland (where the lands were
situate), was not operative as an execution of Alexander Murray's
general power of appointment over the proceeds of sale of the land.
For this purpose it was necessary to determine whether the property
subject to the power was immovable property or movable property. It
was argued that the lands were equitably converted into money and that
the property subject to the power was therefore movable property which
the will was invalid to pass. In a considered judgment Andrews J. held
that the property subject to the power was immovable, and gave Philip
Murray liberty to apply for a grant to him of letters of
administration with the will annexed, limited to such estate and
interest in the lands, or the proceeds of sale thereof, as Alexander
Murray had power to appoint, in so far as he did, by the paper writing
pur****ting to be his last will, appoint the same, and in so far as the
same, so appointed, passed under the will of Eugenia Grace Murray. The
material ****tion of the judgment is at pp. 236 and 237 of the re****t.
[His Lord****p then read the passage: "It is settled law .... movable
or immovable."] The learned judge then proceeds to give another ground
upon which the same result would be reached; but the primary ground
for his decision is his conclusion that the property subject to the
power must be treated as immovable property. That decision seems to me
to cover the exact point and is in my opinion right. The note in the
first edition of Dicey's
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Conflict of Laws (published in 1896) to which Andrews J. refers runs
as follows: "A question may be raised whether, when a person domiciled
in a foreign country, e.g. France, dies intestate leaving English
realty which has been converted into personalty (see pp. 312, 313
ante) the succession thereto is governed by the lex domicilii or the
lex situs? Semble, it is governed by the lex situs." That note does
not appear in the second edition or in the third edition; but
curiously enough the second edition (published in 1908) contains no
reference to Murray v. Champernowne (1), while the third edition
(published in 1922) refers to the case more than once and without any
adverse comment. In all three editions, however, is to be found the
statement cited by the Master of the Rolls in In re Hoyles (2):
"Immovable property includes all rights over things which cannot be
moved, whatever be the nature of such rights or interests." So far as
another great English authority is concerned (I refer to the late
Professor Westlake) the position is this. In his third edition
(published in 1890) at p. 189, in =A7 158, he appears to contemplate
that moneys produced by sale of immovables might, in their situs, be
considered to represent the immovables and be subject to the same
rights. In his fourth edition (published in 1905) at p. 203, and his
fifth edition (published in 1912) at p. 221, the wording of =A7 158 is
altered, and runs thus: "Money substituted for an immovable by the lex
situs is subject to the same rights as the immovable, but, when an
immovable is sold under a disposition made by the owner or in
consequence of a dealing with it by the owner, the rights to which it
was subject as an immovable do not affect its proceeds unless kept
alive against them by the will of parties or by the lex situs."
Neither the fourth nor fifth editions refers to the case of Murray v.
Champernowne. (1) In the sixth edition, however (published in 1922),
Mr. Bentwich (at p. 209) refers to that case and throws doubt on the
correctness of the decision. In my opinion this doubt is not well
founded.
On behalf of the Countess Szokolyi it was argued that
(1) [1901] 2 I. R. 232.
(2) [1911] 1 Ch. 179, 183.
[1923]
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1 Ch.
BERCHTOLD, In re. BERCHTOLD v. CAPRON.
RUSSELL J.
according to English law land directed to be sold and turned into
money must be considered to be money; and that on the principle that
equity considers done what should be done, the Birmingham freeholds
are, in the eye of the law, money. This argument, to be effective,
must add the words "for all purposes." That the Birmingham freeholds
are to be treated as money for some purposes, no one doubts. Thus the
interest of the taker is personal estate. But this equitable doctrine
of conversion only arises and comes into play where the question for
consideration arises as between real estate and personal estate. It
has no relation to the question whether property is movable or
immovable. The doctrine of conversion is that real estate is treated
as personal estate, or personal estate is treated as real estate; not
that immovables are turned into movables, or movables into immovables.
As Farwell L.J. pointed out in In re Hoyles (1) the fact that a
mortgage is regarded as personal estate for certain purposes in
questions between our fellow subjects here has no bearing on the
question whether such a mortgage should be regarded as a movable or
not in questions of international law.
Various authorities were cited in sup****t of Countess Szokolyi's claim
which I will now refer to. Forbes v. Steven (2) was a decision of Sir
William James. The question for decision was whether legacy duty was
payable under the will of a domiciled Englishman on his share of the
proceeds of partner****p real estate in Bombay which was sold after his
death. The testator died in 1849. The real estate in question was not
sold until 1864, and in 1867 the share of the testator in the proceeds
of sale was transferred to the account of his executors. The Inland
Revenue claimed that legacy duty was payable on this share as arising
from property impressed by the partner****p contract with the character
of personal estate and devolving in that character on the testator's
legatees. The Vice-Chancellor decided in favour of the claim on the
ground that the produce of a partner****p asset was personal estate,
that the residuary legatees only took it because it was personal
estate, and that they must take it
(1) [1911] 1 Ch. 179, 187.
(2) L. R. 10 Eq. 178.
[1923]
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1 Ch.
BERCHTOLD, In re. BERCHTOLD v. CAPRON.
RUSSELL J.
subject to the legacy duty imposed on residuary legatees. That case
had nothing to do with the question whether the interest in the Bombay
real estate (which in equity was personal property) was movable
property or immovable property. In re Stokes (1) was cited as a case
in which North J. had in effect held that an interest in partner****p
land or in land agreed to be sold was movable property. The testator,
Robert Stokes, was a domiciled Englishman, who was in partner****p with
his brother, John Stokes, in the business of sheep breeding. The
testator was entitled to four-sevenths of the partner****p property.
Part of the partner****p property consisted of a freehold estate in New
Zealand called the Milbourne Estate. There was a question whether this
was converted under an agreement between the partners, or whether it
was converted by being part of the capital of the business. North J.
held that, upon either view, the estate was subject to a trust for
conversion. The testator by his will had disposed of all those, his
four equal seventh shares and all other, if any, the estate and
interest which he might at the time of his death possess or have power
to dispose of in the Milbourne Estate upon certain trusts. North J.
held that what was disposed of by the words of the will was his
interest under his agreement with his brother by virtue of which he
was entitled to receive: "not four-sevenths of the estate, or four-
sevenths of the proceeds, but a share amounting to four-sevenths of
the surplus after making all the deductions that were necessary in
respect of expenses and also bringing into hotchpot any advances that
either of the brothers had received and which ought to be set against
his share." The learned judge then describes that interest as personal
estate, as a credit to which the testator was entitled in respect of
the estate. In these cir***stances North J. held that legacy duty was
payable in respect of that interest. He followed Forbes v. Steven (2),
the liability to legacy duty depending not on whether the interest was
a movable or immovable but on whether or not it was personal estate.
He nowhere decides that the interest was movable property. Du
Hourmelin v.
(1) 62 L. T. 176, 178.
(2) L. R. 10 Eq. 178.
[1923]
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1 Ch.
BERCHTOLD, In re. BERCHTOLD v. CAPRON.
RUSSELL J.
Sheldon (1) was also relied upon, as showing that an interest in the
proceeds of sale of land devised upon trust for sale was not an
interest in land. The question arose because some of the persons
entitled to contingent reversionary interests in the proceeds of sale
were aliens; it was alleged by the purchaser on a sale under order of
the Court that such interests could not be held against the Crown, and
that consequently the Crown had a title over which the vendors had no
power. The Master re****ted that a good title could be made, to which
re****t exceptions were taken. Lord Langdale overruled the exceptions,
pointing out that there was no vested interest in any alien, and
holding that the species of interest in land which the will gave to
aliens did not entitle the Crown to take the benefit of the proceeds
of sale given to such aliens. The case does not really assist me upon
the question whether such interest is movable property or immovable
property. So, too, with the case of In re Lyne's Settlement Trusts
(2), which was merely a decision that an interest in the proceeds of
sale of land held on trust for sale, but not yet sold, was personal
estate within the meaning of Lord Kingsdown's Act. Peterson J.
(construing the words "personal estate" in the latter Act by reference
to the definitions of "real estate" and "personal estate" in the Wills
Act) held it was an interest in real estate. The Court of Appeal held
it was personal estate within the meaning of Lord Kingsdown's Act.
Here again the question for decision did not raise the point whether
being personal estate it was or was not a movable or an immovable. In
re Gunn (3) decided that a will exercising a general power of
appointment over the proceeds of sale of real estate settled upon
trust for sale but still unsold was a will disposing of personal
estate and entitled to probate. I get no assistance either from that
case or the cases of In re Smyth (4), and In re Piercy (5), upon the
question whether the property under discussion here is a
(1) 1 Beav. 79.
(2) [1919] 1 Ch. 80.
(3) 9 P. D. 242.
(4) [1898] 1 Ch. 89.
(5) [1895] 1 Ch. 83.
[1923]
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BERCHTOLD, In re. BERCHTOLD v. CAPRON.
RUSSELL J.
movable or an immovable. I can find no real ground in the various
authorities which were cited on behalf of Countess Szokolyi for
altering the view which I have already expressed, that the beneficial
interest in relation to the Birmingham freeholds and the proceeds of
sale thereof owned by Count Nicholas and Count Antoine at their
respective deaths was immovable property according to English law.
I answer the second question in the summons by declaring that the
persons or person beneficially entitled to the proceeds of sale of the
Birmingham freeholds and to the rents and profits thereof until sale
are the persons or person who would be entitled thereto according to
the law of England.
The costs of all parties to the summons, incurred since the date of
the order of Eve J. of February 19, 1914, must be taxed as between
solicitor and client, and raised and paid by the trustees out of the
Birmingham freeholds.
Solicitors: Capron & Co.; Leader, Plunkett & Leader.
J. B. B. M.
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